Taking ownership of your retirement

In this episode Grant discusses taking ownership of your retirement with a personalized plan, how alternative assets can play a role in your retirement planning, pension substitutes, and the difference between wealth preservation and income generation. 

What is The Retirement Blueprint?

Grant Dorhout, Founder and Wealth Advisor of Dorhout Retirement Services shares his thoughts on investing and helping secure your retirement in his weekly radio broadcast, The Retirement Blueprint. Grant is a full service advisor and has been helping families live out the retirements they deserve by giving them experienced, common-sense advice. Dorhout Retirement Services 4611 S 96th St, Omaha, NE 68127. [phone]. Investment advisory services offered through CWM, LLC, an SEC Registered Advisor.

When it comes to investing, retirement taxes, healthcare and estate planning, the decisions you make today can greatly affect the quality of life for you and your loved ones tomorrow. What you need is straight and unbiased information on the most important issues you'll face when planning for your retirement and financial future. Good news, you found the retirement blueprint with Grant Door House. Grant is the founder of door out retirement services, and he's been guiding people financially and into retirement for nearly 20 years. So get ready for an hour of the most comprehensive financial information on the radio. It's time for the retirement blueprint. And now here are your hosts, grantor Howard and Jeff Shea. Good morning and welcome to the retirement blueprint to show that gives you the straight talk and honest answers you need to help you reach your wealth management and retirement goals through Smart Investing and careful planning. On today's show. We're going to be talking about taking ownership of your retirement. That means having a personalized plan also how alternative assets can play a role in your retirement planning. Then we'll discuss how to replace the benefits of a pension. And finally, the difference between wealth preservation and income generation. My name is Jeff shade and I'm just here to ask the questions. But of course, the words of wisdom and solid advice come from Grant dollhouse founder and wealth advisor of door hot retirement services right here in Omaha grant, how're you doing today? Jeff? I'm excited to be here with you today. I'm really looking forward to the topics we got. I think this is gonna be a fun one. Yeah, absolutely. Me too. And of course, always great to talk to the fine people here of Omaha, Nebraska. So let's talk about the pitfalls of planning for your retirement by yourself and why professional guidance is the key in preserving your wealth and your retirement trajectory. First of all, grant as a financial advisor, there are a lot of things that you can do that the DIY investor can't do, not only because they don't have the knowledge, but also they're not licensed. Yeah, Jeff, there's there are so many different aspects of our marketplace that have changed over the years. If I think back to what my mom if she said, You know, I'm gonna do the same thing as what her dad my grandpa Jake did my grandpa Jake in the 1980s. He was renewing his CDs at 15%. That was a wonderful plan for him. He was a very risk averse, and he he liked CDs, he liked getting that fixed interest. Well, if my mom tried to do the same thing, when she retired, when she moved to town about 17 years ago, while the interest rates were much different, they were much lower for when my mom would have retired. So that type of planning when worked then so those changing times it has influenced how we can actually put together a retirement plan even now today, if I think about certain aspects of how we do some retirement planning, there are investments that people can get into right now with $1,000, that just a couple of years ago would have taken you $5 million to actually access that exact same asset and having that knowledge of those changing parts of our market is invaluable. Also, I would imagine as a DIY investor grant emotions are such a powerful thing when it comes to money, probably very difficult to keep your emotions out of it. Because after all, it's your money. Oh, absolutely. I actually just said this to a group of people I was speaking to. And I was talking about the fact that if you look at back in look at March of 2020. And we look at what happened then we had this huge health crisis and COVID-19 that came about and the market was behaving in very, very drastic ways. And you saw massive losses in just a month timeframe from late February of 2020. To late March of 2020, the market was just in absolute freefall. Well, if we're positioned improperly for those times, when they come, what I've seen is how we behave emotionally because we don't just look at $1 If someone has a million dollars, and it goes from a million dollars to 700,000, for instance, just to give an example. And that happens in a relatively short span of time, we don't think of $300,000 as $300,000 Our minds, it's like we make this more than this dollar amount we see 30 years of hard work, we see the overtime that we had to do with we see the the kids ballgame that we missed because I had to do the overtime because I was trying to save this extra money for my family. And then we see it evaporate as a result of something that we couldn't predict or control. And that makes us emotional about funds. And if we just position ourselves a little bit differently, and if we just look at retirement a little bit differently, we can help ourselves not behave in a irrational way or emotional way. Yeah. And it's like doctors, I mean, they don't operate on or they don't treat their relatives because they can't keep their emotions out of it. And I think just like a doctor, you really have to be objective about it so that you can make the best decisions for someone according to their individual situation. The other thing I would think too, is that if you're working, you know, 40 hours a week, 5060 hours a week, possibly you don't have the time to do this. I mean, this is not something that you do in five minutes in your spare time, is it? No, not at all? Not at all. We're at the office at 8am and typically we
Don't leave until at least after five. And we're always trying to keep up on the trends and the beautiful thing that we have with our affiliations with having a registered investment advisor and Carson wealth that we have, we have a research team that they're constantly giving us additional information that we can use to try and help our clients in the best way possible. And that's all done behind the scenes. And that's their full time job and my full time job. I mean, I can't imagine someone trying to recreate or duplicate that if they go to work 40 hours a week, and then they just go home, and then they check what is Fox News? Or what does CNBC have to say, or MSNBC? What are they going to tell us? What's Jim Cramer's idea of the day, you're not gonna get that type of specialized expertise, just from tuning in to CNBC once a day for an hour? And correct me if I'm wrong grant, but I mean, this can get relatively complicated. And I would think for the DIY investor, who has not spent as much time as you have in this particular business, that it's very common, or it could be very easy for them to make some mistakes that might be difficult to recover from, oh, absolutely. I've met some people that have been really, really good. I mean, some very talented people in their asset allocation, the stock picking that they've done, the money that they've made for themselves has been really, really good. I mean, I, I've been truly impressed with a lot of the people that I encounter. Here's the difference, though they've done it for, you know, the past 1015 2030 years, maybe it's because they're fee averse, which is fine, I understand that we all no one wants to overpay for services that they're getting. Or maybe they just enjoy putting these portfolios together. They enjoy doing this research that they're doing. But what I've found is actually when they enter retirement or when they're going through retirement, you get certain things that they haven't encountered, and that's different fluctuations, and then withdrawal strategy that can really tip their strategy that they've had for the last 20 years that's worked well. It can tip it on its head strictly, because the Situation's changed, and we're no longer in the accumulation phase, we're in distribution phase. And grant, I think a lot of people when they do these DIY projects, they think, Well, if I do it myself, I'm gonna save a great deal of money. But in reality, I think with an investment advisor, is that necessarily true? Not always it can be. It just depends on what that fee is, it depends on what the services that you're getting, I'll give you an example. I can paint my house, I can do that. I have paint brushes, I have paint rollers. But when my wife came to me a couple years ago, and she said, Hey, I'd like to paint this whole main floor, I'd like to change this and change that, you know, kind of think about it. Well, you know what, I can do this. But there's a reason why I pay the painter and you know what our main floor looks a lot better. As a result, I didn't have to worry about it, I was done with it. If you look at actually, from an investment standpoint, it's very, very similar. There are certain things that we have access to in certain planning tools that we can put together to make things potentially more efficient for someone to where they can hand it off. And they can sit back and then they can come home. And like I did when I got home, man, I mean floors painted. This is beautiful. I'm glad I paid someone else to do this. Because I couldn't do it this way. I couldn't put it together this way. And as a result, I was freed up and I was happy with the result. We do the same thing with our clients plans. And also di wires also think, well, I've got really all control here. I can do it exactly the way I want. But with a financial advisor such as yourself, I mean, is this my way or the highway? Or does the client always have a say in this? I mean, do they have the right to say no? Oh, that's an excellent question. They always have the rights, their money. I've had that conversation many, many times when someone will ask me, Should I take money from here? Should I take money from there? Should I take it from Roth or traditional or whatever it may be, I'll always make an effort to point out, Hey, you can do that. I want you to think of it from the negative side. Okay, this is what's detrimental if there is a detriment to it. If there's no big deal, then then we just say yeah, go ahead. You can do that with your money. But if there is something where hey, this is going to negatively impact you on taxes, have you considered this, whatever it may be, I had the conversation with a lady yesterday, she we went we went through her taxes from last year. And we were looking at what she had done and how much she had taken out of IRAs while she was working and and I let her know that when you took that out the way that you actually did that distribution, I don't know what we would ultimately have done because she had another financial advisor that just said, Okay, I said, we would have pointed out the fact that you can do this now and this part later, and here's why we want to consider that. And I gave her just a couple of ideas around how we would advise her and make sure that we're thinking of it from all angles. All too often we make knee jerk reaction decisions, hey, I need $10,000 Send me $10,000 Take the taxes out boom done. And I want to take that from my money that's at the custodian whether it be Schwab or
Used to be TD or whoever it is, and we don't really think through Okay, should I do this? Should I have the taxes taken now? Should I have it taken later? What's the best route to go? Grant? I wonder listeners to think about this. I mean, if you wouldn't trust yourself to provide medical expertise or fix your car on your own, do you really think you should fly solo when planning for your financial future? So before we continue grant, I want to take a moment to remind our listeners how they can have a conversation with you to ask their questions about whether or not they can do it themselves. request your no cost, no obligation, no judgement door out Retirement Services review by calling 402-281-0750. That number again, is 402-281-0750. Now when you call you'll get a friendly voice on the other end of the line, who will gather some basic information from you then set you up with a conversation with grant to create a path towards a successful retirement. Now remember, this is not going to cost you a dime, but it could uncover some blind spots that were addressed may help you improve your quality of life and a retirement that could last as long as 30 years. Once again, no cost no obligation for this consultation. That number again, is 402-281-0750 It's 402-281-0750. Or you can request your complimentary consultation online at Door House retirement services.com. That's door How do our h o u t. Retirement services.com. One more strategies to support the quality of life you won for 30 plus years. Stick around. There's more retirement blueprint with grantor out in just a moment.
With recent sharp increases in government spending and the US budget deficit in the trillions of dollars, it's no secret that tax increases may be in our future. Inadequate tax planning could derail your quality of life in retirement or how Retirement Services knows this. That's why accounting for tax increases is a big part of the retirement plans they build. They're looking ahead in your tax future to find opportunities to reduce your taxes wherever possible. Wouldn't you like to know that you're not overpaying in taxes if you'd like to talk about a retirement plan that could last 30 plus years that includes a tax minimization strategy call for your no cost no obligation financial review at 402-281-0750 402-281-0750 or requested online at door Howard retirement services.com Financial Planning offered through CWM LLC and SEC registered investment advisor. You can't start a trip you've never taken without a plan. And you can't start your retirement journey without a comprehensive plan to get there safely. To request your no cost no obligation or hard retirement roadmap call 402-281-0750 or requested online at door Howard retirement services.com. Now back to more of retirement blueprint with Grant door out and Jeff shade. we so much appreciate you joining us here on Newstalk 1290 coil for the retirement blueprint with Grant doghouse. In this segment, we're gonna be talking about how alternative assets can play a role in your retirement. You know, Grant was so many questions about the future of the US economy, you might be curious about how you can effectively protect your finances or seek a hedge against the uncertainty of the economy. While a good retirement portfolio strategy should already account for the chance of economic uncertainty by including those hedge options, it's still important to know what these alternative assets are and how they work. So let's talk about the basics here grant of gold and real estate annuities and other things followed by a discussion of how these assets may be applicable to your retirement. First of all, let's talk a little bit about gold grant. Some people love it. Some people hate it. But let's break it down. Let's talk about gold and the value of it as an alternative asset. Yeah, so I had a client actually come into my office this week, she'd been listening to some radio shows. She's been reading some stuff online. And the first thing when we're doing her review, the first thing that she says is should I buy gold? And I asked her why are you asking like what do you want to buy gold? Like what's prompting this question? Because she's been a client of mine for seven years. And I've never heard that from her. And she said, Well, I saw these advertisements online. And then I heard some stuff on the radio saying, I need to buy gold, it's the best thing to do. And I can even do it with my IRA. And I said, Well, what's the purpose? Like, do you just like it? Or do you think it's a great investment? Like what's your feeling? And she really had no feeling whatsoever? And I told her if she wants to buy some gold if she wants to have some coins, you certainly can you can put it in your safe and say yes, I have some gold. I personally wouldn't recommend that she takes her IRA and purchase gold with it. But that's up to her. And ultimately we had a discussion for a little while around the benefits or and the potential drawbacks that she could have from it. And she said, yeah, that answers my question. I don't need to buy any gold and that was for her the next person they might say, you know, that answers my question. I'd like to buy some gold and then they might do that you got to keep in mind that the person that that is putting the advertisement out there that says you must buy
A gold and you should even do it with your IRA. I mean, they're gonna charge you a premium, if you're gonna buy some gold eagles, for instance, you know, the gold per ounce yesterday was $1,919 per ounce. And, you know, if you get a gold Eagle, you know, it might be over $2,000. I don't know what the exact dollar amount is on those right now. But thinking about people saying it's a great hedge against inflation or, or that through uncertain times, it's a great thing to hold, you know, the month I was born was October of 1980. I looked it up actually. And it was $2,380 an ounce back then. So looking at the depreciation, it depreciated even more than what it currently is, and then it's come back. So if someone wants to have some gold, I say go ahead. But don't overdo it. And like any asset, and as you pointed out there grant, the value of gold can still go down, especially during years when economies are booming, and there's less demand for the doomsday hedge. However, another good point that you made is that anytime there's a transaction with gold, or any sort of precious metal like that someone the middle people are making money on that. But if you want to have it, you want to hold it and say I've got it here, that is just fine, go ahead and do that. But when I think about gold, or precious metals versus other sort of investments to gold and silver in you know, they just sort of lay there, they really don't produce anything. So you've got to consider that when you're talking about gold as an alternative asset. And the last time I checked to the service station, the gas station doesn't take a gold ingot from gasoline. So it really is in Manila. Yeah, maybe they will in the future. But precious metals, not that terribly liquid. So consider that another alternative investment grant is real estate, I would imagine that people have asked you about real estate now. And again, right, I run into a ton of people that have real estate, and they've actually generated a lot of wealth from it. The majority of people that have held it for a long period of time that and those are people, you know, Lady a couple days ago came in, she's got about a million dollars in real estate, she has four properties left, and she really enjoys the income that comes off of it. I don't run into too many people, but I've run into a few that are still you know, in their 60s and 70s. And they're still buying and fixing and flipping houses. You know, that's a couple of different ways that you can generate some income for yourself. Typically, when someone gets to retirement, though, we're not seeing them flip the houses, that's just a little bit too time and labor intensive. For the majority of the people that I run into, not every one I actually probably about six, eight months ago, I ran into someone from council bluffs that they were still on the hunt for those deals, and they wanted to fix and flip and that that's right for them. And real estate comes in two forms grant, of course there is active real estate, like you said, it's owning rental properties, or maybe fixing and flipping. And that is right. For some people. It's not right for everybody. And keep in mind too, that real estate doesn't always go up, it is possible to lose money in real estate. But the other real estate option is going to be passive real estate. Let's talk about that just a little bit. Yeah, yeah. So you'd be talking about a couple of different avenues where you'd be looking at a real estate investment trust potentially as being an option where it has a big package of investments, like he might have this big, I guess, down in Papillion, where I live, you know, you have this big shopping center area that something like shadow Lake, I don't know if that's owned by a real estate investment trust, but something like that, that it has a bunch of different buildings that it's generating income on a monthly basis. And if they do it right, if they actually pay it out properly, then they can actually have some different tax benefits at the real estate investment trust level. And so that could be a good idea for someone if they want to have regular income because of what that real estate investment trust is typically going to do. That's one avenue that someone could be in real estate, but they're not active in it. They're not doing any management, they're not dealing with people that just put in the money, and then they collect some checks if it's managed properly. So another way is lady that was in my office just two days ago, she came in for initial consultation, and she said, Yeah, I got these real estate properties. But you know, there's really just no good way for me to get out of it. And I asked her what she meant. And she was talking about the fact that the way that she had depreciated her assets and the way that she was positioned, she just have to pay way too much tax. So she didn't think that there was a good way to get out of that real estate. And I let her know that there was a couple of different ways if you utilize Delaware statutory trust, or if you do a 1031 exchange, or you could utilize that to where you could get out of those properties. And you could defer that tax further down the road. And you could still generate income it depending on which Delaware statutory trust that you would get into and there's a different diversification that comes with that and that and you get to choose different ways that you can invest that money now you don't have as much control. So you have to be very, very aware of that. You don't have near as much control as if you own your own rental property. You know, if you want to change the carpet or you want to do no fix ups or whatever it is, that's going to be managed by a third party. So you have to consider that as a potential drawback if you
We'd go down that road as well. So as I understand it, real estate investment trusts or REITs. They're sort of like real estate stocks. But those are subject to market volatility and a certain percentage of profits must be paid out in dividends to shareholders. And that's after though the developer's cost and salaries are paid. So it's not a direct investment in real estate. It's what we call passive real estate. And as you talked about Delaware statutory trust 1031 exchanges, Can you just elaborate a little bit more on when you would use a 1031 exchange or what an example would be where you use a 1031 exchange, and then invest that money into a Delaware statutory trust? Sure, yeah, I actually have one client that we're using the 1031 in a couple of different ways. They came to me about two and a half years ago, and they said, Hey, we want to retire, we don't want to be in these properties anymore, we want to move, they actually wanted to move to Florida. So a couple of different things that we did is they found another rental property in Florida, that they could take some of their property here and utilize a Qualified Intermediary where the money goes in there, and then they do the 1031 exchange down into the property in Florida. But then they didn't want to do too much active management of properties. So they actually wanted to utilize the Delaware statutory trust. So we actually did, the first one we did I think was about a year and a half or two years ago, where we sold the property, it stays at the Qualified Intermediary, we identified the property that they wanted to be invested in. And then we did the 1031 exchange into the Delaware statutory trust. And then 30 days later, they start getting payments from that particular Delaware statutory trust. So it can help them with their retirement income goals, depending on what they are, of course, but for them, that actually was a route that was advantageous for them, because they wanted to get out of the active and more into the passive real estate, right? I mean, it's a landlord exit strategy. Basically, for people who are active landlords, and they're tired of the toilets and tenants and trash with a Delaware statutory trust, they can invest into other forms of real estate. There are also some tax advantages to that as well. Yeah, there can be depending on how the debt is actually held at the Delaware statutory trust, there could be certain steps that actually enhance your tax benefits. But it also there's a potential that there is an enhancement in the income. And it might happen one or two or three years down the road, you have to be very detailed in that part. But depending on which one you get into, it might be apartment complexes, it might be just storage units, it might be commercial property of maybe a Walgreens or something like that. But all of that is going to change how that different treatment is, you do need to be aware though, if you have a property that is in Florida, or Colorado or California or Tennessee or any different state, you have to be aware of what the different tax treatment is in that particular state as well. And make sure you consult with your tax advisor if you have a CPA, make sure you know with them what type of additional complication there could be because you might get different K ones from different states and then have to file different state income tax returns as well. But once you've wade through that, there could be really some some nice benefits for someone that wants again, to get out of the active management into more of a passive area and they don't want to pay that tax right now, when they sell that property. Our show is called the retirement blueprint with Grant door out we're talking about how alternative assets can play a role in your retirement. Finally, in this segment, Grant, I will talk about the basics of annuities really a mix between a retirement investment vehicle and an insurance product. Yeah, absolutely. A lot of times people think of them. There's a lot of misconceptions around annuities that I wanted to clear up here a little bit today. One, some people think that they are the best thing ever. And that's because of their experience, or maybe their parents experience. I had a gentleman call in here a couple weeks ago, and he said, Hey, my dad had this annuity and he got this payment from it every single year. I think that's the coolest thing ever. That's the best investment vehicle and I had to tell him, Well, there are restrictions as to what you can get out of that. Yes, his dad was getting a payment every single year. He was getting that on the specific date that he asked for it. But it is a relatively illiquid investment when his dad went into that if he turns it into, let's say it's a spear a single premium, immediate annuity, you've turned that money over to the insurance company, it's going to pay you but you can't get any additional money out of that. So you have to be very aware of that aspect. Now, on the flip side, some people might think that they're the worst thing ever because they heard well, there's high fees or that it's really, really risky. And there are certain types of annuities that do have higher fees and that they are associated with certain risks. That yes, it could be that way, but it's not the worst thing ever, either. When you look at annuities, you have to look at
It is a part of a comprehensive plan. You can't look at it to be everything because no investment is. But you also can't say that it is the worst. So So you have to be objective with what is the goal? What are we trying to solve for? And if someone's going to try and solve for a retirement income plan, while an annuity could be a piece of that it could be a part of it, but it's definitely not everything. Well, Grant, if our listeners have questions about alternative investments in their retirement plans, I want to invite them to call us so that they can schedule their 30 minute consultation with you. All you've got to do as a listener is call right now. 402-281-0750 It's 402-281-0750. Now this consultation is totally complimentary. No cost and no obligation whatsoever we want to help you succeed will not only help you compare your different options and strategies so that you can pick what's right for you but door out Retirement Services, we'll also take a look at your overall lifestyle plan to help ensure that it's set up to support your quality of life in a retirement that could last 30 plus years. Once again, all you've got to do is call this number 402-281-0750 402-281-0750. Remember, this is just a friendly conversation. We're not going to try to sell you anything at all. It's just a chance for grant to get to know you you to get to know him and ask your questions and get the answers that you want again 402-281-0750 Or visit us online for your complimentary plan at door out retirement services.com Dr. h o u t retirement services.com.
One more talk about sustaining your wealth and thriving in a retirement that could last 30 plus years. Stay tuned for more retirement blueprint with grab door out after this.
Retirement can be a long journey that could last as long as 30 years or more are you prepared for the challenges it may bring door how to Retirement Services has the knowledge and tools you need to have the best retirement possible considering your circumstances and having a plan that considers tax minimization strategies and healthcare costs means you may be able to avoid some unpleasant surprises down the road. Start your complimentary retirement conversation by calling 402-281-0750 or visit door hot retirement services.com Financial Planning offered through CWM LLC, an SEC registered investment advisor ready to climb a mountain of financial know how good because it's time for more retirement blueprint with your financial Sherpas grant Dora and Jeff shade. If you're just joining us, this is a retirement blueprint with Grant dork out my name is Jeff shade. And if you want to hear the show again, don't worry. We're also a podcast, just go to wherever you get your podcasts and search for the retirement blueprint with Grant door help, you'll get this show along with past shows so that you can stay on top of your wealth and retirement planning grant. In this segment, we're going to be talking about replacing the benefits of a pension. Now you may have heard about pensions and their qualities of steady income generation much like Social Security, you may even have one of your own and have contributed to one throughout your working years. But unfortunately, pensions have been rarely offered by employers, especially private employers for quite some time. Now. Some do but many don't. But before we put them on a pedestal, how do they really work? And if you don't have one, how can you emulate a steady income stream that one looks forward to when accessing a pension. So let's talk about what the pension is, how it works and how to access steady income in retirement without a pension plan. So first off, let's go down to the one on one level grant and talk about what is a pension? How does it work? Well, very simply, I'll just reference my brother. He's been a police officer up in northwest Iowa. He's been there for about 30 years now. And he's 53 years old next year, he'll be 54. And he'll be retiring probably in the spring now in his particular pension, there is a percentage of his highest three years that he actually will be able to get and that will pay him monthly for the rest of his life, he can actually elected a couple of different ways he can have 100% of his pension, and then if he passes away, nothing will go to my sister in law, or he could do in their case, what would be a better idea, he would take a little bit less so that his wife would be able to get that pension for the rest of her life as well. So it'd be for both of them. Now, what you have to be aware of with that pension, though is when they pass away those payments stop and there's no lump sum for beneficiaries. Now, that's a little bit of a unique one where he has the highest three years and everything. Not everyone is going to be that way. Like if someone has it through an insurance company here in town, they might have a specific amount at 60 260-364-6566 that they might be able to start their pension at a typically they'll actually have a calculator at that employer or with your HR that will be able to show you Hey, based on your wages based on your years of service, this is how much you'll be able to get at those ages. And then that's a part of a good start to a income plan in retirement. But as we said there aren't as many people who have pensions these days.
as there used to be, but there's some people out there who do have them. So let's talk to those people about the option, the big option that they have when they get ready to take it is, Should I take a lump sum from my pension? Or should I take the monthly pay off for the rest of my life? Yeah, that's a great question, Jeff. Actually, if you look at the US Census Bureau and 2021, they did a survey where it found that about 13, and a half percent of people either had a defined benefit, which is a pension or a cash balance plan, that could be a pension. And with that, those people about 13 and a half percent of people, they're going to have an option, typically, where you could get a lump sum option. And what you want to do is you want to compare how can I get a reliable income out of this, I have a client of mine, he came to me a couple years ago, he worked for 20 years at a particular job, he actually wasn't a big fan of the way that he left that job. So he wanted to get the money away from there as soon as possible. And I told him, We need to run the numbers to make sure of what is going to be best for you. So what we did is we ran how we could get the income for him over the rest of his life? How could we actually generate these incomes? And would it duplicate what he had at work? Now, ultimately, he chose to actually take that lump sum because of the fact that if he passed away and his wife passed away, there's a possibility that there would be a death benefit for their kids yet versus at his pension in his particular pension. If he got one paycheck, and him and his wife were both no longer here, maybe they got in a car accident or something and they passed away, there would be nothing for their kids. So they like that option of having the lump sum that if in that same scenario, if we took the lump sum option, we start getting some income off of it, if they pass away, then their beneficiaries would actually still be able to get a lump sum death benefit payout. So it comes down to really just a math equation and figuring out how long you're going to live to make that decision between lump sum and that monthly payout. For listeners who do not have a pension grant. I mean, it sounds like a great idea. Are there ways that you can simulate a pension? Absolutely. And that's exactly what we did with that particular client, you have a couple of different avenues that you can use, you could utilize certain stocks, you could have dividend paying stocks, there are certain risks that come along with that, like if there's some sort of an event that would make that company cancel the dividend, for instance, well, that becomes problematic if we're relying on that for income, I can't tell you exactly what that event would be for every single company, I'm just saying you have to be aware of that. So temper expectations for what type of longevity we could have with that particular dividend paying stock. We could also like we talked about earlier, they can utilize a real estate investment trust to generate some income if they wanted to, or if they had other real estate, they could be utilizing the Delaware statutory trust as a potential. But you could also utilize a strategy where you would purchase a particular type of an annuity that would pay you whether it be a single premium immediate annuity, you could utilize a fixed indexed annuity, you can utilize fixed annuities that could have some payouts. Now, if you're going to use for instance, an index annuity, or a variable annuity that has a income rider on it, you would actually have a fee for that rider to have that company generate that income for you. And you would have a contract with that company where they would be paying you that monthly income. And if you actually look at it side by side, a pension paying you monthly or an annuity paying you monthly it's very similar, it's going to have different types of restrictions and guarantees if there are any on both sides. But just be aware, there are ways that you can take your lump sum that you've built in your 401 K or your 403 B or your 457, or any of these different assets, ways that you can actually turn that into an income stream more so than just leaving it in that particular asset that you've built this wealth in and then just start taking the distributions like in a 4% rule type of a scenario. There's other ways that you can build more of an income plan versus just saying, hey, send me some money. Grant. There are some people who still have pensions of course, who may be listening to the program today and they are faced with this buy out offer the employer typically offers the pension by out by sending a letter or sending a packet that includes details about the offer the participants pension benefit, the amount of the lump sum payment being offered, etc, etc. If someone is faced with a buyout offer, is it still a math and science equation? Or how should you figure out what's the best thing to do? It's all a math problem. It's almost always a math problem that we're trying to solve and making sure that we have the max benefit for the client and all you're going to do is a very similar to if we're looking at a lump sum payout on a pension versus taking the lifetime income. You're going to look at it in the very very similar way but you have to take into consideration what are my other reliable income sources? What is my income
Need to I even need this income, we're going to have some people that have a buyout offer on a pension, that that pocket of money, they may never even touch, they may never even need these monies. So they're going to be looking at passing this money on to their beneficiaries or to a church or a charity or their grandkids or whoever it may be, they might not even need that income. So then in that scenario, it becomes very easy to figure out, okay, yeah, they should take that buyout, because they're not even going to need that income. Someone else that is in a different situation where yeah, I'm going to need income off of these funds, then you have to run the same math equation, then solve the math problem, like you did with someone that has the lump sum option versus the lifetime income option. When you're getting a buyout offer, though, I would encourage you to find out why why are they trying to get out of this right now? What is behind that motivation? Can we figure that out? Is it something that I need to be concerned with the longevity of or the solvency of that particular pension? Is it that far? Or is it just simply that, hey, you know, what we want to get out of the pension business. And so we'll give you this much money to go away two very different stories there to where we would take the information and try and make the best decision for the client to make sure that we get the max bang for our buck in that pension. And grant, anytime I think of income, I think about taxes, I mean, they go hand in hand. So let's talk about the tax implications of taking a buyout versus taking a monthly annuity as far as the pension payout goes. So depending on how you actually take that buyout, it'll depend on if it's more of an employee stock option plan, or if it's going to be something where two, we have an option to roll these monies into a traditional IRA, or is there some other way that we can actually take these monies out? Or they're going to just say, No, you know, what, we want to write you a check, and you put it in your checking account. That's two very, very different stories in what it's going to be treated like for the rest of your life. If you can roll it over into a traditional IRA, and then just take the monthly distributions, you got to figure out okay, well, what's my tax liability throughout the rest of my life? Does it actually make more sense to actually cash it out and put it in my checking out most of the time, I would say that that's not going to be the way to go. But everyone's different. And we got to figure out where you're at currently versus where you're going to be 510 15 years from now and what your goals are through retirement so that we can accurately again solve the math problem. Grant, I'm sure based on our conversation today that people do have some questions about pensions if they do have pensions, or if they want to create a pension alternative. So if you're listening to the program, you have questions, we invite you to call us and request your complimentary Dalhart retirement review. It's just a friendly conversation with grant that will cover a wide range of topics based on your individual situation so that you can proactively adjust your financial plan to address your retirement journey and any blind spots that might hinder you from reaching your goals. Once again, there is no cost there is no obligation whatsoever. And of course, there's no judgment grant, we'll meet you where you are that number again 402-281-0750 It's 402-281-0750. This one call could make all the difference. You can also request your complimentary plan online at Door House retirement services.com. That is d o r h o u t retirement services.com. One more straight talk and honest answers about your wealth management and retirement journey. Stay with us there's more retirement blueprint with grantor out here.
If you're planning for retirement, you may have some questions like when should I take Social Security? How do I pay for long term care? Or how can I reduce my tax bill to or how to Retirement Services can help answer those questions. They recognize your unique and so should your plan be designed just for you. If you'd like to begin a conversation about retirement planning and get your questions answered, request your complimentary review by calling 402-281-0750 or visit to our house retirement services.com Financial Planning offered through CWM LLC and SEC registered investment advisor. We're back with more strategies for a successful retirement. This is the retirement blueprint. Once again, here's grant door out and Jeff shade. Thanks for joining us here on the retirement blueprint with Grant Door House. Once again, we're on the radio for you every week for your fiscal fitness and your financial education. And in this segment, we want to talk about the difference between wealth preservation and income generation. If you've saved well and have a solid plan for retirement, you're probably thinking about what your future in retirement has in store for you, especially in this economic climate. So let's address two key parts of the retirement puzzle that you can control your wealth preservation and income generation strategies. But achieving both of those in a way that meets your goals is easier said than done. So let's talk grant about the key differences between wealth and your income in the context of retirement plan wealth preservation and income generation both important but two very different things right? Completely, completely different. I mean, if you look at well
All funding that's really about what you own. It's how much you have, it's how much you've amassed, it's how much my nest egg is, that's how much I have. But that doesn't tell me anything about the income, I might have a million dollars. And I might be $3,000 per month short on my monthly bills, because my Social Security doesn't cover all of my bills. So generating income out of what you have generated in wealth is very, very important. So if you look at your retirement plans, there used to accumulate wealth you your 401, K's, your IRAs, they're really structured to help you build that million dollars, for instance, or however much money you have built up in retirement, but then there has to be a shift, you have to have a difference of opinion or a difference of strategy once you get into retirement so that you can make those ends meet so that your your retirement bills are paid throughout retirement. And while both are important grant, I think there's a difference between wealth preservation and income generation according to the different phases of retirement. I mean, you've got your accumulation phase versus your distribution phase. So I would imagine that generating income is very important during your accumulation phase, but also equally important during the distribution phase. It's wealth preservation, but you really shouldn't forget income generation as well, Oh, absolutely, you have to change the mindset, if you actually think about different principles of mathematics. This is where I start getting into some of the weeds, but the distribution completely changes how your numbers and how your rates of return work. So I'm just going to use a simple example, if I multiply four times five times six times seven, I will get 840. But if I also go a different route, and I say seven times six times five times four, I did a different order, but I still come up with 840. When I go through retirement, I'm going to throw a different wrinkle in that and I'm going to start pulling money out. So if I look over a 20 year period, the market whether it goes up 10 987 Or goes up 789 10, and then it has a drop or whatever, at the end of that 20 year period, it doesn't really matter where my positive and my negative fall over that timeframe, I'm going to get the same numbers. That makes sense. Yep. Okay, so if I'm looking at taking money out, and I do that same sequence, I go four times five times six times seven, but I put a wrinkle in it four times five, and I subtract with a hypothetical income of two. And I do that throughout 4567, I'll come up with 740. But if I go backwards, and I go seven times six, and I take out the income, the hypothetical to at the end of those numbers, 7654, I come up with 790. And that's something that I can't control, because I don't know what my rate of return is going to be. So looking at the income generation, we have to generate it from a source that takes these variables that I can't control sequence of returns, it takes that and it sets it aside. So I don't have to be concerned with it. grantee is wealth preservation. I mean, is that more important than income generation? Is it equally weighted? I would say it's completely equal. I mean, I want to preserve the wealth. Absolutely. I want to make sure that we have this nest egg, but I can't tell you how many times I've heard people say I want to spend my last dollar on my last day, that tells me for them, income generation is going to be more important than wealth preservation, but for our business, and what we try and do for our clients is we're trying to make them equal, we want to make sure that we have this nest egg so that people feel good about what they have to fall back on. But we also have to make sure that we generate that income on a monthly basis for the rest of someone's life so that they can live the way that they want to and travel the way that they want to treat their kids and their grandkids the way that they want to. And that's all going to be through that income generation. So Greg, can you give me some examples of tools or techniques that you may use to help preserve wealth? Yeah, there's a couple of them that I've used, and that I prefer utilizing a structured note. For instance, if I have a structured note that has say, barrier protection or buffer protection on the downside of the market, we could have some buffer or some barriers. So if the market doesn't behave over the next two or three or five years, if it goes down, we have some protection there if we're within those limitations, so if I have a barrier protection of say, 30%, and the market goes down less than that I have some semblance of protection there. On the flip side, if the market goes up, which is more likely over, say, a five year period, then we could have enhanced participation on the upside. We really like utilizing those and if I think of a fiscal house, I use that in the walls and I describe this for every single person that comes through and we discuss that with them. But we also can utilize annuities for downside protection on the market. If I say you know what, someone that like CDs, if they like to have four or 5% fixed, you can do that inside of a fix.
annuity right now, much like a CD, but you also can utilize indexed annuities that give downside protection on the market. But there's limitations on the upside. So you're not going to get all of what the market does on the upside, you have to be very conscious of that. And don't try and make it what it isn't. It's a preservation tool and an income generation tool. It's not going to beat the market. It's not designed to do that. It's designed to actually give some security as long as you utilize it properly. And you don't cash it out early. And we touched on this earlier in the program grant, and that is income generation tools. What are some of the tools that you would use to generate income? I mean, it's not just stocks and bonds, the old 6040 split, is it? No, not at all. That's where again, you're gonna utilize some of those annuities. If you if you want to, you can use it in a myriad of ways. You don't have to pay a fee for an income writer. I've had people say, You know what, I need $10,000 per year, I'm gonna put $200,000 in. So if I get 5% interest, can I just take out my interest? Sure, yeah, you can do that that's a that's a way that you can do it in a very simple and easy way. And you can generate that income that you need on a monthly basis, you could do it annually. Some people have a income need, I had one earlier this week, her income need wasn't necessarily for her income, but she had required minimum distributions that she wanted to take out and she had to take out, she wants to take it out every single November, well, that's totally fine. We'll just set it up through that particular strategy where we, every single November, it just sends her exactly what her RMD is. And it's really simple for her. That's what her income generation need was just to have a secure RMD, that sends it to me every single November, and I don't want to worry about fluctuations with those funds. I just want that to send me a reliable income because I need to take that RMD anyway, Greg, what are some of the key mistakes to avoid when transitioning from growing your savings to turning those savings into income. So if you look at some of the tax advantaged retirement accounts, you're going to have a couple of things that you need to be aware of it depends on when you're retiring, like if I have someone that's retiring at 56, and they have money in a 401 K, you have to be aware of what your withdrawal potential is, inside of that particular 401k, you could avoid this 10% IRS penalty versus if you rolled that out at 56. You roll it to a traditional IRA, and then you start taking money out of it. Well, you're gonna have a 10% IRS penalty, and then you have the taxes. So you have to be aware of that. If you're going to be taking it at that time. You also need to be aware of okay, how much is this thing likely to grow throughout my retirement? And how much is my tax burden going to be throughout retirement? It doesn't make sense to pull some more money out or do even Roth conversions in the early years. It may make sense. It depends on if you're taking Social Security, if you're 62. If you're 65. If you're 67. It also depends on do I need to plan to not take Social Security until 70. All of these things are going to matter. Because if you start taking Social Security at 63, and you start pulling too much money out of your IRAs, we could negatively impact how much tax we pay on our social security, what is that income need going to be? And I think the biggest thing that along those lines, that is a pitfall is we just don't do the complete Math, we just say I want to take my Social Security at 62. Because I want to get the maximum amount out of Social Security that I can well, that may not be the best strategy for you, depending on what your numbers are. So Social Security, Miss timing could be a big mistake for you as well to income generation versus wealth preservation grant, is it possible to create income while not touching your corpus or your principal? Oh, absolutely. That's what when we see someone that wants to do that, that's someone that would be exactly along my grandpa Jake's heart, he would cash in his CD, he would renew his CD, and he would just take the interest off of it, we can do that exact same thing with interest rates coming up the way that they have, we can start generating some nice interest off of these accounts that can really help people maybe go on some more trips or just to pay their monthly bills, where I like to see that just hey, we got 5% coming into the account, do you want that 5% coming out for your income, and you're never gonna see that go down throughout this year. A lot of people like the way that that looks and I really do too. I prefer doing it that way versus utilizing a fee based product to generate income. I'd much rather say You know what, hey, we can get this much fixed interest. Let's just go ahead and pull that off of our investments. And then we still have our nest egg, our lump sum that's still sitting there and that a lot of people really just like seeing that aspect. Well grant I'm sure that our listeners have some questions about wealth preservation versus income generation. So let's talk a little bit about what that consultation looks like when people come in and sit down with you and they ask that or they just want that initial consultation. What does that really look like when they
Call 402-281-0750 and make the appointment and show up and meet with you. Yeah, we do pretty much the same thing every single time. The first time I meet with someone in this client engagement process, we really need to get to know him. I mean, it's really, I've heard people say before a customized listening session where we're just trying to figure out okay, what makes this person tick? How do they want to live their life? I have to discover what their current plan is, is there any plan? What is their goal? What's their risk tolerance, figuring out how that looks, that's what happens during the first time that someone comes in. And I actually show them exactly how we would build a successful retirement plan that would work. When I'm going through the discovery with them, I actually discover what is going on in their life, what plans they have, what goals they have, what risk tolerance they have, and then review how we actually would manage their wealth. Once we do that. In the second, third, fourth time that we meet with people, we're actually showing them that we would introduce strategies and what the piece in retirement blueprint actually looks like. If a fit exists at that point, then people can tell me that they do want to look at what the implementation of a strategy would look like for them. And then we review plans and discuss and address these questions and show them what their completed strategy is. And then we have to do annual reviews, we show them all of that exactly what piece of the process they're in. But it's important to note, there are a lot of advisors that are going to be in a really big hurry, I'm not in a hurry. I want to make sure people have all of the information that they need to make an educated informed decision, we're not going to say hey, you know what we've met with you once sign on the dotted line, or we met with you twice and we're 30 minutes into our second time meeting. I'm not going to ask you for any signature until you're completely comfortable. You actually would tell me that's what I've told people for years. I never asked people when they want to move money, they have to tell me they're comfortable. And then we actually help them implement the strategy that works for them. Thanks grant. If our listeners would like to take advantage of this offer to get their piece in retirement blueprint. Once again, that number to call 402-281-0750 It's 402-281-0750. Again, no cost no obligation and no judgement for that just a friendly conversation between you and grant to design a retirement blueprint that will get you to and through retirement. You can also request your complimentary plan online at door out retirement services.com That is do our h o u t retirement services.com. Well, Grant we're out of time for this week. I want to thank you for your time, but most of all, thanks to find people here of the Greater Omaha area for joining us for grant Jorhat I'm Jeff shade, get out Have a blessed weekend in this great part of the country that we live in. We'll talk again next week with another edition of the retirement blueprint right here on Newstalk 1290 coil. The opinions voiced in the retirement blueprint with grantor Howe and Jeff shade are for general information only and are not intended to provide specific advice or recommendations for any individual past performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly investing involves risk including possible loss of principal no strategy assures success or protects against loss to determine what may be appropriate for you consult with your attorney, accountant, financial or tax advisor prior to investing Jeff shade in show guests are not affiliated with CWM LLC investment advisory services offered through CWM LLC, an SEC registered investment advisor distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and if taken prior to reaching age 59 and a half may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions to qualify for the tax free and penalty free withdrawal or earnings. A Roth IRA must be in place for at least five years and the distribution must take place after age 59 and a half or due to death disability or a first time home purchase up to a $10,000 lifetime maximum. Depending on state law Roth IRA distributions may be subject to state taxes