Retirement Planning - Redefined podcast

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Treść dostarczona przez John Teixeira and Nick McDevitt, John Teixeira, and Nick McDevitt. Cała zawartość podcastów, w tym odcinki, grafika i opisy podcastów, jest przesyłana i udostępniana bezpośrednio przez John Teixeira and Nick McDevitt, John Teixeira, and Nick McDevitt lub jego partnera na platformie podcastów. Jeśli uważasz, że ktoś wykorzystuje Twoje dzieło chronione prawem autorskim bez Twojej zgody, możesz postępować zgodnie z procedurą opisaną tutaj https://pl.player.fm/legal.

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QUALIFIED: How Competency Checking and Race Collide at Work with Shari Dunn | 284 33:58

5 dni temu33:58

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In this episode, we delve into the concept of being "qualified" in the workplace, examining who gets labeled as such, who doesn't, and the underlying reasons. We explore "competency checking"—the practice of scrutinizing individuals' abilities—and how it disproportionately affects underrepresented groups, often going unnoticed or unchallenged. Our discussion aims to redefine qualifications in a fair, equitable, and actionable manner. Our guest, Shari Dunn , is an accomplished journalist, former attorney, news anchor, CEO, university professor, and sought-after speaker. She has been recognized as Executive of the Year and a Woman of Influence, with her work appearing in Fortune Magazine, The Wall Street Journal, Ad Age, and more. Her new book, Qualified: How Competency Checking and Race Collide at Work , unpacks what it truly means to be deserving and capable—and why systemic barriers, not personal deficits, are often the real problem. Her insights challenge the narratives that hold so many of us back and offer practical solutions for building a more equitable future. Together, we can build workplaces and communities that don’t just reflect the world we live in, but the one we want to create. A world where being qualified is about recognizing the talent and potential that’s been overlooked for far too long. It’s not just about getting a seat at the table—it’s about building an entirely new table, one designed with space for all of us. Connect with Our Guest Shari Dunn Website& Book - Qualified: https://thesharidunn.com LI: https://www.linkedin.com/today/author/sharidunn TikTok: https://www.tiktok.com/@thesharidunn Related Podcast Episodes: How To Build Emotionally Mature Leaders with Dr. Christie Smith | 272 Holding It Together: Women As America's Safety Net with Jessica Calarco | 215 How To Defy Expectations with Dr. Sunita Sah | 271 Share the Love: If you found this episode insightful, please share it with a friend, tag us on social media, and leave a review on your favorite podcast platform! 🔗 Subscribe & Review: Apple Podcasts | Spotify | Amazon Music…

Retirement Planning - Redefined

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Financial and retirement planning guidance from Certified Financial Planner John Teixeira and Nick McDevitt of PFG Private Wealth Management in the Tampa Bay, FL area. On this show, you'll learn about how the financial and retirement world has evolved over the past several decades, how to properly plan for your own future, and some of the important pitfalls to avoid. PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.

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Retirement Planning - Redefined

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Social Security Claiming Tips for Diverse Family Situations 20:22

18 dni temu20:22

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Social Security claiming strategies can vary greatly depending on family dynamics. This episode explores how different family situations, such as those with a stay-at-home spouse or a blended family, can impact when and how to claim Social Security benefits to maximize your retirement income. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Speaker 1: PFG Private Wealth Management LLC is an SEC registered investment advisor. Information presented is for educational purposes only, and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Speaker 2: The rules of retirement have changed. No longer can most of us rely on Social Security or a single pension to fund our futures. We're living longer and retirement doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens with fresh eyes, with a new approach and plan of attack. Here to answer the call, our financial advisors, John Teixeira and Nick McDevitt of PFG Private Wealth Management serving you throughout the Tampa Bay area. This podcast is Retirement Planning - Redefined, and it starts right now. Marc Killian: Time for another edition of Retirement Planning - Redefined with John and Nick, financial advisors at PFG Private Wealth. Make sure you subscribe to the podcast on whatever podcasting app you like using. Just type in Retirement Planning - Redefined, or find it online at pfgprivatewealth.com. That's pfgprivatewealth.com, and while you're there, you can book an appointment with the guys right there at the top of the page. Just click on the little tab and get started today. We're going to get into Social Security conversation this week with the guys, some claiming tips for family situations, different kind of family situations that are out there before we get rocking and rolling. Nick, how are you doing, my friend? Nick McDevitt: Doing pretty good. Marc Killian: Yeah, hanging in there? Nick McDevitt: Oh, yeah. Slightly enjoying the cooler weather, but I always enjoy hoodie weather, so I could use a couple more degrees, but. Marc Killian: Okay. Nick McDevitt: But not too bad. Marc Killian: Not too bad. And John, how are you doing with the herd down there? Everybody doing all right? John Teixeira: Yeah, everyone's good. Everyone's trucking along. Yeah, my daughters are in karate, so they're enjoying that. Marc Killian: Oh, nice. John Teixeira: And debating what the next step is for one of, actually, they run around kicking me all the time now. Marc Killian: Yeah, they're going to ninja flip you all over the house. John Teixeira: Nice. I'm trying to get my youngest one into flag football so I just bought her a football and throwing it. Marc Killian: Very nice. John Teixeira: My wife's like, "No, no, she's doing softball." And I'm like, "Whatever." Marc Killian: Nice. John Teixeira: So we're trying to get her into some sports here, so it should be fun. Marc Killian: Good, good stuff. Good stuff. Well, since we're talking about families, let's talk about the Social Security breakdowns on some things. Claiming strategies vary, obviously from dynamic to dynamic. In this episode, let's just run through some stuff. I guess we'll start with the broad view, fellas. Social Security claiming strategies, there's a lot of it. I mean, it can get a little overwhelming, which again is important to work with somebody who has some experience in this. Whoever wants to tackle that, what's your thoughts on just the sheer number of claiming strategies that are out there? John Teixeira: There's a lot. There's a lot of them, but it really boils down to a few that you end up doing. I think the most important thing is to understand your current situation, whether it's the discrepancy of what the income's going to be for each person. If you're filing jointly or you have two people taking Social Security and understanding what the need is at the time. Do you need income right now? Can you hold off? But there is a lot of different options to pick from. The best thing is to review what makes sense based on the plan, and then also at this current time what you have going on. Marc Killian: Yeah, I think a lot of people view it as, well, we've got this collection. We've got a 401(k) and this, that, or the other that we've personally saved. Oh, and Social Security versus maybe looking at them all together holistically in one overall strategy. It should be thought about and we're going to talk about that in the way you set up your income structures. Nick, I guess I'll let you take over and get this first one. Let's look at it from a single income household consideration. We don't see this as much anymore, but maybe it's just one person that goes to work and the other person stays at home, which is totally fine, but what's some things to consider in that unique situation? Nick McDevitt: The timing of the benefits are super important. Number one, the golden rule in retirement planning or financial planning is it depends. From the perspective of I think one of the biggest drivers in a single income household is going to be age difference between the two, and that has the biggest impact on the claiming strategy. Ultimately, any of these Social Security decisions come down to their function of other assets and the impact of the timing of the Social Security benefits and how that's going to take into account. But if we were to pick one thing from the standpoint of survivor benefits is a good example. A lot of people are under the impression, or I should say the feedback that we've gotten from many people is not having a good understanding of how survivor benefits work. The reality is that survivor benefits are when one passes away, the surviving spouse gets to the higher, the two benefits, the lower one goes away. Marc Killian: Right. Nick McDevitt: Oftentimes obviously if it's a single income household, the person that hasn't worked, their benefit's going to be lower, it's going to be half or even less depending upon when they take it. We'll go through and use, we have some calculators that we'll work with with clients, put their specific situation in there, then use those numbers and overlay them with the plan to help them try to figure out the most efficient way to do it. We always say to them that there's the top financial strategy and then there's the we have to try to balance that with the I want my money and I want it now strategy. Marc Killian: Right. Nick McDevitt: When it comes to Social Security, there's something to it from the perspective of people putting in the money over years and really wanting to get access to their money quicker. That's how we go into most of these strategies is overlaying it with the plan and looking at how it's going to work. Marc Killian: Well John, let me ask you a couple of follow-up questions on the single income household side. I think there's some confusion too. I typed this in the other day when I was putting these together and I saw this, I think it was, I don't know, Reddit or something feed where people were back and forth and they didn't seem to, there was a lot of misunderstanding about if you didn't work, could you get Social Security? People were saying, "Well, you have to work the 40 quarters in order to qualify for Social Security," which that's accurate for your own. However, and then somebody else would follow up and go, "Wait a minute, my grandmother who never, ever had a job gets Social Security. How is that possible?" I think there's confusion out there that if you're a single income household, if you've never worked, you can claim against your spouse, correct? But they have to have already activated it for it to start, is that correct? John Teixeira: You get the spousal benefit. Correct me if I'm wrong here, but I believe you have to be married nine months in order to receive that. Marc Killian: Yeah, correct. John Teixeira: In reality, most people will get that as a spouse. Marc Killian: Sure. John Teixeira: I had one situation actually where someone got married, they didn't qualify and the spouse died after eight months. Marc Killian: Oh, wow. John Teixeira: So they did not qualify anymore. You do have the spousal benefits, which is half of the earning or the qualified spouse's, what they call full retirement amount. Marc Killian: And they have to turn it on first, right? That's a bit of a sticking point. If you're the worker, you have to claim Social Security before the spouse who never worked can also get their half, correct? John Teixeira: Yeah, Marc. That is accurate. To receive a spousal benefit, the spouse that is qualified has to be drawing on benefits. The person receiving the spousal benefits has to be past 62. The big confusion on this was in the past, you could do some strategies like file and suspend where the person didn't have to be drawing it just yet, so you do some strategies. But they closed those loopholes about six or seven years back, which ultimately was a loophole that needed to be closed to help the longevity of the program but a lot of people weren't happy because it was probably the best strategy out there to use. But good news is it helps longevity of the program. Bad news, you can't do it anymore. But some of the confusion comes into play where people that have already done the file and suspend are grandfathered in. Marc Killian: Gotcha. John Teixeira: Circling back to the spousal benefit, spouses are entitled to half of their spouse's full retirement benefit. They can drawing at 62, and their spouse has to have started drawing on it themselves. Marc Killian: Yeah, gotcha. Nick McDevitt: And if they do receive the benefit, if the spouse that hasn't worked and is receiving the spousal benefit, if they take it before their full retirement age, then there is a reduction. Marc Killian: There's a reduction as well, right. Nick McDevitt: There's a function there. The only other thing I want to mention for the single earner is, single income is if somebody was married for at least 10 years and then are divorced and not remarried, they are eligible to, and maybe they never got their 40 quarters, they are still eligible for a spousal benefit. John Teixeira: To jump on that, because this has come up quite a bit with clients, if you're divorced and you're eligible for spousal benefits, you do not have to wait for the person to be drawing. As long as they pass the age of 62, you can draw. Part of that is because you might have some vindictive spouses that are waiting to draw to make sure their ex doesn't get the spousal benefits. Marc Killian: Well, and we're going to talk about that in a minute as well. There's a couple little things, little caveats there. To our point, kicking this off, there's a lot of nuance to Social Security. We're going to try to keep it high level a little bit and not get too confusing. Again, it's important to talk to somebody, but those are some basic things to think about from that single standpoint. Let's go to the dual income households, which is most people, guys. John, you talked a little bit about file and suspend and while it's no longer an actual strategy, what I know a lot of advisors often talk about with their clients who have dual income is if one person is making more, then maybe you're letting that one grow to 70, right? To the max out. And then the person who's maybe making less, especially if they're the same age, maybe then you're looking at turning that on earlier, whether it's full retirement age or even 62 depending on the money needs. That's a workaround I suppose, to the file and suspend a little bit. That's some things to think about. So what's some other things to think about and dive into wherever ever you want on dual incomes there? John Teixeira: Again, rule of thumb is just overview versus individuals, but it does make sense to always suspend the higher benefit, whether if you're dealing with a survivor benefit, there's some strategies. You have the dual income spousal benefits, you want that extra compounding on the higher amount is basically why you want to do that. Marc Killian: Right. John Teixeira: Another strategy for that and why you might want to delay the higher benefit is the survivor benefit is going to be higher. You can in essence defer someone's benefit till age 70, and if they were to pass away, the survivor benefit now has that increased amount so that is one option you could do. As you mentioned here, you could take a lower benefit earlier, let the other one go. If you have two working spouses, but let's say someone's benefit isn't as high as their spousal, you could look into someone taking their own benefit at 62 and then switching to the spousal later. There's definitely a lot of different things you can do. And a reminder of what Nick said, anytime you take early, you are going to get a reduction of benefits. Marc Killian: Yeah, 30% currently, right. John Teixeira: Yeah. Marc Killian: That's a big haircut- Nick McDevitt: Depending upon your full retirement age. Marc Killian: From your full retirement age, yeah, it's a big haircut, 30%. To your point earlier guys, when you're building a strategy, because I guess Nick, part of this is looking about where are you taking money from, right? You've got your 401(k), you've built up your personal, then you got your Social Security, and it's like, okay, when are we turning on what and where so that we can maximize this? It's like, which horse are you riding? The one you brought or the one the government brought kind of thing. Nick McDevitt: This might be a little bit too detailed, but really, what we do from our standpoint as an advisor is we use the withdrawal rate as the test to figure out. When we look at the overall portfolio and we go through the expenses and we figure out how much income a client's going to need on an annual basis, let's say that delaying Social Security is going to force them to take a 10% withdrawal rate. For three years, they're going to have to take out 10% of their money out of their portfolio a year to cover expenses to delay. That number's probably too high. For most people, that number's probably too high. If it's something around a max of a seven or eight, and it's only going to be for a couple years, depending upon the size of the portfolio, that can make sense. But when there's just too much pressure on the portfolio to perform, then oftentimes just at least getting one of those Social Security benefits and that's why staggering the two oftentimes makes sense. It's like, okay, well if a 10% withdrawal rate is what's needed, then if we can reduce that down to a seven for a couple of years by taking one and then drop it closer to a four and a half, five after a couple more years and stagger it, that's the ideal. Marc Killian: Gotcha. Nick McDevitt: It really is a function of portfolio like the nest egg number, the expenses and what we need to take out to cover those expenses and what the gap that Social Security benefit's going to provide. Marc Killian: Gotcha, okay. Yeah, so I mean, again, there's really a lot of nuance to figuring out. Most of us are going to probably fall into this dual income household planning strategy. You want to make sure that you're working with someone to just maximize things based on what you've built yourself, plus what we're going to get back from Social Security. Can we talk about a lot of money over time? John, you talked about ex-spouses earlier, so let's talk about special considerations for blended families or people who have gotten a divorce and remarried or whatever. I'll throw this out there as well. So my mom found, and Social Security, people that work there, they're not supposed to, typically they're not going to help you with their claiming strategies, right? They're going to give you the options available for you, but it's not really their job and they're not really supposed to be diving into the weeds. But I will say, that said, there was a lady that helped my mom. She was asking her a question, and she informed her, and a lot of people don't know this, that you could claim on an ex-spouse, right? To John's point earlier, and so she found out she could actually get a higher benefit, she's in her eighties, by claiming from her first husband who she hadn't been married to in a very long time. But there are some caveats and rules to that. It could be something that you consider doing in your claiming strategy as well, especially if you're a widow or you're single. You have to be single obviously in order to do that, that's one of those caveats. But talk to me a little bit about some of that stuff. It was interesting, she found out she could get more money. And to your point about the vindictiveness, they don't ever know. So when you claim, they don't find out, they don't get to come to your house and go, "You're claiming against my Social Security." They don't even know. John Teixeira: Yeah. That's something that comes up where I guess some misinformation or I don't know how this comes up, but it's somewhere out there where I've had clients ask, "Hey, is my ex-spouse drawing on my Social Security going to affect mine?" The answer's no. What you just said there, you would never know when they draw on your Social Security, it's not going to affect yours whatsoever. And vice versa, where it's like, "Hey, will they know when I start drawing my spousal benefit?" Marc Killian: Yeah, can I stick it to them? Like, "No." John Teixeira: No, you cannot. And then one thing you mentioned earlier, Marc, when you were going through that is you can draw an ex-spouse as long as you are not remarried. Marc Killian: Correct. And I think you had to be married 10 years, right? To the prior person. Yeah. John Teixeira: Yeah, you have to be married 10 years and you cannot be remarried. I've had situations where people did not remarry to take a spousal benefit. They just let it ride and said. Marc Killian: Mom being in her eighties, she was like, she's not getting remarried anyway. But she was like, "Huh, I didn't know that." To your point about not knowing, one of my siblings was like, because we're half siblings, "Well, that's not cool. She's drawing against my dad's." I was like, A, he's never going to know. B, actually, he's never going to know because he's passed away anyway, right? It's a weird little loophole, but it is one that could be beneficial, and a lot of times I think it does benefit widows sometimes who maybe have been, maybe their second marriage and then that person passed away. It is something to consider if they had a prior husband who maybe made more money. It could be an option to look into, but there's some rules and there's some things, so you want to make sure you're talking with somebody about that. John Teixeira: Yeah, the most important thing is let's say you are in that situation where you have an ex and currently doing this right now, you have to go to Social Security and provide them with the information so you can determine what their benefit actually is. And if you have multiple exes that qualify for you get to pick and choose whichever one's higher if you're going to be doing a- Marc Killian: But you do have to have the paperwork to your point, yeah. You have to show- John Teixeira: You have to have the paperwork and everything like that. Marc Killian: Yeah, to show. John Teixeira: Definitely there's a lot of options, information out there, and it's important to do your due diligence. And if you do call Social Security, and we're going to say this every single time we do a Social Security podcast, sometimes they give you bad information, unfortunately. It's important to make sure you're working with the qualified professional that knows it, and you might want to call multiple times to confirm what you're hearing. Marc Killian: Well, speaking of, that might be a good time to bring up the fact you guys got something going on. What's going on there? You got an event or a class or something? Nick McDevitt: Coming up at the end of the month in January, a fair amount of our clients have come to us through the classes that we do around at different educational institutions. But starting on January 30, it's a two night course, so two and a half hours on the 30th, and then two and a half hours on the following Thursday. And then concurrently, we also run day one of the course on the 4th and the 11th of February. Marc Killian: February, okay. Nick McDevitt: It'll be at Pasco Hernando Community College, the Porter Campus up in the Wesley Chapel area. We've got clients that originally went to the course and then sometimes like to go back and freshen up. We have other people that have come to us, whether it's a referral or heard the podcast or whatever, and they find out that we do the class and they like to join. So more than welcome, just reach out to us if it's something that you're interested in. Marc Killian: What's the best way to go about doing that? Just go through the website or call a number? Nick McDevitt: I would either call our office, (813) 286-7776. Or they could email either John or myself, it's nick@pfgprivatewealth or john@pfgprivatewealth. Marc Killian: And again, that number if you need to, folks, is (813) 286-7776. Or email John or Nick and then @pfgprivatewealth.com. All right, that's going to do it for this week on the podcast. Thanks so much. So yeah, great. If you'd like to attend that event, I mean at the time this podcast is happening, you want to jump on the February one. But definitely reach out to them ASAP, don't delay and get yourself in there because a lot of stuff that goes into Social Security. Make sure, as John said, that you are talking with the professional who can help you with this and you can reach out to them at pfgprivatewealth.com or the information we just gave. Check the show notes below for links and information that way as well. Don't forget to subscribe to us for future episodes of Retirement Planning - Redefined with John and Nick from PFG Private Wealth. We'll catch you next time. Thanks guys.…

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New Year, New Me: How To Change Your Money Attitude In 2025 22:04

6 weeks temu22:04

22:04

As we kick off 2025, a lot of people consider what they want the year to look like and how to put their best foot forward, especially financially. Think: “new year, new me!” To figure out what the new “you” is all about, sometimes it helps to reflect first on what you’ve done in the past and what you want to change moving forward. Today, we’ll talk about the financial decisions and habits you’ve maybe had in the past and what changes you can make this year to embrace the new you. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Speaker 1: It's time once again for another edition of the podcast, Retirement Planning Redefined with John and Nick, financial advisors at PFG Private Wealth. And you can find them online @pfgprivatewealth.com. That's pfgprivatewealth.com. And we are into the new year. It is 2025, which still sounds weird to say. And we're going to do that new catchphrase in the last couple of years has been that new year, new me thing. So we're going to do that with our money. Now, I know it's the middle of the month already and you think, well, you should be doing this like the first week. But I was thinking about this, guys, I think January 16th I think which is the day we're dropping this podcast, I think that's actually officially quitters day if I'm not mistaken. But they have a term for it, people who set a resolution and then quit within two weeks. So I thought, well, let's wait till now and then we'll do our money attitude changing hopefully. And that way hopefully people will stick with it when it comes to following their resolutions through. So let's get into it this week. John, how are you doing, my friend? Speaker 2: I'm doing all right. How are you? Speaker 1: Doing pretty good. Are you a resolution kind of guy? Do you set those? Speaker 2: I don't think I've ever set a New Year's resolution. Speaker 1: Really? Okay. All right. What about you, Nick? You doing all right? Speaker 3: Doing pretty good. I can't say that I am a much of a resolution person either. Speaker 1: Okay. Nothing wrong with that. Speaker 3: Yeah, but trying to do a little bit better, set some goals not necessarily New Year's resolution. Speaker 1: Well, I will say this, I'm not a resolution person either, but I did set last year as like I wrote four things down I wanted to accomplish in 2024. And I actually wrote it down, which I never do, and it actually kind of worked. So I kind of did stick with it and I got all four things accomplished. So I tried it again this year. So we'll see how it pans out. Speaker 3: Yeah, there's definitely science behind it, write it down and everything. Speaker 1: Yeah. So with that said, guys, what we're going to do is we're going to do that kind of attitude and we're going to do that kind of conversation piece here with finance. So if you're in that kind of new year, new me camp, this might be right up your alley. So guys, I'm going to give you the old you, like what maybe the old version of yourself might be saying. And then you give us the new you spin. Okay, so how to take it in that direction we want to improve on. So John, we'll start with you. So the old you might be like, man, I live beyond my means. I know I'm overspending. I got to get that under control. And A, first step is if you can accept that and admit that that's already a great thing, but what else should you be doing if you're trying to get into the new me? Speaker 2: Yeah, I think a first step for that is really take a look at where you're spending your money and prioritize what do you want to be spending on? So you kind of look at last year and say, "Hey, a lot of this stuff was unnecessary. I really didn't need it. Could have done without it." And maybe there was a little bit of guilt when you purchased it or did whatever you did. So I think prioritizing is step one. Setting a little bit of a budget. It doesn't have to be strict, but something that you could at least track as you just mentioned there, you wrote down some goals and it kind of helped you out. Same thing with this, write down where's your money going. And as I said, if something gets tracked you can definitely take a look at it and see where you can adjust it. And the hardest thing for most people and I've fell into this category at times, is kind of impulse buying. So definitely figure out how to stop that, whether it's you see something you want, put it down for a second, take it out of the car and give yourself a day or two. And if you really like it, maybe go back and get it. But definitely stop yourself from that impulse buying. Speaker 1: Yeah, it can certainly get us. Speaker 3: Yeah. I would say too, one of the things that a conversation with some clients recently is those that maybe have a little bit of trouble from the spending standpoint, a lot of times they don't really have too good of a system for how they do spend. Meaning not necessarily setting a budget, but sometimes people will whipsaw from any sort of budget. I know that's kind of how I react. But having a plan of attacks. So for example, if we see people that use their debit card for a quarter of things, one credit card for gas, one credit card for publics, one credit card... And try to get all spread out, they oftentimes end up spending way more money than you realize. Speaker 1: Yeah, that sounds like a recipe for disaster for me at least. Speaker 3: Yeah. And so especially with clients that are one to two years out from retirement, more and more we encourage them to have the household use a single credit card that the website has a system where we can do an export or a data dump at the end of the year. It'll categorize the expenses for us, and we can kind of look from year to year and use those same categories that are a part of their card, to help them really see what's going on from year to year standpoint [inaudible 00:04:52] clients. Speaker 1: Yeah. And certainly you could do that with one card, you could do some points. I think if you can manage that stuff and then you can use that for flights and trips and things that... You can certainly kind of couple that credit card idea in there. But multiples for individual things, that definitely sounds like a recipe for disaster. So, all right, good job guys. I like that. So prioritize what you need if you're overspending or living beyond your means, maybe that wants versus needs list kind of thing. And to John's point, to curb those impulse buys, they can certainly get you. All right, so let's go to the next one here. The old you, now this might be a little bit more for our folks that are getting closer to retirement or maybe even into it guys, they are great savers. The old you has saved maybe even to a fault. And I think a lot of retirees struggle with this, and you guys can talk to this point. But they don't now feel comfortable using it and enjoying it. They've gotten so grooved into saving for 40 years, they don't want to touch it. So how do you get that mindset to change to go, hey, this is what I worked for, let's enjoy this money in the new year, the new me, right? Speaker 3: Yeah. Fortunately from an advisor standpoint, we do run into this because it's a little bit easier of a conversation to have with clients versus the overspending one. But this is really kind of where we can focus on the planning, where the software that we use with us being kind of a planning focused firm, we really kind of go through stress test the plan, show them, hey, we've kind of planned for multiple different scenarios, try to have them zoom out a little bit. And again, just like a lot of things it ends up kind of being little psychological things that need to be done to make adjustments where they feel better, where maybe it's increasing their monthly distribution from their investment accounts so that when it's in the bank, they feel a little bit more comfortable spending it. Sometimes too, just playing games. We talked about using the credit cards as a consolidate and obviously pay off every single month. But we've had a conversation with a client that liked to travel a lot. Her daughter had been pushing her to, instead of going on flights that... So from the outside you would look and see, okay, they travel a lot, they go do fun things but maybe it was all day of flying because they had two layovers or three layovers because they wanted the cheapest plane ticket. And so, hey, what are things that you can do to give yourself the permission to make that process a little bit easier for you? And sometimes that's points things. Sometimes it's just saying, "Okay, it's all right to spend a little bit more to make this process easier for you, so it's more enjoyable for you." Speaker 1: Okay. Yeah, and John, do you run into that sometimes where it's just convincing them, or maybe it's just showing them in black and white, "Hey, it's okay to spend this money. I get it, you've saved and you hate to see it go down and you're worried you're going to run out." But sometimes it's really just more of that just kind of coaching, I guess, just to show them it's okay to do this. Speaker 2: Yeah, that comes up a lot more than you would think because most people head into retirement. It's like, oh, now it's time to enjoy it and do the things I want. But that fear of running out money really sets in. So reviewing the plan, as Nick mentioned, really gives the most peace of mind. So I'll tell you, when we do our reviews and it's like, "Hey, this is kind of what you're set to have at the end of your plan.' It's like, "Okay, I feel comfortable spending then." And then it's always a good reminder to say, "Hey, if you're not going to spend it, I'll tell you your beneficiaries are going to spend it." So I think it's important that you enjoy yourself while you can. And most people, once we see the plan and we have that conversation, it's a kind of push to do it. And unfortunately, next year it's another push to do it but it's always a good conversation. I'll tell you the ones that where it clicks, they're very appreciative of that conversation. It's kind of like, "Hey, appreciate you letting us know we're in good shape and we can kind of splurge a little bit more and do the things we want." Speaker 1: Yeah, and that's the point of coming back in for the updates and the consultations and the reviews. So you can keep track of that and make sure that you're feeling a little bit better about it. And yeah, to your point, what's the old saying, if you don't fly first class your kids will whenever they inherit the money. Speaker 3: I haven't heard that, but I'll start using that. Speaker 1: Oh, okay. Well, there you go. Yeah, start using that. If you don't fly first class in your retirement, your kids are going to whenever you leave them the money. So all right guys, so good job on that. Let's do another one here. So old you, I don't really know what I have or where it's at if I'm being honest. So a lot of people are in this camp where I got stuff, but I don't really know why I have it, where it's at and truly how much it is or how it works. So if the new you is trying to get better financially, whether you're still working, a pre-retiree or a retiree, what's some things to think about? John, you take off with this one first. Speaker 2: Yeah, so again, going back to the reviews, this happens quite a bit. As much as you show someone their plan, their net worth, this is what we do for a living so it's constantly on our minds, but the average person probably isn't thinking about their balance sheet or their net worth. But again, back to importance of doing your annual reviews or semi-annual reviews, it's a reminder of, "Hey, this is what I have and here's where all my stuff is." Because it can get confusing where you're talking about, hey, I have an account for this and then I have an account for income and I have a pension coming in. It does get, I would say, overwhelming. But when you have that plan, it's easy just to see it when you're with your advisor or if they have the tools and technology where you can just kind of log into a website or an app and you can just see it immediately. Typically, helps set people at ease. Nick and I just got an email this week, similar thing. And we do our annual reviews and semi-annual reviews and check-ins quite a bit, but it's always nice for them. It's kind of a conversation of, "Hey, I don't know where anything is." We sit down, it's like, "Okay, great. I appreciate you guys. Thank you so much for sharing this and kind of walking me through it again." Because this is what we do and the average person it's not what they're thinking about day to day. Speaker 1: Yeah, for sure. Right. Good ahead, Nick. Speaker 3: I think the client's really trying to become more familiar with technology and using those tools that... because we do set those things up for clients so that they're able to check in on those things. And some like to see it, some don't like to see it, just kind of want the affirmation that things are okay. So it all just depends. But technology luckily has made it a lot easier for those that want to be more involved to be involved. Speaker 1: Yeah. And think about just not knowing where things are at and stuff like that. Especially if the loved one who is handling all that, which is typically the way it works, passes away. The one person it seems like that does this particular thing or whatever goes first, and then the other person's left holding the bag a little bit more. So having a good 30,000-foot view of things and knowing what you have, why you have it, where it's at. Important. Good stuff. All right. All good. Speaker 2: Yeah, Mark. And just to kind of touch on what you just said there, that happens quite a bit where a lot of people come to us and whether it's one spouse or the other. And it's, "Hey guys, I want to work with you. Very important we develop this relationship because if something happens to me, I want to make sure that my spouse has someone they can call on where they know everything that's happening." Speaker 1: Yeah, know where to turn, get some help because you're already dealing with a lot obviously. But being completely behind the eight-ball and not even knowing what's going on with your money makes it even worse. All right, let's do this, let's see if we can do one or two more guys here and then we'll wrap it up for the new year, new me conversation. Old you, until things settle down, I'm going to pause on my investments. We've seen this a lot last year, so I'm going to pause putting money in my 401k if I'm still working because it's so crazy out there. There's the election, there's the volatility, there's the wars, there's the whatever. That's just nuts to me because when is life ever... If anything we've learned since 2020, nothing seems to settle down in the last five years. So Nick, if you're trying to do the new, what's your recommendations for the pause until things settle down kind of person? Speaker 3: Yeah, you kind of referenced it from the standpoint of 2020, COVID, pre-COVID, post-COVID. We're almost four or five years post the beginning. And so the conversation that I'll oftentimes have with people is, yes, certain things may seem a little chaotic, but let's kind of rewind and let's talk about what we've been through over the last four or five years. And so in retrospect, does now really seem super chaotic and- Speaker 1: And more so than it was. Speaker 3: Yeah. And the important part of realizing that China time things rarely works, just kind of having the overarching plan, continuing to average into the market. And that the market tends to be resilient, especially with how money was printed during that phase of time. And so a market continues to be resilient. And for those that did decide to maybe sit on the sidelines, what is oftentimes even more stressful for them is kind of the re-entry and chasing, chasing returns, chasing timing. And then all of a sudden you look back and you have half the money that you could have had. So it's tricky. Speaker 1: Well, think about just people who, John might've even said this for the election, leading up to the recent election here this past November. Well, look at what the market's in the last two years, the S&P of the last two years was 20 plus percent. And if you were sitting on the sidelines because you were worried of what the election might do to it, you're kind of kicking yourself in the butt. Speaker 3: Yeah, and that happens a lot. And again, because sometimes people will make that initial decision, hey, I'm going to wait. Hey, I'm going to sideline some of this money. And it's one thing to do a certain percentage, that's fine. But maybe make a broad, really big decision and trying to then readjust that decision is even harder than the initial one. Speaker 1: Yeah. And I said, John, I meant to say Nick, apologize about that. But John, what's your thoughts on it? Speaker 2: Yeah, I've been saying things are going to settle down for me for the last five years. Speaker 1: Have they? Speaker 2: No, they haven't. Speaker 1: Right. Speaker 3: That's what he keeps telling me and I keep waiting. Speaker 2: Right. Yeah, no, I think there's always something happening. So I think the best time to start doing stuff is the present. There's always going to be something coming up. There's always going to be something why you shouldn't invest or why you should do whatever you got to do. So I think then the best action is save what you can and just continue to save. You'll be in a much better position and happier at the end. Speaker 1: Well, isn't that the point of your risk analysis anyway? Because something's always going to be going on. So if it's riskier right now and you want to pare back some risk, cool. But just wholesale jumping out, especially when you're thinking about just the dollar cost averaging, just the fact that you're losing over time by not putting in... If you're still working, you're not putting in your 401k because you're worried about what the market's going to do, that's just goofy. Especially if you're missing out on the free money from business and matching money from the company you might work for. So just lots of reasons to have a conversation. Again, to sit down with a professional if you're worried, if you are stressing over when's the right time to do this or that. Sit down with somebody so that you can kind of build a plan based on your comfort and tolerance level. That's part of that, which really leads me to my last one, guys. If you're one of those folks that are in that, I have no financial plan. My parents didn't have one and it worked out for them I guess, so I'll just hope for the best. Many of us do this in the old you camp. So whoever wants to start with this one, I guess, John, I'll let you start with this one. If you're trying to do the new you, make a new resolution to get better financially and you're hoping for the best, that's not the way to go. So we've talked about it multiple times, but what should we do? Speaker 2: Yeah, definitely like I just said something's always going to be coming up and the present's the best time to start doing stuff. So we definitely recommend starting a financial plan. If you're just getting into it, maybe it doesn't to be a full comprehensive one, but something where it's just some type of outline, some type of goals you can start setting for yourself using... I'll say times have changed. My parents both had pensions and they were very blue collar old school, so they didn't have a plan. They just kind of went to work, got their pension and retired which most people could have done back then. Speaker 1: Sure. It was great. Speaker 2: Yeah. Now with pensions, pretty much for the most part, I don't want to say gone, but very limited to a select few, the responsibilities on the individual to be saving. And there's a lot more stuff going on now than there was 30, 40 years ago. So planning is very important and making sure you're on track, and hitting your goals and saving money is more important now than ever. Speaker 1: Yeah, for sure. And Nick, I'll let you have the final word here. You've got to take some kind of action. Hoping for the best, hope is not a strategy. Speaker 3: Yeah, we were talking about sayings earlier and I think there's some sayings out there about hoping without any action too. But from the standpoint of how things were versus how they are now, and John kind of covered the pension versus no pension. One of the other things are even if you decide, hey, from an investment standpoint you want to pick your own investments, that to kind of do it yourself, there are more tools than ever before to be able to do that. Whether it's targeted funds, index funds, the financial world has made it easier for people to engage. So that's a positive. But I'll say that I think the most alpha or the biggest benefit that people have is taking control of a strategy. And that's really the biggest difference. You could take two people side by side, and if you were to break them down in 10 different variables and one of the variables that's different is kind of having a plan and not, they could have same income, they could have a lot of the same sort of setup. The person with the plan is going to outperform substantially. And that's just kind of how it is. So can't emphasize that enough. Speaker 1: All right, so before we wrap this up, guys, since we're talking about New Year, new me, Nick, tell us a little bit about the upcoming course you guys got going on at the end of the month. Folks want to attend. This would be a great way to kick the new year off, right? Speaker 3: Yeah, so we do the course and have been doing it for years. It's called Retirement Planning Today. It'll be up in Wesley Chapel at the Porter campus. It'll be starting on Thursday evening, January 30th from 6:30 to 9:00 PM. That'll be the session one. And then session two is the following Thursday, same time, same place. And if Thursday nights don't work, we also run it on Tuesday nights. It'll be February 4th, 6:30 to nine, and February 11th, 6:30 to nine. If anybody's interested, wants to go, just reach out to us directly. You can call our office at 813-286-7776 or email either John and myself. It's just our first name, nick@pfgprivatewealth.com or john@pfgprivatewealth.com. Speaker 1: All right, there you go. So if you guys want to attend that upcoming retirement planning workshop, that class, then definitely reach out to them. Let them know. Good stuff there. And that's going to do it this week for the podcast. So again, find them online @pfgprivatewealth.com or call the number as the guys mentioned, 813-286-7776. We'll catch you next time.…

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For Couples, Retirement Planning Is A Team Sport 16:17

22 weeks temu16:17

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Are you and your spouse on the same page when it comes to what retirement is going to look like? If not, it’s time to talk. Listen to this episode where we'll explore why it’s so important for couples to have detailed conversations about their finances and retirement futures. We’ll cover exactly what you need to discuss, and how to handle any disagreements. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Mark: Are you and your spouse on the same page when it comes to what retirement is going to look like? If not, it's time to talk. So check into this episode where we explore why it's important for couples to have detailed conversations about not only their finance, but their retirement futures and their dreams, this week on Retirement Planning, Redefined. What's going on? Welcome into the podcast. Thanks for hanging out with John, Nick, and myself as we talk investing, finance and retirement. And we're going to go to couples therapy this week here on the podcast a little bit, or maybe we'll make it more manly, I guess, and call it a team sport. However you want to look at it, you want to be on the same page with your spouse, with your loved one when it comes to retirement. I wanted to talk a little bit about that this week, guys, to see how many people generally are on the same page by the time they sit down with professionals like yourselves, financial professionals, or if it's happening a lot in real time, right in front of you. So we'll get into it this week. What's going on, John? How are you bud? John: Hey, I'm doing good. How are you? Mark: Doing pretty good, hanging in there. Looking forward to chatting about this a little bit. Nick, I hope you're well. Nick: All good. Mark: All good as usual. Well, that's very good. Nick: Good start to the season for the bills, so I'm happy. Mark: All right, well there you go. Nick: It's early. It's early, but... Mark: My lions, my lions are all right for right now. We'll see. I don't have a lot of hope. 40 years doesn't bode well when you have one good season in 40 years, but we'll see. Nick: I get it, [inaudible 00:01:33]. Mark: All right, so let's dive into this couple stuff here. Why is it important for couples to work together on their retirement plan? I mean, you come in, somebody sits down for the first time with you guys for a consultation, and they're just not even remotely on the same page. That's got to be a bit more problematic, yeah? Nick: Yeah. Not being remotely on the same page is tricky. I would almost say we probably, at least for John and I, we probably don't run into it too much where they're completely on separate pages. Mark: Well, that's good. Nick: I would say that there tend to be different ways that they think about money and kind of communicate about money. To be honest, that's one of the reasons that I would say that John and I like working together as a team with clients is because oftentimes one of us will kind of pick up more on the vibe that one of the people in the relationship is on, and then vice versa the other way around. And so I'd say it's pretty rare that people in a couple tend to think about finances the same way. Even though they might end up having similar goals on the backside, they kind of attack it a little bit differently. And really it's, I think we joke sometimes, I think at this point we're 80% therapist, 20% financial advisors. Mark: Right. Nick: And really it's just trying to get people closer to the same page, and realizing that a lot of the things that they're talking about are pretty similar and they're just going about different ways to attack that. Mark: Well, John, to expand on that, when somebody sits down for the first time, do you guys, if they haven't really discussed some of those big issues, is it important that they maybe try to knock some of that out before they come in to see an advisor? Or does it not really matter as long as it's getting done? John: Yeah, I don't think it really matters. I think sometimes they're not even really sure exactly what to be knocking out prior. So to delay meeting with someone just to try to figure out, "Hey, are we on the same page?", I don't think makes sense. I think what tends to happen in our meetings is we'll ask some questions that kind of get them thinking a little differently. Like, "Oh, I didn't think about that." And ultimately, I think what we do when we do our planning, they tend to have some things come out and then they tend to kind of understand where the other one's coming from and that kind of lines up. Mark: Yeah. Well, I mean, I talk to advisors all across the country and I certainly hear stories often about people saying, one person will say something and the spouse will go, "Since when? I never heard of that." Nick: It definitely happens sometimes for sure. I would say almost that tends to be more on the lifestyle side of things. Mark: Okay, all right. Nick: Versus almost purely financial. Mark: Like "I want to go scuba diving in every major ocean or something." And the other one's like, "What?" Nick: Yeah, when the husband pulls, "I want to drive across country in the RV" card, that's where I've seen a lot of the sideway looks where... My parents are a good example, it's like my dad doesn't like to drive to Publix, but then he said he wanted to drive- Mark: Across the nation. Nick: ... In an RV, because that's going to be more relaxing. And I remind him that a thousand miles is a lot worse than five. So there's things like that absolutely. How to spend that time, or even just the extra time together. I've almost seen it where it tends to be a little bit of a smoother process for couples when one person retires first, and maybe there's a year or two lag, where they kind of have a little bit of a staggering on spending an extra 50 hours a week together, which can be a little bit of a shock. Mark: Sure, yeah, it's a totally different animal. Yeah. Nick: Yeah, a totally different ballgame. So I would say from at least my experience with clients, it tends to be more in the lifestyle side of things. What I've seen most often with couples are it's rare that it's a 50/50 input on finances. A lot of times I'll see it where one person might be a little bit more strategic on expenses, and then the other one might be a little bit more focused on the actual investments, things like that. But they end up being kind of having the same goal or outlook, but the lifestyle and how they're going to spend their time in retirement and how much they're willing to spend to do those sorts of things tends to be a little bit different. Mark: All right, John, well let me throw this one your way. So my wife and I are not usually on the same page when it comes to certain different things in a relationship, like most couples. And when it comes to risk, we are completely different. So how can couples navigate if they are in different places risk-wise? Because let's be honest, I mean the statistics are what they are. Typically, us fellas tend to want to take a little bit more risk, and a lot of times the ladies tend to want to play it a little safer. Not always, but that's kind of the average. So how do you guys handle that and what's some advice there? John: So we'll do risk tolerances for each client when that comes up. And we we'll find that someone, again, might be more aggressive than the other, so maybe their accounts are invested, maybe a moderate where someone else's, the spouse might be invested conservative. So that, having separate accounts makes that a little bit easier. It becomes more difficult when it's the, a joint account. And what we'll do at that standpoint is we kind of go back to the plan. So a lot of the times it's what type of rate of return are we trying to achieve from the planning standpoint. We kind of have conversations, and we'll try to blend the two of them together. I'd say for the most part, I don't want to speak for Nick, but he could jump in, have never really had this come up as an issue. It's kind of like, "Hey, this is how you want to do it. This is how this other person wants to do it." And for the most part, the spouses are okay with it as long as they're achieving their goals. Mark: Interesting. Nick: For the clients that tend to be, for the ones that have a little bit more of that risk appetite, we found through conversation that they have the risk appetite when things are good. Mark: Sure. Everybody likes it when it's up, right? Nick: Yeah, for sure. And not necessarily when things are bad. And so we're big fans of almost having, for lack of a better term, like a petty cash drawer or just kind of a smaller investment account that will carve out. So when there are clients that want to have that higher risk appetite, want to take opportunities to really kind of get some big upside. Mark: So that's your speculative casino type money, right? Nick: Yep. Mark: If you will. Nick: Yup, yup, exactly. And really too, because I would say the majority of our clients are pretty close to retirement or in retirement, they tend to, at least in our experience, be a little bit over that phase with any sort of larger amounts of money. Oftentimes they come to us and they're like, "All right, we had our fun and we're ready to be a little bit more in line on the risk side of things with the investment decisions that we're making." And oftentimes when we have that conversation of, "Hey, if you get an itch, let's have this off to the side and it'll help you make better decisions with the rest of the money." That tends to be kind of a winner for everybody. John: No, I was going to say, yeah, that's kind of what we reference sometimes as a cave, this is kind of your play account where you want to buy some individual stocks and things like that, where the fluctuation won't really make a big impact overall on your plan. So as Nick mentioned, that kind of satisfies some of the very aggressive clients. Mark: Okay. Well, so you mentioned the fact a second ago that a lot of your clients tend to be nearing or into retirement, and with a different demographic comes different feelings and mindsets about money. So with that in mind, we tend to find that, which is really weird if you think about it this way, a lot of times you tend to find that in couples, going through the life, building of the life, raising the children, blah, blah, blah, blah, blah, typically the wife tends to budget the money, handle the money, so on and so forth. She's doing all that stuff in the house. But when it comes to retirement, it tends to seem like us guys tend to take the lead there. Is it okay for one person to handle all the financial matters? Or do you guys really prefer that both people have a good understanding, even if it's not your bag, do you still prefer them to have a general, I don't know, 10,000 foot view of what's going on? Nick: Yes. I would say too, more and more that, again, from our experience, and maybe it's our clientele where you've got a lot of households that are both people work, both have retirement accounts, and although they may make some differences from the perspective of risk in their portfolios and stuff like that, it tends to be a collaborative effort. Again, I would say we have, anytime we do planning, we have clients fill out an expense worksheet. It's rare that they both fill it out. It's usually one of the two that are filling out the expense worksheet. And so it does tend to get kind of broken up a little bit from who focuses on what. But it's definitely important that they're both on the same page and have a good grasp and an understanding. And I would say too is the easiest example of that, and the people that work with us kind of know this is there's one report that we go over with clients, it's like a cashflow. It's in detail, wall of numbers, lots of columns, can be kind of intense. And then there's an area called the decision center, which takes all those columns and it puts it into kind of a graph format and it's more interactive. And I think that's kind of almost the best illustration of the different sides of the brain where one person in the couple sometimes likes the details and likes the column report and they like to, because they can go in on their client side of the portal and go through that and re-review it. And the other one is, "Hey, let's zoom out. Give me the broader picture. Are we good? Are we not good? Give me an idea of a couple of decisions that we need to make moving forward and let's go from there." Mark: And there's no right or wrong to either one, it's just what is your personal appetite? But I think neither, like if both of you don't have a good understanding, John, that's a recipe for trouble later on too. John: Yeah, no, I'd agree with that. It's important for both to at least have an idea of what's happening and working as a team, whether one takes a lead and one takes a backseat, we encourage everyone to have a general understanding. Because this past year has been interesting where I've had some clients have some health issues, pass away. And you got to make sure that both pistons are aware of what's happening because you don't want that situation where it's like, "Hey, I don't know where anything is. What do I do?" So [inaudible 00:11:43]. Mark: That's exactly the point, right? Yeah, that's the worst case scenario. And it often, it happens more times than people realize. So you both want to have a decent understanding, even if it's not your thing. And again, no gender roles there. It tends to be the case, but I mean, my wife is way smarter than I am, and she actually deals with, she's very analytical and deals with money and numbers all the time for work. And it's one of those things where when it comes to our retirement, she's like, "I don't want to deal with it. So you deal with it." And it could just be as simple as, "I deal with numbers all the time, I don't want to deal with it yet another way." So no matter what it is, you find a way to make it work, but not having a decent understanding of what you have, and why you have it and who to turn to in the event of a catastrophe, is a recipe for disaster. So obviously if you're working with a financial professional and a team like the guys at PFG Private Wealth, then at least you also have that resource to turn to when something does happen like John just mentioned. So one final question here, I'll let you both kind of jump in and chime in a little bit here. What final piece of advice would you give to couples who are maybe just beginning their retirement planning journey, when it comes to making sure that they both are feeling comfortable? Nick: I think it depends on what phase they are in life, but in general, I think it's hard to screw it up long-term, if you're saving money. So even if you are very conservatively saving the money and you're not getting much return on your money, that kind of instills an ingrained habit of saving money and being used to living on the rest. That will lead you to better habits and better outcomes. You can always take the next step in, whether it's working with an advisor, whether it's doing research by yourself and then making better and smarter decisions on how you invest that money that you saved. That tends to be kind of the easier part. But the behavior of saving that money first and then going from there, is the number one thing, I think that's important. Mark: Okay. That's his advice there. What do you about you, John, what do you think? John: Yeah, it's really similar. You can never go wrong saving. And it's really just kind of the words that just get started. Just get started saving, just get started planning, get started with any of it. Whether you have kids, you want to make sure that estate documents are in place, insurances are in place. So depending on what phase, it's just a matter of getting started with the overall planning, and saving is definitely where you want to be the forefront. Because like Nick said, you can't go wrong. You're never going to be mad looking back saying, "Man, I saved way too much for retirement." Mark: Right, exactly. Taking the forward steps and doing something to quote the rush song, right? If you choose not to decide, you still have made a choice. So don't make that choice to do nothing. Do something for yourself and your future self and get started today. Make sure that you are planning for retirement and having conversations with your loved ones so that you guys are on the same page. And of course, as always, if you need some help, make sure that you get onto the calendar with qualified professionals like the team at PFG Private Wealth. You can find them online at pfgprivatewealth.com. That's pfgprivatewealth.com to get yourself some time on the calendar to sit down with John and Nick and get started today. This has been Retirement Planning, Redefined. Don't forget to subscribe to the podcast on whatever major podcasting platform app you like to use. They're on all of them. So you can just type in Retirement Planning, Redefined in the search box, or just go to pfgprivatewealth.com. We'll sign off for this week. For John and Nick, I'm your host Mark, and we'll catch you next time.…

1
The Magic 8 Ball’s Guide to Retirement Planning 16:04

22 weeks temu16:04

16:04

Remember the thrill of shaking a Magic 8 Ball to get answers to your childhood questions? Would we ace that math test? Would we be famous someday? Well, today, we're bringing a bit of that magic back. But instead of asking about pop quizzes and playground crushes, we’re turning to the Magic 8 Ball for advice on something much more important: your retirement planning! What would the Magic 8 Ball have to say about these common retirement questions if it had the wisdom of a financial advisor? Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: Speaker 1: PFG, Private Wealth Management LLC is an SEC registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor and or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance insurance. Products and services are offered and sold through individually licensed and appointed insurance agents. Speaker 1: You all remember that thrill of shaking the Magic Eight Ball to get answers to those childhood questions we couldn't wait to find out? Would we ace that math test or be famous someday? All those crazy fun questions we had when we were kids. Well, this week on the podcast, we're going to do the Magic Eight Balls Guide to Retirement Planning with John and Nick here on Retirement Planning Redefined. What's going on everybody? Welcome into the podcast. Thanks for hanging out with John and Nick and myself as we talk investing, finance, and retirement. And we're going back to our childhood with the Magic Eight Ball. Going to have a little fun with these things and shake it up and see what kind of answers we get for retirement. Then of course, let the guys give us some proper answers just in case the Magic Eight Ball gets it wrong. But guys, what's going on this week? Good to talk with you as always. Nick, how are you buddy? Nick: Good, thanks. Just staying busy. Speaker 1: Staying busy, rocking and rolling. Very good. John, my friend, how are you? John: I'm doing all right. Getting ready for this upcoming storm we have, so. Speaker 1: Oh, big fun. Yeah. John: Getting to the grocery store quick, so all the crazies don't run me over. Speaker 1: Nice. Now you got little ones. Do they still sell the Magic Eight Balls in the store? I think they still make them. Don't they? John: They do. I think we had one at one point. Speaker 1: Nice. John: And it didn't work very well, so anytime they asked a question, it would end up on the side and they're like, what does it say? And I don't know. Speaker 1: I can't see it. You got to reshake. John: It was definitely something good that entertained them for a little bit. Speaker 1: Yeah. John: But like any little kid nowadays, it lasted all for about 20 minutes. Speaker 1: Oh, yeah. Yeah. John: Like, all right,- Speaker 1: Well I'm a wee little kid of the 70s, so I thought they were great. That and the Etch A Sketch and the Stretch Armstrong, I was a happy dude, so. But anyway, let's have a little fun with this, this week here and I'll toss you guys out a question. You kind of give us the Magic Eight Ball and your answer to it, or at least what it maybe should be, so to speak. Right. So we'll make it easy to kind of get things started. John, I'll toss this one to you. Should I start saving for retirement now? What's the Magic Eight Ball say? John: Magic Eight Ball is going to say yes, definitely. The sooner you can start the better. And that goes for anybody, whether that's you in your 20s. I have some clients that right out of college started and now they're in their late 30s, and when we do reviews occasionally, it's always like, "Hey, really appreciate you kind of getting on me for starting to save," because as life happens, expenses are going up, they have kids and stuff like that, it's harder to save. But when they didn't have too much going on in their early 20s expense wise, they were definitely built up a nest egg, so. Speaker 1: Yeah. John: If you haven't started at any point, wherever you are, 20, 30, 40, it's good idea to start. Speaker 1: Yeah, I mean 50 as well, right? I mean it doesn't make a difference at this point. Waiting yet another day only causes you more problems, right? So should you start now? Definitely. And I'll give you guys kind of a little primer on the Magic Eight Ball. So we kind of looked through some of the stuff. They have, I guess what you'd call the green, kind of the positive answers, right? Stuff like the one John just got there, yes, definitely, most likely, out look good, that kind of stuff. Then they had that kind of middle of the road, nah, not so sure, right? Reply hazy, ask again later, better not tell you now, that kind of thing. And then of course they had the negatives, which was my reply is, no, very doubtful, don't count on it. So on and so forth. So we'll use those answers to kind of kick things off with each one of these episodes and then let the guys expand on it like John just did. All right Nick, so your turn, give it a go. Is a million dollars enough to retire on? What says the Magic Eight Ball? Nick: That's definitely a reply hazy, try again answer on that one. A consistent conversation that we have with people, whether it's somebody that we've worked with for a while or somebody that has come to us and we're kind of taking them through the planning process is that everybody's situation is different. Speaker 1: Sure. Nick: People love to compare things with each other, whether it's cars, houses, finances, whatever. And we try to make sure that people understand that comparing themselves even to a sibling or a neighbor or friend doesn't necessarily make sense. Some of the most common examples that we'll see are people that maybe they have pension plans because of the sort of job that they have. Speaker 1: Yeah, they saved a million, but they got a pension versus someone who saved a million and doesn't. That's a dramatically different setup, right? Nick: Correct. Speaker 1: Yeah. Nick: Correct. Yeah. And so assets are important obviously, but really the end game for assets in retirement is to generate income. So ideally people will have the combination of both, but having an arbitrary number like a million dollars is something that doesn't make a whole lot of sense. And I know that recently there's been some kind of articles in the news about, I think we just hit the highest percentage of millionaires in the US. Speaker 1: Right. Nick: And even from that perspective, dependent upon the situation, again, a million dollars isn't what it used to be. So it really just all depends. We've had clients that have had five or $6 million going into retirement that when we look at their plan, they're going to burn through that in 15 years because they spend too much. And we've had clients that are retired with five or 600,000, but they have their expenses very much in check, they have no debt and they live within their means and their plan looks great. Speaker 1: Yeah, there you go. I mean there's three of us here on this podcast and it might take a million for one and 500,000 for the other and two and a half million for the other. Right. It all just depends on where you live, how you live, all those sorts of things. So yeah, reply hazy, try again. And really what it comes down to is get a strategy, get a plan, and get the numbers crunched for your specific situation and then you're going to understand exactly what you need to get to. You're going to have a better outline versus just kind of a shaking the Magic Eight Ball. And I think the idea behind some of this too was fun. You know how you guys in the industry know this. There seems like there's always advisors out there that have a little crystal ball on their desk and they like to say, "Let me check the crystal ball," when somebody asks them a question and they're like, "Well it doesn't work today." And that's because it's not a sound way of doing things. So we thought we'd take that kind of analogy and apply it to this week's podcast. So back to you, John. Can I rely on social security for my retirement? John: Say out look not so good. Speaker 1: Right. John: Yeah, definitely not what you want to be banking on. It's a good source to have. Speaker 1: Sure. John: But you do not want it to be your only source. Speaker 1: It's big dollars. I mean it can be big dollars for a lot of people. And I think an interesting question, and I put it this way, is I've got a family member, a loved one who totally survives on social security only, but it's not what she wanted, right? So could you do it? Yes. But is it ideal? No. John: Yeah, no. I think on average social security covers maybe 30, 40% of someone's retirement income. So you have to look at where's the other money coming from. So just planning on social security I would say is not a very good plan. Speaker 1: Very true, very true. Well following that up there, Nick, give us the Magic Eight Ball answer here. Is it wise then to have multiple sources of retirement income? Nick: It is absolutely as imperative as you can get to try to have different sources of income. A conversation that we have with people consistently is that from the perspective of planning, the one thing that we know and that we can absolutely count on every single year, year after year, is that there's going to be change. And so anything that you can do to build in options, build in flexibility, allow yourself to adapt and pivot to what's going on is essential. And part of that is income streams, not only diversifying assets, but diversifying income streams. Speaker 1: Definitely. Right. So you definitely want to have those. Social security is a big piece of it, but it doesn't need to be the only one. You need to have multiple sources of income streams. All right, John, back to you. Can I expect to have fewer expenses in retirement compared to when I'm working? What's the Magic Eight Ball say? John: I'd say don't count on it. Again, I don't know, we've kind of preface this quite a bit and we've even said it today, everyone's different. So we've had some people where expenses have gone up during retirement because they want to vacation more, they want to do more things with the family. So I wouldn't say plan on that necessarily. And the only way to really find out is to do a comprehensive plan, but then there's going to be curveballs that come at you, whether it's health expenses. That tends to not go down as we get older. So maybe something could be dropping off. Speaker 1: Right. Right. John: But you never know what's going to get added. So do your plan as best you can and try to be as accurate as can. But I wouldn't have that be like the bulletproof, like, hey, my expenses are going to drop so I should be good. Speaker 1: Well, that's a great point because a lot of times people say, hey, here's our back of the napkin math. We think if we curtail this a little bit and this a little bit, we can make it work. Right. We can kind of squeak into retirement. But then you get there and you think, I don't want to do that, right? And there's certainly a lot of conversation around regrets that people have when they're talking once they get to retirement and they go, boy, I wish I would've spent more in those early years when my body would've let me go out and do some things that I wanted to. Right. So can I expect fewer expenses? Yeah, probably not, right? Because like you said, things are going to drop off, but other things are going to add and of course don't count on it. I think that was the answer Rhonda Thomas gave me when I asked her to the seventh grade dance, I think she said don't count on it. I think she must have got that from Magic Eight Ball as well. Nick: That's stuck with you. Speaker 1: Yeah, right. Exactly. It stuck with me. I'm still wounded Rhonda, if you're listening. All right, so let's do the next one here. Should I review my retirement plan annually? Nick, what says the Magic Eight Ball? Nick: Without a doubt on that one. Going back to what we talked about earlier, things constantly change. So updating the plan is really important. The most recent example of why that's important has been inflation over the last couple of years. So when we do a plan and we put in an inflation increase every year in expenses, the software still requires us to kind of update those baseline numbers. And so what we found and what we've tried to emphasize to people is that us capturing and updating those baseline numbers every two or three years is really important and gives us a much more accurate projection from the perspective of planning. So,- Speaker 1: Gotcha. Nick: Those annual reviews are important. Speaker 1: Yeah. And that's how you kind of keep track of the expense changes or the income source changes or added a grandchild, want to change this, whatever the case is. So all those annual things are certainly important. Your life's going to change, your plan has to change along with it. All right, John, will my retirement plan be affected by future changes in tax laws? Not to get political, but you have to talk policy and certainly when it comes to taxation, that's going to be part of the conversation. I mean, seems like everything is political these days, but if you're thinking about future changes in tax laws, you're going to have to certainly think along those lines as well. So what says the Magic Eight Ball when it comes to will your plan be affected by it? John: Signs point to yes. Speaker 1: 35 trillion? Maybe. Yeah. John: Yeah. So you definitely want to take that into account. I mean if you look at maybe people that retired in the 70s and then all of a sudden the 80s, your social security is getting taxed, you weren't really anticipating that happening and then,- Speaker 1: Oh yeah, the IRMAA tax, right? That gets a lot of people blindsided. John: Yeah. So you could count on taxes changing. Whether it's going to go up or down, again, we don't have our crystal ball, but we have the Magic Eight Ball here. Something's going to happen and you should be planning for that. One thing you could do when you're running retirement plans is you can have the ability to stress test it, to take a look at it. So definitely plan on it. Speaker 1: Yeah, I mean you figure, look, regardless of where your political bent is, we've got a lot of debt and so taxes are going to have to change. And even if it's not this particular administration change, this current election, right, God willing, you live long enough in retirement. If you last 20, 25, 30 years in retirement, you're going to see multiple administrations come and go. And that's going to mean multiple tax law changes because they do that every so often. Right. So the odds of that happening are pretty great. So signs point to yes, you should consider how taxation is going to affect you because it is one of the biggest pieces of your retirement strategy. What is that old saying? It's not what you make, it's what you keep, right? So make sure you're talking with qualified professionals like John and Nick when it comes to dealing with all this stuff. Let's do one or two more and then we'll wrap it up. Nick, let's toss this over to you. Let's see here. Should I focus on paying off debt before increasing retirement contributions? Nick: So I would say depending upon the debt, most likely. Speaker 1: Okay. Nick: From the perspective of consumer debt like credit cards, all that kind of stuff,- Speaker 1: Bad debt, right? Nick: That can absolutely, it's hard to argue that that's not unimportant. One thing that can be a slippery slope for people is it kind of tends to depend on their behaviors. We've had clients that have been good income earners but have at different times had debt problems. And in certain ways, whenever they pay off the debt, the debt comes back up and then they kind of find themselves not saving at all. So it's oftentimes kind of a balance of both. One of the most common sorts of comparisons from a perspective of debt is mortgage. We found that over, we had a lot of those conversations when interest rates were really low and we kind of emphasized with people to take advantage of those low rates and that's come to be a pretty beneficial sort of decision. So I would say in order, consumer debt for sure, trying to do both consecutively, both at the same time, obviously ideal, and then just kind of working through the plan and prioritizing what makes the most sense and how to deploy the money. Speaker 1: Yeah, definitely, right? I mean, debt's going to be a big component of that as well, and certainly getting rid of that, the higher interest stuff is always a good idea. So the final piece then here guys, and John, we'll let you wrap it up since you started it. Should I consider working with a financial professional as I near retirement? This is kind of a layup for you, but I'll give it to you anyway. What do you think? John: Appreciate that layup. Answer is yes. As you're getting closer to retirement, it becomes even more important to make sure you're working with someone to update the plan or start a plan and take a look at it. I would say you don't have to wait until you're near retirement. I think the answer is yes at any point. Speaker 1: Yeah. John: Even my younger clients, they always appreciate having someone they could talk to and bounce some ideas off of, whether it's not always comprehensive planning, but it's someone you could talk to discuss things. Speaker 1: Exactly. Because there's so many nuances out there and it just continues to grow and get more complex. So certainly not a bad idea at all to get qualified professionals on your side. So if you need some help, reach out to the team at Pfgprivatewealth.com. That's Pfgprivatewealth.com and don't forget to subscribe to the podcast on Apple and Spotify or whatever platform you like using. It's Retirement Planning Redefined with John and Nick from PFG Private Wealth. And we'll see you next time here on the show and enjoy the Magic Eight Ball. We'll catch you later. Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.…

1
Combatting Popular Excuses For Poor Financial Decision-Making 17:19

33 weeks temu17:19

17:19

Very often, we see people who know that the financial decisions that they’re making aren’t the best decisions, but they try to create excuses or explanations for why they’re doing what they’re doing. Let’s talk about why these excuses usually don’t hold water... Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Marc: This week on the podcast, we're going to talk about combating popular excuses for poor financial decision-making. Very often we see people who know that they've made some poor financial decisions and they try to explain it away or create excuses as to why they've done that. So we're going to talk about that this week from things the guys have seen and maybe that'll shed some light on your situation right here on Retirement Planning Redefined. Announcer: The rules of retirement have changed. No longer can most of us rely on Social Security or a single pension to fund our futures. We're living longer and retirement doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens with fresh eyes, with a new approach and plan of attack. Here to answer the call are financial advisors John Teixeira and Nick McDevitt of PFG Private Wealth Management, serving you throughout the Tampa Bay area. This podcast is Retirement Planning Redefined, and it starts right now. Marc: Hey, everybody, welcome into the podcast with John and Nick from PFG Private Wealth here with me to talk investing, finance, retirement, and hopefully avoiding some of these poor financial decisions that everybody gets into. It doesn't make you a bad person, doesn't mean you did anything wrong. But if we can learn from the mistakes of others, I forget who said that, was it, Einstein, probably a little bit better off than making some of these mistakes ourselves. And of course, the guys helping many families retire, so they have seen a lot of this stuff and a great resource for you to tap into. So if you've got some questions, make sure you reach out to them at pfgprivatewealth.com. That's pfgprivatewealth.com. What's going on, John? How are you doing this week? John Teixeira: Hey, I'm doing all right. I'm doing all right, doing real well. So I think you mentioned the end of the last podcast with new puppy. I don't think we talked beginning, but yeah, new puppy is doing well. My girls are attaching to it quite a bit. It's funny, because if my wife and I go to feed it, they're like, "No, no, no, no, I'll feed it. I don't want you bonding with it." Marc: Oh, nice. Okay. John Teixeira: They want to make sure the dog's their friend. Marc: Their dog. John Teixeira: They're pretty excited. It's really cute. Marc: Nice. Very cool. Very good. Well, Nick, my friend, how are you doing? Nick McDevitt: Pretty good. Pretty good. Speaking of dogs, I was with family this past weekend and my sister-in-law reminded me that I volunteered to take care of one of their dogs when they went out of town soon, and I had totally forgotten. So be on doggy duty for about 10 days, which I'm actually looking forward to, so it'll be fun. Marc: That's cool. Yeah, very good. Good stuff. Your sister live far away, or do you have to? Nick McDevitt: It's brother and sister-in-law. They're down in Sarasota, so yeah, not too far. The last time I took care of this dog though, it was pretty funny because he's not used to being in a city setting, so he's just used to being in his backyard. There's so many other dogs around, all the scents. He wouldn't pee for almost two days. Marc: You're driving him nuts, huh? Nick McDevitt: Yeah. Yeah. So I was taking him out every two hours to try to get him to finally go, so I'm hoping this time it's a little bit smoother. Marc: There you go. Very good. Little dog stories here to kick things off. Always good. So man's best friend. Well, let's get into some conversations here, guys, about these poor decisions. Hopefully you won't make any poor decisions when it comes to the dogs, but let's talk about some of these from a financial standpoint, guys. I got some classics here I want to share with you, and then you guys give us your take on what you guys see and how you guys react or help folks through these types of things. So for example, when someone wants to start their social security early at 62, a lot of times the excuses or the explanation is, "Well, they owe me, right? Or I've paid into the system. I want it back before it goes bankrupt," all that stuff we've been hearing the last couple of years. Nick McDevitt: Yeah, definitely heard this one or 100 times, but history has shown that if you can afford to wait, one thing that people are noticing, I would say we have less and less clients retiring pre 65, unless there's something that happens, maybe a health situation or loss of a job and they need the income at 62. That's one thing. Marc: Well, that's the thing, right? If you're talking about excuses, Nick, if you need it, you need it. But if you're just turning it on because you feel like you want to stick it to the government or whatever, you could be costing yourself a lot of money. Nick McDevitt: It has a huge impact over time, especially in the last four or five years where the inflationary raises that have been given for social security have been much higher. People that waited because they get that inflationary raise and people that are collecting get the inflationary raise, but it's compounded when waiting because you get the normal increase plus the inflationary raise. The amount of benefit for people that have made that decision to wait has been substantially higher. And we've had a lot of people that have clicked over to that 64, 65, 66 and have started to take their benefit or will be. And we look back at those numbers. And to a person, they've all been extremely happy that they waited because the benefit is substantially more. Marc: And John, I mean, if you are thinking about turning it on, don't forget that if you decide that you're bored and want to go out and earn some money or something like that, there's going to be limitations there too. There's more than just the haircut that you take from taking it early. There's some other things that go along with that. John Teixeira: And that's one of the things. Typically, as you guys already mentioned, when someone brings this up, it's really what do you need it for or why are you taking it? And the big thing is are you still working? And if you are or if you plan to work even part-time and you make above I think it's roughly 20 to 23,000 or so... Marc: Around 20, 21. Yeah, somewhere in there. John Teixeira: If you make above that, there's what they call a recapture. So they'll take half of it above that amount. So it's definitely something to consider is are you working currently or do you plan to go back to work? But once you hit your full retirement age, you are able to take your social security and not worry about that. Marc: Yeah, sky's the limit then, right? You can make as much as you want then. John Teixeira: But beforehand, definitely something to consider. And what we typically do for clients on this, and we'll offer it to anyone that's listening, is we can run a social security max strategy, which helps people see it. It's one thing to say, "Hey, I want to take it now." But once they see it, and like Nick mentioned, that compounding is really important with waiting, with the cost of living adjustments that you get. And especially we talked last time about inflation and how that's gone crazy, so you really want to plan correctly. Once people see it on paper, it tends to slow them down from taking it, but everyone has their different opinions. Marc: Yeah, for sure. But again, if you're doing it just because it's like, hey, I want to get it before it runs out of money or something, don't make that excuse. Run the numbers, as John said. Get a stress test maximization on that social security strategy before you turn it on. And then if you need to turn it on, well, certainly turn it on. That's the point. All right, number two, when someone is taking too much risk with their money, we often hear things like, "Well, I'm behind. I'm making up for lost time." We talk sports often on here as well. If you're thinking about baseball, the home run kings, typically the people that usually hit the most home runs, are also the strikeout leaders because they're swinging for the fence a lot. And so just be careful when you're doing that. Whoever wants to take this one, feel free to jump in here. But if you're behind, that's one thing. A lot of us do feel that way. But I guess the first question I would have is, how do you know you're behind? Is it just a feeling or have you actually gone in and sat down and had your numbers ran? John Teixeira: Yeah, this is a really common one. When talking about getting these, I got this a couple of months ago and the person wasn't behind. They felt like they were. But when we started doing the planning, they weren't. But a big thing with this, especially trying to get more aggressive is it's going to take you outside of your risk tolerance. Can't stress enough that you really want to stay in with whatever risk tolerance you have. Because if the market starts to fluctuate and you can't handle it, so if all of a sudden we have a COVID type year or whatever might happen, the market's down 20, 30% and you start to panic and you go to cash, and then within a month later a rebound, you just missed out on all that upside. One of the first things in investing is understanding your risk tolerance and investing in that type of portfolio so you don't make mistakes. You really don't want to chase any returns or anything like that and feeling like you got to catch up. Because ultimately if you do that and you're not a risky investor, you're going to end up even more behind. Nick McDevitt: And oftentimes too when people are actively making that decision like, "Hey, I'm going to take a little bit more risk," and when you kind of flush it out and you talk about it, they're often under the impression that they will exit at a certain point like, "Oh, I'm just going to wait until I make X amount or I get this amount and then I'll back off." But when you're in the midst of things going up, it's very difficult to walk away. And trying to time things, having that perception that they can time it is extremely difficult. And the overreaction that tends to happen after that just puts them into a highly volatile situation. Human behavior comes in and just makes it very difficult to be able to even benefit from it, even if it does work out. Marc: I mean, getting that risk analysis done to find out, okay, am I behind and how much risk can I take or should I take, feel comfortable with taking? All of that is part of sitting down with a qualified professional to find that stuff out. And I think we all, human nature, a little bit feel like is once you get to 50, I think that switch kicks in and we're thinking, okay, I've got to start thinking about retirement. And boy, I haven't done a whole lot, whether you have or you haven't. So again, run the numbers, sit down and have that analysis done. That's going to help you understand whether you're behind or not. So let's go to the third one here, John. How about this one for you? When someone has way too much cash, often it's, well, I've been burned, right? Or maybe even more recently right now is, hey, it's a pretty decent rate. With the interest rates rising up, I'm getting a decent rate at the bank, so why not just sit in cash? And that's fine, but it's also not going to last real long. And you're not going to just automatically get that 5% or whatever that you'll see ads for right now. If you just have money sitting in your savings account, check your savings account. It's not generating that much. You're going to have to talk to the bank about a different product. They're not going to automatically just increase your savings account interest rate. John Teixeira: And this goes back to the risk tolerance as well. The first part that you said here of people being wary of the market or they've lost before. So this is what happens, and we've seen clients that lost money in '08 and doing plans for them and introduced them in 2016, 2017, and they were in cash for almost eight years and they'd lost out on some big runs. So if they were invested properly, it wouldn't have been the issue. So you definitely want to, again, risk tolerance, get the plan down, stay the course, because long-term history has shown us that you will in a portfolio basically beat the cash just sitting in cash all the time. Marc: Oh yeah. I mean, it never does. No matter what the interest rate, even people who live through the late '70s, early '80s when interest rates were really high, 12, 13, 15, 16%, it still wasn't beating inflation then. I mean, that's the thing with the interest rates at the bank, they never outpace inflation ever. It's there for that safety portion. John Teixeira: Yeah, exactly. And as far as people that are with money on the sidelines and they want to stay in the money market getting some rates, you're right, it's not going to stay like that forever. They're trying to force these rates ultimately down at some point. The thing is going to be the timing of when do you get back in. So we have some clients that earn that scenario, and we're doing a combination of cash and also dollar cost averaging into the market to give them best of both worlds right now to take advantage of the nice cash that they have, nice interest rate. Again, not just sitting in a savings account in some type of money market, but also trying to take advantage of potential upsides in the stock market. Marc: Yeah, for sure. I mean, again, all this stuff we're talking about this week is they sound like a good excuse, but when you really break it down, again, you need to have that analysis before you start rationing away these decisions that you've made. Nick, how about this one for you, my friend? When someone has no idea what they're invested in, which is often people come in and say, "Hey, here's my stuff, here's what I got," often the excuse is, "Well, finance isn't my thing, or I was told to get this or that, and I don't really know what it's doing for me." And that's certainly not where you want to be. You want to understand what you have and why you have it. Nick McDevitt: Having had this conversation many times, one of the things to try to point out to people is that we can't care more about your situation than you do. So we don't necessarily need you to be reading The Wall Street Journal every day. But at the same time, we want there to be a level of engagement. We want there to be questions. And really I think the trend of the last five to 10 years is people realizing that strategy and planning when you zoom out is becoming more and more important than maybe the underlying investments. Even if you look at a simple example such as target date funds and 401(ks), the tools that are out there make it easier and easier for people to be able to put something on overdrive to a certain extent versus 10 years ago, a default strategy might be a money market fund that back then was paying 1% and people start putting money in. They don't realize their money's not doing anything, where a lot of times the default strategy these days is going to be a target date fund and there's some actively managed things happening inside of that to help them move it along. But maybe they haven't incorporated in or understand like, "Oh, 401(k)s have Roth options now. Have you started to do that? Or, hey, maybe your company has some discounted stock plan that you can participate in." And if it's a publicly traded company and you're getting a 10 or 15% discount right off the bat, you almost don't even have to do anything. You just need to make a really basic decision to do it. So the level of engagement from a strategy standpoint is an important thing, and the underlying how to get exposure to those markets has become easier with time and technology. Marc: Yeah, great point for sure. All right, John, any final thoughts from you on that same one from Nick? John Teixeira: Yeah, yeah, to add to that, something we've seen right now what Nick mentioned with the cash or someone sitting in money market not realizing it, we've seen that with annuities as well. A lot of annuities right now, the rates have gone up and the products look pretty attractive. But some client, if you're not looking at your stuff, you could be in an older one where today's rates might be five, six times better than what you're currently getting. So it's important to take a look at what you have, do a quick snapshot of it and just understand, "Hey, this is where I'm at. Is there anything better I could be doing," which everyone should do at some point. Marc: Yeah, for sure. And there's usually little tweaks. Sometimes people think, well, I probably should sit down and talk with a financial professional, but it's going to be this major undertaking or whatever. Not always. Sometimes it could just be little tweaks and whatnot. So go check them out online, pfgprivatewealth.com. That's pfgprivatewealth.com. You can book an appointment right there on the page, top of the page on the right-hand side there. There's lots of tools, tips, and resources. You can click on the podcast page to check out past episodes or subscribe to us on whatever platform you like using, check out the blog, and so on and so forth. So a lot of good information there at pfgprivatewealth.com. And again, you can subscribe to the podcast on whatever platform you app you like using, Retirement Planning Redefined. Thanks for hanging out with us this week. We always appreciate your time. For John and Nick, I'm your host, Mark, and we'll catch you next time here on the show.…

1
Take the Fork: Yogi’s Wisdom on Making Financial Choices 16:32

34 weeks temu16:32

16:32

In this episode, we’re diving into some famous words by the one and only Yogi Berra. You might know him for his legendary baseball career, but Yogi was also a goldmine of wisdom. We'll spin some of his classic quotes into financial advice. It's all about viewing things through the right lens—so let's see what financial insights we can uncover from Yogi’s memorable sayings! Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: Speaker 1: PFG, Private Wealth Management LLC is an SEC registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor and or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance insurance. Products and services are offered and sold through individually licensed and appointed insurance agents. Marc Killian: In this episode, we're going to dive into some famous words from Yogi Berra. We're right in the heart of baseball season, so it seems fitting to do a little classic wisdom from Yogi and some financial lessons here with the guys. This is Retirement Planning Redefined with John and Nick. Speaker 3: The rules of retirement have changed. No longer can most of us rely on social security or a single pension to fund our futures. We're living longer and retirement doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens with fresh eyes, with a new approach and plan of attack. Here to answer the call are financial advisors John Teixeira and Nick McDevitt of PFG, Private Wealth Management, serving you throughout the Tampa Bay area. This podcast is Retirement Planning Redefined, and it starts right now. Marc Killian: Hey, everybody, welcome into the podcast. Thanks for tuning in to the podcast here with John and Nick and myself. And I don't know why I said podcast twice, but I did. Thanks for hanging out with us and we're going to talk about Yogi Berra. We're going to take the fork in the proverbial road, and have a conversation with the guys and just get some financial lessons from some classic Yogi-isms. This guy had some great, great, great quotes through the years. Fantastic baseball player, obviously a legend, but his quotes were pretty good as well. So we're going to talk about that this week here on the podcast. What's going on, Nick? How are you, my friend? Nick McDevitt: Doing pretty good. Getting over a little bit of a cold, but finally turned the corner. Marc Killian: Yeah. Okay. I know you're a football fan. Are you a baseball fan as well? Nick McDevitt: I grew up a big baseball fan. My grandfather... My mom's side of the family is Cuban, so baseball's a huge deal. And I grew up a Mets fan, which is torture, but really kind of phased out of baseball probably over the last maybe seven, eight years, harder to kind of hold the interest. Marc Killian: Gotcha, okay. All right. Nick McDevitt: Yeah, but did grow up really enjoying baseball. Marc Killian: Nice, nice. Well, John, how are you doing, my friend? And what about you? Did you enjoy your baseball growing up or are you a fan? John Teixeira: More of a basketball and football fan, but no. Growing up in Boston, you kind of automatically get sucked into the Red Sox aura. Growing up, I could understand Nick's pain, but then they kind of pulled through as in my college years. But I will say I'm excited. The Celtics is just won the NBA Championship, so- Marc Killian: This is true. Again, yeah. John Teixeira: That's a good thing I'm happy about so. Marc Killian: Yeah, and they've got quite the team, so there's a good chance you might see them again next year in the run for it as well. John Teixeira: Yeah, yeah, let's hope so. Let's hope so. Marc Killian: They're stacked pretty well. John Teixeira: Marc, real quick question as we talk about football is what do you think of Drake Maye? He was there in North Carolina. Marc Killian: Yeah, it was interesting. Curious to see how he's going to do. I don't know. I mean, he played pretty well here, so we'll see how it translates. When they go to the NFL, you never know, right? It's a crapshoot. Didn't work out so well for Trubisky when he went to Chicago. John Teixeira: No, it didn't. No, it didn't. Marc Killian: So we'll see how it goes for Drake, but let's get into some baseball here. We'll talk about some Yogi Berra Again, this guy had some classic lines here, so this should be a little fun. And really they're kind of fitting not only to just finance, but just our world seems today. Yogi's been gone for a while now, but these things kind of fit with our society and the crazy world that we're living in. So let's jump in. Whoever wants to take this first one here. Pretty apropos considering what we've been facing the last couple of years, when Yogi said a nickel ain't worth a dime anymore. Boy, that's the truth, isn't it? Right now? John Teixeira: Yeah, that couldn't be any more true than right now in the kind of time we're in. Inflation over the last few years, really, post COVID has just gotten, ramped it up with the supply chain issues and then the influx of cash going in. It's just a double whammy with what's been happening and as it relates to planning, I've seen a lot of clients happen to really pick and choose what they're spending money on because primarily the cost of food. And I could tell you myself personally, I feel like my food bill has doubled, but not 6 or 7%. I feel like certain things have doubled in the last few years. So inflation is a big thing you got to be aware of when you're doing your finances. And then here in Florida, and Nick can speak to this, and what we've seen is the homeowners insurance is outrageous. Marc Killian: Oh, I bet. Yeah. Nick McDevitt: Homeowners and car insurance have really been a huge, basically like a rocket ship. As far as expenses, John mentioned the groceries. One of the things that we do from a planning standpoint is, especially in times like this, I think where some people kind of make a mistake is they start to really mess with the inflation rate that they use in the planning instead of just repricing where their expenses are now versus where they were maybe a couple of years ago. But from the standpoint of between groceries, car insurance, homeowners insurance, we have a huge section of clients that those numbers, those three categories specifically have probably doubled in the last three or four years. Marc Killian: After the hurricane a couple of years ago, I imagine some of that got worse too, yeah? Nick McDevitt: Yeah, but we have hurricanes every couple of years. Marc Killian: That one was just obviously pretty massive. Nick McDevitt: For sure. And the hurricanes have a big impact on the car insurance. So a lot of people- Marc Killian: Right. That's what I was thinking. Yeah. Nick McDevitt: ... yeah, don't necessarily think about that per se. Marc Killian: All the flooding and stuff, yeah. Nick McDevitt: Yeah. Some of the other laws that are in the state of Florida based around insurance make it on the higher side in general, but companies have really ramped those up. Marc Killian: Oh, I'm sure. Yeah. Nick McDevitt: I think Citizens, which is kind of the insurer of last resort, which is state-backed, just I think applied and got approved for, I want to say a 14% increase. So there's a lot of pressure on people right now, especially in Florida. Marc Killian: For sure. All right, well a nickel ain't worth a dime anymore. Yogi had that one, right? How about this one, guys? I mean, you got to love the simplicity of his lines. If you don't know where you're going, you might wind up someplace else. Yeah, I mean if you don't know where you're going, you could end up someplace completely different. Nick McDevitt: Yeah. It is funny when reading through some of these how apropos they tend to be and how they line up from an industry standpoint where having a plan, having stated goals that you're working towards, having a clear vision of what it is that you want in retirement, make a really huge impact on your habits and overall the probability of having a successful retirement. So these quotes have really kind of stood the test of time. Marc Killian: Oh, for sure. Yeah. Johnny, he said the future ain't what it used to be. And again, if you think about the world we're living in right now, how many people of a certain age are like, "Man, that could not be more true." But even from a society standpoint, but also even just in what you guys do, it's not what it used to be when it comes to finance and retirement planning, even just a couple of years ago. John Teixeira: Things have changed drastically. You look at my parents, they worked for the most part at one place, had a pension, retired, and it was pretty easy for them from a retirement standpoint. They had to really keep their expenses in check. But when they retired, it was Social Security, pension, luckily cost of living adjustments on both of those things to keep up with what we discussed there with inflation, but it was much easier. But what's happened throughout the last, I'd say 10, 15 years, maybe 20 years or so, as the companies have been putting the risk onto their employees to say, "Hey, you know what? We're not going to do the pension anymore, but we'll still give you a benefit. But retirement, your investment is now going to be your responsibility." "While you're working to make sure you're investing the right amount and picking the right options, and then while you retire, now it's on you to figure out what's the best solution for supplementing your retirement income." So it's definitely ain't what it used to be, which is very important to make sure that when you do retire, it's a different game where it's not accumulation. You have to realize that money needs to last throughout your retirement and you have to put together different strategies to make sure that it does do that, not just like you have a pension that's going to guarantee for life so. Marc Killian: Yeah, all the changes to the Secure Act, both versions, clearly the onus is more and more things have been put saying, "Hey, this is on us to do what we got to do for our futures here." And they're putting some rules in place to kind of help out a little bit, but at the same time, if you're not reading the tea leaves, you're going to get left behind there. And that's why you got to work with a financial professional to really help you get sound advice so that you can be set for retirement. I should have segued it this way because, Nick, if you don't, it's going to be like deja vu all over again, which is another Yogi-ism, which is classic. Nick McDevitt: Yeah, it's things changing rapidly. It's interesting because there's always kind of the perspective of zoom out. We talk about that a decent amount where from a smaller sample size or even if we look at things from a micro standpoint, yes, the way that the tools in investing change rapidly or have changed quite a bit in the last few years, how AI is coming along and what the impact of that's going to be and those sorts of things. But when you zoom out, these things are cyclical. So even though the technology may be very new and the way that maybe things react are different than they were before, there's been other times in history where the technology at that point has been new and the way that things react are different. And there's a lot of different quotes out there about how history is really kind of the greatest teacher. And when you zoom out, so many of these things have happened before. The subplots are different, but so many of these different things have happened before. And it kind of goes back to having a good plan, having the ability to adapt to what's going on, kind of not painting yourself in the corner because really the only certainty that we have is change. So it's pretty wild. Marc Killian: That's a good point. And John, I think for this kind quote was like deja vu all over again. Most people kind of feel that way about the market. It's like, "Oh man, here I go again." Especially if you got burned at any time for any amount, it's like even a little dip here or there. And it gets you a little panic, especially if you are over 50 because you start thinking, "I can't afford to get rocked again." Even though... And the weird thing about the current time that we're in is news is always changing and always causing issues, but sometimes this market kind of just kind of rebounds and you think what's going to be the next thing that does it? And soon as you think it's going to happen, it doesn't happen. So it's very hard to read right now. John Teixeira: Yeah. Yeah. It is definitely hard to read because people... Just looking at clients, it's, "It is now the right time to put money that's been on the sideline to get back in?" And it's always hard to determine when that is and try to time things. It comes back to the kind of fundamentals of staying the course and not really panicking depending on what's going on. Because like Nick said, there's always going to be something happening. Things may change a little bit, but there's always going to be something happening in the world. So you stay the course, stick to the plan, and you find those people do much better than the ones that kind of jump around based just looking at behavior. Marc Killian: Okay. Well let's wrap it up here with a final Yogi-ism, for us sports fans of any kind for your team if they're not doing well, it works appropriate for that, because it ain't over till it's over. And that's pretty classic line for any kind of sports mantra. You still got a chance maybe to come back in. I mean, just look at what's going on right now as you guys are in Florida with the Stanley Cup, right? So we're taping this episode here before the final game seven's going to happen, and who would've thought that being up 3-0, Florida would mess up and allow Edmonton to get back in it and tie it up and go to a game seven? So it's not over until it's over, depending on what your viewpoint is, and I guess you could say the same thing from a financial standpoint. If you've made some mistakes, it doesn't mean it's completely over. Get a strategy, start working on it. Nick McDevitt: We've had kind of conversations recently with people where there's been a good run. COVID was an up and down year, but outside of the market drop in last year, which a lot of people have almost forgot about, things have been good, really post recession, Great Recession. So we're talking 10 plus years at this point, and some people have kind of taken a step back and some of these changes that are happening with the inflation that we talked about and maybe a little bit more volatility, we're in an election year, all these sorts of things. It's important to make sure that you keep updating, try to stay on top of things, don't necessarily just kind of check out. So I think it's important to stay engaged and involved. John Teixeira: Going through the ups and the downs of planning, talking about the Stanley Cup here, you want to make sure also when you're building a plan, you want to stress test things to understand when things do really get tough, what is your plan going to look like? So we just did this with a few of our clients where we test market downturns. Things have been good for a while. What happens in your plan if all of a sudden we have two years of negative 15, negative 20%? How does your plan look? If it doesn't look good, what are we going to do to adjust it? You can stress test it with taxes, inflation. Just making sure that whatever happens, whatever scenario you run in, you're flexible to adapt to it. And if you currently can adapt, making sure we understand how do we make you adapt. Nick McDevitt: And even just to kind of add to that, and this ties in with some of the things that we had already talked about. A little perspective is always good from the standpoint of three years ago, four years ago, whenever we were a couple of months into the pandemic, in reality this was an event that most of the people alive had never been through before. Everything changed and then there's still obviously fallout from it, but we got through it. And when you think about it from a planning perspective and markets and all that sort of thing, sometimes taking perspective of what you've actually been through, what you've seen, and the fact that we were able to move through it is really important. Marc Killian: Yeah, for sure. I mean, when it first started, the market first started dropping, that initial bit there, people were having the reaction that we're going to see it drop 50% like it did in 2008 or '09. It wound up maybe being 30 or so percent. But then it also rebounded within just a couple of months, so a lot faster than people thought. So it is not over till it's over. So these are some good Yogi-isms, and it all kind of works really well with financial planning and strategizing. So if you need some help with that, make sure that you're reaching out to John and Nick. If you're already working with them, that's fantastic. Make sure you subscribe to the podcast. If you're not, maybe share the podcast with others who might benefit from checking out the message and the conversation. And you can find them online at pfgprivatewealth.com. That's pfgprivatewealth.com. And you can subscribe to Retirement Planning Redefined on Apple or Spotify or whatever platform you like using. Just type in Retirement Planning Redefined or again, visit them on their website for all the tools, tips and resources at pfgprivatewealth.com. Guys, thanks for hanging out. And John, good luck with the new puppy you got. John Teixeira: Thanks, appreciate it. Marc Killian: Appreciate it. Nick, hope you're feeling better, my friend. We'll see you next time. Nick McDevitt: Thank you.…

1
Retirement Questions The Baby Boomer Generation Is Asking 20:54

47 weeks temu20:54

20:54

Each generation is currently navigating a unique part of the retirement planning experience. With many baby boomers preparing for the transition into retirement, we're going to focus on some of the top questions this age group is asking in today's episode. Stay tuned to see what you can learn from John and Nick this week on Retirement Planning Redefined! Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Marc: Every generation is currently navigating a unique part of retirement planning experience. No matter what generation you're in, there's going to be different questions that you might want to tackle. So on this week's episode, we're going to talk about that from the baby boomer standpoint, here on Retirement Planning Redefined. Welcome to another edition of the podcast, folks. Retirement questions that every generation should be asking themselves is the docket this week, and we're going to touch on the baby boomers. We may come back around to some of the other generations right now, but I think for most of our listening demographic, the boomers are certainly going to be ones that want to pay attention. It's interesting, guys, the boomer term has become polarized. It used to be one thing to say just baby boomers or whatever, but now they get a little offended, I think, with the whole boomer thing. It hasn't gone very well on social media the last couple of years, but either way, we're going to talk about that demographic from 1946 to 1964. It's so funny with these age things, they keep changing it. I was looking at the one for generation X, which is what I am, and now they're saying late '70s when it used to be like '83 or something. So I think they just changed these numbers based on what they want to have happen for conversation pieces. But anyway, we're going to get into that with John and Nick this week. What's going on, John? How you doing, buddy? John: Doing all right. Actually getting ready for, Nick and I are bringing some Easter baskets to the local children's hospital here. We're going to be handing them out this coming up Friday. Marc: Oh, very cool. John: We're excited for that. Marc: Yeah, very cool. That's nice, you guys are always doing some cool charity things going from around the area, so very, very cool. What's happening, Nick? How are you doing, buddy? Nick: Good. Staying busy, along the lines of what John was talking about, the group that we're involved in, we're working on a big derby party here in St. Pete, so big event. So that's fun to works the other side of the brain, and then we're just staying busy with... We've got one thing that's been interesting, John and I were talking about it earlier, this area is growing pretty rapidly, and it feels like we've had more clients than ever that are looking to move out of the area and slow down a little bit. So, it's starting to become a little bit of a trend recently, so. Marc: To move away from Tampa? Nick: Yeah, yeah. Move away from Tampa or further out to more of the outskirts of the area, but we've had some clients recently like Panhandle, Georgia, North Carolina. The growth here has just been pretty overwhelming. Marc: Monstrous, yeah. Nick: Yeah, and- Marc: There's a lot of states that are that way, right? I mean, there's a number of states where I think people, everyone's flocking from places like New York and California, and it's just like, okay, stop. We can't handle it. Nick: Yeah, it's interesting because this area, the east coast of Florida has always been like the Atlantic coast south, and then the west coast of Florida where we are has always been a little bit more low-key. Still a decent size, but a little bit more low-key, and it has that feeling like developers and everybody is trying to make it more similar to the East Coast. I think that's kind of pushing some people out, but even because obviously Texas has been a place that's been a popular area for people to move to for some of the similar reasons, whether it's taxes or just how the government runs or whatever their reasoning is. But one of the biggest differences, just reading about Austin, which is I would say Austin's most similar to this area in certain ways from a size perspective and all that, but they've had a huge drop, cost-wise in housing because they've been able to maintain supply. Whereas the housing here is just completely insane at this point, especially in St. Pete. Marc: I was going to say, across the country, it seems like it's really inventory's low. So, just a lot of people that just aren't selling, well, because the prices of houses through the roof, so you're not selling the one you're in because you know that when you buy another one, it's going to cost you just as much or more. So, it's interesting. Nick: For sure, that's definitely had an impact. This area specifically because of the influx, there's also been some interesting articles about how much corporate owned, single-family housing there's been. But I mean, you're talking 11, 1,200 square foot houses in St. Pete for 800 and up, [inaudible 00:04:23] how things shift. Marc: It was on my list, a roundabout way to talk about some different questions that every generation should ask themselves. So housing certainly can apply to any generation. I mean, even folks in our baby boomer conversation today could have been thinking about downsizing or whatever the case is in retirement and that certainly could play into that question. So that's one we tackled without really even setting it up to tackle it. So we'll just jump in and talk about a few more of these things. But again, with everything being so wild right now, it seems like from a financial standpoint all across the spectrum, whether it's inflation, housing costs, food costs, whatever the case is, how do you manage all that? So risks, whatever risks guys, is going to be top of mind, especially if you're a senior. My mom is 82 going on 83, and she's constantly worried about the various different kinds of risks that may affect her at that age. Market volatility, social security, whatever it might be. So let's just start with the market volatility. Whoever wants to take that one. Nick: Yeah, so from a market volatility standpoint, it's very interesting from the perspective of how things seem to work these days from a market perspective. I don't have the exact numbers, but I know last year, essentially needed to... The majority of the growth in the market, although we had a great year, the majority happened within a seven to 10 day market window. So your chances of if you're not just holding and studying the market, your chances of really getting the returns that you're looking for are very difficult. So volatility, the swings up are substantial and the swings down can be. I think a lot of that has to go, can be attributed to the algorithm based trading and high frequency trading and things like that have an impact on that. Marc: And if you're a senior, none of that interests you, right? So I mean, that's [inaudible 00:06:18]. Nick: No. No. Yeah, absolutely not. But for a lot of people in that generation, they're used to the returns being more steady throughout a single year or the perception from that perspective at least versus like, hey, if you miss a month and it was a good month, then your returns could be next to nothing. So it's pretty interesting. Marc: Yeah, managing that risk, for sure. Nick: Yeah, it goes back to that classic perspective of the asset allocation continues to be as important as ever. Marc: Yeah, for sure. John, if you think he just mentioned steady income. So if you're a senior, best approach for transitioning from a steady income like your job, for example, to retirement withdrawals, that's usually a massive hurdle for anybody going into retirement but obviously right now, these are the boomers. I just read actually today that we're taping this guys, I think four million people were going to be retiring this week, four million this week. John: It's a good number. Marc: Crazy, right? So, how do you deal with that scared-ness of, okay, I had a paycheck last week and now I don't, I got to use my retirement money and turn that into paychecks. That's a big hurdle for people. John: It's a huge hurdle for people. This is one of the biggest things we see when we're doing retirement planning for clients that are transitioning. It's, I used to work and get my paycheck every biweekly, whatever it is, and now it's gone. There's a fear of spending their money they've been saving all these years. I'll tell you, the best thing to do in our opinion, is to develop a financial plan and a strategy for retirement income. So you really have to put the pen to the paper and determine, okay, what are my expenses? How much do I need? That's going to be the first step. Then after that, it's looking at, hey, what are my income sources? We talked about social security last week, we'll touch on it a little bit more here, but hey, how much is social security going cover? Okay, what other sources do I have? Really evaluating where's the money going to come from? Once most people see it, it provides peace of mind and a little bit of, okay, this is what I'm doing. You got to have the blueprint. Once the blueprint's there, you feel much better about what your approach is. Marc: Well, we all want to know we got mailbox money coming. We all want to know that when we go out, and I know most of us don't go to the mailbox anymore to get it right, but it's the same idea that when you go open the mailbox, the check is there. That's what you need to know. That's that comfort factor that you need to know. So that's turning these accounts that you've been building up through your working years into this retirement income. So certainly, that is an importantly huge question for baby boomers to ask themselves. We're talking about wealth and building wealth and working through the years. Nick, I'll throw this one at you. I'm going to hop around here a little bit, but passing on wealth to the next generation without sacrificing your own retirement, is also another huge question that boomers are asking themselves because they want to know that they are going to be fine, but a lot of times they want to leave something behind. I just was looking this up real fast. Experts are putting that number between 40 and $100 trillion right now that they're estimating in the great wealth transfer conversation, which is what boomers will be leaving to their kids and grandkids over the next 20 years. $100 trillion. Man, that's crazy money. Nick: Yeah, it's pretty wild. What's interesting is I think the baby boomer generation has done a good job of accumulating assets and saving. Marc: Oh yeah, great job. Nick: There's also, I would say, versus maybe their parents' generation, they spend a little bit more. It's interesting, a lot of the people, I wouldn't even call it half-and-half, maybe around 30, 35% or 40%, leaving money for them is incidental, where their focus is primarily on themselves. A lot of times these are people that have done a good... They've helped the kids get through college, kids have good careers, and- Marc: Right, we've saved it, it's ours, let's party, right? Nick: Yep, so they want to travel. Obviously travel is the most popular thing that people tend to want to do. So having that conversation changes things. For those that are highly focused on leaving the money, and what's interesting is where I've seen it happen a little bit more is because people like to, in their mind, it makes it easier for them to segregate money. So we've had a few recently where their retirement plan looks good, their thought process with the money that they have saved and accumulated and leaving it to their kids is incidental like, hey, if there's money there, great, if not, we want to take care of ourselves first. But, they've also inherited money maybe from their parents or a brother or sister, and they say, all right, well this is going to be the money. I consider this found money, and so this will be money that I'll try to leave and pass down. So it's been interesting seeing that thought process. But with the way that current estate tax exemptions are from a tax perspective and avoiding estate taxes, that sort of thing, for most people, that's not an issue. But for those that are, maybe they've got kids that are high-income and they would like to leave them money that has less of an impact from a tax perspective, depending upon their situation, we might look into life insurance options or even converting to Roth options to help them pass on money and not have a major negative impact to their overall plan. Marc: Yeah, because you want to figure out how to... If you do have it in your mindset to transfer some wealth upon passing, and I think probably the healthy approach that a lot of people take is, we're going to do what we want to do, we're going to be fine, and whatever's left at the end, fine, transfer that over to the kids or grandkids. You want to make sure that you're doing that as efficiently as possible. So some strategizing there is certainly going to go into play. John, I'll throw this back to you, whether it's leaving money behind or even how you set up your social security, because you talked about it a minute ago and readdressing social security. Maximizing social security could impact what you do have left over at the end to leave behind because that's not something you can pass on. So it's a matter of figuring out how you want to structure these things to maximize your benefits and get everything out of it that you can while you're still here. John: Yeah, yeah, if you're able to maximize your social security and figure out what's best for you, what that ultimately does is you're dipping into your own investments a little bit less because you have that strong social security income stream. So if there's more investments left over, your beneficiaries, whoever your beneficiaries are, will have a bigger balance coming to them. So definitely, we talked about it before, we always stress on it. You don't want to take social security decision lightly. You want to make sure that you're strategizing for your situation on how to maximize those benefits. I believe it was last week that we talked about the cost of living adjustment in social security. So if you delayed yours, people have been getting 6% or 7% increases, and if you were taking yours later, you get a bigger balance. Those 6% or 7% over the past few years have really added up. So, very important to make sure that you take what's best for you in social security and not just take it lightly. I hate to say this, but you don't want to listen to your neighbor on what they did because you'll be surprised how many times we're meeting with people, it's like, my neighbor's doing this, and it's just like, huh, okay, well- Marc: That's your neighbor, right. John: What does your neighbor do? Well, they're in tech. It's like, okay, well. Marc: It's a little bit different, yeah. Well, thinking about that social security conversation, so getting a maximization ran, going through the planning process, going through a strategy session with you guys, and having it stress tested and having that maximization ran will help you see that because that's a great point. Are you riding the horse that brought you, which is your retirement, or the government one? I know technically it's our money, the social security, the government, but it's like figuring out the best balance between those two when you're going to start pulling things from whatever account. So, good stuff right there to think about when you're talking about for generations. Go ahead. John: One thing Mark, with that. With social security maximization, a lot of people don't realize is there are these calculators that you can look at and say, hey, you put in your numbers, you put in a spouse's number, and it will shoot out, hey, this is the strategy, but it doesn't take into account other factors, as far as, do you have a pension? Things like that. How you want to figure out what's the best strategy is when you look at your social security and how it affects all your other assets and income streams, then you can figure out what the best approach is because when you just look at social security in a vacuum, there's other factors in there that really make a big difference on what the best strategy is. A lot of people will just go online, hey, what's the strategy, maximization strategy, but it doesn't give the overall picture. Marc: A great point, really good point right there. So let's wrap it up with one final piece here to think about, Nick. Of course, we could go forever on this topic, but we'll just... Some couple of concise points to think about when you're talking about addressing healthcare costs in retirement. Obviously for boomers, this is a huge concern, really for anybody, if you're alive and human right now on the planet. Healthcare is obviously growing out of control, but certainly a big concern when you're elderly. Nick: Yeah, I think, and this is almost a tiered approach. So the first thing or aspect that needs to be addressed is if you plan to retire before you're eligible for Medicare. So having a plan in place and understanding what those costs could look like. So for the majority of people, if they want to retire before age 65 and they need to get healthcare coverage outside of their former employer, then we tell them to typically budget between $800 and $1,000 a month per person. For most people, that's going to be a huge increase in costs. They might be able to float it and they also might be able to reduce that cost substantially if they have money saved that are non-retirement funds. So non-qualified accounts where we can keep their income on paper down and they might be able to qualify for a subsidy. So that's phase one. Then phase two is, once you are eligible for Medicare at age 65, making sure that we're budgeting somewhere between 4,000 and $5,000 a year and having them talk to a person, and we've got a couple of resources that we're very happy with and we refer people to, because depending upon their overall situation. Again, if they, especially people that are coming from working for a large company that maybe had really good benefits and they're used to paying maybe a couple hundred bucks a month for coverage for themselves, that may actually be an expense that goes up. Then the phase leading into those two things are, are you eligible for a health savings account at work? Are you putting money in? Then that money that is getting put in maybe something that we could use to help mitigate some of these costs and be efficient from a tax perspective. Then also help you cover maybe potential large, actual purely out-of-pocket medical expenses that start to approach and happen down the road when you get to your 70s, 80s, etc, where these things pop up. People live longer, whether it's some sort of acute care or if it's some sort of need for long-term care, which is expensive, but- Marc: Yeah, crazy Nick: Really, the key to that is the overall plan, making sure that we test those numbers out in the plan and that we've got a strategy to approach it. Marc: Yeah, because if you don't take a strategy into account with that, if you're married and you're a senior and you're like, hey, we're going to just take care of each other because it's just going to be cheaper, it's a wonderful sweet and noble sentiment that has no basis in reality because it's just not smart. It's such a taxing physical thing, a mental thing, to take care of one another without having some sort of help in there. So you've got to plan and strategize for it, whether or not it is daunting to do, yes, but if you don't start having those conversations, it's only going to get worse. I mean, my wife jokes with me all the time. I mean, I'm 52, and she's like, I can't pick you up now, I can't imagine trying to pick you up when you're 72. She's 70, it's just not going to work. So you've got to have a good strategy for healthcare to address the rising cost because it is going to continue to do so. Again, these are some questions for boomers to really think about and ask themselves. If you need some help, if you need to sit down and start that planning session, that strategy conversation because you've been putting it off or you've addressed a few things, not all the things, whatever it looks like, reach out to John and Nick and get yourself onto the calendar at pfgprivatewealth.com. That's pfgprivatewealth.com for a consultation and a strategy session of your own. Don't forget to subscribe to the podcast, Retirement Planning Redefined on Apple, Spotify, Google, YouTube platforms, whatever, you can find us on all those major platforms. Just type into the search box, Retirement Planning Redefined, or again, go to pfgprivatewealth.com. That's going to do it for us this week for John and Nick, I'm your host, Mark. We'll catch you next time here on the podcast.…

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Don't Make These Income Planning Mistakes 15:43

48 weeks temu15:43

15:43

Are you planning for your retirement with the confidence that you're making all the right moves? In today's episode, we'll unveil the crucial income planning mistakes that could jeopardize your retirement and show you how to craft a financial plan that's built to last decades, not just years. Tune in to ensure your retirement strategy is foolproof against common pitfalls and ready to secure your financial future. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Are you planning for your retirement with the confidence that you're making all the right moves? Well, on today's episode, we'll unveil the crucial income planning mistakes that could jeopardize your retirement and show how to craft the financial plan that's built to last decades, not just years. Tune in to Retirement Planning Redefined. All that, coming up next. Hey everybody, welcome into the podcast, John and Nick joining me once again to talk investing, finance, and retirement here on Retirement Planning Redefined with the guys from PFG Private Wealth. John and Nick are financial advisors helping folks get to and through retirement. You can find them online, if you've got some questions, need some help, at pfgprivatewealth.com, pfgprivatewealth.com. And we're going to talk about some income planning mistakes this week here on the podcast. What's going on, gents? How you doing, Nick? What's going on, buddy? Nick: Good, good. Just staying busy. Just crazy that we're almost April. I guess we're approaching April at this point. Just had some friends in town, so that's always a little bit chaotic. But no, everything's good. No complaints. Marc: John, how's it going in the crazy household that is yours my friend? You doing all right? John: It is crazy. I don't want to get into it. But yes, it is a madhouse. I'll leave it at that. But, yes. Marc: But having little ones always is, but that's good. John: Yeah, you know well. Marc: Well, and it's April, right? It's a busy time of year, too, a lot of things happening with taxes and financial strategies and everything. Anyway, it's spring, all that good stuff. So, let's talk about some income planning mistakes. Let's kick it off with something simple. I teed it up a little bit in the intro there about being retired for decades, not just years. I know that we all fundamentally think that, John. We're like, "Yeah, of course, we're going to be retired for decades." But somehow or another it disassociates, I think, as we're getting thirties, forties, maybe even in our early fifties. We don't really put as much thought to it, I guess, as we should. For me, for example, all the men in my family die young. I've already had heart surgery at a young age, so I could easily jump onto that path of, well, I'm not going to live that long, so whatever. I am not going to really worry about planning for decades. But that's just a bad move, especially if you've got people that you love, loved ones that you may want to make sure they're taken care of too. So, ways to think about it, right? John: Yeah, the worst thing you could do is plan to retire for a few years, and next thing you know, run out of money, you don't know what's happening anymore. But no, we get this quite a bit where I can remember clearly Nick and I were doing a plan and the money around the eighties, it was looking a little tight. The person was pretty excited. We were like, "We need to make some adjustments to make sure it lasts age 100." He is like, "No, I'm good." He's like, "I'm not lasting until 80 or 83." And we were like, "Okay, well, we'll still do our due diligence to make sure your money lasts for a while," but [inaudible 00:02:55] Marc: What if you're wrong? That's the thing. And did this person have a spouse? Were they married? John: He had a spouse there. He was semi-serious, but we ended up making some adjustments to it. But that is something we had quite a bit. When we do our planning, we make sure it goes to age 100, because you can't predict the future. And with technology and everything that's going on now, people are living longer. Marc: For sure. John: It's just the healthcare industry, there's just always new innovative things happening. But it's a mindset that I will say people need to understand. And that goes with building a portfolio. Just had a conversation with a client this week, and we're doing some things, and they're just looking at everything short-term. I had to remind them and say, "Hey, you're looking at a 20, 30 year period where there's some long-term money here. Not everything is the next five years." And just talking to her made her realize that of just saying, "Hey, I'm still invested for the long term. I can't make adjustments just based on expecting the next four or five years." So, that is a mindset people really don't understand with the investment portfolio. You still have some long-term money, because your retirement is going to be 20, 30 years, not just four or five. Marc: No, a great point. Glad you were able to have that conversation with her and get her eyes moving. I think that's a real value add right there that people don't often take into account when working with a financial professional. We tend to think, "Well, it's the X's and the O's. They're going to help me figure out the dollars and the cents." But there's also really thinking through and behavioral analysis a little bit, behavioral changes that we have to walk through, because you guys see this day in and day out. And Nick, I'll throw number two over to you. Part of that, as John was just saying, "Hey, you've got to set things up for short-term and long-term," social security is going to play a big factor in that. So, starting it too early could really change your long-term numbers. Nick: Yeah, there's an extra emotional attachment to social security, which we very much understand. Marc: Whether you're mad at it or not, whether it takes off or not. Nick: Yeah, and we totally understand that. For us, we always try to integrate the social security decision with the overall investments and the overall plan. Just like with anything, we always approach it from the perspective of, hey, our job is to tell you the impact of the decisions you may make, and then ultimately it's your money. But, for sure, one of the biggest negatives, especially if they're financial situation is pretty solid otherwise, starting social security too early these days makes a difference. Really the last few years have really played that out. Anybody that started social security before COVID and maybe didn't necessarily need to, between the inflationary adjustments that have happened, which they still would've received, that inflationary adjustment compounds with the delay. And so, the jumps in benefits for anybody that's waited those few extra years have been substantial, and people that are starting it now are pretty happy that they waited, and it's made a difference for them. Marc: Well, if you don't have a strategy, you could be costing yourself tens of thousands. This could be big dollars over the course of your lifetime. I get it. We're all terrified about what's going on in the world, because every five seconds it seems like there's some new, crazy, weird, wonky thing happening in the world that is 2024. But you've still got to make sure that you're making the right decision so that these planning mistakes don't come back to bite you 10, 15, 20, 25 years down the line. So, good points, for sure. Hey, John, what about bonds? For years, you'd go 60/40. You'd go standard portfolio. You'd go to bonds as we age for safety. Last couple of years though, they ain't been all that great. So, is it still one of those things where assuming it's a safe source is a good move, or not? John: Yeah, I would say it's not to assume that that's going to be 100% your source of income. We're going to- Marc: From a safe side, right? John: Yeah, yeah. We're going to touch on inflation and things like that. We've talked about being retired for decades, so you want to make sure that you have some equities in the portfolio so you are keeping up with costs of living going up. If you're just in bonds and fixed income, you're going to lose out on a lot of upside. And then, if you look at the past years, although interest rates have gone up obviously the last couple of years, there was about a 15, 20-year period where you get a bond and it's giving you two or 3%. That's nearly not enough to supplement most people's income. Marc: Oh, for sure. John: So, you definitely want to diversify, make sure you're planning for the long term for some growth, and also you want to adjust to an environment where interest rates are very low and the bond yields just aren't enough to sustain what you're trying to do. Marc: And at the time we're taping this here, it's just at the very end of March, it'll probably be out sometime here in April of '24, Powell still saying that even though the numbers came back in, inflation was a tad higher, I think, just last month then what they anticipated core inflation. He's still saying that nothing's changed for him, and that they may be looking at cutting rates throughout 2024. So, who knows? But Nick, that does play into inflation as John just teed it up. Our fourth point here is it's going to play into it no matter what's going on with the dynamic that we have right now. But even just basic inflation, even if you just go sticking with the normal 3% we've seen for years and years and years, if you don't take this into account, and again, our topic being income planning mistakes, you are seriously messing yourself up, because five grand right now, if that's your expenses, is not going to be five grand in 10 years. It just isn't. Nick: Yeah. I would say too, especially in this area, I think there's been some studies at the inflation rate in the Tampa Bay area has been higher than other places. Marc: Okay. Nick: I've had multiple conversations with clients where there's been this... I think because there was such a period of scarcity in getting decent fixed rates, whatever it was, eight to 10 years, it's like people are just taking a deep breath and just saying, "Oh, finally I can get four and a half or 5% on my money again," which is great, but the issue is that some are assuming that it's going to last for a long period of time. Last year is a really good example from the perspective of that five-ish percent, whether it's a CD or money market or whatever, solidified last year. We had some clients that shifted more over, and we had many conversations about it. But again, it's like the S&P then did, what, around 20% or something like that? So, there was an opportunity cost there. When the market's up like that, you really don't want to lose out on those years. And so, the inflation is compounded. For example, even just people that are in Florida and live in a condo, maybe they've lived in a condo for a while, all the condo rules and association rules have changed. They're like, "I've seen association fees double in the last two or three years," and it's really putting a lot of pressure on people. Even if their mortgage is paid off, but they've been on somewhat of a fixed income, there's a lot of pressure happening there. And so, yeah, we try to just keep emphasizing even if it's a small portion of the money, even if it's only 20 to 40% of the overall portfolio where we have something related to growth, more marketed towards that, getting them to understand that, hey, this is for money down the road. No matter where the rates are right now, the one thing I can promise you is they're going to change. And so, that's been a little bit of a different conversation than we've had to have probably, I'd say, the 10 years previous to that. So, it's going to be interesting to see how people start to react when the cuts do happen. Marc: Yeah, because you're talking about having to keep up with inflation, you need to have some stuff at growth. You've got to have some stuff at risk, basically, so that you can pick up gains in the market, things of that nature, wherever it's coming from. But you've got to have some money out there taking a few chances, because you do have to keep up with or outpace inflation. I guess that really just brings me to my last point here, John, and you guys can both jump in if you'd like to on this, but you've got to have other income streams besides just social security, plain and simple. That's all fine and good, but you've got to have some other income streams and some of that needs to be safe, and some of that needs to help you with the future money, which is growth. John: Yeah, 100%, Mark. Social security might cover thirty to forty-percent of someone's expenses, and covers a portion of what they need for income there, but really important to have some other income stream, whether that be real estate, whether it's your investments. Right now, we're talking about rates, rates are really strong. We have a lot of clients looking into these income annuities, because they look really appealing right now. Because as interest rates go up, those annuity products typically tend to look a little bit better. So, just having that guaranteed income or just reliable income source to put on top of social security really gives a nice buffer. I don't want to speak for Nick, but I have found when you have your floor of guaranteed income, it helps you make better decisions even with your other money, where if the market's volatile, but you say, "Hey, I have X amount of dollars guaranteed income coming in in this pool of money here that's set aside for growth," even when it's a little volatile, it's just giving you a little more peace of mind to saying, "Hey, I know my baseline expenses are covered, so I'm going to be okay." We find that that does help people make better decisions when they have multiple income streams. Marc: Yeah, you got to do it, right, Nick? It's just the point of the fact that you want to have that diversification not only in income but also with tax buckets. You just want to have some general good broad diversification in your entire portfolio. Nick: Yeah, absolutely. The diversification, and I alluded to it earlier, it's just as important as ever. Having the higher floor on fixed rates has been helpful the last couple years, but the phrase that I've used quite a bit lately is zoom out. We need to zoom out and continue to zoom out, because that's really important, for sure. Marc: That higher view of things versus trying to narrow in? Nick: Yeah. Marc: Yeah, I got you. Well, so there's some income planning mistakes that we can certainly make, so make sure that you're avoiding these. And of course, if you think, "Well, I don't do this every day," or, "This is something that I just can't wrap my brain around all the time because I'm just too busy living my life and working my own job," or whatever the case might be, that's why you have a financial team to help you out. So, if you need some help, and of course you've got questions, always reach out to a qualified professional like John and Nick before you take any action to see how something's going to fit into your unique situation. They're financial advisors to PFG Private Wealth. You can find them online at pfgprivatewealth.com. That's pfgprivatewealth.com. And don't forget to subscribe to the podcast Retirement Planning Redefined on Apple or Spotify or YouTube platforms. That's going to do it this week for us. We'll be back with more on future episodes. So again, hit that subscribe button and we'll catch you next time on Retirement Planning Redefined with John and Nick.…

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Money Mistakes You'll Regret and How to Avoid Them 17:11

1 year temu17:11

17:11

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” – Eleanor Roosevelt… Ever wish you could foresee financial missteps before they happen? On today’s episode explore some real-life stories of regret and arm yourself with the essential dos and don'ts to ensure your money works for you, not against you. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: "Learn from the mistakes of others, because you can't live long enough to make them all yourself." Eleanor Roosevelt said that, and we all certainly wish that we could foresee financial missteps before they happen, so on today's episode, John and Nick are going to share some stories with us and talk with us about money mistakes we might regret and how to avoid them here on the podcast. This is Retirement Planning Redefined. Hey, everybody, welcome into the show this week, as John and Nick and myself are going to talk about those money mistakes and hopefully ways to avoid those. So we're going to get into a few of them this week. And as always, if you've got some questions, you need some help, reach out to the guys before you take any action on something you hear on our show or any others as it relates to your situation specifically. We all have these universal things that apply to us, but individually in the nitty-gritty is where we need the qualified professionals to really help us dissect and do the right things for our retirement. And John and Nick can be found at pfgprivatewealth.com. That's pfgprivatewealth.com. Get yourself onto the calendar and don't forget to subscribe to the podcast. John, what's going on, buddy? How you doing? John: I'm doing pretty good. How are you? Marc Killian: Hanging in there. Doing pretty well. Looking forward to talking to you guys today about these money mistakes and seeing what we can do about them. Nick, my friend, what's going on on your end of the world? You doing all right? Nick: Yes, sir. Staying busy. Marc Killian: Yeah? Just keeping busy. Well, that's good. It's that time of year. We are into, I don't know, we're right around November about the time we're doing this, so we'll see. The year's winding down quick and so it's always something coming fast and furious. So let's talk about a few of these things so hopefully we can avoid them, especially in the fourth quarter. Sometimes we start to maybe spend a little bit more money than we realize. So let's get into today's conversation a little bit, guys. And I want to talk about IRA withdraws, whether it's a loan from I guess a 401K or I know that you can't do it from different kinds of accounts, or just taking them out prematurely. Why is this a money mistake that people might regret? Because I've talked to a lot of advisors and it seems like everybody universally says this is the last place to access money early if you need it. If you needed something for an emergency or something's happened, most people seem to advise against pulling money out of these types of accounts early. Why is that? Whoever wants to tackle it. John: Yeah. I'll take that one. So yeah, the main reason why you want to avoid this is it can be riddled with fees and there's a 10% penalty. If you're under 59 and a half, you don't qualify to take the distribution out, so what you're doing there, and we talked about it last week, is Uncle Sam has a liability on your money. You're just basically giving Uncle Sam 10% of your money. And then on top of that, you're paying taxes on any withdrawal. And if you're already currently working, now you just actually raise your tax bracket, so you could be paying additional taxes and this is money that's just lost. And what you're really losing out on is the growth potential down the road. So it really is a lost opportunity cost of, hey, if you pulled out 40, 50 grand over whatever, a couple year period, well, depending on how long you were going to wait until you retire, that's 50 grand of six, 7% potential compounding growth. That could really add up and could be a detriment to your overall retirement strategy. Nick: I would add to that, too, from the perspective of a lot of times, the reason for taking out the funds isn't necessarily the best, and there could be other ways. If it's a last resort, that's one thing. If it's something where it's for an update to a house or different things like that or even certain types of debt consolidation, we've found that literally the money just disappears almost to the standpoint of it never gets replaced. When that expense goes away, they don't catch back up and reemphasize savings or things after that. The money comes in quick, it feels easy, it goes out quick, and then they just move on like it never happened, so it really can put people behind the eight-ball. Marc Killian: Yeah. And I definitely like the point of not only is there the immediate impact, but there's that future impact that John talked about by losing the ability to continue to grow that money for our future self. So certainly a money mistake that we could regret and why many advisors, most advisors advise not doing that and looking for some other alternatives. Let's talk about lifestyle creep. It's not a song from Radiohead. It's like you get to that peak earning years, I suppose, and the kids are out of the house. I'm there now, guys. I'm 52, the kid's in the Navy, she's doing well. My wife and I are doing all right, and so I've been splurging a little here and a little there on some extra items and we're enjoying ourselves, but I'm also being mindful not to let it get out of control because there is that future me still waving, saying, hey, don't forget about I need some of this money, too, when you're 75. So you got to be careful with that. You guys see that sometimes when folks get to this age where they're like, hey, I've worked really hard. I'm going to treat myself a little bit. Nick: Oh, yeah. Definitely we'll see that. And we always joke with people that we're not the money police and we're not here to tell you that you can or can't use your own money or those sorts of things, but to just show you the repercussions of decisions, both good and bad. So those years in your fifties where you're able to save really make a big difference. And so sometimes we'll even phrase it like, okay, well, maybe you're going to splurge on a certain type of vehicle or a second home or something like that. Marc Killian: That's big splurging. Yeah. Wow. Nick: Yeah, yeah. So what can we do from the perspective of, okay, a little bit for you now and a little bit for you later sort of thing. Because sometimes it's as simple as, all right, let's just start an automatic deposit into a separate account and at least force it. Let's see how it feels. Because a lot of times people will adjust to having a little less take home income or they're used to having a certain amount of money in the bank and maybe it's substantially higher than it was five or six years ago, and they get almost addicted to looking at it, and now it's like, all right, well, you've reached that. Now let's deploy some of what we'll call the new money elsewhere and start to save it to try to make up for that creep a little bit. Marc Killian: Yeah. It's all about balance. And of course, John, I was talking about just buying season hockey tickets and he's talking about buying an extra house. But either way, it's all about finding that balance so that you don't get that lifestyle creep out of control a little bit. And John, I'll throw this one at you since you've got the little ones there. Another one of the big money mistakes people are starting to really wake up to is I paid too much for my kid's tuition and I can't finance retirement. So I told my daughter this. When she was 20, I was like, all right, you need to get your stuff together because you ain't staying on my couch forever. And besides, you don't want me on your couch whenever I'm 70 and you're in your forties or whatever and you've got your family and you're raising your kids and I've had to come live with you because I gave you too much for college, or I helped you too much along the way. It's got to be about balance on this as well, I would think. John: Yeah, yeah, a hundred percent. I think most parents, they want to provide obviously as much for their kids as possible. Marc Killian: Of course we do. John: They'll say, oh, I don't want them to have all these student loans coming out of school. I just want them to focus on school. But a hundred percent. You can't go at 59 and a half or 65 and say, hey, I need a retirement loan. That's not an option. Marc Killian: The only choice there might be maybe a reverse mortgage, and that's the conversation of the day. John: Right, exactly. So you don't want to catch yourself in a situation where it's like, hey, in your high earning years, you're really, hey, let's help out with school. And then all of a sudden they're done and you look at your nest egg and it's like, wait, I got to work extra or I have to adjust my lifestyle. And you really back yourself into a corner. So there's other ways to go around it. Maybe they do take out a student loan and once they graduate, maybe you assist them in paying it back, but at least you have that option to really adjust it to your situation. We're talking about mistakes and how to avoid them. What you especially want to avoid is backing yourself into a corner at the 55 plus age, because that's a lot of times where you're a high earner and companies might look at it and say, hey, we need to downsize. I've had a few clients where late fifties, early sixties, and they're looking at it like, hey, I got to go find a job somewhere. And they weren't planning for that. So you definitely want to leave yourself flexible to adapt to any situation that's going to come up. Marc Killian: Yeah. Since I was talking about hockey a second ago, we'll use that as an analogy. You definitely don't want to have two guys in the penalty box, two of you in the penalty box, and have it be a five on three because it's just going to be a little rough right there. So making sure that, again, balance is going to be the key, right? Making sure that you can handle helping the kids without sacrificing your future. And they don't want you to do that either, ultimately. At the moment they feel like they do because it's great to have mom and dad help, but when it comes back around years later and they have to help you, they're going to really regret that decision as well, so that's why we're trying to highlight some of these areas for you to avoid. And Nick, I'll toss this one to you. Similar in a way, but instead of helping your kids, you're helping yourself because you chose to retire early. And if longevity risk is the great multiplier to all the other risks we face in retirement, and that's just the years we live longer, I would think that retiring too early is almost like longevity risk on steroids. Nick: Yeah. I think the retiring too early thing is usually if there's a really strong plan, meaning financial plan, retirement plan done, I think we feel pretty comfortable with the level at which we do plans and give people just input on, hey, we feel comfortable with you retiring. We don't feel comfortable with you retiring. But for example, recently, a new client, somebody that is going to retire a little earlier than maybe is considered typical reviewed the plan that they had been working off of the last maybe 5, 6, 7, 8 years, and the rate at which the plan had expenses dropping for the client jumped out to me as a red flag. And so it's not only from just a standpoint of, hey, in theory it doesn't make sense to retire too early and all these different things, but also just showing the importance of second opinion or the importance of the plan, importance of inputs in a plan where in our opinion, cutting expenses by 50% between 70 and 80 is a pretty tricky thing and can be very misleading with the security that you feel with your plan. So yeah, things like drawing down the money too early, whether it's taking Social Security too early. Those increases that people have gotten in the last three, four years in Social Security, especially those that have waited are going to make a really substantial difference because they've been so high, and just anybody that took those real early and locked in those gains on much lower numbers, they're going to feel it 10, 15 years down the road. Marc Killian: Yeah. I don't have the exact data in front of me, but I just saw something not too long ago that talked about waiting three years, just three years to retire, delaying it three years, made some crazy number difference in the math for retirement. It was pretty wild. I'll have to find that. We'll have to talk about that on a future show, but it was pretty interesting, just the massive difference that it can make. So certainly important. Hey, if you want to retire early and the numbers bear out, cool, but just I think that's the point. Run the numbers. Make sure that you truly can pull the trigger and retire early so that it doesn't bite you along the way. Because you certainly don't want to get to 80 and be like, oh, okay, now I got to go back to work. That wouldn't be good, so let's not do that. John, let's talk about the last one here. I want to have you chime in a little bit on different taxable buckets. We were just talking a couple of weeks ago about kicking the can. We're so used to it. That's what we've been taught. Pumping into a 401K, defer, defer, defer, and many people, if we're talking money mistakes again, is I didn't really explore other tax buckets and I regret doing that. So maybe it might've made more sense to look at Roths, for example, or something else. John: Yeah. Going back to our last session, this is when you look at your nest egg and you say, wait, Uncle Sam's getting about 15 to 20% of this, and you realize, hey, I should have done some Roth money. But yeah, that's definitely something. We see a lot of people going into retirement where Roths weren't too popular really 10 or 15 years ago, and 401Ks, that is, and now it's more popular, so more people are doing it. But definitely right now, we're seeing a lot of people where most of the money's pre-tax and they'll go into retirement and realize how much they're paying in taxes and just saying, hey, I wish I had some tax-free money to really help the burden of the taxes I'm paying. And again, the tax rates could change, so just being able to adjust and pivot depending on what's happening. Marc Killian: Yeah. I definitely think that it's something worth investigating, having a conversation, but there is some things they have to think about, too. So I know it's been the hot topic lately to talk about we're doing Roths or conversions, Nick, but if you are considering doing so, make sure that this is also money that you're not going to need to access right away because there is a five-year hold, correct? If you're converting? Nick: Correct. Yeah. So if you're going to implement conversions into your overall strategy, it's really important to have it road-mapped out because we've seen people that have converted too much or converted money that they expected to be able to use within that five-year window, and then it defeats the purpose. And or maybe they don't have money outside to be able to pay the taxes. So yeah, it's really important to have a broad-based strategy when you're looking to do that. Marc Killian: Yeah. Because I know it's been a hot topic and a lot of people have been really pushing the importance of getting money, paying the taxes now at the lower rate that we're in, because we're all pretty sure the tax rates are going to go up, yada, yada, yada. And so it's been a big focus, but don't just get sold on it because it's the thing, and then all of a sudden, to your point, someone's saying, hey, I got a million bucks. Let me start converting all of it because you're going to jack yourself up in tax brackets that way, too. So there has to be some strategy to that as well. Just like everything in finance. Make sure that you got a good strategy in place for all the different pieces, the income side, the taxation side, Social Security, all those pieces need a strategy to them in order to be effective and working together within that strategy. So if you need some help, that's what the guys do day in and day out. Get yourself onto the calendar. Or if you know someone who's in a situation that does need some help, share the podcast with them. Let them know to reach out to them or just stop by the website, jot this down. Pfgprivatewealth.com and share that with those that might benefit from the message. Pfgprivatewealth.com is where you can find John and Nick, financial advisors at PFG Private Wealth. And don't forget to subscribe to the podcast, Retirement Planning Redefined on Apple, Google, and Spotify. Guys, thanks for hanging out. Nick, buddy, I appreciate you as always. Nick: Thanks, man, and enjoy your hockey. Marc Killian: Absolutely. Going to do that, and to your mom as well. She's a new big fan as well. So go hockey. And John, my friend, I hope things are going well for you, and thanks for hanging out, buddy. John: Yep, have a good one. Marc Killian: Yes, sir. We'll see you next time right here on Retirement Planning Redefined with John and Nick.…

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Retirement Planning’s “Hidden” Questions 20:47

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The retirement planning world is filled with plenty of advice and suggestions, but there are critical questions lurking in the shadows – the unasked, the overlooked. These are the questions that can help define the comfort and security of your retirement future. On this episode, we unearth and tackle these hidden, but essential questions about retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc : The retirement planning world is filled with plenty of advice and suggestions, but there are some critical questions that sometimes get lurking into the shadows or unasked or just overlooked and that's the questions we're going to talk a little bit about today here on the podcast. So check it out here this week on Retirement Planning Redefined. Hey, everybody. Welcome into the podcast. Thanks for tuning in as John and Nick and myself talk about today's topic, which is some hidden or overlooked questions in retirement planning. So the guys are going to help break this down this week on the show. Thanks so much as always for being here and listening and if you've got some questions, make sure you reach out to the guys at pfgprivatewealth.com. That is pfgprivatewealth.com. Get yourself some time onto the calendar and you can also subscribe to the podcast on whatever app you like using. Find it all right there at pfgprivatewealth.com. Guys, what's going on? Nick, how are you, bud? Nick: Pretty good, pretty good. Happy that we've worked our way into football season and we're starting to get some tease of cooler weather. I'm excited about that. Marc : Yeah. Very good. John my friend, what's happening in your neck of the woods? You doing all right? How's the little ones? John: Good. Little ones are good. They're seven and four. So they keep getting older and a little bit more- Marc : Weird how that happens, right? John: I know. Personality's definitely coming out I'll say. My kids are completely different and we're like, "How did this happen?" One is very reserved and shy and the other one's a complete maniac, but they're great. Marc : Yeah. It's like they look at each other as they're going through things and the stuff that we don't see as parents and they're like, "I'm going to be the opposite of this person," or whatever the case is. It's always funny how the siblings, now I just have the one, but I'm one of seven myself so I certainly can relate to the siblings, but myself, I only have the one kid and she's all of it rolled into one. She's got a little bit of everything going on with her so there's definitely nothing happening. There's nothing hidden about that kid that's for sure. She puts it all out there. And that's my segue into the topic today for retirement plannings hidden questions. I think guys for some of these, they're not necessarily hidden as much as maybe overlooked is the better term. I think we know it, we keep it in our mind somewhere, but we tend to just either forget about it or we put our focus someplace else during the journey towards retirement. So you'll see what I mean here with this first one. The question might be, how much are these tax deferred savings eventually going to cost me in taxes? And so you can kind of see where I'm going with this. If you're pumping away into the 401k 'cause you've been told that's the thing to do for 40 years, you kind of forget that eventually you know it, but you forget, eventually Uncle Sam's going, "Hey. Where's mine?" Right? So how much is it going to cost us? Nick: Yeah. I would say that's definitely a topic that we talk about quite a bit, especially with the required minimum distribution age getting pushed back. Some clients that have allocated a large portion of their retirement funds to pre-tax accounts and then maybe have their expenses low and don't plan on taking out much money at least initially early on in retirement can get a bit of a surprise when those required minimum distributions kick in. And so that's something that we try to plan around where oftentimes accountants are usually focused on taxes today. So a lot of times they'll suggest, "Hey. Defer those until you only have to take them out and use other money first," and we tend to try to split that money up, take some of the money out of the pre-tax accounts earlier on, make it kind of blend with some of the other non-qualified funds so that when the required minimum distributions kick in, it's not such a huge surprise and maybe causes income above and beyond what they expected to have. Marc : Yeah. And John, 'cause a lot of people, let's just use a million dollars 'cause it's a round number and it's easy, but it's kind of sexy, right? It's got this allure to it like, "Hey, I'm a millionaire." But if you've been pumping this all into one of those type of accounts, you're not really a millionaire. You're more like a 700,000 aire because the government wants their share again, right? John: Yeah. Yeah. It's something that's always there and if you start to look at it, you want to estimate I would say on average, again everyone's different, but I'd say 10% to 20% you could expect would go to taxes. Obviously if you withdraw it in one year, it'd be a bigger chunk than that, but when you retire, we're looking at effective tax rates between 10 to 20 sometimes 25%. Marc : Yeah. John: Not that we like to look at rule of thumbs, but if you're looking at a balance sheet and wondering, "How much of this is going to be mine?" That's a decent place to start. Marc : Yeah. It's a good place to start the conversation, right? John: Yeah. Yeah, exactly. But it's something to be aware of and this is where the planning becomes very important to understand, "How much taxes am I going to be paying per year?" And that's where it's important, whoever you're working with when you're doing your retirement plan, they should be able to show you that at any given year how much you're going to pay in taxes and that way you have an idea of like, "Hey.' The big thing with this too, especially this day and age, a lot going on in the world and- Marc : Just a little bit. John: Yeah. Big question is are taxes going to go up? So if a lot of your money's pre-tax, and we're going to get to this later I believe, if taxes go up, that's a bigger hit that Uncle Sam's going to take out of your nest egg. So it might be 10% or 15% when you first retire, but all of the sudden it could be 10 years in and that's a bigger chunk they're taking depending on the rule changes. Marc : Yeah. That's a great point. And so using that same million dollar analogy here, Nick, the next question that again gets looked at, but maybe not looked at the right way is how much can I pull out of this joker each year? And so talking about rules of thumb a second ago with John, it's easy to do the back of the napkin and do the 4% thing, but if you did that off a million dollars and you say it's 40 grand, well if you don't have a million dollars, 'cause again, you got to pay the taxes and you got more like 700,000, now you're at 28 grand, so on and so forth. So it becomes a real, I don't know, sliding scale as to what you can withdraw each year. Nick: Yeah. It could be a tricky thing, especially because, and I would say even the landscape has changed a little bit. So for example, clients that retired five years ago when interest rates were really low and the money that they needed to take out of their nest egg wasn't going to just be this concept of interest only or dividends only because the ability to be able to do that was minimized with where rates were. So we do talk about the 4% rule to give people an idea of and a better grasp of understanding of, "Hey. When you look at your nest egg and you're trying to figure out how much money can I really take?" That's an easy calculation for people to make so that they understand, "All right. 40,000 for every million," because some people are under the impression that they can take out a lot more for example. And so helping them understand, "Well, hey. Maybe not quite," is a big thing. And that also, kind of what you alluded to, where 40,000 from maybe a non-qualified account is different than 40,000 from a retirement account because of taxes and especially if they're living in a state where there's state income tax, that sort of thing. Marc : Gotcha. Nick: So we discussed that 4% rule with people so that they have a better understanding of it, but then it really helps us emphasize the importance of having a withdrawal or a liquidation order, helping them understand, try to focus on some short-term, mid-term, longer-term assets and almost kind of assigning a job to different types of accounts because some accounts we're going to spend down a little quicker. Other accounts we want to let grow, but especially when it gets to times like these where the markets are a little haywire and people are getting nervous, sometimes they want to bail and try to emphasize it's important to still make sure that you keep some long-term investments in play. Marc : And that's a good point 'cause that's going to lead me to my next little hidden one here that we've been reawakened to John and that's our friend Mr. Inflation. Not that he's our friend, I'm being sarcastic, but- John: Not my friend. Marc : Not my friend at all, right? But we've been reawakened to it, but forever in a day it was like, "Okay. It's just there. It's not that bad. Two and a half, 3%, whatever." But now people are going, "Well wait a minute. Is this going to derail my plan?" John: Yeah. We are seeing quite a bit of that. Everyone's inflation rate's different. That's one thing that we will say is that everyone has a slightly different inflation rate depending on what you do, what's important to you- Marc : The things that you buy. Yeah. John: Yeah. So example, I'll tell you where I've seen my biggest expense has been food. Fairly well and all of the sudden it's like to try to go eat something that's a little bit good for you, it's like, "Man, this is getting expensive." Marc : Exactly. That kind of hit my ear funny. I'm sorry. I'm going to cut you off real fast just to ask you to expand on that some more, but people might go, "Wait a minute. The inflation rate, it's 4.5%. Why is it different for different people?" But that's a great point. How you live and your lifestyle, and we're not even talking like living super high on the hog now, go to the grocery store or other places, you know it's still not 4.5%. They don't factor so many things into that number. It's really kind of a misnomer, right? John: Yeah. Everything's different. As we know, energy costs are different, food, and then what do you like to do in retirement? Do you plan on traveling? Are you doing more activities where it doesn't cost anything? Then guess what? If you're just hiking and doing things like that where you live, then not going to be a big impact for you, but if you like to travel and do other things that result you get on a plane, going out to eat, things like that, it's going to be a whole different experience. Again, we harp on this, but it's important to do the plan and if you are working with an advisor, maybe they have the ability to categorize each expense and have it have a different inflation rate depending on what's happening in the world. Marc : Nick, are you guys taking into account a higher inflation rate currently for folks to adjust that or do you still look at the historical over the long-term rates and say, Okay. Historically we'll probably be somewhere back down in that three or 4% range over time?" Or do we need to adjust for that in the interim? Nick: So the way that we've been handling it, because we think it's a little bit more efficient to look at it, is it's a little bit more work. So every couple years we have people update their expenses. So we have an expense worksheet. So the key being that when they update their expenses, we can account for their inflation over the last few years. And then we'll use a more traditional rate moving forward 'cause the tricky part with using a higher rate is that's over the lifetime of the plan. So we're talking 20, 30, 40 years. And normally that's not something that happens. So we know that oftentimes there are these spikes, which we've had in the last couple years. So we want to reprice that in and take in accounting for what these higher expenses that they have are and then use a more traditional rate moving forward because the amount that we would have to increase it over the last couple of years would be higher than it would be over a 10, 20 year period. Marc : Gotcha. Okay. Makes sense. Nick: So that's kind of what we found to be the most accurate. And again, there's things where, as an example, had a friend that got into a car accident either late last year or earlier this year and they were forced to get a new vehicle versus if they hadn't gotten into a car accident, they wouldn't have wanted to. So they were forced to get a new vehicle and with where prices were on used vehicles- Marc : At the time, yeah. Nick: Yeah. Just like crazy pricing. So that is something that specifically impacts them differently than somebody that doesn't need to buy a vehicle and can just wait until things slow down a little bit. So that's just kind of a good example. And we've got people who, if they're renting, I live in downtown St. Pete and I rent and the rent in downtown has doubled over the last five years. There's things like that versus somebody who's in a mortgage and that's a little bit different. So those are just kind of some examples of why we want to reprice where things are at, update our baseline, and then kind of move forward in a little bit more traditional and keep an eye on it. Marc : Yeah. And John, you said a second ago, how you're living, the kind of food you're getting or whatever, but also where you live. So another hidden question might be, is where I live going to impact my retirement situation? I can't see how it wouldn't. What you're going to be doing there in Tampa, for example, where you're at John versus where I'm at, I'm in sticks. Just even property taxes are going to be vastly different from county to county and so on and so forth or state to state. John: Yeah. Where you live will make a big difference and one example Nick just actually gave where it's renting versus owning. That's going to make a big difference depending on what's happening. But no. It definitely makes a big difference. I was just up in Boston a couple of weeks ago and I saw some of that inflation up there as I was up there and I'm like- Nick: Wow. John: Tampa's catching up, but it's still not there and it's just like, "Okay. Things cost a lot more up here." Nick: Yeah. John: So it does make a big difference and then of course, where you live, is that where you're going to spend most of your time? Again, are you traveling? You know what I mean? Marc : Well with Florida being a retirement destination, a lot of times people will do the moving to Florida. I don't know if I would move there just for the tax benefit. Is that big enough to wag that dog or it should be moving there because you want to move there for various other reasons? Oh, and then there also is the benefit of the tax situation. Is that a better way of looking at it or just, "Hey, we're going to move from New York to Florida because the tax rates are better." Nick: I would say that the lifestyle that people used to have when they came to Florida, and this is in all parts of Florida, but obviously Miami, Lauderdale, Naples have always been pretty high and areas like Tampa and St. Pete have lagged a little bit, but now a regular middle class home in Tampa is going to cost you 500 plus thousand where six, seven, eight years ago it could be you might have to move out into the suburbs a little bit more, but the high twos to 300. And so it's going to be interesting to see how it does impact that traditional, unless you're coming from a city like a Boston where the values are still much higher. Marc : New York. Yeah. Nick: There's a lot of places where, I'm from Western New York, Rochester, New York, the value of the homes were never that high, but the tax difference was substantial and now it's a lot cheaper to live there even with the taxes than it is here to have the same sort of house and neighborhood and when you factor in car insurance has gone insane here, property insurance has. So it's going to be interesting to see how it impacts it. Marc : For sure. Well let's do the final one here. We'll wrap up with pit questions and Nick and I were just talking about some significant ladies in our life getting into hockey, his mom, my wife. And I asked my mom, I was like, "Hey, you want me to take you to a hockey game?" And she's 82. She's like, "Honey, I could never get all the way down the stairs and then back up again." But the question becomes is should we be planning, especially if you're in this what they call the sandwich generation, if you're in this 45, 50 range, 55, for caring for your elderly parents. It's certainly happening happening more and more. John: Yeah. I would say definitely something you want to look at in your plan and something you just want to be aware of it and the potential of that happening and then you want to have conversations with siblings if you have siblings on, "Hey. If this were to happen, what are we going to do in this situation?" Marc : What do they have? What does mom and dad have? And then what do we need to shore up possibly? John: Yeah. So it's having all these conversations with the whole family of, "Hey. Do you have long-term care insurance in place?" "Okay, you don't. Okay. What's the nest egg? What's the income coming in?" So something you definitely want to have a discussion on and I think Nick has shared a couple of stories and I have a couple of my own where we're seeing where maybe it's not financially impacting the couple that's retiring, but it's impacting their lifestyle. So I've had some scenarios where clients couldn't do the things they wanted to do because they were caring or taking care of a parent, not necessarily financially 'cause the finances were fine, but they were physically doing things and had to be present. So it really impacted some of the things that they were able to do. Marc : Yeah. Nick: Yeah. I can speak to that 'cause my grandmother lives with my parents. It's been over 10 years now. Marc : Wow. Nick: And it's real life for them as far as what John just talked about of being able to travel and do the things that they want to do. They get some breaks where, for example, now she's up staying with an uncle up in Rochester. So they've been doing a little bit more like traveling and trying to do things to enjoy that, but- Marc : They have to plan out their activities more. Nick: Yeah. Much more so. And let alone the stress of taking care of someone and all that kind of thing. So I think that one of the best pieces of advice to potentially give people is to, and that generation can sometimes be a little more difficult when discussing money. It feels like they're getting a lot better, but being able to have conversations with them to understand what do they have? Do they have their documents in place? Who are the executors of their estate? Or is it a will? Is it a trust? Is there going to be issues that may be a fallout from how things are written? What can be done now to clean that up? And even things from the perspective of, 'cause sometimes parents will start to want to gift money or do different things and we've seen that that generation oftentimes has a lot of non-qualified money. So maybe it's stock accounts or things like that where if they sell to try to gift some cash to kids or grandkids or whatever, they can incur some serious taxes 'cause oftentimes that generation has held their accounts for a long time. And so even just understanding like, "Hey. Well if you leave these types of accounts after you pass, it's going to be much more tax efficient than leaving these other types of accounts." So let's be smart with how we have some sort of liquidation in there and work through that. Marc : Gotcha. All right. So those are some hidden questions that you may want to consider and have top of mind or at least readdress when you're talking about getting a retirement strategy into place. So if you've got those questions, again, reach out to John and Nick and subscribe to the podcast. Find all the information at pfgprivatewealth.com. That is pfgprivatewealth.com and subscribe to Retirement Planning Redefined with John and Nick on Apple, Google, or Spotify to catch future episodes as well as checkout past episodes or just find it all at pfgprivatewealth.com. For John, for Nick, I'm Mark. We'll catch you next time here on the podcast. This has been Retirement Planning Redefined.…

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Till Debt Do Us Part: Resolving Financial Sources of Tension Between Couples 18:19

1 year temu18:19

18:19

Money can't buy love, but it can certainly start some spicy debates between you and your better half. In this episode, we're digging into the financial face-offs that make Monopoly fights look like child's play and exploring some money minefields that can test even the most solid relationships. Listen in as we explore how to resolve some of the most common financial sources of tension between couples. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Welcome into another edition of the podcast. It's Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com if you've got questions or concerns about your retirement strategy or lack thereof. This week we're going to be talking about 'til debt do us part, resolving potential financial sources of tension between couples, because let's be honest, married couples fight, and often it's about money. That's usually the number one reason that we get into arguments. So we've got five that we want to identify and talk through a little bit and try to hopefully shine some light on some places where we can talk about some of these things and maybe get onto the same page and not have these arguments. Because a lot of times these things happen in front of advisors the very first time. Guys, not too long ago, I was just chatting with another advisor, who said he was sitting down with a married couple, they were talking, they were going over the stuff, and they were pleasantly surprised about some extra money that they were going to have. The husband says, "Great, we're going to buy an RV and travel the country," and the wife looked at him and said, "Since when? You've never ever brought this up before." So it was the first time she had ever heard it. So we want to make sure that that's not happening. We want to try to have these conversations, ideally with each other before we sit down with an advisor, but certainly that's going to happen as well, because you guys, as you know, often wind up having to be a little bit of marriage counselors sometimes when it comes to dealing with finance in front of folks. That's going to be the topic this week. We're going to get into it. Nick, how you doing buddy? Nick: Doing well. Doing well, thanks. Marc: Yeah. You ever run into that situation where a couple said something in front of you and you could tell the other one was completely caught off guard? Nick: Oh yeah. Yep. Yep. It's- Marc: Par for the course? Nick: Yeah, that's when the couple's therapy hat goes on. Marc: That's right. Nick: Probably a lot of advisors don't work in teams like John and I do, oftentimes, and I would say one of the things that it helps with the most is just being able to pick up on the social cues a little bit easier from both people, just because people, depending upon their personality, they may show you a lot with their expression. Marc: Yeah. Little tandem action there. John, you're married. I'm married. Married couples argue, right? And money's usually the big deal. John: Whoa, whoa, whoa, whoa. Speak for yourself, Mark. [inaudible 00:02:15] aware of it. It's all roses over here. Marc: Your wife's listening, that's right. Make sure you don't say anything, yeah. But it does happen, right? And money's the number one argument point. So, let's talk about these five that we've identified here that people tend to run into in y'all's industry. Risk tolerance, if I start that first one, risk tolerance in investments. This is pretty simple. If you're talking about two people, there's a good chance one feels one way about something and the other one feels the other way, especially when it comes to being married couples. So one person may be more aggressive with the portfolio and one's not, right? That simple. John: Yeah. This does happen quite a bit because everyone has different risk tolerances, personalities, and how they react to the market. What we typically do in this situation is each person will fill out their own risk tolerance questionnaire, and that gives us understanding of how to invest each portfolio. And if it's a joint account, we usually have a discussion of, "Hey, how does this fit in the overall plan and the strategy?" So, again, hate to sound like a broken record, but we really try to have the plan dictate how much risk we should be taking, and then obviously the risk tolerance comes into play. But what we do in this situation is we take account both risks' levels, and then we'll try to incorporate that into the plan and make sure that it's in line with what we're showing for numbers. Marc: Yeah. This is pretty basic one here, but we want to make sure that both parties are feeling comfortable with the risk that they're taking. It's just that simple. So to not have the argument, you don't want to have the portfolio 90% in the market, for example, just as throwing numbers out there, if the other person's tolerance is only going to be comfortable with half of that or less than that. So you want to have those conversations. It's also good to work with an advisor who can help you go through. And this is why another piece of the importance of both parties being involved with the financial planning process, so that they both are getting their needs met, as well as understanding what's happening and knowing what their plan is. So that's the first one. Nick, let's talk about the second one, retirement age. My wife and I are five years apart, and she jokes all the time, and I don't think she's joking, but all the time she's like, "You're going to retire five years before me and I don't think I like that," because she just doesn't want to see me goofing off and having fun while she's going to work. Understandable, but something you got to talk about. Nick: Yeah. It's definitely something that comes up quite a bit. It's interesting, honestly, it varies quite a bit from couple to couple. I've seen it go from anything from one person really enjoys their job more than another and they plan to work longer and they're comfortable and happy with that. In the last few years, we've had people shift to working from home and that has kept them in the job longer. They don't have to do the commute anymore. We've even had clients move maybe a little further out into the burbs because of it and start their adjustment to retirement by being in a quieter area, that sort of thing. Also, in a funny way, sometimes couples are like, "We need to ease into this whole spending all this extra time together sort of thing. So us doing it at the same time may not be best for us as well." Then purely from a financial standpoint, there could be a significant age gap or maybe at least three to five years where the cost of health insurance, those sorts of things for the younger one, could make a significantly negative impact on the overall plan if they were to retire early. And so they just do it. They continue to work just for that reason alone. Marc: Yeah. So you've got to have those conversations to sort that out a little bit so that you don't have that argument or that fight over what's going on, things of that nature. Again, this could be an easy one, but it also may not be depending on the age disparity, or even just from the financial standpoint of figuring out the ideal way to do this. John, let's go to number three for you here on legacy for the family, for heirs or whatever the case is. I joke with my daughter all the time, we only have the one, but I joke with her, I'm like, "I'm not leaving you anything but a credit card statement." So she's expecting to get nadda. She knows that's not true, but for folks who have multiple kids like yourself, it could be simple, where one party wants to leave them a whole bunch and the other party doesn't, right? "We worked hard for this. We want to enjoy our retirement with the money that we put together. The kids are doing fine, so I don't want to leave as much." And that's certainly the source of tension between a married couple, if one's wanting to give a lot and one's wanting to give a little. John: Yeah, this is probably, I would say, my planning career here, the biggest tension one I've seen actually, because if you're setting aside money to leave for a legacy and you're not spending it, that can make a big impact to what you do in retirement. So, again, the planning does help this out where you start to kind of see it. But this is definitely one where I would say it's a conversation to have in making sure that everyone is on the same page as far as what is the goal for leaving a legacy to kids or grandkids? Marc: Yeah. And the grandkids can certainly be another whole equation in that too. Although the funny thing is, is couples tend to get on the same page about the grandkids. It's like, "The heck with the kids, just give it all to the grandkids." But, again, you've got to really talk about how you're going to separate that out. Nick, do you see that as the biggest one as well? As John's mentioned, that's the thing he's seen the most in his career. Do you see that quite often as well? Nick: Yeah, I would agree with him on that. That's definitely the case for me as well. Marc: Yeah. It's, again, "Let's leave them as much as we can. No, they're doing just fine. We've given them everything throughout their life. I'm not leaving them that much." That's what my wife and I joke about with our kid. We're like, "I'm not leaving her nothing. We've given her tons of stuff. She's doing well on her own. She doesn't need any of the stuff that we have. We're going to enjoy our retirement ourself." So, we don't have big fights about it, but you could. John: Mark, actually, one thing that I've seen at work is a kind of in-between, if this debt does become a sticky point, is I've seen some clients that instead of leaving money, it's, "Hey, let's do some things that we enjoy with the family." So instead of just saying, "Hey, we're going to leave you this nest egg," maybe it's, "We go on a vacation and we pay for everybody to come, so we create memories versus just passing away and just leaving them a chunk of money." So that's kind of an in-between, where it's, "Hey, I want to enjoy my retirement. We'll leave it for the kids. Let's do both." Marc: Gotcha. That's a great point. Yeah, for sure. So maybe trying to enjoy that while everybody's around is a good way of looking at that. Let's do number four here, housing and retirement, probably the second biggest one, more than likely. "Do we downsize, do we not? Well, we raised the kids here. I want to stay here and raise the grandkids here," kind of thing. Like, "Have the grandkids come here for those great memories, but financially it makes more sense to downsize," or whatever. So there's a whole plethora of arguments that can pop up around the housing issue, Nick. Nick: Yeah, the housing issue, from almost like a hyperlocal standpoint here, has really become quite interesting, and, to a certain extent, in other areas as well. In our area here we've had really home values post-COVID double, and then interest rates go up. So there's this stuck factor, where in theory somebody may look to downsize their home, but for what they would get for the money, the change in taxes, if there was financing involved, it's one thing if they'd be able to pay cash, but if there'd be financing involved, a lot of times that cuts into any sort of gain that they would get. So unless they're shifting out to an area that's substantially less expensive or that sort of thing, people are a little bit more stuck than they had been previously, which we see that from the standpoint and the perspective of low inventory and that sort of thing. So we're in an interesting cycle, and it's going to be pretty interesting to see how that ages in the next few years, because we've already had some clients that had looked into downsizing but wanted to stay local, and with the pricing where it's at, it just didn't end up making financial sense. The downside of that is that there's more maintenance and the house is harder to keep up. So instead, they're spending money on maybe some services related to the home that they hadn't before. It's pretty interesting. Some clients that have relocated from other areas of the country where the housing markets are higher, they've been able to have that be a downsize that's worked out well for them. But that gap used to be much more substantial. What they would sell a house for in maybe the Eastern Seaboard versus what they could buy something for here now, the gap is much smaller than it used to be. Although for some areas it's still a better value, it's changed. Marc: Yeah, it's easy enough to get into these arguments about different things, and certainly anything that's emotionally attached, like leaving money to the kids or raising the grandkid... I keep saying raising, but spending time with the grandkids in the same home where you raised your children can certainly carry a lot of emotional weight to that. But if the finance or the math bears out in a different direction and one party's leaning towards math and finance and the other one's leaning toward emotion, can certainly lead to arguments. And also, not having the conversations until you sit down with the advisor, probably not the best way to go about that either. "We're going to sell the house." "No, we're not. We're going to stay in the house," and you guys are left sitting there going, "Oh boy, this is going to be fun." So definitely something you want to have a conversation about. Then the last one guys, is also a pretty big one as well, which is just retirement lifestyle in general. Again, what do you want to do? I used my wife and I as an example a minute ago, I'm going to retire before she does, and she travels a lot for work. Well, she doesn't want to travel that much in retirement. She wants to be at home and enjoy her garden and so on and so forth. And I'm like, well, I'm always working from home, especially while she's traveling now, so I want to get out and do things once we retire. So we're in two different spaces. We've got to find a way to make that work as we get there. And many couples face that same kind of analogy. John: Yeah, this happens quite a bit in understanding and getting that aligned. I think with all these topics, I'll say that just sitting down and starting a financial plan will answer a lot of these questions and making it come to light. And once you see the plan, you'll really start to determine, "Hey, should we downsize? What can we leave to the kids?" Retirement age, et cetera. And then also, "What are the things we can do in retirement?" It really opens up the conversation. Just kind of give you scenarios here. I just had a client that, she, herself, her goal was to hike the Appalachian Trail. She just did about half of it, and the husband didn't want to do that. She did it, and then he would actually meet her at certain spots in the trail and they would hang out and then he'd fly back home. But those are things that she wanted to do, and she's not the only one. I have some other people like that as well. If it's that drastically of a difference, some people might do things solo off their bucket list. But the majority of the time, I'll say, maybe we've been fortunate that we've worked with people that will actually compromise and work with each other, even if they have different bucket lists in retirement. Marc: Yeah. Yeah. Nick, you want to chime in on this one? Nick: Yeah, it's really an interesting dynamic. I see it now more with my parents who both retired during COVID. The caveat with them is that my grandmother lives with them so that puts some restrictions on what they can do. We have a lot of clients who have that same sort of situation, which is also another reason for people to be strategic about the things that they want to do, and be able to plan around that sort of thing. As an example, for my parents, I have an uncle that's going to fly down and stay with my grandmother for a week, and they're going to go travel a little bit, go out west for a wedding, and be able to enjoy that time. So, people that tend to be homebodies too, I think I've seen maybe struggle a little bit more than others. I would just say that any sort of engagement, hobbies, things to get you out of the house, all those sorts of things, we've seen have a very positive impact on people's energy levels and how much they're able to actually enjoy retirement. Marc: Yeah. Well, and again, these are five big places where we can certainly argue about money when it comes to our finances, sources of tension. Whether it's arguing over how aggressive or not we are with our portfolio, whether it's what kind of age we want to retire at, the legacy to leave behind, where we're going to live, or just what overall retirement's going to look like, why have this be a source of tension when we can have a conversation with each other? Hopefully we've done this already, but again, many times couples, they know they're going to fight, so they try to avoid, or maybe they're not as truthful, guys, as they might be with their partner when it's just them. But sitting down in front of advisors like yourselves, now they're a little bit more comfortable because they feel like they've got this mediator who doesn't have a vested interest in the fight. They're just there to help provide the financial information. Is that fair? John: Yes. Nick: Yeah, I would say so. John: Yeah, I would definitely agree with that. Marc: Yeah. I think a lot of people feel better about doing that in front of an advisor, but again, try not to catch your partner off guard by never having this conversation with them and just springing something on them. Talk about it, and work your way through it, and hopefully maybe use this podcast as a catalyst if you need that, if you're having trouble with your spouse, and just say, "Hey, listen to this." Maybe this will get you guys talking or whatever. And then sit down with a qualified pro like John and Nick to go through the process and see what it is that you need to do to tackle these items and get onto the same page. So reach out to them, pfgprivatewealth.com. That's where you can find them online. Don't forget to subscribe to the podcast, pfgprivatewealth.com. You can find Retirement Planning Redefined on Apple, Google, or Spotify. Whatever podcasting platform app you like to use, just type that into search box, or again, stop by the website, pfgprivatewealth.com. Guys, thanks for hanging out and breaking this down a little bit for us this week. I always appreciate your time. For John and Nick, I'm your host, Mark, we'll see you next time here on the show.…

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Mastering Retirement Cash Flow: Understanding Income 17:03

1 year temu17:03

17:03

Get ready for part two of our Retirement Cash Flow series! This time, we're diving into the income side of the equation. In our first two episodes, we tackled the ins and outs of your expenses in retirement. Now, it's all about understanding the crucial role of income analysis. We'll uncover the secrets of guaranteed income versus the uncertain stuff and shed light on the consequences of retiring without a clear income plan. Don't worry if you're feeling lost - we've got your back with practical solutions and expert guidance. Tune in and take charge of your retirement cash flow! Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Welcome into this week's edition of the podcast. It's Retirement Planning - Redefined with John and Nick from PFG Private Wealth, back with me again to talk about mastering retirement cash flow. So we're going to dive into the income side of the equation here a little bit on these things that we need to discuss, and go through this crucial role of income analysis. And we'll talk about, hopefully, some ways to highlight some points to think about when it comes to making sure you've got that cash flow taken care of. Because clearly, we've got to have income in retirement when we're no longer getting those paychecks. So that's on the docket this week on the show. Once again, guys, thanks for being here. John, what's going on buddy? John: Oh, not too much. Just starting to get this Florida heat hitting me and we're only about a month into it, but I think I'm already tired of it. Mark: Already tired of it? Yeah, you got a ways to go if that's the case. What about you, Nick? How are you doing, my friend? I know you're doing a little moving. Moving's always fun, right? You getting that all worked out? Nick: Yeah, yeah. Well, luckily the move wasn't too bad, but pretty much settled in and I got a little bit of break from the heat in July after going up north for a little bit, like I tend to do during the summer. Mark: Oh, yeah. Although it's been hot everywhere. It was probably hot up there too, wasn't it? Nick: It was, it was. But it was, for sure, cooler and the humidity less. Mark: Yeah. That's the kicker. Yeah. Nick: We definitely had some warm days for sure, but I do enjoy being able to go on the fresh water up there, because I don't do fresh water in Florida. And it's not like I go to the beach that much anyways, but the water at the beaches here right now is just insanely hot. It's not even worth going in. Mark: It's like you get in the bathtub. Nick: Yeah, yeah. It's ridiculous. Mark: You think, "The ocean! I'm going to cool off." No, you're not. But yeah, well, good. I'm glad you guys are doing all right. So let's get in and talk about this cash flow thing here a little bit. Why is understanding income, guys, in retirement critical for the stability of your financial strategy, and what could happen if you don't have that clear picture? Nick: Yeah, so I was actually having a conversation with a client earlier today and really kind of emphasizing ... We emphasize this with our clients quite a bit, that it's super important to have income. Obviously, income is king in retirement, but not completely in lieu of liquidity, of having other funds. So this one client had good direct income sources and then had a decision to make on a pension, on whether to lump sum, roll over or take it as an income. And because of the overall financial strategy, for her it made sense to take lump sum, roll it over into an IRA. And that would kind of give her the balance of having assets that she can dip into, versus just a stream of income that would limit her on other things. Creating that balance is different for every single person, but we really try to emphasize trying to make sure that you understand the different forms of income, and balancing that with making sure that you have access and accounts that are invested, but are also liquid. Mark: Yeah, okay. I mean, that makes sense, clearly. And so, when we're thinking about the stability of income streams, John, what are some examples of different sources? I mean, there's some that are pretty obvious, but we want to make sure we have more than just one, clearly. So what are some of the things to think about? John: Yeah. You definitely want to analyze where the money's coming from. I know the last podcast, we were talking about expenses, and that's really where you start, is getting to understand, "Hey, how much am I spending?" And the next step is, okay, now that I'm spending this, where's my income coming from to cover those expenses? And you want to make a clear picture of understanding what your income sources are, because the biggest risk going into retirement is making sure you do not outlive your money. And part of that is understanding, "Okay, where is my income coming from? And how do I make sure that I maintain my lifestyle without running out at age 80 years old, and now all of a sudden I'm looking to get a job at 80." Mark: Yeah, nobody wants to do that. So we're talking pensions, right? IRAs, 401(k)s, social security, annuities, so on and so forth, things like that. Is it advisable to try to rely more heavily on one versus the other? And I think for many years, John, people would kind of say, "Well, social security's going to make up half or more", but I don't know that that's the reliable source we want to go with anymore. What do you think? John: Definitely not, no. Especially with ... Not that anyone's done this yet, but a lot of talk of updating the social security program, cuts and things like that. You definitely want a good balance of retirement income sources, because if, let's say, there was an update to social security, you'd want to have something in your back pocket where you can say, "Okay, that's okay, that's not going to affect me too much. I can pull from this income source." Nick: And things like understanding ... One of the things that we walk people through as far as if they're taking distributions from their retirement accounts, as they're leading up to retirement, going over the whole concept of a safe withdrawal rate, being around 4%, maybe 4.5%. Rates are a little bit higher, but we don't know how long they'll stay that way. That helps people get a little bit of a grasp of how much money they can take from their investments safely, and look to make sure that any other sources kind of fill in the gap. Mark: Let's talk a little bit about some of those guaranteed sources versus non-guaranteed, Nick, I'll let you kick this off for a second here. What is a guaranteed income and what's the difference between that versus non-guaranteed? Nick: Sure. The way that we would look at something such as the term "guaranteed income", although there are issues with social security for the most part, we look at that as a guaranteed income source. That may be something that we toggle down as far as the percentage that they would receive, but we would look at that as a guaranteed income source. If they implemented an annuity strategy, dependent upon the type of strategy that it is, that could be considered a guaranteed income source. That would be something. It's always important to point out to them that, although the history is pretty strong for insurance companies, when it's an annuity, the guarantee is provided by the insurance company itself. So that's something that's important to know. Pension plans are usually considered pretty safe and a guaranteed source of income. Mark: Yeah. I mean, non-guaranteed is going to be ... I mean, when we think about a normal 401(k), right, where we're just pumping money away, but unfortunately, if you've got it weighted in the market or things of that nature, it's not necessarily guaranteed. If you're risking it, by having exposure to the markets, then that's where that non-guarantee comes from. Correct? Nick: Correct. Yeah. For example, the conversation I had earlier with the client as far as ... Because the question that she had was exactly that. Like, "Well, hey, if I do this lump sum rollover, is that guaranteed like the pension is?" And of course the answer is no. But I also did kind of point out to her, and this was somebody that doesn't have a spouse but has kids, that, hey, this single life option is guaranteed for your life. But if you pass away within five years, you haven't even gotten close to the lump sum balance and nothing would pass onto your children. So that's something else that can come into play, where the word "guarantee" can be tricky, because it can guarantee certain aspects, but not others. Mark: Right, yeah. And so John, listeners have probably heard of things like paycheck versus playcheck, right? So if we're talking about explaining, and as you mentioned, we did some expenses on the last show. If you can walk through some of the ways that we might do that. I would think that we would want to try to use our guaranteed income sources to cover, which would be our paychecks, to cover all the have-to-haves in life. And then we use the non-guaranteed, possibly the playcheck side, as the fun items. I guess every situation is different, but is that a simple way to break that down? John: Yeah. So your paycheck would be associated with your fixed expenses, the things you need. Your necessities, things that you really need to make sure that are covered. Taxes, groceries, things like that, that you cannot do without. Mark: Rent. Electricity. John: Yeah, exactly. Your playcheck is obviously, as you mentioned, discretionary income, your wants. Let's put it that way. And what we do when we're doing the plan, and everyone's situation's different of course, but we'll have a lot of people that, let's say they're very conservative and they just say, "Hey, I want to make sure that my paycheck items are covered on a guaranteed basis. That no matter what, I want to make sure I have this covered, so I stress a little bit less about what's going on with the markets." And we can adjust the plan to basically make sure that happens for them. And then what we end up doing is, anything that's tied to fluctuation, whether it's the market or anything else, or rents, then it'll be the playcheck scenario where, "Okay, this is going to cover it." And let's say where that comes into play is, if a year is down in the market or interest rates drop, well, all right. Maybe that specific individual might not do as much in discretionary spending in that given year. Mark: Yeah. And Nick, maybe depending on how you've saved for life or how your setup is, maybe you have a pension or not, there's a possibility that you could have your paycheck cover everything that you need in retirement, or most of it, and you're really just using those accounts that you've built up, your 401(k) or your IRA or something, as something to leave to heirs. So I mean, there's lots of options out there, lots of strategies. It just really comes back to, what have you done and what kind of a saver you been, and so on and so forth. Nick: Yeah, that's absolutely correct. And for clients that we have that did retire with maybe a substantial pension, and they've been a really good saver, and they don't really dip into those investments, we definitely put together ... And their main objective is to leave money, we can work together and put together strategies to try to do that as efficiently as possible and that sort of thing. Mark: Yeah, because a lot of people will say, with RMDs for example. I mean, I can't count on one hand or both hands how many advisors I talk to that have clients saying, "Yeah, I got to take this money out for the RMD and I don't need it. What am I supposed to do with it?" But you have to do it, right? Nick: Exactly. So it's like you got to take that hit from a tax perspective, but the money could always be reinvested, it can go into a different sort of investment vehicle. There's a way to continue to have it grow. Some people will use RMDs to fund a permanent life insurance policy, to kind of shift money from a taxable inheritance to a tax-free inheritance, that sort of thing. So it just kind of depends upon, just like anything else, the overall situation and the factors that are specific to their plan. Mark: Gotcha. Well, John, let's finish off with this. So, any strategies for maximizing, maybe some non-guaranteed income? Because we often think about, or hear, John, stuff like, "Hey, get your social security maximized, run a social security analysis, make sure that you're getting all that you can there." But how do we do something similar, I suppose, in the non-guaranteed space? John: Yeah. So this will be where, I'll give you a scenario. If we're doing a plan for somebody and all they have is social security and there's no other guaranteed income, and let's just assume this person's conservative, and they have a decent nest egg where we could look at it and say, "Okay, what we could do is, from the investment portfolio, whether that's a 401(k) or IRA or a Roth IRA, whatever it is, we could pull some money out of there, put it into one of these annuity companies that provide a guaranteed income", and of course, disclosure based on their paying ability. Mark: Sure. John: And from that we can say, "Okay, here's your social security. And based on the plan, we feel that together we come up with this number, you should have x amount of guaranteed income on top of social security." And we can basically take a chunk out of the investment portfolio and put it into one of these annuity products to give, in essence, some guaranteed income. And what that typically does, it'll provide the person with a little bit of peace of mind where they say, "Hey", back to that scenario of paycheck and playcheck, "I know that my paycheck items are now covered and I feel a little bit more secure about what's happening." Mark: You're kind of creating your own pension. John: Exactly. Mark: Yeah. Okay. And again, for some folks, Nick, that's where the strategy might play off. Because some people, obviously, especially when you think about the annuity term, some people are game to learn, some people are very hesitant because they've heard whatever it is that they hear. But it could be an option for folks who don't have a lot of other resources to tap into, especially if you're going to do something like a fixed index where you're going to tie it to an indices. And that way you're kind of experiencing some of the upside, but you're also having some of that protection on the downside, so that it's not quite as non-guaranteed as it could have been if you just left it straight in the market. Is that fair, is that accurate? Nick: Yeah, annuities are always a subject that can be ... Mark: It's a hot topic. Nick: Maybe volatile, yeah, hot topic sort of thing. And the way that we tend to approach the subject is, there are so many different options when it comes to annuities. There's kind of dividing up the decision-making process between strategy and then implementation. So what I mean by that is, oftentimes, integrating in an annuity strategy for somebody can make sense to really dovetail into what John talked about. "Hey, we've got an income gap that's needed of maybe $15,000 to $20,000 a year, and hey, we can carve out this amount of money and cover that." And then we'll see issues arise in the implementation, where the advisor that they had worked with uses a product that is maybe super expensive or the guarantees are not good, or it's been misunderstood or mis-sold, or the sales charge period's a really, really long time. So the implementation is poor, and that oftentimes sets off the red flags and that sort of thing. So just like anything else, we would look at it and we tell people upfront, "Hey, this might be a strategy that makes sense for you, it may not. We think our job is to explain to you how it works so that you understand it, so that you can say yes or no. And then we move forward with whatever you feel comfortable with." Mark: Yeah, so sometimes you may have to create some alternate sources using life insurance products or different things that are out there. But again, each situation's going to be different, so you want to identify what kind of income sources you need and then where you're going to be getting them from. So if you need some help, as always, make sure you're talking with a qualified professional, like John and Nick, before you take any action on anything you hear from our show or any other show. You always want to see how it's going to relate to your unique situation. Obviously, we're all affected by the same kind of things; we're going to have expenses in retirement, we're going to need income in retirement. But how you break that down and how you're able to utilize the things that you've done through your life, are going to be different from person to person. So, get yourself onto the calendar, have a conversation with John and Nick at pfgprivatewealth.com. That's pfgprivatewealth.com. That's where you can find them online. And don't forget to subscribe to the podcast on Apple, Google, or Spotify, whichever podcasting platform app you like to use. Guys, thanks for hanging out. As always, I appreciate your time. For John and Nick, I'm your host, Mark, and we'll catch you next time here on Retirement Planning - Redefined.…

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Mastering Retirement Cash Flow (Part 2): Understanding Changing Expenses 19:11

2 years temu19:11

19:11

On this episode, we will continue our conversation on what expenses may change when you enter into retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Back here for another episode of the podcast with John and Nick from PFG Private Wealth. On Retirement Planning Redefined, we're going to get back into our conversation from the prior episode about cashflow. We went through some categories, housing, work stuff, healthcare, taxes, so on and so forth, on how those expenses will change either to the plus or the minus, depending on our setup. Well, this is the time to talk about the setup. So as we are assessing our retirement expenses, we'll break these down into a couple of categories. So we're going to talk about those with the guys. John, welcome in buddy. How you doing this week? John: Hey, I'm doing all right. How are you? Mark: Hanging in there. Doing pretty well. How about you, Nick? Nick: Pretty good. Staying busy. Mark: Staying busy and enjoying. So we're taping this before the fourth, but we're dropping this after the fourth, so hopefully you guys had a good fourth? Nick, you probably went up and saw family, yeah? Nick: Heading up north to just, yeah, extended family and friends. That fourth week makes it an easier week to get away because everyone's doing stuff anyways. Mark: Yeah, yeah. It's always funny when we have the holidays and we're kind of taping the podcast ahead of time because then drop it because we're not around, so sometimes I get confused on my dates. So yeah, again, we're talking about this before the fourth about what we'll probably will be doing on the fourth. So John, are you on grill duty? Because I know I am. I'm stuck on it. John: No, no. My brother's forcing me to have a cookout at my house, so I told him if I'm providing the house, he's the one on grill duty. Mark: Okay, that'll work. John: He's visiting from Boston, so he's excited because my other brother's down here and my sister, cousin, and actually the best man in his wedding is married to my sister, so he decided to come down. Mark: So Marketing 101. So the second you said Boston, all I hear is these Sam Adams commercials right now, "Your cousin from Boston." Every freaking time I hear Boston, that's the first thing I think of. Or Sam Adams beer, I go right there. All through the hockey playoffs and NBA playoffs, I kept seeing those commercials so it's embedded in my brain. But hey, that's the point of marketing, right, is to be those little earworms, so you go out and buy whatever it is that you go out and buy. And speaking of that, that's my transition into the must haves versus the nice to haves. So if we're talking about those accounts, those different categories that we went through on the prior episode, guys, how do those things now play into for our cashflow? Again, cashflow is the conversation wraparound, it's the wrapper of this whole endeavor. We need to break this down. And do you guys do this with clients? Is it something you encourage them to do, because everybody's individual needs and wants are going to be a little bit differently, but do you break things up in the must-haves versus the nice to haves? Nick: I would say to a certain extent, we do. We kind of list basic expenses and discretionary expenses. Mark: So give us some musts. What's the musts? Nick: So obviously housing, healthcare, food and groceries, some form of transportation, whether it's one vehicle, two vehicles. Getting rid of debt. Those are all things that are obviously needs. [inaudible 00:03:02] Mark: Life essentials, right? Nick: Yeah, for sure, for sure. Depending upon the people, some things are discretionary. I would say most of the people that we work for can't afford to have some sort of traveling in retirement. Mark: Yeah, so is two trips a year or is it five trips a year? That's kinds how it starts to change? Nick: Yeah, exactly. Or even a big trip every X amount of years. So like a baseline travel budget of X, and then let's add one of the things that we commonly do is, let's say the travel budget is $6,000 a year from a baseline standpoint, and then every three years they want to do an additional trip of another 6,000, that's one trip. And so we can scatter that in throughout the plan and show them what it looks like and toggle that on and off. And with how we do planning, we can show them the impact of doing something like that and what it does to their plan. So for the higher tier, nice to have. For discretionary expenses, we will use our planning software and kind of show them, Hey, here's the impact on your plan if you want to do that. Because we always preface everything, it's telling people that it's your money, we're not telling you how to spend your money or what to do with your money, our job is to show you the impact of the decisions that you make. Mark: That makes sense, yeah. Nick: So let's arm you with that information so that you understand if you do these things, then let's make an adjustment accordingly. And for sometimes it helps them put into perspective where not everything is a yes or a no. And what I mean by that is, well, let's just say that there's two lifetime trips that they wanted to really do, and so they like to have a bigger travel budget, but really when you boil it down, it's like, okay, I want to make sure I go to these two places. So we make sure that we can accomplish those and make adjustments elsewhere. [inaudible 00:04:58] Mark: Yeah, because the must ... I'm sorry to cut you off, but I was thinking about this as you were saying it. The must-haves, like the housing, the health, food, you're not going to have any kind of discretionary wiggle room. Well, you don't want to. Now you could say, okay, we'll eat less food, or something like that, but that's not the goal in retirement, you don't want to go backwards. So the place typically we do make some adjustments in the cuts are in the nice to have categories. Nick: Yeah, and usually it's almost more of a toggle where even to a certain extent of, we've had conversations where, hey, if things are going really well in the markets and we're able to take advantage and take a little extra money out in years where things have gone well, that's kind of the impetus to do this sort of thing. Mark: Kind of pad the numbers a little bit. Nick: Yeah. Mark: John, let me get you on here for, besides the expenses we covered, some of the things we went through, what are some contributing factors that will affect cashflow problems that you guys see in retirement? So all these different things, whether it's healthcare, housing, whether it's whatever, give me some bullet points here for folks to think about on things that can, not in a category per se, but like outside effectors, outside influencers, that can really cause us cashflow problems in retirement. John: The number one I'd say, concern for most people going through retirement is longevity. How long does my money need to last? Mark: And that's the great multiplier, right? Because if you live longer, it makes everything else go up. John: Correct. Yeah. So that's one thing we look at, and we do plans. We're planning for age 100, and we'll always get people like, well, I'm not living that long. But the thing is, that's always ... Mark: What if you do? John: Exactly. So it's like, Hey, listen, if you live to 100, guess what? Mark: You're covered. John: Your plan looks good. You could live to 90 and the plan looks good. So we always plan for, we again, overestimate the expenses, overestimate the life expectancy, Mark: And then you don't have to live with your cousin in Boston, right? John: Exactly. That's right. Mark: All right. What else besides longevity? John: Another big one we're seeing right now is inflation. Because with retirement, you're not getting a paycheck anymore, so your ability to earn is now gone. So your nest egg is providing that income for you and social security. And keeping up with inflation, especially the last few years has been a challenge for quite a few people. And mostly I would say for me, I've noticed my food bill has gone up drastically in the last couple of years, more than anything else is really. Because we talked about musts and nice to have, if trips go up, you could say, all right, I'm going to go on a little bit lesser trip, or not go as much, but you know, you got to eat and you got to have healthcare. So those things there are big ones to really consider going into retirement and to be aware of, is the plan [inaudible 00:07:42] Mark: Yeah, a friend of mine, for Memorial Day, we were talking about cookouts earlier, so we got July 4th, you're probably hearing this after July 4th, but how much did it cost you to buy this stuff? So a friend of mine posted a picture around Memorial Day that he bought three steaks, and he lived in the New York area, Nick, actually. And the tag on the thing was like 60 bucks for three steaks. It was like, holy moly. And I know different parts of the country are more expensive than others, but it was just where I'm at, it was like, wow. And they weren't like that impressive of a steak. So to your point, you got to eat. Nick: To be honest with you, I think there's a little bit of ... Mark: Price gouging. Nick: ... ridiculousness and price gouging going on right now from the perspective of a lot of different areas. I just got my six months notice on my car insurance, I've been complaining to everybody about it. One vehicle, no accidents [inaudible 00:08:34] John: Wait, wait, wait, wait, wait, wait. Nick, this isn't a therapy session, right? Mark: Well remembered, well remembered, John, from the prior episode. Very good. Nick: Yes. I drive probably 7,000 miles a year at the most and paying almost $2,500 a year for car insurance. But the crazy part is that, so okay, if it's always been high, that's one thing, but two years ago when I had switched companies, it was about 1,700. So again, we take ... Mark: Inflation. Nick: Do the math on that. I'm sorry, but 50% is not inflation, there's some 50% in two years and it's kind of wild. And then even just going, the area that we're in has been massive growth in this area, but even what the restaurants are charging, and it's just inflation impacts different areas differently. Mark: It's an excuse. I mean, just like anything, we've turned it into excuse, just like the supply chain problem issue. A friend of mine was trying to get his RV worked on and they were like, well, we're still having supply chain issues for a valve. And it's like, really, a valve on an RV, it's been three years. I don't know if supply chain issue really holds in that argument, but if companies are dragging their feet or employers, somebody's just taking long, that's just an excuse. And I think that's the same thing with the inflation. Is it real? Yes. But to your point, are some of these numbers really truly justified? But they can use that, well, inflation's bad. That's the excuse they use in order to hit you with a 50% increase. Nick: Yeah, and I'd say from a planning perspective, because people get concerned about that from a planning perspective, and saying, well, hey, we had much higher inflation last year than we did in our plan moving forward, and [inaudible 00:10:27] Mark: Are we going to be okay to survive it, yeah. Nick: Yeah, and the easiest way that we mitigate that from a planning perspective is we reprice current expenses. So in other words, repricing the current expenses allows us to take that into consideration, the increases that we've had, and then use more normal rates moving forward, which is how you more accurately display that from a planning side of things. Mark: Gotcha. All right, John, so you hit us with longevity and inflation as a couple of areas that can contribute to cashflow problems. Give me a couple more before we wrap up this week. John: Investment returns is another spot, depending on what type of plan you do or type of planning, if some people will really have their income depend on what their portfolio is returning for them. Mark: So we're talking about sequence of return risk, kind of thing? John: Yeah. So if you having a down year and there's not as much income coming in from your portfolio, well that could ultimately affect your cashflow. Or if it's a down year, and we go back to longevity of, Hey, how long is my portfolio going to last, just have a 20% dip in the market, you're going to be a little concerned about pulling out in that period of time, because once you pull out, you know, you realize those losses, and there's no more recovering [inaudible 00:11:41] Mark: Yeah, it's a double way, it's the market's down and you're pulling money out. So the truth that makes the longevity factor interesting. Okay. John: So one more thing on this. This is really important, and especially what we're seeing in the last couple of years where you have some type of plan where if you are dependent on that, you have almost like a different bucket to pull from in a time like this. So you really want to position yourself to be able to adapt to downturns in the market which could affect your income. Nick: One of the things, and I've been having this conversation quite a bit lately, is that previous to last year, for the dozen years leading up to that, rates in return on fixed or cash and cash equivalence was so low, you couldn't get any return on that money, that really people shifted predominantly, or at least in a large way, to take more risks, meaning more upside, so more heavily on the [inaudible 00:12:39] Mark: Well, because the market was going up too. We get addicted to that, so it's very easy to go, well, it does nothing but climb, it's done it for 12 years in a row, so let's keep going, right? Nick: Yeah. And a little bit of that's a circle where it's part of the reason it kept climbing, is because people were saying, well, and not just, but it's just a contributing factor where it's like, well, hey, I'm literally getting zero return here. So inflation's eating away at my money anyways, I might as well take a little bit more risk. And so earlier this year in the majority of our client portfolios, we took some money off the table because now we can get four to 5% in something that has no risk, and that lets us kind of at least take a deep breath, see what's going on, get some sort of return, where most of our plans, we use five to 6% in retirement anyways. Mark: Yeah, that's a good point. You just got to be careful, right? Because we don't know how long those rates will last either, so you don't want to lock yourself into anything too hefty either, without making sure it's the correct move for you. Especially, I'm thinking more like CDs for example. Nick: Yeah. We still target things that are short term, that sort of thing. But for a retiree, even from the perspective of, let's just use the million dollar number, there's a huge difference between five years ago, where if you wanted to do a one year CD and you could get 0.8%, that's $8,000 on a million bucks versus 5%, even just for a year, now it's 50,000 of income. I mean, one is you can't pay your bills, another one is going to be much more comfortable. So for a retiree, one of the sunny side or glass half full part of what we've been dealing with from an inflation perspective, is that at least there's a little bit more return on safer money as we try to re-plan and readjust. Mark: Yeah. No, that makes sense. So one more category here that I want to hit for just cashflow problems in retirement, John, you did longevity inflation and investment returns. I'm going to assume the fourth one's probably just the emergencies, the things that life throws at you in retirement years? John: Yeah, a hundred percent. Emergency funds, it's [inaudible 00:14:44] Mark: Got to have one. John: ... for that, because you just don't know what's going to happen. Mark: Murphy's Law's going to happen, right? John: Murphy's Law's been happening for the last three years. So basically a big one is healthcare expenses, which we touched on as a must have. So big health event could really dip into your emergency funds. Or again, especially here in Florida with the roofs, have talked to some clients and friends who basically were having homeowners insurance issues here, and then carriers are basically saying, Hey, for you to get renewed, you need a new roof. And all of a sudden it's like, what? I just go, my roof's fine. It's like, well, it's outdated, you know, you need a new one, or else [inaudible 00:15:24] Mark: And so they're not covering maybe the full cost or some of the cost, I guess, but they won't insure you. John: I had some friends actually get notices saying, your roof's too old. If you don't replace it, we're dropping coverage. Mark: Oh geez. Okay, yeah. John: So that's an emergency expense. Mark: Definitely. John: Roofs aren't necessarily cheap, so important to have an emergency fund because like you said, Murphy's Law, you have no idea what's going to come up and you want to be prepared for that. Mark: Yeah. No, that's a good point. Nick: The roof thing is pretty wild here too, because a lot of people have tile roofs down here. And depending upon the size of the house, a tile roof is going to cost you, what John? Between 50 and a hundred thousand dollars? John: Yeah, 50 to a hundred grand. Mark: Really? Holy moly. Nick: And so, yeah, and then if you're in a neighborhood that has association rules and all these other things, it can get a little squirrely. So just understanding even little basic things like that, where especially people that came maybe from up north where it's just shingle roofs and 10, 12 grand, 15 maybe, and then [inaudible 00:16:25] Mark: Yeah, I was going to say, my metal roof was like 20, and that was like eight years ago. Nick: Yeah. So there's just things like that where we always very much emphasize having an emergency fund. Mark: Yeah, definitely. All right, good stuff. Talking just cashflow issues, things to consider here on the podcast the last couple of weeks. So if you're worried about the cashflow or you're just worried about making sure your plan is accurate for the time of life you're in, especially if you're one of these folks that maybe got a plan, you're like, ah, I got a plan put together like a decade ago, or whatever. Well, it's not a set it and forget it, it shouldn't be a set it and forget it, anyway. Even insurance policies, sometimes it's very easy to get one and throw it in the drawer for 20 years and forget about it, but all those things can be looked at and reviewed and see if there's a better way to put a strategy together. So if you need a first opinion or second opinion, reach out to John and Nick and the team at PFG Private Wealth. Find them online at pfgprivatewealth.com. That's pfgprivatewealth.com. Don't forget to subscribe to the podcast on Apple, Google, Spotify, whatever the case might be. Whichever podcasting platform app you like, just type in retirement planning redefine in the search box. Or again, find it all online, pfgprivatewealth.com. For John, Nick, I'm your host, Mark. We'll catch you next time here on the podcast. This has been Retirement Planning Redefined.…

1
Mastering Retirement Cash Flow (Part 1): Understanding Changing Expenses 20:46

2 years temu20:46

20:46

In this episode, we’ll explore many of the expenses in your life that might drastically change (one way or another) in retirement. We’ll break those expenses down further to see which ones are the top priorities and analyze some of the other factors that impact your cash flow in retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Welcome back to the podcast. It's Retirement Planning-Redefined, with John and Nick here with me to talk investing, finance, retirement, and mastering retirement cashflow, part one, is going to be the topic today. We're understanding just changing expenses. We're going to break this into really a two-parter here, obviously, by calling it part one. And we'll do a little more focus on some of the other things on the next session. But for today, I want to explore some of the expenses in life and how they just change as we're moving some things ... as we're moving from working into retirement. And things you guys see with your clients and how you work through that process for them. So that's the topic today. Let's get into it. John, first of all, how are you doing, buddy? John: I'm doing all right. Getting ready for the summertime here. Marc: If it happens. I don't know what's going on in the south. I'm in North Carolina, and we've had one 90 degree day, and it's almost July. Totally unusual for us, so it's very, very weird. Nick: Oh, it's hot here. Marc: Yeah. It's like two states seem to be in a weird spot. I don't know what's going on with the middle of the south here. It's very strange this year. But Nick, I heard you chime in. How are you, my friend? Nick: Doing pretty good. Marc: Yeah. So you guys are sweltering, is that what you're saying? Nick: It's definitely hot, yeah. Marc: Well, kick a little this way because I don't know what's going on. It should be warmer here than it has been. So, very weird. Nick: Well, I'll trade. Marc: Okay. All right. Yeah. Like today, it's ... well, we're getting a ton of rain. Today, taping this podcast, it's 72 for the high, and tonight's overnight low is 58. That doesn't happen usually in North Carolina in late July or late June. Nick: Yeah. That is pretty surprising. That's cool for North Carolina. Marc: Very, very weird. So I don't know, Mother Nature is off her meds, I guess. But what can you do? So let's get into this conversation, guys, about changing cash flow, before I keep going down that tangent. I've got a few parts here I want to run through. What are some of the expenses that might drastically change one way or the other, either to saving us money or to costing us more money? Whichever way you guys want to take this, whatever you've seen with your clients. But let's start it off with housing. I think housing is probably the number one expense in retirement. Correct me if I'm wrong there, but what do you think? Nick: Yeah. I would say for a lot of people that maintain a mortgage past retirement, it's definitely a significant monthly expense. One thing that we are seeing here with the tick up in interest rates over the last 12 months, we had had conversations with multiple clients from 2018 through 2021 about taking advantage of low interest rates and keeping their mortgage and that sort of thing. And for a lot of people, that makes them feel uncomfortable. But to a person, everyone that we've talked to that has done that, now that rates are where they are, they've been pretty happy about that decision and being able to take advantage and lock in those low rates. But for those people that just naturally, with the schedule mortgage that they had, and ended up paying off the mortgage by the time they retired, that drop in expenses is usually a big help. I would say one thing that jumps out that's a reminder that we use for people is ... especially because the homeowner's insurance market here has now gone completely insane. Taxes and insurance don't go away. So I can't tell you how many times we've had a conversation where maybe somebody had a mortgage that was $3,000 a month, and they're like, well, once I retire, that 3,000 a month is going to go away. And we point out, well, hey, about half of that is. The rest of it's for taxes and insurance. So sometimes that drop in expense isn't quite as much as they thought it was going to be. Marc: Gotcha. Yeah. And it's easy to do, even with downsizing, because the market's been high. So it's not always just lowering things just to go to that downsizing piece. John, what's your thoughts there? John: Yeah, I would say the downsizing is a big part of it. Not only if you downsize, you might be able to get some equity out of your house there. So if you downsize, buy a two or $300,000 house, you get some cash that you could do something with. But then you start looking at smaller house, less homeowners insurance, less maintenance costs, things like that, it could really be a pretty significant savings. Especially, as Nick mentioned here, with homeowners insurance. I think mine went up like 60 or 70% in a year, which was ... ... I've heard a lot of people. At first, I thought it was just me. And then I talked to some clients, friends, family, and it seemed across the board that it just shot up. Marc: That's hefty. Nick: Yeah, there's a lot people that are falling between five and $10,000 a year now. For homeowners insurance down here, it's gone just wild. Marc: Well, I imagine the big hurricane added a lot to that, right? That's probably part of it. From last year. Nick: Yeah, yeah. Marc: Yeah, for sure. Insurance companies are like, we got to recoup some money. How are we going to do that? 60% hikes. All right, no more work stuff. Category two on the changing in expenses. I think we probably assume for the most part that no more work stuff means we're going to save a little bit of money. John: Yeah. So this is something that when we do planning, we definitely hit on. We have different categories of current expenses and then retirement expenses, and then we actually go one further and we're looking at advanced age expenses. But this is one where you're not commuting anymore, or at least to work. So depending on what your commute was, you could be saving quite a bit on gas, car maintenance expenses, things like that. And then the big one, I know when Nick and I worked in West Shore, was the lunch expense. Where it's like every time for lunch it's like, all right, where are we going? A good excuse to get out of the office and just get a change of scenery, you find you're going out to lunch every day. That does tend to add up quite a bit. Marc: Oh, yeah. You can spend some dough that way, for sure. So I think in this category, we feel like ... and this one I think maybe drives a lot of people feeling like, oh, I'm going to spend less money in retirement. Right, Nick? I mean, this is one of those things. Well, I'm not doing all those things now, so I'm going to be saving money. But you're also doing more stuff because you don't have to go to work, so you may not save as much as you think. Nick: Yeah. I would also say too, that this post-COVID work from home shift has prepared a lot more people to have a better idea of the expenses that have changed. We do have a fair amount of clients that used to commute, and no longer do. And so they've gotten a peek into what that looks like. And people are creatures of habit. Inevitably, they develop new things that they do, and usually there's other expenses that replace previous ones, but- Marc: There's always something, right? Nick: Yeah. But oftentimes, there are reasonable reductions in some of those work-related expenses. Marc: Okay. Let's go to healthcare. This one here, this one to me seems like this is not going to be going into the positive. This is not going to be putting money back in our pocket. More than likely, this is going to cost us more. Nick: Yeah. I mean, for a big chunk of people, especially if they work at a company that has pretty good health benefits, and maybe they haven't had their kids on their plan for a while, so it's just them and a spouse or them solo. Oftentimes, the shift to what we budget for post-age 65 Medicare-related premiums, oftentimes it goes up for people. So we typically budget about $4,000 a year, and we have a more aggressive inflation number that we use on that. Oftentimes, people come in less than that, especially with a high deductible plan, those sorts of things. I just had this conversation the other day with someone, where they were going to have a pretty substantial jump. And they had worked for the same company for a long time, didn't realize- Marc: You mean a jump in the premiums? Nick: Yes. Yep. They had worked for the same company for a long time. It was big company and had really good health benefits, and premiums were going to go up. So it can be a little surprising that way. If it's somebody that's shifting more from the perspective of, kids recently got off their plan and they're cutting back on ... maybe went from a regular health plan to a high deductible, those sorts of things. It can be a drop. But honestly, I see it more neutral or go up than I see it go down. Marc: Yeah, definitely. John, taxes, let me hit you with this one. This is a big misnomer that's been around for years. That when we get to retirement, our taxes are just generally lower because we're not getting a paycheck, we're not making as much. But more times than not, eight out of 10 times people are not in a lower tax bracket. John: No. Typically, they tend to be in the same, if not, maybe a little bit lower. Because what you're really trying to do when you do planning is you want to keep the person's income where it was while they were working. Marc: Right. You're trying to fill in the ... you're shortening the short shortfall. You're pulling from our assets to make up the shortfall based on Social Security or if you have a pension or whatever those kinds of things are. So you're trying to keep the numbers basically the same, correct? John: Exactly, yeah. So we are trying to keep the numbers the same. And we find a lot of people ... I would say we find the majority of people have most of their money in pre-tax accounts. So what you'll find is when you're pulling out of the pre-tax accounts, you're paying taxes on it. So this is really important when it comes to planning, where you ... and we harp on this constantly. It's a matter of setting yourself up to adjust. So maybe if you have some tax-free money, some after-tax dollars in some other accounts, you can really try to eliminate ... or not eliminate. But try to lower what your taxes are going into retirement. And I'll say one thing that happens quite often with clients, and this is only maybe a year or two that we see in retirement, is they just have a couple of years of just massive expenses where ... we just had someone that's purchasing a second home and they need to pull out of their retirement account. And all of a sudden, it's like in that given year, that's going to be a big tax hit. Or it's a health expense. Or I've had other ones where they want to do a remodel on their house and it's like, well, I got to pull money out of my account. And everything is pre-taxed, so they really get ... we see a significant increase in their taxes in those years. Marc: Yeah. And that's why we want to get tax efficient, if we can. And maybe that's worth looking at, trying to maybe move some money so we don't have that tax time bomb sitting there waiting on us. Some different things. And speaking of actually that, Nick, let's go to the next one here because you can chime in, it fits well with that. Is one of the biggest things we're doing is pumping money, hopefully, especially the last 10 years of working, into our retirement account. Maybe that 401K that John was just talking about. And therefore we're growing those dollars. And that is an expense that goes away once we stop working, we're no longer feeding that. Nick: Yeah. That deferral is usually the lowest hanging fruit of expenses or cash flow going down. Marc: Money back in our pocket, kind of thing, right? Nick: Yeah, exactly. That outflow is usually the biggest drop, especially if it's ... if you're talking a couple that is essentially, maybe they're both maxing out or pretty close to maxing out, they're saving around 25,000. That's $50,000 a year. Granted, that's the money that they're used to living on anyways. Marc: Yeah. Because we weren't seeing that. When we're working, it's going straight to the paycheck ... or straight to the 401, for example. But now that we're not working, we also don't have the paycheck. So to me, is it truly a savings or is it a wash, because you weren't seeing it before either? You know what I mean? Nick: Yeah. I think for a lot of people it's a wash. Realistically, in the day-to-day setting and from a lifestyle perspective, it tends to be a bit of a wash. Marc: Okay. Yeah. Nick: Yeah, it's more of an on-paper reduction, more than anything. Marc: Makes sense. Nick: And in theory, when you start ... if you want to nitpick a little bit. The money that you defer into those plans, you still pay payroll taxes on it. So there's a little bit of a savings there. So that's something that can factor in. And one of the changes that fits in with both the tax and retirement things is a lot of times at that point in time, they're no longer claiming kids. Maybe the mortgage is paid off. So from a deduction perspective, there's also a change as well from the standpoint of what they're able to deduct versus what they can deduct in retirement. Marc: Okay. And so what we're doing is we're talking about these categories here on understanding how our expenses are going to change, whether it's to the plus or to the minus. And then we'll talk a little bit more later on about how that's going to affect us in our overall expenses and some things to cover in ways to be more efficient in that. So let's continue on with a couple more categories here and then we'll wrap it up for this podcast. So we went through housing, work stuff, healthcare, taxes, the retirement savings account when we're no longer feeding the 401 animal. John, so you mentioned earlier travel and leisure, when you were talking about there's different things we're going to spend money on. So if every Saturday is the day I spend the most money, well, guess what retirement is? John: Every day seems like it's a Saturday. Marc: It's a bunch of Saturdays, right? John: Yep. Marc: It's Groundhog Day. John: The more time you have, you find yourself trying to fill the gap of what to do. And we see a lot of people that are, if they're like golfing, they tend to be golfing a little bit more. Or fishing or whatever it might be. I'll see- Marc: But that's the point, right? That's the point of retirement. It's what we're striving for. But I think the scary part is, is if we haven't budgeted for how much we're ... the activity. That's when we can maybe shortfall ourselves. John: Exactly. Yeah. That's where it's important where you're doing a cashflow analysis for retirement. Like I said, we typically look at retirement expenses. We'll look at what the person does for hobbies and try to estimate, okay, this is what we can expect. And you always want to go over the amount, you never want to go under. Marc: I was going to ask you that. Yeah. You want to- John: Yeah, you always want to go over, because- Marc: ... inflate it a little bit. John: Yeah, exactly. I'll tell you this ... and my wife doesn't listen to the podcast. When she's at home more, I start to notice my Amazon bill goes up and packages end up at the door. So when there's a lot more downtime, you tend to say, okay, what's out there? Oh, let me go run to the store. Let me go do this real quick. And all those things add up to just added expenses, which fine- Marc: Yeah. Well, sitting on the computer or the phone, you're just like, I'm bored, I'm not doing anything. Next thing you know, you're on some sort of shopping site because you're like, I was thinking about this or that, or a new set of golf clubs. Right, it's easy to do. John: Home projects because Pinterest is giving you all these different ideas that you should be doing with your home. So yeah, all those things are up. Nick: All right, John. This is not a therapy session. Marc: No, but I mean he's right, though. I mean, it totally ... and people do that. John: So Marc, that's coming from the single guy right now. Marc: Right. Yeah, exactly. Yeah, I was thinking the same thing. And you mentioned, you were talking about projects, DIY projects or Pinterest. We're right in the middle of rebuilding ... I'm building a billiards room here next to my office for the pool table. And it's just, scope-creep has taken over. It's like, oh, I can ... I factored in the budget. I'm like, I could do it for this amount of money. And I'm way over budget. And that's, again, if you're retired ... I'm still working. But if I was retired, that could be a real problem. If I let scope-creep get in there and I'm spending 25% more than I budgeted for this project, that could be an issue. So you want to make sure that you are inflating it, to your point. Puff those numbers up a little bit, just to be on the safe side. Nick: Oh yeah, big time. I don't think I've seen anybody come in under budget on anything in the last three years. Marc: Yeah. And that's with professionals, let alone doing it yourself, right? Nick: For sure. Marc: Okay. So that's travel and leisure. So the last one here, last category, insurance. Many people, guys, walk into retirement saying, well, I don't need insurance anymore. That's also that old standard, as far as the financial services world. Well, who needs ... why do you need insurance if your kids are grown and you don't have to replace your income because you're not worried about sending them to school. Or all that kind of stuff that you guys have heard probably a million times. Nick: Yeah. So we'll see ... one of the most common insurances that go away, whether it's at retirement or early in retirement, is life insurance. So we obviously emphasize the fact that a death early on in retirement is the bigger risk, especially if there's outstanding debt, those sorts of things, versus later on in retirement. So sometimes we'll have people that, maybe they've got three to five years left on their term policy and the premiums aren't prohibitive. And we'll just them keep the coverage because there's still a mortgage, or just that additional money if something were to happen would be a big boost to the surviving spouse. But disability definitely goes away because disability insurance, by definition ensures your ability to work. So if you're not working, then you're not insuring anything. So that's something that drops. And then some of these supplemental policies that maybe were provided by the employer, aren't portable and you can't take them with you anyway. So some of those things will drop off. So that's definitely something that can be adjusted and adapted to reduce some of the costs. Marc: Well, I think for every situation, insurance is one of those questions, John, that goes either way. Some people may not, when you guys are developing and looking through the plan, maybe insurance isn't needed. But then again, maybe it is. Or maybe they're using an insurance policy for the cash value policy side of things or whatever. So this one is one I think could go either direction. John: It definitely could go either way, it really depends on the individual. And like we were just talking about here, each person, whatever is important to them will dictate whether your insurance is going to be going up or down. That's really what it comes down to is, each individual, what they value and what they want to protect with insurance and what they're ... oh, okay. I'm okay without it. Marc: Well, and that's a good way to think about what we're going to get into for the next podcast, is really assessing must-haves, nice-to-haves, things of that nature. And then how other aspects in the financial services world could affect those categories we just ran down. So we're going to wrap it up this week. So again, these are just the expenses categories, and some major ones here to think about how they may change to the plus or to the minus with our cash flow in retirement. And we'll be back next week with the second half of this conversation. So do yourself a favor, if you haven't done so yet. Reach out to the team if you don't have a strategy or a plan in place, and get started with a consultation and a conversation for yourself. You can find the guys at pfgprivatewealth.com. That's pfgprivatewealth.com, where you can get started today on a strategy for yourself. Reach out to John and Nick there. And guys, thanks for hanging out. I'll see you next week ... well, in two weeks on the podcast. Nick, have a good one. Nick: See you. Marc: All right, John. Thanks, buddy. John: Sure. Marc: And I'll catch you later. We'll see you guys here on retirement Planning-Redefined, with John and Nick.…

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Ep 60: Top Social Security Myths, Part 2 20:47

2 years temu20:47

20:47

This is part 2 of our Social Security conversation. We will be debunking the remaining 5 myths on today's show. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Back for another edition of the podcast. This is Retirement Planning redefined with John and Nick from PFG Private Wealth, serving folks all around the area here. So reach out to them on the podcast, pfgprivatewealth.com is where you can find them online for a lot of good tools, tips, and resources. You can subscribe to the podcast, book some time with the team, all sorts of good stuff. Again, stop by the website if you're not already working with them at pfgprivatewealth.com. And if you haven't subscribed to the podcast, consider doing so while you're there. We're on Apple, Google, Spotify, and all that good stuff. So you can check that out. And this week we're going to follow up with the second half of our social security myths. We did the first five on the prior episode. You don't have to have listened to that one to listen to this one, but it certainly isn't a bad idea to go back and check that one out. So that one came out a little bit earlier in April. So we're going to drop this one here and get into the second half of this, the next five myths. Guys, you doing all right this week, John? How are you buddy? John: I'm doing good, having a little contract work done at the house, which is, as you know Mark is - Marc: Challenging. John: I'm dealing with that. It's always a challenge and fun. Marc: That's right. John: Looking forward to the project being complete. Marc: Yes, we need more contractors, we need more people who are in the trade services. That is for sure as there is a major shortage all across the country, really I think globally actually as well. But Nick, what's going on with you bud? Nick: Staying busy for sure. Marc: Spring is here and the weather's nice. That's always good. Nick: Yeah. Although it has been warmer here than I feel like typical this time of year. Marc: Could be a hot summer then. Nick: Yeah. So hopefully it cools down just a little bit for the next month so we can enjoy the end of spring. Marc: Have an actual spring, not skip it. Nick: Yeah, that's all I'm asking for. Marc: There you go. Well, let's jump into some myths here and see if we can help some folks out with some more of these. Again, we did the first five, which are kind of the big five I think that many people hear often, but I've got some other unique ones as well. So these might appeal to some folks who are thinking about social security or getting close to that age and are wondering about some of these things that they've heard maybe online or on the news or whatever. So let's jump in, talk about a few things guys. Myth number six, out of the total 10 we were doing, you can't work and receive social security benefits at the same time. I think this myth revolves around the fact that if this applies to people who take it early, because there are some limitations. So Nick, why don't you break this one down a little bit? Nick: Yeah, just like everything else, the devil's in the details. So essentially the way that SSA, Social Security Administration, looks at this is kind of from a tiered perspective. So they break it down in essentially three sections. So from when you're first eligible which is 62 up through essentially before the year that you reach full retirement age, and then the year that you reach full retirement age has its own section, and then the period of time after your full retirement age. So as an example to bring that all together and make it make sense, you can have income while collecting social security before your full retirement age, but there is a limit. That limit is about $21,000, little over $21,000. And for every $2 that you make over that amount, you have a $1 reduction or penalty on your social security. Marc: So almost like part-time, you could do part-time work if you took it early, so to speak, right? Nick: Yeah. And a lot of times that's kind of the ticket for some people is to work part-time, keep them busy, help them transition into retirement, and to help prevent them from having to dig into their nest egg. They might file and collect social security and those numbers kind of balance out, they have income less than the amount that would cause a penalty, and so it works out for them. In the year that you reach your full retirement age, that amount goes up to about 56,000. So essentially what they're saying is we understand that birthdays range and that from a calendar perspective it can get a little bit tricky. So they say that you can collect your benefit and earn up to the 56,000 without any sort of penalty. Once you've reached your full retirement age, there's no income limit at all. So you can do a full double dip per se in that scenario. Marc: Yeah I mean if you make $1,000,000 a year and you're 69 years old, that's fine, right? Let it rip. Nick: Yeah. What you're giving up per se is the 8% increase per year on the social security benefit. So there is some sort of give up, but whether or not that has a big impact depends on somebody's situation. Marc: If you're waiting till the 70, right? Nick: Correct. Yeah. If you're to wait until 70. So some scenarios that we see this work out really well are somebody hits their full retirement age, they plan on continuing to work, but maybe the mortgage isn't paid off, so they'd like to turn on the social security with the goal of, when they retire at 70, these social security payments that are coming in, will go directly towards paying down the mortgage and they can retire without having a mortgage. Or maybe they're behind on their retirement funds. And so they want to make sure that they can really maximize retirement savings, so they'll collect and save it or just put the money away. So it's like, I'm going to take this benefit, but instead of just spending it, I'm going to go ahead and save it and then I've had people say, this is going to be my vacation fund for our first five years of retirement. We're going to save as much as we can, and then we'll use that to pay for our vacations for those first five years where we're most active in retirement, that sort of thing. So you can get strategic, but that's kind of the breakdown of how it actually works. Marc: Yeah and John, I think for many people that that's where that confusion comes in, like my brother, for example, he's already 65, but he is retiring before full retirement age, so he has to wait, so he can work part-time make up to that limit that Nick was just describing. But I think that's where the confusion comes in. At least that's what I've seen from my perspective. How about you? John: Yeah, I'd agree with that. A lot of people confuse 65 Medicare eligible age to full retirement age and social security, so I'd agree with that. Something else that people typically miss with this or maybe just don't fully understand is that this is based on the individual's earned income, not household. So I've seen some scenarios where someone was thinking about drawing social security, they were retired, the other spouse was not, and I said, well, I can't draw yet because our income is higher and our household income is much higher. It's not based on household income, it's based on the individual's earned income. Marc: Yeah, good point. All right, so that was myth number six. Myth number seven, I don't think I've really heard this one before. Social security benefits are only for US citizens. This seems kind of like a no-brainer. That's basically the case, wouldn't it be? John: Yeah this is definitely a myth, it doesn't come down to whether you're a citizen or not, it comes down to have you met the requirements to be eligible. Marc: Okay, which is that 10 years, 40 quarters thing. John: Yeah, 10 years, the 40 quarters there, and once you hit those, you are eligible for social security. Marc: I wonder if some of this is for folks who retire abroad, so there's some confusion there, because I even thought about it myself. My wife and I were joking. We were going to retire and live in Aruba part-time, and I asked myself, I wonder if you live in Aruba, can you still collect social security benefits? And I think if you have dual citizenship, I think you still have to maintain citizenship is my understanding. But it's certainly something that you can have a conversation. That's some of the questions that might make more sense when you're going to the social security office versus saying, Hey, when should I turn it on? They're probably better equipped to answer questions like that than they are answer questions about when's the best time for you to activate it. Nick: Yeah. One example that goes in with that too is you'll have people that are considered permanent resident alien. So I can even give an example where in my family, my grandparents came from Cuba. My grandfather work was a professor at State University, and he spoke English and Spanish, but my grandmother had different issues and she never fully spoke English, so she never was able to do the citizen test, that sort of thing. But my grandfather was here his whole adult life and paid into social security, and so she was eligible for a benefit as a spouse and she has permanent resident alien status. So there's different things like that that kind of come into play. Marc: Yeah certain non-citizens then. Nick: For sure. Marc: Yeah. That's cool. That's a great example. Thanks for sharing that. All right, so myth number eight. This one is interesting, and I don't know if this is state by state or why this myth is around, but see what you think about this one. If you have a pension, you're not eligible for social security benefits. This just seems weird to me. I don't think that one precludes the other. Nick: Yeah, so I can kind of explain this as well. So what some states used to do with their pension system, and a lot of times it was, again, in certain states or even certain kind of counties or municipalities in certain states, they would allow, or their structure would be, instead of the person who was working for them paying into social security, they would pay into the pension. And so it was both they and the employer were paying into the pension system in lieu of paying into social security. And there's a clause for this, what would happen. I know I for sure had some people in Illinois that dealt with this. And so because of that issue, there was this calculation that would offset the amount that they were eligible for social security. And so where people got in trouble would be sometimes what people would do is they would say, I'll use a teacher for an example. So this whole program is called the windfall provision. And so what they would do was, so say a teacher, they knew that they weren't going to be eligible for social security because of the way that their pension was structured, so they might work a summer job so that they could start to build in their 40 quarters and be eligible for social security, but they didn't realize that there was an offset with how this worked. So the windfall provision, or it's called windfall elimination provision, is something where if this sounds familiar, it's something that you want to look into. And it was because the main part wasn't paying into the social security, but unfortunately when they would get the scenario with the second job or something like that, that's where it would almost penalize them because they would subtract the amount that's coming from the pension out of the amount that they'd be eligible for social security. Marc: Interesting. Okay. So the windfall provision, interesting. All right. John, any thoughts on that one? John: No, run into the same scenario in Massachusetts where I've had some clients up there that have paid into the pension system up there, and basically they got reduction of social security benefits. Marc: So it sounds like it doesn't preclude you, it just may alter benefits. John: There's different situations. Nick: Significantly. Yeah. Marc: Okay. Good to know. Interesting. You never know sometimes, there's always some sort of kernel to these things which kind of gets distorted and pulled out. So again, if you've got questions around this, and especially if you're on a pension, you may want to certainly talk with your financial professional about that. And John and Nick are here to do so. So again, reach out to them at pfgprivatewealth.com. All right. Good stuff. Let's do myth number nine. Social security benefits, John, are based on your income and assets. This one's an interesting one, I think because I guess the confusion of thinking, if you have a, I don't know, whatever your salary is, but then if you have a $5 million home, it's somehow different than someone who has a million dollar home. John: Yeah, that's not the case. I mean, it is based on your earnings, which I guess some people could say, well, is that my income? And we're going to talk about this later, it's based on your highest 35 years of earnings. Marc: But it's not means tested, at least not now, not yet anyway. John: Not means tested, but I'm glad you mentioned that. That is something that has been discussed as doing some means testing to basically help the program out where let's say if you're above a certain income or asset level where they start to reduce your social security benefit. Marc: I mean, could you see Elon Musk ever needing or Oprah Winfrey ever needing social security? but technically they're eligible, right? Nick: With the means testing, that's a tricky thing because the way that it goes kind of hand in hand is that people that exceed the cap, which I think right now is around 150,000, something like that in income, they no longer pay into social security. So there's almost like a built in kind of means testing. Marc: But doesn't that have a donut hole, Nick, where it kicks back in again after a certain higher amount, you start paying again after $400,000 or something? Nick: They're discussing that, but not currently for social security. And it's that way for Medicare, so for example, the Medicare portion of the tax is in perpetuity, and then there's an additional amount over a certain amount of income. So what could be interesting is almost giving people an option of, and again, this is just speculation, but hey, you have the option to over this cap, you can continue to pay social security or have a means test later on when you retire. That's something that could be interesting, almost like one or the other, or just remove the cap completely and then just have a maximum amount that could be paid out. So going back to what we had talked about in the other session, there's definitely a way to figure this out, but somebody's got to have the guts to do it. Marc: Well for us, regular folk, I guess. So to John's point, it's not really based on those things. Not exactly anyway, it's more based on your work history and your salary through the years, right? John: Yeah. How many years you've paid into it and what those numbers were. Marc: And so that just walks us into the number 10 here. So we'll do that one. John, I'll let you start with it then. So your social security benefits are based on your last jobs salary. And you kind of alluded to it, it's really based on the highest 30 years, correct? John: 35 years of earnings. Marc: Sometimes I hear advisors say, hey, make sure you go to ssa.gov and take a look and make sure that your numbers are being reported correctly. Heard a lot of this during COVID, especially for folks who may have been laid off or things are kind of wonky to make sure those numbers do get reported correctly because that kind of thing can make an impact. And if you think about your highest earning years, John, many of us, that's going to be between the ages of 40 and 60 or 45 and 65. So you want to make sure those numbers are correct. John: Yeah, typically those are the highest earning years, and it's always good to do a checkup every two or three years, especially after you're hitting the 40-50 mark you really want to take a look at what did they put in there for me last year? I'd say more often than not, it's accurate. If there are any issues, sometimes we'll see them with someone that's self-employed, so this comes always to the person that is self-employed and I don't want to say determine their W2 income. It's kind of like, how much income do you want to show for social security when you're talking to your accountant? But that could be a negative if you're doing some accountant stuff and showing lower income. Marc: It could bother you for your earnings later, for your social security draw later on. I think about the highest 35 years when you're talking about that, you could hear someone saying, well, I don't remember what I made at Wendy's when I was 16, 40 years ago. That one probably gets dropped off. So the idea of being the highest, again, 35 years versus maybe that first job way back when. Nick: Just to kind of add to that context, because that social security cap has continued to go up over time with inflation it's the highest 35 years in relation to the cap. So that's something to understand because effectively your income income today, let's say in theory, for example, $100,000 today compared to $75,000 20 years ago, that 75 may actually be a higher percentage compared to the cap. So there's a little bit of nuance in there, but that's just in general, that's how it works. Marc: Okay. All right. Well, some good stuff. John, any other thoughts as we wrap up this podcast on Social Security myths? Anything else you'd like to chime in with? John: No I think we've hit all the points. I think we're good. I think we did a good job debunking all these myths. Marc: Certainly some good stuff in there. I think there's a few things that might catch people by surprise. Nick, anything else before we go? Nick: No, just the additional emphasis that it is a complicated decision and the good part of that is that there's usually strategy involved and that you can do things to improve the overall planning for yourself. So just like a lot of things, the gift and the curse per se, but we'd rather have people have the ability to be able to adapt their decision making process to help make this a decision that improves their overall situation than be forced to do just the same old thing. Marc: I like on the prior episode we were talking, John said that you guys can break things down a couple of ways. You can look at social security in a vacuum, but then also look at it as it applies to everything else that you have going on from a retirement standpoint. And I think that's going to be a real advantage when folks are trying to sit down and figure out the best ways to handle something that can be actually a lot of money. I mean, social security could be a lot of income, total dollars applied to your retirement nest egg. So you certainly want to make sure you're getting it right, and that's what the team can help you with. So again, if you got some questions, need some help. As always, we appreciate the time on the podcast, but don't forget to subscribe to them. And so you can catch new episodes and check out past episodes. But also just in case you need some help, stop by the website and schedule some time. Have a conversation with John, Nick and the whole team there at PFG Private Wealth. Find them online at pfgprivatewealth.com. That's pfgprivatewealth.com to get started today. A lot of good tools, tips, and resources. And of course you can also, again, find the podcast and subscribe there on the website as well. Find us on Apple, Google, Spotify, under Retirement Planning Redefined. Guys, thanks for hanging out. As always. I appreciate your time. I'll sign off for us. But for John and Nick, I'm your host, Mark. We'll catch you next time here on Retirement Planning Redefined.…

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Ep 59: Top Social Security Myths, Part 1 21:02

2 years temu21:02

21:02

Have you ever wondered if the Social Security system will run out of money before you retire? Or if claiming benefits as soon as you're eligible is the best decision for your financial future? In this episode, we'll be debunking common myths about Social Security and answering the questions you've been curious about. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Welcome into another edition of the podcast, it's Retirement Planning-Redefined with John and Nick from PFG Private Wealth. Got a little two-parter going on this podcasting episode. We're going to spend this one and the next one talking about some social security myths, some of the top social security myths. Some of these certainly, I've heard and many of the guys have heard, and maybe even the listeners have heard, but there's a few in here maybe you haven't, and hopefully it'll help you out a little bit if you've ever wondered some of the questions or things that we hear on the news all the time. Now we're constantly making the rounds online. So again, we're going to break this into a two-parter. So if you have not yet subscribed to the podcast, make sure you do so at pfgprivatewealth.com. That's P-F-G privatewealth.com. Just hit the subscribe button or heart button or whatever it is on various different apps you might have already on your phone, like Apple Podcasts or Spotify or Google or whatever the case might be in that regard. So with that said, we got a lot to get through. We got five this week and five for the next episode as well, so let's dive in. Get started. Nick, what's going on buddy? How are you? Nick: Good, good. Just staying busy. I had some family in town this weekend, which is nice to visit, which tends to be a trend this time of year. Marc: Yeah. Yes, we're taping this right after Easter, so yeah. Yep. Nick: Yep. And then tax season is always entertaining. Marc: Oh, busy. Mm-hmm. Nick: So yeah, so we're just plugging. Marc: Good, good, good. John, how are you my friend? John: Doing good. Doing good. Just celebrated my oldest daughter's seventh birthday and I'm like, "Man, she is... Marc: Where does it go? John: When she hit school, it's like, "Man, this is going by much faster than I anticipated." Marc: Yeah, it always does. Nick: Yeah. Marc: Mine is 25. She'll be home this week, actually, for a couple of days from the Navy. And yeah, I'm like, "God, 25. Really? Stop.". It only speeds up my friend, so good luck with all that. John: I believe it. Marc: But happy birthday to her. All right, let's get into some social security myths. Neither one of our kids, John, will need this anytime soon, but for a lot of our listeners, social security is certainly a big topic of conversation, whether you're, I think, you're 50 plus. I think anything financially related from a retirement standpoint, we start paying a little bit more attention, maybe getting a little bit more nervous about some things that we see in here. So let's jump in and talk about some of these myths. Number one, whoever wants to tackle this, I'll let you guys go. The Social Security Administration will help you make the best decision about when you should start your benefit. Nick: I'll jump in on this one. Although I have heard some reports from clients, recently, where some of the information and/or slash, I wouldn't call it advice, but information has been more comprehensive when they've had appointments with Social Security. It's definitely not going to be the primary resource that one wants to use, as far as helping them to make their decision. Ultimately, this is one of those things where the social security decision should be heavily, or for most people at least, is heavily dependent upon the rest of the parts of the planning and the scenario. Is there a pension involved? When is retirement? Is one spouse still working while the other is retired? So there's a lot of different factors that go into deciding and figuring out which options, scenario are best. And a lot of times, one of the things that's come up quite a bit, with people, is we try to explain to them that it's almost a two-part decision, where three to five years out, we have a good outlook and projection of when we expect to take it. But at the same time, in reality, what ends up happening is that the shorter-term, or more of a micro, decision tends to be impacted by factors that come up. So for example, a spouse gets laid off and retirement for them happens sooner than expected, or the market's going haywire, and we want to dial back on withdrawals that were taken from investment accounts, those sorts of things. So having the ability to be able to pivot is important, but having a broad, overall plan in general when you want to take it is obviously the most important. Marc: Yeah, and to your point, they just don't know your personal, complete situation, so they can give you some ideas on, I'm sure, the best overall... Well, I mean not the best overall, but just looking at some of the claiming options that you have available to you, but how that's going to play with everything else, they're going to not have any clue to that, because they don't know your financial situation. Now that's the first one. Myth number two, John, you want to tackle this one? You won't get any social security if you're a stay at home mom. That's not exactly right either. John: Yeah. I'll jump on this one, and then also I want to go back to myth number one. One thing I have also noticed, that people need to be wary of, is calling Social Security and getting wrong information. I've actually had multiple calls with clients and the representative didn't necessarily know exactly, maybe what was being asked and they basically gave the client bad information, where we had to call up together and ask. And it really affected the client's strategy that they were going to use, because at first they were kind of like, "Well, this is what Social Security told me.". And we did our due diligence, realized like, "Hey. No, that's not accurate.". So we called up once, continued to got bad information, then we had to call back again. There's actually specialists that we were able to talk to, that basically gave us the right information, which in her case ended up being quite a bit of money that she ended up gaining, by able to do some widow benefits where... Marc: Oh yeah. That's good to know. John: Otherwise, she wouldn't have known. So yeah, I just wanted to add that in, because I've seen it happen a couple of times. Marc: No, absolutely. Yeah. John: And as far as not being eligible as a stay-at-home spouse, basically that is a myth. There are spousal benefits and if you qualify for those, you're eligible to get half of the other spouse's full retirement benefit. There's different strategies that one can implement in that situation, but you are eligible for some spousal benefits, even if you were not working and have earned credits into Social Security. Marc: Yeah, and so I think some of the confusion, and a lot of times how these myths is usually it's kind of close, but maybe a little off. So if you're talking about your own individual benefit, you have to work, what is it, 40 quarters I think, through your lifetime, which is 10 years total, in order to qualify. But, to your point, if you're married, and I think there's a caveat there too, is it not that you have to be married at least 10 years. Is that what it is to get the spousal? Nick: Correct. Married 10 years is the case. Marc: Yeah, so there's a couple little caveats, but I think that's how myths get started and get skewed out of proportion. So yeah, if you're married and you've been a stay-at-home mom raising the kids the whole time, you are still eligible for your spouses. So it's certainly good information to know there as well. All right. Myth number three, you won't pay taxes on social security, since you already paid taxes on that money when you paid it into the system. Once upon a time, that was true, but it's no longer true, right? Nick: Oh yeah. If you want to get somebody fired up, this is the way to do it. Yeah. So what we try to explain to people, is that for most people, most households, kind of middle class and up, about 85% of their social security income is going to be includable in their taxable income. So there's a chart and it is dependent upon the other income sources that are coming into the household. But, like I said, for the most part, most people are going to have their income, up to 85% of their social security income, includable in the amount of taxable income that they have. So it is important for people to understand that there's a difference between that, "Hey, it's taxed at X amount rate.", or something like that, because there is confusion in there. So that 85% of the number just is tax at whatever effective tax rate they're in. So for most people, they're going to fall into the 10 to 12, 13% effective rate. So it's not a huge overall impact, but because it is considered a payroll tax that funds it, there is a little bit of firing up that happens when, from an emotional standpoint, where the thought process is, "Well, hey, I paid taxes into it." Marc: Yeah. Nick: Yeah. Marc: I mean it is... I was going to say, just didn't mean to cut you off, but I think where people also don't realize this is a good place where strategy comes into play, because how you're pulling your income, it's your income levels that's going to determine how much that this could get hit. So again, social security should be part of an overall strategy and not just, "Oh, I'm pulling money out of X, Y, and Z account and then also I have this social security thing.". You want them all working together, right? Nick: Yeah, and the reality is, and people don't necessarily want to always hear it this way, but the reality is, is that social security payments through your payroll, while you're working are essentially, I try to tell people, essentially you're paying into a pension, is kind of what you're doing. Marc: Sure. Nick: So you're kind of paying it into a pension, so it is done via payroll tax, but in reality that's kind of what's happening. Marc: Yeah. John, anything you want to add on that one? John: Well, I guess the one thing would be, as you mentioned, strategy. If you find yourself in a position where your social security is going to be taxed, maybe you have to take extra income in a given year, Roth IRA would be a great spot for it, because that does not count towards your modified, adjusted gross income in this case for the calculation. Marc: So, maybe looking at ways to lower your taxable income limit, so just to help with that strategy? John: Yeah, yeah. And that's why it's important. And if you tune into this podcast, often you hear Nick and I always say, you want to put yourself in a position to adapt to any situation and have balance, so that's where that's important, where it's like, "Hey, I have to take some money out this year. Health, whatever, house.". As we were chatting offline of house issues and contractors. Roth could be a good spot to take from, where it doesn't affect your income. Marc: Okay. John: To get off-topic, same thing goes with Medicare. As you have too much income, your Medicare premiums might go up, so planning is very important. Marc: Exactly. Strategy is completely important in how it might affect that particular myth. All right. Let's do the last two. Here are some of the big ones, and these are the ones that get people most concerned or whatever. Myth number four, there won't be any social security left by the time you get to retirement. I just don't feel like this is probably going to... I can't see any politician standing up there and doing it. It's too much of a hot potato. They're going to continue to kick the can down the road, and I think there's going to be something, in some form or fashion. Could changes be coming? Sure, but the whole concept of it's just going to go away, just seems like a lot of fluff to me. John: Yeah, I would agree with that. Changes are already happening. We already see the cap limit for income going towards social security. That's been increasing. So there are some updates that we see happening, and this is really an actuarial problem, so it's a matter of just being like, "Okay, this is what we need to do to fix it and it will be fixed.". What most people... What's interesting, is I just got a question last week on this from a client, because they read an article about the trust fund will be exhausted between 2032 or 2034, if no changes happen. So their concern was, "Hey, is the money going to be there?". And the answer is, your benefits will still be coming in, because it's funded through your payroll, so there'll be people paying that system, while people are drawing out. Marc: Right. And we do have a problem there. That is a concern, right? If you look at those numbers, there's way less people paying in now than people pulling out, which is why some other changes may need to come into play. But yeah, I think that's where the confusion comes in too. John: Yeah, exactly. And I believe a couple.. And you can look this up, if nothing changes, there will be roughly a 20 to 24% reduction in benefits, if they don't change anything. But we feel confident that they'll make some adjustments to the program- Marc: Last minute, yeah. John: ... to get everyone whole. But again, it comes back to planning correctly. So, are you positioned yourself to adapt to this, if this were to happen? If social security benefits were to get cut, how does that affect your plan and what are you going to do? Marc: Yeah. You hear all sorts of strategies out there, Nick, right? I've heard the one that if they just eliminate the early, at 62, and even moved it to 64 or just said, "No, we're just dropping the early and you're 66 or 67, depending on your full retirement age.", it could fund it for another hundred years. Then they're talking about means testing. So there's a lot of things on the table, they just haven't pulled the trigger on any way to actually replenish it yet. Nick: Yeah, it's pretty frustrating, because like John said, there is kind of a science to calculating this when you're talking about this many people, from an actuarial standpoint. Literally from, like you had mentioned, increasing the initial, early retirement age from 62 or even starting to phase it in, like they have in the past as far as what they consider full retirement age, starting to move that towards an average of 65 would make a huge difference. Adjusting the cap, as far as the maximum amount of income that you pay into social security on, if they adjusted that up. So it's frustrating, because like so many other things, and without going on a rant, it tends to be quite political. And unfortunately what tends to happen is instead of it being the small adjustments, that can make a huge difference, what tends to be in the news is more of like, yes or no. Will it be there or will it not? Versus like, "Hey, we can start to just adjust these numbers and make these... People are living longer, so we can figure this out.". Marc: Well, the doom and gloom makes a better headline too. Nick: Yeah, for sure. Marc: I mean, look at what's been happening in France for the last month. They're totally upset over pushing their pension there, which is basically the same thing that we have, back two years. There's options there, it's just a matter of what's going to be acceptable. And I think for many of us, if you're probably 50 or over, the chances of it affecting you greatly are probably diminished. I can certainly see though, changes to the ages or things like that affecting people. They say, "Okay, born from this date down, for sure you're going to see some changes.". So possibility, but just the quote on quote, "Well, it's empty. It's gone. No one gets a check ever.", I think is just kind of silly. Nick: Yeah. Marc: All right. Final one guys and this kind of rolls into that prior one, as well. Number five is go ahead and claim it as soon as possible, turn it on as soon as you possibly can. And I think, again, whoever wants to answer this first, but if you need the money, that's one thing, right? Turning it on, because the strategy makes sense, because you need the money, but turning it on, because you think it's going to run out is maybe not the best way to look at that. Nick: Yeah, we tend to agree. Taking it when you're first eligible is very rarely a best bet. You give up significant benefits by taking it when you're first eligible at age 62. And it kind of dovetails a little bit into what we had talked about, just on the previous question, where people that were at the point in time where their full retirement age was 65, so 62 is only three years before that period of time, the reduction, which is about a half a percent per month before your full retirement age, it didn't have as big of an impact. But now with full retirement age, for many people, being 66 and a half to 67, now we're talking a wider gap of years, four and a half to five years. So that the compounding effect of that early benefit is significant. So it has a really big impact for people that take it really early, when they don't necessarily have to. And I get more regretful responses from people that took it early, not understanding the full situation, than I do from people that waited and had more of a strategy for when to take it. Marc: Yeah. Any thoughts on that take it as soon as possible, John? John: Yeah. I think it comes back to, like we said, what is the person's situation? I really see situations where if someone doesn't need it, taking it early makes sense. The only time is if there's significant health issue or something like that. But then you also have to think about survivor planning. So there's a lot of variables that you got to think about and does it make sense? Nick: And just to dovetail off of that, John mentioned the survivor planning, where sometimes, as an example, one person in a couple taking it earlier and using that to leverage the other person waiting much longer, that combination can work out sometimes, work out- Marc: Yeah, a couple's strategy. Nick: ... really, really well. Yeah, yeah, so factoring in both strategies, letting one ramp up and using the other one to make it easier on the overall nest egg, sometimes that can make sense, but this is always something that we use. We have different calculators to strategize for social security and that sort of thing, and so we try to be as strategic as possible. Marc: And John, I think you're referring to the break point, so you're talking about when you're turning it on, you can run some calculations and see what that break even point would be if you turn it on early versus waiting. Obviously health plays a factor, but you guys can kind of stress test those numbers as well to see the best chance or the best option. John: Yeah, so we have different programs, which is great, where one, we just look at social security in a vacuum and basically it's, "Hey, let's look at taking now versus 67.", if that's the person's retirement age, and we can go look at their break even, which typically is mid-seventies in that scenario. Then we have our comprehensive planning tool, which takes into account other factors of, "Well, if you take it early, your investments can build up a little bit longer. What if you take it early and save it, so you can really put in different factors on it.". But one thing people really think about if they take it early, and we've seen this lately, is the cost of living adjustments. So those in the last few years have been pretty significant. So when you take it early, you're still going to get those cost of living adjustments, but they would've been much greater had you waited, because the balance is bigger that you'll be getting monthly. Marc: Gotcha. Okay. So again, there's a lot to the social security strategies, the conversation. These were some of the bigger ones. We're going to do a second part, with five more myths in a couple of weeks here. So make sure you tune in and check that out. But as always, if you've got questions, if you need some help, especially when it comes to claiming strategies and maybe running a maximization strategy to see what the best option's going to be, don't just run out and do something. And also don't treat it as a separate entity from everything else that you've set aside for retirement. It really is about them all working together in a cohesive plan. And that's what John and Nick and the team can help you out with. So if you need some help and you're not already working with them, jump onto the calendar at pfgprivatewealth.com for a consultation and a conversation. That's P-F-G private wealth.com. Get yourself some time onto the calendar, subscribe to the podcast. You can do so while you're there as well, so there's a little dropdown tab for podcast. We're on Apple, Google, Spotify, all that good stuff. So again, P-F-G private wealth.com is where you can find them online. And we always appreciate your time here on Retirement Planning-Redefined. For John and Nick, I'm your host, Mark, and we'll see you next time for more social security myths.…

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Ep 58: Fore Your Retirement: What Golf Teaches Us About Financial Planning 16:22

2 years temu16:22

16:22

Are you a golfer? Even if you're not, the game of golf can teach us valuable lessons about retirement planning. For example, hitting a hole-in-one might be thrilling, but it won't necessarily guarantee your overall success. And just like you need different clubs in your golf bag to play a round, you need a well-balanced approach to your investments in retirement. But perhaps the most important lesson from golf is the value of having a caddy. In retirement planning, a financial advisor can help you navigate the hazards and make the most of your financial "clubs." Tune in to this episode to learn more about how the game of golf can help you plan for a successful retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Back in for another edition of the podcast. Thanks for hanging out with John and Nick here with me. Talk investing finance and retirement here on Retirement Planning - Redefined. We're going to have a little fun with this podcast conversation, a little golf lesson and tie-in to financial planning or retirement planning. So this will be fun. It's right up your guys' alley. John, just a few weeks back, you guys had your annual golf tournament, and we had talked on the prior podcast, it went really well. I should have had this ready for you. We could have talked about it then, but that's okay. John: Yeah, yeah. It's all right. If you want to ask questions about it, I can definitely tell you. It was a great event and we donated to Boys and Girls Club of Tampa Bay and Tampa Hope, which provides homeless shelter stuff. So, yeah. Marc: That's awesome. Yeah. John: Yeah. Marc: All right, so are you a big golfer yourself? John: No, I'd like to be when I can get back at it, but I'm not very good. It's been on my to-do list to take some lessons and be able to get on the course, but I like- Marc: Well, you don't have to be good to like it. I think that's most people. John: Yeah, no, I like going on the cart and driving around and hanging out with my buddies. Marc: There you go. Nick, what about you? Are you a golfer at all? Nick: I wouldn't call it golf, personally, I go out and I hack for- Marc: Yeah, there you go. Nick: ... about seven or eight holes- Marc: There you go. Nick: ... and then I'm pretty much done at that point. Marc: You're a hacker. Okay. Nick: Yeah, maybe now that I'm in my forties it'll be something that I reengage with, but I enjoy being out there when it's the nicer time of year, the cooler time of year here. It's fun to hang out with buddies and go and be out, but it tends to be a four to five hour chunk. So it just depends on my mood, I guess. Marc: Yeah, it certainly can be fun. It can be a frustrating sport, but it's easy to do, and of course it's obviously a very popular sport for retirees and pre-retirees, so it's easy to do some financial analogies with it. Since you guys just had that golf tournament and raised some money, which, again, is fantastic. This'll be a little fun podcast conversation. So let's jump in and talk about some lessons we can get from the game of golf financially speaking, and we'll just have a little fun with this. So hitting a hole in one. I've actually seen this done live in person. I was playing with some friends a couple years back and we were playing with.... we got put with an older couple and she won the day, she was killing us. She was right down the fairway every time. We were all left and right around the sun. She was awesome, but her husband, on a par three, popped one up and lo and behold dropped it right in the hole. It was just totally awesome to see that happen. Thinking about this guys, I think about getting lucky in the market one time. Because this guy's attitude changed when he got the hole in one. He was super excited. He obviously was very cool, but you could see the rest of the day he felt pretty cocky about his game. I would imagine that from a market standpoint, that could be the same thing. You do really well on one investment in the market and you think, oh, I got this whole financial thing figured out, and it might not be that easy. Nick: Yeah. It can be interesting. Just in general, and you alluded to it, people like to talk about their wins more than their losses. That's something that we see quite a bit. It's a similar concept as when you have a friend that goes to Vegas and they talk about how they hit on a certain thing, but not necessarily that they came back less money than they started. It's that concept. The goal when we're focusing on financial planning, retirement planning, that sort of thing, is a long, well-thought-out strategy that encompasses multiple decisions, builds in options for different scenarios and really is just more strategic than having a single goal in trying to necessarily get lucky. Marc: Well, and John, I was going to say, I think most golfers would agree that a hole in one is a little bit of skill, but a whole lot of luck. Maybe that's the same thing to be said for the market, but you can strategize properly with your retirement and not just be wishing for luck, I suppose, in retirement, right? John: Yeah, yeah, you definitely want to have a strategy and a plan versus just rolling it all in one event, unlikely event really happening. So you want to make sure that you put together the strategy, and again, you're just trying to hit, bring it to baseball, those singles and doubles consistently, versus always trying to go for the home run. Marc: Well, like I was saying, the gentleman's wife, at the end of the day, he got cocky because of that fairly early, and he clearly was going to beat the two younger guys that he was playing with that day, me being one of them. I think he felt like the day was his because of the hole in one. But she wound up winning the day from having and shooting the best round because she was consistent. To your point with baseball there, she was right down the fairway, 150 yards every time. She ended up just kicking our tush because, like I said, we were all over the map, somebody else's hole and everything else from slicing and all sorts of good stuff. So consistency, while a hole in one is sexy, consistency is probably the better idea for a strategy. So let's talk about clubs in the golf bag. This is a fun analogy to think about too. You're probably not going to go play golf and go Happy Gilmore and just show up with a driver and a putter. You need some more things in there. John: 100%. This goes with your investments. You can't just have just one tool in the bag there. You definitely need to have different investment vehicles doing different things so you really hit your goals. In case with golf, you make sure you get the best score possible. Same thing with your retirement planning and investments. You want to have different investments. Here's the term everyone hears, diversify. You want to have different investments in your portfolio, investment portfolio, and different investments overall, whether that be some fixed income stuff, and then especially nowadays with the rates being the way they are, CDs are definitely a great option right now. So you want to have the different irons, different drivers, different- Nick: Yeah. One thing that people tend to obsess about is, "What's best, what's best, what's best? Should I have this or should I have that?" So frequently our answer is, "Well, it depends," and or, "Yes, all of the above," and it dovetails into this where, "Sure, you do want to have some funds that are going to be pre-tax and also some funds that'll be tax-free later on," and really focusing on the fact that just because something is better right now doesn't mean it's going to be better later. So the ability to be able to adapt and pivot and adjust to whatever the scenario is, is super important. Marc: Yeah, and that's the point of, "It depends," sometimes with that answer because while it's not the flashiest of answers, because it's not a set it and forget it. Your strategy is going to change. Just like the club you're going to have to pull out of the bag may change. You may think it looks like a simple 7 iron shot, but as you start to look at it and evaluate a little bit more, you might realize that it's not, you got to go with a different club. So different clubs do different things, different investments do different things. Having that arsenal, I suppose, at your disposal is really what you want to do, versus, again, like I said, just trying to be Happy Gilmore out there and use a driver and a putter only. Probably not going to go the way you want to go. That comes to the final one here for this little fun analogy, guys, is listening to a caddy. Now, granted, when a lot of us go play golf, we don't have the luxury of having a caddy, but you may have some friends who you're doing a foursome or whatever and they're giving you some advice or things of that nature. And while you don't want to ask your friends necessarily for financial advice, if you ever have got the chance to play with an actual caddy, it's pretty freaking cool. A true professional can really make the difference. I'd say that's an easy analogy to what you guys do. John: Yeah, 100%. I will say having an advisor in your corner, just someone to talk to, ends up having... people end up making better decisions with that. Just go back to the most recent thing, COVID here, where I would say the first month of that was really calming people down and talking them off a ledge. I'll tell you how many times we heard, "Oh, I'm so glad we got the chance to talk because I was getting really nervous and thank you for your time." So just having that resource of someone to bounce some ideas off of or just talk things through, ends up in the long run helping someone out financially more than they realize. Marc: Yeah, definitely. Again, it's the little things. It's not always just the Xs and Os, sometimes it is having that sounding board, "Hey, I'm thinking about this idea. What do you think?" "Okay, this is a good idea because X, Y, Z," or, "This is maybe not a good idea because X, Y, Z." So it's certainly important to have those conversations and if you need some help, reach out to the team. Obviously, as always, they're here to help you with this, to help you get to and through retirement. Pfgprivatewealth.com is where you can find them online. Pfgprivatewealth.com, and drop us a line while you're there, send an email in to the website if you'd like to have your questions answered. Of course, they're going to certainly do that with each and every question, but we also take those from time to time here on the podcast. So yeah, let's wrap up with one or two here guys. We'll see how we can go, see how many we can get through. We got Claire, and she says, "I'm supposed to retire next month, guys, but I haven't really done any planning at all." Yikes. "I just realized that I still need to figure out Social Security options, pension options, Medicare options, and as well as what I'm just going to do with my time." Wow. "Should I push my retirement date back until I figure this out?" Guys, that's a interesting one and a tough one. Not trying to pick on her, but she's done zero planning and thinking about retiring in a month. Nick: Yeah, probably not a good idea. There's two ways to address this. Well, what we would say to somebody in this situation is, "Okay, yeah, you need to focus ASAP on putting together a plan," because usually when this happens, it's because of anxiety of what the answer is going to be. It's the concern that whatever the results are of the plan are going to say, "Hey, retiring is not a good idea," or that the plan doesn't look good or that sort of thing. So taking the action to do something is really, really important, and you can't rewind time. So getting that plan in place. Would recommend holding off on the retirement until you can put the plan in place. Just there's probably options in strategies that they're not familiar with that can be put in gear sooner than later and could help to make that retirement more successful, because people's ability to reenter the workplace after they have exited is often much more difficult than they realize. Marc: Yeah, John, I'd say probably just call somebody, right? Get started. Don't wait one more minute, right? John: Yeah. Mistakes can be costly and it sounds like Claire has a lot of important decisions to make, especially with the Social Security and the pension there, one wrong move on that, you could be losing thousands of dollars, basically, is what I'm getting at. Marc: Yeah, yeah. Yeah, so you got to get a strategy, Claire. Do you need to push off retirement? You're just not going to know until you figure the two... Her question is, "Should I figure this stuff out?" Yeah, get in, sit down with a professional and find out where you stand and they'll be able to help you determine is retirement next month even possible? I guess my question would be, how do you know that you could retire next month? She says, "I'm supposed to." Maybe they're going to retire her from the job. Maybe she's been told. I don't know. It could be one of those types of things, but either way I would get in to see a qualified professional, ASAP, and of course John and Nick are here to help. So 813-286-7776. All right, final question here. We'll do one more. Lee says, "Guys, I don't understand the Social Security spousal benefit. My wife worked for about five years before we had kids and hasn't worked since, but she does have some benefit of her own. What is she entitled to? How does it work?" Nick: This is a good question, and the reason that we wanted to review this with people is because sometimes the tricky part with dealing with planning, retirement planning, is the jargon or the terms that people use. Sometimes they mix up the terminology and that can lead to mistakes, which can lead to big problems. In this case, from a spousal benefit standpoint, in general, people are eligible either for a benefit of their own based upon their own work history, and that is only valid if they have 40 quarters of work. So 10 years of work. Now, if they are married, and there are some additional scenarios, if they were previously married but married for at least 10 years and are divorced, there are some options on spousal benefits at that point. There's so many different scenarios that if somebody's situation is complicated, we highly recommend that you reach out to an advisor that's familiar with this space. But in this specific example, the spouse working for five years is not going to be eligible for her own benefit. She is going to be eligible for a spousal benefit, and that spousal benefit is a calculation factored on the primary earner's income and how long they've paid into the benefit and that sort of thing. So this is something that we would tell, "Hey, we can help with this scenario. The main information we're going to need is going to be the Social Security statements, and then we have some software that helps us pick, show what those numbers look like. But the spousal benefit is going to be a factor of the primary income earner's benefit amount." Marc: Okay. Yeah, so definitely can get very complicated. Thanks for sending the question in. Hopefully that helps you out, but definitely have a conversation with a qualified financial professional. Reach out to John and Nick to talk more about Social Security and eligibility and all those good things and how it plays into it. 813-286-7776 is the number to call, or stop by the website, pfgprivatewealth.com. That's pfgprivatewealth.com. Don't forget to subscribe to the podcast on Apple, Google, Spotify, all that good stuff. As always, we appreciate your time. You can catch past episodes by subscribing or check out future episodes when they come out. Thanks for your time today, for John and Nick. I'm your co-host, Mark Kelly, and we'll see you next time here on Retirement Planning - Redefined.…

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Ep 57: Retirement Expenses For Which You Forgot To Plan 18:50

2 years temu18:50

18:50

Are you preparing for retirement but feeling confident that you have covered all the expenses? Well, think again... It turns out that many retirees overlook some crucial expenses that can leave them financially vulnerable. In this episode, we explore the retirement expenses that most people tend to forget, including skyrocketing medical bills, unexpected travel costs, taxes, and much more. We'll discuss practical tips and strategies to help you plan for these expenses and ensure a secure and comfortable retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Hey everybody, welcome into the podcast. Thanks for hanging out with John, Nick and myself here on Retirement Planning Redefined as we talk, investing, finance and retirement with the guys from PFG Private Wealth. And this week we're going to get into retirement expenses for which you might have forgotten to plan for, which certainly happens. So on this episode, we're going to discuss some practical tips and strategies to help you plan for these expenses and maybe secure a more comfortable retirement. Guys, what's going on Nick? How are you buddy? Nick: Pretty good, pretty good. I got some friends coming into town next week and then family trickling in over the next month, so it's going to be a hectic month. Marc: Yeah, that's not bad though. Nick: That time of year. Marc: There you go. And spring is upon us, so that's always good. We're into March, so that's a good deal there. John, what's happening buddy? How are you feeling? John: I'm feeling okay. Getting there. Getting a little stronger each week so excited about that. Marc: There you go. John: But feeling pretty good. We just wrapped up our golf tournament, nonprofit charity golf tournament. Marc: Oh, fantastic. Yeah. John: And looking really good. It was a great time. Nick was out there helping me out because I couldn't lift anything heavy, but it was a great turnout. And it's year three and looking forward to year four. So. Marc: That's awesome. Yeah, fantastic. Always good to hear those success stories. So let's share some things this week. Let's get into the podcast here a little bit and talk about some expenses that we might encounter in retirement. And maybe we planned for them, maybe we haven't. Hopefully we have. But let's start with a big one obviously, medical expenses. I mean, typically they outpace normal inflation a lot of times. It seems like medical's just constantly on the rise. So how do we address some of this stuff? Nick: Yeah, what's actually been probably at least most recently with a bunch of our clients, the dental expenses have been pretty wild. I know my parents have kind of run into this too. It seems like once you get into your sixties almost everybody has some sort of major dental work and it's almost impossible to get out of there for less than 10 grand. So it's interesting too because without going on a massive tangent, dental practices and offices seem to have really gotten down the financing aspect of things. And really they tend to run the businesses pretty tight and costs have gone up pretty substantially. So yeah, those dental expenses can be a big deal. We tend to make sure that we have a fair amount of money budgeted each year for healthcare related expenses for clients and making sure that we're allocating the right amount for insurance premiums in that sort of thing. But yeah, those numbers really do add up over time. Marc: Yeah. They can get pretty staggering. I think it's what is the average person what, $250,000, something like that in retirement and medical expenses. So I certainly can take off there for sure. John, what about unexpected travel? Obviously that's one that when we think about travel as part of our retirement strategy, but where would we find unexpected travel in that situation where it kind of creeps upon us and costs us more than we realize? John: Yeah, so one thing we'll always say is things are always going to come up, you can plan as best you can, but something's always going to come up whenever life happens. So we've seen a lot of times where it could be funerals, long distance where people are having to go places they weren't expecting to go, obviously. And just hotels stay, travel, whether they're for a week or two, seeing some of that. Or caring for family members that don't live in the state. So it's traveling other sides of the country. We've seen that quite a bit. Marc: I'd say, that's probably a pretty big one, especially for as your retirees, you might have to go take care of a sibling or something who's having a long-term care event, extended stay. I think my sister had to do that a while back as well. So that's a great point. John: And then there's always the, which I think we've all experienced the destination wedding invite where it's like, oh man, do I really want go to this place? And it's just like, okay, all right, let's start adding up the cost. And if it's a family member, you typically feel obligated to go. Marc: Yeah, so that's good point. John: Those are some of the top three we've seen in our practice. Marc: Do I really want to go to Cabo? Yes. Do I really want to go for my niece's wedding? No. John: Sounds about right. Marc: Yeah. or something like that. Right. So definitely some places where expenses can come up. The medical obviously certainly can get really costly, but then again, so can parental or child assistance. I mean, Nick, more people now are than ever are in the sandwich generation where they're taking care of maybe an adult child to some degree, helping out and they're also taking care of their own parent. That's one thing I've heard about. Nick: Oh yeah, yeah, so the child's assistance thing, we saw it quite a bit like back in the years, immediately following the great recession, was kind of the first time I had seen that quite a bit where kids were getting out of school, graduating from college and having a hard time finding a job. So back to the parents and some help and that sort of thing. Marc: And then we got that again in the COVID too. Nick: Yeah, exactly. That's what I was going to say. From the standpoint of when COVID hit, that was something that impacted quite a bit. The job market's still pretty good for a lot of fields, but have definitely seen that. And I would say a lot of our clients are also entering into that period of time where there's more assistance needed for parents. My grandmother's been living with my parents for, I want to say over 10 years now, but she just turned 90 and now it's becoming even tougher. And we hear about that quite a bit from clients. And then if their parents are out of town, that's some that have brought them into town or they travel fairly regularly to go see them. Yeah, it's a lot on the plate. Marc: And that's an expense that can really derail your retirement. I imagine thinking using your parents there as an example, if they weren't prepared for 10 years of taking care of grandma, I mean that's an added expense that you just weren't planning for. Nick: Yeah, there's the financial aspect and then even from the standpoint of we are focusing for this on the financial side of things, but even from a lifestyle and mental health standpoint or even just your ability to be able to do the things that you planned and wanted to do, whether it's travel, that sort of stuff. It can be difficult, for sure. Marc: Sure. Yeah, definitely affects the family dynamic along with personal relationship and everything because it's a full-time gig. It can be, for sure. Nick: Oh yeah. Marc: So a lot of times we are focusing on the expenses here, but that's a good point to bring up as well. So planning and strategizing for those things that can maybe be overlooked or forgotten, certainly important. Taxes, John, is the next one. Now we got a plan for taxes, hopefully we're doing that. But are we thinking about the possibility of a tax hike because it sure does seem imminent. John: It does, doesn't it? You figure with all the spending happening, at a certain point, taxes we'll have to go up. But that is definitely one that I know we cover quite a bit in our planning is making sure clients are flexible and to adapt in an environment where if tax rates do go up, we really try to make sure people have the ability to adapt to the situation. But I will say this is often overlooked where it's, oh, you'll have less income. So your funnel, lower tax bracket is kind of what you normally hear, but it's definitely something that you want to be able to adapt. So perfect example of this, having some tax free money into retirement where tax brackets go up, you can basically say, Hey, this next three or four, five years, I have at least some Roth IRA money I can pull from where it's not going to really impact my lifestyle too much. But taxes go up 7%. That's a big, big dip in your nest egg or your living, your lifestyle, Marc: Especially if your income stays the same. So your income stays the same when your tax rates jumps from you said what, 7%? So let's say we go from 25 to 32, that's not so great, you're not going to feel so good about that. John: Yeah, and something else I'll say we see quite a bit with this is where there's big expenses in a given year. So we talk about, I know I think we're probably going to touch on it later, but if there's like a home remodel expense or whatever it might be, or we had the recent years with COVID, like, hey, I want to buy an RV or whatever it might be, it's big purchases can also affect those where you might be pulling out 50, 60 grand extra in a given year and if all your money's pre-taxed, that's going to be a pretty big hit to you in that year. Marc: And that's a good point. So Nick, I know you've got a list of a few things to think about in that department from maintenance or repair. Now again, we could strategize for the RV, we could strategize for, and I think this is maybe the point people missed, you tell me if I'm wrong here Nick, but if you're getting close to retirement and somewhere in retirement, you're going to probably have to replace your roof, start planning for that so that it's not an unexpected expense versus just going, oh well now we found out the roof is damaged and we need to repair it. That's a little different. So I don't know, what do you think? Nick: Yeah, for sure. From a planning perspective, the way that we typical typically handle that is we have home maintenance and repair expenses on an annual basis and then we will oftentimes every X amount of years add in an extra bump so that we can show people how we model that out and try to factor that in and build that in. But yeah, absolutely. One of the things that I've seen too is I guess and this is definitely not for everybody, but there's a fair amount of people that like to purchase vehicles cash and just not having the car payment. And that's something that has been a transition for a bunch of clients where just kind of emphasize with them, they may keep a vehicle for 10 years and so when they do make that new purchase, if we're taking money out of qualified retirement accounts to do that, you've got to take out X amount more and then that hits you from a tax perspective, where really stretching out the payment, taking advantage of lower rates that dealers often offer. Just even little things like that where you may tweak how you've spent the funds on certain expenses in the past to just take into consideration what your new reality is in retirement. Marc: Yeah, definitely. Nick: It's important. Marc: Yeah, if you strategize again, you won't be caught off guard by some of these expenses that you didn't plan for. But John, the last one, I mean we got caught off guard for sure on the last one. Many people don't plan for inflation normally, even when it's in a normal 2% or 3%, let alone what we've just been going through. John: So yeah, the last couple of years have been interesting for inflation. In a normal environment, it's obviously not this type of hike in a given year. I mean coming out of a pandemic and then obviously with the Fed raising rates the way they have been doing to try to combat some of that. So normally it's pretty slow and then all of a sudden it's like you go to the grocery store and it's like, whoa, what just happened? I'm paying almost 20% higher for milk or whatever it might be. COVID definitely made things interesting with the supply chain, everything like that, which added to it, which we're starting to see come down a little bit. But this is a big one that you definitely want to put into your financial plan and you want to stress test the plan saying, Hey, what if inflation does hit 2%, 3%? It's something that we typically do as well. And if you're working with somebody, you should do is different categories have different inflation rates. So one thing with medical is historically that has been higher than the normal inflation, which you said would serve around 2%. We normally inflate that about 4%. And if you're planning to pay for, at this point, most people when they retire aren't paying for kids' education but might be paying for grandkids because that's what they want to do. So you got to pay, that has a different inflation rate. So it's cool to be able to adjust each category with a different inflation rate when you're doing planning. So if that's something you are working with an advisor, you want to ask that question, is the inflation rate you're giving me kind of general over everything or are we actually putting different inflation rates on different categories? Marc: That's a great point. Nick: And just to jump in here on this one too, obviously inflation has been in the news so much lately. One of the conversations that we've been having with people is that really from the standpoint of news, the inflation that they report on, what CPI is really such a specific bundle of goods. Anybody that's been paying attention to expenses over the last five, six, seven years, they've been going up. And so just kind of reminding people that this is happening every year. We just get really mad about it every 15, 16, 17 years, over and over again, rinse, repeat. And so really making sure that they understand that. And also just to another take on the inflation side of things is when they're looking out over the nest egg and the plan and they kind of look to see, all right, well, I'm going to have X amount of dollars in 20 years, or I'm targeting to try to have X amount of dollars in 20 years or at life expectancy and making sure that they understand, hey, is that in present value? Is that in future value? Because 20, 25 years down the road, that number can start to seem a little, if things are going well, like unwieldy or super optimistic when in reality it could be just when you use the right and when you look at it the right way it's similar to where you're at today and stuff like that. So just not having that false sense of security if it's not warranted is always important. But yeah, inflation's an important topic. Marc: Yeah, I mean you got to plan for these expenses. Some things we can't plan for, but many can, or at least we can try to somewhat strategize for things we think are going to happen because inflation's always going to be there, tax rates are always going to be there. We don't always know what they're going to be, but then some of those other items we can certainly try to strategize for. And by not having the conversation, you're certainly not doing yourself any favor. Let's finish off with an email question, guys, whoever wants to take this one and we'll wrap it up. Thomas wrote in and he says, "Look, we're retiring in two years and plan to sell the house and move to the beach, and values are still pretty high in my neighborhood to sell the house, so I'm wondering if I should sell it now even though we're not ready to move and just rent a couple years." His overall question is, "It a bad idea to rent at this stage of life?" John: Yeah, that's a great question. This seems to be coming up quite a bit with what we're kind of seeing happening in the housing market right now. I wouldn't say it's necessarily a bad idea to rent at this stage of life. I'd more look at it from what's going on in the housing market, the economy. So that type of strategy right now could be a pretty big risk depending on what happens. Example, if you were to sell your house and anticipate buying in a couple of years. If house prices, again, who knows what's going to happen, dramatically go up over that next two year period, you could be putting yourself in a really bad position financially depending on what happens. I talked to someone who actually did something like this during COVID where they said, Hey, house prices went up a little. It was right when the boom kind of started where they looked at it and said, house prices are going up. They're really high. I think they're going to go down like they did in '08 and this gentleman sold and then two years later, I mean they kept going up. Marc: Right. John: So now basically he's caught in a tough spot where he was renting for a couple of years and for him to get back into the same house he just sold, I mean he's paying almost $200,000 more. That's a big swing. So I don't know if it's worth a risk, let's put it that way, to do that type of strategy because none of us have that crystal ball. Marc: Yeah, it's an interesting proposition. A friend of mine did exactly this, Thomas. So he sold his house at the peak actually about eight months ago. I guess maybe that was the peak in this area or that area. But yeah, he decided he was going to get an RV and just drive around camping for a while and he is waiting for the housing price to come down before he goes and gets another place. So he banked on that strategy. He feels like he made the right decision. He's enjoying the RV time. But every scenario is going to be a bit different with this, to John's point. So I think it's always worthwhile to kind of crunch some numbers, run some numbers, get a strategy put together and just stress test some things. Not only just that question from the email this week, but just a general topic that we talked about this week. Have a conversation with a financial professional like the guys at PFG Private Wealth. Get onto their calendar, have a chit chat with them. Stop by the website, check it out at pfgprivatewealth.com. That's pfgprivatewealth.com to talk with John and Nick and the whole team at PFG Private Wealth. And don't forget to subscribe to us on Apple, Google, Spotify, whatever platform you like to use. We appreciate your time, as always. Thanks for hanging out with us. For John and Nick, I'm your co-host, Mark. We'll catch you next time here on Retirement Planning Redefined.…

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Ep 56: Four Ways The SECURE Act 2.0 Might Impact You 15:16

2 years temu15:16

15:16

After being discussed in Congress for nearly a year and a half, the SECURE Act 2.0 passed in January. Listen to today’s episode to see what you need to know and learn four ways the new changes might impact you. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Welcome into another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. We're going to tap into the SECURE Act 2.0, a couple of items you might want to be aware of if you're not and four ways that it could impact you. They went ahead and got this passed at the very, very end of 2022, right before the Christmas break, and some more changes coming down the pike. A lot of changes really in the SECURE Act, but we're going to touch on some of the bigger ones today. There's a lot of little nuance, so if you definitely have questions around it, absolutely make sure you're talking with your financial professional or reach out to John and Nick and have those chats with them at pfgprivatewealth.com. Nick, what's going on buddy? How are you? Nick: Doing pretty good. I can't believe it's already almost February. Marc: Yeah, at the time we're taping this, it's like a day away. So we'll be dropping this first week or so of Jan... or February, excuse me. Yeah, time is moving quickly, so, for sure. John, what's going on with you, my friend? John: Not too much. Doing all right. Looking forward to... Nick's probably not looking forward to this, but the upcoming Super Bowl. Two good teams. Marc: Yeah. John: So looking forward to checking out those quarterbacks go at each other. Marc: Yeah. Yeah, it was an interesting playoff season, for sure. So not the result I was looking for either, Nick, but all good. So... Nick: Yeah. Marc: It is what it is. But let's talk about some of these changes, guys, because they did a ton of them, but I want to touch on some of the bigger ones and any other ones you feel are important you want to touch on as well. But like I said, right there before Christmas, literally like the Friday before Christmas, they went ahead and passed this as part of that omnibus bill, all sorts of stuff in there. And they went tinkering around with some more things. And the first one on the list that might affect most people is the RMDs, the age. They changed it again. So you can give us a little backstory if you'd like from how you want to go, with whatever angle you want to go in, but explain to us what they did. Nick: Sure. So for many years, the RMD, or required minimum distribution age for pre-tax retirement accounts was 70 and a half. And at least... I was just personally excited when they got rid of the half year, because why in the world did they have it in the first place? Marc: Right. Nick: But so in early 2020, they pushed it back to age 72, so people picked up about a year and a half. And now, for anyone born between 1951 and 1958, the starting age is 73, so they bumped it back one more year, and for those born in 1959 or later, the age is 75. So from a standpoint of impact for people, there are... I would say, a big chunk of people out there are taking withdrawals from their retirement accounts, and the amount that they're taking is pretty close to their RMD amount that would be required anyways. But for those that aren't, it gives them more time to defer funds, let them continue to compound. And from our side of things, it kind of just lets us be a little bit more strategic on creating a liquidation order and helping clients figure out which accounts we should start taking withdrawals from when. And this just builds in more flexibility, which is nice. Marc: Yeah. So overall, do you kind of like this concept of them pushing this back a little further? I mean, either way, to me, it feels like it works for them to get more tax revenue, right? Because either the accounts get bigger and they get more RMDs you have to pay taxes on, the government will get their share, or people are doing Roth conversions, they have more time to plan for something like that, for example, and they're getting tax revenue that way. So either way, to me, it seems like it's a win-win for them. Nick: Yeah. And realistically, yeah, I think just in general, people don't like to be told what to do. So anytime, from looking at it from a client standpoint, just to know that there's flexibility, because I can say that I've had more than one and probably more than 10 clients be unhappy when they realize that requirement distributions are a thing to only realize that they were taking the money out anyway. So it's just literally the psychological impact of choosing to do it versus being forced to do it. Marc: Okay. All right. So that was one big change that they did. John, let's talk a little bit about the special catch-up contribution. Give us a quick breakdown on normal catch-up contributions, something that happens all the time. They change the numbers from year to year, what it is, but then also this new little wrinkle they added, and let's get your thoughts on that. John: So normal retirement contributions are what the normal limits are for 401k. Whether you're going to make a contribution or not to it, you do max out. And what is the current [inaudible 00:04:43] Marc: 22,500, I think. John: ... up as well. Nick: Yeah. Marc: Yeah. Yeah, I think it's 22,500 for the current- John: Yeah, so 22,500 is kind of normal. Catch-up provision is once you're over the age of 50, you're able to actually do an additional amount, which they consider, hey, catching up for basically your retirement. So for 2023 it's going to be 7,500, which is a nice jump from last year. What makes it even better is anyone between the ages 60 and 63, starting in 2025 can be up to about $10,000. So that is really significant. And why that is, we found a lot of people, when they get into their fifties, they're kind of in their highest income earning years. So it really comes up quite a bit where it's like, hey, I want to save more money, but I'm really limited in what I could do. So this is really going to help people defer more for retirement, which ultimately in the long run helps them overall have a larger nest egg and more retirement income. Marc: Yeah. And so it's interesting what they did that. So yeah, they moved it on, they added this extra four year thing. So again, what's your thoughts on that? It doesn't kick in until 2025, but do you think that's a useful tool to add even more room for people to sock away? John: Yeah. I think anything that encourages people to save is definitely a positive for retirement. Marc: Yeah. So what's your thoughts on that, Nick? Nick: Yeah. I mean, again, it's one of those things where when you add in flexibility and the ability for people to kind of adapt, especially knowing how many 401k plans allow for Roth contributions now. So even if it's from the perspective of, hey, maybe they don't want to add more pre-tax money, but they want to take advantage and use some of that buffer for Roth funds, it's just nice to have the flexibility and ability to be able to put in more funds. Marc: Yeah. Okay. An interesting one that caught a lot of people off guard, guys, especially a lot of advisors, was the 529 to Roth transfer option. So let's talk a little bit about that. That's been a kind of nice little wrinkle. People have been pretty surprised by this. Nick: Yeah, this is interesting from a perspective... So for those that aren't super familiar with 529 plans, they are essentially education accounts, and there are funding restrictions. And one of the, in theory, downsides on 529 plans previously were the way and the timing of when you had to use the funds. And so essentially, using funds in the years that costs are incurred, there were some ability to be able to transfer funds from one person to another. But now, essentially what they're doing is they're kind of reducing the quote, unquote risk of overfunding a 529 plan, and they're letting people essentially use 529 funds to make Roth contributions when they start working. So as a reminder for people, to be able to contribute to a Roth IRA, there has to be earned income. So when there's earned income, you can contribute up to a hundred percent up to of the earned income, up to the maximum amount. And then there are income limitations and restrictions on how much you make versus how much you can put in. To be honest, realistically, this is probably going to be something that is much more tiered towards higher income earners. Definitely the kind of, maybe there's grandparents that have a significant amount of money and they can overfund a 529 plan for a grandkid, and it can be a way to essentially start to kind of build in some future wealth transfer, which is cool, to be able to have a creative way to be able to do that. Most likely, that's how I see it playing out overall. So it's just nice to have that flexibility. And I was pretty surprised as well that it was something that they came up with to integrate into the plan. Marc: Yeah. So if you wind up not using it, maybe you got the one kid that doesn't use it or you're going to give it to the other kid or you don't have a second kid, it just gives you options. I mean, other people still looking at different ways to fund for college, but it's nice to have that extra wrinkle in there. So a lot of people have been fairly pleased and surprised by that one. John, any thoughts on that from yourself since you've got a couple of little ones? John: Yeah. Yeah, I think I like this. Because one of the things that I've always thought about is let's kind of take off the table overfunding, but what if they don't use it at all? What if they decide to go a different route from traditional college or what if they get a ton of these grants and things like that? So I think it's a nice feature. Kind of puts a little peace of mind where it's like, hey, if they don't end up using it and you try to just pull it out, you get hit with these taxes and penalties on the growth. So I think it puts my mind at ease a little bit more knowing, hey, if I contribute to this, that it'll still be going to them and they'll still be able to benefit even if they don't use it for school. Marc: Yeah, definitely. All right. So let's talk a little bit about the other changes kind of addressing, I guess, maybe students if you will. And there's a lot of changes that they did, guys, to just, I think in general, company-sponsored plans, a lot of little nuances. Again, you may want to talk with your financial professional to see. They did some little things like moving, I think, Roth options right now, so matching contributions can go to a Roth, and lots of little stuff. So you may want to have those conversations. But let's talk about the changes to the company 401k match, especially for younger folks. I think this was maybe to address the whole student loan debacle and all the conversation that's going on about to forgive, not to forgive, whatever the case is. So explain a little bit what they've done with this. Whoever wants to take this one. John: Yeah, I'll start with it. So yeah, I definitely agree with you there, Mark, on kind of throwing this in there to help with what we have going on with the student loan issue there. But this is pretty cool in my opinion. I got a younger sister-in-law, and she's got... law student, hefty amount of student loans. So we were talking about some different things and we talked about helped her out with picking some stuff in her employer plan. And it came up to this, and this exact conversation came where she said, hey, I'm paying such a big amount on my student loans. I don't have any extra really to save for retirement. So this is a great way, in my opinion, to try to... That way they can get something going to the retirement account because, as you know, Nick and I do planning for people, there is sometimes a shortfall and the earlier you can start the better. So I think this is definitely a great way to get people to at least get the money into the retirement accounts, and ultimately, when they have the cash flow, they start to see what their match is doing and growing, I could see them starting to contribute themselves a little bit more as well. Marc: Yeah. What's your take on it, Nick? Nick: The student loan burden is so significant for so many people, and that's separate... The whole validity of it and does it make sense and all that kind of stuff, I think, is a separate conversation. And so the reality is that there are a ton of people living with that, and so anything that can be done to provide some sort of options and flexibility and encourage employers to assist with that, I think, is a big deal. Because ultimately so many employers, they are looking to have these sorts of certain certifications, certain underlying education requirements, all that kind of stuff. Marc: Right. Nick: So they're a participant in kind of the machine, so to speak. So to me, it makes sense to integrate some kind of creative thinking into it. Marc: Okay. Well, so that's some of the major changes. Anything else I missed, guys, you want to bring up? I know like with the RMDs, little things like they reduced the penalty, which was a pretty hefty penalty even though a lot of times I don't think they enforced it. Any other little items that you want to share? John: No, I think these are the main ones that are good. And like you say, always if people have any questions, definitely reach out to us. And as we're meeting with clients, if something pertains to them, we always bring up kind of what makes sense for them. Marc: Yeah, okay. All right. Well, there you go. So some major items there that they updated when it came to the SECURE Act 2.0. There's no really big gotchas, it doesn't seem, like there was with the first one with the removal of the Stretch IRA, for example. That one seemed to be annoying for a lot of advisors and stuff like that. Any big gotchas here that you feel like that's make it a real concern? Or for the most part overall some decent changes? Nick: Not that I've seen so far. Marc: Yeah. Okay. Yeah, you never know, right? I mean, they still got, I mean, what is this, 10 years on some of this stuff? Some of the stuff starts in '23, some of it '24, some of it '25, some of it 2033. So they got a while to roll some of this stuff out, so we'll see how it all plays out. But if you've got questions, again, make sure you reach out to the guys, have a conversation. Don't forget to subscribe to us on Apple, Google, Spotify, all that good jazz. And you can find all of that information at pfgprivatewealth.com. That's pfgprivatewealth.com. Guys, thanks for hanging out with me. As always, appreciate your time for John and Nick. I'm Mark. We'll see you next time here on Retirement Planning Redefined.…

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Ep 55: How Bonds Work: What Retirees Need To Know 17:43

2 years temu17:43

17:43

Too many folks misunderstand bonds, how they work, and what role they play in a proper financial plan. We’ll address some of those bond related issues on today’s show. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: Welcome into another edition of the podcast, Retirement Planning - Redefined with John and Nick from PFG Private Wealth. And it's time to talk about bonds and really what you need to know and how they actually work. And there's a lot of conversation around that, obviously in '22, certainly to the fact that nothing seems like a good idea as far as things go. And when the market is weird, often we run to bonds for the safety aspect, but there's some things going on there too. So, let's talk about how they actually work, what role they might play in a proper financial structure and how maybe this here lately, it's been a bit of a different show in that regard. So guys, welcome in. Nick, what's going on buddy? How are you? Nick McDevitt: Pretty good, pretty good. Staying busy. Marc Killian: Yeah, that's good. Very good. John, and you? How are you doing? John Teixiera: Doing all right. Marc Killian: Yeah? John Teixiera: Hanging in there. Marc Killian: How's the bond market? A little rough. John Teixiera: Little rough if you've owned some already. Could be good if you're buying some new ones. Marc Killian: Yeah, right. And that's the difference, right? John Teixiera: It depends where you're at. Marc Killian: Depends where you're at. So yeah, we're going to talk about that a little bit. First thing I want people to understand is that the bond market is actually way bigger than the stock market. A lot of people don't know that. That's just an interesting little tidbit, but it is a lot bigger. John Teixiera: Yeah. Yeah, a lot of people aren't aware of that, but- Marc Killian: There's a whole lot more stuff in there. Right? John Teixiera: Yeah. Marc Killian: But let's go into the misunderstandings, right? So first off, just why don't you guys give us the basic gist of how a bond works, for folks who just might not know? John Teixiera: Yeah. So, to break it down to its simplest form, a bond is basically loaning your money to a public institution or private entity. So, you're basically saying, "Hey, I'm going to give you my money." And for that, the company typically provides some type of interest rate for that period of time where they have your money. And as far as obligations go from that company or public institution, there's a promise to pay you back. And that promise is only as good as the paying ability of that company. So, I think that's bonds in a nutshell, if you try to break it down to its simplest form. Marc Killian: Yeah, you're loaning the company money, right? You're lending them money versus as a stockholder you're buying a piece. John Teixiera: Correct. Marc Killian: Yeah. Okay. Nick, what's the difference between a bond and a bond fund? So, like an individual bond and a bond fund? Because most of us wind up with bond funds and we're maybe not totally sure what it is we have, we just say, "Oh, I have some bonds." But what they really have is a bond fund. Nick McDevitt: Yeah. The reality is the difference as far as how it affects a typical investor is the important part to understand. So, with bond prices and interest rates having an inverse relationship, so again, if interest rates go up, bond prices go down, then the issue that somebody that has invested in a bond fund has is it's a pool of bonds. And so, you're relying upon the manager of that bond fund to manage the buying and selling of those bonds while trying to protect the value of your account and gaining interest. So, sometimes the easiest way to guide people through this, and obviously we've been having this conversation quite a bit lately with people, especially with how we've invested in fixed income in the last few years, is that if you own an individual bond, you have the ability to hold it until maturity. And when you hold it until maturity, you then receive the par value back. And this might be a little bit too much detail, but we'll try to give people a good understanding of this. So, oftentimes people get confused with the difference between the initial issue of a bond and then when it trades in the secondary market. So, when a company initially issues the bond, that's when they are receiving the loan basically, or the money from whoever purchases that bond initially. So, when they sell the bond, the bond sells for $1,000, there's a promise to pay that the company issues with the bond as well as, "Hey, in the meantime we're going to pay you an interest or a coupon." So, let's just say it's 3%. So, company A, we'll call them Apple, Apple issues a bond in 2020 for five years and they're going to pay 2% over those five years. And as long as whoever holds that bond at the end of that five years, no matter what they paid for it, they're going to get $1,000 back. That's the promise. Marc Killian: Okay. Nick McDevitt: So, we'll say John bought that bond initially, but two years into it he decides, "Hey, I no longer want this bond, I'm going to go ahead and sell it." So, because of the market situation and what's going on in the market, that bond in the secondary market, because interest rates have gone up, even though he paid 1,000, he can only sell it for 900, because that 2% coupon rate isn't competitive. Marc Killian: Right. Yeah. Nick McDevitt: So, let's say he sold it to me and I bought it for 900. So, I got a discount like, "Hey, I'm only getting 2% so I'm not going to pay less, so I'm going to get a discount." And now my goal is I'm going to hold that bond until the end of that total five year period and I'm going to collect that 2%, but I'm also going to get the extra $100 on top, which makes my return, my overall return, my total return higher. So, the difference is that when people, as an individual, when they own those bonds individually, they have more control over holding that into maturity and essentially getting their par value back while collecting their interests in the meantime versus when it's in a bond fund, that performance is strictly going to take place dependent upon how it gets managed. And we know obviously it's confusing and it's always a tricky spot of trying to help people understand and giving what might be too much information. But with this, I think a lot of times it's the more you know, the better it is to try to understand it. Marc Killian: Yeah. And we're going to talk a little bit more about some normal things that we're used to thinking about or hearing and how it messes us up a little bit. And John mentioned earlier, he is like, "Yeah, if you're getting into a bond right now, higher interest rates, they look a little bit more appealing than someone who bought maybe a year ago, as the rates were down lower." And to your point, you said the inverse reaction. I was always taught, an easy way to remember it is when rates are high, bonds die. So, little rhyme, helps you remember it. So, when rates are high, bonds die, because the value. Right? So, they have that inverse reaction. That's just a good way to think about it. So, John, a lot of people consider them to be the safer, conservative part. I want to jump to the standard 60/40 for just lack of a better term. Right? We've grown up with this thing of when the market's rough go to bonds, right? As you get older, go to bonds, because it's a safer option and we feel as though it's that safe, conservative part of the portfolio. Do you agree with that approach normally? And what's your take on it this year when it's also having a lot of trouble? John Teixiera: Yeah, normally I'd say that you're correct. Yeah, normally that is how it works. This year it's a little different obviously with the Federal Reserve really trying to hedge against inflation. So, they have been aggressively raising the rates. So, that's where you're starting to see these bond values drop drastically. And I don't know the exact number, but I think year-to-date we're almost negative 10 to 15% in the [inaudible 00:07:35] bond index. Marc Killian: Yeah. It was close to 15, last I checked. John Teixiera: Yeah. That's actually what's happening in people's portfolios where if the market was down, they have at least a bond portion that's level or maybe down a little bit or up a little bit. But right now it's like, hey, you're getting two sides of it where they're both getting hammered. This is where it's important, and Nick mentioned, how can you mitigate that risk? And you can do it, it's just a matter of structuring the portfolio and getting the right type of investments to understand, "Hey, in this type of environment, this is where I want to be." So, it really comes down to, again, this is your investment plan. Like, "Hey, what's your investment plan to mitigate this type of environment and how do you take some of this risk out of your portfolio?" Marc Killian: Yeah. Nick, back to you, and the question I asked you a minute ago, people say, "Well, individual bonds themselves may not still be a bad option right now in this current bond environment, but it's the bond funds that tend to be taking a bit more of an issue." And to your point, you mentioned, actually maybe it was John who mentioned them being a pooled investment, but either way, right? And that bond fund manager, whereas an individual bond may still be an okay option. So, that's really where you need to talk with your advisor or have an advisor to find out if you're thinking about bonds, what's the right avenue to go? Am I on track there or is that incorrect? Nick McDevitt: Yeah. To a certain extent, for sure. And another thing that happens, one of the things that we've integrated into clients' portfolios, and we did it a few years back, was bond ladders. So, exchange traded funds that hold bond ladders that mature at a set maturity date, so that way we can still use a pool of investment that's a little bit more efficient to buy and sell, and we know when the maturity data is going to be, so we can act accordingly and adjust accordingly. So, there's always this give and take, but using instruments like that, using individual bonds, are absolutely ways to take a little bit more control in the space and have less of a negative impact on the overall value of your portfolio. John Teixiera: Yeah. And to jump in with what Nick's saying there- Nick McDevitt: Sure. John Teixiera: ... I think it comes down to ownership. When you have a bond fund, you don't actually own those bonds, the fund does, you own a piece of the fund, but when you're talking about individual bonds or this basket of bonds, that's where you technically have ownership of that. So, you can control when it's bought or sold. Marc Killian: Okay. Yeah, that's great information. Thanks so much for sharing that. So, guys, anything else that I might have missed on the bond, what we need to know area? Either one of you, feel free to jump in with something. Nick McDevitt: I think from the perspective of overall for investors and just understanding in general the space that we're in, one thing that we've done even recently is we've started to add in some shorter term CDs for clients, because that helps them get a decent rate of return because those rates of returns have gone up and it lets them stay a little bit more flexible with where we expect rates to go, which we still expect some increase on them in the next six to 12 months, where they can then stabilize a little bit. But just like anything else, it's important to have ... Different aspects of your investments have different jobs, and bonds and fixed income still play a necessary role. And realistically for people that are retired or are going to be retiring soon, a lot of the pressure on portfolios for the last 10 years has been all on the stock market because you really couldn't get any returns on the fixed income side. So, now at least, hey, we can get four to 5% a lot easier on fixed income, which will help to generate returns and income for people, which it makes it a little bit easier for us to get a little bit more conservative in portfolios, which has been much more difficult over the last 10 years. So, there's a little bit of a silver lining in here and as we adapt to a new normal like we always do, there will be positive to it. But when you're in the midst of it and going through it, like we have this year, it can be difficult. Marc Killian: Yeah, no, and that's why I wanted to talk about it because again, we were taught this traditionalism and if you're doing things on your own, you're thinking, "Hey, I'll just jump over to bonds, while the market's been so rough this year after," to your point, "the market being fantastic for the last 10, 12 years." And it may or may not be a good move. Right? So, that's just why, understand the basics, or maybe a little bit more than the basics, and then make sure that you're having a conversation with an advisor. Bring somebody into the fold, especially if you don't know what you're dealing with, because there's a lot out there in the bond arena. So, good stuff. Thanks for sharing on that, guys, I appreciate it. Again folks, if you've got questions and need help, jump on over to the website, book some time with them, reach out to them, let them know you've got some questions around bonds and how it works or what you're thinking about doing, or strategy, conversation, questions, whatever that might be. And get some time with the guys at pfgprivatewealth.com. That's pfgprivatewealth.com. A lot of good tools, tips and resources. You can send a message into the podcast. Like I said, you can schedule time to talk with the guys. Lots of good stuff there. So, pfgprivatewealth.com. And we'll wrap it up with an email question again this week here on the podcast, Hoover wants to jump in on this, totally fine. Wendy had a question. She says, "Guys, our 401(k) plan at work now has a Roth option for available future contributions. Should I take advantage of that?" I'm curious too, guys, because actually my wife, they just offered that to her actually. She just got the paperwork I think about three days ago. So, what's your thoughts on 401(k) Roth options? Nick McDevitt: The annoying answer is it depends. The reality is that most likely it does make sense to take advantage of it. Some people cannot make contributions to regular Roth IRA accounts because the income is too high. So, this is their only way to be able to make contributions. Our feeling in general is that the more options you have from income sources in retirement, the better. So, especially if you don't have any Roth funds built up or if your pre-tax funds are substantially more than your Roth funds, it's a good idea to integrate that. And so, one thing that people have done to just start it, so as an example, let's say that somebody's contributing 10% of their income and maybe their company matches 4%. Okay? So, the match that a company puts in is always pre-tax. So, in reality, if they're doing 10 and they get a 4% match, 14% of their income is going into pre-tax money. So, maybe you say, "Hey, out of my 10 I'm going to make it 4% Roth to match the match that they're getting. The other 6% is pre-tax, and now it's like 10 and four." That could be a good place to start. And then maybe build it up where some people say, "Hey, each year when I get a raise, I bump up my contribution by a percent or 2% and try to build it up to make it match, until you're maxing out." But absolutely, building that up to build up some Roth funds for yourself is a good idea. Marc Killian: Yeah. The limits, so if you think about a traditional Roth IRA, there's earnings limits, right? You can only make a certain amount, I think it's 144,000 for individuals, 214, somewhere in that neighborhood, I think, for married couples. And they change it all the time, but I think that's '22. But with a Roth 401(k) at work, there is no income limit. So, if she makes more than that, for example, she could still put money in. Nick McDevitt: Exactly. Yeah. But you don't have to deal with that income limitation anymore, which is great. Marc Killian: And it's a newer piece too, John, right? Not every company has this option yet, so they're starting to come on more and more though. John Teixiera: Yeah. Yeah, it is a newer piece. I'd say the majority of companies we run across now do have them. Marc Killian: Okay, good. John Teixiera: But I'd say we do run across some that still don't offer it, but it's catching on pretty quick because a lot of people do like that option. Marc Killian: Yeah, for sure. So, I think definitely to answer the question, just make sure that you're double checking, check the various different limitations. If you don't have a professional you can bounce those questions off, certainly, hopefully the guys gave you some thoughts there. But you can always just call, reach out, and get a little bit more in-depth if you have some of those Roth 401(k) questions versus a Roth IRA, and those questions too, as well. But reach out to the guys, don't forget to subscribe to the podcast, Apple, Google, Spotify, all that good stuff. It's Retirement Planning - Redefined with John and Nick, and you can find them online at pfgprivatewealth.com. Guys, thanks for your time. As always, appreciate, have a good close out to the holiday season as that's upon us, and we'll see you guys next time here on Retirement Planning - Redefined.…

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Ep 54: Warning Signs: How To Spot Problems In Your Financial Life 15:41

2 years temu15:41

15:41

Just like the lights on your dashboard can indicate if something is wrong with your car (like low tire pressure or leaking oil), there are indicators in your financial life that might point out that you have a problem that needs to be addressed. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Welcome in to another edition of the podcast. Thanks for tuning in to Retirement Planning Redefined with John and Nick here from PFG Private Wealth to talk with me about some warning signs, how to spot problems in our financial life. The years winding down, getting into the new year. It's maybe a good time to have the radar out looking for things that we are doing maybe incorrectly that we can improve. If you got a warning light on your car, you're probably going to take it in for service. So maybe the same thing financially speaking. What's going on guys? John, how you doing my friend? John: Hanging in there, getting ready for the holiday season. Marc: That's right. John: Thanksgiving is next week, right? So yeah. Marc: Yeah. John: Doing all right. Marc: The time we're taping this, yeah it's upon us. Nick, how about you my friend? Nick: Rough couple weeks for Bill's fans, but besides that, doing pretty good. Marc: Overall though they're still pretty stout, so. Nick: Yeah. Marc: Yeah. But it happens. It happens. Well, John: Well the Bills kind of do this every year where they kind of, last year they did it too. They like a two or three games stretch where they just kind of lost focus. Marc: Yeah. Yeah, yeah. They're still young too, right? So be a lot too. Nick: Still painful. Marc: It is painful. This is true. Hey man. Lions, that's all I'm going to say. Every time. Although two weeks in a row and we beat the Packers. I'll take that any day of the week so. Nick: We play you guys on Thanksgiving. Marc: Oh well, I'm sure it'll be a slaughter then. Poor Lions. Nick: Let's hope so. Let's hope so. Marc: The poor Lions. I just have no faith anymore after 30 years. Well anyway, let's get into warning sign, right? There's a warning sign right there that maybe I should move on. But let's talk about a couple different things. Yeah, this is a pretty big one, this first one actually. So many people are getting ready, as they get ready for retirement, maybe they come in to see an advisor for the first time and they truly have no idea what it costs to fund their lifestyle. That's kind of a big red flag. And I think many people come in to see folks like yourself the first time. They also kind of undershoot that number. Right. Oh, it'll only take us three grand to fund our lifestyle. And you start digging in, you're like, no. So they have no idea. Nick: Yeah. Yeah. Usually the most painful process of the planning process is digging into the expenses and figuring out what that looks like. Marc: Right. Nick: The thing that we try to really emphasize and harp on with people is that it's one thing to being able to, because there are a lot of people that say, Hey, I save X amount of my money. We've got some savings in the bank. And then we don't pay attention really. And we carry some debt here and there, but we're usually able to pay it off at a certain point and stuff like that. And it's like, okay. So from a lifestyle standpoint, as they're working, it's not a huge factor. The problem is that when we don't know what that is and we carry it over into retirement, not understanding what's being spent and then it makes it really hard to create a plan and to figure out, hey, when you're going to be able to comfortably retire, things like that. So just so many other things, taking inventory, understanding what numbers we're dealing with and then trying to make adjustments from there is really important. Because we joke with people, we're not the money police, but it is important for us to get a good understanding of where things are going from a money perspective so that we can help you plan for the future. Marc: Yeah, definitely. And you got to have a good grasp on what it truly costs and most of us just wind up not doing that. So again, the big warning sign, if you truly don't know what that is. John, maybe another warning sign is focusing on that magic number. Right. We've heard it for years and most people kind of do the million dollar thing and just use that because it's easy. But that might be a warning sign. Why are you so hyper focused on a specific number if it maybe takes less or more? John: Yeah. That's 100% accurate. And I think that, I forget what company it was that came out with that commercial. What's your number and what's your nest egg number or your goal? And I think people got fixated on that. And it's not necessarily what is your goal from a nest egg standpoint. It really should be what is your goal from an income standpoint so you can fund your lifestyle and how long can that income realistically last? So when we do planning, it's a matter of hey, like Nick said, we look at, hey, what's your lifestyle? How do we make sure you continue that and where are the assets? Where's the money coming from to produce that income going into retirement? Because you can build up as much as you want, but if it's not giving you income that you feel comfortable with, you're going to not really hit your goals and stuff you want to do into retirement. Marc: Yeah, yeah. You have a million dollars, right, and then you find out that 700,000 would've done it and you worked three years too long or you need $2 million and you stop too soon. John: And things to consider, and actually we're in an interesting time period now with this, is that the interest rate environment and also inflation kind of determines what your lifestyle is going to be because your nest egg could be with interest rates going up, it actually helps you a little bit more from an income standpoint. But with inflation happening, it's kind of deteriorating your spending power. Marc: Yeah. Yeah. John: So long story short, there's a lot of factors that go into this, which is why it's so important to do planning versus hey I need to get to a million dollars because what does that even mean from an income standpoint? Marc: Yeah, exactly. And the eight and a half, yeah I don't care what the government official number is, but use your wallet when you go to the store and various things. It's a lot more than that in many aspects of life to that inflation conversation. So it might be the official number, but I don't know, I think milk's like 50%, so milk's a whole lot more. All right, mental image guys of what your parents did. It's as easy for a lot of people. I'm a Gen Xer, so my dad wasn't retired long, but I think back on it and I'm like, I don't think he did any retirement planning. So it kind of worked out so great. I mean I could see people doing that, right? Well my parents really did very little and they seemed to be fine, so I'll be fine. That's not really the best idea to go off of because I don't know how his financial life was completely different than what mine is 35 years ago. Nick: Yeah. And the reality is, is that that generation, for the most part between their focus was with their parents coming out of great depression, things like that, it was paid down your debt. It was a much less expensive, even adjusted for a lot of different variances of inflation. Less expensive to own a home and they paid off their debt, they had social security, they had pensions and very much lived within their means. Lifestyle and consumption weren't really kind of the name of the game back then. And so it's just very different. So they went from having a certainty of income via their pension and social security to now people have to save money in a 401ks, need to learn how to generate income from that. We just went through a 10, 12 year period where as John just kind of referenced good luck getting any sort of return on any sort of fixed or conservative type of investment. And so it was just much more difficult. And that doesn't even factor in the longevity aspect that we have to deal with. How much more expensive healthcare is. Marc: Right. Yeah. Nick: All these different things. Marc: Yeah. No, it's easy to do, right, especially if you're doing the procrastination thing, you can kind of talk yourself into anything, but probably not the wisest thing to do. And again, that's the whole point of the podcast is how to spot some of these warning signs in our financial life. Getting worked up about the current events? Man, I get this one too. How do you not, right? I mean at the time we're taping this, it's even crazier. I mean we've got all sorts of things, the market volatility, the election cycle being over, but still problematic. Bonds are down because of the interest rates. We've got still conflict thing. It's hard not to let current events affect how you feel about your portfolio, but that's also dangerous time for jumping in and just saying, well I'm going to make a change because I feel like I have to versus making sure that you have the right strategy. John: Yeah, the media doesn't do us any favors. Marc: Oh gosh, no. Yeah. John: With how they portray things and definitely, Marc: It's the sky is falling [inaudible 00:08:16]. John: The sky's always falling. I think they obviously realized that negative media kind of grabs more eyes and more clicks. So that's what they focus on. This is really where you want to always go back to the plan. And if you don't have a plan, highly recommend you get one. So I'll use COVID as an example. That one month period where the market was dropping significantly, the fastest drop potentially ever over that three week span, when Nick and I were doing quite a bit was when we were doing reviews with clients, we would look at the plan and say, hi, how does this affect your plan? Are you still on track? And when they would see that they were still good, the fear kind of went out, like okay, I kind of took that punch and I'm still doing okay. And then it helped them make better decisions and not having any knee jerk reactions. And I'll say, I'm having the kind of same experience here. We're doing reviews, obviously a lot of stuff going on, markets volatile. And we look at the plan and the plan still looks solid. People are like, okay, that's good to know. I'm glad to hear that I'm still on track and this hasn't affected my lifestyle going into retirement. Marc: Yeah. John: I think that's what most people want to know is, hey, is all this stuff going to affect me? And if it does, how do I adjust to that? Marc: Well people are kind of pleasantly surprised to find out it's not been as bad as they thought. But it also depends on how your allocation was set up. It depends on how you were weighted your portfolio. Because 21, right, these two years back to back are pretty interesting, right? 21 was majorly up, 22 is all over the map and down. Right. Anywhere between 15 and 30% depending on the indices. And so there's like, there's just kind of this wide spectrum there and if you were heavily weighted in tech, then you're taking a bigger beating than someone who wasn't, right? So that's all part of the game. It's all part of how you're strategizing and that's why you've got to get these things done, working with a professional to help you through it. Last one, financial warning sign, the nursing home, long term care conversation, however you want to put it, kind of doing that. Well, almost like the parent thing, well it wasn't a big deal. It probably won't be for me or we'll take care of each other or the kids will pitch in or that kind of thing. It's just going to kind of naturally work itself out. It's probably a big warning sign. Somebody mentioned longevity earlier in this conversation, right? That's going to add to it. Nick: Yeah. This is as far as the cost of healthcare in retirement, including whether it's assisted living or nursing home facility care, it's a really tricky one because obviously those costs have gone up substantially. It's become more and more difficult for those that want to try to use insurance to help with it. Whether it's a traditional long-term care or some sort of hybrid policy that's become kind of a cesspool of space where it's very difficult to find something. So it is difficult, but just like anything else, factoring it into the plan and understanding that hey, these expenses may be coming down the road and just making decisions, whether it's with legal documents and or how you save your money to just try to plan for as many scenarios as possible is really important. Marc: Yeah, definitely. You can't just put your head in the sand. We are living longer, the costs continue to go up. They're typically outpacing normal inflation. I hate to even think of what some of the numbers might be right now. So just don't put this stuff off. Make sure that you're thinking about these, looking and identifying these potential warning signs moving into a new year, especially moving into the new year. Take some action, start getting some things done. That's going to do it for the main section of the podcast. We'll finish off with an email question that has come in as well. And of course if you've got questions, need some help, stop by the website, pfgprivatewealth.com. You can find a lot of good tools, tips, resources, you can subscribe to the podcast, all that good stuff at pfgprivatewealth.com. And we'll finish off with a question from a Charlotte who says, "Guys, I'm 60 years old and I'd love to retire and I think I can, but it seems like of course everyone I know waits till 65, 66, somewhere in that neighborhood. Is early retirement a bad idea?" John: Yeah. Charlotte, I think one thing you got to realize is you want to look at your own situation. So whether it's good or bad isn't depending on somebody else, it's really up to you. We're talking about the nest egg and the income and lifestyle and the question really comes down to does your income sources going into retirement and nest egg allow you to retire at 60 to maintain your lifestyle till when the planning ends, whether that's age 90, 95, or 100. Marc: And she thinks she can, so why not? Instead of think, right, how about no? Right. John: Correct. Yeah. If you think you can do it and you've done a plan that looks solid, definitely you don't want to miss out on some fun years, especially earlier in your 60s when you can do more stuff. Marc: Yeah. But if you just think or how certain are you, right? So do you have a plan or is this something you're back of the napkin kind of thing? Are you kind of guessing this out? And I think the other piece in this, John maybe is did she take into account, hopefully she did the five year gap before she can get Medicare? John: Yeah, that is the biggest thing. And that's why we see a lot of people that hold off on retirement til 65 for that. Marc: Yeah. John: So when you're doing your planning Charlotte, you want to make sure that you're budgeting for independent plan, whether it's through a specific company or the marketplace, whatever it is, you want to budget that into it and make sure you're getting good insurance coverage because you never know what's going to happen. Marc: Yeah. Is early retirement a bad idea? Probably. I mean, no, it's not a bad idea. It's a bad idea if you don't have a plan and can't do it. Right. If you've got everything you need, then it's a great idea. So that's the importance of a plan. That's the importance of strategizing. And that is why we do the podcast. So if you need some help, it is Retirement Planning Redefined. Reach out to John and Nick and the team at PFG Private Wealth at pfgprivatewealth.com and we'll catch you next time here on the podcast. Don't forget to subscribe on Apple, Google, Spotify, all that good stuff. And we'll see you next time. For John and Nick, I'm your host, Marc. We'll talk to you next time.…

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Ep 53: Getting It Right: Irreversible Financial Decisions 14:33

2 years temu14:33

14:33

There are plenty of decisions that you’ll make in the retirement planning process that can’t be undone, so you want to make sure that you make the right call. On this episode, we’ll explain why these decisions are so important and can’t be undone. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Back here for another edition of Retirement Planning Redefined with John and Nick once again, joining me to talk about getting things right the first time. There are some irreversible financial decisions or close to it in retirement and there's plenty of things we've got to deal with. So we want to make sure we get it right as often as possible, right out of the gate, because some of these things just cannot be undone. So you guys being in Florida, mulligans, everybody plays golf. Mulligans are a thing, for sure. You didn't see that? Some mulligan, its a give me. Let me do it again, kind of thing. But there's things in retirements that you just got to get right the first time. So that's going to be the topic this week. Nick, what's going on, buddy? How you doing? Nick: Good. Good. Staying busy. Speaker 1: Yeah. Keeping rocking and a rolling. John, how you feeling my friend? John : I'm feeling good. I'm feeling good. I'm looking forward to this topic. I'm actually a couple of weeks out from finish some construction in my house and I wish that the original builds and plumbers got it right and knew how to glue some pipes that wouldn't have caused a leak down the road. But anyhow, Speaker 1: Yes. John : Looking forward to getting that construction done, so. Speaker 1: Yeah, I tell you what, that's a great point. Right. So we all want people to do their job right the first time. Certainly when you hire someone, that's what you expect. But these are some decisions that many people do to themselves because so many people DIY retirement. Right. One of the benefits to turning to financial professionals like yourselves is to get these things right so that you don't have to worry about having these issues that can't be undone. So let's walk through a few of these. We're going to start with a biggie. Again, there's a little caveat here, but for the most part, once you turn on social security, it is what it is. So you have to be sure that you're, especially if you're activating it early, that this is what you want to do. There technically is a do over, but most people don't really go through it. So kind of explain if you will guys. John : Yeah. So this is a big one because social security equates to roughly 30 to 40% of kind of average households retirement income going into retirement. So it's important. And Nick and I, everything we kind of say goes back to the planning and this can't be stressed enough because once you start taking it, let's do over for the first year out of it, that is what it is. And I'll kind of use an example of a client that we had where she was a survivor and she wasn't fully aware of her options and the strategies she could use. And just luckily she was referred to us right before she started taking social security. And I don't want to go too much into details, but basically the strategy that she was just going to take initially, I mean would've cost her a lot of money down the road. So we simply had to basically call social security, stop the payment and redo the strategy. But again, by not really having a game plan, she could have cost herself a lot of money down the road. And this doesn't happen just for survivors. It's anybody, whether it's your taking your own benefit or divorced, things like that. So there's a lot of things to evaluate when you're taking social security and when's the best time to take it. Speaker 1: Okay. So and again I mentioned the fact that you can pull it back. Right. You have what one year. Nick is that right, correct? You have one year. Nick: Yeah. So essentially the rule is that if you begin your social security benefits, you have 12 months to essentially reverse your decision that you started receiving benefits. You have to pay the benefits that you received back and then you can defer it again as if you never took it. So years ago, you used to be able to do that over a much longer period of time. And then the Social Security Administration caught onto that and they restricted it to a 12 month period. Speaker 1: And let's be honest. Most people, the reason doesn't get really used very often is who wants to do it. Most people don't want to, as soon as they hear, well, you got to pay the money back. They're kind of like, eh, so I don't want to do that. Right. So, Nick: Yeah. Speaker 1: [inaudible 00:03:57]. Nick: Yeah, it's a tricky thing. Speaker 1: Yeah. Nick: It's like we've had some clients inquire about this recently and their sub full retirement age, so sub 66 or 67 or somewhere in between there and in instances where, because where the confusion lies for a lot of people is they want to continue to work maybe, but shift to part-time. Speaker 1: Yeah. Nick: And they don't realize that the part-time income is still in excess of the amount that they can earn without any sort of penalty, which for most people is around $20,000 for the year. Speaker 1: Yeah. Nick: And when you start to factor in the fact that you're permanently locking in a lower benefit plus running the risk of having a penalty on top of it for the rest of your life, it's not ideal. So, Speaker 1: Right. Nick: That's definitely a major decision and something that we like to model out and test out for people. Speaker 1: And again, so technically there's a caveat to undo in a very limited window, but it's just best to get this right the first time, because for all intents and purposes, it's irreversible. You just don't want to go down that path. Same with the spousal benefit situation here on a pension, should you be lucky enough to have one. Once you select this, I don't believe there is any do-overs on this. It is what it is. Nick: Yeah, that's correct. This is definitely a topic that we go through in the classes pretty in detail. Years ago, it was a lot easier for people to mess this decision up. It still happens sometimes, but it's less common because oftentimes the spouse has to sign off on it. But the reality is that having a really good understanding of what sort of survivor benefit you're going to choose, if you are eligible for a pension through your employer is a major, major decision and something to take into consideration. And one thing to throw in here too, for those that live in the state of Florida, oftentimes the projections that they send you or that you can access easily online, I should say are options like one and two or A and B. And there are two other options that are oftentimes better options and you usually have to request those. So we've seen that be a mistake that people have made only thinking that they had two options when there's actually four. Speaker 1: Gotcha. Nick: So that's something and it's important to know. Speaker 1: Okay. John : And what Nick's referencing there is the Florida pension plan, the state pension plan. Speaker 1: The state. Okay. Got it. Thank you. So John, what about life insurance? What is the kind of the impact here? Irreversible financial decision, somebody might say, well, can I just cancel it or whatever, right, kind of deal, but what are some important points to know when it comes to this? John : Yeah. So when you're doing planning, one of the things we look at is we start with the need for life insurance. And that really depends on dependence and some other factors, but it's easier to get when your younger. So that's one thing we take a look at and there's different types of policies that allow you to convert. And not to get too much into the weeds, but the older you get, some health issues might come up where you can no longer get it. So that's where it becomes very important to understand, Hey, is this something I really want to have down the road and does it work in my financial plan? And if it does, the sooner you can get it the better because things come up as we all know. As you get older, health issues come up. So you want to get it right the first time. Speaker 1: And that's where you could run into a problem, right, especially if you wait too long and then a diagnosis happens, then it could either make it impossible or certainly incredibly costly. Nick: Yeah. Especially, we joked a little bit in the last podcast about John and I hitting 40 this year. And the reality is, is that I know, I know. Everybody I'm sure is shedding a lot of tears. Speaker 1: A lot of our listeners are like 40. I would trade with you in a minute. John : Let's see, 40 back surgery this year. It's a good year. Nick: Yeah. All of a sudden I got tendonitis in my arm and my shoulders all messed up. Speaker 1: And right now you have listeners going, I'm going to go in and slap him. Nick: I know, I know. But the key, the point with this whole thing is that some of these things, maybe not some of the things that John and I talked about, but maybe a type two diabetes or some sort of health issue that pops up where it doesn't in reality, necessarily in most people's mind affect what your life is going to be like. It could have an impact on what life insurance is going to cost for you. Speaker 1: Yeah, exactly. Nick: And so you pay for it out of your bank account, but you qualify with your health. And so usually the sooner you can lock in any sort of coverage, the less expensive it is and that'll pay off over time. Speaker 1: No, you're exactly right. I mean, we're coming up, we were joking about this, but to really drive home your point, we're coming up on the 10th anniversary for me of my open heart surgery. I was 41 years old. I didn't think anything of it. And so it made it really difficult to get life insurance or get some different kinds of insurance once I had that happen. So I monkeyed around and waited too long. Right. And then I was like, well, I didn't know this was coming. Now luckily it was more lifestyle and things. So after enough of a time period, I started to eventually get some offers, but it is more expensive. So it is important to definitely have this stuff in place if you can, sooner than later, because again, it makes the financial impacts pretty great. So definitely keep that in mind as well. And then finally, choosing a retirement date. We debated on this one, about throwing this on the list because people would definitely can argue and say, well, sure you could change your decision on this. If you pencil in a date to actually retire, you can just move it around as you need to. But if you want to take it that a step further, depending on how you want to go, if you've given notice at a position, maybe not, right, it may be something you can't undo that. So just talk to me about the impacts of just either penciling in, choosing a retirement date to actually walk away just from different pros and cons. Nick: Yeah. I can jump in on this a little bit. This is something where in reality, I think what we found is maybe a specific date is necessarily the key or the thought process, but understanding the range that you're looking at and understanding what sort of cost you might be incurring if you do retire early. So for example, if your somebody that has saved and done a good job of that and is looking to retire early, call it maybe 62, understanding the impact of how much lower your social security benefit is, understanding what sort of costs you're going to have when it comes to premiums for your health insurance. So as an example, we've got clients that are paying, some clients that are paying between eight and $10,000 a year for health insurance premiums per person, when they were used to while they were working, paying closer to three to $4,000 for the household. So that's something that can have an impact on that retirement date, where maybe you've been thinking in the back of your mind, Hey, I've got a good nest egg. I'm just going to plan to go a little bit early, but didn't quite realize the expenses associated with it. On top of that, from a planning perspective, we do have other clients that they knew that they were going to retire early. And so we put strategies together for leading up to retiring early. They were able to save some extra money into non-qualified or non-retirement accounts. And by taking their income in the first few years of retirement, out of those accounts, it allows them to qualify for certain subsidies for health insurance, which brings their costs down. So again, when we have clarity on what the goals and the objectives are in the financial world, there's usually ways that we can plan around it and try to optimize it. And so having a good idea of what that looks like and the impact of the fallout from that goal and then planning around that, it allows us to be more strategic. Speaker 1: All right. So obviously there's lots of little things in there where again, you could make the argument that you could move some of these things around, but ideally we want to get it right the first time. And often, as I mentioned earlier, excuse me, when we're doing it ourselves, we don't know a lot of these little things, a lot of a little caveats and whatnot. So we want to get it right the first time. And that's where working with a professional really comes into play. So if you got questions, you need some help as always make sure you're checking with a qualified pro before you take any action on something here on this podcast or any other, you want to make sure that you're seeing how it reflects and affects your specific situation. So stop by the website, pfgprivatewealth.com. That's the home for the team, pfgprivatewealth.com. You can subscribe to us on Apple, Google, Spotify, iHeart, Stitcher, all that good stuff. Retirement Planning Redefined is the name of the show. You can look it up on those apps if you'd like, or just stop by the website again, pfgprivatewealth.com. We appreciate your time here on this week's podcast. We'll see you soon for another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 52: Retirement Planning From A Psychologist’s Point Of View 17:21

2 years temu17:21

17:21

We always talk about the money side of financial and retirement planning. But what about the mental aspect of that big life change? Today we’ll break down an article written by a Licensed Professional Counselor (Kate Schroeder) for Psychology Today, titled The Psychological Investment In Retirement . Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Welcome into another edition of Retirement Planning Redefined. Thanks for hanging out on the podcast with John, Nick and myself, as we're going to talk about retirement planning from a psychologicalist... Can't talk, from a psychologist point of view. Say that three times fast. What's going on, guys? How're you doing this week? Nick: Pretty good. How're you doing? Speaker 1: Apparently I can't talk, but other than that I'm doing all right. What's going on with you, John, my friend? How're you feeling? John: Pretty good. I think last time we spoke, I don't know if I mentioned in the podcast, I was getting ready for kind of lumbar spine surgery. So, four weeks out and feeling pretty good, so everything went well, as far as I can tell and looking forward to rehabbing and getting back to normal. Speaker 1: Good. Good to hear. Nick, my friend, I think we're taping this just before the beginning of September. You and I are, I think John is too, football fans for sure. And so, it's just around the corner. By the time we drop this podcast, it should be out. So, looking forward to the new season? Nick: Oh yeah. Yep. Bills are opening up this season next Thursday night, so [inaudible 00:00:57] I'm pretty excited about that. Yeah. Speaker 1: Very good. Very good. So good. Well, that's always a fun time of the year for a lot of sports fans, so they'll be happy to have that back. But let's talk about, and I guess if you want to think about that analogy for a second of sports fans, we get kind of... Lots of people, sports fans get pretty depressed when the football season ends or whatever season it is that they're into, sport they're into. And then they get rejuvenated when it gets closer. Well, if you think about this from a retirement planning standpoint, a lot of people get pretty stressed, clearly, it's a big difference, I understand, but I'm just kind of using that as an analogy to when it comes time to making that shift from working into actually being retired. So, there's these big mental hurdles, if you will, to major life changes. So, we'll put the link in the show notes as well, but we'll break down this article written by a licensed professional counselor, Kate Schroeder, hopefully I'm saying that right, for Psychology Today and titled The Psychology of Investing for Retirement... Excuse me, The Psychological Investment of Retirement. As I mentioned earlier, I can't talk today. So, let's talk a little bit about this because, Nick, I know you got a little bit of a story to share along the lines of this as well, but a lot of people don't consider, and this is kind of the first key point, the consequences of what that transition looks like when they walk away from something, the routine, the definition maybe, whatever term you want to put to it, that their life has had for a number of years, and they go into retirement. It's a big, big hurdle for people. Nick: Yeah. We've had a bunch of clients retire recently in the last couple of years, my parents have retired recently, so I see it a little bit more on the personal side with them and the transition for people, especially during a time we've had the last couple of years during COVID, post-COVID, people typically need purpose and structure. And so, for those that are not used to having that extra time, or maybe they weren't self-employed, or maybe they got up and went to the office every day, they had that redundant kind of structure that at times, I'm sure they didn't like, but maybe didn't necessarily realize how big of an impact it had on kind of their overall life and their planning. Having all that extra time and having to find ways to fill that time and not kind of have it just turn into a black hole of sleeping in, just maybe watching TV, watching the news, doing things that aren't necessarily healthy for you, or kind of keep your mind sharp and going. The feedback that we've gotten from quite a few people is that that transition has been a little bit more difficult than they expected. Speaker 1: For sure. John, the author goes on to point out that the number one thing retirees struggle with is finding something consistent and kind of genuine or lasting in what they're moving to. So, we need purpose as people, we need to find something that, I don't know, makes us want to get out of bed, so to speak. John: Yeah. Yeah. I would a hundred percent agree with that. I think finding something that has meaning to you or someone else, or really, I would say just helping people. I think what I've seen a lot of people where they've struggled with that, it's like, "Hey, what do you enjoy doing? What can you do to help some other people or even family?" So, I've found a lot of people get fulfillment from that. So, whether it's finding a charity that you've kind of probably, maybe want to participate in and never had time to, at this point, it'd be a good time. I'll use my parents as an example, they watch my kids two to three days a week and that kind of gives them some consistency and purpose. It's funny, my dad will actually... They've been retired for a little bit, but I can tell when he is getting bored, when he calls me up and he's like, "Anything you need to be done around the house that I can come do?" And I'm like, "Yeah, sure, come on over." So, for at least them, their consistency is their grandkids and kind of helping out family, but I think everyone needs to find kind of what's important to them to give them some meaning and some level of importance to the ones around them and themselves. Speaker 1: For sure. Well, as humans, look, I mean for a lot of ways we looked forward to retirement. We're like, "Yes." Maybe you're tired of your job. You're like, "I can't wait to get out of here. This is going to be awesome. I'm going to do nothing." But at some point the lack of structure does kick in and we kind of require that, we kind of crave that, I think as a species. We need some guardrails or something just to keep us on the track if you will. And so, people view their time off or that break as more of a stressful period because maybe there's just nothing... Something productive is not there. Or even just the accomplishment of completing tasks. So, it can be that simple. And imagine when you guys are dealing with retirees, again, that's the big hurdle. They have the excitement of wanting to be retired, but then at some point they do need that structure to be there. And maybe for some people that's, Nick, I don't know, going back to work or maybe finally starting some hobby thing they've always wanted to do. I'm sure you have clients ask about that. Nick: Yeah. For some people it can be... We've had some clients that do a great job with it, that are almost more busy than they were when they were working. Speaker 1: That's the old saying, too. Right? Nick: Yeah. Yeah. Have that mindset of maybe it's lifelong learning, that sort of thing. And then they take up, whether it's a sport or activity like golf. Or we had one client recently who has been trying to learn a new language and traveled and went and stayed in the country that they were trying to learn the language and kind of immersed themselves in it. And that was something that they really enjoyed kind of doing. And so, one thing just because this has been on my mind a little bit, just kind of seeing different clients go through it is just thinking further out, down the line, and even personally for myself, what are the things that I enjoy doing? What do I like to do? And one thing I've realized is, and it sounds pretty basic, but just getting outside, just being outside, even if it's just for a walk or going for a bike ride, walking along the water, fortunately we have that here, can be a really good mental reset. So, that's one thing I've heard from people where if they're finding themselves maybe kind of falling into a routine that they're not a fan of, having some sort of reset activity that kind of snaps them out of it, gets them going out, doing different things. It's almost like the snowball effect where just doing one or two new things will oftentimes spur you into trying other things. Speaker 1: Yeah, for sure. John: Nick actually, and I'm following next month, you just hit 40 this year, so I think he's giving some personal experience on his midlife reset here. Speaker 1: Is it midlife at 40 or have we moved that to 50? Because I'm 50 and I feel like it's now. John: For myself about turn 40 next month, let's say it's moved to 50. Speaker 1: Okay. All right. Yeah. I'm feeling it pretty heavy right this minute, so maybe 50 is better. You both got a ways to go, so that's okay. So, I was going to pivot to your practice or just your clients in general. Do you see people that sometimes come in mentally prepared for this at all? And either whoever wants to answer, feel free to answer, but where they kind of come in and they're already leading that charge by saying, "Hey, I'm a little worried about the transition," or asking for advice on that, or even just saying, "Yeah, I'm prepared. This is what I want to do." John: Yeah. Yeah, I think we see that quite a bit. We see it a lot when, let's say, one spouse is retiring early. Speaker 1: Oh okay. Good point. Yeah. John: I think when that happens, it's the person that's retiring early starts to think, "Hey, what am I going to do while you're working?" So, I'll say those people are typically thinking ahead of the game of, "Hey, while he or she's working, I need to find something to do. And this is what I'm going to do." And we've had people that get into photography or start doing kind of more physical activity, whether it's running, bike and things like that, just kind of becomes more of a routine like we talked about. So, I'll say yeah, I think we see a lot of clients that do start to mentally prepare for it. And normally if it's a couple situation, it's kind of what we like to do together, whether it's traveling or whatever it might be, but we definitely see that quite a bit. Speaker 1: Yeah. I'm five years older than my wife, and so she teases me already. She's like, "I don't know what I'm going to do if you retire before me," she's like, "Which you probably will." She's like, "I don't know if I'm going to be jealous about that or not, it depends." So, that's yet to be seen in my life. Nick, when you guys have people that are struggling here, is there a role that you guys can play as advisors that help in that? Can you share other things you've seen or have you kind of encountered that where you do get leaned on? Nick: Yeah. So, I would say what we tend to see people that have worked their whole lives, they're transitioning into retirement and they have done a good job saving, but they have a little bit of a scarcity mindset. And they're really concerned about whether or not they can afford something or by default, that's one of the benefits that... That's one of the things that have probably helped them throughout their working years save more money, was being a little bit more on the conservative side, but then in retirement they find themselves struggling to use the money that they saved up. And so, from a planning perspective, we try to tell people that, "Let us tell you now. So, whether it's a thought process of you want to consider getting a second home in the mountains, or you want to bump up your travel budget for the first 10 years of retirement, or there's a certain sort of, whether it's a social club or a golf course or something that's going to help kind of bring stability to your life, but you're concerned about the money aspect of it. Let us run the numbers for you and show you that it's okay." And we go through different scenarios. And what we've found is because for many people, we're trying to help them just improve their decision-making process when it comes to finances, and so we really try to help focus on the fact that we don't want them to be self-limiting. The goal for us working together is to communicate for them to share with us what's important to them, so that we can help get them there from a financial perspective, or at least give them the confidence they need to go ahead and make that decision. And frankly, we see that... We get emails or calls every couple of weeks on these people that are starting to make that transition and think about those sorts of things, so that's probably the most fun part about what we do. Speaker 1: That's cool. Well, we'll wrap it up with this kind of last little question here to follow this up. Is this something you guys actively include that's kind of a softer side, if you will, of the financial planning process, not just the Xs and the Os? Is it something you think about as a team that you guys discuss these other parameters that's not just again the Xs and Os? John, if you want to answer or either one of you guys or both. John: Yeah. I think it is something that we consider and I think it's a case by case, so not for everyone do we kind of go into this with planning, but specific individuals where we feel like, "Hey, maybe they need a little bit of guidance or a little assistance on some options, what's out there, we'll definitely go into it." And in the classes that we teach and go through, there's a section of the book that actually has some resources where pre-retirees, or retirees can go in and kind of see what's out there. What are people doing? It's always good to hear what others are doing to give you an idea of like, "Oh, I didn't realize this was out there. I can do this." Speaker 1: Nick, anything else? Nick: Yeah, I would just say kind of a little bit of what I alluded to in the last portion where just trying to get them to think about things more broadly, and instead of kind of going through... Because so many people, it's like they have a friend or a brother or a sibling or whatever that did this or that did that. And they're used to kind of sitting back and watching and maybe not participating as much. And so, them just really kind of being comfortable enough to open up to us, tell us what they really want to do, so that we can help figure that sort of thing out. From a financial perspective... To arm them with the information they need from a financial perspective, to be able to make the decisions that they want from a lifestyle perspective, I think is one of our top goals. Speaker 1: Well, again, it's a huge component of retiring, we get so focused on the Xs and the Os, making sure do I have enough money to retire, all that kind of stuff. And obviously that's clearly important, but there is a lot to think about from the mental side, getting prepared to step away from maybe something you have been doing for 20, 30, 40 years, whatever the case is, how it affects the other person in your life. There's a lot of little parameters that go into retirement other than just the money. And so, that was the point this week here on the podcast. Again, we'll include the link to this reporter, this article from Kate Schroeder that we talked about here today on the show. And before we go, Nick, I wanted to give you a chance to mention, you guys have an upcoming class pretty soon here if folks would like to get involved. Give us a little bit of a rundown on that please. Nick: Yeah. So, John had mentioned earlier in the session that we do classes and we know a lot of our clients have come through those classes, so starting on September 15th, we'll be holding our normal Retirement Planning Today class at the Pasco-Hernando Porter Campus. It's a two day session, so it's about three hours each day. People can attend on the 15th and the 22nd, which are Thursdays, or the 20th and the 27th, which are Tuesdays. And so, we go through a full gamut of information. We bring an attorney to go through the estate planning portion of the class. And we always welcome those that have come through the class already, they're always welcome to attend again as well. So yeah, just wanted to let everybody know that was coming up. Speaker 1: Yeah. Good stuff. Now, this podcast is probably dropping out shortly before that, so what's probably the fastest way to see if there's still space available? Just to call the number? Just to call the (813) 286-7776? Nick: Yeah, go ahead and give the office a call or shoot either John or myself an email and we can do the connection for you. Speaker 1: Okay. So again, it's (813) 286-7776 if you'd like to attend that Retirement Planning Today class, or you could email John or Nick, the basic way to spell their name, John, Nick@pfgprivatewealth.com. And there's a lot of good tools, tips, and resources there. Guys, thanks for hanging out. John, I'm glad you're feeling better, my friend. John: Appreciate it. Thanks. Have a good one. Speaker 1: Absolutely. Nick, thanks as well, buddy. And I'll catch you guys in a couple of weeks. Nick: Talk soon. Speaker 1: All right. We'll see you next time right here on retirement planning redefined with John and Nick from PFG Private Wealth.…

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Ep 51: Financial Planning Considerations When You’re In Between Jobs 13:39

3 years temu13:39

13:39

Finding yourself between jobs can be frustrating—whether you were fired, laid off, or just had to step away of your own choosing. But it can also present some opportunities. Let’s discuss some of the challenges and opportunities that you need to consider if you’re between jobs. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: It's time for another addition of the podcast. It's Retirement Planning Redefined with John and Nick and myself, and talking about considerations to ponder if you find yourself between jobs. Guys, I want to frame this from the standpoint of 50 plus, okay? So, and maybe in that pre-retirement stage. Obviously we've seen the great resignation the last two years, people leaving jobs, fired, laid off, downsized, had enough, don't want to go back to work, dealing with COVID, the fear of COVID, whatever it might be. Just that mindset of changing jobs later in life. Some challenges to be aware of. You guys got a lot of clients of various different ages, but again, I want to look at this from an older standpoint. If you've got references from a younger standpoint as well, but I'd like to look at this from a retirement type of standpoint. So let's jump in and get started because I know we're up against the clock today. But first how you doing John? John: I'm doing all right. I'm on day 12 of COVID and looking forward to this slight congestion to go away. Speaker 1: Fantastic. John: Other than that I'm good. Speaker 1: Oh, yeah. Well, day 12, that's no fun. So all the best to get better soon. Nick, what's going on my friend? How you doing? Nick: Better than John. Speaker 1: Fair. Fair point. Nick: Yeah, just got back from some traveling up north to my hometown in Rochester, and I go each summer and it's always kind of a good reset for me. Speaker 1: Yeah. Nick: So times with friends and family and a little bit cooler weather. Speaker 1: I was going to say you got away from the heat didn't you? Nick: Yeah. Honestly it was still pretty darn hot up there a lot of the time. Speaker 1: Yeah. Nick: But cooler than here. Speaker 1: Well, let's dive in and take a look at some of these things. So again, whatever reason you've left, fired, laid off, walked away, you're own choosing, whatever. If you're 50 plus guys, maybe it's not the worst thing. I want to try to look at a couple different angles. Maybe it's time for a new career. I've talked to so many people who are like this job is super stressful, it's just wearing me down, and you add all these other elements in the modern world of what we got going on. And some people just want to kind of scale back. If they're financially in shape, it's not the worst idea to maybe look for something that brings you some better joy and less stress. What do you think, John? John: Yeah, I definitely agree with that. And it comes down to kind of what you just said there and kind of looking back at what we talked about a couple of weeks ago on saving for retirement. So if you have enough saved up, you are in the driver's seat to go ahead and make this kind of decision of saying, "hey, I don't enjoy this anymore." Speaker 1: Yeah. John: My passion is X and I really want to do it. So, the more you have in the bank or saved up, the more options you have to go ahead and really consider what you want to do. Because it could take six months to a year to really get into that field [inaudible]. Speaker 1: Right. Are, we tapping into emergency fund money in that kind of vein? John: You might have to. Speaker 1: Yeah. John: Again, everyone's situation's different. But you may have to do that depending on kind of where you're at. Speaker 1: And where do you guys usually go with emergency funds? Six months worth of expenses in case of a job loss or 3, 6, 9? What do you guys kind of tend to recommend? John: Usually if there's two incomes, we're usually around six months. If there's only one income that might kind of extend it a little bit longer than that. Speaker 1: Gotcha. John: And again, everyone's situation's different. I don't want to speak for Nick, but I have certain people that are more conservative and they're a minimum. They want one years and some two of emergency funds. And I have other ones that they're fine with six. Speaker 1: Yeah. John: So every everyone is definitely different. But for me, I would say you want to be at least at six months because you never know what's going to happen. Speaker 1: Yeah. Okay. Well, Nick, actually it works well for you for my question. The next question which is, maybe that new career is actually a job for yourself, right? Maybe if you're 50 plus and you've kind of had enough and you're thinking about changing positions, maybe it's because you really wanted to go into business for yourself. There's a skill set that you have or whatever that you've always wanted to explore. Nick: Yeah. So, one of the ways that we can look at this because obviously we end up being kind of a testing ground for people to explore some of these things. So the first thing that we try to do is put it into the plan. And with the software that we use, we can kind of model different things and be able to say to somebody, hey, if this is something that you're looking for, do you have an idea of what it would look like from an income standpoint, or how long it's going to take you? Or even work backwards and say, hey, let's figure out how long you could try this new endeavor without having any income, so that you can kind of enter into it with some sort of game plan to look to see what's feasible or what's reasonable and kind of look at it that way. But it's absolutely depending upon the field, it's easier for some than others. Some fields it may not be kind of conducive. And there's also something to be said for trying to build up your own business while working elsewhere. In reality, if you're going to run your own business, you're going to be working 60, 70, 80 hours a week anyways in the first few years. So kind of getting it up and started while you have something else going can kind of give you the light at the end of the tunnel, and give yourself an exit strategy without putting yourself through so much financial stress. Speaker 1: That's not a bad idea either. So, all right. So those are the emotional or the job type setup scenarios. So let's talk a little bit, we talked about emergency fund or having some money to kind of stop gap us, but let's look at some specific pieces to that. Guys, so John, health insurance, okay? If you're walking away or have been asked to walk away, you may or may not have some healthcare options or even starting a business, right? Especially, again, if I'm talking 50 plus you might be still looking at 10 years let's say before Medicare. So what do you do? John: Well, you have a few options and kind of the first one people look at is Cobra. So, you are allowed to stay on your workplace plan for, Nick, was it 18 months, Nick. Is that right? Nick: I believe so. John: Yeah, 18 months. So yeah, you could stay on there, but we find every situation's different again, but that typically can be very expensive. Speaker 1: I was going to say, you got to have the funds for that though. John: Yep. Then there's the marketplace. Just making sure seeing what else is out there on an individual marketplace. And with the loss of a job, that's considered a qualifying event so you should be able to jump right into another plan. And then also if your spouse is still working, there's the opportunity to jump on him or hers plan. So, big thing when you're doing this is you really want to look at the plan you're going on and what benefits you need. The last thing you want to do if you have some health issues is jump onto a worse plan that's going to be not beneficial for you and your family. Speaker 1: Yeah, definitely. But it is something you got to think about. Don't just walk away or again, whatever the reason is and make sure that you've got some sort of plan in place for the health insurance, because at 50 plus again, this could be, and at any age really, but certainly at 50 plus, problems tend to come at us more fast and furious as John and I know. We were talking about some things a little bit here, so they start to show up on you a little quicker. So you want to make sure you got a plan in place for that. Nick, is it a good time to talk about that 401k and roll it over? Obviously, if you're walking away or been asked to leave, you don't want to just leave it behind, correct? Nick: Yeah. I would say that oftentimes that is the case. The qualifier and disclaimer, just to kind of give an example is understanding what the next steps are. So for an example, tying in with some of the questions that we had previously, if somebody's going to be considering going into business for themselves, then maybe they're going to need some sort of startup capital. One of the things that we've done with clients before is, and not all plans allow this, but they've been in a plan that allowed for loans on the 401k, even though they're not employed there. And they were able to access the money to help with their startup costs and pay it back over time. Speaker 1: Okay. Nick: Versus if that money was in an IRA, and especially if they're under 59 and a half and they needed some capital, incurring some taxes and penalties, things like that. So, depending upon what the next steps are in the overall strategy. If it's a typical situation where you're shifting to a new employer and there's new benefits and you have other money you're looking to consolidate and want an advisor to help you with your funds, then the rollover could absolutely be a good time to do that. Speaker 1: So if that's the case too, maybe it's worth having a conversation about Roth conversions, right? So that could be on the radar as well, because then you're taking advantage of maybe some of the tax opportunities now versus later. But more than anything else, I think just leaving it behind is typically not a good idea because you've got more control if you move it over as well as to tend to, can probably find some cheaper options as well. Because they can be a little expensive. So something to ponder. Nick: Yeah. Speaker 1: All right. John, last one, I'll toss to you buddy. Any severance conversation that may come up? Now again, if you've been shown the door, you might get a severance package, or even if you've just volunteered to leave or whatever, you might get some sort of severance package treating it a little bit like a pension conversation. Sometimes they offer a lump sum. Sometimes they offer monthly installments. Maybe that's some of the money you use to carry you over. But is it worth having a conversation about where you put that money and what you use it for? John: Yeah, I think it is. And again, everyone's situation's different, and it's important to understand where you're at currently. Do you have that six months of emergency savings or a year? And really that will dictate quite a bit how you take it. Or just kind of going back to some of our questions here. Are you trying to start your own business? Like Nick mentioned it's going to take you some money, some capital to get that started. If you are, maybe you do take the lump sum option. Or if it's a monthly installment and you're going to get extra money, you don't need it, and you kind of do the math and it's like, hey, if I do the monthly, I'll get an extra whatever it is, 20,000, 30,000 over a period of time. Speaker 1: Right. John: Then you go with that option if you don't need it. So I hate to sound like a broken record, but it all comes back to your plan and what fits your situation. But definitely with severance packages you just don't ignore them and just take the first option they give you, you want to evaluate it and figure out what's best. Nick: And just to kind of jump in here. John: Yeah. Yeah. Nick: I think this is a good time to kind of remind people. And one of the things that we try to tell people is that, use us for clients that are working together with us. We have the core of their plan built already. Speaker 1: Mm-hmm. Nick: And we're able to help model these sorts of question, and help them through these decisions to give them kind of at least the data they need from the perspective of finances. And then what that a lot of times does is because sometimes the concern of finances can be self-limiting. So a lot of times when we're able to kind of paint a picture from a financial standpoint, it lets them then prioritize the rest of the factors that they need to take into consideration and figure out how to kind of attack this. But these are the sorts of questions that we're here to help on. Speaker 1: Yeah. I guess what I was going to say, if you're 50 plus and whether you expect to be shown the door or not, or you're choosing to leave whatever the case might be. It's one of those situations where you have got to have a plan in place. And if you're over 50, hopefully you do, hopefully you are thinking about the retirement journey, the future, whatever that might be, and you have a plan in place. And if you don't, then reach out to the guys at PFG Private Wealth. Again, the podcast is Retirement Planning Redefined. If you're catching this through a newsletter or something like that where you've come across it and you haven't subscribed to it yet, consider doing so. You can find this on all the major platforming apps like Apple, Google, Spotify, all that stuff, and you can also find it all centrally located back at the main website, PFGprivatewealth.com. That's PFGprivatewealth.com. Anything else guys that I might have missed before we go? If you're thinking about job transition, I think just having a good strategy ahead of time is probably the best recipe. John, what do you think? John: I agree with that. It definitely put yourself in a situation to adapt to whatever comes up because as we know, things are always going to come up. Speaker 1: Always going to come up. Well, thanks for your time my friend. I appreciate it. I know we got to let you get out of here. You've got to go sit with some clients. Nick, thanks for your time as always my friend. I'll catch you next time on the show. This has been Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 50: Can You Get An A+ On Our Retirement Planning Quiz? 17:10

3 years temu17:10

17:10

Don’t dread this as much as you hated hearing these words as a kid, but it’s time for a pop quiz! We’re putting retirement planning preparedness under the microscope with 5 critical questions to which you need to know the answers. So sharpen those pencils and let’s see how ready you are for retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Welcome into the podcast. It's Retirement Planning Redefine with John and Nick and it's pop quiz time. We're going to have a little fun here with a retirement pop quiz. And don't worry, it's only five questions and it's multiple choice. So we make this pretty easy. Guys, did you enjoy pop quizzes? When you hear that phrase, do you automatically get filled with dread or with joy? Nick, I'll start with you. How you doing buddy? What's going on? Nick: Oh, pretty good. Fortunately, I was a pretty good test taker, so never bothered me that much. Speaker 1: Okay. Nick: But, so I luck out that way, but I know a lot of people dread it. Speaker 1: Oh, for sure. Well, you know what? You are the first person, congratulations that I've talked to when I've doing the pop quiz that have said, all right, let's do it. I have no problems with it. Nick: I don't know if I can go that far, but yeah. Speaker 1: Oh, there you go. Nick: At least not depressed. Speaker 1: Not depressed. Okay. John, what's going on my friend? How you doing? John: Ah, doing all right. Speaker 1: Yeah. John: I was in between, it depended on the class. Speaker 1: Okay. Okay. John: If was something I enjoyed, Speaker 1: Yeah. John: It was, let's roll. If it was something I dreaded, I was like aw man. Speaker 1: I think that's fair. I think, well, this, John: Got to throw this at me right now. Speaker 1: Yeah. I think that's fair. But this should be pretty easy, because this is right up your guys' alley obviously. Right. So this is retirement planning, pop quiz. So folks can play along with us here. I'm going to basically give you guys the question, give you the multiple choice answer. Let you give us the best answer from the choices. And then if you'd like to elaborate on something different or why none of them are a good idea feel free to do that as well. And I can never hear pop quiz anymore without thinking of the movie Speed from the 90s now. I only hear the Dennis Hopper going pop quiz, punk. Nick: Great movie. John: That was just on TV the other day. I was scrolling and I saw, and I'm like, oh man, like Nick just said, this is a really good movie. Speaker 1: It's a remote dropper. Yeah. John: Yeah. Speaker 1: Yeah. You'll drop the remote and watch it. So, pop quiz for the guys here. Let's see how we do. This is kind of just a retirement pop quiz, just five basic questions to check your preparedness or what you might have done and see if we should do things differently or whatever. So number one, I'll give this one to you, John. At what age should people start saving for retirement A, when they begin working B, after they buy their first home or C, once they've paid off all their debt? John: I'm going to have to go with A, when you begin working. Everyone probably has a different situation, but I'll say that as soon as you start making income, it's good to start saving towards retirement or saving in general. And yeah I'll use one of my clients as an example, started out young, I think started with me when he was 24. And a big question was, Hey, I'm making money. What should I do? And we just started overfunding his retirement accounts. And seven, eight years later life happened, two or three kids. Speaker 1: Sure. John: Bought a house, all this stuff. And with all the expenses, he can't save as much, but he's built up such a nice nest egg from his 20s that he's really in an excellent spot. So we just really started out strong and, Speaker 1: That's a good idea. Yeah. John: Everyone's seeing those charts where the sooner you start, the more you have at the end, but yeah, there's a lot of truth to that. So I would say as soon as you start an income and have some money, I would definitely sock it away because you don't know what the future's going to hold. Speaker 1: Now that's a great idea because then when you do, when life does happen, which I was thinking about that with the home thing, it gets tougher. So then if he's only able to put just a little bit away from time to time or on each paycheck or whatever, from the job getting the match or whatever, then you're already up on the game a little bit. So I like that. Nick, want to chime in at all? Nick: Yeah. I think the answer is just yes. As soon as you can start saving, you should even, and I know it's something that's talked about a lot, but even if you can just save up to the match and kind of get some free money from your employer, Speaker 1: Right. Nick: The sooner because it's more about habits than necessarily the amount and just kind of getting used to creating smart habits is really a positive thing that last a long time. Speaker 1: Yeah. That's a good point too. And let's be honest. See, come on, when you paid off all your debts, does that ever happen? Like we'd always be chasing something. Right. Somewhere through life. Nick: Yeah. There's always something. Speaker 1: Yeah. Well I'll do it after I this or I'll do it after I that. Right. So you don't want to go that route. All right, Nick, I'll give you this one here. Number two, which of these is the best estimate of how much income you'll need in retirement, A 50% of your income, current income, B 85% of your current income, C, 100% of your current income or D, none of the above. Nick: This is one of those questions that I'll probably annoy people with on the answers. There should maybe be like another option that lets you pick multiple. So the key kind of word in this is need. So in theory, 85% is probably the number for a lot of people. Speaker 1: That's kind of what we hear, right? That's the term we hear. Yeah. Nick: But at the same time, from the standpoint of many people that we talked to, they're looking to, especially after the massive market run that we've had over the last 10, 12 years, even including this pull back recently, a lot of people have ended up with more money than they expected, and they're wanting to do things and travel and enjoy, and it becomes less about need more about what actually do you want to do? So I would say somewhere between 85 and 100%. One other thing that we've seen for some people is, especially those that work at large employers. We've had a couple people pointed out recently in the last six months. We've got some people that were used to paying 100 to maybe $200 a month for health insurance per person. And now when they see what they're going to pay with Medicare and so to supplement things like that, there's some expenses that maybe are higher than what they expected. So I would say somewhere between that 85 and 100% is where a lot of people end up. Speaker 1: Yeah. Yeah. I think we hear the 85. John, I used to hear this comedian. It was pretty funny a way of looking at it. If you've ever been on puddle jumpers. Right. Any of us that have gotten on a plane where you go to little island hopping or whatever, they ask how much you weigh. Right. Because then they say, well, you go, well, why? And they go, well, because we want to know how much fuel to put in. And this guy goes, well, fill it up. Here's my credit card. Right. It's on me, I'll pay because the idea is, so you don't want to just get sort of to retirement and then say, well, 85% enough. I would say 100% is what a lot of people are hoping for because they typically don't want to go backwards in their lifestyle. Is that a fair assessment? John: Yeah, I would say so. The big thing that typically where I think most people assume 85% is the mortgage might be gone or maybe you were saving 15% into your retirement account. So, that's a spend that's gone, but 100% is you want to maintain the lifestyle. But everyone as Nick kind of stated earlier, everyone's different and everyone's situation's different. So very important to do a plan and make sure that you're living off the income you want to live off of versus just needing, so. Speaker 1: What you need. Yeah. Okay. Fair enough. All right, John, back to you and I've kind of basically just going back and forth with you guys a little bit here. John: Yep. Speaker 1: Number three, which of these do you find that retirees fear the most, pretty easy one here I think A, not leaving enough to the kids, B running out of money or C nursing home care? John, what say you? John: I'm going with B, running out of money. That seems to be the biggest fear, because I think most people don't want to go back to work. And then we hear a lot of times where we're doing plans and it's Hey, I don't want to be old greeter at Walmart at some point. So, let's make sure that the plans solid. So, one thing to alleviate this fear when we're doing planning is, we try to be conservative with the rate of return we're using, the expenses to make sure, Hey, it's better to air on the side of caution versus be aggressive with these things because last thing we want to do is hit your mid 80s and you're looking at your accounts and you starting to get a little nervous, so. Speaker 1: Exactly, exactly. And I think that's, everybody's going to say B, although Nick, C is right behind it for many people. I mean like neck and neck. Nick: Yeah. Yeah. There's definitely in theory, I think a lot of times B and C, C can lead to B, realistically in other words, Hey, is there going to be enough money left over for me to have respectable care towards the end of my life? So ultimately it ends up leading to do I have the money, sort of thing, or have I planned properly and do I understand how that ties together? But yeah, I've got a few clients. What I've seen that a little bit more too is in a lot of single clients that they're heavily focused on that, especially women oftentimes, Speaker 1: For the long term care, you mean? Nick: Yeah, for sure. And a lot of men like to use the line, just take me out back and that whole thing. Speaker 1: Yeah. Nick: Hear that plenty as well. But there's so many people that are living longer and it's, I was just up North and we were kind of, I was talking with friends and kind of seeing some long time friends and their parents that I haven't seen in a while. And there was a bunch of friends who parents still had one of their parents alive, usually the mom and they were all in their 90s and, Speaker 1: Right. Nick: Still doing pretty well. And, but the circle of care needed to help make sure that they maintain. And my grandmother was with my parents and I know how difficult that is. And it's a lot of work. So that's definitely something that people are concerned about. Speaker 1: Yeah. It's got to be on the radar. It's got to be part of the plan. And if you plan right, hopefully you won't have to worry about either one of those. And then if there's something left over, then you can do A as well and leave some money to the kids. So it's all possible, but it's got to have some strategizing going on there. It's got to have some retirement planning redefined if you will. All right. So let's see. Nick back to you here for the lead answer. Number four, which of these examples best represents a diversified retirement plan, A, a mix of 60% stocks and 40% bonds, B three rental homes and a good amount of cash in the bank. So rental income there. C, 10 to 12 different mutual funds or D, none of the above. Nick: My answer is D none of the above. A lot of people, I think they think about like a 60, 40 mixes. Speaker 1: Traditional, right. Nick: A pretty traditional answer, but in our minds, this is the emphasis on the plan. For example, I'll just use two sets of family members. So you've got one set of family members where there's a pension involved. So that pension, between pension and social security live within their means, expenses are covered. They never saved as much as maybe they would have if they had had higher income and were able to save more. And they're in a very comfortable position from a retirement standpoint whereas maybe another set of family members, a sibling earned more money over time, but also spent more money and don't have as many kind of income producing assets going into retirement. And there's a lot more stress there. And so, really the plan from a diversified plan standpoint, it's really ends up being a function of people's risk tolerance and how much sort of risk they're willing to take. You can tell somebody that, Hey, 60, 40 mix of stocked bonds is great till you're blue in the face, but if they don't have market tolerance, then it's never going to work. Speaker 1: Right. Yeah. Nick: And so, you have to adapt and adjust, and that's our job as advisors. Speaker 1: Yeah. And John, typically those 10 to 12 different mutual funds, they're probably large cap. Right. So there're probably a ton of overlap in there and 40% in bonds, I mean, bonds aren't doing so great. John: Yeah. I think, to kind of back when Nick's saying here, when you look at what's going on today in this market year to date with equity stocks being down and then rates going up, which in turn fixed income markets are down. So both of those at this point in time are down 10 plus percent. So that's not a very good, Speaker 1: Yeah. John: Diversified strategy for this period. Speaker 1: Yeah. 60, 40 is that traditional portfolio split. And it had its place for a long time, but it just doesn't seem to be the case for many people, more and more people right now. So it's always best again, to get it kind of customized. So yeah, I would say none of the above, or at least maybe a little bit of each of these three kind of sprinkled in is more diversified than just one of them. All right. Last question, John will lead off with you here. To make sure you do not run out of money in retirement, only withdrawal blank percent from your portfolio each year A, 1%, B 4%, C 6% or D just find a different strategy altogether. John: Yeah. I'm going to go with D on this. The rule of thumb typically we hear is 4%, but I'm going to say this is one you definitely don't want to live by the rule of thumb and you want to customize a plan to yourself because everyone's going to be different. And if you just live by a rule of thumb on this one, there's a good chance that you're going to hit that fear of most retirees and that's running out of money. Or if you're just doing 1%, you might not be living to the best of your ability. So, definitely here it's D and do a plan and figure out what's your strategy. Speaker 1: Yeah. Nick, do you concur with that one? Nick: Yeah. I think an example from this is the last really seven to 10 years where a lot of people that were maybe risk averse, avoided some of the market. And we know that it was very, very difficult to get any sort of return on conservative money. So whether it's cash in the bank, CDs, Speaker 1: Right. Nick: Bonds, those sorts of things. And so it made it difficult for people that were conservative to be able to sustain that sort of withdrawal rate and really it kind of emphasize the importance of having an overall balance. But yeah, again, one of the things that we tell people oftentimes is that one of the good things about kind of planning in the financial world is that there's something for everybody, and that can be one of the bad things too, because it makes it hard for people to navigate. But usually, once you really kind of drill down and figure out what people are comfortable with, there's some sort of solution out there, or combination of solutions to kind of get them to the point that they need to be. And that's kind of the importance of planning. Speaker 1: Yeah, definitely. And the 4% rule, it was a fine rule of thumb for a while, maybe back of the napkin. But most of the time you hear people say it's more like maybe 2.9 or 3.1. And so it's just better to find a specific strategy altogether versus relying on in general. Again, if you're out to dinner and you're just doing some quick math and you say, Hey, we'll use 4% or something like that. Maybe that's one thing, but really at the end of the day, getting it dialed in for what you actually need to do, get a strategy, get a plan and get started if you're not working with a qualified professional, like the team at PFG Private Wealth. So reach out to John and Nick, if you need some help and you're not already working with them and your checking out the podcast. You can find them online at pfgprivatewealth.com. That's the website, lot of good tools, tips, and resources. Speaker 1: You can contact them that way. You can subscribe to the podcast, whatever you'd like to do. Find all the information again at pfgprivatewealth.com or reach out to them at 813-286-7776. Guys, you did well. You passed. So thanks for hanging out and playing the game with us here on the show. And we'll see you next time on Retirement Planning Redefined with John and Nick.…

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Ep 49: What To Do As You Count Down The Days To Retirement 17:38

3 years temu17:38

17:38

We’ve assembled a list of priorities to keep in mind as you count down the days to retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey everybody. Welcome to the podcast. It's retirement planning, redefined with John and Nick and myself talking about the countdown to retirement. What to do on those days, as we're getting closer, working our way towards it. We've assembled a list of priorities to keep in mind, as you are counting down those days to retirement. And we were getting ready to get this podcast started and we were kind of laughing at some of the things that we seem to run out of in this whole supply chain issue, had ourselves a good giggle along the way. So hopefully we'll have a good podcast for you to tune into as we talk about these things, because there's some good stuff on here. And guys at the time we're dropping this, I think we're going to drop this right after Memorial Day if I'm not mistaken. Anyway, it's right around it. Mark: And Memorial Day is kind of the unofficial kickoff to summer. It's not technically summer yet, right? I think it's what June 20th or something like that. But when we get to 50 and a lot of times, if you want to think about this countdown 50 plus, it's kind of the unofficial kickoff to retirement. We're not actually retired yet, but we start thinking about it, paying more attention to it. So on and so forth. So John, the first one on my list is getting healthy and staying healthy. Many of us develop chronic issues in our 50s. So it's a good time to put some thought onto this so that you can actually enjoy those golden years. John: Yeah, 100%. I would even because I'm sure, I don't know in the previous podcast I talk about my health issues, but I think it's important for everyone at any age, especially though I will say 50. Mark: True. John: Focusing on health and getting to the gym and just do whatever makes you feel good. But when you have an health issue and you can't do the things you were doing, I'll tell you it's quite a, it's a challenge. It's quite upsetting. And I'll say from the clients that we work with, we see a big difference in those that actively in retirement are working out, maybe seeing a trainer a couple of days a week to those that are not. And as you age, I think it's more, it's very important just to stay active because you're not recovering like you were in your 20s. Mark: No, I think that's a great point. I like that too. Yeah, we should start sooner. Right. But if you kind of want to put a, some sort of a time table or something to it when we get, and it kind of works with our conversation for retirement, just get there, start making some of these changes. So you can really enjoy what we call the go go years. Right. So when we first get to that early days of retirement. And then this is a really big one, we could kind of merge two and three together, but we'll do them a little bit separately, but two Nick, is the free time. Now there's a lot of it. And maybe silver lining in the pandemic has been the fact that many couples got to realize life together, 24/7 working from home, being at home. Mark: Because that's what retirement is. That's a big shift that we don't often talk about. We put a lot of focus on saying, yeah, we want a big travel and we want to go out and play a ton of golf or whatever. But like there's a lot of free time and you're spending it with that significant other that maybe you guys didn't see each other for eight, 10, 12 hours a day. Now you're together all the time. I don't know how many advisors I talk to where they're like, they have funny stories about one spouse or the other saying get them out of my house. They're driving me nuts. Nick: Yeah. The time challenge can be significant. I can tell you two things that I would recommend against. And those things would be watching a lot more news and, Mark: Right. Nick: Deciding that social media is going to be your new hobby. Mark: It's not your friend. Right. Nick: If anything, there's a pretty good documentary on Netflix. I forget what it's called, but it's about social media and really kind of the big data side of things and how the algorithms work and really kind of feed into things. And in general, there's been a lot to handle for people over the last few years with the pandemic and everything else going on. So can not underestimate the importance of having constructive hobbies, doing things that kind of keep you sharp or engaged. And even from the standpoint of being social, things that you can do both alone and with others. The relief that people get from a psychological standpoint of being engaged with others and doing different things, kind of being out and about is really, really important and it's going to help keep you fresh. It's going to help you be able to focus on the things that are important versus the things that aren't, and that you don't have control over. And so, making sure that you're developing hobbies, and we would say that that's even separate from things like travel and that type of thing where, Mark: Right, right. Nick: Being inquisitive, doing things that have your brain still working are really important. Mark: That's a great point. And John, I mentioned blending two and three together. So two was determining what you want to do with your free time. Three, we put post retirement career, maybe career is too heavy of a term, but a post retirement something. Right. Retire away, like if you hate your job, let's just say you despise it and you can't wait to retire and you're leaving with nothing else to go to. Like, I get that frustration, but I think people tend to be happier if they're retiring to something. And maybe that's not necessarily another career, but something like, even if you took a year off and literally did nothing, I'm sure you guys have story upon story of retirees who first enjoy doing nothing. But as humans, I think we crave some sort of structure, something to help us kind of fill the time and fill the days. John: That's 100%. It's important to really start thinking about that. And I can't tell you how many times we've been in meetings and it's when do you want to retire? And the response is, well, I don't know if I'm ever going to retire, but I want to leave this job at this age. Mark: Right. Right. John: So it turns into what am I going to do next? And I think kind of what you said there. My mother watches my kids and that's kind of a level of importance to her and she watches them two or three days a week, and there's actually a study where grandparents that kind of are helping out their children, watch their grandchildren actually live a little bit longer. And I think it's all about that level, feeling important. Mark: Yeah. John: So whether that's watching grandkids, my clients had started to be a realtor and they actually end up making more money than they were at their previous job. So whatever it is, it's just making some type of level of importance. Whether it's making money, helping out family, volunteering is just feeling like you got to get up and do something in the morning. Nick: And a good way to kind of sum that up as purpose. Mark: Purpose. There you go. Nick: Purpose. When people feel like they have a purpose for both themselves and those around them, they tend to do a lot better. Mark: Yeah. No I'm with you there. And we used to retire at let's say 65 and you probably were passing away at 67, right? So sitting on the porch for a year or two and doing nothing felt great because we were tired. We were worn out. The concept of retirement is a little less than a 100 years old. So a lot of stuff is actually changed quite a bit. So a post retirement, something or another post retirement purpose instead of career. I like that. Thanks, Nick. We'll use that. And going forward is a great way to think about that on this countdown days to retirement list. Let's go to number four, Nick. So why don't you throw us some things to think about in the opportunity to save more. Again, I mentioned 50, right? So at 50 plus, some stuff starts to change and there's actually some good time to catch up a little bit or just cycle a bit more away if you need to. Nick: Yeah. Oftentimes whether it's in their 50s or early 60s, people have, maybe they have children coming off the payroll and they don't necessarily plan to figure out how are they going to be able to recapture some of those dollars that they're used to spending on the kids and kind of help them really build up their retirement and maybe catch up from all those years of taking care of the kids. That can be something that's a big deal. One thing that's come up multiple times in the last, I'd say three to four weeks with what's been going on in the market is, we have clients emailing or calling us asking, Hey, the market's down, should we stop saving? And, the way that we try to kind of explain to people is that markets are cyclical. Nick: We have had this period of time, 10, 12 years, where the markets have generally gone up and people's conception of what, or I should say, perception of what, typically happens in normal cycles, one to three to four year cycles is a little bit thrown off, but an easy way to think about this is that this is why we have a plan in place. You want to continue to save. And if anything the thought process is that you're buying at a discount from what things were previously. So in a lot of ways, the market's on sale. And so continuing to average in and chipping away and taking advantage of the benefits of being able to save money pre-tax, or those sorts of things is an important thing. Mark: Yeah. It can make a huge dent, right? We're hopefully making the most money we've ever made and all that good kind of stuff. So 50 plus there's should be some good opportunities to sock a bit more away. And that might help John with number five, which is reducing down the debt. So even if you're not necessarily putting more away into a retirement account, because you've done a good job or whatever, maybe the focus is take some of that extra money with the kids being off the payroll and get rid of some of that, especially bad debt. John: Yeah. 100%. I mean, with rates being as low as they have been, we have seen a lot of people go into retirement with mortgages, but you're at 2.6%, that's nothing crazy, but let's take mortgage out of it. Other debt definitely recommend trying to get that down and off completely, but get it off your books because when you go to retire, it's a big cash flow, where's your income coming from? Social security, pension, investments. The last thing you want at that point where there's no longer a paycheck coming in is debt. What that's doing at that point, it's really eating into kind of things you want to do, which we talked about for hobbies or enjoyment. And then on top of it, it actually adds some stress level to Hey, I need more income coming in to pay out all these bills and all this debt. So definitely before you hit retirement, it's good to be debt free. It's easier to pay off the debt in your working years than when you're not working. Mark: Yeah. And on the concept of the house, right, there's always the arguments back and forth there, the different things. So certainly, that can also still be on the get debt free list if you'd like. I don't think it's a bad idea to necessarily get rid of it, but just make sure that you're doing that smartly and not being house rich cash poor as the saying goes or whatever the case is. So just kind of bear that in mind. Mark: But yeah eliminating, if bought an RV or the big plans where the RV in retirement, maybe getting that paid down, if you bought it a little early or whatever, or boat, or I don't know, muscle car, whatever it might be. Right. Just get rid of the stuff that you've got some debt on. And then Nick, the final one here, number six on the list on just counting down stuff is the risk conversation. So if we're reducing our debt, maybe we ought to also think about reducing our risk. Now last year, people would've said, I'm not reducing my risk, the market's on fire, but right now they're like, okay, well let's maybe reduce the risk. Point being at 58 should we be investing like we're 38? Nick: Yeah. So risk is an interesting word. And we wanted to take a little bit of time to kind of chat about this because there are different types of risk, and depending upon who you talk to, how they rank the different types of risk via priority is different. So for example, inflationary risk, which is something that we're dealing with right now, that's a risk. So in other words, losing the spending power of our money via inflation is something that we need to keep and take into consideration. However, we're in this kind of perfect storm where taking too much risk, if you're shifting money out of cash per se and moving substantial amounts of money into the market, you're dealing with a significant amount of market risk. And then we have interest rate risk from the perspective of, as they've increased interest rates, that's really pushed down the prices of bonds and bond funds. Nick: And one conversation that we've been having with people is them not necessarily realizing that the bond market and even if you look at the most general bond index is down almost 10% year to date. And so we've been trying to take a lot of time in one-on-one meetings with people to try to explain how this has an impact and really this is a, with what we're dealing with right now is probably the best case in the last 15 years or so to show people why it's important to be diversified and understand that trying to fully time the market, whether it's from the stock side to the bond side, to the cash side, real estate, et cetera, it can be really tricky. And when things are going great, it's hard to remember that, but right now it's showing us that it's really important to make sure that when we think about our risk, that we're taking into consideration poor times, not just great times and understanding that just because maybe throughout the majority of your investing career, taking less risk has meant, Hey, let's reduce our stock exposure and increase our bond exposure. Nick: It doesn't mean that that's always going to stay flat or go up, there's risks along with that too. So, diversification, understanding that sometimes we do run across periods of time where we just kind of have to take our medicine where all markets have been up for the most part over the last 12 years. There's going to be times where we run into corrections, which is kind of what we're dealing with now. And we have to be patient and try not to go overboard with overreacting to the short period of time. Sometimes looking at the lens through the last, even one year, two year, three year period of time and realizing that in the scheme of things we need to just kind of stay steady. Nick: But yeah, in general, I would say that making sure that you kind of do an update on what you feel comfortable with from a risk parameter. Now is a good time to reevaluate that. Because what we have seen is that people have been comfortable with a certain amount of risk over the last 10 years, because things have just been going up. And so now that things aren't just going up, what they thought of risk and how they feel comfortable managing it is substantially different than it has been. Mark: Yeah. Oh definitely. Our risk tolerance level's been like, yeah, I'm fine. I'm fine with the risk. I'm fine. Whoa, wait a minute. I'm not so fine now, right? Nick: Yeah. The risk over the last 10 years has been okay. I'm okay getting 8% instead of 15%, Mark: Right. Nick: Not oh, I'm okay being down negative 11 versus negative 20. Mark: Yeah. Yeah. Nick: Everything's been more on the positive side of things and even with COVID, we had the fastest bear market in history where it boomeranged right back up. And so even though that only happened a couple years ago, people have already forgotten about that. Mark: Oh yeah. Yeah. Nick: So, yeah. And I can't emphasize enough the importance that this sheds on having a plan and thinking longer term. Mark: Well, there you go. So that's some countdown items to think about for the days towards retirement, sixth list, list of six things there, excuse me, that you can think about and address towards your retirement strategy. And those are the things that you'll go through when you have a plan put in place when you're working with a team like the team at PFG Private Wealth. So if you're not, then reach out to them and have a conversation, set up some time to get that started, pfgprivatewealth.com, that's pfgprivatewealth.com. That's got all the tools, tips, and resources there. You can schedule some time. You can reach out to John and Nick and the team and get started that way. Of course, you can also find the podcast, subscribe to us on whatever platform you like to use there. So you can catch future episodes as well as check out past episodes. Again, pfgprivatewealth.com. That's going to do it this week for the podcast for John and Nick. I'm your host Mark. We'll see you next time on Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 48: Secret To Retirement Success: Get Out Of Your Own Way 18:41

3 years temu18:41

18:41

There are plenty of external factors that often negatively influence our chances of having a successful retirement. But often, failure comes from within. On this episode, we’ll talk about some of the common ways people get in their own way when it comes to financial planning. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey, everybody. Welcome into another edition of the podcast. It's Retirement Planning Redefined with John, and Nick, and myself. And we're going to talk about the secret to retirement success. Here, it is. Get out of your own way. Typically, we are the success or the reason for failure, one of the two, because we tend to muck up the works ourselves by often injecting our emotions and thoughts into these things. And rightfully so, because that's part of it, which I think, again, we're going to talk about the value of working with a team and some professionals like John and Nick, because we tend to get in our own way. And I think we all realize that we do that in many aspects of life, and certainly money is one of those. What's going on, guys? How you doing this week, Nick? What's up buddy? Nick: Everything's great. Perfect. Mark: Yeah. Rock and rolling? Nick: Yep. Mark: Feeling good? Nick: Yep. It's great. Mark: That's fantastic. John, how you feeling my friend? John: Doing all right. A little upset over the weekend. The Celtics lost game three to the Miami Heat, but there's another game tonight. So- Mark: Another chance. John: Hoping that they could tie up the series. Mark: There you go. Fantastic. Well... Nick: Yeah. I'll throw in a good gold [inaudible 00:01:01] lightning, our own fire. Mark: Okay. Nick: Free nothing as we record this. Mark: Nice. Very nice. So what do you think about my statement there, getting out of our own way? There's lots of external factors obviously, that negatively influenced stuff in our retirement world. Right? We can't control the markets, but we can control how we react to them. Do you feel like that's a fairly accurate assessment of finding some keys to success sometimes is, getting out of your own head? John: Yeah. Yeah. I would 100% agree with that. And we're seeing that right now where the market is, it's down year to date. There's a lot of negative news out there and, there's always negative news out there. But there's a lot of things happening in the world and it's creating a lot of fear. And what that does is it really eats into people's perceptions of what's going on with their portfolios. So naturally what's happening is, hey, when is the bleeding going to stop? Do I need to pull out of the market? Do I need to get more conservative? What should I do? So this is really a period of time where, important to get out of your own way and just stay the course. Mark: Yeah. John: And we harp on it quite a bit in all of our podcasts, but this is where the plan is essential, because we've had some reviews and people are nervous and rightfully so. But when they see the plan, it's like, how does this 10% pull back, whatever it is at the time, affect your overall plan? And they look at it and they say, oh, it doesn't really affect that much, just yet. Mark: Right. John: And when they see that, it's like, oh, okay, that makes you feel a little bit better. See where I'm at. So yeah, 100%, stay the course and definitely get out of your own way so you make good decisions. Mark: And I think if we're talking with the market being the first one on the list, fear and greed, that's the normal stuff, jumping in and jumping out. And we tend to feel like it's the only thing we can do are these two things anyway. A lot of people, we're going to touch on that in a minute as well, but often it's well, all I can do is the market are cash and the market's scaring, the pa jeepers out of me so let me just jump out, and that's typically when we're making the wrong decision, especially if you don't have a plan. So having a strategy in there, because yes, it stinks when we're losing, we talked a little bit about on the last episode. Everybody's fine with risk when the markets have been on fire for 12 and a half years or whatever, but when they get real shaky for a few months, that's when people tend to get in their own way and allow that fear or greed to jump in there. Mark: So since we covered that one on your initial part there, John, I'm going to jump to number two. No, go ahead. If you've got something else. John: Yeah, yeah. One, actually you mentioned greed there and actually, it plays into the fear thing as well- Mark: Okay. John: Because, we've talked about the markets running up and when that's happening it's, I only got X percent this year. If I was more aggressive, I would've got a little bit more. So we have had those conversations where it's like, hey, should I get more aggressive? And the answer is no. Go to the plan, look at your risk tolerance, stay the course because when you try to get greedy and then all of a sudden, let's say you do go to a more aggressive portfolio. Mark: Right. John: And we have a big pullback in the S&P and in equities and all of a sudden, you're more nervous than you should be because you're taking more risk. And now you start to jump out and you get to that fear stage and you just make bad decisions. Mark: Yeah. Great point. Great point. Well, Nick, talk to me a little bit about getting in our own way, when it comes to picking an investment or doing something solely because we think it's a tax help, right. It's not part of the plan, it doesn't make sense in other arenas. The idea is, no I'm doing this simply for the tax advantage. Is that a bad move? Nick: Yeah. A really good example of this would be towards the end of last year, early this year, we made a pretty big cycle in client's portfolios from the growth side of the market to the value side of the market. And so that did cause some capital gains and probably a bigger capital gain shift than we typically have for clients that are in taxable portfolios. But again, the premise was that we felt strongly that moving forward, it was going to be something that benefited them from a performance standpoint, which is the number one priority. And that's really turned out to be the case where really the value markets are down closer to 3% or 4%. The growth markets are down close to 30%. So that's kind of a perfect real world, real life example of, yes, nobody likes taxes, but sometimes taking some gains and recycling the portfolio and shifting to where we think things are going to look better moving forward, is something that makes sense. Mark: Yeah. Nick: Taxes are again, something that people don't like and when we want to, we avoid it, but it should rarely ever be the number one priority in any sort of financial decision making. Mark: Yeah. Don't let the tax tail wag the dog, as the saying goes, don't do something solely for the tax advantage, especially if it doesn't fit well into the overall strategy. And I'm glad that you brought up that point there where, looking at that and saying, hey, we do things, they all work together. There's a lot of these puzzle pieces that ebb and flow and move in and out together. So sometimes you do one thing and it has a ripple effect to another. And that's a great point. So I'm glad you brought that up. Mark: John, another one on here is the cash conversation. I mentioned a minute ago, people tend to think there's only two options, the market or cash. And when it gets choppy, we go heck with this, I'm getting out and going to cash. And then we can even, maybe even just right now, we might even find this need to justify it by going, well, the Fed's ticking the rates up so I'll get a little bit more in cash, right. Even though it's nothing compared to inflation, but anyway, that can be a bad decision. You're getting in your own way. And then you might wind up just sitting there too long. And I mean, what if you jumped out in April of 20, when the pandemic was happening, we're down 30%, you jump out, you sell, you get your losses locked in and you stayed in cash the rest of 20. Well, you missed a heck of a second half. John: Yeah. That that's accurate. And that's why it's always important to stay the course, because timing to get back in is almost impossible. Because the rallies up happen really within, if look at historically, it's always a couple of days or a week or two. Mark: Right. John: And if you miss it, you miss a majority of it. So important to stay the course. Be in the right risk tolerance so you don't go to cash or something like that. And then we have seen this quite a bit as well with cash in the sideline. And it can happen in an upmarket where we're hitting all time highs constantly, because it's like, hey, I don't want to put this money in because we keep hitting highs, it's going to come down at some point. And then now where it's the reverse, where we're having a pull back and it's like, well I don't want to put the money in because it's currently going down. So strategy against that would be dollar cost averaging into the market. Just piecemealing it and that typically will help some people get back into it with less risk. Mark: Yeah. John: And there are other strategies involved, but definitely you got to put your money to work [inaudible 00:08:15] pace inflation and especially nowadays. Mark: That's a great point for sure. All right. So Nick helped me out here, buddy. I don't want to fall to fear. I don't want to necessarily fall to greed. I don't want to make bad choices from a tax standpoint. I don't want to go to cash and do nothing. Well now I don't know what to do, I'm just stuck. That's number four on my list. We overthink it to the point where we just freeze and we do nothing. And as the song says from the great Canadian rock band Rush, if you choose not to decide, you still have made a choice. So doing nothing is just as bad sometimes as doing something in the wrong way. Nick: Yes. The overthinking side of things is definitely something I have empathy for people with. It takes me about a month to book a trip and probably sitting down five different times with 20 tabs open each time. So I get the process issue. Mark: Well, humans procrastinate. Doesn't make you bad, it just- Nick: Yes. Yeah. Mark: We all do it. Yeah. Nick: For sure. But what this does and people hear this a lot from us because we talk about it a lot is, it's the importance of the plan. So a lot of times what ends up happening is, the reason that people are frozen with indecision is because they're worried about their process. They're worried about the outcome and usually the fear of the unknown is more fragile and worse than actually knowing, having some certainty on what things look like, even if they're not ideal. So when we have people that are overthinking things or are really fretting about a certain decision, usually what we try to do is go back to the plan. So hey, let's re-review the plan. Let's look and see what things look like. And one of the things that we emphasize with clients that work with us from a planning perspective, is trying to help them start to make decisions differently. Nick: And so the way that we do planning, the way that we're able to model out different situations and scenarios, we'll joke with people, let us tell you no. Because a lot of times what happens is people are limiting themselves out of concern of the unknown. And so, let us be your guardrails a little bit, let us be the bumpers in the lane to use an analogy and we'll help you work through these decisions, but instead of worrying about what the outcomes are. It's almost impossible for people to figure out all the outcomes on their own. Mark: Yeah. Nick: And so let us help you figure out, let's see the potential outcomes, let's see what we can do to mitigate some of the risks associated with it. And we can really narrow down. And so having that open door policy with clients and having them work with us, to work through these sorts of decisions where, we're a team member versus them trying to figure it out on their own is really important. Mark: Nah, I like that. And I'm a heck of a bowler with the bumpers up. I'm just saying, so. Nick: Yeah. Yeah. For sure. It definitely increases the average. Mark: It did a little, just a little bit. So to check this out, John, let's do one more here on this conversation about getting in our own way. So a friend of mine, super nice guy, we're chatting the other day and this is what he says to me. Tell me what your reaction to this. So he says, Hey, my neighbor and I, we're good buddies. We're the same age. And our house costs the same amount of money, roughly that, where we live here. He's going to cash. And he's like, and I know you talk about stuff on podcast and stuff all the time. He's going to cash and he's advising me to do the same thing. I think it's a good move. And I said, why? Because you're the same age and your house costs roughly the same? Don't you think there's like about a million more things you could base this on? Mark: So my point being is, is getting advice from people who really don't need to give you advice. I'm sure his friend and his neighbor didn't have any ill intention, but that just seemed like a goofy scenario to me. It's water cooler talk, so many of us do that. John: Yeah. Yeah. We see that quite a bit where people are, my friend's doing this or like you said, my neighbor's doing this, but we have to constantly remind [inaudible 00:12:20] everyone that every situation's completely different. Something that might be good for someone else isn't good for you. And that's the importance of really getting the plan and making sure all your decisions are based on your plan. Mark: Yeah. John: And not your neighbor, not your cousin, not whoever- Mark: Cousin Eddie. Yeah. Right. John: Yeah. What we typically find with this is everyone always tells you about their good decisions. Like, oh yeah. I went for cash and this is what happened. They don't tell you when they didn't make a good decision. Mark: Yeah. John: It's not exciting to talk about when you lost money or lost an opportunity. So definitely want to leave it to the professionals and not a neighbor, a buddy that really doesn't have much experience in navigating these environments. Mark: Yeah. Nick: Yeah. It's the whole wins in Vegas scenario. Mark: Exactly. Exactly. Nick: People always talk about the wins and I just want to jump in on this one- Mark: Sure. Go for it. Nick: Because one of the things that I've been trying to emphasize with clients as well, especially those that are new to maybe, having an advisor or a planning relationship is that the advice that we're giving for them is the advice that we're giving at that set place and time. And so meaning, people tend to feel more comfortable when there are like general rules of thumb or those sorts of things. And so maybe it's a question like, a basic one that happens all the time is extra payments towards the mortgage or not. And so one of the things we've been trying to really get through people's heads is that, hey, we may be telling you to not do that right now, but it's because we have goals over the next one to three years that we're trying to hit because of X, Y, Z factors. And that might be something that we target three years down the road, but right now, it's more important for you to do these other things, to put yourselves in a better position to be able to do that. Nick: And so what having that kind of conversation with people have seen the light click on quite a bit, because giving them the situation where, Hey, let's take you and your friend, and let's say that nine out of ten factors are the same, but that one factor can dramatically change- Mark: Yeah. Nick: The advice. And so even though you might feel like you have a twin in so many different ways, that one factor can be a huge differentiator on the sort of advice or the sort of strategy that you should have in place from a financial perspective. And really, you hear people talk about, each situation's unique, but really being more specific in helping them realize that has been something that has been helpful for some people lately, especially with the choppy waters that we've been in the last four or five months. Mark: Oh, absolutely. I mean, you listen to this podcast and there's three guys on here having a conversation, but the three of us need different things for the time of life that we're in and whatever's going on. You two might be similar in age for example, but one's got kids, one doesn't. Nick: Exactly. Mark: I'm older than exactly you guys. So there's a million variations could go into what you need individually. So again, I don't think that the neighbors or coworkers or cousin Eddie or whatever it might be mean any ill will, but it's just not the best advice. So again, getting in our own way sometimes is listening to those people who really we shouldn't be listening to. So that's going to wrap it up this week for the podcast. So the secret to retirement success is you and how willing you are to not get in your own way, to make sure that you realize the things that you know, and the things that you can do, and then turning to those people to help you in those shortcoming areas. Mark: I don't pretend to try to rebuild my car from the ground up, because I have no idea how to do that. Sure, I can change some spark plugs and change the oil, but that's the limit of my knowledge. So I'm not going to tear the whole thing apart and start from the ground up. Same kind of idea. So that's the conversation, make sure that you reach out to John and Nick. If you've got some questions, if you're worried about sabotaging yourself, doing some things you shouldn't be, especially in these choppy waters, as Nick mentioned, it's easy to do. It's easy to let that little fear monster jump up and nibble in our ear. So reach out, have a conversation with the team at PFG Private Wealth, before you take any action, especially if you feel like you need to make a change. Mark: I think that's a fundamental thing that we do as humans as well. Sometimes we feel like if we're not doing something, we're doing something wrong and often not doing anything could be a good move for your situation, but you need to find out through the process of getting a plan put together or just reexamining the plan that you may already have in place. So pfgprivatewealth.com is how you make it happen. That's where you can find John and Nick and the team at PFG Private Wealth. Again, pfgprivatewealth.com. Pretty easy to remember and reach out to him if you got some questions or concerns, get on the calendar, hit the subscribe button for whatever platform you like to use. Athol, Google, Spotify, so on and so forth. For John and Nick. I'm your host Mark. We'll see you next time here on Retirement Planning Redefined.…

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Ep 47: Understanding Financial Jargon: Investment Terms You Should Know 20:49

3 years temu20:49

20:49

There are some important terms you’re going to come across as you prepare for retirement. Having a basic understanding of these will help you achieve financial success, so we’ll cover what they mean and what you should know on today’s episode. And don’t worry. We won’t go quite so far down the rabbit hole where we expect you to be able to explain how a company’s P/E ratio meshes with it’s Alpha and Beta ratings to determine how much stock you should buy. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey everybody welcome into the podcast. Thanks for hanging out with John and Nick and I, as we talk about Retirement Planning Redefined here on the podcast. As always, don't forget to subscribe to us on whatever platform you like to use. Find all the information you need at pfgprivatewealth.com. That's the guys website pfgprivatewealth.com. Lot of good tools, tips, and resources to be found there. We're going to have another conversation today about some financial jargon. This is more kind of investment terms you might want to know or have heard and maybe you want to get a better understanding on, especially if you're sitting down and you're shopping for a professional or something like that. You want to kind of understand some of these things that you're talking about. Now we're not going to go super deep. We're not going to get into PE ratios and alphas and betas and all that kind of stuff, but we're going to keep it kind of high level. So we'll jump into that this week on the podcast, Nick, what's going on, buddy? How you doing? Nick: Pretty good. Pretty good. Staying busy. We're recording this, just kind of closing up tax season. So happy that that is over for- Mark: I bet. Nick: Everybody that is at least not filing an extension. Mark: Yeah. Nick: But yeah, it's obviously a lot going on in the world. So it's been keeping us pretty busy. Mark: Yeah that's true. Very true. John, what about you buddy? You glad tax season's over? John: Yeah. Yeah. It's a fun kind of hump to get over. Mark: I like that little pause. It's fun. Yeah. John: Yeah. So, no, it's good. It's kind of a mark that people have on their calendar, so that's over with, and really we start to kind of get busy afterwards. Mark: Yeah. John: Because a lot of people kind of delay meetings until after tax season, so excited to get back at it. And then also excited that NBA playoffs started. So Boston Celtics are playing the Nets right now. Mark: Alright now, there you go. John: Gearing up for that, so- Mark: There you go. Very good. Well we probably should have done a show really on tax planning versus tax preps right after tax season because really tax planning is something you should be doing all year long with your retirement professional anyway, but we're not going to do that this week. Maybe we'll do that here in the next couple of weeks, we'll come up and do something. Mark: But for now let's talk about some terms that people hear and probably should know. Maybe you know, maybe you have that kind of cursory high level view, whatever the case might be. Maybe you don't. So let's talk about a few of these. Let's kind of start with fiduciary guys. And this is a term that I think people should know. They should know what it is. I kind of wish, and I was thinking about this before we started that our politicians had to do what fiduciaries have to do, right? They have that legal, moral, ethical responsibility to do what's right for their client AKA us as American citizens. I wish our politicians had to be fiduciaries, but either way explain what it is and maybe a little bit of the difference between that and like suitability. John: Yeah. So fiduciary, especially in our world's investment advisor, it's where the fiduciary is obligated to put the client's best interests ahead of their own. So really looking to do what's best for the client, regardless of any other factors. And what you mentioned there with as far as, how does that compare to suitability, where kind of like a broker has to recommend something that's suitable for the client, so there's a big difference when you start to kind of analyze that is something might be suitable for you, but it might not be the best thing for your situation. Mark: Right. John: Or maybe there's other things out there that are better. So fiduciary has the due diligence and say, "Hey, I'm making this recommendation. And based on my expertise, my knowledge, everything I've compared it to this is what I believe is the best for you." And also if there's any conflict of interests for the advisor as a fiduciary, they must disclose that to you upfront. Mark: Yeah. John: So one thing, what people really need to do when they're interviewing advisors or kind of taking that step to try to find someone to work with, it's really one of the first questions should be asking. I'd say the good thing is the industry is really going in this direction- Mark: Mm-hmm (affirmative). John: Over the last, decade or so. It's really been kind of going, fiduciary, fiduciary, so that's. Mark: Making that the standard, making it more the standard? John: Yeah. Yeah, no, I think that's a great point. So if I'm getting this right, then maybe to kind of break this down for people, and Nick feel free to chime in, but so if there's three options available, suitability would say, "Hey, any of these three technically work for my client, but this one actually pays me better or there's a reward of a trip or something like that attached to it." You're not doing the wrong thing by picking that. It's still suitable. Whereas a fiduciary has to go with the absolute best thing for the client period. Is that a fair way to break that down in layman's terms? Nick: Yeah, I think that's a pretty fair way to kind of break it down and it can get tricky because when you really get into the nitty gritty in theory, people can argue about what's better now versus what might be better down the road and that sort of thing. Mark: Right. Nick: But if anything, I think what's important for people to understand is the conflicts of interests, the potential conflicts of interest and where they come from. So, if you're working with an advisor that is tied in with a parent company that has proprietary products, then they're probably not able to function as a fiduciary. So- Mark: Gotcha. Nick: Understanding that there's a conflict of interest, a potential conflict of interest, there is just something that people should ask about so that they understand it. It can be from experience just kind of chatting with people. It can get a little overwhelming for people to kind of really drill down understanding the difference between fiduciary and standard versus a suitability standard. But people oftentimes understand conflict of interest. And just to kind of piggyback a little bit on your short little rant earlier about politicians, many people would be shocked to know that many politicians are able to invest in companies even though there may be conflicts of interests. Mark: Yeah. Nick: And the fact that's able to happen. And there's some websites that track those sort of things, but oftentimes they're privy to information that will impact a company in the marketplace and they're able to take advantage of it even though, the rest of the country can't do that, so- Mark: Yeah, I was just even talking financially. In just their basic decision making when they pass laws. Nick: For sure. For sure. But that's a good example of them not passing laws that- Mark: True. Nick: Aren't good for everybody. Mark: Well and to John's point, so there's nothing wrong with asking, right? When you go in and sit down with someone, you just say, "Hey, are, are you a fiduciary?" Right? That's a fair question, and there's nothing wrong with asking that. Nick: Agreed. Mark: Yeah. Okay. All right. So let's move on to the other big term right now that everybody's getting hit over the head with, on a regular basis, and that's inflation. At the time we're doing this podcast guys, the CPI numbers came out a couple of weeks ago for March, pretty ugly. Gross is a term that has been thrown around quite a bit some of these numbers, 8.5% on the inflation, we're talking what 48% on gas, 35% up on used cars, food 13 to 17% up. So inflation break it down a little bit. Nick: Yeah. So inflation has to do with spending power of money. And so one of the easiest ways for people to kind of think about it is, you mentioned food for example, one of the things that we kind of joke around with people is they were able to a couple years ago, do you remember when you could walk out of Publix and get everything you needed for 70, 80 bucks versus it now costing 100, $120 for the same amount of stuff. And the tricky thing with inflation is that it's there on a consistent basis year to year, but every 10 to 15 years, it kind of creeps up on us. And then we realize, Hey, this is kind of annoying. Nick: And then obviously we have times we're in right now where there's some hyper inflation and kind of pocket books are getting hit. The one thing that I would say just to kind of pour some water on it is that although there are some real substantial issues that people are dealing with, there are some kind of, I guess, what we would almost call acute factors that are having an impact on it, that we would hope subside to a certain extent within the next year or two. But also there are going to be ramifications that we're already starting to see where the FED is doing things to try to combat inflation, like increasing interest rates, which we're kind of already on the docket, but has been getting pushed down. The cans been getting kicked down the road for a while. Nick: And so things like mortgages, mortgage rates are now I think mid fives I read, whereas a year ago, closer to three. And I was just having a conversation with somebody to kind of put that in real world numbers. A half a million dollar mortgage at rates a year ago, a half a million dollar financed amount is from a monthly payment standpoint is equivalent to around 370,000 now, or if you look at it inverse half a million dollar mortgage at current rates is going to cost you around $700 a month more than it was a year ago. So that's going to have a real impact on housing prices and a lot of other things as well. So those are some real world examples of how inflation kind of impacts our life. Mark: All right. So yeah, obviously we're hyper aware, we've talked about it before a little bit, but inflation we always kind of think of, at least I do it anyway, like calories, right? We know it exists and we don't often put a lot of thought into it until it's slapping us in the face, so to speak. And it's definitely doing that right now, so a lot people very concerned about that. So when we are talking about that, what happens is you start thinking, well maybe I should take a little more risk or whatever the case is with my portfolio to try to outpace inflation or keep up with it or whatever the case is, especially in these crazy times. So that leads us into risk tolerance guys. So what is your risk tolerance? And is that a wise move to try to take on more risk to combat something? Usually it's not. John: No, it's not. And this is one of the most probably important things in building a portfolio that someone should really take a look at, and it's often overlooked. So risk tolerance is, to kind of bring it down to the simplest form is how much loss is an investor willing to take in their portfolio? How much volatility can they tolerate? So one of the things that we do when we are building a portfolio for our clients, the first thing actually is we have them go through a risk tolerance questionnaire to determine, are they conservative, moderate, aggressive? And from there we really help us design the portfolio so that way we can kind of match up the expected volatility of the portfolio with kind of what they could bear. John: Because one of the worst things you could do investing is jumping around. And I hate to say it seeing a little bit right now I've already kind of feel a few phone calls I'm like, hey what should we do with the market? And if this volatility's already got you nervous and it hasn't really, it's been a pullback but it hasn't been anything too significant. Mark: Right. John: You really need to take a look at am I invested correctly because as we all know, as you shift to conservative or to cash, and then the next week the market just rally up and all of a sudden you just lost all. You realized your losses and didn't get to recover from it. Mark: Yeah, knee jerk reaction is not the best right now. Right? Nick: Yeah. And I would even jump in with that too going along with what John said where I think we have hit that point where people have forgotten what it's like to have bad markets, or even a normal market cycle of having a negative year. Even during COVID when the markets pulled back, 35, 40%, they bounced back by the end of the year. So it was never really realized. There was a short period of panic, but the recovery was quick, but. Mark: Mm-hmm (affirmative). Nick: There's a lot of people that don't remember that hey, there are going to be years where the market is down 10% for the year, the whole year. 12 whole months, so that's something that's interesting that's happening right now that we're seeing. Plus, historically where people would shift would be to fixed income or bonds. And that's not necessarily a safe place right now, either. So we're kind of in this, almost unicorn phase that only comes along every 50 or 60 years where there's not a lot of opportunities in many places. And so there's going to definitely have to be some patience involved- Mark: I like that. Nick: In the next 12 to 18 months. Mark: Yeah. I like the unicorn phase. That's a good way of putting it. It's definitely been interesting, that's for sure. So do you guys kind of with the risk tolerance, is it kind of that number kind of system? Do you guys do that risk tolerance kind of thing where you kind of give someone almost like sleep number, if you will. If you're 100 or if you're a 20, how does that work? John: Yeah. So how we do it and I've used actually some programs that do that. They give you a risk number based on how you answer questions. We have a set of some pretty good questions that give us an idea of what that person can kind of stomach. Mark: Okay. John: And what their expected return is. It's really, when you start to break it down, it's a lot of the same questions just asked differently to really kind of understand how the person ticks. Mark: Yeah. John: So we do a real good job of figuring that out. And then as advisors, part of our job is to make sure we put them in the appropriate portfolio based on how they answer. Mark: Yeah. Because it's pretty easy to say conservative, and you go, what does that even mean? Right? Or I'm moderate. John: Yeah. Mark: Well what does that mean? That's probably a wide window, right? John: It is. Nick: Yeah. And then I would say one of the things that without it sounding like a commercial for ourselves, one of the things that we do that's a little bit different than some places that we do have what's called like a tactical tilt to how we manage money, where if we do have significant concerns, we will tamp down the risk. So maybe if somebody's normally in a portfolio that's a 50/50 mix stock to bond and what we would consider a moderate portfolio, if we have significant concerns in the market, we may drop them down to 30% on the stock side of things in certain cycles where we have high concerns. So sometimes what we found is that helps allay some fears for some people that there's some proactive potential changes, where if we really feel like it's going to hit the fan, we will make that change. Mark: Right. Okay. So risk tolerance, another big one then definitely making sure that you're having that proper risk tolerance for yourself, especially in these inflationary times. When it becomes, it's hard to not feel, I think as humans, we feel like if we don't do something, we're doing something wrong or we have to take action or therefore we've made a mistake. And sometimes doing nothing can be a smart move. Especially in volatile times when it comes to a financial standpoint, if you don't know the correct answer, making no move might be a good place to start at least. That way you're not having that knee jerk reaction. And then of course, talk with a professional. Get some advice, and get a good strategy in place so that you know the right moves to make at the right time. Let's do another one here, guys, another technical one, dollar cost averaging, what is that? Nick: So dollar cost averaging is the easiest example that most people have exposure to on a regular basis. And they don't probably realize that they're doing it is when people are contributing to their 401k. So every two weeks, a certain amount of your paycheck goes into your 401k and you have a set allocation and you are buying in to that allocation at whatever price it's at that point in time. So the thought process with dollar cost averaging is that you are balancing, you're investing over a period of time. Where sometimes you'll be buying at a premium, sometimes you'll be buying at a discount, but the objective is to continually invest and make sure that you are not trying to time the market. John: And part of that is also what we're finding with the current market where it's at, with people with money on the sidelines, it could be a good way to kind of take some of the risk of putting all your money into the market and all of a sudden it dropping. So there's a strategy to basically say every, if I have 100,000 I want to put into the market every month or so, I'm going to be putting in 10 grand into it. That way, if it does dip down immediately, I only have $10,000 at risk. So dollar cost averaging, as Nick mentioned, most people are doing the 401k, not knowing it, but if you have money on the sideline in a volatile market, or if you're nervous, it is a good way to kind of get money that was on the sideline into the market. Mark: Okay. All right. Well let's do one more guys and we'll wrap it up this week. Asset allocation, another big term we hear. We probably get that tossed around a little bit. Give us the kind of high level view of what that is. And because often I think people wind up feeling like they have a whole bunch of one thing and they're diversified because they've, I don't know, for example, I've got a whole bunch of mutual funds, so therefore I'm good. So explain what asset allocation is and is that correct? What I just said, is that really diversified or not? John: Yeah. So asset allocation's kind of taken diversification to a different level. You could have seven different mutual funds, but if it's all the same type of funds, for example, like a large cap growth fund, they're going to do the same thing in reality when the market goes up or down. So when you do asset allocation, you're spreading your money, your portfolio within different asset classes, such as large cap stocks, small stocks that Nick mentioned, fixed income earlier, cash, some alternatives. John: So what you do there is when you're building a portfolio and again, starting with your risk tolerance and your goals, you determine, hey my risk tolerance is X, here's my goals. I should be in a, let's just call it in income in growth portfolio. Well, what's the right mix of asset classes to make that work and to kind of bring it down to layman's terms here? Imagine kind of cooking, you're making recipe for a pie. The pie has certain ingredients to make it work and make it taste good. And that's basically what you're doing in your investments. It could be 20% large cap, 5% small cap, 20% fixed income, and our job as advisors and wealth management is we build that portfolio for the client if they hire us to do so. Mark: Gotcha. Okay. All right. That's a good way of breaking that down. You just think about like a pie. So, and who doesn't love pie? So there you go. All right guys, thanks so much for the conversation this week. Good stuff talking about these technical terms, some jargon here. Hopefully we kept that pretty high level and it helped out with some of the things that you might be thinking or hearing. And if you've got questions, definitely reach out to the guys. Mark: As always, before you take any action sit down. If you're already working with them, maybe share this podcast with someone who might benefit from it. If not, if you've been listening for a while, just reach out to them, have a conversation, and chat with them for yourself. You can find all of it at pfgprivatewealth.com. That's their website pfgprivatewealth.com. They're financial advisors at PFG Private Wealth, which makes a lot of sense. So make sure you subscribe on Apple, Google, Spotify, all that good kind of stuff. That way you can catch past episodes as well as future episodes. For John and Nick I'm your host, Mark. We'll catch you next time here on Retirement Planning Redefined.…

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Ep 46: The Most Important Birthdays In Retirement Planning 21:32

3 years temu21:32

21:32

There are certain age milestones where you should really pay attention to your retirement planning progress. On this episode, we’ll look at the most important birthdays as you approach retirement and cover the exact things you should be checking off your to-do list at each age. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey, everybody. Welcome into another addition of the podcast. This is Retirement Planning Redefined, with John and Nick and myself, talking investing, finance, retirement, and birthdays. Mark: We're going to get into important birthdays in the retirement planning process. As we get older, I don't think any of us really want birthdays, but these are some things we need to know. They're pretty useful. Some of this is pretty basic. Some of this stuff's got some interesting caveats in it as well. So you might learn something along the way. It can go a long way towards that retirement planning process. Mark: We're going to get into that and take an email question as well. If you've got some questions of your own, stop by the website, pfgprivatewealth.com. That's pfgprivatewealth.com. Mark: John, what's going on, buddy? How you doing? John: A little tired. Got woken up at 2:00 in the morning with two cranky kids. Mark: Oh yeah. John: So if I'm a little off today, I apologize. Mark: There you go. No, no worries. You get the whole, they climb the bed, and then you're on the tiniest sliver? John: I got one climb into bed, I think kicked me in the face at one point. Mark: Oh, nice. John: Another one climbed into bed missing out on the other one, because they share a room. Then I had the sliver. I woke up almost falling off the bed. Mark: There you go. And usually freezing because you have no blankets. John: Yeah, yeah. Mark: That's usually the way it goes. Nick's sitting there going, "I don't know what you guys are talking about." Mark: What's going on, buddy. How you doing? Nick: Yep. No. Pretty low maintenance over here. Mark: Well, that's good. Hey, don't you have a birthday coming up? Nick: I got a couple months still. Mark: Okay, a couple months. Nick: Yeah, I just got back from a trip a few weeks ago. Some buddies that I grew up with, a group of us have been friends for a really long time, I guess, going back to middle school. We're all turning 40 this year, so we rented a house in Charleston, and all survived. Mark: Nice. There you go. Nick: Yeah. It was good. John: This is how you know Nick's turning 40. He came back with neck pain. Mark: Exactly. Nick: Yeah. Mark: Hey, when you start to get a certain age, you start going, "When did I hurt that?" It's like, "I didn't even do anything." Yeah. You don't have to do anything. Mark: Well, you know what? That's a good segue. Let's jump into this. Mark: We're going to start with age 50. I turned 50 last year. First of all, the thing that sucks is you get the AARP card. I don't know about all that. That's annoying as a reminder that you're 50. Mark: But the government does say, "Hey, let me help you out a little bit here if you need to catch up on some of the retirement accounts, help building those up." Talk to me about catch up contributions, guys. Nick: Yeah. Essentially what happens is when you hit 50, there's two types of accounts that allow you to start contributing a little bit more money. The most basic one is an IRA or a Roth IRA, where the typical maximum contribution for somebody under 50 is 6,000 a year. You can add an additional thousand to do a total of 7,000 a year. The bigger one is in a 401(k) or 403(b) account, where you're able to contribute, I believe it's an extra 6,500 per year. Nick: This is also a good flag for people to think about where, hey, once that catch up contribution is available, it's probably a good time, if you haven't done any sort of planning before, to really start to dial in and understand your financial picture a little bit more. Because if you talk to anybody that's 60, they'll tell you that 50 didn't seem too far back. So that's a good reminder to dig into that a little bit. Mark: Yeah. It adds up. It's not necessarily chicken feed. You might hear it and think, "Well, a thousand dollars on this type of account over a year, or 6,500 on the other type of account, whoopedidoo." But if you're 50 and you're going to 67, let say, for full retirement age, and we'll get to that in a little bit, that's 17 years of an extra seven grand. It's not exactly chicken feed, right? Nick: No. It's going to be big money down the road. Mark: Yeah, exactly. So that's 50. Mark: John, talk to me about 55. This one's really similar to 59 and a half, which most of us are familiar with, but most people don't understand the rule at 55. So can you break that down a little bit? John: Yeah. We don't see people utilize this too often, but an example would be let's say you're 50, 55, 56, and for whatever reason, you leave your current job. You have an opportunity, at that point... John: Let's give a bad scenario. You get laid off. If you didn't have a nest egg saved up in savings, there's an opportunity to actually access some money from your 401(k) plan without penalty. What you'll do is, basically, you take the money directly from the plan, and you just have it go to your bank account, and the 10% penalty's waived. John: Now, some people need to be careful with this. Once you roll it out to an IRA, this 55 rule here, where the 10%'s waived, ceases to exist. It has to go from the employer plan to you directly in that situation. It's a nice feature if someone finds themselves in a bad situation, or they need access to money, and the 10% penalty's gone, but you still have to pay your income tax on that money [crosstalk 00:05:03] Mark: Of course. Yeah. That caveat being, it's only from the job that you've just left, right? It can't be from two jobs ago kind of thing. It's got to be that one that you've just walked away from, or been asked to leave, or whatever the case is. That's that caveat. John: Correct. Mark: It's basically the same rules, Nick, as the 59 and a half. It's just is attached to that prior job. But 59 and a half is the more normal one. What's the breakdown there? Nick: Yeah. Essentially what happens is, at 59 and a half, you are able to take out money from your qualified accounts while avoiding that penalty without any sort of caveats. One thing to keep in mind is that usually you're taking it out from accounts that... Nick: For example, if you're currently employed, the process of taking it out of the plan where you're employed can be a little bit different, but it's pretty smooth and easy if you have an IRA or something like that outside of the employer plan. Nick: One other thing that happens in most plans, for people at 59 and a half, is, and we've seen it a bunch lately, where a lot of 401(k) plans have very restricted options in fixed income and those sorts of things, where most or many plans allow people to take inservice rollovers, where they're able to still work at their employer, but roll their money out of the plan to open up some options for investments outside of the plan. Nick: That's not always the best thing for people. Sometimes the plans are great. Fees are really low. Options are great. So it may not make sense, but oftentimes people do like having the option to be able to shift the money out without any sort of issue. Mark: Okay. All right. So that's the norm there. You got to love that half thing. You always wonder what the senators or whoever was thinking when [crosstalk 00:06:56] John: Finally, they got rid of the 70 and a half [crosstalk 00:06:58] Mark: Yeah. They get rid of that one. Yeah. We'll get to that in just a minute as well. Mark: John, 62, nothing too groundbreaking here, but we are eligible finally for Social Security. So that becomes... I guess the biggest thing here is people just go, "Let me turn it on ASAP versus is it the right move?" John: Yeah. So 62, you're now eligible. Like you said, a lot of people are excited to finally get access to that extra income. You can start taking on Social Security. John: Couple of things to just be aware of is, any time you take Social Security before your full retirement age, you will get a reduction of benefit. At 62, it's anywhere, depending on your full retirement age, roughly 25 to 30% reduction of what you would've gotten had you waited till 66 or 67. Mark: They penalize you, basically. John: Yeah. Nick: Yeah. Actually, if you do the math, it ends up breaking down to almost a half a percent per month reduced. Mark: Oh wow. Nick: Yeah. It really starts to add up when you think about it that way. John: Yeah. We always harp on planning, so important if you are thinking about taking it early, once you make that decision, and after a year of doing that, you're locked into that decision. So it's important to really understand is that best for your situation. John: Other things to consider at this age, if you do take early, Social Security does have what they call a earnings penalty slash recapture. If you're still working and taking at 62, a portion of your Social Security could be subject to go back to them in lieu of, for a better term, [crosstalk 00:08:27] Mark: It's 19,000 and some change, I think, this year, if you make more than that. John: Yeah. Mark: Yeah. John: Yeah. Anything above 19,000 that you're earning, 50% goes back to Social Security. [crosstalk 00:08:36] Mark: Yeah. For every two bucks you make- John: 5,000 goes back to Social Security. So that's really important. John: Something that I just want to make, last point on this, is that earnings threshold is based on someone's earned income, and it's based on their own earned income, not household. That comes up quite a bit, while people say, "Well, I want to retire and take at 62, but my husband's still working. Am I going to have a penalty if I take it?" The answer is no. It's based on your own earnings record. Mark: That's where the strategy comes into play too. Because if you are married, then looking at who's making more, do we leave one person's to grow, as we're going to get into those in just a second, to grow towards that more full number. Mark: Again, that's all the strategy. It may make sense for one person to turn it on early, and the other person to delay it. That's, again, part of the strategy of sitting down and talking with a professional, and looking at all the other assets that you have, and figuring out a good move there. Mark: Nick, let's go to Medicare. 65 magic age. Nick: Yeah. Actually, my dad turns 65 this year. So we've been planning this out for him. He is a retired fireman, so he has some benefits that tie in with his pension. Nick: One of the things that came up, and just something that people should think about or remember, even if they are continuing to work past 65, is it oftentimes makes sense to at least enroll in Medicare Part A. You can usually enroll as early as three months before your birthday. The Medicare website has gotten a lot easier to work with over the last year or two. Nick: Part A, the tricky thing is that you want to check with your employer, because usually what happens for the areas that Part A covers, which is usually hospital care, if you were to have to be admitted or certain procedures, it's figuring out who's the primary payer, who pays first, who pays second. So making sure that you coordinate your benefits. Check in with HR, if you're going to continue to work. Nick: If you are retired and are coming up on that Medicare age, make sure that you get your ducks in a row so that you do enroll. Most likely you're going to start saving some money on some healthcare premiums. Mark: Technically, this starts about, what, three months early? It's a little actually before 65. I think it's three months when you got to start this process, and three months before and after. Nick: Yep. Yeah. You can typically enroll three months before your birthday, and then through three months afterwards. There can be some issues if you don't enroll and you don't have other healthcare, at least for Part A. There can be penalties and that sort of thing. Nick: Frankly, with Medicare and healthcare in retirement, this is a space that we typically delegate out. We've got some good resources for clients that we refer them to, because there are a lot of moving parts, and it can be overwhelming, especially when you start to move into the supplements and Advantage plans, and all these different things. Mark: Oh yeah. And it's crucial. You want to make sure you get it right. A lot of advisors will definitely work with some specialists, if you will, in that kind of arena. So definitely checking that out when we turn 65. Mark: Again, some of these, pretty high level stuff, some of this stuff we definitely know. But we wanted to go over some of those more interesting caveats. Mark: Let's keep moving along here, guys. Full retirement age, 66 or 67. John, just what? It's your birthday, right? John: It is your birthday. That's the time that you can actually take your full Social Security benefit without any reduction, which is a great thing to do. Then also that earnings penalty we discussed earlier at age 62, that no longer exists. Once you hit your full retirement age, 66 or 67, you can earn as much as you want and collect your Social Security. There's no penalty slash recapture. John: When that happens, people have some decisions to make. If they're still working, they can decide to take their Social Security. I've had some clients that take it, and they use that as vacation money. I've had some other ones take it, and they take advantage of maxing out their 401(k) with the extra income. Or you can delay it. You don't have to take it. You get 8% simple interest on your benefit up until age 70. John: So full retirement age, you got a lot of big decisions to make, depending on your situation. But you want to make sure you're making the best for what you want. Mark: Definitely. Nick: Just as a reminder to people that that 8%, and you had mentioned it, but it does cap out at age 70. So there's no point in waiting past 70, because it doesn't increase any more. Mark: Right. Thanks for doing that. It wasn't on my list, but I was going to bring it up real fast. So yeah. People will sometimes email and they'll say, "Hey, I want to keep working past 70. How's that affect Social Security." It's like, "Well, you're maxed out, so you got to just go ahead and get it done." You can still work if you're feeling like it. Your earnings potential is unlimited, but it's just a matter of you're not going to add any more to it. So I'm glad you brought that up. Mark: John, you mentioned earlier, they got rid of the other half. Thank God. The 70 and a half thing, just because it was confusing as all get out. They moved it to 72. Nick: Yeah. Required minimum distributions, as a reminder for people, are for accounts that are pre-tax, where you were able to defer taxation. 401(k), traditional IRA, that sort of thing. At 72, you have to start taking out minimum distributions. It starts at around 3.6, 3.7% of the balance. It's based on the prior year's ending balance. It has to be taken out by the end of the year. Nick: An important thing for people to understand is that, many times, people are taking those withdrawals out to live on anyways. So for a lot of people, it's not an issue at all. However, there are a good amount of people that it's going to be excess income. Nick: Earlier mentioned, hey, at age 50, really time to check in and start making sure that you're planning. One of the benefits of planning and looking forward is to project out and see, hey, are these withdrawal going to cause you to have excess income at 72, where maybe we're entering into a time that tax rates could be higher, tax rates could be going up, which is fairly likely in the next five to 10 years. So if we know and we can project that, then we can make some adjustments to how we save, should you be putting more money into a Roth versus a traditional, and how we make adjustments on the overall planning. Nick: So making sure that you understand how those work, and then the impact that it has on other decisions to take into account for that situation, is a huge part of planning. Mark: Definitely. Those are some important birthdays along the way. You got to make sure you get this stuff done. 72, there's the hefty penalties involved if you don't do that. Plus you still got to pay the taxes. All this stuff has some crucial moments in that retirement planning process, so definitely make sure that you are not only celebrating your birthday, but you're also doing the right things from that financial and that retirement planning standpoint along the way. Mark: Again, if you got questions, stop by the website, pfgprivatewealth.com. That's pfgprivatewealth.com. You can drop us an email question as well, if you'd like. That's what we're going to do to wrap up the show right now. Mark: We got a question that's sent in from Jack. He says, "Hey, guys. I've thought about meeting with a financial advisor to plan my retirement, but I've never used a budget or anything like that before. So I'm wondering, should I budget myself for a couple of months before I meet with a professional?" Nick: Based upon experience, putting expense numbers down on paper is one of the biggest hurdles for people to get into planning. But with how this question is phrased, I would be concerned, because it's kind of like the situation of starting a diet. You start a diet. You're going to eat really good for two to three weeks. You're trying to hold yourself accountable. You're functioning in a way that isn't necessarily your normal life. Nick: One of the things, as advisors, that we want to make sure that we understand are what are you really spending. It's great to use a budget, but if you're budgeting to try to look good in the meeting, which we've seen happen, you're painting a false picture, and you're not letting us know what the finances actually look like. Nick: So I would actually say to put down the real expense numbers in place, let's see what it really looks like, and then if we need to create a budget after we've created a plan, then that's something that we can dig into. Mark: Yeah. John, let me ask you, as we wrap this up, sometimes people associate seeing a professional financial advisor with a budget. Also, people have a cringe to the B word. They think, "Well, I don't want to live on a fixed budget," or something like that. Mark: That's not necessarily what we're talking about, right? That's not probably what Jack is referring to. He's just trying to figure out, I guess, more income versus expenses, right? John: Yeah, yeah. The first step is to analyze your expenses. That could be what he's referring to as far as, "Hey, should I take a look? Should I get my expenses down before I meet with someone?" John: I'd agree with Nick, even if that's what you're looking at, versus the budgeting, I would say no. I think the first step is sit down with an advisor, because they can assist in categorizing the expenses correctly based on today's expenses, versus what expenses are going to be at retirement. John: I think it's important just to get going rather than trying to prep. Because we've seen a lot of people that have taken ... They've been prepping for years to meet. That's years where they haven't done anything, and they've, unfortunately, lost out on some good opportunities, otherwise, if they just said, "Hey, I'm going to sit down first, see what's going on." Mark: Yeah. It gives you that built-in excuse. John: [crosstalk 00:18:26] Mark: It gives you that built in, "Well, I'm not quite ready." Well, you might never be ready if you play that game. Especially a lot of times when it's complimentary to sit down with professionals, have a conversation. Most advisors will talk to you, no cost or obligations. So why not right? Find out. Just get the ball rolling. That's the first step. It's usually the hardest part too. Nick: Yeah. One thing that we typically tell people is that we are not the money police. We are not here to tell you that you can't use your money the way that you want to use it. Nick: The way that we view ourselves, and what our role is as an advisor, is to help you understand the impact of decisions. Whether those decisions have to do with spending money, saving money, whatever, it's to make sure that you understand the impact of your decisions so that you make better decisions. That's it. Mark: There you go. Yeah. It's your money, at the end of the day, your call, but certainly having some good, well, coaches in your corner, if you will, advisors to help advise, that's the whole point. But I like that. Not the money police. Mark: All right. That's going to do it this week, guys. Thanks for hanging out. As always, we appreciate your time here on Retirement Planning Redefined. Don't forget. Stop by the website. Mark: If you need help before you take any action, we always talk in generalities, and try to share some good nuggets of information, but you always want to see how those things are going to affect your specific situation. Mark: If you're already working with John and Nick and the team at PFG Private Wealth, fantastic. Then you already have a lot of this stuff in place. But if you have questions, or you're not working with them, or you've come across this podcast in whatever way, or maybe a friend shared it with you, definitely reach out and have a chat. pfgprivatewealth.com. That's pfgprivatewealth.com. Don't forget to subscribe on whatever podcasting platform app you like to use. Mark: We'll see you next time here on the show. For John and Nick, I'm your host, Mark. We'll catch you later here on Retirement Planning Redefined.…

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Ep 45: Planning For Things We Can’t Predict 15:22

3 years temu15:22

15:22

There are certain things in life we just can’t predict. If we knew the answers to some of these questions, planning for retirement would sure be a lot easier. So let’s see how you go about constructing a plan that addresses the kinds of questions to which you can’t possibly know the answers. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey everybody. Welcome into another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com. That's p-f-g-private wealth.com, where you can check out a lot of good tools, tips, and resources, schedule some time with the team or subscribe to the podcast on whatever platform you like to use. And on the podcast us this week, we're going to talk about planning for things that we cannot predict. There's many things in life that are just out of our control, and we can't predict. Yet, we somehow have to figure out a way to bring these things into the fold when it comes to our retirement strategies. And if we knew the answers, these things would be a lot easier to do, right? Just like saying, if we knew when we were going to pass away, you guys could build the greatest plan anybody's ever seen, but we don't come with a timestamp on us. So we have to figure out a way around some of these complicated questions and construct a plan that handles these, but also works with the unknown. So we'll get into that in just a second, but what's going on, Nick? How are you doing? Nick: Doing pretty good. Thanks. Speaker 1: Yeah, how's the old puppy doing? I've got mine next to me right now while we're taping. Nick: Unfortunately she passed like a month ago. Speaker 1: Oh, I'm sorry, buddy. I didn't mean to do that. Nick: It's all right. Oh yeah, no, I don't take it like that. I was going to say something earlier and then I just kinda left it, but yeah, it's been a bit of a crazy month. Speaker 1: I gotcha. I'm sorry to hear about that. It's always rough when we lose our little furry friends there as well, but hopefully things will get better for you. And we'll talk about something, you can't predict that kind of stuff. Right? We'll get into that kind of conversation here in a second. John, what's going on with you? John: Today's topic is pretty fitting. I couldn't predict that the house I bought had a loose AC drain and currently all the floors in my master bedroom and hallway ripped up. It's going well, as well as can be. So we're adapting to the renovations in our house currently. I just send Nick some pictures of it and he's like, whoa. Speaker 1: Oh, wow. Well, I put my foot in my mouth already to start the show, so we'll get into it. But I guess that fits really well though with the over conversation is, because there's a lot of things. I mean, life is unpredictable, right? Murphy's law, whatever you want to subscribe to. And so we still have to somehow plan for some things, look at the state of the world, right? Who would've predicted 7.9% inflation rate, who would've predicted. What we're seeing in the Ukraine and so on and so forth. So it all affects the financial side. So we'll turn our attention there as we typically do. And a lot of times guys with what you do for a living, I imagine, and I talk to advisors all across the country when they meet people that do what you guys do for the first time, almost inevitably somebody goes, Hey, so when's the next market crash, right? They kind of like you guys, somehow some know this magical information that when the next it crash is going to be, well, you can't predict for that, John, but you still got to plan for being able to retire in any economy regardless of what the market's doing. John: Yeah. And this point I'm going to say, probably goes for all of these things we're discussing today. Is you really want the flexibility to adapt for any, I don't say any, a lot of situations that come up in retirement and one of those are, a market pullback or a crash, so things to put yourself in a pretty good position is, we kind of stress this, is having a decent cash savings. So if the market is crashing, you can rely on your cash savings for income during that period of time. So you don't sell any of your losers and realize those losses. So there's a lot of things you can, you can't predict it, but you could definitely set yourself up in a situation where you can adapt to it, to put yourself in a good situation moving forward. Speaker 1: Yeah. And as I mentioned on the last podcast, we were talking about the fact that we were dealing with overconfidence as one of the money biases. And the last several years, it's been easy to get confident in the market, but when we start to see these downturns or corrections, like we're going through right now, people get nervous and they tend to do the wrong thing. So you can't predict when it's going to happen, but you want to make sure that you're setting yourself up in a way to work through that. And Nick, similarly, we could talk about healthcare costs, right? I mean, who knows what they're going to look like in 20 years? Now a good bet is probably that they're going up more than likely, right? Unlike the market crash, where there is some historical data, I mean, healthcare costs, the reality is we're living longer. So more than likely these costs are going up, but how can you plan for that? If you don't really know, you just have to start, kind of chipping away at this. Maybe. Nick: Yeah. It's interesting because this is one thing that we can probably lock in that it will go up and will continue to go up. But from a practical sense, in a practical standpoint, the things that we can do are from a planning perspective, make sure that when we're planning for them, for these healthcare related expenses that we understand what's involved. So as an example, a lot of people think about, well, Hey, I know that my healthcare expenses are going to get higher later on down the road, but many times they don't understand. And when we see this all the time that even their cost for Medicare, when they switch to Medicare in retirement, there's a decent chance it's going to cost more than what they're currently paying for their health benefits through their work. Nick: And because a lot of people have that concept that it goes down versus most likely going up from a premium perspective for a lot of people. Using a higher inflation number for those healthcare premiums and healthcare related expenses, which is something that we make sure that we do with clients where we'll use a three and a half to 4% inflation number on healthcare related expenses in the plan, which tends to be, one to two points higher than the rest of the categories in for inflation. Nick: So, things like that where we can't predict it, but at least from a modeling standpoint, we can kind of, use a prudent person rule of, making sure that we at least model those things to be a little bit higher and faster, increasing costs, especially when we look at how those plans are being financed by the government, which is not great. Speaker 1: Yeah. And that's a great point because even in normal inflationary times, right? What is it the two industries that outpace even regular inflation on the regular is college tuition, right? And healthcare. So while college tuition may not be affecting as many of retirees or as maybe pre-retirees the healthcare certainly is going to affect them. So you got to take that into account and definitely start strategizing for those healthcare costs. Putting your head in the sand is not going to help you out 20 years later when you need it. And John, you could kind of make that same argument really about the tax rates. Right? The Smart bet, the money is probably on the fact that yeah, they're going up, but God willing, you're going to live through multiple administrations in retirement. So, to say, well, what are tax rates going to look like three presidents from now who knows, right? Administrations are going to do what they got to do. John: Yeah. And that's where, again, it's important to flexibility to adapt to the situation and how you get flexible is diversifying your assets from a tax standpoint. So, and you might want to look at, increasing your Roth contributions, if you have a Roth 401k at work or eligible to contribute to a Roth IRA. So that could be a really good strategy. So that way, if tax rates are up, when you're taking your income, you could say, Hey, you know what, I'm going to take some of my tax free income this year or for these next couple of years. And you can really adjust to that situation. And not just only with Roths, but you could go outside of retirement accounts and kind of deal with capital gains. But then you got the same issue there with what are the rates going to be? John: What Nick and I have been seeing quite a bit lately is clients really over funding their HSAs and not using them, just letting them build up for retirement. Cause that would be a nice tax free distribution, if qualified for healthcare costs, which also piggybacks what Nick was talking about. About healthcare costs, not knowing what they're going to be. So there are definitely different things you can do to allow yourself some flexibility. And one thing that we typically do when we're doing planning is we do stress test these things for certain clients. Where we'll look at some kind of market pull backs. How does your plan look like if there's a 20% pull back? What if healthcare costs go up? What if inflation goes up? So there's definitely things you can do to prepare. Speaker 1: Now. Those are some great points right there because we, again, we don't know what's going to happen. The smart money is taxes are probably going up, we've got 30 trillion dollars in debt. There's almost 40 plus trillion dollars in retirement money sitting out there, the taxes haven't been collected on. So if that doesn't have a bullseye on it, you're probably kidding yourself. So trying to be as tax efficient as we can today could be beneficial. Because again, we have no idea what it would look like three presidencies from now. Speaker 1: So these are, again, things we cannot predict, but we certainly got to still plan for some of the options that are out there. And Nick, I joked earlier that if we had an expiration date stamped on us, like a gallon of milk, you guys could build the greatest, retirement plan for each individual that they've ever seen, but we have no idea how long we're going to live. And I could use my own self as an example for the listeners. My brother died at 50, I'm 50. My brother died at 57, my father at 63, my grandfather at 60, be easy for me to say, Hey, I'm going to spend all my money between now and the age of 65, because I'm not going to be here. So I'm going to party. But yet that's not responsible, because what if I'm wrong? Technology has changed. And of course, what am I doing to my spouse? Nick: Yeah, this is always an interesting one. It's probably the source of the most quote unquote jokes from people. Whether it's clients or people that attend our classes, that sort of thing. And really from a practical sense where this comes in is, how long do we plan for? So when we're building a plan 99% of the time, we plan to age 100. And when we plan to age 100 for clients, we can see what, how much money's there at age 85 and age 90 and all those sorts of things. And the thought process is that if the plan works until age 100, then the probability of it being successful up into, 80, 85, etcetera, is much higher. And the plan, what it will also help us do is for those people that do want to make sure that they spend their time early on in retirement, really doing the things that they want to do, no matter how much bluster there can be about, because again, usually it's some sort of internal insecurity or internal bias that has them talking about passing away early. Nick: But sometimes what we found is that, really they're just saying that because they don't want to deal with the concern of running out of money. It's almost in a weird sense, comforting that, Hey, if I pass away early, then I don't have to worry about money. This planning thing isn't important. I don't have to stress about it. No big deal. So in actuality, when you go through the planning process and you do see where you sit and you do see, Hey, maybe I can do the things that I want to do and I can still, make sure that there's money down the road for a spouse, all these sorts of things. It actually really kind of tick up the confidence and they will enjoy those things much more than having that uncertainty because, and I've seen it across the board because what ends up happening. I mean, and again, just seeing it being in this business, people that had that thought process 60 today, used to feel like 50 70 today feels like it. when people were 60, 15 years ago, nobody realizes how old they are, or they have this perception of that they're going to feel a certain way. And usually that's not the case. So, planning for all scenarios is really important. Speaker 1: No, definitely. I mean, my mom's always joking. She's 80 and she's forever saying, I don't feel it. when I, if I'm not moving or if I'm not doing anything, I don't feel like I'm 80. She's like in my mind I still feel like I'm 30 or 40. She's like until I look in the mirror or I try to move a certain way. Nick: Yeah. And unfortunately I had to go up to New York for a funeral this past month and my dad and I flew up and we walked into the room with some family members and stuff like that. And after the initial reminder that we're no longer in the south due to how loud it was and all of the swearing. Somebody said something about because that side of the family, I was always one of the younger and I'm like, how old are you going to be? And I was like, I'm going to be 40 this year. And everyone looked and they're like, and I was like, you know what? That means you guys are really old now. So, again, it's that whole concept of people just don't realize it. And the concept when you're younger of what you're going to feel like or what it's going to feel like when you're older, it never tends to be that way. So it's important to really plan. Speaker 1: Yeah. It definitely. So you got to plan for these things, even though we can't predict them, how long we're going to be around tax rates, healthcare costs, market crashes, whatever the case is, these things are again, probably going to happen throughout your retirement. And if you have a nice long retirement, which you certainly hope that you do, you might be retired 20, 25, 30 years. You're going to experience multiple things with some of this stuff that you can't necessarily predict for, but you still have to strategize to hopefully have the retirement that you want in any economy and any circumstance. So that's where planning comes into place. And that's what you got to reach out to the guys for here on Retirement Planning, Redefined with John and Nick at pfgprivatewealth.com. That's where you can find them online, pfgprivatewealth.com. Don't forget to subscribe to us on whatever platform you like to use. Apple, Google, Spotify, so on and so forth. And we'll be back with more episodes coming up in a couple of weeks. Nick, thanks for hanging out as always. John Good luck with those floors, man. John: Thanks. I definitely need and appreciate it. Speaker 1: Absolutely. Nick, we'll see you next time here on the podcast. This has been Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 44: Do You Have A Money Bias? And How Much Is It Costing You? 23:06

3 years temu23:06

23:06

On this episode, we’ll breakdown a recent CNBC article that analyzes a recent Morningstar study. The study found that most of us have at least one money bias, some of us more than one, and that those biases are very possibly costing us money in our checking, savings, investing and retirement accounts. Listen to see if you might be impacted by a specific money bias and for strategies to get it back under control. Helpful Information: CNBC Article: https://cnb.cx/3KKXSHf PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey, everybody. Welcome back to the podcast. It's another addition of Retirement Planning - Redefined with John and Nick from PFG Private Wealth. We got to fun and interesting podcast this week to talk about, money biases and what those are, and are they costing you a little bit? If you have a money bias and you're going to be probably surprised to find out that you indeed do most people, I think do have biases about a lot of things. So, that's going to be on the podcast this go around. And of course, if you've got questions you need some help, always reach out to theguys@pfgprivatewealth.com. That's p-f-g, private wealth.com. John, what's going on, buddy? How you doing? John: Hey, doing good. How are you? Mark: Hanging in there. Doing pretty well. We were chatting a little bit off air and just talking about life, moaning and groaning a little bit, but overall you're doing okay? Hanging in there? John: Yeah. Yeah. We, we just wrapped up a golf tournament that we hosted with Bern's Steakhouse. It's our second one. Mark: Nice. John: Yeah. Finalizing the numbers, but looking like a pretty decent donation to a couple of local Tampa charities here, which are Blue Star Families and then Jackson In Action, 83 Foundation, both a military base. So, so we're excited. It was a great event and we look forward to delivering the check soon. Mark: That's fantastic. Awesome. Nick, how you doing my friend? Nick: Doing pretty good. It's been a little bit of a crazy month, but have some vacation coming up, which will be nice, although I'm going to Key West and it'll be my first time going there, so... Mark: Okay. Nick: I'm looking forward to seeing what that's like. Mark: Well, I don't know how you're getting there, but I filled up my truck yesterday and it cost me triple digits for the first time. It was over a hundred bucks. Nick: Yeah. Luckily I'm flying. So... Mark: All right. Nick: We're good to go. Mark: Well, the inflation numbers came in for February 7.9%. I don't know if you guys saw that at the time we're taping that they just came out this morning, so yay. Right? So people are definitely frustrated and we're kind of concerned. There's a lot going on, obviously the stuff in the world and the market's been reacting to that inflation is up. And so I thought it would be interesting to kind of have this chat. And we were talking about these money biases and how we feel about some of the different things. And I thought maybe it'd be a good idea to share some of this stuff with the listeners. So what we'll do is we'll also put a link to the article. This was a CNBC article guys, that was based off a Morningstar study. And I'll let you guys talk about Morningstar if you'd like to, just to explain that to the folks in a second. Mark: But the study found that most of us have at least one money bias, some of us more than others, and that biases are very possibly costing us additional money in our checking, savings, or investing in retirement accounts. So, we'll see how this kind of impacts you and you'll kind of learn a little bit about this along the way. So a couple of key points before we dive in is that everybody has different attitudes about money. No real shock there, right? We know that, but that new behavioral financial study from Morningstar found that 98% of the respondents exhibited one or more. So when we say just about everybody has one, that's pretty true and that they are likely costing them some money. So we'll jump right in and get going here and with take away number one. Nick, what are the four main biases that they talked about and that you guys see? Nick: Yeah, we really wanted to kind of focus on this with this chaotic as the beginning of the year has been. we think that people taking a little self inventory on, on how they might make some decisions would be beneficial. So right. The first bias is called a present bias or really kind of like present time. So really what this focus is on is kind of the tendency to go for immediate rewards over long term goals, or, the good old instant gratification. I would say that, what's interesting is, this can definitely be different for different age bands. So for people that, kind of like in that baby boomer era, they have their toes in this, for sure, whereas younger clients definitely. I would say it's a little bit more dominant just because of the things that they're used to and convenience and instant gratification. Mark: Sure. The world we have. Yeah. Nick: Yeah, for sure. And I think this is something that's real important because this become a stronger and stronger bias just with things that we're used to like news cycles and stuff like that. So, so that's, that's the first one. Mark: Well, let, let me ask you a follow up on that real quick, Nick, before you move on. So with that present bias basically like it's that idea of, I feel like I need to do something now. Right? So like we'll use the market falling as an example. Right this minute we're down about 10% I think in the S&P or into a correction, I guess officially. So I must... I must need to do something now, so I can see the response, the immediate response. That way I feel like I've done something that's really what a present bias is. Nick: Yep. Very much reactionary. Mark: Okay. Nick: Typically, and usually for most people, taking action at something like this, it's oftentimes too late. So that can really turn into this kind of yo-yo effect of, waiting where this is one of the things that lead people to buy high in sell low, which is kind of the opposite. Mark: Which is the wrong. Yeah. Okay. Nick: Yeah. Mark: So that's the first one. Nick: Yep. And then second one, is what's called base rate neglect. So really what happens is, this is kind of focused on how you judge the probability of something happening based upon new information, while you essentially ignore your original assumptions. So this is something where, for example, the whole concept of best laid plans. So this is where planning can really come into play, where might get a call from a client that, maybe it's a certain sector of the market. Hey, I want, I really want to jump into this certain sector of the market and they're not taking into consideration that maybe they already have exposure to that. Nick: Or again, maybe it's a little bit too late and they're forgetting all of the effort and all the time that has been put into kind of creating the overall plan and then overreacting to good or bad news. And, this is definitely something like, for example, for myself, right. That I have to have, people remind me, I know that this is something that happens to me where it's like, because I do try to consume a lot of information and process, a lot of information and news where, dependent upon what's going on. This can kind of throw me a little bit for it. Mark: I gotcha. So let, let me, John, let me of get you in here on this for a quick second. So for example, what I'm hearing then, so the NASDAQ for example, is technically into bear territory now, cause it's down 20 plus percent. So people calling up and saying, Hey, I need to get out of tech might be an example of this base rate neglect because they're seeing the current situation and they're reacting to the news versus does it make sense for their overall long term strategy? John: Yeah. A hundred percent. It's the whole, kind of going into behavioral finance where it's, you're selling out when, when you shouldn't be, in reality, now's the time you know, if, as Nick mentioned, it's probably too late at this point. Mark: Sure. Right. John: It may be best just to stay of the course and stay in it, but a hundred percent that's kind of what we typically see. Mark: Okay. All right. Go ahead Nick, what the third one for us? Nick: Sure. So third one is overconfidence. This is an interesting one. Also, one that I know that I have a bias, where it's the whole concept of putting too much weight in your own abilities to make good financial decisions. Mark: Sure. Yeah. Nick: So, another way to think about this can be, is wanting to be right. And we tend to all want to be right. But then sometimes we will, double down or not take into consideration a concept of like a sunk cost where Hey, we're not always going to be right. And sometimes it's okay to make mistakes. You just want to learn from that. Oh definitely. And not double down, triple down, that sort of thing. So understanding that there's law of large numbers and there's efficiencies in different areas of the market and or planning. So being over confident, and again, this is something where if you look at the pie, you want to have your plan, your investment strategy, all that you want that pie to be, around 90% or so of the very strong part of your fundamental long term plan. Nick: So sometimes having some of these biases on a small portion will help you really learn, usually people don't, they try to do it on a much larger portion. So that's a little bit of a takeaway too, is in moderation. Some of these things can be good because there are places where you can have a lot of upside that if you do it with the right amount of money and you take a little bit of risk with a smaller amount of money can help you kind of work through some of these biases without over overacting over correcting. Mark: Oh, definitely. And if you think about the overconfidence bias here, Nick, I mean, we've basically been on a 12 year run, 12 plus year run with the market. So everybody's been feeling pretty confident. I mean, 1920 and 21 all finished up with double digit years. Nick: Right. Mark: So it's easy to feel confident when, when everything's going up, everybody's a genius, right? Nick: Oh yeah. Mark: So it's when it's going down that you start to get a little more concerned and maybe that overconfidence comes into play. And since we mentioned down, go ahead and go to the fourth one, which is the final one. Nick: Sure. So the fourth one is going to be loss aversion. So a classic case of this is, because there's different types of risk as well. And one of the risks that we talk about sometimes are inflationary risks, which we're seeing now. So in other words, for people that might be way too heavy in cash over prolonged period of time, or they're afraid to take any sort of risk, they don't necessarily think about the trade off. So they, again, this is the concept of having a plan and having balanced, not only in your investments, but in your strategies and your overall planning is really important because as we see, sometimes people's thought processes, well, hey cash, if I'm in cash, it's okay. I just don't want to lose my money while, in times of massive inflation or just compared to other areas of the market, there can be significant downside to, the concept of what some people may think is no risk can actually have quite a bit. Mark: Okay. So those are the four biases then. So you've got the present bias, the base rate neglect of the overconfidence bias and the loss aversion. So John here's the interesting part to me about this whole thing is take away number two, is that 98% of people are exhibiting at least one of these, what they found was the lower, the level of bias, the better your overall financial health. So if you only have one let's say of these four, then you're probably in better shape than someone that has two, which again, it kind of makes perfect sense, but there was some interesting statistics and information in this. So why don't you talk to me a little bit about that? John: Yeah, yeah. That is pretty interesting. Basically the lower level of bias you have, the better financial health you end up having. And it's one of the ones here is like the present bias where basically research showed, if you have a low level of present bias, you were three times as likely to spend less than the money you that you make. So basically you're going to be saving more money. So again, it's kind of... You kind of look at this in life. You don't have that instant gratification. You're kind of looking at the long term of, Hey, I don't need this today. You know, if you go to the store and buy something, do I really need that now? No, I don't. I can hold off on it. You know, just making better financial decisions all around when you kind of break it down. Another one that was interesting with, with that, with the present bias was there's seven times more likely to plan for the future. Mark: Yeah. John: So, so I get... [crosstalk 00:11:36] go ahead. Mark: I was trying to say, so what I'm hearing there is then, is if they don't re... If you don't react, if you don't give into the instant gratification bias, you typically were a better saver. Sounds like. John: Better saver, better planner, just not reactionary to what's going on. So it's really the long term goal seems to be in mind with these type of people. Mark: Seven times more likely. That's pretty good. John: Yeah. It makes me think I need to... I need to be a little less into gratification for myself. Mark: There you go. John: You know, it's, I'm getting off topic here, but it's funny. I was talking to my wife the other day with, we got Disney plus for the kids. Mark: Sure. John: And it's like, oh, I want to watch this. And I started thinking, I'm like, man, I just remember just sitting there looking at the guide until, a TV show would finally pop on or a move I wanted to watch because you couldn't watch things right away. You back in the late eighties. Mark: And in those places, it's great. Right. We enjoy that kind of stuff. But then what happens to this kind of this point is next thing you know, you've got 12 subscription services and you're not using them all. So yeah. John: Yeah. So anyhow, starting off on a tangent. Mark: No, you're fine. John: But yeah, another one would be, overconfidence, lower level bias there. They found that people would have basically more savings. So again, back when Nick was staying with overconfidence in and I fall into this quite a bit, it's like, ah I have some time I can build that up or whatever. And I've seen this quite a bit with some retirees. So, if you're not over, you tend to save a little bit more and last one is the loss aversion of having lower 401k balance, the less bias you have towards that, the more apt you are to take a little more risk and save more into your 401k. And just as Nick mentioned here, not sit in cash and try to outpace inflation. Mark: I gotcha. So yeah, if you, if you're a bit more overconfident, you feel like you can kind of well, I'll take some chances, right. Because I can get it back. So therefore I can build that savings back up or whatever the case is. So really interesting takeaways from that standpoint, when you think about it, because we all fall into one of these, whatever it might be. And so the lower level of money bias, typically the better financial health. Nick, so talk to me about some of the solutions Morningstar offered because they called it build a money life that fits your priorities, which makes a lot of sense for what you guys do as advisors to kind of find that right mold or fit for the individual. Nick: Yeah. So it's pretty interesting in... We joke a decent amount of time with clients and among each other that, our business is probably 20 to 30% finance and 70 to 80% therapist. And really it's helping people with these sorts of things. So some of the things they talked about as far as what they call building a money life is kind of put some speed bumps or have a process in place for your decision making. So, one of the things that we try to get our clients to do as an example is that we have the... Because we are a planning focus firm and we use planning tools and software to help people model out different scenarios, we try to get them to start thinking through that realm because a lot... People have often like the quite, well, what about this? Nick: Or what about that? Or should you know, one of the most common is, do I put extra money towards the mortgage or do I save some money? And the answer for everybody is different based upon what they've done up until that point. And so, for those that work with us, what we try to get them to do for those speed bumps is to say, number one, number two; number one, if there's something that you're concerned about, walk us through, what is the scenario that you're concerned about? So for example, if you're concerned about, the cost of fuel, cost of inflation, those sorts of things, in what way are you concerned about how that applies to you specifically? So not just the world and everybody on the news and all that kind of stuff, but how does it involve you specifically? Nick: And so, okay. So, sometimes what people realize is that it's not going to impact their life in a dramatic way. It could have some sort of impact on, the economy and those sorts of things. But most of the times it's not going to have a massive impact on their life. And then we take it. So maybe, we figure that it could have some sort of impact. So then we can kind of go to the planning software and kind of model it and say, okay, well, if these things happen, let's take a look and see what it looks like. And okay, so now that you see what it looks like, here are some of the decisions that you can make to bring that sort of risk down and have a little bit of clarity. And then we can go ahead and try to implement those decisions. Nick: So instead of just these open-ended concerns of things that are not in anybody's control, let's look at the things that we do have in control. And those decisions that we can make to impact and make it easier. And kind of referring back to what we talked about earlier, where that kind of high level of base rate, and then the overconfidence for lower savings and checking, sometimes what ends up happening is that, and we try to remind people of this is, having a solid base of savings, cash savings is your permission slip for a lot of different things. So when people look at and realize like, Hey, that this is... These are exactly the times that we emphasize having this cash handy because we can deal with these fluctuations in the market. We don't have to make irrational decisions because you've built this buffer and you've given yourself this permission slip to deal with these different sorts of circumstances. Mark: That's a great point. Yeah. Nick: Yeah. So that can be interesting. And then if, you're doing it on your own, maybe making some sort of process where, hey, you've got a couple of rules that you take into consideration where once you get to certain gains on an underlying investment, you're okay selling, or you sell with half and maybe you let the rest of it ride. Or you just kind of give yourself a buffer time. You know, sometimes people will joke that they have rules for emails, like when they're mad. So, give it an overnight, you're ready to fire off an email, maybe it's to a coworker it's to a family member, whatever. Mark: Right. Yeah. Nick: Or text message. Mark: Wait till you cool down. Nick: Yeah, wait to cool down. And, or maybe haven't had an adult beverage and give it a little bit of time because oftentimes, when we sit on it, we see that maybe even though we didn't think we were, maybe we were a little over confident in what our thought process was previously. Mark: So yeah. I like that idea, John, what do you think? Like one of the things they had on there, and I think this is a good idea was the whole, wait three days to make an important decision. I'll use an exam... I mean, you've got the little ones there. That's great advice to try to, raise kids on as well. My dad used to do that with me. Hey man, if it's a good idea, on Monday, it's still going to be a good idea on Friday. Right. But if something changed or you don't feel like it's a good idea, then it's good that you waited before you took action. I've been thinking about buying a muscle car here recently. And of course, gas prices have got me second guessing that. So I went and looked at one last Friday and I still haven't made a decision because I wanted to take that time to make sure I was making that right choice. Right. Don't... That's that instant gratification, I guess, take a few days... [crosstalk 00:18:48] John: [crosstalk 00:18:48] A hundred percent. Nick: [crosstalk 00:18:49] Or you might be getting a really good price right now. I mean... Mark: Well, that's true too, but. Nick: So if you really want it... Mark: What do you think, John? John: I think it's always best to wait a couple of days to see if that's something you really want. I think, like you said there, it's going to be there, and the price could jump up in three days in this environment. But I think it's always best kind of way it a little bit before you make financial decisions. So you ultimately feel comfortable with decisions that you made. That it wasn't kind of an impulse buy or decision... Mark: Right. [crosstalk 00:19:20]. John: That could affect the rest of your life. Mark: So, well, the speed bump idea was really good, right? The Morningstar, they called it speed bumps to place your... Slow down your decision making as Nick alluded to. And if you think about the stock market, right, they've got those circuit breakers in place. We saw that with COVID right. When the circuit breakers would kick in to prevent any more trading because it was falling so fast. So if you want to kind of use that same analogy, have some speed bumps or some circuit breakers in place for your decision making process. So lots of different ways we can look at it. John: Yeah, another one in the article I was reading through is really, and it goes back to what we're saying here, and what we always say is having a plan, a sense of direction and to tune out the news and really stop taking advice from your friends where it's basically, "hey, I did this", or "I'm buying this." And especially with, we don't advise on crypto, but you know, "I'm buying some crypto" and stuff like that. It's really, have your plan and stick to what your plan is for versus listening to what other people are doing. That was also in the article, which I thought was an interesting point. Mark: Yeah. Very good points. Well, I tell you what, like I said, we're going to link this into the, to the show notes and information there. So if you'd like to check that out, you can. And as always, if you've got some questions, we'll wrap this up this week about a money bias, your own money bias, which one you may be affected by. You should be able to tell if you suffer from the present bias that give me now thing, that base rate and neglect where you just react to the news, the overconfidence of feeling like you've got it all figured out, you've mastered it all. Or maybe just the loss of version where that fear of losing money, just really kind of cripples you either way, it could be costing you money. So reach out to the guys, if you've got questions on how to control this. Mark: And I think that's some of the value that an advisor brings to the table is they're not going to have those biases about your portfolio plan because it's not their money, right? So they're there to help guide you and be that sounding board and be that coach. So reach out to John and Nick, if you some questions at PFGprivatewealth.com, that's PFGprivatewealth.com. Before you take any action, you should always check with a qualified professional, like the guys, they are financial advisors at PFG Private Wealth. Don't forget to subscribe to us on Apple, Google, Spotify, or whatever platform you'd like to listen to. And if you'd like to learn more about some of those charities that they were... John was talking about earlier in the show, or maybe attend the next time they do one of those events, again, reach out to them at PFG Private Wealth. For John and Nick, I'm Mark, thanks for hanging out with us. We'll see you next time here on the podcast, Retirement Planning - Redefined.…

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Ep 43 : Don’t Fumble Your Retirement In The Financial Red Zone 18:17

3 years temu18:17

18:17

In football, teams are extra careful not to make a mistake when they get within about 20 yards of scoring points (known as the Red Zone). They’ve typically worked hard to get to that point and don’t want to cost themselves by throwing an interception or fumbling the ball and giving it to the other team. On this episode, we’ll explore the financial equivalent of the Red Zone and discuss how you can really mess things up if you’re not careful during this phase of your life. If you’re approaching retirement, this is a fundamental conversation you won’t want to miss. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: Hey everybody. Welcome back into the podcast. It's time to talk football a little bit here on retirement planning, redefined with John and Nick. We always talk finance, investing finance and retirement, and we're still going to, but we're going to talk about not fumbling your retirement in the financial red zone. We are in the playoffs at the time we are dropping this. Now we are recording just before they're starting. They're starting this weekend. And so this will come out while the playoffs are rocking and rolling, but that's all right. We're still going to talk about this analogy, because it works really well for this time of year. And we'll get into that in just a second. But first let me say, Hey to the guys. Marc Killian: Nick, what's going on, buddy? How you're doing? Nick McDevitt: Good. Nick McDevitt: This was a good reminder to ask John on when I'm going to get paid for my second place finish in the Fantasy Football League. Marc Killian: Nice. John Teixeira: I don't know what Nick's referencing here. We do not gamble here, so I'm going to give Nick a nice handshake and pat in the back for drafting the second best team in the league. Marc Killian: There you go. Okay. Well what's going on with you, John. You're doing all right? John Teixeira: Doing good. Trying to get some recapping from our last session of their great resignation, and actually trying to get some contractors to send me an estimate based after they came to my house has been a challenge. Marc Killian: Right? I know. Marc Killian: I was talking with some contractors not too long ago and they're like, right now, all I got to do is show up and I get like 50% of the jobs, you know? John Teixeira: Yeah. Marc Killian: And, they're not wrong, you know? So there's a lot going on. Well, I know you guys are both football fans and guys both come in from the same division, actually. We got a Patriots fan and a Bills fan. So living in Florida, which is interesting, and especially considering that you got radio right around the corner now, but either way, we're going to talk about this financial red zone and football and a little analogy to go back and forth. And as I said, the games are starting for the playoffs and you guys are going to be actually competing against each other. Your teams will be anyway. So we'll have some fun with this. So do me a favor real fast. John, I'll let you start. Tell me what's the financial red zone? Go ahead and talk about the football red zone if you want as well. I think most people know it, but just real quick and then tell us what the financial equivalent is. John Teixeira: Yeah. Football red zones, when you get 20 yards of scoring. So, right before the end zone, really important place to be efficient, making sure that everything's tightened up. The defenses plays a little bit harder here because the shorter field. So just really important to make sure the offense is doing their best and making sure everything's done right, which leads into what we call the financial red zone, where we would consider that last 10 years before retiring and can range for five to 10 years after retiring, but the analogy goes well where. This is probably the most important part of your retirement is making sure that, Hey, you got 10 years left or you're five, 10 years into it. You cannot make a mistake. Marc Killian: Yeah. John Teixeira: And it's important to make sure everything's lined up and you're being as efficient and careful as possible to make sure you hit all your goals and maintain the lifestyle that you want going into retirement. Marc Killian: Yeah, for sure. So it has been pretty easy. Right? So just think of it like that, same scoring red zone. Now maybe you're not trying to score necessarily in the financial red zone as you're talking about retirement, but there are some things to pay attention to because turnovers, as you mentioned with the football analogy are more critical. So Nick give us some reasons why people need to pay attention to that? Nick McDevitt: Yeah. There're a few things here and obviously it'll all depends on the plan, but in many ways, from an accumulation standpoint, time is no longer on your side. The goal is obviously to save as much money as you can. And once you get into that 10 year window, hopefully you're in your higher earning years and you're able to save more money. Maybe there're less kids on the payroll, et cetera. And it's also important from the standpoint of the money that you've saved up to that point, making sure that it's invested properly, it's a lot easier to have a half a million dollars double in the last two years than it is to have a hundred thousand dollars catch up to $500,000 or things like that. Nick McDevitt: So, that's some money that you've been able to build up once you've entered into that red zone and then how that money's going to accumulate, leading up through retirement is an important time. So, really making sure that your decisions are coordinated together and you're not really just, Hey, I just saved this amount of money and I put it into this, and I don't pay attention to it. Usually isn't the best sure strategy. Marc Killian: Yeah. Nick McDevitt: It's just much more difficult to recover from mistakes that are in this period. Marc Killian: Yeah. So, If you're in a good place, right, this is when a lot of times teams will start looking at taking the knee, right? If you're in a good spot from a financial standpoint, you want to start taking that victory formation because you're trying to protect the ball. And John, I'll go to this next one, but I'll make you happy by bringing something up here when you're talking about, some of the mistakes that you see people make getting a little too risky. Think back to that Seahawks Patriots game, Super Bowl, a few years back, I think it was 2015. Right? And the whole world knew the Seahawks were going to punch that in with Marshawn Lynch, running on the one yard line, but they took a risk. They threw it and they got intercepted and it cost them the Super Bowl. John Teixeira: Yeah. That was a big risk. Marc Killian: Right. It sticks in my mind seven years later, right? John Teixeira: Yeah. It's funny. I watched some of the man of the arena with Brady, it's been background noise at this point just when I'm doing stuff around the house and they replayed that. And it was interesting to hear the people talk about it, but yeah, that was a big risk. And that's a big mistake that we see for clients when they're nearing retirement is they are taking too much risk and that can happen quite a bit in your 401k, because you've just picked a fund when you first started at that company. Marc Killian: Right. John Teixeira: And typically everyone unfortunately chases returns in their 401k. They just look at a fund and say, this did, will they pick it? But as you're getting that red zone, it's important you evaluate what you're in because if you're taking too much risk and we have a 2009 type recession, it takes a little bit to fully recover from there never mind that you got the mindset of, Hey, I just lost 30% of my portfolio. John Teixeira: I don't want to lose any more. Should I get more conservative? Which will seep into people as you get closer to retirement. So if you make that shift and get conservative, market bounces back within a two year period, you miss a majority of that recovery. So important to make sure that how much risk you're taking your portfolio is the right amount of risk for you and your plan. We go back to, again, the planning, having the right distribution strategy, as you're in the red zone, very vital to your retirement success and scoring. Marc Killian: Yeah. Well, Nick, before I go to the next point here, I'm going to give you a chance on this as well, because if you think about, what he was just talking about, making sure that your portfolio's not taking too much risk. This market is on a 12 year run. It makes it really enticing and really hard for us to not go. I can eek out a little more. Right? I can squeak out just a little bit more, but that's when you start putting more at risk on the table. John Teixeira: Yeah. And you know, because ultimately what ends up happening is what we're trying to do is, is manage decision making and what ends up happening. And the reason that we try to de-risk a little bit in the situation is so that there's not an overreaction. So, the easiest way to prevent an overreaction for an individual is to have a plan. So you can remind yourself of, Hey, this is why I'm doing what I'm doing. And you have something to go back to show you, Hey look at, this plan tells me that if I do X, Y, and Z, that I've got a pretty solid chance to have a comfortable and successful retirement. And, if you've got ice water in your veins and you can handle, a 40% dip in a year and something in a year that where things happen chaotic and it doesn't even blip your iWatch then that's one thing, but most people can't. John Teixeira: And when that feeling of anxiety starts to creep in, as you start to log in your account more because we're going through a pullback happens and it pushes you to make a poor decision. That's when the snowball starts rolling down the hill and that's where we can really get into trouble. Marc Killian: So, well, even if you've got ice water in your veins, there's a good chance, your significant other doesn't, right? John Teixeira: Yeah. Marc Killian: Oftentimes there's that split in the investing philosophy many times where one is a go getter and one is a bit more conservative. So you want to make sure you're just not taking too many chances in the red zone. If you got a good plan, you got a good strategy. Your team is so "winning the game," then again, consider taking that knee, take that victory formation, at least start hedging your bet, that way you're not going to have too much at risk because you got to still outpace inflation. That's a given, but you also don't have to necessarily continue to throw the ball, 40 yards down the field. Marc Killian: So for those that are paying attention, John, that are being proactive, why is retirement planning easier for those folks once they do get to the financial red zone? John Teixeira: Yeah, I'd say the biggest thing we see when someone goes through a planning process and they get to see it, it provides them a blueprint and a roadmap of what they can expect. And that roadmap of blueprint really gives people a little bit peace of mind so they can see the cash flow, they can see the money and it really comes down to, they can see their goals and what they want to do. So it makes it come to life. So that makes a little bit easier versus the unknown of, Hey, you try building the house without a blueprint, it makes a little bit harder. Right? So, the financial plan is that blueprint and just gives people peace of mind, which ultimately they make better decisions. Marc Killian: Yeah. John Teixeira: So you can look at things, income stream, social security, when is the best time to take it or my pension options. When you have the plan, you can test those. So you feel confident in, Hey, I already looked at this and I know what to expect. What's the best option for me in my family and what we're doing. So, the plan is key in making sure you make sound decisions and it provides people, again, sound like a broken record or a peace of mind that what they're doing is right. Marc Killian: Yeah. Definitely. Any couple of little bullet points Nick to toss in there. Nick McDevitt: Yeah. I would just say that, the people that are doing well are the people that are able to zero in, in this financial red zone. Part of the reason is because everything starts to feel a little bit more real. Sometimes people have a really hard time thinking about 30 years down the line. Marc Killian: Right. Nick McDevitt: And the numbers seem out of whack and the variables seem super unpredictable, and things like that. So oftentimes once we're in that zone, we have a good idea of what the numbers are going to look like from an income stream standpoint, whether it's the social security or you have a pension or Hey, there's lead at the end of the tunnel of having the mortgage paid down, or the kids are going to be off the payroll in two years and that's going to free up X amount of income per month to be able to save. So, you feel there's hope and momentum on the side and the people that do well with planning, they really lean into that and are really able to take that momentum and move themselves forward strongly. Marc Killian: Yeah. So let's not fumble the football in retirement, the financial football, if you will, if you got some questions, need some help, you should know what to do by now. Hopefully you're already working with John and Nick. There's a good chance of just catching this because you already are. And you're checking out the podcast and you get the information. But if not, definitely stop by and reach out to them at pfgprivatewealth.com. That's the team's website, a lot of good tools, tips and resources at pfgprivatewealth.com. And you could drop us a line as well. We take email questions. Of course, they all get answered, but we also take some from time to time here and use them on the show. And that's what we're going to do to wrap things up. Marc Killian: So, whoever wants to tackle this, no pun intended, go for it. My brother tells me that I have way too much money in the bank and he's probably right. I got about $150,000 sitting in there now, but I just like knowing if there in case I have an emergency, this is Frank by the way. And so Frank says, is it really that bad to have that much in my savings account, take it away. Nick McDevitt: So, this is an interesting question because oftentimes for most people, the answer might be yes. However, the thing to remember and what we try to harp on with people is that, it doesn't necessarily matter what your brother, your sister, your mailman, your coworker, your dog walker, everybody's willing to give their opinion or their advice on financial topics. And it's important to take your situation, put in a perspective. If you're somebody that makes $300,000 a year, then maybe that 150 is a good amount. If you're somebody that makes $40,000 a year and you've got 150 in cash, then there's a good chance that you're not saving into things that have more upside and more growth for you. You probably have been a little bit wary of the market or didn't know how or where to invest. Nick McDevitt: And there're things that you can do. Maybe you've never saved to a Roth before and we could start putting money into a Roth. Maybe you haven't adjusted your 401k contribution in eight years. And that's part of the reason that this money is saved up. So, there're ways that we can take a portion of it and save it into vehicles and then maybe adjust. One of the things that we've seen is adjusting from here, moving forward. So in other words, it might make you very uncomfortable to take a hundred grand out of that 150 and put it to work, but maybe we can take 25 and put it to work, but also we're going to aggressively save moving forward with the income that you have and and figure out where that pain point might be to put money away. Marc Killian: Yeah. Nick McDevitt: So it really is a function of what your expenses are. Things like, do you have dual income in the house? Is the house paid off? Dual income, you could probably have a little bit less in there. If the house is paid off, definitely put more money to work. So, it could be, but just like everything else that we talk about, it depends. And the easiest way to really truly answer that is to look at it through the lens of the plan and go from there. Marc Killian: Well, I guess I would say John, probably what's your definition of liquid, right? In getting to it, obviously a lot of people see, they want to see a certain number. I'd ask myself if I was Frank, what kind of emergency constitute 150 grand and/or what do you consider liquid, right? If it's something you need to get to within three to five days, often there're many types of accounts you can do that. It doesn't have to just be money in the bank. John Teixeira: Yes. So, liquid would. A lot of different people view it differently. So one would be, Hey, I can get access to this without any penalty. And that would be number one of being liquid. Another version would be, Hey, I can get this without any penalty or taxes, you know? So that could be another version of someone considering it liquid, but yeah, there're different buckets to choose from when you need access money. And it's important you work with an advisor to figure out what are the penalties and very important what are the tax consequences for accessing this cash? Marc Killian: Yeah. Okay. Well, Frank, thanks so much for listening. Hopefully that helps you. I know you how you don't want to admit your brother's right. So technically you don't have to. So if you're like me, I never want to tell my brother he is right. You can just certainly say it depends. Right? So everybody's situation is different. That's going to do it this go round for the podcast. Don't forget to subscribe to us again at pfgprivatewealth. That's where you can find all the things from the team at pfgprivatewealth, which is John and Nick's company there. So find it online at pfgprivatewealth.com. Marc Killian: We're going to wrap it up, but guys, I'm going to give you a chance to say what you think is going to happen for the Super Bowl since we're dropping this beforehand, who's winning the Super Bowl this year? John go. John Teixeira: Good question. I'm going to have to say, I think the 49ers might win. Marc Killian: Okay. All right. He's calling the 49ers. Nick, who you're going with, buddy? Nick McDevitt: I'll go with the Packers. Marc Killian: Wow. Neither one of you guys took the team. John Teixeira: I was going to go with the Packers, but Adam Rogers always chokes him. Marc Killian: He does play. John Teixeira: He is like notorious for NFC championship game. Let me play awful. Last year I think Brady threw three picks in the second half or third quarter or something. Marc Killian: Yeah. John Teixeira: And he couldn't capitalize on it or fourth quarter, whatever it was. I don't know. Marc Killian: There you go. Well, folks, let us know what you think. And we'll be back with more on the podcast in February. So probably after the Super Bowl. So, we'll see if the guys are right and we'll talk to you next time here on retirement planning, redefined with John and Nick.…

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Ep 42: How “The Great Resignation” Could Impact You Or A Loved One’s Retirement 22:37

3 years temu22:37

22:37

Droves of workers are retiring early or taking a break from work as they change career paths. It’s become known as The Great Resignation. On this episode, we’ll highlight some of the key takeaways of a recent Forbes article and explore a lot of the impacts on retirement planning from across different age groups in the wake of this massive workplace shift that’s underway. Forbes Article: https://bit.ly/3JtbbeQ Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey everybody, welcome in to the podcast. Thanks for tuning in to another edition of Retirement Planning Redefined with John and Nick, as we talk investing, finance, and retirement. And we are going to discuss the Great Resignation on this podcast. And if you're not familiar with that, well, that's been all the mass exodus of people leaving work over the last three to four to five months. And we've got some interesting key takeaways here to talk a little bit about this. Droves of workers retiring early, or taking a break as they consider this career path, that's been called now the Great Resignation, and there's a Forbes article, we'll probably take a link and put that in the show notes as well. But guys, what's going on? How you doing Nick? Nick: Good, good. Staying busy, kind of getting rocking and rolling to start off the new year. So, you know, I think a month or two ago we had hoped that maybe it'd be a little less chaotic from the standpoint of the whole pandemic thing, but I think everybody's just kind of plugging away and recovering from the holidays. Mark: Yeah, definitely. John, how you doing my friend? John: I'm good. I'm good. Doing good. Mark: Yeah. Nothing, nothing too crazy going on. Into the new year all right? John: Yeah. Yeah, it was quiet. So just hung out with family locally here and in Tampa area. So it was just a nice little break and like Nick said kind of excited to be back to doing some work here and the holidays it's always nice, but at the same time, I'm kind of ready to get back at it. Mark: Yeah, exactly. So have you guys heard this term, the Great Resignation, are you guys a little bit aware of this and what's your thoughts? We'll get into it here, some data here in just a second, but just have curious if you've heard it or not. Nick: Yeah, I definitely have. I think it's interesting. I think depending upon who you talk to, their interpretation of it is a little bit different, but in my mind it's really, it's kind of, to kind of think about it from the perspective as almost like a real estate market, there's a buyer's market and there's a seller's market. And I think that really what's happened is not all, but many companies have been slow to kind of improve wages and pay and benefits and things like that and so this has kind of put things into kind of the worker's hands a little bit more and given them a little bit of leverage from the perspective of competitiveness from a company standpoint. And that obviously, that doesn't deal with the people that are in between or are waiting to kind of figure out what they want to do with their whole life, that sort of thing, but more specifically, the people changing jobs and how difficult it's been for employers to keep employees. Mark: Yeah. I mean, it's definitely all over the map and John, we're going to talk a little bit about it from the different age groups, but for the most part, we're going to look at it as it affects retirees and pre-retirees, but have you seen some of this stuff? Are you familiar with it? John: Not necessarily the term itself, but yeah, we've seen a lot of this with our own clients that are basically doing some job changes or just outright, just retiring early which I know we're going to get into. But yeah, we're seeing quite a bit of this. And then we see it when we're trying to personally and work wise trying to get service work done. It feels like- Mark: Big time. John: Feels like no one's working anymore. My local Dunkin' Donuts here, I can't go in to get a coffee because they don't have enough workers, so everything's drive through. But it just [crosstalk 00:03:23] seen across the board. Mark: And that's part of it. Yeah. And that's part of it. So a lot of times, I think, when we think about this what's happened in the pandemic, we automatically go to the lower paying scale jobs, the fast food type jobs, and that's definitely a big piece, but for an example, 4.2 million people quit their job in October of 2021. So just a couple of months ago and there's been a lot of other people quitting. So there's been, I think somewhere now around six, six and a half million, I think over the last four to four and a half months. And it's not just the lower end stuff. And of course it's also unknown how long these people will stay out of work. Some of it could be retirees or pre-retirees that are just like, you know what, I'm not going back. Mark: I'll use my brother as an example, he's 63 and he's like, as long as they keep me working from home, I'm going to stay. But the minute they tell me, I have to go back to the office. I think I'm going to pull the trigger and retire early, even though his plan calls for him to wait till 60, his full retirement age, which I think is 66 and seven months or something like that. So let's talk about it from that's kind of standpoint, guys. Mark: I've got three takeaway categories here, or actually four. I'm going to kind of give you guys the headline and let you guys roll from there a little bit on this. Okay. So we'll dive into it, hit it however you'd like, not just the lower income scale, but also the upper end, or people just closer to retirement things that you might be seeing or hearing. So number one, if you are going to step away early, taking a break from Social Security, whether it's short term, long term or whatever, don't sell short that, the impact that, that can have to your long term benefits. Nick: So, depending upon how long you are out of work, it's important to keep into consideration that when you're not earning an income, you're not building up your Social Security credits and so that's something that can impact you down the line. And I've actually had this come up a little bit lately where people don't quite grasp the impact, the positive impact of Social Security, or how much, or how important it is to their overall plan. So it is a big deal and you want to make sure you still have your 10 year minimum work history. It's important to remember that, really the benefit that you receive is a cumulative kind of record of your highest 35 years of income. Mark: Right. Nick: So every year that you have a higher year than a previous year, adjusted for inflation, that's going to knock out the other years and you really kind of help bump that benefit up. Mark: Right. And if you're stepping away in your fifties because of this Great Resignation type of thing here, that's some prime earning years. So that's where I say you could be putting a big dent in that. Nick: Yeah, absolutely. And realistically it always does kind of go back to the whole plan concept of that we really try to harp on people about, is we have had some people retire early because we have had a bull market for the last 10 years and they've done a good job with saving and those sorts of things, but we kind of verified it through the planning, the whole retire really early on a whim or not really looking at it from an analytical standpoint can definitely be pretty, pretty dangerous. Mark: Yeah, for sure. So you definitely want to make sure that if you are stepping away from Social Security, you're looking at what it could do to your long term strategy, six months, a year, retiring early, whatever the case might be. Just make sure you're strategizing that with your advisor. Mark: John, talk to me a little bit about takeaway number two, the 401k isn't a rainy day fund, is kind of the category I had. Because over the last two years, and even the last six months, there's some pretty interesting stats about what people are doing with their 401ks. John: Yeah, yeah, for sure. I mean, during COVID 2020, there was some ability to actually access for 401k funds or retirement funds without any penalty. Mark: Right. John: And not even have to do a loan and that's gone away. So now, not that... Fortunately for our clients, and I think we do a great job educating them, we haven't really seen too much of this where clients are taking out 401k loans. But I have had conversations with some individuals that have done that. And it's just kind of like, "Hey, how much can I pull from my fund? I did this, what are the impacts of it?" So it's just important to fall back to the plan. And we do a... One of our biggest recommendation's to make sure that people have an emergency fund and whether it's three to six months or a year of emergency savings, because, as you know the pandemic hit in 2020 and no one saw that coming and you just don't know what's going to happen in the future. So it's important to have an emergency fund to help out in certain situations like this, so you avoid pulling from the 401k loan because you really want to let those assets grow for your retirement and not access it for rainy day funds- [crosstalk 00:08:10]. Mark: Kind of a stop gap. John: .... on things like that. Mark: Yeah, yeah, yeah. What's some negative impacts of doing that though, John? I think one of the things people get lost on is just the compounding of it over time, right? John: Yeah. So you take out 40 grand out of it, basically, especially, let's say you did that in 2020, let's say you took out $40,000 there, you just lost the compounding over the next year and a half, two years of which has been really excellent in reality [crosstalk 00:08:33] with what the market's done. So not... You're just not losing that $40,000, you're losing what that $40,000 could have grown to, which is the importance of having, again, the rainy day fund, so you can let that money in there, let that money grow for you and earn and work for you. Mark: Yeah. John: And then nevermind then you're paying money back into it that are after tax dollar. So there's a lot that goes into it that you really need to evaluate it. Sometimes it's you have to because you have nothing else to pull from. Mark: Right. John: But it's always important to plan and make sure that you... This is the last resort. Mark: I hear a lot of advisors say taking that loan against it is usually the later, like if it's kind of like the last in the line, if you really need it, okay, here's where we can go. But let's try not to. Just simply from a multitude of reasons, especially with the resignation, right? If you take a loan against your 401k and you leave the job, you have to pay that back. Correct? John: Yeah. That's a great point that you bring up. Most companies will give you 30 days to pay it back. So example, you take out that $40,000 and all of a sudden it's, "Hey, we're downsizing," and you get a pink slip, and not only you got, now you all of a sudden you got to pay 40 grand back to your 401k within, a 30 day period, maybe 60 day period. And if you do not pay it back, you're going to be paying taxes and penalty on that, on those dollars. Mark: Pretty stiff. Yeah. John: Yeah. Mark: Yeah. So that's another takeaway for that. And Nick, let's stick with the 401k for a minute for the next one. If you are in this kind of nomad thing where you're jumping out of one job, you're waiting a bit, maybe going into another, looking for a better option for yourself, seeing who's hiring, whatever the scenario is, take that 401k with you, right? Don't just leave it back behind at the old place. Nick: Yeah. It can be, realistically the more accounts people have, the more places, the more often things are overlooked, not checked up on, not taken care of, so we definitely are fans of consolidating. Whether it's rolling it into the plan at your new employer or rolling it into an IRA where you can control the assets yourself or work with an advisor to manage them for you. Just like so many other things, it's one of the things that former or past employer 401k plans are oftentimes one of the most overlooked and non-adjusted things that we've seen people kind of not take care of. Mark: Yeah. Nick: And then they lose a lot of long term money on it because of that. Mark: Well, you got to think about the vested portion too. Right? So if it's, let's say you're 50 or something like that, and you're pondering this, make sure you under... that you're getting the fully vested part before you jump on. There are some people that could say, well, all right, maybe I'd better stick this out a little longer or whatever the case is. Nick: Yeah, absolutely. There are some people that... It's much more common for people to move from one employer to the next these days. Especially in certain industries where they can be almost more of a tech role or consultant role, things like that. And sometimes, because of that, their employer has put in a decent amount of money, so an employee's contributions are always vested, it's always their money, but they could have substantial employer matching that vests over three to five years. Or some other sorts of benefits, even if it's not exactly the 401k, but maybe there's a stock plan that has vesting. It's important to take those things into consideration because we've seen people leave tens of thousands of dollars on the table. Mark: Right. Nick: Not realizing that it was a factor they should have taken into consideration before they switched employers. Mark: Yeah. Don't leave that behind. Right? So definitely take it with you, whether you're rolling it from the old one into the new one. And if you do it properly, it's not going to, it's not an issue, right, Nick? So if you've got it in the old one and you roll it to the new one, you just go through the proper channels and there's no taxable event and so on and so forth. Same thing if you move it to an IRA, correct? Nick: Correct. Yeah. The goal is always to make sure that it's rollover, it's not taken as a lump sum distribution- Mark: To yourself. Nick: Yeah. So you always want to make sure that when the rollover happens, it gets paid directly to the new custodian. So it's not written out to you. It's written to the new custodian, whether that's a Fidelity or a Vanguard or whoever it may be, it's paid directly to them, the funds go over and that avoids there being any sort of tax liability or penalty if somebody's under the age of 59 and a half. Mark: All right. So let's go to the fourth takeaway here, guys. I'll let you both kind of jump in and out on this. John, I'll start with you. It seems like this whole resignation thing is kind of tailor made for those early retirement dreamers. Kind of go back to my brother's conversation there about, Well, if they... I'll retire a couple years early, if they make me go back to the office kind of thing, but I'll work from home." So it's enticing for sure, but point out some challenges to just ponder if you are retiring early, ahead of what you originally planned, you guys kind of divide up a few of these, if you would, but John go ahead and start with a couple of bullet points to think about. John: Yeah. One of the things that I think about is qualifying for Social Security. The earliest you can draw Social Security is age 62. So, if you're retiring at let's just call 57, you got a decent gap of where you can't take any Social Security. So you really have to evaluate are there any other income sources coming in like a pension or maybe some real estate income or whatever it might be. And then if there isn't, is your nest egg able to sustain your plans. [crosstalk 00:14:06]. Mark: Five years, yeah. John: Yeah. Is it able to work if you're using your nest egg to basically live off of for that period of time. So those are one of the things. And then you always want to of look at as one, we've had situations where one spouse might retire early and the other one's still work and they say, "Hey, we could live off of just one income for the time being. And if we need any extra money, we have the nest egg that we can pull from as needed." So that would be a big one to really look at. John: Another one that we come across quite often is healthcare coverage. I'd say one of the main reasons that people don't retire. From our standpoint, what we see is really healthcare. So they wait till they're 65, so they can draw on Medicare. And prior to that, they just kind of look at the cost of going to the Marketplace and say, you know what, this is probably a little too rich for my blood, so [crosstalk 00:14:55] kind of hold off. Mark: And if you use your example of 57, I mean, you're talking eight years, what are you doing in that gap? Right. John: Yeah. And we've seen everyone's situations different in what their premium is, but I've seen some premiums for individual at that age at $10-11,000 per year. Nevermind, the coverage isn't as good. So that's [crosstalk 00:15:12]- Mark: And that's not per person too. Right. So if you and the spouse. John: Yeah, yeah. Yep. That's per person. Mark: Can your retirement accounts handle that for that setup that we just talked about or whatever the case might be and then realizing that that's also, that your retirement is now going to be longer, right, because you've retired early, so it's the kind of great multiplier. So those things just kind of compound and go up from there. Nick, do you agree with that and what's some things you see? Nick: Yeah. For sure. It's definitely a slippery slope when you start to factor in. We've got some clients who work for large employers, their total health premiums for the households can run $2-3,000 a year for both of them. So when you go and you take... You go from $2-3000 for both of you while you're working to somewhere between $8-20,000 a year before Medicare age, it can be pretty substantial. And oftentimes, for many people, there's going to be a price increase, even when they're on Medicare from if you were working for a company that was a larger employer and had pretty inexpensive health benefits. So that makes a huge, huge difference. Nick: And one way that some people have managed things from that perspective are with some of the Marketplace options out there will kind of connect people with specialists that can help on the medical insurance side of things. And you may be able to take money from taxable accounts that don't have large gains to put your income lower so that you don't pay as much, but in reality, to be frank, usually the only people that can do that are ones that have saved substantial amount of money into a non-qualified account, which usually means they have a lot of money. So, it's less of an issue. So really looking at that, looking at the different types of accounts, when you create your withdrawal rate, and figuring out, hey, how can we keep your income taxes low, not a only for a short period of time when you're in retirement, but kind of building flexibility throughout your retirement, where you're not just letting this tax bomb grow, or you're not using all of your Roth money first or leaving it all for the end. Nick: It's usually kind of a bit of a balance. So we harp on it a lot, but this is really where there's so many factors and things like this. That this is where kind of software and the tech tools that we have today really help us tailor make a plan, come up with a really good income and liquidation strategy, help us figure out what kind of gaps are we going to have between the time that you retire and when things like Social Security are going to kick in to help supplement the income, and then when Medicare's going to kick in to help reduce expenses. So, it's definitely a puzzle and fortunately we enjoy putting the pieces together. Mark: Right. Well, look, if you're on the fence, well, if you already did the resigned and walked away, hopefully you had a plan in place, but if you're not, if you're among some of those folks that are still considering, I've heard some interesting stats that they think that's going to happen. Again, early on the first half of 2022, make sure you're talking with an advisor about all the different things that could happen if you do step away early. Most people, hopefully do, but sometimes you just get frustrated or whatever the case is. And a lot of it does have to do with this kind of going back to work, staying working from home, it got good to us, we really kind of, in some ways, very much so enjoy being able to work from home, in other ways we kind of missed the camaraderie. So there's a lot of different things to just kind of take into account before you pull the Great Resignation. Mark: And with that, we're going to wrap it up this week. We're going to knock out an email question here real fast. Whichever one of you guys want to tackle this, but we've got one from Rebecca who said, "Guys, every six months or so I tell myself, I need to start saving more for retirement and I pretend like I'm going to get serious and actually do it. But then I can't stay motivated to increase my savings. I'm putting a decent amount in the 401k and I have a pretty nice balance there, but it feels like I could be doing more. It's the beginning of the year, I want to be more motivated. How do I do it?" John: This comes up quite a bit. And I'd say the easiest way to save is probably the 401k, because it's done through payroll and you really, once you start saving in to it, you really don't miss the money coming out into it and you can always adjust it. And we've had some people where they say, "Hey, I'm putting enough into my 401k, what else should I do?" And the first step is just really just setting up an account and you can start with as little as $25 a month, or $50 a month, but once that account's open, it's much easier just to say, hey, let me up this. So I would say the first step is look at the 401k and if you don't want to continue contributing to that, just open up an account somewhere with your advisor or on your own and just set it up monthly, and then you can always adjust it as needed. Mark: Yeah. Or maybe a Roth, right? If she wants to look at a tax, something more tax efficient. So... John: Yep. Mark: That's another way to look at it. But yeah, I think if you automate it and you just put it in play, Rebecca, that should hopefully get you... You just, if you don't see it and you don't think about it and it's just happening in the background, then that's the beauty of it, so then you don't have to worry about necessarily getting motivated. But another way might be to sit down with a professional and start getting some advice. It doesn't matter really on your age, the sooner, the better. So if you got questions, need some help, reach out to John and Nick, go to the website, pfgprivatewealth.com. That's pfgprivatewealth.com. Mark: Don't forget to subscribe to the podcast on whatever platform you like to use, Apple, Google, Spotify, iHeart, Stitcher, just type in Retirement Planning Redefined, or again, just find it all at their website, pfgprivatewealth.com. If you got questions, need some help, John and Nick are here for you. Mark: Guys, thanks for hanging out. I appreciate it. Talking to me about the Great Resignation and we'll talk about it in a couple of weeks here, we'll see what's going on. Nick: Thanks, Mark John: Thanks. Mark: I appreciate your time as always. Guys, thanks for hanging out with me. We'll see you next time here on the podcast, with John and Nick, this is Retirement Planning Redefined.…

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Ep 41: Opportunities For Retirement’s Late Bloomers 17:59

3 years temu17:59

17:59

Maybe you’re close to retirement and think you don’t have nearly enough money saved. But let’s talk about some reasons that the news might not be as bad as you think. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey, everybody. Welcome into another edition of the podcast. It's Retirement Planning Redefined with John and Nick, Financial Advisors at PFG Private Wealth. You can find them online at pfgprivate wealth.com. That's pfgprivatewealth.com. A lot of good tools, tips, and resources there as well as a way for you guys to find the podcast, listen to past episodes, subscribe to it, all good kind of stuff. We are going to talk about opportunities for late bloomers in retirement this go around on the podcast. [inaudible 00:00:28] what's going on? John, how are you, buddy? John: I'm good. How you doing? Mark: Hanging in there. Not doing too bad. Hope things are going well for you. Nick, you doing all right, my friend? Nick: Yep. We've had some nice fall weather here lately, so I've been enjoying that. Mark: There you go. Humidity finally- John: Yeah, I get to put a hoodie back on and no humidity Mark: Vacation [crosstalk 00:00:47]. John: By enjoying, Nick means he's just open up his balcony door versus going outside. Mark: Gotcha. Let the wind in. All right. That's all right. Hey, I'll take it. That's good. Let's talk about these late bloomers here. Maybe you're close to retirement and you think you don't have nearly enough money saved. We mentioned that on the prior podcast a couple of weeks ago. That's often the case with people. They feel automatically like well, I know I don't have enough, even though you have no idea because you've never sit down and done a plan and gone through a process to try to find out, but let's just assume that you don't have nearly enough or you think you don't. There's some good news. There's some places we could actually gain some ground pretty quickly. Mark: Guys, I've been using this analogy for this. I turned 50 this year and Memorial Day is kind of the unofficial kickoff to summer. It's not actually summer, but everybody just kind of treats it like it is. It's kind of how summer starts. 50 seems like the unofficial kickoff to retirement because it's when you start going, I better get serious. Right? When people turn 50, they start to think about this a little bit more. Catchup contributions is a great way and you can make some serious dent in the savings that you need with some of the things that government allows us to do once you turn 50. Talk to me about that. John: Once you turn 50, you can do catchup provisions, which if you have a individual or retirement account, AKA IRA, you can put an extra 1,000 into it if you're above the age of 50. If you got yourself and a spouse, it's an extra two grand you can put in there. Most people, where we kind of maximize the strategy is in the 401k where you can actually do an additional 6,500, which is a nice way to not only save, but also reduce your taxes. With the 401k, it's pretty easy because you just contact your payroll provider or go online where your investments are and a couple of clicks and there you go. As we say, once it's done through your payroll, it's easy to just set it and forget it. You just adapt to what you have as your net income moving forward. Definitely once you hit age 50 something, you need to start consider just saving more to hit your goals in retirement. Mark: Oh, yeah. I mean, $6,500, that's not chicken feed, especially over, let's say, 15 years. If you're 50 and you're planning to retire at 65, that can add up. That can make a nice dent in catching up from being behind. Now, I know you don't have kids to speak of. John, your kids are too little just yet, but kids coming off the payroll, this is something you guys still deal with. You have a lot of clients that, when you get 50 plus, hopefully you're making the most money in your life that you have. Usually that's the case for a lot of people when they're in 50 plus. As my dad used to call us, biscuit snatchers, come off the payroll because we're no longer doing things like the car insurance, cell phone. As a matter of fact, my daughter's out working and doing things as a young adult and she's actually paying the cell phone bill for her mom and I, so how about that? Nick: This is interesting. I would say that over the last, probably six, seven years, we've seen this get pushed back a little bit where it tends to be the kids start to come off the payroll with clients that are in their early 60s, but it's substantial and it's usually a huge relief. We've got clients that have been able to bump up their savings by 1 to $2,000 a month with kids graduating from college or whatever it may be. It makes a huge difference, whether it's saving more money, whether it's using that additional money to maybe help you achieve the goal of paying your mortgage off by the time you retire. Recapturing those funds is a really, really big deal. When they come off the payroll, just figuring out a way to try to recapture at least 50 to 60% of that could make a huge difference to help somebody catch up. Mark: John- John: You like that term biscuit snatcher, don't you? Mark: You like that? John: You used that in one of our workshops, so... Mark: That's what my dad used to call us because he loved his biscuits and I was always running and snatch one and take off with it. You're going to get this at some point, John. Obviously, you do this for your clients. You help them navigate this now, but with your two little ones one day, you'll be having all these extra things and then they'll come off the payroll. I mean, it could be sizeable. You could be paying their car payment, their cell phone, car insurance, maybe some health insurance, so it adds up. John: I actually just experience some of that because... And my wife works. She's just actually wrapped up her master's program for nurse practitioner, but we had a nanny for that period and that just stopped. That just freed up some cash flow, which was pretty significant for us, but so I know the feeling of it. Mark: A lot of places and a lot of opportunities for "late bloomers" in retirement to gain ground if you're behind. Another one, guys, is disappearing debt. Maybe you've got some things... Again, we're going to use this analogy of the 50 range, like 50 to 60. You're getting into that pre-retirement stage. You're trying to make sure you've got enough. My wife and I just got our boat paid off, just I think last month or two months ago, something like that. She just paid off her car. Now, she'll probably get another one between now and the time we get to retirement, but still, you get the idea. Credit cards, things like that, that stuff's really starting to dwindle down. [crosstalk 00:05:56]. Nick: Being able to recapture those is a big deal. The car thing is still an interesting thing just from the perspective of growing up up north and you have to deal with rust and the wear and tear of winters have on cars and all that, whereas down here in Florida, they can last so much longer. That's a good example of something that people are able to leverage to help recapture some money to save. Like you said, that mortgage going away, getting that paid off or eliminating that credit card debt. I've had a few clients that in the last 12 to 24 months, they've been able to wipe out debt that they had had from... One was healthcare related and a couple of other things. Being able to redirect that money and that's always the key is to recapture and redirect. That can make a big, big difference. Mark: Especially the credit card stuff because there's the whole bad debt, good debt thing. Take those high interest things first and get rid of those. Since we mentioned the home, that's another place, so maybe a downsize is on the radar. In this area, a lot of people doing the condo kind of thing. Maybe you don't want to do the big house. Maybe you're moving from up north, Nick, to your point a minute ago. The difference is maybe you want to think about it from a everything needs to be on the first floor because my knees can't handle the stairs standpoint. Either way, prior to recently now... Recently, the housing market's been pretty crazy, so selling it, you might get a lot of money, but you also might pay a lot of money for the next place, but it could be potentially a place where you could capture some more gains as well. Nick: Replacement cost is high right now, but downsizing can definitely be something. We've had a few clients do that recently. We've also had some clients, and this is a good reminder of the... For example, we've got one client that has had a beach rental that they've been using to rent out Airbnb for a while. They're going to take advantage of the market by selling their primary residence at a pretty high number and then going ahead and no longer renting out the Airbnb rental and moving into that space. That's something that they're able to take advantage of. Nick: Then not only that, but from a strategy standpoint, there's that capital gains exclusion that's out there where a married couple can exclude up to $500,000 of gains in a property. They're able to exclude the gain in their primary residence and then we went through and reviewed that if they then live in the rental that would've been previously the rental, if they live in that for two years and then sell to maybe shift into another property, that they can exclude the gains in that if they wait the two years. There's some strategy that can get involved in that space to help you on taxes and help you also downsize. John: One thing with the downsizing, and we've run into this a couple of times where I would say just be careful with downsizing because we've had some scenarios where someone thought they were downsizing and when we started to really evaluate the costs of everything, it really wasn't much of a downsize. Mark: Good point. John: It needs to makes sense, especially when you take in account, property taxes here where you can homestead and when you move, you can transfer it over, but sometimes you don't get the biggest bang for your buck. It's just as important to really evaluate the new house. Does it need renovations? Things like that. The maintenance costs, and that's where you always go back to the plan when making these type of decisions because we've seen scenario areas where someone wanted to, we actually evaluate it and it's like that doesn't make sense to do it. Mark: Another great point. There's so many reasons to consider it. Obviously, there's the financial potential as we're talking about this particular go around, but as I mentioned, it could also be something where you need to simply because you cannot physically handle the house anymore. You got to take a lot of those things into consideration, but right now, we're talking about how to use the money to gain ground. It's just another way you could potentially make up some of that if you're a late bloomer. Then the final one is maybe the twilight career. If you want to find a silver lining through all this pandemic stuff, it's the fact that the world has definitely embraced telecommuting from work, or just all kinds of different really, jobs and things that you could do remotely. Maybe you do need to make some ground and maybe you can't do the full corporate job or whatever it was that you were doing as your main career, but a twilight career could be there. You could be selling your crocheting stuff on Etsy or whatever. You could be consulting just from your kitchen. Nick: We're in an era where workers have a little bit more power right now post and I guess still on the tail end of COVID. We've had clients that have been able to... Sometimes we call it the make my day strategy where they're important to the company. They know it and they go through and they negotiate. They've been working from home, at least for a portion and they've still been productive, so they've gone to their employer and said, "Hey, if I can work from home three days a week, I'll continue to stay here for X amount of time," or just using some of the stuff that's going on as leverage because companies are having a really difficult time hiring. It's become very, very competitive. We've had some clients go ahead and use that to their leverage. Then like I said, it's just they take advantage of that until they're no longer happy and then they exit. John: We've seen a lot of people a little different where they start working part-time and really start getting into hobbies that they enjoy for income, photography, event planning, things like that. There's definitely a lot of different avenues you can go in this period of time here because we've seen quite a few people churn hobbies into income. Mark: That could be a great way to not only offset the shortfall you may have or even whatever the case might be, but it's also just something to do. I mean, just keeps you active so why not "double dip"? Get something out of it. You're getting some activity, something you enjoy, but also adding a little something the to the income levels. Nick: I was going to also mention that where one thing that we have found from some people is not having a purpose or a routine has been very difficult. Mark: Oh, yeah. Nick: Some people handle it better than others, but in general, people need some sort of purpose. Some people are able to take that extra time, spend it with kids, grandkids, travel, do all these different things and they're very comfortable or they have an active social life and it works out well. A lot of people got a lot of those interactions via work, and so not having them anymore, spending an extra 40 hours a week with their spouse, as much as they love them can be a little bit much. Whether it's volunteering, whether it's finding something, just having an open mind and looking for something that fulfills you and gives you purpose is a really big deal. Mark: You got to have something to retire to as well, otherwise you just turn into a couch tater and you don't want to do that. Those are so some places where you can make up some ground if you are a late bloomer in retirement, meaning basically you feel like you started too late or you don't have enough put away. Of course, how do you know? Well, you know by getting a plan put together to see if you are even behind because again, you might not be. Reach out to the guys, to the team at PFG Private Wealth. Stop by the website, pfgprivatewealth.com. Get scheduled to come in for a consultation and find out, first of all, even if you are behind and if you are, then you can look at some of these options and some of these opportunities that we highlighted today on how to make up that ground, pfgprivate wealth.com. That is pfgprivatewealth.com. Don't forget to subscribe to the podcast while you're there on Apple, Google, iHeart, Spotify, whatever platform you like to use. You could find it all at the main website, pfgprivate wealth.com. Mark: While you're there, you can drop a line as well and we take those from time to time here on the show. Let's wrap up with an email question from Elizabeth. She says, "Guys, I have a pension fund from a previous job in a different state. It's been sitting there for years, but I do have the option to take the lump sum and invest the money myself, or just leave it there and get the monthly pension once I retire. Thoughts? John: This is coming up quite a bit lately with pensions offering these lump sum payouts for participants. It really important to evaluate if you take that lump sum, what type of income could you expect from it on a, basically, lifetime basis. What goes into that is really your risk tolerance. What could you expect to achieve from a rate of return based on how much risk you want to take? Again, you want to look at this from a conservative standpoint. What we've done in the past with clients, we might compare it to maybe doing their own type of guaranteed income stream through some other financial vehicles and see is it similar and maybe provide some more flexibility they're comfortable with, the financial health of the current pension. I wish there was an easy answer for this, a yes or no, but as always, it depends on your plan and your situation, and what works for you and, and your family if you have beneficiaries. There's a lot of different factors that go into this. Nick: Testing it through the plan's so important, especially John alluded to the beneficiary aspect. For example, we've had a fair amount of clients that maybe they're single, whether it's widow, divorce, whatever, and their beneficiaries are their kids. The thought of having worked for a company for a prolonged period of time and what would be a substantial pension. Their kids not being able to benefit from that at all if they were to pass away early doesn't sit well with them. They'll look for alternatives. There are a ton of factors that go into that, but comparing and using realistic variables when you're making those comparisons is really important. Mark: I mean, it's one of those things where a lot of times, you do have more controlling options if you take the money in lump sum and do it yourself, but it's not the right fit for everybody. Definitely a great question. Reach out and call the guys and have a one on one conversation or share some more details for sure. 813-286-7776 is how you can get ahold of them if you've got questions of your own, 813-286-7776 or again, stop by the website, pfgprivate wealth.com. That's all our time this week here on the podcast. We appreciate you guys as always, for John and Nick. I'm your host, Mark and we'll see you next time here on Retirement Planning Redefined.…

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Ep 40: Quit Cutting Corners In Your Financial Plan 16:41

3 years temu16:41

16:41

It can be tempting to cut corners as you make your retirement plan - but those decisions can often turn into a huge inconvenience, if not an outright disaster. We'll go over some common ways people cut corners in their financial plan, and what you should be doing instead. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: Hey, everybody. Welcome to the podcast. Thanks for tuning in to Retirement Planning - Redefined with John and Nick here from PFG Private Wealth. Going to have a good conversation, as we usually do, about investing, finance, and retirement, and cutting corners. Quit it, stop that. You don't want to cut corners when it comes to your financial plan. So we're going to look at a few ways that people try to do that. And the guys will give us some feedback on why that is not a good idea. Marc Killian: And we are moving right along here in the year, it's just winging by. So how you guys doing, everything going all right? Nick McDevitt: We're getting ready for approaching the holiday season here. Usually these last couple months of the year just fly by, just end of the year stuff and get through the holidays. Marc Killian: John, how about you, buddy? John Teixeira: Doing good, yeah. Doing good. Actually this morning I picked up my wife and kids from the airport and I like to think I saved someone's life. Some guy fell on the escalator and couldn't get up so I had to run there and help him up. So I did my good deed for today. Marc Killian: Fantastic. Nice. I'll tell you what, those things, man, they can hurt. You get trapped on one of those things- John Teixeira: Oh no, he's okay, but he's definitely scratched up. And when I grabbed him, his head was like on the bottom and I was having flashbacks of seeing those things where people kind of get knocked out. So I was just trying to keep his head up. But he ended up getting up all right. Marc Killian: All right, well, let's get into some cutting corners here, guys. There's no cutting corners when it comes to the financial strategies because, again, it's not a good idea. So where we typically see this stuff is taking too much risk when you're trying to make up for the perception of being behind. And I think that's the reason I wanted to frame it that way, is a lot of times people come in for a review, their first time sitting down with an advisor, guys like yourselves. They think, most people think, they are actually in worse shape than they are, but often fairly pleasantly surprised. So you could be taking risks when you don't even need to. Nick McDevitt: Yeah. I would say that one of the... and some people do end up coming through the classes that we do and maybe they are a little bit behind. But the thing that we try to emphasize with people is that just like many other things in life, we can't change the past and regrouping and just making decisions based upon where you are now and moving forward is important. And being able to show them via the planning about the things that they can do to catch up, because you're right, that perception, there are a lot of people that have that, some that are doing okay, some that are maybe a little bit behind. But usually when they're behind, they just don't know what they can do to get themselves caught up. Nick McDevitt: And oftentimes if they are behind, taking more risk doesn't really make a huge difference because they haven't accumulated enough money for that risk to benefit them yet. So yeah, that's usually not the way you want to do it. And the good thing about planning is that we can really kind of illustrate like, "Hey, if you are a little bit behind here, there are decisions that you could make that can get you ahead." And when we work with people, those decisions don't ever include taking more risk than they should. Marc Killian: Gotcha. Marc Killian: John? John Teixeira: Yeah. I would jump in on that. And we do hear that a little bit and it's a bad idea to go ahead and start taking too much risk just to try to catch up because when you find yourself in the wrong portfolio based on your risk tolerance, you could really make bad decisions. So example, market dips, and let's say, you're a conservative investor and you say, "I got to get more aggressive." And all of a sudden, you're in an aggressive portfolio, the market dips. And it's like, "I can't take this," and you bail, you leave the strategy. And the next thing you know, as we all know, in a couple of weeks, or a month or so, it bounces back up and it's like, "Okay, you just lost out on some stuff there." Marc Killian: Yeah, especially in the environment that we're in right now because we're not sure what's going to cause a downturn at some point, but certainly we're overdue, I mean, just from a historical standpoint. So if you're take too much risk and then one of these different things we've got going on out there, it's a very volatile time, you don't want to be caught holding that bag, per se. So definitely having a plan and getting a strategy put together and making sure that you're not taking too much risk for the type of portfolio that you need and can handle is certainly a good idea. So don't cut that corner. Marc Killian: Another one is legal documents, guys, not getting these put in place. This one just frustrates me because it's super easy to do and it's often not that costly. And a lot of these things you can just handle them pretty quick and it saves a whole lot of heartache for a loved one down the way. John Teixeira: Yeah, this is really important. It is one of those things that, it's not expensive to put in place, but it's just one of those things that are on your to-do list for a while and it just never really gets done. But that's something we try to make sure we're active with our clients in making sure they have the right documents in place because we've seen scenarios where someone passed away and they didn't have the documents. And it was just really, I won't say it's a nightmare, but it was very difficult for the beneficiaries to track things down. And I'd say especially in the case of a second marriage where you have maybe two sets of kids, one on each side, it's even more important to make sure that you have the right documents in place and that your assets are going where you want them to go. So we can't stress that enough. Marc Killian: Yeah, not getting organized, Nick, that's another one that people cut corners. It's easy, just throw it all in a box here, kind of thing. Nick McDevitt: Yeah. Yeah, I would say many of us struggle with this sort of thing in some part of our lives. Marc Killian: Oh, sure. We all have a junk drawer, right? Nick McDevitt: Yeah, for sure, a junk drawer for something, that's for sure. Now whether it's, up north, it was basements- Marc Killian: A junk basement. Nick McDevitt: Yeah. Yeah. And down here, we just try to find anywhere to put it, but- Marc Killian: The closet. Nick McDevitt: Garage. Marc Killian: The one closet no one opens because they're afraid it's all going to come falling out, yeah. Nick McDevitt: Exactly. So one of the things, and obviously we talk a lot about our emphasis on planning, but for example, the software that we use and what we try to emphasize with people is that, "All right, you've taken all these steps to get started with planning and it'll be a little bit intensive to get rolling, but once we get everything all set up and put together, then in the platform, the client platform that we use, it allows them to upload important documents. It allows them to link all their accounts together which usually helps push them to consolidate a little bit. And they really like the fact that they can log into one place and see all of their accounts in one spot. We've got clients that will bring in their kids and we can create a separate login for their kids and only have a certain amount of access so their kids know where things are. Marc Killian: All right. How about number four here on my list, guys, ignoring details about certain investments. Whether that be, "Don't talk to me about X, Y, or Z product because I have no interest in it," or maybe thinking something is everything you want, but you really didn't do that much research on it. You're just like, "Oh, that looks good. Give me that." Don't cut the corner of not understanding what you have. John Teixeira: Yeah. That's really important to understand what you have and we always harp on the plan, but really getting a grasp of what you have and how does that implement into your financial plan, so it's really important. Marc Killian: What do you have and why do you have it? John Teixeira: Exactly. What's the goal for this? What's it doing for me? How does it operate, and what you just said there about the biases of certain investment vehicles. Really, before you shut the door on things, again, everyone's situation's different, you should probably be open to understanding how that works, and ultimately, how can that benefit you and help you reach your goals and give you peace of mind. Everyone's situation's different, but can't stress enough, understanding what you have or what's available to you to help you hit your goals. Marc Killian: Exactly. My brother is a anti Ford guy. He will not drive a Ford, look at a Ford, ride in a Ford, nothing, to the point that I'm like, "Really, man? This is a strange bias." And it's just one of those things, he can't really explain why. He just, "They make some really nice looking cars, but I don't want to even check one out." And I'm like, "Why? You're just limiting yourself." John Teixeira: I'm assuming he's a Chevy guy? Marc Killian: Oh yeah, exactly, yeah. John Teixeira: It's interesting. It's one or the other with [crosstalk 00:08:19]. Marc Killian: Yeah, exactly. But people do that. They get these weird biases, and it's like, "Don't talk to me about this because I won't pay attention to it." And it's like, "Okay. But you could be cutting something out that's very helpful. So just don't do that," Especially when we're talking about financial stuff. Marc Killian: All right. Well, let's do some fun stuff here as we wrap things up. We're going to do a little getting to know you. We don't do this too often on the show. But I got some fun questions here I'm going to ask you guys. Feel free to answer. We'll jump in with this first one. What's the hardest job you've ever had? John, you go first. John Teixeira: In college, I worked couple of summers with a mason. So I was basically lugging around cinder blocks and- Marc Killian: Yep, laying bricks. John Teixeira: ... and going on scaffolding, which, I'm not afraid of heights, but I also don't like being up on a scaffold that's swaying, you know what I'm saying? So I'd probably say that was one of the more difficult jobs I've had from a physical standpoint. Yeah, I would never go back to that world of scaffold. Marc Killian: Nick, you got anything? Nick McDevitt: Yeah. So honestly, maybe it's a priority for some people, but getting started as an advisor, it's a pretty wild world. And so I started back in 2007 without local contacts and not being from the area. And so it was a little bit of a slow start, but something that I obviously really enjoy and still doing. So I'd say, from just getting things going, that was probably the hardest thing. But the good old 16 year old dish washing, and all that kind stuff. That was a different sort of hard, but gave you perspective and tell you the value of the dollar, and all that kind of thing. Marc Killian: No, that's cool. Yeah, I like that because, I mean, what you guys do is complicated and getting your licenses and things, it's serious stuff. So it definitely can be complex. But yeah, the manual labor side, I'm with you there, John, I worked for a construction company as well and did asphalt and, ugh, asphalt that's a hot job, in the summer, woo, not something I recommend. That's a tough one. So anybody does that, kudos to you. That is hard stuff. Marc Killian: All right. Here's a random silly one. Who's your favorite TV character, if you have one? Nick McDevitt: I watch a fair amount of TV, especially working from home. I usually have something going on in the background. And I want to say, two or three weeks ago, Netflix added Seinfeld. And so I went back from the beginning and have been rewatching Seinfeld. I always knew George was hilarious, but he continually makes me laugh. So he's one of my favorite characters in all of TV in just his mannerisms and all the things that drive him crazy are just really entertaining. Marc Killian: John, with two little ones, I don't know if you even have time to watch TV, but if you do, it's probably some cartoon character like Peppa Pig or something, right? John Teixeira: Yeah. I'm trying to think what are they watching nowadays? Marc Killian: SpongeBob. John Teixeira: Like Fancy Nancy, I think, is what's on my TV quite a bit or Doc McStuffins turning into my number one there. Marc Killian: There you go. There you go, Doc McStuffins. John Teixeira: I would say, I mean, I don't necessarily have a favorite character, kind of Nick said there, it just depends on what I'm watching, but I'm a pretty big Game of Thrones fan. So I like Tyrion Lannister, his wit and sarcasm is pretty good. Marc Killian: That's right. He drinks and knows things, that's what he says, right? John Teixeira: Pretty much. Marc Killian: Yeah. There you go. Well, there you go. Let's do one more thing. We'll wrap it up this week with an email question. And of course, if you'd like to submit your own into the show, feel free, or just ask a question period, well, just go to the website, pfgprivatewealth.com to get your questions answered. To get on the calendar to have a conversation about your retirement journey, pfgprivatewealth.com is where you go to make that happen. And you can subscribe to the podcast while you're there on Apple, Google, Spotify, iHeart, Stitcher, all that stuff. You can find it all right there at the website and get in contact with the guys and the team at PFG Private Wealth. Marc Killian: And here's the email question this week, it's from Wade. And he says, "My wife and I both earn pretty nice incomes and we don't have any kids and we are only 45, but we think it's reasonable to look at retirement in 10 years at 55. Any pointers on things to do to make this happen?" Nick McDevitt: Yeah, I'll jump in on this one. Sounds a little flippant, but it's called a plan. Marc Killian: There you go. Nick McDevitt: It's one of those things where instead of... this is a classic example of what we've seen in the past in situations like this, and I can almost use a client that we got about five or six years ago. They're a few years apart and this situation, good income, no kids. They were about 45 and 50 when we started working with them and he retired last year and she retired this year. And it was really the putting the plan together, first letting them know that it was feasible instead of just like in theory, feasible like, "Hey, we've done well for ourselves. We think we can do it," to making it very concrete, creating very specific goals and helping them get there. Nick McDevitt: And they constantly tell us how big of a difference that made to them in having those specific goals. Because usually what happens in this situation is, somebody's 45, they ask questions like this. They talk about it with themselves. They talk about it with friends, all of a sudden, it's five years later, they haven't done the things that they could have been doing for last few years to hit that goal. And now they end up being behind where they could have been, so the sooner the better. Marc Killian: Gotcha. And I would think, the one thing that would jump out to me if you're talking about retiring at 55, would be the healthcare side of things. Like what's your plan, and that would be part of the plan, right? What is your plan? Because you're not going to get Medicare for another 10 years until you're 65, and that could be pretty costly. Nick McDevitt: Yeah. Yeah, absolutely. The managing of the expenses, especially for people that work for companies that are benefit rich can be a little bit of a shock. So figuring that out and then navigating that space, especially learning some of the rules and where they're going to generate their income from and how to keep those high healthcare costs down, all that sort of stuff can be a bit of a maze. Marc Killian: Well, and that's all part of getting a plan put together, as you said. You said that it's not really flippant if it's true, right? So get a good plan together, wait, and have a conversation, reach out for some other pointers and some things to start. If you're serious about doing this, the longer you wait, the longer it takes to get that put together. So get started with a plan with Retirement Planning - Redefined, and the guys in the team at pfgprivatewealth.com, that's pfgprivatewealth.com. Marc Killian: Guys, thanks for hanging out, as always, I appreciate it. John, have a great week. John Teixeira: You too. Marc Killian: Nick, we'll see you next time, buddy. Nick McDevitt: All right, thanks. Marc Killian: All right, we'll talk to you later. Hear all the podcasts. This has been Retirement Planning - Redefined with John and Nick.…

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Ep 39: Is Your Retirement Plan Out Of Tune? 19:56

3 years temu19:56

19:56

Even if you have a solid financial plan in place, things can quickly get out of tune if you don’t make adjustments from time to time. Let’s talk about some of the areas where we often see people get out of tune in their financial plan. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey, everybody. Welcome into another edition of the podcast. Thanks for hanging out with John and Nick and myself as we're going to talk about Retirement Planning Redefined once again. This week, we are going to chat about getting in tune. No, not instruments, and we're not going to sing, because that might be bad, but we're going to talk about getting our retirement plans into tune, especially because we all want to have that good solid piece in there that we know we're going to be comfortable and happy and get the things we need out of it, but we also can drift off from time to time. So, we want to pull those back in, get the reins if you will. So, that's going to be our topic this week is getting in tune. What's going on guys? What's shaking? How you doing? John: All good. Nick: Staying busy. Speaker 1: Yeah, staying busy. How's the dog? I know you got that dog that's really old. Is she doing okay? Nick: Depending upon your definition of okay, she's doing great. Speaker 1: Well, good. Nick: Yeah, she definitely keeps me on my toes. I think she had to go out five times before 11:30 today, so that was fun. Speaker 1: Holy cow. Nick: Yeah. Speaker 1: My mine's 15 and she's going deaf and going partly blind, but she's still okay in that department. How's yours doing? Is she having some hearing or vision? Nick: Oh yeah. No, she can't hear and her vision is not great, and so it's fun stuff. I'm on the third floor of my building, so I carry her down every time to go out. She's not a big dog, so it's easy, but- Speaker 1: It's cute and it's sad sometimes that she's losing her hearing. I'll be calling for her and she can't figure out exactly where it's coming from, because she's not completely deaf. So, she looks around in different angles and I'm like, 'I'm right next to you, you ding dong.' Nick: Oh yeah, I know that look well. Speaker 1: Pretty funny stuff. John, what's going on with you buddy? I know you don't have these exciting dog stories, but what's happening? John: Not too much. Just staying busy and I think as you're aware, becoming a school parent, so that's fun and then started my little one in gymnastics, so I have to head there tonight. Speaker 1: Oh, nice. Yeah. You're getting to that phase now where you got hobbies and activities all the time, right? John: Yeah, play dates are starting to get formed now. I pick her up from school and it's like, "Hey, I want to do a play date with my friend." It's like, "All right." Speaker 1: Yep, go, go, go. That's all right, hey, at least we're getting back to some of that stuff. So kids and stuff. I mean, everybody needs interaction, so it's good that we're here getting some of that stuff going on. Getting our life back in tune, so to speak. That'll be my segue back into the topic here. So, let's talk about how to get our financial plans or our retirement plan back in tune in case we've got out. We talked a couple weeks ago guys, and we're waiting to see what the fine details are going to be, we'll probably do a podcast on it, but tax considerations, future tax considerations. Speaker 1: A lot of the stuff that's right now at the time we're taping this that's before the house, it may go through, there's quite a bit to the corporate tax change, there is bumping up. They're trying to make it sound like it's all going to be for the higher net worth folks, but $400,000, $500,000 is not that hard to get to for some of these things. So depending on where you're at, tax considerations needs to be on everybody's radar no matter what you're making. Nick: Yeah, tax considerations are definitely something that we try to focus on with clients. I think in our minds, the number one, the rule of thumb when it comes to tax considerations in regards to investments and retirement accounts is to have options. So, what we mean by that is not only a diversification in the types of investments, underlying investments that you have, but also in the types of accounts that you have. Nick: You want to have accounts are going to be tax free down the road, accounts that will be taxed down the road and then maybe some accounts that are subject to income or capital gains taxes versus just ordinary income. So, the having options, building a personal moat and being able to have the ability to adapt and adjust, I think and staying nimble is the number one priority when it comes to planning. Speaker 1: Having a personal moat, I like that. John, you've been getting so much rain, you might have your own moat, right? John: Yeah, that's funny. I do feel like it's been raining every day. It's just new house, it's like we have this big yard and I walk back there and it's constantly soaked and the pool's always overflowing. So yes, I do have a personal moat keeping Nick out. Speaker 1: Nice, I like that. Okay, so tax considerations. Again, lots of things happening there, so that could even be changing and that's why it's definitely important to make sure. It's always important really, no matter what time we're in, but I mean certainly when we get to retirement, tax considerations and what we're paying is a big deal. So it's not what you make, it's what you keep, all that stuff. Speaker 1: Life insurance. Fellas, having the right amount, well, 'Hey, I'm retired, I don't need it.' That's what most people say, or at least that's the general consensus or rule of thought, but is that correct? John: Sometimes it is. It really comes down to when you're looking at, do I have the right amount? So, is there a need for it? If there is a need for it, then it becomes income replacement. So example, I go to retire and let's say I do have a pension that's life only. We talked about that a couple weeks ago and if I pass away, that pension's gone, does my spouse need that money for her money to last at that point or for her to hit her goals? John: If the answer's yes, she needs that pension replaced, then yes, there is a need for life insurance. There're other things that go into it, but that's just looking at it from a retirement standpoint. It's really replacing someone's income or assets that are needed to generate income for the surviving spouse. Nick: Yeah, and I would say just on top of that, I think probably the reason that we mentioned this in this conversation is just to not absentmindedly push it off the side. I think there's a perception for people that no matter what, they're not going to need any sort of coverage approach in retirement or into retirement. Just like anything else, we think it's important to take inventory, and when you're building your plan, to make sure that you vet out the different situations and scenarios. Nick: Because when you were originally planning, you may have not expected to have a mortgage, you may not have expected to help out your kids with education costs or maybe at the level that you did, or a myriad of other things. So life comes at you quick, we think it's important that... because so many people automatically assume that it's just no longer a part of the conversation for them, that you make sure that it is or is and take a good inventory to see if it makes sense for you. John: Yeah, definitely. Let me jump in here real quick. Speaker 1: Sure. John: This is really important for big business owners to look at as their near retirement, because a lot of small businesses, they are in essence the business, and if they don't have any life insurance and something happens to them, sometimes we've seen businesses have to fire sale and stuff like that. Nick: Yeah, if something happens to the owner, the business is relying upon the owner, the family expected to be able to sell the business and cash out and be profitable and sail into the sunset that can get derailed pretty quickly. So that's another good example. Speaker 1: Yeah, definitely. And you mentioned cash, just cashing out, but that was actually, cash is on my next one who doesn't love cash. I mean, everybody loves cash. We want to keep a nice amount around. We feel like most people kind of have this, the higher the number the better. My kid, she's 24 now she's working, making good money for a change. Speaker 1: Now she's learning how to play this game with herself about, Ooh, how much can I get my savings account to grow? I'll be chatting with her and she'll be like, 'Yeah, I'm trying to hit this number. And I'm adding a little bit more.' And it's nice to see her kind of start to play that game with herself where she's trying to grow those accounts. And she enjoys always the fact they're growing and that only happens more as we get older. So people sometimes want these pretty large amounts sitting around. So what's the right amount to actually have, because I mean, at some point, we start talking about emergency funds and so on and so forth. I mean, what are you going to do with $100,000 sitting in the banking cash? Is that really too much? Is that the right amount? I mean, how do you figure that out? Nick: Well, this is where our very effective, but also annoying answer of it depends comes into play. So, this answer possibly more than almost anything else is I think hyper dependent upon the people or the person that we're talking about. Obviously there's kind of the rule of thumb of, six to 12 months of expenses in cash. But really when we drill down further, one of the things that I like to run by people is to have them think of cash in a way of it's the ultimate permission slip. What I mean by that is what amount of cash allows them to feel comfortable enough to not make irrational decisions with the rest of their money? So if having a year or 18 months, 24 months, even 36 months of cash allows them to be invested in a way that they should be with the rest of their money. Nick: Then in my mind that the opportunity cost of that money, getting more upside, that cash getting more upside is worth it because it prevents them for them overreacting to things like market corrections like we're having this week or these different sorts of scenarios and circumstances where one of the best techniques that has worked for us is going through and saying 'Yes, the market just pulled back over the last three months. Let's just say it did 10%.' But if we can go to the client's accounts and say, 'Look at, you've got your next 18 months of expenses without ever touching your investment accounts is sitting there in cash for you.' Plus remember that we've got somewhere between 30% and 50% of your actual investment and fixed income automatically their blood pressure, their heart rate, and their amount of emails and phone calls to us go down, which are all things that are positive. Speaker 1: Really that's the talk, starting talking about risk as well. And that's my final bit on getting the plan in tune is having the right amount of risk for the time that you're in and for the situation that you're in. Maybe those two things go hand in hand, well, they all really go hand in hand, if you think about a retirement plan in general, but getting the right amount of risk is certainly important. Speaker 1: And we touched on this a couple of weeks ago when we were talking about couples and how they sometimes they're opposites in that regard. So you still have to find that that happy place that's working for the plan. I think I saw an email for somebody in a couple of weeks back guys, and it was something like, my account haven't done as well as the market this year and maybe I should change advisors. And it was like, well, wait a minute. You know, don't just assume that it's the advisor's fault because it didn't keep up with the market. How are you set up from risk? Are you exactly... Are you taking all as much risk as possible in that, which case the market return should be closer? Or are you very conservative and just don't really know what you have and that's why you didn't perform as well. There's lots of ways in variables to look at this correct? John: Yeah. It's definitely one of the most important things to look at when your overall portfolio is what is your or risk tolerance and how are you invested in? And what you just said is on point, we find that a lot where people are trying to compare not only to us, but other advisors like, 'Well, the S&P did this, what did I do?;' And then when you start diving into it, it's, well, you're a 50, 50 mix and that's the S&P all 100% equities. It's not going to be the same. John: But definitely from a planning standpoint, we try to make sure people are invested correctly based on their risk tolerance. Because if you are more aggressive in your portfolio than you actually are, when you start to see a dip, chances are you're going to panic and chances are if the dip is fast enough or goes down enough like in the COVID period, there March, April 2020, some people change courses and went from what they were, and then went to very conservative. John: And then three weeks later, the market just rallied back and all the gains were lost if you were, are seeing on the sidelines. It's important to really pick your risk tolerance, pick your portfolio and stay at the course based on the plan. Speaker 1: Yeah, absolutely. I mean, you can't panic. That's usually the worst time to do it. It's definitely one of those cases where we tend to do that. And that's, again, the value I think of an advisor, because somebody can call up and say, like the pandemic crash or whatever, and say, 'Hey, I'm panicking. What do I do?' And you can walk through those scenarios without just locking necessarily locking in those gains by panic selling or whatever that case might be. Speaker 1: So something to look out for, make sure you have your plan in tune, and they require a tune note, folks, these they're not a set and forget it kind of thing, it's not. Even life insurance, if you bought life insurance 25 years ago, and you hadn't looked at it 25 years, it's one of those things where we buy it, we think we're never going to need it to look at it again, but no, that's not the case. Speaker 1: Stuff changes. Life happens. So make sure you're making little tweaks, your plans should change and ebb and flow just like your life's going to. And that was our topic this week on the podcast. And as always, we're going to try to take at least an email question or two, if we can, if you'd like to submit your own, go to the website at pfgprivatewealth.com, that's pfgprivatewealth.com drop us a line there and subscribe to the podcast while you're there as well. Speaker 1: We'll see if we can get these two in at least one, we got a question for Nick, from Jamie. He says, 'Nick, I've looked forward to retirement for many years and I enjoy the podcast. And now that I'm actually retired, I can't shake the feeling that I'm going to run out money. So you got any solutions for fighting the feelings, or should I just go back to work?' That's one of these things where people get into that situation. It's like they maybe don't have a good plan or they're just not comfortable. So they're not really sure what it's doing for them. Nick: Yeah. So this is interesting because I would say that realistically, the majority of the people that work with us, their plans are pretty solid and we have a high level of comfort of them retiring. In those scenarios where, where we have a high level of confidence in their plan and what we've done, especially, because we use a lot of pretty of variables. We try to up the cadence of meetings or the amount of times that we talk and get them to start trying to view things maybe a little bit more like us. Nick: So using things like the client portal that we have, where they can view their cashflow or their lifetime and see the different parts start to become more familiar with how the planning software works and get some of that comfort and affirmation that they're online and on target is really, really important. Nick: And then from the perspective of things that maybe aren't quite as static, in our regular reviews, really trying to drill down and dig into what are the things that are concerning them the most? For example, for some people, the things that are concerning them the most might be taxes. We can work, show them and illustrate a scenario of a significant bump in taxes and show them how that impacts them specifically. Nick: When I realized that I should ask clients that have serious concerns about how these specific things that they're concerned about impact them specifically, because one of the things we've seen is that, it's like, 'Okay, I'm watching the news and the news says this is going to happen and freak out in twos. Nick: They're thinking in large terms maybe from societal standpoint and that's understandable, but take that one step further and say, 'Okay, well how does this impacting me? How impact my plan? How does this impact me? And then when we start to drill down, when they start to learn to do that, the amount of stress that they have starts to go away pretty significantly. 'Okay, well I'm concerned about these taxes.' All right, well, Hey, let's take a look at the amount of income you're in. Let's take a look at sort of bracket you're in. Nick: Historically, even if we go back the last 20 years, how much that bracket has fluctuated and you see throughout 9/11, throughout the great recession, throughout the bounce back, throughout... Year bracket that you're in has gone plus, or minus 3%, that's not going to really have a huge packed on you or let's even just let's bump it up an extra 10%, those sorts of things or using that same sort of situational awareness with markets or, whatever else it is, health, those sorts of things. When people start to really think about how to impact them, it's usually kind of a calming factor for them. Speaker 1: Yeah, I think at the end of the day, if you don't have a good strategy in place that makes sense to you and that you understand you're going to have a hard time shaking that feeling and not feeling calm and feeling nervous about it. And that's really where the right advisor and also the right plan comes in place. If you're working with somebody and you feel like things maybe aren't totally there, it's okay to get a second opinion. Whether it's Jamie or anybody else that checking out the podcast, find out if you're working with somebody and you're not sure that that's the right fit, then get a second opinion and you may find that it is. It's everything's working swimmingly well, and that's fantastic. Or you may find that you might need to make a change. Speaker 1: And if you do, just reach out to John and Nick and schedule some time, have a conversation with them. Second opinions is part of the industry. So give them a jingle, have a conversation, pfgprivatewealth.com, that's pfgprivatewealth.com and time wise, guys, I think that's going to wrap it up for this week. So we'll, we'll take that next email question next time on the show. Speaker 1: So reach out folks, let them know, to give them a cell, 8132867776 is the number to call. It's just easier to go to the website, pfgprivatewealth.com, subscribe to the show and all that good stuff on Apple, Google, Spotify. And we'll see you next time here on Retirement Planning Redefined with John and Nick and you guys have a great week. We'll see soon. Nick: [inaudible 00:18:25] John: Have a good one.…

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Ep 38: Financial Mistakes Couples Make 19:35

3 years temu19:35

19:35

Getting husbands and wives on the same page with their retirement plan can often be a challenge. Let’s talk about some of the things that couples often mess up. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Everybody welcome to the podcast. Thanks for tuning into the show. As we talk about investing, finance and retirement here on Retirement Planning Redefined with John and Nick. And we're going to talk about couples this go around and some financial mistakes couples often get into. Because John, I don't know about you, buddy, but my wife and I are on the same page about everything all the time. John: Yeah. Sounds like you go by the motto happy wife, happy life. Mark: Yeah. Not so much. No. She would disagree with that. Something fear. She's like, "If I could ever get you to agree with me on anything for happy wife, that'd be good." But no, this is a joke people make all the time. Couples that definitely do not see eye to eye on a lot of things, and finances is certainly one of those. John: Finances and kitchen remodels, definitely. So... Mark: Kitchen remodels, Nick, what's going on with you, buddy. How you doing? We don't want to leave you out. Nick: Pretty good, just staying busy, happy that football seasons here, NFL season is here. I'm looking forward to fall weather in Florida. Mark: Yeah. Well it's on its way, hopefully. So we're into September when we're taping this. So let's get into it and talk about some stuff. I imagine you guys see a lot of different things when couples come in, and you see a lot of different people on, whether they're on the same page or different pages or whatever the case might be. And many times as much as couples might think they've talked about this stuff, I imagine you guys probably see that they didn't talk about it as much as they should have, or maybe as a depth or they just really glossed over the subject. Mark: So let's dive into a few things and see if we can highlight stuff for folks. So when they do come in and sit down, maybe they're a little further along in this conversation, and you guys don't have to wear your marriage counselor hats along with your financial advisor hat. So number one, making the wrong choice on how to handle the spousal benefit option, if you're lucky enough to have a pension, I talked to a bunch of guys advisors and stuff, fellows over the years that have said, "It's amazing how many times somebody will take that without even talking to their spouse about it, just because they see that higher number." Nick: Yeah, it's interesting that a lot of places have put some restrictions from the perspective of the paperwork where they'll have to be a notary sign off or things like that, but we've seen them without, and there's definitely a misconception or misunderstanding on how these pension payouts will work. And so this could be a mistake that it's typically a one-time decision. So for anybody that has substantial income, that will be coming in from a pension, this could ultimately be the most important decision that they make, and it's something not to overlook. And just to be a little bit more direct, oftentimes they will see the single life option, which you would referred to as the highest payout, and not realize that if something happens to them, then nobody gets any remaining benefit. Nick: One of the ways that we'll try to phrase that to people is, no matter what, I've never met anybody that wants to have worked for a company for a long time, and even if there's a divorce situation or something where if something happens to them that nobody gets any of the benefits that they would have been due for the rest of their life. So on making sure that those options are understood and making sure that they're correlated and tied into the rest of the decisions that they've made for their planning it's super important. John: Yeah. And a big thing to that, Nick mentioned single life, is understand the different joint survivor lives. You can have a joint survivor where one passes away, they still get a 100% of the benefit. And then there's a couple of different options where you get 75 and 50%, and it's always good to reference the plan to make sure if one person passes away that the plan basically is still intact and that surviving spouse can still hit all their goals. Mark: Absolutely. On those conversations, if it does happen, I can't imagine that the other person's too happy about, "Hey, wait a minute, why did you take the wrong one and leave me out?" So, you want to make sure that you're doing those for sure. Number two is the coordination on the social security strategy, social security is that horse that we're going to beat constantly, because it's a big component of people's retirement plans, and the money that's out there. But we can't get into this rush to just go turn it on without really thinking about a strategy, especially if you're married, because there's a lot of strategy involved. John: Yeah, there is. You hit it perfectly when you said it's a big decision. I believe social security equate for like 30 to 40% of someone's household income in retirement. So you want to coordinate it right, and the biggest mistake we typically see is once one person retires maybe early at like 62, 63 64, they're just going to go ahead and turn it on, while the other spouse is working, but there's definitely a lot of different strategies that you can implement. Nick and I focus heavily on planning, and it really all does come back to the planning cause everyone's situation is different, but you really want to look at what's best for your situation. Does it make sense to defer the higher amount for survivor plan down the road? We just talked about pensions. Is there a current pension in place? Which will make the social security decision even more important to really coordinate that with any pension or any other guaranteed income stream. Mark: Strategy is key, and so many things for retirement planning, but certainly in social security. And again, that's why the podcast this week is really about mistakes for couples. Because again, we can kind of talk through this stuff in generalities and sometimes we just kind of barely touch on it, but there's a lot of minutia to dive into, and that's where an advisor really comes into play. And here's a simple one guys, and I don't know how often you guys encounter this, but I talked to many advisors who say, "It's pretty surprising. People will come in for the first time. And they really haven't truly talked about what they want to do with their actual time in retirement, what they want to actually do with retirement. And yeah, they say the general things, well, we want to travel, well, he wants to play golf or whatever, but it's like, well, what does that actually look like? How much golf, how much travel? Where to? So on and so forth." So that stuff really is important in what you guys do to help them design a plan for that. Nick: Yeah. This is something that I've been really trying to focus on with people, with clients. And one of the things that I've found is that, for so many people that are retiring recently or very soon, looking back, one of the things that I've found is that many of them, even if we were to rewind five, six years ago, we've had this huge run-up in the market. So now you have people that have a lot more money in retirement than many of them thought that they would. And so some of the options that they have in some of the thought processes that they can have is less of a scarcity mindset and more of a thriving mindset and really trying to focus on things that they really want to do. Nick: An example recently is a plan with clients that had retired within the last year. And so they're plugging along and the plan looks really, really solid. And so, I really tried to start drilling down. It's like "Now that you've been retired for a little while, now that you have a feeling of what it feels like, what are the things that you really want to do?" And then using planning to help them figure out if we can do it from a financial standpoint. So, one client wanted a larger property for their primary residence to be able to work on cars, that was the kind of hobby. And so it goes. We've kind of talked about the fact that the sharper they stay, the more engaged they stay, whether it's hobbies, whether it's volunteering, no matter what it is, as long as you're staying engaged and sharp, their life is going to be probably longer realistically. And the brain's not going to really rot away. Nick: And so helping people dial into those things that they want to do, I think is probably one of the most enjoyable things on our side of the business, but it takes a while and quite a bit of repetition to really get them to visualize it and see it. Mark: Yeah, indeed, because again, you might talk about some basic things you want to do, but you really start to have to dive in and dissect more because you got all this free time now. And of course you hear all of the funny stories, maybe the Mrs. Will say, "Find something else for him to do get him out of my house." John: One thing we've noticed is that when we do the planning, we'll ask that question and one spouse will say something and the other one just gives a look like "What? I didn't know that." Mark: First I've heard about it. And that's the point of really even though they think maybe they've communicated this. And again, I think that's really where great value comes into play from what you guys do, because you get to be this... Maybe that's not always the most fun thing to be in the middle, but you get to be this mediator a little bit, or this sounding board where to that point, John, when somebody is like, "Wait a minute, this is the first time we're talking about it." Now they're going to hash it out and you guys can help them walk through it. So hopefully it's good in the end because they're getting through to the details they really got to get to. So these are, again, are mistakes that couples can get themselves into when planning for retirement. Number four, not coordinating other accounts. So how important is it guys to include or incorporate coordination amongst his 401k and her IRA and so on and so forth? John: So this is a really important one. And again, we sound like broken records, but this is important to the plan itself, as far as once both people are retired, and you're looking at how much income is needed from the nest eggs, where is that money coming from? Whose accounts? And once that's determined, that will dictate how that money should be invested. So this is really important and often overlooked if someone has not gone through a comprehensive plan, whether they've done it themselves or working with an advisor, but this could be a really big mistake if you haven't coordinated this correctly. Mark: And coordination is the key, getting on the same page is the key. I started off this podcast by joking about my wife and I are always in agreement because that's how spouses are. Yeah. Right. So, at the end of the day, we tend to see differently in a couple of ways, opposites attract kind of thing. Right. So how often, and how much do you guys deal with managing the opposites in their personalities with risk? For example, that's a big one, obviously. Because many, many times I think we're going to see people where one person is like, "Hey, let's take some risks, let's take some chances." And the other, one's not so comfortable with that. And maybe they haven't even been as honest as they might be in front of you guys saying, "You know what, now that we're sitting here, I don't want to take that much risk." So you guys have to figure out a way to get them in a neutral, workable ground. Nick: I think one of the ways to do that, that we found to be the most effective, is to try to double down on embracing the differences and letting them know that. And even if we go back through the plan and say, "Hey, look at these two decisions that you made, really help the plan in this way." And then, these two decisions that the other spouse made really helped the plan in this way. So they compliment each other. Nick: So, let's focus on moving forward. What are the things that we do to earn the next step? And what I mean by that is, so there's a couple of things, we try to continuously emphasize the fact that we don't really care what their brother, sister, neighbor, dog walker/former coworker does. And then we'll rattle off four or five things that are immediately different about their life then all of those people. And so they start to get that. And then as we further drill down and we'll say, "Okay," we'll look it, "Hey, I know that you're feeling a little bit concerned about the market, but remember that we've got two years of cash in the bank. So that's your pass to be able to do X, Y, and Z." And so almost just walking them through and helping them understand, like, "Hey, we've done this, and so we graduate to this level. We've done this, we graduate to this level." And so we keep moving up the ladder and that all of these decisions are tied together and correlated. Nick: And we try to emphasize the fact that, when we make these recommendations, it's not like we make these recommendations for every single person that we work with, these recommendations are specific to them. And so I think that helping them understand that, to embrace those differences and to make sure that we've done things, we've put things in place. So maybe the spouse sets a little bit more aggressive, we point out, "Well, Hey, look it, we've got 15 to 20% of your assets in this Roth IRA. And this is where we're taking the majority of the risk in your portfolio, because the upside is tax-free." And then maybe the other spouse is more conservative and we say, "Hey, remember that you have your social security, you got a small pension. And we put this annuity in place with guaranteed income to satisfy that risk that we perceived." And so all of these things are working together to try to balance it out. And usually it's just kind of rehashing that over time. And then people start to get it. Mark: Yes. The multiple pieces of the pie. So you're going to have these different things in there that are going to hopefully help address multiple concerns. That's why there's a lot of financial products and vehicles out there to be used. And it's not any one thing is the right fit, any one thing is the wrong fit. It's a matter of finding the right vehicles for the right situation and then plugging and playing those in for the different person and their scenario. So that's some places financial mistakes couples can get into. Of course you want to make sure you don't get into those by working with a good advisor or a qualified team, like John and Nick and their team at PFG Private Wealth. So if you'd like to drop by the website and send us an email as well, pfgprivatewealth.com. Mark: If you've got a question, we take those from time to time pfgprivatewealth.com is where you can go. All questions get answered, not all get asked on the podcast, but we do have one this week. So let's see what we got for you guys, Christopher, he sent this one and he says, "Hey, John," but I'm sure he means either one of you, but he says, "Hey, John, I'll be turning 70 at the beginning of next year. And I'm getting annoyed about having to think about taking money out of my IRA, because I'm not going to need it. I'm sure you have some tips for circumventing this rule. What are they?" John: Christopher, good question. So just to update you, the new RMD Required Minimum Distribution age is now 72 versus 70. So that was just seven and a half, that was just changed a couple of years back. But now that this comes up often, one of the things that we currently do for our clients is we'll actually set up a individual taxable account where we'll basically just, if there's a 15, $20,000 RMD, that's unneeded, we'll just transfer that right into it. And go ahead and invest in exactly what they're invested in before, because it really just needs to come out of the IRA, it can go right back into the market. Another strategy we've done is if a client is doing some charitable contributions, you can actually make charitable contributions from your IRA to your selected charity. And that will avoid taxation of that. And again, we always have our disclaimer, talk to your tax advisor if you look for tax advice, we're not tax professionals, but that's a really good strategy to use when you're trying to avoid the RMD taxation. Mark: Got you. Well. So the good news, Christopher, is you got a little bit more time. It's 72 now. I love when people say, "There's got to be ways around this," there really isn't, either don't have an IRA or there's not really a way around it. You're going to have to give the government their share, which is why people have been doing things like conversions. There've been converting money out and doing so on and so forth so they can reduce the amount in there to avoid having to pay that by not having the account. But that's really about the only way, correct? Nick: Yeah. The conversions can be helpful to reduce the amount that's going to have to be required to come out. But at the same time when the window is short and they realize that, "Hey, I'm just going to have to pay. I'm going to have to pay taxes on that money now when I convert versus, a portion of the amount that I would take out down the road." Or that, it's like, "Hey, well, you are going to pay tax on it, but still our plan's recognizing the taxation and you could see here in the planning software, this is what your total tax obligation is going to be. And we can reinvest some of that money. So it may have less of an impact on, on you that you think." Nick: I think one of the things that we've seen is that obviously taxes are a hot button and nobody likes paying them. But I would say that probably 90% of the people that we interact with overestimate, or assume that they pay a lot more in taxes than they actually do. So that's always a good exercise for us to remind people that in the scheme of things, many of them are paying a lot less than they realize anyway. So it's one of those things where in theory sometimes the move can be good, but oftentimes in their mind it's better than in actuality. And of course, just like anything else, we try to test that out through the planning. Mark: Well, Christopher, so there's some good news in there, like I said, there's some more information for you. Obviously they showed a couple of ideas, but hang onto your hat. Because as of right now, stuff's going through that we're tying at the time we're taping this. There's more things to possibly be passed. So there could be some changes again, coming as well. So we'll do an updated podcast on that once they go through or as we have more information, but for now, that's going to wrap it up this week here on the podcast, Retirement Planning Redefined with John and Nick. Guys, thanks for hanging out as always. Appreciate your time. And folks, if you need some help, reach out to them at pfgprivatewealth.com, that's pfgprivatewealth.com. Don't forget to subscribe on Apple, Google, Spotify, iHeart, Stitcher, any of those platforms. You can certainly find it that way. You can find all that information at the website and subscribe from there, again, pfgprivatewealth.com, for John and Nick. I'm Mark. We'll see you next time here on the podcast.…

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Ep 37: Things That Don‘t Matter Till They Do 20:48

3 years temu20:48

20:48

Fire extinguishers, airbags in your car, and smoke alarms in your house are all examples of things in life that don’t really seem to matter until they’re the only thing that matters. On that rare occasion when you need one of those items, you’ll either be very glad that you have one, or really regretting the fact that you don’t. Let’s talk about some of the things in the financial world that don’t matter until they do. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Mark: Hey everybody, welcome in to another edition of the podcast. This is Retirement Planning - Redefined, with John and Nick from PFG Private Wealth. And we're going to chat today about some things that don't matter, well, until they do. And I've got some pretty good examples of that, so we're going to get into that in just a second. But I don't know, Nick, I feel like I should pick on you a little bit. Things that don't matter until they do, is that the Buffalo Bills again this year or what? Nick: Those are fighting words. It's a good thing we're in a different state. Now, what's your football team? Mark: I just had to pick on you because of the whole Tom Brady thing. I was going to talk to you about it, so you just couldn't get away from this guy, right? He was kicking your butt in New England, then he comes down in your backyard and still knocks your team out. I actually felt for you this past playoff, so. Nick: Yeah, it's all good. We've got a real quarterback now so I'm okay with it. Mark: Yeah. Nick: I'm not a complete... Mark: My team is total garbage, so you can pick on me all day long, so it's no worries. My team is the laughingstock of the NFL pretty much on a regular basis. John: Are you a Panthers fan? Mark: That's close. You think I would be because, same thing with you guys, I'm next to the Panthers so you think I would be. But no, I'm a Cowboys fan. Yeah. It's the worst. Nick: Nah. Trust me. It's not the worst. Mark: We get a lot of flack for Cowboys fans. That's for sure. Nick: Yeah, but it's not the worst. Mark: Gotcha. John, what about you? Do you pull for anybody? John: The Patriots. Mark: Oh my God. Wait, what? Oh my gosh, you two must have really gone back and forth. John: Yeah, I grew up in right outside of the Boston. Mark: That's right, I remember that now yeah. So you guys have had some fun times over the last few years, haven't you? Nick: John used to ask me to watch games- John: He refuses. Nick: I couldn't be around. I couldn't be around people in public watching the game, but now that they're a little bit better- Mark: They had a great year last year, they really did, so. Nick: They made the playoffs three out of the last four years. Mark: Yeah, they did. They're definitely on the run. So I just had to give you a little bit of a hard time, but it's all good. It's all good. Mark: So listen, things that don't matter until they do. So here's some real examples, like a fire extinguisher, right? Who thinks about a fire extinguisher until you need one? Or the airbags in your car or smoke alarms in your house, all these things we just don't pay any attention to until we actually really need one. And then we're awfully glad that they're there. Mark: So I've got a couple of these financially speaking fellas. So talk to us about the importance of why these things can be kind of out of sight, out of mind. But man, we really need to have those ducks in a row. And let's just start with an easy one, legal documents, right? Won't matter until they do, but when you need it, man you're going to be glad you've got it in place, and right. John: Yeah, this is a great example of that. And where when you're living and this happens is you have some type of health event and I just had a family member who just got an accident and healthcare surrogate had to step up and make some decisions and help them out during that process. So that's something that you really need to consider doing some of these things. Meeting with an attorney that's qualified to do this stuff, to make sure that your ducks are in a row. John: And the unfortunate one where it's too late is if you pass away and then now your beneficiaries are dealing with whatever estate, whether it's trust, wills, documents that you did or didn't do. I'll tell you from Nick and I have helped a lot of clients kind of navigate that, if it's not done correctly it can be a nightmare for your beneficiaries just to figure out where everything is and who is responsible. Mark: Yeah. And it's one of those things that's easily avoidable, right Nick? I mean, this is not that hard to fix. This is, of the low hanging fruit that can be out there, you can do this stuff pretty easy. Especially things like beneficiary designation, updating those, so on and so forth. Wills and trusts, sure, they can be a little more complicated, but even that it's not that complex. You've just got to get with an advisor and an attorney. Nick: Yeah. What we've seen is that often times people don't personally know an attorney or somebody in this space that can help them. Or, if they do, they're private and they don't necessarily want them to know everything about them. Or we'll see people that just... It makes them extremely uncomfortable to talk about death, dying and, or being sick. Nick: And so it's a classic avoidance behavior. And like we had talked about previously, time flies and all of a sudden it's five or 10 years later, and your mom and dad that you've had listed as the beneficiaries are no longer alive and kids are grown up or you had another child that's not listed anywhere. Or maybe you got divorced or remarried. Nick: All these things happen and if the documents aren't in place or they're lagging and inaccurate, it can turn into quite a quagmire if something happens. And I'll say this too, is oftentimes when people think of the legal documents, they think of death and not necessarily what John referred to as far as healthcare proxy and a power of attorney, those sorts of things where there's a health event and you're still alive, but you need help making decisions and that can really get pretty squirrely. Mark: No, I agree with you. And I think the other one we hear sometimes too as well, is, that's for rich people, right? A trust is for rich people or so on and so forth. And it's like, okay, that's not really the case. And it's really not as expensive to get some of this stuff taken care of as we often think it is. I think we build it up in our mind or whatever. We just kind of have this, oh, that's for rich folks or it costs too much money so I'm just going to avoid it. Pretty easy to handle this stuff. Nick: Yeah, I would say that's accurate, as well as, and we've talked about the run-up in the markets over the last five or 10 years. There's a lot of people that, seven, eight years ago they maybe had a third of the money that they have now. And so they still kind of are in the same train of thought or the same thought process. And they don't realize maybe what they perceive... They still think of themselves in that same way as they did eight to 10 years or even 15 years ago. And there's a little bit of disbelief. And so it kind of leads into kind of procrastinating and you almost have to kind of take stock and realize, okay, hey, this is something I really need to get done. Mark: Yeah, exactly. Mark: Well, that's hopefully what we try to provide here on the podcast is there's a little useful nuggets of information that might spark that conversation. And speaking of which, John, life insurance, not something that you're really popping up at the dinner table saying, "Hey, let's have a rousing conversation about life insurance." Right? It doesn't kind of go that way. But, again it's one of those things that don't seem to matter until you need it. And it can be quite important and quite useful tool. John: Yeah, a hundred percent. I'll say this is probably one of the most disliked conversations for people, is talking about life insurance and what happens after if they were to pass away or a spouse or whoever. Mark: Right. John: Especially with children, because when you have kids, and I have two daughters, one of the big things you look at is, I'll use myself as a scenario, I'm gone. So there's my income gone for the next 20, 30 years. So you really want to look at it from that standpoint when you're talking about needs planning for life insurance is... I'm no longer here. My income's no longer providing for my family. How do I replace that? And really life insurance is a great vehicle to go ahead and replace someone's income for a 20, 30 year period. And there's ways to back into what amounts are correct, but definitely something you need to look at when you're doing a plan. John: And going into retirement can be the same way depending, and Nick mentioned it on the last session where everyone's situation is different. Well we've had scenarios where, there may be still is a need for life insurance in retirement because maybe one person has a heavy pension. And if that person passes away, that pension now is gone. And maybe that's a big requirement for the plan to work. John: So everyone's situation is different. It's definitely something that needs to be considered. You just want to take a look at it and see what would happen if someone did pass away and there wasn't any life insurance. I'll say a lot of these things that we're going to go over too, I think it's easy to address, there's definitely people that can help you out. And it's just a matter of getting it done. And once it's done it just kind of provides a nice peace of mind that it's kind of like a bandaid, just do it, rip it off. Mark: There you go. Exactly. I think life insurance too, I will be honest. It's a very important tool even for retirees, there's a lot of ways it can be used. It's not our daddy's Oldsmobile like those old commercials. There's just so many different nuances now to life insurance, where it could be a useful tool for various times of life, but I can't help but thinking of Ned Ryerson and the Groundhog Day movie, when he comes up on Bill Murray, that insurance guy. I think that's what a lot of times people think of when they think life insurance or life insurance agent, and it's just changed so much. But it is a great movie. Mark: Lifetime income streams. We kind of talk about this fairly often, but I mean, look, it's one of those things maybe you don't think about. You think, well, I've got these accounts, right? I got all this stuff, but how do I turn it into money because I do need money all through my retirement? I need a paycheck coming in. Nick: Yeah. So, one of the things that we'll say is that in retirement, income is king. Assets are great and assets are the thing that people love to talk about and kind of chat about, but income is king. And I'll say too that everybody knows about social security. They realize in theory it's important, that sort of thing, but many people, and this is something that we'll kind of review with people often, is that they don't quite realize like, well, hey, if your household is getting $60,000 a year in income from social security, which these days, a lot of people are. That is really equivalent to between one and $2 million of nest egg assets from the standpoint of generating a saving [column 00:09:37] , having it last your lifetime and getting inflationary raises. Nick: So, building a portfolio or an overall strategy where, we've got quite a few clients that they have rental properties, that rental income, they purchased a property a little bit when they're younger. They get the house or the property paid off, and the rental income supplements their income in retirement. Nick: John referred to pensions, that can be a big deal. Annuities can provide a guaranteed income as well. So, trying to balance forms of guaranteed income with assets can be really important. And just a little caveat to throw in there, although income is king, it is important to have assets. So the reason I say that is we have had some clients come to us that have been, whether it's between social security and pension, they've been income rich and asset poor, and that can also lead to other issues as well. So a good balance is really just like so many other things is really the most important part. Mark: Well, balance is key, definitely balance is key to anything. And we all know we got to have these different forms of, or we have to have some income coming in, in retirement. But having the multiple streams and turning things on at different times, and whether you want to call it bucket strategies or laddering or whatever the case is, but just having these different various forms to be able to pull from at different times is going to make obviously all the difference in keeping up with our retirement. Because nobody wants to go backwards in their lifestyle in retirement. They want to kind of continue on the way they have been, or maybe even more so in retirement. So that's some things that- go ahead. Nick: And let me jump in on that too, that point that you made about not going backwards or maintaining is important. Because there are times, and I've had this happen a couple of times, when it comes to retirement and income in retirement and when it comes to life insurance, two of the topics that we talked about, in people's minds they have an enormous amount of confidence that all of a sudden they no longer need any of the things that they've wanted and bought for the last 25 or 30 years. It's like all of a sudden they flip the switch and it's going to be the cheaper food, the cheaper restaurants, the cheaper car- Mark: I've got plenty of clothes. I don't need to buy any new clothes. Nick: Yes. And in reality, people don't live like that. And so that's an important- John: In reality, it's typically the reverse. They have more time on their hands to go buy things. Mark: Right, yeah. My dad always said every day was a Saturday when he got to retirement and he spends the most money on a Saturday, so, that always stuck with me. Nick: Yeah most people live in a state of want versus need and it's often, that's a pretty common thing, so anyhow. Mark: That always stuck with me. That's a great point. Well, I'll tell you what, that's some things that don't matter until they do so, again, whether it's legal documents, pretty easy fix, life insurance, certainly a worthwhile conversation to have no matter what stage of life you're in. And making sure definitely that you've got those income streams set up for life. Some key topics there that we talked about this weekend. Mark: We're going to take some email questions and wrap up because we want to get back to a couple of these here. We haven't done these lately. And of course, anytime you submit a question, you're going to get your question answered, but to just talk about someone here on the show, we kind of do those from time to time. If you'd like to drop a line, go to pfgprivatewealth.com, that's pfgprivatewealth.com or call (813) 286-7776 if you've got some questions for your own situation that you need to get answered, and the guys will certainly tackle those for you. Mark: But for right now, let's see what we got from Linda who had sent an email question. And guys, she says, "Fellas, my daughter just turned 18 and I'd like to help her get off onto the right foot with some retirement savings. What's a good idea for something to get her started with?" John: Yeah, I'll take this one. So, we've had this come up quite a bit with some of our clients and their kids, when they turn 18, they want to just get them used to investing or just understanding it which we think is very important. Some of the things we've done, it just depends. If the child is working, we might do a Roth IRA where we'll go ahead and just open up a Roth retirement account. It's a great vehicle for kids because they can tax free money in retirement. They could use it for a first time home purchase, et cetera, et cetera. So we've done that. We've just got to make sure that they're working because you need earned income to contribute to a Roth. John: If they are not working, there's definitely some kind of joint accounts you can set up, but it's definitely a good thing to do. Because I'll tell you, we've done that for some clients and we've had those kids become clients early, right when they graduate college. And they're pretty aggressive in saving. I have one where, as soon as he graduated he got in touch with me and then just started aggressively saving in his early twenties, which is very uncommon. And now he's early thirties and he has a pretty sizable nest egg. And now he's got kids and all this stuff and he can't save as much because he does not have as much discretionary income. But it really set that foundation for him to really start saving for retirement, understanding how important that is. Mark: No, I think that's awesome that you're having some people do that, especially at a younger age. And so kudos to her for getting her daughter start off on the right foot. And for people that just in general kind of have that interest. I had a young kid that I knew for a couple of years ago that used to work for me. Same thing. Early on he was very into saving money for his future self, which is fantastic. I think because his parents hadn't done a very good job and so sometimes we see that mental shift, right? Where you see your parents do something and you want to do the opposite and so on and so forth. And in this case, that was a good thing. Mark: So very cool question. Thanks so much for submitting that. Hopefully that helps you out a little bit and keep listening to the podcast. We certainly appreciate it. And let's do one more guys before we wrap up here, [just 00:15:13] go around, and we've got one from Patty. You guys got to put on your counselor hats here. Patty says, "My husband and I argue almost every day about money because we haven't done a very good job planning for our retirement and it stresses us both out. Is this a normal thing between spouses or do we need some serious help?" Nick: So I'll jump in on this one. So, there's a couple of things here. So the first thing is that this points out specifically the importance of a plan. And what we mean by that is that when there's not a clear picture of what people actually have, what their life actually looks at, when there's a high amount of uncertainty on the future, that's when there's often anxiety and bickering, arguing those sorts of things when it comes to money. Nick: And so, step number one is take an inventory, build a plan. So once that's done, if it is truly terrible, then you can fight, but at least let's figure out what's there. But all joking aside, so then the next step is to kind of come to grips with the fact that, hey, we are where we are today. There's nothing that we can do about it. If we can focus on the future and start making decisions that are positive and maybe make some changes that'll be helpful, then that's great. Nick: From our perspective as advisors, one of our kind of golden rules, and we oftentimes tell clients this is that, we can't care more about your money and your situation than you do. So ultimately it has to start at home and then they have to be willing to take guidance and advice and make changes. And then really what we found is that in 12 to 24 months, the momentum can be significant in a positive way. And things can really swing strongly. And once that happens, it becomes kind of addicting. It's kind of like when you're in your early twenties, for most people maybe they're just starting out at the first job and the first time you started to hit a few thousand dollars in your account that stays in your account, maybe 5,000 is your threshold and you're like, "wow, this is great." I've never had this amount of money in here before. Nick: And then maybe down the road you hit 10 and as you get older that number changes. And what's interesting is that it also becomes more stressful and you kind of get this hoarding mentality where once you hit these certain thresholds, 50,000, a 100 thousand in your savings account. Once get there and you realize the comfort and the peace of mind that it provides, you never want to go back. And so we like people to kind of get that, to taste that so that they can understand that. And then usually it's full speed ahead. Mark: Yeah, no, that's a great way of looking at it. My daughter, she's still pretty young but is definitely, she kind of got that. She was constantly just spending her check and spending all her money when she wasn't making too much. And then once she got started getting a decent check in from the Navy and she got a couple of bonuses and she put it in there and she watched her account grow, she was like, "wow, this is-" and so now she's gotten bitten by this bug to kind of see what she can get the number to. She'll message me every so often, "The number is this now. And the number's that now." And so I'm like, "Hey, cool. You're 24 years old. You got a long time for that to grow and compound." So yeah, it definitely can be addicting. Mark: And of course, if you're closer to retirement and obviously that sounds like that's the case for this question. I think that's a great piece of advice. Find out what you got, get an assessment, get a plan put together, look at it. And then see, you guys might be fighting over nothing too, so think about that. You guys could possibly be in much better shape than you even realize. And therefore you're fighting for [not. 00:18:55] Mark: So reach out and have a conversation with the guys. Just give him a jingle and call them at (813) 286-7776, or stop by the website, pfgprivatewealth.com. And that's going to do it this week for the podcast. Again, don't forget to subscribe to us on Apple, Google, Spotify, iHeart, Stitcher, or whatever platform you like to use. You can find it all at the website, pfgprivatewealth.com. For John and Nick, I'm Mark, we'll see you next time here on Retirement Planning - Redefined. Nick: Go Bills.…

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Ep 36: 5 Things About Decumulation 18:14

3 years temu18:14

18:14

So much focus in the financial world revolves around accumulating money. There’s all sorts of advice, how- to guides and guardrails in place when it comes to saving and investing, but a lot less resources out there to help retirees navigate the period of time after retirement. This is known as decumulation, the spending down and managing of the assets you’ve accumulated through your life. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey, everybody. Welcome into the podcast. Thanks for hanging out with us here on Retirement Planning - Redefined with John and Nick and myself once again chatting about investing, finance and retirement. We're going to talk about decumulation, five things you must know about decumulation to retire successfully. We're going to get into that in just a second. Speaker 1: Of course, if you've got some questions, need some help, reach out to John and Nick at PFG Private Wealth. That's PFGprivatewealth.com. That's the website you can stop by at, and gents, what's going on? John, how are you buddy? John: I'm good, I'm good. I know it's been awhile since I think we've done one of these sessions here. Speaker 1: Enjoying the summer, I guess, right? John: Yeah. It's been a busy summer for myself, and Nick can speak to what he's been up to, but yeah, it's definitely been busy. But my little one started kindergarten, so I'm adapting to that life of drop-off car line and pickup, which is fun. Speaker 1: Yeah. I don't know if you remember this movie or not, but do you remember this Michael Keaton movie, Mr. Mom? If you haven't seen it, you should go watch it because you could probably relate to it. The whole car line drop-off thing is hysterical and that was from like the '80s. John: I'll definitely go check it out. Speaker 1: Yeah. John: Yeah. Right now my wife's, she's studying for her boards, so I've been helping out with all that stuff and yeah, it's been interesting. Speaker 1: It's a great movie. It's a great old '80s movie, but yeah, you could probably really relate to some of this stuff right this minute. Especially when you mentioned that car line thing, it made me think of that because he just, he has the hardest time understanding and getting his mind wrapped around the whole car line thing. It's pretty hilarious. Yeah, definitely check it out. Speaker 1: Nick, what's going on with you, buddy? I know you've been traveling and running around. Nick: Yeah. I was a recently up north hometown in Rochester, New York. I've got a lot of friends, family and clients up there, so did my yearly pilgrimage. Just kind of catching back up from being back and readjusting to the heat, so all good. Speaker 1: Yeah. Got you. All right. Well, good. Well, I'm glad you guys are doing well and yeah, let's get into the five things we need to know about decumulation. Speaker 1: First of all, it's a big fancy sounding word, but really it just is the spending of your assets, right? I mean, we've accumulated the money, now we're going to decumulate it. It's just kind of a fancy way of spending down what we have saved. Speaker 1: On this episode, let's point out a few items that people might want to think about to retire successfully. Let's start with the first one. Nick, I'll give this to you. Just a lack of support. I think if you go in, obviously if you type in any kind of a financial something or another, you're going to get 18 billion hits on Google, and a lot of it is about how to accumulate money versus not too much necessarily about the decumulation side. Speaker 1: But I think if you think if you're working with a good financial professional or an advisor like you guys, obviously that's where some of that support is going to come from, a lot of that support is going to come from. But there is a real lack of that it seems like if you're just trying to do it yourself. Nick: Yeah, it's interesting. The perspective that people tend to have for this phase of their life, as far as whether you refer to it as decumulation or the distribution phase of life, is oftentimes kind of ingrained in them from their parents a little bit. Nick: What we've seen a lot with people that are really entering or soon to enter into retirement, and I had this conversation recently with a client is, hey, we know what our expenses are. We have an idea what's going to be coming in from social security, and we just want to protect our principal and go ahead and just take interest in dividends from our accounts, because that's what we know from our parents, and that's kind of... That just makes sense to us. Nick: The conversation that we get into and we take them really have to force them to go and review the plan that we've put together because the plan will really lay out how this is going to be structured and the underlying components can be a little bit confusing. Nick: As an example, when I explain to somebody that brings that up that that's what they want to do and help them understand that, hey, on average your dividends on the stock side of your portfolio might be around 2%, if you want solid stocks. Then from an interest rate standpoint, maybe you're looking at 2 or 3% as well. If we're looking at a million bucks, we're talking a total of 20 to $30,000 a year and that will often send them right into a panic attack. Nick: Understanding how these things tie together, understanding that with the advent and the prevalence of things like exchange traded funds and mutual funds where we can do fractional shares and we can break accounts into a short-term, mid-term, long-term bucket to help us try to preserve some principle over time via growth, but also have a safe withdrawal rate and strategy is really important. It's hands down the most misunderstood, but important thing when it comes to retirement planning. John: Yeah. I think what we've seen a lot of advisors and client, or a lot of advisors individuals focus on just accumulation, so it's really just kind of building, building it up and they never, as Nick mentioned here, there's never a strategy for as far as how do you actually start taking that money out? John: It all comes back to you don't want to start planning for that once you retire, that really needs to be as soon as you can, but in reality when you hit that red zone of 5 to 10 years from retirement, I would say more towards 10, you should really start considering, "Hey, what is my distribution strategy?" Speaker 1: Got you. Okay. Yeah, and I think a lot of times we do kind of get wrapped up in the accumulation thing and we tend to forget about these other stages and it leads me really into the second topic guys on this, which is it's funny, maybe not funny, but it is interesting how the fear of spending is really real. Speaker 1: At first, when I first started, I've been doing this now for a number of years, talking with advisors all across the country and you think, hey, you get to retirement. You're looking forward to finally spending your and having a good time and so on and so forth and enjoying your golden years. But many, many, many people are truly afraid of actually spending what they've saved. Speaker 1: I think a lot of it probably comes down to just confidence, but it's a real thing getting over that hump and getting comfortable saying, "Okay, it's okay to spend this money we've saved for the last 40 years now." What do you guys see? John: Yeah, no, we see the same thing. It really is, again, back to the accumulation phase or savings phase in this scenario. They're just so used to getting a paycheck, saving it, and then they live off of their paycheck. Well, now your nest egg is now retirement that providing that paycheck for you, and the biggest fear for retirees is not running out of money. With that comes, can I spend this much? What will my assets, or what does my plan look like if I continue this spending or if I go buy this? John: It's important, and we've had scenarios where the plan really does give clients confidence of when they look at it and say, "Okay, if I continue my current spending rate, I have X amount at the end of the plan." The cool thing about some of the stuff that we do when we get to see our clients see it is we'll show, "Hey, what if you spend an extra 10 to 15 grand over the next 10 years for a vacation?" And we'll model it out and they get to see how does that affect their overall plan, and is there still money left at the end? Is there enough money left where you feel comfortable? John: We find that when people see that and there's two versions of it. One's a very detailed kind of actuarial cashflow number, which is kind of boring to look at. But then we also have a chart form, which just makes it easy to understand and it's, "Okay. You know what? I can go spend that money," and it just provides a nice peace of mind. John: We've had scenarios where people see that and then they go do some of their goal, whether it's buy an RV, do this vacation, spend time with family. It's the fear is definitely real, and it's important to have a plan to give you some peace of mind, to see if you... That you're not going to outlive your money. Speaker 1: Yeah, and I think definitely it's that confidence factor, right? Because oftentimes people that are in good shape, they just don't really feel comfortable that they can go through that transition period. I think that's a lot of the value that you guys bring to the table by saying, "Okay, now we've built a plan. I've showed you this is going to work, and then you're there as that kind of coaching sounding board to say, "No, it's okay. We can get over this hump together. You're going to be able to enjoy this because that's what you've built up and worked towards." Speaker 1: Now we know obviously we're living longer and there's more things to be... There's more risky stuff out there, and not even talking about the crazy kooky world we find ourselves in right now, but just risks in general. If we're talking about the de cumulation phase, which is when we're into retirement, the risks in general become more numerous, especially financially speaking. Nick: Yeah, so one of the things that can impact a retirement plan or this phase of somebody's life, this decumulation phase, is what's called the sequence of returns. Essentially, what that means is that on a typical case, people think in terms of average rates of return, and that's understandable because that's how most people are taught. Nick: But there can be an average over a 10 year period, a 15 year period of, you can call it 6, 7, 8%. But if the... Even though it averages that number, if the losses are incurred early on and they're significant, that has a much greater impact on how long the money will last than if those losses come further on down the road. Nick: That's why it's important to really have a strategy, to understand that the plan should be consistently updated. And what ends up happening, especially in one of the things that we're starting to see a little bit is, the markets have been up for the last 6, 7, 8, 9 years, so there's a little bit of, I don't know if you euphoria is the right term, but a little bit of a sense of invincibility for some people. Where it's like, "Hey, I keep taking money out and it keeps going up and that's great," and that is good, but it doesn't always happen like that. Nick: When we have these risks of AC goes out, child loses their job and you help them financially, you get grandkids, there's a change of social security, you have a health issue, all these different things. We're trying to prepare for all uncertainties, and so making sure that your investment strategy is really lining up with your overall plan is important even in good times, which is what we've had for quite a while. Speaker 1: Yeah, no, I definitely would agree with that statement for sure. You know, and John, listen, hey, they've passed another trillion dollars just a few weeks ago at the time we're taping this podcast, now they're talking about another $3 trillion. So focusing on tax consequences has probably never been more important than what it's going to be over the next couple of years. Whether they sunset, they do nothing and leave them alone, and they sunset back to the old means here in a couple of years, or they make some changes, you got to have some focus on taxes. John: Yeah. Taxes are definitely an eroding factor on your money, especially going into retirement. Because that for the majority of people, that's their... The IRA pre-tax money is typically their biggest part of their nest egg and they're pulling it out. Every time you pull out a hundred grand, you're getting whacked with taxes on that. It's important, again kind of that red zone area, even before that you want to start planning for what you think your tax situation is going to be. But also you want to start planning to have the flexibility to adapt to any type of tax environment so you can basically limit how much taxes you're actually paying. John: So example, Nick mentioned some risks where let's say you have a health event, you need to pull out 30, 40 grand. It might be nice to have some tax free money, AKA kind of some Roth money that you can pull from so you don't really jump into a higher tax bracket and just start paying enormous amount of taxes that you could ultimately have avoided. Speaker 1: Yeah. I mean, again, it's not what you make, it's what you keep. It's all those kinds of things we know, we hear about it, but if you're not talking about taxes as you're preparing for retirement, I mean, I'll go out on a limb and just say you're doing it wrong. Right? You've got to make sure that you're factoring that in there and having those conversations, and if you're not, well, then that needs to be a red flag as well. Speaker 1: So that at the end of the day, we've got these five things I mentioned. Here's the fifth one, guys, just leveraging the lifetime income. We got to replace a paycheck, whether it's for 1 year, 5 years, 15 years, 25 years, 40 years. It'd be easy if we knew exactly how long we're going to live, but we don't, so you've got to have that thing ready and you've got to leverage that income for life. Nick: Yeah. It's one of the things that we try to emphasize with people and one of the keys to planning is that everybody's situation is different. When you talk to your brother, your sister, your friend, your neighbor, whatever, and when I was just up north, I'm reminded about, I was reminded about how much people love to talk about just everything. Being down in Florida, people tend to be a little bit more private from what I've seen. People are, "Oh yeah, I did this, I did that. I did this." Nick: One of the things that I try to emphasize to people on a consistent basis is that sure, your sister may be doing X, Y, and Z, but maybe your sister has a pension. Maybe your sister's mortgage is paid off. Maybe your sister didn't have kids, and so her situation and all of the decisions that line up with that are very different from yours. Because you don't have a pension, your house isn't paid off, you did have children that cost you more money, and let alone the risk tolerance from the standpoint of the market, that's a whole different ball game. Nick: When we evaluate things, one of the things that when we go through a plan, one of the things that we typically go through with people is just looking at options from the standpoint of a guaranteed income. In reality, the only way to get guaranteed income is through annuities, and a lot of people have a certain perception of annuities or they don't like them. We always try to remind people that, hey, our job is to make sure you understand what options are out there and available for you. Make sure how you know that they work or would work for you in your situation. Then if it's something that you don't like, then we just don't do it, and we move on. Nick: But when we factor in social security, whether or not somebody has a pension and/or whether or not they want to have some form of guaranteed income in the future, it can really make a significant difference. Not only from just a pure planning standpoint, but also from a peace of mind standpoint. Nick: One of the things that is probably underestimated are how people emotionally respond to different things that happen in the market, and how that can impact their decision-making. No matter how many times somebody, says, "Hey, I know I need to invest longterm. I know I need not to be reactionary," when it hits the fan, it's really hard not to be. John: Nick, I'm going to stop you for a second. A perfect example of that was actually when Coronavirus hit. I think we had a true indication of how much risk some people were willing to take. Nick: A hundred percent, and so this is that whole... I referred to it a little bit earlier, this level of euphoria over the last year is that, "Hey, everything's going well." Or we've had conversations with clients where maybe they've used some sort of annuity or some sort of guaranteed income product. It's like, "Well, hey, if I would've kept it in the market, it would have done this, this and that." It's like, "Yes, but what we did was we separated that money and we gave it a certain job, and as long as that does its job, then we have a lot less pressure on everything else, including your brain and your emotions, and that cannot be underestimated." Speaker 1: Yeah, absolutely. Well, those are five things, folks, that happen or can happen during the decumulation phase, which again is a fancy word for the spending of the assets that you've accumulated through the years to get to retirement. Hopefully, that helped you a little bit, gave you a couple of useful things to think about. Speaker 1: As always, if you've got some questions, we talk in generalities here on the podcast, make sure you're checking with your advisor or reach out to qualified professionals like John and Nick before you take any action. You can find them online at PFGprivatewealth.com, that's PFGprivatewealth.com. Speaker 1: Don't forget to subscribe to the podcast while you're there on Apple, Google, Spotify, whatever platform you like to use. We put these out quite often here, so you've got definitely a lot of content. You can go back and listen to some past episodes and, of course, get notified when new episodes come out as well. Speaker 1: So guys, thanks for hanging out with me. I appreciate it. Glad to have you back in and chatting with me and I'll see you guys in a couple of weeks. We'll be getting ready for football season. Nick: Yes, sir. John: Right. Speaker 1: We'll catch you next time here on Retirement Planning - Redefined with John and Nick from PFG Private Wealth.…

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Ep 35: Not Your Father’s Retirement 16:55

4 years temu16:55

16:55

If you’re of the age that your mom and dad retired 20 or 30 years ago, the world was a much different place when they walked away from their paychecks. Let’s talk about how things are different now. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey everybody. Welcome into the podcast. It's Retirement Planning Redefined with John and Nick from PFG Private Wealth. Hanging out with me to talk about this being not our father's retirement now. That's our podcast topic this week, not your father's not our fathers, whatever you want to say, we're going to go into this conversation about how things are so much different even just 20 years ago when it comes to retirement. And some things to think about before we walk away from that paycheck. And there's a lot that's obviously changed and obviously we're seeing a lot of turmoil coming off of COVID and things of that nature. So there's a lot of good topical stuff in here for us to discuss, but let's jump in and say hi to the guys first, Nick, what's going on, buddy? How are you doing? Nick: Pretty well, staying busy. Speaker 1: Staying busy. Well, that's always good. John, how are you, my friend? Last time we talked you were having some troubles with the kids. Everybody not sleeping and things like that. Doing better? John: Yeah, for the most part, actually, I don't know if I've mentioned it. We got them to share a room which has helped their sleeping habits a bit. So we've been sleeping through the night. So it's been a few years, my friend, of consistent nights of sleeping. Speaker 1: There you go. John: Starting to feel pretty good again. Speaker 1: Yeah, I like that. Well, very good. So you never know what's going to make the trigger there. So I'm glad to hear that. Do you guys remember these commercials? I'm a little bit older than you, but I know a lot of our listeners might remember these as well, if you guys don't. But back, maybe late '70s, early '80s, Oldsmobile was trying to rebrand and make the Oldsmobile a little bit cooler. And so they had these commercials and it would always say things like, "It's not your father's Oldsmobile." You guys remember those at all? Nick: I do actually. Speaker 1: Yeah. And so they would try to rebrand it that way. So that's kind of the idea I had for today's conversation. It's not our father's retirement. My dad retired in '93. He passed away in '96. So he didn't have a very long retirement, but even just the principles and some of the things are completely different here 30 years later. Speaker 1: So let's talk about a couple of these things and how the world's changed and how really planning has also changed and what you guys do and what folks need to consider when they get closer to retirement. First of all, the concept of retirement is not actually that old, a hundred years ago you didn't retire. You worked until you dropped. Right? So really retirement's only been around since, the idea of it really since the late '30s, '40s, '50s, '60s, so on and so forth. And it was this thing where you got to 65, you retired, you were done. Maybe you sat on the front porch and did little, but nowadays more and more people work beyond 65. They want to, not just have to, they want to, and that's okay. Right? There's nothing wrong with that. John: Yeah. I would definitely, we see that in our office here, Bob Perry's 76, 77, he's still working. We joke that his wife won't let him retire, but he really enjoys coming in and the environment here and just being with everyone, it gives him stuff to do and he provides a lot of insight for us as well. So it's great to have him around so I could see where in his situation or other people's, if they're somewhere they enjoy, what's the point of retiring if you enjoy it? Speaker 1: Right. Exactly. And not only that, Nick, but a lot of times people, again, they just want to do some other things and maybe you don't need the full job income, like you used to have, the big career, but maybe you do need a little extra money to help with the plan or something, but it's just a way to kind of have some fun and maybe make a little extra scratch on the side. Nick: Yeah. I think ultimately what happens is that almost one analogy to think about, you see things like football players, baseball players, et cetera. Here you have people that retire early, they maybe have a career 5 to 10, maybe 15 years. And obviously their situation is a little bit different from a perspective of the money that they're retiring with and the bandwidth they have to route the time between retirement and their life expectancy. However, there's probably a little bit more similarities than people realize where ultimately when you see interviews with people like that, the things that you hear them talk about are missing the structure, missing the comradery, coworkers slash teammates, those sorts of things. Nick: So, there's actually a lot of similarities and it's almost keeping that sort of structure and help keep my mind sharp, keep people engaged. We definitely see patterns from the perspective of, there are some people that they do a great job of having hobbies and they know that when they retire, they've got a list of things that they want to do, whether it's travel, whether it's hobbies, whether it's a small sort of business. And then you have people that really struggle. And I was having this conversation actually with my parents this weekend. My dad is a retired fireman, but he's been working, he had his own small business for the last maybe 15 years. So he retired as a fireman really early. Nick: My mom's a nurse. She works a couple days a week now, but she's looking to slow down. And my dad was talking about a friend of his, maybe like 10 years older, that still does some work because he can't just sit around, he's got to stay busy. And my dad was like, "Well, he needs hobbies." And I said, "No, you need some hobbies. You don't have any hobbies." And he looked at me like, "I had never really thought about that before." And we've had different conversations, but the point that I'm trying to make is a lot of times, we look at other people, we look at other situations and we perceive ourselves in a different way. And sometimes just taking that self inventory and asking ourselves these sorts of questions, it really is important because there's many more similarities that we realize. So... Speaker 1: Yeah. Nick: So we've tasked my nieces who are younger to help, start coming up with some hobbies for my father, their grandfather, to keep him sharp and engaged. So... Speaker 1: Well, I think we went through this cycle. Like I mentioned earlier, a hundred years ago you just worked until you dropped. And then we said, "Oh, we can do this thing called retirement." And then people started retiring and sitting around and doing nothing. And then you wither away that way too. So I think we've now started to learn over this past a hundred years that, okay, it's got to be a bit of both. You, you work really hard, you get to retirement, you hit retirement, but you still need to be active. You still need to do things and have things that interest you, if you want to just sit on the front porch and make wicker baskets, then that's great, do that, if that's what you want, but more and more people are- John: Real quick, Nick loves making wicker baskets. Speaker 1: Does he really? I got to get one now, I need a custom wicker basket. Nick: No wicker baskets. Speaker 1: Oh man, just crushed my dreams right there. But anyway, I think that's a really great point is having something to retire to. Now, the next point on this guys, is being retired, it can be more expensive nowadays than working. So, we used to see that 20% less is what you need in retirement. Well, that might not be the case now. And we've just been having conversations as well about inflation and stuff. So it can be quite expensive to retire if you're not careful. Nick: It absolutely can. Especially depending on where you live from the perspective of the things that you may be looking to get into or do. I live in a downtown area in St. Pete and I absolutely see how, anybody that lives in this space, all you have to do is walk down the street to grab a coffee, to grab a lunch and depending upon your lifestyle, you've just got more time on your hands to do the things that you want to do. So, so why wouldn't it be more expensive if we're just doing these things more often, more frequently, so it can definitely be the case. And that's even from a discretionary standpoint, let alone the health care costs and all the things that people do to stay healthier, stay more engaged, live longer, all those sorts of things. Nick: And ultimately, one of the things that we'll have conversations with people, sometimes people come in with an open mind thinking like, "Hey, this might be happening. I may spend more money." Other times we have people that they're absolutely convinced, " No I'm going to spend 50%, 60% of what I spent before." And that's sometimes the question to them is, "Why would you? Is that what you want to do? Or is this just something that you read?" Because I would guess ultimately you want to enjoy what you've saved up for and worked hard for. So, at what point in life or maybe even in the last 30 years, one of the questions, at one point in the last 30 years, have you lived only for needs and realistically here in the U.S That's for most people that's not too common, ultimately we live in the things that we bought. We enjoy the times that we want to spend with others, all those sorts of things. So, that's an important conversation to have. Speaker 1: No, I definitely agree with you there. John, retirees are facing more problems than ever too. Well society, we're all facing more problems than ever before, social media, so on and so forth. Just the inundation of information, but longevity, I think maybe longevity guys might be a key to this whole conversation today because it magnifies all of these things. And that's certainly going to be the case when juggling more problems because we're living longer, so much longer, the body's able, we're figuring out lots of great ways to keep the body going, but sometimes we're having some difficulties when it comes to the mental side, dementia is on the rise, things of that nature. And that gets pretty costly. John: Yeah. Yeah. Previously we talked about retirement changing, people had pensions which lasted for their life. And the shift has been away from pensions to putting the responsibility on the individual where now they have just basically savings, whether it's cash or investments or whatever, but now you need to be very cautious, we have to be very careful that that's going to last you 30 plus years. And that's why it's important to have the plan to make sure that your money is going to last throughout retirement, which is really the biggest concern for retirees. Some other things we've seen popping up more recently and we've just dealt with this with a client where their they're aging parents, they were providing financial assistance for their parents in assisted living facilities and things like that, or having helpers. John: So I have one client where they're were assisting their parents with that. So they weren't really going on vacation and enjoying their time. And then the parent passed away and then with everything that's happened recently, their son lost a job and then they were not helping out their son with expenses. So it was a double whammy for them is that they can't truly enjoy retirement because they're helping family members out, which again, no one plans for this, you just happen in this situation, but it's something that you always want to keep track of. Nick: Yeah. That's kind of that sandwich generation that they talk about a little bit and it really started coming to the forefront back during the recession, '08, '09, '10, where there was a lot of kids coming out of college, couldn't get jobs, parents aging, all these sorts of things. So I would say baby boomers definitely have their hands full with all the different things that they have to juggle. And so having peace of mind of having that plan in place and understanding how their money is going to work in retirement is more important than ever. Speaker 1: Yeah. Well, and like I said, longevity is probably the key to this whole conversation. So we have to sell fun. Right? We don't have pensions now. Well, not many do. Right? So I think something like 15% or less of the population has pensions. It's an interesting statistic, but we're talking 30, 40 years. I was just chatting with somebody yesterday, guys who they're 72 and their mom and dad both are still alive. They're in their 90s and they're also dealing with helping their 40 year old children. So there's a lot in this to unpack. Nick: Yeah. Yeah. We see it all the time. We see it all the time and it can be pretty stressful. And a lot of times what we'll try to do and go through with people and this even ties into some other previous podcasts, that we'll have from the perspective of, "Hey, my kids are looking to buy a house. I want to give them money for a down payment." And we'll talk about things like, "All right, well, where does that money have to come from? How does it impact your overall plan?" Nick: So we try to walk it through and we try, we joke where we try not to be the money police and tell people what they can and can't do, but we just help them understand the impact of their decisions and trying to make sure that they do it from a perspective of viewing their retirement first and making sure that they're okay because they also don't want to be a burden down the line for their kids. So it can be a really slippery slope and making sure that the decisions that are made along the way position them to be able to help, but it can be difficult, especially like you said, planning for that 30, 40 year retirement. Speaker 1: Yeah, definitely. And it's a situation where we're just going to continue to see more of it. So having a good strategy, having a good plan is going to be paramount to getting through all these hurdles and things that we've got going on. Because I imagine at the end of the day, nobody comes in and says, "Hey, I'd like to have less of a lifestyle than I have now in retirement." No one wants to go backwards. So you want to make sure that you are having those conversations to move yourself forward or at least maintain into retirement. So that's our topic this week. So we all know things are different than they were 20 or 30 years ago. But when you really start dissecting it, especially from a financial standpoint, there's just a lot to unpack. Speaker 1: So sit down and have a conversation. If you're not already with a team that can help you like the team at PFG Private Wealth, John and Nick, and the whole team there to get on the counter, reach out to them. (813) 286-7776. If you've got some questions or concerns, reach out on the website if you'd like to as well pfgprivatewealth.com, that's pfgprivatewealth.com. Don't forget to subscribe to the show. Retirement Planning Redefined on your smartphone there. If you've got an Apple phone, for example, Apple Podcasts is already on your phone. You can just open up that app and type in Retirement, Planning Redefined, and subscribe that way or Google or whatever platform you use. Most of that stuff's already pre-installed on your phones anyway, but you can find it all at pfgprivatewealth.com. Guys, thanks for hanging out with me this week. I appreciate it. John. I'm bummed that he's not going to make me a wicker basket. John: I've been trying to get one, he won't do it. Nick: I'm not the creative type. Speaker 1: Not the creative type. All right, guys. Well, thanks for hanging out again. I appreciate it. I'll see you next time. John, take care, buddy. John: Have a good one. Speaker 1: We'll see you later. Nick, take care. Have yourself a good week. Nick: All right. You too. Take care. Speaker 1: We'll talk to you next time here on Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 34: Learning Through Uncommon Sense 19:27

4 years temu19:27

19:27

At first glance, each of these statements seem like basic common sense that everyone agrees with. But when we look at the way people actually behave with their money, it seems that common sense is actually a bit uncommon. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey everybody. Welcome in to the podcast. This is Retirement Planning Redefined with John and Nick. Hanging out with me talking investing, finance, and retirement. Uncommon Sense is going to be our theme on this podcast. I've got some statements here that I think all of us agree are basic common sense. But yet when we go to do these things, we tend to do the opposite. We act a bit uncommon. So that's going to be good. We're going to have a fun conversation with this and stick around. We're going to jump into that. But first let's welcome the guys in and see what's going on. John, how are you, buddy? John: Good. How are you doing? Speaker 1: Hanging in there pretty good. We were just chatting before we rolled the tape here on the podcast. A little sleepy. The kids did not want to cooperate last night. But other than that, things are going good for you? John: Yeah, yeah. Things are going well. Speaker 1: Very good. Very good. And Nick, how are you, my friend? Nick: Doing pretty well. We're staying busy. The heat is starting to settle in, in Florida here. So although I'd say we had a pretty awesome spring weather wise. Speaker 1: Yeah. Nick: The humidity is starting to kick in. So kind of a realization that John and I were talking about the other day, that we can't believe it's already between COVID, chaos of everything going on, that it's already almost halfway through the year, so. Speaker 1: Well, 2020 was like the longest decade ever, even though it was only a year. Nick: Yeah. Speaker 1: And then this year seems to be hauling pretty fast. So it's going pretty quickly. Hey, speaking of the weather, actually, how did the event go? Last time, we did the podcast, the prior one, we chatted a little bit about the golf tourney you guys were working on. How'd that go? John: It went really well. We ended up having about 108 golfers total, which we were told for a first event would be excellent. Speaker 1: That's awesome. John: We hit that goal. And we're just finalizing the numbers. But it looks like we're going to be doing some pretty, a good size donations to Pepin Academies and then Southeastern Guide Dogs. So we're excited about that. And we actually, the winning team's going to get a nice invitational jacket, so we're getting them sized up. So they're excited about that. That was kind of a surprise to them. So at the end we had a tailor there, and getting their sizes and showed them the jacket and they were pretty excited about it. Speaker 1: Very cool. So are you guys hustling and bustling all through that? Did you enjoy the process of putting an event together like that? And would you definitely do it again? John: Nick, do you want to take that one? Nick: Yeah. It was an interesting sort of a learning process. It's always, just like anything else, there's a lot of collaboration. And so, a lot of people, a lot of bodies required. And it's a first-time event, having to get everybody on the same page and organized. It was a little chaotic. But ultimately we chatted about this in our meeting afterwards. Ultimately, I think the experience for the people that participated was smooth. And if you ask them, they wouldn't have even noticed the things that we did as putting it on. Speaker 1: Right. Nick: The feedback that we received was good. A lot of money went to charity. So all's well that ends well. Speaker 1: The hallmark of a good event then if the participants think it's great and it runs smoothly, they don't need not know about the chaos. Right. That's the way you know you've done a good job. So very cool. Well, kudos guys. Glad to hear that. I'll be looking forward to some final numbers later. John: Yeah, yeah. We had a very good team all around. So it was a truly team effort to get it done, so. Speaker 1: That's great. John: It was good to work with everybody. Speaker 1: That's awesome. That's great. I'm glad to hear that. And definitely look forward to hearing more about that in the future. But for now, let's go ahead and jump into our topic this week. Again, like I said, guys, I've got some statements here, some basic axioms that we all hold to be accurate. I think we all would say that that's common sense. We all agree with it. But yet what you guys see and what advisors see all across the country, a lot of times with these is people tend to do the opposite. Speaker 1: So talk through that a little bit, what you see and maybe some ways to counteract that. And we'll start with a classic, which is the buy low and sell high. You're not going to find a single person that disagrees with that theory. We do that. I don't know, gas shopping, right? Gas has been going up. So you're like, oh, hey, I heard it's 5 cents cheaper over at this station, and you'll go over there. But when it comes to investing, it's almost always the opposite: If you are undisciplined or don't have a plan type investor where you panic and you do the wrong thing. John: Yeah. And I think the reason why is really emotion. Investing becomes very emotional because it's your money, it's your nest egg. You're going to see it there. So when that dives into it just, it's very hard to make easy decisions. And a perfect example is the pandemic in 2020 when it started in March. Stocks dropped very fast. I think over like a two or three week period, there was an almost 30 to 40% drop of the S&P, and which is a great opportunity to buy stocks cheap. But what we're hearing from some people it's, hey, should I sell? And then really it should have been, should I be buying more into it? But against the uncertainty, the emotions of not knowing what's going to happen. A similar thing happened in 2008. With the bank and liquidity concerns, same thing here. Stocks were dropping. Good time to buy. But the thought process and emotion made people do the reverse. Nick: Yeah. And it's tricky because intuitively sometimes you look at what's happening and oftentimes by the time that most people in general, kind of in the general public, notice what's happening, a lot of the volatility's already happened. So in other words, once they notice it's really going down, it's already gone down a bunch and once they notice it's going up, it's already gone up a bunch. And so tend to be late on both sides, which is not good. Nick: And John and I will kind of joke with each other where I'm definitely the more emotional one out of both of us and he's less so. And so, we absolutely understand the emotions of things, and even being in day-to-day, it's important to understand how it is. It really just kind of goes back to having a plan. And that's what we try to do even back in, when everything went down with the pandemic is bring everybody back to the plan. Make them realize that, hey, we've got a plan for these sorts of things. These are unfortunate times. But we have these things baked in for happening, and so we're just going to hold the line. Speaker 1: Well, I think with emotion being the culprit there, that's why working with an advisor in a good team is helpful. I'm not going to say you guys are disinterested. You obviously clearly care about your clients and what you do for them because it's very important work. But at the same time, you can't approach it with a little bit less passion, I suppose, or panic than the person might. Because to your point, John, it's their money, right? And you guys are going to do the very best that you can for it. But it helps you make, it helps you look at things a little bit more objectively, I guess that's where I'm trying to go with that. So. John: Yeah. Speaker 1: That's a good way to do it. So, that's one. Let's go with a second one here. Not paying any more in taxes than we have to. Well, that's like a duh, right? Nobody volunteers to sign up to ... I don't think anybody's standing out on the street corner with a sign saying, Let me pay more taxes, please. Yet, when you guys start to look at things and you work with an advisor and a CPA and they start digging into people's financial and retirement situations, often we are paying more than we need to be. We're not being as efficient as we could be, I suppose. Nick: Yeah. And some of the areas that we'll see these sorts of things are, and again, this will tie into the emotional decisions, which we definitely understand money's emotional. But as an example, somebody's retiring or getting close to retiring, maybe they've got 80 to $100,000 left on their mortgage and they want to cash out a bunch of money from retirement accounts, and just pay it off quicker in one fell swoop. And they may not realize from a timing standpoint, number one, the impact that a large distribution like that could have on their taxes. And then the snowball effect that it might have on costs of Medicare or different things like that. So, having a strategy and always going back to the idea of planning long-term and having different types of accounts that have different types of taxation in retirement, it's really important. Speaker 1: Yeah. I would agree with you on that because taxes, there's all those little things like, it's not what we make, it's what we keep, so on and so forth. But there is a lot more ways to be efficient when it comes to, especially for retirees and pre-retirees, when it comes to taxes. And of course, everything we're seeing right now with increased spending and inflation and so on and so forth, taxes is going to continue to be a really integral part of our retirement plan. So it's important to make sure that you're working with somebody who is taking that into account. Speaker 1: And another important part of this is keeping costs low, guys. Like I said earlier about the gas situation or bargain shopping, pretty much everybody's looking at buy one, get one free, or 50% off things. We look for these kinds of things in all aspects of life. But then again, when it comes to investing, sometimes we're not thinking about that. You'll have the person say, I want to keep costs low. And my guy or gal only charges me 1%, and they're really not taking into account everything else, as well, right? John: Yeah. That's absolutely correct. Again, it can be taking into consideration from a common sense standpoint. But sometimes there are better times to buckle down on certain things than others. And ultimately you're just trying to make solid decisions with the information that you have available to you. So, it's anybody. You mentioned inflation. It's always interesting with things like that because anybody that has gone to the grocery store in the last two years, they know that things cost more. And so it doesn't when it's not talked about in the media as much or whatever. They might talk about it with their friends or complain about it with their spouse or something like that. John: But then when it starts being talked about in the media, it catches up. So ultimately, I think people know that these sorts of things have been happening. But now that it's being talked about more, in general, and there are other assets that are tracked more from a consumer price index and those sorts of things, to actually show inflation is a legitimate thing. Especially with all of the money that's been being printed for the last decade, really. Now it's a good time to reassess and make some smart decisions to keep costs down. Speaker 1: Yeah. No, definitely. There's hidden fees in all those little things, and that's actually going to lead into my next one here. For example, I'm going to pull a grandma-ism, guys. Another one of these axioms we hear is "don't put all your eggs in one basket". And I'm going to take this from the standpoint of people who have a lot of the same thing, they'll say, John or Nick, I've got 10 mutual funds that I got from 10 different companies, right. So I'm "clearly diversified" and I'm not getting charged very much. And they're completely wrong in both of those counts. John: Yeah. We see that a lot in the 401k space because a lot of that is the people are picking their own funds and they'll do stuff like that where they'll pick six, seven mutual funds or whatever. And they say, hey, "I'm diversified." But in reality, they're all similar type funds. So for example, they all could be large cap funds. So what that means is when the market goes up, they're all going to do relatively the same thing. Give or take some percentage points on which one's performing a little bit better. When the market goes down, they're going to do the same thing. John: The whole point of diversifying is so that the portfolio has some zig and zag. So kind of sounds weird to say this, but in reality, when something's going up, you want something else going down or not doing what the other investment are doing. And that actually comes down to proper asset allocation where you have maybe some large cap funds, and then you also have some fixed income funds and some real estate. So everything's not the same type of asset class. And that's really what you want to focus on. On really diversifying is not just having multiple funds, but having the right mix of multiple funds. Nick: And even in addition to that, diversify from the perspective of taxes. You don't necessarily, we feel, end up in retirement with only having pre-tax money that's going to be fully taxed at whatever bracket that you're in, in retirement. Speaker 1: Mm-hmm (affirmative). Nick: These good examples currently, there's a decent chance and we've been talking about it for years, but there's a decent chance that taxes will go up. There's a price for printing money for a long time. Whether it's cutting taxes and more spending, et cetera, eventually there is going to be a price for that. So having options from the perspective of pre-tax money, broth money, a taxable brokerage account, what that utilizes capital gains, all these sorts of things end up really paying off down the road. Speaker 1: A lot of times that whole diversification conversation comes back into play with people. And often what you guys find, John, to your point, you were talking about that a little bit is that somebody who's got a lot of the same thing. There's just a ton of overlap. And typically, it's almost always large cap or something. And if you think about this year, right, small cap was outperforming large cap in the first quarter. And maybe you don't have enough here and there. And that's that point of that having a little bit. That's when something's going up, something is going down. Most people just don't truly realize that. They think, oh, I've got a target date fund; I'm groovy. Or whatever that looks like. And then what ends up happening for the last one is that you have people then turn around and say, ooh, I want to jump in on dogecoin, or whatever, because Elon Musk made a tweet. And then the next week he makes another tweet and the thing tanks. And so market timing is virtually impossible. John: Yeah, correct. Ultimately, you can't do it. It comes back to what we talked about earlier. When people are trying to time the market, it's really emotional of saying, hey, when's a good time to get in or get out. And this was something that we saw a little bit about, not necessarily so much with the pandemic, a lot of people stayed the course and maybe because it happened so fast. But with the election at the end of last year, either way we saw people that were trying to pull out and time it depending on who won the election on when to get back in. John: And unfortunately it didn't work out. And it doesn't work ... Either way it doesn't work out because it's always so hard to say, hey, now is the right time because as we saw, the market went up. And then it's like, well, do I go in now or do I wait until it goes down? And you can find over the last five or six, seven years, if you've been waiting, you've been waiting a long time to get back in. So it's always best to have a plan and stick to your plan and make sure that you're invested correctly so you can just stay the course of what you're trying to do. Nick: And even further with that, ultimately, if you decide that you're going to exit and try to time it, the time that you have to then get back in, is usually the most basically, disgusting time to have to do it. Speaker 1: When it hurts. Nick: It's the most painful time. It's the time of the most chaos because that's usually where the bottom is. And so it's really difficult to try to time that. Speaker 1: Yeah. Nick: In fact, we've had conversations with clients before where we say, hey, our objective is to hold the line. If you want to exit, we'll exit for you, but you got to tell us when to get back in. We're not going to exit at your request and then move in at our determination. Nick: If we're going to exit, then you also have to let us know when to enter back in. And so sometimes we've found that, putting it in that, in those terms, ultimately ends up helping people just decide to hold the line. Once they realize like, oh, well, I've got to tell you when to get back in? Then that helps them realize, oh, okay, I get it. Like, I'm probably not going to be able to do that. Or by the time that I feel comfortable enough to tell you, it's too late. Speaker 1: Yeah. You're right back at that emotional sticking point, right? To your point of it's typically it's painful or it's the worst time, or it's just really uncomfortable to do it. And of course, you're trying to be right twice in something that is super, super fickle. So again, these are all some basic common sense things we can all agree on. And yet we tend to do the opposite. And that's where it comes into play to really work with a team who does this day in and day out to help us through those things so that we don't trip ourselves up. As the saying goes, "We're often our own worst enemy." So do yourself a favor if you haven't done so. Have a conversation about your retirement journey and some of the things that we've covered today on the podcast. Speaker 1: Reach out to John and Nick. As always, you should check with a qualified professional before you take any action on anything you hear anyway on our show or any others financially-related. So reach out to John and Nick at (813) 286-7776. That's (813) 286-7776. Or stop by the website, pfgprivatewealth.com. That's pfgprivatewealth.com. And don't forget to subscribe to the podcast, Retirement Planning Redefined. You can find all the information right there at the website. Again to subscribe on Apple, Google, Spotify, whatever platform you like. I'm going to sign off this week for John and Nick and myself. So thanks for hanging out with us here on the show, and we'll catch you next time on Retirement Planning Redefined with John and Nick.…

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Ep 33: Fact Or Fiction 16:31

4 years temu16:31

16:31

Sometimes the easiest way to learn about something is make it really simple. Like some of the first true/false tests you might have taken in school, let’s play a round of fact or fiction to test your financial planning acuity. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Hey everybody. Welcome into this edition of the podcast. Thanks for hanging out with us here on retirement planning, redefined with John and Nick, financial advisors at PFG Private Wealth. Find them online at pfgprivatewealth.com, that's pfgprivatewealth.com. Fun podcast this week, we're going to have a little fun with some financial fact or fiction and test our financial planning acuity with the guys in just a minute, but let's say, hey and see what's going on. John, how are you my friend? John: I'm doing good. How are you? Marc: Doing pretty good hanging out and doing well hope you guys are doing the same down there. Nick, what's going on with you? Any new action on that attorney you guys were telling us about? Nick: No, we're still plugging away on the golf tournament. We're looking forward to doing that. This the first time that John and I have been involved in putting together a golf tournament. We're not big golfers, it's definitely an interesting process, but we're looking forward to... I think our two charities are going to be locally Pepin Academies and Southeastern Guide Dogs. We're looking forward to raising some money for charity. And then, we also actually recently sponsored a run through the Herald Center, which is a part of the USF Tampa campus and through the college of public health, that's done to support in studies, family violence, which is a huge issue really in any community. They have a run coming up and we're sponsoring that. Anybody that's involved locally with that, we'll see the name of the podcast and those sorts of things. We always stay involved in the community, enjoy doing those things. Marc: That's great. John: But we are definitely not running. Marc: You're not running. Are you going to golf? John: We're probably not golfing either. Nick: [crosstalk 00:01:47]. Marc: I imagine planning a tourney, a golf tournament, is a bit more challenging than you might expect. You first dive into it. You think, oh, this is... And then you're like, wow, this is a lot more work than I thought. John: There are a lot of moving parts, but we have a really strong team. We have some members that have planned golf tournaments before and they're heading up the logistics. Nick and I are very organized and detail oriented, we're making sure all the tasks are checked off and everyone's doing their work, but we're really excited about that one. Marc: Dotting the I's and crossing the T's. Nick: The local steakhouse that we're teaming up with is really well known. Having them involved, this is the first time that we had paired up with them. It's a pretty cool experience as well. Marc: Very cool. Well, I'll keep asking about it and we'll keep updating things as we get closer, but for now let's play a little financial fact or fiction. I know it's a little tougher sometimes in your guys' industry, because often I've heard that saying that the answer to most financial questions are, it depends, but we'll try to do as best we can here. Like when we were in school, we do true or false of simple ways to learn things. I've got some basic statements here guys, just have a little fun with it. Fact or fiction, give us the best answer you can, based on the way the question is worded and we'll go from there. Fact or fiction, whoever wants to take this first one, your social security can be taxable. John: I'm going to say fact, although sometimes it's not, but it's based off of your income in retirement. They called it, your modified adjusted gross income in this situation, where basically it's half of your social security, your adjusted gross income, plus any non taxable interest like municipal bonds. They add all that up and depending on where that falls will determine how much of your social security is taxable. Example if you're making married filing jointly over 44 000 of that [inaudible 00:03:46] income, up to 85% of your social security is going to be taxable. That's the maximum amount of your social security that's going to be taxable is up to 85%. Marc: Okay. It can be taxable. It doesn't mean it always will be, but it can be. John: Correct. I'll say more often than not, it is going to be taxable because the limits where it's not taxable, it's married filing jointly between zero and 32 000, 0% is taxable at that point. But you'll find the majority of people, they're above that when you're talking two incomes. Marc: Got you. Okay. All right. We'll go with fact on that one, it can be taxable. Quick and easy fact or fiction. Nick, how about you, you want to take this one? Your taxes will likely be lower in retirement. Nick: There is a decent chance that may be the case, the tricky part about that, and we usually have a better idea of that within the last couple of years of retirement, when we can measure your expenses and measure what is being deployed into savings and those sorts of things. I would say that a solid percentage of people do have lower taxes, at least initially in retirement. But one of the things that we've started to see is, especially those that have done a good job of maybe managing expenses, because the market has taken such a big jump over the last, five to 10 years, there's a lot of people that have found themselves with a lot more money in retirement accounts than they expected. And they're creeping into their RMD age, which is now 72, they're going to have income that's going to be coming in via their required minimum distribution that may be much higher than their spending that could really flatten out that difference. going back to what we've said in previous podcasts, there is a decent chance that your taxes will be lower in retirement. However, it's important for us to plan for scenarios that they aren't and give you options in retirement. Marc: Yeah. And to be fair with continuing taxes possibly going to be on the rise with all the spending we're doing, it's one of those statements where again, it's in the wording, likely to be lower. Okay. But there's a good chance of anything happening in that arena. You always want to make sure you're checking them as relates to your specific scenario and plan efficiently. Try to plan to be as efficient as possible so that you can be tax efficient, hopefully in the future, just in case they do go up, because they do raise up the tax brackets. All right. How about fact or fiction guys? Term life insurance is better than whole life insurance. John: I'm going to have to say it's a, it depends on this one. I can't go fact or fiction on this one because it depends on your situation. Term-life is great for covering an immediate need. Example, having two kids, I've enough life insurance, death benefit to cover my income for the next 20 years, if something were to happen to me. Whole life is nice to have basically a permanent policy. Going into retirement, I have something that's going to last, in essence, depending on the policy and disclosures, whatever and disclaimers it's going to last forever. This one is, it can't be fact or fiction, it really depends on the person's situation. Nick: One of the things I would just throw in there on this is that, life insurance can be a topic that people feel strongly about. Typically though, it breaks down to a cashflow issue where if you have the cashflow to be able to have the right type of permanent whole life insurance, oftentimes it can be a better plan and strategy than otherwise, but it's definitely an in-depth and a topic that's important to go through in detail. Marc: Well, we're having a little fun with these, but like any financial vehicle or product there's pros and cons to everything and what's going to be right for your scenario may be different for someone else. It's all about that complete holistic strategy, if you will. And that's why working with an advisor is a good idea to do so when it comes to your scenario. And of course, if you've got questions or you need some help or whatever the case might be as always check out John and Nick, and have a conversation with them if you need some help, or if you have something that sparks your interest a little bit, go to pfgprivatewealth.com, that's pfgprivatewealth.com, and you can drop them a line there while you're on the website. Lot of good tools, tips, and resources. Here's another one guys. Medicare will cover most of your medical needs in retirement, fact or fiction? John: I'll say fact that the right type of Medicare policy will cover most of your medical needs in retirement. Again, disclosure, everyone's situation is different and Medicare only covers certain things. But I'll say from your basic health needs, going to the doctor, prescriptions, if you have the right type of Medicare policy, it will cover quite a bit of that. As far as any disabilities, that's where Medicare does not really kick in for that. A lot of people get confused. Marc: Hospital stays, basic doctor visits, things like that. But it doesn't do dental. I can be interesting. My mom had, with her Medicare, she had some cataract stuff done and it covered portions of it. There's definitely some outliers there, which is why they've got the 47 million supplement programs that go in there. A lot of stuff to talk about for sure and it doesn't do anything with long-term care. John: Correct. It's important just to understand what it covers. Both Nick and I, we know a good amount about it, but we've both gone to some seminars and presentations and make sure we're up to date on the latest. But we typically, when it comes to that point in the planning, we refer this out to a couple of people that specialize in it because there's so many different policies of so many different nuances. And again, it's all about finding the right professional and what fits your needs. Fact, some of the time, fiction some of the time as well. Marc: Yeah, exactly. Well, I guess with these, it's really just a fun way to do it, but ideally when it comes to financial stuff, there's always a depends caveat, if you will. One more here, we'll have this last one, then we'll take an email question to wrap up this week. As you get older, you should gradually shift from stocks to bonds. That's been a thinking for a very long time fact or fiction, or maybe has that changed? Nick: I would say that it obviously depends upon where you're starting from. If you've been a typical investor that has been comfortable with market risk throughout your life and you are starting from a place of maybe having a 70/30 stock to bond or a 60/40 stock bond portfolio that shifting to decrease your risk does make some sense. We've seen plenty of people that haven't really taken enough risk from the perspective of market risk. Not taking enough market risk, can create things like longevity risk and your money lasting for you, those sorts of things. If you're going to make shifts, it's important to be shifting in the right way. Making sure that you're looking at stocks that are on the lower risk side of things is important. But I would say in general, the key is to tie your investments to your overall financial plan. But in general, it will make some sense for many people to reduce some of their stock holding risk as things go forward. With the caveat that when you're getting your access to the fixed side of things, the bond world, you need to do it much more carefully than maybe you had to 10 or 15 years ago. It's a much more convoluted space than it was. And so that's something where there are many people that under-appreciate the risk that you can have in the bond space. Marc: All right. Well, that's going to do it for fact or fiction, and we're going to wrap up this podcast with an email question again, if you'd like to submit your own, stop by the website at pfgprivatewealth.com, that's pfgprivatewealth.com. Greg's got a question for you. Greg says, "Guys, I'm being offered an early retirement package from the company I worked at. It also includes a severance package and pension buyout. It seems wise to consider this anything to think?" Anything that he should be thinking about, questions to maybe ask? Nick: Yeah. Good question, Greg. Nick and I are seeing quite a bit of this coming up where clients are near retirement, few years away, and all of a sudden it's, hey, I got the severance package and this pension buyout, what should I do? And the first thing we do is really to say, "Hey, let's run the numbers and the plan and see if you can retire with that severance package and what the pension buyout is." And we'll evaluate it and give our recommendations based on, again, the plan. I'll say it's definitely worth comparing your options in that situation. One thing you want to consider is the financial health of the pension itself. Is it fully funded or is it underfunded? Because we have seen some pensions that aren't fully funded and there's some financial risks of that pension. In that scenario, I would say you might want to go ahead and take the money. Nick: And then, reverting back to the plan, what are their current income needs versus liquidity? Just to give you an example of a plan we're doing, client had a couple of pensions and didn't really have much liquidity. When a situation like this came up, we evaluated it based on the income that it was spinning off and what a lump sum could do. But, we looked at it and said, "Hey, this, this could be a nice option to give you some of the liquidity, which you currently don't have", because he had two pensions and social security, but didn't have a lot of liquid assets he could draw on if needed. Another thing to consider is beneficiaries. We've seen a lot of clients where they say, "Something happens to me with this pension, basically the money goes away. I don't feel comfortable with that. I'd prefer the lump sum buyout. At least if something happens to me within the next 10 years or 15 years, someone's going to get something versus in the pension option that I'm given, they're not going to get anything." And again, there's different pension options and we review it all. And then, we've seen some scenarios where the pension guaranteed income was so excellent, we didn't even consider a lump sum withdrawal or any other type of contracts that provide guaranteed income because it was so strong. Marc: Some good questions to ponder there, Greg. Thanks for submitting that in. There's obviously a lot of information that you didn't share with us. If you'd like to have a more in-depth conversation about exactly what they're offering, you definitely reach out to John and Nick. You can call them at 813-286-7776, but that gives you four or five things there to think about. Again, 813-286-7776. You can give them a call and have a conversation with them. Of course, with the podcast, subscribe to the show folks, if you have done so already. That way you can catch up new episodes when they come out, you can also check out past episodes and all that good jazz. You can find it all at pfgprivatewealth.com. It's really the easiest way to get in touch with the guys, If you'd like. Marc: You can drop an email question, you can book some time with them. You can subscribe to the podcast, just a lot of good tools, tips, and resources there at pfgprivatewealth.com. That's pfgprivatewealth.com and that's going to do it for us this week on the podcast. John, Nick, guys thanks for hanging out with me and good luck with the upcoming events. Nick: All right, thanks Marc. John: Thanks, have a good one. Marc: We appreciate it. We'll see you next time here on retirement planning, redefined with the guys from PFG Private Wealth, serving you here in the Tampa Bay area. We'll talk to you next time on the podcast folks.…

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Ep 32: Are You Flirtin' With Financial Disaster? 22:10

4 years temu22:10

22:10

Let’s talk about some of the areas of your financial life where you might be flirtin’ with disaster and don’t even know it. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: Hey everybody. Welcome into this week's edition of Retirement Planning Redefined podcast. We appreciate your time, hanging out with John and Nick and myself as we're talking, investing, finance and retirement. And of course you could check them out online if you've got some questions or need to follow up or have a chat about your own situation, get your retirement planning redefined at pfgprivatewealth.com. That's pfgprivatewealth.com. Don't forget to subscribe to the podcast while you're there. A lot of good tools, tips and resources to be found. Marc Killian: And on this go-around, we're going to talk about flirting with disaster. As Floridians, there's certainly always the case where we have some disastrous situations can come up from time to time, but we're going to talk about these from a financial standpoint and some areas in our financial life where we could do this and not even realize it. First off, let's say hey to the guys. What's going on, Nick? How are you? Nick McDevitt: Doing well. Doing well. How about yourself? Marc Killian: Doing pretty good hanging in there. Looking forward to today's topic. Got some good, easy fixes I think for a few of these things, as well as some that are maybe a little more complicated. We'll dive into that. Let you guys share. But John, how are you? John Teixeira: Doing good. Doing good. Nick and I are actually in the process of planning a golf tournament for a couple of charities here locally with... the group we're in is, again, 13 Ugly Men Foundation. And we're partnering up with Bern's Steakhouse to do a golf event at TPC Tampa Bay. So, we're excited about that coming up. Marc Killian: Very Nice. Yeah. Keep us posted on that. We'll definitely like to learn more as we get closer to there. Well, hopefully, you guys won't have any disastrous situations come tourney time, but let's talk about them today. I got about five here, guys, I want you to just break down for us. And, like I said, some of these are kind of easy fixes, so let's start there. They can definitely cause a lot of havoc, but, again, they are easy fixes. So, out-of-date legal documents. Not the sexiest thing in the world, but a pretty easy thing to fix. Nick McDevitt: This is something that is a common oversight, a common mistake that people make. Some of the instances that we see where the documents are out of date or just not going to accomplish the things that they're hoping to accomplish. Our scenario's somebody moved from out of state and the... many people don't realize that from an estate planning standpoint, from a legal document standpoint, a lot of those documents are different from state to state. So, that's an important thing to review if you are somebody that has recently moved. A few years back, there were updates in Florida to durable power of attorney rules. And so, that's a reason to have a review. Nick McDevitt: But just like anything else, it's important to make sure that you have in inventory or you take an inventory of what you have. Something like this, people never... or oftentimes, people don't realize how long it's been since they have updated their documents. There could be children that are alive now that weren't before, parents that were alive then that aren't now, a previous marriage, et cetera, et cetera. So, making sure that those documents are updated and chatting with an attorney about that is a really important thing. Marc Killian: Yeah. We tend to set it and forget it with a lot of those. What are some of the key ones we should think about, John? John Teixeira: I would say one of the biggest ones is a second marriage. That's where you really want to pay attention to who the beneficiaries are, who's getting what. And there are certain rules in the state of Florida. And, of course, defer to the professionals and attorneys on that, where a spouse is entitled to a percentage of the assets. So, if you want to make sure that, if it's a second marriage, you have kids in the first marriage and you don't want to disinherit them, you want to make sure your documents are definitely up to date. John Teixeira: Another one we've seen, and Nick mentioned it, people moving in from out of state. If you have assets in other states, it's important to make sure that you kind of have some documents for that state where the other assets are. So, example, I'm from Massachusetts. My parents have a house up there, so they had to make sure that... they basically had a will for up there and down here. Marc Killian: Yeah. I got you. Now, a lot of times, the misconceptions with wills are if you have a will, the saying goes, you will go through probate, whereas a trust allows you to maybe not do that. Is there some other main documents that we should have? I'm assuming the power of attorneys, correct? Nick McDevitt: Yeah. Durable power of attorney, a will. Oftentimes, people will confuse a traditional will with a living will. And essentially end-of-life documents are important to have. Marc Killian: Like a medical power of attorney obviously, right? Nick McDevitt: Yep, exactly. So, there's kind of that core package that most attorneys will review with you, help you recognize, "Hey, is this out of date? Is this still applicable?" And we always recommend, obviously with any sort of legal topic, that you're communicating with either an attorney that you have and are familiar with or we obviously have a few attorneys that we work with that we send clients to that we know and trust and will help make sure that they get through the process. Marc Killian: But it's often not as costly as we think it's going to be too, to get these things handled. And once you get them in place, again, out of date, if you're just making some adjustments, usually can be done through a phone call. So, kind of an easy fix, right? Nick McDevitt: Yeah. We've definitely seen, especially over the last year, many, many companies, including law offices, have put their tech into hyper drive to make [crosstalk 00:05:18] easier for clients. So, yes, sometimes mentally things will feel overwhelming and that will slow us down from doing it. And this is one of those things that doesn't need to be super difficult and can be done pretty easily. John Teixeira: Yeah. And we actually have something we give to clients, it's kind of a wills point checklist. It's like 24 questions to consider, almost like a prep before you go see an attorney so you feel like, "All right, I'm a little bit prepared for this." So, if anyone does want that, they're more than welcome to shoot us an email or call the office and just mention that and we can get it to them. Marc Killian: Yeah. Again, folks, stop by the website, pfgprivatewealth.com. Drop them an email. John or Nick @pfgprivatewealth.com is where you can email them. Yeah. That's a great point. So, thanks for bringing that up as well. Marc Killian: And, John, you mentioned another marriage, for example. So, the BDs, the beneficiary designations, having those incorrect, another easy fix. And it's not just... we tend to think of, I don't know, one item or one type of account, but there's multiple places where you're going to have these beneficiary designations. And updating these is, again, a pretty easy thing to do. Marc Killian: I had somebody teach me that there's a couple of Ds to remember, to kind of trigger you to double-check these: if you get a divorce; if you have a death; or a disability; or at minimum, at least once a decade. That way, you get the four Ds, if you will, to maybe update these or take a look at them. John Teixeira: Yeah. Those are all really good ones. Actually, kind of going back to the will stuff. So, if you do have beneficiaries on some of these accounts, it does bypass probate. So, if there's a beneficiary on a life insurance or a retirement account, it doesn't actually go through probate; it goes directly to that beneficiary. So, that's always kind of good to know. John Teixeira: But yeah, divorce, very important one to update. Can't tell you how many times Nick and I have done some reviews with some clients that are new clients and it's... we've seen on the 401(k)s especially because that's kind of a set-it-forget-it type thing, where you have an ex-spouse on there. We've unfortunately seen some people with 401(k)s where they get auto-enrolled. They just never put a beneficiary on there just because [crosstalk 00:07:27] signed up, it's auto-enrollment for the company. So, those are two important things to really take a look at. John Teixeira: And we don't see this too often, but we have seen some people just kind of just have a fallout with some beneficiaries, whether it's a child, a niece, nephew, whatever it may be. And we've seen some changes from that where it's, "Hey, to be frank, I just don't like this person anymore." Marc Killian: I mean, it happens. It definitely happens. And so, we're talking IRAs, life insurance policies, 401(k)s, things of that nature. John Teixeira: Yep. Marc Killian: Okay. All right. So, those are, again, pretty easy fixes for some of that stuff. And the havoc they can wreak... I imagine having somebody come in and the new spouse is saying, "Hey, I found out that the old spouse is still on this life insurance policy." That's not good. And that's not an easy fix at that point, but it can be taken care of ahead of time pretty darn quickly. Marc Killian: Let's move to some more complicated one here, guys. You could be flirting with disaster, talking about the ticking tax time bomb. Obviously, that is going to continue to be a mainstay of conversation in retirement planning in general because it's such an important part of it, how we're being... if we're being as tax-efficient as possible, I should say. But with the continued spending that we're seeing as a nation, it seems like this is only going to become more and more of an issue. Nick McDevitt: Yeah. So, one of the things that we try to... so, when we talk about a tax time bomb, what we're typically referring to is when people only save into accounts that are tax-deferred, a.k.a. traditional 401(k), a.k.a. traditional IRA. And so, when they are in retirement, the thought process is like, "Hey, I'm going to have lower taxes. So, no matter what, this is going to be a better deal for me." Nick McDevitt: And the thing that we try to focus on with clients and with people in general is that there's a lot of uncertainty on what we know is going to happen from a tax perspective. And so, our really emphasis is not necessarily to be right, as far as, "Hey, we know that X, Y and Z is going to happen"; it's that you have options so that no matter what, you can adapt to what's going on. Nick McDevitt: And the tricky part about that is if you're two to three years out from retirement, you're at your highest earning income years, you don't have any Roth money for example or any just regular investment account funds put away, we may continue to have you save into a pre-tax account. But then once you retire, we may look into trying to do some Roth conversions or make some adjustments or plan for kicking in a strategy when you do retire. So, it's not like it's necessarily the easiest thing to navigate. Your best bet is that, as soon as you can, start to save money into different places so that you not only are diversifying your investments, but you're diversifying how you're going to be taxed in retirement, is really a thing that we emphasize with clients. Marc Killian: Yeah. And that's a good point as well because this is not as easy as a fix, but it's something you can get on pretty quickly simply by working with an advisor, having them review your scenario and your situation and saying, "Okay, how can we be more tax-efficient?" and looking for ways to do that. And I just saw the other day that they're estimating about 40 trillion is what's sitting out there in uncollected taxes on traditional IRAs or 401(k)s. The government's kind of salivating over this estimated $40 trillion as people go through these retirement accounts and start to pull the money out or whatever the case is. So, certainly places where you could have those conversations and hopefully be more tax-efficient. So, again, if you need the help with that, make sure you're talking to a qualified professional like John and Nick. Marc Killian: What about flirting with disaster, guys, when it comes to just no plan at all for long-term care expenses? This one obviously is going to be even more complicated, but most people just ignore it. I know it's a daunting subject sometimes for folks, but there's things you can do. John Teixeira: Yeah. So, you're right on that. Most people do ignore it. And there are some options out there. They used to be much better. Unfortunately, they've kind of gotten just not as strong. 10 years ago, you could get a really good policy from a good provider. And nowadays, a lot of these providers have left the space in essence and they're not offering it anymore. John Teixeira: So, what we've kind of seen more is kind of, and Nick goes through this part in the class, some hybrid vehicles where it's a life insurance and a long-term care policy kind of bundled up in one. We've had situations where, from a planning standpoint, maybe getting... it's very hard to qualify for it so we've had to put in some buffers to self-insure. Again, not covering the whole cost of it, but just trying to help out in the event that something were to happen. It's very important, just limited options out there currently, but it's definitely worth exploring your situation to see what fits for you. Marc Killian: Yeah. And I imagine you're going to exacerbate that by not having the conversation. So, if the options are becoming a little bit more limited and you're also not taking the time to discuss it, you could be putting yourself even further behind the proverbial eight ball. So, definitely have those conversations. Don't just stick our head in the sand, especially when it comes to long-term care expenses, whether it's the 2 out of every 3 people or 7 out of every 10. Whatever the case is, it's happening more and more because we're living longer. So, we therefore have to deal with those outcomes that come with it. Marc Killian: One more here, guys, on some places we can flirt with disaster. And then we'll probably wrap up with an email question that we got into the site as well. But that's the classic 60/40 portfolio. First, just run it down for us, what that is for folks. And then why might you flirt with disaster on that? Nick McDevitt: Sure. So, there's a little bit of jargon in there, of course. We try to stay away from it as much as possible. But a 60/40 portfolio is what's considered 60% stock, 40% fixed income or bonds. And it's tricky because really, the way that people invested a short while ago was different than the way that people are investing now. And really, what also happens... so, for example, these last few years, as bond yields or returns from bonds have gone down, people have kind of flirted a little bit more with taking more risk on the stock side. And so, it's really important to make sure that when you are evaluating your overall portfolio and looking at how much risk you're willing to take, that you really understand how these different parts work and move together. Nick McDevitt: So, really, what it boils down to is that it's important for you to have a liquidation order. So, for example, what some people used to do is, "Hey, I'm going to have a 60/40 portfolio. I'm going to pull from my account every single month without any sort of strategic plan on how I'm going to pull that money out or where it's pulling from." And when we have corrections in the market or volatility in the market, where we'll see people really suffer is let's say they had a million-dollar portfolio. We get a big pullback. All of a sudden, your statement debt, two months ago said a million bucks, says 800,000 or 750,000 now. It can make you or prompt people to overreact to the market. Nick McDevitt: And then once that overreaction happens, basically you're locking up your losses. You're selling at lows. Then you're going to want to buy back at highs. And so, it's really, really important to make sure that the portfolio and the allocation that you have lines up with truly how much risk you're willing to take. Marc Killian: Yeah. John, it seems as though the 40% in bonds... I mean, the bond market's been just as volatile as of late for a while. So, that seems like maybe one of those rules of thumb that might be a bit antiquated, going with that standard 60/40. But again, everybody's scenario is different, so, like a lot of things, I imagine that it might be fine for some and not for others. John Teixeira: Yeah, of course. And, like we say, we really want to start with a plan for the client and dictate the investment options and strategy based on that plan. There are some other what we consider fixed income vehicles that can kind of substitute the bond market that we've been utilizing when necessary. And, again, works for some people; doesn't work for others. But it's good to know your options and how it works for you. Marc Killian: Yeah. Versus trying to see- Nick McDevitt: And just to your point there, Marc, too- Marc Killian: Oh, go ahead. Nick McDevitt: ... as far as the bond side of things. In general, as interest rates go up, bond prices go down. And so, one of the ways that we have built around that, just for clients, for those people listening that are clients, are essentially creating bond ladders in their portfolios that aren't as negatively impacted as rates do continue to go up. So, there are ways to work and to build around these things, but typically, especially people that are holding this money in their 401(k)s, those sorts of things, there may be significant limitations to how they can adjust to them there. And that's where they can get in trouble. Marc Killian: Yeah, no, great points. Exactly. I mean, that's kind of the point of doing the podcast as well, is to share some of these things for not only existing clients, but obviously for potential clients that might be listening to the show and just hopefully offering some good nuggets of information along the way. Marc Killian: And with that said, that's going to kind of wrap up our flirting with disaster. Again, five areas where you can jump on these things and maybe get these corrected pretty easily. At least a couple of them, for sure. And the other ones, it's worth having those conversations with an advisor, if you're not working with one, on how to be as efficient as possible. Marc Killian: With that said, let's wrap up with an email question this week. Again, if you'd like to stop by the website, we certainly encourage you to do so at pfgprivatewealth.com. A lot of good tools, tips and resources there. While you're there, you could subscribe to the podcast on Apple, Google, Spotify or whatever platform you use. You can also drop the guys a line as well at pfgprivatewealth.com. Marc Killian: And here is an email from Andy who says, "How much of my portfolio, guys, is it okay to have invested in just one stock? I'm sitting on about 2 million, but almost half of it is with one company." Nick McDevitt: Well, that's enough to have a panic attack. So, usually, if you're asking if you have too much in one place, you do. But all kind of joking aside, where we typically see this sort of thing happen is in one of two situations. Nick McDevitt: So, situation number one, was inherited from a parent. And maybe that parent worked for a company for many, many years or they invested in that company for a long period of time. And now, all of a sudden, that money has ballooned into a big amount. And due to a combination of tax rules and laws, plus sentimental value, all of a sudden, that holding makes up a significant portion of the underlying portfolio. Nick McDevitt: And option number two is just somebody that has worked for a company for a long time, 30, 40 years. They've been buying the company stock for years and years and years. And maybe the stock has performed well and there's this kind of emotional and financial attachment to it. And so, in this situation, oftentimes what we'll do is we'll show them a comparison of that stock to the S&P 500, for example. And oftentimes, the S&P 500 itself has performed similarly or even a little bit better. And we'll show them like, "Hey, look at, you can have the same sort of upside potential or growth potential by holding an ETF or an index fund versus just holding that one stock and protect yourself a lot more." Nick McDevitt: And another question that we'll pose to them sometimes that we've gotten good results from in the past was, "Okay. So, if I was going to hand you a $2 million lottery ticket and you were going to invest that money, would you spend half of it on one stock?" And the answer is usually a cross-eyed look like, "No, are you crazy?" And so, that's exactly the same sort of thought process, where usually it's just way more risk than somebody needs to take. There's ways to still have similar performance and reduce the risk by quite a bit. And it's just not really worth it at that point in time, is typically the case. Marc Killian: All right. Great question, Andy. Thank you so much for submitting that into the show. I know it's cliche, but as your grandmama might've said, "Don't have all your eggs in one basket." So, have those conversations. And certainly, you're thinking about it, to Nick's point, if you took the time to drop an email to the show here. You're obviously probably already thinking that direction anyway. So, follow up. Have a conversation with some qualified professionals like John and Nick from PFG Private Wealth. Marc Killian: And that's going to do it this week for us on the podcast. Thanks for your time as always. We appreciate it. Always check out with a qualified professional, as I mentioned, before you take any action on anything you hear on this show or any other. And you can find it all at pfgprivatewealth.com. For John, for Nick, we'll see you next time here on the show. Thanks for your time. We'll talk to you later.…

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Ep 31: Where Crisis & Opportunity Meet 19:17

4 years temu19:17

19:17

To write the Chinese word for “crisis,” you combine elements of two different Chinese characters. One character means “danger” while the other one means “opportunity.” Translated into English, it means “opportunity riding on a dangerous wind.” Let’s discuss how some of these crises might actually be opportunities, depending on your situation and perspective. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Time for another edition of the podcast. Thanks for hanging out with us as we talk investing finance and retirement here on Retirement Planning - Redefined with John and Nick from PFG Private Wealth, and we're going to talk about when crisis meets opportunity here on this episode of the podcast. But first I'll say hi to the guys, and then we'll dive into what that means. What's going on, Nick? How are you? Nick: Oh, doing well, doing well. It's been a really busy start to the year. People are anxious to kind of check in and go over things and all that kind of stuff, so we're enjoying catching up with everybody and just kind of walking them through where we are and how things are going. Marc: Good. Yeah. As the first quarter winds down, I imagine that's the case. John, what's going on with you, my friend? John: Oh, not too much. As Nick mentioned, just a very busy start to the year, so yeah, get in touch with everyone has been good. And I think the last time we said the weather's starting to warm up around here, so we have two or three months of some really nice weather, then it's going to get scorching hot. So just try and enjoy the nice 70s to 80s for the time being. Marc: There you go. Exactly. Well, so what we're talking about this week here on the podcast is some people view certain things that are going to happen to us in retirement, or that happen to us in general, when it comes to our financial lives as a crisis, and other look at it as an opportunity, right? So I'm going to give you guys a couple here. I'll let you guys expound on those based on what you see or what you do, and we'll just discuss some of these ways that these crises, if you will, might actually be an opportunity, a good way for you to look at it, maybe change your perspective just a bit. Marc: Now, John, I know we're in totally different spaces when it comes to this, you and I, but I am an empty nester. I've been one now for, well, actually about two and a half years going on three years. But for some parents the idea of empty nest is a very joyous one. My wife and I were pretty surprised at ourselves. We were like, "Sweet. We love her, but bye, do your thing, have a good time." And for others, obviously, there's a very sad attachment and sometimes they have trouble with it. But from a financial standpoint, what's some things to think about here? John: Some of the things you can think about is definitely your cash flow. I would assume for the most part is now you have a little extra cash flow. So from a financial standpoint, I think, in the last session we talked about in the 50s having a little bit extra money to save. Marc: Right. John: We see that quite a bit when kids are out of college. You're no longer paying for college bills. Your electricity, water bills, maybe gone down a little bit. Marc: Cell phone. John: And the big one is groceries. Marc: Groceries. John: That really shot down for certain people here, and it really gives you an opportunity to either save some more for retirement or go on some more vacations and travel, you know? Marc: That's a good point. Nick, I wasn't trying to leave you out there, but I know that you don't have any little ones yet, so I just was getting John's take on that. What do you see though, from a planning aspect? Nick: Yeah, it's interesting because we almost see this happen in kind of like two phases. So, for a lot of our clients, the first phase is when the kids go away to school. It's kind of like ... Or even from the standpoint of when the last kid goes away to school, so there's that period of time where they're away at school, but they'll come home on breaks, and maybe during the summer they stay at home, and so there's a little bit of adjustment. But while they may not be at home, they may still be on the payroll per se? Marc: Right. Nick: And then there's that kind of full shift into, all right, they're gone, they're off the payroll and what now sort of thing. And for some, depending upon the age that they are, that's where grandkids may come into play. And so there's a little bit of a transition where maybe you're watching the grandkids a couple of days a week, and people tend to kind of like having some sort of interim between they're being a crazy household versus an empty household. Nick: But really that recapture of money that was being spent, saving it, putting it away, so that's one of the most effective tools I would say that we have to kind of help people with this process is if we're able to show people. Maybe they're somewhere from five to eight years out from retirement and it's like, "All right, our expenses have dropped by a thousand dollars a month with the kids kind of shifting out of the house. We had originally planned to retire at 65, but if we save this thousand dollars a month, is there a chance that we could retire at 62, 63, 64?" Nick: And so, kind of going through a planning process and showing them like, "Hey, yeah, in some cases, if we can recapture those dollars, if we can put that money away, we can get you into that next phase of life a little bit quicker." There's a huge relief for many people that comes with that where there's less ... Even if they are going to continue to work, knowing that they may not necessarily have to work, there's a huge kind of mental relief that we see in people. And so I've seen that really alleviate some of that mindset change quite a bit. Marc: Gotcha. Yeah. And so whether you view the empty-nest syndrome as a crisis because you're like, "What are we going to do? We're all by ourselves." And maybe it's a standpoint of you got to spend more time with your spouse. It's just the two of you. Who knows what your viewpoint is? But at the same time, you could look at it as an opportunity to maybe put away more for retirement, whether it's they're half off the payroll, completely off the payroll, to both of the guys' points here. So try to find the opportunity in that versus necessarily the crisis. Marc: All right, so let's move to the next one, guys, and that is market downturns or market crashes. You know, obviously they're going to be stressful no matter what happens. I mean, just what we saw a year ago now last March with the downturn due to the pandemic. And so I get where the crisis can come into play, so what some things to think about in the event that we want to try to turn that mindset into more of an opportunity? John: Yeah, so when we have downturns in the market, a good opportunity is really buying into it. It's like you have a store that's going out of business and they have their going out of business sale and you kind of jump in there and see what they have that you can get at a very discounted price. Same thing with stocks. John: I mean, just to give an example of one, and I kind of use this in the class, because I feel like I'm always there, is Disney. Their stock dropped quite a bit last March when we started to shut down, and that was a great buying opportunity if you had some cash on the sideline to take advantage of it, because it's really skyrocketed since then. And I'm just using Disney as an example. There's a lot of other ones as well that we can discuss, but you know, if you're ... position yourself to really take advantage of a market crash, you can really put yourself ahead and when the things rebound. So, there's definitely some opportunity in market crashes. Marc: I think people sometimes immediately latch on to the paranoia side of it. But if you had a good plan in place, it might not feel as much of a crisis, I guess. Nick: You know, one of the conversations that we'll have with clients as they do shift into retirement, for those that may be a little bit skittish about the market in general, or if we have concerns that some market volatility will kind of derail them from their plan, just maybe overall that the market stresses them out a little bit, what we'll do is kind of figure out. Like, "Hey, how many months of expenses will make ... If we hold X amount of months in cash to cover expenses, will that put you in a place where you'll feel comfortable?" Because with a crash there's two parts. Number one is to not bail and to cash out at a loss. Number two is if you have cash handy to put that cash, like John said, and enter it into the market and take advantage of the upside. It can be significant. Nick: So for clients that are fully retired, being able to have some of that cash set aside to be able to take advantage of opportunities, and also prevent them from acting in a way that is not good for them longterm can be important. And for those clients that are actually still working and still actively saving into accounts, saving on a monthly basis or on a consistent bi-weekly basis helps, whether it be [inaudible 00:08:23] cost averaging is what a lot of people know it as, helps you buy in at times when the market's low or at a discount, once it bounces back, you can really bounce back in a significant way, and make a difference. John: Yeah, So another opportunity you can do in a market crash is really do some Roth conversions on IRA assets. Marc: Good point. John: So what you would do is ... And I think we've discussed this in kind of one of our last sessions. But now that this has come back up, it's probably a good time to bring it up again, is if your IRA balance drops, that could be a good opportunity to convert it and pay less taxes on a lower balance at that point in time. Marc: Okay. All right. Certainly some good points to think of, and again, we're trying to show some areas, silver linings, if you will, where something might feel like a crisis or seem like a crisis, but maybe there's an opportunity there to be had. And of course, a lot of that comes down to, as I mentioned, just having a good plan in place that'll help you alleviate some of those feelings because you'll know what to expect as you're walking into some of these scenarios. Marc: Number three, guys, maybe a little bit tougher, obviously, to plan for, but still something that has to happen. And this is one that I think just gets avoided mostly because people are afraid to talk about it, but it's long-term care, and maybe that's the crisis is the continual rate hikes or something like that. Nick: Yeah. With clients that have long-term care policies, we try to make sure that we explain, and when we do our classes, we walk through this section. We try to make sure that we explain so that they fully understand that premiums for traditional long-term care policies can go up, and anybody that's really purchased a policy in the last decade is really starting to see that now. And so, those policies do have what are called non-forfeiture options, so they have the ability to either keep their premium the same and reduce benefits, or pay more and keep their benefits the same. And we really try to take it on a case-by-case basis, but it's important to take it into consideration and understand because it is absolutely a factor that can impact the overall planning, and is just really another reason that when you're planning for expenses for clients, building in buffers on expenses and making sure that the plan works well, this is an important space to make sure that you cover. Marc: Yeah, certainly some good points. And sometimes maybe it's just a good reminder, a kick in the tush that we sometimes need, to just look at some of the things we're a little bit afraid of addressing. And nobody likes thinking about it, but it is part of life, so it's certainly worth having a conversation. Marc: One more here guys, and that is the crisis, and we saw this obviously a lot in the last 18 months or so of downturns, getting laid off, in this case, whole industries really suffering due to the pandemic. It's certainly going to be tougher to look for opportunities there, but from a retirement standpoint, and we're not necessarily talking about people that are in their 20s or 30s or 40s, but from a retirement standpoint, any things we can try to find here to turn that into an opportunity? Maybe getting laid off early, the first thing that would pop into my mind is that if you had a good plan in place, you'd be able to know if that's necessarily a bad thing or a good thing. It might just be saying, "Okay, well, it's time for me to go ahead and retire and I know I'm going to be okay." John: We've seen that situation's come up recently where we've had clients laid off and it's like, "Hey, Nick, John, let's get together to do a meeting." And in the meeting, it's, "All right, let's look at how the plan looks without you working currently," and we find out it doesn't look as bad as they thought, and it kind of makes them feel a bit better about their current situation. John: We've also had some other scenarios where maybe it doesn't look great, but it's, "Hey, you don't need to go work full time anywhere. You can go find something that you enjoy to do and maybe work part time and the plan still looks solid." So, that's something to just keep an eye on is if you are laid off, you don't necessarily need to get back to the income that you were making before. Maybe you can now go do something else that maybe you enjoy more or a second career, and maybe at part time, your plan still works. And that's where it's important to plan ahead and make sure that you have the ability to make decisions and be able to monitor those. Nick: Yeah, I would add, in reality for somebody that's within a couple of years of retirement, the money that they are going to save in those years, if they've done pretty well up until that point ... So, let's say for example, somebody is planning on retiring at 65 and they get laid off at 63. Well, the money that they were going to save between 63 and 65 wasn't going to have a huge, huge impact on their overall plan and make it rapidly improve. However, not having to dip into the money that they've saved in those couple of years will be important. So kind of along the lines of what John said, it's like, "Hey, if we can ..." We'll go through the plan and say, "Maybe you're used to making a hundred grand a year, but if you can find something making 40 or 50 that can help you avoid having to dip into your accounts, let your accounts to continue to grow, and even if you can't save for these next couple of years, it lets you hold the line, that can be really a win-win and make an impact." Nick: So between that and kind of sticking with the fundamentals of trying to make sure that you have six plus months of expenses in cash and really kind of the tried-and-true things from a planning standpoint, can help people get through that. And we've also seen people kind of have a sense of relief where they were getting burned out at work. They weren't really happy there anymore. They didn't realize how much it was taking out of them and just literally a month or two to regroup kind of refreshes them, and they end up in an opportunity that's a lot better than the one that they were in anyways. Marc: Yeah. Some great points for sure. I mean, try to find that opportunity in it. Maybe if you're lucky enough to have a position where a pension was involved, maybe they've offered you a lump sum buyout, whatever the case is, or the monthly. So, it's worth having those conversations to find out where you stand, because it may not be that crisis that you initially thought it was. Marc: But it's the gut punch when you first find that out, sure. But if you've got a plan in place or you go and you find out and you have those numbers run, you may certainly find, to the guys's point, that you could be in better shape than you realized. And it's interesting that the way you guys phrase that, because my brother's actually right there now. He's 63 and he's going to be ... They're going to be closing up the business here that he works for in the next couple of months. And so he's at that cusp as well, and he's like, "Well, I'm going to take a look at my numbers again." And so he sat down and talked with his advisor, and he's like, "I think I can just go to part time," to John's point, "and just do some things that I want to do now." There's a couple of little hobby ideas he's been thinking about doing. Marc: So you never know, right? You got to look for the opportunity where you can. And it's hard to sometimes not focus on the crisis, but with a good strong plan in place, that'll certainly help you do that. And that's kind of the whole point. That's one of the reasons we do the podcast is to shine some light on some areas to think about that. Marc: And you've been listening to Retirement Planning - Redefined. Stop by the website at PFGprivatewealth.com. Check out the guys there. A lot of good tools, tips, and resources. You can contact them to come in for a consultation or review or talk about your situation. You can find the podcast there, subscribe to it that way, or drop us an email here as well on the program. And we've got one this week we're going to wrap up with. Jane has a question for you guys. She says, "It's about 401k funds. If I don't use the target date retirement fund, is there a certain number of funds that I should allocate within my 401k? I don't want to under or over diversify. Is there a right number of funds or does it really just depend?" John: Our answer to almost everything is, "It always just depends." It sounds like Jane, she's not doing the prebuilt kind of option, which is the target date, and is looking just to really build her own portfolio, which is fine. But it's really more important as far as how many funds you have to get into the right asset classes. So, 401ks do a really good job of making sure that you have a lot of different asset classes to choose from. And when I say asset classes, large cap, small cap, bond funds, international, that's the way you want to diversify within a portfolio. John: It really comes down to your risk tolerance, which again, with the 401k platforms, they typically have a questionnaire for you when you sign up or on the website. And then once you determine that, I'm just throwing it out there, if you're moderate, then you're going to want a certain mix of those asset classes to make sure you have a good portfolio for you. Easier said than done, so it's really important to work with a financial professional to make sure that you have the right number of funds and you're diversified in the right asset classes for your situation. Marc: All right, there you go. Thank you so much for the question. We certainly appreciate it. And you know, every situation's a bit different. There's universal truths to apply to all of us, and that's one of the reasons, again, we do the podcast to share some of those things, but every situation can be uniquely different when it comes to retirement planning. So, reach out to the team and give them a call if you have some questions at (813) 286-7776. Marc: Don't forget to subscribe to us at Retirement Planning - Redefined on Apple, Google, Spotify, iHeart, Stitcher, so on and so forth. You can find all the information at PFGprivatewealth.com. Guys, thanks for your time this week. I appreciate it as always. John, have yourself a great week. Nick, you as well, my friend. Nick: Thanks, Marc. Thanks. John: Have a good one. Thanks. Marc: We'll talk to you a little bit later here on the program. This is Retirement Planning - Redefined.…

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Ep 30: This Is Why You Never Assume 21:31

4 years temu21:31

21:31

We often see people making certain assumptions about retirement that just aren’t correct. Let’s explore some of those on today's show. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc: Hey, everybody. Welcome into Retirement Planning Redefined. Thanks for hanging out in the podcast with us as we talk investing finance and retirement with John and Nick from PFG Private Wealth. On this episode of the podcast, we're going to talk about not making assumptions reasons, why to never assume. We all do it as humans, but when it certainly comes to retirement, there's some ways and pretty easy ways to just not make these assumptions, but yet it does happen. So we're going to talk through that a little bit, got a couple of bullet points we're going to go over, but first let me say, hey to the guys. What's going on John and Nick? How are you doing John? John: I'm doing good. I'm doing good. I don't know if I mentioned it on the past podcast, but we moved to a new house and it's been a couple of months and just settling in. So getting some new furniture, which if anyone's ordered furniture recently, everything's back ordered by about two months. So we finally have some of that trickling in and so it's nice to settle into a new place and then getting ready to enjoy it with the weather turning around here. Marc: Very nice. Yeah. If you bought or tried to buy a lumber as well, holy moly. Lumbers through the roof if you've gone even to just a Lowe's or something to get some plywood. It's pretty crazy. But Nick, what's going on with you? How are you? Nick: Just staying busy. No complaints. I have a friend coming down to visit. He was one of the early people to get vaccinated, so he's coming down to visit in another week or two. So that'd be kind of cool we'll do everything outside and all that kind of stuff, but to have some sort of activity and a friend in town will be a good time. Marc: Yeah. Absolutely. Absolutely. Well, good. Well, I'm glad you guys are doing well. So let's jump in and talk about this week's topic, making assumptions. As I mentioned before, I mean, it's common right? We're humans. We do it in all sorts of areas and ways in life, but when we're talking about retirement, there's a few of these that maybe just don't hold water anymore. So let's start with a classic one here guys. I'll spend less when I retire. I mean, we've heard that for a number of years and I get it, but at the same time, I just think with the cost of everything going up, the way it is, and my dad used to tell me when you get to retirement and he got there, he's like, "Every day is a Saturday," and he's like, "I always spend the most money on a Saturday." And I thought that was a good way of looking at it because you're inclined to just do more, at least you want to anyway. That's the goal of retirement right, is to get out there and do those things you've wanted to. Nick: Yeah. Well, one of the things that we oftentimes talk about with people is really the whole goal of this planning process and the work that we put in over the years that are leading up to retirement is to allow you to not have to spend less, to want to spend the same. Maybe you'll pay a little bit less on certain things here and there. Maybe you got the house paid off, but really from a lifestyle standpoint and your analogy that your father used of every day's a Saturday is correct in a lot of ways. And so a lot of times people, depending upon the conversation, people will focus on needs versus wants, but very rarely do people live a lifestyle of needs only. And so, the beauty of planning is we can try to kind of build some of those scenarios in, but ultimately, and we'll kind of say it to people up front is like, "Don't you want to live the same sort of lifestyle, so why don't we budget and plan for that?" John: Yeah. And we see a lot of people when they go to retire, a lot of those kind of bucket list of vacations happen, and I'll tell you those aren't cheap. So it's kind of it's... we call them what? The go-go years, where it's time to really start doing things and if you plan correctly, you do want to spend the same amount of money if not more, to really start enjoying your Saturdays every day. Marc: Yeah. And if you think about the go-go years John, in that respect, you're doing more in the first couple of years of retirement, but you're starting... Yeah, maybe there's some trade offs like I think there's some statistics, like people go out to eat more in their thirties, forties and fifties. As you get over 60, you start going out a little bit less and less. And we'll just take COVID out of the equation for right now. And even with that's the case, you're going to start trading that off for other things. So yeah, you might spend less than this category, but you may spend more in another category. So just the general assumption that you're going to spend less in retirement is typically a false one, especially if you are having some dreams and some lofty things that you want to do again, COVID aside or not right? So that's one classic one to ponder. Another one that goes right along with it guys is the taxes will be lower. Typically, we think our tax rate will be lower in retirement and maybe that used to be the norm when the tax rates, there was a wider range in them. I mean, I'm talking 20 or 30 years ago, but I don't know that that's the case anymore. What do you guys see? John: When we do planning for the most part, I'll say we see taxes drop a little bit, but Nick and I really try to kind of build a worst case scenario and we're historically in very low tax brackets. So when we're doing planning for our clients, we make sure that even if the plan showing lower taxes, that we adjust their plan to taxes do go up. At some point they're going to go up, I'm assuming with all the spending the government is doing, that they can adjust to that. So although we have seen that, we definitely do not make plans based on that and when we run some numbers, we kind of stress test to say, "Hey, what if taxes do go up into retirement?" So one of the big things that we'll see when people retire is they do have a little bit more deduction. You have that deduction of, once you hit 65 on your taxes, and then also you're not paying social security tax anymore because there's no more earned income. So that tax does get lowered, but from an income tax standpoint, maybe a little bit, but again, not enough to really say, "Hey, I'm going to be spending a lot more because my taxes are lower." Nick: It can also very much be a production of how you have saved over the years. So for example, if maybe you're eligible for a pension and you have a pension which is going to be fully taxable when you receive it plus the money that you saved has gone all to pre-tax accounts, to pre-tax 401k, pre-tax IRA and you don't happen to have any Roth accounts or any accounts that are what we would refer to as non-retirement non-qualified accounts, that can have a significant impact as well. So it's not as simple as a total income number. It can also be, "Where is the income coming from and how does that impact the overall situation?" And just like John said, the probability of taxes going up in the future is fairly high with the debt levels and those sorts of things. Marc: Yeah. I mean, just some quick numbers. Right now, I think it's around 75% or so the federal budget is allocated towards entitlement programs. I mean, think about that. So what's it going to be 10 years from now? And that's not factoring into your guys' point, some of the stimulus stuff. So it's going to continue to be a situation where I think everybody's in the same agreement that it's going up. It's just a matter of when, when they're going to do it or whatever the case is. So being prepared and not just making that assumption again, that you'll be in a lower tax bracket. That's the goal if you're working with a good team and working with guys like yourself to get to plan, to keep your taxes as low as possible. That's always the goal, but just don't assume it's going to happen. Marc: Let's talk about the college conversation, guys. We'll try to stay away from those, "Should it be paid off or should it not be by the government," well, if we can. But just in general, the thought from a retiree standpoint, especially for people who've had kids later in life and they really want to help them with retirement... or excuse me with college, that's great. We all love our kids. We all want to do things, but at some point, do you guys see a situation where people can put themselves behind the eight ball for their own retirement and now they're becoming a burden on their kids later in life because you've sacrificed your own retirement to help them get started? That's a slippery slope. John: Yeah. So actually oddly enough, I just had this conversation today where a client had some money that was freed up and their kids are young and they're in daycare. So there's some extra money now that they're going to school. I mean, the question is, "Hey, what should I do with that?" And part of the conversation was, let's start looking at your overall retirement plan to see what that looks like before you start socking away all this money into a 529 plan or any other college savings plan because there are loans for college. There's no loans for retirement. Marc: Right. Maybe a reverse mortgage will be about the only thing way you could finance a retirement. Maybe right? But that's totally another conversation for another day. John: Yeah. And when the kids get to that point of school, depending on how you structure your retirement assets, there are some ways that you can access those retirement funds to help them pay for school. And kind of the way I view it is that you can tap those funds to pay for school and still kind of maintain your retirement. So it's always something you really want to take a look at and just plan for and be prepared. Nick: Yeah. I would say that our default is, typically save first for yourself and for your retirement and then we can build in strategies and structures for saving for college expenses for the kids. We really don't know what that space is going to look like 10 or 15 or even 20 years from now, whether college will be fully required for everything or what sort of programs will be put in place, even the ways that students will be able to qualify for things like financial aid and those sorts of things. And so, anytime a plan is too heavily focused in one area, we oftentimes see mistakes. And so it's difficult with this conversation because it can be a very personal conversation. Oftentimes, it's based upon the client's experience when they were children, whether or not they had to go through it themselves. Nick: And that can go both ways like, "Hey, I don't want this burden to be on them," or, "Hey, I learned a lot by having to do that and I'd like my kids to do the same sort of thing." And so just like so many other topics, we really try to talk about the financial side of things and help them understand the impacts in that space and then get their feedback on their personal feelings about it, and then try to find a way to kind of mold those two together to make it make sense from both a preferential and personal standpoint as well as a financial standpoint. Marc: That's a great point. Yeah, exactly. Because it can be, and everybody [inaudible 00:10:29]. it's almost like the same conversation around legacy planning right? Some folks say, "I don't want to leave anything to the kids because they're doing just fine," and others say, "I want to leave as much as I can." So yeah, it becomes a very personal conversation, but just be careful because what we've seen over the last couple of years is people sacrificing a little too much. And then again, like I said, it comes back around and you wind up being a burden. You're in your seventies and you need help with retirement and now you're trying to lean on your adult kids who are maybe just starting their own families. And so it's just a slippery slope. So just be careful. Nick: Yeah. And one other thing on that. You pointed out the legacy planning and that's kind of a good point because, and we consider that factoring in the overall throughout the whole planning. But a lot of times what we will see are, "Hey, we paid for school so we are going to spend our money in retirement and use our money in retirement," or the vice versa where it's like, "Hey, we didn't help out with school so we'd like to make sure that we leave some money." So again, it's a multi-tiered sort of conversation. And ultimately, we always try to focus on control. Be in control of your own money, be able to have as much of an impact as you can on your own personal decisions. And so, sometimes knowing like, "Well, hey. If I can help them out down the line afterwards, that may be a way to "make up" for not having put away as much money for their education or whatever." Marc: That's a good way of looking at it. And again, it's all very personal things. So just, again, the topic this week on the podcast, it's just not making the assumption that you have to help your kids through college before you worry about retirement savings because they can get you into a bit of a pickle. One more here, guys, on the main topic this week, and that's the classic "I'll never be able to retire" kind of assumption. And I think what we find, and you guys tell me what you see in your practice is many people just assume that and they never take the time to sit down and go through a planning process and find out if they're right or wrong because they are just terrified and they're assuming they're going to be wrong. And more times than not, they're actually not. People find that they're in better shape than they thought they were when they go through the process typically. John: Yeah, I would agree with that. Nick and I do the classes and a lot of those people are kind of in that position, it's time to start looking at it. And we've had a lot of scenarios where people feel that they haven't done enough. And when we do the plan, it's, "Hey, you're on track and it looks really good," and it produces a nice kind of sense of relief for some of those individuals. I definitely will say, never assume that and it's better to take a look at it sooner rather than later because if it's vice versa where you need to start saving more, we do find that people in their fifties, kids have moved out. They're kind of off the payroll. And now if there's a time to really catch up, it's going to be in your fifties to sixties. So it's really important to build that plan, see where you're at and if you're on track, great. Let's enhance that to give you more flexibility down the road and if you're not on track, now is the time to really... it's better to start planning sooner rather than later versus, "Hey, once you hit 60 and it's like, your working years-" Marc: It's going to be harder right? Nick: Yeah. And just like so many things in life, we've had conversations with people like this. And the reality is, is that we can't change the past. So we really try to emphasize the present and the future and decisions that can be made moving forward. It can be difficult for us as advisors sometimes because ultimately, we tell clients, "We can't care more about your money in your retirement than you do." So the number one factor in this whole thing is that it has to be an important thing for you and you have to be motivated to make changes if you are behind the ball and we'll absolutely help you get there, but I would say one of the biggest mistakes that we'll see is that people get paralyzed by the concern about mistakes that they've made in the past, and then all of a sudden, it's five years, 10 years later and they've just really doubled up on the mistakes. And so the sooner you can make changes the better and less focused on the past and more focused on the present and the future. Marc: Absolutely. So some good points to ponder there as we're talking about not making assumptions for retirement. And of course, if you've got questions or some concerns, you need a little bit of help, you want to get a second opinion on a plan you might have, or even the first opinion if you've never taken the time to do so, reach out to the team, go to the website, pfgprivatewealth.com. That's pfgprivatewealth.com. You can click on the podcast link right there at the top of the page. There's a blog. And there's a contact section where you can send us an email to the show if you'd like to do that as well. You can find all those goodies at pfgprivatewealth.com. And like I said, if you want to send an email question, feel free to do so. And we've got one this week, we're going to toss out to you guys. Bo sent one and he said, "Fellas, I need about $5,000 to live on each month in retirement and my social security and pension is looking about to be $5,300 a month. You think that means I can leave my 401k behind to my son? What do you guys think?" Nick: So there's a couple of things with this question. Ultimately backing up a little bit, we're always concerned when people provide flat numbers like this. I think I've been doing this since '07 and John you've probably been doing it at least as long, I think an an extra year. I don't know if I've ever seen anybody come in with $5,000 a month flat on expenses. It's an awfully convenient number. And so first thing- Marc: Well, he does say, "I need a [inaudible 00:15:58]," I guess, so we'll give him the benefit, but yeah. Nick: The first thing that we like to do is kind of peel back those numbers and make sure one of the things that we've learned kind of throughout these years of doing this are that sometimes when people post questions like this, some people think pre-tax and some people think net of taxes. And so first backing up to see in reality, depending upon how they're calculating the numbers, that $5,000 expense number might actually be closer to 6,000 or 6,500. And then the social security and the pension numbers may be net versus gross. So the first things that we'll make sure that they understand will be, from a cost of living standpoint and projecting out the numbers for the social security, are they using a cost of living and which number are they using it? And then for the pension also, the same thing. I would say at this point, depending upon where the pension's coming from, if it's coming from a private company, typically we don't see cost of living's built in. If it's coming from some sort of like state or a municipality employee, then there will be some cost of living's built into that. Nick: So making sure that they calculate inflation on both income and expenses is going to be a huge deal. So as far as being able to leave the money, the first conversation that we're going to have with them about specifically, "Hey, am I going to be able to leave my 401k money behind?" We'll be making sure that they understand how required minimum distributions work and what that looks like. So as an example, making sure that they understand that starting at age 72, they're going to have to start pulling money out of their account so that the government can tax that from an income standpoint. And that doesn't mean that the client has to spend that money. It means that they will pull it out so that they can pay the taxes and then either they can save it or they could spend it. Nick: So just like so many other things, it's a pretty nuanced... it's a question that on the surface seems super simple like, "Hey, I did the math. My income is 5,300. My expenses are 5k. I look great. Let's just plug along. And my goal is going to be to leave my money behind for my son." So kind of diving into making sure that they first understand how those factors are going to work from a planning standpoint with things like inflation, how they understand that the required minimum distributions are going to work, pulling that money out and then really focusing and drilling down on if it's very important for them to leave money, for Bo to leave money to his son. Nick: Let's figure out what might be... is that the best way to leave the money or are there other things that we could do to leave that money? Like for example, does it make sense for him to start doing conversions to convert his traditional money to a Roth account, which can be a much more effective tool to be able to leave? What sort of income bracket is his son in? If he leaves pre-tax money, is that going to be a tax bomb for him? Those sorts of things. So on the surface, it looks like a very kind of basic question, but in reality, we're going to have to peel back and look at kind of the other factors and then really strategize to figure out ultimately what's the goal and can we find more efficient ways to accomplish that goal? Marc: Yeah, exactly. I think the first thing that I thought when I read that was 5,000 now, what is it going to be in 10 years? So with inflation, I mean that 5,000 might be 10, so who knows? So some good thoughts there for Bo to consider. Thanks so much for the question. We certainly appreciate it. Nick, thanks for handling that one. And that's going to do it this week here on the podcast. Again, if you've got questions or concerns before you take any action, you should always check with a qualified professional like John and Nick at PFG Private Wealth. Give them a call at (813) 286-7776 or stop by the website, pfgprivatewealth.com. Don't forget to subscribe to the podcast, Retirement Planning Redefined. You can find all that information at the website. Of course, you can also just search it out on Apple, Google, Spotify, or whatever platform you like to use. And for John, Nick, I'm your host Mark. We'll see you next time here on the show. And this has been Retirement Planning Redefined.…

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Ep 14: Traditional IRA 101 16:44

5 years temu16:44

16:44

We cover the basics on the traditional IRA. John and Nick will break down what this investment vehicle is for and how it may be able to benefit you. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey everybody, welcome into this edition of Retirement Planning Redefined with John and Nick here with me, talking about investing finance and retirement. From their office, their PFG Private Wealth in Tampa Bay guys, what's going on? How are you this week, John? John: I'm good. How are you doing? Speaker 1: I'm hanging in there. Amidst the goofiness of the world, I'm doing all right. How about you, Nick? You doing okay? Nick: Yep, yep. Pretty good. We finished up the retirement classes that we teach recently, so just meeting with a lot of people after that class. Speaker 1: Okay. Those went pretty well? Nick: Yeah. Yeah, always good. Always fun. Speaker 1: Okay, well, very good. Listen, I got a little bit of a kind of a class idea for us to run through here. I wanted to talk this week about IRAs, really just an IRA 101, if you will, and then we'll follow it up with our next podcast coming up after this one. We'll follow up with the Roth side of the coin. Let's jump into here just a little bit and talk about this and get rocking and rolling. Just do us a favor. Just assume that we don't all have the same knowledge base. What is an IRA? Give us just a quick 101 on that. John: So yeah, good question. Especially with a tax season coming up, because I know a lot of people when they're doing their taxes, and whether it's TurboTax or working with an accountant, at the end of it it says you might want contribute to an IRA and maybe save some taxes this year. Or maybe get [inaudible 00:01:22] taxable income down the road. But you brought this topic up. So when I raise an individual retirement account on the personal side, a lot of people have their employer sponsored plans, but the IRA is for the individual. Really, there's a lot of tax benefits to it to provide for saving for retirement. One of the biggest questions that Nick and I get, or I guess assumptions, is that most people think an IRA is an actual investment, and it's really not. I explain it as imagine a tax shell, a tax shell you can invest in a lot of different things, and you have some tax benefits within the shell. Speaker 1: Okay. So it's like a turtle shell, if you want to look out that way. It's a wrapper really, right? So it's what your Snicker bar comes in. It's the wrapper. Then inside there you can put all sorts of different stuff. So who can contribute to IRAs? John: Well, there's two main types, and Nick will jump into that. But there's your traditional IRA and then a Roth IRA. Speaker 1: Okay. Nick: From the standpoint of how those break down, how those work, we're going to focus on traditional IRAs today. The number one determination on whether or not you can contribute to an IRA is if there is earned income in the household. So if it's a single person household, they have to have earned income. That does not include pension income, social security income, rental income. It's earned income. You receive some sort of wage for doing a job. So that's the first rule. You can contribute for 2019 and for 2020 essentially, if you're under 50, you can contribute $6,000. If you're over 50, you can take part in what's called a catch-up, which is an additional $1,000 for a total of $7,000. Nick: So as an example, let say that it's a two-person household. One person is working, one person is not, and the person that's working has a least $14,000 of income. Then as long as they satisfy a couple other rules that we'll talk about, they can make a contribution for themself for the $7,000 and for the spouse for the $7,000. So earned income doesn't have to be for both people. It has to be for one, and then the amount ties in the amount of earned income. Speaker 1: Oh, okay. John: One thing to jump into that, and I've seen some people, not our clients, but others, make some mistakes where they think that, we talked about the two different kinds, traditional and Roth, where they think they can make, let's say, $7,000 into one and $7,000 in the other. It's actually $7,000 total between the two of them. Speaker 1: Oh, that's a good point. Yeah. So, okay, so those are good to know. Whenever you're talking about just the contribution, the base set up of them. So let's stick with the traditional IRA and talk about it. What are some key things to think about like as an investment vehicle, as a machine here? These are pre-taxed, right? Nick: Yeah. When we talk about, and this is where the confusion really sets in for many people, when we talk about traditional IRAs, we really like to have conversations with people to make sure that they understand that there can be both a tax deductible or pretax traditional IRA, and there can be non-deductible traditional IRAs. So the logistics are dependent upon, really, a couple of different things whether or not they're active in an employer's plan. Then there are income limits that will determine whether or not somebody can participate in the tax deductible side of a traditional IRA. So that can be a little confusing. We usually have people consult with their tax prepare or and/or their software so that they can fully understand. Nick: But part of the reason that we bring that up is a real-world scenario is, what [inaudible 00:05:17] this client, worked at a company for 10 years, and she contributed to the 401k on a pretax basis. She left the company, rolled her 401k into a rollover IRA, and she's no longer working, but her spouse is working and wants to make IRA contributions for them. But he has a plan at work and makes too much money. They might have to do a non-deductible IRA. So usually what we will tell them to do is to open a second IRA, and when they make the contribution, they're going to account for it on their taxes as they made it. They're not going to deduct it. So we try not to commingle those dollars together. So a nondeductible IRA, we would like you to be separate from a rollover IRA. Otherwise, they have to keep track of the cost basis and their tax basis on nondeductible proportion commingled, and we're really just [inaudible 00:06:16] nightmare. John: Yeah, that's never fun to try and keep track of and never easy. One thing with with the pretax, just give an example of what that means is, let's say someone's taxable income in a given year is $100,000, and doing their taxes, it says, you might want to make a deductible contribution to an IRA. If they were to put $5,000 into the IRA, their taxable income for that given year would be $95,000. So that's where people look at the pretax as a benefit versus a nondeductible. That same example, $100,000 of income, you put $5,000 into a nondeductible IRA, your taxable income stays at that $100,000. Speaker 1: Okay. So what are the factors that determine if it's deductible or not? Nick: The answer is that it's fairly complicated. The first factor is, if we talk about an individual, they're going to look at do you have a plan at work that you're able to contribute to? So that's the first test. The second test is an income test. The tricky part with the income test is that there is a test for your income, and then there's also tests for household income. So usually we revert to the charts and advisors. We work together with the tax preparers to help make sure that we're in compliance with all of the rules. It should be much less complicated than it actually is. But it's really, honestly, a pain. I will say that if you do not have a plan at work that you can contribute to, your ability to contribute in [inaudible 00:07:56] to an IRA, a traditional IRA is much easier. Speaker 1: Okay. Gotcha. All right. So if that's some of the determining factors in there, what are some other important things for us to take away from a traditional IRA standpoint? John: Yeah, one of the biggest benefits to investing in an IRA versus, let's say, outside of it, is and if the account grows tax-deferred. So let's say you had money outside of an IRA and you get some growth on it, I say typically, because nothing's ever absolute. But you can really get it [inaudible 00:08:28] every single year and the gains and the dividends and things like that. Within the IRA shell, going back to that, it just continues to grow tax-deferred. So really help the compounding growth of it. Speaker 1: Okay. So when we're talking about some of these important pieces and the different things with the traditional, what are some other, I know a lot of times we know that it's the 59 and a half, right? All that kind of stuff. Give us some other things to think about just so that we're aware of the gist of it. Now, there was some changes to the Secure Act, which also makes them some of these numbers a little bit different now. The 59 and a half is still there, but now it's gone from 70 and a half to 72, right? John: Yeah. With good things like tax deferral and pre-tax, we do have some nice rules that the IRS/government basically hands down to us. One of them is as far as access to the account, you cannot fully access the account without any penalties until 59 and a half. After you're 59 and a half, you do get access to your account. If you access it before that, there is a 10% penalty on top of a whatever you draw. So that's basically deter to pull out early. There are some special circumstances as far as pulling out before 59 and a half, which could be any type of hardships financially, health wise, and also first time home purchases. We get that quite a bit sometimes where people say, I'm looking to buy a house and I want to go ahead and pull out of my IRA. Can I do so and avoid the penalty? The answer is yes, up to $10,000. John: Some of the changes with the Secure Act where they used to be after 70 and a half, you can no longer contribute to an IRA, even if you have earned income. That's actually gone, which is a nice feature when we're doing planning for clients above 70 and a half, where we can now make a deductible contribution to an IRA, where before we couldn't. Nick's the expert in RMD, so he can jump in and take that. Nick: One of the biggest things to keep in mind from the standpoint of traditional IRAs are that they do have required minimum distributions. The good thing is that those required minimum distributions are now required at age 72 versus 70 and a half. So that makes things a little bit easier for people. And again, that's kind of a big differentiator from the standpoint of a Roth IRA does not have an RMD, a traditional IRA does have an RMD. Speaker 1: Right, and with the RMDs, it's money that basically the government says, we're tired of waiting. Where's our tax revenue? Is there any basic things there just to think about when we're thinking about having to pull this out? Is there a figure attached to it? Nick: I would say we try to give people an idea, because sometimes there's uncertainty on any sort of concept of how much they have to take out. But on average it's about 3.6% in the first year. I would say though, that probably one of the biggest, or I should say one of the most misunderstood portions about it are that the RMD amount that has to come out, it's based on the prior years and balance of all of the pretax accounts. So you may have multiple accounts, you don't have to take an RMD out of each account. You just need to make sure that you take out the amount that is due, and you have the ability to be able to pick which account you want to take that out of, which really, at first thought that can seem more complicated. But if you're working with somebody it helps increase the ability to strategize and ladder your investments and use a bucket strategy where you can use short-term, mid-term, long-term strategies on your money, and have a little bit more flexibility on which account you're going to take money out of when. John: To jump on that, we went through that paycheck series when we talked about having a long-term bucket, and in some strategies that's where by being able to choose what IRA you draw from, you can just let that long-term bucket just continue to build up and not worrying about pulling out of it. Speaker 1: Gotcha. Okay. All right. So that gives us a good rundown, I think, through the traditional side of it, and gives us some basic class, if you will, on what these are. Of course, as the guys mentioned, they teach classes all the time. So if there's things you want to learn more about the IRA, the traditional IRA, and how you might be able to be using it or better using it as part of an investment vehicle, then always reach out to the team and have a conversation about that specifically. Because again, we just covered some basics and general things that apply to just about everybody here. But when you want to see how it works for your situation specifically, you always have to have those conversations one-on-one. So reach out to them, let them know if you want to chat about the traditional IRA, or how you can better use the vehicle, or change, or whatever it is that you're looking to do. Speaker 1: (813) 286-7776 is the number you call to have a conversation with them. You simply let them know that you want to come in. They'll get you scheduled and set up for a time that works well for you. That's (813) 286-7776. They are financial advisors at PFG Private Wealth in the Tampa Bay area. Make sure you subscribe to the podcast on Apple, Google, Spotify, iHeart, Stitcher, whatever platform of choice you like to use. You can simply download the app onto your smartphone and search Retirement Planning Redefined on the app for the podcast. Or you could just simply go to their website at pfgprivatewealth.com. That's pfgprivatewealth.com. Guys, thanks for spending a few minutes with me this week talking about IRAs. So let's, next podcast, talk about the Roth side. We'll flip over to the cousins, okay? John: One more thing I want to mention before we go is withdrawing from the accounts of, let's say someone goes to retire above 59 and a half, and it's time to really start using this money as income. So it's just important to understand that whatever amount that you withdraw out of the IRA, assuming everything was pre-tax that went into it, it adds to your taxable income. So for example, if someone's pulling $50,000 out of their IRA, their taxable income goes up by $50,000 in a given year. So we just want to point that out, because as people are putting money into it, we sometimes do get questions of, when I take it out am I actually taxed on this, the answer is yes, if it was pretax put into it. Speaker 1: Gotcha. Okay. Yeah, great point. Thanks for bringing that up as well. So I appreciate that. And again, folks, the nice thing about a podcast is you can always pause it, and you can always rewind it, replay it. If you're learning, trying to learn something useful, or get a new nugget of information here, that's a great thing about it. That's also why subscribing is fantastic. You can hear new episodes that come out, as well as go back and check on something that you were thinking about, and that way when you come to have that conversation, you can say, listen, I want to understand more about how withdrawals with my traditional IRA is going to affect me, or whatever your question might be. So again, guys, thanks for your time this week. I'll let you get back to work and we'll talk again soon. John: Thanks. Nick: Thanks. Speaker 1: We'll catch you next time here, folks, on the podcast. Again, go subscribe. We'd appreciate it on Retirement Planning Redefined with John and Nick from PFG Private Wealth.…

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Ep 13: Secure Act Changes - Stretch IRA 15:19

5 years temu15:19

15:19

We continue our conversation about the SECURE Act. Another big piece to this new law is the removal of the stretch IRA. Nick walks us through the things we need to know about this big change. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Mark: Hey, everybody. Welcome into another edition of Retirement Planning Redefined. Thanks for tuning into our podcast about investing, finance and retirement with the guys from PFG Private Wealth. On this episode, just Nick joining me again. That's all right. I like talking to Nick. How are you buddy? Nick: Pretty good. Pretty good. Mark: Hanging in there. Hope you had a good week since the last time we talked. Nick: Yeah, absolutely. This is kind of my favorite time of the year from the standpoint of climate in Florida. Most people are in a pretty good mood overall, including myself. Mark: Well, I'll tell you what, you guys have in the weird weather we are? It's in the 70s in North Carolina. Nick: It's definitely warmer than I prefer, but I know that it's going to kind of cool back down. It's still at least not 90 for four months in a row. I'll take it. Mark: Well, the bad part about the warmer winters is it doesn't get a chance to kill the bugs. I'm showing my old man age there by that, but it's really true. Every year I get older, it's like, man, we do kind of need a cold snap during the winter to kind of kill off some of the stuff that is going to haunt us come spring in summer, right? We don't get rid of some of those bugs. It just makes it that much worse. Hopefully another cold snaps on the way. Nick: You must live near the woods. Mark: Woods or water, man. Woods or water. Nick: There you go. There you go. Mark: You'll get it with that. All right. Well, let's get into our show this week. As I mentioned the last time, we talked about the SECURE Act on our previous podcast. If you haven't subscribed to the show, please do so on Apple, Google or Spotify or whatever platform of choice you'd like. We're all over the place with those. We talked about the increase to the RMD age limit and also the contributions for IRAs with the new SECURE Act. The SECURE Act, as I mentioned before, for those of you who'd just be catching this, that is the most significant piece of legislation the government has passed for our listening audience since really the Pension Protection Act of '06. The SECURE Act is setting every community up for Retirement Enhancement Act. Mark: This was $1.4 trillion budget piece that they kind of snuck it into at the end of December there last year in 2019. This week we're going to talk about a really big component, Nick, and that is the elimination or the altering of what was termed the stretch IRA. Really a lot of people they're saying this is the big negative to this piece of its great for the government because is basically a tax generating... This is the way to create more tax income for the government, but not so great for folks who planned on using this as a generational tool, which is primarily what it was done for to leave wealth to their heirs. Nick: Yeah, absolutely. It's going to have a pretty significant ripple effect from the standpoint of people that were planning to leave their IRAs or maybe had adjusted the way that they were taking from their investments throughout retirement and trying to preserve the IRA to pass. That's going to have a pretty significant impact on that. Plus it's also going to probably cost some people some money in legal fees as they adapt and adjust their estate plans and legal documents to take these sorts of things into account. Mark: Yeah, absolutely. What was the stretch or kind of give us a quick overview and then what they've done to alter it? Nick: Yeah. One of the things I always kind of tell people is from the standpoint of a stretch IRA is that it's really kind of a nickname and it's a concept. A joke that I would kind of make is if somebody passed away and you had inherited funds that were in an IRA and you walk into the bank and you tell the bank teller that you want a stretch IRA, they may look at you cross-eyed. It's not an actual legal name for an account type. The real kind of legal name for the account type is an IRA BDA or a beneficiary designated IRA. Essentially what happens is if you inherit IRA funds or you're listed as a beneficiary on an IRA, there are kind of two classifications for how they look at or at least that's kind of been the rule up to now where it's either spouse or non spouse. Nick: The way that it would work is that if you were to inherit an IRA from a spouse, you could either put those funds into your own IRA, or you could put it into the beneficiary designated IRA. The rules for withdrawals would kind of dovetail from there. For a non spouse, you would also open it as a beneficiary designated IRA. But then the required minimum distributions that would have to be taken from that account would be based upon multiple factors, including your age, the year at which the person passed whether or not they had started taking distributions already, et cetera, et cetera. There are some different rules that went on with that, but in theory you could really stretch that over your entire lifetime by taking the minimum out, and you could also list a beneficiary yourself on the account. Mark: The reason for doing that was to if it was a larger account for tax purposes, right? Nick: Absolutely. Let the account continue to compound, avoid taking out in a lump sum and having to pay taxes on the entire lump sum amount. Because just as a reminder for people, when you inherited a traditional IRA or traditional IRA funds, the full account balance has... Taxes are due, federal taxes. If you live in a state where you pay state income taxes, income taxes are due on that full amount. That could be a pretty significant kind of tax bomb dependent upon what happened, especially if you made a mistake in how you had to take it out. Really this new provision essentially applies to people that are going to inherit these funds starting on January 1st of 2020 moving forward. It is not a retroactive rule. Essentially what it does is it says that you must deplete that account within 10 years. Nick: From what I've seen so far, correct me if I'm wrong, the rules on how you need to take out distributions within those 10 years are not as strict as they used to be. However, that account needs to be depleted within the 10 years. Mark: Right. Yeah. You can do it over like annually obviously, but at the end of 10 years, whatever's left, you got to pull it out and pay the taxes. Nick: But you can defer within those 10 years as well. Mark: Yes. Nick: Again, that could create a pretty big tax bond dependent upon the size of the account. There's a little bit of a flexibility and a little less accounting or paperwork on trying to track those required minimum distributions that would have to come out and the amount on are you doing it correctly, are you calculating it correctly, or some people most likely, and we haven't gotten into it yet with any clients with it being so early in the year, but my assumption is dependent upon the overall situation, people are going to probably take it out equally over the 10 years or try to defer and be a little bit strategic with how they take it out dependent upon maybe there's an impending retirement. Maybe a husband and wife are 60 years old and they both plan on retiring at 65. Nick: Wife's father passes away, leaves them money in the inherited IRA. Our goal is going to be that we're going to take it out post retirement where the income has come down, try to minimize the taxation, and maybe even let that fill in the income hole that they have between 65 and 70 or even 65 and 72 now that the RMD age for their own accounts has bumped up to 72, and they can let their own account kind of accumulate and grow and defer accordingly. It will definitely add another level of strategy and just kind of thinking outside the box a little bit so that we don't have to deal with that, but it's going to be interesting to kind of adjust and adapt to the new rules. Mark: Oh yeah, for sure. Now, for some of those folks listening who are thinking about this now, I do know there are definitely some exceptions I guess if you will, if you want to call them that. There are definitely some pieces to ponder when it comes to some exceptions I guess if you will. Obviously if you're a spouse, that kind of stays the same. This is really kind of targeting the heirs, so like basically if you were leaving this to your kids, but there are also a couple of exceptions there like chronic illness I think is one. There's a couple of others as well. Nick: Yeah, chronic illness is definitely one. If there's a disability, that changes and adds a different set of rules. Those sorts of kind of deeper details are the things or the aspects of the new legislation that everybody's kind of digging through. The attorneys are kind of reading through all the paperwork to make that everybody has a really good grasp and understanding of what those exceptions are and how those funds can be used. Attorneys typically do a good job of interpreting the new rules and laws and coming up with new strategies that allow us to work around them a little bit. Mark: Yeah, no, that's a great point. That's why it's really important to talk with your advisor about how this may affect you if you are planning on leaving. A lot of people do that. Some people are saying, Nick, with the way this whole SECURE Act is working together with the increase to the RMD limit at 72, age of 72, and then with this, a lot of folks, they're kind of looking at it saying it's a tax grab for the government, which of course, I mean, it's always something, but it's one of those deals where if you're living longer and you're putting more money and you don't have to take it out and you choose to leave it to your heirs, like these IRAs or whatever, then that's kind of where this is coming from. Mark: That's kind of how the two pieces of the puzzle in some people's minds are working together in order to generate more tax revenue for the government. It's certainly a piece where you want to talk with your advisor about how you can now be planning more efficiently. Nick: Yeah. As an example with that, just kind of a thinking outside the box and how people may adjust and those sorts of things, if there are substantial funds in the IRA and it's important to you to try to leave money to your beneficiaries, this change in the law may kind of push people to look a little bit more at using a tool like a permanent life insurance policy where they're going to use their own distributions that they're taking from their IRA in retirement, apply some of those distributions towards a life insurance policy that is going to pay out tax free after they pass on and avoid that potential tax bomb that the IRA would leave. Mark: Got you. Nick: There's different things. The fun part, and we can put that in quotes as far as the fun part, but the part that we enjoy the most as far as financial planning and retirement planning, et cetera, is that people are different. There are enough rules, laws, product strategies, et cetera, that there's usually something for everybody. It's just important for us to kind of get to know them, figure out what's most important to them, and adapt and adjust the strategies that we recommend so that it fits within their life and what they're trying to do. This is just another change that we take it into account. We adapt. We adjust. One of the things that we always preface, and this is a really good example of why is... Nick: In these classes that we teach, one of the most common questions that people will ask us is, should I contribute money to a traditional IRA or a traditional 401k or Roth IRA or Roth 401k? They start to understand by the end of the class together that we say it depends for a reason, things change. The only thing that we know for certain is that things will change. This is a great example. We always emphasize building in the ability to be flexible and adapt to whatever changes we do have happen to us so that we aren't all in on one certain strategy that we have no control over whether or not it changes. This is just a perfect example, and it emphasizes even more that it's important to have multiple sources of income in retirement, multiple account types. Nick: That goes for the funds that you're going to use in retirement, as well as the funds that you want to leave in retirement. Mark: Got you. Got you. Okay. That's why we kind of preached that on the show that anytime you hear anything, whether it's our podcast, somebody else's, a different show, a radio show, a television show, you may be hearing some information that kind of peaks up your ears there and kind of gets you to thinking about something. But before you take any action, you should always check out what's going to affect your specific situation by talking with a qualified professional financial advisor like the team at PFG Private Wealth, John and Nick here on the podcast. As always, we're going to sign off this week. Really good information here on the show. Mark: If you've got questions about how the stretch IRA, the removal of that or the changes to that are going to affect you or how the SECURE Act in general is going to affect you, make sure you talk with your advisor or reach out to John and Nick at (813) 286-7776 here in the Tampa Bay area, (813)-286-7776. You can also find this online and subscribe to the podcast via the website pfgprivatewealth.com. That's pfgprivatewealth.com. You can subscribe on Apple, Google, Spotify, iHeart, Stitcher, whatever platform it is that you choose. Nick, my friend, thanks so much for your time this week. I appreciate you. We'll talk more I'm sure about the other components of the SECURE Act and how it's going to affect things in the weeks to come. Nick: Thanks, Mark. Have a good day. Mark: You do the same, and we'll see you next time right here on Retirement Planning Redefined.…

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Ep 12: Secure Act Changes - RMD 12:36

5 years temu12:36

12:36

After it simmered in Congress for a year, the SECURE Act is now law. If you have a retirement account of any kind, or will one day inherit a retirement account, this will affect you. Today Nick will discuss the details around the new age specifications. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Transcript of Today's Show: ----more---- Speaker 1: Hey everybody, welcome into another edition of Retirement Planning Redefined. Into 2020 with our first podcast of the new year, joined this week with just Nick on the show with me. Nick McDevitt joining me here from PFG Private Wealth. Nick, buddy, what's going on? How are you? Nick M.: Just recovering from the holidays and getting ramped up for the new year. Speaker 1: Yeah, aren't we all? It's so weird. Are you used to 2020 yet? I don't know, it's a weird number to me. Nick M.: It is weird. Honestly, I was having this conversation with somebody the other day and the craziest thing to me is, with the age that I am, my grandparents were born in the early 30s, late 20s and it takes me back to thinking about in grade school, learning about The Great Depression and realizing that, that was 100 years ago almost. Speaker 1: Yeah. Nick M.: World War I and how far back, growing up in the 90s, how far back the 20s seemed and now here we are again. Speaker 1: Yeah. Well, to that point, I'm a little older than you is, my dad was born in '32. Actually my grandfather was born in 1890, go get that. And here it is 2020, so that just totally trips me out. My family had this weird and I'm only 50. But my family had this weird tradition of having, well, they had a lot of kids back in the day, but then they also had them late. My dad was 40 when I was born and so on and so forth. So yeah, maybe that's why, my wife's grandfather was born at the same time my dad was, and it's just really weird how different people's family dynamics work. Speaker 1: But to that point, 2020 is bringing us a lot of change obviously and we're going to spend probably, we're going to the next two podcasts around this topic, but obviously we're going to have an election later this year. The market popped 29,000, the DOW did for the first time, actually I think has done it twice now. It went over and then went back down at the time of this podcast taping, here in the early couple of weeks of January. So we'll see. It didn't drop very much, but it's gone over and down. So that's new records and new things happening, a lot of stuff. Speaker 1: But out of all of that, one thing that really affects our listener base here for retirees and pre-retirees is the passing of The Secure Act. We talked about it months ago that it was sitting before the house and it looked like it was dead, The Secure Act. But then all of a sudden in December, there at the end, they slipped it through with some budget stuff. So let's talk a little about The Secure Act this week, shall we? Nick M.: Yeah, yeah. For sure. I was pretty surprised that it pushed through as quickly as it did. I had some clients that touched base towards the end of the year. And I told them what I always tell everybody from the standpoint of once it's passed and it's done, then we can talk about it. Speaker 1: Yeah. Nick M.: Because there's always little adjustments and amendments and things like that, that are made. But a lot of the key aspects carried through. And so we're still pouring through the details or really getting into the nitty gritty. But we figured today, we could at least cover one of the topics. Speaker 1: Yep, sure. Nick M.: And focus on that. Speaker 1: Yeah, we're going to do that with this week's podcast and next week. We're going to cover the two biggest components that it pertains to a lot. There's multiple facets to The Secure Act and like any piece of legislation, there's good and there's bad. And of course, the government had to give it this name, secure. So for folks who are wondering, it actually is an acronym, it's setting every community up for retirement enhancement. So that's a mouthful. Nick M.: Yeah, I always wonder how many people got in a room to try to figure out those sorts of things and how long it took them. Speaker 1: How much money they spend just coming up with a name. Nick M.: Yes, yes. And it actually takes away, fortunately, as you alluded to, the biggest aspect of this is changing the age at which required minimum distributions are required. Speaker 1: Let's get into it. Nick M.: From 70 and a half, to 72 years old. Speaker 1: Yeah. Nick M.: Which ruins one of my favorite jokes about, again, the previous rule was so confusing to so many people and so absurd to make it a half a year and people trying to figure that out. We're constantly befuddled, so now this is pretty cut and dry and pretty easy for people to understand, which I think it is probably a bigger benefit even than the increase of age. Speaker 1: Well, okay, so let's dive into that a little bit. So they did raise the RMD limit to 72, as Nick just mentioned. That's the required minimum distribution, was 70 and a half. Now we should say Nick, to clarify, that if you have already started your RMDs at that 70 and a half threshold, it's not like grandfathering but you have to stick with that. So make sure you are talking with your advisor about that. You don't get to switch. Nick M.: Correct, yes. So if you turn 70 and a half before 01/01/2020, then you are- Speaker 1: On the old system, yeah. Nick M.: So it's everybody from 2020 moving forward, which again is a positive. A lot of people are working longer. And for those that don't need the full distribution, defer income to live on, it helps them accumulate and grow money for a longer period of time. Speaker 1: Right. Nick M.: We're definitely a big fan of the change. Speaker 1: Yeah. And I think it needed to be done. I think from that standpoint, it's good and it does clear up that confusion piece, but we just have to get through this initial weirdness, right, for folks who maybe just turned or are just planning at the end of last year, that kind of thing. So there may be a few areas where you want to try to have that conversation with your advisor about where you fall in that. So it's certainly a piece you want to ask. Speaker 1: So as you're listening to this podcast, if you are new to our podcast and you're not working with John and Nick yet, make sure you reach out to them. If you're working with another advisor, ask them that same question, how it's going to affect you because you still don't want to get hit with that God awful penalty that the RMDs have, which is 50%. Nick M.: Correct. Yeah. So just as a reminder for everybody, when those required minimum distributions are calculated. And from my understanding, again, we're digging through all the language, the actual tables that are used to calculate the amount of money that has to come out, those tables themselves haven't changed. So it's just the time that you can wait as a little bit longer. Speaker 1: Right. Nick M.: And as a reminder to everybody, as an example, let's say that the required amount needed to come out as $50,000. And for the last three years you've been taking out $2,000 a month from your account or $24,000, the penalty would be the difference between the amount due, which is 50, minus the 24,000 so 26,000. It's 50% of that $26,000 so it'd be a $13,000 penalty, which is absolutely not a penalty that you want to participate in. Speaker 1: No, that's like a death sentence and it's just terrible. I mean, so they don't mess around when it comes to making sure you do that. Now this piece of legislation, by the way, The Secure Act, folks, it's the most significant change since the 2006 Pension Protection Act that has come through. And there's like I said, there's a lot of components. We're just going to talk a little bit about the age limit today. And along with that line, Nick, they also did eliminate age limits for contributions. So tell us a little bit about that. Nick M.: Correct. So previously, if somebody had a traditional IRA and they were continuing to work, so as a reminder for everybody, if you want to be able to contribute to a retirement account, you must have earned income. So for those people that were maybe, let's say, one of the things that we'll see a lot is, to keep themselves busy, people would work a part-time job, so they would have earned income. And they were over 70 and a half and they weren't necessarily working for the income. Of course, some are. But for example, even if you weren't, if you were over seventy and a half, you could not contribute that money into a traditional IRA, even though you had the earned income. Nick M.: So that rule or that restriction has been lifted. So it allows people that are working longer, which is much more common than it used to be, to be able to add money to the traditional IRA and dependent upon other factors, to potentially deduct that. So that's a nice bonus because the other thing that happened is, because even if you were working in and this is how some of these two tie together. Let's say you're 71 and you were still working and you had IRA money and 401k money. Previously you would've had to take your RMD out of the IRA, although you could defer or wait on the money that was in the 401k for a business owner. So now that extra year and a half buffer, it can really, on some situations, it can really have a significant impact for some people on avoiding having to pay as much in taxes. Speaker 1: Yeah. And it really also expands the opportunities for backdoor Roth conversions, as well for older clients, so that's nice as well. Nick M.: Yes, absolutely. And for those of you whose ears perked up a little bit on the Roth conversion, there's a lot of caveats and we're actually going to have a podcast in the future that talks specifically about those. There's some hoops that you have to jump through, but that can be a really good tool to be able to use to produce some Roth money. Speaker 1: Exactly. So yeah, make sure you subscribe to the podcast. That's a great segue for me to mention that. We are going to talk next time about the stretch IRA and what happened to it in The Secure Act. So by subscribing to the podcast, you'll get notifications for new episodes and really that's pretty much it. So it's a pretty easy thing to do. We just let you know about new episodes. You can listen to past episodes and you can find it a couple of ways. Whether Apple or Google or Spotify or whatever is your platform of choice, you can simply search on their a window, like if you're on Spotify and hit search. You could certainly just type in retirement planning redefined and get us that way or Apple or whatever platform you choose. Speaker 1: You can also go to the guy's website@pfgprivatewealth.com. John and Nick have got the site there for their service, for their company. And while you're there, there's the podcast page. You can check that out. So that is pfgprivatewealth.com. That's pfgprivatewealth.com and you can also call them. As we mentioned before, it's very important. There's a lot of changes, a lot of components to The Secure Act. We're just going to cover over the next couple of episodes what's going to affect most of our listening audience, but there are a lot of little pieces, so you want to make sure you're having a conversation with your advisor and about the planning opportunities that may arise from these changes in The Secure Act law. Speaker 1: Call John or Nick, give them a ring at the office there, if you need to talk with them. (813) 286-7776 in the Tampa Bay area, (813) 286 7776. Anything you can think of extra this week about the RMD component or shall we say goodbye for this week and hit it up next week? Nick M.: I think we're good to go. Speaker 1: With that, we'll say goodbye for this week on the podcast. So again, talk to your advisor about the RMD age limit change with The Secure Act. Reach out to John and Nick if you need a second opinion and we'll catch you next time here on Retirement Planning Redefined.…

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Ep 11: Social Security, Part 5 13:31

5 years temu13:31

13:31

Today is part 5 of our social security series and we will focus on the survivor benefit option. We will talk about a few situations that can arise and share a couple of client stories that have revolved around this topic. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Transcript of Today's Show: ----more---- Speaker 1: Back here with us for another edition of Retirement Planning Redefined, the podcast with John and Nick from PFG Private Wealth. Gentlemen, how's it going? Nick, how are you today, my friend? Nick: Doing pretty well. How about yourself? Speaker 1: I'm hanging in there. Not doing too bad. We are into December. Moving along nicely on this. John, how are you doing? You doing all right? John: I'm doing good. I'm doing good. No complaints. It's a getting a little cooler here in Florida, which is nice. It's been been hot, so it's nice to get a little a cool, no more humidity. Speaker 1: Yeah. Yeah. Now, as planners, you guys plan a lot of things, but are you the same way when it comes to holiday shopping? Have you kind of gotten some of this knocked out? We're at about the middle of the month here now in December. So you guys ready to roll for Christmas or are you last minute? John: I'll take that one first. No, I do a lot of Amazon shopping [crosstalk 00:00:49]. Speaker 1: Me and you both. But how about you, Nick? Nick: Anything I can do to avoid going to a store, I do, so the majority of my shopping [crosstalk 00:00:59]. Speaker 1: I think so many of us are that way, right, which obviously we can see in the death of brick and mortar, for sure. But yeah, absolutely. I agree with you there. Well, hopefully, folks, you're out there getting your shopping done. Maybe you're checking out this podcast while you're driving around doing some shopping or walking around in the malls or whatever the case might be. That is kind of the beauty of podcasting. It's not like traditional radio obviously, so you have more options, and hopefully you're subscribed to the podcast Retirement Planning Redefined. Do it at Apple, Google or Spotify, and a couple others as well, and you can find the links if you want, and podcast episodes on their website at PFGPrivateWealth.com. That's PFGPrivateWealth.com. Speaker 1: All right, part five. I think this is going to probably wrap it up, too, for our series on social security. We're going to talk about survivor benefits. Guys, give us some things to think about here. Survivor benefits are available to children and surviving spouses, correct? John: Yeah, so it is available to children and surviving spouses. For today's session, we're going to focus more on surviving spouses because that comes into play more when we're doing retirement planning. Speaker 1: Okay. John: So we always like to actually joke around with the survivor benefit. Not many people are aware, but they get a nice $255 lump sum death benefit if the spouse were to pass away. Nick: Obviously has not been adjusted for inflation. Speaker 1: Yeah, no, that doesn't cover much of anything, does it? John: No, no it doesn't. But they do get a monthly benefit as survivor and when it comes to planning, that does help out quite a bit when we're talking about strategies and trying to figure out a plan for a survivor. Kind of some rules that go with that. A survivor can actually start drawing social security at age 60 versus 62, which is kind of the normal first spouse, which we discussed last week. Nick: It is important to note that as a reminder, even though they're eligible to draw at 60, there are still the income tests from the standpoint of reductions. So if that person is working, then it may not make a whole lot of sense to get that early. John: Yeah. What Nick's referencing, we talked about the earnings penalty if you start taking social security before your full retirement age. That does still apply age 60, so if you're still working, most likely that will wipe out any social security benefit you're going to get as a survivor. John: Some other things to consider, and I'll kind of give some examples of this. Survivor benefit is not available if someone remarries before age 60, okay, unless of course that marriage ends. So we've had situations where we were planning for clients and we were talking about doing some survivor strategies and they actually ... Let's just give an example. They were 57 and were considering getting married and actually deferred their marriage until age 61 to be safe, which I don't think the spouse is too happy with us on that because it deferred the marriage, but it made sense because we actually get some pretty easy strategies, which we'll talk about later, to maximize the social security. Nick: For the widow to the eligible for those survivor benefits, they had to have been married for at least nine months. There's a caveat to that where the death was an accident, that could come into play. So essentially, that's pretty lenient, but it is important to understand the nine month rule as well. John: Yeah. And we stress a lot on just understanding what your situation is. Just kind of give you an example of that, I had a client that thought she's eligible for social security because she was married, but he passed away when they were within eight months of marriage. And she was shocked [inaudible 00:04:23] the whole time, let's say the last seven years, she was planning on it and then didn't qualify for it. So it was shocking, and unfortunately for her, she was hitting 62 so it made a big difference to her overall plan. Speaker 1: Gotcha. Okay. So good information there. Surviving spouse's benefit is based on what? Nick: So essentially kind of the caveat to this is whether or not people have been collecting. So if both spouses are receiving their benefits and there is death, then the surviving spouse receives the higher of the two. John: Not both. Nick: Correct. Not both, which some people will be surprised about how that works. But it's important to understand that they receive the higher of the two, not both. And one of the big factors that gets calculated into the firm calculation of the amount of money that the widow will receive takes into account when the deceased spouse originally claimed their benefit. And it gets a little bit confusing, quite frankly, for most people, but it factors in essentially whether or not they took it before or after their full retirement age. So John will walk us through an example on that. But it is important to understand how this works. John: Yeah. Again, we like to do everything in the realm of planning. So this is where doing the social security maximization strategy is very important. Social security is a big part of someone's retirement income. So you want to make sure that you're making the best decisions available to you, because the last thing you is to look back 10 years ago, it's like, "Oh, I wish I did this. I could have had X amount of dollars or really been enjoying my [inaudible 00:06:05] a little bit more." John: So just going to touch on an example of that. We'll call them Jack and Jill. We talked about some survivor strategies last week, but let's say Jack's up for retirement benefits, 2,400. Doesn't take it [inaudible 00:06:20] 70. Basically, Jill can jump on and actually take ... Let's increase it to 2,976 increases. That will be her new basically benefit for social security, so she gets a nice increase and that's where we talked about really trying to protect the spouse and giving them more income for life. And if she tries to draw early, let's say she takes it at 62, which anytime you draw early, you get reduction of benefit or a reduction based off of now the higher amount that he deferred, which is a nice little caveat. We have to really do some planning for a spouse. Nick: And one of the things too from a comparison standpoint is when we discuss the spousal benefits and how the spousal benefits do not grow past full retirement age, the death benefits does, or the widow benefit, survivor benefit does grow past [inaudible 00:07:15] age, so another reason why that's really a big factor. John: Yeah. And one thing that we'll always do, if we're incorporating strategies, you always typically want to delay the higher benefit. So if you're looking at an opportunity to take a widow's benefit or my own, rule of thumb, and everyone's different, but rule of thumb is defer the higher ones. I'll give my family as an example. My father-in-law, his wife passed away young and basically age 60, he was able to actually draw her social security benefit at 60, which a reduced amount. Most of his income is from real estate and investment income, so an earnings penalty didn't apply to him. So the plan is he's taking the widow benefit at 60 and he's deferring his, and then at full retirement age, he's going to switch over to his and get his full retirement benefit. So from 60 to 66, he was actually able to get some type of benefit and then at 66, will jump to his own and he gets the full amount. Speaker 1: Yeah. So there's some good strategies, some good things to think about, good information here when we're talking about these survivor benefits. So a couple of final key points or key takeaways, guys, just to think about? John: Things to consider is a reminder that basically when the person passes away, their social security benefits stop. And if the surviving spouse is going to take one, they'll take either their own or the deceased spouse, whatever one's higher, just making sure that it's important to plan and make sure the strategy is best for you based on your situation. Social security ... This is everything, not just survivors ... it's very confusing, and there's a lot of different things you can do, so if you're working with an advisor, just make sure that they have the capabilities to stress test your decisions, to make sure you're making the correct decision based on your situation and not your neighbors or as Nick likes to say, up north, his clients, they've talked to their plumber. Nick: Yeah. Everybody likes to get an opinion from somebody else. We will talk about opinions. But so anyways, I think the biggest kind of overlying thing, and we talk about it a lot, but we can't emphasize it enough, and even when we do overemphasize it, people still ask, but this is not a decision to be made in a vacuum. So many other factors tie into this decision. Nick: And even when we plan ... As an example, I was walking somebody through a plan this week, and they are three or four years out from retirement, and even though we have a strategy set up for social security in the plan on what we plan to do from a baseline standpoint, they asked and I really had to emphasize that realistically this decision doesn't really get made until maybe three, six months before their retirement. Nick: So we may plan for a certain strategy for four or five years, but the importance of planning and updating your plan every single year cannot be understated, because especially with social security, if we're in the midst of a recession, if we're in the midst of a 2008, we're not going to have somebody take a bunch of money out of their nest egg even though over the last five years we planned to do that. We're probably going to have at least one of them take social security, protect the value of the nest egg, give it time to bounce back and then adjust accordingly. The planning is via kind of a living, breathing thing and we always have to adapt and adjust. Speaker 1: Nope, I think that's a great point. We've said that many times here on the podcast that you've got to have a plan and then you have to realize that that plan needs to evolve much like your life's going to. A lot of times we kind of get a collection of things. We have some investments, we have some insurance vehicles, we think about social security. Maybe you're lucky enough to have a pension and you say, "Okay. Well, I've got this collection of things. I'm good to go. I have a retirement plan." No, you have a collection of things. So pulling them all together in a full retirement plan is really important. Speaker 1: That's what John and Nick do every day at PFG Private Wealth, so give them a call if you've got questions or concerns. Get on the calendar at 813-286-7776. That's 813-286-7776. Don't forget to go to the website, PFGPrivateWealth.com. You can always subscribe to the podcast and get new episodes, check out past episodes, things of that nature on Apple or Google or Spotify. So check them out online as well@pfgprivatewealth.com and also share the podcast with folks that you think might benefit from it as well. Speaker 1: This has been Retirement Planning Redefined. Thanks so much for staying tuned into the show. John. Nick, thanks for your time, as always. I hope you have a happy and safe holiday and we'll talk actually I think in 2020. Nick: Sounds good. John: All right. Speaker 1: You guys- Nick: Thank you. Speaker 1: Yeah, absolutely. Take care and enjoy the holidays, everybody, and we'll see you next time right here on Retirement Planning Redefined.…

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Ep 10: Social Security, Part 4 17:05

5 years temu17:05

17:05

Today's show is part 4 of our social security discussion. Our topic today is spousal benefit options. John and Nick will walk us through the ins and outs of this facet of social security and offer their advice. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Transcript of Today's Show: ----more---- Mark: Hey everybody, welcome into another edition of Retirement Planning Redefined. Thanks as always for checking out and tuning into the podcast with John and Nick, financial advisors at PFG Private wealth. Gents, what's going on? John, I'll start with you. How are you buddy? John: I'm doing good. I'm doing good. How are you doing Mark? Mark: I'm hanging in there. How's the little one's doing? I know they, you had some cold running through the house. Everybody getting better? John: They're getting much better, which is good. No more getting coughed in my face a lot less this week, so yeah, that's a good thing. Mark: And Nick, how are you my friend? Nick: Good, good. Looking forward to the holidays coming up here and all kinds of good food. Mark: Oh yeah, yeah. Are you a Thanksgiving kind of guy? Nick: I have become more so after my brother started deep frying turkeys a couple of years ago. Mark: Okay, good. So no YouTube videos of that now, so just be careful. We don't want to see any flying turkeys. Nick: He's got it all under control. Mark: Fantastic. Awesome. Yeah. At the time of this podcast taping it is just about Thanksgiving. It's just about here on us. And so we're going to continue on with our a multi-part series we've been doing about Social Security. So hopefully you've been checking these out and if you have, great, if you have not, make sure you go to the podcast page, you can find it on their website at pfgprivatewealth.com that's P F G private wealth.com and you'll find the podcast page. You can subscribe to it on Apple or Google or Spotify. I think there's other couple of choices there as well. Mark: So make sure you do, a lot of good content that we're discussing. This is a multi-part series all around Social Security and part four here is going to be on Social Security, spousal benefits, not deep frying turkeys that'll come another day, but a Social Security spousal benefits. So guys, let's get into this and just kind of break down some information for us on, I guess, what we're entitled to or how this whole thing kind of works. Nick: Sure. So just kind of a recap on, you know, how eligibility wears for Social Security. Essentially somebody needs to work, you know, for 40 quarters, pay payroll taxes for those 40 quarters and they become eligible for their own benefit. However, you know, one of the common questions that we may get is one spouse stayed at home, one spouse worked. The spouse that stayed at home didn't get their 40 quarters. And they want to know are they eligible for any sort of benefit. Nick: So it's important to understand that, you know, as long as the couple is married, the person that has not qualified for the benefit is eligible for a spousal benefit. And that spousal benefit is essentially calculated by looking at the full retirement amount benefit for the spouse that was working and multiplying by 50%. So, that's the starting line. That's kind of how you understand how they calculate that. And the reason that they did create that was understanding that households, you know, it's not always cut and dry from the standpoint of one spouse is working. There's obviously value to the other spouse staying home, helping to raise a family and they want to protect that spouse in situations like divorce or other sorts of scenarios by providing them with this kind of caveat for how the benefits work. Mark: Okay. And yeah, so the simple way to break it down. So give us some more, John, give us some more things to think about here when we're talking about the eligibility of spouses, maybe some rules, things of that nature. John: Yeah. So basically, some of the rules before you can collect a spousal benefit, the primary worker must have filed. So wait until the spouse actually draws and then you can go ahead and take your spousal benefit. Spouses can actually start taking it at age 62, that's the soonest that you can start taking. Nick: So a kind of a good example of that is, so let's say, Mr. Smith has been the worker and Mrs. Smith stayed at home with the family and raised a family. And a couple of years ago, two years ago, she started working, you know, so she's not eligible for her own benefit. So Mr. Smith is going to continue to work and Mrs. Smith is trying to figure out, "Hey, I'm also 62, can I file for benefits?" So the answer is not until Mr. Smith essentially retires and fights for his benefit. So that's where the restrictions on the ages kind of come to play. Nick: And when John referred to that primary worker must filed for their benefits, there used to be some other rules in play where you can kind of navigate around, but they really cut down and things are a lot more restricted than they used to be. John: Yeah. And just to kind of give some numbers to that, let's say Mr Smith's full retirement benefit was 2,400, Mrs Smith's spousal benefit would be, as Nick mentioned, 50% of that sort of 1200. And again, so her spousal benefit is based off of his full retirement amount benefit and not what he actually gets. So example of that would be, you know, when she goes to draw, let's say if he'd started taking early and he get his full 2,400, she's not penalize by that. Her 50% is still the 1200, assuming she draws at her full retirement age. John: If she decides to take early at 62 she will actually have a reduction of her spousal benefit. Nick: It is important for people to understand that, you know, there's the dates on when people start to receive the benefits are calculated, or factored in I should say, for each person. Though it factored in potentially when Mr. Smith files and starts collecting and it's also factored in when Mrs. Smith files and starts collecting. And so there's a lot of different variations on how that works. And because there are some different variations, we typically recommend to people that, you know, I was helping you kind of walk through the different, let's test out different scenarios and figure which one makes the most sense because there are so many factors that go into the decision. Nick: We understand a lot of people like to just, you know, they want a cut and dry answer and unfortunately or fortunately, the positive to there not being a cut and dry answer is that, you know, oftentimes they can be strategic and find something that works better for them and if it were cut and dry. But it does take a factoring in a lot of other things to make the right decision. John: Yeah. At first the answers to certain questions are, it depends. Mark: Yeah, that's the case a lot of times I think. John: One question we actually get a lot and we talked about in the last sessions was, you know, if you draw Social Security after full retirement age, you actually get a percent increase in your benefit. That does not work for spousal benefits. So if the spouse didn't want to take or they want to defer their spousal benefit, they do not get the 8% increase on it. Nick: Yeah. So, we have seen that mistake happen, you know, the primary person has decided, "Hey, let's wait to collect the benefit" because they are under the assumption that not only will their benefit grow by 8%, but the spousal benefit that their spouse will take will grow, but that's not the case. Only their benefit grows, the spousal benefit does not. So when we run kind of break even calculations, it can often makes sense to just have them start collecting so that they can get both of them. John: Yeah. And then, you know, it's important understand also for to be eligible for spousal benefits, you have to be married at least one year. So can't be a just getting married and after six months started drawing on Social Security for a spouse. Mark: They're not going to just make it too easy for you anyway. All right, so that's some good rules. That's some good basic information there. What are some strategies? Give us a few things to think about when it comes to the spousal benefit options. John: Yeah. And like we said, everyone's situation is different. It really depends and it's important to customize what works for you. And I think we offered in the last session, but if anyone wants it, we actually are working on a Social Security machination strategy, which we're happy to do so. But one thing that we'll do with some spousal strategies, depending on the situation, we might have one spouse claim early and the other spouse, depending on the situation, you know example of that would be, let's say we have a high earner and they want to protect the spouse in case of a premature death. So we might go ahead and have the high earner, who's Social Security benefit is higher, actually delay theirs. So, if they were to pass away prematurely, that spouse can actually jump onto a higher amount, high Social Security benefit, which is nice strategy to protect the surviving spouse. John: I've used that a couple of times when there's an age gap on the spouses or if I'm there, you know, sometimes clients will come in and they're just concerned saying, "Hey, I'm really concerned something could happen to me. Is my spouse going to be okay?" We'll go ahead and implement some strategies like that. Nick: Another time where that can be used is if the primary earner has worked at in an occupation where they're eligible for a pension and they're going to receive a pension and they, you know, kind of through planning or whatever it may be. Or like the example of John mentioned where on of the spouses is maybe quite a bit younger, so when the other spouse is quite a bit younger, it pulls down the pension amount that the primary person would receive. So to offset that a little bit, we might recommend, "Well, hey, instead of doing a hundred percent survivor benefit on the pension, let's do a 50% so that you can have a higher pay out. But to offset that, what we'll do is we'll have you wait to take Social Security until 70." So the pension amount that the spouse would receive would be less, but we can offset that waiting on Social Security a little bit and still have more income coming in the household. Mark: Gotcha. Okay. All right. So a couple of different strategies there to consider and I think a lot of times people sometimes don't plan ahead for that part. It's like we're sitting there talking about different, when you're getting your retirement plan done, I think sometimes we look at it overall and say, "Well, we want to turn Social Security on as soon as we can and yada, yada yada." Instead of saying, "Okay, how can we most maximize our Social Security for both of us in an overall inclusive retirement plan?" Mark: So it's certainly important to do. And as John mentioned, you know, they can run that Social Security maximization if you have some questions on that. If you want to get that done or have a chat with them, give them a call at (813) 286-7776 that's (813) 286-7776 and you can also check them out online at pfgprivatewealth.com. Mark: As I mentioned before, there are financial advisors here in the Tampa Bay area, so if you have some questions about that, again, as always when you're listening to this show or any other show before you take any action, always check with a qualified professional about your specific situation because everybody's, it can be so different, so make sure you have that chat. Mark: All right guys, I think in the interest of time we can probably squeeze in a couple more things. Can you give us a few things to think about on divorced spousal situations? John: Yeah, so it is important for people to understand that they are still eligible for a spousal benefit if they were married for 10 years and they are not remarried. So a scenario that we may see with that is they were previously married to a high earner, maybe they worked a lower paying job, they were married for 25 years, became divorced, they went back to work to cover expenses, et cetera. They may be in a relationship currently, but they're not officially married and we kind of go through calculations and we determined that, "Hey, the spousal benefit that you could receive from you former spouse would be higher than the benefit that you would receive on your own and or higher than the benefit that you would receive if you were to marry your current partner." And obviously a lot of other factors go into that. John: But, from a purely financial decision, that could work out really well because again, you cannot collect that spousal benefit from a former spouse if you are remarried. We have had questions along the lines of, you know, "Hey, I was married twice. Both were over 10 years. Am I restricted to choose just the most recent one?" And the answer is no, you can pick the higher. We had a nice young lady one time that had four different ten year marriages and she asked if she could add them all up together and unfortunately you can't, it's just the higher. Nick: But she had a lot of options. John: Yeah. It's good to have options. Mark: Like window shopping apparently. John: So, yeah. So those are a couple of things to keep in mind. Nick: Yeah. And one question we get a lot with divorced clients, they say, "How soon can I draw on the ex-spouse's Social Security?" And really you can draw on an ex-spouse once that ex-spouse hits age 62. Unlike a kind of a normal situation, when we wait until the spouse draws Social Security. They put this rule in really to protect the ex spouse because we've seen scenarios where certain people might delay drawing to intentionally hurt the other spouse and so they can't draw on them. So basically the rule is once the ex-spouse hits over 62, you can actually start drawing on the spousal benefits for divorcees. John: Yeah. It does not matter whether or not they're collecting. And also some people are happy about this, some people are not. But when you do get that benefit from a former spouse, again it does not affect their own benefit. There is no negative impact to doing that to them. Mark: They don't even know about it. Nick: They would have no idea. And it actually wouldn't affect any new spouse for somebody. So we get that question quite a bit where it says, "Hey, an ex-spouse draws on my Social Security. Does that affect my new wife or husband?" The answer is no. Mark: Yeah, exactly. Yeah. And there's interesting on the time period on that, it's funny that you kind of brought that up. My mother, who's 78, actually was given that information and did a refile with the Social Security for her first husband. She was married twice as well. And so yes, she was able to do that and they hadn't been married in like 40 years, but they were married over 10 years. So they were like, "Yep, that's something you can do." So I was like, "Okay, well knock yourself out." Mark: So yeah, it's interesting. There's definitely some few things to consider in there. Different kinds of a spousal benefit options, divorce spousal benefit options. So again, a lot of it comes down to having a conversation about your specific situation with your advisor when it comes to Social Security, because there are a lot of things in Social Security obviously, which is why we're on a four part series, going to be a five part series actually around this. Mark: So with that said, I think we're going to depart this week on the program. I'll say John and Nick, thanks for your time. As always, we appreciate it. Folks, make sure you reach out to them, give them a call if you've got some questions at (813) 286-7776. (813) 286-7776, again, that number to call. And as always, make sure you subscribe to the podcast. Retirement Planning Redefined. You can find it on Apple, Google or Spotify. Mark: You can also just find it on their website at pfgprivatewealth.com and as I said at the beginning of this, that it was prior to Thanksgiving when we were taping this. Now we'll actually air it after Thanksgiving. So we certainly hope that everybody had a great holiday season. And we'll see you for more of our conversation around Social Security through the month of December, right here on Retirement Planning Redefined. For John, for Nick, we'll see you next time.…

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Ep 9: Social Security, Part 3 16:21

5 years temu16:21

16:21

This is part 3 of our social security conversation. This week we talk about what aspects you should consider before you decide to start taking social security. Everybody's situation is different, but this may help you get a better idea on when you should start reaping your benefits. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Transcript of Today's Show: ----more---- Speaker 1: Thanks for tuning in to a another edition of the Retirement Planning - Redefined Podcast. As always, I'm here with John and Nick, Financial Advisors at PFG Private Wealth. Nick, what's going on buddy? How are you this week? Nick: Doing pretty well. How about yourself? Speaker 1: I'm hanging in there, not doing too bad. Are you guys still sweltering down there? We are here in North Carolina. It's been pretty dang hot the last few days, and it's in October, so we'll see how this plays out. You guys still burning up? John: Yeah, we had two days of a little less humidity. Speaker 1: Uh-huh (affirmative). John: And then it just came right back. Nick: Yeah, yeah, the humidity dropped off and it kind of was a little bit of a tease like taking the dog out in the morning. It was like, "Okay, this is not bad." Especially even in the shade during the day. But came back with a vengeance the last few days. So hopefully we kind of get back to the... The heat, I don't mind as much as the humidity, but winters. Speaker 1: Yeah. When you got to use a butter knife to cut the air, because it's so thick with moisture and whatnot. Now that was Nick's voice. The other voice is John's. John, how you doing buddy? John: Great. Speaker 1: Hey, well that's good. Oh great. I like that. Well, very good. Well good. Then you're going to be ready to roll on this conversation. It's part three of our ongoing chat about social security. And we covered a few things the past couple of weeks. If you've been listening to us, we talked some mechanics, we've talked taxation, we've talked funding, some overviews of some of those things there. And if you did not listen, well go sign up at the website. It doesn't cost you anything to subscribe to the podcast. So go to pfgprivatewealth.com, that's pfgprivatewealth.com. That's their webpage. You'll be able to find lots of things about the team, as well as the podcast. And subscribe to that on Google or Apple or whatever you'd like. Speaker 1: You can also just call them if you ever have questions, or get tripped up and you want to have a conversation. And you should before you take any action. You should always check with a qualified professional like John and Nick. They are financial advisors. (813)286-7776 is the number to reach them at. (813)286-7776. But again, we're talking social security. We covered a lot of those things. So now let's talk strategy a little bit, gents. Big question that always pops up, and that's usually number one for most people is when should we apply for benefits? Nick: Yeah, so this is always a good one. My dad actually just hit his official social security birthday. He just turned 62, and of course the thing that he wants to do the most more than anything in the world, is start taking income. Speaker 1: Turn it on. Right? Nick: And so the first question that we have to anybody that hits 62, and is interested in potentially starting to take their income is, "Do you have any other earned income?" So the social security system is set up where if you have earned income, so earned income specifically on an individual basis, then there is an earnings test on how much you're making. And if you decide you want to take your social security benefit, whether or not there's going to be a reduction. So what we mean that is again, using my dad as an example, he's a retired fireman, he has a small business, so he has some income from the business, but he has a pension. Nick: So pension income does not count towards this income test. It's only the earned income that he gets from his business. At the same time, the income that my mom makes as a nurse, does not count towards his test for his social security. So understanding that it's based upon an individual's income, and that it's an individual's earned income, that limit is about $18,000, 18 to $19,000. It changes a year-to-year and it's been inflating up. Nick: So for every dollar that you earn above that amount, they start to reduce your social security benefit by 50 cents. So it's about a 50% reduction. So what we'll tell people is, a lot of these other factors start to come into play on whether or not they need the money, what they're going to do with the money. And we'll kind of get into some of those details a little bit more. But understanding that there is a penalty, or a reduction in the benefit that you receive if you take it before your full retirement age. And understanding how they calculate that's really, really important. Nick: So a really basic example is, if we say that somebody is going to earn $24,000 of income, so they're going to be about 5,000 over the limit, and there's going to be a reduction in their social security. That reduction isn't nearly as bad as somebody that's maybe earning 40,000, where they're almost going to zero out their social security benefits. And since they took it early, there is a permanent reduction anyways. So it does become kind of a more complicated response and an answer, but it does help to get people thinking and understanding and kind of strategizing on what makes the most sense for them. John: So to jump in here, in the year you reach your full retirement age actually that penalty goes away. So basically, let's say your full retirement age is 67, and you turn 67 in June, once you hit your birthday, you can earn as much as you want. And from that point moving forward, there's no penalty on any earned income for that individual. And kind of back to what Nick was saying, very important that people do understand that it's based on the individual's income and not household. Because I have run into some scenarios where some clients previous to us got some bad advice, and they actually did not take the social security, because an advisor told them it was based on household income. So there was a couple of years that they wanted to take it and they didn't, because they got bad advice. Speaker 1: Yeah, that's not good. So yeah, you want to make sure- John: No, that's why Nick kind of stressed that. Speaker 1: Okay, so let's talk about 62 as a magic number, first. If you go as soon as you can, Nick, you mentioned your dad. A lot of people do that. They're like, "I'm going to run right down and turn it on as soon as I can." That might be the right decision for you, but it may not, because you could be looking at a reduction in your benefit. Correct? John: Yeah. So I'll use my parents' example here. Speaker 1: Oh go for it. John: So once they hit 62 they were done. They were done working, they wanted to retire. And we had the conversation of whether they should take it or not. And we decided that it was best for them to go ahead and take it at 62. So the negative to that is you do get a reduction of benefit, which could be anywhere from 70 to 75%, which was okay for them, because they actually had some pension income. John: So when we were doing their plan, we looked at it and said, "Hey, we're going to take a little bit of a hit in your guaranteed income from social security." But they had some pension income, which helped out, which is why we kind of decided for them that it was okay to take. And again, everyone's situation's different, but just understand that when you do take at 62, you get a reduction of benefit, and that reduction of benefit is permanent. Nick: So then kind of going from there, that range between 62, which is when you're first eligible, up to your full retirement age, which is actually determined by the year that you were born. So for somebody that's in their early sixties now, their full retirement age is most likely 66. For somebody that might be in the thirties and forties, it's 67 or later. Nick: But once you hit that full retirement age and your statement that you receive on an annual basis, or when you log in to see it, it does tell you, that's kind of the point at which you can receive your full benefit amount. There are no earnings tests anymore, there are way less rules, is kind of the easiest way to think about it. However, let's say that your situation allows you, maybe you have a younger spouse, and your younger spouse is still continuing to work. Their income still is enough to support the household and you don't need additional income. You can let your benefit continue to grow, and it grows by 8% simple interest. And that number caps out at age 70. Nick: So once you get to age 70, there is absolutely no point in waiting any longer, because your benefit does not grow at all. So an important thing to kind of take into consideration as far as that goes, is we're going to have a separate session on spousal benefits and widow benefits. However, spousal benefits do not grow with those 8% increases. Spousal benefits do maximize at the full retirement age. So again, we'll kind of get into more detail on that a little bit later on. But just wanted to make sure that we took that into consideration. And one of the most common questions that we'll get, "Should I take it at 62 should I take it up for retirement age? What about in-between?" Nick: So there isn't a hard difference between 62 and full retirement age. The benefit will continue to increase. So we've used my dad as an example a few times. So although he just turned 62, we looked out over the next year, and we realized that the need to take the benefit this year didn't necessarily make a whole lot of sense, but we're going to revisit it next year. So this is something that you can kind of reevaluate on a year-by-year basis, or really even a month-by-month basis. Essentially what happens is that benefit grows by about a half percent per month. So that can does continue to grow. So it's not like if you wait between 62 and 63 you've been penalized or anything like that. It is something that does continue to grow. Speaker 1: Yeah. John: So one of the main questions that we get when deciding is really the break even point. So deciding, "Hey, if I take at 62, I'll have this amount of money versus full retirement age." And the break even is usually mid to late seventies, let's just say 76 to 77 years old. Looking at it in a vacuum, without any other parts, that's when people determine, "Hey, if I waited until 60, my full retirement age, once I hit 77 it would've been better to wait for that." John: But one thing to consider is that, just looking at a vacuum, really we're missing a lot of key points here. So a reason to take at 62 could be health. So as far as, I'll use myself as an example, because I'm currently injured with my back. But in my twenties, I could do a lot more than I can in my thirties. So someone might want to take it at 62, so they can enjoy between 62 and 75, and have more money to go on vacation. So those are things that you really need to consider besides the break even point. Nick: Yeah, I would say from a strictly planning standpoint. So if we take out some of the lifestyle decisions that factor into this, if we take a look at it from the standpoint of strictly finances, there tends to be, dependent upon people's situation, there tends to be kind of a magic number for the nest egg. So in other words, dependent upon how much people need to take out of their nest egg, if waiting on social security forces somebody to take an unreasonable or an unsustainable, which are all right from their nest egg, we're probably going to go ahead and have them take the social security. Nick: Because maintaining that nest egg for as long as possible is really important. And if that number isn't there, if they just for whatever reason haven't been able to save, or get to that number that's right for their specific situation, a lot of times taking that social security is going to alleviate the pressure on the nest egg. It's going to help us sustain through maybe some negative points of the market, and allow them to live the lifestyle that they want to live in that early five to eight year first portion of retirement. So that's a huge driver from a financial standpoint, to kind of make the overall plan work. Nick: Things like life expectancy come into play, although that can be a little bit tricky from, we'll kind of refer to that as the crystal ball planning. Where we try to plan for a long period of time not maybe what happened with your parents or things like that. So there are a lot of different factors but that helps kind of bullet point some of the key things to consider when trying to decide on when to apply. John: Yeah, no I just kind of jumped in with something that just popped into my head about something to consider where, client situation, where they had a really good strong social security benefit and pensions, but they really didn't have a lot of liquidity. So not a lot of assets. John: So strategy that we're using for them, is we're actually taking the social security once they hit the full retirement age, because they are still working. And instead of letting that benefit build up, we're actually saving that into some type of retirement plan. So when they do fully retire, in this situation it's age 70, they'll actually have some type of nest egg that isn't just income. It's actually a nest egg they can pull on. So we are taking the benefit, full retirement age, but we're actually saving it to provide some liquidity in retirement. Nick: Yeah. And so maybe a real world example of that is we work with a decent amount of local faculty at some of the local universities, and their plans have structures where they can save money into the different retirement plans. So in that scenario, maybe they have a pension, they're going to have a good pension when they retire, they have social security benefits. It's going to cover their expenses. But because of those things they save, let's just call it maybe like $200,000 into their nest egg. Nick: So what we can do is turn on that social security, and bump up the savings that they're putting into their 403(b), or some other sort of employer-based retirement account, offset the taxes from an income tax standpoint as they're taking that. Because again, going back, that benefit's going to be taxable or at least includable in their taxes, offset that, build that up, try to really bump up their nest egg by another hundred, hundred plus thousand dollars a year. And give them a little bit more peace of mind when they retire. Speaker 1: Well, really, really good information here on this podcast edition of Retirement Planning - Redefined. We've been talking about really kind of the strategy of taking social security. This is part three of our ongoing series of social security. When should you apply for benefits? A lot of good information covered. The great thing about a podcast is if you're going through and you're listening to it and you didn't quite catch it, or you're not quite following, you can always back up and listen to it again. Unlike a radio show or something where you just kind of catch it in passing. And especially easier if you subscribe to them. Speaker 1: So make sure you go ahead and subscribe to the podcast at pfgprivatewealth.com. That is pfgprivatewealth.com. But if social security is tripping you up, do not feel alone. It definitely can be that way for a lot of folks. Reach out and call John and Nick and have a conversation with them. Get yourself on the calendar at (813)286-7776. That's their number if you'd like to reach out to them. (813)286-7776, serving you here in the Tampa Bay Area, at PFG Private Wealth, where John and Nick are financial advisors. Speaker 1: And with that we're going to say goodbye this week for the podcast. Tune in next time, when we're going to continue on with social security, and talk about spousal and widow benefits in part four of our ongoing social security series here on Retirement Planning - Redefined with John and Nick, financial advisors at PFG Private Wealth. Boys, I'll see you next time. Thanks so much for being here and for everybody listening we'll talk to you next time here on the podcast.…

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Ep 8: Social Security, Part 2 11:50

5 years temu11:50

11:50

We continue our discussion on social security this week. Today's show will focus on how you can integrate social security in your retirement plan and some variables you may need to look out for when doing so. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com ----more---- Transcript of today's show: Speaker 1: Thanks for coming back in with us. As we talk here on retirement planning redefined, we always appreciate you joining us here on the podcast. With John and Nick, financial advisors at PFG Private Wealth, and we're going to continue our multi-part series on social security. We talked about a few things last go around on the podcast, and we're going to continue that on this time as well. John, how you doing buddy? How's things going? John: I'm doing good. How are you doing? Speaker 1: I'm hanging in there. Doing pretty well. I think I'm doing about the same as Nick. At the time as podcast, our teams did not fare well this past weekend in football. How are you doing, Nick? Nick: Good. While we lost, I'm still cautiously optimistic. Speaker 1: Yeah, that's right. That's good. Nick: I'm okay. Speaker 1: That's how fans do it, right? You still stay optimistic even when they break your heart over and over. We'll save that for another time, but I do want to continue on our conversation about social security. We had some good chat the last time. We has some good conversation about things to consider, so we're going to continue this piece on. As we teased the last time, and if you didn't listen to it, make sure you go and check out the prior episode. You can go to PFGPrivateWealth.com. That is PFGPrivateWealth.com, and you can subscribe to the podcast, Retirement Planning Redefined, you can subscribe to that and listen to past episodes as well as future episodes. Let's get into this part. We're going to talk about how to integrate, really, social security into your retirement plan. So what's a few steps to start and start thinking about when it comes to the integration of it? John: Yeah, you know, one thing we wanted to touch on with social security is just how important it is in someone's retirement plan. A lot of people don't realize it really equates to almost 30 to 40% of their retirement income, and a big factor of why it's important, it's actually inflation protected. On average, historically, social security is average about 2.6%. So it's really nice to have a set of income that's actually going to be going up with cost of living adjustments. It makes a big difference. John: Just kind of give a quick example. Let's say if you're starting social security now, it's $2,000 per month. Within 20 years at 2.6%, that'll be about $3,340 or so, which is a big jump in income. It's important to understand how valuable that is in how much that really does help out someone's retirement plan. Speaker 1: All right, so let's talk about some taxation and some benefits there. Nick, what are some things to think about when it comes to the benefits of the taxation? Nick: From the standpoint of I guess making sure that people understand how social security works. From conversations that we've had, a lot of people are under the impression that because social security was funded via the payroll taxes that we talked about in the last session, they're under the impression that there's not going to be any sort of income tax when you start to receive it. Speaker 1: Right. Nick: As many people do know, that is incorrect. The formula that they use to calculate how much of the benefit is taxable to somebody is a little bit convoluted. Essentially what they do is they look at a modified adjusted gross income number, which includes your adjusted gross income, half of the amount that you receive from social security, and then a tax exempt interest, aka, interest from municipal bonds. They add that together, and then they really kind of look at a chart. And then dependent upon if you are single or married, it's going to determine what percentage of your benefit is going to be includable in your taxable income. Nick: If we were to say that your benefit amount was 2,000 a month, and your combined, that income formula that we kind of talked about, puts your income over about $38,000. 85% of your benefit, or about 1,700 of the 2,000, is going to be added to the other income sources that you have to determine how much you're going to pay in tax. We just like to make sure that people understand that although that benefit is coming in, oftentimes they look at the gross amount, and they don't necessarily understand that, hey, once you're on Medicare, your Medicare, it gets deducted out of that. You're probably going to want to have some sort of federal income tax withheld from it. That benefits starts to drop down. So that's something that we always make sure we focus on and make sure that people understand. John: When we're doing planning, and people find out that the social security is taxed, they are not happy. Nick: Yeah, and sometimes we get asked when did that happen or how did that happen? It really happened in the 80s, during the Reagan administration, is when it took place. Realistically, for most of the people that we're working with, they've been in the working world for 30 years, and that's been in place. It's not something that's necessarily very new or anything like that. There's really minimal ways that you can actually reduce the impact on taxes. Realistically, the only other sort of income that's not includable in that is any withdrawals that you'll take out of a Roth IRA. So dependent upon their overall situation, and dependent upon the structure of what they're going to have to take out, required minimum distributions and those sorts of things, we may look at different strategies, like converting traditional money to Roth money, and determining if that makes sense. Nick: I'll say this, that people do tend to hate taxes, and I know that sounds kind of funny, but the point being is that sometimes they'll try to make irrational decisions just to try to deal with maybe a tax issue without figuring out that hey, you know, they may only be paying an effective tax rate of 12 or 13% on their income, which in the scheme of things is really low. And so making sure that they understand that, and that they don't need to make rash decisions with how they structure their decisions is an important kind of thing. Social security just kind of factors in, it's important for people to understand how it works and how it's taxed. It's more of just kind of an FYI sort of thing. Speaker 1: Well, really good information here. We're talking about how to integrate social security in a retirement plan. John, did you have another point about the taxes here on this? John: Yeah, so one thing that we do in planning is we really start to map out someone's taxes into retirement, and a big chunk of that is their required minimum distribution age 70 and a half. If we can see how much taxes they're going to pay, we can really make some strategies for someone's social security based on that. But again, the plan kind of gives you the roadmap so you can make the right decision based on your situation. Nick: And to kind of add on to that. More specifically, when we map that out and we look at it, what we're looking to see is when those required minimum distributions are due at 70 and a half, because people, by default, like to put them off as long as they can. Sometimes it will actually make sense to start taking money out of their IRAs first and wait on social security. Whereas the default for most people is take social security first, and then take out the money for the required minimum distributions. Structuring those decisions together as one is a really important way that you can kind of add in some tax planning into your overall retirement planning. Speaker 1: All right, so we're going to continue our conversation on the next podcast as well, part three if you will, about social security. But before we get out of here for this particular episode. Any other thoughts about some of the things we've covered today, gents? John: Yeah, so it's kind of going back to what we first talked about with social security being important in someone's plan and inflation. The reason that is is when you have a portion of your retirement income that's guaranteed, it really helps us kind of map out how we should invest or basically implement a distribution strategy from the rest of the assets. So having that base of, let's say, 30,000 guaranteed income coming in, that's going up with cost of living, helps us really map out the rest of the investments and how we should strategize behind that. Nick: I think another good tool or, you know... Because as an example, my father has a pension, he's a retired fireman, and I have to constantly remind my mother what kind of the equivalent of a lump sum of dollars would be if he would have a lump sum versus the amount that he gets every single month through the pension. If we're saying on average the social security benefit amount for somebody that's been working for their full life, and waits until their full retirement age to take it, is around 2,000 per month. Let's say it's a dual family household, so we're talking about 4,000 per year. That's really the equivalent of a safe withdrawal rate and a million bucks. Nick: One of the super common questions that people ask us is how much can I take out of my retirement account each year? The safe withdrawal rates around 4%, so 4% on a million, $40,000 a year. 2,000 a month times two is closer to $48,000 a year. So we're talking about one plus million bucks. If that money was sitting in an account at least generating income, even though you couldn't invade principle, that sometimes gives people some perspective on how valuable that social security income really is to them in our overall planning. Speaker 1: Well again, we are talking about social security. We've gone through a couple of pieces the last couple of podcasts. We're going to do another one coming up in just a couple of weeks here, and continue on with our conversation with John and Nick, financial advisors at PFG Private Wealth, around social security. If you have questions and concerns, and you probably do because social security can be quite confusing to a lot of us who don't deal with this every day. Well then reach out to the guys, give them a call and let him know, because they do obviously work in this arena every day. Having a conversation, getting a second opinion if you've already got one, maybe you have no plan at all, or maybe you've had no conversations around it,. Well, just reach out and let them know that you'd like to talk. Speaker 1: 813-286-7776 is how you can reach out to them if you'd like. here in the Tampa Bay area. 813-286-7776. And of course, you can also just go to the website, PFGPrivateWealth.com. That is PFGPrivateWealth.com. Check out the team on the website there as well. You can also subscribe to the podcast on whatever platform you choose, Apple or Google, or so on and so forth, and listen to past episodes as well as future episodes. So guys, I'm going to say bye this week for you, and we'll be back next time here on the podcast, so make sure you tune in for more Retirement Planning Redefined with John and Nick from PFG Private Wealth. We'll see you next time.…

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Ep 7: Social Security, Part 1 17:17

5 years temu17:17

17:17

Today is the start of a multiple part series on social security. We'll be discussing topics such as the state of the fund and reforms that are aimed to help the program and more, so tune in and catch up on social security. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com ----more---- Transcript of today's show: Mark: Hey gang, welcome into another edition of retirement planning redefined with the boys from PFG Private Wealth Financial Advisors, John and Nick, once again here on the program with me as we talk about investing, finance and retirement. Always go to the website and check them out at pfgprivatewealth.com that is pfgprivatewealth.com. While you're there, subscribe to the podcast. Give us a like and check us out and all that good stuff. Subscribe to it for past episodes as well as future episodes. And of course anytime you hear anything, you've got a question or concern, give them a call before you take any action. 813-286-7776 is the number to call. If you hear a useful nugget of information and you want to learn more, again, reach out to them at (813)-286-7776. Guys, I hope you're doing well this week. Nick, what's going on man? Nick: Yeah, we're doing well. Staying busy for sure. Today what we wanted to do is kick off a multi session on social security. Mark: Okay. Cool. Nick: And we just want to let everybody know. We know that some of the people that'll be listening to this will have become familiar with us through either the more comprehensive classes that we put on around town or via a financial wellness workshop. And social security has been one of the hot topics for a long time and it continues to be as it is more in the news with the different pressures and some of the funding issues and those sorts of things. And then obviously with everybody, so many people and so many baby boomers getting closer to retirement, although we will be getting into it fairly comprehensively in this session, we just wanted to make sure that everybody knew that if they were interested in having us come in, whether it's some sort of association or an employer based kind of program, we like to do the lunch and learns or some sort of financial wellness workshop. Nick: And we've got about a 50 minute session that we'll do on social security. And from the feedback that we've gotten, it's been one of the most positively embraced sessions that we've done. So we just want to let people know that if they wanted a more comprehensive overview on this or they thought it might be beneficial for their employer or fellow employees or coworkers, that that's something that's available. Mark: Awesome. Yeah. When we get into that we'll have this multi-part series on the podcast regarding social security. And again, as Nick mentioned, if you want to talk with them, (813)-286-7776, (813)-286-7776. Mark: John, how are you man? You doing all right? John: I'm doing great. How are you doing? Mark: I'm doing very well. Thank you for asking. And you know, Nick got us all set up there for the conversation. So what do you say we dive into it? How does it work? I mean, what's the crux of the whole social security situation here we're looking at? Nick: Most people are obviously familiar with the fact that they are eligible for social security and they pay into the system, but not a lot of people are familiar with how it all works and ties together. We always like to start off in explaining people how the program is funded. A lot of people have seen on their pay stub where it might say FICA and they're not really quite sure what that is. But out of that 7.62 that comes out of your paycheck for those FICA tax is 6.2% of that is for social security. And one of the things that we have found over the years is that many people are not familiar with the fact that the employer also pays in 6.2%. Some people have this idea that the program is fully funded by the government and really it's fully funded by them and their employer. Nick: Letting them know that about 12.5% of their income each year is going into the program towards them is something that is important for them to understand. And for some of the higher income earners, they may have noticed at a certain point of the year that their paycheck gets a little bit bigger. And usually that's because payroll tax is capped, so people no longer pay in on earnings over ... In 2019 on earnings over $132,900. And as we talk a little bit about some of the things that'll change over time with the program, one of the things that's in the news the most is that cap and removing that cap so that it's similar to Medicare where people will pay on, no matter what their earnings are, they will continue to pay into the system. John: That cap's actually been going up aggressively. You know, I think a few years ago it was $112 Nick, and I think now they've jumped it up to one $132. Nick: Yeah, yeah. They've definitely been indexing it up faster than inflation, that's for sure. Mark: Yeah. And depending on what happens in the elections coming up next year, you know, depending on who gets in, there's conversations that that 6.2 could be raised as well. So if you're still working, so that could go up substantially as well. Mark: How much can somebody expect guys? I imagine that's a big question that always comes up is, what are we looking at? I know you can get your estimates, obviously, from the website. They don't even send those little papers out anymore I don't think. They used to send them out every year, then it went to every five years. I'm not sure if they even still do that. John: They do occasionally, and I'm not sure the exact how often, but I know that from our classes we're starting to have guests say, yeah they're getting the statements. But it's based off of your earnings record. And one thing that's important to understand, it's actually your highest 35 years. So a lot of people when I first started working, I think the first year I was 18 I made like $12,000. Mark: That's pretty good for 18. John: You're [crosstalk 00:05:20]. Yeah, exactly. Your highest earning years are really later in life, once you hit your 50s and 60s. So that's important to understand if someone's thinking about retiring early to make sure that they look on the statement and see, Hey, what years do I have that are significant in here? Because if I stop working my last seven years, you know the benefit that I'm seeing on my statement's actually going to be less. John: Because when you get your statement, what it shows if you continue to work up until that age, not if you stopped. So that's important. Another thing we tell our clients and anyone that comes to our classes is to make sure that you look at it, see if there's any zeros in there. Because if you do have zeros in your highest 35 that will actually bring down your benefit and that's something you may want to consider maybe working a couple of extra years to make sure that you maximize your social security retirement benefit as best you can. John: And you're right, you can go on social security.gov and pull up your statement. They'll ask you a lot of funny questions. What was the color of your first car? Most likely most people get locked out unfortunately, but it's good to go check it out if you haven't done that in awhile. Nick: Yeah. Another thing to just make sure that people know from the standpoint of those highest 35 years is that's in relation to the cap. And so you know that cap that we mentioned earlier, that $132,900, it's in relation to that. Just because there may have been a period of time, we've seen it in some circumstances, where maybe somebody took some time off to stay home with the kids and then they're returning to work and before they took time off they were making a higher income. And although, from a pure dollar standpoint they may be making more dollars now as in relation to the cap, that may not necessarily be the case. Nick: That highest 35 earning years is in relation to that cap. And with how social security date change the mailing out of the [inaudible 00:07:04] and that sort of thing, we absolutely recommend that people, although it can be a little bit of a pain from the process, to really get logged into the site, make sure they understand how to access that statement, make sure they understand how to read that statement. Especially from the standpoint of people that we have that are self employed. We have them double check their statements to make sure that their income is being correctly recorded because they may be paying in their self employment tax, which is essentially payroll tax. Making sure that that's recorded properly so they're going to get the benefits that they're entitled to down the road. Mark: Yeah. Now guys, I've heard through the years that if you see those zeros on there like John mentioned that that's not really on the social security to fix that. That falls back on you in trying to follow up possibly with past and employers. Like if you know you earned something in a given year and you're seeing a zero, is that still how it is? Is that the way that it goes? Do you need to talk with the social security office about that or do you need to track down that past employer? John: You do need to reach out to them and Nick's, I believe, grandfather did that and Nick can share that story. Mark: Oh, all right. Nick: And this was years ago, so I don't know any details on it, but my grandfather was from Cuba and so he had a natural distrust for the government. And when he was a professor at the University of Rochester and when he went to retire and file for social security, he did not agree with the amount. And due to his non-trusting nature, he happened to have every pay stub that he ever had in the basement. And so he was able to figure that out. Luckily now we have things that are more electronic and we do have people try to keep some sort of record and haven't had anybody recently deal with that in any sort of deeper way. Mark: That's good. Nick: But usually a tax return will help. And tax returns are one of the things that we have people ... We've got a portal for clients and we have them upload those tax returns so that they can be a really good resource down the road in case there's any issues. Mark: Well that's cool. Yeah. I mean I'm 48 and I think about myself and I think God, if I had to go back and figure out who I worked for when I was 20 and what they owed me or whatever, or what I paid in, I don't know where I'd start. So that was awesome that your grandfather actually kept all that stuff. Because I know that for a lot of people that would be definitely a challenge. But that's just something I thought about and I wanted to bring that up and get your guys' opinion on that. Mark: So if you're talking about things that are really important to people, obviously a big question for boomers, and I'm sure you get this at the wellness events that you do and just in general is the constant question of the health of the fund. Is it going to be around? John: Yeah, that is a 100% the main question we get at the workshops and also when we're doing planning for clients. But as it states today there's actually a surplus and the fund is actually growing. There's roughly $2.9 trillion in it and when you say trillion it doesn't really in reality mean much, we have no idea what that actually equates to. Mark: It sounds like a lot. John: [crosstalk 00:09:56] Surplus, it is a lot. But the surplus is about $3 billion a year between money that's coming into it through the payroll taxes and also the interest earned on the balance. Just to kind of give some people some numbers because they're always asking. In 2023, 2024 that surplus actually will stop. So it's actually going to be going into a deficit and then in 2034 the fund's basically exhausted and then it's just going to be paid through basically money coming in through payroll taxes and then the money's going to come out. An then in 2034 when that happens, based on the numbers, the estimates, is looking like there's going to be a 21% reduction of benefits. So you're going to get 79% of the benefit owed to you. And again, that's if no changes happen, which we'll we're going to go into shortly. Nick will start it up where we're talking about some of the reforms that already have been happening and that will continue to happen. Nick: And we do tend to ... Some of these will probably be repeated throughout the series about social security. And earlier I mentioned the increase in max earnings, removing that cap. That's probably one of the lowest hanging fruit from the standpoint of people getting on board with making higher income earners continue to pay into the system. Right now, the earliest retirement age that somebody can collect benefits from is 62. So that's an age, especially with the longevity of people's lives and people just living longer overall, that 62 will probably start to increase. I'm sure people will be grandfathered in at a certain age or certain, your worth and before it will be grandfathered in, but- Mark: It seems like that's a really- Nick: John and I suspect that our- Mark: Yeah, that seems like the easiest one too for a lot of things. Right? Just push it back for people under a certain age, like 50 and under or something, just push it back. Nick: Yeah. And social security ... The trickiest thing and probably one of the biggest reasons that not much has been done with it is because, frankly politicians are worried about not getting voted back into office, so- Mark: Yeah, it's a political poker chip for sure. Nick: They [inaudible 00:11:53] can down the road and try not to tick people off at least to a certain extent. So raising that initial retirement age from 62 probably upwards of ... They'll probably ease it in, but I wouldn't be surprised if John and I, our initial retirement age is closer to 65 or higher. Nick: They've talked about doing means testing from the standpoint of if people have a certain amount of income on that they wouldn't collect their social security. I think that one will probably be a little bit more difficult because usually that's income focused and honestly there's a lot of ways around that. Nick: But another thing would be that cost of living adjustment, and that's been tinkered with a little bit really over the last decade as inflation stayed low for a little while and interest rates were really low. But that could be something that they adjust. But realistically what we think will be the easiest things to do will be to take up on the payroll tax, potentially have employers put in a slightly larger percentage than the actual employee. It's something that they can do. Increasing that cap or the earning cap or removing the cap in general, and bumping back that initial retirement age, are all things that we think will be a big deal. Nick: The other thing could be the, really the increases, the percentage increases that social security provides for people that defer taking their benefits. So if they wait, any year after full retirement age, there's an 8% increase. And so that's something that'll probably drop as well. Nick: The good news is that this is pretty actuarial and really all you have to do is math to figure it out. It's just going to take people being willing, people being the government, being willing to make the changes. John: Yeah. And they've already, in 2015 they actually closed some of the loopholes which we've been seeing a lot of in planning some strategies that people were using are going away, which helped the program out. They're already doing some things. And the big thing that ... One of the things Nick talked about was the cost of living adjustments. To me that's one of the ones we need to keep an eye on because when we're doing planning, it really helps out the plan when you have some type of guaranteed income that actually goes up with inflation. John: Historically, social security has gone up about 2.6%. It's been low over the last five or six years due to inflation, but that's actually a pretty nice benefit when you look at what you start with at let's say 66 and what you end up with that age 85. It's a big amount. When you look over that 20 year period. Nick: Probably the one people want to fight for the most to maintain from the standpoint of anybody that's likes to be active or have a vested interest in the topic, that cost of living adjustment's really, really important for them. Mark: Absolutely. Well, let's take that point and segue into an offer for you guys. If you're listening and you want a free maximization strategy and the social security guide to anyone who emails in, just email john@pfgprivatewealth.com that's john@pfgprivatewealth.com. Again to get that free maximization strategy and social security guide here on the program. Mark: And I that's going to do it for us this week on the podcast guys. Really good information to start this week, talking about social security here on the show. We're going to continue on, as Nick mentioned earlier on, and do a multi-part series on this next time here on the program. We're going to talk about integrating social security into your retirement plan, making that part of the plan and some things to look for and think about in regards to that. Mark: You've been listening to retirement planning redefined with John and Nick financial advisors at PFG Private Wealth. Again, that's PFG Private Wealth and that you can find them online at pfgprivatewealth.com and subscribe to the podcast while you're there. Don't forget to email John if you'd like to get that social security maximization or give him a call at (813)-286-7776. If you've got some questions about your own social security, get on the horn with them. Come in for a consultation and a conversation. (813)-286-7776. This has been retirement planning redefined for John and Nick. I'm Mark and we'll see you next time.…

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Ep 6: The Challenges Of No More Paychecks, Part 3 13:36

5 years temu13:36

13:36

It's time for part 3 of our discussion about one of the most challenging parts of transitioning into retirement, dealing with the fact that you're no longer receiving a paycheck from work. Today, we'll discuss specifically how to turn your nest egg into paychecks with strategies like living off of dividends and using an income floor. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Transcript of today's show: ----more---- Speaker 1: The rules of retirement have changed. No longer can most of us rely on social security or a single pension to fund our futures. We're living longer in retirement doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years, and maybe even more. We need to look at retirement through a new lens, with fresh eyes, with a new approach and plan of attack. Here to answer the call are financial advisors, John Teixeira and Nick McDevitt of PFG Private Wealth Management, serving you throughout the Tampa Bay area. His podcast is Retirement Planning Redefined, and it starts right now. Speaker 2: Hey everybody, welcome into Retirement Planning Redefined with the guys from PFG Private Wealth, John and Nick, financial advisors here with me once again as we talk about investing, finance, and retirement on the program. Anytime you're listening to the podcast and you've got a question or concern, jot it down, jot this number down, give them a call and talk to them about it before you take any action with anything you're listening to that's financially related, 813-286-7776. Well, that's a mouthful. Let me do that again, 813-286-7776 is the number to call, and of course you can go online to PFGPrivateWealth.com. That's PFGPrivateWealth.com, and while you're there, subscribe to the podcast so you can get upcoming episodes and check out past ones and all that good stuff. Speaker 2: John, what's going on man? How are you? John Teixeira: I'm good. How are you doing? Speaker 2: I'm hanging in there. Trying not to melt. At the time of this podcast, it's about 8 million degrees, I think, on the outside. Nick, what about you buddy? You hanging in there? Nick McDevitt: Yeah. Yeah, we've had a ton of rain lately- Speaker 2: Which just makes it worse. Nick McDevitt: Giving me flashback of living up north, but ... Speaker 2: Well, aside from the heat and all that fun stuff, what else is going on with you guys? Do you guys got anything cooking, no pun intended. John Teixeira: Yeah, so tonight we're actually excited to, we're doing some volunteer work tonight, and there's a group that Nick and I are part of. It's called the 13 Ugly Men. That's exactly the response whenever people hear that name. But no, it's a great organization. It's about 30, although it's 13, there's 35 guys in it. We throw events and donate to local Tampa Bay charities. And part of the donation, we actually do hands on work. So we're donating to a charity called Gigi's Playhouse, which Nick and I actually interviewed, and he's on the charity committee for, for our group. Speaker 2: Nice. John Teixeira: And we're throwing a Halloween event. The goal is to donate about $25,000 to them. And tonight we're doing some hands on efforts, which Nick can kinda touch on, cause he set it up. Nick McDevitt: Yeah, man. The organization supports people with Down Syndrome, and so they have a lot of different programs that they have. So tonight we're going to go in and kinda run an evening of Bingo and bring in some food, and kind of play Bingo, and there will be a broad range of ages there and stuff like that. So, so we're looking forward to that tonight. Speaker 2: That's awesome. That's really cool. I appreciate you sharing that with us. That's very cool that you can do that. Speaker 2: And maybe what we can do is we can talk on another podcast about how you can get involved with that particular thing if you'd like to help. But that's awesome that you guys are doing those extra things out in the community here in the area. So, well, with that, let's turn our attention to this week's podcast, which is to continue our conversation about strategies to turn that nest egg into a paycheck. We covered several things last time to your cash reserves, bucket strategy, so on and so forth. What are some other things we need to think about? John Teixeira: Yeah, so you know, like we talked about last week, there's a lot of different strategies and really we let our financial plan kind of dictate which is best for the individuals based on needs and goals. John Teixeira: So as you mentioned last, week we did go over the two year cash reserves bucket strategy. Another one that we've been utilizing, and depending on the situation, is basically just living off of your dividends and interest. So that's where you have your principal and whatever dividends interest is spun off either monthly or quarterly, that goes into a spend account, and that basically becomes your paycheck moving forward. Some of the benefits of kind of utilizing this would be you don't have to worry about your money running out, because you keep your principal intact, and you're never really dipping into into it. So, the fear of money running out goes away. John Teixeira: And also we see this a lot where someone's interested in leaving some type of legacy to somebody. Speaker 2: Right. Sure. John Teixeira: Basically like, "Hey John, Nick, I have this money here. I want to leave it to my kids, I want to leave it to whoever. So I'm just going to live off of the interest in dividends." So that's kind of one way to look at it. Nick McDevitt: And I would say this is a strategy we wanted to talk about, because we get asked about it. However, with how the markets have changed over time and how people spending in longevity has changed over time, it's become less of a common strategy, with one of the big reasons being yields are down significantly over the last 20 years. Where years ago you could get a really good CD rates and things like that, where you can get a decent paycheck from that. Nick McDevitt: So some of those challenges are, it's tough to find a yield, whether it's via dividend, whether it's via fixed securities, to give people the amount of income that they need. And so what'll happen is they'll chase that yield and give up growth opportunities, which then essentially makes it difficult for them to keep up with inflation over time. So dividend rates will change over time and at the onset people kind of see it as, "Hey this is what my parents did," but maybe their parents had a pension or their parents expenses were a lot lower. Nick McDevitt: And we like to talk about it because, and it's interesting, it's usually men that bring it up and more focused on like individual stock or individual bond investing, which is less common now. So although it is a lot more rare, we do like to bring it up at least to address it, so that people understand how it works that depending upon their overall situation it can be, but most likely some of the other strategies we're going to discuss are probably going to make more sense for them. John Teixeira: Yeah. And kind of who this works for is really someone who has a very large nest egg and... Speaker 2: Okay. John Teixeira: ...and necessarily doesn't need more than the dividends interest will spin off. And as Nick mentioned, this environment does make it very challenging because interest rates are low, and then people will kind of go to stocks for that to try to find some extra dividends. Speaker 2: Right. John Teixeira: But we [inaudible 00:06:24] some of the equity corporations, they'll actually change the dividend on you. So that's a big risk where, and I know Nick touched on it, but I've seen where some companies will have a specific dividend and then recession hits or the stock isn't doing so well, so they need some growth, so they'll go ahead and lower their dividend, which could really affect your monthly income. Speaker 2: Okay. All right. Speaker 2: So that's kind of a living off a dividend type of strategy to turn that nest egg into a paycheck. What's another one? Is there something else we can also share with the listeners? Nick McDevitt: Yeah, so another one again, depends on the situation, is kind of creating an income floor. Speaker 2: Okay. John Teixeira: So this is where you look at, "Hey, what's my guaranteed income that I have coming in?" And most people, clearly social security is number one. But some other people might have a pension and what they'll look at is saying, "Okay, what's my guaranteed income?" And we'll do an exercise and do all their expenses, but we'll divvy it up where we have our fixed expenses and then our discretionary. And what we'll try to do in this situation is match up their guaranteed income with their fixed expenses. So no matter what happens, it gives them peace of mind to say, "Hey, no matter what happens in the market or health, I know that my fixed expenses are covered." And we make sure that those fixed expenses are covered for life. John Teixeira: The risk of running out of money necessarily for those fixed expenses really isn't there. And then some challenges to this, what we see in why. Again, it's not perfect every situation, but some challenges with it is, does that leave you with enough liquidity? Do you have enough money? What if you need to tap into a little bit more. And then also the big one with this I would say is inflation. I don't know if you want to add anything to that, Nick. Nick McDevitt: Yeah. So, realistically there's only a few ways to kind of create the guaranteed income floor, and we'll end up talking about that kind of later on down the series of a podcast. But, John mentioned the social security. They may or may not have a pension, and so the only other way to create, essentially a guaranteed income, would be through some sort of annuity, and there are different sorts of annuity. Nick McDevitt: So when John refers to the not having enough liquidity, meaning that, to provide the guaranteed paycheck that they may be looking for, there may not be enough in assets to do it in a large sum of money. So usually if we're looking at something like that, we only like to attribute up to 20% of their overall nest egg into a strategy like that. Nick McDevitt: So typically it's people that, where something like this would make sense is somebody that may be a conservative investor, somebody that has maybe a lot of longevity in their family and they have a significant fear of running out of, or outliving their money. Maybe they're only guaranteed source of income is social security. So they're looking to kind of build on and have some additional security from that standpoint. So, going through and trying to find other ways to help increase that floor is a pretty typical process that we use with people. Speaker 2: Okay. Yeah. Speaker 2: So again, each of these strategies may or may not be the right fit for the individual. It's a matter of going through and talking about some different things and looking at stuff to see which is going to work best for you. Speaker 2: You mentioned kind of earlier on that you're just living off the dividends. What about somebody who might be in a situation where they do need to sell off the investments, maybe as needed type of thing. So more of a withdrawal strategy, I guess. Nick McDevitt: Yeah. So what we'll kind of refer to that as is like a systematic withdrawal. And frankly this is pretty much the most common way. Speaker 2: The norm kind of thing. Nick McDevitt: Yeah. How people handle their income from their assets in retirement. The majority of people, their nest egg is comprised of some sort of combination of funds, whether it's mutual funds, exchange traded funds, in some sort of diversified portfolio. Nick McDevitt: And what we'll do is, kind of after we go through the planning, and we figure out - Hey, your plan kind of tells us that we need to pull out, we'll call it $3,000 a month from the nest egg, and they want to receive it on the first of the month, each month. And from the standpoint of their advisors and kind of portfolio managers, we'll structure it so that that money deposits automatically into their account. We decide which investments that kind of sweeps off of, and we do it via kind of an automatic quarterly rebalance to make sure that we're keeping the portfolio diversified in what the overall objective of the account. And then, realistically, this helps them deal with the ups and downs of the market. And really they're only spending what they need. John Teixeira: So, one of the things that Nick kind of said here...it's important that you have a very good advisor, because you are looking at your advisor to make sure they customize the portfolio to deal with some challenges like a market downturn. So, that is a big risk with this, because if the market goes down and you need to sell off your investments, the worst thing you can do is really start selling off big chunks in a down market. John Teixeira: So it's important that your advisor has some strategy in place for that. And then also, again, a challenge with this would be depending on the person's mindset, they might get afraid of spending too much, because the risk of running out of money and the kind of spiral down effect of tapping into your principal is always there. Nick McDevitt: So it's really important. I think you'll notice as far as who the strategies work for is really who's saved a lot of money. So it's important to save as much as you can, because it allows you the ability to really use any of these strategies and be comfortable with it depending on your situation. Speaker 2: All right. Well there you go. Speaker 2: So there's a few things to consider, to think about. We were, again, continuing our conversation about ways to turn our nest egg into paychecks and retirement and if you've got some questions, if you've got some concerns you'd like to talk with the team about how to do that, talk with John and Nick, give them a call at 813-286-7776, that's 813-286-7776, to talk with John and Nick, financial advisors at PFG Private Wealth, serving you in the Tampa Bay area. Speaker 2: Go to the website, PFGPrivateWealth.com. Again, that is PFGPrivateWealth.Com - check them out there, as well as subscribe to the podcast, and give us a chance to share a bit more of these things with the each and every week by subscribing on whatever platform it is that you happen to like. Apple. You can find us on Apple podcasts, on Google play, Stitcher, iHeart, various things like that. Thanks for listening to this edition of Retirement Planning Redefined. For John and Nick, I'm Mark, and we'll see you next time here on the program. Speaker 2: PFG Private Wealth Management LLC is an SCC Registered Investment Advisor. Information presented is for educational purposes only, and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.…

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Ep 5: The Challenges Of No More Paychecks, Part 2 11:17

6 years temu11:17

11:17

It's time for part 2 of our discussion about one of the most challenging parts of transitioning into retirement, dealing with the fact that you're no longer receiving a paycheck from work. Today, we'll discuss specifically ways to get more comfortable with the transition from working to retirement. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com ----more---- Transcript of today's show: Speaker 1: The rules of retirement have changed. No longer can most of us rely on social security or a single pension to fund our futures. We're living longer in retirement, doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens with fresh eyes, with a new approach and plan of attack. Here to answer the call are financial advisors, John Teixeira and Nick McDevitt at PFG Private Wealth Management, serving you throughout the Tampa Bay area. This podcast is retirement planning redefined, and it starts right now. Mark: Hey, welcome into another edition of Retirement Planning - Redefined with John and Nick, financial advisors at PFG Private Wealth, serving you here in the Tampa Bay area. We're going to talk about investing, finance and retirement as we usually do here on the program. And you can find John and Nick at their website at pfgprivatewealth.com. That's pfgprivatewealth.com. Of course, you can also give them a call and come and see them in their office in Tampa Bay at eight, one three, two, eight, six, 77, seven, six. That's eight, one three, two, eight, six, seven, seven, seven, six. If you hear something useful, interesting nugget on the program and you want to talk more about it before you take any action, always check with a qualified professional. Reach out to John and Nick, give them a call at that number. Eight, one, three, two, eight, six, seven, seven, seven, six. Guys, how you doing this week? John: I'm doing good. How are you? Mark: I'm hanging in there. Doing all right. Just surviving the summer, the dog days. How about you Nick? You doing all right? Nick: Yeah, doing pretty well. One of the things that we like to do is present on different retirement topics. And earlier today we did a lunch and learn or what we can refer to as a financial wellness presentation over at the University of South Florida at their College of Public Health. Mark: Oh nice. Nick: So that's something that we enjoy doing and covered a specific topic and something that we're looking to do more of. Mark: That's very cool. So yeah, lunch and learns. What'd you call it, financial wealth class? Nick: Wellness. Financial wellness- Mark: Wellness, I like that. Nick: Yeah. Mark: Was the turnout out, good people enjoy it? Nick: Yeah, it's usually a small, at those sorts of things it can be tough for people to get away. So usually we have somewhere between eight and 15 people in the room and we present for 45 to 50 minutes and just try to keep it light and really focused on a single subject at that period of time. We like to do that with different local companies as well. So it's something we enjoy doing. Mark: No, that's very cool. So if our listeners to the podcast want to be involved in those in the future, is that something they can reach out to you guys or find that on the website at all, or just give a call if they'd like to attend those things? Or are they kind of closed door deals? Nick: We usually go through the employer. Mark: Oh, okay. Oh, I gotcha. Okay. Nick: So if they are an employer, really no cost to the employer and it's definitely a benefit for their employees. Mark: Sure. Yeah. Nick: And we bring in lunch and go over a couple of different topics. But they can absolutely reach out to us and I'll let us know and connect us with whether it's an HR department or their employer. Mark: Yeah. Okay. Nick: Cover different topics. Mark: Very cool. Well, yeah. So if you're listening to the podcast and you think that might benefit your fellow employees or you're an employee yourself, give them a call. Eight, one, three, two, eight, six, seven, seven, seven, six. Ask about the lunch and learns or the wellness classes. So you guys, John, have both of you guys presented this thing or do you guys take turns? John: This one here we both did. Mark: Okay. Very good. John: We do a lot of stuff as a team. Mark: Nice. Very cool. Well good. That's exciting. We'll have to talk more about those in the future coming up. But I do want to address what we mentioned last week since we teed that up and I want to kind of go back to that conversation. We talked last week about just the stresses and some challenges of not having a paycheck anymore when we transition from working years to retirement years. And so let's talk a little bit now as I had mentioned about just some strategies on how to create that paycheck, if you will, from our nest egg. Mark: Now I think most of us realize we have to do this, but it becomes kind of ... It becomes daunting for people who just obviously don't do this all the time to think, "Well, how do I turn my IRA into income," and so on and so forth. John: There's a lot of different strategies to use. And when we do planning, we don't just say this the only one that worked. There's a lot of different ones and it's really depends on kind of how the person ticks, kind of what they're comfortable with and what their goals are. So we'll go through, we talk about a few of them, but we're not ... Whatever we talk about today, it's not going to be all of them. John: But you know, one that a lot of people feel comfortable with is where we do two years of cash reserves where we'll basically set up a separate account and almost be like a payroll account where that's where their money's going to filter from for the next roughly two years or so. And again, that number can change depending on the individuaL. But that's where if hey, they have social security coming in and pension, we'll look at, hey, what your income gap. So if their expenses are 50,000 and let's say social security covers 20,000 of that, basically we'll have this account that generates 30,000 a year and that might come up monthly. John: And that's one strategy. And what that will do is it'll provide a little bit of peace of mind, which we discussed last week, where hey, if the market does turn down, you have a special place where you can go and not be worried about, "Hey, do I need to pull on my investments while the market's down?" Nick: So the way that we'll kind of have that conversation with them is almost back into it and take them through a situation of, even if we go back to kind of 2008 where there was the great recession. And we go through and look at historical market and show them here's how long it took the market to bounce back. Even if we were to run into this sort of situation, how much would they specifically individually need? What would make them feel comfortable to hold in cash so that they wouldn't make a rash decision. Nick: And one of the things that we have kind of seen is that two year number seems to be a bit of a magic number for people. But ultimately it's getting them to start to almost program themselves to remind themselves that, hey, this is here. If these things happen, this is here. But overall, our goal is to have this mini strategy to help us implement our overall broad base strategy. Mark: We talked in the prior podcast when we were discussing this a little bit about the market and how it can affect people and make people nervous when they're first making that transition. And one of the pieces that I know that also gets when you're building the strategy to deliver that paycheck, you also have to plan for this to evolve through retirement. Because you got to plan, you got to put inflation in there. That's something that you've got to make sure that you're working on. You've got to look at all those little extra pieces that come in there. And that's why getting together with a good team to build to that good strategy is going to be helpful. Nick: Yeah. One of the ways that will ... It's become pretty popular and in the more in-depth retirement classes that we do teach, the six hour classes that we do at the local community colleges, refer to it as a bucket strategy, which a lot of people are familiar with. It's in a general sense. So the way that they'll identify with it is, we essentially say to them that, "We're going to task your money with different jobs." There's going to be a short term, mid term, a longterm. Those short term money is where we don't want to take the risk but that longterm money is the money that we want you to kind of think and remind yourself that we've got this 2030 year plan for you. And if you look in reverse in how you invested your money 20 or 30 years ago, this longterm money needs to be invested in the same sort of way. Focused on longterm growth to help make up for the money that you're going to spend in those shorter time periods. Nick: And we found that people definitely relate to that. They understand that and when they think about it from the standpoint of, instead of them working their money, that bucket of money is working longterm for them. People have been able to grasp that pretty well. Mark: I got you. Yeah, because we're talking definitely longterm. I mean obviously the number one fear is people running out of money before they run out of life. And just to veer off for a quick second. Do you happen to know who the oldest, not the ... No. But you take a guess at the age of the oldest person in the world right now. Either one of you. John: [inaudible 00:07:50] seven. Mark: What'd you say? One oh seven? Nick: Yeah, I'd probably go like one 15. Mark: Yeah, Nick, you're the winner. Actually you're closer. It's actually Mr. Tanaka, he's 116 years old. 116, can you imagine that? So I know that's like totally not the norm, it's the exception to the rule. But we're getting there more and more where when you guys are doing this, kind of to Nick's point a minute ago, you got to plan this stuff out a much longer to have these income streams past 80 or 85. You've got to be pushing this into the nineties a lot of times or maybe even a hundred, right? Nick: Yeah. When we plan, we always start off our plans planning to age 100. And we used to get heckled quite a bit from potential clients and existing clients about that strategy. But actually, because a lot of people that we work with come through our class, they see the importance of planning for longevity. And I would say probably in the last 18 months we've actually had people asking us, more than one, asking us to plan past a hundred. So I think that sentiment is actually starting to kind of permeate people's thinking and if they have longevity in their family, people have started to focus a little bit more on that. And making sure that they're focusing on being able to kind of stave off inflation and plan for longterm. Mark: Yeah, I just, I don't know if I'd want to be a 116. either one of you guys? John: I'm going to say no to that depending on what technology brings at that point. Mark: Right. I guess that's true. Yeah. John: As of now, no. Mark: What about you, Nick? Nick: I'd have to ask Mr. Tanaka what it's like. Mark: That's probably a good idea. I don't know, man. I just, I couldn't imagine it. But yeah, I mean that's going to become more than norm the more technology continues to go. Mark: So yep, well really good conversation here with the guys talking about the fact that you you've got to create a paycheck for retirement and you got to make sure that that nest egg is going to [inaudible 00:09:38]. So we covered a couple of cool things to think about. The cash reserve, the two years, the bucket strategy, the dividends, keeping the principle, income floor, all these kinds of things we touched on. So if you have some questions, if you have some concerns, you have some thoughts about it, make sure you reach out to the guys, give them a call. If you're interested in some of that wellness classes and lunch and learns, give them a call. Reach out to them at eight, one, three, two, eight, six, 77, seven, six. That's eight, one, three, two, eight, six, seven, seven, seven, six to talk with John and Nick, financial advisors at PFG Private Wealth, serving you in the Tampa Bay area, here from their office as well as in Tampa Bay. And pfgprivatewealth.com is where you can find them online. That is pfgprivatewealth.com. Mark: Guys, anything else you want to touch on this week before we go or shall we wrap it up until next time? John: I think we're good.Till I think we're good. Mark: All right, well with that I'll say thanks for tuning into the podcast. You've been listening to Retirement Planning - Redefined for John and Nick. I'm Mark. We'll catch you next time you're on the program. Speaker 1: PFG private wealth management LLC as an SEC registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.…

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Ep 4: The Challenges Of No More Paychecks, Part 1 12:40

6 years temu12:40

12:40

One of the most challenging parts of transitioning into retirement is dealing with the fact that you're no longer receiving a paycheck from work. So today we'll discuss how to make that process as smooth as possible, as well as talk about some of the common feelings and missteps that many people face. ----more---- Here is a transcript of today's episode: Marc Killian: Hey everybody. Welcome in to another edition of Retirement Planning Redefined with John and Nick financial advisors at PFG Private Wealth, an independent RIA serving you in the Tampa Bay area. Their office is also in Tampa Bay. Find the guys online at pfgprivatewealth.com. That's pfgprivatewealth.com, and anytime you're listening to the podcast, not just ours, but anybody's, if you hear something interesting or that you want to learn more about when it comes to your retirement plans, your financial plans, before you take any action, always check with a qualified professional like John and Nick at 813-286-7776. That's how you can call them and ask those questions that you might find interesting or useful. 813-286-7776 and with that I'll say, guys, welcome in. How are you? John Teixeira: Hey, good. How are you doing? Marc Killian: I'm hanging in there. Nick, how are you? Doing all right? Nick McDevitt: Yeah, staying busy. Marc Killian: Staying busy. So what's going on with you guys? I haven't talked to you for just a little bit, and now we're getting back on the podcast here. What's new? John Teixeira: Oh, what's going on with me? I have three year old daughter, Olivia, just started her swim lessons back up. So that's been pretty exciting. Going to the YMCA few times a week Nick McDevitt: And I have been traveling a little bit this summer. Was Up north in my hometown of Rochester, New York for a week for a family reunion, and traveled a little bit out to the west coast to visit an old friend. Marc Killian: Oh, Okay. Cool. So had a little bit of personal stuff going on. What's going on with the business? How's things going in the practice? You know, let's talk about some things today that might help our listeners out when it comes to, you know, just in general when we're thinking about retirement planning and getting these things together. I kind of had a general thing I wanted to talk about, if that's alright with you guys? It's just to kind of touch on the fact that a lot of people would kind of stress over no longer having a paycheck anymore, and that's usually like kind of the big hurdle mentally, at least when you're first hitting retirement is to say, "All right, so, what do I do when I don't have a check?" Nick McDevitt: Sure. We've actually had a lot of clients kind of making the transition to retirement lately, and recently the markets had been a little bit more volatile. Marc Killian: Sure, yeah. Nick McDevitt: One of the interesting things that we've seen is with them being retired, they spend some more time watching TV and watching the news and of- [crosstalk 00:02:14] Marc Killian: Man, that's a bad combination. Nick McDevitt: ... Yeah. Tends to tick up a little bit. And so, you know, we've really been working on emphasizing with them the importance of having an overall strategy and plan, reminding them of that, and helping to work with them to just kind of implement a process where we can kind of recreate what they're used to from the standpoint of, although they don't have a paycheck from work anymore, you know, we are generating a paycheck from their investment accounts. And so we try to create some stability with that, and remind them of the longterm strategy. John Teixeira: Yeah. Kind of jumping on that with Nick, you know, a lot of people, I mean in reality start kind of working what, 16, 18 you getting a paycheck the whole time. Marc Killian: Right. John Teixeira: And it's really almost like your permission slip to go spend things. It's like, "All right, I want to buy this," and all of a sudden, "Hey, all right, after two months of saving I'll go ahead and purchase this." And when that's gone, it really creates a little bit of fear, because now you have your investments that need to provide that. And what we've seen a lot is clients, they get afraid to spend. One of our joint clients was kind of transitioning to retirement and she's like, "I don't know. I'm afraid to spend money, because I don't have my paycheck anymore." So you know, it's really important what Nick mentioned to really focus on trying to create some type of strategy to provide a peace of mind. Marc Killian: Yeah. I mean, you can get the plan put together and all that kind of stuff, but sometimes there's these mental hurdles. The things that you just have to sit down and talk through that part of what you guys do sometimes really is also a bit of counselors, if you will, because it's like, "Okay, let me show you why it's okay for you to spend some of your assets," or you know conversely saying, "Okay, you're going a little too crazy spending. Let's roll that back and whatever and make some adjustments." So clearly that makes it important to have a strategy, you know, like if people are used to getting paid, let's say monthly or bimonthly, do you do the same thing when it comes to disbursing, you know, their retirement accounts? Nick McDevitt: Yeah, we tend to try to focus people on a monthly budget, especially from the standpoint of, you know, for those that have filed for social security, they are getting paid once a month, usually towards the beginning of the month. And then a lot of times what we will do is maybe the automatic distribution that we send to them will be a couple of weeks later, halfway through the month. So they still get, you know, two paychecks, one from social security, one from us. And that provides them with a little bit of stability to kind of get used to. Although the paychecks usually aren't equal, they're still getting paid twice a month. And they get used to figuring out when they have to pay their bills, and how they're going to manage your expenses. But overall we try to really, as we go through the planning, we create a budget. We create, you know, a projected monthly expense. Nick McDevitt: We start sending them, you know, the proper amount based upon that. But we also let them know that that first year or two is really a test, you know, to see, make sure that they're comfortable, emphasize for the planning that what they're spending is okay, and also the factor of trust really comes into play, because we're letting them know that if we're uncomfortable with the amount of money that they're spending, we're going to let them know. And so we try to have them filter some of those concerns through us, so that they're not restricting themselves at times when they don't really need to be. Marc Killian: Yeah, I mean obviously that's going to be the case because like anything as you're moving through retirement, you're going to have to alter this. The strategy needs to move and flow and ebb. You know, you kind of mentioned earlier that the markets have been pretty volatile the last little bit. At the time of this podcast taping, we've had a pretty good slide. Just earlier this week it was like, I think it was, what, almost a 10% drop or so, but that's going to happen. Right? And so if don't have a paycheck coming anymore, sure it's understandable to get stressed out. I mean, the market does this. I think on average it does move quite often. If you go do the research and the statistics, you'll find that it doesn't always just, even this bull run we've been in, it doesn't just go straight up. There's always ups and downs and ups and downs. Marc Killian: And I think most of us know that, but when we don't have a paycheck, that's when we start to get a little more touchy about it. We start to get a little bit more worried that it's going to alter our lifestyle, and how we are going to be able to, you know, use those monies and so on and so forth. So is there an amount you try to determine? Do you try to go a percentage over what somebody is already doing? Let's say, okay, we were making $5,000 a month, now that we're going to be hitting retirement, is that kind of where you use as a starting point? John Teixeira: So we really will try to take a look at what their expenses into retirement are going to be. So it's not always necessarily going to be the same as what it was. So we really try to, again, with the strategy and the plan, providing the blueprint of, "Hey, this is how much you're going to have to be spending." So we'll start there, but kind of perfect example of what we talked about earlier of people having a hard time spending when they don't have a paycheck because they're afraid, is exactly what happened these last week or so with the market sliding. John Teixeira: That type of kind of market slide creates fear of saying, "Well I don't want to spend my money." So it's important to have kind of the ability to have the strategy, to make sure if something like this does happen, you don't want less income, you want to keep it the same, and then also to be ready to adjust. So if there's a market pullback, it's "Hey, what do I do now?" So that's important when you're building the plan or strategy that you can manage it and adapt to whatever's happening in what environment you're in. Nick McDevitt: One of the things that we found with people that we kind of tend to have an honest conversation with them about is, you know, we figure out how much do they like to have in savings at their bank, because they feel that that money's, you know, accessible and easy to touch. And then we go through and we kind of go through an exercise and figure out what's their personal pain point, or what's going to make them comfortable. How many years of expenses sitting in cash or something close to cash is going to make them feel comfortable? And then what we've found is that when we maintain that, they feel a lot more comfortable, because overall the objective is to make sure that they don't make any rash decisions. So managing that short term money has tended to be an exercise that's made people feel more at peace with what's going on in the short term with the market. Marc Killian: Yeah. Well I mean, that makes sense. You know, so, I mean a lot of times you're going to have to find these places to be able to compensate and deal with the fact that it's going to do that. So, you know, if you're looking at having just a challenge in general of not having a paycheck anymore in retirement, it's going to come with several things, not just the loss of the check because hopefully you've got those retirement accounts that are going to create those funds for you, but really a lot of times, again, it comes down to kind of maybe the mental hurdles that we need to kind of get used to in the transition from working years to retirement years. Would you agree? John Teixeira: Yeah, I would agree with that. And I think the worst thing that as a planner, I think that we see sometimes, is where, you know, working with someone that has enough money to really enjoy their retirement and they don't do it. Especially in the first few years, because they're afraid, again, of not having a paycheck, and it's really those, you know, I hate to say it, but your first five, ten years of retirement should be the most exciting because you're able to do more- Marc Killian: Right. Sure, yeah. John Teixeira: ... as far health goes. So you don't want to waste the first five years just looking at your balance and saying, you know, "Can I spend this or not?" You really want to be comfortable with doing that, which you know, Nick just mentioned there. We really like to get people's kind of comfort point as far as how much, you know, how much do you like to have in the bank and as long as they feel comfortable, they make better decisions, and ultimately, you know, you're doing all this to enjoy retirement and really, you know, have your wish list and start checking those things off. Marc Killian: Yeah, I mean that makes a lot of sense because you do want to get out and what do they call that? The go go phase of retirement. When you first get there, you want to be able to enjoy it. John Teixeira: [inaudible 00:09:50] Yeah. Marc Killian: Yeah, and not look at the market, you know, not tune into these TV shows like as we mentioned at the top of the podcast, and get ourselves all worked up because they're going to lead with, you know, doom and gloom anyway, right? So they're going to make everything sound, you know, just terrible. And so if you're sitting there stressing over that or watching of that, certainly no way that you want to enjoy your retirement. So having a good plan in place, will certainly lead towards that. Well, what I think we'll do is next week on the podcast we'll talk about some strategies to create a paycheck, since we are talking about no longer having a paycheck anymore on this week's show. Marc Killian: And so I think with that, I think that's pretty good thing. We'll wrap this up this week on the podcast. We hope that you got some useful information from it. If you've got a question or concern, again, always reach out, don't hesitate. Give them a call at 813-286-7776. That's 813-286-7776. Call John and Nick at PFG Private Wealth. They are an independent RIA. They are financial advisors here in the Tampa Bay area. And don't forget to go to the website, pfgprivatewealth.com, subscribe to the podcast, listen to it on whatever platform of choice it is that you like, whether it's Google, Apple, iHeart, so on and so forth, whatever, Stitcher, whatever different platform you like. So reach out to them at pfgprivatewealth.com that way. And for John, for Nick, I'm Marc, we'll talk to you next time here on Retirement Planning Redefined.…

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Ep 3: Why The Role Of Your Financial Advisor Isn't What It Used To Be 15:44

6 years temu15:44

15:44

As the financial industry has changed, the role of the financial advisor has also changed in order to fit the needs of today's retirees and pre-retirees. So let's talk about some of the crucial elements that your advisor should be providing you with in a retirement plan, as well as how you can spot an advisor that may not have your best interests in mind. ----more---- Here is a transcript of today's episode: Marc Killian: Hey everybody, welcome in to another podcast edition of Retirement Planning Redefined, with financial advisors John Teixeira and Nick McDevitt of PFG Private Wealth, an independent RIA serving you in the Tampa Bay area. Their office there is in Tampa Bay. If you want to get on the counter and come in for a consultation or a conversation, or you know someone who needs a little help, give them a jingle at 8132867776, that's 8132867776 to give them a call and always, you can check us out online, check out the team and there's some good tools, tips, and resources to be found at PFGPrivateWealth.com, that is PFGPrivateWealth.com. You'll be able to click on podcast and also subscribe to the program, catch past episodes, and future episodes as we continue to put these out. Hopefully you'll extract a useful nugget or two of information to help you along your retirement journey. PFGPrivateWealth.com. Marc Killian: And guys, welcome in this week. Thanks for being here, I hope you're doing well. Nick McDevitt: Doing well. And how are you doing, Marc? Marc Killian: I'm doing very well, thanks I appreciate you asking me that. John, how are you, buddy? John Teixeira: I'm great, how are you? Marc Killian: Doing pretty good. How's the weather been here lately? It's been pretty hot in my neck of the woods. You guys are starting to roast a little bit, or at least it's coming anyway, right? John Teixeira: It came. Nick McDevitt: You know, it's actually pretty nice and then all of a sudden the next day it's like mid-90s. Marc Killian: Just bam, huh? Out of the blue? Well that's Florida, right? And as they say, if you don't like the weather wait five minutes, it'll change. Nick McDevitt: Winter's not coming here right now Marc Killian: Yeah, winter's not coming. That's right. A little Game of Thrones thing there, uh-oh. So let me ask you guys a question this week if you caught our previous podcast last week folks you know we talked a little bit about industry overview, just, I guess, how things have changed in the last decade. I kinda threw this bull market we've been on, honestly it's been a lot going on the last ten years so we've teased up the fact that we were gonna talk about how the financial advisor's role itself has changed. So let's kick it off and talk about that. Over the last decade what have you guys seen that's changed for your specific role as financial advisors? Nick McDevitt: Yeah, so, in the classes that we teach, one of the things that we talk about quite a bit are that seeing that the majority of the clients, and the majority of the people that come through our class, are kinda that and that, 50-55 years and up range. Many of them have, at one time in their life, maybe earlier on but maybe still, have worked for an employer where there was a pension plan or maybe a significant benefit packages, and their lives are very closely, have been very closely touched by one company's head pensions for everybody and one really employer took on the major amount of risk from the standpoint of a person having a respectable retirement. So, [inaudible 00:02:43] transition from the worker having a pension plan, having really good benefits, to them becoming more responsible for their retirement. Nick McDevitt: So that's kinda driven the changes as an advisor where maybe before, the advisor really only had to worry about managing the investments, where now it's much more planning and strategy focused. And really it's trying to take all of these different decisions that have to be made like maybe it's a couple situation, one of them has a pension, they're both in the social security system, they haven't paid off the house yet, they're trying to determine, "Do I pay off the house? Do I save? What age should we retire? Shall we both take social security at the same time or should one of us wait? What sort of options should we take on our pension plan?" And so it's taking all these different decisions and putting them together, and then making sure that the risk that they're taking with their investments lines up properly with what they're actually comfortable taking as they approach retirement. Nick McDevitt: That transition of what we'll kind of talk about as accumulation, where they go to work, they save money into their retirement plan, and now, all of a sudden, they're starting to realize that, "Hey, I need this money to start to generate income for me. How do we work through that transition and how do we give ourselves, how do we empower ourselves with the information that we need to make the right decisions, and also feel comfortable so that we don't derail that plan if, let's say there's a pull back in the market or something like that." Marc Killian: I gotcha. Okay, so, if we're gonna talk about some of these variances when it comes to how these roles have changed, let's talk a little about advice and planning versus investment management. Nick McDevitt: Sure, so it's always an interesting kind of experience as we will go through and teach these classes where just like any sort of situation you have certain people that are very comfortable asking questions that are particular to them, and other people are quiet. So, we'll have people that will raise their hand and will say to us, “Oh, I'm going to retire in two years, and I'm a teacher, and I'm gonna have my pension. And how much should I take out of my retirement account?” And John and I kinda typically joke with them, and we just oftentimes say, "It may be frustrating for you to hear it, but what you're gonna hear from us a lot is it depends." And that's where we really try to shift people into having that mindset of building that plan and trying to walk through the decisions that they're trying to make in the basis of a plan, and then that plan then dictating how they manage their investments. And even if they're gonna have us managing investments or they're gonna manage them themselves, they need to have a broad based plan and we want the risk that they're gonna take in the investments to be dictated by the overall plan. Nick McDevitt: We'll oftentimes make a joke that, "I'm sure that your mailman, or your plumber, or your electrician, or your cousin, or your brother have great advice for you but their situation is different than yours. And they may have a much higher ability to handle risk, they might have a pension, they may not have kids that they want to leave money to, they may have a house that's paid off. And so everybody's situation is different and how they develop their investment strategy should be based upon that plan first. Where, in the past, most people have just said, "Hey, I wanna achieve some arbitrary sort of way to return their investments." And there's no rationale or rhyme or reason behind how they're doing that. Marc Killian: You're listening to Retirement Plan Redefined podcast with John and Nick from PFG Private Wealth. And so John let me get you in on this conversation a little bit. Let's talk a little bit about focus on the strategy and broad based planning and how that's changed over the last few years. John Teixeira: Yeah, so, most people that we meet with we like to call if they have the financial junk drawer. Marc Killian: Right. [crosstalk 00:06:46] John Teixeira: It's kinda going through work and they're really just purchasing financial vehicles and there's really no rhyme or reason to it. So we make sure that whenever we meet with someone or we're going through the classes, that we really focus on A) establish what your goals are, let's put a strategy in place to hit those goals; and then second, is really then let's put the investments in the products that are appropriate to make sure that you do [inaudible 00:07:10] those goals versus vice-versa where a lot of people will just end up, "Hey, let me get all these things." Marc Killian: Right. John Teixeira: And then really no strategy to make it happen. The negative to that, or what could be bad is that you back yourself into a corner where you can't adjust. So it's important, when you're doing the plan, as Nick mentioned, the plan really dictates how you should be investing your money, what type of rate of return should you shoot for. So example, we've seen some people where their plan looks good and they're investing very aggressive, shooting for 9%, and in reality they can hit all their goals with a 4-5% expectation in the portfolio. And what that does is if your plan works at 4-5%, why take the risk of 8-9%? [crosstalk 00:07:51] We really want our clients to be able to sleep at night. So that's kinda part of focusing on the strategy, which ultimately will let you focus on what investments in your strategy to go into. Marc Killian: Yeah, and I think that makes a lot of sense. Especially when you're talking about time horizon because as you're aging and getting close to retirement, if you don't need to reach for those higher return rates, I mean I get it, everybody wants to make as much as they can make but why take the risk? Especially as you're getting closer if you don't need to. Nick McDevitt: Yeah and where planning can actually help with that is, so let's say for example, because people tend to think about all of their money in one pot, so there will be times where we'll have conversations, and sometimes it'll be referred to as bucket strategy or something like that, and so while we're having our conversation we'll say, "How about we carve out, let's say, 10% of the overall nest egg and that 10% we can invest for a long term growth and that's gonna have a little bit more ups and downs, but that's gonna replace the money you're gonna spend in the meantime." So that lets them get that kind of exposure that they may want just on a smaller scale. And it makes the whole transition a lot smoother for them. Marc Killian: Okay. Well I think we'll finish up this week's podcast, we talked about some of the financial advisor role changes here. And a lot of times, guys, people just are a little overwhelmed, as we touched on. There's the kind of wondering, well this person has this designation, and that designation. All the little stuff that goes on your business card, right? And so it can get a little overwhelming. So John, is there some things we can do when we're doing a little research, when we're looking at people we want to talk to, maybe sit down with, some ways we can kind of do our own homework on if it's maybe the right fit or not? John Teixeira: Yeah, so we always recommend that if you're interviewing or looking at advisors, you wanna do a broker or adviser look up. So you can look at Finnvera.org, you can look up, put in their last name, their location, and you can do a broker check and then also the SEC advisor website has an advisor lookup that you can do. And what that will tell you is where have they worked? So you can kinda see how long they've been in the industry, where they've been, and more importantly are there any complaints or any issues with that advisor. John Teixeira: So we like to tell stories, and Nick and I had a meeting with someone and something wasn't right. It was an initial consult to really get to know who we're sitting with. We could tell that something was off, and Nick likes to google quite a bit, so he went on there and pulled up the advisor's history and there was a lot of complaints and there were actually, Nick, jump in if I miss something, they were actually kicked out of the industry. So it raised a lot of red flags, had those people looked him up prior they would have saw that and maybe not backed themselves into a corner kinda going back to just focusing on what we were talking about, just focusing on products versus strategy. It's just important to really know who you're dealing with. Nick McDevitt: And more specifically, when you do that lookup you can see what sort of license they have, and that license will tell you what kind of role that they can have as far as, are they able to provide advice or are they simply a broker where they're just selling products? And so as John mentioned, you can see if there's been suspensions, you can see if there's been complaints, you can see if they've had to settle financially, if they've had to pay out money to maybe a past client that's complained about them. Nick McDevitt: And it will also will show if they've had any personal financial issues. So a lot of people, especially back through kind of the 0809, one of the things that popped up that we'd have questions on from people where they or their advisor had gone through some sort of bankruptcy or something like that. And that doesn't necessarily mean that that person's no longer a good person or they're not trying to do what's best for the client. Nick McDevitt: But, they way that we approach it and they way that we think about it is that it's important for people to arm themselves with as much information as possible to help them make smart decisions. So being able to look up that information, seeing what kind of licenses they have, see if there's been any complaints, see if they've been at a different firm, if they've been at five different firms for one year at a time then that's usually a red flag [crosstalk 00:12:01] that's something they should be asking questions about. Again, it's just one of those things where it's good to know things like that. John Teixeira: Yeah [crosstalk 00:12:09] sorry, so one thing I do wanna mention on this and I kinda feel passionate about, so I do wanna jump in on it. We've run into some people where they thought they were working with an advisor that, let's say, had all the licenses, but they were only insurance license. So basically, what I mean by that is, they can only sell certain insurance products so, specifically, certain types of life insurance and annuities. And basically, what they did with this one person I was working with is they just jammed him into all annuities and life insurance because they couldn't sell anything else or offer advice for anything else. So important where you are looking up someone, make sure that they can offer you everything that comes into the financial planning world. Marc Killian: Yeah, and I think, when you're doing your homework, folks, do a little bit of research again, it's one of those situations where it's your money, it's your retirement obviously you need to care about it more than the person you're hiring. But you wanna hire someone who is gonna have your best interests at heart. Which is we talked about that last week as the fiduciary versus the suitability. But do a little homework, check some things out. The guys gave you some good places to consider to take a look when you're kinda checking someone out. And because we all are gonna have that gut feeling as well. So when you sit down and talk with someone, you're gonna also be able to decide if they give you the warm fuzzies, so to speak. So do a little bit of homework, sitting down and checking out some different people, certainly a good way to go when you're trying to find that right advisor to build that relationship with. Marc Killian: And if you'd like to come in and talk with John and Nick, and have that conversation with them, feel free to do so. Give them a call at 8132867776, again 8132867776. They do classes throughout the year as well, there's more information you can find on that at the website PFGPrivateWealth.com. You can learn about when those are gonna take place, and how to get involved, and all that good kind of stuff. And while you're there make sure you subscribe to the podcast on iTunes, Google Play, and whatnot. Marc Killian: And, John, Nick, thanks for your time here on Retirement Planning Redefined. I hope you guys have a great week or two, and I'll see you the next time we do one of these. Nick McDevitt: Thanks, Marc. John Teixeira: Alright, thanks. Have a good one. Marc Killian: Take care of yourself and enjoy yourself, and have yourself a fantastic day, and we'll see you next time here on Retirement Planning Redefined, with John Teixeira and Nick McDevitt of PFG Private Wealth an independent RIA. We'll talk to you next time, bye bye.…

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Ep 2: How The Financial Industry Has Changed In The Last Decade 15:23

6 years temu15:23

15:23

Things are changing in the financial world, and they're changing for the better. This week, we'll look into how advisor fee structures have changed, and we'll talk about why more and more advisors are becoming independent fiduciaries and separating themselves from the larger wirehouses. We'll also explain the difference between the suitability and fiduciary standards, and discuss why holistic planning is becoming so popular. ----more---- Here is a transcript of today's episode: Marc Killian: Hello, and welcome in to another addition of Retirement Planning Redefined with the team from PFG Private Wealth. Joining me on the program is Nick McDevitt, as well as John Teixeira. Guys, welcome in. How are you? John Teixeira: Good. How you doing? Marc Killian: I'm doing very well. Hope that you guys are doing pretty good. Anything interesting going on since the last time we did our initial podcast? Anything exciting or new to talk about? John Teixeira: Nick, you got anything going on? Nick McDevitt: No, just getting ready for the summer. Marc Killian: Well John, are you sleeping? Because, I mean the last time Nick made some comments about you trying to get some sleep with the little one. John Teixeira: I'm ... I'm not sleeping. Last night was pretty rough, so for an interesting day. But yeah, no sleep last night, but I'm up and running. Marc Killian: Yeah, there you go. Well they're good for that when they're little, but they're also got a lot of little fun things happening there too. So, it's interesting being new parents, that's for sure. But listen, guys I want to talk over the next couple of podcasts. We kind of kicked off our first one just to get to know you guys a little bit and get to know the corporation, the company a little bit, PFG Private Wealth a little bit. You guys are an independent RIA. You are serving the folks here in the Tampa Bay area. And I wanted to talk a little bit on this podcast just kind of about the industry, a few things. Kind of an overview if you will. And just get your thoughts on some of these things. Marc Killian: And of course, folks, if you want to subscribe to the podcast, check us out, moving forward we're going to be doing more of these. Go to pfgprivatewealth.com. That's pfgprivatewealth.com, and of course as always, you can always call them if you have some questions or concerns. Before you take any action, always talk with a qualified professional like John and Nick, 813-286-7776. That's 813-286-7776. Marc Killian: So guys, let's talk a little industry overview here. Just in the past decade, how's it changed? Nick McDevitt: Well, so typically we work with people that are 50 and up, where things are kind of starting to get a little bit more serious as they approach retirement. And one of the common things that we've seen is they come in, whether it's to one of our classes, or they come in for a consultation, is that they've had multiple people in their life that have helped them with maybe specific financial decisions. They've had a person that they've bought life insurance from. They might have a mutual fund account somewhere else. They may have bought a few stocks from a different broker, something like that. And what they haven't done is sat down with somebody that can help them look at it strategically and look at it from a broad base viewpoint. Nick McDevitt: And so, that's been the biggest change where things have become more planning focused versus maybe just focused on the stock market or returns in the market, that sort of thing. And as part of that, there's really been a huge shift in how the industry... And there's a lot more room left for the industry to grow that way. But the sort of transparency that the industry has from the standpoint of what our client's actually paying for. Marc Killian: Got you. Nick McDevitt: From a fee standpoint, really how are the advisors compensated, that sort of thing. And there's been a big shift where more and more advisors are breaking off from your Morgan Stanley, Merrill Lynch, wirehouse sort of structure, to an independent sort of structure. So, those have been some of the big changes for people. Marc Killian: Okay. And I want to talk a little bit more about that in just a second. But I wanted to ask John a question to kind of chime in here. What about fiduciary versus suitability? Now, for some of our listeners John, they may have heard these terms before, they may not. So real quick, tell us what they are and then give us a little bit of a difference on these. John Teixeira: Yeah, so this is ... goes in line with what we were talking about, the industry changing. And the industry's really going more towards a fiduciary basis versus suitability for clients. So, just to define those for people that don't know what it is, a fiduciary has to do what's in a client's best interest and has to put their own interest aside. I mean, it's funny to kind of say that, but [crosstalk 00:03:47] fiduciary has to do what's in the client's best interest, compare all options, disclose any conflict of interests that may happen in the result of planning. Someone that's working on a suitability capacity basically has to recommend to a client what is suitable. So it might not be the best thing for them. So example, if you work for a particular company, and they had very good products and investments, and you said, “Well this is suitable for this individual, but there are some other ones that are better, would better serve them. But I'm recommending what's suitable, so this will be just fine.” Marc Killian: Got you. Okay. And so as you guys, as fiduciaries, you obviously are doing what's in the client's best interest. And so is that just something that ... I mean again, it does sound weird to say, right? But you would think that just should be the norm. So I guess it is good that the industry's moving more that way. And is there any kind of particular reason behind that? Or just something I think they feel that they should do? John Teixeira: I think it's a lot of transparency, and something that really ... Dealing with people's retirement's very serious. You want to make sure that people are doing the best thing for their retirement, getting the best advice. And kind of going into what Nick was saying, a lot of people are leaving the Merrill Lynch's and stuff like that and Morgan Stanley's and going more independent. Being independent really allows you to be a fiduciary, where there's no proprietary products that you have to sell. There's no quotas to hit. There's no one kind of looking over your shoulder and saying, “Hey, what are you doing for us today? Did you sell this particular product? Or did you push this investment?” Things like that, so- Marc Killian: Got you. John Teixeira: All that ... Being in an independent space allows us to be a fiduciary and do what's best for the client. Nick McDevitt: And another maybe simplified example of that is ... Let's say we kind of go through and we develop a plan for somebody and based upon their plan, the client has decided that they would really like to have some sort of guaranteed income. And so they say, “Which ways can I get guaranteed income?” And we go through the options with them, and they decide, “Okay, well we're interested in some sort of annuity” and so, maybe somebody that's working in a suitability...from the suitability stand point, they have a broker dealer in a company that they work for that says “Okay, you're allowed to show your client these three options for them to purchase that annuity but, we've restricted you to these three options” versus somebody that's in a fiduciary capacity they could go out into the market place and look at everything in the marketplace and maybe there's ten options and that really allows them to come up with the best option for the client. So, that's kind of a basic example that might help add some clarity. Marc Killian: So, you've got a little bit more of a smorgasbord there going on, things you can kind of look through. I always kind of make the analogy when I talk to people across the country and host different shows that in a lot of ways with some of these big boxes, if you will, it's almost like sweaters. For example, when seasonal stuff changes they start pushing the stuff they want to get rid of, right? So, they can clear it out for the next thing to come in and so sometimes you might see that in some of these bigger box chains where they're saying “Hey, we really want to push this particular product versus that,” even if it's not always the best fit. We might refer to that as the cookie cutter plans, right? Where it's just kind of a one size fits all and is that what you were talking about, Nick? When you were mentioning that independent versus the wirehouse? Nick McDevitt: Yeah, so, a good way to...some good examples of that, and this changed even more as we went through the recession...'08, '09, and there was a lot of consolidation. So, let's say for example somebody walks in to a Bank of America and they want to open up an account, like an investment account at Bank of America. Bank of America purchased Merrill Lynch so Merrill Lynch is owned by Bank of America, and they will have an office inside of the bank that's just supposed to be for Merrill Lynch and the rest of the bank is supposed to be for Bank of America. And so, at the same time, those Merrill Lynch advisors that are in that bank may have certain quotas to hit. So, for example, if somebody is going to open an account with them they may also have quotas from the standpoint of saying “Well, what are you doing with a line of credit, do you have a line of credit on your house, do you need one? What about a credit card?” Nick McDevitt: And so, [crosstalk 00:08:03] it gives to all these other lines of business that in our mind from an independent stand point create conflicts of interest for the client and puts them in a position that may not be best for them. So, as an independent, when there's not proprietary products and you're able to act as a fiduciary and you know that you don't have any quotas to hit at the end of the year. The matter if you are ethically a, an extremely ethical person and you really do try to put the client forward, there are just conflicts that are out of your control, no matter as an advisor if you're trying to do the best that you can, eventually you're going to be put in a position that may make it difficult for you to do that. And so, that's really where that difference [crosstalk 00:08:45] comes to play. Marc Killian: That makes a lot of sense and I think that kind of helps things. That's why we're kind of talking and named the show here Retirement Planning Redefined, that's what you're listening to. The podcast with John and Nick, financial advisors at PFG Private Wealth and of course check us out online at pfgprivatewealth.com and I guess I'll ask one kind of final question here to kind of wrap up our podcast here around the industry overview. Hopefully, you've found a useful nugget or two of information in there, and that's around fee structures. So, if things have changed a lot over the last decade, and we talked about some of these things, how has that changed, what are you talking about when it comes to fee structures? Nick McDevitt: Yeah so, again going a part of the change, I'd say when I first started back in 2006 and the investment world was really geared toward commissions. For example, you would sell “Hey, Marc, you want to buy some Bank of America stock?” I'd trade it and then make commission off of that. Marc Killian: Right. Okay. Nick McDevitt: Where now it's going more towards just a flat fee. So, if I'm managing a client's portfolio, let's just say it's half a million dollars, I may charge X amount and it's that for the year. So, it's just much cleaner versus the commission focus. We found a lot of clients that have come to us we're leaving their advisors because they were only hearing from their advisor when there was a stock trade. And it's like “Hey, this is the new buy, let's go ahead and buy this.” They generate a commission, wouldn't hear from the person until they was ready for another commission that was coming their way. Marc Killian: Right. John Teixeira: Where the fee based it's really just ongoing advice on the assets so it's just much cleaner and in reality when you're charging a fee to manage someone's portfolio, you really want a long term relationship with the client. It's not a one and done. So, you, let's say, you work a little bit harder to make sure that the client is going to stay with you. And that's just kind of on the stock basis but, the same thing goes for mutual funds where, especially, when I first started in '06 it was all these A shares where basically someone would buy into a mutual fund family, let's just say American funds and there was almost a five percent sales charge in to it and the person would stay within that fund family. Negative to that was, American funds is good at certain thing but they're not the best at everything. So, some of these people were kind of stuck within that fund family where a fee basis you can kind of use all the best funds available to manage someones portfolio. Marc Killian: Okay. I got it. It makes sense. And, a lot of times we do hear those kinds of questions from folks, they feel like...and that sometimes maybe the difference between just having a broker and an advisor is you only kind of hear from that person when they're trying to move you in and out of a different product whereas an advisor, a financial advisor, one that you're building a long term relationship with, you can kind of turn to that person and say "Hey, here's what I'm thinking about for the future, here's what I want to plan for, here's this, that, and the other" and you kind of pull all those facets together, is that kind of how I'm reading that? John Teixeira: Yeah, and I would say as well that a couple of the buzz terms on that are that, so, when things were, when trades were commission based or almost load based, what would happen is that the conversations would be “Hey, it's time to make a change to your portfolio” and because those changes would often incur expenses, clients started to kind of get a little bit reticent to, like....is this actually good for me? And so, that communication made it harder for the advisor to do their job, and then for the client to trust that they were doing their job. So, with the fee based management where the advisors team typically operates on what's called a discretionary basis, so in other words, if things are happening and changes need to be made, that agreement has been made up front. And, because there aren't additional competition towards the advisor incurred on those changed, the client, typically from the feedback that we've had, they feel more comfortable that those changes are being made proactively because they're not a cost being generated to them. So, it increases the communication which ultimately ends up with their being a better relationship between the advisor and the client. Nick McDevitt: To jump in on that, we find a lot of clients actually like the fact that there's invested interest in their account going up. So, they say, we hear things like, "Oh, so, when my account goes up you make more and if my account goes down you make less" So, we find that's [inaudible 00:12:53] hear that quite a bit. Marc Killian: And we're going to touch on that a little bit more on our next podcast episode, we're going to talk about how the things have changed over the last decade from the advisor role. We kind of talked about the industry overview here a little bit today on this podcast with Nick and John and so we're going to touch on that the next time. So, make sure you tune in, make sure you subscribe to us and go to pfgprivatewealth.com again while you're there you'll be able to... we'll have this coming here pretty soon, you'll be able to click on podcast and subscribe to us on iTunes, Google Play, Stitcher, various different outlets, whatever one is the one of your choice. And as always, reach out to the team if you have questions or concerns about anything before you take any action give them a jingle at 813-286-7776, again 813-286-7776 to talk with John Teixeira and Nick McDevitt at PFG Private Wealth, an independent RIA, serving you in the Tampa Bay area. And guys, thanks for your time, I look forward to talking to you in a couple of weeks when we talk about advisor roles and how they've changed over the last decade. Thanks for your time guys. John Teixeira: Thanks, Marc. Nick McDevitt: Thanks. Marc Killian: We'll talk to you next time here on Retirement Planning Redefined.…

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Ep 1: Getting To Know Your Hosts: John Teixeira and Nick McDevitt 17:08

6 years temu17:08

17:08

On this inaugural episode of the Retirement Planning Redefined podcast, we'll get to know your hosts a bit better. We'll find out how they got involved in the industry, how their partnership formed, and what experiences have shaped their financial and investment philosophies. ----more---- Here is a transcript of today's episode: Marc Killian: The rules of retirement have changed. No longer can most of us rely on social security, or a single pension to fund our futures. We're living longer in retirement, doesn't just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens, with fresh eyes, with a new approach and plan of attack. Here to answer the call are our financial advisers, John Teixeira and Nick McDevitt of PFG Private Wealth Management serving youth throughout the Tampa Bay area. This podcast is retirement planning redefined and it starts right now. Marc Killian: Hello and welcome into retirement planning redefined. Thank you for tuning into our podcast with financial advisers from PFG Private Wealth, an independent IRA. Joining us here is Nick McDevitt as well as John Teixeira. We're going to be talking about the role of investing, finance and retirement, and they're serving you here in the Tampa Bay area. Make sure you go to the website pfgprivatewealth.com, that's pfgprivatewealth.com. John, Nick, guys, welcome into the kickoff podcast. How are you? John Teixeira: I'm good. How are you doing? Marc Killian: I'm doing very well and Nick, how are you? Nick McDevitt: Doing well also. Marc Killian: Very good. How's the weather going in Tampa right now? John Teixeira: It's raining quite a bit, more than usual, we usually get about 10 minutes, 15 minutes span. It's been going all day. Marc Killian: Oh yeah. Well that's Florida for you, right? John Teixeira: Yes, it's true. Marc Killian: Now see that through the power of the Internet I don't have to actually be in Florida to do a show with you guys. I'm actually in North Carolina, we're usually are kind of the same way. Just wait five minutes and the weather will change if you don't like it, same kind of thing in Florida. Got a lot of friends and family down there, so I'm used to that as well. But that's not what we're going to talk about here today on the podcast is the weather. Just trying to kick things off a little bit. But what I wanted to do on our first episode is just to kind of get to know you guys a little bit and get some information out there. So as we start archiving more and more podcasts and folks are finding us, whether it's on iTunes, or Google Play, or iHeart, or Stitcher, or whatever your podcasting platform of choices, they can kind of go back and get to know you guys a little bit as well through this. Marc Killian: So I've got a couple of basic questions for this initial a show just to kind of get to know you guys and I'm going to toss these out. Just feel free to... whoever wants to tackle this. But first question is, well, how did you get into doing what it is that you do? Nick McDevitt: This is Nick. I've been an advisor now since 2007, Fall of 2007, and it was something that I was always interested in kind of in high school and then throughout college, but after moving down to Florida in 2003 and starting off in a different industry and more of a sales capacity, I kind of came full circle and decided to move into the profession. Marc Killian: And what about you John? John Teixeira: Yeah. I moved down to Florida, Tampa area from Boston in 2006. I graduated in 2005 and just really actually wanted to understand how money works. I started reading some books on financing and banking and then just started diving more into the stocks, actually more of a learning thing and then I was wanting to kind of help people, so really as I started learning more about finances, figured this would be a good avenue to kind of do both. Marc Killian: I got to know, you said when you moved down to Florida, where are you from originally? John Teixeira: I'm from Boston, Massachusetts. Marc Killian: Okay, no accent at all, so you've definitely long since shed that, so that's pretty good. John Teixeira: I did. Marc Killian: Yeah. Nick McDevitt: And Nick from Upstate New York- Marc Killian: I was just getting ready to ask because I was going to say, Nick are you a Floridian by default there or no? But I guess not so. Nick McDevitt: No, Rochester, New York moved to Tampa Bay in 2003. Marc Killian: Now did you guys... well, I guess I'll just move around there and all my list of questions there and I will just kind of keep this little more conversational. How did you guys get to working together then? John Teixeira: A good question. I joined MassMutual in 2006 and then Nick joined in 2007, right Nick? Nick McDevitt: Yeah, the fall of 2007. John Teixeira: From there just kind of in the same training, became friends and just kind of really stayed in touch. I had left MassMutual in 2009, 2010 and Nick was still there and in 2016 we actually teamed up. We've been friends for over a decade. It's been a good friendship and good working relationship as well. Marc Killian: Very cool, well, that always helps. So you guys met through there and decided to kind of branch out. So when you set up this partnership working together, what's kind of the each other favorite part? Is that the same favorite part? Do you kind of both tend to do different avenues of the Retirement Financial Planning side of things? Or how do you guys go? Nick McDevitt: I think the good part or a strength of ours is that we are both pretty well rounded. I would say John's a little bit more analytical than I am, but we're both pretty well rounded so we're able to pick up the slack for each other if one of us is out of town or John's having babies like he has been over the last few years or able to kind of pick up the slack and adapt and adjust whenever the other person kind of needs a pickup. It's not that our duties are totally segmented, where it's more complimentary and we're able to work together pretty well, which is what's made it work for us. Marc Killian: That's very cool. So John, aside from having babies and Kudos to you for that, what kind of is your favorite part of what you do? Nick McDevitt: Really it's just working and helping people. We meet a lot of people and I'd say, after we're done kind of building a plan and putting a strategy in place, people leave with peace of mind of that they're on the right track and once we hit that goal for each client, it's fulfilling. I really enjoy, every day's a little different and we do get to meet a lot of different personalities and the clients end up becoming friends so I enjoy that part. Marc Killian: Yeah. I host a lot of podcasts and radio shows on the topics across the country and a lot of times we do get that response from people is that, it's definitely different all the time, you see so many... I think we all share commonalities when we're talking about finances and retirement planning. There's definitely generalities that go into it, but at the same time everyone is so uniquely different that it winds up branching off pretty quickly and then of course you get the different personality types and all those kinds of things in there. That works out really well to kind of keep your day interesting, I'm sure. Kind of get back into this partnership here a little bit. So you guys org... either one of you guys is numbers junkie because I think for a lot of us that listen to these types of podcasts and types of shows, maybe Math isn't always our strong suit and so we kind of assume that a financial advisor is really into numbers and so either one of you guys that way or is it really more the love of trying to help people? Nick McDevitt: I think that it's a little bit of combination of both. This is nick. For me, there's... I've always had a strength in the Maths space but what's interesting about our field is that from what we have found, and I don't know if it just happens to be how most of our clients come to us, but our ability to communicate with them and not talk, are not used to much jargon and be able to help them. Yeah, see the big picture and then work with them, you with different tools and with kind of the planning process that we use, to then slowly start to bring it down to a common denominator is what's made people feel more comfortable. And so that's part of why we're looking forward to doing this podcast is to provide them with additional tools to help them to continually learn, almost like a continuing education sort of program for them. Marc Killian: No, I think that's a good way of looking at it because I... and I think a lot of people, and that's kind of why I phrased it that way, do tend to... because you guys see the biggest thing that comes with people coming in and talk with a financial advisor's procrastination, right? A lot of times they're like, well, I don't know, I guess I could do it myself, or that's not my thing, or I don't like talking about my money, or whatever the case is. And so people tend to get a little hung up there. But I think when you're working with somebody who can talk to you and make it relatable and make it to where you're comfortable with it, that goes a long way in helping you feel better and understand your plan and enjoy your plan. Would you agree with that, John? John Teixeira: Yeah. Most people I think just want to know how things work and just want to make sure that you're really just advising best for them. Marc Killian: Yeah, I would agree. Alright, so let me turn the attention that we kind of talked about you guys and the and the partnership a little bit, how that kind of formed in your own personal things, but let's talk a little bit about the firm. So what kind of makes PFG Private Wealth a little different than the rest? Nick McDevitt: So we are what's called a... we're an independent firm so we're an SEC registered investment advisor firm. There is a team of about six advisors and then we have some staff members, and the firm itself has been around for... really just the original founder of the firm just hit his 50th year anniversary actually a couple of weeks ago. And so the firm's really kind of transformed over the years and continually updated and adapted to try to be in the forefront of what's going on in the industry. And so there's always been a focus on an advice-driven practice, whether it's been through strategic business with... there's a good strength on the insurance side, executive level, sort of insurance planning. Then over the years that transformed into more of the investments as Jeff Perry, who's the portfolio manager, became more involved in the practice. Nick McDevitt: Over the last probably five or 10 years, it's really shifted more towards the advice side so the actual fee-based financial planning and independent investment management internally. We're clearing custody with TD Ameritrade, so everything there is third party. And that's something that we always try to emphasize with the people that we're working with or the people that are coming in to talk with us is that from a conflict of interest standpoint and from a fiduciary standpoint, we do believe in having that basis, and that's really how we're structured. John Teixeira: Yeah. What the practice... one thing I think that separates our business model here is that we do work as a team. So Nick and I really focus on the planning end of things. If there's something where we need some assistance, whether it's asset management, we have specific guys that strictly do asset management, Bob Perry, which is the founder of 50 years focused on the state planning so he's a great resource and someone to talked to for that. It's a collaborative effort, we all work well with one another and we enjoy working with each other too, so I think that adds to it. Being independent, which nick mentioned, no proprietary products, which is very important nowadays so there's no one telling us, hey, this is... you have to use this fund, you have to use this product. It's really geared towards our client and what's best for them. John Teixeira: Yeah. I always kind of enjoy talking to the folks that do a lot of the independent advising. Sometimes when you think about the big box thing, I sometimes make the analogy of Walmart and sweaters and it's like a certain time of the year they get the sweaters out even now you're thinking, why a sweaters out right now, it's summertime, right? But they're trying to push him for the roll up or vice versa when the season's over, and they're just trying to get rid of them, and they try to jam everybody, I you should buy one of these, or whatever the case is. Same kind of deal sometimes when you're working with those big box cookie cutter things where they want to jam everybody into the same whatever vehicle it is because that's the hot topic that they want to get pushed that month. John Teixeira: A lot of times when you're working with an independent advisor, you do get, I think a little bit more holistic, if that's a good word, kind of view of everything. That works pretty well. Marc Killian: Alright. Nick, you kind of touched on this. I'm going to let you... I'm going to ask one more question here and then we're just to be about out of time for our first podcast but you kind of touched a little bit on the podcast. I was going to say, why are you guys looking at doing a podcast? What's kind of the overall theme that you're wanting to carry out through this? Nick McDevitt: Sure. What we found is that because most of our clients come to us through the classes that we teach. The classes are typically over two weeks and it's two sessions, three hours per session. We cover a broad base of topics and don't really have a ton of time to get in depth on them and when those people that decide to work with us after the class, they go through our planning process, it is fairly intensive and so we want to help and we want to have this podcast allow them to be able to touch on and remind themselves about certain things. Nick McDevitt: An example of one of the things that we found is, maybe a husband and a wife come to the class, Maybe they're 60 years old and they come to the class, about to focus on themselves, but during the class we mention a couple of things about experiences that we've had working with clients whose parents are becoming ill and starting to go through, and mistakes that they make from the standpoint of what their parents do with their money, and it's an additional problem, it's an additional phase that they're going to enter into, and it would be great for them to be able to listen to things in a convenient manner, be able to increase their level of knowledge a little bit so that then they can come in and sit down with us and chat with us, and they'll feel more empowered by having a higher degree of knowledge on different topics and subjects. That's really how we're... what we're focusing on is trying to give people an opportunity to increase their level of knowledge and be able to feel more comfortable having those sorts of conversations with us. Marc Killian: I got you. Well, that makes a lot of sense. Actually I guess I do have a quick follow up and then I'll let you guys get back into your day. So, John, with the class just kind of give us a quick overview. Nick touched on it a little bit of it, but this is something you guys offer a pretty periodically throughout the year and is it pretty easy for folks to get involved if they do want to choose so? John Teixeira: Yeah, so we offer it twice a year, Spring time usually falls right around January to March. Then we offer it in the Fall starting around late September, October. Most people hear about it, read about it through our mailers. And then also we have a lot of clients that will refer colleagues to the class and then also coworkers. Hey, I want... we hear all the time, "Hey, I passed your invitation on along to a couple of friends of mine. Is that okay?" And we always say, yeah, so what we'll do is we'll follow up, send them a link so they can register and register for their friends as well. Marc Killian: Okay, well, you can always tell the difference depending on obviously a lot of our listeners are going to wind up being in this area anyway, but I love the fact you're like springtime January to March, and it's like, I used to live in Michigan and there is no say I used to live in Boston. There is no spring in January. It's just known gold. Right? John Teixeira: It is. Yeah. The nice thing about being in Florida, especially in the winter time, it doesn't get dark at 3:30. Marc Killian: Yeah. Right? Yeah. My first year in North Carolina, when I moved from Michigan, Christmas time, it was 65 degrees on Christmas day and I was playing basketball. I was, yeah, alright, I can deal with this. It was much better shot than my friends back in Michigan. Go ahead now. Nick McDevitt: Now I was just saying that's similar experience after moving down from Rochester, which is very similar to weather in Michigan. You adjust quickly. Marc Killian: Yeah, you can enjoy that sunshine a little bit more. Well, there you go so that's our first podcast. Just kind of getting to know the team a little bit @pfgprivatewealth. Well the.com is where you can find them. That's not the name of the company is PFG Private Wealth, but if you want to check them out online go to pfgprivate wealth.com. They are an independent RIA as nick mentioned, and of course I was talking with John Teixeira and Nick McDevitt and the guys are going to be on with me from time to time. We're going to talk about various things. We're going to do a lot of different stuff on the show. We'll talk about some of the things you might hear in the class. I'll have some fun, interesting topics, kind of some oddball things all through with the guys from time to time. You can send an email questions that will cover, some news topics, lots of different things as it relates to finance, investing, retirement and all that good stuff. Marc Killian: As always, if you have questions or concerns, make sure that you reach out before you ever take any action. You always want to talk to a professional and John and nick are available if you need to reach out to them at 813-286-7776, that's 813-286-7776 and just share that with friends or family that you know might have a situation as well. And of course, when you're on the website, don't forget to click on the podcast that'll be coming soon and you'll be able to click on subscribe, whether it's iTunes or Google Play or whatever your platform is. Marc Killian: Alright, so we'll catch you guys next time here on retirement planning redefined with John and Nick, financial advisors at PFG Private wealth. We'll talk to you next time. Bye. Marc Killian: PFG private wealth management, LLC Is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.…

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Welcome To Retirement Planning Redefined 3:13

6 years temu3:13

3:13

Coming soon: It's a new podcast helping you plan for your financial future and retirement. It's Retirement Planning Redefined with the team at PFG Private Wealth Management. Each week, John Teixeira and Nick McDevitt will bring you common sense planning guidance and advice to help you stay on the right track to get to and through retirement. Listen to this quick preview of what's to come on future episodes. Episode 1 is coming soon. Meanwhile, learn more about PFG here: https://www.pfgprivatewealth.com/…

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Ep 29: Understanding Annuities - Fixed Index 18:01

4 years temu18:01

18:01

This is the final installment for our annuity mini-series. We will wrap things up by diving into fixed-index annuities. We get more into the finer details of some properties of annuities and also take a look at how these contracts are typically structured. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Back here for another episode of the podcast. Thanks so much for listening to Retirement Planning Redefined with John and Nick from PFG Private Wealth. They are financial advisors serving you here in the Tampa Bay area. 813 286-7776 is how you get ahold of them if you've got some questions or concerns about anything you hear on our show, or really any others when it comes to your retirement plans. Speaker 1: And this week on the podcast, we're going to continue on with our annuity session. This is part three, and we're going to talk a little bit about indexed crediting strategies as well as indexing methods. And that sounds fancy, so we'll let the guys break it down. But first, we'll say what's going on. John, how are you, my friend? John: I'm good. I'm good. I was, this morning, just getting some quotes on artificial grass. It was- Speaker 1: Oh, that sounds fun. John: ... very interesting to look at the different samples of them. Speaker 1: The different samples of artificial grass. All right. Who would've thought, right? John: Not me. Speaker 1: It's a strange thing you can do. That's for sure. Nick, how are you doing, buddy? Nick: Definitely not looking at artificial grass, but doing pretty well. Staying busy. Speaker 1: Good. At the time we're taping this podcast, your Bills won a playoff game, yeah. Nick: Yeah. Yeah. First time in quite a while. And they continue to take years off of my life, but at least it's a lot more enjoyable to watch now. Speaker 1: I totally forgot to ask you, because as a Bills fan, you finally get rid of Brady in your division, but he moved to the town you're in. Nick: Yeah, it's pretty interesting. I mean, I've been in Tampa Bay since '03. I moved down the July after they won the Super Bowl, so they were pretty popular. And then Florida is such a different town from a sports perspective, and Tampa Bay, specifically is obviously all I have experience with. But there's so many people from other areas that it's just different. Whereas, the Bills, in Western New York, are kind of like a way of life. It's been an interesting... The Bucs have a chance, we'll see, to be the first team to play a Super Bowl in their home stadium, which would be kind of interesting. And then if it ended up being against the Bills, that would be double interesting. Speaker 1: Yeah. Some of those ghosts could be haunting them, so they're probably hoping to not see him once again. But, anyway. Nick: Yes. Yes. Speaker 1: We'll get into financial topics and we'll talk sports another time, but I just wanted to ask you about that. So good stuff, indeed. So guys, what am I talking about or what are we talking about here today on this annuity session? What are some of the features and some of the things we need to be thinking about? Nick: Yeah, this will be the last in the series of the annuities that we talk about. And just like anything else, we view ourselves as informational and educational. And because annuities are such a topic that there's so much information out there about, there's plenty of positives and plenty of negatives, that we want to make sure that we go through these different things. Nick: And so this session is going to be focused on what are called fixed index annuities, which can be confusing, just like anything else. There are some more moving parts, but we have found over the years that for those people that are pretty conservative and risk averse in looking for opportunities to have some sort of upside from the market, but are not comfortable having much downside, that these are something that can make sense for them. So we're going to spend the session kind of going through and talking about them. John: To compare these to the last session we talked about, you can expect a higher interest rate than a fixed annuity, over a long-term period. And comparing it to the variable annuity, it doesn't have the same potential because you're tied to a specific index and there's some restrictions to it, which we'll go through. John: So this is really a good hybrid in between, if you're looking for, like Nick mentioned, you want some principal protection. But the negative to a fixed annuity is, hey, I'm locked into this rate, I can't really get much more. How can I get more? And then this fixed index would actually accomplish that because if the market does go up, there's potential to actually go up with the market to a point. John: Something to understand with these, again, important in all annuities, understand the fees that you're in. And while typically... Again, I hate using the word, but we have to. Older contracts, we haven't seen fees in these, but there are some newer ones where they are having some fees within the contract. And the way that they explain that is, hey, if we put this fee in here, well actually, there's more growth potential on your crediting methods. John: So just understand if you're looking at any of these, like anything, you want to look at the surrender period, you want to look at the surrender charge, you want to look at the fees. I mean, those are three important things to look at in any annuity contract, and especially with these. Nick: So in general, the term index annuity really comes from the structure of how they credit growth inside of these contracts. One of the most popular indexes that are used in these sorts of contracts is the S&P 500. And the way that the contracts essentially work is they will offer different indexes that they will provide crediting towards, and use that index as the barometer for how it works. Nick: So just to super simplify it, what'll happen is they'll say, okay, there are different rates and John's going to different sorts of structures and John's going to kind of get into that. But they'll say, okay, between the time that you open this contract and a year from that period of time, we're going to track the index. In this case, we can call it the S&P 500. We're going to track the performance of that index over time and then we're going to give you a percentage of the performance of that index. And that percentage can change for year to year, and they declare it on each anniversary. Nick: And so that's what provides you with the upside within that contract. However, and this is the reason that many people will use this sort of contract is, if the S&P 500, in this example, let's say it drops 10 or 15% between now and 12 months from now, you're not going to participate in that down portion, that downside, you're just not going to get credited anything. So essentially what ends up happening is that you're flat for the year. Nick: So when these things talk about not having the downside or protecting your principal, that's what they're referring to. So if the S&P 500 is up 10%, you'll get a percentage of that growth and John, we'll talk a little bit about how they may credit that. However, if it's down 10%, you're just going to not lose any money that year. It's going to be flat. Nick: So that's the general principle of how it works and which index is used, how much they credit, that's all the due diligence that happens when people choose which contract to go with, but in a very basic sense, that's how it works. John: Yeah. And to really explain it, I think, let's give an example of that. So if you're in a participation rate, and let's say you start with $100,000, and like Nick said, the most popular one is the S&P 500. And by participation rate, let's say it's 50%. So what that means is you're going to get 50% of the S&P 500 on the upside. So if you're in contract January 1, 2021, they'll look at the S&P 500 on January 1, 2022. If the S&P 500 has gone up let's say, 20%, your contract is going to credited 10%. Again, that's 50% of the 20% gain. So if you start out with 100,000, your account is now at 110, okay? John: A benefit to this is that actually your 110 now is your new floor. So when you get credited, that's actually your floor moving forward. So, example, let's say year two, you're still in a 50% participation in the S&P, S&P goes down negative 10. You're year two, basically what's going to happen now is the 110 is now your floor, you stay at 110. Now you move on to year three to see what the S&P 500 does. John: So that's one crediting method, participation rate. They also have a cap rate. So, that's kind of like a ceiling. So, you could have an S&P 500, again, index that you're monitoring or are kind of shadowing. And your cap is 6%. So what that means is, you're going to get up to 6% of the S&P 500 growth. So same example, 100,000, let's say you have a 6% cap. The S&P goes up 20%, in this scenario, you only get 6% because that's your ceiling, okay? So basically 6% your cap, that's all you're going to get that a hundred thousand now, after the one year, it's going to be at 106, because you got 6%. Year two, again, S&P drops, you stay at your 106. John: So, just important to understand the different crediting methods. There's one more called a spread. This is kind of like a fee, but it's only taken off if there's gain. So a spread could be like 1.5%. And again, let's use the S&P 500. If it goes up by 7%, they take 1.5% off of that gain. In the same idea. You get the credit for that year, it locks in your balance at that point in time, and that's kind of your new floor. John: So important just to understand you have participation rate, cap rate, and a spread. Those are the most popular, they're not the only ones. There's actually a lot more, but those are the three that we typically see. We don't have enough time today to really go through each one, but those are the most common. And I'd say kind of when we're using these strategies, those are typically the ones that we use, because they're just simple to understand. Nick: Yeah. And some of the other things to look out for, if let's say you already have an existing contract and because these insurance companies, they can change those rates that John walked you through from year to year, maybe one year your cap was 6%, but they drop it to 3% on the S&P 500, it may make sense to look at another index. So most contracts have a menu of indexes that you can choose from, from year to year, and they allow you to change your choice on an annual basis. Nick: So what we've seen is people may get complacent and they've had the same index for a couple of years and because they know that there's not really market risk per se, they just leave it. And they haven't realized that those rates have changed and what they've been in, their potential is much lower. And, usually what ends up happening is that they may lower some, but they may increase others or there may be other opportunities and other portions. Nick: So it's important to look at it on an annual basis, take a look and see what changes they've made to the contract and if it makes any sense to make a change. And some of the options aren't just a one-year option, they may offer a two year option. That could have much better rates and that could be an opportunity as well. Nick: So even though it's a vehicle, a tool that can be used, sometimes there's complacency that kicks in because there isn't perceived risk and just like anything else, doing your due diligence each year and adapting to what's happening within the contract can really, really pay off for people and they can try to maximize or take advantage of the opportunities that are within the contract. Speaker 1: It sounds like any financial product where sometimes people just want to set it and forget it. And that's not always the best strategy having. And that's where you can do with reviews and things of that nature, but just kind of checking on these things is certainly a good idea is what I'm hearing. Nick: 100%. 100%. And I will say too, that in our last session on variable annuities, we talked a little bit about some of the riders that are available that can provide people with guaranteed income. And many times there are those writers available on these fixed index annuity contracts as well. So they can be a tool that provides future guaranteed income, but maybe provides options with less fees than a variable contract or higher guarantees than a variable contract, which is something that can be used from a comparison perspective. John: Yeah. And to jump into what Nick was saying about the indexing methods changing, it's important when you're looking at some of these companies that you go with a quality carrier and look at their track record. Because the last thing you want to do, and we've seen this where, one company might be offering a very competitive cap rate, let's say 8% or something like that. And then once you're in the contract with them, they all of a sudden lower their cap rate to four. And it's like, Whoa, now I'm with this company for the next seven years, because that's my surrender period and they've just lowered their rates on me, you know? John: So that's where doing your due diligence on what company am I going with, what's their ratings, what's their track record? Are they a good company I want to be with for the next five, seven years? And that's where it's important, if you're working with an advisor that they're doing their due diligence, and you're doing your own to make sure that if you're going to be with this company that they're going to do right by you, if you're going to be with them for that period of time. John: It may sound like we harp on it quite a bit, but the pitfalls are important to understand. Make sure that the company that you're looking at is a reputable company and has strong financial ratings. Pay attention to the surrender charge period with these contracts, where people have that and tripped up is we've seen people locked into contracts that are 15 years long, 18 years long, which really can be pretty tricky. So making sure that you understand how that's structured. And then, like John said, getting some historical background on how often they change their indexing rates. And if they're really just kind of using teaser rates to get people locked in. John: So just like anything else, it can be a piece of the pie. And oftentimes where it's most appropriate would be for people that are pretty conservative investors looking for a little bit more potential, especially in this current environment where rates for CDs and money market accounts and that sort of thing are so low. Speaker 1: Yeah. Again, when we talk about these things, it's always important to remember and realize that like anything in life, you should always do your own due diligence, as well as when you're working with an advisor, or when you're looking for an advisor to work with. Make sure that you're going through the proper steps, do some of the homework, and then take the time to find out is this product right for you? Don't just jump into anything because it's something you hear on any particular show or a talking head or whatever the case is without seeing how it might relate to your specific situation. Speaker 1: And if you need help with that, whatever type of annuity it might be, or any other financial product, because annuities can be a bit polarizing, have those conversations reach out to John and Nick, they're here to help in the Tampa Bay area 813 286-7776. If you've gotten this email through a newsletter or a blast or something like that, or whatever the case might be, and you haven't yet subscribed to the podcast, feel free to do so, certainly would be appreciated. If you'd like to get more content as they come out, you can simply go to pfgprivate wealth.com. You can find the podcast page there, pfgprivate wealth.com. Speaker 1: You can also find a lot of good tools, tips, and resources, and reach out to John and Nick. You can also subscribe through your favorite app or whatever that might be. Just search out retirement planning, redefined, and hit the subscribe button. A lot of times it's a heart or a thumbs up or something like that, search the type retirement planning redefined in the search box, or just call 813 286-7776. Speaker 1: John, Nick, thanks guys for your time in this series on annuities, a lot of good information. They do get a little complicated sometimes, so again, it's really important for people to understand and have a good working knowledge of this, especially if they're considering it. So I appreciate you guys sharing some of your knowledge. John: Cool. Thanks Marc, have a good one. Speaker 1: John, appreciate it, bud. Take care of yourself and we will talk next time here on Retirement Planning Redefined with John and Nick from PFG private wealth.…

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Ep 28: Understanding Annuities - Variable and Fixed 19:13

4 years temu19:13

19:13

This is part 2 of our annuity mini-series. We focus on two types of annuities on this episode which are the variable and fixed deferred. John and Nick explain what are significant about each of these and how they may fit into a retirement plan. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Marc Killian: Hey everybody. Welcome into the podcast. Thanks so much for hanging out with us today as we talk investing, finance, and retirement with John and Nick, once again, here on the airwaves with me on Retired Planning Redefined. Marc Killian: We're going to pick up with our conversation on annuities. We are doing this series, or this session, on annuities and we're going to talk about fixed deferred annuities, as well as variable annuities today on the show. But before we get into all of that, let's say hey to the guys. Nick, what's going on, buddy? How you doing? Nick McDevitt: Good. Good. Just we're in the new year now and things are off to the races for sure. It's been a hectic start to the year. Marc Killian: What races? We don't know, right? Nick McDevitt: Yeah. Yeah, yeah. Yeah, that's true. Been a hectic start to the year, but looking forward to the new year. Marc Killian: John, how about yourself? You're doing all right? John Teixeira: Yeah. Doing good, just busy. And like Nick said, it's been an interesting three weeks to start out the year to say the least. Marc Killian: I don't know if you guys saw that meme that says, "I'd like to cancel my subscription to 2021. I tried the seven day free trial and I'm not happy with it." John Teixeira: Yeah. Nick McDevitt: Yeah. I've seen ones too where it's like, "This is week 54 of 2020. Marc Killian: Something like that, yeah. Pretty interesting times that we're continuing to live in. John Teixeira: Actually, my wife, I got the vaccine, first one, yesterday. Marc Killian: Oh, did she? John Teixeira: She's a nurse, so she was nervous a little bit, but also excited that she could just not have to think about it once she gets the shot. I think it's six months to a year, roughly, that they say the immunity from it... To be determined, but I think six months at least [crosstalk 00:01:36]. Marc Killian: I hear depending on which company you get it from, it's a series of shots and they say maybe you might feel bad for a day or two after it. How'd she do? John Teixeira: Not too bad, although last night we were putting one of the kids to bed and she comes in and she's like, "Hey, where's your EpiPen?" I'm like, "EpiPen? What do you need that for?" Her throat started feel like it was tightening up, but it went away within 30/40 minutes, so that was it. Honestly, shes doing well and- Marc Killian: Good. John Teixeira: She's doing good. Marc Killian: Good. Good to hear. Certainly interesting. Obviously, the virus itself affects so many people different ways and then apparently the vaccine does the same. My business partner, his wife's a nurse and same thing with her. She got the shot a couple of weeks ago and had a really bad headache was her side effect from it, but I think that was about it. So, you just never know how it's going to affect everybody, so I'm glad to hear she's doing well and be curious to keep an eye on that, as we move along, how the vaccines and all that stuff's going. Marc Killian: But for now, like I said, let's talk about annuities. Let's get into part two of this. I mentioned at the top of the podcast kickoff, we're going to talk about two types today: fixed deferred and variable. So let's start with fixed deferred, guys. John Teixeira: Yeah. So, fixed deferred annuities, recapping what we went through last time, anytime you get into an annuity, you really got to look at the company you're going with because the guarantees are based on the issuing company and how strong they are. But just go over a fixed deferred annuity. John Teixeira: It's very simple, similar to a CD issued by a bank, just issued by an insurance company. You have a guaranteed rate. There are some that just give you a minimum interest guarantee where they'll say your minimum interest is 1%, but it can fluctuate based on some factors. The most popular ones that we typically use are where there's a multi-year guarantee where it will say, "Over five year period, you're getting 2.5% or 3% over that five-year period." John Teixeira: Typically,... I say typically because there's always some outliers... typically, no fees, again just comparing it to a CD, no fees on it. You're just getting your 2.5% for that five year period or three year period, whatever you pick. We typically find that these rates are normally a little bit higher than CD rates, so it's very competitive in that space. "Just looking for something just very simple. Let me just get a fixed rate. I don't want to worry about any of these other moving parts. I just want a fixed interest rate with no risk." Nick McDevitt: Yeah. And I would add to that from the perspective of... from a functionality standpoint, as far as how the rates are fixed, there are some similarities with CDs. But it is important to understand that CDs typically have FDIC coverage or insurance because they are issued from a bank up to the limits that the FDIC provides, whereas the guarantees and the CD are going to be from the insurance company. Nick McDevitt: So, we know that that's a concern that people have when they bring it up or talk about it, so we always like to point that out. And then, on top of that, from the perspective of keeping in mind that annuities, by rule, by default, they have limited access to money until 59-and-a-half or after. So, if it's money that somebody is using that is a non-retirement account and they're younger than 59-and-a-half, it's important to make sure that they remember that rule, that 59-and-a-half rule. Nick McDevitt: But the positive is that it does provide tax deferred growth. In other words, you don't get a 1099 from the bank or from the insurance company every year on your interest like you would in a non-retirement account if it was in a CD. So, the rates, the taxation, and the protection side of things are some differences between those. John Teixeira: Yeah. And also, and just going back to what we talked about in the first annuity session, there are surrender periods on this. There are surrender charges, which will make them different than CDs. So just, if you need a recap of that, just go to our last podcast and we went through the basics of annuities, which is going to apply really to the fixed, the variable, and the index, which we'll be going through. Marc Killian: All right. A lot of times when people think about different financial products, we often hear about the three qualities of money where you're looking for growth, safety, or liquidity. And every different kind of vehicle provides different things. Often, when we think of annuities, we think of maybe the growth and the safety aspect, but without some of that liquidity you guys were talking about. Marc Killian: But again, since there's different kinds of annuities, you want to check and see really what the pros and cons are going to be for your specific situation. So, a fixed deferred might be something that worked really well for you and your situation, but again, you want to go through that with an advisor. And then, the variable, this tends to get more of the bad rep, I suppose, so break down some of it on the variable annuities for us, guys. Nick McDevitt: Sure. Essentially, what a variable annuity is and what it does is it combines the structure of being able to invest in mutual fund-like investments, where in a variable annuity they're called sub-accounts. So it combines that with the chassis of an annuity, which provides tax deferred growth on the growth of the account. Nick McDevitt: So, these became a little bit more popular back in the 80s where you would have high-income people that were looking to save additional money; maybe they were maxing out their 401k plans, or their retirement plans at work. They are in a high income, maybe a high income state or just, in general, high federal tax bracket, and so they were looking for additional ways to invest their money and they would use the variable annuity contracts to provide them with that tax deferred growth on the dollars and not get a 1099 each year on their investments. And so, over time, as tax rates changed and really became a little bit more favorable over the last 20 or 30 years, the popularity of the contracts became less than less. Nick McDevitt: And then, what the insurance companies did was they started to add different riders and different guarantees onto these contracts, almost like an additional layer that comes over the top, that provided some additional guarantees to really just incentivize people to use them. And so, John, if you want to talk a little bit about some of those guarantees, and really the reason why many people that really have owned them over the last 10 or 15 years own them? John Teixeira: Yeah. I'll start with some of the less common ones and we'll end with probably the most common, and Nick does a good job expanding the income ones. But they have somewhere, basically, your principal's guaranteed and not so popular anymore, but I've seen some contracts where you might get in today and they'll guarantee your principle payment over a 10 year period. John Teixeira: So example, you put in 100,000, they guarantee you over the next 10 years if the market goes down, you'll at least walk away with your $100,000, so you get a principal guarantee and they'll have a term period where they'll put that guarantee. So example, year nine, your account's at 80 grand; you put in 100. Once you're at the 10 year anniversary, they just give you your 100,000 back. John Teixeira: There are some death benefit guarantees to it where we've seen some contracts where, again, your principal payment has a death benefit, so if the market drops, you at least get what your principal payment was. And then, there's actually some riders where the death benefit will increase automatically irregardless of what the market is doing. What's very popular maybe about 10 years ago was long-term care riders on this where they'd put, if you qualify for long-term care insurance... so, lose two of your six ADL's... the annuity would kick in some type of income for long-term care expenses. Those have really dwindled down over the last few years because of just the cost for facilities. John Teixeira: Nick, I'm not sure if you see too many of that nowadays. I know I haven't seen any good ones, but I'll let you talk on if you've seen any good long-term care riders on these contracts. Nick McDevitt: No, I haven't seen that that much and really the main rider that we see on the different contracts are what are called guaranteed withdrawal benefits or guaranteed income benefits, sometimes referred to as GMIB or GMWB. When we do our classes, we really try to harp on these from the perspective of just explaining how they work. And really, in this sort of venue, this sort of avenue, what we would just recommend to people is that if it sounds familiar that you have a variable annuity, and/or a variable annuity with some sort of income rider that you know guarantees you some income, it's good to have somebody help you review that contract and make sure that you understand how it works. Nick McDevitt: So essentially, there's just like anything, there's both sides, and then the truth is in the middle somewhere. These sorts of contracts, they can be good and, just like anything else, some are better than others. There are some contracts that have really held up over the last decade, 12/15 years, that have been beneficial, even to the extent where insurance companies will offer incentives to the contract owners to essentially try to buy them out because the guarantees are good. Nick McDevitt: So essentially, what happens and just to use an example, let's say that you have a deposit of $200,000 into the contract and the insurance company is going to go ahead and offer a rider that has a guaranteed appreciation on that initial deposit. Usually, it's either a simple interest or a compound interest, so that's important to know. Because some companies might say, "Hey, we offer 7% growth on the rider," but it's simple and over time a 5% compound could beat that. So, it's important to understand how that works. Nick McDevitt: And then, at a certain point in time, they offer a guaranteed withdrawal amount off of that guaranteed appreciation amount. So just to use basic numbers and try to help people understand how it works, let's say you deposit that 200,000 and over a 10-year period, which is usually the maximum growth period of those riders, that goes ahead and it doubles over the 10 years. So the guaranteed appreciating amount on the rider goes to 400,000 and then maybe they guarantee you a 4% withdrawal rate on that. So, it's the 4% on the 400,000, so that'd be about 16,000 a year. Nick McDevitt: Normally, the way that those will work is that that 16,000 a year is guaranteed for your lifetime; so even if the underlying account balance goes to zero, the income is guaranteed for your lifetime. Some of them also will offer a guaranteed income for both lives, so if you are a married person, for you and your spouse. Nick McDevitt: So, where people will get a little bit confused is that they may assume that that 400,000 number is their money, is like the real money, and if they wanted to cash out in year 10 or 11, that they can actually cash out that 400,000 number, and that's usually not the case. Usually, it's the underlying value, which inevitably because of expenses and things like that is going to be lower. So in this situation, it could be something like 300,000, which is the actual... what we'll often call real money. So, just like anything else it's really important to... We really just emphasize and harp on the fact that it's important to know what you have; it's important to understand how it works; it's essential to know how it impacts your overall plan. Nick McDevitt: So with these contracts, we do think that they can be a fit in many people's plans, especially if maybe there's not a pension or something like that. So it's important to understand how they work; make sure that the guarantees that you thought are built into it; and make sure you understand how it factors into your plan. I would say, from the standpoint of pitfalls to avoid where we've seen people really get into trouble are if they put too much of their nest egg into it. We typically recommend a maximum of 20 to 25% of investible assets into something like this. If you're going to do it because of some of the negatives. John, if you want to jump in on just some of the negatives overall, so that people understand the things to look for? John Teixeira: Yeah. Devils are in the details on these things. You just need to understand your limitation to your money in some of this, where some negatives we've seen is where someone's doing their withdrawal benefit and they try to take extra money out, more than what the guaranteed amount that's on the contract, or what they're supposed to. It could really mess with how long the money's going to last at that point, or what your minimum pension benefit's going to be: your income withdrawal. So that's something to really understand. That's why Nick was saying, "You don't want to put too much into this because if you need access to money, this is not where you want to go." You almost want to set it up and if you're going to do the income withdrawal, just forget about it from a accessing standpoint, more than what your income withdrawal is. So, that's something to be aware of these. John Teixeira: Why these typically get a bad rap and Mark, I know you mentioned at the beginning, it's really the fees. When you put a income benefit on this, you can look at anywhere from 3 to 4% overall in fees. So there's a mortality expense fee, [Jim's 00:15:22] throwing out some averages, could be 0.95%. There's an admin fee, could be 0.2. The investment you're going into could range anywhere from 0.3 to 1%, and then the rider itself, which is that guarantee, can range from 0.5 to 1.4. John Teixeira: So you could see that when you start adding all that up, it really makes a big difference, or really adds up a big amount in the fees. Not saying that's necessarily bad; it's just important to understand what you're in and how it works for you. Nick McDevitt: Just to follow up on that, the fees are usually coming out of the performance, not out of the riders, so that's important to understand. And again, just like anything else, it's important to understand how things work and how it fits into your overall plan, and just get an analysis on it, and making sure that it's working how you expect it to. Marc Killian: Yeah, exactly. At the end of the day, we're doing a little session here on annuities, a couple of episodes on this, but like any financial vehicle, you want to make sure it's the right fit for you by working with an advisor. You can learn some information and certainly get a good working knowledge. Many folks do not want to understand the complete nuts and bolts, and that's why they turn to an advisor. But finding the right one for you and the right product for you is paramount really in anything that you do. Marc Killian: So, as always, before you take any action, you should check with a qualified professional like John and Nick at PFG Private Wealth. You can call them at (813) 286-7776; that's (813) 286-7776; before you take any action. If you've got some questions, you can also go to the website: pfgprivatewealth.com. Shoot them an email that way; contact them that way at pfgprivatewealth.com. Marc Killian: Don't forget to subscribe to the podcast. We'll be doing another episode on annuities here, coming out very soon. So, subscribe to the podcast on Apple, Google, Spotify, whatever platform you'd like and that way you get new episodes as they come out, as well as can check up on some past episodes. It's Retirement Planning Redefined. Search that in any of the boxes or any of the apps... excuse me... as you'd like to, whether it's Apple, which is probably on your phone already. Apple Podcasts or Google Podcasts, already pre-installed on your phone most of the time. Just open up those apps, type in Retirement Planning Redefined. You should be able to find it that way, and that's another way you can subscribe. Marc Killian: And that's going to do it for us this week here on the podcast around annuities. Again, we were talking about fixed as well as variable. If you've got questions, reach out to John and Nick: (813) 286-7776 for John, for Nick. I'm Mark. We'll see you next time here on the podcast.…

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Ep 27: Understanding Annuities - The Basics 24:12

4 years temu24:12

24:12

There are a lot of strong opinions on annuities. Some people heavily advocate for them, while others claim they are a bad investment. Today John and Nick will break down the basics for us by discussing what an annuity is and some important terms to know. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. I nformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance. Transcript of Today's Show: For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ ----more---- Speaker 1: Hey everybody. Welcome into the podcast. Thanks for tuning into Retirement Planning Redefined with John and Nick from PFG Private Wealth. We appreciate your time as we're going to get into understanding annuities, we're going to do a series on annuities, several podcasts coming up but we're going to start out with the basics, annuity basics. So, stick around for that, we're going to get into that in just a second. But first, let me say hi to the guys. What's going on, Nick? How are you? Nick: Staying pretty good, just waiting for the weather to cool down a little bit here in Florida. We are ready for, I guess what we would consider our winter or fall one. Speaker 1: Do you get fall? Isn't it just summer, winter? Nick: I feel like when I first moved here, there was some fall back in '03, '04, '05. But the last few years, it feels like it's just kind of jumped from one to the other. But whatever it is, where it's not 90 plus and sticky out, I'm ready for it. Speaker 1: Right. Yeah. John, how you doing my friend? John: I'm good, I'm good. I'm with you. I was thinking we're just chatting about the weather and it's still 87 here and it feels like 92 and I'm ready for a low 80s and no more humidity. Speaker 1: There you go. Yeah, the humidity can be the bear, that's for sure. Well, good. I'm glad you guys are doing well since our last time chatting here on the podcast. So, we've got a lot to cover, we're going to try to keep this into our timeframe. We're trying to keep this into a digestible amount of time for folks here. So, let's jump in and start talking about annuities, understanding them and again, as I mentioned, we'll start with the basics. Speaker 1: It's just really important to understand them because they can offer some things to people, it can be a vehicle that some may find useful. There's risk reduction, retirement income, tax deferral, death benefits, so let's just get into some of this stuff. What is an annuity to kind of start off with guys? John: When you break it down, it's a contract with an insurance company. So, that's kind of the premise of it all and what that contract, typically, you're getting some type of guarantee and we'll dive into that a little later but it could be some type of a principal protection guarantee, income guarantee, death benefit guarantee. So, that's what you're looking for. And it's really important again, kind of going back to understanding it because it is a contract with an insurance company, so you need to understand all the details of it, just because it could come back to bite you. And we've seen that happen quite a few times as we're doing some reviews with clients. They just don't truly understand how it works because these are pretty complex vehicles and there's a lot of moving parts. John: So, it's just important to understand how, going back to the overall plan, how does the tool work with everything else? And then one thing that we, again, being a contract, the guarantees are based on the paying ability of the company that you're with. So, one of the things that we always kind of look at is what's the rating of the company you're going with because if you want to set the contract for some type of guarantee, you want to make sure that they're going to be around to actually give you that guarantee. Speaker 1: Right, yeah. Yeah. So, Bob's insurance is not necessarily the best idea, right? Nick: Yeah. And I will say one other thing that we like to preface this sort of conversation with and part of the reason that it is so confusing for people is that there are many different subsets or different types of annuities. And so, oftentimes people have heard the term annuity but they don't realize all of the different types and that their experience may pertain to one of 10 different types. So, as we get into the differences and kind of the nuances, we'll kind of joke sometimes in our classes that we almost wish that they were called different things. It's like saying, "Hey, should I buy a vehicle? Well, do you want a car? Do you want a truck? What are you trying to do? Is gas mileage important to you? Is off-roading important? What is it?" And that same sort of mentality is important when you are talking about it. Speaker 1: Well, you could think about that analogy Nick with and just leave it at cars because many people would just say, "I need to get a new car." Even when they're looking at like an SUV or something like that, they don't really refer to it that way. So yeah, that's a great way of thinking about that. And we will cover, we we'll get into, like I said, we're starting with the basics today but we'll get into some of the different types, their names, what they are, so on and so forth. So, John gave us kind of what the gist of it is. There's a couple of phases to think about, what are the phases? Nick: As we get into it and when we're talking about deferred annuities, there's essentially what's called an accumulation phase and a withdrawal phase. So for the accumulation phase, what that is referring to is, between the time that you initiate or deposit money into the annuity and between that starting point and then the period in time in which you start withdrawing money, it's called the accumulation phase. And that's important to know because there's different rules, which we'll sort of get into but that accumulation phase is important to understand because by itself, an annuity does provide tax-deferred accumulation or tax-deferred growth during that phase. Nick: So, if somebody says an example of that is the easiest way to compare it is, client has $100,000 in a money market account at the bank and they get to collect, when they get interest on that account, they get a 1099 at the end of the year, they pay taxes on the interest in the year that the interest is incurred. In the annuity, in its own chassis, it's going to provide tax-deferred growth, which means that that growth just compounds without having to pay any taxes on it until the point that you start taking it out. That's a pretty big deal and could be a really useful tool for higher income earners that are looking to put money in places that are more tax beneficial especially if we do enter into a higher tax bracket, phase, which we may in the next four to eight years. Nick: And then for the withdrawal phase, it is that money starts to come out. So, the first thing that people need to understand is that when you take that money out, if it's non-qualified or non-IRA money, there is going to be some form of taxation. It's going to be ordinary income, which means whatever tax bracket they're in, those withdrawals, as long as they're part of the gains that have happened in the contract, those earnings are going to come out first and they're going to be taxed at ordinary income. Nick: So, understanding how that works is kind of an initial importance. There is a term and a methodology of taking out money inside of an annuity via what's called annuitization. Again, this is one of those things where you wish that they would just come up with words that aren't confusing, annuity, annuitization, et cetera. So, annuity is basically like a noun, it's a type of account. Annuitization is an action essentially. Annuitization is when the company liquidates your lump sum of money and starts paying you in it whether it's a monthly or an annual payment. And one of the benefits of annuitization is that they can actually spread out your gains over a longer period of time and it can be a more tax-efficient way and can guarantee you payments over a certain period of time. Nick: And so, in one of the other future series, we're going to get into that process a little bit more. But the easiest way for people to think about it is kind of like a pension payment, a fixed amount of money that's going to be paid out over a certain period of time. And then, there are guaranteed withdrawals and we'll talk about that a little bit where you can kind of structure how you want to take out withdrawals. So, it is confusing, there's a lot of moving parts and it's a good example of why we're going to have in-depth series on this. Speaker 1: Yeah. That's a good example of why to work with an advisor as well to help you go through some of these things. And John, there's definitely caveats that go with it. There's things you'll want to know, some big bullet points if you will. Give us a few of those in the basics of an annuity. John: Yeah. Important again, any contract you go into important to understand what the rules are and these are things you want to consider. So, similar to an IRA where there's that 10% penalty if you withdraw before 15 and a half, annuity has the same scenario. So actually, this just came up with some advisors I was working with and we were doing some planning and the client needed money in a four-year period and really needed to, they wanted to make sure there was some guarantees to it. So, it was discussed of kind of an annuity to provide some type of principal guarantee. But by the time they would need the money, they would have only been 58. So, it was decided, "Hey, this isn't a good vehicle for you because you can't touch it 'til 59 and a half due to do that 10% penalty." John: So again, important when you're going into anything, just understand the rules because had they put that money into it and then in four years when they needed it, they wouldn't be able to access it penalty-free. So, just important to understand that one. Another one that we see a lot of people mistake or not understand how it works is the surrender period. Some of these contracts basically, when you give the money to the insurance company, there's a period of time where you actually can't get access to all your money full and clear. And this is separate from the 59 and a half but the surrender periods can be as short as three years. So, let's say you give your money to XYZ insurance company, they give you these guarantees and they tell you, "Okay, for a three-year period though, you can't get full access to your money. We're basically keeping it." John: So, it can be three years and we've seen as high as 16. And that's one of the things you really want to understand what you're getting into because unfortunately, we've seen some people where they've gotten to the 16-year period, is that they had no idea they we're getting into it and they have limited access to their funds. And we'll go through ... There is a piece of money you can get at but you just want to make sure how long has this contract going to be before you can get out of it. And with that is what we call the surrender charge. So, let's say your surrender period is seven years and in year five, you want to pull out money. Well, there's actually a descending surrender charge. So in year five, if you decide, "Hey, I can't do this anymore. I need to get access to my money," the insurance company might charge 4% of your principal for you to actually get out of the contract. John: So, an example of that would be seven-year contract. First year surrender charge could be 8%, second year would be 7% and so on. So, that's where you really want to understand exactly, "What's my surrender period? And if for whatever reason, I need to pull out of this contract early before the surrender period's up, how much am I going to get charged to do so?" Again, it's all about reading the fine details in the contract. Nick: And within that, many contracts have a 10% free withdrawal amount that will avoid you having to pay a penalty even that surrender charged during that surrender period but that can be confusing as well. And sometimes, that's used to oversell or kind of force people into not necessarily force, but convince people to put more money than they feel comfortable with into something like that. But many of them do allow for a 10% withdrawal each year. John: Yeah. So an example of that, so I'm glad you brought that up, Nick is, let's say you had $100,000 in an annuity and you're in year three. And you don't necessarily need to cancel the whole contract but you do need access to some funds, you could pull out. Typically we see a max, they allow up to 10%. We've seen some as low as 5%. But in a 10% scenario, you could pull out 10 grand in that year free and clear of any charges. So, that's important to understand exactly what's your free withdrawal amount. And then, one thing to understand is once the surrender period is up, so if you're in a seven-year contract, once that seven years is over, you can move your money wherever you want or you can keep it in the current contract. So, once a surrender period's up, it's 100% liquid at that point in time. Nick: And just one other thing on that surrender period, if somebody out there is evaluating them, a good question to ask is whether or not the surrender period is what's called rolling or not on rolling. So, what that means is that if it is a non-rolling surrender period and it's a seven-year contract like John explained or kind of detailed, the seven-year period starts when you first deposit the money and it never extends. So, you can make an additional deposit down the road, say in year five and that new deposit does not have its own seven-year surrender period, it only has two years left just like the rest of the money. Nick: So, that can be a really useful tool for somebody that's trying to sock away some money, make ongoing contributions to it but still maintain access to their money. Whereas a rolling surrender charge period, each deposit has its own seven-year surrender period which can get really squirly and hard to keep track of. So, that's an important thing to look out for. Speaker 1: And so, you mentioned some of those bullet points there, John, to think about, you mentioned guarantees and the insurance company and so on and so forth. Are there protections in there? A lot of times people wonder what kind of creditor protections are there? Nick: So, creditor protection tends to vary from state to state, which is actually a good kind of segue. So, one thing that people may notice, especially we're in Florida and we have a lot of people that live in different states, et cetera, or at least part of the time. Insurance companies are regulated state by state. So, even though XYZ insurance company may have contracts in 50 different states, the rules and benefits that they provide in each state can be different. So in Florida, and this is always something where you want to, before you make any major decisions, you want to check in with an attorney, especially in estate planning or asset protection attorney, somebody that really works in that space. Nick: But in the state of Florida, annuities fall into one of the categories that have a level of asset protection via loss, kind of joke that it's the OJ Simpson rule, why he became a resident here many years back after he was found liable in court for the murders back in the '90s were because the State of Florida provides asset protection on annuities for their residents. So, that is an area where we'll have people that are high income earners, maybe physicians, specialists in medicine, things like that, where they're very worried about asset protection, they may use annuities as a place to put money for growth but also provide them with a level of protection. Speaker 1: Okay. And does that apply to a probate things of that nature in some protections, wills, so on and so forth? Is that caveat also? Nick: So, probate typically is the process of essentially the court system, implementing the direction of a will or your estate and there's a fee for probate. So, because an annuity is considered an insurance contract, you can actually list the beneficiary in the insurance contract, which will allow that process after a death of the funds to transfer directly to your beneficiaries and avoid them having to go through probate to get those assets, which can be a savings of somewhere from three to 5% of the assets in there. And not only that, it keeps it private instead of a public process, which probate is, but it just is a much cleaner way to be able to leave assets by listing the beneficiaries in the insurance contract, which is the annuity in this case. Speaker 1: Okay. So, let's talk about some more basics here. We often hear the term riders, make sure you get something with a rider and this has that so on and so forth, different options. John, what's a rider? John: So, a rider's basically an additional piece to the contract that you can add, some type of guarantee or some type of benefit. And let me preface it by saying, most riders will have some type of cost associated to it. So, an example of a rider would be like a death benefit. You could put a death benefit rider on the contract where your initial principal payment, that's your guaranteed death benefit. So, if you were in a, we're talking about variable annuities, but if you're in a variable annuity and the market dropped, you put in 100,000 and the market dropped to 80 due to market fluctuation, your death benefit stays at 100 or there could be a rider where the death benefit could potentially increase each year by a guaranteed rate. John: Some other riders could be like a principal guarantee where you can't lose any of your initial purchase payment amount. And then, the most popular one that we see is a guaranteed income rider, where it will guarantee income throughout the life of the contract similar to, when Nick was talking about what the pension and we'll dive into this a little bit deeper on how this works in some of our future sessions, but when people are asking questions like, "Hey, what is this rider?" It's typically some type of benefit or guarantee within the contract. And there is more often than not some type of fee associated with it and it's important to understand how that fee works and then how the rider works on your contract if you like that type of benefit. Speaker 1: It kind of goes into the factor of, is it worth it or not for that purchase that you're making for what it is you're trying to accomplish, right? What you want that vehicle to do for you. John: Yeah and with the annuities, it really all comes down to the guarantees and if that's what you're looking for. Are you going to be guaranteed against some type of loss, guaranteed some type of income and is the cost of that guarantee worth it in the annuity contract? And for some people it's great, it really gives them peace of mind and for other people, they don't want to pay that extra fee or any type of cost on their money. Anything I missed there, Nick? Nick: No, I would just say the way that you want to view any sort of, really any sort of investment vehicle itself, but especially annuities are through the realm of yourself, your specific situation, your plan. Because there are so many different variations of annuities and there are lots of bad ones and there are a bunch of good ones. Oftentimes, where we see the biggest mistakes made are when people implement a strategy that was good for their friend, their neighbor, their brother, their sister, but not good for them. And so because of that, and because of that decision it's like, okay, these are bad," where instead it should have been, well hey, you used the wrong strategy, you used the wrong type, this wasn't something that made sense for you because X, Y and Z. Nick: So, when you kind of evaluate these sort of things and as you kind of listen through the upcoming sessions and we talk about the positives, the negatives, some of the features and the benefits, et cetera, you really want to look at it through the realm of yourself and your specific situation because your brother, your sister, your neighbor, your friend, they may have different tolerances for risks, for expenses, their income levels may be different, they may have a pension where you don't. So, every situation is different and I think that gets amplified by a significant amount when it comes to annuities and it's part of the reason why they're so often misunderstood. Speaker 1: Well, and like any financial vehicle you already said that you want to make sure what's the right fit for you. There's so many vehicles out there, so many different financial products, there's pros and cons to everything. And so, it's finding the right balance, the right fit for you. Well, we're going to wrap this up here in just a second. So, you mentioned, actually John mentioned variables, there's basically three types. So, what are the three types we will be covering on the future conversations? John: Yeah. So, we're going to jump into fixed annuities and breaking down those and the pros and cons of variable annuities and then also fixed index annuities. We're really going to try to do a good job of giving people details so they have the education and the knowledge to have good conversations, whether with their advisor or for themselves to really figure out if it's the best decision for them. Speaker 1: Makes sense. And so, we'll finish it off by saying, make sure you subscribe to the podcast if you haven't done so yet, they'll also send this out for those folks if you're getting that already. You can do a couple of things. You can either just go to the website, pfgprivatewealth.com, that is pfgprivatewealth.com or you can type in retirement planning redefined on whatever app you're using like Apple or Google or Spotify. You can find it on all the most popular apps as well, just type in retirement planning redefined in the search box and you should have that pop up and you can subscribe to it that way. Speaker 1: If you've got questions or before you take action, you should always call a qualified professional like John or Nick at PFG Private Wealth. They are financial advisors here in the Tampa Bay area. So, give them a call at (813) 286-7776, it's (813) 286-7776. And we'll also address guys that we'll find a little bit here, it's just a bias. You kind of alluded to it. People, they hear things and it's like, "Oh, I don't even want to talk about them because I know they're all bad." So, we'll also discuss a bit of the biases for them and against them. John: Yeah. So, with the biases, we find a lot of people based on stuff they read and articles and things they've listened to, they really come in with a bias, whether for them or against them. And one of the things that we like to just say is say, "You have an open mind and just learn about it and figure out if it works for your plan because if you're reading an article and it's telling you that annuities are bad, all the stuff," and I'll say like, "Fisher Investments, they're really dog annuities," but when you look at it, what they do is asset management. So, their primary focus is getting money, going into stocks, bonds, mutual funds, things like that. So, they're not really offering annuity so they're basically, they're going to be against them. John: And vice versa, we've seen some advisors that aren't actually licensed but they have an insurance license and all they can offer is an annuity. And guess what's the greatest thing out there? It's an annuity for you because they can't do anything else. So, whatever you're reading, you got to kind of look at it from a perspective of, "Is this person open-minded to it?" And that's where Nick said it's really important to look at the tool, the annuity, the pros and cons to it and does that fit with your plan and what your goals are? Speaker 1: Well, that's a great way to end the podcast this week. Thanks so much for your time here with John and Nick as we were talking about understanding annuities on the podcast. This has been Retirement Planning Redefined. We appreciate your time. Make sure you hit that subscribe button on whatever app you use or reach out to John and Nick at pfgprivatewealth.com and we'll see you next time.…

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Ep 26: How To Process A Rollover 15:46

4 years temu15:46

15:46

Last episode we talked about the different items to take into account if you are thinking about doing a rollover. John and Nick will discuss how to actually process a rollover and some common mistakes to avoid. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Marc: Thanks for tuning in to Retirement Planning Redefined with John and Nick from PFG Private Wealth. We appreciate you tuning back into the podcast. We're following up with our prior session on rollovers, if it's right for you, having the conversation and this session is going to be a little bit more about how to kind of go through that. Some of the differences, some of the biggest mistakes sometimes that people might get themselves into when attempting to do this. So we're going to dive in and get started. We're just going to just hop right in. Marc: Nick, differences between rollovers and transfers. Let's just start there, kind of break it down a little bit for us. Nick: Yeah, I would say, the reality is, is that this space from the standpoint or the perspective of the process of taking your money from one place in a retirement account and putting it into another place in a retirement account, the jargon or the terminology gets intermingled quite a bit. And some of those terms that get intermingled are rollovers and transfers, and we'll talk about it a little bit more, but from the perspective of a direct rollover versus the 60 day rollover. Nick: Just to kind of back up a quick second, when we are discussing or having this conversation we kind of preface it from the standpoint of the money that we're talking about is money that is held in a retirement plan of either a former employer, so maybe it's 401(k) or 403(b), and you are looking to move that money elsewhere. Nick: Your options are typically you can take that money and you can do a direct rollover into either traditional individually held of IRA. Or if the funds are Roth funds, you can move it into a individually held Roth IRA. Or if you are employed with a new employer and you are eligible, you have to check with them, you may be able to move the money into the new plan at work and do it that way. Nick: When you are doing that, usually when you are executing kind of this process, it either has to be done via a form, or via a phone call. Some places require a form and we've seen a lot of people make mistakes on completing the form correctly, so oftentimes we'll help clients with it. And then if it's a phone call, the issue is that you're dealing with somebody and I will say the level of service probably over the last few years at companies has gotten better, but we still see a lot of mistakes. Nick: Oftentimes you are working with somebody that's working in a call center and although it is their job, mistakes happen. When you are kind of doing this process, understanding that the terminology of executing a rollover is when you are moving that money from that retirement account into an IRA or a new plan. A transfer is when you have an existing account that is an IRA or a Roth IRA, and you are moving it from one custodian to another custodian. Nick: I'll use an example just to try to make it a little bit more easily understandable. A direct rollover example is, okay, Mrs. Client, she just got done working at her company and their 401(k) was held at Fidelity. And now Mrs. Client would like to move the money from Fidelity into the IRA that she opened up at Vanguard. She's able to call up and get the process going of processing that roll over from Fidelity, the 401(k) to the IRA at Vanguard. A transfer is you already have an IRA or somebody already has an IRA. We can say at T. Rowe Price and they have a new IRA, they no longer like T. Rowe Price, they have a new IRA at Fidelity, and they want to move that money from T. Rowe Price to Fidelity. That is a custodian to custodian transfer. And the reason that we mentioned that is because there are some limitations on what are technically rollovers. Nick: John, can you give a little bit of an example of exactly what a 60 day roll over it? John: Yeah. There actually kind of two ways to do it where if it's coming from a plan. Let's say if it's coming to you directly. So John Teixeira gets a check from the plan, I have 60 days to put that into my IRA. Or if let's say I have money in my IRA, and for whatever reason, I might need the funds and I pull it out, I have 60 days to put it back into the plan, and that would be a kind of a 60 day rollover period. John: Important if you are processing it that way, definitely keep good records. You want to keep the records of when the money was distributed when you received it, and then when you deposit it, because if you ever were audited, you have to prove that the money went back in within 60 days or else everything is taxable. Nick: And the issue with that 60 day rollover and what kind of give an example of kind of one of the most common ways that we'll see it as a mistake is that you are only eligible to execute I believe it's one of those per calendar year. Is that correct, John? John: Yeah, that is correct. Nick: So if somebody is making a mistake or even doing it on purpose, if they by mistake execute more than one of those in a year, there's some pretty significant penalties that are involved in that, and that's really something that you want to avoid. What we always like to see is the money moving directly from one custodian to the other custodian. And when that happens, the check is made payable from the old custodian to the new custodian. And we'll kind of talk about that in a little bit more detail, but I wanted to give a kind of a quick example of where we see this mistake happen the most often. Nick: The reality is that the majority of the people that are listening to this with how things are set up currently, they may not run into this too often, but where we have seen this issue come up quite a bit is if they are helping their parents with finances. Maybe their parents are in their 70s or 80s. And oftentimes that age demographic loves CDs and they love chasing rates at banks. And there will be confusion from the standpoint of, hey mom has a CD at BB&T Bank, and the CD is actually inside of an IRA. And she goes into the branch to move the CD from BB&T bank over to Bank of America because Bank of America is offering an extra 0.2%. And so she's working with the teller at the bank and she says, "Hey, I want to take out my money because I'm moving it to another bank." Nick: What we've seen happen is that teller will sometimes have that check made payable to the client, to mom, in her name. And at that point it's considered that starts at 60 day window. The reality is that we want that check made payable to the new institution for the benefit of mom. This is where we've seen issues kind of pop up and arise where mom might try to do this a couple of times a year. Now she has done more than one 60 day rollover in a year because it was done incorrectly. It wasn't necessarily her fault and it just creates this total kind of quagmire and tax nightmare. Nick: We always like to kind of bring that up to make sure that people understand that that's an issue. And again, because the terminology is oftentimes intermingled and not done correctly, having that done the proper way is really important. I know John does a good job of explaining the best way that people can make sure that they execute that properly. John: Thank you, Nick. I do a very good job at explaining that, actually. So I appreciate that. So yeah, just kind of walk you through the process of doing a direct rollover. First step is contacting the investment provider for the retirement plan and you need to determine, can they do this over the phone or is it a form as Nick mentioned earlier? Let's just assume it's over the phone and you're putting your money into, let's say TD Ameritrade. TD Ameritrade is the custodian, they're the ones holding the funds. They're like a Fidelity or Vanguard. So you want to make sure that check is made payable to the custodian, and that way you're not the one getting the receipt of the funds, it's the custodian, and that's the main reason why it doesn't kind of execute that 60 day rollover kind of window. John: It's a direct transfer to the custodian and the checks going to be written out to in this example, TD Ameritrade for benefit of you. So if I'm doing it, it's going to be check's going to be made out to the TD Ameritrade for Benefit of John Teixeria. Now, once you receive that check, we were going to say it now, do not sign the check, because it's actually not written out to you, it's written out to the custodian. We do have some people that will say, "Do I sign it?" Or, "I signed it. What do I do?" Don't sign it. There's no need to. John: Once you receive the check, the next step is now it needs to get deposited into your IRA. And if you're working with an advisor, typically you pass it off to him or her. And if you're just working directly with an investment company, you're going to want to go ahead and get it to the investment company and have them deposit into the IRA for you. If you are mailing checks, just some people like to be cautious and kind of make sure it has some type of a tracking number which is something you can request from the retirement provider, not necessarily, but some people just prefer that so they can kind of keep track of where it's at. Marc: Okay. So obviously there's a lot that can go into this and there's mistakes that are going to happen as you just alluded to. So what are some things to maybe avoid, just kind of some simple things to check off for folks? Nick: I would say the first one and we talk about this whole process in the class that we teach. And I have a slide that I bring up and it's a huge picture of a train fire. The biggest mistake to avoid again, is to do a lump sum distribution when the money's paid directly to you. That is the number one. And I know we've kind of harped on it quite a bit, but it can be confusing because especially on some of the forms that companies use. They say, "Hey, I want to take all my money out, because I'm going to move it to this new place. So that's a lump sum distribution, right?" Nick: Well, depending upon where it is, that might mean that that money is coming directly to you, which it enters you into that 60 day window, which is what we want to avoid. Making sure that you do a direct rollover versus a lump sum distribution is really important. That's probably the number one mistake. John: Yeah, and if we see the lump sum, what the 401(k) or whatever, 403(b) provider will have to automatically do. If I were to receive the money directly to me, they would have to withhold 20% automatically. 20% is going to uncle Sam, so that could create an issue if you're trying to get all your money back into another IRA within 60 days. Marc: Well you mentioned 401(k), and then you said another. I would assume that this is kind of the same for several of those alphabet soups, right? Whether it's a 403(b) or TSP, is that same kind of process in general? John: Yes. Yeah. Marc: Okay. John: I mean, yeah, exactly. Employer retirement plans, it's- Marc: Gotcha, okay. Because sometimes people- John: ... across the board. Marc: ... get confused by that, right. They'll think, "Oh, well I don't have a 401(k). I have a 403(b) or whatever." John: Yeah, 401(k), 403(b), 457- Marc: Right. John: [crosstalk 00:11:41] plans. Marc: Right. Yeah. John: All of them. Marc: All of them. Yeah, the whole alphabet soup. Exactly. John: Yeah. Marc: Nick, any other mistakes to avoid anything too that we might've missed as we're kind of winding down here? Nick: I know it's come up a couple of times, but sometimes people will worry about timing. From the perspective of there's... As an example, the last five months really kind of post-Corona market drops, et cetera, et cetera. And people will say, "Hey I've lost a bunch of money in my account, is now the time to move it? Should I wait for it to bounce back?" And the reality is that you want to take a broader perspective and look at it from the standpoint of that you're moving it from market to market. So the goal is to do it as quickly as possible, but the perspective of, hey, should I let this bounce back before I move it? Isn't necessarily always valid because as long as you're in a similar allocation and maybe even a better allocation with a higher level of management, the reality is, is your bounce back could be quicker and/or better potentially by making a change the sooner the better. It all depends, but that's usually a pretty low priority variable in the whole conversation is time. Marc: Okay. All right. Well, there you go, folks. So as always, there could be some moving parts here, it's not always very too complicated, I suppose, maybe is a good word, but it can be, especially if you're not focusing. The best way to do it is to avoid some of those mistakes by reaching out and talking with a qualified professional before you take any action, getting some helpful tips, getting some advice, whatever the case might be. But before you take action, reach out to someone who does this on the regular. So call John, call Nick, give them a jingle at (813) 286-7776, that's (813) 286-7776. When you're talking about doing a rollover and if it's right for you, there's just a lot of questions that they can help you walk through and get you some advice going in the right direction. Also, stop by the website at pfgprivatewealth.com, that is pfgprivatewealth.com. Marc: While you're there, subscribe to the podcast, Retirement Planning Redefined, you can find them on Apple, Google, Spotify, whatever platform you choose. So there you go, that's going to do it for the series here on rollovers guys. Thanks for your time as always. I appreciate it. Obviously, there's so much that goes on in the financial world. It's good to just do these since you're not doing classes right now, doing a lot of things online or podcasts. It's good to go through and kind of get this information out for folks. Nick: Thanks, Marc. John: Thank you. Marc: Appreciate your time. We'll talk to you next time here on Retirement Planning Redefined with John and Nick of PFG Private Wealth, and we'll see you next time.…

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Ep 25: Is A Rollover Right For You? 16:45

5 years temu16:45

16:45

Company retirement plans can be expensive and many people are considering to rollover their account. But what considerations should be thought about before you take any action? Today John and Nick discuss the fee structures, investment options, and a few more factors when deciding if a rollover is right for you. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Marc Killian: Hey, welcome into the podcast folks. Thanks for tuning in here as we talk about retirement planning redefined with John and Nick from PFG Private Wealth. What's going on, guys? How you been, Nick? What's up buddy? Nick: Doing pretty well, doing pretty well. Just kind of getting settled back in over the last couple of weeks. With the lockdown going on as long as it's been going on, I decided to take a little bit of a road trip. So I drove up north and stayed up north for about six weeks total. Marc Killian: Oh, wow. Nick: Yeah. So it was pretty cool. The virus situation in my hometown is a little bit better, which is Rochester, New York. Once we knew that we weren't going to be meeting face to face with any clients here anytime soon as the numbers got worse here locally, I decided I needed to take care of my cabin fever and get out of Dodge a little bit. Nick: So I drove up, made some stops. Stopped in Savannah and Pittsburgh on the way up, and then outside of Philadelphia and DC on the way down. Stayed with friends and family and had a good time. It was good to get away. Marc Killian: You couldn't get any more diverse than saying Savannah and Pittsburgh in the same sentence. Nick: Yes, yes, definitely. But I'll tell you what, I was pretty impressed with Pittsburgh. Marc Killian: Oh no, it's actually a nice town. They've made a lot of changes. I used to live not far from there, back in the late 70s, early 80s. I was just a kid, but yeah, I've definitely made a lot of changes. Nick: Yeah. Yeah, it was my first time there so I'll be back. Marc Killian: Very cool. Well, nice extended holiday. John, what about you buddy? I know you got the little one there. Did you do anything with the little baby? John: Yeah, so we normally, the last couple of years, we've gone up to Pigeon Forge, Gatlinburg area and rented a house there. But this time, after that last drive with a seven month old for 11 hours, I decided I didn't want to do that again until she was facing front because she doesn't like being in a car. We decided to change and go to Sanibel Island here in Florida. John: So that was nice, actually. I'm not normally a like sit around the beach type person, but we had nothing to do. So it was about a week of just nothing to do where normally on vacation I'm either going up to Boston where I'm from and I'm seeing a bunch of people and doing all this other stuff, or going to Pigeon Forge and just trying to do as much as we can within a week period. But this time it was actually pretty relaxing where we'd wake up and we wouldn't figure out our day until about 10, 11:00. It was a change of pace for me, so it was actually pretty nice. Marc Killian: Very cool, yeah. Well, we're going to talk today about rollovers. Actually, we're going to do a two part series on rollovers and things to know and think about. But I want to ask you real fast, this kind of bit of an extended vacation, did she put the phone down a little bit? Because I got to say for my wife and I, when we can put the digital leash away for a little bit, you just feel so better. Did you get a chance to do that at all? John: I did at Sanibel and it wasn't because I wanted to, I was kind of forced to with the service. Where we were at, the service where we stayed, it wasn't the best. So it kind of forced us to do that, and the wifi was terrible. So, it was nice. Marc Killian: But you wound up saying that you really had actually a great time. I think your words were, "Yeah, I actually really enjoyed it." So that might've been part of it, having that digital lease put away. What about you, Nick? Did you put it down? Nick: So, the first week that I got up to Rochester, I kind of used that as a vacation time and I was a little bit more unplugged. It was really the week of the fourth so it was pretty easy. But then the rest of the time I was still working. It was just that working remote up north versus down here. Marc Killian: That's okay. Nick: Summertime's always a little bit slower, so I would take my time in the morning to knock stuff out and definitely used it less than I normally do, which is normally like a 24/7 schedule. So it was good. Marc Killian: I mean, even a week. So that's my public service announcement to our podcast listeners is even if you can give yourself just a few days from time to time just to put that digital leash away, it does wonders for how you feel. Sometimes we just have to kind of set it down and step away from it. But anyway, I'm glad you guys had a good time. Good, safe, little bit of a holiday break there. Marc Killian: So let's get back to work and let's talk about rollovers. As I mentioned a few minutes ago, we're going to do a two part-er here on some things to know. Deciding on a rollover for your retirement funds, if it's the right thing for you. That's pretty much the first step, right John? Determining if it's in your best interest. John: Yeah. And that will happen. We're getting a lot of questions right now. "Hey, I have a 401k plan at a previous employer or a job change," and the question is, "Should I roll it out and what's the process?" Which next week, Nick will go into details on what the process is. John: There's definitely some factors that you need to kind of go through. I'll say one of the main ones is the investment options in your current plan. So, we work with a lot of different people and we've seen some plans where it's really limited as far as what you can go into. They might only have 15 different options and the selections really aren't that good. We've also seen some other plans where there's 20 or 30 options and there are some good tools within the platform to use. John: So to me, that's the first step is really evaluating, what am I options within this 401k plan or retirement plan at work? And is it enough for me to be efficient and actually build a quality portfolio? Especially in this kind of volatile time period that we're in. Nick: If I were to jump on that a little bit from the perspective of not a lot of people realize that really the size of the plan that they are in is the determining factor for what the fee structure is in the funds that they use. So, sometimes they can be in a fund that costs much more inside of the plan than it would even outside of the plan. So there's a lot of different variables to take into consideration on that investment selection process. Marc Killian: Well, are they limited more so in those types of plans? When you're talking about that, you mentioned the investment options. A lot of times, I do think people feel that they are a bit more limited, and I know advisors think that. Is that how you see it as well? John: Yeah, you're limited to what they are for you, and then also some plans actually limit how many exchanges you can do per year. I'd say nowadays, that might be rare, but it's still out there. So that's something you want to look into where if you're thinking about rolling it over, let's say you go into just an individual retirement account, IRA, really have unlimited investment choices. It's kind of an open architecture platform and there's no limitations and you can almost invest in anything you want to. When you have that open architecture plan, that's where you can really be creative and efficient on your portfolio and making sure that you have the right choices to weather some volatile markets. Marc Killian: Yeah. Well, Nick, you mentioned fees. So let's dive into that a little bit because often that becomes the case for people. When you get down to all the different nuts and bolts, it's the fees that they tend to be most interested in. Nick: Yeah. I mean, we find on a pretty consistent basis that when we tally up the aggregate fee that they're paying inside of the 401k plan and we compare it to what we can do outside of the plan, especially with how prevalent exchange traded funds are these days and with how much lower the costs are, that oftentimes, even if we combine the expenses on the underlying holdings in the portfolios that we manage and add in our investment management fee, they're coming in either equal or under what they were paying fees before. The fees are now more transparent than they were before because oftentimes, as many have come to find out over the years, they don't really understand what fees they're paying in their 401k plans. So many times we're able to reduce the fee and then add on a much higher level of management, as well as roll in additional services like the planning services, et cetera, et cetera. So, quite often you can get a lot more for the money. John: And to go with that, a lot of people don't realize within a 401K plan, there's a lot that goes into it. I mean, there's the advisor that's on the plans getting compensated. There's typically a third party administrator, which basically helps out with the construction of the plan and the filings and stuff like that that gets compensated. The fund company are using. So that's why we see, just to reference what Nick said, the fees can add up in there as important to understand what type of plan you have and what your fees are. Marc Killian: Yeah, definitely. And is this consolidation of accounts, can that help kind of bring all that into, I guess, better focus? Nick: I would say absolutely. So there's a couple of things that I've seen pretty much on a consistent basis from the standpoint of experience working with clients are that number one, obviously, when you consolidate it's a little bit easier to have a good grasp on what your overall allocation is from the underlying investments. Nick: But quite frankly, what I would say is the bigger benefit is that when people have their accounts scattered in multiple places, they tend to just be more anxious about their overall situation in general. They feel like they don't necessarily have a good grip on what they have and what's going on. They don't have a full understanding of what their overall strategy is. There's usually not a plan in place, which is a big indicator of anxiousness and anxiety when it comes to the whole retirement planning conversation. Really what that ends up then leading to are just poor decisions. So, non-coordinated decisions, maybe making a rash decision when we were going through what we were going through a few months ago when the market initially dropped. Nick: So it's really kind of a trickle down, snowball effect where consolidating accounts, building a plan, having a concise roadmap for where you're trying to go with how your investments are managed and making sure that they correlate to your overall plan really helps with your decision making process and peace of mind. Marc Killian: If people want to have someone do this for them, they want to kind of delegate that out, what's some steps to think about? What's some stuff they should be working towards? Things of that nature. John: Yeah, so all the factors we've already gone through is part of that and what we find that when people are near retirement or in retirement, they really don't want to do it themselves anymore or have to check on it on the 401K platform. So what they're looking for is to work with an advisor and have them do it for them in retirement so they don't have to worry about it. It's just kind of something else where it's off their to do list and it provides some peace of mind. John: So we've seen a lot of that where clients and prospects are... No one's monitoring this for me and I definitely need some help and I don't want to do it so I need to hire someone. So that's another reason to consider rolling it out. Marc Killian: For a lot of people. I talk to guys all across the country, guys and gals, and it seems like the level of service sometimes from the providers or from the companies gets pretty frustrating. I mean, even prior to COVID, same kind of thing, right? You feel as though you got to go through this process and it's automated a lot of times, or you're just not getting the answers you want. Nick: Yeah. I would say, because the reality is that inside when the funds are inside of your 401k, it's still your responsibility and your obligation as the account holder to make any investments, decisions and changes. From the standpoint of needing or requiring any sort of guidance, if you're calling a 1-800 number and you're talking to people in a call center, oftentimes those people don't have a good grasp and understanding of your overall situation. If you have gotten to that point where you're looking to make those sorts of changes, you're probably under some sort of stress or duress and having guidance and having somebody that understands what you have going on is a pretty big deal. Nick: We saw that quite evident during the end of quarter one when the market was tanking with COVID and just being able to have conversations with clients, them knowing that, hey, we understand their situation and what's going on, we understand the longterm planning. And them knowing that, as part of our services and when we're managing assets for them, the changes that we make inside of a portfolio are proactive. We're going to automatically make those changes for all of our clients at once versus on a one-to-one, or one off basis, makes for a much more efficient process and a lot more peace of mind. Nick: So it's a much higher level of service. I mean, sometimes we refer to it as, if you use a sports analogy, going from the minor leagues to the major leagues where it's just a whole different service level and engagement level, which we think is really, really important, especially as people get closer to or are in retirement. John: Some other things to consider are, we have seen some people get aggravated with the 401k plan moving to a different company where all of a sudden it might've been Vanguard and they're changing to Fidelity and that requires blackout periods and stuff like that. Some people just don't enjoy that process because now it's time to really keep track of it. John: Or if you move, it's your responsibility to tell basically the human resource where you moved to so they could start sending all the notifications to you. So there's just kind of just some inconveniences with keeping the money yet a retirement plan that you may or may not be aware of. John: I've actually seen one plan where they got audited and no one could touch the funds for a couple of months because they were doing an audit investigation of the plan itself. So it's your money, but at the same time they were auditing so some people's funds were frozen. They weren't happy campers for that month period. Marc Killian: I bet not. That definitely can be a pretty frustrating situation. So hopefully that'll help you out a little bit here, folks on the first part of our series on deciding on rollovers, if it's the right for your retirement funds. Nick, anything you want to add before we sign off for this week? I know we're going to talk more about some things next week. Nick: No, I think this was a good overview and I think the reality is that, in our session next week, we'll get into the details a little bit more of how you actually process these and the things to look out for and that sort of thing. Marc Killian: Fantastic. All right. Well, I'll tell you what, for that we're going to sign off then. So if you've got questions or concerns, again, about doing a rollover or if it's right for you, reach out to John and Nick, give them a call at (813) 286-7776. That's (813) 286-7776, or go to PFGprivatewealth.com. That's PFGprivatewealth.com. Marc Killian: While you're there, subscribe to the podcast, click on the podcast page. You can check out past episodes, you can listen to future episodes. You can subscribe to them on various apps that are out there. Or if you're using Apple, let's say, just type in retirement planning redefined in the search box and you can also just like it that way. So lots of different ways you can find us, and we certainly appreciate it. We'll see you next time here on Retirement Planning Redefined. For John and Nick, I'm your host Marc Killian. We'll talk to you next time.…

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Ep 24: Importance Of Risk Management & Asset Protection 18:49

5 years temu18:49

18:49

When it comes to retirement planning, many people focus on filling in an income gap, or making sure they will have enough money to get them through retirement. While this is fundamental to the plan, it's important to make sure your assets are protected. John and Nick will explain what investment vehicles have some sort of protection and will also give a hypothetical example. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey, everybody. Welcome in to Retirement Planning - Redefined with John and Nick of PFG Private Wealth, serving the Tampa Bay area. Thanks for tuning into the podcast. As we talk investing, finance and retirement, and we're going to jump in and get started with the conversation. Guys, I hope you're doing well. We were kind of laughing right before we started the session recording here that John's been doing some swim lessons with his kids and it's been going really well. And I wanted to make the joke that Nick, you finally learned how to swim. Nick: Yeah, no, all joking aside, I can swim and swim well, but besides that- John: You're welcome, Nick. We've been doing some Zoom swim lessons [crosstalk 00:00:41]. Speaker 1: Zoom tutorials on swimming. Nick: Yeah. I get in the bathtub with goggles and see what happens. But no, I've been doing well. Things are starting to slowly get back to normal from the standpoint of, I want to say last week I went out to dinner for the first time at a restaurant outside in a few months, so that was pretty cool. So things are slowly starting to get back to normal, although it's going to be interesting is some of the numbers seem to spike here, how things will adapt over time, but no complaints, no complaints here. Speaker 1: Yeah, it will be interesting to see as this cluster bang of a year continues to wobble on. So we're about halfway through 2020 at this point. So we've still got a lot to go, so we'll see how it shakes out. But that's good. Glad to hear that there's some good positive spots here and there. So let's jump into our topic. So let's review the importance of risk management and asset protection. Let's just start with a basic overview, Nick. Nick: Yeah. So for those that are listening that have been through our class that we hold at the local colleges, this will sound a little bit familiar, but we've had a couple of things pop up with clients and questions from friends and things like that. So we thought it would be a good topic to re-review where oftentimes people get focused on the fun or more exciting aspects of planning, which may be investments or talking about retirement and those sorts of things, but really risk management is a super important part of overall planning because really the objective is to increase your probability for success by reducing your risk. And then ultimately, overall the goal by doing that is to do it while keeping your costs down. So when we go through the planning process with clients, we do review their property and casualty insurance. We're looking for how their accounts are titled. We're looking and analyzing things from the standpoint of, "Are we making sure that things are protected?" Nick: So we always like to make sure that people do realize, because it isn't necessarily something that is top of mind and oftentimes, when you talk to people, the reality is that when they're shopping out their homeowners insurance, their car insurance, they end up having been with the company for a long period of time. Usually it's price dependent. So we've seen where people made a change to cut costs, six, seven, eight, nine, 10 years ago and now they're in a completely different financial situation and they haven't made adjustments to correlate to that from a risk management standpoint. So we just kind of want to walk some people through that. Nick: So one of the first things that we review and talk about and help people to understand are that, there are certain assets that are creditor or protected in the state of Florida. This is something, again, we're not attorneys, we're not property and casualty agents, but these are topics that we review. And this is one of the perfect examples of something there where we can provide feedback, give you help, provide you with questions to ask and then help connect you with or you connect with an existing relationship that you have with a property and casualty agent, with an attorney if there are legal documents that need to be involved, that sort of thing. But in the state of Florida, it's important and many people know that you can declare your primary residence as your homestead. Nick: And there are a lot of protections built into declaring your home a homestead. So many people just focus on the tax benefits and that's one thing, but really it provides a creditor protection and asset protection for your home. So that's a big deal. If you own non-qualified annuities and/or have life insurance that has a cash value component to it, those are protected in the state of Florida. Qualified accounts, so in other words, 401k, IRA accounts, those accounts are protected in the state of Florida. One kind of caveat to that where we'll have some people say, "Well, hey, I'm 60, 70 years old and I've got these accounts and my home, why do I need any sort of additional protection?" And one of the things that we like to remind people are that those qualified accounts, you do have to start taking money out at a certain point. And at the time that they go from qualified to non-qualified that becomes something that could be available. Nick: From the aspect of different types of trusts, there are certain types of trusts that can be set up to provide protection for assets that's absolutely 100% in the realm of working with an attorney. John's going to talk about one of the misconceptions that a lot of people have when it comes to trusts. And just a basic thing that is important for people to consider, let's say you own a business and you are not structured as an LLC, you could be putting yourself a little bit of risk from that standpoint. Speaker 1: Yeah. Certainly there's a lot of pieces in there. So again, homestead, annuities, qualified accounts, LLC, certain trusts, some of these things are the protected assets or at least in Florida. John, what are some of the non protected? John: Yeah. So some of the non-protected assets would be cash accounts or your bank accounts, things like that, CDs, non-qualified investment accounts. Someone might have a brokerage account that they're just putting money into monthly, or just maybe just put a lump sum in there. Just understand that just because your retirement accounts are invested and you have investments there and they're [inaudible 00:06:27] protected. If it's in a nonqualified account with investments, it's not protected. John: One other thing with the qualified accounts is to understand that there are limits to what is actually protected. So actually an ERISA plan, which is a 401k, 403(b) type plan, it's typically fully protected, no matter what the amount is and IRA, and this does go up, it used to be a million, and I believe right now it's about 1.3 million if an IRA is actually credit protected. John: And then a recent rule change in the past few years, inherited IRAs are no longer credit are protected. So it's important to understand that if you inherit an IRA from somebody, it is not credit protected at all. Something that will come up, Nick mentioned with the homestead where your primary home is credit protected, any secondary home you have is not. So that's a misconception we see sometimes if you have a rental property, or let's say your, like a second vacation home, it's not credit protected. And then with the businesses, if you're a sole proprietor and you never develop any type of LLC, so example I have a [inaudible 00:07:32], but I'm not LLC, that is not creditor protected. So that's why it's important to, if you're working with an attorney, you want to ask these questions, "Hey, should I create an LLC with the business?" And you definitely want to have them help you draft the documents so they're done correctly. John: One of the biggest questions we get when we're doing planning and part of the planning is we look at the estate side of it. We don't draft any documents, but we are knowledgeable enough to have people ask the right questions and point them in the right direction. But it's with trusts. A lot of people feel like, "Hey, if I set up a trust, does that protect my assets?" And if it's a revocable trust, the answer's no. So a revocable trust basically just get to the meat of it. You still have control of that trust. So you either are owner of it, or you make decisions of it. And basically with that, it's still considered part of your estate [crosstalk 00:08:22] and for that reason it's not credit protected. Nick: Yeah. And just for further emphasis on those protections kind of tend to kick in after you pass and the trust stays, but while you're alive, it's includable in your estate and it doesn't provide those protections. And one other caveat or thing to consider think about are for those non-qualified accounts, non-qualified investment accounts or non IRA, if you hold them jointly in the state of Florida using Tenancy by the entirety for those types of accounts, if you hold it with a spouse, so it has to be with a spouse to use that, that does provide some additional level of protection. Although it's not the same as like a retirement account per se. John: Definitely, as you can tell, it gets confusing. So you definitely want to ask the right questions if you're wanting to know what is and what isn't and just asks the right people and adviser will know enough, and attorney would definitely be the best resource. Speaker 1: Yeah. I'm definitely say if you're working with an advisor, obviously bring the conversation up with them, have them bring the attorney in and so on and so forth. And of course, John and Nick can help you in that arena as well. Now you mentioned property and casualty, so let's do a quick review of that as well. What are some things to consider? Nick: Sure. So the main types of property and casualty policies that people are going to have are going to be their car insurance, homeowners insurance, and maybe an umbrella policy. So one of the examples that we tend to give from the perspective of a car insurance policy is, really just walking you through a scenario. So when you look at your car insurance policy, you're going to see that there are limits that are provided, that are referred to liability, and then you will see a designation for what's called uninsured motorist or UIM. Nick: So the example that we usually use is, let's say John and I are both driving down the highway and we get into an accident. So we're both in our late 30s, business owners, our incomes continue to go up. John has a family, I don't, but if something happens to me, I do have assets going to parents and brother and that sort of thing. So let's say we're driving and we get into an accident and because John likes to multitask a lot, he was texting and it's his fault. So we're going to blame him. So I have the- John: Wait, wait, wait, full disclosure, I never text and drive. I do multitask, but I do not do that. Speaker 1: Good [inaudible 00:10:57]. Nick: That's good. That's good. So we get into an accident. I have damages, fairly serious damages and I'm going to go ahead and I'm going to sue him. There's kind of a negative connotation oftentimes with the whole aspect of suing somebody, which the reason that we use this example is because, here we are, we're friends, we're colleagues, in many ways business partners, that sort of thing. But the reality is, is that if there's damages and mistakes happen and mistakes are made, ultimately my responsibility for me and family is to try to become whole again, from a financial standpoint. So I go ahead, I sue him. The first thing that's going to be reviewed and looked at are going to be his liability limits. So the liability limits protect him from lawsuit, from somebody else when he is at fault, essentially. Nick: So let's say he has one of the most common levels of coverage that we see is what's called like 100/300. So what that means is 100,000 per person in the accident, a total of 300,000 in the vehicle. So in this instance, in this situation, I'm the only person in the vehicle, so the maximum amount of his car insurance company is going to pay out that they're going to send their lawyers to deal with this lawsuit, the maximum amount that they're going to pay out is 100,000. If I happen to have other people in the vehicle, that's where that 300,000 limit would come into play. But let's say my damages are 250,000 and the most his insurance company is going to pay out as the 100. So, now what? So at that point, what's going to happen, there's going to be kind of a different phases. So I'm going to have an attorney. And my attorney is going to look at, "Hey, does John have additional assets that are not protected, like we talked about earlier that are available through suit?" Nick: So that's something that he's going to request, some sort of inventory, financial inventory, asset balance sheet via the lawsuit. The other thing that they're going to look at is, "Hey, Nick, do you have uninsured motorist coverage?" And luckily because I do this sort of thing I have planned ahead and I have uninsured motorist coverage. So what uninsured motorist coverage does is it protects me in the case of having damages that are above and beyond what the person who inflicted the damage has. So in this case, my limits for uninsured motorist, let's just say there are 250,000, I can essentially sue my own insurance company to fill in that gap, to get me up to that 250,000, so that coverage has protected me. Nick: So the liability limits protect the person at fault against the person having damages and not having enough coverage. So, because we do see people oftentimes outright reject uninsured motorist coverage, and knowing that, especially in the state of Florida, people are often underinsured or uninsured, having uninsured motorist coverage is something that we think is important to have a level of protection. Nick: So the same scenario, I was injured and John had coverage and I had substantially much more significant damages. Let's say that I was permanently disabled and I wasn't going to be able to work anymore, so the amount that the amount of protection and coverage that I'm looking for is going to be substantially more than the 100,000 that John has, or even the 250,000 that I have in the uninsured motorists. And that's where something like an umbrella policy could come into play. So what an umbrella policy will do is, it's a type of coverage that essentially goes above what you have for the auto coverage. Nick: So an umbrella policy can be both liability and uninsured. So in this example, what we'll use for the example is we'll say, "Hey, Nick has an umbrella policy. And because my damages were a million dollars and John's insurance company has paid out 100,000, my insurance company has paid out 250,000, there's still a gap of 650,000. Essentially, I can go ahead and sue my insurance company from the standpoint of the umbrella to try to fill in that additional gap. So if John had had an umbrella policy, they would have tried to use that for protection. But in this scenario, me having an umbrella policy and being the one that had the damages really comes to the point of being able to protect me in my assets. Speaker 1: Yeah. And certainly it's important to review your risk management, your asset protection, because something like an accident can certainly derail retirement plans, it can really wreak a lot of havoc and other things that you had going on as well. There's countless stories out there along situations like that. So if you've got some questions or concerns about this week's topic, and you need some help, reach out to John and Nick, and of course they can help point you in the right directions for some of the things they don't do as mentioned earlier. It's always important to review and have these conversations about all these little assets. It's not just about income, which obviously that's super important in retirement, but there's all these other little facets. So this week we focused on some risk management and asset protection when it comes to some of the things that are protected in Florida, not protected and a bit about the property and casualty as well. Speaker 1: So reach out to them if you've got questions on these topics at 813-286-7776, to have a conversation about your own situation, 813-286-7776, or share the information with a friend who might benefit from that well and go to pfgprivatewealth.com to learn more about John and Nick and their practice, pfgprivatewealth.com, a lot of good tools, tips, and resources. You can also click on the podcast page, you'll see that right at the top. And you can subscribe to us on whatever platform you like to listen to. And we would certainly appreciate it. Guys, thanks so much for your time this week. As always, I appreciate all that you do to help us out here and continue to do a good job with those swimming lessons there John. John: Thanks. Speaker 1: And Nick, maybe one day, you can take the floaties off, you'll be good. Nick: Hopefully. Speaker 1: All right, guys, have a great week. We'll talk to you soon. Stay safe, stay sane, and we'll see you next time here on Retirement Planning - Redefined.…

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Ep 23 : Should You Be Thinking About Refinancing? 12:21

5 years temu12:21

12:21

With rates being at historic lows, a lot of clients have been asking questions about refinancing. So this week we answer the biggest questions people have. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Marc: Hey everybody. Welcome in to this edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. And we're here today to talk about investing, finance, and retirement. And we're going to talk about refinancing actually a little bit here on this first podcast. Guys, what's going on? Nick, how are you, buddy? Nick: Doing pretty good. We're staying busy. Today we're in the little bit of a midst of a market pullback, so today's been an interesting day. But besides that pretty good. Marc: Good, good. Yeah, it's been a little all over the map the last week or so the market has been for sure. So John, how are you, my friend? John: I'm good. I'm good, I'm actually just started coming back in the office this week. So it's been nice to say the least, although I miss seeing my kids 24/7, it's nice to have a little break from screaming madness. It's a good change. Marc: Yeah. A little mental break from time to time is certainly a good thing. Well, I mentioned we were going to talk about refinancing. So a lot of people have been sending questions in that they are thinking about it with the rates being what they are. So let's dive in and talk about it. Why refinance? John: Yeah. So over the last month, Nick and I have got a lot of requests of just really helping clients as far as just analyze, "Hey, you know, the rates are dropping, and is it now a good time to refinance?" And, full disclosure, we're not mortgage brokers. We're not in that industry, but we're familiar with our clients' situations. So we're able to at least help them navigate and ask the right questions in this situation. So we've definitely seen an uptick over the last month. So we figured this would be a good time to kind of discuss it. John: So just understanding really initially what a refinance is. And it's basically, you're taking your current mortgage and you're paying it off with a new one. Some reasons why you might want to refinance is obviously the biggest one is lower interest rate environment, which we're seeing currently. And when interest rate's lower, and Nick correct me if I'm wrong, typically rule of thumb, a 1% drop, you may want to look into it. It could really reduce your monthly payments, and over time it could really help you build equity in the house as well, if you're going to be in there longterm. John: So, just a quick example. A 30 year mortgage at 5.7%, let's say 300,000 mortgage balance. The payment on that's about $1700 per month. Let's say the interest rate's dropped to 4%. That same 30 year mortgage payment's going to be about $1432, roughly $271 per month saving. You're looking at about $3,250 per year, which is a pretty big number. And then especially if you're looking at, if you still have 20 years left in the mortgage, that can really add up. So, that's one thing you want to consider. Nick: Yeah, I would say one of the other times where it can make a lot of sense is, let's say for example, you took out a home equity line a couple of years ago and use the home equity line either to make improvements on the home, purchase a second home, use it for a down payment on a second home, or whatever the reason may be. A lot of times those equity lines had a really, really good rate in the first year or two. And then they start to kind of jump up. So the consolidation of the two together, and while reducing the payment and also potentially reducing the term of the loan can be a really useful scenario, situation for people. John: Yeah. And I'll say one thing, when we do a lot of planning with clients, one of the biggest goals we see is, "Hey, I want to make sure my mortgage is paid off when I go to retire." So now could be a good time to analyze and say, "Hey, I'm 10, 15 years out from retirement. Do I want to adjust to a 10 to 15 year mortgage?" And we've been finding in this environment, we've seen clients keep the payment the same as they're currently doing, but they're shortening the terms. So again, it's really just a matter of your situation and what works for you. Marc: Well, are there any right moves? I mean, how can we determine is it the right move to make, is there some things, some bullet points we can kind of consider? Obviously talking with the qualified professionals, the right people, goes a long way, but is there some things we could go through on our own checklist ahead of time? John: Yeah, I mean, the main thing really is how much are you going to be saving monthly? So you kind of start there and evaluate that. And then you kind of look at it longterm. One of the biggest negatives with refinancing is the closing cost, which can range from application fees, to recording fees, and whatever else. And we've seen them range from 1% to almost 4% sometimes. John: So you want to evaluate, "Hey, is it worth refinancing, incurring those costs into my mortgage?" And that's where it's important to work with someone to help you analyze and crunch those numbers. And one of the biggest things that we've seen, it depends how long you going to live in the home. So you want to ask for an amortization schedule whenever you're looking at it to say, "Hey, if I'm going to only be in the home for 10 more years, does it even make sense to refinance this?" And that's one of the biggest things I think people don't take a look at, is just figuring out, "Hey, how long am I going to be in this house and does it make sense." Nick: Yeah. That term, that length of being in the home is probably the biggest reason that it may make sense for somebody not to refinance. Because the reality is that the monthly payment, if it's staying the same or reducing, if it's very small, because there are costs associated with refinancing, it may not make a whole lot of sense unless you have kind of a strategy and a longterm plan. So we have seen those scenarios where people have said, "Hey, we don't plan on being here any longer than a couple of years, does it make sense for us to spend this, to do that?" And we recommended no, dependent upon the situation. So that's absolutely something to keep in mind. Nick: I will say as well, that there are companies out there that will kind of advertise "no closing costs" or "we pay your closing costs," that sort of thing. And while that may be true, and they still may be offering good rates, one other thing to make sure you do is we always recommend get three offers from three different companies, banks or lenders, because we've seen, "Hey, we'll pay your closing costs, but you're going to pay more on the rate." You know, they make it one way or another. But we've had clients recently getting quotes at anywhere from 2.5, to 3, 3.25, dependent upon the length of the term, dependent upon if it's their primary residence versus a rental property, those sorts of things. So, all things to consider, keep in mind. Marc: Well, if you are refinancing, some might say you're resetting the clock. You're adding years. I mean, obviously you've got to have these conversations. You might get a lower rate, but you might be tacking on more years. Nick: Yeah. And I would say that it's rare that we're going to recommend anybody tack on any extra years. The one thing that I will kind of comment on is, their other habits have a big impact on whether or not something like that could make sense. So for example, if somebody is, by default, a very good saver, and let's say a 30 year mortgage will add on five years. But let's say it's going to free up $500 a month. And the reality is that they're not going to be in that home for more than another 10 years. And they're really good at recapturing that money. So in other words, instead of paying that $500 a month, they've proven over time that they're a good saver and they're going to actually save that $500 or even set up a schedule to save that money right away. And maybe they're very comfortable in the market and investing and their thought process is, "Hey, I'd rather have control of this extra $500 a month than have the lender or the bank have control of the money." Nick: That's a scenario that we may consider saying, "Okay, that's something that could make sense for you." But I would say that it's pretty rare where we're going to really kind of give our okay or green light on somebody extending the term of their loan. Usually it's keeping it the same, reducing it a few years, and if we can reduce it four to five, six years and keep the payment the same, that's oftentimes a win for the client. Conversely, if the reality is that having that mortgage payment a little bit higher for them is a forced, quote unquote, savings by reducing their liabilities, that's something that we take into consideration and that's the important part of us understanding and knowing our clients, knowing their tendencies and helping to put them in a position to succeed. Marc: Well, if you're thinking about refinancing, again, you need to go through of these questions. Why do you want to do it? Is it the right move? Have the right conversations with the correct people. John, anything in the summary that you want to add as we kind of wrap up this podcast about this? John: Really, just if you're thinking about it, just make sure it aligns with your overall financial plan and your goals. It's just important. You don't want to do it just because the rate has dropped. You really want to make sure it makes sense for you. And we highly recommend working with people that understand your situation versus just someone random that's just trying to go ahead and "Hey, let's just do it" just to do it. So definitely want to do due diligence and make sure that aligns with what you're trying to accomplish. Marc: Yeah, because I'm sure a lot of people keep getting things in the mail, right. "Our rates are so low." I mean, I think I get something probably almost every other week to contact whomever about refinancing. So, that's a great point. You want to make sure that it works in conjunction with what you're trying to accomplish and not just doing it for the sake of, because we keep getting hit with these things that are like, "Oh, let's look at this rate." So on and so forth, right. Have a conversation, make sure the whole scenario plays out correctly in the way that you want it to. And we talk about that often on the show anyway, is make sure whatever steps you're taking, whatever you're doing, it's part of your overall plan and an overall strategy to get us to and through retirement. Marc: So that's going to do it this week for the show, Retirement Planning Redefined. If you've got questions again about today's topic, make sure you reach out to them and let them know you'd like to have a conversation. We've already had quite a few people bring this up, which is why we talked about it today. So give them a call at (813) 286-7776. If you've got questions before you take any action, (813) 286-7776. You can also go to PFGprivatewealth.com. That's PFGprivatewealth.com. Don't forget to subscribe to the podcast by hitting the subscribe button on Apple, Google, Spotify, whatever application you like to use. But check the guys out there at the website. And with that, gents, I'm going to let you go this week. Thanks for your time, as always. I hope you stay safe and sane, and we'll see you soon. John: Thanks. Nick: Thanks.…

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Ep 22: Case Study- Implementing Roth Conversions 16:32

5 years temu16:32

16:32

We spent last podcast talking about what exactly a Roth conversion is. Today we will examine a financial plan and see how implementing Roth conversions can potentially improve this situation. Case Study Before Implementing Strategy: Dual income Household: Ages 55 & 53 Existing Accounts: $500k Pre-Tax 401k Funds $25k Roth IRA Funds $50k Cash Mortgage on the home – paying extra on mortgage ($250/m) (5% rate on 30 year loan, 10 years in) Income: Person 1: $110k Person 2: $60k Current Savings strategy: Total Joint Savings 18% of income ($30.6k/yr.) – all into pre-tax Each person has 3% company match for pre-tax ($5.1k/yr.) Total being saved: $35,700 EE Contributions: $30,600 ER Contributions: $5,100 New Strategy: Refinance Mortgage to a 15 year loan with significant reduction interest rate lowers total monthly payment, allows for $250/m extra payment recapture & additional $150/m savings New Total being saved: $40,500 401k EE Contributions: $21,400 Pre-Tax: $15,900 Roth: $5,500 401k ER Contributions: $5,100 Roth IRA Contributions: $14,000 Person 1 strategy: EE Total: $23,600, ER Total $3,300 EE Pre-Tax 401k Contribution: $11,100 (10%) EE Roth Contribution: $5,500 (5%) ER Pre-Tax 401k Contribution: $3,300 (3%) Max Roth IRA: $7,000 Person 2 strategy: EE Total: $11,800, ER Total $1,800 EE Pre-Tax 401k Contribution (No Roth Available): $4,800 (8%) ER Pre-Tax 401k Contribution: $1,800 (3%) Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Marc: Hey, gang. Welcome into another edition of The Retirement Planning Redefined Podcast with John and Nick from PFG Private Wealth. Mark Kelly in here along for the ride as we talk investing, finance and retirement with the guys. And this week, actually, we got sort of a follow-up to our prior podcast. We're going to talk about implementing ... Really a case study about implementing Roth strategies into your plan, some things to think about there. Again, if Roth conversions are on your mind, this is a great podcast for you. And as always, if you've got questions or concerns, let the guys know. Reach out to them at PFGPrivateWealth.com. John, what's going on this week, man? How are you? John: I'm good. I'm good. Nick still hasn't taken me up on that race offer, but I picked up some yoga in the meantime. Marc: Oh, okay. John: So, I'm doing well. Marc: All right. So rowing and yoga. After a couple of weeks, you should be lean and mean and you should be ready to roll. John: I'm trying. I'm trying to get in shape for when I go back out in public. Marc: Did you get the quarantine 15? John: Yeah. A lot of Oreos eating over here. Marc: Oh, yeah. I hear you. Nick, how are you doing, bud? Nick: Pretty good. Pretty good. Yeah, John's definitely going to have to spend a little bit more time rowing before he can catch up. I've got a month head-start on him. Marc: Oh, okay. Nick: And luckily, the irony for me is because I've been forcing myself to get out I've actually been losing weight, which is kind of nice. Marc: Oh, nice. Nick: And going out to eat a little bit less. It's funny when you see what kind of difference that makes, for sure. Marc: Yeah. It really does. And everybody has their vice. Oreos, as John was mentioning. Everybody's got their vice. Yeah, during the quarantine, in lockdown, I certainly was no stranger to my own vices as well. And I was like, "Yeah, this isn't good. I'm getting fat." Not happy about it so I'm right there with you, John. Wasn't Oreos but just as bad. Marc: Anyways, let's jump into our topic this week and talk about this case study, really, and ways it helps you see implementing how a Roth conversion may or may not work. Nick, take it away. Give us a quick breakdown on what this is and just walk us through it. Nick: Yeah. What we wanted to do with this session is kind of mix it up a bit where ... One of the things that we found just communicating with people, especially in the classes that we typically do is when we walk through almost a little bit of a case study and give a sample example of a household, what they have in assets, what they have in income, how they're currently saving and the things that we can do with pretty minor changes within the structure available to really try to improve their overall situation and planning. Nick: The scenario that we had put together was a dual-income household, ages 55 and 53. Marc: K. Nick: And their existing accounts were pretty heavily dominant to the pre-tax side. Half a million dollars in pre-tax 401K funds. They had about $25,000 in Roth accounts, $50,000 in cash between checking and savings, 30-year mortgage ... About 10 years in to a 30-year mortgage. And they were paying an extra $250 a month towards the mortgage to try to get it paid down. Nick: One of the most common questions that people have when they come in to see us or come into a class is, "Hey, I'm saving. I'm doing a good job with saving. But am I saving in the right area? Should I be paying this extra money towards the mortgage, et cetera?" The breakdown in income was person one, $110,000, person two, $60,000 of income. So, total household income of about $170,000. And the reality is that both of them were getting a company match into their 401K and they were saving ... Between the two of them, they're saving essentially 18% of their income but they're putting it all into pre-tax accounts. The Roth accounts that they have on their balance sheet are essentially accounts that they've had for a long time. They funded it early on and then at a certain point they got phased out because they made too much in income. Nick: Their main question or, I should say, potentially goal when they came to us was, "Hey, again, we have a good income. We're living comfortably. We live within our means. We save a good amount of money. But are we doing it the right way?" One of the first things that we did was evaluate the mortgage and, really, what we've seen in John's work on these quite a bit with a few different clients is that mortgage rates have obviously dropped in the last .... These clients were 10 years in so mortgage rates have dropped. And they went ahead and spoke to their credit union and they were able to refinance. One of the things you always want to look into is try to keep down closing costs, et cetera. And they were able to reduce the payment. Nick: And so, really, with rates where they are, they were able to go from having 20 years left on their mortgage to refinancing to a 15-year mortgage, which is something that they felt much more comfortable with. When we discuss mortgages, we always have the conversation of pure finance decisions versus a comfort level as well. They were able to reduce their monthly principle and interest payment by $150 a month over their 30-year. Essentially, what we're able to do is we're able to recapture the $250 a month that they were paying extra towards the mortgage to try to shorten it, take five years off the mortgage with the refinance and save an additional $150 a month. Really, we've got a $400 a month savings plus we shaved five years off the mortgage automatically. The goal being how do we redeploy that money? Nick: John, any tips for people when they're looking for refinancing on the mortgage and some things to look into? John: Yeah. One thing, you just want to analyze what the rates are, what you're currently at. I know a lot of people use the rule of thumb of basically if you can lower it by one percent it might be a good idea to at least look into it, and that's where we start is look into it depending on what rates are and what your current rate is and then work with an advisor or some type of mortgage specialist to evaluate exactly, does this make sense for me? A decent website just to see where rates are at is BankRate.com. Just be wary putting your name into anything because we have had some people where they ... "I put my name into this. I'm getting bombarded with phone calls from everybody." BankRates is a good place to view but ultimately, you definitely want to work with someone and just figure out what's best for your situation. Nick: For sure. From there ... Again, part of the emphasis for us, and I know that a lot of our listeners and our clients have heard us talk a lot about the importance of balancing ... Trying to create some sort of balance or equity in portfolios from the standpoint of we want to diversify future taxation and current taxation. With this client, they were very heavy on the pre-tax. Half a million in pre-tax, only $25,000 in Roth dollars. Client one, essentially their plan at work allows for Roth 401K contributions where client two, their plan does not allow for Roth contributions. That's one of these things where sometimes households we've seen when there's a dual-income household they try to make everything even and it's not always the best strategy when we look at it from a global standpoint. Nick: The other thing that we've seen people not necessarily consider or quite realize or understand is that when their employer is making a match contribution for them, those match contributions are pre-tax contributions so there's additional money going in. Previously, for the household, they were contributing on their own about $30,000 a year into retirement accounts and they were getting about $5,000 a year of company contributions. And now, after the refinance, what we're actually able to do is increase the amount that they're saving. Nick: One of the first things that we'll look at for clients is the income test on whether or not they have the ability to contribute to an individual Roth IRA account. This household came in underneath the limits, which means ... And they're over the age of 50, which means that all of them are able to contribute $7,000 a year into a Roth IRA account. The benefit, obviously, of having an individual IRA account is that they're going to have some more flexibility on the investment options that they have and if they want to work with us and have us invest the money for them, they have that option. Whereas when they're dealing with accounts that are strictly held at their employer they're required to use the funds that are inside of there. Nick: Previously, again ... And I know it gets a little confusing in this sort of format, but essentially they were saving $30,000 a year pre-tax. Their employers were putting about $5,000 a year pre-tax. So, about $35,000 a year pre-tax into accounts and then another $3,000 a year into their mortgage, extra. Now what we've done is we've said, "Okay, we're able to recapture those dollars from the mortgage and the total amount that's going to be saved has increased up to $40,000 a year, which is a nice jump." That breakdown is going to be $14,000 between the two of them into Roth accounts, $7,000 each. The employer contributions are staying the same, so that's still a little over the $5,000. But client one, because they have access to both pre-tax and Roth options in their 401K, they're going to put a little less than $16,000 a year into the pre-tax and about $5,500 into the Roth per year. Nick: What we've done, in this case, is where previously they weren't putting any money into Roth accounts, they're not approaching $20,000 a year of Roth contributions that they weren't completely aware of how to be able to take advantage of that. And again, we think that that's a super important step to be able to build in diversification to not necessarily ... If a conversion down the road makes sense for them, they can do a conversion. But if we can do it up front, take advantage of the low tax rates that we are currently in in this current environment and not have to worry about future brackets from the standpoint of dealing with conversions, this is something that really allows them to start to build up their Roth funds. Nick: John, do you want to talk a little bit about ... From the standpoint of how we might adjust their actual holdings and risk allocation in a Roth versus the traditional funds? John: Yeah. One thing that you want to look at when you're looking at allocation, overall funds, it's typically ... And I say typically because everyone's situation is different. You want to be more aggressive or take a little more risk in the Roth IRA or Roth 401K accounts because that has more potential for growth so that gives you a little bit more, again, potential to have more money down the road in a Roth bucket, tax free. Nick: Yeah. We like to try to capture that upside, especially because when you look at it from the standpoint of the total amount of funds when you look at the overall nest egg, the money that's in the Roth is a lot less money so we feel a little more comfortable taking a little bit more risk with those dollars because it's a much smaller chunk of the pie. And then we dial back the risk on the pre-tax dollars because that's a bigger piece of the pie and try to create some balance. And for anybody that may have gotten tripped up with some of the details, because we know there are a lot of moving parts in this, we will have the breakdown in the show notes to be able to walk you through to check that sort of situation out; to see if something like that might make sense for you. Marc: Okay. All right. Absolutely. Definitely a little bit different this week on the podcast, but it's certainly and interesting way to take a look and see about how different strategies can be implemented into unique scenarios and help things along. As Nick pointed out, follow along with the show notes. They'll have a break down in there for you, as well, on that. And anything else we need to wrap up with this week on implementing this case study that we were talking about? Nick: I would say that the biggest thing is just for people to make sure that ... Again, where people will often times analyze the decisions that they're making from an investment standpoint is with the sorts of holdings they have and not necessarily with the types of accounts that they have. Just making sure that the methodology that you're using and how to save and put money into accounts is something that you're looking at and looking into, whether it's with your employer, asking, "Hey, do we have a Roth 401K option in our plan?" And if not, getting a few people together to try to push for something like that can really open up options for you. That sort of process is always important. Marc: All right. There you go. All right, folks. Great episode here this week on Retirement Planning Redefined. Hopefully you enjoyed this case study; a bit of a break down and look into implementing Roth strategies. Again, follow along with the show notes on the website. Go to PFGPrivateWealth.com, click on the podcast page. That's PFGPrivateWealth.com and then you'll see the podcast page. Click on that and you can follow along in the episodes. And, of course, subscribe to us if you have not yet done so on Apple, Google, Spotify; whatever platform you like to use for your podcast needs. And if you do have questions, if you do want to talk about a conversion or implementing a strategy, reach out to John and Nick. Let them know you want to chat by calling 813-286-7776. That's 813-286-7776, serving the Tampa Bay area. Get on the calendar, have a chat with them. Marc: Please, before you take any action you should always check with a qualified professional like John and Nick at PFG Private Wealth. And with that, guys, we'll say goodbye this week. Hope you guys have a great week. Stay safe, stay sane and all that good stuff. For John, Nick, I'm Mark. We'll talk to you next time here on the show and we'll see you later on Retirement Planning Redefined.…

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Ep 21 : Roth Conversions 13:48

5 years temu13:48

13:48

With our tax brackets being at historically low rates, many people are looking at implementing Roth conversions in their plan. John and Nick will explain what exactly this concept is and how this may be able to save you some dollars on taxes in the future. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey everybody. Welcome in to this edition of "Retirement Planning - Redefined" with the team from PFG, private wealth serving you in the Tampa Bay area. John and Nick once again with me on the show, as we talk investing, finance, and retirement. Nick, buddy, how's it going? How you doing, man? Nick: Pretty well. Pretty well. Just still kind of moving through this pretty crazy time, but no complaints. Pretty fortunate overall. Speaker 1: Good. Good, good, good. John, how you doing, my friend? John: Doing good. Doing good. Recently purchased a rower. Nick sold me on it. He got one about a month ago, and he's been ranting and raving about it. And I joined the club. So, done a couple of sessions and excited to do a little more. Speaker 1: A rower. So it's like an exercise machine, like one of those rowing, or actually going out and rowing in a boat? John: No, no. Rowing in my garage, an exercise machine. Speaker 1: Gotcha. John: Once I get good, I might link up to Nick and we'll race down some fake river on a video screen. Speaker 1: There you go. We'll have to set that up. We'll have to shoot that on Zoom or something. That'd be good. Nick: Yeah, ranting and raving may be a little bit of an overstatement, but. Speaker 1: Just a little? Nick: As to be expected these days. Speaker 1: Gotcha. Well, there you go. Well, hey, at least you're exercising, doing things to stay fit. It's good for stress and all that kind of stuff as well. So, always good. Speaker 1: Well, listen. Today on the topic, basically we're going to talk about Roth conversions. If you determined a Roth was right for you, are you interested in converting if we're going from a traditional to a Roth? Things of that nature. So, we'll just jump in and start talking about it here today on the podcast. John, let's kick it off with tax liability. If you've determined that a Roth is right for you and you are interested, let's talk about some of the key components to maybe consider in tax liability would certainly be one of those. John: Yeah. Yeah. Just understanding how a Roth conversion works. When you convert a traditional IRA to a Roth IRA, you pay income taxes at your current tax rate, and in return for that, you're getting tax-free withdrawals during retirement. And we'll talk about different strategies with that as we go on on this. But just to give an example, let's say someone's taxable income is $100,000, and they meet with their advisor and decided it's a good idea to do some type of conversion. They say, hey, let's go ahead and convert $50,000 of your traditional IRA to a Roth. Your new taxable income for that given year is $150,000. So that's how it would work from a tax liability standpoint. Whatever amount you're converting ends up being added to your taxable income for that given year. Nick: Yeah. And the biggest thing we like to just remind people when they do a conversion is they want to make sure they have the money off on the sidelines to pay that tax. They don't want to do it with the converted money, especially if they're under 59 and a half. Speaker 1: Okay. All right. So, with some of the monies and stuff like that, you want to, again, make sure you're having those conversations, to the guys's point. So what kind of strategies should we employ to kind of work our way through this? Kind of like the lump sum approach, we do it over time? There's lots of conversations out there about ways to go about a conversion. John: Yeah. So one of the things that we do, we focus quite a bit on retirement planning. And when we do that, we're able to actually model out and estimate what someone's going to pay in taxes throughout their retirement. And we have certain scenarios where someone might go ahead and retire early. And let's say, they retire at 62, and they don't really have much income coming in other than maybe lowered social security amount or they have some non-qualified, basically non retirement assets that they don't have to pay income taxes on. And we would look at that. There could be a period from 62 to 72 where they're not paying much in taxes. John: So what we'll do is we'll develop a strategy over that five to 10-year period where we're actually converting the traditional IRA in increments throughout that period of time to really take advantage of that period of time where they're in a lower tax bracket. John: Well, if you look at that through the life of someone's 20, 30-year time horizon, that can make a big difference in their overall tax liability throughout their plan. So it's a nice thing to be able to look at and say, hey, what am I going to pay in taxes? And how can I take advantage of paying less ultimately overall? I know I've been talking a lot here. I'll let Nick jump in on kind of the flexibility of having different buckets of money, whether it's pretax and after tax, going into retirement. Nick: Yeah, really, both fortunately and unfortunately, one of the things that we tell people that they can count on while they're working and then in retirement is that there will be changes. And usually the area that there's most often changes are in tax law. And we've seen that over the last couple of years. And so, sometimes people get a little bit caught up on the thought process of which is better, pretax or Roth money. And in our minds, and when we say it a lot, but we try to continuously emphasize it, is that it's important to have options. And so, to have options, you need to adjust how you contribute or take advantage of Roth contributions and that sort of thing, so that not only are you diversifying from an actual investment standpoint, but from an account type standpoint, which means giving yourself flexibility from a tax standpoint as you take out withdrawals. We find that really, really important. John: Yeah. And where that comes into real life is, let's say someone wants to buy a car in a given year. They don't want to take out a loan. You don't want to take out 40 grand out of a taxable account. That's really going to increase your tax liability, where if you had some Roth money, you might say, hey, I don't want to pay any more taxes. I'll just pull it from that. Or it could be some type of health emergency where it's unexpected and you're pulling 40 to 50 grand out in one pop for whatever reason. So, it's nice to have that option to avoid paying unnecessary taxes. Speaker 1: Okay. So, when we're talking about doing these conversions, obviously clearly taxes right now are lower. And so, that's something that is appealing to people, but we also have been dealing with this down market. Is that another component that should be obviously considered? And what's your thoughts from a conversion standpoint with that in play? John: Yeah. And everyone's situation is different, and this is something that, this recent downmarket, some people took advantage of, where basically, the market dropped almost 30%, 40% from the high. And they went ahead and said, let me go ahead and convert my IRA and this lower balance, pay tax on the lower amount, so when it recovers, basically everything's tax-free moving forward. So, just a quick example of that is, say you had an account that was a $100,000 before the market dropped. Assuming 15% tax liability on that money, and it's a $15,000 tax hit if you were to pull it out. After a 40% drop, the account balance is 60 grand, and a 50% tax on that is $9,000. So you're looking at about a $6,000 tax difference at that point in time. But the reason you would do it is obviously after market downturns, just typically recoveries and all that growth that you get is now tax-free moving forward. So, that's a nice little benefit. Speaker 1: Well, and again, any time you're thinking about that conversion, always check with your advisor, always talk with an advisor. If you're not working with one, reach out to John and Nick and have a conversation with them about it. But it's certainly, even before the whole COVID thing in 2020, it's just been a very popular conversation point, due to the fact that the tax rates that we're in have been so low. So again, if you do have questions around, is it a good time to convert, should I convert, things of that nature, make sure you're running your specific scenario past a qualified professional financial advisor like John and Nick. And of course, you can always reach out to them at (813) 286-7776. That's (813) 286-7776. Or go to pfgprivatewealth.com. Speaker 1: Okay, guys, another place to consider would be the legacy portion. Is that something we should throw into that mix for converting? John: Yeah. So a Roth IRA is actually a great vehicle to pass on to beneficiaries because they receive it tax-free. So, some strategies that Nick and I have implemented with clients in the past is basically converting it so their heirs can get it tax-free, and kind of this scenario where someone doesn't necessarily need the IRA money for income today. It's more of a kind of a cushion for them. And the goal is to pass it on to kids, grandkids, whatever it might be. So, to just kind of give a situation here, client's 68. Don't need the money for current income. Tax bracket's 12%, one of the lower ones. And kid's, daughter's, in a 35% tax bracket. So, the strategy that this person is doing is, over a 10 to 15-year period, again, going back to estimating the taxes, they're converting pieces of the IRA to a Roth. Okay? John: Now you've got to remember that retirement really is a 20 to 30 -ear period. So you could do this over 10, 15, 20 years. Okay? So during that 10 to 15 years, they're basically just making all that IRA money. They're paying taxes in a lower bracket. It's becoming tax free. So when they do pass away, their daughter in this situation inherits it tax-free. In this current situation, the daughter is actually in a 35% tax bracket. So you could see it as a big tax savings there, because once the daughter inherits it, it's all tax-free, versus her paying it at 35%. So, kind of just summary, the client pays the taxes at a 12% tax bracket, daughter inherits it in a 35% tax bracket, but it's tax-free because of the conversions happening. Speaker 1: Okay. And with the stretch going away, does that make that strategy more appealing at this point? Nick, what do you think? Nick: Yeah, I would say, so previously what would happen if we had these kinds of conversations, in a good scenario, or I would say maybe a pretty typical scenario with what John just outlined is, maybe it's a widow. And between Social Security and pension houses paid off, etc., so they have good income. They don't really need to take much from their retirement account. They have a daughter that's a physician, making a really good income. And the strategy is to pass the money down. Well, previously, they might have said, hey, if we pass traditional IRA money to the daughter, it's not as big of a deal. Ideally, a Roth would be better, but with the way that stretch IRAs work, she would only have to typically take a small amount each year out, but do it over her lifetime. Now that that money needs to be taken out in a 10-year period versus over the daughter's lifetime, the tax impact is much more pronounced and harder to navigate. Nick: And so, we're pretty confident that these sorts of conversations with those changes are going to happen much more consistently over the next couple of years. So, that's just kind of a good example of why and how some of the recent changes make it important to be able to adapt and be flexible. Speaker 1: No, I definitely agree with you. And obviously, there has been a lot of changes. There were changes to start the year. And then, of course, the COVID changes also altered some things. So, if you're thinking about or have questions about, again, going over a Roth conversion, if it's right for you, how you want to implement that into your overall plan, or maybe you don't have a plan and you need to do all of those kind of pieces, well, reach out to John and Nick at PFG Private Wealth and let them know you want to talk about it. It's certainly a huge topic point, and it can be a very beneficial component or tool to your retirement planning tool belt, if you will. So, definitely have that chat with them. (813) 286-7776. That's (813) 286-7776. And don't forget to subscribe to the show, "Retirement Planning - Redefined" on Apple, Google, Spotify, or whatever platform you like to use for your podcasts. Speaker 1: We've made it available for you to find at the website pfgprivatewealth.com. That is pfgprivatewealth.com. A lot of good tools, tips, and resources to be found there as well. And of course, you can always just search it out by typing "retirement planning redefined" on whatever platforming app you choose. Speaker 1: All right, guys, is there anything else we need to address with the Roth conversions this week before we go? John: No, I think we're good. Appreciate your time. Speaker 1: Yeah. As always, we appreciate you guys stopping in, chatting with us for a few minutes. If you've got questions about those Roth conversions, again, reach out to them, folks, here on "Retirement Planning - Redefined." John, Nick, you guys enjoy the rowing machines, and I'll be looking forward to that competition coming up soon. And we'll catch you next time here on "Retirement Planning -Redefined" with John and Nick, financial advisors at PFG Private Wealth.…

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Ep 20: Peeling Back The Curtain 18:33

5 years temu18:33

18:33

On this week's episode, we check in with John and Nick on how things are going personally with their families, communities and clients. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey, everybody. Welcome into this edition of Retirement Planning Redefined with the team from PFG Private Wealth. Got John and Nick here with me as always, financial advisors. Guys, what's going on? Nick, how are you, my friend? Nick: Oh, doing pretty good. Just been just like everybody else, working remote, working from home, kind of biding my time through this process. Speaker 1: Yeah. Yep. John, yourself? John: Yeah, pretty much the same. Like Nick, working from home and just keeping myself occupied with some things to do around the house. Speaker 1: Yeah. I saw somebody, a lot of times people say, well, we're all on the same boat together. And I thought, I don't think that's quite accurate. And so, I saw something that was cool. It said, we're all in the same thunderstorm together, but we might be rowing different boats. And I thought, that's probably a little more accurate. We're all in the same massive storm here and everybody's got different little nuances. The different states are doing different things, different people are dealing with economic issues, issues different than others, health issues, personal issues, stress issues, whatever. So it all falls into a same storm category. I thought that was kind of a cool way of putting that. Nick: Yeah, I think the personal experience that people are having, like what you said, is pretty drastically different from not only region to region and state to state, but family to family. Speaker 1: Yeah, true. Nick: Dependent upon what occupations are and/or just ... there's so many different factors that it's going to be interesting to see what movies come out down the road and the different forms of media and when we can actually look back and just kind of- Speaker 1: Oh, yeah. That'll be really interesting. Yeah, for sure. Well, we're going to go easy today, actually. We're just going to keep it in this vein. We've been spending so much time talking, doing multiple series parts on different things. We thought we would just scale it back a little bit this week and just have a conversation about just life and just peel the layers back, if you will. So we kicked it off a little bit with personally you guys are doing okay. How's the families? Everybody okay there? John: My end, yeah, everyone's good. We got to just remind some people listening, I got a one year old named Aria and a four year old named Olivia and my wife Jenny. So yeah, we've just been quarantining here and trying to keep them busy, and they're definitely keeping us busy. Nick knows, I threw out my back a couple of weeks ago. I think I was just chasing around the kids and then doing way too many home projects now that I'm stuck at the house half the time, so. Nick: I definitely, I haven't thrown out my back and I also have not had to chase around a one year old and a four year old. But I've been able to, a couple times, spend some time with immediate family, parents, brother, sister-in-law, nieces. And my brother and sister-in-law, they're still working. My sister-in-law is a nurse and my brother has a business that's considered essential. And so, my nieces are nine and 10. And so, my parents, they haven't been working because of everything. And so, they've been able to take care of the nieces that's extra time with them. I got to see the experience of what it's like for them to attend school remotely and some things like that. So it's been a little bit different perspective. Speaker 1: Are you zooming in and being a guest teacher for a day? Uncle Nick going to teach them about whatever? Nick: No, definitely not. I quiz them on some things here and there, but some of this common core stuff and some other things, it's pretty, pretty wild. So I'm there for moral support. Speaker 1: John, you got to give us the skinny. Can he substitute teach? John: Definitely not. Nick: Only due to patience. Speaker 1: You got the math down, right, but the patience level maybe is a little different? Nick: I could present and not allow any questions. Speaker 1: There you go. There you go. Community-wise, how's things in your specific area? We pulled the curtain back before here on the show. Clearly, you obviously were social distancing. We're all remote in our houses doing the podcast, but even prior to that, we were already doing that because I'm actually in another state when we do these shows. Of course, you guys are there together at the office or whatever the case might be. But how's the community near you? How's things going there? John: Yeah, so pretty good. Nick and I are both involved with a nonprofit group called the 13 Ugly Men. And one thing that we did as our membership here, we did Feeding Tampa Bay. So we donated a hundred thousand meals to those in need during this time that you need to eat and don't have the funds to go ahead and do that. So that was pretty cool, because we did a match donation and then we coupled it with a Facebook Live event where we had a DJ playing and then people were tuning in. Maybe they were bored at home and needed something to do during happy hour and they locked in and have a little bit of music to listen to. So it was interesting to see, using the Facebook platform to engage in our guests that usually attend our events and using that platform also to raise dollars. And again, Nick and I are both in that group together. And then, Nick's also involved with Casa so he can jump on that because I know they did some type of thing, Nick, so. Nick: Yeah, so Casa's a domestic violence organization in Pinellas County in St. Pete and I've been on the board there for, it's got to be over, around close to 10 years now at this point. And may have mentioned it in a previous podcast, but when this whole thing was starting, I had been following the news in pretty significant detail and my main venue to gather news is Twitter. And on Twitter, I had seen a post by the founder of the company Slack, which is a tech-based company that's actually stood out over this period of time. I know they've gotten a bigger footprint during this period of time, but... Nick: So the founder of Slack, they had gone public last year, and he and his fiancé had created a foundation and they had decided to donate a million dollars total to four different sectors of nonprofits. And I had come across it and they did a matching program. It was a five-to-one matching program. So essentially, if a local organization that fit into their four tiers, and one of the tiers was domestic violence, if that organization was able to essentially secure donations and then forward the proof of donation to their foundation, they were going to match at five to one. And, pretty amazingly, we were able to rally both the board and local donors to raise, we raised $25,000 locally and the founder of Slack matched it with $125,000. And so, we were able to raise $150,000 in less than 24 hours. Speaker 1: Wow. Nick: Which was pretty awesome. Speaker 1: Yeah. Nick: So, it was pretty cool. Speaker 1: No, both of those are amazing. That's awesome, guys. Kudos for that. That's really, that's great. And I imagine that, obviously, those things are very well received. We're seeing a lot of that stuff happening all over the place, but that's really awesome. You guys are continuing to do that right there in the backyard, so to speak. And with your own clients, obviously, right there in your backyard, again so to speak kind of thing, how's things going with that? We briefly talked about some of that a couple of weeks ago. Still going okay with the working remote? Are people adjusting to that a little bit better? How's that going? John: So yeah, I think people are. Nick and I have actually been doing, before all this happened, we started doing more remote meetings. And I think clients are finding that it's actually a pretty efficient way to meet and it actually maybe helps us meet with them more often, where they're not having to drive and coordinate schedules and it's just a little bit easier. So I think one of the things we'll see coming out of this is that we'll probably, even when this is over, probably start doing more remote meetings with the screen shares. And then once we get back into the office, we'll probably do more video stuff. But I think things are going to change and go more in that direction based on people just becoming familiar with the platforms and being comfortable with it. Speaker 1: Yeah, it's one of the things that we've seen a lot as well. I interview a lot of people all across the country and some, especially for the client base being retirees, pre-retirees, a lot more folks have embraced it I think than initially thought, which I kind of thought that'd be the case. I mean, just because you're older doesn't mean you're not tech savvy. But I know that there's points where some folks feel a little uncomfortable still and it is different, I suppose, being on a platform like Twitter or Facebook, for example, versus being on a Zoom call with a camera coming in and catching you in the living room. But again, you're scheduling these things and you've got time. There's secure ways to do document portals for transferring delicate information. And that stuff's been out there, in the cloud anyway, for a while. So I am generally seeing across the country that more folks are embracing it than I think maybe some skeptics originally feared. Nick: Yeah, I would definitely agree with that. It's pretty typical. Oftentimes, whether it's new technology or adaptation to what's going on is oftentimes spurred by what's happening around us. And so, the platforms have been around for a while and the reality is that they're pretty easy to use once you get through it for the first time or so. And really, the communication with clients initially was getting everybody to hold the line. And one of the things that we've been seeing maybe for the past week, week and a half, maybe two weeks, and we had a conversation with a client today, is the disconnect between the market and what's happening around us still being in ... Florida is just opening up now, but a lot of other states are still locked down and things like that, is that the market's responded and pulled back from its lows for the last month plus now. Nick: And people, from what we've seen, they haven't really caught on yet that the market has responded pretty positively and we've bounced off the lows pretty significantly. So, that's one of the things that we're going to be working on from a messaging standpoint moving forward is, obviously, we don't know what's going to happen over the next six to 12 months. Speaker 1: Right, right. Nick: From the standpoint of finances and the market and where things are, it's not nearly, I think what a lot of people ... the feedback that we've gotten from people is, when we've explained how much they're down from the beginning of the year, has been like, "Oh, that's it?" Which is always good to hear. But it's been an interesting thing, because John and I are so knee deep in it day to day that it's just a good example of the importance of communication, helping people realize where we really stand from the standpoint of how the market works and their overall plan. Speaker 1: No, that's a good point because a lot of people initially, obviously, do the ostrich thing, right? It's going down as bad as it was in March. And you don't want to open your statements, you don't want to look. My brother, he's 62, he was in that. I kept talking to him through things. And finally, matter of fact to that point, Nick, that you just made about a week ago, he finally looked and he goes, "Yeah, it wasn't as bad as I thought." And I said, "Well, April," I said, "Technically April, it kind of got lost on the shuffle of all this, but April was one of the best Aprils the market's ever had. It's 28%." Now granted, from the bottom, not from the top. Speaker 1: But still, you got to find those silver linings, you've got to find those little victories where we can get them. And like you said, there could still be plenty of volatility ahead. Who knows? But doing the ostrich thing usually doesn't do you any good either. Because I kept telling him, he's like, "Well, I don't want to look. I can't handle it." And I said, "Well, okay, but let's go on the bad foot. If it was bad news, the sooner you find out, the sooner you can start to address it. If you just keep ignoring it, it's like a cavity. It's going to get worse." I was like, "And then you end up being pleasantly surprised anyway." So you have to look at it through the right perspective, the right lens. Nick: For sure. Speaker 1: Yeah. John: For sure. Speaker 1: Well, you mentioned Florida reopening. So how's that going with the phase one thing? You guys have been on that this week, at the time we're taping this? John: So, yeah, yeah. It's been this week. So far for me, I haven't done anything different. I'm still in quarantine mode. Speaker 1: Right. John: So, I think one of the biggest differences is certain stores I've been to are now requiring face masks. So now when I go in there, you just see everyone with a mask on, where maybe two or three weeks ago that wasn't the case. I don't know what Nick's been doing different, but I think we're in the same boat. Nick: Yeah. Not too much different on my side. I will say, because I do live in downtown, in downtown St. Pete here, it's been interesting to ... Each day I've either been going for a bike ride or a walk or something to get outside. And they started putting tables out. There's a lot of sidewalk dining here, so they started putting the tables out because the restaurant capacity is 25% inside, and then they have outside seating. John: Oh, interesting. Nick: So starting to see some people sitting at tables and more people walking around. The beaches opened up on Monday. And the park that I go through, it's called Vinoy Park here, the last month or so, every single day at the park has been, people did a pretty good job of distancing, but pretty packed. You could just tell people needing to be outside. And starting Monday, the park was empty, which is kind of shocking. So I don't know if everybody that was going to the park automatically went to the beach. So it's going to be interesting to see how things continue to progress. Speaker 1: Yeah. Interesting in the state difference too. Obviously, you guys are in Florida, I'm in North Carolina. Your restaurants are doing outside dining and limited seating. We are in our phase one, but that's not allowed. There's still absolutely nothing inside restaurants at all. It's still take out only. Which, it's a strange point, we went to pick up some stuff for Taco Tuesday and my wife wanted, she said, "Let's do Taco Tuesday." And there was 25 people standing outside waiting to get their order. It's like, you might as well just let them in or let a portion of them in, because there's still that many people, there were in a pretty small window in a strip center trying to wait by this one door. So yeah, it's interesting how the different areas are doing all the different things. Speaker 1: So we'll hope for continued improvement and all those good components that come with it. And I think what we're going to do, we'll wrap this up. I just wanted to touch base with you guys and just see how things are going. So I'm glad we just had a little bit of an informal chat, not necessarily the X's and O's this week. But I was going to ask you a question, just a fun little hypothetical I've been asking all this week. What's something you're looking forward to? If things get back to normal, what's something you would enjoy seeing or doing once again? John? John: So I'm looking forward to not doing swim lessons in my pool and bringing them back to a school, because I've been YouTubing how to teach a one year old and a four year old how to swim and I'm not a very good teacher. So that's something that I look forward to. Speaker 1: Okay. Nick, what about you? What's something you look forward to? Nick: For me, I just really look forward to sitting with some friends, watching sports, and perhaps eating something that tastes very good and drinking something that tastes very good. Speaker 1: There you go. Nick: Yeah, that's what I'm thinking about. Speaker 1: All right. There you go. I imagine neither one of you are in a boat alone for that one. There's probably a fair number of those. Real quick, I was going to ask one more thing before we go. How's your school systems looking? Ours have said that schools, as of now, plan to reopen in mid-August, which would be obviously for the next school year. I imagined since you guys sound like you're ahead of us, they're probably having those chats too? John: I think the school, the current year is definitely not going to be ... Nick, if you know, just jump in. I believe the current year is not going to be going at all. Speaker 1: Right. John: The plan is to start back up, which is mid to late August down here. Speaker 1: Sounds like the same thing. Yeah. Okay. Nick: Yeah, yeah. I think around the same idea. Speaker 1: All right, well there you go. So- John: And I'm sure all the parents are looking forward to that happening. Speaker 1: I think that was one interesting side effect to all this. People are like, wow, the whole teaching home thing, it's a lot harder than people think it is, so. Nick: Yeah, I'm thinking that the teacher unions are getting their talking points ready to roll for a few months from now and working on a bump in pay, for sure. Speaker 1: Exactly, exactly. Well, all right guys. Well, thanks for your time this week. I appreciate it, as always. I hope you guys continue to stay safe and stay sane. And folks, if you need some help, you've got some questions. Well, first thing, definitely subscribe to the show. We'd certainly appreciate it. And you can do so by going to Retirement Planning Redefined, you just search that out. Retirement Planning Redefined on Apple, Google, Spotify in the little search box for podcast. Wherever you get your podcasting apps, just type that in and you can find it and subscribe to it that way. Or you could go to their website, which is PFG Private Wealth.com that's PFG Private Wealth.com. Speaker 1: If you're already subscribed or a client, then that's great. We certainly appreciate you tuning into these. And if not, give them a call if you've got some questions or concerns, (813) 286-7776. That's (813) 286-7776. But definitely hit that subscribe button and we'll see you next time here on Retirement Planning Redefined with John and Nick, financial advisors at PFG Private Wealth.…

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Ep 19: Market Downturns And Recoveries 19:23

5 years temu19:23

19:23

Today our discussion revolves around bull and bear markets. We will break down the basics of what each of these types of markets mean and take a look at some historic trends that are relevant to this topic. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Marc: Hey, everybody. Welcome into this edition of retirement planning redefined. Mark here once again with the guys from PFG private wealth, John and Nick joining me as we talk about investing, finance, and retirement from the confines of our own happy homes as we're still on lockdown doing this thing here. Everybody doing okay? Doing safe, John, how are you bud? John: I'm doing good. I'm doing good. How are you? Marc: Not too stir crazy? John: No, no. I get out a lot, do a lot of walking, some biking, and I got some kids to entertain me, so that might make me a little stir crazy, but not sitting in the house. Marc: Yes. I see a lot of people doing the homeschool thing and they're like, "Mommy needs a teacher work day bad." All the moms that are doing homeschooling and whatnot. Mine's grown, so that would be frustrating and kudos to those folks that are doing that. Nick, what about you? But how are you? Nick: Pretty good. The area that I live in downtown in St Pete, the waterfront's pretty close by, so I have been at least every other day either taking a jog or taking a walk over there. The water tends to put your mind at ease with it. Marc: Isn't it interesting how like ... I mean, could you find the time to do that before? It's almost like we do get this interesting time to reset and appreciate some of the little things that we just seemed to gloss right over before. Nick: Yes. Living in the area, I've tried to make sure that I take advantage of it, but even with that I still hadn't always. It's interesting, you do see from the standpoint of ... St Pete, it's pretty well known. There's a lot of waterfront parks, so they've done a good job protecting the waterfront and there's definitely a lot more people. You can tell because I would try to snack a run during the day and that sort of thing previous times, there's definitely more people out than was typical. People are doing a pretty good job of distancing themselves, but there's definitely flocking to that sort of environment. Marc: Yes, you've got to be careful, if you get too many in there, they'll wind up shutting it down. They'll lock it. Nick: Yes. Marc: I know, I saw that with a lot of places like here where I'm at, we'd go out to the lake or whatnot and you were allowed to go use the ... the parks are closed, but you could go to the state parks, but you could go to the lake. You go get on the lake, you get on the boat, and then people were hanging out putting their boats together, chit chatting, and drinking beer or whatever the case might be. It's like, no. Sure enough, they closed the lake. You've got a whole lake stay, stay apart from one another a little bit. Just right around your boat, do some fishing, whatever. Marc: Don't make a party out of it, but they did, so they closed the lake. Well, it is what it is. It's part of this paradigm we're living in. Hopefully, we're getting closer. Every week is bringing us obviously bad news, but there's some positives, there's some things that are starting. We're starting to see numbers decrease in places here and there, so hopefully that will continue on. We're going to continue on with our ongoing series that we've been doing the last couple of weeks about just in general things to think about during this downturn. Guys, we're going to pick it up this week with market downturns and recoveries. John, why don't you kick us off with our friend, the bear, since we were in the long bull forever in a day it seemed like? Now, we're hearing about the bear so much. Just give us an overview here. John: Yes, so just want to define kind of what is a bear market and basically a bear market is when there's a 20 percent drop from the recent peak. Let's just say like a 52 week high, so when it drops 20 percent from that standpoint, we're now considered in a bear market. Just a little bit of history. Since 1926, there's roughly been about 16 of them and they happen on average about every six years or so. Just some tidbits. When you're dealing with this type of bear market, and we're probably repeating ourselves from our last sessions, but you never want to be selling off of your portfolio, especially at the bottom. It's really important during this time frame just to remain focused and just remember it's a longterm strategy. Just stick to your overall plan. Marc: Okay. Those are some things to kind of keep in mind with the bear marker. Nick: I would say too real quick, just one last thing on the bear market because we have gotten a few questions on it. Some people had asked about once they finally checked in on their 401K and they're making their regular contributions, should they stop making those contributions, and will that help them? I'm quoting a few people here, but, "What's the point of putting in the money if I'm just going to lose value on it in a week? Those sorts of things. That just has to do with averaging into the market, again buying on a discount. Even though it's going down, the next contribution that you make will be able to buy in at a lower price. When things bounce back, buying in at those lower values are what help people bounce back faster. Marc: Yes. It's all part of the strategy, right? With every situation, you want to make sure that before you take any action of any kind that you're checking with your advisor and how your plan is situated and set up or if you don't have one, get one because that's going to help you answer some of those questions as to how you may or may not want to look at different vehicles, different investment ideas, strategies, so on and so forth during anytime, but obviously during a downtime as well. Since we covered the bears, let's talk about the bull. Actually, I think at the time we're taping this, I saw that Germany posted and said one of their indexes pulled out of the bear. That might be encouraging news, but what's a bull market, Nick? Nick: Really, the bull is just kind of the opposite where we're talking about a 20 percent increase in stock prices. Historically, there's been around 14, about 14 bull markets. Really, these going to last for quite a bit of time. I mean, the reality is that post great recession of '08, '09, for all intents and purposes, we've been in a bull market situation for ... a previous too, this coronavirus induced issue over a decade. The tricky thing with bull markets when they, especially one that lasted as long as the most recent one did, is people can become a little bit complacent. They can forget what feeling any sort of loss feels like or looks like. Again, redundancy can sometimes be annoying, but it does help to kind of get it to stick in people's head. It goes back to the importance of the plan, sticking to the plan so that again we're taking that into consideration and helping us make our decisions. Marc: Well, if we're going to talk about the history of a little bit, and John, you started to touch on in some of that, let's jump in, kind of kick off, and discuss a few of the things because we called this market downturns and recoveries, so let's look at a few of those, some of those I guess peak moments and how they looked on the down as well as on the upside. John: One of the more famous ones is black Monday, October 19th, 1987. I was a little boy then, so I wasn't really paying attention much to what was going on. For some of our listeners, they might remember. It was basically triggered by a computer as tradings and basically the fair evaluation of the dollar against Germany's currency. John: That kind of caused it and it was actually pretty quick compared to some other ones. It lasted about three months. In total, the S and P pulled back about 33 percent. In turn, we've talked about what follows the bear is typically the bull. Recovery took roughly 18 months and then as Nick mentioned, basically in the initial phase is when you see a lot of your gains, so in the first 12 months after that, the S and P gains were about 21 percent. That's why it's important to just stay the course and always stay invested because you don't want to miss that initial upfront of the basically rally up. Marc: Got you. We've heard a lot of comparisons to this one, the drop of 87 and the speed of it to what we saw obviously with the beginning of the coronavirus as well. We probably saw a lot of that on the news from time to time. Nick: For sure. We just want to emphasize that this is not to be confused with the Showtime show, Black Monday, although for those that haven't seen it, it is pretty funny. It is a very adult to show. In these times, if somebody is looking for a little bit of dark humor and levity, the TV show on Showtime's really funny. Marc: I'll have to check that out. Let's go to the big big boy here because that's probably the one that's most ... obviously, besides this, fresh in our mind is '08. John: In '08, the main trigger there that caused it was really the housing market in the US basically collapsed. That lasted really from late 2007 to 2009, roughly 17 to 18 months. The dip for the S and P from the peak was about roughly 57 percent down from the highs. The recovery took roughly three years or so, but the 12 months following the pullback, the S and P gained about 68 percent so again, important to stay invested because you just don't know when that rally is going to happen. Marc: Yes. The recession, that one ... I think that's where people also ... guys, I'll let you continue on with this analogy in a second, but I think that's where people are really also just taken aback about how to handle this one because there were economic indicators with the other one. There really wasn't with this, this is a completely different animal so it's really hard to say how ... we've heard them say it's going to bounce back in a V. Some say it's going to come back into U. As far as it's going to come down, go flat for a while, then come back up sharply or whatever. It's so hard to predict because this is a medical health thing. We really haven't seen this before. Nick: Yes, it's definitely a different sort of situation. Probably a month back, we had sent out an email blast that talked a little bit about some of the previous pullbacks with health related or virus related things. Those were definitely different because we never had this sort of social distancing or... Marc: Mass closing of businesses. Nick: Yes. Mass closing and those sorts of things. It will be interesting to see the impact over the next 12 to 18 months. The market's definitely been dialed in or trying to dial in to what sort of timeframe we're looking at where people can start to kind of get back to work. There's definitely much less intermediate term fall out in this so far than we had in the recession. Marc: Well, some people would say that this was egged on, some of this has been made worse by the Trade Wars and all those kinds of things that we were working our way through that as you know at the end of middle of '19, end of '19. Going into '20, I think we were supposed to start the phase one and all these different kinds of things, so there's a little bit of data there too. John: Yes. There was a pullback with the Trade Wars, trade war with China and stuff like that. That was also a pretty quick one where basically the downturn was about three months, S and P went down about 20 percent from the high, recovery was four months. Again, it just bounced back fast and basically almost 38 percent in the next 12 months following that. Nick: Just for clarity on the time period, this was the fourth quarter of 2018 where the year had started off pretty good. Then, we had that quick drop in the last quarter- Marc: After Christmas there, yes. Nick: Their year end statement at the end of 2018. Then, 2019 was such a good year. Part of the reason it was such good year was because of that drop. It's interesting because people remember how great 2019 was, but they tend to forget what happened at the end of 2018, which is like when your friends go to Vegas and they brag about what they won, but now what they lost. That sort of thing. Marc: You've been talking to my wife again it sounds like because I haven't been to Vegas in a long time with everything that's going on. In general, a lot of the information if you're going to take from this, that's actually a good point about Q4. I mean, it dropped so fast around Christmas of '18 and it was bouncing back pretty darn fast. You can miss those days. A lot of the data in there that John shared, it seems like within that first year, there was really potential for missing out on some of those best days. That's where your timing in the market becomes such an issue. You're not going to know that. Nick: Yes. It's really difficult in ... even just the last few weeks have shown the importance of missing some days. There has been some studies and data where one example that we found was if somebody started with a hypothetical investment of $100,000 in 2000 and if they stayed invested in their same allocation the whole period of time, their balance would be at the end of that period, so it would have been at the beginning of this year, they would have been at about 324,000. In the study, the randomized data showed if they missed 10 days of upmarket performance and it was kind of spread out or the time, so it's not a consecutive day thing. The balance instead of the 324K, had been closer to 162K. If they missed 25 days of the biggest, upswings, they actually would have lost money and ended up at about 82,000. The emphasis on that is really not necessarily the specific days and that sort of thing, but it's really staying invested, not trying to time too much because somebody that just stayed the course and made good decisions throughout that time, they ended up benefiting the mos. Really, that has played out again over the last few weeks where we're about 20 percent off the bottom as we speak right now. A lot of that's come really between three or four days. Missing those days is not ideal. Marc: Well, what's the overall conclusion, the kind of lesson if you will, to take from some of this? John, any thoughts as we wrap up this week? John: Yes. The overall conclusion of I think everything we've been talking about is really just staying invested and staying in your initial course of your overall plan, that cost financial plan. Then, that backs into your investment strategy. You really want to just stick to it as hard as it might be. You want to block out any noise that you're seeing in the media, just focus on your overall goal, just stick to your, stick to your plan, and just really just try to stay invested as best you can. This is where it's very important for people that are currently retired, that you've set up, I think Nick mentioned in one of our last sessions, a liquidation strategy where basically you have buckets to pull from during this volatile period so you don't have to sell out on your stocks. You really just want to have everything coordinated correctly and again just stay the course. Marc: Yes, I think that's where a lot of people too get confused, right? I mean, when things like this happen, we see the market's dropping or whatever, we start to panic, and we think what's it doing to our retirement or our potential retirement. Again, depending on how your strategy was set up and how your plan ... hopefully, you had one was in place. It may not have affected you as much as it maybe affected your neighbor who didn't have one or so on and so forth. It really all comes down to working with an advisor, having a plan and a strategy in place that hopefully, again you had in place prior to this, but if you didn't, don't feel like you need to sit on your hands and wait until this is all done and over with. Marc: I've seen email questions come in, in different places, different things. Should I not invest? I think Nick, you brought it up I think even last week on our last time on our podcast that, should you still be putting money into your 401k during this time period? All those kinds of things, get those questions answered for you specifically by working with and talking with an advisor. If you're already working with John and Nick and you're listening to the podcast because you're learning more information, great. Then, you're already on that right path. If you're not, or you know someone who's not working with an advisor, let them know, tune into the podcast, check it out, have them give them a call, and have a virtual meeting. Go through the process and see if there's things that need to be tweaked or adjusted because we're still going to want to retire. Marc: I'm 50 and while I still got several years to go before I get to retirement, I still want to make sure that I'm planning for that. I want to get to that point and so I can't let this thing just derail me entirely. Work with an advisor, have those conversations. (813) 286-7776 is how you can call and talk with John and Nick. They'll get you set up for a Zoom meeting, go to meeting, or whatever kind of virtual conversation to get the ball rolling, but you can have a talk about your situation with the guys at PFG private wealth, (813) 286-7776 is how you call them. Marc: Subscribe to the podcast. Go check them out at the website by going to PFGprivatewealth.com. That's PFGprivatewealth.com. While you're there, subscribe to us again on Apple, Google, or Spotify. Share it with someone who might benefit from the message, all that good stuff, and we'd certainly appreciate it. Guys, we're going to get out of here this week. Thanks so much for your time. We went a little bit longer than usual, but that's okay. Good information here this week on the show. John, appreciate you. Stay safe and stay well. Nick, you too, my friend. Enjoy those walks and we'll see you soon. Nick: Take care. Marc: All right guys, take care. We'll see you next time here on retirement planning redefined with John and Nick.…

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Ep 18: Investing In Down Markets 17:16

5 years temu17:16

17:16

It can be tough to see the silver lining in times of volatility, but when the market is down oftentimes there are some great investing opportunities. John and Nick give us some key tips on how to take advantage of a down market. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Mark: Hey, everybody. Welcome in to this week's podcast. Thanks so much for tuning in to Retirement Planning Redefined with John and Nick from PFG Private Wealth Financial Advisors. Going to talk with me again about investing finance and retirement. Hopefully you've been listening to our series we've been doing the last couple of weeks on, well, really just what's going on in the world in general. And we're going to continue on with that theme by talking about investing in down markets this go around. First off, let me say welcome in guys. Nick, how you doing, bud? Nick McDevitt: Doing well, doing well. How about yourself? Mark: All right. Hanging in there considering all things. Hopefully everybody's safe and staying home and staying with the shelter-in-place and all that good stuff and not going too stir crazy. John, how you doing, buddy? John Teixeira: I'm good. I'm good. It's funny, as I'm quarantined here I'm taking a lot of walks so I'm actually meeting more of my neighbors now that I'm supposed to be stuck at home. Mark: Isn't that interesting? All the different things ... So many conversations had about how our life is so different. If you want to look silver lining, there's a lot of silver linings we can find in this. I know it's tough when people are getting sick and passing away and all, but there's so many things that we're slowing down and maybe realizing stuff that we didn't need or we didn't have to use or we didn't rely on. Mark: I was talking to somebody yesterday and they were ... This sounds like I'm joking, but they're like, "My Starbucks budget. I didn't realize how out of control it was." I know that's a minor thing but coming out of this, I want to think about how to be better about not drinking so much coffee, or at least drinking so much overpriced coffee. John Teixeira: You can ask Nick how he's doing with that. His Starbucks budget's pretty high. Mark: Was it? How you doing, bud? Nick McDevitt: It used to be until I bought myself an espresso machine ... Mark: Okay. Nick McDevitt: ... About a year and a half ago. Mark: Yeah? Nick McDevitt: Yeah. I took care of that expense issue a little while back. Mark: But you can relate, then, to what they were saying, right? They were like, "It was out of control!" Nick McDevitt: Oh, for sure. Yeah. Especially because I typically drink lattes instead of just regular coffee. Mark: Right. Nick McDevitt: Those are a little bit harder to make at home. Mark: Six bucks a pop. Seven bucks a pop. Whatever it might be. Nick McDevitt: Yeah. Yeah. So, I brought that cost in-house and good machine pays for itself pretty quickly. Mark: Yeah. There you go. See, look, there's an investing tip right away! Nick McDevitt: There you go. Mark: Right off the bat. Boom! A bonus thing you didn't know. All right. Let's talk about investing in down markets, guys. John, talk to me about proper asset allocation. Let's just jump in and spend some time on some of these pieces, okay? John Teixeira: Yeah, yeah. I think we want to recap from our session the last time where we really talked about planning. We go from the standpoint of the plan really dictates your investment strategy. Once you have your plan in place, it tells you, "Hey, this is how you should be invested, whether it's conservative, moderate, aggressive growth for income." But once you determine that, you really need to develop the right allocation of investments within your portfolio. And once you determine that, hey, I'm going to be ... I'm just throwing this out there ... 60% equities and 40% bonds, you really want to stick to that strategy. And when you're building that portfolio you want to put into things like diversification as far as not having all your eggs in one basket and really develop a zig and a zag in your portfolio. John Teixeira: In reality ... It sounds kind of weird to say, but you always want something going down while the market's going up, per se, because what will happen is when the market's going down hopefully that asset class with be going up. And that's one that we do in our portfolios. We're really trying to make everything work together as a unit. And part of that is ... I'm going to throw out a term people probably haven't heard ... Is correlation of assets. And that's how we can determine exactly how are these assets correlated so when one goes up, is one going down? If one goes up, is the other one not doing anything at all? And when you structure and put that all together you can really build a good portfolio for someone to weather the storm a little bit in this type of volatile market. Nick McDevitt: Yeah. And zig and zag also happens to be John's favorite dance move as well. He really tries to tie into that as much as he can. Mark: Do the zig, do the zag. All right. There you go. I can see you. John Teixeira: Nick's just a little jealous. He has no zig and zag. Mark: Ah. Nick McDevitt: Yep. It's true. Mark: I would have pegged you as a stanky leg kind of guy, myself. John Teixeira: You got me right. Mark: All right. Nick, what's your thoughts here? Nick McDevitt: Really, from the asset allocation standpoint, really what you need to take into consideration to determine that the plan helps create the parameters and what makes sense from a planning standpoint. But then there's also the emotional aspect of it and people's previous and historical experiences with the market can play in. Any client that we bring in, we go through a risk tolerance process where essentially they're answering questions that have to do with risk. Typically, it's probably the process that people like the least ... Mark: Right. Nick McDevitt: ... Because often times, they want us to tell them. "Hey, this is what you guys are here for, right? Is to help guide us through this." And they answer to that and the feedback on that is, yeah, we're going to tell you if you're not necessarily taking enough risk for the plan or if the answers you're providing are outside what your plan is telling us makes sense. But at the same time we want to make sure that the amount of risk that they are going to take is something that's comfortable to them, even during uncomfortable times, which, obviously we're in right now. Nick McDevitt: That work up front. One of the things that we really do emphasize with people that we work with is we do a significant amount of work up front. Our process is probably a little bit more in depth and tedious than a lot of other advisors out there that tend to focus on, "Hey, let's get the money in and then we'll dial in after that." Where we say, "Let's get the plan done. Let's do the work up front to make sure that we don't have to overreact or make emotional decisions at the time where we are the most emotional." We can kind of revert back and say, "Hey, remember, this is why we did what we did. Here's the process that we went through. We spent a lot of time doing this. This is why it makes sense." Nick McDevitt: Making sure that as we approach retirement we have a plan for adjusting the risk and early into retirement. But also, making sure that we're not getting out of all market risk. Not being in the market has a cost, an opportunity cost, and that's its own risk. That work that we do up front in determining that asset allocation and the risk really helps us weather through the tough times. Mark: That's really great points, here, as we're talking about investing in down markets. Again, proper asset allocation, risk ... Obviously, those are all key factors in there. What about just the value that an advisor brings? I've been saying for ... I do tons of shows and podcasts all across the country and I've been saying for a while now that as we're moving through this Coronavirus epidemic, never been a better time to have an advisor and, really, in so many ways you should have one anyway. But going through this, people aren't sure where they stand or they aren't sure how things are going to look on the other side. And I just think that the value of an advisor is immeasurable right now. Nick McDevitt: Yeah. We obviously have a little bit of built-in bias that we do feel that we add value and we are important, but the reality is that there's been studies that have been done and Vanguard has done a pretty good study and we'll talk about that a little bit, but the reality is that during times like this having someone to share concerns with, to be able to talk to ... One of the things that we really emphasize early on and when we work with people is the importance of communication, where we want to be heavy on technology, heavy on communication. We want to make sure that people are comfortable having difficult discussions and conversations with us because that allows us to really do our job. Nick McDevitt: We're really hamstrung when we don't have the information that we need. So, when we can be a sounding board for clients ... Even though I know all of these things, I will say I was still a little bit surprised how far a five or 10 minute conversation with clients over the last month went where, really, they just needed some affirmation, a reminder of what's going on, a reminder of what we're going through, and that although it's looked different we've been here before. And the feedback that we've gotten from people has been very positive and that's where some of these studies ... And John can talk about it a little bit more in detail, the Vanguard study, where the studies have shown that the performance that people who work with an advisor have versus people that don't work with an advisor ... There's a pretty drastic difference. And part of that is because of the work that goes up front. It's not just, "Hey, somebody picked better investments at different points of time." Really, it has to do with the plan and the overall strategy and having a game plan and implementing those sorts of things. John Teixeira: Yeah. And that study, Vanguard did it. It's called Advisors Alpha. And basically, the study came out to showing that having an advisor brings about an average of three percent increase in the portfolio over the years. And really, that's in a segmented time period where the market's doing really well or the market's doing really bad; where advisors help clients take emotion out of it. And if you here a dog barking, that's my dog. We really help take emotions out of it. And one of the things that I'd say ... When things are going really good, I'd say we have some people that ... "Hey, maybe I should get more aggressive." And one of our jobs is to make sure that they stay the course in what we initially set up out front. John Teixeira: And the same thing when the market's been volatile as last month, it's, "Hey, let me sell out. Let me get more conservative." And it's like, "No, let's go back to our initial plan, our initial strategy. Let's stay the course." And I think that's one of the biggest values that ... One of the values that we bring to our clients is really just helping them take emotion out and realize it's never as good as it seems, it's never as bad as it seems. And let's just stick to the plan and the strategy. Nick McDevitt: Yeah, and part of that, too, is depending upon how closely they follow things like the news or what's going on, the market tends to be a leading indicator in things. And so, this last month and a half has been a good example of ... Before people were seeing the negative impact in their communities of the virus and the things that were happening and as they were still going to work and, really, their day-to-day life hadn't started to change yet, the market was racing down. Now, we're pretty much 20% off of the bottom and from a societal standpoint and from a lifestyle standpoint, people's biggest impact is currently happening. They're currently living that. And yet, they're seeing that this market bounces back and that's really a good example of what happens. And when you let the emotions or even sometimes ... It sounds weird to say it, but sometimes logic, get in the way you can really have a negative impact on your overall investment strategy. Mark: No, and I get what you're saying about the logic portion of it as well because we ... If anything, logic seems to be going out the window anyway, right now, for a lot of things. All this new paradigm that we find ourselves in, it's very difficult sometimes to figure out which way is up and which way is down. And you're talking about the markets and, obviously, we've seen huge, massive swings. At the time we're taping this particular podcast, we've had a couple of decent days in the room. But that, John, does create buying opportunities or at least the conversation to have with your advisor. "Hey, is this a good time to buy? Is it a good time to look into this, that or the other as part of the overall strategy?" John Teixeira: Yeah. And one thing we like to look at, before we jump into that, is really, what's your time horizon with the money? Is this money that you're going to need within the next year? You may want to not consider buying in in a volatile market. But if you're looking at a five plus year time horizon, I would say this is an excellent time to really consider buying some equities. Looking back at 2008, and I'll preface it by saying past performance is not indicative of future performance, but there were a lot of stocks that, I'm sure, if you look back and said, "Oh, man, I wish I'd bought it at that price," just what they've recovered over two or three years after the 2008 recession. John Teixeira: We have had some people calling in saying, "Hey, this is a great time to buy. What do you think? I'd like to put some money to work for me and take advantage of some of these stocks that are on sale." And when you say it that way, it makes a little bit more sense because if you go to the store and it's like, would you rather buy stuff at full price or when they're on sale? That just brings it full circle to help people understand that a little bit more. Nick McDevitt: Yeah. I would just say that there's always a silver lining to any sort of situation and what John emphasized about the buying opportunities and that although things are going to continue to be difficult in the "real world", at least we've got a little bit of stability and a reminder for people of how these sorts of things play out in the marketplace; how they happen quickly. And really, the importance of having an advisor that can help guide you through it so that you don't make decisions that you're really going to regret in the long-term. Mark: And as we're finishing up with the podcast this week, guys, that's the message I've been trying to convey over the last couple ones. I think we're going to continue to push that message, as well, is that while so many things are out of our control when it comes to the virus and when we're off of lockdown or whatever the case might be and we feel like we're sitting on our hands, there's still a lot of things we can be proactive about. And thinking about our financial future, our retirement future on the other side of this is one of those things we can certainly do. We've got more time on our hands, so put some thought into this. Have some conversations. Talk with your advisor. Work with an advisor. Find an advisor. Mark: Whatever the case might be, there's a lot that can be done virtually in this time frame. And people will be saying, "Well, I can't go drive around and see people." No, you can't. But you can listen to podcasts like this one. You can listen to John and Nick, things that we're talking about. You can reach out to them and let them know you want to talk. They can set you up with a virtual Zoom Meeting like the whole world's doing. We're doing one right now. We're doing the podcast through Zoom Meeting. Mark: Reach out and let them know that you want to have a conversation about some of the things we've discussed here today on the show when it comes to investing in down markets. And give them a call at 813-286-7776. Again, 813-286-7776. That's the number you call. Let them know that you'd like to chat and they'll get you set up and taken care of for a time that works well for everybody. You can also go to their website PFGPrivateWealth.com. That's the name of the company. PFGPrivateWealth.com. You can subscribe to the podcast while you're there on Apple or Google or Spotify. Share it with those who might benefit from the message. And also, of course, check out and learn more about the team; about John and Nick, at PFG Private Wealth. Mark: Guys, thanks so much for your time. I appreciate you, as always. Hope you're staying safe and sane and not too stir crazy. Nick McDevitt: Thanks, Mark. John Teixeira: Thanks, you, too. Mark: All right, guys. Take care and I'm going to need to see some dance moves on the next episode. Just saying. I've heard about it. Nick McDevitt: We'll take that under consideration. Mark: We'll go video next time and we'll see some dance moves. All right, folks. Take care of yourself. Have a great week. Have a safe week, and we'll talk to you soon here on Retirement Planning Redefined with John and Nick, financial advisors at PFG Private Wealth.…

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Ep 17: Planning Through Volatile Markets 14:07

5 years temu14:07

14:07

We talked last time on some of the financial impacts the Coronavirus had caused, but now we will discuss how to plan to get through tough times and market downturns. John and Nick will talk about a few suggestions they have when they see situations like this and how to withstand a volatile market. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Mark: Hey everybody, welcome into this week's edition of Retirement Planning Redefined with John and Nick of PFG Private Wealth. Here today again to talk some more about the, well the coronavirus, like we can't not talk about it. It's the only thing going on in the world it seems like. And we're going to talk about retirement planning for this volatile market. Mark: So guys, welcome in. How are you this week? I'll start with Nick. How's it going bud? Nick: Oh pretty good. Just trying to be a voice of reason for people during this crazy time. Mark: Are you doing your part, staying safe, staying home, all that good stuff? Nick: Yep, I [crosstalk 00:00:32]. John: So let me jump in here. Nick's been doing his social distancing for the last three years so he's pretty good. Mark: Good stuff. How about you John? Nick: For at least three weeks, at least three weeks. Mark: At least three weeks? Yeah. Mark: How you doing John? John: I'm good, I'm good. I'm more upbeat today. I feel rejuvenated. I'm ready to roll. Mark: Well that's good. And that's tough, that's a challenge we're all going to face because a lot of us have been doing this for about three weeks already and we're looking at another month going through April at the time we're taping this. We've still got a few weeks to go, so we'll see how it plays out. But there's news every day, it's changing all the time. So we'll see how this plays out. But we thought it'd be worthwhile to at least go through some conversation about retirement planning through or during this volatile market. So let's just kind of jump in and talk about the overall importance of a strategy. Nick, I mean we talked about it long before this downturn happened and more than ever I think that it benefits to work with an advisor because it's a little bit easier some would say when markets are up and things are good and everything's going swimmingly well, than it is during downturns. And if you don't have that roadmap, it certainly can make things more cloudy. Nick: Yeah, it's been interesting. John and I both started in the industry in about '06, '07, so right at the kind of onset of the recession. And after we kind of got through that period of time, people were still afraid of it and what happened in that period of time for three, four, five, six, seven years. And since the markets have been going up for so long, planning has become more prevalent and people have understood that it's an important thing to do. It seems like some have done it almost because, okay, well this is what we're supposed to do, so we're going to do it. Nick: And now the feedback that we've gotten from clients is that it's really kind of clicked to them how important the planning is and how much peace of mind kind of re reviewing it and understanding parts that maybe they didn't quite get when we first set up the plan or in the first couple of reviews, realizing the importance of the plan as we move through times like this after having kind of a smooth sailing decade really. So we can't emphasize enough the importance of clarity and even just helping to avoid rash and unsmart decisions we can kind of put it that way. So the confidence level that we've seen for people that have a plan versus those that don't, from the standpoint of we've been introduced to new clients and we've gotten referrals kind of through this period of time and it's definitely a drastic difference. Mark: Yeah, definitely. Mark: Well John, let's talk about some of the things that the plan determines. Let's go through a few things to consider in there. John: Yeah. We like to say the plan determines what type of investments you should be going into and what strategy within those investments. And that's where Nick and I really try to focus on, "Hey, let's get an understanding of what your needs and goals are. What are you trying to accomplish?" And once we determine that, secondary always comes the investments and one of the things that with the investments go, we try to curtail or develop a comprehensive strategy for each individual person because everyone's different, everyone's risk tolerance is different. But the plan really dictates how much risk you should be taking. John: So we've had scenarios where basically we're doing a plan and the person when we first meet they're pretty aggressive and then when we do the plan it's, "Hey your plan works very strong at four to 5% rate of return, so why are we taking all of this unnecessary risk?" So really when you do something like that, you could be putting more scenarios where failing happens in the plan because there was a pullback. So we really have the plan dictate how much risk you should be taking, which with our clients, if we see it working around four or 5%. Not that we just aim for that, but we kind of scale back on the risk we're taking. Which I'll tell you right now, some clients are appreciative of that strategy, of just saying, "Hey let me gear what I'm trying to aim for a rate of return based on my plan." John: Other things that we really look at is someone's risk tolerance, which I think in the last month or so people's risk tolerance kind of shifted a little bit because they saw some real volatility because we've been almost in that 10 year bull market with not a lot of pullback. So we really try to figure out, "Hey, what's someone's risk tolerance and how much can they mentally afford to lose?" There are some scenarios where we might stress test the plan and that's a case by case depending on the individual. But it's important that you kind of take a look and just stress test it to figure out exactly how will my plan work with any type of market pullback? And then we're going to touch on this later in the next session next week, but importance of kind of building the right asset allocation in your overall investment portfolio. Mark: Well Nick, a lot of people had the question, especially with the heavy downturns, it came so fast, obviously in response to the virus and so on and so forth. You have people saying things like, "Why don't you just close the market?" Right? They want you to shut it down or whatever. And we thought, well we closed it a little bit during 9/11 but that was a little bit of a different scenario. But you're effecting liquidity by doing that and that's another key component to an overall plan is understanding liquidity as part of the strategy. Nick: Yeah. So the speed at which this happened, one article that I read had pointed out that this bear market happened in half the amount of days as the one during the great depression, which was kind of an eye opening sort of thing to think about where it really only took us about 21 days to get here. And so the speed at which that happened, literally when you think about it, in between the time that people get their monthly statements, they've lost a significant amount of money. So to tie into the planning, and this is something that we've tried to reemphasize with clients as something that we take into consideration, but I think it's also helped maybe shed a little bit of light on us spending a little bit more time talking about it with clients as we're putting together the plan is having a liquidation order and a liquidation strategy. Nick: And so what we mean by that is, people tend to look at their money as one pot of money and they don't necessarily think about it as, some people refer to it as the bucket strategy and a lot of times that makes the easiest way to understand, where we have short term, mid term, long term money and in understanding that even if you are two years from retirement or in your first couple of years in retirement, et cetera, we still have a long time horizon. And we don't just shut things down from the standpoint of the overall investment strategy and shifting the cash and those sorts of things. Nick: So we try to review and make sure when we have clients that are taking monthly withdrawals, we usually look to set up six to 12 months of expenses, dependent upon the client, dependent upon what they're comfortable with from a risk standpoint. Set up six to 12 months in their account of cash so that they know they have that income. The emphasis that we've made with clients on keeping a cash reserve where some feedback that we've gotten over the last few years, "Hey, interest rates are so low. This money's just sitting there. I hate not having it do anything for me," et cetera. Nick: And we've kind of tried to hold the line and tell them, "Hey, we understand but that money will come in handy." And really the peace of mind that people have when we go through it and we kind of walk them through. It's like, "Hey, look at between the money that you have in cash in your bank account and the money that we have sitting in cash to be sending you your withdrawals, we have a year to two years worth of income without you having to sell any of your other holdings, which gives your money time to bounce back and not realize these losses that we've seen," really starts to help people understand the importance of having that liquidation order and liquidation strategy. Nick: And then also, from the standpoint of having the big broad based game plan, having a premise or an idea of when we're going to start social security, but then understanding that, "Hey, when things change like they are right now," saying, "Hey, let's look at the numbers. Instead of us waiting another year and a half to start social security, let's go ahead and get it fired up now. Let's have that income start to come in that way you have a little bit more peace of mind, you have additional income coming in, we have to take less out of your investments." And as difficult as it is for people to think in the way of, "Hey, now's a good buying opportunity from the standpoint of your investments. Let's let that money work for you and try to get as much bounce back as we can over this period of time." So that liquidation order and how it fits into the broad based game plan has become really evident and important to a lot of people. Mark: Well, and speaking of importance too, one of the things that we're doing is we're all hunkering down in place and staying safe, staying home, all these things that we keep hearing now, but we can't just hunker down on our plan through this time period and just say, "Well I'll get to it after things start to get better." Right John? You want to revisit, you still want to have these conversations even during volatile periods. John: Yeah, and one thing we've tried to do during these last few weeks is really reach out to clients, especially the ones that are retired or are knocking on the door of retirement and revisit their plan and just let them know that, "Hey, even with this pullback, this is kind of where you still stand." And for the majority of them, they're still in a good situation. Again, partly because we had some strategies in place for a downturn in the market saying, "Okay, well now that the market's down, we have these other buckets, whether it's cash or whatever it might be, where it's not tied to the market and you can access it and let your investments recover." John: So I'll say in our reviews, when we show people their plan still works, it actually really provides a lot of peace of mind and it helps them make better decisions not to cash out where it's basically like, "Okay, you know what? Even though it's dipped, the S&P's dipped 20, 30% over this time frame, my goals are still going to be achieved so let's go ahead and stay the course." So that's where it's really nice just to have the plan in place. It's something you can always take a look at and say, "Hey, I know that the market's doing this, but how am I doing? And how is this going to affect my overall goals?" And when you evaluate it and say, "Hey, you're still okay," I think people feel a bit better about what they're doing. Mark: Yeah, I agree. And I think it goes a long way towards anything we're doing whether you're getting inundated with news every day on the virus and it's driving you nuts and you need a reprieve or you're getting inundated with market volatility or whatever. Sometimes having some clarity, having a calming voice, having someone to kind of talk you through some of these pieces certainly goes a long way. So it applies to your health, it also applies to your wealth. So reach out to the guys if you've got questions or concerns. That's going to do it for this week on the podcast. We talked a little bit about, again, how to plan through this volatile market. We're going to talk some more strategy on the next session. So make sure you subscribe to us on Apple, Google, Spotify, iHeart, whatever platform you choose. Mark: You can find them by simply typing in Retirement Planning Redefined, if you're using one of those apps and you enjoy a particular one versus another, just type that in the search box and you'll find it. Retirement Planning Redefined. Or go to their website, pfgprivatewealth.com, that's pfgprivatewealth.com and you'll see the podcast page there. You can subscribe that way and get all the episodes as they come out, check out past episodes. And of course, as always, before you take any action, if you have questions or concerns, please check with a qualified professional like John and Nick before you do so, and you can reach them at 813-286-7776 at PFG Private Wealth. 813-286-7776. Guys, thanks for your time this week, I appreciate you, for John, for Nick. I'm Mark and we'll see you next time on Retirement Planning Redefined. Nick: Thanks Mark. John: Thanks.…

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Ep 16: CARES Act 16:08

5 years temu16:08

16:08

The Coronavirus (COVID-19) is having a dramatic impact on our daily lives and many people are taking a huge financial hit from lost wages, a volatile stock market, and general economic uncertainty. Congress recently passed the CARES Act to try and help alleviate some of the financial impacts. John and Nick will give us the rundown on this new bill. https://floridadisasterloan.org/ https://www.sba.gov/funding-programs Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey everybody, welcome in to this edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. And boy, guys, welcome into yet another week of bizarro world. What's going on? How are you? Nick: Pretty good. Staying busy. We've just been kind of proactively trying to reach out to clients and put our psychiatrist hats on for the last few weeks. But we're kind of bunkered down working from home and just trying to stay in touch with everybody. Speaker 1: Yep. John, how are you man? John: Doing good. Doing good. Definitely doing the challenges of working from home with two little ones and homeschooling and all that, but we have my parents helping us quite a bit, so that's been a nice relief. Speaker 1: Okay, good. Yeah, I think we're all in that boat, so one good thing about all of this is we have the technology right now to continue to do some business and work. We're staying home, we're staying safe. So if you're checking out this podcast, don't worry, we're not doing anything wrong. We've been practicing social distancing, which is a new word in everybody's lexicon, for a while. We do these shows remotely anyway, so we're kind of ahead of the curve in that respect. But you can still work with John and Nick. If you've got questions or concerns, you can still talk with them via virtual meetings and things of that nature. And today we're going to break down the CARES Act a little bit. And Nick, I know you've got something you want to share real fast before we do. Nick: Yeah, the big thing that we wanted to make sure that we pointed out for this is that we see this session as more informative and not advice based. So we just want to make sure that everybody knows that sticking to the plan is ultimately the primary goal. And if any of the provisions of the new act and the new legislation are something that people think that may be something they need to take advantage of or use or might be applicable to them, we highly recommend that they consult with not only their advisor, whether it's us or someone else, but a tax professional as well. We just don't want to see anybody harmed longterm from any of the provisions inside of this act. Speaker 1: Yeah, definitely. Well, let's go ahead and jump into some of those provisions and let's talk about some of the things inside the CARES Act. Whoever the guy is or gal that gets the job of naming things there, they've been on a roll lately. They got the SECURE Act, the CARES Act, they all have these, whoever the czar of acronyms is ... John: Yeah, they definitely make you feel good, huh? Speaker 1: Yeah. Really. So hit us with some of these provisions, Nick. What do you got? Nick: Sure. So the first provisions that we're going to kind of review and go over are provisions that make people's money inside of their retirement accounts a bit more accessible without incurring penalties. So as an example, investors are now able to take out up to $100,000 in 2020 without paying the 10% early withdrawal penalty, which can be a big deal. So normally the early withdrawal penalty is a 10% penalty, so that penalty is waived for any anybody at any age. And then although that withdrawal will be a taxable withdrawal, taxes can be avoided if the money is replaced in those accounts within three years. So essentially what happens is, if someone needs to take out $50,000 from their investment account, their IRA, or 401k account, and they're taking it as a distribution, not as a loan, then the 10% penalty is waived if they're under 59 and a half. Nick: If they replace the money over three years, they can avoid any sort of tax on it, but they can also spread the tax on the distribution over three years, which then kind of builds in some flexibility and time to pay that back. So that's a pretty big deal. The distributions can be taken for corona-related issues, but really the rules are pretty loose. So we do recommend people kind of document what in theory they're using the money for and why, just so that they have some records. And for those of us out there that may need to take advantage of loans out of a 401k. So maybe you say, "Hey, I don't want to take a distribution. I want to take a loan." Typically, and these are usually plan sponsor dictated, but typically the maximum amount that somebody could take out via a loan is 50,000 and actually what's happened is they've increased that limit up to 100,000 of a fully vested balance. Nick: So that's a pretty big deal as well. And the biggest difference there, though, that people want to understand is when you take a distribution out versus a loan, a loan is typically going to have a preset repayment schedule. So if cashflow is a significant issue, the loan may be much more difficult to manage than the distribution. And the last thing, for those of our clients out there who are due to take required minimum distributions or RMDs, they are actually waiving that requirement for this year, which is kind of a big deal. So the thought process with that for people is, "Hey, maybe you don't need the distribution from your account, you don't need that additional income, and you're trying to let your account balance back after the hit it's taken in this market cycle. So why recognize the loss while you can keep the money in there for now?" And we just kind of pick up where we left off on next year. Speaker 1: Okay. John: Also, one thing with the loans as well that people should be aware of, and again it's up to the plan itself, is that if you leave your employer, so let's say you take out a loan and then something happens, you were to be laid off in a few months. Some plans have a provision where you have to pay back the loan within 30 to 60 days of your separation, so that's going to be important. If you're looking at that as an option, just understand that, "Hey, if I take out 50,000 due to what's going on right now," if you were to be laid off or separated from service in the near future, you may have to pay that 50,000 back in a certain timeframe. So it's just important to really understand where you're getting into and just really talk to a professional that can walk you through it. Speaker 1: Yeah. And obviously with the CARES Act, it's very fresh. At the time we're taping this podcast here, it just was a few days ago. So there's still going to be a lot of data coming out. The guys are sharing some good provisions and thoughts with you, but as always, as they mentioned, please check with a qualified professional before you take any action and see how it's going to affect you. So John, on that kind of front for a minute, how do you feel about these changes overall? Do you see these as being effective? John: Yeah, so I think anything to help people out during this time is good. Definitely a lot of people are nervous and scared, especially if you've been laid off or let's say your company is slowing down and you're not getting as much work. So this definitely helps alleviate some of that stress, saying, "Hey, you know what? I have this in my back pocket that I can access without the penalty, and there's nice rules in place where I can put it back in and avoid the taxes." So we ultimately think that's good. But as far as when we, and I believe our next session we're going to talk about planning, you definitely want this to be kind of a last resort type thing. You don't want it to be the first kind of bucket of money you go towards, cause when you save for retirement you want to set that money aside for retirement. John: So when we do planning for clients, we try to make sure that, "Hey, we have three to six months in emergency savings." Which basically this would constitute accessing that right now, it's an emergency and you have three to six months to kind of get you through your everyday living expenses. So we would say definitely kind of try to access some other money first. But this is the last resort. Again, it's just a nice thing to have in case you need it. Speaker 1: Yeah. Yeah. And I was going to ask you that. I was going to say, did it make sense from a financial retirement planning standpoint? But you kind of answered that question for me. So you kind of view this as hopefully people are going to view this as a last resort should they need it. John: Yeah. And like Nick mentioned, you really want, if you're working with someone important, to before you do anything, talk to that person you're working with to make sure what you're doing is right for your situation. Because as we know, and we say it when we teach our classes and we'll say it now and we say it during our podcast, everyone's situation is different. So everything depends on what's important to you and what your goals are. Speaker 1: Yep, absolutely. That is a given. Well, Nick, let's talk a little bit about the unemployment benefits. What's some data and some things to consider in this area? Nick: Yeah, so there's been a couple of changes in this act for unemployment benefits. So typically unemployment benefits are state to state, which will stay the case. However, really for corona-related unemployment what they have done is increased the amount that people can collect to an additional $600 per week for really the next four months. For example, in Florida I believe the maximum amount per week is $275 a week, which isn't going to really go too far with everything that's going on. And I know that the unemployment filing systems and websites and everything is completely inundated and hard to get through. Nick: But the extra $600 a week is a big deal. And I will say this too, that they have expanded the people that can file for unemployment. So previously a lot of people in this kind of, I'll kind of describe the additional people who can file. A lot of times they were unable to file, so those that are not otherwise eligible but are based on this are self-employed, independent contractors, gig workers, part time employment seekers, people that lack sufficient work history, or those that have exhausted their unemployment benefits elsewhere. So that's kind of a big deal. I've got a family member up north who owns a barber shop and is self-employed and normally would not be able to file and so he will be able to file with this. So that's a pretty big deal. Speaker 1: Well, let's hit the big question a lot of people have, John, and that's the checks to the individuals. Obviously that's clearly on the front of everybody's mind when it comes to the stimulus side. John: Yeah. So individuals can get up to about 1,200 and that's per person and then $500 for each child. So example, let's say my wife and I, I could get 1,200, she can get 1,200. That puts us at 2,400. We have two kids. That's an extra thousand dollars, 500 a piece. So that gives us a direct cash infusion of $3,400. Now, this is means tested. So basically this is for anyone that's earning up to 75,000 individually or 150,000 for couples, and that's adjusted gross income. And this is based off of your 2018 tax return or 2019, whatever one is the most recent. Speaker 1: Small businesses, there's a lot going on with that. And we know that that makes up a large portion of, workers in this country work for small businesses, more so a lot of times than actually work for the larger corporations. And so there's a lot of provisions in there for those folks as well. John: Yeah. So one thing that we've been noticing is that the small businesses seem to be the most effective so far. So what they've done is they've actually allocated about 350 billion to prevent layoffs and business closures, which will be a nice feature, especially for the small business owners that were forced to basically shut down. That will give them up to eight weeks of cashflow assistance. And one of the benefits to this is if they kind of maintain payroll, use a portion of the loans to cover interest, mortgage, utilities, rent, things like that, the loan could potentially be forgiven. And our disclaimer, we're not attorneys, we're not accountants, we're not bankers. Important just to basically talk to those professionals that you work with to figure out if your situation works for this. So again, just check with professionals. Some places you can go to to look into this is FloridaDisasterLoan.org and then spa.gov to really get some information and maybe start the process if you're interested in that. Speaker 1: Yeah, and there's a lot of data and a lot of information that's, again, going to come out about this and there are so many people affected by it. Nick, any thoughts from you? Any kind of final thoughts as we wrap up this week's podcast you want to share with us? Nick: No, I would just say, from the standpoint of keeping an eye, these pieces of legislation are huge and so as you kind of mentioned, things kind of unwrap over time and everybody's still kind of sifting through it all. So try not to act in haste and kind of work through and building contingency plans, and make sure that the decisions that you're making are as sound as they can be in what we know is a pretty chaotic time. Speaker 1: Yeah, definitely. I think that's a good piece of advice. We have extra time on our hands, that's for sure, so there's no shortage of a few extra hours here and there since we're not going out and doing as much. So make sure you're taking the time, do the due diligence, look through things, talk with your advisor. If you're not working with an advisor, reach out to John and Nick and have a conversation with them. You can do things virtually through Zoom meetings or GoToMeetings, phone calls. There's lots of ways that,. one good thing about this happening now is that in 2020 we do have a lot of technology on our side to help us continue on with the business of planning for retirement, getting to it, getting through it, all those facets. And we will probably put this up in the notes as well, but I'll go ahead and give it out again. Speaker 1: The resources for those loans that John mentioned was FloridaDisasterLoan.org. That's FloridaDisasterLoan.org. And also the sba.gov, www.sba.gov. As always, guys, make sure that you reach out to John and Nick, like I said, if you have questions or concerns here in the Tampa area at PFG Private Wealth. You can find them online at PFGprivatewealth.com. That is PFGprivatewealth.com. Subscribe to the podcast on Google, Apple, Spotify, whatever platform you choose. You can either search by typing in Retirement Planning Redefined or find it on the website, either way. Give them a call if you've got questions and you need to take immediate action. Before you do, definitely talk with them at (813) 286-7776. They are financial advisors, (813) 286-7776. Guys, thanks for your time this week on the podcast. I appreciate it and we will talk again soon for some more on the CARES Act.…

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Ep 15: Roth IRA 101 14:00

5 years temu14:00

14:00

Last week we covered the basics of the traditional IRA and today we will shift our focus to the Roth IRA. John and Nick will once again explain the basics to this investment vehicle. We will also compare and contrast the Roth IRA to the traditional IRA. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com For a transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/ Transcript of Today's Show: ----more---- Speaker 1: Hey everybody. Welcome back in to Retirement Planning Redefined. Thanks for tuning into the podcast. We appreciate it. Maybe you've received this podcast through the team's newsletters or email blast. Or maybe you found us online on various different podcast outlets like Apple or Google or Spotify. Either way we appreciate your time. And we're going to spend a few minutes with John and Nick talking some more about IRAs. And this go round we're going to spend some time on the Roths. But first guys, what's going on? How are you? John: I'm good. So my one year old is sleeping through the night very well, so I feel like a new man. Speaker 1: That goes a long way that's for sure. Well kudos on that. And Nick, how you doing, buddy? Nick: I'm pretty good. My 15 year old dog is not sleeping through the night.I'm okay. Speaker 1: Yeah, getting up there. I've got a 13 year old dog and she's a pistol. I got a 22 year old daughter and I can't tell which one's a bigger pain in the butt, the dog or the daughter. But they're both doing pretty well. The kid's actually graduating from nuclear engineering school. Actually I get to go see her Friday, and she's now a petty officer. She ranked up in the Navy. So we're all proud of her. Nick: Congrats. Speaker 1: Yeah, I appreciate that. I'll tell you what, let's not talk about babies, dogs or the Navy for just a minute. Let's talk about the Roth IRAs as I mentioned. So if you happened to catch the last podcast, we wanted to go through and talk about IRAs, about the vehicle. And we spent some time on the traditional side. So guys, do me a favor first, let's just do a recap, a little bit, of the traditional IRA before we switch over to the Roth so people have some context on that. Nick: So one of the biggest benefits for any sort of IRA account are some of the tax benefits. But one of the things that we wanted to remind everybody of, and this helps with IRA accounts, but also just really any investment account. Sometimes the feedback we've gotten is it's helpful for people to think about the different types of accounts in three phases of taxation. There's as the money goes in, is it taxed, is it not taxed. As the money grows, is it taxed, is it not taxed. And then when it comes out so that you can use it, is it taxed or not taxed. So for traditional IRA, you know the first one, as it goes in, in the last session we talked a little bit about it. Most of the time for most people it's not going to be taxed. But there will be some rules on when that's after tax money, it's going to grow tax deferred. So you're not going to get 1099 on it each year as it grows. And then when it comes out, it's going to be ordinary income tax. Nick: And then for the Roth IRA, which is what we're going to get into today, it is money that's already been taxed is going to go in. It's going to grow tax deferred. So [inaudible 00:02:43] 1099s, and then on the backside it's tax free. That's the comparison as you go through. Speaker 1: Okay. Since you brought it up, let's go ahead and just jump right into it. So John, give us a few things to think about on the Roth side. He already mentioned the tax deferred part. What are some other limitations and things of that nature we talked about like with the traditional, some numbers or some things we need to know? John: Yeah, so like the traditional IRA, the contributions are based off of earned income. So again, that does not count real estate state income, any interest, income like that, but earned income. And as far as the limits go, if you're below 50, [inaudible 00:03:20] 6,000. Anyone above 50 can do 1,000 catch-up, which gives you a 7,000 total. And just to again reiterate some mistakes we've seen where you can only contribute 7,000 between the two of you. You can't contribute 7,000 each. Okay, so 7,000 total. John: And something that some people aren't aware of is that even if, let's say one spouse is not working and is staying home for whatever reason. They are eligible to make a spousal contribution to an IRA, whether that's Roth or traditional, which is a nice feature because that does come up quite a bit. So to talk about the contributions of a Roth, we gave the example of traditional IRA as far as making a pre tax contribution. As Nick mentioned, the Roth is after tax dollars. So example of that, 100,000 of income for somebody, they make a $5,000 contribution to a Roth, their taxable income stays at 100,000 in that given year. So there's no tax benefit up front with the Roth IRA versus a traditional IRA, you could have a tax savings up front when you make the contribution if it's deductible. Nick: So from an eligibility standpoint, for a single person, somebody that makes under 122,000 can make a full contribution. If their income is between 122,000 and 137,000, there is a partial that can be made. If their income is over 137,000, they are not able to make a contribution to a Roth IRA. For married filing jointly, if their income is below 193,000, they can make contributions for both of them and their spouse. If the income is between 193 and 203,000, it's a partial. And if the household or the married filing jointly income is above or greater than 203,000, then they are not eligible to make the contribution. Speaker 1: Gotcha. Okay. All right, so we've covered some of the contributions, some of the eligibility you mentioned already in the tax deferred growth part. What about access? Did we cover some things there? John: So one thing the eligibility and it's becoming more popular now with Roth 401k. So if you're not eligible to make a Roth IRA contribution, one thing to do is check with your employer and see if they offer a Roth 401k, which actually has no income limits for you to be able to participate in it, which is a nice [inaudible 00:05:37] Speaker 1: Okay, that's good to know. Yeah, absolutely. All right, that's a Roth 401k. Maybe we'll do another show about that another time. What about the access side, anything there? Is it the same 59 and a half, all that kind of stuff? John: So rules are fairly similar, where you as far as access getting to the account, there is the 59 and a half rule. And if you do draw early there's a 10% penalty on your earnings. And I stress earnings on that, because with a Roth IRA and I say this, consult with your tax preparer, tax advisor, we don't give tax advice. But with a Roth IRA, you can actually access what we call cost basis prior to 59 and a half without any penalty. I've seen a couple of people do it where basically let's say if you've put in 30,000 into your Roth in your account at 50. So 20,000 earnings, 30,000 is what you've put in, which is considered your cost basis. You can pull that 30,000 out without paying a penalty. It's just you have to keep very good records of your contribution amounts. And if you do pull it out, you have to work with your tax preparer to go ahead and let the IRS know that you pulled out a portion of your tax basis. And that's would avoid any type of a penalty on that. Speaker 1: All right, so we've covered several things on the Roth side, so the access, the eligibility, contributions, all that good kind of stuff. So let's just get into the fact that it's been hugely popular. It's been a very hot button issue for the last really couple of years. Obviously one of the reasons, we mentioned earlier that it's tax deferred. Really, the taxes are low, right? We're in a historically low tax rate. So one of the reasons that a Roth might be a good place to go, or a Roth conversion I guess I should say, is because of the tax thing. So what are some other reasons why the Roth is just really popular? Nick: You pointed to one of the biggest reasons from the standpoint of we are in historical low tax brackets. And one of the things that we talk about with clients and it really became evident towards the end of 2019 is, the thing that might be the quote unquote best strategy today, it may not be the best strategy five years down the road, 10 years down the road. So for most of the clients that we meet with, they're substantially overweight on pre-tax money and maybe only recently have started to build up Roth money. And we think it's really important to have balance and to have options in retirement. Your ability to be able to pivot and adjust to law changes, rule changes, market conditions, etc. are really important. And then part of that is not having to be forced to take out a required minimum distribution on a Roth helps you maintain that balance and maintain the nest egg, those tax free [inaudible 00:08:18] roles help give you flexibility and balance, the ability to be able to pass on funds to beneficiaries, Roth dollars. Nick: Especially if you have... Maybe your kids are high-income, you've done a good job planning. We go through the numbers, we built the plan and there's a pretty high probability that you're going to be passing on money to the kids. The rub, money is usually much better to plan or to pass down, because of the fact that it will be tax-free to them as well. So the ability to really create flexibility in your planning and strategies is one of the reasons that we think the Roths are a really important piece of the pie. John: Just to jump in. One thing, just backtracking to accessing it tax-free. Just a couple of rules with it is you have to be above 59 and a half. And you actually have to have had a Roth IRA account for at least five years. So an example would be, let's say I open one up at age 60. I'm above 59 and a half. The person cannot actually withdraw tax free until basically 65. So I have to wait five years and that's from the first Roth I ever started up. So one thing that we typically will work with clients is if they're eligible, we might just go ahead and start a Roth IRA just to start that five year window. Speaker 1: Okay. All right. That's good. Yeah. Good information to know on that. Now with the beneficiary thing and passing things along, is the change in the SECURE act, does that make a difference in the Roth as well? Is there anything there that would pertain to people if they're thinking about it that they should definitely be checking with you guys on before doing a conversion or something like that? John: Yeah, so I believe we're doing a four part session to this. We're going to talk about conversions, but yeah, that makes conversions a little more appealing where you have to pull the money out over a 10 year period now. Where basically at least if you have to pull it over 10 years, there's actually no tax hit. So as your IRA gets bigger, if you're pulling out of a $1 million IRA over a 10 year period, that's going to really affect your tax rate. If it was all Roth money, it would have no bearing on your taxes. Speaker 1: Gotcha. Okay. All right. Yeah, and we are going to continue on with this conversation on a future podcast about which one might be right for you and all those good kinds of things. Nick, anything else that we may have overlooked in there we need to throw in? Nick: No, I just can't really say it enough from the standpoint of building in flexibility is key. Most of the people that listen to the podcasts are going to have pretax money, but if they don't have any Roth money then just getting started can be really important to build that up. Because even if they're within a few years of retirement, just remember that we're still planning for 30, 40 years down the road. Having money that compounds over a long period of time and then has tax free withdrawals on the backside is a pretty significant leverage point and benefit. Speaker 1: Okay, one final question I'm going to ask you guys is you sometimes hear people say, if I'm still working, can I contribute or should I contribute to both kinds, the traditional or the Roth? What do you say when someone asks that type of question? Should someone do both the traditional for the tax reasons and then the Roth for the non-tax? What's your answer? John: We'll answer that in the next session. Speaker 1: Nicely done. Look at him teeing that up. There you go, folks. All right, I'll tell you what. We will take care of that on the next session and that way you have a reason to come back. A cliffhanger if you will. So if you've got questions about the Roth IRA, make sure you talk with your advisor about that. If you're not working with an advisor, you certainly should be. Reach out to John and Nick and give them a call at PFG Private Wealth. And you can reach them at 813-286-7776. That's the number to dial. 813-286-7776 here in the Tampa Bay area or go to their website, check them out online at pfgprivatewealth.com. That is pfgprivatewealth.com. Don't forget to subscribe to the podcast so you can get those next episodes as they come out. Nick, John, thanks for your time this week. Speaker 1: I hope everybody has a great week and you guys enjoy yourself and continue to get some good sleep while that baby's resting, all right? John: Hopefully it continues. I think it will. Speaker 1: Yeah, there you go. Nick, appreciate your time, buddy. Take care. Nick: Thanks. Have a good one. Speaker 1: We'll see you next time here on Retirement Planning Redefined with the guys from PFG Private Wealth, John and Nick.…

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