On this week’s episode of On the Money with Secure Money, Neil Mager discusses how to create a comprehensive strategy around those years that exceed traditional retirement times.
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Radio Show Transcript
Announcer 00:00
These investment advisory services are offered through foundation investment advisors, LLC. an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they do not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company
Steve 00:39
A Fidelity Investments survey show that 71% of Americans are concerned about the impact of inflation, and a volatile market could have on reaching their retirement goals. Today, we’ll outline five retirement related risks to avoid this year.
Announcer 00:58
And now, On the Money,
Brian Quaranta 01:00
Any good retirement plan starts with the foundation,
Announcer 01:04
asset protection, tax reduction, holistic planning
Brian Quaranta 01:08
These are the things that start to move you towards having a retirement plan.
Announcer 01:12
Retirement doesn’t have to be complicated.
Brian Quaranta 01:15
You think that’s the difficult part that’s just started!
Announcer 01:20
And now, On the Money with Secure Money.
Steve 01:25
Hey, welcome, everybody. This is On the Money with Secure Money. I’m consumer advocate, Steve. And joining me today, as always is Neil Mager. Neil is Senior Advisor at Secure Money Advisors. He’s a fiduciary, and so much more. Hi, Neil. Always good to chat with him.
Neil Mager 01:39
Likewise, Steve, thanks for having me today.
Steve 01:41
Absolutely. The salt this whole talking about inflation all the time. It’s seems like it’s interesting. And I do think people need to be aware of some of the subtleties, especially as we get into, you know, close to retirement.
Neil Mager 01:54
Well, Steve, I don’t know, if we’re talking about inflation, we’re feeling inflation.
Steve 01:59
Well, that’s for sure.
Neil Mager 02:01
That’s the real concern on everybody’s mind. You know, it’s just the feel of it. And, you know, Brian and I were talking recently, and we were talking about how inflation is really impacted everybody differently, right. I mean, if you have a family of six, and you spend a significant amount every month at the grocery store, and you have a further ride into the office, that’s going to impact you much more than if you’re in retirement and have relatively small budget as far as grocery and not really driving too far. I mean, think about the difference in inflation there. So, inflation might be, you know, nine 10%. For some people, it might be as high as 30-40%, for others, and that that impact is significant. So, we’re definitely feeling it.
Steve 02:46
Yeah. Oh, my gosh, yeah. Folks, if you’d like to get a head start, it’s 800-656-8616. So, we’re talking about some retirement risks that we should avoid? And of course, longevity risk. Is that a real avoid that, Steve? Well, no. But I mean, we want to avoid a good one. Right? Yeah. Well, I guess, but because we’re living longer, we do face longevity risk. And is that something that we have to be concerned about?
Neil Mager 03:11
Oh, for sure. For sure. I mean, Americans are living longer and healthier. IRS recently raised the average life expectancy that to 84.6. So, think about that your assets have to remain over that longer retirement. You know, this isn’t as simple as your employer paying you a monthly pension. Month by month, you know, these are the yo-yo retirement that we’re in, you’re on your own, figure it out, figure out how to invest your money, figure out how to generate cashflow, make sure that’s going to last and only last but last a long time, as we’re living longer and longer. Right. It’s definitely something we need to be cognizant of for sure. So maybe that just simply means, you know, what we always see as people hit an age where they feel like they’re required to retire. And, you know, don’t feel like just because you’ve had a certain age that you want to retire. You know, a lot of people, they’ll have really great jobs, and they’ll really enjoy their jobs, and they’ll enjoy the people that they work with each and every day. And yet they hit a certain age and they feel like well, I’m required to retire. Well, you know, if you live till 95 years old, and you’ve had 65 that means you’re going to be retired for 30 years. That’s a long time. So, you know, really think it through and be cognizant of the longevity, the longevity that you have in your family, you know, and that’s going to be different for each and every person
Steve 04:46
Sure, But and so we’re kind of going over things that can help keep us calm and risks to avoid well this is a risk to and they’re calling it tedium risk. What does that mean?
Neil Mager 04:58
Well, when you plan for it time one of the first things many households do is make a budget. Okay? Now this means is estimating how much money you need annually monthly. Now what I’ll see, though, Steve is a lot of folks will come in, and they’ll have listed out all of their monthly expenses, right? And those will be utilities taxes, car payments, mortgage payments, if they have things like that, right? Yeah. Now, I’ll give you an example, though. I had a woman come in not too long ago. And she had everything listed out. And she told me she needed $2,500 a month. Okay, okay. Well, her net income was $5,100 a month. And so, I said, Joy, do you save any of that money? You know, you bring in 5100, your monthly expenses are 2500. So, you have about a $2,600. Delta there? Do you save that money somewhere? And she goes, no, I use it. So, to me, Steve, what we have to be aware of is that she needs what $5,100? Exactly. So, as great as budgets are to do, what budgets are very easy to do is forget about a lot of things that you purchased around a year, you know, Birthday gifts, Christmas gifts. You know, baby shower,
Steve 06:25
Random grandkid gifts…
Neil Mager 06:26
or you have random- exactly. Exactly.
Steve 06:32
Well, and again, so as So basically, what you’re saying, I think is that we have to really include not only our needs, but our wants, in that budget,
Neil Mager 06:41
our wants for sure. I mean, you know, we’re in retirement, and every day Saturday. And when you’re in retirement, you have a lot of free time. And that free time is going to typically be used to do things that you like, and those things that you like, typically will cost money, like going out to dinner with your friends like golfing, like traveling, or all these leisure activities that could become expensive. So, you have to be mindful of those lifestyle expenses.
Steve 07:09
Sure. And one of the things that we talk about this every week deal, it’s and we talk about health care costs and how important it is to address that in your budget. And especially if you’re retiring before 65, you’ve got a health, you know, health care gap to fill. Once you get to Medicare. Again, Medicare is not the be all end all. I mean, it’s good. And it does really good job, but it doesn’t pay for everything.
Neil Mager 07:31
Yeah, I mean, a lot of people don’t even factor in the cost of Medicare, you know, Medicare’s $170 A month that’s comes directly out of your social security payment. So, when you’re starting to do your budget, have you factored that in for each and every one of you now, if your incomes higher than a certain threshold, then your Medicare premiums can actually go up. And so, you want to be aware of that as well. So, if you’re doing anything like Roth conversions, or anything like that, you want to be mindful of those increased costs of Medicare.
Steve 08:01
Hey, Neil, we’re up against the clock here. And we need to we need to take a quick break. So why don’t we invite folks to call right now and get that spot on your calendar?
Neil Mager 08:08
Yes, Steve, our right track financial review, it will teach you how to increase your probability of retiring when you want it maybe even sooner than you thought possible. It will show you how to make small changes to your investments that will lead to the biggest reductions in risk of losing money. Give you a plan for determining how much income you’ll need in retirement, and exactly how to get there. Steve, we’re going to focus on these five key areas with our right track Financial Review. Those are income, taxes, investments, health care, and legacy. But you got to do your part, you got to pick up the phone, give us a call, schedule your right track Financial Review.
Steve 08:47
800-656-8616 is the number you’re gonna get that comprehensive financial review, no cost, no obligation, you’re gonna see where you are today. But more importantly, you’ll find that you now have a roadmap that can help get you to where you need to be 800-656-8616 That’s 800-656-8616 Hey, come on up after the break. Can you have too much money in retirement? Probably not. But some retirees are finding they do have some excess cash even after their bills are paid and are debt free. When we come back. We’ve got some ways to share the wealth before you die, stick around.
Announcer 09:26
hurricanes, tornadoes, and fire. These are serious situations we plan in advance for the volatility of the market can be just as devastating. When a market correction does occur. There are strategies you can employ to bounce back. Call Brian Quaranta and his team at secure money advisors at 800-656-8616 or text key word Brian Q to 800-656-8616 we’ve made it easy folks. All you have to do is call or text the keyword Brian Q to 800 656 8616
Steve 10:06
Welcome back, everybody. This is on the money with secure money. Neil Mager is here for Brian Quaranta today, Brian is a busy guy. And it’s always good to talk with Neil. Neil is a fiduciary. He is a senior advisor at secure money advisors, by the way, that website, secure money advisors.com. So, we were talking about having too much money in retirement. You were just talking about that in the last site. But Neil, where you talk about like one thing who had, you know, she was she had, this was what her budget was, but then she had this much left over? Well, yeah, what a good problem to have. Right?
Neil Mager 10:38
That’s a good problem to have. We all want too much money in retirement, right? Of course. That’s the number one goal. And believe it or not, we do see it often. You know, a lot of times people are still coming in, they have really great pensions, they have two really nice Social Security checks. Maybe they have two pensions. So, we do see it. And they’re often looking for strategies, to how do we actually now that we have a plan in place a financial plan in place, where we know with the right amount of predictability and success, that we are going to be very comfortable, even if bad things happen to us in retirement? Sure. And those things come up that we have peace of mind in this plan. And so what are the options?
Steve 11:30
That’s an option. We’ll give it away. Right? Away. Little Red Hot Chili Peppers, sort of… I love it. I love that. But that’s true. I mean, we can I mean, that is something that we can legitimately do and make a difference.
Neil Mager 11:48
Yeah, I mean, and that’s what a lot of people are saying, you know, when you start to think about, okay, what are the options for me, as I have some pretax money, potentially, that I don’t really need, what would be my options, and giving it away, gifting your money to your family to your children, is a great way to do it. Because people say that say to me all the time, you know, listen, Neil, I want to see my kid just moved into a new house. And we want to help them because they need their basement finished, or they need a deck on their house. And we’d love to gift them some money. And not only that, but they have a young growing family. And we want to see how they use the money. And we want to understand how they would appreciate the money. So, you know, makes them happy to give their money to their, to their children, because, you know, they know it can be hard when you start just start out. Sure. And so, giving away, you got the ability to give $16,000 per person to you know, if you could give $16,000 to your son, your spouse could give $16,000 to her son, and then you have the ability to give it to their spouse if you chose another $32,000. So yeah, I mean, that’s a really great way giving it away sure it seeing how they use it and are able to, to make decisions with the money.
Steve 13:09
I like it. I like this idea, too, but gift, a Roth IRA to your grandkids, now we’re talking about a 529 plan, too. But I like this idea of gifting them a Roth, I mean, what a great way to incentivize them as they get older.
Neil Mager 13:23
Yeah, for sure. And I have a lot of clients that does not necessarily with their grandchildren, because a lot of their grandchildren, you know, maybe don’t have the earned income that’s required to contribute to a Roth IRA, but they will do with their children. So, Roth IRAs are a great way to teach about growing money, the world of investing, you pay the tax upfront with Roth IRAs, and they have income eligibility restrictions, but they grow tax free, and carry no required minimum distribution in the future. So, I have clients that do this, where, you know, maybe they feel that their son or daughter has, you know, gone through some tough times and right now aren’t able to save for their retirement. And they know that their son or daughter isn’t going to have a pension when they get older. And they’d like to help. And so, what they do is they contribute to a Roth IRA and that child’s name, up to $6,000 with the equivalent amount to their annual taxable earnings, whatever’s less. And it’s a really great way to say here, here’s, here’s how we’re going to help you. We’re going to put this money in there, you’re not going to touch it for till retirement age 59 and a half. So, it’s a really great way to help out as well. All right, so strategy.
Steve 14:41
And again, you’re saying that that’s a pretty common thing that you help people do. Very common, because there is there are some technicalities where I mean, if it’s a, you know, somebody that’s under 18, and all of that, you’ve got to set up certain accounts and that kind of thing, but you take care of all that.
Neil Mager 14:55
That’s what we’re here to help with.
Steve 14:57
All right. (800) 656-8616 months If we piqued your interest, one of the other things we can do in terms of excess money, investing in a 529 plan is, is that a good idea? And are they? Are they a good thing?
Neil Mager 15:11
Yeah, I mean, investing in a child’s education is one of the most wonderful things a parent or grandparent could do. 529 plans are state run, there are tax advantaged accounts that allow you to save for your child’s college education. There are tax savvy tools, you know, I utilize them for my kids. And the reason is, is, you know, there are some minor disadvantages that you are penalized if your child doesn’t use them for higher education. But that higher education can be a number of different things. So, you should be able to figure out how to utilize them without penalty. And I utilize them for my children, because I want my children to be pushed into thinking that education is important. And that’s what mom and dad are helping you do. And we’re we want to help you create that path. Sure.
Steve 16:01
And every like you said they’re state run. So, every state’s a little bit different. I’m sure you’re well aware of what’s going on what’s going on in your world. Yep. For folks. All right. So, all the things that we can do. Let’s talk about I bonds and I’m hearing a little bit more about I bonds these days.
Neil Mager 16:16
Yeah, everybody’s in the I bonds right now due to sky high inflation. Roller coaster stock market trends. US government backed I bonds are a very popular choice right now for investors designed to protect your money from inflation. That’s what the I stands for. And because inflation is so high, the current I savings bond rate is 9.62%
Steve 16:39
800-656-8616. Neil, I mean, we’re up against the clock already. Let’s go ahead and invite folks to call get on the calendar and come on in and have the conversation.
Neil Mager 16:48
Yeah, folks, our Right Track Financial Review goes through the five key areas of financial planning when you’re in that retirement stage. And they what we focus on is income planning, tax planning, investment planning, health care planning, and legacy planning. Our right track report will teach you how to increase your probability of retiring when you want, it may be even sooner than you thought possible, it’s going to show you how to make small changes to your investments that will lead to big reductions in risk. I’ll give you a plan for determining exactly how much income you’ll need in retirement, and exactly how to get there. Folks, don’t delay, we’re only offering this the first 10 callers our Right Track Financial Review
Steve 17:28
800-656-8616 10 callers we’re looking for, you’re gonna get the comprehensive financial review, you’ll see Yep, this is where you are today. But more importantly, you’re going to find that you have a roadmap that can help get you to where you need to be 800-656-8616. Again, 800-656-8616, we’re going to take a quick break, I’ll remind everybody coming up in the next segment, we’ve got yours, we’ve spent years building up that balance in our 401k. But what happens after we retire when we come back, we’re gonna go over some choices of what you can do with that hefty 401k.
Announcer 18:07
He’s letting the clock run out on his social security at age 70, for maximum benefits. And here comes the Roth conversion. He’s got some outstanding coaching with that lifetime income plan. He’s created his own pension as well. And it looks like he’s going to go All! The! Way! Play your best retirement game call Brian Q 800-656-8616, or text Brian Q to 800-656-8616 Call or text Brian Q to 800-656-8616.
Steve 18:40
And we are back on the money with secure money and deal major is here. Neil, of course, is a fiduciary and independent advisor with secure money advisors. And this is I mean, boy, the stuff we went through this time, Neil is just amazing. One of the things we didn’t touch on in the last segment when we talking about your 401k in that is required minimum distributions RMDs we’ve got that’s that’s a big part of this whole thing.
Neil Mager 19:07
Yeah, the big old RMD, you know, at the age of 72, all of your pretax money that you have in retirement accounts is subject to having to be starting to come out of your accounts. And for some folks that have saved a lot of money and then have a lot of pretax money. This can become a real headache. The initial year you divide by 27.4, you add up all of your retirement accounts divided by 27.4. And that is the amount that you’re required to take out of your accounts. Now, Steve, what types of things can what types of issues can be brought by that while you might jump into a higher tax bracket, that’s for one, your Medicare premiums might go up because of this required minimum distribution. So those are two things that nobody wants. A lot of good planning can help alleviate both of those situations, though.
Steve 20:03
Sure. Well, then again, it’s all about the plan and RMDs are I know are discussions that you have all the time. In fact, we’ve got a question here from Brian, about RMDs. He’s asking, Do I have to take RMDs from a tax-free Roth 401? K? That’s a good question.
Neil Mager 20:20
Well, Brian, that’s a really good question. And the answer is actually, yes, believe it, but you just said, right. The required minimum distribute distribution amount is based on your entire 401 K balance, including any designated Roth accounts. That’s different from the rules for Roth IRA. So,
with a Roth IRA, you do not have to take a withdrawal. But with a Roth 401K, they are subject to RMDs. So that that was a really good question, Brian. I bet you a lot of viewers, listeners did not know the answer to that. But yes, it is in a 401K
Steve 20:58
and a Roth 401. K. Correct.
Neil Mager 21:01
Steve, before we move on, I wanted to tell you about something interesting that I just did yesterday. So, I had a client who was 74, okay, and he gives a lot of money each and every year to his church. Okay. And so, what we’re doing with his required minimum distribution is the portion that he gives to His church, he’s able to do what’s called a qualified charitable distribution. So, with the money that he gives to His church, we’re going to send that money directly from the IRA, to the charitable organization, which in this case, is the church. And because he never touches it, he’s actually not going to have to pay taxes on that money. Wow. So, if you send the money directly to the charitable organization, you will not have to pay taxes on it. So, when they would with the standard deduction? That’s a pretty important little thing to consider. Yeah, absolutely.
Steve 22:00
800-656-8616. All right. Let’s go to Betsy. I liked this question. Betsy says I’ve recently retired at 67. And she’s waited her whole life, she says to take a trip around the world. Betsy says she spent $90,000 on a cruise to see all seven continents in nine months. However, she says I’m a little concerned, given the potential economic crisis. Should I cancel my dream vacation?
Neil Mager 22:26
Oh, my goodness,
Steve 22:27
that’s a tough problem to have like, yeah.
Neil Mager 22:31
It’s a tough problem to have for sure. I’m not telling Betsy to cancel or vacation, that’s for sure. No, I get it, though. I get it. There’s a lot of concern. Right now. There’s a lot of unrest with everything that’s happening. But I would tell you this, Betsy, if you’re working with a good financial group, and you’ve laid out a plan to spend $90,000 on a cruise to me, it doesn’t really matter what’s happening when we lay out and build the plan for folks. We put bad things in that plan, and we anticipate them, and we know that bad things will happen. So, this should not stop you from traveling. As long as you’ve built out the plan, and you’re comfortable with the plan that you and your retirement planner have built.
Steve 23:11
All right. Well, there you go. Betsy. What that’d be a heck of a cruise, wouldn’t it? Nine months, Yeah.
Neil Mager 23:16
Maybe we can join Betsy.
Steve 23:19
Yeah, exactly. Let’s see, we got time for another one here. Let’s go to Mitchell, Mitchell says I’ve been dealing with an advisor for years. And lately, I believe he has me at too much risk right now. I’m 61. I’m about six years away from retirement. Do I need to look at someone else? So it will not have me at so much risk?
Neil Mager 23:40
Yeah, Mitchell, I you know, that’s why we offer the complimentary Racetrack financial review, it’s truly to get a second opinion on what you’re currently doing. A lot of people have been with advisors for a long, long time, and they’re not sure. You know, maybe as you get to 55, 60, 65 years old, if, if that advisor is the right person to lead them in retirement, and it sounds like Mitchell could use a second opinion. And the second opinion never hurts, and you can’t get it from, you know, the person that’s leading you right now, I mean, that’s not going to be a good way to get a second opinion. So, what I would suggest is, give the office a call, take advantage of our right track financial review, that’s totally complimentary. We can do a review of your portfolio. But also, what we’re going to talk about with you, Michel are those five key areas of retirement planning. And I think when we talk you through some of those things are probably going to open your eyes on a lot more that you probably never discussed with your current advisor. So, I think it would be really valuable for you to pick up the phone.
Steve 24:40
All right, then again, folks, that number is 800-656-8616. Make the call while you’re thinking of it today. And Neil, we got to wrap this thing up. Let’s go ahead and invite folks to call one last time.
Neil Mager 24:52
All right, Steve, our right track financial review, totally complimentary. For the first time callers. It’s going to teach you how to increase your problem. ability of retiring when you want, and it may be sooner than you even thought possible. It’s going to show you how to make small changes to your investments that will lead to big reductions in risk. It’s going to give you a plan for determining exactly how much income you’ll need in retirement and exactly how to get there. The focus is going to be on the five key areas of retirement planning, income taxes, investments, health care, Legacy planning, you got to do your part. It’s a complimentary financial review our right track financial review, pick up the phone, give us a call and get on our schedule.
Steve 25:31
played 800 656 8616. You heard Neil the next 10 callers are going to get that comprehensive financial review, and you’ll see where you are today. But what’s important is you’ll find in your hand, a roadmap, it’s a guide that can bring you or help get you to where you need to be in retirement. 800-656-8616 again, 800-656-8616 Neil, as always, a pleasure to be here and chat with you because we cover so much ground and it’s really good stuff.
Neil Mager 25:59
Yeah, Steve, great talk. I appreciate you having me on today.
Steve 26:03
And we certainly appreciate everybody listening as well. We’re gonna come back next week with new questions and topics and more right here On the Money with Secure Money.
Announcer 26:17
Investment Advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor. Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the use of drip information. Discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.
