Speaker 1 0:01
The Gen X is next in line to retire, and for those who’ve been saving diligently, this moment isn’t about fear, it’s about focus. With the youngest Gen Xers now turning 60, the big question isn’t if they can retire, it’s how to do it right. We’ll talk about that and more today on Retire Smart Maryland Radio. Welcome
Announcer 0:23
in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:29
Welcome in to Retire Smart Maryland Radio. Your host is Prashant Sabapathi, and I tell you, folks, it’s always about the importance of being ready for retirement, having that path, having that map again, make sure you’re doing this, being proactive, not reactive. You can find Prashant at Elite Income Advisors. The website is a resource, Elite Income advisors.com He is an independent fiduciary, published author, fiscal health, retirement wealth, and a second book, Retire Abundantly. They’re headquartered Ellicott City satellite office in Annapolis. For your convenience, I’m Morgan Patrick. Just an absolute pleasure to jump on and have these discussions, but focus in on just the importance of being prepared, having the plan. And Prashant, as we always do, before we jump into our first discussion about Generation X, how was the week?
Speaker 1 1:19
The week’s been really fun. I’ll tell you, what it was kind of cool. A lot of our audience might know that just had a new baby that came into our lives a couple months ago, and it was kind of cool. I brought him around the office here to meet my team, and it was really cool just getting them, getting to bring him in, and seen the reactions from everyone, so it’s been a really special moment, but yeah, it’s been busy around the office, a lot of cool personal things going on. We’re actually doing an office expansion here at our headquarters here in Ellicott City, Columbia area. We’re adding on another couple 1000 square feet. We’ve hired a bunch of new people recently, both new advisors, new client support specialists, got a new director of first impressions recently, and so I just got to start by saying, thank you. You know, it’s like we try to do our part in putting as much content and free educational information out into the universe, and I think it’s been very well received by the community, and that’s really shown in the number of people that we’ve been able to help, the number of people that have attended our workshops, and by the way, those are people that, whether or not they become clients of Elite Income Advisors, they still give us tremendous feedback, and so I’m extremely grateful for the opportunity to do what we do, and as a result, we’ve been able to expand. We’ve just opened a new office in Annapolis, and so it’s been, it’s been a lot of fun. I gotta say, 10 years ago when we started this whole thing, I don’t think I ever dreamed it would grow into what it has grown into, and I think that is just a testament, not just to the work that my team does every single day, because I got some really good grinders here in my office that are always trying to get better as financial planners, but it’s also ultimately all about the clients and the people that come to visit with us, so it’s easy to lose sight of that. I’m very grateful to our community for giving us the opportunity to do what we do.
Speaker 2 3:24
I was just going to say, you hear stories that you know people are, you know, they’re concerned about their money, it’s very personal, and sometimes they reach out for some advice, and maybe that phone call isn’t returned, that appointment isn’t set. I love the way you described some of your, I guess, your new employees as first impressions. Yeah,
Speaker 2 3:43
talk a little bit about that, because it’s so important when people do reach out. And again, we’re going to have an opportunity for you to grab a complimentary appointment with the Elite Income Advisors at no cost, no obligation. But when they reach out, that first impression employee, it’s not like it’s going to take a week, it’s not going to take two weeks. I mean, they’re on it. That’s
Speaker 1 4:04
exactly right. Look, I think when you deal with things like your family, your health, and your money, I think it’s such an ultra personal type of interaction that people are looking for, and that is not lost on us. As much as our practice has grown, I always try to make sure that I never lose sight of the fact that we’re dealing with and impacting people’s real lives. I think it’s easy for advisors to just get caught up in the work, as it’s just a bunch of numbers on the page at the end of the day, but to me, I think it’s always really important that we deliver a first class experience to every single person that we try to come into contact with. By the way, those are people that are a great fit for us, even the people that are not a great fit for us. I try to make sure that when they leave our office they can say that they were treated. Correctly, with respect, that they got good, honest advice, no matter what their situation was, and hopefully that they feel better about what direction they should go, regardless of where in the planning process they are, and so that’s what we’re all about here, is trying to deliver a first class experience, and one thing I ask of all my clients when they become a client, because you know so much of working together, setting the appropriate expectations, and I always say to my clients when they’re just starting with us, if I ever don’t meet the expectation or the experience that you’ve gotten to when you became a client of ours. I invite people to let me know of that, and let our advisors know of that, because look, without clients, without people to work with, I’m out of a job, I don’t have a practice, and luckily, over the last 10 years, we’ve put client service at the forefront of everything that we do, and that goes so much further than just the traditional financial planning, it’s making sure that they understand that we understand that this is their real life that we’re talking about. So, it’s been very cool.
Speaker 2 6:10
Well, and I also want to shed some light. I received a picture earlier on in the day of a future employee of Elite Income Advisors, and I’ll just say, Prashant, you better dot your i’s and cross your t’s, because your two and a half month old son looks pretty good sitting in your chair with that microphone.
Speaker 1 6:26
Yeah, we, I took a picture of him sitting in, in the, in the radio chair with the microphone in front of him. And so, who knows if I’m lucky enough to still be here in 18 years, I think I might have found my replacement, but you know, it’s just.. it’s kind of a full circle moment, honestly. I mean, anyone who has kids is probably at some point felt that, and I’m certainly going through it now with my first kid, and it’s just really cool to be able to bring him in the office, expose him to really good people and what we do, and you know, I was listening to something earlier this morning, one of my, one of my mentors, I was having a meeting with him, and he told me that when he first started his job, he wanted the impression his kids had of work to be that work was a happy thing, not just the nine to five that he couldn’t wait to get away from, and so that’s what I hope I can bring to my kids one day, too, is that they should know that we love what we do here. I don’t feel like this is work to me, it just feels like I get to do something that helps people, that by the way, we make a really good living doing it. I’m super proud of that, and I hope that my kids and my clients understand how valuable that is, and how important that is to us, and we don’t take it very, very lightly at all. So, again, just kind of filled with gratitude in this first segment. I know this isn’t exactly what we wanted to, or what we plan to talk about, but I always like talking about it, but yeah, it’s been very cool. Morgan,
Speaker 2 8:03
yeah, do what you love, love what you do. When it’s, when it’s not hard to go into the office, because you know what you’re doing, you’re helping people,
Speaker 1 8:10
that’s right.
Speaker 2 8:10
And there’s so many different areas people are coming from, generations. We’re going to talk a little bit about Generation X. We’ll get to that coming up in segment number two, but let’s just open it up. We’ve got appointments. These are complimentary, no cost, no obligation. Just kind of walk us through it real quick.
Speaker 1 8:27
It’s just a conversation about your financial situation. Maybe there’s something that’s been kind of eating away at you with your retirement plan, whether it’s too much risk in the market, whether it’s the uncertainty surrounding whether or not your tax rate will be higher in retirement if you’re not sure how to deal with a long-term care health event or something like that. If there’s been something that’s eating at you, just give us a call. It’s 800-653-8404 It’s a free conversation with our team of licensed fiduciaries and retirement specialists. 800-653-8404
Speaker 2 9:00
is the phone number to schedule a complimentary visit today. I promise we’re going to talk Gen X coming back from the break. You’re locked in the Retire Smart Maryland Radio, Retire Smart Maryland Radio, your host Prashant Sabapathi. Elite Income Advisors, where you can find him. They’re headquartered, Ellicott City satellite office in Annapolis, independent fiduciary. Yes, he is. The website, a resource, Elite Income advisors.com Check it out, Elite Income advisors.com He’s published author, a couple of books to his credit, so far, Fiscal Health, Retirement, Wealth, and Retire Abundantly. I’m Morgan Patrick, and we promised you some Gen X conversation. So, here we go. They’ve long been called the forgotten middle child of the retirement conversation, kind of right in the middle, sandwiched between the boomer. Is the millennials, so we wanted to kind of give their due today, because you know saving got them to this point when you think about it, but planning is going to get them all the way through retirement, so we’re not forgetting about you Gen Xers. So, listen up. So, let’s just start with the big picture. How ready is Gen X for retirement?
Speaker 1 10:18
You know, I think the numbers tell a little bit of a mixed story here. The average Gen X household has around $150,000 saved for retirement in retirement savings, right? But many financial experts, I think, think that they’ll need closer to around a million, million and a half dollars to retire comfortably. The interesting thing is only 16% of Gen Xers say they actually feel very confident in their retirement readiness, and so one thing we know about a lot of our listeners, in particular, at least this is through the people that have come in to visit with us, what I’ve found is that a lot of them are really steady savers, so it’s not so much about catching up to get on track for retirement, it’s taking what you have saved and mapping it out in such a way that allows you the easiest or best path forward to to a retirement that is fulfilling and abundant, and so it’s not so much about how do I accumulate the most amount of money, it’s about how do I take what I’ve accumulated and translate that into a retirement that is ultimately going to be what I envision.
Speaker 2 11:35
Yeah, you need to have a strategy, you know, we’re applauding the accumulation because you’ve done that, you’ve done a really nice job of that, but now you know, how are you going to apply that? What’s going to be your plan, and how do we help these super savers, Prashant, move from the prep to precision?
Speaker 1 11:54
Yeah, for me, I always come back to paychecks and income, you know, for me it’s it’s while you’re working, your financial life is truly about money coming in and money going out, it’s paychecks coming in, it’s expenses going out, and you try your best to save as much money as you can, and then when you get to retirement, I’m not so sure that that concept changes, it’s still very much so about the income, and it’s something that I’ve been thinking about, like I almost think of it as if it’s a factory, right? I call it the paycheck factory. It’s you’ve built this beautiful factory, it could be comprised of things like your 401 k, your IRAs, your brokerage account, but the factory is only valuable if it produces a paycheck on schedule, right? And so you, in order to make that factory work, you need assembly lines, which are like your income sources, you need quality control, which is risk management, you need inventory, which could be like your cash bucket, so that even when things get crazy, your retirement paycheck doesn’t stop when markets kind of wobble a little bit, and so this is why we always talk about comprehensive income planning at a certain point of your life, it’s not any longer about growing your money to the highest number that it can possibly be. At some point, in my opinion, it becomes about protecting what you’ve spent decades earning, and then turning what you’ve protected into an income that allows you and empowers you to live life the way that you want to live it. When you get to that next phase, and I think a lot of advisors make the mistake of coaching their clients to just think about money in terms of how do I get to the highest number, that is not what we do at Elite Income Advisor. I tried to be so transparent about this, it’s not about how much you have, it’s about what, how what you have can, how much income that can create for you down the road,
Speaker 2 14:01
yeah. What you get to keep, what you get to spend on yourself, right? I mean, it’s about planning, and we’re kind of directing our conversation at the Gen Xers right now, looking at the big picture, also being, you know, prepared, but not only having the savings, but how are the savings going to be working for you? And so this next one kind of fits right in line with that, and that is just being as tax efficient as possible, because a lot of what the Gen Xers are dealing with, it’s in tax deferred,
Speaker 1 14:30
that’s right, and I think there’s an overarching concern that with the state of the national debt, that tax rates may have to go up in the future to deal with the deficit, the growing deficit, and so with that being said, think about all this money that you diligently stashed away in retirement accounts, your IRAs, your 401 ks, your TSP. You did that thinking that you would actually be in a lower tax rate environment when you retired. But this being said, if the national debt continues to skyrocket, if there’s underfunding through different social programs and taxes go up, you might actually find yourself with a lower income than you had while you were working in retirement, but maybe paying the same or even a higher tax rate in retirement, so think about that half a million million dollars, $2 million that you have every time that you take money out of those retirement accounts, you have to pay the income tax. Why don’t we see if there’s a way to transition that fully taxable money into a more tax preferred or maybe even a fully tax free status for the future, that’s kind of the conversation we’re having surrounding income tax at this particular point in time.
Speaker 2 15:46
I mean, I was going to say it’s worth talking about. It’s worth sitting down, seeing kind of where you are, seeing what puzzle pieces you need for your overall plan, and so many of you have done what we’re talking about as Gen Xers. You’ve saved really, really well, but they’re in tax-deferred accounts. You don’t have a plan, and boy, I tell you, the tax man’s coming, because as many times as you’ll hear on our show, and probably other shows, do you think the taxes are going to go up in the future? Have you seen the national debt? It’s going to go up, folks. You need to plan for it. There’s going to be an opportunity to get on the calendar with Prashant and his team at Elite Income Advisors, there are no-cost appointments, no-obligation appointments, meaning you’re not agreeing to become a client, and they’re not agreeing to take you as a client. It’s a great way to see if there’s a comfort level, a good fit. Call the number, grab one right now: 800-653-8404 That’s 800-653-8404 So, back to the Gen Xers. When you think about it, having the plan, being precise, being prepared, make sure you talk about the tax part of this, because it’s going to be, it’s going to be big, it’s going to be huge. Got a plan for it. Healthcare is the next one. Long-term care. How do you help a Gen Xer kind of see the writing on the wall, because Medicare is not going to cover everything.
Speaker 1 17:05
Healthcare is the elf in the room, isn’t it? I mean, we know that we’re going to incur some expense on this. We have to be proactive, not reactive on how we’re going to plan for it. I’ll give you an example here. I read a Fidelity study recently that said approximately 315,000 $115,000 is what the out of pocket projected health costs in retirement are for a 65 year old couple in America today. $315,000 that’s like buying a new house just for healthcare. The issue is it’s not like buying a new house because it doesn’t appreciate over time, it doesn’t bring you value, it’s just dollars out of your pocket, and so with that being said, I think one thing we have to do, if I was 50 or 55 years old, how I would think about this is I know that when I get to 65 and I go on Medicare, I’m going to have some additional income that I’m going to need to help fund my health care costs. Well, I just did a plan like this for another one of our radio listeners. They came in to see me. They had about $1.4 million saved in their retirement accounts, their 401 k specifically. Now, the good thing is they actually had pensions and their projected social security was actually going to be enough to cover all of their month to month expenditures, so the cool thing is they didn’t have to tap in to the $1.4 million for the purposes of discretionary income in retirement. Now, health care was a huge concern, as well as long term care was a huge concern for them. What we did is, of the $1.4 million we took $200,000 and we put it into a separate account, which is safe, that can’t lose any money due to the market going down, and what we’re going to do is, we’re going to specifically use just that $200,000 account to fund future health care costs, seven 810 years in the future and beyond, and by setting it up that way, we’re taking a very small relative percentage of their overall assets, and we’re effectively solving what we think is their future healthcare expense problem, and the cool thing about this, Morgan, is that this was actually a very easy thing for them to do. They just didn’t even know that it was an option to kind of pre fund in such a way this type of expense eight or 10 years before they got to retirement. It was one of the most powerful things that we’ve done recently, and I think a lot of people just don’t know that that opportunity exists. Wow, I mean, think about it. Just having that conversation kind of changes the path. That’s what planning is all about. And there’s so many of us that are going through life, and we don’t know what we don’t know. And here we are with our savings. What’s next? Uh, just having the conversation and starting the planning process can be very eye-opening, and the opportunity to get that done is on this show, and these are complimentary appointments. We’ll tell you about them here in just a little bit. Last one I want to hit on the Gen Xers, Prashant is just the purpose after paychecks, and that’s just kind of, you know, this generation, this group of people, they’re kind of redefining retirement. Yeah, I think I would break this down into just five kind of core strategies that every person potentially needs to be thinking about, just real quick, because I know we got to get to a break here. Number one is social security timing. To this day, social security is still a huge piece of your retirement income pie chart. You need to figure out when the best time to collect social security is. We do a free social security timing report for every single person that we sit down with. It’ll really start to demystify the social security process. That’s number one. Number two is, how do you create tax efficient withdrawals from your retirement plan, income taxes are going to be there. We have to figure out how to minimize our tax liability. Number three, we just talked about health care and long-term care. Let’s figure out a plan proactively to fund health care and long-term care expenses in retirement. Number four is flexible lifestyle planning.
Speaker 1 21:19
Okay, it’s not just about your fixed expenses on a month to month basis. Let’s figure out how we can enhance your retirement lifestyle by affording you more income and more flexibility through retirement. And then the very last thing before we get to the break is what I would call three bucket income planning. A lot of times we take our clients through a bucketing strategy where they have risk money that is designed to go up and down in the market, but hopefully up over time to outpace inflation. The second bucket is safe money that is protected from market risk that provides us guaranteed income, and then the third bucket is an emergency or cash savings bucket. Folks, if you’re five years from retirement, or maybe you’re already retired, and you don’t have a written income plan that you can explain in 60 seconds or less. Let’s fix that. The phone number is 800-653-8404 That’s 800-653-8404 We’ll open up a few spots in our calendar for that complimentary retirement paycheck review. In one visit, we’ll show you how to structure cash and income for the next several years, stabilize your retirement income plan, and hopefully give you all the income you need to live the retirement you deserve. 800-653-8404 We’re back with more Retire Smart Maryland Radio right after this.
Speaker 2 22:52
You’re tuned to Retire Smart Maryland Radio, your host Prashant Sabapathi. You can find him at Elite Income Advisors, headquartered Ellicott City satellite office in Annapolis, and again the power behind this program, Elite Income Advisors, and they have a resource website, check it out, Elite Income advisors.com links to the show here, TV show as well, you’ve got our show in podcast form, but it’s Elite Income advisors.com shot independent fiduciary. I’m Morgan Patrick. It’s always a pleasure to jump on and just hit so many different topics. It gets you thinking about your own situation when it comes to retirement planning. A lot of you don’t have a plan, you’ve done well in the saving department, you’ve acquired the monies, it’s sitting in those vehicles. What are you going to do when you get to retirement? You got to have a way of kind of getting through what is going to be a little bit of a maze. You want to make sure you have the solution to that puzzle, which is your retirement plan. So, you’ve worked hard, you saved well, and now you’re in this season of life that should be all about enjoying the fruits of the labor, right? But there’s something that surprises many retirees, and this could be you. Retirement isn’t a finish line for your finances, it’s kind of a transition. So, there has to be a new strategy, and one of the most powerful principles of this stage, for this stage of life, is movement, staying, you know, healthy, healthy body, staying active, your money needs to kind of stay in motion as well to remain productive, protected, and purposeful. So today we’re going to kind of dive into how to keep your retirement money moving, not recklessly but strategically for both growth and safety. So I like this, being active. So number one, we wanted to start with the big idea, what does it really mean to keep your money moving in retirement? Prashant,
Speaker 1 24:46
you know, I think a lot of retirees were kind of trained to think of retirement really as the time to play it safe, right? You get to that point in life, you feel like you can’t afford to lose, and so you stop taking risks. And look, I’m not necessarily saying that that’s wrong, but I think safety doesn’t necessarily have to mean stagnation. So, the way I think of it is, you know, like a, like a well-managed farm, right? Like, even in harvest season, there’s rotation, pruning, there’s activity, and financially this just means looking for opportune times to make strategic moves that could mean reallocating investments during good times, where you harvest gains, you reduce tax liabilities, use your income stream strategically, and so I think there’s a balance that has to be had here. It’s not just about being totally safe with your money, I think it’s important to always be continuing, continuing to grow your wealth and your assets over time. You just maybe have to do that in a way that’s a little bit more strategic, that doesn’t expose you to the types of risks that you were comfortable taking, and that it made sense to take when you were in your 30s, 40s, and 50s, and so one thing I would encourage people to do is, if you are probably within 10 years of retirement or less, I think it makes sense to do a full on risk reward analysis of your portfolio. It doesn’t necessarily even mean that you need to change anything, but I think that you should be able to evaluate your portfolio, understand what kind of reward potential that portfolio has, but more importantly, understand what your worst-case scenario is. Heaven forbid we go through another 2008 like market, or more recently, the 2022 market was pretty devastating. You should know how your portfolio is going to perform at a time like that, that’s part of the complementary analysis that we pretty much do for every single person that comes in to visit, and whether you choose to become a client of ours or not, that’s not really my concern. It’s being able to provide you enough information so that you can make great financial decisions with your money, whether that includes elite income advisors or not, that’s up to you. But that being said, I think more education, more information definitely never hurt anybody.
Speaker 2 27:10
I think you hit on something, your initial statement about people when they get to retirement, it’s almost like you’re circling the wagons, right? You want to protect yourself, you don’t want to run out of money, and that leads us to this next question. I mean, what’s the risk of just parking the money, and a lot of people do this, they’re doing it at, you know, low-yield accounts, they want to be careful, but this can also bite you. That’s
Speaker 1 27:32
right, I call it losing money safely, is kind of like the terminology I use, and the reason I call it losing money safely is because let’s say you park your money in a check-in or savings account that pays you 1% per year, but if inflation is still around 3% per year, you could lose a heck of a lot of purchasing power, you might not be losing value in terms of your principal, but if costs are rising faster than the rate of interest that you’re earning, you’re effectively losing your purchasing power, and so that’s why I say it’s kind of like losing money safely. So, here’s how we solve this issue for clients, because presumably you’re keeping that money in a bank or in a savings account, because you don’t want to take the risk with it, right. So, there’s these programs out there where you can actually safely potentially outpace inflation by indexing your money to the market. So, how it works, it’s actually called an indexed annuity. It’s becoming more and more popular. Basically, how it works is if the market goes up, your money has the opportunity to grow, because the market went up, but if the market goes down, you can’t lose any money due to that market decline, and so it gives you the opportunity to earn more potentially than just a standard fixed rate of one or 2% per year, but you can do so without having to feel like you’re incurring the risk of investing in the market. I met with someone the other day. Now I had about $1.8 million but on 800,000 of it, he was very specific. On $800,000 he said, “I am sick of looking at my account week to week and losing 20,000 50,000 in a week, even if I gain it back the next week, or what have you, I’m getting real sick of seeing the fluctuations, and so all we did is we took his $800,000 we put it into one of these fixed indexed annuities, and now he never has to worry about losing money ever again due to the market going down. If the market goes up, he gets some modest returns, but if the market goes down, he never loses a penny due to that. Now he’s got other money that still remains in the market, but now he feels like all of his eggs are not in any one basket. It’s a great risk management tool, and I think it’s one thing that a lot of people struggle with when they get to retirement is how do I balance making. County with taking risk, and that’s a fundamental question that most people have to figure out how to answer. Well, and working with a professional, a fiduciary that can help you map this out. I mean, that’s the confidence we talk about here on the program, week to week. Look, we get it, you’re busy, you got a busy life, there are a lot of things going on, and having to manage your money or create your own retirement plan can be very taxing. Why wouldn’t you want to work
Speaker 2 30:30
with a professional, almost like a retirement coach, to get you in position to enjoy the retirement you’ve always wanted? Now, the appointments we make available on this program are complimentary, that means there’s no cost to it. There means there’s no obligation, meaning you’re not agreeing to become a client if you grab one of these, and they’re not agreeing to take you as a client. This is a get to know you type thing. It is a test drive, see if it’s a good fit. Call the number 800-653-8404 that’s 800-653-8404 so kind of back to this discussion. So we’re not going to park our money, we’re going to be, you know, very diligent about that. We’re going to plan for that. And can you talk about, you know, how income-producing assets can can keep the money moving while providing that stability? We talk about,
Speaker 1 31:17
look, it’s all about the income when you get to retirement, right? It’s all about making sure that you have enough coming in to live life the way that you want to. So, how do we go about creating income? There’s several different ways to go about doing it. You could use things like real estate investment trusts, with which may have some sort of a yield that’s higher than whatever a quote unquote normal amount of yield is. You could invest in things like dividend paying stocks, you can use more complex options strategies to create income, you can use things like the annuities that we talked about, or even structured notes that could generate income while maintaining some growth potential. All of these tools, in some way, keep your money moving, so to speak. Okay, it’s not just sitting in a drawer collecting dust. Now, the trick I think is to figure out which combination of those income-producing assets are the right fit for you, because I’ll tell you what, the guy who may love dividend stocks, that might not be a great fit for, you know, his coworker, right? Your situation ultimately demands what combination of investments or solutions could ultimately be the right fit for you. And so, folks, if you don’t know where your income is going to come from in retirement, if you’re not sure with what level of certainty that income is going to be there, if you don’t know how it’s taxed, if you’re not sure what happens to it if you pass away prematurely, it’s a great opportunity to call us and just have a conversation. It’s 800-653-8404 We have offices in Ellicott City, Maryland, that’s our headquarters, as well as in Annapolis, Maryland, or you can book a virtual consultation with my team at Elite Income Advisors. When you come in to visit with us, it’s just a conversation about the specific things that you are concerned about with your retirement plan. It could be where’s your income coming from, it could be the stock market, it could be the threat of rising taxes, among other things. It’s 800-653-8404 It’s a totally complimentary visit with our team 800-653-8404
Speaker 2 33:27
When we return on Retire Smart Maryland Radio, I’ve got scenarios. We’ve gathered them from around the country. We’ll throw them up per shot, see what it comes up with next. We are back on Retire Smart Maryland Radio, hosted by Prashant Sabapathi. You can find him at Elite Income Advisors, the power behind this program. The website, it is a resource, check it out, Elite Income advisors.com We have links to the TV show. Our radio shows are in podcast form. That’s Elite Income advisors.com Great information on retirement, retirement planning, but also background information on the team. And speaking of that, independent fiduciary, yes, Prashant is published author, you bet. Couple of books already to his credit: Fiscal Health, Retirement, Wealth, and retire abundantly. They’re headquartered at Ellicott City Satellite Office in Annapolis. I’m Morgan Patrick. A pleasure, as always, to talk about the importance of having a plan and being prepared for what is going to be your postseason. And now we get into scenarios, and these happen all over the country. We’ve gathered a handful of these. Let’s see what Prashant would do all right, so Prashant, your first one, they’re turning 60, still have a mortgage, and their youngest just started college. They worry about retiring late and wonder if working until 70 is the only real option. Is there a smart way for someone in this kind of predicament or position? To balance college costs, mortgage payments, and still build a reliable retirement income.
Speaker 1 35:05
Look, I think this is all about income at the end of the day. I think it’s really easy to take a scenario like this and overly complicate things. I try to make things simple for people to understand. Okay, it sounds like we’re in a position here where expenses are really high, and if that’s the case, the way to set your future self up to deal with something like this is to make sure that you have reliable income that is going to be higher than whatever those expenses are. Now, look, that very well may include them working until 70, and if that’s the case, then that’s the case, but one thing I would encourage is with whatever retirement savings that they do have, let’s figure out a way to position it so that it can both a grow and b create reliable income for them in the future, and by the way, that doesn’t necessarily mean that you need to go all in one direction. It’s not that they either have to make it grow or create reliable income. There might be a way to go ahead and do both. So, where we would start with a case like this is, let’s map out expenses, and then let’s start to build out an income plan that allows you to have an income that exceeds those expenses. Maybe you can do that by the time you’re 65 Maybe you’ll have to work till 70. I think most people would want to know what that looks like 10 years ahead of time, rather than getting to 70 and still having more questions than answers. You have your own retirement scenario, your own picture. How’s it looking? Do you have questions? Do you have concerns? The opportunity to get some answers to those questions, and maybe quell some of those concerns. It’s ongoing during the course of this show. You can call at any time and grab one of our complimentary appointments, 800-653-8404
Speaker 2 37:00
no cost, no obligation. 800-653-8404 Come in, have that conversation about your retirement scenario. All right. Next one up, Prashant, is this: they’ve got about 450,000 saved between a 401 k and a Roth IRA, but they, they lost a decade of saving during job instability when they were in their 40s. They’re asking if it’s too late to catch up, so what steps can someone take in their early to make up for lost time and reduce the risk of running out of money later on.
Speaker 1 37:33
Look, I think this is always an interesting question. Is it too late to catch up? What’s your option? Your option is either you can try to get back on track, or you can just write it off and say there’s no way I’m going to make it and give up, and to me, I don’t really subscribe to the latter, and so I think regardless of where you are in your planning process, even if you are feeling like you’re behind, I think it always makes sense to try to optimize your situation and move forward now. Someone in their early 60s who’s trying to make up for lost time. The one thing that comes to mind for me is the idea of utilizing what are called catch-up contributions to your retirement accounts. If you’re over the age of 50 years old, the federal government allows you higher limits on contributions to things like IRAs, Roth IRAs for 1k plans, and because those limits are higher for folks that are at the, you know, kind of the tail end of their career, I think it’d be silly to not take advantage of being able to put away more money if we’re in a position to be able to do so. So, if you’ve never had an advisor talk to you about the importance of cat-up contributions, and how that could help inject potentially 10s of 1000s of dollars extra into your overall retirement plan. I think that’s something that you ought to be looking at as you get closer and closer to that next phase of your life.
Speaker 2 38:57
Yeah, catch up contributions, if you’re 50, if you’re 60, there are different stages that you can really look into and start pushing that accelerator to the floor, adding more to those accounts, and again, compounding interest is our friend, right? So, make sure you’re asking these types of questions, getting these types of answers. All right, scenario number three, they’re considering claiming social security at 62 just to go ahead and lock it in, even though they’re still working part time. How do you help someone think through the trade-offs of claiming early versus waiting, especially if they don’t plan to fully retire until 67 And this social security question on when you take it is a big one. Don’t take it lightly,
Speaker 1 39:42
exactly right, because you only typically get one shot to get it right. If you collect at 62 and then when you’re 68 you feel like you made a mistake by collecting it early. There’s not too many opportunities to go back and get a do over, right? That just doesn’t exist with Social Security, and so you have to feel. Confident that you are making the right decision. How we help people through that is by examining data. It’s no different than if you were to go to a doctor and they take an x ray before giving you advice on how to treat your problem. We do the same exact thing when we create a financial plan. We do an x ray of your overall financial situation, and then from there we figure out when the best time to collect social security is within the context of your specific situation. It kind of leads to the idea that it’s not about what the masses do, like what your coworker does with social security what your golf buddy does with social security, what your brother-in-law does with social security has no bearing on what may or may not be the best thing for you to do, and so often I see people saying, hey, my friend told me to take social security at 62 and then you ask them why, and they’re not able to explain it, they just say things like, well, I want to lock it in, or hey, I’ll never live long enough to get all my money out. Now, look, I’m not saying those are not legitimate concerns that people should have, but I’m saying that shouldn’t be the sole reason why you make a decision. You should make a decision because you truly feel that that decision is going to further your financial objectives. If you haven’t had an advisor explain that to you, or if you haven’t had someone prove to you why a certain strategy is a good strategy for you, then I’d argue you don’t have enough data to make a really good decision. That’s what we do with Social Security planning. We try to give clients and pretty much everyone we visit with enough data to feel confident in the decision they’re making. Confidence is the one thing that you can’t go without when you file social security, in my opinion.
Speaker 2 41:52
So, important to be ready for your retirement. There’s so many different aspects when we get to these scenarios each week, it kind of sheds light on that fact that everybody’s going to be different. There are so many nuances to retirement for the individual or the couple that’s heading towards retirement. So, make sure you have that customized plan. We’re going to give you the opportunity to get on the calendar with Elite Income Advisors, no cost, no obligation. We have one more scenario, then we’ll open up those appointments, and here it is for you, Prashant. They’re financially ready to downsize. This has got to be this has to happen a lot. So they’re financially ready to go ahead and downsize, but they’re emotionally attached to their long time home. Their kids are grown, but the house still feels like a home, and it’s home base. How do you guide someone who is financially better off downsizing, but they’re emotionally stuck in this place, and when I say that, I mean all their memories are there.
Speaker 1 42:51
Yeah, that’s right. Look, when we were doing our prep for the show, the reason we put this in, you know, we’re calling this a scenario, but this happened to my father, you know, and he built his dream home. He built it from scratch. He designed it. He decorated it the way that he envisioned, and he did that when me and my brother were still kids, and it was a great home for us to grow up in, and so on and so forth. It was a 10,000 square foot house, his big expensive home, he spelled it, spent his whole life saving to buy this thing, and then we moved out, and it became too much for him, but he was stuck for years. He had a big mental hurdle selling his dream house and moving out of something that consumed him for this many decades of his life, and I think where I was finally able to connect with him a little bit was just by saying, what is a bigger financial stress to you? I understand that there’s a ton of good memories that come with this home, but when you have a 10,000 square foot house and the mortgage payment is 8000 bucks every single month, that’s a heck of a lot of money to come up with. Your kids aren’t home anymore. We’re all grown and we’re doing our own thing. Is the emotional attachment you have to the memories worth the financial stress? And so back in 2018 2019 timeframe, he sold the house and he’s been in a much smaller place for the last six years, and two things have happened. Number one is the stress has gone away. Morgan, he just feels free. He can do whatever he wants with that $8,000 that he was spending. That’s number one. And number two, we’ve seen a huge increase in his overall wealth over that period of time, because instead of spending 8000 on a mortgage, he’s actually able to invest that money, and as a result of investing it, he’s been able to grow his wealth over time. It’s a really kind of a cool exercise to go through. Sometimes you just need to look at it from a non-biased, non-emotional step. Standpoint. Two quick questions that I’m going to challenge every listener to reconcile. Number one, could you explain your income plan in 60 seconds or less, or would you be guessing? That’s number one. Number two, if the market dropped 20% next year, which accounts would you tap first, and how long would your money last? Okay, two things to think about if you’re not sure how to answer those questions or anything else that we’ve talked about with taxes, your income, your legacy in retirement. The phone number, folks, 800-653-8404 It’s the last opportunity for today’s program to get into the calendar. We have spots open for the next couple weeks here. Calendar fills up really quickly, so call right now: 800-653-8404 Complimentary no obligation retirement visit to talk specifically about your retirement concerns.
Speaker 2 45:55
Another edition of Retire Smart Maryland Radio with Prashant Sabapathi is in the books. I’m Morgan Patrick. We’ll see on the radio next week.
Speaker 3 46:11
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