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Real World Retirement is a podcast hosted by Alexander Pushman, dedicated to exploring all aspects of retirement planning with the help of expert financial advisors. Each episode dives into crucial topics like Social Security, investing, taxes, legacy planning, and income strategies, offering real-world insights and practical advice. Listeners are encouraged to stay engaged by following the podcast, sharing their questions, and shaping future episodes tailored to their retirement needs.
00;00;00;00 - 00;00;27;28
Unknown
Welcome back to the Real World Retirement, where we talk about real families, real solutions, and really just really trying to make this tangible and help you make some of these really tough retirement decisions that we all face out there. So today, I'm really excited. I got Kevin Beasley, world renowned, financial advisor. Kevin is a sharp guy, wonderful advisor, wonderful person, wonderful dad.
00;00;28;00 - 00;00;45;06
Unknown
Kevin, I always like to start out, if you don't mind, talk to me a little bit about, you know what? What got you into financial planning? What got you to be an advisor? You know why you're so passionate about what you do? Yeah, well, first of all, thanks for having me. I'm excited to be here. So, I have a more unique story.
00;00;45;06 - 00;01;06;28
Unknown
And getting into this, business. I know a lot of financial advisors have a story about maybe some family that pushed them into this direction. Right. I always knew I wanted to work with numbers. I studied sport management in college. Okay? I wanted to be like the CFO of a large sports franchise. Or work in college athletics in the finance department, which would be a lot of fun right now with all the analysis.
00;01;06;28 - 00;01;25;15
Unknown
I found you pretty interesting. Yeah. But my career path kind of took a change when I took an internship, doing some, and with an athletic department and college athletics. Okay, I realized that they work a lot of weekends and nights. Got him. Family is really important to me. Grew up my whole life. Family first from my dad, family first.
00;01;25;15 - 00;01;44;18
Unknown
I actually wrestled, 160 plus college matches easily. My dad never missed one. Wow. So family is really important to me in the family. Time is very important, is instilled in me at a young age, and I learned that if I wanted to work in finance in my career, I needed to find a different avenue. Okay. And so coaching has always been a passion, of what I like to do.
00;01;44;20 - 00;02;03;05
Unknown
I still coach at Detroit Catholic Central High School. Nice. And so I wanted to find something that could, blend both of those things. Yeah. Right. Where I could still use my passion in coaching, and work with numbers. And so, you know, I have some great people in my life that have introduced me to, some really great people from my high school.
00;02;03;05 - 00;02;22;13
Unknown
Wrestling coach is actually best friends with our CEO, Michael Fergus. Right. And he introduced me to Mike. And Mike and I had a few conversation, and, and now I'm getting to help families with the retirement journey, and I kind of feel like I'm their CFO and their coach, right, with the families I work with. So I kind of I get to do the things that I've always set out to do, just in a much different way.
00;02;22;13 - 00;02;44;04
Unknown
I love that. Yeah, I love that. Well, to today's episode, we're going to be doing the rules and the risk of retirement, the rules and the risk of retirement. So a couple of the things that Kevin is, is really, I'd say is, is his brand and things that he's really always talking about with this clients is basically the efficiency.
00;02;44;06 - 00;03;01;03
Unknown
And then also you got to know the rules to play the game of retirement. And there's so many myths. There's a lot of incorrect information. Unfortunately, in this day and age, people can pull out their phone and type and old Doctor Google, you don't know. You don't know where it's coming from and you don't always know if it's accurate.
00;03;01;05 - 00;03;24;20
Unknown
Right. And so, what I want to start with is, is you had a really good case study, right, of a family that you work with and you've helped and had some great solutions with, if you're if you're okay, Kevin, I'd love to turn it over to you. And so you kind of talk about that, that specific family that you helped and kind of walk through, you know, what you did for them, what the solutions were, you know, some of the concerns and fears they had and how you were able to help and overcome that.
00;03;24;20 - 00;03;46;23
Unknown
Of course. Yeah. So I have a family I work with. And I started working with her late in her career, or late in her life, actually. So her husband was a big, do it himself investor did a great job. And, and she was not involved in any of the planning piece of it. Okay. He unexpectedly passed away, pretty close to his 70th birthday.
00;03;46;23 - 00;04;08;08
Unknown
He actually was a month or so after his 70th birthday, and she felt like she was left scrambling. Yeah. Had didn't really have a great picture or what was going on because her husband managed everything and again, did a good job himself. But she was lost. And so she came and sat down with me, and we kind of went through, their whole situation trying to understand and put some pieces together.
00;04;08;08 - 00;04;24;10
Unknown
Yeah, to see what their plan was for him. But there was a big hiccup in all of that. Okay. So he had filed for Social Security on a 70th birthday, right? As most of us should know, there's no point in delaying Social Security after you turn 70. No advantage to it. So he filed on a 70th birthday.
00;04;24;12 - 00;04;47;15
Unknown
Typical Social Security fashioned. The check gets delayed about a month. So he passes away in between that period of time. Okay. My client, she let's Social Security know you passed away. They don't send a check. And so they never received his first social Security check. She goes to file for the widow's benefit from Social security. Social security turns around and says, hey, your payment is going to be around.
00;04;47;15 - 00;05;05;27
Unknown
It was like $2,700, around $2,700. She comes in and sits with me and says, hey, Social Security is going to be around 27. My husband was supposed to receive around 3435. But, you know, they told me I get his full retirement age benefit. And I said, did he file when he turned 70? She said, yeah, but he passed away.
00;05;05;29 - 00;05;20;14
Unknown
But he had already filed. We just never received the check. And I said, hey, we should, we should call Social Security. Yeah. And just double check into some of these things because. Right. Just because he didn't receive his check. If he filed for Social Security. And so we called in work for Social Security.
00;05;20;14 - 00;05;34;18
Unknown
Took quite a while. And if you've ever called the Social Security office out, but, we did a lot of waiting on him to do the waiting on hold. We got some good elevator music that we sat and listened to. But we get to the bottom of it, and she ended up getting a close to $700 extra.
00;05;34;21 - 00;05;54;29
Unknown
Yeah, her monthly payment, that she wouldn't have had. She not sat down and and met with us because, again, we're it's really important that we know the ins and outs of Social Security, right? We focused a lot on that in our office and understanding the different rules. And her getting that extra $700 actually turned into some extra planning we could do, because we didn't have full $700 elsewhere.
00;05;54;29 - 00;06;16;14
Unknown
Right. For income. It opened up a lot of different avenues, for extra planning that we could do on the side. So I was just getting to the bottom of that. Yeah. Open the door for us to do some extra Roth conversions. It changed her investment strategies a little bit as well. Right. So again, it was, just a weird thing that it's important to know the rules because again, I had she not been working with someone, stayed on the same path.
00;06;16;14 - 00;06;36;10
Unknown
She just would have accepted that she was going to get $2,700 a month, right. And not known that she was entitled to more. Yeah. And, you know, a couple things there that were just kind of jump around in my head as you were going through that number one, to your point, if you didn't have the conviction, the confidence and the experience to encourage her and then make that phone call with her, right?
00;06;36;10 - 00;06;53;22
Unknown
Like, hey, that's not fun sitting on hold for, you know, candidly, God knows how long, right? I think it's some crazy number like Social Security gets over 250,000 phone calls a day, right? If she didn't have somebody to encourage her to do that, you know, it's the government, right? So a lot of people are kind of standoffish.
00;06;53;22 - 00;07;11;18
Unknown
Hey, I'm not going to rattle that cage. They got to get it right. It's the government, right? It's a Social Security administration. So that's a big piece. The other thing that where where my mind kind of goes to that is we're talking about north of $8,000 of a year, right, of a swing. That's that's a big number.
00;07;11;19 - 00;07;31;20
Unknown
Big number. That's a big number. And unfortunately with a lot of single single women out there, good, bad, indifferent, I've seen it go both ways. And I know you have is there's usually one person who kind of leads the charge with the financial planning. Right. And in this case, she was the one who, you know, obviously, I'm sure took care of the home, did her thing, but he ran the financial piece.
00;07;31;27 - 00;07;51;27
Unknown
And oftentimes, I mean, this is one where I would I would really, you know, just say, if you're listening to this, if you're watching and you're somebody who's a single, you know, widowed, whether you're a man or a woman and you're not comfortable and you don't have that education, you haven't been running the church. Reach out to us because, you know, number one, you got to know the rules.
00;07;51;27 - 00;08;06;19
Unknown
Yes. But number two, we have all the resources and the experts that are going to help you understand those rules. So please engage with us. You know, like us on social media focus financial group. Comment. Send us a message. If you have a specific question, send us that specific question. We're going to get you an answer. Okay.
00;08;06;19 - 00;08;24;10
Unknown
But if you feel that that's something that kind of ties to you and resonates with you again, don't hesitate. There's a reason you're watching this. Please reach out. So that's a big one. And I know I have a ton of clients like that, right? The person who runs the show passes away. They're kind of left in shambles. So you make a huge swing, change the Social Security.
00;08;24;11 - 00;08;42;21
Unknown
Were there any other things to that kind of case outside of the Social Security that throughout your process you uncovered that needed some attention? Right. Yeah. So once we uncovered the Social Security and we're able to fix it, and that took care of a lot of her income, right? That $700 swing was actually really big based on her income.
00;08;42;21 - 00;09;06;07
Unknown
Right. And so then we realized that, hey, she had a future problem. Okay. So she had a pretty large IRA balance, okay. And her her income needs were pretty, pretty spot. Okay. Spot covered. Okay. By that social security. And so as her IRA was projected to grow based on our income planning and some of the things we're running, we realized that when she turned 75.
00;09;06;07 - 00;09;28;25
Unknown
Yeah, she was going to run into a required minimum distribution problem. So the old RMD risk. Exactly. Yeah. Yeah. She had a RMD risk there that a lot of people that I sit down with aren't fully aware of what risk kind of involved with this and and this person in particular. Again she was very hands off, when we sat down, didn't really know what a required minimum distribution was.
00;09;28;25 - 00;09;47;27
Unknown
Yeah. And so when I explained that to her and said, hey, when you turn 75, you're going to be required to withdraw an additional $25,000 that we're not planning for you to need. Yeah. Yeah. And she, she was pretty shocked by that. Yeah. And I said it's a good problem to have. Right. And you're missing in the curse, right?
00;09;47;27 - 00;10;10;01
Unknown
You and your husband did a great job of saving money, right? You know, it's it's not a bad thing, right? Right. Good problem to have, but a problem nonetheless. Yes. Right. Because that because she was a single filer. Now and that extra $25,000 that was going to push her tax bracket significantly higher. And so we started doing some things now to avoid those problems when she turns, turns 875.
00;10;10;01 - 00;10;26;18
Unknown
So we're moving money from IRA to Roth, paying the taxes now and doing a little bit more efficiently then rather than being forced to take the money out. Later on. Okay. And so and if you don't mind, Kevin, just because I know there's, there's people out there who, you know, require minimum distribution. RMD. What are you talking about?
00;10;26;19 - 00;10;44;25
Unknown
You have to take money out of time to God. Can you just kind of walk through the audience a little bit through like what an RMD is? You know, some of those those rules and how to navigate those waters. Yeah. And and it's okay if you're confused right now because, the US government has changed that that moved that they've moved the, the field goal posts on us a couple times.
00;10;44;25 - 00;11;02;27
Unknown
Yeah. Right. So yeah. You know, let's kind of take it back. But pre 2020 required minimum distribution. Age was age 70.5. So you have a traditional IRA for one k 4 or 3 B. Right. Any pre tax retirement account. Right. Pre 2020 age 70.5. You have to start taking out a certain percentage out of those accounts. Yup.
00;11;03;00 - 00;11;20;22
Unknown
2020. They moved the goalposts on us. They say if you are not required minimum distribution age yet if you're not already 70.5, we're going to make it age 72 and move it back to your act. Right? Yes. Yeah. Secure act that passed became law 2020. Move the field goal post on US age 72. Now. So say we're going to make you let you wait a few years.
00;11;20;25 - 00;11;40;16
Unknown
All right. Yeah. People are living longer. We're going to push it back a little bit. Then security 2.0 passes becomes law in in January 2023. And that's where it gets a little dicey. So if you're born between 51 and 59 okay. Age 73 okay. Is your new required minimum distribution age if you're born 1960 or later? They pushed it to age 75.
00;11;40;17 - 00;12;02;06
Unknown
Right. And actually when I say 59, there's an asterisk I'm 50. Yeah. Yeah, there's an asterisk. So if you are born in 1959, you have to take a required minimum distribution rate 73 not when you're 74 and then again when you're 75. So the rules get really confusing correct. Inside of there. And then, they also moved the penalty.
00;12;02;06 - 00;12;20;00
Unknown
So there are penalties if you don't take it on time. Right. Right. So if you don't take required minimum distribution on time starting now after the Secure act, passed secure act 2.0, it's a 25% penalty for whatever you don't take out. So let's say required minimum distributions, $10,000 and you don't take it out on time. You have a 25% penalty.
00;12;20;01 - 00;12;35;01
Unknown
You have to take 10,000 out, pay taxes on it, and then pay an additional $10,500 to the IRS. Right. Or not doing it now they do lower it. If you correct that within ten years there's still a 10% penalty, but still thousand dollars that you owe the government just because you didn't know the rules. Right? And that's only if it's ten grand, right?
00;12;35;01 - 00;12;56;10
Unknown
Exactly. Right. Right. I mean, I've seen RMDs that are significantly higher. Yeah. And so again, if you don't do it right, it can be a pretty costly penalty. Absolutely. And it's and thank you for explaining that because I, I obviously see it on a daily basis. Right. But those are RMDs man. They're confusing. People don't understand that. Also that percentage goes up every single year.
00;12;56;10 - 00;13;14;18
Unknown
Every single year. So like a lot of the times when we talk about these blanket rules, the 4% rule, right. Everybody's a 4% rule, right. That 4% rule gets a bullet putting its head in. You know, by the time you're what, 70, you know, depending on when your RMD starts. But about three years, four years into it, now you're at four and a quarter, okay.
00;13;14;18 - 00;13;32;19
Unknown
It's not a big deal. But now you're 81 and it's 5.15% you're forced to take out. And just so everybody knows out there the 4% rule, what I'm referring to is a lot of, you know, the cooler talk, right. You guy to work. You just got to take out 4% every year because hypothetically, you should have more gains than 4%.
00;13;32;26 - 00;13;48;15
Unknown
So you're hypothetically never, you know, jumping into your principal. Right? Right. Yeah. The the 4% rule is, hey, if you withdraw at a rate of 4% or less. Yes, you'll never run out of money, right? Right. It's a great general rule of thumb, right? Right. A lot of variables that come into play. Yeah, but a great general rule.
00;13;48;16 - 00;14;09;25
Unknown
Absolutely, absolutely. And so 90% of the people I sit down with, 90% of their investable net worth is in these qualified accounts that have required minimum distributions. Kevin, why is that? What you're most people are getting free money, right, to invest in these type of accounts. Right. You have your 41K where you put a certain percentage of your salary away, your employer matches a certain percent of your salary.
00;14;09;26 - 00;14;26;03
Unknown
Right, right. And so a lot of people save in this vehicle because it's the easiest way. It's also the easiest thing to put on repeat, right. You don't have to see the money right. Every two weeks. You just get to invest inside of a retirement account and you're saving on repeat. So 90% of your net worth, investable net worth I should say.
00;14;26;03 - 00;14;43;14
Unknown
Yeah. Inside of these accounts. Right? Right. And then maybe you don't need a large portion of this when you retire and you're living off of or, you know, you're you have your retirement income coming in. And so, yes. And then you hit age 80 and you're withdrawing at a rate of 4.95% on 90% of your net worth, your percent higher than the 4% rule.
00;14;43;14 - 00;14;58;24
Unknown
Right? So now what happened to that 4% rule? Right. And so yeah, a lot of these things come into play. And so just knowing the rules can help you, be a little bit more efficient and manage your retirement. And like one of my favorite things, you know, oftentimes I'll call you and say, hey, Kevin, what's the rule on this?
00;14;58;24 - 00;15;16;16
Unknown
What what's the what's the rule on this? And I call you the king of the rules, right. But, you know, it's funny, one other thing on the RMD, oftentimes I'll sit down with a family, and, you know, that first time we're getting to know something, you know, a client might have referred somebody to, you know, somebody reaches out from the public and says, hey, I love to talk to you.
00;15;16;22 - 00;15;37;16
Unknown
At first meeting. We're really just getting to know them. Right? Okay. What are your goals? You know, what are the things you're worried about, how much money you need a month, what are your investments? All that good stuff. And real quick I can figure out who's got an R&D issue, right? They got their IRA. But then all of a sudden I'm looking at their bank and it's got 300 grand in it or 250,000.
00;15;37;16 - 00;15;57;24
Unknown
I'm like, you know, it's just earmarked for some property or you know, you know, an event. It's a project around the house. No, Alex, I just, I'm getting forced to take money out of my IRA, and I'm not confident enough to invest it. And so it sits in the bank, right. Or a checking account, and it just sits there and it accumulates year over year over a year.
00;15;57;24 - 00;16;16;22
Unknown
And so really quick us as advisors, we can spot that from a mile away. Right. Yes. You're going to verify. But you know that's the type of scenario that Kevin's talking about. You get forced to take money out. You don't need it raises your potentially raises your tax bracket from an income standpoint, potentially raises your Medicare premiums over time.
00;16;16;22 - 00;16;39;09
Unknown
Right. And then all of a sudden now you're leaving a qualified plan, you know, some type of tax deal, right? Whether it's tax deferred or tax free in a Roth, which just another conversation and and now you're forced to put it into a non-qualified account where you pay capital gains on all your profit. Right. So now there's another element thrown into the tax picture starts becoming inefficient.
00;16;39;09 - 00;16;58;08
Unknown
Yes. Really fast. And so you're saying your solution to that problem. And I'm sure this was the first of many steps. But your first was to say, hey, let's take this IRA. Right. We're going to we're going to take money out, pay the tax today, and we're going to convert it to a Roth IRA. Correct. Can you kind of just walk through again?
00;16;58;11 - 00;17;15;18
Unknown
I, I've we're preaching to the choir. I apologize, but there's a lot of folks out there who don't really understand the Roth. Yeah. You just kind of walk through some of the rules and the basics of the Roth IRA. Right? So let's, kind of best understand the qualified plan so where we can understand the qualified Roth piece.
00;17;15;23 - 00;17;36;10
Unknown
Right. So qualified plan, you have your for one K, they cut your paycheck, they take the contribution and out of your paycheck and put it into your for one k. Right. And then they tax your paycheck. So for your traditional IRAs or traditional for one case, the money that goes into that for okay never been taxed. Right. And then you buy a certain investment inside of the 400 and K.
00;17;36;10 - 00;17;55;10
Unknown
And then you sell that investment and buy a new investment. You're never taxed on any of the growth. Then when you retire you start pulling income. All tax that your ordinary income right. So that's how qualified works how Roth works. Let's say you have a Roth for one K or a Roth IRA. How that works. They cut your paycheck this time.
00;17;55;10 - 00;18;19;03
Unknown
They tax your paycheck first, then they take that contribution, put it into a Roth IRA. So now that investment piece, the money that went into the investment has already been taxed. Yes, they've already taxed the money. And then you buy an investment. That investment grows, you sell that investment, you don't pay taxes by new investment. That investment grows, you retire, you start pulling money out of the Roth IRA, both your principal, because you already paid taxes on it, but also the growth tax free to you.
00;18;19;04 - 00;18;38;09
Unknown
You don't pay taxes on it. Important piece to this. Right. So we talked a little bit about Social Security. Yeah. Also does not affect how your social Security is taxed. Right. And that's a whole different conversation. And we could probably talk for hours on that as well. But it a lot of efficiencies come from that Roth IRA outside of just not being taxable as in a withdrawal standpoint.
00;18;38;09 - 00;18;55;14
Unknown
Right. And so not only it's not not taxable and tax free on the withdrawal when you're using it from income, it's tax free on the growth of the account. Correct. And then obviously you know worst case scenario you pass away. It's handed down to your family members your beneficiaries. Tax free is tax free. Yeah. Right. And so some rules that go along with that.
00;18;55;14 - 00;19;14;27
Unknown
Right. And I think it's important you pass away right. And kids inherit it. Your Roth tax free to those kids. Now they still do have to follow the ten year rule that came out with the original secure act. Okay. So when you pass away and you inherit these different accounts, traditional Irish, you have ten years to take all of this money out.
00;19;14;29 - 00;19;34;10
Unknown
Now, you're supposed to have required minimum distribution even if you're not required minimum distribution age. So let's say, you inherit an account from your mom. Your dad. Maybe grandpa inherited a traditional IRA, fully taxable to you, and you have ten years to liquidate that account. Now, you're supposed to have a required minimum distribution based on your age.
00;19;34;14 - 00;19;54;23
Unknown
So a lot of people don't know this. The uniform lifetime table that determines the percentage of the IRA that you have to take out, that's what they use to calculate your RMD when you're age 72, 73, 75. All right. Every age has that a number assigned to it. So even 0 to 115 has a number assigned to it.
00;19;54;26 - 00;20;14;17
Unknown
So no matter how old you are you inherit an IRA. You have a number for required minimum distribution you're supposed to take. Now you have ten years to fully liquidate that account. The number you have to take out is required minimum distribution significantly lower than liquidating that account in ten years. Exactly. IRS also waived those for the last four years, so you haven't actually had to take a requirement.
00;20;14;22 - 00;20;32;19
Unknown
Distribution. Yes. Each year they waive it, they say, hey, next year we promise you're going to be required to take this required minimum distributions. Right. And then they keep kicking that can down the road. Yeah. But Roth IRAs, even though they're not taxable it's a very, very tax advantage account if you inherit it absolutely still have to liquidate that account inside of ten years.
00;20;32;19 - 00;20;57;04
Unknown
Yeah. So it is important to know that they don't fully get tax free benefit. But they do get it for ten years. And then they can liquidate that. Do you find there's any like specific myths around some of these rules that you've heard like, oh no, that's just blatantly incorrect. Right. And like the first one that comes to my mind and like whether it's about RMDs, or Roth IRAs, whatever it is, because I know, again, you're the king of the rules specifically, like the Roth conversion.
00;20;57;04 - 00;21;12;20
Unknown
Yeah, I know there's some around. I was converted because the one that came to my mind is like, when we talk about Social Security, people are always like, well, no, Alex, it's your highest ten years of working, right? I'm like, no, no, no, no, no, 35 it's your highest 35 years. They're taking into that formula. Right. That's the first one that came to my head.
00;21;12;23 - 00;21;31;16
Unknown
Are there any rules that you you see people often get wrong again RMDs, Roth conversions, any of these things we're kind of discussing today. Yeah a couple different things. And it's going to be in individual situations. One that's across the board. You know, I think I've had maybe 30 people that have said this to me, which is pretty crazy.
00;21;31;18 - 00;21;53;17
Unknown
So required minimum distributions taxable as ordinary income. Right? 100% ordinary income. It's not long term capital gains because you've held the investment for a long period of time. Ordinary income. So whatever tax bracket you're in, when you have to take required minimum distributions, you're going to pay ordinary income tax on that required minimum distribution. Right. There's only one way to avoid ordinary income tax on required minimum distribution.
00;21;53;17 - 00;22;13;02
Unknown
That's through a qualified charitable distribution. That's it. And so for those that don't know what a qualified charitable distribution is, you send a donation. So it has to be to a registered charitable organization. You send a donation directly from your IRA. Yes. To that charitable organization. You can't take ownership of it. Got it. So it can't go from, you know, your required minimum distribution age.
00;22;13;05 - 00;22;36;16
Unknown
Alex Bushman can't take the withdrawal and then send it to that has to go directly from your IRA to the charitable organization. Not a taxable event counts towards your required minimum distribution. And that's really the only one to basically turn a taxable event into a deduction. Exactly. Right. Right. Exactly right. But yeah. All required minimum distributions taxable ordinary income.
00;22;36;16 - 00;22;54;16
Unknown
That's one I see quite a bit. Okay. Like oh, it's, long term capital gains. I've had this account for 30 years. No, not how it works. Yeah, yeah. Unfortunately it's ordinary and unfortunately it's ordinary income. Right. Because because historically, to your point, long term capital gains is usually lower right than income most of the time. Yeah. More times than.
00;22;54;19 - 00;23;12;19
Unknown
Yeah. The other one that, that kind of as a, as you talk about this is, you know what? I don't want to do a Roth conversion because I will be in a lower tax bracket in retirement. More times than not. I've been doing this a while. That is a myth, correct? More times than not.
00;23;12;19 - 00;23;28;24
Unknown
Great point. I see it a lot. Now, again, this is going to vary, right? There are some people that are very high income earners that don't actually spend a lot of money. Right. And they are in a lower tax bracket in retirement. Right? A lot of times, a lot of families that I, that I sit down with, unfortunately, it's just not the case.
00;23;28;27 - 00;23;46;01
Unknown
Yeah. Like, you know, I always talk about, you know, you read a book, right? Or these, these white papers. You will only need 70% of what you spend today working. Right? I'm like, that's not what I see. Right? Whatever you're spending today, unless there's a very unique circumstance. Hey, I'm paying off my mortgage in five years. Right? And so that's like a legit.
00;23;46;01 - 00;24;06;00
Unknown
Okay, what's your mortgage? Two grand. Okay. Well, then we can count on two grand less, right? Most of the time, in my experience as well, it's the exact same. You're spending $7,000 a month. When you're working, you're sad. You're spending $7,000 a month return. Candidly, those first couple of years usually spend more, right? Just about to say that I was going to say, in my experience, yeah, sometimes it's more right.
00;24;06;00 - 00;24;22;06
Unknown
Right. Because again, you retire and and you want to experience the things you have a lot of time I sit and folks, I say, how are you enjoying relaxing in retirement? Kevin I'm busier than I was. That was when I was working. Right. And you know, the the classic line is, yeah. How did you do it all in two days, right?
00;24;22;06 - 00;24;35;00
Unknown
Right, right. Yeah. And so yeah, they're out enjoying as they should be. Right? They worked hard and they earned it. But yeah a lot of times that's a big myth I see is yeah, I, you know, oh, I'm going to be in a lower bracket and, you know, more times. And now that just hasn't been the case.
00;24;35;00 - 00;24;48;24
Unknown
Yeah. And I know we encourage, you know, what the families and the clients we have, we encourage them. Hey, you know, you're retired. This should be a celebration, right? We bake it into the plan. Other trips you want to do, other bucket list items that you want to do because you know, the running joke that, yeah, I know we always talk about we're in retirement planning.
00;24;49;01 - 00;25;08;29
Unknown
Is there six Saturdays at a time? Oh, yeah. Right. And there's more time the day you retire. All of a sudden, all these projects, you've been waiting to do it. Your house, you're at Home Depot everywhere, Lowe's or whatever it is. Money is being spent. Oh, yeah. Yeah. Of course. And so you said you said a word that is really important to me, especially when we talk about risks and rules and and things we're looking at in retirement.
00;25;08;29 - 00;25;27;05
Unknown
You said the plan. Yes. The plan. Yes. In my opinion, if you don't have a retirement plan or a retirement income plan, specifically in retirement, you don't have a retirement plan. I couldn't agree a lot more. A lot of the planning pieces we're talking about, right. Understanding. Hey, do you have a required minimum distribution problem? Should you do Roth conversions?
00;25;27;07 - 00;25;45;05
Unknown
You know, hey, when should you take Social Security? Yes. Right. And understanding the rules that go along with those things. But having a retirement income plan answers 95%, 100% of those questions. Yeah, yeah. Yeah. Right. And how can we be the most efficient right inside here. Right. Having a a retirement income plan answers a lot of those questions.
00;25;45;05 - 00;26;06;19
Unknown
And it is the, in my opinion, the most important piece of your retirement journey. I couldn't agree with you more. I mean, you know, my story of me getting into the business my my grandfather runs out of money, has to move with my parents, right, right. And, if he would have had an income plan five, ten, 15, 20 years in advance, he would have known he was going to run out of money.
00;26;06;19 - 00;26;20;00
Unknown
Right. It's a mathematical formula to your point. There's all sorts of, you know, that's why you can't ever give it 100, right? There's variation, there's variables. There's things we have to consider. We don't know when we're going to get sick. We don't know. You know, when the good Lord so many sometimes so many things out of our control, correct?
00;26;20;00 - 00;26;35;27
Unknown
Right. Has to be fluid, right? Or it has to be fluid. And we understand that it's not a perfect system. Yeah, but what it can help you do is make educated decisions. Absolutely. Right. And be educated on on the things you want to do. Yeah, right. I tell the families I work with. Right. My job is not to tell you yes or no, right.
00;26;36;03 - 00;26;51;09
Unknown
My job. I don't tell anyone what they can and can't do with their money. So my job. Yeah, right. My job is to show them the short term and long term impacts of the things that they want to do with their money, right? Right. And, hey, if you want to do this, by all means. Yeah, but, hey, here's what it looks like if we plug it into the plan.
00;26;51;09 - 00;27;09;04
Unknown
Absolutely right. It had your grandfather had seen that information on paper. Does he make some of the decisions that he makes? Maybe. Maybe not. Right, right. But we did our due diligence to educate, right? Yeah. And on that note, I would I'd like to just again, if you're in the audience out there and you're listening, you're watching, you don't have an income plan.
00;27;09;06 - 00;27;28;22
Unknown
I get to Kevin's point. It's the most important part of a retirement plan. Whether you're retired or you're thinking of retired or it's ten years away, I would encourage you. Reach out to us again, engage with us, drop us a line, give us a comment on social media. Send us an email. Kevin, personally, I know would do a phenomenal job to create an income plan for you and help you out.
00;27;28;22 - 00;27;45;13
Unknown
But that's the type of stuff we want to talk to you about. Do you? A are you going to be one of those people who's forced to take more money out and RMDs and through your IRA and you don't even see, you know, it's like that thing where we always talk about like, hey, there's a tsunami coming. You don't see this tsunami till it's right up on you, right?
00;27;45;15 - 00;28;06;16
Unknown
You know, but these are the type of exercises and tools that we've learned right through experience working with real world people and how we can help solve those problems and or just take a proactive approach to those problems. So, you know, with the rule stuff, we could probably talk for two hours straight about rules because I know, again, you're the king.
00;28;06;18 - 00;28;22;07
Unknown
Let's talk a little bit about risk. Let's talk a little bit about risk. You know, what are the main things you think of when you're saying, hey, risk. Like what are the things that jump out to you that people should be thinking about pertaining to their retirement? Yeah. Great question. There's two sets of risk, or two definitions of risk.
00;28;22;07 - 00;28;40;28
Unknown
I want everyone to know, okay. Right. Whether you're working with me or not I tell folks, okay, these are the two things you need to know to be successful. Risk number one. Most people know this 90%. People I sit down with understand risk number one. What's your risk tolerance? Right. How comfortable are you with the volatility of the market and your investments going up and down okay.
00;28;40;28 - 00;28;59;07
Unknown
Right. Because that determines what you can and can't invest in right. Hey I can't sleep at night. If I lose 6% of my portfolio, well then, hey, maybe we can't be invested in individual stocks. Yes. Right. Things like that. Yeah. So you need to know your risk tolerance. Most people have a pretty good idea, right? And when I say risk tolerance, I always have to laugh at this.
00;28;59;10 - 00;29;14;02
Unknown
Most people are comfortable with risk on the upside. Amen. When the market's going up right, it's hey, how comfortable are you with risk on the downside. Right. Right. When when the market starts losing we have a year like we had in 2022. Right. Hey when are you running for the hills? Yeah. Are you holding the whole time and you're okay.
00;29;14;07 - 00;29;33;15
Unknown
Where are you calling and saying, hey, we're down 5%. I want out, right? Right. What's your risk tolerance? Their second. What's your risk need? How much risk do you have to take in your portfolio to be successful with your goals in retirement? Right, right. And this jumps back to what we were just talking about, right? How do I understand my risk?
00;29;33;15 - 00;29;51;26
Unknown
Need I have an income plan. Right. You sit down with me and you have a conversation about how much money you want to spend every month, plus inflation for the rest of your life. I'm going to tell you what rate of return your portfolio needs to get requires to cover the goals that you want to set. Right. And then and then you have to have a deeper conversation.
00;29;51;28 - 00;30;08;29
Unknown
Right. Do you want your do you want to end with zero? Right. Do you want your last check to bounce or do you have a legacy plan? Yeah. Right. Do you do you want to leave some money to the family? And and kind of go down that path. Right. So having a deeper conversation about what your goals are, can again affect that risk need on your portfolio.
00;30;09;01 - 00;30;24;19
Unknown
Yeah. And it's, it's when we talk about risk, it's a really good point because like, you know, everybody always just kind of like, you know, and I even use it. Right. The kind of cookie cutter because it's easy to get the answer. Hey what's zero is no risk. You're sitting in cash, right? Tanya in crypto. Right, right. Where do you fall on that?
00;30;24;19 - 00;30;44;09
Unknown
0 to 10. Yeah. You know, and as people get older, most of the time, I mean, we got those outliers, right? I got a couple. But as you get older, you usually people start coming down that spectrum. They're landing. Maybe it's a six or a five or A43. And hey, you know, I'm you know, I'm joking aside, like, I always joke around with people like, I'm like a nine and a half, you know, like, with my own money.
00;30;44;09 - 00;31;05;22
Unknown
You know, I do this for a living. I'm very comfortable with risk. I'm 40 years old. My wife, right. 34 years old. She's like a one, you know? And there's no right or wrong, no right or wrong answer. But understanding your options that will give you peace of mind. You know, we always talk about in our firm providing peace and purpose for people's money, right.
00;31;06;00 - 00;31;22;28
Unknown
That's one of the components, right? That's one of the components of having that good conversation and being real with yourself. Because like the two things I also thought of while you were talking about risk, number one, everybody's okay with risk when they're making 20%. Oh, it's but then all of a sudden it starts a dip. And so I, I know you do the same thing.
00;31;23;04 - 00;31;38;23
Unknown
Also how I kind of make sure that response is accurate. I'll ask the question, what's the maximum dollar figure you're comfortable losing this year? If you lost 100 grand, are you okay with it? And then you watch somebody face and you know if it's real or not. You're not a nine out of ten anymore. You're not a nine out of ten.
00;31;38;26 - 00;31;54;18
Unknown
You know, and and then, you know, the other thing I was going to say is just kind of along with that is, is one of the jobs that I know you do really well, is that legacy planning piece you know, we never want to go there in conversation, but unfortunately in our business we have to have the tough conversations.
00;31;54;22 - 00;32;17;10
Unknown
Yeah. You know, because I often ask me, you know, what? Do you want to leave your kids or the grandkids? Yeah, they'll get what they get, and that's fine. But here's a better question. Would you prefer they get most of it or would you prefer the IRS gets a bigger cut? Right. Because these are the decisions we need to make now to influence that type of ratio.
00;32;17;11 - 00;32;37;06
Unknown
Exactly. Right. Yeah. Right. So once we understand your risk tolerance and your risk need right, then we can start to look at the other risks that your portfolio has. Yeah. Right. So we build the income plan. We look at okay okay. Here's how much risk you need to take right. Maybe it's only 3.5% is what gets you to accomplish your goals.
00;32;37;08 - 00;32;58;04
Unknown
Right. So then we can talk about the different investments and so on and so forth. And that's that's pretty fine. But then we can start evaluating some of the other risks. Right. We look at okay your withdraw rate is X right. And at age 75 you only need $30,000 off of your portfolio. Then I flip to the next page of my income plan.
00;32;58;06 - 00;33;27;07
Unknown
And it says your required minimum distribution at age 75 is $86,000. Yeah. But wait, now these don't line up. Yeah. You only have to take $30,000 out of your investments. This tells me you're required to take out 86. That's a problem. Doesn't line up right now. That's a risk. Now. Now your risk of normed risk. Yes. Right. So is your RMD going to be detrimental to your portfolio by causing tax problems causing Medicare cost problems.
00;33;27;13 - 00;33;45;05
Unknown
Right. I mean and then they start to add up. It's a snowball snowball right. Little things like that. They start to add up right. You know, this is a different analogy when I'm talking to my clients about saving money on taxes. There's not a magic pill, right? To hey, you do one thing right. You save tens of thousands of dollars, right?
00;33;45;07 - 00;34;01;24
Unknown
It's a lot of little things. It's almost it's death by a million cuts. Yeah, right. You do. You do ten, 15, 20 things right for your taxes. And that's when you really start to save money. Yeah, right. It's the same thing in building an investment plan, right? It's like, hey, we just build an income plan and all of a sudden you're okay, right?
00;34;01;24 - 00;34;22;13
Unknown
Oh. You're set. No, I tell you, the income plan now shows us. Hey. Okay, now, what risks face you in retirement. And now we have to start doing little things right to make sure that we can accomplish your goals. Yeah. And on that front, if this is, is is kind of jumping out to you as you listen to this or watch this, you know, what Kevin's really talking about is the same thing.
00;34;22;13 - 00;34;42;05
Unknown
We all kind of talk about good, comprehensive, independent fiduciaries are going to do very similar things. We're going to have income plans. We're going to have investment plans. We're gonna have tax plans. We're gonna have legacy plans. We have Social Security plans. We're gonna have plans on plans, on plan plans. But my point is, if you don't have these things, hey, are you taking too much risk with your investments?
00;34;42;07 - 00;34;58;12
Unknown
Again, these are the conversations we want to have with you. Our expectation isn't always, hey, we're your guy or your gal, right? The expectation is our goal. And I know, Kevin, you're one of the best of this. We're going to educate you and we're going to help you understand your options. You said it earlier. My job is not to tell you yes or no.
00;34;58;15 - 00;35;18;10
Unknown
You know, it's to educate you and help you make an informed choice, right? Whether I build a plan for someone and they decide to work with me or not, I want them to understand the risks that go along with the decisions they're making. Yeah, right. Good. Better than different. Right. So when I'm working with someone, we're going to cover these things, and you're going to leave with the.
00;35;18;11 - 00;35;38;18
Unknown
At the very least, you're going to leave with the knowledge. Yeah. About that. Right. And that's the most important thing to me. And when I'm, when I'm synonymous with folks. So you've you've been throwing a lot of good stuff out here. Would you say there's any other rules or risks that you think would be just kind of good, good things to throw a nugget or a tip out there for people to think about who are listening, then?
00;35;38;20 - 00;36;02;01
Unknown
Yeah, it's a really good question. You know, I always lean back on Social Security, when it comes to rules. Right? And I don't know if it's so much rules. Exactly. Yeah, but understanding your options, and I guess the rules that go along with those options, because the list is, so long on those things and we could do a whole probably another hour on just this alone.
00;36;02;01 - 00;36;21;11
Unknown
Yeah. But just some quick ones. Okay, here's the rules. Social security window opens at 62. It closes at 70. Right. So you have that eight year window, to, to elect for Social Security. And there's a lot of different options you have inside of there. Right. Then something like you can you can there's 529 ways or something.
00;36;21;11 - 00;36;38;16
Unknown
Create 527 or so. I know that if you combine married filing jointly single widows disability and you look at everything, I know it's over 500 different ways to file for Social Security, which is mind bending. Yeah. Married filing jointly. It's 80 just for just for a couple 80 different ways. I mean, think about that. Right. And that's what both people still live.
00;36;38;21 - 00;36;56;10
Unknown
Yeah. I mean, yeah. So yeah, a lot of different things open up. But and understanding your options. Right. So, when I talk about marry filing jointly, and I try not to look at Social Security in a silo, a lot of people look at Social Security in a silo and say, hey, how do I maximize my individual Social Security?
00;36;56;10 - 00;37;13;11
Unknown
Or, hey, how do I make sure I get the most out of Social Security? When you look at a family, sometimes there's a significantly higher income earner right than the other, right. You want to look at. Hey, how do we maximize Social Security for the family? Yeah, you need to know the rules that go along with that.
00;37;13;14 - 00;37;33;10
Unknown
Right. So at for time and age, let's say you're for retirement age is 67. Yeah. Right. For retirement age is age 67. And maybe you you you stayed home with the kids while your spouse worked, right. You're actually entitled to 50% of your spouse's Social Security benefit at your full retirement age. Now this is where people get a little confused.
00;37;33;10 - 00;37;57;27
Unknown
Okay? That's only at your full retirement age. You elect Social Security at age 62. Oh yeah, and you're getting the spousal. It's only like 32.5% of your spouse's full retirement age, something like it's, like 70% of the, 50 or something, like. Yeah, it's about 32.5% of 50%. Okay. So, so or of the full retirement age. Right?
00;37;57;27 - 00;38;18;25
Unknown
Right. So yeah, it's, right that you need to know those rules. A lot of people think, hey, I'll get half. I just turned it out because you look it up or you hear people talk about these things and they're like, oh, spousal benefit is 50%. Yeah, at a certain age. Correct. And they don't know that. Right. And, you know, you type it into Doctor Google or ChatGPT.
00;38;18;28 - 00;38;35;22
Unknown
It's not going to give you that detail, right, of of your unique situation. Hey, the spouse benefits 50%, right? Hey. Also, the higher income earning spouse also has to be on Social Security for you to get the spousal benefit. It has to be turned on right? So they have to be receiving Social Security and turned on Social Security for you to receive the spouse benefit.
00;38;35;25 - 00;38;52;18
Unknown
So little things like that, right? Yeah. That's good. Yeah. Those those are important. So just like that's a quick rule. Yeah. That's really important for me. And and Social Security is such a big piece. Yeah it is. And and there's so many different ins and outs of those rules. Yes. Like I said, if we could do an hour extra long on this.
00;38;52;18 - 00;39;14;22
Unknown
Yeah. Yeah. And that's something I know that's important to you. It's important to me. Our firm is having the ability and understanding those rules because it's some crazy statistic. I think last time I looked at it is right in the neighborhood of, you know, somewhere in the neighborhood of like 60 to 64%, somewhere in there is, 60 to 64% of the income in retirement comes from Social Security for the majority of Americans.
00;39;14;22 - 00;39;30;00
Unknown
Right. That's more than half your income in retirement. Yeah. You want to get a big decision and you don't get do overs. No do overs, no do overs. You know, one deck technically one one and a half. Yeah I want to have two overs. All right. So yeah let's dive into that. Right. Want to have two overs. Hey you're listening to this.
00;39;30;06 - 00;39;49;04
Unknown
You turn on Social Security less than 12 months ago and you're like, hey, I don't know if I made the right decision. Yeah, right. You take that 12 months, within 12 months, you can actually turn it off. So yeah, I screwed up. I need to rethink about this. You do have to pay all the money back. So if within the first 12 months you turn on Social Security, you pay all the money back, it's like you never took it.
00;39;49;04 - 00;40;08;09
Unknown
Yep. Second, do over point five. Do over. You reach full retirement age. You say, oh man, I really screwed this up. You can press pause and press pause on your stuff, go back to work or something like that. Or you can press pause on receiving the benefit and you can start delaying, your Social Security benefit again, and then you're going to be getting those 8% increases 8% a year.
00;40;08;09 - 00;40;26;04
Unknown
You wait. And it's actually just on that case. I know you were thinking this. You actually don't get an increase every year. It's monthly, right? It's a monthly increase, but it's 8% a year. 8% here. Yeah. It's like two thirds of 1% a month. Yeah. Let's see. The real king. Anything else you can think of. Because man this has been some good stuff.
00;40;26;12 - 00;40;45;08
Unknown
Again, the myths and incorrect information is one of the biggest concern I have for families out there who don't have somebody in their in their corner. Right, right. A good financial advisor who's who's a fiduciary who cares and who's educated. When people get it wrong and they don't know the real information, you can't make a real decision, right?
00;40;45;08 - 00;41;07;05
Unknown
You know. Yeah, I think, yeah. Just not too much more. I have on rules, myths, regulations. Yeah. I think it's just understanding that there is a lot that goes into all of these accounts and all these decisions. Right. And being informed is the most important piece. Absolutely. Right. So you know, I and Alex has done a great job of saying, hey, if you are looking for some help from us.
00;41;07;07 - 00;41;31;26
Unknown
Yeah, but but again, if you want to come in and have a conversation and talk with I don't work, I can't work with everyone. I sit down and have conversations with. Right. But I treat every single person I sit down with the same way. Right. Because knowing these things is so important, whether these people work with us or not, walking away with this information and just understanding like, phew, it's a little deeper than a lot of people think.
00;41;31;26 - 00;41;47;21
Unknown
Yeah, it is a really important piece, right? So just making sure you have the information and you understand the ins and outs of your decisions, right. And to that point, I appreciate you saying that there's not any strings attached. Right. And to your point, we can't work with everybody and that's okay. But what we can do is we can answer anybody's questions.
00;41;47;26 - 00;41;59;19
Unknown
If we don't know the question, we're going to, you know, if we don't know the answer, we're going to find it. Yes. You know, and the and the odds, we don't know what are and none. But, you know, I absolutely I appreciate you do that. And again, I want to encourage everybody make sure you're engaging with us.
00;41;59;22 - 00;42;17;07
Unknown
Make sure you're following, our social media channels that focus financial group, make sure that you are getting engaged. You're again, if you have questions, I. I'll say it till I'm blue in the face. You got to send us messages. You got a comment? We all have an email address here in 2024 or 2025, right?
00;42;17;10 - 00;42;38;14
Unknown
So, please feel free to reach out. Continue to be engaged with us. Hope you're getting some good stuff. Kevin, thank you for joining me today. It's always a pleasure. You're a wealth of knowledge. And, again, episode four here the Rules and Risk of retirement. The real World retirement podcast. I hope you're enjoying this. Tune in next time.
00;42;38;14 - 00;42;50;21
Unknown
And thank you for joining us today. And again, Kevin, thanks for coming, man. Thanks for having me. It was a blast. Absolutely.
00;42;50;23 - 00;42;55;05
Unknown
It's.
00;42;55;07 - 00;42;56;21
Unknown
Going.