Subscribe
Share
Share
Embed
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. (402) 281-0750. 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 House 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. Thanks so much. Welcome to the retirement blueprint with Grant Dora how to show that gives you the straight talk and honest answers you need to reach your wealth management and retirement goals through Smart Investing and careful planning. On today's show, we're going to be talking about ways to invest outside of the stock market. We'll also be discussing planning for long term care. Then we'll be talking about key ages to mark along your retirement journey. And finally, we'll discuss the 4% withdrawal rule what it is and why it may not be right for you. My name is Jeff shade. And I'm just here to ask the questions. But of course, the words of wisdom is solid advice come from grant your house founder and wealth advisor of outdoor hot retirement services right here in Omaha grant, how're you doing today? I'm just happy to be here with you, Jeff, I am happy to be with you as well grant. And this is show number two, we had a great show last week, and really looking forward to what the fall brings us here and what the coming year brings us you know, the financial environment, the landscape changes so much. And people need to keep on top of that if they're going to have the information that they need in order to get to and through retirement. So this is the place to be every week to be educated and informed I like to say to keep Fiscally Fit and financially aware. So anyway, the retirement blueprint is here. And let's get started for today. You know, grant for decades prior to 2022. The stock market held the answer for a lot of investment needs. We saw some really great returns the overall market and some sectors actually exploded outperforming the broader market year in and year out. But you know the market is changing and stocks might not hold all the answers for retirement investment plan going forward. So if you've been wondering where to turn when stocks seem like a riskier part of your portfolio, we're going to be talking about some of the investments that you can make that don't involve stock buying grant, let's start with high yield savings accounts. First of all, Grant, what are they actually how are we defining high yield these days? Yeah, that's a great question I've had a lot of people come in and they I just had a client that I talked to yesterday about the money that they had in the bank, they saved up an extra $15,000 It's sitting in their bank, the banks giving them point zero 1%. And they're not very enthusiastic about that, understandably so. Yeah. So they just asked me Well, hey, do you have any any money market? Or is there any savings accounts that are better out there, and I just let them know that there's high yield savings accounts, you can do some online banks, if you want to check those out, you got to be a little bit careful with that making sure that you're getting with a good bank that's going to be there. But I've seen some of these rates that are north of 5%. And these tie yield savings accounts and you really should check into them. Don't just let that money sit into bank wherever you bank at point zero 1%. Yeah, the environment is changing quite a bit. And for people who are really a little more risk averse, high yield savings accounts certainly can be an option there. But keep in mind that any investment does have risk. But I think you're mitigating a little bit with high yield savings accounts. We call those cash equivalents. The next one is CDs, and grant I don't mean compact discs. And they haven't really come on like vinyl yet. But we're talking about certificates of deposit. Yeah, CDs I've had actually I've had several clients, they're still CD buyers, they had been even when they were 1%. And they they just like having a CD, something that their parents did my mom, her dad, back in the 80s, my grandpa Jake, he'd skipped to the bank renewing his CDs at 15%. And my wife said, You know what, I'm just gonna still get some CDs. And I said, Well, don't do too much, because 1% isn't that much when she was doing it. But now, just like the high yield savings accounts, like with everything, we've seen, those interest rates go up so much that you can actually generate some actual yield. And people should be looking into them and compare the banks, I've seen a very wide variety of up to 2% for the same terms right here in Omaha and the different banks. So just because you have a relationship at your bank doesn't mean that you should actually utilize their CD, you can reach out and look at other banks as well. Yeah. And I think you really need to make sure you know how CDs work and the term periods associated with them before making any investment. And sometimes you will see online from these online banks, they'll be sort of these what I will call come on rage. They're really abnormally high, but there's usually a catch with those isn't there? Oh, absolutely. If they're giving you a really, really high rate, you gotta read the fine print because it might be something that they give you a bonus up front of X amount of percent, but the actual base rate is 2%. For instance, they might be doing something like that. I don't know which one you're going to be having but you have to read
Define print and make sure you know all of the terms that they say, You know what? We're going to give you six or 7%. During the first year, okay, well, it's a five year commitment. What's your two through five? Right? Well, it could be 2%. Well, that's kind of a gotcha. And once you're into it, then you're subject to the terms of it and the penalties that go with withdrawing that money early. Yeah, good point there. And there's usually a minimum deposit rate too. But as you said, after the first year or so that rate very well could drop. So do your due diligence. Next one outside of the stock market is going to be bonds. Can you explain a little bit more about that? Yeah, I have people that look at bonds a lot and in a variety of ways, either as a derisking measure for their portfolio, and some people actually utilize it as a way to create income. And you can do that in a variety of ways. You could utilize corporate bonds, where they're issued by certain companies, and it's a debt instrument where they're issuing debt to you and they're going to pay you for the term of that debt. Now, something you have to be mindful of with a bond as if you take out a bond for two or three or four or five years, and interest rates change, it could negatively or positively impact the overall balance of your bond, if you go to sell it in the secondary markets, you have to be very aware of that and what risk you're taking on. That being said, if you are planning to hold that bond for the entire duration, again, doesn't matter. If it's two years or 10 years, that really isn't going to matter to you, because you're not going to sell it in the secondary market. And you don't take on that risk. But that first part is the corporate bonds. But then there's also government bonds, where you can utilize treasuries or municipals, you can utilize treasury inflation protected securities, or you can utilize AI bonds as well, where you can put up to $10,000. That's tied to inflation. And if you actually want to generate certain tax advantages, you starting to looking at municipal bonds, that's typically where we would direct people if they if they want to generate some income in a tax advantaged way. But you have to be aware of how that's going to affect other areas of your retirement income. And how is that going to fit into your provisional income? Is it going to affect your Social Security, those things have to be fitting into your income plan as well. And incidentally, Grant, I understand that bonds are maybe one of the biggest sectors of the investment market. Is that true? That's actually that's an excellent point, Jeff. Most people don't know that the bond market is by far the largest securities market in the world. Wow, that actually is right from PIMCO. They put that right out there that this is the largest sector in the world, and, and most people don't know it. So I'm not saying that people need to get into bonds, but it is a way that you can generate certain yields and those yields again, they are rising. Our show is called the retirement blueprint with Grant door out we're talking about ways that you can invest outside of the stock market. The next one grant is annuities sometimes misunderstood. Can you explain more about annuities? Oh, yeah, there's a lot of misinformation and misunderstanding around annuities, whether it's really good or really bad, it really doesn't matter. You kind of have to make sure that you get all of the information. They are an insurance based investment products, it's done through an insurance company. So if you purchase one, I've had people ask if annuities are FDIC insured? Well, no, they're not because FDIC insurance actually insurers, a bank, and an insurance company isn't a bank. So it is not FDIC insured, it has different regulations in the insurance industry, if you're going to have a payout, they may require a certain pay in period before you're going to start receiving those payments, maybe over the rest of your life or a five or a 10 year period, or it might just be a lump sum that could be used to pay it in. And then they can start paying you immediately or you could defer that income until later on down the road. There's other ones that are fixed annuities, that's actually I like to look at that one and compare it to something like a CD it as a fixed term, and then as a fixed interest rate. And at the end of the fixed term, you're going to be able to get all of the money out if you want to take it out. And they can be utilized in a beneficial way. But they also could be utilized in a way that's not good for people if they put too much of their money in them because they are restricted as to how much money you can get out of them. Jeff, and as you mentioned, Grant, they're fixed annuities, they're also fixed indexed annuities, and then they are variable annuities. And again, annuities is a segment of investing. That is very misunderstood. And we'll be covering the ins and outs of annuities on a future show. The next one is Life Insurance a way to invest outside of the stock market. Yeah, if you look at life insurance, a lot of people just think of it as death insurance, which is it's true, there is a death benefit associated with it, but there's a death benefit associated with pretty much every asset that we own. It's whatever that is held and inside of that life insurance policy. Depending on the type of life insurance policy, you may be able to access that death benefit during your life as a living benefit. If you pass away before utilizing that there is a tax free death benefit that goes to your bank
A fisheries tax free, okay. But if you pull some money out, you might be able to withdraw for some retirement income or or to buy a car to help kids with college or I mean, anything that you want, really, there's no real restriction on that as long as the cash value in there is enough to actually support what loan you'd take against that death benefit. And next up is an area that a lot of people misunderstand, they want to get into it is real estate, not as simple as some people may think. Now there's two types of real estate, there's active real estate. And then there's passive real estate. And of course, active real estate is when you own a property, you're an active landlords, but I want to concentrate for the purposes of this conversation on passive real estate. Yeah, I can tell you from firsthand experience that both are difficult,
done passive real estate out of state, recommend that I've also done active and passive real estate locally. And that's also difficult, but some people think, hey, you know what, I'm gonna get rich, I'm gonna get rich quick, because there's a guy in my building, I actually talked to him when I just got into the office this morning. And they've been flippers for years. And and if someone hears his story, they're buying a house, they renovate it quickly, they turn it around, and they sell it and they make a big profit right away, you can do that. But you have to be very, very seasoned. And you have to know your numbers very, very well, just like they do. So you, you absolutely could. But there is significant risk with doing that. If you look at something that might be a little bit more long term, that'd be looking at passive real estate in in terms of doing a rental property, whether it be a single family home or apartment complex. And that's a couple of ways that you can do it. Or you could do this with a real estate investment trust, you could do it with a REIT. And it could generate some income for you. With a real estate investment trusts, you can put your money in there, and then they will manage all the properties, it might be a big complex, like several of them that we have here in Omaha where where you see all these big buildings, and they're just renting them out for five years, they have very stingy requirements, and they can withstand that hold that they have to have in order to get their terms because they have so much backing versus you and me, we wouldn't be able to do that. And we'd have to probably cave and actually take what we really don't even want to get for a particular property. So that's just a couple of ways there with utilizing active management and passive here in Omaha. And the final way we're going to talk about investing outside of the stock market. This segment is precious metals, and I'm talking about gold and silver. But again, this is an area where you really have to be careful. Oh, yeah, very careful. Because I remember when I first started in this business, almost 20 years ago, I got a phone call from a guy and he said that he had the greatest idea in the world that I need to buy these gold Eagles from him. And these gold eagles were going to cost X amount I committed to it. And then after I thought about it, call them back, I said, you know, that's not for me. And that was a good decision. Because after I would have purchased those, they would have dropped significantly in value. Now, over time, that would have come back. And through recessionary periods. Precious Metals are going to maintain their value over those recessionary periods. However, I wouldn't look at it as an extreme growth opportunity over the long term. Some people just like to have it, I have plenty of clients that they hold silver in, they're safe at home, just because they like to hold the coins, or they like to have the bars and that's okay to have some but don't get too carried away with it. Yeah, I think in the end of times, and that's why people invest in this stuff because they go boy, you know, in no time. So I'm gonna have gold and silver, we'll tell you what, you can have your gold and silver, I'll take bullets and food. I think I'm gonna come out ahead of that. And keep in mind too, with gold and silver that anytime you make a transaction, somebody else is going to get paid on that too. So that may or may not be the right thing for you. But if you'd like to hold it, touch it and say that I've got it, it possibly could be a thing that you could invest in outside of the stock market. Well grant, I'm sure that our listeners have some questions about investments outside of the stock market. And if you want answers about our topic today, then request your no cost no obligation, no judgment Jorhat Retirement Services review by calling 402 to 810 750. That's 402-281-0750. Now remember, it's not going to cost you a dime, but it could uncover some blind spots that when addressed may help improve your quality of life and a retirement that could last as long as 30 years. Once again that number to call 402-281-0750 402 to 107 50 or you can request your complimentary consultation online at Door House retirement services.com. That's Dr. 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.
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 door Howard 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. Glad you could join us again this week. This is show number two in our series of shows here. We're with you every week right here on Newstalk, 1290 coil for your fiscal fitness and your financial education. last segment, we talked about ways to invest outside of the stock market. If you missed that, remember, we are a podcast simply go to wherever you get your podcast search for the retirement blueprint with grant your house, you'll find this show and all of our past shows right now there's just one other show, as far as past shows go. But we'll be posting those every week for you. In this segment grant, I want to talk about planning for and paying for long term care. You know, retirement is all about being smart about covering your expenses and healthcare is a crucial expense in retirement. However, some people make the mistake of not planning for long term care costs, because they don't think that they're going to need the coverage or because they think their current health care plans and insurance already covers it. But long term care is actually separate from regular health care. And it is an expensive and highly common cost in your later years. So are you prepared to cover this expense? First of all, Grant? Let's talk about the expense right here. And one of the last bastions of sanity and breadbasket of America, Omaha, Nebraska, what does it cost on average for long term care? Yeah, I actually saw a statistic recently, it's just over $93,000 is the average. Now that's what the average numbers are. That's the statistics out there. But in my personal experience with clients here in Omaha, it is actually higher than that we're actually seeing north of $9,000 per month. And actually, I have one that I couldn't believe it when they told me it was $18,000 per month. Now that was very specialized. It was like Alzheimer's battery unit like 24 hour care, it was very intense. So don't get too concerned about that one, that was a extremely specialized situation, but it is out there, you need to be aware that something is going to have to pay for this because a lot of times people are like my mom, when I talked with them about this, or 1718 years ago, I asked my mom what her opinion was on what we were discussing for their long term care options, and how we were going to cover this. And she just looked at me and she said, I don't care because I ain't going. Okay. I said, Okay, that's one way. And what she thought is she thought of her mom in a nursing home. Yeah, that's a reality that we had to deal with. But we have to also realize that if if someone turns 65, today, they have a 70% chance of utilizing Long Term Care in some way, shape or form. Right. Now, that doesn't mean that you're going to spend the next five years in a nursing home. This is home health care, assisted living, community, daycare, adult daycare, all of these areas that goes into long term care, it's not all skilled nursing facilities or nursing homes, that is all long term care. And as you said, Grant, I mean, paying for this is very, very expensive, outside of the reach of most people, most people just not plumb to spend that sort of money. So let's talk further about how to pay for this. I mean, some people have the misunderstanding that Medicare is going to pay for this. But that's not the case, is it? Now not even a little bit, I mean, there's a chance that you could get up to 100 days, but beyond that you're not getting anything from Medicare, if you're going to have a government agency pay for you, you're gonna have to have no money, and then Medicaid will pay for you. But then you have no assets anymore, and you've gone through everything. So that's not really the best plan either. And some people say that to me that, hey, you know what, I'm not gonna buy any insurance. And I tell people all the time, I'm not talking about buying insurance, I want to talk about planning for how are we going to pay for this? Because we do this all the time in our lives, right? I have a specific savings account for car repairs, and for our new vehicle purchases, right? I have a vacation savings account for vacations so that I can segregate those things out. We have to do the same thing with our long term care expenses, because this is a very real thing. I just came up with the step for you. If you turn 65 Today, yes, 70% chance you're going to need to pay for it. So how are we going to do it? Is it going to be out of pocket? Are we going to just pay for it until we have no money left? Are we going to look at insurance options. And what's the best option for you? There's a lot of options out there and everyone's different in the way that they want to cover it. And Medicare pays for rehabilitative care things that you're going to get better from if you've got to go into a facility for that, you know, hip replacement, knee replacement, that sort of thing, but it's really not meant for long term care and for the rehabilitative care, my understanding is that is up to 100 days, but those people who plan to pay for it with Medicaid, as you said, you can't really have much in the way of assets for Medicaid to pay for it and you can't Divest yourself of assets one day and go into the nursing home the next ganja now now there's a look back period that you have to be very very careful with I actually had a relative of mine several years ago
that their mom actually came down had dementia. And she was relatively young though. And so they were actually paying out of the estate to the kids giving those gifts that the maximum gift limitation that you could give every single year. And I told them be very careful with that, because, you know, she runs out of money, the state will look back at where that money went, and they're gonna come to you, and they're gonna ask for you to pay. So be very careful if that's your strategy. I had one gentleman when I lived up in South Dakota over and T South Dakota, he thought that the best idea was for him to put everything in his son's name, he put his farm in his son's name, he put all the bank accounts, all the investments, everything's in his son's name changed everything, the dad had literally nothing. And this was one of the worst stories that I've ever heard. The son then decided that he liked being rich, and he wanted to spend the money and not really take care of that. Wow. And so we don't think that that's ever going to be our children. I tell that story strictly to say we can do a better job of planning than leave ourselves susceptible to certain things, like a look back period, or something with a child, I don't think that most people would have that issue. But that was a really, really sad one that I'm sure that gentleman never thought would happen, either. This is the retirement blueprint with Grant door. Hi, my name is Jeff shade, and we're talking about paying for long term care. That's the problem. How do we pay for long term care, one of the solutions that we talked about certainly was Medicaid, also saving money in a separate account to pay for long term care. But let's talk about the insurance aspect of this. Let's talk about long term care insurance, the pros and cons of that grant. Yeah, so typically, people are going to think about, I'm going to pay a monthly premium, I'm going to pay it with XYZ company. And if I pass away, I get no benefit out of it. And if I go into a home, or if I have home health care, then it's going to pay out and it's going to be those terms, it's going to be a certain amount for home health care, there'll be a certain amount for nursing home coverage. And if someone's going to look into that, I would highly encourage them to look into a partnership program, it's a different way that you can actually protect the assets that you have, where if $1 is paid out, it's $1, protected in assets. And then you have to make sure with the company that those provisions are the exact same as what the states are, so that it lines up with the state so that you can actually have that full protection. You can also look at a situation I had just two years ago, a client called me up right at the first of the year. And he said, Grant, I got some bad news, my wife had a stroke, she's in the hospital right now. And she's going to have to have care, but we never got long term care, we had discussed that. And then we came up with an option for him that we could take a portion of her retirement assets, and we could put them into an annuity that had a rider on it, there was actually no fee for this rider where it would actually give an income doubler for in home confinement in the nursing home confinement, I mean, so that's an option that worked out really, really well for them. And she was not healthy at that point. But there was no health qualification. Another option that a lot of people don't know about is utilizing life insurance. If you have an indexed universal life or a universal life insurance policy, you can actually pull the death benefit a certain portion of the death benefit most policies, it's up to 2% per month of the death benefit. You can do that for up to four years. So I mean, you do the math, if you have a $500,000 policy, that's $10,000 a month, which actually covers about what the cost is here in Omaha. And some people will come back and say, Well, yeah, but that's only for four years. And that's okay, because the majority of claims aren't the 10 year claim. We all know of one. Of course we don't and we don't want to have that happen. But if we try and ensure for everything, then it's going to become unaffordable as well, Grant, we're just talking about insurance, where you're talking about the sort of insurance policy that pays a portion of the death benefits. If you can't do two of six of the activities of daily living, correct, yeah, that's two out of the six. The six activities of daily living that are defined as bathing, dressing, eating, transferring, toileting, and continence. And if you can't perform to out of those, or if you have severe cognitive impairment, which basically is a doctor saying that my grandpa when he got Alzheimer's, he would write a note and say, Yes, he has Alzheimer's. Yeah, he might be able to do some of these other things, but he has Alzheimer's so he needs care. That's what you're going to need in order to qualify for that to pay. If you're just joining us. This is the retirement blueprint with Grant door house and we just finished discussing planning for and paying for long term care once again, if you want to hear the show again, we're also a podcast go to wherever you get your podcast search for the retirement blueprint with Grant door house. You'll get this show along with past shows so that you can stay on top of your wealth and your retirement planning. And again, if you'd like to get in and talk with Grant about paying for long term care request your no cost no obligation
Question no judgment retirement review by calling 402-281-0750. Again, it's not going to cost you a dime. It's 402-281-0750 just a friendly conversation with grant to get your questions answered and to help grant and you design a plan that'll get you to retirement or retirement which you not only survive but you also thrive you want to get retired and stay retired. Again, no cost and no obligation for that. You could also request your plan online at door Hout retirement services.com. That's D O R h o u t retirement services.com.
One more talk about sustaining your wealth and thriving and a retirement that could last 30 plus years. Stay tuned for more retirement blueprint with grab door out after this.
Ready to climb a mountain of financial know how good he goes. It's time for more retirement blueprint with your financial Sherpas grant Dora and Jeff shade. Thank you so much for joining us here on the retirement blueprint. We're here for you each and every week at 2pm here on Newstalk 1290 coil. And in this segment, we're going to talk about key ages to mark along your retirement journey. You know, birthdays grant may seem like a silly thing to celebrate your later years. But there are certain birthday milestones that you'll reach that can open your retirement planning options up allow you to take a more hands on approach to how you're really going to finance your retirement years, it's important to know these key retirement ages so that you can celebrate them and take advantage of your new retirement planning options. At those ages. The first age grant we want to talk about is half century, it's age 50. What's important about that pretty simple one, you get a step up where you can actually you can contribute more to your 401 K or to your traditional IRA or your Roth IRA, where you can, it's called the catch up, if you hadn't saved enough, or you want to just save some more you can start doing that at that age. Okay, so that is age 50. And we'll continue along the line here bumping up another five years 55. Why is that significant? That's an extremely significant, most people don't know this one, I actually had someone in my office a couple of weeks ago that she was retiring, I don't think she should have retired, but she was retiring from a job, she's 56, she was probably going to need to be taking money out of her funds, and she only had qualified funds only had IRA funds, and she was going to be needing to take money out prior to 59 and a half. Well, then the next age, we'll discuss why that's significant. But I told her, we have to keep a certain portion of these funds in this 401k. Because you could be eligible inside of your 401 k to be able to take money out prior to 59 and a half after 55. But you can do that penalty free at that point. So that's age 55. Let's bump it up to something that you teased us with your little bit and that is age 59 and a half and leave it to the US government grant to pick the age of 59 and a half, why is it not 59? Or why is it not? 60? But nevertheless, for the time being? It's 59 and a half? Do you think they're just purposely trying to be a little complex there? Well, I think you can point to the entire tax code and the complexities that are inside of it and just leave it there that I don't know why it's 59 and a half, why couldn't it be 60? That would make more sense to me. But just because of some of the Medicare and or some of the social security provisions that are at 60. And everything, why do we have to throw in 59 and a half, I really don't know. But at 59 and a half, this is the age at which you can start taking money out of your IRA penalty free or your Roth IRA. And if you do that prior to 59 and a half, there is a 10% IRS penalty again, like I mentioned in the previous one unless you have a 401k where you're allowed to take it penalty free, but you have to be aware of that 59 and a half rule. If you have a Roth IRA, you have to have that Roth IRA for five years. Otherwise, the gains could be taxable as ordinary income check with your tax advisor if that applies to you. But that five year rule is very important to note there as well. Okay, let's step it up. Now we're getting into the juicy parts of the ages here. Let's take it out to age 62 significant benefits to being 62. Oh, absolutely. That's when we can start taking Social Security. I'm not saying you should start taking Social Security then. But that's when you can. And there's a lot that goes into factoring whether you should take it at 62. But this is the first point at which you can now most people their full retirement age is later but you're gonna see a significant reduction in those benefits based on full retirement age and 62. It's about a 30% reduction, actually. And granted last week show we did talk about this if our listeners missed that, of course, we're a podcast, go search for that wherever you get your podcast, but let's continue to talk about 62 and how it applies to Social Security. As you said, that is the earliest age that you can actually take Social Security benefits. What are some of the reasons why you may not want to take Social Security at age 62? Oh, that's great. Yeah. And I think we actually did talk about this last week where we were talking about the fact that if you're still working if
You're making more than $21,240. That's not a good plan, you should not start taking Social Security, if you're making more than that, because of the amount of money that you're going to have to give back of that social security. So if you're a full time worker making 5060 $70,000 per year, I would really think twice about taking Social Security at 62. So there are some caps on earnings limits. And we'll call that earnings limits if you do take Social Security prior to your full retirement age. And we'll talk about that in just a moment. But also, it permanently reduces your benefit that would also have some sort of an effect on survivors or a spouse, right? Correct. Yeah, absolutely. So if you have a, let's say, It's me and my wife, for instance, I'm two years older than her, if I take mine at 62, this is a ways down the road. But if I took mine at 62, and if she's going to claim my Social Security, when I would be gone, would affect her for the rest of her life. And what if that happens when I'm 65, or 66, or 67, at a relatively young age, you have to factor those things in and looking at someone's longevity in their family, and what their family history is all plays a key part in figuring out if that actually is going to make sense for you. And grant, I know that you do a Social Security optimization plan there at Door House Retirement Services, I know there are hundreds of different ways that you can do social security, and it's really going to narrowed it down to the best couple of those. But what are some of the reasons why someone may want to take Social Security at age 62, most of the time, if they have enough saved up that they can just retire at 62. And it makes sense with their overall goals meaning, okay, they think, hey, you know what, I have a family history where I'm most likely not going to be here past age 75, I've saved enough up, I've known this for the last 40 years. So I saved up enough by the time I was 62, I'm going to retire, I'm going to get my Social Security benefits, I have enough money saved up even if I live past 75. But I'm gonna get those benefits now. And I'm gonna enjoy those benefits. Now, while I can versus someone else that might have a family history that I mean, my family history, there's a very high likelihood that I'm going to make it to 90 to 100. Well, that person might be saying, Gosh, you know what, I'm definitely not taking it at 62. Because I'm not done working or I don't want to be done working or whatever. It may be totally different situations. But if someone's in that situation where they're going to retire at 62, it's what their goal is overall. And if they if they don't have longevity in their family, that's going to play a key part. So there are pros and cons to taking Social Security at age 62. It just depends upon your individual circumstance. Let's bump up now these important ages to age 65. What's important about that Medicare Oh, yeah, on Medicare. So and a lot of people don't know you're you're enrolled in Part A automatically, you have to opt in or out of Part B for Medicare at age 65. Now you have an open enrollment period for a few months right around that where you can elect to take a Medicare Advantage program, you can take part A and B and a Medicare supplement you can get any prescription drug plan you want, and then you have those benefits for the rest of your life. So with Medicare, you take it at age 65. It's automatic, as you said for Part A but what is part A cover part A? Oh, that's a good point. I didn't hit that. Thanks, Jeff. Part A is the hospitalization portion basically, where it's anything in patient that's a hospital charge. And if you look at part B, that's where your medical or your outpatient or I like to think of it as anytime you utilize a person. So my dad, when he had his quadruple bypass years ago, the surgeon, well, that person's charged, that's a part B charge that surgeon charge. But when my dad's in the hospital bed being cared for all of those hospital charges, that was the part A charges. So big, big, big differences. You You really don't want to go without Part B, in my opinion, some people do because they have employer coverage. That's a legit reason. But if you are out of employer benefits, if you don't have any other health insurance, and you just have Medicare, and you're just trying to have Part A you can do that. But it could be a risky move moving forward. And with Medicare Part B, there is a premium for that too, isn't there? Yeah, Jeff, the Part B premium is actually $226 a month for Part B and 2023. Now that has been going up and it does actually increase annually. So you're going to see it increase. We've seen it in the past where it's decreased for a short period of time. But it wasn't that long ago that it was $160. I don't know where it's going in this inflationary environment. My hunch is that it's probably going to continue to go up for the next few years. But you have to be mindful on that part b premium that if you have a higher wage, if you make more money, you are going to pay more in those Part B premiums. And there are also Medicare Supplements. I mean, there's a part G which is sort of a Medigap Plan. There are a lot of choices to make with Medicare, but Medicare can be a very good way to pay for health insurance. So let's go to the next age here, which is age 66 to 67. It's actually a year long period there. Yeah, that's when most people right now are reaching their
Full Retirement Age, most people I'm seeing right now they have the 67 year old full retirement age or FRA, where you have reached full retirement age, you can continue working, you can take your Social Security, you can make as much money as you want working, and they're not going to take any of your Social Security benefits back. So it's totally fine for you need to take that my dad, for instance, he's now 82 years old, his was I believe, 65 and six months. So that has been creeping up over the last 17 years. But now we're up to 67. And your full retirement age, as you said, is the age at which you can take Social Security at which there is no earnings cap. So very, very important age. Okay, next one is going to be age 70. What's important about age 70? Yeah, so that's 70, then you have maximum Social Security, I've had people talk to me about instead of saying optimization, they say I want to maximize my Social Security. And what they're really thinking is optimization. And when they've said maximization, I said, that's simple, just wait until 70, and then turn it on, there's no thinking and there's no planning for that, at 70, it's not going to grow anymore. So if you look at actually from 62 to 70, it's about 8% per year, right? That you're going to have an increase all the way up till age 70. And again, if you have longevity in in your family history, it could be advantageous to go ahead and wait all the way until 70, because that gets a lot more significant. So age 70 is an age at which you can take Social Security to get the maximum benefits. But if you take it later, it doesn't make any sense because you're not going to get any more final one here is age 73. What's important about age 73, Grant, yeah, 73 just changed now that became significant. And the last one that just became significant was 72. And before that, it was 70 and a half. And now that I say that most people will know that it's the required minimum distribution age is now 73 years old, you have to take required minimum distribution off of the traditional IRA assets that you have. And you have to do that every single year prior to the end of the year. So now you have to keep in mind that this year now, if you turn 72, prior to January, one of 2023, you still have to start taking those RMD starting at 72. So little technicality for those people. So grant if our listeners have not considered these key ages in their retirement journey, I want them to listen up because this is for you. Granted, I invite you to call us right now. So you can schedule your 30 minute consultation with an advisor so that you can optimize your overall retirement income to take advantage of the opportunities that come at certain ages. All you've got to do is call right now. 402-281-0750 That's 402-281-0750 this consultation is totally complimentary. There's no cost and there's no obligation we want to help you succeed will not only help you compare your different options and strategies so you can pick what is right for you. But the advisors at door hot Retirement Services will also take a look at your overall lifestyle plan to ensure that it's set up to support a quality of life and a retirement that could last 30 years. All you got to do is call right now. 402-281-0750 that's 402-281-0750 or visit us online at door hot retirement services.com. That's Dr. 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 Grant door out here.
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. Thank you so much for making us a part of your weekend. You're listening to the retirement blueprint. And certainly we are so happy to be with you here in the great city of Omaha each and every week at 2pm right here on Newstalk 1290 coil. In this segment, we're going to be talking about the 4% rule whether or not it's right for you. If you've been curious about how to use your retirement savings to provide you with retirement that you've worked so hard for you've probably done some research about strategies to help you effectively and comfortably retire. Well. One of those strategies you may have heard of is the 4% rule. But does the 4% rule really work for everyone? So Greg, let's talk about the 4% rule. First off, what is the 4% rule? Yeah, so the 4% rule is very simple. If you save, let's say a million dollars, and by the time you retire, let's say an average stock market return, let's say you take 4% of that number out $40,000 per year to cover costs you should be okay. That's part of my problem with the 4% rule is the part where I said you should be okay. Not we know you will be
okay, so something that I don't really like about it is that when you say it should be okay, you should be okay. throughout retirement, I think we need to develop much more certainty because depending on the sequence of returns that you have in retirement, you could have a drastically different experience 10 years into retirement one sequence of returns that we've seen in the last 30 years, you're going to be totally fine that you're not going to have any concerns
Your balance is going to be fine, your income is going to be fine, you're going to be fine. And you're going to be feeling really good. The other part is, if you had found a different sequence of returns, or you're retired in a different year, which again, we don't know what your sequence of returns is going to be in the next 10 years. But if you found this other 110 years into retirement, you're actually in a really bad spot where you might have to go back to work. And that's not something I'm willing to put my clients at risk with. So the 4% rule, if I'm hearing you correctly, really does make a lot of assumptions. And you really can't assume anything. No, no, not with the stock market, how can we assume that we're not going to have three down years in a row in your first three years of retirement like happened in 2001 2002? Or that we're going to have a financial crisis like 2008. And when I was talking about those two different 10 year periods, you know, if we had 1990 to the year 2000, we're sitting really, really good after 10 years, but 2000 to 2010, not so much, we can't assume that we're going to have 1990 to 2000, and then just go into retirement thinking, Okay, we're good. I don't like it when I would have to have a conversation with a client. Or if I would have to have this conversation that, hey, this might work out the problem I have with it is I'm not going to know until you're about 75 or 80. And I don't want to tell you that you need to go back to work then. So we're going to work this a different way. That's going to give you certain other avenues to create a retirement income that you're going to like the way that that looks a lot better in those types of environments. Yeah, granted, I perked up a little bit when you said this might work out. I mean, it's sort of like a doctor, you're going in for the surgery. And he says, this might work out for you. I want a little more certainty in my retirement plan. After all, it is only to all the money that I have. And I'm going to need to rely on it for about 30 years. So the 4% rule possibly maybe could be right for you. But it possibly maybe could not be right for you. So if the 4% rule is not always right. And I know that it isn't always right. For everybody, each person is an individual, there are no cookie cutter plans at door out retirement services. So what are some of the things that you look into to determine what the proper withdrawal rate really should be? How do you figure out that number? Well, it depends on what someone's spending habits are, what their Social Security is. And then we have to do that, again, that Social Security optimization, are they going to retire at 62, or 65, or 67, or 70? Or when are they going to take that Social Security, that'll determine how much I need to take out of these retirement assets. And then we kind of work it backwards, because our overall retirement income, we're going to increase that by two and a half percent, we're going to have that for our inflationary base. But then we're going to look at our Social Security income, we're only going to increase that at about one and a half percent. Because we're comfortable looking at it in that framework. I understand the last couple of years, it's been a little bigger than that. But we don't want to figure on that high of increases moving forward. So we put a little more stress on the portfolio, and it's all driven by spending. And we actually can tell someone by using that formula, very simply, we can show them, okay, we can retire right now. Or hey, you know what, we need to actually wait another year or two. And this is where we need to get to in order for your retirement income plan to be reliable in the way that you're going to want it so that you don't have the potential of a 4% rule issue. You know, when you're 75 or 80 years old, where we want to make sure when you retire, you stay retired. That's the last decision, we're done working, and we're done working for good and grant these withdrawal rates. I mean, they're really not set in stone, are they I mean, retirement can be a very long journey. So let's say that someone's withdrawal rate is maybe 5% 6%. Is that set in stone or as you go along? Is that a number that can be changed? And often is it changed? Oh, yeah, it changes all the time, the way that people live, I have one client that pops into my mind that they have certain retirement aspirations that certain things just haven't worked out for how they wanted the retirement to go with properties that they were going to buy and stuff. Well, what they were going to need to withdraw drastically changed based off of what we were planning on. And not only that, well, what if it goes the other way? What if inflation kicks in, and we need a little bit extra out in a year like 2022 2023, because inflation is going up higher than our two and a half percent, we can build that in so that there's additional flexibility so that instead of it being four, or five or six, sometimes we can even have it as high as 7%. And if someone can tell you exactly how long they're going to live, then it makes this planning a whole lot easier, doesn't it? Yep, I can get that one. 100%.
I think that most people and correct me if I'm wrong, maybe underestimate the years that they have on this earth. I mean, you know, modern medicine and so forth. longevity risk really is a big risk in retirement planning, isn't it? Oh, it's a huge risk. And I've told this story many many times about a commercial that I saw where it
had people there walking, and it shows them how long their money is going to last I believe it was like a yellow boxes that lit up. Yeah. And then it had them go next to that. And they'd see how long their money was going to last based on how they were planning. And then they'd start walking. And then it was blue lit up. And then they get to where their money ended. And they'd look over, and then they'd keep walking. And then they'd look back at the line and say, Oh, no, this is how long I'm likely to live based on the factors you just brought up. Well, if we're gonna lift 90 or 95, I've had people plenty of times come into my office and say, don't plan on me past 77, huh, oh, well, let's not do that. Let's plan on you to 100. And if you're gone at 77, we're still fine, right? But if we plan on you to 77, and we're out of money at 77, and you're here until 100, we got a problem. And it's my responsibility to make sure we plan that in a little bit different way so that we make sure that we have as much money as you have life. So your withdrawal rate does account for market risks and other assets that you may have grant. But does withdrawal rate account for a tax strategy? does that play into things as well? Now the 4% rule doesn't, it just looks at what your overall assets are in it just says, Hey, 4% of that is where you're looking at, well, what if we have $10 million, and this is my tax rate at $400,000 coming out of it versus someone that has $1 million, and there's 40,000 coming out, that's a little bit different strategy that's going to need to be had based on those two people are talking about the proper withdrawal rate for you and your retirement journey with Grant door out of door out retirement services grant, I understand one of the biggest fears if not the biggest fear of people who come in to have retirement plan is not running out of money. If people say to you grant, how do I not run out of money in retirement? That's my big fear. What do you tell them? That's really, really simple, we actually just allow assets to do what they were intended to do income producing assets, let them be an income producing asset. If you want to market fluctuating asset that's going to grow over time, let it do that. But in order to do that, you have to set up a reliable income plan. So you don't have to worry about fluctuations in the market. And, you know, people typically they don't come in and they don't flat out, say, Grant, I'm worried about running out of money. But every single one of their concerns is all around running out of money and making sure that they have their retirement funded, we have to fully fund that goal in a responsible way, by allowing assets to do what they were intended to do. There are things out there that are designed to give you income in retirement, that's what they are for. And there are things that are out there that are designed for you to have a good growth rate in retirement, but they're not for income. Okay, you can't make these things the exact same if you plan on retiring with your 401k. And just taking money out, I think that there's a better way that you can give yourself much more security and grant based on our conversation, I'm willing to bet that our listeners do have some questions about what their withdrawal rate should be, or it could be and if you have questions about that, we invite you to call us request your complimentary retirement review. Just a friendly conversation with Grant it'll cover a wide range of topics based on your individual situation so you can proactively adjust your financial plan to address your retirement journey and any blind spots that may hinder you from reaching your goal. And that would be not running out of money in retirement, among other things. Again, there's no cost there's no obligation. There is no judgment for this retirement review. Grant. We'll meet you where you are. That number is 402-281-0750. That's 402-281-0751 Call could make all the difference. You could also request your complimentary plan online at door hot retirement services.com That's Dr. H. O ut retirement services.com cran. I've greatly enjoyed our conversations today. This has been a very valuable conversation. I think I think your listeners really have learned a lot once again, door out retirement services.com is the website. Check us out. We're out of time for this week grant. So for grant door hot I'm Jeff shade, get out have a great weekend. We'll talk to you again next week with another edition of the retirement blueprint right here on Newstalk 1290 foil. 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 and 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 tax
Simple 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 for 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