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Real World Retirement is a podcast hosted by Alexander Pushman, dedicated to exploring all aspects of retirement planning with the help of expert financial advisors. Each episode dives into crucial topics like Social Security, investing, taxes, legacy planning, and income strategies, offering real-world insights and practical advice. Listeners are encouraged to stay engaged by following the podcast, sharing their questions, and shaping future episodes tailored to their retirement needs.
00;00;00;00 - 00;00;25;09
Unknown
Welcome back real world Retirement, the podcast. I am Alexander Pushman, your host, and, thanks for joining us. I hope you've been enjoying this journey with us. A little bit about who we are and what we're doing here. We are a bunch of financial experts who take true passion in educating our community. Me personally, I've done over 3,002nd opinions, for people's retirement plan.
00;00;25;11 - 00;00;45;07
Unknown
And I've been in the business well over a decade, and we have over 20 advisors here at Focus Financial Group. And one of the things we pride ourselves on is educating people to make good and honest financial decisions. You know, it's such an important part of your life where you work your whole life. You get to this place, you kind of get to the Mount Everest, right?
00;00;45;09 - 00;01;00;09
Unknown
And you don't want to mess it up. Hey, I made it. Let's not mess it up. So that's the main thing that we focus on, is we want to educate you. So if you're somebody out there who has questions or you need something, here's something we say in the podcast. That's me. I need more on that. Please engage with us.
00;01;00;09 - 00;01;21;21
Unknown
Right. Make sure you're following us. Make sure you're subscribing. We got a good one today. So, I'd like to join my man Leland. Lindy, to the set here. He's one of our phenomenal advisors. And the topic today is to be first principles of investing. Now, Leland, I know you're like you know, the whiz kid when it comes to some of this stuff.
00;01;21;23 - 00;01;36;02
Unknown
Talk to me a little bit about first your story, and then I kind of want to get into the actual topic. First principles of investing. So tell the tell the folks a little bit about why you do what you do. Well, well let me let me just say thank you. I'm sure you're, you know, awesome to be here.
00;01;36;02 - 00;01;53;22
Unknown
I appreciate you I appreciate you having me on, first principles of investing. So my story, I guess we got to go back to the beginning, right? So I grew up in Midland, Michigan. Right? Okay. So if you know anything about Midland, Dow Chemical country. Right. Everybody in the town works the Dow one way shape or form community of scientists.
00;01;53;24 - 00;02;14;24
Unknown
So I've had a, you know, strong scientific thought process ingrained from an early on. Now I grew up thinking I was going to be, you know, scientists of some sort. Right. When I was young my my mom got laid off from Dow Chemical actually. Okay. And so you decided, well, you know, I'm going to go back to medical school, right?
00;02;14;27 - 00;02;38;16
Unknown
Job security was more than M.I.T.. Scientists have already been an analytical chemist. It's not that big of a job. Right. So she went back to medical school, right? I became a physician. And, you know, going through middle school, high school? I thought I was going to do the same thing. Right? It's like a family business, right? Right. When I got to college sophomore year, my uncle passed away suddenly from a heart attack.
00;02;38;19 - 00;03;02;22
Unknown
And, you know, it was, you know, ground shaking. Yeah, right. It was one of those course correcting moments where, you know, he had been an entrepreneur. You know, we started a family business, family restaurants. He had parlayed that into a, you know, substantial real estate portfolio. And, you know, we built it as a family. Yeah. And when he passed away, you know, things changed.
00;03;02;22 - 00;03;24;22
Unknown
Now just to kind of liberate a bit on that. His wife of eight months. Oh, baby sold everything. I sold out five restaurants, sold all the real estate, moved back to Texas. And so it was financially devastating for the family, as you can imagine. And so what happened was we all knew what he wanted to do. Hey, I bought a house for my for my mom.
00;03;24;22 - 00;03;43;20
Unknown
This restaurant is for my cousin, right? Everybody kind of knew what the intentions, you know, were. Yeah, but it wasn't on paper. Oh, baby wasn't on paper. Right? There was no actual estate plan in place, right? So not only was it emotionally devastating, it was financially crippling. And so that made me really kind of get disenfranchized with medicine.
00;03;43;20 - 00;04;06;16
Unknown
And it kind of put me on this path to figure out, well, why did that happen? Yeah. And then how do we stop it from happening? Wow. Other people. So that's like my origin story, you know what I mean? Ingrained from a young age, you got to do something to help people. Yeah, right. And I realized in this industry, we've got the opportunity not just to help people on a one on one, but we can change the whole, you know, trajectory of people's families if we do our job.
00;04;06;16 - 00;04;22;08
Unknown
Well. Absolutely. And and so, yeah. Wow, that hey, I, I know me mean you have chatted about it, but I've never heard the whole story about the uncle side of it. And and that's I mean, hey, if that's not, you know what I would say? You know, Mike Tyson, Mike Tyson punch in the face. Right. Wake you up.
00;04;22;10 - 00;04;39;18
Unknown
And that was to your point is like a trust legacy issue. Exactly. Right. Hey, we talked about everybody knew, but it wasn't on paper. And then this eight month wife yeah goes and throws a grenade. I like to joke that, you know that that I got hit with Hurricane Katrina twice, right? Right. You know what I mean?
00;04;39;18 - 00;04;57;15
Unknown
With hurricane hit Memphis, where my family was from. But also, you know, that that piece, that there's that piece as well. So, yeah, you know, that that's what got me into there. Okay. All right. Well, it makes sense. And, you know, it makes sense because I know you're super passionate about what you do, and you have an amazing like me and you, I think, have this in common.
00;04;57;17 - 00;05;18;01
Unknown
You know, we love our clients. You know, we we genuinely like, you know, I go golf with clients, we hang out with clients and and you know, you're giving them hugs, right? Like you have a huge heart. I appreciate that. And so I love that. So now first principles of investing. Yeah. Walk let's let's talk a little bit about what are these first principles I know you you kind of highlighted it.
00;05;18;02 - 00;05;39;01
Unknown
There's basically six sections on how you educate your clients. Can you do me a favor and just kind of highlight those six sections. And then we'll we'll start doing as we'll start diving into each one if that's okay. Yeah, absolutely. So from from from my perspective from what I've learned. And you know, throughout the industry, there's six main pieces of a truly comprehensive retirement plan.
00;05;39;01 - 00;06;02;15
Unknown
Right, right. You need a foundation. Right. You know, and that could be a savings plan that could be just having the right protections. I mean, you got a young family, you need life insurance, your property owner, you need LLCs, you know, protecting different parts of your portfolio. Right? You need an investment plan. Right? Okay. We need an income plan, which is I think is one of the probably most overlooked under planned aspects.
00;06;02;15 - 00;06;21;18
Unknown
Totally agree. We need a tax plan. Yep. We need a health care plan. And we also need an estate plan. There it is. Right. So the first principles part is you know in engineering there's this first principles kind of mindset or framework to think about how to solve problems okay. So that first principles comes more from the engineering world.
00;06;21;23 - 00;06;41;23
Unknown
Yeah okay. Exactly. And they basically say okay, if we're trying to solve a problem instead of solving it by reference, we've always done it this way. So let's start there and figure it out. First. Principle says let's get to the base of what's actually objectively true. And then let's build from there. Let's work our way up okay.
00;06;41;23 - 00;06;58;20
Unknown
So in financial planning you know maybe this is just a bit of you know who I am personally, maybe a bit of a contrarian. You know, one of those kids was always asking, well why why, why, you know. Right. But I from from the financial planning. Let's, let's look at each part of those, each six of those and figure out, well, is there a better way?
00;06;58;22 - 00;07;14;05
Unknown
Okay. What's just kind of always been done in the standard. So right. That's the first principles mindset to investing and I love that. And now let's jump in from the bottom up the foundation as you put it. Because basically what we got is we got a foundation. We got and you know, and to your point, that could be savings.
00;07;14;05 - 00;07;31;14
Unknown
It could be protection. There's some some layers unfold there. Then we get into investments, then we get into income planning. Right. Then we get into tax planning. Then we get into health care, which is, hey, that is not discussed a lot. For the record, most people leave that one out and then we get into that legacy piece estate piece.
00;07;31;14 - 00;07;49;23
Unknown
Right. So this is a full we got the full deck. And I know that you got some some nuggets on each one. So let's start from the foundation. What are the things that you are, you think are the most important factors of a foundation of a good plan? Okay. Number one thing I would say is you got to pay yourself first.
00;07;49;24 - 00;08;08;07
Unknown
Yep. And you got to set it up to be automatic. Right. Sometimes the biggest risk to your financial retirement plan is you. Right. Right. So we got to account for that. How do we plan around that. You need to have your savings and investing automatic okay. Right. So a lot of us you know four and one K okay is just coming up before I never even see the money.
00;08;08;07 - 00;08;26;21
Unknown
Yeah. Right. Well in addition to that right I always say, you know, save as much as you can stand. Right. Right. 10% should be a minimum. A lot of people are like, well, hey, I don't know if I can I can't say $10. If you if you go through your budget line item, you're going to find a lot of leakages, right?
00;08;26;23 - 00;08;41;15
Unknown
Spending, you know, ten bucks a day at Starbucks, right? Right. If I put that in, that's a long term. I mean, you're talking hundreds of dollars, you know, this amount of money. So. Oh my gosh, people people don't realize that there's a lot of habitual things they do. Yeah. Then when you let's break it down, identify them.
00;08;41;15 - 00;08;57;09
Unknown
Let's actually put that to work long term for yourself, for your family. Right. And you're going to get a better result okay. So you know I talked about the protection. Life insurance is very young family. If something happens to you you need to make sure, hey, you know, they're going to be taking care of, you know. And so that's the foundation, those kind of foundational layers.
00;08;57;09 - 00;09;17;09
Unknown
I'd say that's the most important thing I love that I love that, and to your point, like you, because one of the things you said right out of the gate there is, pay yourself first. And don't we see that all the time with small business owners? They just keep investing in their business and they keep investing in their business, and they keep investing in the business, and they never take that time to start scraping some off the side and put it in investments.
00;09;17;09 - 00;09;36;03
Unknown
Get it off to the side. That's probably the biggest mistake I see with small business owners. So that's a phenomenal point. Okay, so foundations number one making sure you have the appropriate protections in place, whether it be life insurance whatever that might be. You got a business that's in the appropriate, designation of an LLC or whatever that needs to be, and then also automate your savings.
00;09;36;06 - 00;10;02;10
Unknown
Okay. Now then we go to the investment layer. What are some of the things that you look at there. So in the investment piece. And I'll just say when I first got into this I realized I thought this is where, you know, the rubber hits the road, right? You know, one of the things is a lot of maybe academic knowledge that's thrown around, but when you actually study the best in the world at investing, you realize that they actually take a different approach a lot of times.
00;10;02;10 - 00;10;22;19
Unknown
Right? And so trying to bring some of those techniques, some of that learning down to the retail level where our clients can benefit. Yeah. Yeah. You know, you realize that one of the things that, you know, the top, top investors do, you know, there's a famous Warren Buffett quote, right. Two rules of investing. Rule number one, don't lose money.
00;10;22;22 - 00;10;50;06
Unknown
Rule number two, see rule one. Right. So I try to bring that up. That's important. Right. Maybe on the way up. Yeah. You know hey I've got a 30 year time horizon market's going to do what it's going to do. But when you're talking retirement planning losing money is critical, right? We've you know, I've worked with people who, you know, planned on retiring and, and 2007, 2008 were a couple more years.
00;10;50;08 - 00;11;08;05
Unknown
I literally I did a seminar this time and stopped me in the middle of it and said, what you just said, describe me exactly. Retired in oh seven, 2008 happened. My portfolio wasn't defensive enough, and I ended up having to go back to work as a truck driver for another 12 years. Didn't was until 2020 when the pandemic hit.
00;11;08;05 - 00;11;33;17
Unknown
Wow. So from the investment planning piece, when we're talking about retirees retirement planning, you need to have protected growth. You need to have assets outside of the market, outside of, you know, risk of of sequence of returns, risks and these type of things. Right? I also like to layer in buffered growth. Okay. Right. We need to have assets that are participating in the market but aren't fully just riding the volatility wave.
00;11;33;17 - 00;11;58;09
Unknown
Right. Then we need to have a sleeve of pure growth so that when we have these big 25% up years okay I'm getting a piece of that too. Right. And so that is kind of the the foundation, the crux of how I approach the investment planning piece. I love using principal protected investments, not just downside risk protected right, but also principal protection in the sense of, well, how do we protect the principal?
00;11;58;11 - 00;12;15;14
Unknown
We need cash flow, right? But maybe there's a way that we can position our investments to get that without drawing down the principal. Right? Absolutely. And I mean, when you're going and like one of the things I would say out there to the audience, in the listeners is what Leland is talking about is some pretty high level stuff.
00;12;15;17 - 00;12;38;12
Unknown
And, you know, if I just said to you, hey, protected growth buffered, you know, being able to take income but not sell anything. Right? I know what that means. Yeah. And and me and you were on the same page. And here's the thing I would say to the folks out there, if you are somebody who's either very close to retirement or you've just retired and you're like, wait a minute, I'm sitting in the same stuff I've been working in for the last 30 years.
00;12;38;19 - 00;13;07;11
Unknown
I'm going to encourage you to take some action here. I want you to reach out. I want you to drop us a line, send us a comment on social media. Send an email in. We can get you teed up with Leland directly, and he can help educate you on exactly what he's talking about. Because what we're really talking about is diversification, and we're talking about the different seasons of somebody's life to where if you're from 40 to 60, in your prime earning years, your investments are going to look different, hopefully, than when you're 60 to 81.
00;13;07;13 - 00;13;24;27
Unknown
Right. And that that concept in and again I my personal story is my grandfathers same same same wavelength. You know took too much risk at the wrong times and, and had to move in with my folks. You know what I mean? Because he ran out of money. So that that lands really, really, you know, on my heart.
00;13;24;29 - 00;13;48;05
Unknown
But what I would also add to that is the last thing you had mentioned about not having to sell off investments and get income. You're really talking about dividend strategies. There aren't that accurate on a person. Okay. Can you give a little bit of education on dividends and how you use them for retirees 100%. So, you know, maybe this is just kind of the my baseline defensive posture that I take with the investments.
00;13;48;08 - 00;14;05;03
Unknown
But I you know, I'm a true believer in cash flow. Right, right. And I just we haven't even got income planning yet. But in your life plan you need to have assets. You need to have investments, right. That are providing cash. Right. It makes it easier to rebalance. It makes it easier to, you know, if we hey, I need money for x, y, z.
00;14;05;03 - 00;14;32;06
Unknown
Well, we have cash set aside for that, right? There are investments out there that will allow you to say, hey, give me a eight, nine, ten, maybe 11% yield paid monthly, where at the end of that term, not only have I gotten these dividend payments, but I'm getting my principal back, right? Right. So a lot of people don't even know that there's these there's there's all kinds of tools out there that, yes, that you can't find in your 41K.
00;14;32;07 - 00;14;57;07
Unknown
Right. You know, in the election option. Right. That your, your standard I array may not have. Right. So some of these are right. You know I would say had maybe historically been used more by institutional investors, you know, endowment funds things like that. But you know, when you take a first principles mindset and you realize, well, hold on, I can use some of these techniques to as a, as a, as a retiree.
00;14;57;09 - 00;15;11;25
Unknown
And it's going to give me a better outcome or at least a better chance at a better outcome. You know, it's like, well, you know, let's explore that and kind of dig deeper into it and your pool and I know your approach to it. And then in my approach is, hey, we're going to educate you on all these options.
00;15;11;27 - 00;15;32;21
Unknown
And then based on your unique situation and comfort level, we're going to start making decisions on which ones make the most sense for you personally and for my client base. I love dividends, I love dividends, and they work so well, especially for more moderate to conservative families. There's some phenomenal options to reduce risk, still get great yields, have that income stream.
00;15;32;21 - 00;15;50;13
Unknown
So I couldn't agree with you more. And again if you're somebody out there you're like dividends I've heard about them. What does this mean. Engage with us I'll tell you up with the master right here okay. So so investing you're basically saying, hey, what we do traditionally when we're working, it should look different in retirement. Totally agree. We should also have different levels of risk, right?
00;15;50;13 - 00;16;11;20
Unknown
We should have safe products. We should have some buffers. And we should have some just pure growth. Right. And again based on some discomfort. But that traditional view of always doing the same thing 6040 bond stock doesn't necessarily work to your point because it's a different layer of your life. Exactly. Okay. Exactly. And and just because something worked once upon a time doesn't mean it's going to continue to work right into the future, right?
00;16;11;20 - 00;16;30;24
Unknown
Right, right. So bonds are supposed to be uncorrelated, right. And they can be. But but they become highly correlated when, when when they when it matters most. You look at 2022 you know you know average bond was down 13% that year. Again it depends on what you were holding. But that that wasn't a quote unquote safe investment that year.
00;16;30;27 - 00;16;51;11
Unknown
Exactly. So and to your point, you made earlier, you know, we we we we we're we deal with this every day. Yeah. We're professionals. Right? We we discuss things all the time. And I'm not saying you get jaded. You think that everybody knows this stuff, but it's kind of like hard. Yeah, yeah. You go to a cardiology office and they're talking about EKG, EKG.
00;16;51;11 - 00;17;04;06
Unknown
So like I have no idea. They're like, well, this is everyone knows it. You're right. You know what I mean? So yeah, we got to be we got to be mindful of trying to meet people where they're at. And I love that. So and again, if that's you out there education reach out. We can we can make this.
00;17;04;06 - 00;17;21;07
Unknown
We we can bring it down to any terms. You need us to bring it down to us okay. So all right so we got the foundation. Yeah. And then we got the investing and then we go to income. What are some tips nuggets. You throw out the income side. So the income planning. Income planning is the most important part right.
00;17;21;11 - 00;17;47;06
Unknown
We spend our whole lives working. You get a paycheck, you get to retirement. And the purpose of those assets is to provide income. Amen. Right. You can't you know, you can't pay bills with Apple shares. Right. So we got to turn these, you know, this portfolio into cash flow right. Traditionally the approach is well I'm just going to have a, you know, 4% or 3% drawdown.
00;17;47;06 - 00;18;04;15
Unknown
That's my sustainable withdrawal rate. And that's my income plan. I mean what's what's wrong with that. And and from my perspective, you know, and I'm sure you know, the audience, you guys have seen these reports. Well, if I do 3% or 4%, I've got a 92% chance of success right in front of me, you know? Yeah. Monte. Carlos.
00;18;04;15 - 00;18;29;22
Unknown
Yeah. Personally, I, I have some qualms with that. Just because with something so important as your retirement, 92% chance isn't good enough. Yeah, I agree with that. You're not going to leave the safety of your kids to a 92% chance. You're not going to, you know, not, you know, have fire insurance on your house because only 8% chance my house is going to burn down, right?
00;18;29;26 - 00;18;51;18
Unknown
Right. So we when when I approach the income planning piece, we need to get this as close to 99%, right. Obviously we can't say it's 100% guaranteed. Right? Right. But we need to have an income plan that says, you know, 99% chance of success. Yeah. And so that sort of 3 to 4% sustainable withdrawal rate is more of a guideline to me.
00;18;51;18 - 00;19;12;04
Unknown
Yeah, right. A true income plan is going to say, oh, okay, this is where we're going to pull cash from in upmarket. And this is where cash flow is going to come from in a down market. These are the accounts that we're going to liquidate right. If it's qualified non-qualified Roth, you know. Right. These are the specific investments that are in our portfolio to generate income.
00;19;12;06 - 00;19;30;02
Unknown
And if you know x, y, z happens to that, then we have a back door. We have a backup plan to get cash from. So the truth the income planning piece, you know, in my opinion is it's it's analogous to climbing Everest. Yeah. In a certain sense you reference. Right. It's like on the way up the mountain. I'm sure you guys have heard these these kind of analogies.
00;19;30;02 - 00;19;50;10
Unknown
Retirement planning is, you know, you get to retirement and you've hit the peak. Yeah. You know, I ask people, well, what's the most dangerous part of climbing Everest? And they say, well, you know, the cold, gravity falling off the mountain. It's like, well, when you when you look at it, there's this they call it the death zone.
00;19;50;10 - 00;20;07;25
Unknown
Yeah. Right. Right. There's on the way up the last, you know, fuel. You know, what is a couple thousand feet on the way up. Last one on the way down. And retirement planning is the same way. Yeah. You're, you're you're the 3 or 4 years before you retire. And then the 3 or 4 years after you retire or where you're at your biggest risk.
00;20;07;29 - 00;20;23;24
Unknown
Totally agree. And so we need to have both an investment plan that is going to protect you. Hey, I'm three years out. I need my my investments need to be to be, you know, reflective of that. Yeah. But you also need an income plan that says, okay, this is what I'm going to do year one, two and three.
00;20;23;24 - 00;20;39;26
Unknown
So I don't overspend. Exactly. And so that I'm not, you know, crippling myself. So yeah, that's the kind of, you know, the approach that we, we take to in complaining and I and I love that. And, and just, you know, one other thing I would add to that is like it's that concept of proactive planning is always going to help you.
00;20;40;03 - 00;21;01;25
Unknown
Right. And looking into the future because you know your point. Monte Carlo simulations are great. I love Monte Carlo simulations. What I like better is looking at every single year individually and breaking down what's what's our risk in this year. You know, we can look out over some next 35 years. Is this how much we're spending? And this is what our net worth is where we're pulling money, you know, and again, you usually don't do it for 3 or 4 years.
00;21;01;25 - 00;21;22;05
Unknown
But you can look at that. So that's a great point okay. So we got foundation. We got investments. We got income and then we got taxes. Taxes right. Well to to certain things in life right I mean and I know we've, you know, we've covered it, you know, on the podcast and whatnot. Let's take a first principles approach to this, okay.
00;21;22;08 - 00;21;45;06
Unknown
The story that a lot of people were were told is that you need to put all of your money in A41K IRA. Pretax. Right, right. Qualified account. Right. Because you know your high income years are going to be while you're working. Right. Let's not pay the taxes then. Let's wait till we get to retirement. Our tax will be lower, income will be lower.
00;21;45;08 - 00;22;02;27
Unknown
And we'll be able to save money on taxes. Right? I don't know if I've met with a single client where that turned out to be true. I agree, where they were like, yeah, we want to make less. We actually, you know, the life we're we're, you know, we're gonna we were eating at, you know, the nice Italian restaurant.
00;22;02;28 - 00;22;27;11
Unknown
We're going to go to Burger King now. Not happening. That that that defeats the whole point of retirement, right? The whole point is to work to the point where your your assets can now take over going to work for you. Right. So, you know, doing tax planning around that. Right. Again, the standard sort of methodology, standard operating procedure is actually kind of putting a lot of people in a disadvantaged position right now.
00;22;27;11 - 00;22;50;19
Unknown
This gets compounded when your income plan is already set. Okay. Right. So sometimes a lot of our clients I I've got two social securities coming in and a pension that covers all of our capital needs forever. Bang. And so now they're looking at an issue where well hold on what are these RMDs? What are those. Right. Like, you know, do a seminar and ask people, okay, who doesn't know the RMD, who doesn't know what RMD stands for?
00;22;50;19 - 00;23;10;06
Unknown
And a few people raise their hand and it's like, well, that's because you're too young. Yeah. Right. Right, right. These mean required minimum distributions IRS. Hey, we gave you this special tax account. You didn't pay any taxes on it. We let the funds grow tax free will eventually. The IRS, you know, they come and say, hey, we need our we need our our portion of that.
00;23;10;07 - 00;23;33;14
Unknown
The chickens are coming home to roost, you know. Yeah, a lot of people don't realize that. For one case, IRAs are actually joint accounts. Yeah. Not with their spouse, but their joint accounts with Uncle Sam. That's a actually good. I've never heard that. That's pretty good. So we got a plan around that. So absolutely planning if we if we do nothing, we're going to be in a position where hold on the IRS is forcing me to take out a bunch of money that I don't need.
00;23;33;16 - 00;23;51;10
Unknown
Yep. And I'm paying more for, you know, more taxes on all my other income. Right. Hey, I'm paying Medicare. Go. Medicare goes up, your tax bracket jumps up, right? And you lose complete control of it because you didn't see it coming. Exactly. Yeah, but we got gotta we got a plan for that. Right. And and you know Roth conversions aren't necessarily for everybody.
00;23;51;11 - 00;24;08;25
Unknown
Right. Absolutely. You know I've got a client who has, you know, a lot of non-qualified money. And so part of her tax plan is, hey, I'm just never going to sell some of these positions, right. Or put them into certain funds where we don't get like phantom games where we're paying short term gains. Right? I mean, there's a couple ways skin that cat.
00;24;08;25 - 00;24;28;26
Unknown
Okay, exactly. And to your point, the tax conversation is complicated. It is it's very unique to the family. Right. Because to your point, it's either we're talking about qualified accounts IRAs right for own case etc., or we're talking about non-qualified accounts, which then really just gets into the the importance of somebody being educated on the different investment choices.
00;24;28;27 - 00;24;50;15
Unknown
Yeah. You know what I mean. So okay. So all right. So we got foundation, we got the old, you know, we started getting in there and Rick going down the layers. Now we hit taxes. Know next health care. Health care. What would be a couple of bullets you through. Health care is a big one. So you know, let me I'll just kind of bring up my personal experience right here.
00;24;50;15 - 00;25;18;09
Unknown
Right. My grandmother retired with great social security, great pension, half $1 million, you know, in her in the bank. Yeah. I remember getting, you know, a call from my dad basically saying that and let me set the table. My my dad's side of the family from northwest Iowa. Okay. So, you know, Grandville, Iowa, we're talking a town of 400 people, right?
00;25;18;13 - 00;25;35;05
Unknown
You know what I mean? Where we can we can probably get around, you know, field of dreams, like cornfields everywhere. I mean, Granville had they had a big celebration when they got their first stoplight. Oh, baby. Yeah. And I'm not even sure they were turned it on. Right. It might have been blinking yellow, but, hey, we got one, you know?
00;25;35;07 - 00;26;02;12
Unknown
So we're we're talking to some other goods, you know, and, you know, I remember, you know, my dad getting the call. Hey, grandma was driving around Granville for two hours, right? So obviously, you know, it's time to make adjustments. And so, you know, she went to, you know, first, you know, sister living. Yeah. And then, you know, eventually, you know, progressed and went to full nursing.
00;26;02;14 - 00;26;26;11
Unknown
And so the full nursing care facility, she was that was a great facility. It was relatively close by, you know, it was 8500 bucks a month. Okay. So you're talking, you know, 100 grand a year. Yeah. Right. So, you know, $100,000 a year, you know, five years, $500,000 disappears like that. And she wasn't planning that. She wasn't planning on.
00;26;26;14 - 00;26;50;06
Unknown
Yeah, that wasn't in the plan. It wasn't in the plan. So what ended up happening? Thankfully she was in a, you know, a medicaid approved facility. Okay. So you know, Medicaid. Me okay. For long term care if we don't know, Medicare does not cover long term care, right? Medicaid does. But you have to be destitute, right. So 500,000 evaporate in the House that, you know, my dad and, you know, everyone grew up in that had to be sold off.
00;26;50;06 - 00;27;08;09
Unknown
Yeah. Right. So now I didn't know at the time how to, you know, I wasn't in the industry, you know, so I didn't know the things I know now. But if I did and if our as a family we did, we could have avoided that. Right. So, you know, with the health care plan. Okay. Yes. We need to figure out.
00;27;08;12 - 00;27;23;25
Unknown
Okay, let's plan around our Medicare Part B premiums. Are we going to take part C you know advantage or are we just going to use A, B and D and then you know Medigap supplement plans or you know but but the long term care piece we also need to address that. Yeah. Right. 70% of people are going to need it.
00;27;23;26 - 00;27;51;05
Unknown
You know, probably about 20% or less have it, you know, probably even 10%. Right. So one of the key takeaways with long term care is that there are a lot of different ways to solve that. One of the ones is using, you know, Medicaid state partnership programs. Yeah. Where you can protect, you know, X amount of assets, maybe, you know, two, three, $400,000, but still be able to qualify for Medicaid.
00;27;51;05 - 00;28;23;01
Unknown
Right? Right. And that and that was that's one of those ones where you got to have a professional 100 core to know how to navigate those waters, you know, because that's where it gets really complicated. We're getting three year look backs, blah blah, blah, blah, blah. You know what I mean? You know, but to your point. So and again, I think to your point though, Leland, when you look at that, that health care and that long term care space, one of the things I always talk about with clients is the best thing when you have an advisor who's been around a long time and been in the trenches and been in the weeds with families,
00;28;23;03 - 00;28;41;07
Unknown
experience matters and you learn. I learn new things every week, and I've been doing this for well over a decade, and I learn new stuff every week. I'm like, wow, I didn't realize, you know, because it's always changing. It's granular details. So. So to your point, long term care, health care, that's where you got to have an expert though.
00;28;41;07 - 00;29;01;13
Unknown
Is that fair? 100% 100%. It's very tricky to solve on your own. You're going to if you Google it, it's like, oh my gosh, long term care. The premiums are crazy expensive, right? Well, you know again working with an expert. Well you realize, well hold on a second. You actually can use HSA dollars to fund long term care premiums.
00;29;01;15 - 00;29;31;29
Unknown
IRS saying, hey, we will give you the ultimate triple tax benefit account to try and keep you off Medicaid. Wow. Right. We'll let you find your own long term care, which is essentially an insurance with an HSA. With HSA, a lot of people never got tax. A lot of people don't know that. And now you've got a long term care policy to help take care and essentially to protect, you know, your, your, your beneficiaries assets that you're intending to leave to them, not, you know, to go to long term care facilities, you know, and that that really gets me thinking, if you're somebody out there who's got an HSA and you're like, hey, I don't
00;29;31;29 - 00;29;50;16
Unknown
know how to use these dollars, right? Because there's limitations to it. You can't use it for everything, right? But it's a great tax advantage program where you're not paying tax on those dollars. You're not paying tax when it grows. And to Leland's point, you can fund that into a long term care policy. And if this is the type of stuff where like, well, wait, I never heard of this.
00;29;50;17 - 00;30;06;22
Unknown
Wait, what are they talking about? Do do me a favor. Do me a favor. From a personal standpoint, if you got somebody you trust, great. If you don't know somebody in your network who can help educate you, that's what we're here for. That's what Leland Leland is an absolute expert on this subject. Reach out to us. Engage with us.
00;30;06;22 - 00;30;22;19
Unknown
Because here's the reality we can help you understand what you can do with those dollars you have. And again, if you're somebody out there with an HSA, I met a guy the other day at $60,000 an HSA. He's like, I don't know what to do with this. We started talking about these different options, but you got to learn to understand it.
00;30;22;19 - 00;30;48;14
Unknown
Okay. So we got we get through. So so we get through the five. We're on the sixth layer. And the one that brought into the business the same one that got you start planning. Yes. Throw a couple nuggets out there. So you know with the estate planning you know obviously depends on where you live. Right. We're fortunate in in Michigan where you know there's low cost options to ensure that your assets are going where you want them to go.
00;30;48;14 - 00;31;12;07
Unknown
Right. If you, if you're in a more complex situation where there's real estate and different places and things like that. Right. And, you know, in general, you know, okay, you got will you got to trust. Right. I my default actually is to kind of to tend towards trust. Yeah. The reason being is because you know it's one of those pay now pay later type of things.
00;31;12;07 - 00;31;29;17
Unknown
Yeah. Right. With the trust okay. It's going to cost you some money to get set up. But once it's set up a lot of there's, you know a lot of different options of, hey, you know, you pay a fee and then, you know, the trust can be written and updated for the rest of your lifetime. Right? So but with the trust you get you get control.
00;31;29;19 - 00;31;47;29
Unknown
Right. So in my family's case had those assets been you know state plan using a trust everybody would have what they're supposed to have. Everybody would have had what they're supposed to have. And unfortunately your uncle rolling in his grave I'm sure when that happened I, I could imagine that he was not pleased with the outcome. Yeah.
00;31;47;29 - 00;32;04;03
Unknown
But, you know, everything happens for a reason, right? Maybe that's why, I'm here and and I could potentially use that to, to, to help, you know, hundreds or thousands of other families. Absolutely. You know, to, to kind of it's a great way to look at it. So there's silver lining. Right? Exactly. I mean, everything happens for a reason.
00;32;04;03 - 00;32;26;17
Unknown
I'm, you know, as a scientist where I'm called the bad guy. Right? Everything's just because you can't see the full causal effect doesn't mean that there wasn't a, you know, a reason. So. Right. But, yeah. So the estate planning, if you lean into the trust, though, I usually lean into the trust. Okay. In full control. You know, I've got, you know, a client that older son is is a lot more responsible.
00;32;26;17 - 00;32;42;22
Unknown
Hey, you can take the money and handle a couple million dollars is not going to be an issue, but. And maybe the younger son's not quite there, right? Right. And so the trust, we can say, well, hey, you've got to do x, y, z graduate, get married, but you got to put it in there. Absolutely. We can can add it in there.
00;32;42;23 - 00;33;06;20
Unknown
You're going to get X percent every ten years. Right? Right. With the trust we can okay. Hey I've got I know that my grandkids are going to be taken care of. So that's the reason why I mean that extra control that you get plus two if you look at it, you know, having a, an estate that's, you know, ends up being unsettled, goes to probate, it's going to cost you, you know, can cost time, money, energy a lot, a lot.
00;33;06;21 - 00;33;36;27
Unknown
Right. And so, hey, I paid it. You know, I just paid on the front end and get the trust set up. But I get the peace of mind of knowing, hey, doesn't matter what happens, something happens, you know, tomorrow or if I live to 100, everything's covered. So. Yeah. And I think, and, you know, one thing I'm thinking of is like an overlying like factor I'm hearing is at each piece or layer, we're talking about when it really comes to a true comprehensive plan, is having somebody in your corner who will educate you on each section.
00;33;37;03 - 00;33;55;13
Unknown
Right. It's really difficult if you're a person out there who's listening, you know, you're thinking to yourself, when when Leland's going through this, wait a minute. Hold on. I need to talk to my bank about savings. I need to talk to a financial advisor about investing. I needed to probably talk to a different financial advisor for income. I then need to talk to my CPA about taxes.
00;33;55;13 - 00;34;23;01
Unknown
Then I need to find an insurance agent for health care, and then I need to find an attorney. Yeah, for estate planning. And this is the best news about it. If you have a good financial advisor like Leland. Right. Like, candidly, all the advisors that that work here with Focus Financial Group, we can handle all those. Listen, I'm not going to be the one who's going to write the trust for you, but after I've sat down with hundreds and hundreds of families and seen thousands of situations, unfortunately, money brings the worst out in people.
00;34;23;04 - 00;34;48;17
Unknown
And, you know, there's a, hey, do you want the money to stay in your bloodline? There's ways we can do that through a trust. Exactly. I'm not the one who's actually scratching it. I didn't pass the bar, but we got a guy who does, you know? And so if you can get an expert who can actually educate you on each one of those subjects, and then you, then you bring the expert in when it's saying, I think one of the biggest perks to having a good financial advisor, just from my experience in the business and obviously we are biased, right?
00;34;48;17 - 00;35;04;19
Unknown
We are a biased opinion, but one of the biggest perks to being, an in a spot where you have a good financial advisor is we have a network. We have a network that we can clue you into, so you don't have to go out there and cross your fingers. You're not getting bamboozled, you know what I mean?
00;35;04;22 - 00;35;20;11
Unknown
And I think to your point, education at each layer is important, and it happens at different points in your life, but it's really important to do it kind of to your point in that window, hey, I'm three, four years out, right? But it's never too late. It's never too late. You know, you can always look forward. You can always be better.
00;35;20;12 - 00;35;41;13
Unknown
That's kind of the first principle. There's always a better way. And that's, you know, it's a moving target, right? There's regulation changes. The market changes. You know there's innovation and the vehicles and tools. Right. There's so you you need to have a kind of growth mindset. Yeah I'll say this, you know, to your point about having a good fiduciary advisor on your team, someone to help guide you through the the jungle.
00;35;41;16 - 00;36;09;07
Unknown
You know, there are studies that show that we add about 3% per year, right? And I'm actually even seeing studies that show that having a good fiduciary advisor actually has a measurable increase on on health outcomes. Wow. Right. Less stress. Less less stress. We talked about long term care, health care planning, etc.. Yeah. And so you know, I joke around I mean I end up working in health care anyway, it turns out, you know, somewhat indirectly.
00;36;09;07 - 00;36;31;00
Unknown
But again, you, you, you can't, you know, the peace of mind that you get. Yeah. Of knowing that. Yeah, yeah. I've got my foundation, I've got my investments, my income, my taxes, my health care, my estate plan. Everything's buttoned up. Doesn't matter if, you know, I live to 100 or something. Happens to me tomorrow. Yeah. The marketing can go up, down, sideways.
00;36;31;00 - 00;36;59;25
Unknown
Rates can go to wherever. You know, I'm covered. Yeah. Right. When when you. When you get that now and we've talked about cycles and seasons, you go from being in this kind of, you know, position where you're uncertain and, and, and reactive to a position where actually I know I'm covered. I, I've studied history and I can now not just be reactive to these patterns, but I can now use them to my advantage.
00;36;59;27 - 00;37;21;25
Unknown
Quick story. I, you know, I was working a few years ago, I was working at the bank basically kind of in an associate advisor role, right. And, you know, I had this client come in and this was 2020, probably April, mid-April comes in on Saturday, says Leland. I want you to send $1 million wire transfer over to my brokerage account.
00;37;21;27 - 00;37;39;03
Unknown
And I was like, what? What? What do you mean? And he basically was like, hey, signed by the market. We're down 30 now. We had been trying to get this gentleman to work with us, you know, and I was like, no, I got a guy. I'm not worried about it. Thanks, though. You know, you we're doing your business banking.
00;37;39;06 - 00;37;57;28
Unknown
You know. And so I was blown away by that because what it told me was that he was working with somebody who had him so prepared. Right. Everyone else is freaking out. Covid. It's the end of the world. And he was just sitting by being patient, waiting for the right time. Yeah. Now again, you know, the people will go, okay, that's time in the market.
00;37;57;28 - 00;38;18;22
Unknown
You shouldn't do that right now. I'm not saying that's what we do, but I'm saying with the right preparation, when you have all your plans in place, you know, you're you're not worried about, you know what what CNBC is saying about Mark, about the talking heads, you know, so that's and that's a great story to kind of think wrap things up and how I look at this and this is this is some good information that I appreciate you coming up to.
00;38;18;22 - 00;38;39;12
Unknown
Happy to. And the kind of key takeaways I took from it is kind of at each section. So you get into a situation here where you have a foundation, and that foundation starts with a making sure you have the appropriate protection for your family, but also you're paying yourself and you have an automated monthly savings going into investments, whether that's Roth non-qualified for okay.
00;38;39;14 - 00;38;59;09
Unknown
Then we get into like what we would call income planning, right? And we start making sure that we actually have a plan to account for our budget long term, proactively looking at your life and making those type of decisions. Right. The investing right. The investing piece of like, hey, that 6040 blend, does it work for you? Maybe.
00;38;59;11 - 00;39;21;15
Unknown
But educating yourself enough to understand what are all of my investment choices and which ones make sense for me? Because what it looks like at 30 should look a lot different at 60 on a bear. And having that diversification and also educating yourself on, hey, those protected gross products, those buffered products, hey, what are the really good growth products and understanding the division of lines within that investments.
00;39;21;17 - 00;39;41;26
Unknown
Then we get to the taxes and really talking about, hey, can I save any money I non-qualified money, can I save any money on my IRA dollars? This is a big one because nobody likes talking about taxes, health care, long term care. I think you unfolded that one. For now. Just make sure you understand again your options and you're educated and you got somebody in your court who's a fiduciary 100%.
00;39;41;26 - 00;39;57;28
Unknown
And then the estate planning, let's make sure we check all these boxes so you can have peace and purpose with your money, and you can live with a good peace of mind and not stress out, which actually will give you some more life span. Hope with that hypothetically, you know, okay. And direct. Right. So I mean it's important.
00;39;57;28 - 00;40;16;07
Unknown
So you know AP you're 100% I mean you nailed it there. I know you're in this business to change lives, right? And and, you know, and do good work. And, you know, we can see it. We, you know, we appreciate it. Your clients see it. Right? And, you know, I'm trying to do the same thing. Yeah.
00;40;16;08 - 00;40;33;15
Unknown
Right. How do I help as many people as possible? If I do that, well, you know, I can get to the end of my career and know that, you know, I've had a tangible, measurable impact, and and, Yeah, you know, I love that. You know, that's that's that's the that's the goal. So thank Linden. And, you know, you're you're one of those guys.
00;40;33;15 - 00;40;51;03
Unknown
So I always appreciate talking to you. I always love hearing your point of view man. You got a phenomenal mind. And I love that engineering right. First principles of investing. It's a great take on it. And and so again if you're out there and you're learning some good stuff, Leland just just was giving us some real nuggets there and and really broke it down a phenomenal way.
00;40;51;03 - 00;41;04;28
Unknown
So this is something that you need some education or something popped out there that you felt, you know, it's kind of pulling at your heart strings, heartstrings. Please reach out to us. You know, this is why we do this. We love educating people. You know, it's not one of those things where it's going to cost you anything.
00;41;04;28 - 00;41;22;11
Unknown
You know, we we love connecting with the community and talking to people. This podcast been a lot of fun for us. So thank you out there. Please, please engage this follow subscribe to all that. If you liked what you heard today, please, please continue to join us on this journey. If you're enjoying this, but thank you for joining us on The Real World of Retirement podcast.
00;41;22;13 - 00;41;41;28
Unknown
I'm Alex Cushman. Thank you for joining us. Thank you again, Leland, for coming today here. And, spending so much time and putting some great energy into this and we will see you in the next one. Thank you for joining. God bless you.
00;41;42;01 - 00;41;49;11
Unknown
If. Greenfield confirmed in 744.