Speaker 1 0:02
It’s our 200th episode of Retire Smart Maryland Radio, and we’re looking back at what time has really taught us, what brings peace, what keeps people stuck, and the simple strategies that make the biggest difference in retiring.
Announcer 0:19
Welcome in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:26
Welcome into Retire Smart Maryland Radio, your host Prashant Sabapathi. You can find him at Elite Income Advisors. He’s an independent fiduciary, he’s a published author, a couple of books to his credit already: Fiscal Health, Retirement Wealth, and retire abundantly. I’m Morgan Patrick. Absolute pleasure to be on and to talk about the importance of being proactive and having a plan. Want to tell you about Elite Income Advisors, they’re headquartered at Ellicott City, and they have a satellite office in Annapolis. In Prashant, we have a very special show today, because we’ve hit a milestone, and that is 200 shows.
Speaker 3 1:06
Thanks for listening to the 200th episode of Retire Smart Maryland with Prashant. Here’s to many more years of excellence on the airwaves.
Speaker 2 1:21
All right, so we thought we’d have kind of that game show voice bring us back into the episode again. 200 shows, and I thought it would be fun before we dive into what we normally do, is just to kind of go over, you know, other shows that we’re familiar with that have hit the 200 mark, so things like the US version of The Office, 201 episodes. Friends, one of the all-time great sitcoms out there, 236 episodes. Wow, The Simpsons. Are you ready for this? We’ve got a ways to go to catch them, 750 episodes of The Simpsons, everybody loves Raymond, 210 Big Bang Theory, 279 Cheers, 275 All in the Family, 205 Frasier 261 and Mash, one of the greats, 256 So, congratulations, Prashant, crossing the 200 episode barrier, and we’re going to still go, we’re going to continue to do the show, but we wanted to congratulate you, congratulate Elite Income Advisors. 200 shows is quite the
Speaker 1 2:33
mark, it really is. It’s been a heck of a ride, you know. Five years ago, we, when we first started this endeavor to podcast and do more radio, you know, we’re doing a lot of good work one on one, but I kept thinking, what if we could bring some of these important conversations to more people, and at Mass, at Mass, I should say, and I think one of the neat things is, like, like, whenever you’re starting something new, we got people that told us it wouldn’t work. We got people that were very skeptical. I even heard from somebody that I’m not a radio guy, and I should just stick to planning people’s retirement. And you know, people would say financial radio is overdone, and so, how is our show going to be any different? But something really neat happened. Morgan, as you know, people came into the office. I got a lot of feedback from our community, and I think one of the things that I found that made it fulfilling is when people came in to visit with us to actually talk about their life and talk about their situation. It’s incredible how many people didn’t just talk about the market or didn’t just talk about the financial side of what they were doing. One thing I’ve learned is that people want clarity, not just financial clarity, but they want emotional clarity. They want peace. They don’t want jargon, they want structure, and they want calm, and they want honesty. And so I’m really proud of what we’ve been able to accomplish here over the course of what’s going on, five years now, we started quietly, but it’s kind of blossomed into something that’s been really special, and I think the most fulfilling part of it has been the privilege of getting to actually sit down with people that listen to this show every single week and listen to the pod on Spotify, on Apple Music, and when we get to visit with these people, it takes it from being a generalization to being something that is a real human interaction. And so, John, who’s done the show with me, Morgan, you’ve been with me for years now, and myself, getting to sit down with people has been really the most special part of the process.
Speaker 2 4:40
I was going to say, you start talking about, you know, radio. We think of it as a week to week, but the listener that’s out there, what a great way to vet an advisor or an advisory team that you might want to work with. You know, it’s not like it’s not invasive, you can listen when you want. Listen, and we hear the stories that people will come in and start talking about their planning. Oh, I’ve been listening for months, I’ve been listening for a year. They get to know you through your radio show, and you can’t fake genuine, you just can’t.
Speaker 1 5:14
Yeah, look, I think over 200 episodes, your real personality comes out, you know, and I remember, I distinctly remember when I first started doing these shows, being kind of anxious about it and not showing maybe my true personality, but you know, somewhere maybe it was around episode 30 or 40, I realized that the message that we’re putting out really resonates with folks, and you know, people was always always asked me like kind of, what the most surprising thing is about doing this many radio programs, and by the way, we’ve done almost 150 episodes of television as well, and so our TV shows airs every weekend on CBS and ABC, and so on, so forth. That being said, I think the most surprising thing that I’ve learned over doing this 200 times now, is people get really emotional about the responses, right? And so, when we put information out there, and we put questions or food for thought out there, it’s incredible how emotional the responses are that we get, because people don’t just talk about their accounts, they talk about what brings them peace, peace of mind, and the type of thing that allows them to sleep well at night, and I feel like in some small way this show has given people permission to really stop guessing when it comes to their finances, and I think when you stop guessing you have structure, and you have a real plan in place that you can fall back on, not just during the good times, but during the tough times, when the market is down, or when inflation is high, you can rely on that written financial plan, and kind of the lessons that we’ve talked about here over the last, like I said, going on five years, that’s been, I think, one of the coolest things.
Speaker 2 7:04
Well, I tell you, it’s almost like a birthday, right? We’ve hit 200 You look pretty good for 200 Prashant. I’ll just, I’ll just say that, but it’s also an opportunity for our listeners to really kind of just dive in on the importance of being, you know, proactive and having a plan, and as I’ve said before, it’s not intrusive. I mean, they can listen when they want to listen, they can go to your podcast, they can listen on a weekly basis to the radio show, they can watch your TV show, and they get a sense of what it’s all about. And then we give them the avenue, right? We give them the complimentary appointment to come in and talk,
Speaker 1 7:41
yeah, that’s right. And so just a quick note of gratuity and thanks to the audience, right? Over 200 200 episodes, whether you’ve heard just one or if you’ve been with me for all 200 Just want to say thank you. It’s definitely the reason that me and my team put so much time, effort, resources into producing this show every single week, but maybe you’ve been listening and quietly thinking, you know, one day I really need to get my plans squared away. That day could be closer than you think. Maybe it’s right now. We open up the show every week in the phone lines every week to book those complimentary appointments. That phone number, it’s 800-653-8404 800-653-8404 When you book that complimentary visit with us, it’s just a conversation. You don’t need to overhaul your life overnight. You just need a calm conversation, one where your questions are welcomed, not rushed. It’s really what you’ve been looking for. Me and my team would love to help. It starts with that phone call. Come in and visit with us in Ellicott City, in our headquarters. We also have an office in Annapolis, Maryland, as well. You can book a virtual consultation if that’s easier as well. The phone number, one more time, it’s 800-653-8404 When
Speaker 2 9:01
we return on the 200th episode of Retire Smart Maryland Radio, we’ll get into mortgage rates. Don’t go anywhere, it’s all about the plan. Coming up next, we are back on Retire Smart Maryland Radio. It is show number 200 Prashant Sabapathi, he is your host. You can find him at Elite Income Advisors, right here in the Maryland area, Ellicott City headquarters, Annapolis. They have a satellite office for your convenience, website treated as a resource, Elite Income advisors.com Go there. There are links to the TV show, you’ve got links to our radio show in podcast form, that’s Elite Income advisors.com Prashant is an independent fiduciary, and it’s all about helping Maryland and the surrounding areas. Get ready for retirement show. 200 still hard to believe. It seems like it’s just kind of clicked by. It’s been five years that we’ve been talking about the importance of being proactive and not reactive when it comes to your overall plan. So, let’s talk about this next subject, Prashant, and that’s what’s happening in the mortgage world. What’s happening with the rates? Things are really starting to get interesting.
Speaker 1 10:26
Yeah, we saw mortgage rates drop to their lowest level in nearly three years, and there’s an article that came out on CNBC, was published Friday, January the ninth. The headline says mortgage rates dropped to the lowest level in nearly three years as President Trump orders the buying of check this out, Morgan, $200 billion in mortgage bonds. How about that? 200 billion in mortgage bonds being bought right around the time we’re doing our 200th episode. Pretty cool. But that being said, what that should do is that is going to drive mortgage rates down right when the government buys mortgage bonds through Fannie Mae or Freddie Mac. That level of volume in mortgage bonds it pushes demand up, and as a result, you see interest rates start to go down. So, I think it’s really interesting what’s going to happen here in the housing market, I think it’s worthwhile to keep our eye on this over the course of the next six to 12 months here, because it’s essentially going to make the cost of borrowing more attractive, right. So, hopefully that brings more buyers into the market. Maybe what it’ll do is potentially increase home values, and as a result, that could incentivize more people to be sellers, and so you know, for years now, it seems like every time we talk about the housing market, how often do we hear that the inventory is just really tight? Right, we hear that all the time, inventory is really tight, and that’s what makes buying more competitive, and with that being said, hopefully this releases some inventory. If that releases some inventory, maybe we’ll have a little bit more competition in the market in a good way. And I think this is a big thing for baby boomers and people who have been sitting on their houses that they bought, maybe in the 80s and the 90s, maybe they want to sell, but they don’t necessarily want to buy something in this market. This could be the right time, potentially, to see home values go up, rates go down, and so maybe you could sell your house, move to your retirement home, and buy in a relatively favorable environment from a rate standpoint, as well. I
Speaker 2 12:43
was going to say there are a lot of people out there, Prashant, where one of their biggest assets, if not their biggest, is going to be the home that they own. And if the market is favorable, you know that’s going to really impact retirees and pre-retirees, because it’s another chip in the game.
Speaker 1 12:58
That’s right. If rates stayed high, it would have narrowed the buyer pool, right, with lower rates, more buyers come to the table, which could mean stronger prices if you’re selling, and also if you’re planning to buy, maybe to be near your grandkids, or shift to a lower maintenance lifestyle, that lower rate makes that monthly cost a little bit more comfortable. Now, here’s one concern that I think baby boomers and anyone who’s been sitting on equity for 20 or 30 years that they’re absolutely concerned about is the federal exclusion for capital gains on your primary residence. So currently, under current law, you’re only allowed to exclude a half a million dollars of capital gains. Okay, and so that becomes a real issue, because what happens if you bought a house for $82,000 back in 1985 and now the house is valued at $700,000 I mean, we see so many clients and so many people that come in to visit with us that are in this type of situation, they bought their house really low, prices have skyrocketed, and what they’re concerned about is if they sell the house today, not only will they have to find somewhere else to live, but they might actually have to pay tax on that gain too. And so one thing that I’ve really kind of thought should be the case, I don’t know if the government will ever adopt this, but I wish one of the things that they would do is change that exclusion from a half a million dollars to some number that’s higher, maybe they make it a million dollars or $2 million right? If the change the exclusion to something that is going to be much higher in the future, it’s going to incentivize people to sell and put their hands on that equity tax free now. Obviously, anything like this would come with a pretty big fight in Congress, I think. But that being said, you want to incentivize retirees to sell their properties. I think that will make housing more affordable for younger generations. It’ll keep the economy moving, I think. This idea of buying bonds, mortgage bonds specifically, is a start in the right direction, but everything comes as a domino effect. So, we’ll see what happens here over the next six to 12 months. Very interested, obviously, in what goes on in the housing market, because I think younger generations are absolutely feeling that they can’t catch up right now. Okay, I think there’s a sentiment in people who are 20 and 30 years old who are feeling like baby boomers have all the breaks and inflation is high, wage growth is not keeping up. We got to incentivize younger generations to buy homes, that is ultimately what is going to keep the economy moving for the next 20 or 30 years, so a lot of, lot of moving parts of this thing is very, very interesting to talk about.
Speaker 2 15:46
I tell you, the mortgage rate, where it is, how that’s going to impact planning, not just for the boomers that are heading off into retirement, but also the younger generations and getting into possibly their first home. I mean, this is a big, big deal. It’s going to impact planning down the road. Now, opportunity to have these types of conversations with Prashant and his team at Elite Income Advisors. It’s ongoing during the course of this show. We’ve got the 10 appointments, and all you’ve got to do is call 800-653-8404 Again, 800-653-8404 So, what are some of the big takeaways? Let’s wrap this conversation, and then I think we want to talk a lot about just bucketing your money.
Speaker 1 16:27
Yes, I think if you’re a retiree that is wondering whether to move or downsize or relocate to somewhere near your family or something like that, or maybe you’re just a younger listener that’s hoping to get into the housing market, maybe it’s buying your first house or you’re moving from your starter home to your forever home. I think the overarching question in response to what’s been going on lately is, do you actually have a concrete written strategy in place, or are you simply just reacting to headlines? Okay, now given that mortgage rates are at the what seems to be like at the three year low, that in and of itself does not necessarily mean that you should buy or sell. I think what you have to do is you have to look at your plan as a whole to determine how the housing piece of it ultimately fits in. Okay, you don’t want to let the headline be the driver you want to let your plan and your purpose lead you through the decision making process, and so if you’re not sure how your housing situation fits into your overall financial plan, by the way, I don’t care if you’re 3040, 5060, or 70 years old, that housing piece of it is always going to be a part of your financial picture. It’s a great opportunity to really sit down and dive into the details, not just the headlines, but let’s talk specifically about how your house, how your equity will impact your financial future. Again, that phone number, it’s 800-653-8404
Speaker 2 18:02
So important to be prepared, and again, that house, that home that you are, you’re living in, and you have, you’ve lived your life in it, has value, and it’s going to be a big part of what you do as you move into your retirement years, and make sure you’re planning for it, talk about the options, we get on here and we do this every single week, so make sure you’re, you’re on the same page, you’re on this cusp of retirement planning, but you haven’t pulled the trigger yet. We’re going to talk about that during the course of today’s show, our 200th episode of Retire Smart Maryland Radio. So, bucketing. let’s, let’s get into this, Prashant. We end up talking about the bucket strategy, but for our people out there that are sitting on portfolios and haven’t started planning, or maybe they’re in the middle of something and need a second opinion, the bucket strategy kind of breaks it down for everybody. You know, I was just meeting with a client, doing a review
Speaker 1 19:00
of their financial plan, and I think it is important to do these reviews and do ongoing maintenance of your financial plan. I was just sitting down with a client, and one of the things that they expressed to me, he had just retired about a year ago, she’s retired as well, and so I was sitting down with both of them, they had about $600,000 and it was for the most part invested, right, so about 450,000 of that 600 in retirement was invested in the market, and one of the things that they articulated to me was at this stage of the game they were 70 and 72 years old. At this stage of the game, they felt like they could not bear the risk of the market, they don’t want to see the 600,000 become 400,000 right around the time that they enter required minimum distributions. When the government forces you to take money out, they also are relying on that 600,000 to create a paycheck and create income for them in retirement. So naturally, they didn’t want to see a big loss in their value. At this stage of the game, and so that’s where we revisited this idea of bucketing your money. When we, when we talk about bucketing, what I’m referring to is having a red bucket of money, that’s what I call red for risk. You have a red bucket of money that’s intended to be invested in the market, maybe it’s a combination of ETFs or mutual funds or stocks, and those could be diversified, right, and that could be value stocks, growth stocks, dividend stocks, etc. or maybe you have bonds and mutual funds as well. That’s the risk bucket of your portfolio. The other bucket is your safe income bucket. So, for this particular client of that 600,000 we had $150,000 that is actually positioned in a market protected income generating bucket, and for them it was an annuity, and that $150,000 is actually providing them a guaranteed income of an additional $800 per month, that’s good for both of their lifetimes, and so that’s the market protected bucket that’s providing them, in addition to social security and pension, all of the income that they need to live on, but then with all their other money, we’re empowered to keep it in a risk bucket that’s going to be able to grow, so bucketing your money is a great strategy as you get closer and closer to retirement, it’s not necessarily the best fit for every single person out there, but I think as you get further into retirement or closer to retirement, it is a great opportunity to potentially reduce your risk while still maintaining growth potential. Folks, if the recent mortgage rate drop has you wondering whether to move, refinance, or just do something. Give us a call. The phone number is 800-653-8404 Before you make a move based on urgency, let’s take a moment to zoom out. We’ll help you look at your income, your housing decisions, your next chapter, all through the lens of what is right for you, not just what the market is doing. If you’re concerned about your housing situation, if you’re concerned about whether or not you’re taking enough risk or too much risk, your advisors never talk to you about the prospect of bucketing your money in retirement. Great opportunity to book that free consultation with us. You come into the office, have a conversation about your situation. That phone number again, it is 800-653-8404
Speaker 2 22:29
When we return on Retire Smart Maryland Radio, it’s time for strategy of the week. Stay right there, you We are back on Retire Smart Maryland Radio, hosted by Prashant Sabapathi, and you can find him at Elite Income Advisors. They’re headquartered at Ellicott City Satellite Office in Annapolis, and again growing to better serve Maryland and the surrounding area, when it comes to retirement planning and being prepared. Prashant is an independent fiduciary. He’s also a published author, a couple of books to his credit so far: Physical Health, Retirement, Wealth, and Retire Abundantly. I’m Morgan Patrick. Pleasure to be on. It is the 200th edition of Retire Smart Maryland radio on quite a run, and we’ve started off in the last, I’d say, couple of months doing a strategy of the week, so this is something interesting. So, let’s let’s get into this, and again, back at it, strategy of the week. This one is about taxes, and something most people overlook, Prashant, and that’s how to use after-tax money, and not only use it, but use it better.
Speaker 1 23:44
We talk a lot about pre-tax money, and that makes sense, because this is a retirement-focused show, right? So we talk a lot about 401 ks and IRAs and thrift savings plans. John and I have talked about Roth IRAs in the past quite a bit, but what about that other money that is just sitting in regular brokerage accounts? Right, I think that’s really important to talk about, because it’s after-tax money, and the benefit there is that you’ve already paid tax on that money, and so it is oftentimes the least optimized part of a retiree’s portfolio, because we spend a lot of time contributing to the four 1k We obviously are very attracted to Roth IRAs, which are tax free, but what about just money that’s sitting around in a brokerage account or in a savings account or something like that. And so, why it’s important to talk about is because after-tax money can create what’s called a tax drag. You got to remember, as your after-tax investments earn dividends and earn interest, and as you buy and sell stocks and bonds and mutual funds, those are what are called capital gains. Those things. Things create taxable reportable activity that you have to deal with each and every year, and so I think one thing to talk about is how to optimize the taxes when it comes to your after-tax account, and how to make that money grow for you in the most efficient way possible for the future. Morgan,
Speaker 2 25:20
tell you it’s important to be on top of all of this. It’s a lot to keep track of. We get it, you’re busy, you are doing what you do, and you’re doing it very well, and you’ve put your monies away. Prashant and his team, they deal with this every single day. This is an opportunity to come in and talk with professionals again with fiduciaries, put your interests first on what to do about your retirement, and if you’re just sitting on portfolios, you got work to do, work with pros, map this out, get that confidence, that peace of mind, so again talking about deferred money, so what if you could defer all that tax we’ve talked about while still keeping the money accessible in retirement? That’s a big question for a lot of people.
Speaker 1 26:11
Yeah, so I’ll walk you through an interesting case I just ran into, and I’d venture to guess this is actually fairly common when it comes to the folks that are listening to our show, because I know I see it across our client base all the time. I did a plan recently, about a couple years ago. I did a plan for a client, she recently retired, she has all the income she needs, her money is positioned in not a super high risk way, some of it’s in a green bucket, safe from market losses, and then some of it is invested in the market, but recently her father passed away, and when her father passed away, she inherited something like $800,000 that was all after-tax money. So naturally she comes to me and she says, “Hey, I have $800,000 that I really didn’t need for my retirement. What do I do with it? And part of her concern is if we invested all that money in the stock market in ETFs and mutual funds. Part of the concern ultimately is that it’s going to generate dividends, interest, and buying and selling creates capital gains every year, and so her tax activity is going to go up as a result of this great inheritance that her father worked really hard to leave her, and so what we ended up doing is we took half of the money, $400,000 and we put this into a deferred annuity program. Okay, now I get how that sounds. You hear the word annuity, and I think a lot of connotations come to mind, but one of the most powerful parts of annuities is that any interest earned on an after-tax annuity on an ongoing basis is actually deferred interest, so we put $400,000 into this annuity program when we put that money in every year, if the market goes up, that $400,000 can grow, Morgan, and as it’s growing, she actually does not owe any income tax whatsoever on the growth of that $400,000 So, let’s say five years from now, hypothetically, let’s suppose that that 400,000 had grown to 600,000 that $200,000 of appreciation has not actually been reported as taxable to her, and so she gets to defer all the taxes, which allows her money to compound at a higher effective interest rate, and it kind of solves some of her tax problems as well. Now, keep in mind this isn’t without its flaws. I mean, for every upside, there’s a potential downside, and the potential downside is, of course, when she goes to withdraw that money, it’s going to be taxable at that point in time, but the reason this made sense for her in particular is because she was never going to touch the money, that money is ultimately going to end up going to her children, and so by putting half of it in a deferred annuity, she never has to pay the taxes, and that allows that money to grow at a at a tax deferred status. What we did is we took the other 400,000 and we invested that in the market, but we used a little bit more tax favorable investments. We use things like municipal bonds, we use things like treasuries, in which the interest can be exempt from either state or federal taxes, and so by structuring a portfolio in a way that we have deferral as well as tax preferred investments, it kind of gives her the best of both worlds. She can have that money work for her, but not have to worry about all of the tax liability necessarily on a year to year basis.
Speaker 2 29:52
So important to be ready for this, so important to understand everybody’s situation is different, and when we’re looking at this. Particular category, Prashant. It’s like a teaching moment, like a order of operations for saving. Let’s, let’s get into this. Let’s talk about just how important this
Speaker 1 30:12
is. You remember order of operations, like you know, I think I take myself back to, like, what is it, fifth grade math or whatever, when they teach you about the parentheses and multiplication comes before addition and all this kind of stuff, so I started thinking about the order of operations when it comes to saving your money, right? So, when it comes to order of operations, here’s what we look at. Number one is your employer-sponsored 401 k. When you are saving for retirement, your employer-sponsored 401 k offers you a way to defer money on a tax-deferred basis into that plan, but the reason we put it first is most employers these days are offering you a match, so let’s say that you have a 5% match on your employer-sponsored 401 k, so that means that you would contribute 5% and they give you 5% and so order of operations contribute up to the match in your 401 k, because they’re giving you free money. Always take the match. The next thing to look at is a health savings account, an HSA. An HSA is what I call a triple tax advantaged account, you get a deduction for putting money into an HSA when that money is growing for you, it’s tax deferred, so you don’t pay taxes while it’s growing, and as long as you use the HSA for health-related expenses, it’s actually 100% tax free. So, triple tax advantage is going to be your second in the order of operations. Number three is going to be a Roth IRA. If you’re eligible to contribute to a Roth IRA, you’re putting in after-tax dollars, but that grows tax deferred, and then, of course, it gets withdrawn tax free. So that’s number three in our order of operations. Number four is going to be your taxable brokerage. What we’ve just done talking about here is after-tax dollars going in tax preferential treatment only, dividends, interest, capital gains taxable, and then number six, something like your non-qualified deferred annuity. There, okay, so that’s our order of operations there. If you’re not sure what your order of operation should look like, or if you’re not sure how to deal with money that you’ve had in the bank or in a brokerage account, maybe it’s from a business exit or a recent property sale. Don’t just let it sit there collecting tax bills. Give us a call, let’s sit down and talk about it, and talk about your situation in particular. That phone number, it’s 800-653-8404 That’s 800-653-8404 There are smart ways to grow that money without triggering income taxes every year. Our team is going to sit down with you, help you map out your buckets, your tax plan, and create a deferral strategy that actually supports your future. It’s not about a sales pitch or anything like that. It’s just a smart path forward. It starts with that free conversation, no obligation, by the way, to do any business with us, just a conversation. It’s 800-653-8404
Speaker 2 33:16
So smart, and a great reminder that sometimes the most underused dollars are the ones you’ve already paid tax on. We’re going to talk more coming up on the other side again. You’re listening to Retire Smart Maryland Radio. We’ve got some scenarios coming up next, you We are back on Retire Smart Maryland Radio Show number 200 Your host, Prashant Sabapathi, Elite Income Advisors, where you can find him right here at Ellicott City headquarters. Annapolis has a satellite office for your convenience. He is an independent fiduciary. He’s a published author, Fiscal Health, Retirement, Wealth, Book Number One, and Retire Abundantly, Book Number Two. He is a television star, Retire Smart Maryland TV, available for you as well at the website. You can find links to the TV show, and of course, our radio shows and podcast forms. Just really good information on retirement and planning, check out Elite Income advisors.com I’m Morgan Patrick. Just an absolute pleasure. So, let’s get into this. We’ve looked back 200 episodes, broken down what’s happening now with rates, with strategy, but we want to talk about what’s next. So, where do we go from here, and what are we seeing from the families that we serve? Prashant, one
Speaker 1 34:45
thing I’ve learned is clarity is the most important thing that people are seeking. I get the privilege of sitting down with hundreds and hundreds of people every single year, one on. One, by the way, which is really kind of neat. It really provides me with what I call the power of perspective, right? I get to see people from all walks of life, all different professions, and they share with me what’s important to them. And I think the overarching theme that I’ve found is that when you have a plan that is written down that provides you clarity, and when I say clarity, I’m talking about clarity surrounding where your income is going to come from, where your paycheck is going to come from in retirement. How long is your money projected to last? What is your effective tax rate going to look like when you hit RMDs. How does that impact your Medicare premiums? This is precisely the type of clarity that I think people are seeking, and so financial planning is not about trying to figure out the most clever way to navigate through a choppy market or anything like that. It’s about having clarity, and I think that’s where clarity matters more than cleverness. Is really something that I’ve learned pretty extensively through all the conversations that I’ve had.
Speaker 2 36:13
I tell you, it’s, it’s, it’s impressive when we get on here and just have these conversations, and how many different directions a plan can go based on that individual or that couple that is retiring, and we have themes, we have movements, however you want to say it, in our economy, in our markets, and it seems like for the last 10 years, what have we been doing? We’ve been watching just an absolute bull market go crazy, and we’ve been chasing those returns. What do you.. what do you picture as the next decade?
Speaker 1 36:46
I think the next decade will be for the people that have structure. I think you used an important word there. You said chasing returns, and I think, by the way, Morgan, you’re exactly right. I think from the period from 2013 all the way up until about 2018 2019 with just a few blips along the way, you saw the stock market do absolutely fantastic, and I think that was a good thing in a lot of ways. I think people made a ton of money during those years if you were invested, and if you did, then kudos and good for you, but I think it also created a reality in which people forgot what it was like to go through a negative and down market, and then when the pandemic hit us in 2020 and when the inflation crisis of 2022 hit us, I think the people that had the most structure were the ones that were able to prevail in the most sound position possible, because when you have structure, I think what it takes out of the process is it takes out the emotional decision making part of the process. How many times have you been invested in the market and you see the market go down, and your emotional side tells you to do what tells you to sell, and it tells you to get out, even though you know that it’s probably not the right thing to do. Losing money is such a hard thing to go through that you make an emotional reaction, and you sell out, and you sell out oftentimes at the bottom or at the wrong time, I think people who have structure built into their plan, who have confidence that even a down market will not affect their financial security and their ability to retire, those are the ones that end up coming out in the most sound position, because let’s face it, folks, we have uncertain markets, we have changing tax laws, we have inflation, we have longevity risk. People are living longer, and then, believe it or not, in this day and age, I think it’s natural to realize that we have people that are do-it-yourselfers, and I think today, more than ever, we have more do-it-yourselfers than we ever have. I think all of that leads to the complexity surrounding retirement planning, and so what I’ve learned is peace, peace of mind, and really peace in general does not come from timing markets, it comes from making aligned decisions that are in accordance with the goals and the plan that you’ve set out to, and I think those are the folks that tend to be the most fulfilled in retirement, who are able to do the things that they want to do, and they control their retirement. They don’t let the market
Speaker 2 39:30
control their retirement. You’re out there, and maybe you’ve been thinking about the planning aspect, but you feel lost, and most likely, if you’re out there trying to do it yourself, it’s pretty overwhelming. It’s like drinking from a fire hose. How nice would it be to work with a professional firm that does this on a daily basis, kind of be that coach along with you on this walk towards retirement and beyond. Have that plan in place, that’s the confidence, the peace of mind we often talk about the. Opportunity to jump on the calendar with Elite Income Advisors is right now. You can call at any time, 800-653-8404 This is a complimentary appointment, and you’re not obligated to become a client, and they’re not obligated to take you as a client. This is a C if it’s a good fit for you at Elite Income Advisors, 800-653-8404 so I’ve got a question for you, Prashant. We’ve been at this a while, so let’s just say, what are some of the questions that your clients, your current clients, are bringing to you right now?
Speaker 1 40:32
So, two or three things that immediately come to mind. Number one is, how do I know whether or not I’m at risk of running out of money, I think, in today’s day and age, running out of money is still retirees’ number one concern. And so, when people come to partner with us in their financial planning journey, they do so, they choose us, and we choose them, because A, we’re a good fit for each other, but B, because we’re able to demonstrate whether or not they’re truly at risk of running out of money, if they are at risk, we want to figure out how to alleviate or even eliminate that risk, and if they’re not at risk, we want to make sure that throughout the trajectory of their retirement that they stay in a position where they are not at risk of running out, so that’s number one, is Am I at risk of running out of money. Number two, I’m hearing this all the time, Morgan, I’m sure you can appreciate this, is people are concerned that their tax rate in retirement is going to be a hell of a lot higher a couple years from now, and that’s because of the 38 and a half trillion dollars of crushing national debt that this country supports each and every year, so as that national debt gets higher and higher, people are coming into the office and they’re asking me, okay, my plan works at today’s tax rates, but does my plan actually work if taxes go up and maybe my effective rate goes up to 25 or 30 or 35% is my plan going to work, so I think there’s deep concern over taxation, and then I think number three is going to be what happens amongst any perceived government instability, right, and what I mean by that is what happens if social security is not there for me, what happens if it’s not going to give me the type of income that I always counted on it giving me, so how is the changes, and how are the changes in Washington DC going to impact my retirement? And that one is interesting, because look, as much as we are planners, we can’t speculate or guess what’s coming down the pike on Capitol Hill. Right, I mean, these politicians, Morgan, I feel like it’s something new every day, and it’s something unpredictable, and it’s on both sides of the aisle, quite frankly. So, I think those are the things that are keeping people up at night. Obviously, there’s a downstream impact on the stock market, on inflation, on the Federal Reserve, on interest rates, with all of that, but those are three questions that immediately come to mind that people are actively asking us about every single day. It seems like I
Speaker 2 43:12
tell you, we are, we are winding down our 200th episode, and it’s always centering around the importance of being proactive and having a plan, but that plan needs to be customized. It’s not cookie cutter, it’s not a template that Prashant is going to put out and pull out of drawer A, B, or C. It basically is about what you have, what you want out of retirement, and the plan, that roadmap to get you to those goals. That’s what planning is all about. So, we’ve talked about again 200 episodes, and everything that has gone into those 200 episodes. What are we going to talk about over the next 200
Speaker 1 43:53
I think people should have some questions that they should ask themselves and ask their financial professional. If you’re working with somebody and they haven’t answered the following questions, I would maybe start looking for a second look. It doesn’t mean you have to make a change, but I think it should reframe your mindset on how to properly plan for retirement. If I was getting ready to retire tomorrow or within the next year or two, the questions I would ask, are number one, what am I actually trying to protect? Is it my wealth? Is it my income? Is it my legacy? What am I trying to protect? Number two, is when I get to retirement, what am I hoping to feel? What is going to make retirement as fulfilling as possible? Is it traveling? Is it time with your family, your grandkids, is it charitable endeavors? What am I hoping to feel in retirement? Number three, let’s do some self evaluation and say what part of my financial plan still feels like a guess, right? Is it your tax situation, is it your Medicare situation, are you unsure? Of whether or not you can survive another bear market like we saw in 2022 or 2008 and then the last question I would consider is, what would make me feel even just 10% more confident this year than I felt last year. Okay, is it more income, is it more safety, is it simply having better performance on your investments, I think if you were to answer and ask these questions, it gives you a framework. Folks, if you’re unsure where to start, pick up the phone, give us a call. Last opportunity for today’s show, it’s 800-653-8404 a free appointment just to have a conversation about the things that are important to you and your family and your retirement journey. Again, 800-653-8404
Speaker 2 45:48
Another edition, the 200th edition of Retire Smart Maryland Radio in the books. For Prashant, I’m Morgan. We’ll see on the radio next week, you annuity
Speaker 3 46:06
guarantees are subject to claims payability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain period of time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. Products are subject to fees and additional expenses. Any commerce regarding safe and secure investments and guaranteed income streams refer only to the fixed insurance products. They do not refer in any way to securities or investment advisory products. Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy, and it should not be regarded as complete analysis of the subjects discussed. Discussion should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. Professional advisors should be consulted before implementing any of the strategies discussed. Investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. Investment advisory services offered through Elite Income Advisors Incorporated, a registered investment advisor located in Ellicott City, Maryland. The firm only conducts business in states and jurisdictions in which they are properly registered or exempt from registration requirements. Registration is not an endorsement of the firm by securities regulators, and does not mean the advisors achieve a specific level of skill or ability, content should not be viewed as personalized financial advice. Insurance annuity products are sold separately through Retirement Planning Services Incorporated. Neither firm is affiliated with or endorsed by the Social Security Administration or the IRS. Social Security, Medicare, pension, and tax rules are subject to change at any time. Insurance annuity products are sold separately through Retirement Planning Services Incorporated. President Ozer Culhagil, Prashant Sabapathi, and Jonathan DeFeo receive commissions for the sale of insurance products as insurance agents for Tower Planning Services Incorporated. Insurance and beauty product guarantees are subject to the financial strength and claims payability of the issuing insurance company. Morgan Patrick is not a client of or affiliated with Elite Income Advisors. However, he has a financial incentive to promote our services because he was compensated for his work on Retires from Smart Maryland. The program is paid production of Elite Income Advisors, you.
