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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;21;08
Unknown
Welcome back. We are in episode three, real world retirement, real people, real solutions and real families that we're going to be talking about now, one of the things I'm really excited about in this episode is I have an industry expert here with me, James Katie goes, JT, Katie goes, been in the business well over a decade.
00;00;21;08 - 00;00;40;26
Unknown
18 years, I believe, to be exact. Is that right? You're 18 years your age in me now. And yeah, so I see I see a little bit of the gray in the beard. Right. So, first and foremost, I want to start off JT, you know, kind of give folks, you know, what got you into financial planning, what your story is.
00;00;40;26 - 00;01;00;29
Unknown
Why why you love you, you know, doing what you do, if you don't mind. Yeah. Yeah. No. That's great. Thanks, Alex. And thanks for having me today. I started out, when I was a kid. I was always really good with numbers, and, it's kind of funny when my grandparents used to live in Florida and we would drive twice a year, and back then we didn't have iPhones, right?
00;01;00;29 - 00;01;22;02
Unknown
That's right. And I always got dizzy when we would drive if I was reading in the car. So my dad, who's an accountant by trade, we used to just do math problems. Really for 24 hours down I-75, we'd be doing, you know, what's this plus this and that minus that. And, it just kind of it's always been something that I was good at.
00;01;22;02 - 00;01;44;21
Unknown
So fast forward, you know, going to college, I always knew I wanted to go to business school. I didn't know what I wanted to do with that. And I was sitting in my counselor's office and, you know, just like, the stars align. There was a magazine in front of me that said, you know, the the biggest growth industry is going to be financial planning.
00;01;44;23 - 00;02;03;18
Unknown
And, you know, all the retiring financial advisors and the baby boomers. And I walked into her office and with the magazine and I said, tell me about this. And she goes, funny you should ask, JT. We actually have a degree, the first one where you can get a degree in the state of Michigan for personal financial planning.
00;02;03;24 - 00;02;28;12
Unknown
You're going to take courses about estate planning, insurance planning, income planning. Yeah. All those subjects you did from, you know, a professional, right. And I said, great. I go, do I have to write any essays? Right. No. Do, you know, and, so it kind of spiraled from there. Yeah. And, I, got my degree in financial planning.
00;02;28;12 - 00;02;51;23
Unknown
Personal financial planning from Western Michigan University. Moved out to Arizona. Continued my education with my career and got an MBA in financial management markets and kind of just started my career from there. Yeah. But really, the hook for me was looking at, you know, family experience. Right? And, you know, my grandparents, both immigrants, right.
00;02;51;23 - 00;03;10;03
Unknown
On both sides of the family, they came from Greece. And, my grandfather was a small business owner, very successful. When he passed away, they had no plan for my grandmother. Right. And, you know, he passed away when I was 14. My grandmother ended up passing away, and I was about 19. And those five years were a struggle.
00;03;10;03 - 00;03;28;18
Unknown
She had to sell her home in Florida. You know, the money wasn't coming in anymore. My grandfather worked till the day he died. Yeah. So it was very hard. The other side of the family. My grandmother worked at Chatham's grocery as a butcher. Barely. Barely spoke English until she, you know, until she had grandkids. Essentially.
00;03;28;20 - 00;03;50;08
Unknown
Yeah. I've never seen her work a day in her life. Guess what? She had a pension. She had an income plan. Big difference. Where you, for one part of your family was a little wealthier than the other? Yes. Or more taken care of. Yeah. And it turns out. Wow. This is the total opposite. Yeah. And that really got me interested in saying, okay, how do I make sure this doesn't happen to my family?
00;03;50;08 - 00;04;17;27
Unknown
How does it make sure this doesn't happen to other people that we care about, right? Or people in the community? And, that's really why I was like, okay, this this works. I knew the timing was real, real tight right there. Yeah. When I was going to college, all this stuff was happening with my family. Yeah. So, yeah, it was it was just kind of fell into it that way by being good with numbers and having that family history of saying, okay, like, you know, people need help with this.
00;04;17;27 - 00;04;38;19
Unknown
Yeah, I'm good with numbers. Right. Let me get let me get involved in this industry. Right. Well, hey, that's a great story. And it's funny how you know, so, so many of the good advisors that I talked to in Andover met through the years. There's that person all tie of like a family experience. Right. It's like when you talk to when you talk to a potential client about long term care, right?
00;04;38;19 - 00;04;59;13
Unknown
Yeah. They don't really think of it until they watch their parents go through it, you know. And it's it's very similar to that. So, so today, I know you got some good stuff for me today. You know, the kind of phrase we're going with the early retirement, the early retirement, and we're going to be dissecting a couple different cases.
00;04;59;15 - 00;05;14;01
Unknown
And JT was kind enough to share with me. You know, we're going to have a situation here where we have somebody who had a pension, retires early, and then potentially that situation where you don't have a pension and what that looks like. So I'm going to kind of turn the keys over to you wherever you'd like to start.
00;05;14;01 - 00;05;31;05
Unknown
JT, you know, let's kind of dive in, kind of give me that, that, that case scenario or that case study, that you think is the best place to start. And we'll start diving into this early retirement concept. Yeah. Early retirement folks. That's what we all strive for, right? Right. Easier said than done, for a lot of folks.
00;05;31;05 - 00;05;59;06
Unknown
But we'll start with the non pension. Okay. Right. I think that's a little hard. Yeah. That's a little more complicated. Right. So, case study, long term client of mine. And the gentleman was just turning 60 years old, married, grown kids out of college, right? No obligation to them. And his company was getting purchased work there for, you know, 15, 20 years, no pension, senior level type executive.
00;05;59;06 - 00;06;23;09
Unknown
Right. And, you know, high income, high spender, which is, you know, those usually go hand in hand sometimes once the kids get out of that. Right, right. But we, you know, he came to me, he goes, JT, companies getting bought. I helped with the sale. Right. I'm going to get a lump sum here. It wasn't, life changing amount of money.
00;06;23;11 - 00;06;43;25
Unknown
I'm 60 years old this year. No one in my family is a male. Has lived past the age of 76. Do I need to go back to work? And my first answer was no. Just make your wife work. Right. Well that doesn't. Oh, yeah. That didn't go over to our. Yeah, she know she was sitting in the room.
00;06;43;25 - 00;07;04;02
Unknown
We had a big chuckle about it, but, no, the real answer was, okay, we need to set up an income plan. Let's take a look at how do we create like a family pension for you? How do we create an income plan? Will it work to fill this gap that you're going to have between age 60? And when we decide to take Social Security?
00;07;04;04 - 00;07;22;04
Unknown
And back then there was a lot of different ways you could manipulate Social Security, right. That aren't available now. Right. They've changed the rules. Right? The rules have changed. I think the rules have changed like four times in the last four years. Yeah, it's it's really hard to navigate. But that's the great part about being in the industry, right?
00;07;22;04 - 00;07;52;07
Unknown
You have some great tools. Great resources, especially here with focus, right, where we can go ahead and do that planning for clients and really get it in. Right? Right. So we started there. I think, you know, the income plan starts, the Social Security plan. And then behind that is going to be their investment plan. And what we found out was they both could retire very nice if we put together the proper family pension and Social security plan.
00;07;52;10 - 00;08;22;23
Unknown
And I won't go into the Social Security plan now because those options are not available. Right, right. But you know, there's some unique things you can do back then to make sure that people had enough money and the spouses had enough money and kind of manipulate that. Uncle Sam wised up. Yes. And, Gary, they said, hey, we're, overpaying a lot of people, but, but really, the most important thing was, let's take this lump sum of money, let's fill this gap between Social Security and when you want to retire.
00;08;22;24 - 00;08;45;21
Unknown
Right. What other revenue sources, income sources do we have to put into your income plan? Right. And is it going to be sustainable? Right. And it turns out it was. And it also turned out and in the main, the main thing that was hard for them, I think, was saying, you know, this gentleman for 40 years only invested in the S&P 500, right?
00;08;45;28 - 00;09;12;13
Unknown
I mean, that was his 401 K, S&P 500 for 40 years. Got lucky with the timing, right. He didn't retire in 2008. Right. So got real lucky with the timing there. Yeah. But what we what we found was if we just simply reduced risk, put together a family pension income plan, that this family could retire, spend a little bit less money, but not alter their lifestyle.
00;09;12;15 - 00;09;30;24
Unknown
And guess what? Not go back to work, get to enjoy retirement early, go and and spend time with the grandkids and really just enjoy, you know, their life. The golden era, the golden era. Now, one of the things we did discuss was, and you mentioned it earlier, was like long term care and planning is people are living a lot longer.
00;09;31;01 - 00;09;55;26
Unknown
Correct. And so that was a concern for the spouse. You know, she said hey just because his side of the family, nobody lives past 75 or 76. My family lives in well into their 90s. And you know, how is that going to affect me when he's gone. And the answer was well our income plans for both of you until you're 90, right.
00;09;55;28 - 00;10;13;17
Unknown
And if he kicks the bucket a little early you doubled your income. Right, right. You know, the money's not going anywhere. The only difference is going to be in your Social Security. So, it was really nice to be able to give them that peace of mind. To say you can retire early. You can enjoy your grandkids, right?
00;10;13;17 - 00;10;30;11
Unknown
You can enjoy your family, you can travel. You don't need to worry about going back to work for 2 or 3 years, which is really hard for a lot of folks to know that, you know, especially where people have long term careers, just say, okay, this one's over now I'm going to start one for 2 or 3 years.
00;10;30;13 - 00;10;47;29
Unknown
It's really hard for a lot of folks to do that, especially who have, you know, been in been in the same industry for a long time and they just don't see the benefits. So, turning off the income from work, turning on the income from that, that family pension, like we call it. Yeah. Is something I know that, you know, you know, it's about there.
00;10;48;00 - 00;11;06;13
Unknown
Right? And, you know, a couple things, like, there's a couple things that I, when I hear you're talking about, I want to dive into. So like, you know, when you're saying and I don't know, obviously we both know and just set a good expectation for folks out there. You know, when we talk about investments or we talk about these specific case scenarios, don't take that as a blanket approach.
00;11;06;13 - 00;11;26;09
Unknown
Oh, I should go do that. Right. Like, that's one of those things where it's so unique to the person. It's so unique to the situation in the family. That's also why, again, I and I'm a broken record. I'll do this till I'm blue in the face. I always want to encourage you out there if you're listening or watching, again, you know, engage with us, drop us a line, send us a question.
00;11;26;12 - 00;11;46;08
Unknown
You know, comment. Make sure you're liking our social media channel so you can stay in touch with us. But also, if this is you and you're like, hey, these are some of the questions I'm thinking. Example what rate of return does a family need to average to not run out of money? Now, now, don't confuse that. When I say that, don't confuse that with the concept of hey, what's our goal?
00;11;46;15 - 00;12;03;02
Unknown
Right, right. There are two different. There are two different things. What's a minimum. And then hey, what's our goal? And that should be a conversation we're having management I know we have that conversation all the time with the families we service. Oh yeah. But you know, when when it gets into the investments, JT, when somebody says, hey, I want to reduce risk.
00;12;03;02 - 00;12;20;02
Unknown
And again, this is why I said, you can't give a blanket approach, but maybe just give a little bit of thought process and maybe throw some ideas out there. You know, are there some specific investment products, for example, I know two that come to my mind and again, you might say, yeah, that's the same concept. But you know, there's there's certain annuities.
00;12;20;02 - 00;12;37;03
Unknown
Now, a lot of people have a bad and negative stigma with annuities. But like for me, when I hear somebody say reduce risk, a good bond replacement, I would I would say, sure, it could be like a fixed indexed annuity. Right now you got to know if it's a good or bad one because there's good and bad ones out there or like, dividend play, right?
00;12;37;05 - 00;12;54;09
Unknown
Yeah. Use in equities with dividends or, you know, there's some kind of things that you've historically leaned into when somebody says, hey, I'm thinking about reducing risk. Or is it again, it's very unique to that person. Yeah. I'll say there are four ways to deal with risk. Right. So the first way we we touched on is risk acceptance.
00;12;54;12 - 00;13;15;13
Unknown
Okay. I'm accepting this. I'm willing to, to, to, you know, be comfortable with my early retirement knowing that this is out there. Okay. The next way is going to be risk transfer. Okay? Right. I'm transferring this risk to somebody else, like an insurance company, like an insurance company or whatever. Yeah. Like you're going ahead and you're saying, I don't want to take take this on.
00;13;15;14 - 00;13;36;14
Unknown
I'm going to put it over here for someone else. And also similar to our relationship when we manage people's money. Yeah. Exact transfer. That's a transfer of risk. Yeah. Okay. So we have risk acceptance. Risk transfer. There's going to be risk avoidance. I do not nothing. I don't want nothing to do with this. Right, right. I don't drive 90 on the highway.
00;13;36;14 - 00;13;54;03
Unknown
I drive in the right lane. That's good. Right. That's a very good thing. So we can avoid certain risks, right? I think lifestyle. Yes. You know, are you eating healthy? Yes or no? Are you're not jumping out of a plane, right? Yeah. I would be an avoidance of risk. I do wear a helmet if you ride a motorcycle.
00;13;54;03 - 00;14;15;06
Unknown
Right, right. Okay. All right. And then. But that example is risk reduction okay. Right. So that's the fourth type would be reducing the risk okay. Risk reduction. Yeah. So think about maybe like your portfolio. Yes. Taking some risk out of there too. Now that you know and this is a big thing with people who retire early is they look at they say, well I instead of having 25 years in retirement, I have 35.
00;14;15;09 - 00;14;41;18
Unknown
Okay, let's reduce some of that risk. Right. Because guess what. We know the market's going to go down by a lot a few times within this 2530 years. Let's reduce that risk right. Let's like drive smooth or let's say like have that road smooth paved. Yeah. So you can reduce risk in that scenario. And for folks who are retiring early or considering retiring early, you know, talk with a financial professional, bring this up.
00;14;41;18 - 00;15;01;21
Unknown
Like what risk is am I going to accept. What risk am I going to avoid? What can I reduce. Right. And what can I what can I get off my plate. Right. And, that's a conversation that, you should have and, you know, before planning for retirement, but especially if you're doing early retirement because you can have a lot of time on your hands, you might want to accept some risks.
00;15;01;21 - 00;15;21;17
Unknown
Right? You might want to transfer some of these things somewhere else. Yeah. Might want to say I don't ever want to see this again. Get it know like let's let's get it away from me. So yeah. Everybody's different. Those are the four ways to handle risk. Got it. And I think they're, they're important for all retirees, especially for early retirees or people considering early retirement.
00;15;21;21 - 00;15;37;21
Unknown
So, you know, kind of getting into the case study where to your point, you have this early retiree don't have a pension, no pension. And so then you go through this process of, okay, we need to identify your income plan. Does it even make sense for you to retire at this point? Are you are you going to run out of money?
00;15;37;21 - 00;15;56;14
Unknown
That's really the question that you're answering for that family. Exactly. And then you're going into, okay, now we're going to start diving into your Social Security, right? Yeah. We should plan a huge part of it. How much of a gap do we have to solve? If you're done at 60 and you're taking out 62 social Security, are you taking your Social Security out at 70?
00;15;56;14 - 00;16;17;22
Unknown
Right. To your point, you have to identify, hey, how much, pressure are we going to be putting on your personal savings and investments? Yeah. And also our tax plan. Right. So with this particular case, large 401 case for both going to have huge liability for our RMD. It made a lot of sense to start spending that down.
00;16;17;23 - 00;16;45;08
Unknown
Yeah. At 60. Yeah. Right there old enough over 59.5. You know even if you're 55 there's ways to get around that like a 72 TI. Yep. There's some certain rules there in the tax code. Yeah. Rules, loopholes. However you want to say right. But you know, for them the, the smartest thing to do was and again, let's spend some of this down so we can reduce future tax liability.
00;16;45;10 - 00;17;16;16
Unknown
Right. And that was important because coming age you know back then it was 70.5. You know those RMDs that they were going to have to take, you know, they're well into the six figures. And this is money that is getting taxed at the top line. Right. So to go ahead and reduce some of that, to, to diversify their sources of income by looking at converting some of those assets into Nontaxable Roth conversions, a Roth conversion exactly right turn is not taxable in the future.
00;17;16;17 - 00;17;37;10
Unknown
Right. You know, those are great things to look at a plan, especially if you have, like, maybe people want to plan for a big event and they don't want it to affect them tax wise with all their other income planning. Now you have some nontaxable assets. So we solve for those things. Yeah. But again, every family's situation is different for them.
00;17;37;10 - 00;17;57;18
Unknown
They happen to have these bigger nest eggs that were in qualified plans. A lot of families have nest eggs that are non qualified. Well, now we're now we're doing a different plan. Yeah. We have different options. So yes you know we have to take each family individually, really understand that situation and say okay no one wants to pay extra tax.
00;17;57;20 - 00;18;22;05
Unknown
We all know that. Yeah. How can we reduce that. Right. Legally reduce that, but also make sure that we're doing it. So in the future we're set up not just year one. Right. This is an ongoing living, breathing plan. Yeah, there's a lot to unpack there because, you know, first and foremost, it's like to your point, hey, it's not year one.
00;18;22;05 - 00;18;40;04
Unknown
It's a long term. And I always talk about this with clients of, you know, our perspective is so much different than a CPA or an accountant. Oh yeah. You know, they're looking at what this year. How do I get the taxes down this year? We're looking at the next 30 years, hypothetically of your life. And so it's not that the CPA is right or wrong or it's not that the financial advisor is right or wrong.
00;18;40;04 - 00;19;02;20
Unknown
We just have totally different perspectives of what we're looking at and trying to accomplish. One thing I did want to hit though, so and just to verify again, there's there's folks out here who may or may not know, you know, if you can just really quickly the difference between a qualified dollar and a non qualified dollar, because I know there's probably folks out there who aren't really familiar with those terms.
00;19;02;20 - 00;19;25;28
Unknown
Sure. Yeah. So, qualified money is going to be anything that you have not paid taxes on yet. Okay. So your 401 K is your traditional IRAs. If you're a small business owners right. Your steps and your symbols. Your 403 BS 408 457. Right. All the good ones. Yeah. Anything with a number basically is going to be qualified.
00;19;25;28 - 00;19;49;27
Unknown
Yeah. Non-qualified dollars are going to be dollars you already paid your taxes on. Okay. So something like, you know, your personal savings, your stock portfolio. Right. Anything along those lines are going to be non-qualified assets. Right. They don't have any preferential tax treatment when you started. Yes. Contributing to them. Those are really the main things where you pay capital gains, right.
00;19;49;28 - 00;20;07;09
Unknown
Hey, you invest the money and at the end of the year you get you get that, you know, ten I hey, there's the capital gain, long term, short term, all that good stuff. Exactly. Okay. Thank appreciate you kind of breaking that down. So, you know, when we get into early retirement, you know, to your point, there's kind of two cases we have.
00;20;07;09 - 00;20;35;21
Unknown
And I think that's a really good explanation of what we need to do. We need to have an income plan to verify if they're going to run out of money. Also establish that required rate of return. We then need to have a Social Security plan to understand how we need to bridge the gap. Exactly. Then that bleeds into us going into an investment plan, which is going to tell us which are the best investments to use to accommodate that gap, and the long term needs tax planning, which is a whole nother bag of worms, which we could probably do a two hour slot on Roth conversions and all that fun stuff.
00;20;35;26 - 00;20;55;22
Unknown
And then lastly, to your point, you're getting into, you know, that that legacy planning, right? And again, one spouse passed away early. One doesn't. Where does the money go to the kids. And again, that's kind of like what we always call comprehensive planning. Comprehensive I like to call it longevity planning. Okay. I like that now that people are living longer.
00;20;55;22 - 00;21;17;11
Unknown
Right, right. This this longevity of your family. Right. Longevity planning turns into legacy planning, right? Right. Some people want to leave some money behind. What's the most efficient way to do that? To not put a burden on these. On your family? Yeah, absolutely. And that comes with, you know, and we can talk about, you know, we talk with clients about what's the best way to title your assets.
00;21;17;13 - 00;21;39;19
Unknown
Right. That's huge for for this legacy. Yes. Yeah. So these are all things that, you know, again everyone's situations are unique. People come from blended families. Some people don't have heirs. Right. Or beneficiaries. So there's all sorts of different things that we need to be looking at. Yeah. Comprehensive planning. Like you said, they all need to be talking to each other, right?
00;21;39;20 - 00;22;03;12
Unknown
They do. And going back again, I think I mentioned by trade my father was a CPA. Yeah. CPA love them. We need them. The tax code I mean we could go all the way to the ceiling if we lined up the papers. Right. But they're reactionary, very few people. Great point. Very few people besides business owners talk to their accountant before December 31st.
00;22;03;12 - 00;22;20;00
Unknown
Right. Very, very, very few, very good points. So they're going to say this is what happened. Here's what we need to do now. What we're going to be doing is saying, here's how we're going to make this happen, right. This is what's going to happen, not this is what happened. This is what's going to happen. Right? Let's plan for that.
00;22;20;02 - 00;22;37;11
Unknown
Love that. And I like to I like to send my clients or their CPA with a nice folder with a nice little bow on it to say, here, can you file this? Yes. Right. Yes. And we've already answered all their questions. I laughed because we planned for it to do proactive planning. There you go. Good, I love it.
00;22;37;13 - 00;23;00;15
Unknown
So let's get into the other case study. We got a family who has a pension. Yeah, right. So, you know, let's kind of walk through that because, I mean, you know, especially in, you know, where you grew up, right? I mean, if you want to talk about that a little bit, but, you know, let's get into that pension conversation because I know that's one of the most common concerns I get from people is like, do I take this lump sum?
00;23;00;15 - 00;23;19;21
Unknown
Do I take the annuity payout? Right. Yeah. Does it work? What's the taxation? So if you give a little bit of your history because it's actually a good story, I would say we should highlight. Yeah. So I grew up here in Southeast Michigan where we have the big three, as you know, everybody had a pension, right?
00;23;19;22 - 00;23;42;28
Unknown
Yeah. It was, it was almost like working for the government. Right. You had a pension, right. So it's unique for where we grew up to have people have this, you know, maybe retire early at, you know, did their 30 years at Ford or GM or DTE energy or like any of these big place. Right. Right. And they just walk into making about 70% of their income.
00;23;43;02 - 00;24;10;29
Unknown
Right? Right. And if you wait until you're 65, Social Security usually makes up the rest. You're you're pretty close, right? You're pretty close. The difference is a lot of these, you know, workers, right? People work in the big three. They never they probably never had or a lot of them never had maybe that big like that big lump sum like, oh, I made right a large amount of money or my company got it was a slow roll.
00;24;11;05 - 00;24;33;10
Unknown
It was a slow, steady roll. And guess what? They're accustomed to having a slow, steady income, but they're gradual increases. So it's it's unique to where we're from. But you know, growing up we we knew if you walk down the street like, oh, that guy works at Ford, that guy works at GM. How do you know? Well, he's got a Corvette and he's got a mustang, right?
00;24;33;10 - 00;24;54;12
Unknown
He's got a charger. Right? Right. You always knew where everybody worked just by looking in their drive. Yeah. So with the with the specific study, you know, how do you walk through that process trying to identify obviously it's really hard when we don't have the fancy charts and tables to show. But, walk somebody through, you know, if somebody is out there listening who is facing this decision.
00;24;54;12 - 00;25;11;05
Unknown
Number one, I again, I encourage you to reach out to us. JT is an expert on this. You know, if you have questions, we have a whole team. But, you know, this is a great opportunity if you want to connect with somebody who actually does this for a living, has done it hundreds and hundreds and hundreds and thousands of times, experience matters.
00;25;11;05 - 00;25;27;18
Unknown
Please do not hesitate to reach out. Drop us a comment, send us a message. We're here to help. And I know I'll say it till I'm blue in the face. So, you know, kind of. Give me. Give me that. You know, that that kind of case study you were talking about on the process you went through with, hey, do I take the pension, annuity, or do I take a lump sum?
00;25;27;18 - 00;25;59;19
Unknown
You know, walk me through that experience. Yeah. So, and again, lots of lots of people in this, can fall into this category. Husband and wife, teacher. Ford employee. Okay. Okay. Yep. Ford's doing buyouts. Should I take this buyout and get my pension now? Right, right. So. Or do I stay on and work these next few years?
00;25;59;19 - 00;26;21;00
Unknown
Right. I think it was maybe 3 or 4 years he had to go to get that that number. Okay. Mrs.. Ready to retire. Right. Put in her 35 years in real simple that you quit. You just getting paid. I think it's like next month depending on. Yeah. I mean, it's about. Yeah. Right. It doesn't really. Those teacher pensions are nice.
00;26;21;00 - 00;26;38;12
Unknown
Yeah. So with this one their main concern was okay, one, what am I going to do during retirement? That was a big one for, for our client. Right. Used to getting up and going to work every day. That's kind of like their life. What do you do? What am I going to do? How am I going to spend my time?
00;26;38;12 - 00;27;00;22
Unknown
Yeah, but also, what's the best way for me to get this income? Should I take this lump sum from them and figure out a way to to get what I need? My. Yeah, my my, my goal per month, right? Or do I just say turn it on right now with with with Ford. Right. So we ran the numbers.
00;27;00;22 - 00;27;31;23
Unknown
Right. And that's something that we will do for our clients. That's the nice thing about being a fiduciary, right? We don't I'm not beholden to Ford Motor Company or anybody. I'm holding to my clients. Right. And so we took that, lump sum payout, right? We kind of ran the analysis, we started shopping it around. And what we found was we could get the same monthly income with the same spousal benefit for a lot less than what Ford wanted to do it for.
00;27;31;24 - 00;27;53;25
Unknown
No kidding. No kidding. Yeah. So in this case, you know, we were we basically had about, $350,000 extra that we didn't need to give into this pension. Right. If we took the lump sum. So what we ended up doing is we we we took the lump sum. We rolled it over. Yeah. We roll it over into, like, an IRA, into an IRA.
00;27;53;25 - 00;28;08;16
Unknown
Excuse me. I've just rolled it over into an IRS. We got it out of the corporate plan so we could start having a lot more options. This wasn't a decision that had to be made right away. And I think that's a big thing for people. When they quit working, they say, okay, I got to start taking my pension now.
00;28;08;19 - 00;28;29;22
Unknown
Yeah, you don't have to. This was something that we worked on over about six months to make sure that we were all comfortable with the plan. Yeah. We were fortunate where rates and things were at the time where, they actually increased as we waited. Yeah. So our clients ended up being able to take that lump sum.
00;28;29;25 - 00;28;55;16
Unknown
Go ahead and, put it into a, fixed index annuity, right. With a to get that income. And we had about $350,000 left over that $350,000 left over. We set up an income plan for to fill that 30% gap before Social Security. There you go. And it was huge because now he's getting the exact same income he had working.
00;28;55;20 - 00;29;15;21
Unknown
Yeah. He has a chunk of money still, right? Right, right. And he has control over that. He has control over. You know, we also rolled over the 401 K. Yeah. Right. So now we have that into the income plan. And we were able to provide that income and have and still have a nest egg. And that's important.
00;29;15;23 - 00;29;34;17
Unknown
Yes. And his wife loved it that just this is the greatest plan because all I really want to do is make sure we had about the same level of income, lived the lifestyle they're living, live the lifestyle they're living. You know, people here in southeast Michigan, right? You know, house on the lake, house here, a boat, classic car.
00;29;34;17 - 00;29;54;15
Unknown
Right. Super happy. Yeah. Check out all the boxes. They're good boxes. Right? Right. If only the lines were good back then, and they, you know, they'd be really happy. Yeah. So, you know, my mind's kind of running just because, you know, we obviously I have had a ton of similar experiences with that. And, you know, my mind started around with a couple things right there.
00;29;54;18 - 00;30;13;18
Unknown
Number one, I had a very similar case. I had a client, he was, you know, executive at, Pepsi. Okay. So big company, they were going to say. And it's the same concept, just you just, you know, say, yeah, that sounds right. Yeah. Is, he was going to get it. He had a lump sum opportunity, and it was about $1.3 million.
00;30;13;20 - 00;30;36;25
Unknown
Okay. Big good earner, hard worker, worked a long time. So his lump sum was 1.3 million. And he if he didn't take the lump sum, he was going to get an annuity, deferred annuity. Right. So just so everybody knows that deferred annuity, your Social Security deferred annuity a pension, deferred annuity. So you just got understand when we say deferred annuity we're really talking about a pension.
00;30;36;25 - 00;30;56;20
Unknown
We call it a family pension when we privatize it. And and so 1.3 was a lump sum if he took the annuity payout or the deferred annuity, it was 60, $100 a month. Okay. So I reach out to the, you know, as an independent fiduciary, as J.T. was referring to earlier, being a fiduciary, we're independent fiduciary. What does that mean?
00;30;56;20 - 00;31;19;08
Unknown
We can work with basically any company in the in the country. I don't have I'm not I'm not captive to only one company. And so now we can kind of pick and choose, hey, who's got the best rates? Who's got the best products to solve this problem? Right. Personal financial shopper there you go fam I love it. And so, I basically put it out to my 3 or 4 best who I knew did the family pension, deferred annuity, got a number back.
00;31;19;08 - 00;31;40;28
Unknown
I said, hey. And the question I asked them all, how much would it take to get this individual 60, $100 a month net? Right. And they come back and they said, hey, 770 grand. Wow, wow. So that's phenomenal news. We go talk to my client. And it was basically just because of interest rates. Right. Like interest rates have a big impact on that.
00;31;41;05 - 00;32;08;24
Unknown
Obviously the market and all this good stuff. But these fixed indexed annuities pertaining to deferred annuities, have come a long way over the years. And, I took 770, put it into that boom. That checks the box for the 6100 a month, and then the total lump sum was 1.3. I mean, we still had, you know, again, give or take half $1 million, but we roll over into the IRA, we're doing the Roth conversions, we're doing all the fancy planning.
00;32;08;26 - 00;32;23;24
Unknown
And I mean, they were thrilled. It worked out phenomenal. I'd be thrilled. Amen. But, you know, that's a good example. And that's exactly what you're talking about. Oh, yeah. We were took this number. I, solved the income number, and then we still had some left over to do these other things. Bridge the gap, etc.. Bridge gap.
00;32;23;24 - 00;32;42;16
Unknown
And that's the most important thing about trying, you know, when we have cases where we can help families retire early, we just need to bridge that income gap, right? We need to put the right things in place at the right time. Yes. Given the environment that we're in. Yeah. To make sure that happen. Yeah. And, hey, let's make it easy and predictable.
00;32;42;18 - 00;32;59;18
Unknown
Right? That's the goal. So it's all about expectations. It's all about expectations. That's right. And also, you know, I like to you know, I like to use the sports analogy, right. Like we we have to take what the defense is given us, right? We have to take what's going on in the world today and use that to our advantage.
00;32;59;18 - 00;33;12;24
Unknown
Right? Right. We can't say, oh, it was like this back then, or it might be like this in the future. It doesn't matter. Yeah, right. We need to we need to do what's happening today. That's that's in their best interest. Yeah. And that's really important too. And I really like what you said about the, the fiduciary part.
00;33;12;24 - 00;33;32;24
Unknown
Yeah, right. Your HR department is not a fiduciary to you. Correct. They are employed by the company. Yes. And and you know, it's a big difference. Yes. Right. So that's something I always keep in mind. I know a lot of, a lot of people, especially if you work for a company for 30 or 40 years or, you know, you have a special place in your heart.
00;33;32;24 - 00;33;51;21
Unknown
They're right. They provided everything you have for your family. Right. And I think that's great. And you should be loyal. But, they're not loyal to you with your retirement accounts, right. And that's something different. And you don't really even know they're you don't know if. And again, you could know maybe. Yeah, but you don't know if they've been in that department for a day or ten years.
00;33;51;23 - 00;34;06;28
Unknown
You don't know how familiar they are with the plan there. And again, they're not a financial professional. They're doing their best and and they're trying to help you. But they're not a fiduciary. They're not a fiduciary. Right. They they could in truth be told, they could probably care less if you take their pension or if you, if you come and find a better way to do that.
00;34;07;01 - 00;34;26;09
Unknown
Because as soon as you're not getting a paycheck, you are now an expense that I say this to people all the time. It costs money for them to have you on that. Right. So you are an expense? Yes. You are no longer a producing employee, if you will. Right. So let's go and make sure we're working with people of our best interests.
00;34;26;10 - 00;34;46;22
Unknown
Amen. And that makes me think of one other thing that I know you and I have talked about before, but the concept of risk. Yeah, pertaining to taking a pension or not taking a pension pertaining to the annuity piece. Right. And and basically saying, hey, if I take this lump sum, it's kind of like the earlier part, I'm transferring the risk to me now.
00;34;46;22 - 00;35;08;24
Unknown
Right, right. And now I'm taking the risk with that 1.3. But then also if you leave it there you're taking the risk. Hey is this pension sound right. Is it sound, is it properly capitalized. Right. For all of our listeners out there, any new companies you know of that are offering pensions for their employees?
00;35;08;27 - 00;35;28;19
Unknown
No, I haven't heard of one in a long time. And. No, but that's true. It's true, it's true. There's not a reason why they're going away. Yeah. Huge expense for their firms. Yeah. So let's go ahead and, take that. Avoid the risk of having it with the company who again, we're not sure about the solvency in the future.
00;35;28;25 - 00;35;45;13
Unknown
Nobody knows transfer that risk to us. And then let's just go ahead and transfer that right back to somebody else. Correct. Who may have a better fits our family's plan. And again, to your point, I'm just going to say this. It's like it may be in your best interest to take an annuity through a pension plan. Absolute it may, it may not.
00;35;45;13 - 00;36;07;04
Unknown
But to your point, let's dive into this. Let's make sure it connects with every other piece of planning we have in place to allow us to make educated and informed decisions. Exactly. And there are tons and tons and tons of people who the right decision is to. Let's just keep that. Yeah. Jim. Yeah. Let let me take that pension.
00;36;07;04 - 00;36;26;18
Unknown
Yeah. Some of it ties into their health care, right? Benefits. Right. There's a lot of things that go into it. Right? And, it would be irresponsible not to explore the options. Absolutely, absolutely. That's how I usually put it with clients. Yeah. And it doesn't cost you anything to, let's say take a look around. Right. See what's available.
00;36;26;25 - 00;36;49;19
Unknown
Right. Love the loyalty right that you've shown to these companies and they show to you. But again, things happen, the world changes. Does anyone ever buy Kodak film anymore? Right? Things happen. Things change. So let's make sure we're exploring the options. Yeah. And I know we didn't really talk about like, the disability part, right? We're like, people have to retire early because they're disabled.
00;36;49;19 - 00;37;05;04
Unknown
And like again that be a whole bag of worms that we probably don't get into. But again, I can't encourage you enough if you're out there and you're facing these decisions. Hey, can I retire early? Should I take this buyout with my company? And again, we deal with that stuff with the big three all the time.
00;37;05;07 - 00;37;23;06
Unknown
If you have disability elements that you're trying to understand, what your, your benefits are that you can and can't take advantage of short term, long term disability through companies, social security, disability. These are the things I want to I really, really encourage you if you're listening and you have questions or you have needs around this, reach out to us, connect with us.
00;37;23;09 - 00;37;47;06
Unknown
Because this is what we do all day long, and it is so important to just get your information right, to do your due diligence. Yeah. And I love the way you put that, is let's make sure we're we're doing the math, getting the science, the data, and then making decisions. Right in the decision. And again, that's a huge one for for folks who are facing that retirement decision.
00;37;47;06 - 00;38;09;21
Unknown
They think all these financial decisions have to be made the day they stop working. Right. And they don't. Right. Right. They don't. We can we can analyze this, we can plan for it. And a lot of these plans get implemented over time, right? Right. So if you're 59 in a month, maybe we delay the plan for five months.
00;38;09;21 - 00;38;33;20
Unknown
Right. There's everybody's different. Right. So that's one thing that I think I can't stress enough to people who are out there. It's not like has to be done right today. Like this is something we can work on. We can analyze and we can we can grow with you throughout this early retired. Great way to put it. I appreciate that any any kind of, you know, just, you I appreciate you sharing all this is good stuff.
00;38;33;20 - 00;38;53;20
Unknown
And again, there's so many people out there who are doing this and the baby boomer, you know, kind of spectrum, any, you know, tips, you know, little nuggets you would like to drop, just randomly about that early retirement, maybe something to say. Hey, make sure you're thinking of this in any kind of just kind of closing last things you can think of that would be important for somebody to think of lifestyle.
00;38;53;22 - 00;39;15;03
Unknown
Right. Lifestyle, I think especially after, you know, Covid and everything. Right. And people staying home, a lot of people's idea of what their ideal lifestyle is has changed. Yeah. So this isn't just a math equation. This is an emotional decision. Right? This is something where, you know, look at your what you want, your lifestyle to be in retirement in the future.
00;39;15;05 - 00;39;34;04
Unknown
And if we can speed that up for you, yes. Then maybe that's a good thing. And we want to give. It's really important. And for me especially like my goal in life is to retire when I'm 55. We'll see if it happens. I got three little kids. Right. It's, for some reason things keep getting more expensive.
00;39;34;06 - 00;39;52;06
Unknown
But, you know, that's the lifestyle that I want, right? When, when I have it. And and so I always say that to folks, you know, and make sure when you're planning for retirement, not only have a financial plan, have that lifestyle plan, how are you going to be spending your time? What are you going to be doing?
00;39;52;06 - 00;40;14;09
Unknown
Right. Just that's something that's so important because there's a lot of people, who've I've helped over the years who were ready to retire, but they weren't ready to be retired. And I think that, you know, now all of a sudden and I think, I've heard this, quoted a few times, you know, in publications by now that 100% of your time is free time.
00;40;14;11 - 00;40;35;24
Unknown
What are you doing with it? Right. So so that's something that, you know, I can't solve that problem for you. That's something you have to talk to your loved ones about, right? Husband, wife, kids, you know, and get a game plan for that, too. Yeah, because that's the we'll do the money part. I wouldn't say it's the easy part, but it's it's the mathematical equation part.
00;40;35;24 - 00;40;50;00
Unknown
It's the part everybody focus on. Right, right. It's they're part of like, hey, you know, there's kind of three components I always talk about with clients. It's like there's the financial part. We're going to talk about that. Yeah. And that's our job to figure that out and be honest with you and educate you and lay out those options.
00;40;50;03 - 00;41;08;08
Unknown
But the other two parts of the parts that get neglected, and that's that emotional and that psychological process people go through in retirement. I saw a statistic and I'm gonna I'm going to butcher it. So don't quote me. But it was something along the lines of, like I said, the average CEO retires and dies within five years. It's terrible because they don't have all those people wanting them.
00;41;08;08 - 00;41;27;23
Unknown
They don't have all the their day isn't regimen and exact right. And all of a sudden you lose value and you lose self-worth. And there's an actual true documented, again, emotional and physical piece that that puts on. Is it through through that psychological process or just to get great tip. I appreciate JT again, thank you for joining us.
00;41;27;23 - 00;41;45;12
Unknown
Yeah, thanks for having me. This was awesome. Early early the early retirement early retirement thing. Don't be afraid of it folks out there come come talk to some financial professionals and see if it's reality for you. Yeah. Same. And so, thank you for joining us. Make sure you keep tuning in. Make sure you're following us. Focus financial group.
00;41;45;16 - 00;42;06;25
Unknown
And, we'll keep bringing you this great information. And do not hesitate to drop us a comment. Send us a message again. I will encourage it over and over again. We're here to help you out. And you guys have a wonderful day. And and we'll see you in the next episode.
00;42;06;28 - 00;42;12;26
Unknown
If it's provided by the information in section 27434.