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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.
Welcome to how to retire on time, a show that answers your questions about all things retirement, including income taxes, Social Security health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com. My name is Mike Decker. I'm the author of the book, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to finance, we can pretty much talk about it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational as in not financial advice. If you want financial advice, personalized financial advice, then go to www.yourwealthanalysis.com. You can request your wealth analysis from my team and me today. With me in the show today is mister David Fransen. David, thanks for being here.
David:Well, I'm glad to be here.
Mike:Yeah. Yeah. David's job is gonna be reading your questions that you submitted, and I'm gonna do my best to answer them. You can submit your questions right now by texting us at (913) 363-1234. Again, that number is (913) 363-1234, or you can email them to us at heymike@howtoretireontime.com.
Mike:Let's begin.
David:Hey, Mike. How are you planning for the potential decrease in Social Security benefits?
Mike:Yeah. This is a hot topic for two reasons. One is many people in the financial services space love the fear of what this is. They don't love that it's happening. Yeah.
Mike:But it's a very interesting talking point to try and get people in their doors. We're technically doing it right now. I mean, these are questions people have. But let's let's make sure we're gonna address the question head on and not use it to manipulate people into doing a specific thing. When I say a specific thing, the reality is there are 10 ways you can take income in retirement.
Mike:There There are so many ways you could do tax minimization. You could minimize your taxes, and so the tax minimization offsets potentially the decrease of it of your, Social Security potential dip. So it's not just, oh, you need to buy another annuity. So if if if Social Security dips, you could turn on that income stream. That's just one of so many different ways you could address the potential problem here.
Mike:But here's the reality of it. Social Security, it's a government benefits and entitlement, and the largest voting block in the country is going to decide how this plays out. There's a massive book of all the different ways the government can tax us. Just copy and paste and put it into a different policy and help generate, quote, unquote, revenue. Now I'm not suggesting Keynesian economics, tax more pay for things, or the government's supposed to stimulate everything.
Mike:I'm not talking about supply chain economics or Reaganomics. All I'm saying is if they need a little bit of extra revenue, the congressional budget office Yeah. Has a prewritten playbook built from economists of saying all the different ways they could increase taxes or revenue for better, for worse, and they can do those things. And there's a whole section of how they can address Social Security. They just have to get something passed.
Mike:Now this is my opinion. So let's call it speculation because that's exactly what it is. No one knows the future of the market. But here's here's what I think is gonna happen. I think that the full retirement age for those that are, let's say, 50 years old or so is just gonna get extended.
Mike:Mhmm. Maybe those who are 55 years old right now, it'll get slightly extended. Maybe it, you know, it goes from 67 to 69 years old. Maybe it goes to seven years old. And for everyone that's my age, you know, or in our mid thirties, maybe it's gonna be 70, 70 five years old.
Mike:I mean, the reality is when Social Security first started, the full retirement age when it would start was a couple of years after you were supposed to have died. Uh-huh. It was there as a security blanket in case you live longer, but that was also back when people worked until they basically had one year left, and then they died. Yeah. So things have changed so much and how social security has been managed.
Mike:Never really updated to the times I would be a huge fan of. And there, there are some benefits and detriments to this, but allowing social security and not just buy government debt, but maybe part of Social Security invests in American companies in the stock market. Because right now, the Social Security Fund is basically a bunch of treasuries. Those are barely keeping up with inflation.
David:Right.
Mike:So but do you see how there's there are so many ways they could solve this? They just haven't selected the way that they're comfortable solving with it, and they're also gonna hopefully get reelected with whatever that way is. Right. There's no easy way to slice the issue, but it's a big but. Yeah.
Mike:There are a lot of ways that it could be done. So these are the, the politicians ready to retire, the ones that aren't coming back, that will probably be the ones that will put themselves on the altar of saving social security, try and get it through. They'll be the scapegoat, and it'll be fixed. And I I wanna point out to you, it's it's a very complex issue. Because if you have Social Security, for example, put part of their fund into, let's say, a bunch of American companies, which companies are they?
Mike:Is there a bias to that? That's gonna put a lot of money in those companies, which cause their stock to increase.
David:And
Mike:then what happens when they need to sell those shares? How do they sell the shares without plummeting those stocks?
David:So it's Right.
Mike:I mean, it's admittedly a complex issue, but there are many ways that it could be sliced. Here's how I see retirees addressing the issue. K? No one knows the future of the market. No one knows the future of Social Security.
Mike:No one knows the future of health care and the expenses you may have. For goodness sake, four in ten people 55 years or older are expected to experience dementia.
David:Wow.
Mike:How do you plan for that? And then you've got your the house, the roof, the car replacements. You've got kids and grandkids. Maybe you wanna gift them somebody help them out with certain things. Look at the iPhone.
Mike:That was invented recently. How many people had subscriptions to Netflix in the eighties Yeah. Or to Spotify or Apple Music or whatever? I mean, we have evolved so much today that whether it's a Social Security problem or something else, there will be problems in the future. Heck, maybe it's not problems.
Mike:Maybe they're first world problems like, you wanna buy a robot to just clean your house. And it's not a Roomba. It's like an actual Right. With with iRobot or something like that.
David:Yeah. Some kind of uncanny valley, like, humanoid
Mike:robot. Robin Williams robot movie. Remember that superintennial? Years ago. Anyway, so many robot movies.
Mike:Hopefully, they don't uprise. But the point being is you don't know what you even wanna buy in the future Yeah. Because it might not have been invented yet. Right. So my point being is I firmly believe that every retirement plan, yes, it needs a reservoir.
Mike:It needs principal protected accounts, whether it's an investment or a product that can't lose money so that you can draw income from it when the market's crashed. That's that's, in my opinion, an essential. But everything in your portfolio should have some sort of growth component to it. Mhmm. Why?
Mike:Because if you grow your money, it's this sounds so rudimentary. But if you are growing your money, then you're offsetting inflation and having more to work within the future. You need lifestyle flexibility and the idea that, hey. How much income do you need right now in retirement? Great.
Mike:Let's buy an annuity, turn on lifetime guaranteed income is supposed to solve all of your problems. You don't even know what you want in the future. No one does. So to put yourself onto a fixed income plan to where you have very little wiggle room, I think is a troublesome proposition. I get maybe if you get, let's say, 40,000 as a household in Social Security benefits, and then you want an extra 20 just to kind of have that kind of stability, but everything else comes from your portfolio.
Mike:Look. I get that. We need to live within our emotional and economic limits. But don't go extreme. Don't go all in on the annuity lifetime income, please.
Mike:There's a balance in all things. There are other ways to generate income. There are 10 ways, 10 common ways that you can generate income and even more if you wanna get really creative. But the point being is assets, your investable assets should grow. And if they grow, it gives you more possibilities, more flexibility, more say over how you wanna structure and enjoy your lifestyle in the future and how you wanna give your money when it comes to legacy.
David:Yes. If all things are going well and you are experiencing some growth in your portfolio and if Social Security benefits were to drop
Mike:Then that you're exactly where I was going. No problem. Offset that. You can absorb the difference. If proper planning is done, you can absorb those adjustments.
Mike:Yeah. This is why you plan first, then you explore these strategies. Strategies are intended to find efficiencies in your portfolio. In other words, how do you get more out of your money? And then you start to piece together the portfolio.
Mike:Mhmm. That's it. Yeah. But you have to take it from a comprehensive position. You gotta be willing to spend time.
Mike:That's why we don't do a one meeting analysis. This is why we have a thirty minute call and then a sixty minute. Let's understand the risks. Let's understand kind of the big picture. And then we have a follow-up sixty minute of here are the possible solutions.
Mike:Do you want to continue to explore them? Do you wanna continue to look into them or not? Yeah. Very calm, low pressure situation as in there's not really any pressure. It's just what is right for you, and does it follow the rules that we believe.
Mike:You know, don't draw income from the account that's lost money. Diversify your assets by objectives or strategies, not this investment ambiguity garbage. And then lastly but not least, plan because predetermined guidelines can help increase your overall probability of success.
David:Mhmm.
Mike:That's it. It takes time to do that. That's why, again, it's not a one meeting analysis. It's it takes a couple of visits to do a proper, in our opinion, comprehensive analysis. That's all the time we've got for the show today.
Mike:If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis.
Mike:Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.