Show Me The Money | Top Ten Retirement Planning Mistakes

In this episode Randy and Jake discuss current events, the jobs report, value investing, dividend investing, and the top 10 retirement planning mistakes. 

What is Show Me The Money ?

Listen as Randy and Jake Floyd share their thoughts on the economy and overall financial landscape and how it relates to planning for your secure and enjoyable life in retirement. Just click on any of the shows to listen on-demand,

For the next hour you'll be leaving the show me state and entering the Show Me the Money state. So stop what you're doing grab a pen and get ready to learn. Brandy and Jake Floyd the Floyd Financial Group will be your guide for straight talk and honest answers about living the life you deserve in retirement
to the power now, here are your Show Me the Money hosts, Randy Floyd, Jake Floyd, and Jeff shade. Good morning and welcome to show me the money with Randy and Jake Floyd, the 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. My name is Jeff shade. And as always, I'm just here to ask the questions. But of course, the words of wisdom and sound advice come from Randy and Jake Floyd, of Floyd Financial Group. I'll start with you, Randy, how're you doing this fine morning? Doing very well. Jeff, how about you? I'm doing fantastic. And Jake, how are you? I'm doing great, Jeff. Thanks for asking. You're certainly welcome my friend. I hope that everybody listening to the show is having a good Saturday morning. We appreciate you joining us each and every Saturday right here for some money Talk right here on one or 4.1 ks GF. Where Springfield comes to talk, by the way, my favorite radio station. Let's start off today by talking about current events and what's happening in economic news. Now I understand this past week, we had some new information. Can you break it down for us? Yeah, Jeff. So this last week, we had the job openings number, which basically measures how many available jobs there are out there in the community. And so that number came down, it was expected to be nine and a half million jobs. And it ended up being only 8.8. And and so because that job openings, number is less that should give the fed a reason to pause maybe at this next meeting. So the market liked it initially, we'll see what happens. But we also saw some other data previously. And as some people may be aware of the previous not this last Friday, but the Friday before the Fed was in Jackson Hole talking about how they're probably not done raising rates, and we're ready to move them further if necessary. And I think that caught a few people by surprise. But after that we got these jobs numbers. And so now everybody's kind of in this holding pattern like okay, you know, now that we have this new data, is that enough? Or is he still want to raise interest rates again, and the Fed, as you said, has said that it may raise interest rates, once again, it's the Feds job to bring inflation down to a 2% goal. And we'll do that that is what Jerome Powell said, is that going to be realistic, though, in our near future? You know, that's a really good question, Jeff. I think that's the $50 trillion question. I think that everybody has a different opinion on that. I think Randy, and I's opinion on that is that he probably will not be successful in bringing inflation down to 2%. But at some point, they may shift what their goal is, you know, if you can't beat them, change your goal. That's kind of the Fed way. And I think it's not very likely that we bring inflation down to 2%, unless we're having a full blown recession, which is also a possibility. But if we don't inflation is going to tend to be very sticky if we don't have that recession. And I've said many times on this show that I don't think the Fed will lower interest rates until they absolutely have to, and what does that look like? That looks like a recession? Most likely? So there's two ways Jeff to fix inflation. Number one is to create a recession, or are you ready for it? Are you hanging on to your seat? I am we need to become more productive? Oh my gosh, that it? So can we do? That's called work. And that's a problem for some people, a four letter word for a lot of people. Definitely, fortunately, gosh, but that's it. That's that's the two ways there are or you can try to balance the two. And you know, that's what he's really trying to do at this point. You know, the one thing that I will say is, you know, part of the tightening that he was doing to help slow the economy down and bring things back into balance was he was going to raise interest rates. And then number two, all these assets that were carrying on the balance sheet, he was going to roll off and start reducing the money supply. Right? Well, we started that for a little while. But now with all the other programs that have come along, the money supply is actually increasing again, and we're at a deficit every month as to what we're spending. So you know, we aren't following the initially laid out plan here. So you know, I don't know, it's one of those things, again, where we need to get more productive, or we need to tighten more. And you know what, people just need to be thankful again, to have a job and to be able to look forward and do well and produce something, rather than take everything for granted and be on the dole. Yeah, I remember when having a job was a status symbol. I mean, really, and today, I think having a job is the same thing. I couldn't imagine trying to get through life without a job, but there are people who are trying to do it. Let's talk about inflation a little bit more. I mean, the goal was 2%. I think we're a little over 4% Right now, but the White House says we're making progress. But when I think about that, I make the analogy of losing weight. Let's say that I'm gaining 10 pounds a month, and the next month I gained seven pounds. It's not like I'm losing weight. I'm just not gaining as much weight as I did. And the same thing
With inflation, I mean, it's not really going down, I think it's just not growing as quickly as it was is around 2%, an average rate of inflation, I know that we had it for a while there, but historically is 2% a good rate of inflation. So I think 2% is a good rate, it is also close to the average historical rates. However, the previous 15 years before COVID, we'd been struggling to get to 2%. Right, not able to get there even after printing $6 trillion. And so I think that there's a lot of deflationary pressures when it comes to the baby boomers retiring, and the overall jobs market in the long run. But in the short run, you know, we have a lot of inflationary pressures. And a lot of the people that are looking for work are not really looking for work. So we have twice as many job openings as we have people looking. And that just creates a lot of inflation, because employers have to compete for those people to fill the jobs. And so they have to pay everybody more, pay everybody more, pay everybody more. And if you go to the grocery store with $1,000 versus $100, I imagine your steak that you're picking up will be just worth quite a bit more money, and it won't change what you want to buy. It'll just change your ability to buy it and what you can pay for each item. And I think that's the basics of inflation and how inflation works. And so I think there's a lot of people that don't understand that including most of the idiots in Washington, you know, and I think that that's an important thing for us to discuss as a country, if we understand what creates the inflation, we can help to kind of mitigate that. But there's a lot of people out there that just have their head in the sand and they're just spending money like there's no tomorrow that will eventually stop it reminds me actually of a story Randy used to tell. And since he's sitting here, I'll let him tell it about your old doctor friend. Yep. Chuck Morgan tells the story. And I was hey, Chuck, how are you?
Ah, anyway, tells the story, this guy called him up one time and he said, Hey, he said, My son has cut himself, he is bleeding, and he's bleeding pretty badly. And I can't get the bleeding to stop. It just won't stop. And so Chuck thought about it for a minute. And he said, first of all, let me assure you that all bleeding does eventually stop.
One way or the other. When I think about the economy, that's that's that story comes to mind is like, it may not stop in the way you want it to stop, eventually stop. So anyway, Jack always had a real dry sense of humor. And one of the things I was going to bring up here too, along this same line of jobs and salaries and all that sort of thing and inflation, but all ties together. It's up in front of me here on the CNBC site. Again, I read last week that the average person, you know, is looking for $80,000 A year in any new job they're gonna take. Okay, so that if you think about that, that's a $40 an hour paycheck. Yeah, pretty good. Now, you need to produce something. Oh, yeah.
You're getting to get paid that right? You're getting paid $40 an hour? Correct me if I'm wrong, but wouldn't you be expected to produce more than $40 an hour in value in order to afford to pay you $40 an hour? It's kind of how that usually works? Yeah. But I think, Jeff, that that's the fundamental problem is people don't understand that all they're worried about is that they get more, and they get more, and they get more. And so it's been forgotten that you have a job because you're supposed to produce something for the person you have the job from. That's interesting. So I think that's what I'm talking about, about basic economic education is pretty well lost on the vast majority of the public. And, you know, if I'm paying somebody $80,000 a year, and they're producing 40,000 a year, I have to question why I have them around, right. And so eventually, people will kind of wake up and go, Well, we're paying these people lots of money, and some of them are earning it. But I would say a lot of people that are making 80,000 a year are probably not producing that right now. And as we have the shift back to sanity and reality, I think that will be painful for certain people, but those who work hard and produce will always have a place in this country. That's right. We talked about the jobs report a little bit earlier. Let's touch on housing in this segment, how's it going with housing out there? And it appears to me that prices are certainly not declining? Interest rates are up for sure. I mean, I think that again, I've talked about this a couple of times, you know, I know people have gotten some pretty consistent raises over the last few years and people that job hopped especially the 18 months after COVID were the ones that got 14 15% raises, and then sometimes they wouldn't get another 14 or 15% but eventually all this money's gonna run out but it's crazy Jeff, I keep watching it around here. There's a new subdivision that went in over by us and they've been building building building just as fast as they can build over there. And these houses are they're nice, they're middle of the road houses in how they're built. You know, because they got a brick front and they got wood and composite type siding on them right but just a brick front. Right but those things are selling between 202 $150 A square right here in middle America. You
Springfield, Missouri. And so you're looking at a 2500 square foot house is 500,000 to $600,000. And it's 7% interest. If you got a $500,000 loan, you're paying $35,000, almost 3000 a month in bare bones interest. I don't know how they're doing raise a Yeah, for young people be. And that's kind of the point, right? Yeah, that a lot of those people have maybe two incomes of, you know, 60,000 or 70,000 each. And that payment is just going to be way more than the average person should spend, especially if they're raising a family and stuff. You have all that extra expense. I mean, people are just overextending themselves in just about every way right now. And again, not everybody is I realized that we're listening to a conservative show here in the last bastion of sanity, I'm just talking about the public at large is spinning themselves into oblivion, and it will come back to bite them eventually. Yeah, my general rule of thumb usually was about 30% Is what you could afford in housing for your mortgage payment. And you know, there's some people who suggested it'd be 25% of your take home. That's if you're very conservative, but I think people these days, it is quite regular, if they're young people like that in their first home, or they're buying a new home to spend as much as 50% of their money on housing. That is just very, very unsustainable. We're talking with Randy and Jake, here at Floyd Financial Group, we've been talking about current events. And if you have questions about current events, and how it can affect you and your journey to retirement, I encourage you to give them a call at 417-889-7233 and request your no cost no obligation, no judgment financial review, it's just a friendly conversation between you and Randy and Jake so that they can get to know you so that you can get to know them and to create a path for you that could get you to retirement keep you retired into retirement that could last as much as 30 years. You want to make sure you don't run out of money and Randy and Jake certainly can help you find a way to avoid that predicament. Once again, it's 417-889-7233 to get your complimentary consultation. You can also request your consultation online at Floyd financial group.com. It's Floyd financial group.com. Time for a break. Gentlemen, we'll be right back with more of our show right here on what a 4.1 ks GF where Springfield comes to talk.
Ready for another helping have some more real money dog gods. Now, here's another serving of show me the money with your hosts, Randy and Jake Floyd with Jeff shade. Welcome back, everybody. This is Randy and Jake, you're listening to show me the money. And in this segment, we'll be talking about value investing and exactly what that is. And you'd already value investing might not have all the flash of growth investing. But the strategy really helps folks find hidden gems in undervalued equities. So let's talk about value investing here. First of all defined value investing. So value investing, Jeff is where you have basically two types of investments, growth investment, and then what we would call value investments. So the value investment proposition, if you will, is more maybe stable companies and companies that are maybe paying dividends and companies that are maybe for some reason right now a little bit undervalued. And we can see that the industry they are in and the growth track that they're on or their performance that they're able to produce through their operations is solid. And then we think you know, there's some upside potential versus the growth stock, where we're not going to get a dividend. Most times, they're going to take all the money that they get, and they're going to reinvest that back into the company to grow that company over the long haul. And as they do that, the only way you're going to really make any money in growth investing is to either buy it and hold it long term, or sell some of those stocks along the way. If you need income, you know, if you got growth and no dividends, you have to sell the stock to realize the growth to take the income. So I just a basic difference. And philosophy of you know, maybe I would say the value investment is going to be the company that's a little older, a little longer in the tooth with a lot of track record and growth many times is well just that its growth might be a little speculative. I think one of the things too, Randy, that, you know, as I'm having conversations with clients, and we're talking about value versus growth, one of the things I equate it to is, if you've ever gone shopping at let's say Dillards you know, we have Dillards here, and you walk in the front door, and right up front, you know, they have all the new clothes, you know, all the skinny jeans and all the all the stuff that you know, I kind of wish would hurry up and go away. Back to the old way clothes fit. Me too. But you go in there and you know, all their new stuff is up front. That's all full price. Right? Right. When it comes to value investing, think of it like the clearance rack, right? And so you go back to the clearance rack and most of what's on the clearance rack is kind of junk, right? But as you look through there, you look through and you say okay, where's my size? What fits me here, you know, kind of relating that to risk tolerance and things like that. But we go through here and we say okay, that's junk. That's junk. Ooh, that's pretty nice. That's a good value. It's 70% off. It's still something that I would wear and I don't just have to pay $200 for a shirt, you know, maybe I can get it for 30 or 40 bucks and Dillards
equation right. And so that's kind of how value investing works as we want to buy them when they're on sale. And so, like Randy was talking about, it's the amount we have to pay for the stock relative to its sales, its growth, its dividend and all those types of things. And one of the most legendary investors of all time, Mr. Warren Buffett is renowned as the greatest value investor of all time. And that's that's his primary way that he likes to pick what stocks he invests in is how much value is he getting for every dollar that he invests in there, rather than chasing companies with high multiples that are flashy, he tends to pick companies that have been discarded, that maybe shouldn't have been Jaykar. Randy, can you expand a little bit more on the metrics that defined value investing? Yeah, so Jeff, whenever we look at the market in general, you know, we talk about this thing called a price earnings ratio. And so there's a couple of things that come into play when you're looking at value investing, is it a value? Or are you buying a problem, right?
So housing,
kind of get underneath it, you know, and see what the actual structure the value of the company, you know, what kind of an industry? Is it? Is it in? Is it a declining industry? Is it just one of those things where it's not the shiny thing that people want anymore? You know, during COVID, we had lots of shiny things. Right? Right.
Ooh, shiny. And we also had lots of money in our pockets, because the government kept sending it to us, right. So people were really speculative, and really pushing all the growth stock. Well, as they do that, and they go away from those tried and true companies that were maybe having a little trouble as well as everybody else during the pandemic and all that a lot of that money left those companies which created some value investing proposition. So basically, what we looked at, there was one company that still kind of remains almost a mystery. It's a what I would call a value investment company. But it's an industry that's kind of declining in this country. And that's the steel industry. So US Steel, and then Jake, what's the big one that makes all the rebar, new, new core and US Steel, or go to the main two, you know, those guys have really low price earnings ratios, meaning they make lots of money for what they do. But they're one of those industries where they're kind of tarnished, right? And people think, well, that industry is kind of over. So that may not be a good value, just because the price earnings ratio looks really good. You got high earnings, you know, and it may look really good from that perspective. But we also have to look at what industry is it and where is it headed? So it's not just the price earnings proposition? It's what industry? Is it? What kind of dividend are they paying? Where are they in their growth cycle, all these things come into play. So it's not something you can just you can just go out one day and say, Okay, that looks like a value investment. I mean, it's really more than that you have to look at history, and really kind of being involved with this business every day, you kind of learn where companies have been, where they're going, and where industries in general are going. So the value investing in a new core makes most of the rebar, you know, in this country, and it was kind of funny when I was taking my trip here recently, Jeff, I noticed that out west, I think it was Cheyenne. And one other place, I went by two core steel plants. Mm hmm. Which I thought was interesting. I didn't even know they were out there. But I thought, yeah, look at that, I think well, we're talking about industries that are value type industries. The steel industry is a good example, a lot of some of the more mainstream metals, mining companies, so companies that mined copper and things like that usually would fit into that bill. Also, probably the best value investments over the last several years here would be oil and gas companies. So when it comes to oil and gas companies, they traditionally pay a pretty good dividend, they are now paying an outrageous dividend. During COVID, they introduced something called a variable dividend where they pay a dividend based on how much money they're making. And so used to be that most of these companies would pay a 5% dividend or something like that. But now they're saying, hey, if we make a certain amount of money, we'll pay a bigger dividend. Some of these dividends were in excess of 10%, on very solid companies trading at 10, or 12, times their next year's earnings, which is again, very good from a value perspective. So oil and gas is another good industry telecom would be another traditional value type industry. So like you have AT and T and Verizon that are only trading at like seven times earnings with a 7% dividend. Now, telecom is a little bit scary, because it's kind of a dying industry. That's kind of what Randy was talking about earlier. So I'm not saying you need to need to rush out and buy all these things. I'm just saying that there are when we're looking at value, you know, they tend to be in certain types of sectors of the market, like Randy was saying, when I think of value investing, I think of things that maybe I would use every day and you talked about rebar, you talked about steel, those are ingredients in the buildings that we see around us, but also, you know, when I wake up in the morning, my alarm clock may be made by General Electric, something like that. So I turn that off. You know, I go into my bathroom, I brush my teeth, and there's another company that makes that and then I have my coffee and there's a coffee maker that you know makes that
For people who get in their cars and go to work, they have a certain brand of car and it's just said gasoline. Is that a fair way to begin to define what value investment companies really would be? So I think, Jeff, traditionally you would be correct. The problem is since we started printing money in this country, like there's no tomorrow a lot of the valuations of those companies are just kind of outrageous now, anything from Walmart to Kraft, Heinz Hormel Foods, Procter and Gamble, a lot of those companies are over 20 times earnings, in some cases, 30 times earnings, Clorox those types of companies. Absolutely, Jeff, that's historically what we mean by value, except they're just no longer a good value. You know, it's like your Levi's jeans, right? Like, if you normally pay $35, from which you need to tell me where you're getting your jeans, if you're still paying $35 for him, because I don't know where you get that. But if they're normally $35, and that's your value. Yeah, imagine now that there are $100 When you go in, and there's nothing wrong with the jeans, they're just simply no longer a good value. And so that's a perfect example, actually, of how we look at stocks when we're looking to pick stocks. You know, it's not that all stocks are just bad. There's a lot of good stocks out there that are simply just too expensive. And I think, you know, there's a difference between saying, hey, I want this stock at any price, or, you know, I want this stock, you know, at a reasonable price. And so when we're thinking about value price is a very important component of that. Well, Jake, I hate to tell you a bit of my closet, I've got about five pairs of jeans, and there's not one of them that were more than $30. So I will share where I'm getting those jeans, I'm just not.
I'm kind of fashion icon here. Before we end this segment, I want to talk about dividend investing, we do get questions about that once in a while, what is a dividend investment. So this is an area Jeff, where you really have to be careful, because we have people sometimes that come in, and they sit down in front of us and they say I just want seven to 10% dividend companies. And so while some of these companies have good solid cash flow and good solid business models to support that, in some cases, and in fact, in many cases, we see this where people come in, they're collecting a 10% dividend, but in the last 10 years, their company has lost 60% of its value. So while they get, you know, they're getting the cash flow on the dividend, but their stock value keeps going down and down and down. So you have to be careful that you know, you're not part of a situation where the company is just simply cannibalizing itself to pay out the dividend. And you're running down a track here where you're not going to win. Yeah, so one thing to have a 10% dividend, but it's another thing to have a 10% dividend where you're down 80% in your position is that you know, and that's really again, what you have to watch out for. And there's quite a few companies actually out there that just make it their business practice to operate that way. And I think like Randy said, it's important to really understand what you own, I would argue that anything over about 6% dividend should be a red flag, because if that company is not going up in value to offset that dividend, right, meaning the dividend payout is relative to the stock price. So if you have $100 stock, and it's paying a 6% dividend, it's paying $6 per share per year dividend. And so if you have a stock that's paying, that's $100, that's paying 10%. Why is that stock not appreciating in value off of that dividend, right? Because if it was paying $10, and it's worth 100, it would be a 10% dividend. And so if you really look at it, that lens, maybe there's something you're not seeing in that stock that everybody else is seeing, and you definitely need to look at more line items on a stock than just its dividend yield. Yeah. So one thing to remember too, Jeff, is that if we were to look at the s&p 500, and I haven't done this calculation, but the s&p 500, you know, roughly 500 of America's largest companies, and it has growth stock, it has dividend payer just got all kinds of got value stocks, everything is in there, you know, the overall dividend, I'm gonna say I haven't done the calculation in a while, it's probably 1.6 1.7%. Now that's across all the company's growth and dividend payers. So again, if you were to look at that, let's say half of the s&p 500 is growth stocks and half is more value, or what we call run of the mill stocks it to get to 1.7 We got to have some high dividend payers 3.44% to offset those that aren't paying a dividend in the growth category. So when we really look at that, when you start looking at three and four, and five, and six and 7% dividend, you need to be looking behind the scenes saying, hey, what's the free cash flow of this company? What is their trend and how much money have they got? How are they doing? How is that company doing? Can they sustain what they're doing? Is it truly a value? You're listening to show me the money with Randy and Jake Floyd, we appreciate you joining us here each and every Saturday morning. Before we continue. I want to take a moment though to remind our listeners how they can have a conversation with you and ask their questions about value stocks and dividend stocks. If you need answers and request your no cost no obligation no judgement Floyd Financial Group retirement review by calling 417-889-7233 That's 41788
line 7233. Now when you call you're going to get a friendly voice the other end of the line more than likely Ashley who will gather some basic information and set you up with a conversation with Jake or Randy to create a path towards a successful retirement. Now remember, it's not going to cost you a dime, but he could uncover some blind spots that when addressed may help improve your quality of life and a retirement ticket last 30 plus years once again call 417-889-7233. It's 417-889-7233. You can also request your complimentary consultation online at Floyd financial group.com. Time for a break, Randy and Jake will be right back with more of Show Me the Money right here on one Oh, 4.1 ks je app where Springfield comes to talk.
We're back with your financial catch of the day. And it's a big one. Here's more Show Me the Money radio with your hosts, Randy Floyd, Jake Floyd, and Jeff shade. Welcome back, everybody. This is Randy and Jake, you're listening to show me the money. And in this segment, we're going to be talking about an article that came up that says hey, what's the top 10 Retirement Planning mistakes people make? And ready you know, it's very easy to make big mistakes when saving and planning for retirement and financial advisors say that they see a lot of them that I'm sure that you do as well. So let's talk about these 10 Top errors that the pros see number 10 will start from the backwards and go up we'll start from 10 and go down to one not necessarily in the order of importance. But the first one is being too aggressive in investments. You know, it's funny that you bring this up, I was watching the former president of TD Ameritrade and most people listening to this show will know that soon Charles Schwab will be completely taking over, there'll be a complete transition from Schwab to TD, which we've been planning for the last couple of years. But the former CEO of TD Ameritrade was talking about how people should probably be invested right now, if they want to be safe or conservative. And he talked about right now, because of the fact that Jerome Powell is raising interest rates and everything to the point he has, you should be 50% in fixed investments, and you should be 50% in the market so that if the market takes a 50% dump, you only take half what the market does. And you know, I thought that that was probably pretty solid advice for the average investor out there. And it's right. Sometimes people think that it's as simple as we throw money into an investment, that company that's making the news, the one that's making all the headlines, and all those companies always go straight up and we get rich. So that's not true. We have to be careful. And we have to make sure we take a measured strategy of risk when we get to retirement and to invest properly. I think you've really got to walk a tightrope here little risk is necessary to get to the other side. But being too aggressive can cause you to tumble on the floor below. So financial professionals who cited this retirement planning mistake 21% say that they saw this next 120 3% saw this and this is under estimating real estate costs. Yeah, you know, the joys of home ownership. Oh, they are many. You know that. I remember growing up when, you know, obviously Randy's dad here and I remember growing up and watching him have to replace things like do concrete work or replace the air conditioner, flooring, kitchen cabinets, all that kind of thing. Especially, we bought a house when I was growing up, that was repossessed by the bank, and we had to basically replace everything in it. And I remember watching the bills rolling in going. I think homeownership is overrated. Yes.
Freedom is definitely not overrated. But all things equal, being the one on the hook to fix everything does have a few drawbacks. You know, you've got roofs, you've got water heaters, you got dishwashers, all those things have a finite lifespan. And you're right homeownership can be expensive, but when you balance it against renting forever to buy, I'm gonna, you know, go towards homeownership. I mean, you guys put some sweat equity into that house. And it basically was worthwhile. I would, I would guess, no doubt that you know, homeownership is still a good deal. But here's what I would say, as you're getting close to retirement. And I asked this question many times, do you have any deferred maintenance that needs to be done to your house? What did you put your last heating air unit in? Are there any things you know, those things that need to be fixed? Let's fix them before we get on to fixed income in retirement? Yeah, Randy, obviously, you know, I own my house, you and your house. And so, you know, the lack of freedom is not worth the savings. Right. So, you know, for me, you know, I definitely want to have my own place. But I think that there's a lot of paths people don't think about, I think a lot of people in their mind's eye they say, Hey, I have $1,000 house payment, when I pay my house off that $1,000 house payment goes away.
You still owe taxes and insurance, right? So you know, if you have $1,000 house payment, at least 250 That's probably gonna stick around maybe even 300 Depending on where you live, what county and all that kind of thing. And you know, insurance rates are going up, but I think there's just a lot of little things that add up to a pretty big number that a lot of
People underestimate. Yeah, my older sister is on the cusp of retirement. And just recently, she's had her driveway redone, she's had the house painted, she has had the windows replaced a whole house water system put in there. She's doing all this now so that when she gets into retirement, she's not going to have those big bills. And I think that's a very good piece of advice is that if you're getting ready to retire, take a look at those big ticket items and try to get them done while you're still working. Next one is going to be relying too much on public benefits. And when we talk about public benefits, I would imagine we're talking about things like social security. Yeah, you know, Jeff, I think a lot of times people are not, they haven't taken the time to sit down and really look at what their social security benefits going to be, you know, and what their spouses is going to be and how that's all going to shake out. And so yeah, many times people are surprised that, you know, Social Security doesn't go quite as far as we thought. And so then many times, we're having people that if we haven't gotten with them and developed a plan, the last five or 10 years, they're going to come up a little bit short. And so they have ended up you know, working a few more years working part time or whatever, in retirement, or maybe live you know, life a little differently than they wanted to in retirement. So I guess the thing here is, let's know what those benefits are gonna be less work them into the calculation, looking forward as early as possible. And I will tell you to be careful who you trust, because many of these 401 K plans out there have calculators that are built into the that software, and they'll show you what that estimate is. And I gotta tell you, some of those guys were on crack cocaine when they wrote those programs was they are, they're way too high. Say no to drugs, say no to drugs. Yeah. And if people want to know what their social security benefits are going to be, and I'm going to clarify that and say estimated Social Security benefits, simply Google estimated retirement benefits, Social Security, you'll come up with a calculator right there. But remember, Social Security benefits many times can be tax. So that's something to remember next one is failing to understand income sources. 35% of financial planners say that their clients made this mistake. Well, sometimes, you know, we work 2535 4550 years, we have income from our job, we've saved money, we've read hold money, we've saved it, we saved it, we saved it, and really people don't know. Okay, so now that I've saved this money, or realistically, how much money can I take out of this investment to live on? It's kind of funny, because people talk out of both sides of their head on this, and I'm talking about advisors and financial professionals, they'll say, Well, you know, a good a good mutual fund, Randy will will earn 12% a year. And yet they'll say when it comes to withdrawing money from your account, you should not draw more than 4% adjusted for inflation. Right. So sounds like overselling and under delivering
just what I was thinking. So I'm sitting here going, those things don't compute. And so really, it's it's important that you sit down with somebody. And we do this all the time, we sit down, we assess everything for people. And we then we show them what's available, what's sustainable, and what you can expect from your retirement savings. And so if you haven't done that, and you haven't looked at Social Security as part of that, then all your investments so far, give us a call, you need to come in and do that, then we can help you understand exactly what your retirement savings is going to be able to produce on an ongoing basis for you looking forward. So be sure to educate yourself about the sources of income that will support you and your golden years in retirement could last 30 years. By the way that number 417-889-7233. Next one is forgetting to factor in healthcare cost 39% of financial pros cited this as retirement planning mistake that they see from their clients. I think, Jeff, that it's almost impossible to fathom how much money you can spend on healthcare in your retirement. And the majority of that is going to come from a long term care type situation, either assisted living home health care, nursing home, that type of thing, you know, your actual bills, your normal medical bills, if you sign up for you have Medicare, Medicare Part B, and some kind of advantage or supplement plan, your actual bills for that type of healthcare are going to be relatively low still, even though they might go up some, you know, you're not going to spend hundreds of 1000s of dollars that way, where you can definitely spend hundreds of 1000s of dollars isn't a nursing home assisted living facility, Memory Care Unit, that type of thing. And I think that it's just crazy to think that 10 years ago, you could find care for you know, 120 $130 a day in this area. And now it's $250 a day, you know, so the average nursing home care in the city of Springfield is somewhere between 70 $508,000 A month that's just an astronomical amount of money. So at 8000 a month you're spending almost $100,000 per year per person. If you have a Ronald Reagan scenario where you're in there for 11 years with dementia, you know, that's that's a million dollars you could spend and so having a plan to deal with this is very important and understanding how everybody is going to look at your assets and try to figure out how to get a hold of those if you have these huge costs is also important, but there's ways that you can leverage
Just need to help fix that problem. And there's other types of planning that can be done. As long as we're looking at this thing ahead of time. Even in the moment, there's some planning, we can do what we call crisis planning, but just understanding that this is probably the biggest thing that can come bite you in retirement from a cost standpoint. And remember, Medicare doesn't cover everything. I mean, there's vision, there's Dental, there's hearing aids, I mean, hearing aids can be $3,000. For a couple of those. I don't know many older people who, yeah, me too. I mean, I don't know many older people who do not have some form of hearing loss hearing aids, very expensive radio, I want you to comment on this, because we've talked about this before in the program, a lot of people say, Well, I've gotten Medicare now, you know, I'm going into that nursing home or, you know, I'm going into into assisted living, Medicare is going to help with that. But that's not the case, is it? Yeah, you know, as long as you're in what's called a rehabilitative state, you know, if you're going in there to, you know, you had a knee replacement, or you've had a hip replacement, and you're trying to get better, that's the case, you know, it's going to help cover that. But you know, the most you can expect on Medicare with any program is for it to pay up to 100 days, once you get beyond the 100 days, you're going to be in a situation where I think the copay now is $193 a day for you to be in a nursing home after that. Now, many of these plans are not even going to extend to the 100, they will stop at 20 days. So just remember, if you're going to have long term care, that's going to be a major out of pocket expense. If you haven't figured out how to pay for that, you need to think about that. We have been coaching people that for the last 1516, nearly 17 years now so we can help them that area. And a lot of people think that Medicaid is going to pay for it too. But you are limited in assets, if you are using Medicaid, and there's a look back of five years isn't there, right? So if you're going to Divest yourself of assets to protect against the cost of long term care, ie a nursing home and have Medicare pay for it, you're gonna have to do that five years ahead of time. And remember, there's all kinds of qualifications and things that you have to meet to get qualified for Medicaid. And then there's the last hitch because the state of Missouri says if we pay Medicaid benefits for you for a nursing home, we're gonna keep tabs on what that is. And at the end, we're gonna go out and look for real estate to attach a lien to call the TIF ruling that short for tax, equitability, and Financial Responsibility Act. And so they're going to win that house sales, they're going to be there with our handout to collect the money. So you need to do planning in that area. And that's something we have a lot of expertise here. In fact, we have a whole division of the company that does that. We're talking about the top 10 Retirement Planning mistakes that financial advisors including fleet Financial Group sees we covered five of those we have five yet to go if you have questions about our show today. If you have questions about anything that we have spoken about you want to get in and sit down with Randy and Jake talk about your individual situation to help avoid these problems you can call 417-889-7233 and request your no cost no obligation financial review, it's not going to cost you a dime and again, there is no judgment 417-889-7233 You can also request your plan online in Floyd financial group.com It's Floyd financial group.com Time for a break when we come back we'll continue our conversation about top retirement planning mistakes that advisor see and more when our show continues right here on one Oh 4.1 FM K SGF. Where Springfield comes to talk.
Ready to climb a mountain of financial know how good because it's time for more. Show me the money with your financial Sherpas. Randy and Jake, Florida. Welcome back, everybody. This is Randy and Jake, you're listening to show me the money and finishing up on the 10 biggest mistakes that people make in retirement. Number five is setting unrealistic return expectations. And when you invest, it's fine to hope for the best. But expecting great returns with a sense of rock solid certainty can be a really big mistake. And 40% of financial advisors say that they see this where their clients, what are your comments about setting unrealistic return expectations? So here's what I would say. And you know, we're all human. And we have this tendency to look out there and think that everybody else is doing better than us. And when in reality, that's just simply not true. Or we have this idea that we think about things a certain way, and we're unique and nobody else thinks that way. That simply is not true. For the most part. We're all in this together. Right? So the reason I'm going down this road is right now is one of those times where you know, people are looking back over our shoulder, we came out of an 11 year bull market, the longest one we've ever had that lasted through you know, 2020 and COVID. And so people got used to the idea that man, we can just make money hand over fist in the market. And now we're having this situation where the last two years if we were to look at the s&p 500, which is the broad stock market and look at that it has basically returned zero in 24 months and so
Old people now are very impatient. And they're looking around saying, Well, what am I doing wrong? Or what is my advisor doing wrong? And the answer to that question is nothing. They're not doing anything wrong, we just don't always have the ability to make eight and 10 and 12 and 15 and 20% returns. Now one thing I will say is, we've kind of looked at this a lot, as the money supply goes, so tends to go the stock market meaning is, our government prints more and more money, the market tends to get elevated. Why? Because that money finds its way into asset prices, just like Ben Bernanke said it would back in 2010, when he started printing money after the financial crisis. So the longer the short of it is this, um, this unrealistic returns expectation, you know, in retirement, we don't want to swing for the fences, because if we strike out like Babe Ruth, you know, that's our retirement. Now we're in trouble. Right? Now, if we hit a home, run out of the box, be careful, because now you expect you're gonna hit a home run every time out of the box. So those things where you have to plan and you have to put some temperance in what you expect. And you know, when you sit down with us, we always give you that guidance and that plan so that when we have these times, when we don't make the return, it doesn't kill us. And when we do make good returns, we can make that money again, for the future when we're not going to have such great returns. And the markets always cycled it always will, that's just not going to change. So you know, we have set up 1000s of retirement plans at this point. And so we have a lot of experience in helping guide people down that path. And correct me if I'm wrong, but I think some people think because you're a financial professional, you've been doing this for long period of time that somehow you are magicians, when they come into you, they're gonna get a 10% return, it's going to be totally safe, and it's going to be tax free. Those are unrealistic expectations. If you visit a financial professional, who says I can get you all those things, I think you should turn around and walk out the door because it is just not possible. We're talking with Randy and Jake, here at Floyd Financial Group. And we're talking about 10 Retirement Planning mistakes that financial advisors see. And the next one here is being too conservative in investments. Yeah, for sure. I mean, that is one of the areas that sometimes we have people come in, and they say, you know, I put my money in CDs 35 years ago, and that's where they've been. And you know, for a part of that 35 years, CDs were pretty good for 10 or 15 years of that CDs were pretty bad. And now all of a sudden, with the rise of interest rates in the last 18 months from zero that the Federal Reserve was charging banks to borrow money in March of 22, to five and a quarter percent. Today, we're starting to see CDs come back and be better. But the bottom line is you can't depend on one investment, one safe investment to pave the way for your 30 year retirement, you're going to have to have some planning and somebody at the helm to help you kind of navigate as things change. And one thing we can be sure of Jeff is investing and investments will change. It's kind of like that old movie Arthur, Dad, have you seen the CD when the light hits it just right.
Depend on that light.
Trying so everything comes and goes everything's cyclical, the markets, cyclical, the housing, market, gold, real estate, in general CDs, all of that comes and goes. And so you have to have a plan up front for how much risk you're gonna take. And you need to stick to your guns, everybody's risk tolerance shifts based on the cycle. And so we have to take that with a little bit of a grain of salt, meaning everybody's risk tolerance tends to be really high when the markets going straight up, because there's no doubt and they're like, all I'm doing is missing out, you know, but they forget that it can go down too. And the opposite is also true where people get conservative. I've heard tons of stories of people that come in, they say, Hey, you know, I was invested, I got wiped out in 2008. And I was down 30% 60%, you know, some of the numbers are even bigger than that. And so I got out and I swore I would never go back. Well, what happened is they got out at the bottom when they were down 50% and missed a 660% rally on the other side. And so what we want to do is not that we're gonna get every penny of every rally, but we do need to have a plan and stick to it and really understand what that's going to do to you in retirement. I think that's a big part of where a financial planner is somebody who does this all day every day and helps people retire can really help you stay on the path. Stay on track with your goals. I'm gonna say that again, stay on track and stay right where you need to be on path to your goals through good times and bad times and really help you understand what kind of risk tolerance is appropriate for you. And to the last point also, you know, what you can expect from return standpoint. So being too conservative with your investments, that is a mistake that 41% of financial professionals see in their clients. Next one is over estimating investment income. Yeah, you know, Jeff, this goes back to the old question we've asked on here many times would you rather have a million dollars or $50,000 a year in Garin?
He didn't come for life. Right? Yeah. So one of those things is some people think that the magic number of $1 million is, hey, I've made it, I can do anything I want. Well, maybe for a day or $2
million. Right? There was there was a million dollars and what to use just right there at eight what it used to be, there was the old show, you might remember Jeff called the millionaire, right? Yeah, yep. Yeah, the guy that ran and ran around giving away a million dollars? Well, let me tell you, in the 60s, a million dollars was a whole lot more money than it is today, you know, so overestimating the income. And what that will buy, you know, is, is really the big question here. And again, this goes back to if you were to ask your financial advisor, the correct answer, according to Google, and the powers that be right, whoever that is, is you can take 4% per year, so on a million dollars, that's 40,000. And if you have social security of 30, that's 70,000. That's what you're gonna live on. And they're gonna tell you, if you're going to spend more than that, that you're going to run yourself out of money, I will tell you that a properly set up plan, we can draw a little bit more than that, and we will never spend our money down. But you gotta have the right setup to get that done. And the next 140 6% of financial professionals see this with your clients. And that is under estimating how long you will live. And that is becoming more and more of an issue these days, because people are just living longer. It is Did you see that? The the oldest living gal in America right now he is 115 100. And then one of our neighbors is 114. There's something in the water over there. But yeah, you mentioned I've mentioned before that I've got an aunt who's 107. Now Yeah, yeah, yeah. And then this gal said, Well, you know, my mom lifted 97, my dad lived to 101. You know, a lot of it's just in the genes. And there's not much you can do about that. But there are things that we can do to to, you know, make our life longer. But the bottom line is when people retire, and they come in here at 65. And I tell them, you know, we're gonna plan to age 90, and they go, oh, never lived that long. I said, Well, what do
you do? Would you like to have a plan that accounts for that, rather than one that accounts for you living to be 80 years of age, you got 10 years without any money. And I think that's the biggest fear is running out of money in retirement. So don't underestimate how long you live that last one here, almost 50% of financial pros see this amongst their clients. And that is under estimating the impact of inflation very important to consider that Well, earlier, you know, you asked is 2% the right amount of inflation. So let's explore that just for a minute, because this will kind of bring this home to roost. So the rule of 72 says that whatever your percentage of interest is, or inflation divided into 72 takes is how long it takes it to double. So if inflation is 2%, divided into 72, that means that every 36 years, everything doubles in value, or it takes twice as much money to live, right? If it's 3%, it's every 24. So maybe 3% is the right number. But still, I mean, the impact of inflation is significant. Because you know, every eight years, you're talking about a third more money. Yeah. So think to Randy, that each person is a little bit different as far as what we should account for in inflation. So we don't necessarily have to just account for inflation at all costs, but we need to have a good understanding of what inflation is going to do to our buying power. And that's part of the reason why our annual reviews, 90 day reviews, six months reviews are so important is we need to understand, Okay, what's happened in the last year to inflation and my buying power and that kind of thing? What adjustments do we need to make looking forward, the average person probably doesn't need to keep 100% pace with inflation, right? Because as you get to be 9095 years old, you know, you're just less able to spend money on certain types of things. So but you definitely need to keep an eye toward it. And I think it's a big one, I'd say for me, number two is probably the one that I think is the most concerning on this list of 10, which was that under estimating how long you live, I have lots of people that come in, and they're 65. And they're like, Well, I'm gonna be gone in the next 10 years. And I'm just telling, you know, that may be true, and you never know what a day will bring. But I'd say most people far outlive where they think they're going to live. Certainly earlier in life. You know, I hear a lot of people say, you know, when I was 30, I thought I wouldn't live to see 60. So I didn't save as much money as I would have otherwise. And so I think there's a lot of that mentality where it's like, Well, my dad died when he was 57. And so I just never figured I'd live very long. And I'd say that that is probably one of the biggest dangers that number two is under estimating how long you will live both for men and women. I think it's a pretty common thing that I hear from they're saying, Well, you know, I'm not gonna live 30 years, you're crazy. Well, you know, we'll see. I'm sure that your aunt probably didn't think she was going to live 45 years in retirement or longer. But she she has and if she had not planned correctly, she might be in a world of hurt financially right now. In my opinion, I think that's the most important one. Yeah. And she is so unusual that she's
still lives at home at 107 years of age. I mean, there's an aide who comes in I think every day for a few hours a day, but she is still at home, she would have never expected when she was 65. To live to be 107. But again, you never know what's going to happen. If you've got questions about our topic today or you want to sit down with Randy and Jake, talk about your individual retirement journey, get your no cost no obligation and no judgment retirement review by calling 417-889-7233 not going to cost you a dime. But this one call could make all the difference. 417-889-7233 You can also request your plan on line at Floyd financial group.com If you've just joined us this is show me the money with Randy and Jake Floyd. My name is Jeff shade. Have you want to hear this show again, don't worry. We're also a podcast. Just go to wherever you get your podcast and search for Show Me the Money with Jake and Randy Floyd. You're gonna get this show and all of our past shows so that you can stay on top of your wealth, your journey to a successful retirement. We appreciate you joining us this week and each and every Saturday morning. We're out of time for this week for Randy and Jake I'm Jeff shade Have a great weekend in this great part of the country that we live in and join us again next week for another addition is show me the money right here on one Oh 4.1 FM K SGF where Springfield comes to talk. The information provided in the preceding program is for educational purposes only and are not intended as investment advice for any individual or entity all information contained herein believed to be from reliable sources however we make no representations as to its completeness or accuracy. The opinions expressed are subject to change without notice and do not constitute financial, legal or tax advice. Please consult your financial professional before executing any financial strategy. Financial Planning offered through Florida Financial Group LLC and investment advisor registered in the state of Missouri