Show Me The Money | How To Tackle Inflation In Retirement

In this episode Jake and Jeff discuss how to tackle inflation in retirement, what you need to know if you're planning to work part-time in retirement, and you can be the beneficiary of your own life insurance policy. 

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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 people because you're tuned to the Ozarks number one show about your money. Randy Floyd, founder of Floyd Financial Group, we'll be your guide for a straight talk about living the life you deserve in retirement prepare to be empowered. Now, here's your Show Me the Money host Randy Floyd, thank you so much. Welcome to Show Me the Money with Jake Floyd the radio show that gives you the straight talk and honest answers you need to help you reach your wealth management and retirement goals through Smart Investing and careful planning. On today's show. We're going to be discussing how to tackle inflation in retirement. Also what you need to know if you plan to work part time in retirement. And yes, you can be the beneficiary of your own life insurance plan. My name is Jeff shade, and I'm just here to ask the questions. But of course, the words of wisdom and solid advice come from Jake Floyd, Floyd Financial Group, Jake, how you doing today? You know, Jeff, I just can't wait to eat popcorn and sit and watch Mark Zuckerberg and Elon Musk fight in a cage. That's gonna be amazing. Are you serious about this? I mean, these are two of the most unlikely people that I would ever think would be in a cage match. But you say they're actually going to do it? Hmm. They have talked with Dana White, who is the head of the UFC, they both talked about it, they've said they're serious. Both of them are training at this point. So whether or not it actually happens, you know, is anybody's guess. But I mean, I'd say there's probably a 60 70% chance it does happen at this point. And I've already told the office staff that if it happens, I'm gonna by the pay per view, we're gonna come to the office and watch it and eat popcorn. So is this some sort of grudge match? I mean, what have they got against each other? I guess? Well, in some ways, they are competitors. It is a little bit of a grudge match. Because over the years, they've disagreed on several things from AI to the way he should run Twitter and all that kind of thing. And then recently, about 10 days ago or so Zuckerberg launched the Twitter competitor threads, which you can log in with your Instagram app. And so it's been having a lot of success and detracting from Twitter. But they've been kind of fighting a war of words out there on social media for quite a while now. And I think it's kind of started, as somebody said, Put up or shut up. And he said, he said, You picked the venue. And so Elon said, How about the Vegas cage, you know, and so now they're, they're looking at I think the Coliseum in Vegas is thinking of actually doing this. So it'd be very entertaining to say the least I'm sure there's lots of people that would love to watch one or both of these people get beat senseless. So well, they are a couple of nerds. And this is going to be interesting to see how this all shakes out. Wonder what the closing move like in, in wrestling, they've got a closing move or something like that, wondering what their closing moves are. So Elon has, he's already said So Elon is quite a bit heavier than Mark Zuckerberg. So in boxing and fighting in general, you know, you try to have fights close to the same weight class. But every once in a while when you have these like exhibition type things, I think the weight disparity that between them as like 50 or 60 pounds, that's a massive difference. And so Elon said he's just going to do his signature move the walrus, he's just gonna lay on him.
I can just see that. I know that the visual images are rather disturbing here. But anyway, it's gonna be I guess, pay per view, we'll keep our listeners updated. Because that is indeed something that I want to see if they make a lot of money. where's the money going to go to though? Yeah, so they haven't designated a charity yet, but there's going to be quite a lot of money going to charity. And there's a lot of businesses they're going to put up money in, as well as like pay per view and that kind of thing. So it should be interesting, but I just thought that was kind of funny. I thought we'd share it with the listeners. And yeah, well, I'm not a betting person. But I think if I were I'd probably go with Elon Musk. I don't know, maybe Mark Zuckerberg has got something up his sleeve. But I think the heavier guy I'm gonna go with this whole thing is just nothing but silly. Yeah, I think they're probably gonna go in there. And there's gonna be a lot of huffing and puffing because, you know, fighting is a different type of endurance, you know, and it's not just the same as like going for a jog. So it takes a lot of energy and a lot of cardiovascular strength to go for even 15 minutes in a fight. Well, I can't wait to see that. Hopefully, Joe Rogan will be able to call that when, and again, we'll keep our listeners updated right here on Show me the money. All right, Jake. Let's get to the show today. As I said, we're going to be talking about how to tackle inflation in retirement and what you need to know if you plan to work part time in retirement and a life insurance policy where you are the beneficiary. But let's talk about inflation first, Jake, according to go back rate. 20% of Americans are delaying their retirement because of inflation. Do you think that it makes sense to delay retirement just because of recent inflation? You know, Jeff, I think it's more of a factor of you know how much money you have saved. I think there's a few people probably affected by this but by and large your success or potentially failure to save for retirement is probably more to blame than the inflation however it is going to stretch things a little bit and we've talked about that before on the show that if we have a you know, a 9% adjustment or near
Really 9% Like we did a year before last, that adjustment never goes away on a lot of things, either from a consumer price index standpoint or from a security standpoint. And so everything just kind of remains at this new level. And so the next year's inflation is stacked on top of that. And so a lot of people think that, you know, if we have 4% inflation, that means we're down from 9% inflation, but actually just means we're stacking 4% on top of the 9%. Right. And so I think that's a common misconception. But as far as delaying retirement, that is probably not enough to delay somebody's retirement only, and maybe very, very specific circumstances with, you know, other factors involved. Jake, when you do these retirement plans, inflation, of course, is something that we do have to deal with. And for a long time, we had inflation at two percentages that it was nine, it's 4%. And we're stacking on top of that, typically, what sort of inflation do you build into these plans, we try to look at the long term history of inflation. And if you look back over the last, you know, 2030 years, inflation has averaged around 2%. So we're comfortable managing that kind of inflation. You know, some people say, Well, how do you manage, you know, 9% inflation ongoing? And the answer is, you don't, unless you start with withdrawing 1% of the portfolio or something. Because if you add 9%, every year, for 30 years, you're gonna be looking at 10 times what you started with income. So if you started 100,000 income, you're gonna be a million dollars a year in income. So you probably don't have enough saved to pull $1 million a year. Do you think that inflation is really the only reason why people are delaying retirement? Or do you think it has to do with something else? You know, Jeff, I think that inflation is part of it. But I do think that it's partially just the uncertainty of the environment that we're in, you know, inflation is one facet, but we have a lot of things going on politically, socially in this country. And I think people are a little tentative to make a big change when the future is so uncertain in markets in the workplace. And I think they're just not wanting to make big commitments until they can see the other side. And it's hard to blame them for that, Jake, our parents or grandparents and for many, many years, a lot of people in this country had pensions not so much anymore. How do you make up for the lack of pensions, there's a couple things with pensions, especially when it relates to inflation, there's a lot of pensions that don't have any cost of living adjustment. And so we have to figure out another way to adjust for the increased cost of living. Now, there's a certain amount of that that happens on its own, just simply by the fact that we get older and older after we retire. So if you retire at 65, you're probably going to need the most money in today's dollars that you're going to need simply because you have the most time you have the most ability to travel and things like that. And as time goes on, you'll health may or may not allow you to travel and things like that. But there are some increased costs as we get older, too. I think, like you said, there's less pensions available. Now. In fact, there's lots and lots of jobs that do not offer pensions. In fact, I can only think of maybe a handful here in town that still offer a pension, if you were to start working there today. And I think it's just a major shift in how retirement income works. So instead of having pensions, people have 401, K's that got matched and things like that over the last little bit. So I think the pension is going to leave a big void to fill for a lot of people. And it's going to be important to make sure you save well, but also have a strategy to take that income after you have it. And that's one of the things we're going to be talking about later in the last segment today.
Jake, let's talk about pension alternatives. We know that a lot of people don't have pensions these days, what sort of products or strategies do you use as pension alternatives? There's quite a few different ways we can choose to take income, you know, we can simply take income from, you know, a brokerage account, things like that, or we're getting dividends or just using the growth of the account to take income from but we can also use other tools like bonds, or annuities, or CDs, or any of that kind of thing. annuities have a disposition that's favorable to income, the way that they are designed. They're really kind of designed as a payment or an income kind of a chassis. So there's a lot of annuities that can offer safety, but also offer income, increasing income, guaranteed income if you want that. Not that's not to say that all annuities have guaranteed income, but there are some out there that can provide a pension like income stream, if that's something that you're interested in. But as you know, Jeff, everybody's unique. We try to take everybody their case one at a time and really try to understand who they are as a person. And once we understand that all these different tools that we have at our disposal, we can say yep, we want to use this tool. Nope, we don't want to use this tool. Here's why. And we kind of try to hone in on what the best thing is for that individual specifically, you know, if you are a couple with to 30 year old kids, and you're 10 years out from retirement, your plan is going to look quite a lot different than somebody who's 65 and an empty nester and likes to go
reviewing, you know, so there's no reason that those two people should have the same exact plan set up. So we try to make sure that every plan is unique to fit the individual as closely as possible. Jake, I've heard that annuities offer fixed income rates that don't keep up with inflation. Is that true? And if so, how do you plan around that potential problem? Some annuities have a fixed rate of income like CD, where they pay out for, say, five years at 5%. Those are called Micah's or multi year guarantee annuities. But there's also other types of annuities where you can get safety, but you can link gains toward something like the s&p 500, where you don't get the downside. But you can link your gains to the upside, that can be a beneficial tool as well. As far as keeping up with inflation. I would say that there may be some periods where they would struggle, like when we have 9% inflation. But I'd say over the long haul inflation running more like 2% 3% If you have the right annuity, it will not have any trouble beating that.
Jake, with so much talk about inflation, should we be overly concerned about inflation? I mean, some people talk about it as if the sky is falling. You know, we've had a lack of inflation for so long that I don't think people realize that we were running negative to under 1%. Inflation while we were printing money, like there was no tomorrow and had 0% interest rates trying to stimulate the economy. So now that we finally have some inflation, everybody's kind of panicking, and well, prolonged inflation is not good. I think it's a little early to get super worried about inflation. I think that as things move forward, naturally, we're going to have interest rates want to flow back down, the Fed is going to want to lower interest rates. And as that happens, inflation is naturally going to come down some but we have to kind of get to the other side of this recession that we're going to have here. In order to get to the point where interest rates can come back down and inflation can come back down to great information, Jake, for all those who are listening and one retirement plan that can help them retire sooner than expected. Even with current inflationary problems. Listen up, because this is for you. I want you to call 417-889-7233 Right now, and request your retirement analysis with Jake Floyd. This analysis is at no cost, no obligation and certainly no judgment whatsoever. When you call you're gonna get a friendly voice on the other end of the line. More than likely it's going to be Ashley who gather some basic information so that someone from Floyd Financial Group can call you right back and scheduled your appointment likely early next week. This analysis is an open conversation intended to help you uncover financial blind spots, or what we like to call shallow roots and help you discover potential solutions that can potentially help you retire now, even with higher than normal inflation. Once again, no cost no obligation and no judgment for this retirement analysis. That number to call to get yours 417-889-7230 341-789-7233 or you can request it online at Floyd financial group.com. That's Floyd financial group.com Time for a break Jake would come back we'll talk to you about what you need to know to plan to work part time in retirement and more with our show continues right here on one Oh 4.1 ks GF. Where Springfield comes to talk.
Ready for a heaping helping of some more real talk dots. Oh, here's another serving of show me the money with your server, Randy Floyd, welcome back to show me the money. I'm Jake Floyd. In this segment, we're going to be talking about what you need to know about working part time in retirement. And Jake, according to Forbes 46% of retirees plan to work part time in retirement, why would they want to work part time? And what do people need to know about working part time in retirement? Do you think, you know, Jeff, I suspect that there's going to be quite a big percentage of that 46% that have to work. There are people out there though, that really like to have, you know, a sense of purpose and like to, you know, have something to do other than just go fishing every day. You know, and I think a lot of it. That's really again, what we drill down on when we meet with people is, you know, what makes you tick? What is it that you want to do in retirement, you know, and we have people that don't want to travel the globe, travel the countryside, we have people who don't want to leave home, they just want to sit and watch the grass grow. And everything in between. And I think that's an important part of the discovery process for us is you know, what makes sense there. But when it comes to working in retirement, I think a lot of people are working because it's a necessity because they either didn't save enough money, or they simply want to have some extra spending cash. And, Jake, in your experience, I mean, do most of your retirees that you speak with? Do they actually work in retirement or express a desire to do so? You know, Jeff, that's not a problem. As long as you have not turned on your Social Security yet, you can make as much money as you want. Once you turn on Social Security if you turn it on before your full retirement age, which for the vast majority of people right now is somewhere between 66 and a half and 66
Um, let's say you turn it on at 65. For example, you can only make $21,240 in a year wages, and not have to pay back Social Security. If you make more than that you have to pay back $1 For every $2 that you make, and so you're basically working for half wages at that point. So that's not something most people are real keen on doing. So if you are getting ready to retire, and you're going to work part time, we may want to look at waiting on Social Security until you are making less than 21,002 40, or until you're ready to fully retire. But if you're going to work part time and make you know, 15 bucks an hour or 20 hours a week, you can still turn it on, and you're going to be under that threshold, and there's no issue. And if you reach full retirement age in 2023, for example, you know, later on this year, you're going to be reaching full retirement age, let's say 66 and a half, the limit on your earnings for the month before full retirement age is $56,520. But that's only during the year that you turn full retirement age, again, that cap $21,240. Now, let's say that you do go to work and you're taking Social Security and you're not making that much money, but then this job comes along. And boy, does it ever have a good salary attached to it? Can you stop Social Security? I've heard about this possibly, can you stop it? And then start it up? Again? You can whether or not that would make sense is going to depend on quite a few different factors, though I think, for the average person, that's probably not going to come into play. But yeah, if you did decide you wanted to go back to work, you can suspend so security. But again, most of the time, that's probably not going to make sense to do. So Jake, I understand that Social Security is indeed tax. But if you do take on a job and you're in retirement, I would imagine that that pushes your income level up even more. And potentially that could put you into an even higher tax bracket. Yeah, it can. This is one of the reasons why we want to make sure we have a good plan ahead of time. Because if you're planning to do that, and to go back to work relatively quickly, we may just want to wait on some security until you're sure that you want to retire so that it doesn't get all convoluted as you're probably understanding that it can be if you're listening to this by now. But taxes can be a problem, especially if you decide to go back to work you're taking so security. So security gets taxed at either 50% or 85%, depending on the other income that you make. And so there's a lot of factors that go into there. If you're taking Social Security, then you start making wages, and you already have other investment income out there, you know, you can get into the 22% federal tax bracket without too much trouble. And so if we can avoid that, we want to do that, because I'd like to pay 12% versus 22% for the to the Fed, you know, we don't want to pay any more than we have to, you know, you're already taxed on the Social Security money, I don't think you should have to be taxed on it again. But that's just a personal opinion. So the long and the short of it is if you're thinking you want to go back to work, you should probably talk to somebody about Social Security, a financial adviser or something like that, where you can say, Okay, here's what I think I might want to do. What's the best way for this to go? Because there's a million different ways to file for Social Security and deal with Social Security? There's no kind of one right answer, it's really is going to depend on your situation and all the other things that you have going in your life, so it's important to have somebody look that over before you make any big decisions. Jake, since we've been talking about tax problems to consider if you're working in retirement, let's talk about IRA contributions and Roth contributions. What are the ramifications if you are working in retirement for each of those strategies, as long as you have earned income, you can continue to fund Roth and traditional IRAs. However, there are some people that also have the ability to take the money out and to fund it at the same time. And so there's some things that you can do tax wise, if you're still working after the age of 70. That could be interesting, where you can take money out and put it back in get the tax deduction, and you're doing that at a lower rate than where you put it in originally. But when it comes to the Roth, you know, a lot of people may not be familiar with the Roth, the regular IRA, the way that works is you save the tax money the day you fund it, or the year you fund it. And then when you take money out later, it's taxable. When the money comes out with a Roth IRA, you pay the taxes today, but then the money and all the growth after five years and 59 and a half, that all comes out tax free. So it's really one of the last great tax laws out there. And I'm kind of surprised they haven't closed that loophole yet. But the Roth is really a great thing. Especially if you're making under $100,000 as a couple right now, today, it can be really good because you're not paying that much in taxes now and you're kind of future proofing that money by putting it in the Roth and knowing that you're gonna be able to take the growth and the principle out tax free as long as you have it open more than five years. We're talking with Jake Floyd and we're talking about what you need to plan for if you're working part time in retirement. Jake, I've heard it
suggested that everyone should make their hobby a business so that they can write off their expenses while having some fun. What do you think about that concept, if you're looking to work part time in retirement, maybe taking a hobby and making it into a business around here, we have a lot of people called cattle farmers, that would probably take exception with having it called a hobby. But ultimately, that is kind of how that business gets treated a lot where we get to buy our toys, right, you get your truck and your, your tractor and all that. But you really try to not show a ton of income, the goal is not to pay taxes there, it's to raise cattle, to pay for the equipment and that kind of thing and be able to do that. However, like another type of hobby, like doing quilting, or you know, some kind of business like that, you can kind of be jumping out of the frying pan into the fire, if you're not careful there, meaning you have been working, where you've been working maybe for 30 years, and you know it inside and out, you jump out of there and you're like, Hey, I'm going to get retired. And then I'm going to start this new venture. And starting a business can be very daunting,
and can take a lot more money than you might think, depending on the type of business that you're thinking of starting. Yeah, and you and Randy like to ride bicycles. And if we're let's say the Duranty opened up a bicycle shop in retirement. I mean, you know, it's fun as a hobby. But then when you make it a business, it's kind of takes the fun out of it a little bit. So maybe you're better off just keeping a hobby, a hobby. I don't know about that. What's your opinion on that. So I think the bikes are expensive enough, if you're riding them alone, if you have a business full of,
you know, a big bike shop, like around here in Springfield, we don't have any really big bike shops, but like, if you go to St. Louis or Kansas City, you know, they might have a million dollars worth of inventory and, and bikes, you know, pretty easily. And so, you know, to get into a business like that you're gonna need tons of money, but even even opening just like a little storefront for a quilting business can take 10s of 1000s of dollars, you know, you're also going to be signing leases for you know, so then you're kind of roped in. So the question is, is, is that better? Or should you maybe just, if you're really wanting to do something, maybe just toughed it out at work for another three or four years, you know, where, you know, you're gonna get paid for it. You don't have to make all these extra commitments, time wise, money wise, all that, I would say for the average person starting a business in retirement is probably more than they're going to want to bite off. There are a handful of people who can do that successfully. But you got to have the right mindset going into that. Well, I don't know what they're paying down at the high V. But I know that a lot of supermarkets I mean, that pay is very, very competitive. And you know, this is not necessarily brain surgery. But it is an opportunity for people to get out and get among the people keep their bodies active and their minds active and to keep socialize. So as far as I'm concerned, there is nothing wrong with a part time job in retirement, as long as you know the rules and the ramifications of making too much money. If you're listening and you want to see what your retiree could look like with or without part time work so that you can potentially maximize your quality of life, then listen up, because this is for you. I want you to dial 417-889-7233 Right now, and request your retirement analysis with Jake Floyd. Once again, there's no cost there is no obligation and certainly there is no judgment, just a friendly conversation with Jake to see where you are in retirement and make sure that you're on the right track to retirement in which you not only survive but to thrive. Once again that number to call 417-889-7233 No cost no obligation and no judgment. You can also request your plan online at flight financial group.com That's flight financial group.com. Time for a break. Jake. We'll be right back with more show me the money right here on one Oh 4.1 FM ks GF where Springfield comes to talk.
Back with your financial catch of the day, and it's a big one. Here's more. Show me the money radio with your host, Randy Floyd, welcome back to show me the money. I'm Jake Floyd. And in this segment, we're going to be talking about life insurance and its many uses. Jake, I think a lot of people are misinformed or they misunderstand life insurance. They think that life insurance is simply this I pay a life insurance company money. And if I die, then someone gets a death benefit. That's it. It's that black and white. But that's really just not the case, is it? So there's many, many, many, many, many, many uses, as my dad would say for life insurance. The main purpose of life insurance is correct. You pay a premium, they pay a death benefit when you're no longer here. Now, there's different types of life insurance policies that can be for a term like 10 years or 20 years or 30 years. There are life insurance policies that lasts your whole lifetime. There's Whole Life policies. There's IU wills, which stands for Indexed Universal Life. But the main purposes of life insurance are either estate creation or adding to an estate meaning you want them to get that death benefit, but there's also several reasons you could use it while you're still here. One of those reasons is like accelerating death benefits. So if you have
A life policy that has an accelerated death benefit rider or has accelerated death benefit built into it, you can use that for a couple of different things, but probably the main one would be long term care. And so if you have two out of six ADLs, with a lot of the more modern policies today, you can accelerate, depending on the policy somewhere between 75 and 95% of the death benefit. So if you have $100,000, you might be able to forward you know, 7585 $95,000, ahead of time to help pay for some of that care. And so, a lot of that, because it's driven by how many activities of daily living you can perform, you can use that money for care at home, you can use it for assisted living. And finally nursing home if you need it instead of the way the system is kind of built is just to put you straight in the nursing home, regardless of whether you need to be there yet, because that's the only thing that the system will cover under Medicaid. And, Jake, when you talk about ADLs, of course, we're talking about activities of daily living, and they would be things such as eating or feeding yourself shopping, personal grooming, bathing, housekeeping, communication, toileting, cooking, walking, they can be transferring, there are basically seven activities of daily living, and there are a few more too, but if you've got two of those, I understand that you can get future death benefit, you basically can be the beneficiary of your own life insurance policy. But I want to back up here before we get into the nuts and bolts of that when the term life insurance policy now that's the one that you started with. That's the one that you get when you have little kids at home, and they can be for 510 1520 25, even 30 years. So and that's relatively inexpensive to get when you're younger, would you suggest that people consider a term life insurance policy, even if they are getting ready to retire, just to have a benefit if one spouse passes before the other just to make sure that they're okay. Or is that just basically a waste of money if you're not 30 years old? So as we like to say on the show, Jeff, it depends. So allow me to elaborate. So. So I think that that can be the case where it could be a good idea where we have couples that have really lopsided income, meaning maybe the husband has an $8,000 a month railroad pension, and the wife has raised the kids successfully and kept the house from burning down, which is no small feat, but she doesn't have as much guaranteed income as her husband. So in that scenario, depending on other factors as well, but you could buy a term policy on the husband that lasts maybe 10 or 1520 years so that in the event he is gone, if his pension is not set up to survive him, she's not left in the poor house. So that's one example of literally 1000s of reasons we could give. That would make sense. But if there's any big debt, so if you're a little bit younger, if you have any big debts, like a big house or business or something like that, that you want to pay off, you know, that could be a reason to do it. Term insurance is extremely cheap. And it's extremely cheap, because 97% of all term insurance never pays out. And so they know it's just profit, it's a little bit like when you go to buy electronics, and they say, Would you like to have a protection plan for two to four years on this for for the low price of 5999? On your $200 items? And I'm like, No, I don't want that. You know, and so those are profit centers, right. And so, term life insurance is a major profit center for life insurance, but it provides a very necessary protection in certain circumstances. And as you said, it is relatively inexpensive. When you're younger, you hear these ads all the time, you could be covered for less than $1 a day. Yeah, if you're in perfect health, and you're about age 30, or something like that. But as you get older, the price of this term insurance does go up. So you want to consider that. You also talk about whole life. And I brought that up before and you know, some other talk, Joseph said, I don't like whole life, it's a terrible thing to have. What's your opinion on that? First of all, what is whole life? And what's your opinion on a habit? So whole life, by definition is life insurance to age 100. If you reach the magical age of 100, and you're still paying the life policy and 1000 You are you get a check for the death benefit. Basically, that doesn't happen to very many people, obviously, but whole life is bought from the insurance company. And inside the policy, there's a dividend that gets paid. So it's been said and with a high degree of accuracy, that the whole life insurance policy is only as good as the company who wrote it for you, meaning their history of paying dividends, their history of paying out everything. Whole Life insurance is a much older form of insurance than like indexed universal life insurance. It's a lot less customizable, in my opinion. I'm sure there's people out there writing whole life insurance that would love to have a debate with me on the open air about that. But we're not going to do that today. But I think Indexed Universal Life has a lot of flexibility and different ways you can use it and
Have more flexible terms like instead of going to age 100, you can set it up to where it's guaranteed age 85, or age 120. Things like that whole life can also be good at accumulating cash value inside, you know, so if you've had a whole life policy for a long time, there's a good chance to has quite a bit of cash value in there, Indexed Universal Life can do that as well. But it does it in a little bit different manner. And instead of it being dividend based, it's based on market performance, which one of those is right for you depends on a whole lot of different factors. But Term Life insurance is relatively generic versus you start getting into whole life, you really want to make sure you understand the purpose of the policy your but why you're buying it. You know, there's reasons to buy life insurance that operates more like an investment if you want, because any money that you take out of the cash value, as a loan is not taxable. So I can take, like college funding, for example, I could fund a life policy on my one year old for 17 years until they get to age 18. And I fund that policy. And then when they turn 18, I can start taking loans against the cash value that's accumulated in there to make tuition payments. And that is not a taxable event. Nor does it show up on FAFSA, if you're having your child apply for grants and student loans and other aid, that kind of thing. So that can be a good use for it, you can use it as a retirement account where you know, for the same reasons, you fund it a little bit harder, and it gets down to the end. And you can turn on lifetime income streams from Indexed Universal Life and whole life. But you could do it in the form of a loan to where it's not taxable. So life insurance, that's called Max funded. Life Insurance has been said that it's the Roth IRA on steroids, because you take the loan off there, you don't have to pay the loan back. And then when you pass away, the money goes tax free to the beneficiaries. And so you kind of escape the taxes once and for all on that scenario, as long as the policy is set up correctly. Jake, earlier, you talked about life insurance proceeds being tax free, that is a very important consideration. When you have an indexed universal life policy, the type that does pay death benefits are actually to the living. I mean, if you can't do two of six activities of daily living, are the proceeds that you get from that tax free. Yes, technically, what you're doing is accelerating your death benefit, meaning you're taking your death benefit and taking part of it now, there'll still be a little bit leftover for like burial purposes and that kind of thing. But because it's death benefit, death benefit on life insurance is not taxable. And so because you're accelerating, that those proceeds are also not taxable. And Jake, of course, that money would come in handy if you want to have care in your home, as opposed to going to some sort of nursing home. And we all know how expensive nursing homes can be, and particularly those who do have memory care. So an indexed universal life policy could be a good product, it just as you say, it just depends. So Jake, if I'm claiming that I can't do two of six activities of daily living, is the life insurance policy company just going to take my word for it? Or is it some sort of Doctor certification that needs to be filled out for that? Well, as you can imagine, by looking at society today, Jeff, I'm sure they will not take your word for it, because people have shown that they're not to be trusted. But in all seriousness, they require a doctor's letter just certifying that you cannot perform the two out of six daily activities. And so some of them will require a letter from two doctors is kind of the most extreme one, depending on whether you want to have that care at home or assisted living facility, they'll take the facilities word for it, in some cases. And so it really depends a little bit policy by policy, exactly how they want that to go, and how long you have to have those conditions before the death benefit comes forward to you. But those are all things that, you know, as we're choosing a policy that need to be taken into consideration. You know, there are other types of policies too, that could make potentially more sense than life insurance, depending on your current health income asset level. You know, there's obviously traditional long term care insurance, which is not probably making sense for the majority of people just because it's so expensive, but there are plans out there where we can deposit a sum of money, say, maybe $100,000. And that money will just kind of sit there. And then if you need it, what will happen is they will take that 100,000 and turn it into 300,000 for care. So that's a way to kind of leverage that money. So instead of making monthly payments, we simply kind of set that money aside for that purpose. And so that's another consideration we could do. But there's a lot of ways to tackle it. But it is very important to have a plan when it comes to long term care. Yeah, and that is the key word right? There is plan and so many people worried about how they're going to pay for long term care for those people who do want this life insurance policy that would pay them if they can't do to a six is age a factor in getting this in other words, do you have to get it when you're younger versus older?
Yeah, Jeff. So when we're looking at affordability, younger is always better. But it'll just make things cheaper in general. But you know, even up to like age 65 or 70, it can be attractive if you're healthy. But if that's not the case, then again, like I said, there's several other things that we can look at that might make more sense, just from a cost of the insurance standpoint. If you're listening to the program today, and you're wondering about how you can use life insurance in a comprehensive retirement plan, listen up, because this message is for you, I want you to call 417-889-7233 Get in and sit down and talk with Jake there at Floyd Financial Group, about your particular retirement journey and how you're going to be paying for long term care, and specifically, the uses for life insurance. Once again, that number 417-889-7233, it's just an honest discussion, sort of a discovery process between you and Jake, to find out what's important to you and to find out maybe where the deficiencies are in your retirement plan, so that you can plug the holes right now while you still have time. Once again, that number 417-889-7233. And there is no cost no obligation. Certainly there is no judgment for this plan. You can also request your plan online at Floyd financial group.com. That's Floyd financial group.com. Time for a break. Jake, when we come back, we'll be talking about retirement income. How does that happen? What are the mechanics of getting this money in the D cumulation phase that you've acquired during the accumulation phase, all that and more when our show continues here on one Oh, 4.1 FM ks GF. 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 Sherpa, Randy Floyd, welcome back to show me the money. I'm Jake Floyd. And in this segment, we're going to be talking about retirement income strategies. And Jake, so many people I have heard, you know, they're going well, I'm gonna buy gold, I saw a commercial on TV with that. And that's going to ensure that I'm going to have a great retirement. But you know, when we get old and gray, or if the apocalypse happens, I don't know how much gold is going to you good. I'd rather I think have bullets and food. But so that plan is not a great one. Also, people are buying real estate because they feel that that's going to be the way to create income in retirement. But if you do buy rental real estate, you've just bought yourself a job. But I think the big problem with all of these strategies, and particularly gold and real estate, is that once you own them, they don't make any more profit, they don't make anything, they don't really do anything, they don't earn anything, there's a few exceptions to that, depending on if you're dealing with rental property and things. But if we're just owning land, which is what a lot of people are wanting to do, right now they're like, Hey, um, you know, lands up, you know, 500%, literally, you know, in some of the rural areas, in the last six or seven years, like, I need to get me some of that, you know, and so, it's probably not a great idea to chase land prices here. But maybe even more importantly, you can't spend land, right, and you know, one of the things or gold for that matter, you can kind of spend gold, but not really, I mean, if you're going to shave off a few flakes for your coke at the gas station, you know, it's probably not super realistic at this point. And again, I'm not beating up on anybody, there's there's nothing inherently wrong with gold or land. And I think real estate is a good investment. But when we get towards retirement, and this is one of the things we talk about in our initial consultations with people is every investor needs and every investment provides a certain amount of three things, we have growth, we have safety, and we have liquidity, you have to have your money growing, because you want to replace what you're spending at least. And that's the whole reason to invest the money, we have to have a certain amount of safety for how much safety depends on how much you have saved your appetite for risk and a lot of other factors. And then we need a certain amount of liquidity so you can get to it. So you can spend it in retirement. And certain investments lend themselves to those things more than others. There's no one investment that does all three of those things. Well, and that's why a lot of times we use several different types of investments when we set up our plans. But when it comes to retirement, you're probably not used to taking income off of your investments. Most people have been saving, not spending. And so a lot of times we get the question, you know, like how exactly does that even work? So we set up this account, how do we get paid? You know, how does that work? And the answer to that question is, it can be just like a paycheck, we can set up direct deposit to your bank account, just like if it was Social Security or your normal paycheck up to weekly even, but most people just want to do once a month because they don't want to look at the bills anymore than they have to and I don't blame them for that. But usually once a month, on whatever day you designate, we will have that money deposited to you that way you're good to go each month. It's not something you have to think about. That's one of the top questions we get though sometimes at the end of our meetings, I say hey, how do I
actually get the money. Right? Sounds good. But how does it work? So when it comes to different sources, different types of investments, though, whether it's brokerage accounts, whether it's annuities, bonds, treasuries, CDs, or even real estate, depending on what you have there DSTS Delaware statutory trust, I know, Jeff is well versed in those. But you know, we don't have a lot of those around here. But different types of investments have different kind of income profiles and ways that they pay income. And so it's important when we're putting a plan together, to make sure that those things work well together. So we have enough growth, and we have enough safety and we have enough liquidity to provide the income that you're going to need through retirement because the game changes quite a bit. When you enter retirement before, you know you have time to wait for it to come back. But once you start withdrawing income, you need that income to be secure. You need it to be steady. And you know, you needed to be there no matter what we're talking about retirement income strategies with Jake Floyd, of Floyd Financial Group. Earlier, Jake, you were talking about the three aspects of retirement vehicles, those being growth, safety and liquidity. So let's talk about gold. I mean, gold doesn't really have much growth, I wouldn't think it's relatively safe, but it's not liquid. Would you agree with that statement? From an income standpoint, it's definitely not liquid, I mean, you can go down to your local gold shop, and they will happily give you 90 cents on the dollar. Yeah. But is that really liquidity though? No, you know, in my opinion, you know, if I have to give something up, in order to get my income, that's kind of a deal breaker for me, I should be able to take income off of my investments. When I set up that plan, I gotta make sure I can get income. And so what I don't want to do is have to go down to the gold shop every time I want to get paid. You know, number one, that's not a great idea from, you know, you're gonna get commissioned to death, but there's just better vehicles to distribute money than gold. You know, the other misconception is on that spectrum growth, safety and liquidity, a lot of people would perceive that gold is safe. In my opinion, gold is one of the most volatile assets historically out there, you know, so from like, 1980, gold hit $1,980 per ounce in 1980, which is roughly what it's at today. So 43 years later, it's at the same level. And the reason why everybody's like, Well, no, gold's way up, it is way up. But from 1980 to 1985, Gold fell like 85%. And so there's a lot of people again, that people were loading up on gold in the early 80s. Why? Because of inflation. So why are people loading up on gold right now, because of inflation. So five years from now, what's going to happen to gold, nobody knows for sure. But if we use history as a tell, you know, we might want to be careful how much gold and silver we pile up in our safe because it may or may not stay at the elevated levels that it's at right now. Growth, safety and liquidity giglets Bring a real estate into this conversation as far as those three things go. So real estate, obviously, is very illiquid. And in most cases, you know, you got to find a buyer, a lot of times that buyer does not have the liquidity to be able to actually purchase the land, so they have to get financing. You know, from a safety standpoint, real estate is maybe a little bit less volatile than the stock market. But I think it's just because it's not as easily seen what's happening to real estate where I think there is more volatility than people think it's just that there's no stock market for real estate that you can watch 24 hours a day on the news. And so while it is a little more stable, and growth wise, real estate has done pretty well, you know, if you look at the history of real estate, you know, they're not making any more land, as my grandfather would say.
There's a lot of truth to that. But as with any investment, the point at which you buy meaning the price, you have to pay for something from an investment standpoint is more important than where it's going. Meaning if I buy at the very top of the market, that's not what we want to do, right? If I can buy when things are on sale, either stocks or real estate, that's going to really determine how good of an investment it is, it's not so much where I sell, it's more the point at which I buy and I think that we're gonna have an opportunity to buy real estate south of where it is right now. And I think real estate has come a long way very quickly. And people are starting to sound now like they did back in 2005, six and seven where they said, you know, well, real estate, just gonna appreciate it seven, eight 10% From now on, this is just the way it is now. It's never going down again. You know, nobody would say that and really listen to themselves and go. I really say that what they're implying, by the way, they're spending money on the house, by the way people are buying houses by the way people are paying any cost necessary to have a house built, right and so that will eventually come to an end. We're talking
retirement income strategies with Jake Floyd Floyd Financial Group. Jake, is there any financial vehicle or financial product that you can think of that really is strong with growth, safety and liquidity? And if not, can you get two out of the three of those, in general, the stock market is very liquid. And it's very good at growth. But it's not so good at safety, right? fixed indexed annuities, or rilis, registered index linked annuities where we have some protection or full protection, but we can get gains linked to what the stock market does, those are good at growth, and those are good at safety. But in some cases, we have to give up some liquidity to get those. And so the whole goal between all of these things is what we want to do is set up a plan where we get as much growth as we can, while not neglecting how much safety and liquidity that we need. And so what we don't want to do is put all the money in something just because it's safe, and it can grow. We can't sacrifice all our liquidity, we can't take 80% of our money and put it into a fixed indexed annuity. Even though there's some people that would like that, we can't allow our liquidity to be drained like that. So that's why it's important to have multiple facets to your retirement plan and your investments in retirement. So that you can really get an adequate amount of those three things. And again, it varies very widely from person to person, there's people that don't really need to make more than 3%. But they don't want to lose any money ever. And that's doable, we can do that. There's people that want to try to make more like six or 7%. And they're okay with a little bit of volatility. And we can put, you know, tie up a little bit of money for a little while, but not too much of the money, right. So there's all different types of people with all different types of comfort levels, and all different types of needs for income in retirement. That's why it's so important that people come in for their free consultation. And when you do, we're gonna sit down and say, Hey, what do you want to do in retirement? You know, we'll take into account how old you are right now, how much you've saved, you know, what kind of income do you want to have in retirement, we'll look at all those things and say, Okay, this tool doesn't make any sense. Because either, you know, maybe this tool doesn't make enough money, or this tool is not safe enough, or whatever it is. And we can throw out the tools that we don't want to use and zone in on the tools that we do want to use. And we say, okay, you know, if I have 15 different tools, I could use maybe tool a tool C and tool F make the most sense, right. And so we can put those together in a plan. And we get an adequate amount of our gross safety and liquidity. And we set up a plan that can really see you through and help generate that income that you need in retirement. If our listeners have questions about their retirement income strategies they'd like to get in and sit down with Jake, and talk about what it costs to be them or I'd like to say what it cost to be you. I mean, what do you want to do in retirement, certainly, and put a cost on that design a plan that will pay for that retirement so that you can thrive in retirement not just survive, I highly encourage you to give Jake Floyd a call there at Floyd Financial Group once again, that number 417-889-7233 for 17889 7233. That is the number that you use to request your retirement review your retirement roadmap, if you will. It's just a chance for you to sit down with Jake and get to know all about him and Floyd Financial Group. And for Jake to get an opportunity to find out what you're all about. Once again, no cost no obligation. Certainly no judgment for this plan. It is free for the taking. It'll take about an hour, but it could be the best time investment that you'll ever make once again. 417-889-7233. You can also request your plan online at Floyd financial group.com Hey Jake, this has been a great conversation today about how to tackle inflation in retirement and what you need to know if you plan to work part time in retirement and how you can be the beneficiary of your own life insurance plan and also retirement income strategies. I want to remind our listeners that if you missed any part of the program or you want to hear it all over again, we are a podcast. Simply go to wherever you get your podcast and search. Show me the money Jake Floyd Randy Floyd Floyd Financial Group, you will find it right there. I think the easiest way to do it is to simply go to Google and search Show Me the Money podcast Floyd Financial Group and you'll find many many shows right there. Jake, we're out of time for this week. I want to thank you for your time but most of all, I want to thank all the fine folks here in Springfield, Missouri for joining us for Jake Floyd. I'm Jeff shade get out have a great weekend. We'll talk to you next week with another edition of Show Me the Money right here on one Oh 4.1 FM ks GF where Springfield comes to talk financial planning offered through Floyd Financial Group LLC and investment advisor registered in the state of Missouri all investments carry rich can no investment strategy can guarantee your profitable protected loss of capital past performance is not indicative of future results.