RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:00:01]
ANNOUNCER: You’ve found it. It’s your safer place for retirement planning. Prepare to be coddled in pure fiduciary goodness with your host and president of Decker Retirement Planning, Mike Decker. This is Safer Retirement Radio. If you’re in or near retirement listen up and learn about a math-based, principle-based approach to retirement that is designed to help you enjoy a safer retirement. These strategies are to help protect and grow what you’ve saved and live the life you want today. So, grab a pen because your safer path to retirement planning starts now.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:00:37]
MIKE: Welcome everyone, to Safer Retirement Radio, where you get the transparency that you deserve. I’m back again, Mike Decker, your host from Decker Retirement Planning, President over here, and I’ve got my panel with me today. I love bringing my panel here, Cameron Archibald for the Enforce side of the company and Josh Hunsaker from the New Business side, the architects of the company. Josh, Cameron, thank you for joining me on the show today.
JOSH: Thanks, Mike.
CAMERON: Oh, it’s great to be on again. Love the show.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:01:03]
MIKE: So, today we’re talking about a number of different topics. One, is the market making you nervous? If so, there’s a way to help calm those nerves by simply planning a better, or putting together a better plan that gives you more transparency, more flexibility and more control. We’ll be talking specifically about flexibility for the majority of the program and how you can have flexibility, but not be giving up in a willy-nilly dangerous situation and then we’re also gonna be talking about the gifts. It’s a holiday season coming up. What’s appropriate? What’s not?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:01:38]
MIKE: We’re not here to cast judgment we’re just here to assess the difference between a gift that you want to give versus a bleeding heart gift of taking care of kids that, may slowly be destroying your retirement plan. And there’s a very big difference there. We’re gonna walk through the distinction as well. And then we’re gonna talk about, at the beginning here, I want to start with taxes. We all pay them, hopefully. Anyone that says, “Oh, I can have you avoid taxes,” please [LAUGH] raise that red flag and promptly walk out the door. You don’t mess with the IRS.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:02:15]
MIKE: There’s about two or three tax minimization strategies that are still out there that are okay to use with the IRS, but many, many Americans today are not utilizing them, and I don’t know why. Quite frankly, these are incredible strategies that can save. We’ve had a couple of clients save seven figures on tax minimization strategies. So, we’ll talk more about that here at the beginning of the show and then ease into building the right retirement. But, before we get started, I do want to give a shout out to our website. Our marketers over here at Decker Retirement Planning have done a great job putting content together for you to be able to read and continue your research for retirement planning.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:02:58]
MIKE: So, go to deckerretirmentplanning.com articles, e-books, books our books, they’re about 20 bucks online on Amazon, but if you go to our website we’re offering them for free right now. The Decker Approach: A Common Sense Defense to Retirement Planning. And, in a week we’re gonna be releasing a Safer Retirement for the Engineer. All you Boeing Engineers listening up right now, I’ll tell you what, that book is gonna be right for you. We’ve also got, A Safer Retirement for the Hard Working American, A Safer Retirement for the Business Professional, a few other books that we’re releasing over the next two weeks. You can get ‘em all for free at decekerretirmentplanning.com.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:03:37]
MIKE: And this show, by the way, is also available at decerkretirementplanning.com as well as well, SoundCloud, iTunes, wherever you get your podcasts. A lot of our listeners are migrating to the podcast side of things because you can listen to this great content, and I’m biased, I think it’s pretty great. But, we do speak a little differently. But, you can get it at your own convenience every week via iTunes, Google Play, wherever you get your podcasts.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:04:02]
MIKE: All right. [SIGHS] Josh, Cameron, are you guys ready to dive in?
JOSH: Yeah, let’s do it.
MIKE: Okay. And, by the way, for all you listening right here, if you hear something you like and you want to talk more about it, at no cost to you, you can call 833-707-3030, write that number down, 833-707-3030. If you’re driving don’t write it down. You’re driving. Just go to the website, deckerretirementplanning.com. You can click on the bottom, get started. It will count all the same. But, let’s talk about taxes.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:04:36]
MIKE: Now, I’m gonna give a little question here, gonna pause, I’ll give some hints. Let’s see if you can catch it, a fun little game we’re gonna start out with. 1978 was a big year for what? Has to do with your taxes, let me give you another hint, Safer Retirement Radio listeners, Revenue Act, ring any bells? The 401K was accidentally invented, so to speak, and that’s by speculation and interpretation of how things rolled out in 1978.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:05:08]
MIKE: So, in the early 1980’s all the way through the ‘90’s CPA, financial professionals were saying, “Oh, just stop paying taxes, take what you need for your income and fill up your 401K. You’re deferring your taxes. You’re gonna be just fine.” Huh. [LAUGH] Well, that’s all fine and dandy until your entire retirement plan is IRA or 401K assets. How can you defer your income if it’s all in a qualified account like that? Just put in that perspective. And, Josh, Cameron, chime in here. You’ve seen a lot of different plans.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:05:48]
MIKE: If your retirement plan is 100 percent qualified traditional IRA assets or in a 401K, do you think you’re able to pull money out of that without paying taxes? And if your retirement income needs to be the same or 20 percent more than the income you’re earning at work, which is an average that we’re seeing across the nation. Now, some people, they earn a significantly a more amount of money than they would need in retirement. Those are unique situations at the end of the career. But, for most people, they want to earn about the same or maybe 20 percent more than what they’re currently earning in retirement.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:06:27]
MIKE: How are you minimizing taxes when you’re gonna have to pay more taxes because you’re taking more income from qualified accounts that are charged with an income tax? Washington State you might be you might be able to pass and other states that don’t have your income tax for the state, that’s fine, but we’re all subject to the federal tax.
JOSH: Yeah, this comes up all the time in designing the different distribution plans for clients. Clients come in the door and they’re in a pretty good financial situation and they have a lot socked away for retirement, but it’s all in a 401K, all pre-tax. Some of ‘em have a little bit of Roth, but generally, it’s all in the IRA.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:07:08]
JOSH: That’s not necessarily a bad thing, but it is something that you have to consider when you’re putting the plan together. You can’t just assume that it’s all gonna work out without some serious planning for it.
MIKE: Well, and this is the big part here, is I’ll think about it later. That doesn’t work. You don’t go on a long hike, I remember when we went, Boy Scouts years ago, and I was a Boy Scout, Eagle Scout, got it when I was 14 years old, did it real fast. Anyway. We’re going through Glacier National Park. Do you think you’re gonna pull up to Glacier National Park pack half way through, pull up the map and say, “All right, what are we doing the rest of the time?”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:07:49]
MIKE: We’ve gotten to the highest peak of Glacier National Park that we wanted to get to, now let’s figure out how we want to get down. Does that make any sense? No, but I’m not blaming you, Retirement Radio Listener right now. I’m not blaming you for that, and the reason why is you were doing what you were told by your financial professionals and I’m willing to bet they were not pure bread fiduciaries. It was a short sighted decision, and I can’t help what you’ve already done, but we can help you proceed in an appropriate manner so we can get rid of this potential catastrophe that a lot of retirees are experiencing, especially every December when they pull their RMDs and it’s starting to tank the market every December.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:08:30]
JOSH: Can I draw a quick parallel here?
MIKE: Sure.
JOSH: All right, when I was a kid we’d go on vacation every couple of years or something like that and it was actually some of the most stressful times of my life, going on vacation as a kid.
MIKE: [LAUGH]
JOSH: Because my mom doesn’t plan more than about an hour ahead. So, we… [LAUGH]
MIKE: Oh, oh, my gosh.
JOSH: There were times we would drive out of town with not really a place to stay and just figure, “Well, we’ll figure, we’ll find a place when we get there.”
MIKE: Mm-hmm.
JOSH: And end up staying in some pretty run down motels and things like that. It is deferring is not the same as, “Think about it later.” It’s a different concept.
MIKE: Mm-hmm.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:09:12]
JOSH: And a lot of people defer their taxes saying, “I’m gonna think about it later,” but in reality, you can defer it and that’s great. It’s gonna help the growth. But, it needs to be planned for. You can’t go on vacation without a plan.
MIKE: No. And people say planning the vacation’s more relaxing than the actual vacation, well, why would you even go? Let’s just spend our time planning vacations. Let’s just spend our time planning retirements, thinking about the golden years, thinking about the bucket list. Actually, this is kind of coming true. People are planning for their retirements, but they’re not actually going into the retirements and I think on the sub-cortical level that they just know their plan isn’t gonna work.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:09:52]
MIKE: But, it’s the wishful thinking and the fun thought that makes them happy. Just throwing it out there. It doesn’t have to be there. And that’s the point of this show. That’s the point of our content on our site, deckerretirementplanning.com. That’s the point of our introductory visits, to get to know you at no cost to you, to help ease these concerns. Let’s talk right now about the three different ways, right now, that you can make a huge tax difference in your retirement.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:10:23]
MIKE: If you have 30 percent nonqualified assets, for example, and 70 percent in IRA or 401K assets, we’re gonna plan differently than if you had 100 percent in IRA assets or if you had 50/50. So, my disclaimer out is everyone is so different, please understand these are over generalizations of what you could do in retirement and preparation to minimize your tax burdens. Now let’s just set the stage real quick, debt’s all time high, taxes are historically low. What do you think’s gonna happen in the future? The…
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:10:59]
CAMERON: You know, there’s almost only one answer there and it kind of has to go back to without a distribution plan, a lot of clients, as they’re approaching their retirement years, they’re seeing this number in their 401K’s, or other pre-tax accounts go up and up and they’re thinking that sounds like a good number to retire on, right?
MIKE: Oh yeah.
CAMERON: They don’t have the figures. They don’t think about, “Okay, this is all pre-tax, not only am I gonna get taxed, you know, this year as I pull, but it’s gonna keep growing tax deferred for the next 20, maybe 30 years into retirement, what does that tax situation look like?”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:11:37]
MIKE: Yeah, and well, can we all agree, and this just goes against our human nature on taxes. Can we all agree that maybe it’s okay to pay a little bit more in taxes today so you don’t pay a lot more later on in the future? I think we can all agree that may be a good idea. So, hear me out, here’s, well, first off, let’s just do a tax efficiency real quick. All of you that have a 1040 right now, if you’re, check your 1040 and make sure you’re not paying on the dividends that you’re receiving. They’re getting reinvested as income. This happens on your non-qualified assets.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:12:16]
MIKE: If you have a non-qualified asset you’re paying taxes on dividend on your 1040 and you can check it out. It’s lines two and three. Nice and easy. Have that investment go into a qualified asset so you can reinvest those dividends and not pay taxes on income that you’re not receiving. Let’s just say what it is. You can do that quickly. Look on your 1040 lines two and three and make that quick adjustment. There’s your freebie right now, 30 seconds, tax minimization strategy that saves a lot of money. Let’s go to number two. Should we go to number two?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:12:49]
MIKE: 55 years old to 60 years old you can start preparing how your assets are gonna be, but you can’t really touch your IRA assets until 59 and a half. So, all of you that are 55 to 60 years old, this is one you want to start preparing, of who’s gonna do what? When you play chess you’re thinking 10 moves ahead. That’s how the good chess players play. Josh, it sounds like your mother when she went on a road trip was playing one move ahead, which is why it could be a little chaotic.
JOSH: I think she thought about her moves after she made ‘em actually.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:13:25]
MIKE: [LAUGH] Oh, okay. We don’t want to do that. 55 to 60 years old, what I’m about to tell you, what we want to do is when you come in, to set the stage for what I’m about to tell you for the 60 year olds and on. From 60 to 70 years old, you have access to pull income from your IRA assets. How you do that is gonna be critical. Now, can we all agree, and I apologize for being an over simplification here, but can we all agree that growing tax free is pretty neat? I think we can all get behind that. It’s a wonderful opportunity, thank you government, for giving us a qualified plan to be able to do so. And there’s really two when it comes down to it, ignoring all the other one offs.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:14:06]
MIKE: Traditional IRA, which grows tax free, but pays income tax on the way out, or Roth IRA, which grows tax free, pays tax free and goes to your beneficiaries’ tax free. Okay. Let’s set the stage here. You’re 60 years old, you want to retire at 67 years old because that’s when you’re also planning to take your social security, which we can disagree or agree on. That’s a whole nother topic for another time. 60 years old to 67 years old, you have seven years that you can re-convert IRA asset to Roth IRA assets slowly, bit by bit.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:14:47]
MIKE: What does this do for you? Well, it does a number of things. One, your assets are gonna grow tax free and distribute tax free, so in future tax years, when you’re 75 or 80 years old you’re taking that income as tax free income and you convert it at a historically lower tax environment than they way things look like they’re going, which is a future high tax environment. We’re being smart about this. The assets are gonna grow, compound the same. It’s the same investments, but we want to position things in a way that is prepared for the future.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:15:24]
MIKE: Remember, CPAs are historians. Financial professionals are not fortune tellers, but we’re here to help predict and help prepare for the future, whatever may come. The second part that’s absolutely critical is, and we’ve got a client, they’ve got 13 million dollars up in Washington State. They came to us at 73 years old. They were obligated to be in the highest tax bracket because of required minimum distributions, RMDs. In December, this is a popular conversation, Cameron you get these request often from clients who haven’t satisfied them and didn’t take our advice on taking them throughout their income. It happens. That’s fine. We’re here to help, not to criticize.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:16:09]
MIKE: But, when it comes down to your RMDs, the big question is, “Well, do you convert all of your IRA assets into Roth or non-qualified so you don’t have any RMDs?” No, no, no, no. Absolutes are dangerous, but there is a mathematical number that we can calculate depending on your spread of qualified and non-qualified assets, taxable, nontaxable, that are able to let you have your RMD satisfied within your income and keep you at the lowest tax rate. Who would want that? Everyone.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:16:48]
MIKE: Why would you not want to put yourself in a situation where you’re gonna be in the highest tax bracket required every year by the government regulations of RMDs?
CAMERON: You know? There’s one thing that’s unavoidable here is that Uncle Sam is going to get his cut. Like, you talked earlier about, you know, you can tax defer, but at the end of the day, whether, even if you pass away with pre-tax funds, your beneficiaries will end up paying those taxes to Uncle Sam. So, the question is not if you pay taxes, but when and in what manner.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:17:22]
CAMERON: And what we’re trying to do here is help you pay them in the most efficient manner possible to help the growth of your retirement plan not be solely focused around these required minimum distributions and be able to grow in a more wholesome and beneficial way for you.
MIKE: And if you prescribe to the principles that govern proper retirement planning, which are, draw income from principle guaranteed sources, so you avoid sequence of return risk. That was the biggest reason, in our opinion, why 2008 was such a disaster for the retirees, because they’re taking very expensive income just to survive.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:18:00]
MIKE: Number two, diversify by purpose, not just by risk. Giving every investment deliberate purpose on what it’s intended to do. And then the third one is use a distribution plan, not the pie chart guesser. You can’t plan your income with a pie chart and you very well can’t plan your tax burdens with a pie chart, can’t happen. Can’t happen. So, when we talk about tax minimization strategies, and we’re talking about this one specifically, the IRA to Roth conversion, to do it mathematically, to give yourself control.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:18:32]
MIKE: If you’re someone that wants to be proactive as opposed to reactive, if you’re okay with the idea, if the math makes sense to convert some assets now over the next few years from your IRA to your Roth IRA, while we’re in historic low tax because you also can see that with national debt being all time high and with historically low tax rates. The taxes are gonna go up and you’d rather pay a lower tax rate than a later higher tax rate to prepare for your income later on as well as your beneficiaries burdens, call us right now, 833-707-3030.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:19:09]
MIKE: If you’re 55 or older and have at least 300,000 of assets saved up for retirement we would love to have that conversation with you. 833-707-3030, call right now or go to deckerretirementplanning.com and you can click on the Get Started button. And if you want to be very specific, you can do the Full Decker Review. We can talk about a safer distribution plan, but with taxes specifically. This is trademarked service called a Safer Tax Plan. The third one, we’ll talk about in just a second. I want to prepare for that, but right now IRA to Roth conversions.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:19:47]
MIKE: You want to talk about your 1040. You want to talk about your tax burdens. You want to see the way things are moving towards. Momentum in finance, your funds don’t just take a hard left turn. They’re going in a direction. There is some predictability of the momentum of your plans. Call us. We can give you some wonderful insight from a math-based, principle-based approach. That’s 833-707-3030. Call now or go to deckerretirementplanning.com and click on the button Get Started. At no cost to you, you can visit us in Seattle, in Kirkland, in Renton, all Washington offices, down town San Francisco. You can visit us in Utah.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:20:27]
MIKE: We’ve got a Lehi office, Salt Lake office. We’re here for you, Purebred fiduciaries. Let’s talk about the next one. This one, if it feels a little cryptic, it’s not because I’m trying to hide anything. It’s very delicate in that every person’s situation is extremely unique. But, we have a proprietary system of tax minimization under the Safer Tax Plan that is approved and okay by the IRS. They said, “Yeah,” all day long, “You’re good to go.”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:21:06]
MIKE: This does not have any issue with any of the regulations. There’s no workarounds. There’s no smoke in mirrors. It is straight approved and appropriate with the IRS, but saves people six to seven figures, yes, seven, seven figures, for some people in retirement. This Safer Tax Plan, this minimization strategy is designed to take the burdens of your taxes off, either completely or partially throughout retirement so you can be taking, for some clients, gross income for the rest of your life.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:21:46]
MIKE: That’s pretty substantial. How we do it is we have a tax buffer, a tax, some people call it, we had a client call it a tax vacuum ‘cause it sucks up all the taxes and throws ‘em away. It doesn’t really throw ‘em away. It’s paid for, but there’s certain accounts that we can use, depending on your suitability and which way you want to structure it. They’re designed to grow and absorb the taxes, still pay the taxes, but grow and offset that so you can take gross income, or near gross income, depending on your qualified and non-qualified split for life.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:22:26]
MIKE: We did a special event at Ruth’s Chris in Salt Lake a few weeks ago on this very topic. 100 percent of the people in that room came in for the free dinner, just saying how it is, and that’s okay. We do dinner events. 100 percent of the room openly admitted they were pleasantly surprised and they have all come in to visit with us because no other financial professional is doing this, at least to our knowledge.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:22:58]
MIKE: And we’ve gone through some actuaries. We’ve gone through a few networked people and privately vetted it from other third parties to make sure it was all Kosher. What we’re talking about here is incredible, a Safer Tax Plan. If you want to take us up on that or see what it is, and frankly, it really works best for those who have a million dollars or more in their retirement assets. If you have 500 to 700,000 or so, we are welcome to talk to you about it. We’re not gonna hold any information from you.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:23:33]
MIKE: What we’ve seen, though, is for the higher net worth individuals, this is one of the, actually I think it’s the highest or the most important aspect of any retirement plan because of how many taxes it saves and the burdens that it relieves from. Call us at 833-707-3030 to schedule a visit to learn more or you can go to deckerretirementplanning.com and click on the button Get Started and sign up for our Safer Tax Plan. We would love to have an open conversation with you, pull back the curtain and as the show’s motto is, get you the transparency that you deserve.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:24:10]
JOSH: Just in reference to that, I remember the first time we looked at that new strategy and just thinking, “I can’t believe nobody else has done this yet. I can’t believe how incredible this works in just about any circumstance that fits into it.” It just it’s an incredible strategy that we’ve come up with her.
MIKE: Yeah, the downside, it doesn’t work for everyone. I don’t want to promise that this is some magic pill that cures all. No. It does not work for everyone. But, the majority of people that we’ve had the conversation with, it made sense for them and they wanted to proceed.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:24:52]
MIKE: So, I don’t want to come off as some guy on the radio or podcast that you’re list saying it’s a cure all. It is not. Everyone’s environments of their financial environment is different, but every person that’s come in, that has heard about it is pleasantly surprised at the opportunities that are available and every person’s been able to minimize their taxes significantly by it. The difference is some people can take all their income as gross and some people cannot. What you have done, I can’t help, but how you proceed, I can walk every step of the way with you. That’s why we’re like serapes. Right?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:25:31]
MIKE: You’ve climbed the mountain. How you got there, we applaud you. You’ve climbed Everest. Our job is to get you off of Everest without falling, without hurting yourself. That’s our job. That’s what retirement is and that’s why we’re here. A Safer Tax Plan. Call right now, 833-707-3030 or you can go to deckerretirementplanning.com and click on the button on the very bottom, Get Started. We’ll call you within one business day and schedule your time to have a complimentary review with one of our purebred fiduciaries. I’m gonna pivot now a little bit. Hard pivot right here, but we’ve got a lot of topics to discuss right now.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:26:09]
MIKE: I want to talk about the nerves that people are having with the markets right now. Oh my gosh. You turn on the news and you become depressed. And it’s not just about the Geopolitical environment. It’s not just about oversea affairs. It’s not just about rumors of war or whatever else is happening and the charade talks and blah, blah, blah. It’s the market too. It’s like they just keep layering on bad news and bad news because for some reason they think we like it. I don’t…wouldn’t it be nice to have a news channel that only told you good news?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:26:44]
MIKE: I bet you that would get the highest ratings because after all watching Fox, CNN, MSNBC, we just go, “Ah, this is heavy.” Flip the channel and hear about all the good things that are happening in the world. That would be nice.
JOSH: I think those are the Late Show and things like that. [LAUGH]
MIKE: Yeah, but there’s not much substance there. I mean, they’re playing games. They’re doing silly things.
JOSH: Right.
MIKE: Which is fun, but yeah. If nerves have got you in retirement, listen up because this next bit is specifically for you.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:27:19]
MIKE: When it comes to retirement the biggest questions there are two that I think all retirees face are one, can I retire? It’s the overall question. Is it gonna work? Once you step in, is it gonna work or am I gonna have to do a redo? Am I gonna have to go back to work? Am I gonna have to figure it out, change my lifestyle? There are so many unknowns. The first question, the over arching can I even retire is huge. The second question is if I can, what am I working with? How much can I draw from income? What’s the risk? What does it look like?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:27:59]
MIKE: Safer Retirement Radio listeners, would you argue that there is a more over arching pair of questions than that in retirement? If you do I’d call me, I’d love to hear it. We can incorporate it in the next radio show. But, I don’t think there’s two more important questions in retirement. That sums up the anxiety that most people have and anxiety is the assumption of the future and it’s very real. When you incorporate the principles that govern proper retirement planning, anxiety, as we’ve researched and as we’ve noticed with our own clients, goes significantly down to next to nothing.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:28:43]
MIKE: How is this happening? I’m gonna briefly explain again the principles that govern proper retirement planning and then Cameron. I know you had a story of one of our clients in Washington about this very topic and I’d love to hear how the conversation went. The first principle is to draw income from principle guaranteed sources. Frankly, we don’t care what principle guaranteed source it is. That’s up to you to decide. CDs, bonds, but not the Triple B corporate bonds that are looming dot disaster right now. Let’s be weary of those, folks.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:29:19]
MIKE: But, CDs, bonds if, there’s a lot of people that come through the office that have fixed index annuities, okay. We can work with that. But, all we care about is that you have assets coming from principle guaranteed sources. Why? Thank you for asking. The number one reason people destroy their retirement, based on the research suggests it’s from sequence of return risk. It’s the idea that you’re drawing income from fluctuating accounts, or risk assets that can go up or down and so, you compromise the gains in the up years and you accentuate the losses in the down years, like 2008.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:30:03]
MIKE: Or in 2000, 2001, 2002, woo, that was a slippery slope, three years in a row before we started to recover. Retirees, do you have three years you can sit on your assets and not take income, or one year that you could just not take income? Like, that’s not a situation that would be conducive to solving the very question, “Can I retire?” That’s why the first principle is here. Now, if you want to plan five years ahead, 10 years ahead, 20 years ahead, that’s up to you as long as you’re drawing income from principle guaranteed sources you’re avoiding sequence of return risk and you can sail through market crashes that tend to happen every seven to eight years.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:30:46]
MIKE: Had a little bit of a market crash last December. Are we gonna repeat it again this December? Experts are saying, “Yes.” I certainly hope not for the sake of this country, but if that’s the pin prick that starts the contagion for our next market crash, then so be it. We did it to ourselves. But, our clients can sail through it unaffected because they’re following the first principle that governs proper retirement planning. The second principle and I can go through it. Do you guys want to, I’ll explain it. I’m talking too much today, but, anyway.
JOSH: No, that’s fine.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:31:23]
MIKE: I guess that’s what happened when I did the show by myself for so long. [LAUGH] The second principle is to diversify by purpose, not just by risk. And let me just put a precedent out there. Why do we diversify by risk? It’s risk mitigation, finance 101. Don’t put all your eggs in one basket. And I think it’s interesting, most clients and not clients will use the S&P as the standard of excellence. If you beat the S & P they’re happy. If you don’t they’re sad.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:31:57]
MIKE: If we’re being completely objective, and I’m not recommending this, I’m just making a point here, it’s a one sided situation to where 85 percent of money managers can’t even keep up with the S&P on a year over year basis. It’s up in the 90’s if you look at it from a five year spread. If we’re being objective, and that’s your standard of excellence, we’ll just make sure your expectations are met every year and just invest everything into the S & P. I’m not recommending this. I’m just, in point and fact, the S&P’s diversified, right? 500 good stocks, even though five of them are actually what’s keeping the S&P up, but you know, whatever.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:32:38]
MIKE: That’s the metric we’re all using. No. In retirement we want to make sure we have consistent returns, not volatile returns. The S&P is a very volatile system. Sure, it does well and then it crashes and then it does well and then it crashes. I don’t know about you, but my retirement’s not gonna be a roller coaster like the S&P performance. But, I see the point. We want something that keep up with the markets. Fair. How do you go about that?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:33:11]
MIKE: Well, you’ve got some assets that are in principle guaranteed sources that can grow, they participate in the up, protect your assets in the down, but your retirement income isn’t affected. We’re diversifying by purpose. We’ve allocated some assets over there for that purpose. We’ve got some assets over on the other side for a risk. They can go down, they can go up. Let’s try and beat the S&P each year if that’s what you want to do. If you want to buy and hold that’s fine. You can do that, too. If you want to use what we use, which are two sided managers that are designed to make, or two sided models, these managers have built models that are designed to make money in up or down markets. They’ve averaged around 16 and a half percent since 2000. Great, let’s use it.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:33:55]
MIKE: Yeah, there are some managers that consistently do beat the S&P year over year on an average basis. If that’s the way you want to go that’s fine. Whatever you want to do, we’re neutral about the topic. We just want to make sure we are separating purpose so you have stability in retirement. And then the last one is the easy one. Make sure you’ve got some emergency cash on the side. Life happens. Roof goes out, storm hits, car breaks down. Just make sure we’ve got liquid cash that’s principle guaranteed, ready for those life situations. But, that’s the essence of the principle number two. Diversify by purpose, not just by risk.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:34:32]
MIKE: And then the third one, use a distribution plan, not a pie chart. The reason why is you can’t know your income with a pie chart. You can’t plan tax minimization strategies with a pie chart. It can’t be done. We have yet to meet someone who can accurately project through a pie chart a retirement plan. Has not happened yet. A distribution plan can do it.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:34:59]
MIKE: I wrote algorithms years ago that calculate down to the month net of tax how much you can spend for as long as you live and it lays it out with the first principles so you can see where your income is gonna come from, when it’s gonna come from those accounts and how much it’s gonna be. How many of you listening right now would like to know in 10 years what your monthly net income is projected to be? Would be nice, right? Wouldn’t it be nice too, to have a cost of inflation adjustment?
CAMERON: You…
MIKE: Cameron, you were saying?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:35:35]
CAMERON: No, it just brings a lot of peace to clients’ minds, you know? It just goes back to your principle that with a distribution plan you actually see, into the future, in that regard because we’re following the principles, not just because we hope, you know, that, that’s what’s gonna happen.
MIKE: These principles have never changed, yet how many people have changed their four percent to five percent then back down to three percent and then to four percent again and so on and so forth ‘cause the industry is sort of speculating whether it’s between two to five percent every year. I go to the conferences.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:36:10]
MIKE: I speak at some of these conferences and I tell them it’s ludicrous and they say, “Well, it’s just the way things are.” How does that make you feel? [LAUGH]
CAMERON: Well, it…
MIKE: I’m, a bit of a too much dooms day-er right now. But, this is the reality behind the curtain.
CAMERON: Well, no, and you’d made a point earlier that what are clients supposed to do in those years that they’re down. I mean, some of the advice you get is, “Yeah, just, you know, when the market is down just scale back your distributions.” So, you know, clients still have bills to pay. So, for three, four, seven years they’re supposed to just draw less and less hoping that their retirement, which is 100 percent in risk, will turn around?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:36:49]
CAMERON: I mean, that’s a lot to hope for.
JOSH: Especially when the market goes down 40 percent, does that mean you reduce your expenses by 40 percent for the next few years while it builds back up? It just…
CAMERON: You just call your, you know, the light bill company and say, “Hey, by the way, I only want to pay 40 percent of my bill this month. I hope that’s okay.” [LAUGH]
JOSH: I wish I could do that too, my water bill. Man, if I could just, “I only want to pay half my water bill this month, is that all right?”
CAMERON: Yeah, life’s just not like that, right?
MIKE: No, keep this in mind. Expenses are fixed. Income [LAUGH] is a variable for everyone that’s using a four percent rule pie chart assets allocation accumulation strategy to make distributions happen.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:37:30]
MIKE: That environment is set up for failure at some point. It’s a ticking time bomb in retirement. It’s what causes so much frustration and why when clients come over at first when they’re starting the planning process, when they come to that introductory visit anxiety is palpable about retirement because of this very issue. If income is variable and expenses are fixed what in the world do they do when the variable goes below fixed costs? That is a terrible situation, which is one of the very essence or purposes of why we are here.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:38:07]
MIKE: Cameron, can you talk about, you had a recent, exchange with one of our clients just about, she was watching the news, hearing the anxiety in her voice, what happened and, kind of the beginning of the call and then the end of the call, can you just kind of walk us through that?
CAMERON: You know? And it wasn’t all that recent. I mean, this was actually early last year when the market seemed to be in great health. So, yeah, it was a couple months before her annual review and she called me up and said, “I toss and turn all night worrying whenever the market changes or some bit of political news comes out. Are we still on track?”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:38:48]
CAMERON: You know? This was one of the questions you mentioned earlier that clients often want to know and it’s why it’s so good to check in every year. But sometimes even when clients are invested in a combination of largely principle guaranteed assets, with some market, investment, they can still get anxious about the market conditions even though logically that doesn’t make sense because they only have a small portion that are exposed to the market. Now, this market exposure is healthy for all retirement plans because we’re not retiring for five years. You know? We’re retiring for 20, 30, 40 years [LAUGH] in some cases.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:39:28]
CAMERON: And so, not only do you want to draw your assets from those principle guaranteed sources, but you also need some growth. Thankfully, you know, this client came in, for their annual review the next month and, you know, I was able to talk her through a few things on the phone that she saw and what I had seen was their plan was right on track. And really, the market fluctuations had affected their plan vastly less than she had anticipated because we went back to the principle of diversify by purpose not just by risk.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:40:06]
CAMERON: And it was pretty cool to see afterward she thought, “Oh, things didn’t hardly change at all.” You know? And it was kind of funny with the planner. I was like, “Yeah, that’s what we were saying.”
MIKE: Mm-hmm.
CAMERON: One of the, oh sorry, one of the biggest benefits to working with a financial professional, especially a purebred fiduciary is the ability of the planner to see the long term plan of retirement and sometimes help talk the client off the ledge for fear of the markets.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:40:35]
CAMERON: In addition, having a combination of principle guaranteed accounts with either, you know, some risk assets of your choosing or our proprietary two sided risk models can give clients like you the ability to sail through recessions or temporary market slumps or market jitters practically unaffected.
MIKE: It’s a beautiful thing when you implement principles that don’t change because of market conditions or the whims of politics and theories and all noise that’s out there. It’s almost like the financial industry wants to confuse you into submission of working with them. It shouldn’t be that way.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:41:14]
MIKE: It needs to be a situation to where you’re confident about your plan, the principles are intact so you can walk into the sunset without worries and enjoy the retirement that you want and that you’ve got a plan that you can understand. It doesn’t make sense for any individual to invest in a product or asset that they don’t actually understand how it works. And that’s just, I feel like it’s bullying at that point to say, “Oh, well, you should just do this.” Well, “Why?” “It’s good for you.”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:41:45]
MIKE: No. No, let’s get an education. Let’s understand it and let’s be very open and transparent about it. If you want to have these kinds of conversations, if you want to see how the principles that govern proper retirement planning, what they can do for you, go to decerkretirementplanning.com, click the button Get Started at the bottom. We would love to have an open conversation with you and your unique situation. You can also call us at 833-707-3030 now. We ask that you’re 5 or older. We’re here for retirement, not accumulation, but we’re here to help you enjoy a safer retirement.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:42:26]
MIKE: That number is 833-707-3030 or you can go to deckerretirementplanning.com and click on that button at the bottom of the page, Get Started for the Full Decker Review or, let us know, social security, a Safer Tax Plan, a Safer Distribution Plan, if you want to see safer investment options, those include the two sided models that we use that have averaged 16 and a half percent over the last years since 2000, or we can talk about other principle guaranteed options that are averaging around six, seven, eight percent, some even nine percent year over year and they’re principle guaranteed.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:43:09]
MIKE: Did you know you could get that from a principle guaranteed account? Most people don’t. We’d love to open up the books and let you know. We’ve got two guys full time in the back office researching the best products for you. How many other RIAs or independent practices are doing that for you? How many broker/dealers think that they’re gonna give you that kind of clarity? This is why a math-based, principle-based research firm like Decker Retirement Planning may be able to educate you in ways that you weren’t aware of.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:43:44]
MIKE: It’s not about who’s the smartest person in the room. It’s about setting you up for success in retirement. That’s 833-707-3030, or go to deckerretirementplanning.com. Let’s talk about the last topic here. We may not get to gift giving until the next week. But, and Josh, please do comment on this, ‘cause you’re on the team of the architects that work with the planners to build plans that can work in most all situations. There are three plans ultimately we can chalk up to all retirees. The first plan is what the majority of this country is unfortunately using and it’s the pie chart plan.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:44:24]
MIKE: It’s build for accumulation and people are trying to put this square peg in a round hole and use it for distribution. It’s all guessing. I mean, it’s super liquid, right? Great upside, great downside, [LAUGH] I mean, it is what it is. But, you’ve got great flexibility and when you’re down 30 or 40 percent, you know, by golly you still can change your investments. It flies in the face of the principles. It’s winging it in retirement. But, that’s an option.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:44:57]
MIKE: The other extreme, which is a fear based approach, oh my gosh, I can’t handle anything with the markets. I just want a self made pension. Those are called income annuities and sure if you want to average 1.8 percent annual return year over year for a life time guaranteed income to pay an insurance company to get your own money back that’s fine. If that is what makes you comfortable and lets you sleep at night that’s fine. But, these are very extremes on financial planning and you know how I feel about extremes. I hate ‘em, hate ‘em, except for mountain biking. That’s an extreme sport that I can appreciate.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:45:36]
CAMERON AND JOSH: [LAUGH]
MIKE: And skiing.
CAMERON: Mountain biking, skiing, rocking climbing, all those.
MIKE: Extreme activities are appropriate, but extreme finance is not. I’m putting my foot down there. [LAUGH] Okay. The middle ground of this, where you can have your cake and eat it too is a Safer Distribution Plan incorporating the principles that govern proper retirement planning. You’re capturing way more of the upside with principle guaranteed accounts than that dreadful 1.8 percent average return that we’re seeing across the industry right now.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:46:09]
MIKE: We’re looking at six, seven, eight, one account in particular I’m thinking of, has averaged nine percent principle guaranteed and yes, a lot of our clients actually like that product. Can you blame ‘em? Now, on the other side, you’ve got some risk. That’s fine. If it goes down you’ve got 20 years to make it back. If you want to use two sided models, they’re designed to make money in up or down markets. You have less risk. There still is risk there, but let’s be open about it. The purpose of balanced financial planning and having flexibility in your plan, using the principles here is to be able to make adjustments when, not if, but when life changes.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:46:50]
MIKE: Josh, I know you guys see these all the time, even in the planning process, life events happen. Do you have a story or some commentary on this important part, flexibility within a plan?
JOSH: Yeah, and maybe this is just kind of a peek behind the curtain of what we do with our newer clients. When they come in the door we sit down. There’s several times that they come through and meet with their planner before any triggers are pulled to get things really started. They really define their plans, get ‘em packed in and make sure that everything is the way they want it to be before we start really doing anything.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:47:28]
MIKE: Well, ready, fire, aim doesn’t work for financial planning.
JOSH: Right.
MIKE: A too [INAUDIBLE] close seems irresponsible.
JOSH: Yeah, exactly. And so, it’s usually several weeks process, getting the plan built before we actually start moving anything around. And then once assets start moving around it can take several weeks after that sometimes to get it all in place and exactly where the clients want it. And sometimes, you know, that’s a few months in some cases and things can happen during that time. And so, that’s actually something we see happen quite often.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:48:00]
JOSH: One guy came in. He got his plan in place. We put everything in and then he left his current job. I think he wanted to scale back his hours and just reduce what he was doing a little bit and he went into a newer job, made a little bit less money, but it was less stressful. And then that company downsized. He got laid off within six months of changing jobs. And so, now he’s kind of on the hunt for another job again. But, for him, it changed a little bit in his plan, but overall his plan stayed relatively the same. He’s not 59 and a half yet and most of his assets were qualified, so he’s not really able to jump start his plan quite yet.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:48:43]
JOSH: But, he’s able to find another job and kind of make it to that 59 and a half. But, the nice thing about his plan is he had socked away quite a bit of retirement savings and really laid the ground work for his retirement, so he didn’t really need to make any more contributions those last few years of working. So, he didn’t actually have to find a very high paying job. He could take something he enjoyed doing and do that for the next couple of years until he’s actually ready to retire, basically the day he turns 59 and a half.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:49:16]
JOSH: So, for him, it worked out quite well. He didn’t, I mean, I’m sure that’s a very stressful time, having to look for a new job. We’ve all had to do it. Especially later in life, I’m sure it’s even more stressful. But, in his case, he was able to look for a job, something that he enjoyed more for a couple of years and then he’s gonna enter retirement no problem.
CAMERON: You know, this is such an important topic to bring up Josh because this happens not only in the planning process, but I see it a lot more on the current client’s side where, you know, we set up these plans with the expectation that things will more or less go as planned. And we all know that life just doesn’t always happen like that.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:50:00]
CAMERON: The great part about our distribution plans is we can build in the flexibility and make changes on an annual basis based on your changing life situation. Some clients have fear that because we started one way and then things have changed after a year to, you know, my retirement is doomed and it’s usually the opposite. Usually it’s, hey, because of these other moves we can make, you know, your situation as relatively unaffected or at least it’s affected n a way that you can visualize and you can wrap your brain around the reality of your new life situation and see the math behind that.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:50:41]
CAMERON: And that’s really reassuring to a lot of our clients.
JOSH: Yeah, definitely. And it even goes, in this case, everything worked out great. You know? He’s a couple years away. He’s gonna retire just fine. It doesn’t always work out as picture perfect, but that’s one of the reasons why we build in the flexibility that we do into the plan. I remember the other day you talked to me about a client, Cameron, that came to us and said, “Well, I was gonna downsize my house and inject another 500,000 into the plan, but I’ve decided not to do that.” 500,000 dollars, that’s a big chunk of change. That’s going to change how the plan looks.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:51:18]
JOSH: The nice thing is we can be flexible. We can adjust in the plan. Because we’re math-based it doesn’t blow up. We adjust and say, “Okay, based on that, that’s great. You do exactly what you want to do, but here’s what that means in your plan.” And then he can make the decision of what he actually wants to do. We’ll provide the numbers. We provide the information. In most cases, we get it to work just fine and they can make whatever decisions they’d like to, but we provide the information and let them make the decisions that they want.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:51:49]
CAMERON: You know, and in his case, I believe it was more a preference to enjoying real estate investing and instead of investing, you know, more dollars into investments, he wanted to buy another rental property. And so…
JOSH: Which is great.
CAMERON: Yeah. Which was perfectly fine. The great part is because he understood the framework of the plan, you know, his planner understood the framework of the plan, we were able to do his annual review in a way that showed, you know, based on that decision, here is what this looks like, and the client was still perfectly happy. You know?
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:52:23]
CAMERON: A lot of this comes down to preferences and tolerance for risk or just, you know, preferences with what the client feels in market conditions or just, you know, hassle factor or whatever in different investments. They may want to change over time and we actually have the system to show them what that looks like on a net monthly income basis.
JOSH: Yeah. That’s fantastic. Just, there’s all kinds of stories that I can jump into as far as having to be flexible as far as the income plans go.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:52:56]
JOSH: In another case, we had a client that she sat down with us. She actually put her entire plan in place, the whole time saying, “The plan is to take my lump sum pension and then we’re going to incorporate that into the plan.” We said, “Great. That’s generally what we recommend for lump sum pensions or for pensions in general.”
MIKE: Well, we just, it’s math-based right now to have a pension in the current environment is similar to having an income annuity.
JOSH: Right.
MIKE: You’re paying, essentially the insurance company or a pension company to get your own money back and they hope you die before you break even so they don’t have to pay out the rest.
JOSH: Yeah. [LAUGH]
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:53:34]
MIKE: There are exceptions, though, to where the pension makes sense to keep. It’s just we run the numbers and let you decide.
JOSH: Right. And in this case, she had decided after everything was in place, she decided, “You know what? I’m gonna take the monthly distributions on the pension.” And, you know, that’s here decision. That’s fine. We were able to restructure the plan a little bit and make the adjustments. And we said, “Okay, here’s, if you want to take the monthly distributions, here’s what that looks like in your plan. You can make the decision if you’d like to, but here’s what it looks like.”
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:54:09]
JOSH: And it just kind of goes back into whenever people need to make those decisions, things happen in life, we can be flexible in the plans, especially if it’s income might go down a little bit, it might go up a little bit. But, we’ll provide the numbers and say, “Here’s what that looks like. Let us know what you’d like to do.”
MIKE: There’s something that comes to mind here as we’re kind of wrapping up the show is, we encourage flexibility. We may not use the pie chart, which is the ultimate flexible play. But, we not only encourage, but implement flexibility within the plan.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:54:44]
MIKE: We have people that come into our office, and this is what we hear from other financial professionals who are encouraging people to take a reverse mortgage so they can invest more of their assets because the mortgage rates are so bad. That’s your nest egg. That’s where you live. We should not. Please, not be using these dangerous tactics to get people a little bit more in commissions. It makes no sense, financially speaking, to do risky investment strategies like a reverse mortgage and, true story, reverse mortgage and invest in a bunch of high yield bonds.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:55:21]
MIKE: That’s code for junk bonds that are more risky than the reverse mortgage because the quote, pay off is better and will offset the reverse mortgage price. No. Where you live is your nest egg. It should not be a part of the plan. Locking up all of your assets into an income annuity, you might have a self made pension for life, but if your life changes you can’t change that. You’re stuck.
JOSH: Somebody a while back pointed out to me that with an income annuity, when you look at a life insurance company, the do income annuities. With a life insurance policy, they’re betting on you living.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:56:00]
JOSH: With an income annuity, they’re betting on you dying.
CAMERON: Yeah. [LAUGH]
JOSH: That’s really how it works. They give you this income, but once you die they keep the rest.
MIKE: So, and I’ll even throw this out there as a contrasting, and again, these are things we don’t get paid on, but shows the precedent of how things are happening. Rental real estate is very popular right now, great. Love rental real estate. It’s a great investment plan if you know what you’re doing. But, if you have an investment property you can still get out of it. You could sell the house if you want. It’s not your nest egg. You could keep the rental income. You could up the rent if you have new renters.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:56:38]
MIKE: You’ve got a lot of flexibility. You don’t have that kind of flexibility with an income annuity. Flexibility is key to any proper retirement plan. We’ve gotta wrap up the show here today. But, if you want to talk more about plan flexibility and incorporating the principles that govern proper retirement planning I hope you call us at 833-707-3030 now or go to deckerretirementplanning.com click on the button, “Get Started” and we’ll walk you through the prompts and call you within one business day so we can proceed in helping you plan a safer retirement. Cameron, Josh, thank you for joining us on the show today.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:57:13]
JOSH: Thanks, Mike. It’s been a pleasure.
CAMERON: Yeah, we loved the show today. Thanks, guys.
MIKE: Next week we’re gonna be talking about gifts and bleeding hearts, how your kids can help or hurt your retirement planning and how to approach that, especially in the holiday season as well as much more. Same time, same place on your radio show that you’re listening to right now as well as iTunes, Google Play Podcasts, it releases Friday mornings first thing, so you can get the first look of that, or transcriptions are available at deckerrirementplanning.com as well as a number of other articles, resources and books that are available for free at deckerretirementplanning.com so you can get the transparency that you deserve.
RR S3 E20 CRITICAL RETIREMENT FLEXIBILITY [00:57:52]
MIKE: I’m Mike Decker, host of the show with my panel here. Hope you’ve enjoyed yourself. Thank you so much for listening. We’ll talk to you soon.
