Subscribe
Share
Share
Embed
Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
With that said, I believe you should have the plan done first. As simple, we call it the asset flow analysis. Do the projections work? Do the numbers work? Do they suggest that you can get what you want out of your money?
Mike:That is the first and most fundamental question. And once you have that, then you start looking for leaks.
David:Mhmm.
Mike:Where are you spending money where you don't need to spend? And I'm not talking about your budget.
David:Okay.
Mike:I'm saying, these three years in your plan, for example, you don't need be taking paying that much in taxes. That's $60,000 we can just take away right now if we just shift a few strategies. And then over here, down here, we've got $5,060,000 of extra taxes we don't need to doing if we slowly transition from this strategy to that strategy over an extended period of time. These little adjustments often lead up to 6 if not sometimes 7 figures of efficiencies. It's not necessarily the investments, it's the alpha of the advisor or the really the alpha of the plan.
Mike:Because you have your plan which needs to be dynamic because your life is dynamic. Then it's the strategies designed to help you get more out of your money. Then you bring in the appropriate tools in the toolbox. Whether you buy that van go
David:Oh, yeah.
Mike:Piece of art, or you buy some bonds or bond funds, or you buy some stocks, or you buy some indexed annuities, or some MYGAs, or some CDs, or some whatever it is. And when you work with someone that's a flat fee advisor like us, it really liberates the conversation because we have no incentive of keeping all of your assets at Schwab. That's where we manage money is at Schwab. There's no allegiance to Schwab. We just like their technology, their platform, and they're they don't charge anything.
Mike:When we trade stocks or ETFs, so that's cheaper for the the client. We have a lot of clients that will do one time plans and they're at Vanguard or Fidelity, which is great. But notice the neutrality here. Oh, you need a CD? Great.
Mike:Go to this bank, open an account, put a 100,000 in that CD. That's your income into in one year or two years, whatever that might be. Mhmm. Oh, you need you want this investment? Great.
Mike:Go over here. We'll connect you with it.
David:We'll get you access to what
Mike:you can't get access to on your own. And now you're set up. That neutrality changes the game on how financial planning is done. Because we're not incentivized to keep all of your assets in a Schwab account and charge you 2% or whatever the fees typically are.
David:Alright.
Mike:That's the difference. And by the way, we're gonna we're gonna I I got a couple more things here, but always, Smith questions here. We got them popping in left and right in the questions. But anyone that's just joining us right now, you can go to retireontime.com/ask and get the questions submitted. We'll be taking them all for the rest of the show.
Mike:But I wanna make one more point on this. Because a flat market cycle means, or it a flat market cycle doesn't mean that your it's just about growth and stocks and performance. Some people will say, well, I'd rather just do dividends. You have to remember, dividends can stop. Mhmm.
Mike:When the markets go down, companies can cut their dividend. And so if you're saying, well, I've got these dividend stocks, and they're gonna pay me anywhere from four to 6%, and it's all in my tax return in line three a, and and so it's three a, so that's that and by the way, that means that it's taxes long term capital gains, which is a tax efficient way to get dividends as income and all of that. That's all that sounds great. But your income is dependent on another business's ability to maintain that dividend. And if that dividend is cut, your income is cut.
Mike:And now you're in a pickle. Yeah. See, when you put together a plan, you're looking first at the flow of your assets. Towards the end of it, what we're going to have is a series of investments and products that support the strategies and the plan. And you need to separate income and cash flow.
Mike:What's the difference? Cash flow is the money that comes out of the investment and you decide where it goes. Cash flow is a tax conversation.
David:Mhmm.
Mike:So if you invest in a REIT, okay, that's cash flow that might end up as income.
David:Oh yeah. Because the cash is flowing from one place to another, point a to
Mike:point That's You're just looking at but it's the cash flow is taxable unless it's in an IRA or a Roth. Yeah. If you buy a dividend stock, the dividend is taxed as the flow is out of the company, and then it's either reinvested or it's spent. Notice cash flow is an analysis from a tax position.
David:Income
Mike:is what you spend, and you wanna separate cash flow from income. Because at the end of the day, what's the difference of a stock that averages, let's say growth of 6% or 8% versus a stock that pays a dividend of let's say 6% or 8%? It's the same thing. One's growing through a payout structure while the other one's growing through price increases. That's it.
Mike:Yeah. And so when you separate cash flow and income, now you have control over your retirement spending. When you're dependent on income from a dividend stock or from a REIT or from whatever it might be, you are depending on another entity to do their job well, so you can maintain retirement. And that is a high risk that I I would I'm daring to say, most people at least I've met. So based on my own experience, most people do not put those dots together and they say, oh yeah, the markets are overvalued but I'm be a dividend investor.
Mike:Very common one, easy to do yourself. But there are many layers of risk that are not being talked about. When I say, well, what about this situation? It's almost like they haven't thought through those questions, which is That doesn't make someone dumb. These are very intelligent people who did not know all of the questions that they were supposed to ask.
Mike:And that's okay. Mhmm. I walked up into a doctor's office. I don't know the questions asked. Doc, here's how I feel.
Mike:What should we be looking at? Oh, we need to run these tests. I didn't even know those tests existed. Yeah. Alright.
Mike:That's kind of how how it's, right? Yeah. And that's the same with nutritionists, with mechanics. I love mechanics. I love it.
Mike:Hey, here's my car. Is it working well?
David:Yeah, right.
Mike:It's like, you tell me.
David:What's this noise? What's this vibration? Yeah. Yeah. Is that good or bad?
David:Should I ignore that?
Mike:Is there an update I'm supposed to do that I didn't even think about? That's gonna make give me more more mileage out of the car? Right. So so those things really matter. They truly really do matter.
Mike:You've got to look at them. And separate and and diversify by strategy and so on to be able to have more control over your your retirement. So let me know if you've got more questions on that. Before we dive into the questions, I do wanna say if you look, if this is new to you, if you're going, I never really thought about it that way, here's what you gotta do. Just go to retireontime.com, click talk to a planner.
Mike:What we're doing right now is this really cool introduction. Thirty minute conversation. I wanna ask you two things. What do you want your retirement to look like? I need context.
Mike:What do you want from a financial advisor? And then we have this new analysis called the retirement leak analysis. We run the first version of your plan and we point out all the different leaks through our 47 checklist.
David:Oh,
Mike:here's, you know, here's $10,000 that you don't need to spend. Here's $20,000 in taxes. Here's 15,000 you could save in health care. I mean, we just go down this list, and it's like, oh my gosh. Yeah.
Mike:I had no idea I could adjust my plan to save so much money. Retire on time.com. Click the button, talk to a planner, ask for the retirement leak analysis, doesn't cost you a dime. We just need to understand what you want in your retirement and what you're looking for from a financial professional. We need to understand those things because those shape how we can do the analysis.
Mike:At the end of the analysis, if you wanna keep talking with us, if you want a one time plan, great. If you don't, that's okay too. We're pretty casual in regard like if you wanna work with us, great. If you don't, that's okay too. But I want people, as many people within the sound of my voice that are not already clients, to run this analysis.
Mike:Because now is one of the best times to run it and look at the four zero one k and your current positioning. Because it's not just fees, it's not just taxes, It's also too much risk and what could happen in certain areas.
David:There
Mike:are so many inefficiencies that people have now. 12 b one fees and and anyway, I could go on and on. There's 47 in our checklist right now. It's growing. Mhmm.
Mike:Retire on time.com, schedule the thirty minute call. Highly encourage you all because right now, the markets seem to be near a top. They haven't really grown in last two or three months. So are we at the top? Where's the top in two years?
Mike:No one could possibly know. But in my opinion, when you put a plan together first, when you then explore the strategy second, so you're not wasting your money in unnecessary leaks, then you're more prepared for the good, the bad, and the ugly. Because a true true investor, a true financial professional, a true retiree who cannot predict the future of the market should be prepared on how they want to react. So if the markets go up, it's an opportunity. But if the markets go down, it's also an opportunity.
Mike:Retire on time.com. Click the button that says talk to a planner. Schedule that call today. We've only got like three or four slots even available this upcoming week.