Speaker 1 0:01
So today on Retire Smart Maryland Radio, it’s time to get in touch with your feelings. We all have six main emotions, and we’re going to talk about making each and every one of them work for you, so that your financial future feels comfortable.
Speaker 2 0:19
Welcome in to Retire Smart Maryland Radio with Prashant Sabapathi. Welcome into Retire Smart Maryland Radio, your host, Prashant Sabapathi. The power behind the program is Elite Income Advisors. Prashant is an independent fiduciary, he’s also a published author, couple of books already to his credit, fiscal health, retirement, wealth, and retire abundantly. They’re headquartered in Ellicott City. They have a satellite office in Annapolis for your convenience. I’m Morgan Patrick. It’s always about retirement planning, the importance of having that road map put together for you, and we call it the Retire Smart Roadmap. We’ll tell you more about that as we move through before we get into the emotions of retirement, Prashant. How was your week?
Speaker 1 1:04
Week has been good, of course. In the last couple weeks here, what we’ve seen is a ton of rain. I mean, how about everything going on in the Carolinas, in the Florida area, Georgia? I mean, and it is totally heartbreaking. So, definitely, if you have family down there, we’re all thinking of you, and you know it’s just been terrible having to see it on the news, and obviously some of that rain is coming up to Maryland, but it’s absolutely nothing like what’s going down in the southeast of the United States. It’s scary stuff, quite frankly, it is,
Speaker 2 1:36
and it’s been a heavy, heavy, heavy week for a lot of people, especially on the East Coast and the Southern States, and you know, to kind of pull the curtain back a little bit, you know, I’ve been working with Prashant, and we’ve been having, you know, this radio partnership for a couple of years now, but you know, my origins are from the Carolinas, and my parents still live in Boone,
Speaker 1 1:57
yeah,
Speaker 2 1:57
and Boone got hit really, really hard, Boone, North Carolina, and I’m actually going to be headed that way very, very soon. They still need a lot of supplies. The good news is there’s a ton of support there. They’re getting a lot of help, but it really just rocked the infrastructure, and that’s going to take years to rebuild.
Speaker 1 2:17
It’s too bad, and I know your parents were are in Boone, so hey man, we’ll be praying for them, we’ll be thinking of them, and everyone else that’s been affected by it’s terrible. But other than that, you know, business has been pretty good. We’ve had a lot of people come in to talk about retirement and their plan, and look, elections are right around the corner, but not just the presidential, but you’re talking about mid, you know, what’s going to happen in Congress, what’s going to happen with the Senate and the House, and obviously that has a huge impact on policy, and ultimately all that stuff trickles down into your retirement plan one way or another, it’s something that we have to be aware of. So we had a cool show today, I’m excited to talk about the emotional side of this, because the emotional is just as important as the financial. I think they very much so go hand in hand when you’re creating your financial plan and making sure that you have comfort, Morgan. That’s what it’s all about, right? It’s all about making sure that you are comfortable through the ups and the downs of the retirement planning process.
Speaker 2 3:21
Well, if you’re in the area and you haven’t thought about what-if scenarios in the last couple of weeks, with everything that’s gone on, you know it really starts to, you know, your mind starts to spin a little bit, your gears start cranking. You know, how can I be better prepared, not necessarily for what Mother Nature may bring towards you, but maybe what your future is going to bring. How are you going to be able to handle that? Wouldn’t it be better with a roadmap to kind of get you to and through, and have a game plan for what is going to be your retirement? Now, you mentioned it, we are going to talk emotions, and think about this, you know, it’s about human emotions, and we’re going to relate human emotions to retirement planning, so I’m going to give you the emotion, Prashant, and then you give us, you know, where the focus should be when it comes to retirement planning. So, you know, I think of this when I think of the day that I finally retire, and I say, you know what, Prashant, that’s it, I’m done, I can’t do this radio thing anymore, I’m going to go off into retirement. The emotion I’m going to have is, I’m going to miss you, obviously. I’m going to miss the radio presence that we have, and that’s not anytime in the near future. But
Speaker 1 4:29
what I’m
Speaker 2 4:29
saying is, but most people have this feeling when they head towards retirement, they’re happy. I mean, this is the, this is the beginning of a new stage in their life.
Speaker 1 4:39
And, hey, Morgan, real quick, before I get into the happiness piece, you at least know that you’re gonna have a pretty good financial advisor when you, so yeah, look, I’m glad you brought up happiness, it should be a happy day. I go back to when my father retired from the hospital system, and you know, he went right. Back into private practice, but when he retired from the hospital system, it was happiness. It was happiness because it was a culmination of 25 or 30 years of hard work, and now we got to transition into a lifestyle for which he got to do a bunch of stuff that he never quite had the time for while he was working, and so happiness in retirement, it really comes from being able to live comfortably doing the things that you want to do, that’s going to bring you and your family joy and make your lifestyle as fulfilling as possible. What we relate this to is it all depends on your income, right? You’re used to a certain lifestyle because of your income while you’re working, and by the way, when you retire, your lifestyle is going to be driven by your income, and so you have to understand how much you need coming in in order for your lifestyle to be as fulfilling as possible. I say this all the time, the key to the best retirement outcome, the key to the most fulfilling retirement outcome is income. Income drives the outcome. Know how much income you’re going to need coming in, in order to make your lifestyle as fulfilling as possible. And then design a plan on where that income is going to come from, whether it’s social security, pension, 401 k. That’s where the planning aspect of this thing you need to really get involved.
Speaker 2 6:22
We are diving in on the emotions that are out there when it comes to just, you know, your everyday life, but also as you get ready for retirement, you’re planning for retirement, and how these parallel, so happiness, you know, you’re focusing in on what everybody does, they want to enjoy their retirement. Now, let’s flip that coin. Let’s go to the sad side of this thing. The sadness is out there, and how does that relate to what’s coming in retirement? Now, we don’t want you to think it’s going to be sad times in retirement, but you do need to prepare for maybe, maybe some turbulence.
Speaker 1 6:55
Look, retirement is just like any other point in your life, you go through the ups, you go through the downs, and one thing I say often is that my team and I have the power of perspec, right. We’ve helped several 100, if not over 1000 people retire, and what that’s allowed us to do is be involved with our clients’ lives. We’ve gotten to see the good things that happen, we got to see the bad things that happen, whether it’s long-term care, like what I went through with my own mom, losing a spouse at an unexpected point in time. Our team has experienced that through our clients’ experiences, so we got to remember retirement is not always smooth sailing, sadness, loss, that stuff is going to happen, and you have to be prepared, and one great thing you can do is make sure that you have an emergency fund set up, have a bucket of money set up, so that when things go crazy, you’re able to relieve at least the financial stress of that by having money you can readily access that is totally safe in an emergency fund, so we’ve gotten through two of the emotions, we’ll get to the other four on the other side of the break, but let’s open up our phone lines, folks. The phone line is our open, it’s 800-653-8404 The phone number, again, 800-653-8404 You dial that number, you’re going to be able to schedule a time to come in and visit with our team at Elite Income Advisors. Come into our offices, big beautiful office in Ellicott City, Maryland. You can also schedule virtual if that’s easier for you, but that first visit is an opportunity to talk through some of the retirement concerns you have, whether it’s where’s my income going to come from, what are my taxes going to look like, how much risk am I taking, am I, is my retirement going to be one of happiness or one of sadness, right? Hopefully, we’re on the happiness side. When you come in to visit with us, we’ll help you put that Retire Smart roadmap together to confirm what your retirement may look like. It all starts that phone call, it’s free of cost to come in and visit 800-653-8404
Speaker 2 8:58
When we return on Retire Smart Maryland radio will continue the emotion discussion when it comes to retirement planning, happiness and sadness. We’ve talked about, but now we’ve got fear, anger, surprise, and disgust. That’s coming up next, you We are back on Retire Smart Maryland Radio, hosted by Prashant Sabapathi. Check us out online, Elite Income advisors.com That’s right, the power behind the program, Elite Income advisors.com Again, Prashant’s a published author, couple of books: Physical Health, Retirement, Wealth, and Retire Abundantly. He’s an independent fiduciary, and again, headquartered at Ellicott City, and they have a satellite office in Annapolis for your convenience, and we talk the talk and walk the walk, meaning we will have the discussion here on the radio show, but we give you an opportunity to get in touch with elite income advisors, we have no-cost appointments, that means complimentary, you can talk about that. Hire smart roadmap, get it put together for you, and again, all you’ve got to do is call the number 800-653-8404 So, the emotions we’re talking about them today, and it’s, it’s easy to see this. I mean, you are going to be emotional as you move towards your retirement. There’s the happiness emotion we talked about, just the focusing in on enjoying your retirement. You want to plan well, so you can. And then we talked about the sadness, you got to be ready for the what ifs. How is that emergency fund? Are you prepared? So we have some more emotions to talk about, Prashant. And the next one is, and this one, I think this is natural. I mean, as much as we want to enjoy our retirement, what’s the number one fear? It’s running out of money in retirement, so here’s the next emotion for you. Fear, and how it’s paralleled with retirement planning.
Speaker 1 10:47
Yeah, you’re exactly right. Fear is the number one thing, especially when it comes to running out of money, and what goes into that? It’s the fear of market crashes, right? It’s the fear of ultra high inflation, which, by the way, we’ve all been experiencing the last several years, and those fears kind of compound on money one another and get us to the point where we’re scared of running out of money, and that creates anxiety. You know, I’m reminded of a story that my father told me, some of our really good family friends, this was back in oh eight, and they were almost like mentors to my parents, and so in oh eight they were getting ready to retire, they were mid 60s couple diligently saved for retirement, and the market crashed. What that forced them to do was reevaluate whether or not they could actually retire, so much so that one of them said, Why don’t I pull all my money out of the market, because I simply cannot afford to lose the way that the market is going down, but that was a fear that he had that almost caused him to make a really, really bad decision by pulling all of his money out of the market. I go back to that situation, and I say, How would we have done it differently? How would we advise people to do it differently? And this is where I go back to this idea of bucketing your money, right? We know markets are going to go up and down, instead of having all your money in a market-based bucket that is there to create your retirement income. Why don’t we shift some of this money to a totally safe position, so that when the market crashes, we don’t have to have that anxiety of running out of money, because all of our money is not subjected to the volatility of the market, and this is where just having a little bit of direction, having a little bit of coaching, a little bit of guidance, not only allows you to manage your finances, but manage your fear as well, and so fear is a part of the process. I think what you do, what true planning does is helps you mitigate some of those fears before those scenarios actually become reality, if you have lingering fears and you’re working with an advisor, the fact that you have lingering fears probably means that your advisor hasn’t done a good enough job mitigating enough risk to make you feel confident in your retirement planning. I think you need to create a real retirement plan that gives you the comfort that, quite frankly, you deserve after decades and decades of hard work.
Speaker 2 13:27
And we offer up those complimentary appointments, get that Retire Smart roadmap put together, get some of that confidence as you move to and through your retirement. 800-653-8404 that’ll move you to the front of the line. Grab one of these spots again, they’re complimentary. Leave the checkbook at home, 800-653-8404 The emotions we are talking about in parallels with retirement planning: happiness, the beginning of retirement, sadness, just you know, being aware, but also being concerned of tough times, because we’re going to worry. I mean, it’s our money, right? So we talked about fear, and that’s managing risk in retirement. This next one, anger, addressing financial frustrations. A lot of people without a plan, if they’re just flying blind, not only are they fearful or they’re scared, they’re going to be angry about their money.
Speaker 1 14:17
You know, I was looking through my, my social media the other day on Facebook and Instagram, and I saw this, I saw this video of this young lady who was talking about her student loans, right, and she took out something like 100 or $115,000 to go to school, go to college, and when she graduated, she started paying back these loans. Now she’s made something like, over the last eight years, made something like $50,000 in loan payments, or 60,000 I can’t remember the exact number, and her balance on the student loan was $110,000 And the overwhelming feeling that she expressed when telling that story was anger. How could I pay all this money in loan repayments only to have my balance be just about what it was when I first started eight or 10 years ago, and that’s a great example of financial frustration, and so debt is a huge source of frustration. So is expense, and frustration ultimately leads to anger. So, eliminating your debt before retirement, managing your expenses carefully can really help in alleviating some of the frustration, which ultimately Morgan leads to what I would call financial freedom, and financial freedom goes hand in hand with peace of mind, so you have to have a debt payoff plan. There’s some debts that are maybe okay to carry into retirement, things like a mortgage, maybe, but certainly your higher interest consumer debt. You want to see if there’s a way you can get rid of all that debt before you get to that retirement phase of your lifetime.
Speaker 2 16:01
It’s so important to have you know the conversation about your goals in retirement and creating that plan, and it’s going to be an emotional ride. I mean, we all want to focus in on the happiness part of it as we start retirement, but there’s going to be sadness, there’s going to be fear, there’s probably going to be some anger, and how it all relates together when it comes to your retirement plan. Now, working with a fiduciary in a fiduciary firm, and having that contact, having somebody walk with you down this path, that’s confidence as you move towards your retirement. The next emotion is surprise, and that’s just preparing for what is unexpected. I know a lot of people like, well, how do you prepare for it? It’s unexpected. Well, you can, you can kind of look ahead.
Speaker 1 16:42
Look, you’re absolutely right. Retirement comes with surprises. Some of those are going to be good surprises, and some of them are going to be bad surprises. But to me, diversifying your investments, and most importantly, utilizing a flexible withdrawal strategy can help you adjust to unexpected financial needs, whether those things are like unplanned expenses, stock market changes, you’re going to want to be able to adapt, but look, Morgan, I’m a pretty simple guy. At the end of the day, I try to keep things as simple as I possibly can for my client. Retirement planning is not easy, but I think advisors do a bad job, and they make it a lot more complicated than it actually needs to be, so to me the answer to almost any financial problem that could arise is higher income. Okay, if you have an emergency, having higher income solves that, right? If you want to travel more, if you want to give more, if you want to leave a stronger legacy, having a higher income is going to allow you to do those things. So, in order to deal with the retirement surprises that are inevitably going to come up, both good and bad, oftentimes the answer is built into your income plan 1015, 20% more income than you actually think you’ll need, because at some point something will happen, and you will be thankful that that guaranteed income, that additional income, was built into your retirement plan. Remember, outcome is driven by income when it comes to retirement.
Speaker 2 18:16
We are hitting again emotions and how they relate to retirement planning. We’ve talked about happiness, starting your retirement, sadness, you know, the tough times that may come your way, and being prepared, fear, risk management, anger, making sure you’re addressing whatever financial frustrations you do have, the surprise part of it, you know, preparing, being ready for what is unexpected, and as Prashant said, some can be good, but some can be on the negative side too. And the final one, and that I mean, when you work with a professional, when you work with a fiduciary, you don’t even want to get to this one, but disgust, and that’s just avoiding some poor financial choices. If you’ve got a partner in this, and you have conversations about it, and you have a plan, this is avoidable.
Speaker 1 19:02
Yeah, and what does discuss come from, right? Poor financial decisions. Maybe you have been working with an advisor, or worked with an advisor that you know, in, you know, maybe did something unethical at some point in time, and that’s a difficult scar to, to kind of heal, and that affects your retirement strategy. It affects your retirement savings. So, ensuring that you make really educated investment decisions, making sure that you’re really up to speed on reviewing your portfolio, those are the types of things that help avoid some of those more costly mistakes and ultimately helps you keep your retirement plan on track, and so if you’re working with an advisor, I want you to just take a moment and think about what that interaction with that advisor has been with over the last. Several years, specifically, think to the bad times, think to 2022 when the stock market went down, the bond market went down, inflation was at a 30 or 40 year high. How much did you hear from your advisor? Right, were they there for you to coach you through that time, or were you just a number to them, right. By the way, my opinion, you don’t really need an investment advisor when the market goes straight up. You need the advisor in the bad times when the market goes down to help alleviate the losses that you take and really manage you through that. So, if you’re working with somebody, think about what that interaction might have been like over the last couple years. How often do you see them? What do you wish you were getting out of your relationship, and are you getting it? If you’re getting it, you might not need to come in and visit with us, but if you’re uncertain about any part of your interaction with your advisor, if you’re not sure if you’re working with the right specialist, if you’ve never had a conversation about risk or taxes or income in retirement, or where your paycheck is going to come from. I think you should pick up the phone and give us a call. That phone number, it’s 800-653-8404 That’s 800-653-8404 Now, when you call that number, our operators are standing by, and they’ll be ready to book your appointment with us at our office. So, have your calendar in front of you and be ready to pick out a date. Now, when you come in to visit with us, it’s just a conversation. It’s a conversation about what your concerns are, and whether or not we’re even the right fit to help you address those concerns. For a lot of our radio audience, we find that we are a good fit, and we end up working together in some capacity, but our process, it’s not designed to turn every single radio listener into a client. You’re just coming in to have a conversation, confidential conversation about your situation, and then from there, we’ll help you design a plan that includes social security optimization, an income for life plan to help you map out your income after taxes and inflation, and then we’ll talk about legacy planning and risk as well, and all sorts of that phone call, 800-653-8404
Speaker 2 22:11
When we get back on Retire Smart Maryland Radio, it’s the ups and downs that worry retirees and pre-retirees. If they have no plan, that’s where the worry comes in. Inflation, interest rates, markets, and the political landscape need not worry you when you have a true professional working with you. We’ll talk about that when we return on Retire Smart Maryland Radio, you Retire Smart Maryland Radio, hosted by Prashant Sabapathi, Elite Income Advisors. Where you can find him, the power behind this program. Prashant, an independent fiduciary, published author, Physical Health, Retirement Wealth, and Retire Abundantly. And again, Elite Income Advisors, headquartered Ellicott City Satellite Office in Annapolis. I’m Morgan Patrick. And each and every week, it’s retirement discussion: the importance of having the plan, being ready, being prepared, working with professionals, and making sure you know as you move towards your retirement, you’re comfortable, you’re confident. So, as the year closes, hard to believe we’re talking about this, because, man, it has flown by retirees. Those nearing retirement, you’ve got some last-minute strategy opportunities that could significantly impact the finances. So, again, taking advantage of tax-saving opportunities and reviewing charitable contributions, these are all things that you can be lining up right now, you should be having these types of conversations, so I’m going to throw some questions at you, Prashant. Here we go. How can retirees optimize their required minimum distributions, the RMDs? We talk about RMDs all the time, but how at this point in the year can they optimize them?
Speaker 1 23:55
So I think there’s two things to consider here. There’s something called what I call the RMD aggregation rule, so think about this. Maybe you have multiple IRA accounts, maybe you’ve rolled over money from a 401 k or tsp into an IRA, and maybe you have multiple IRAs. There’s actually a rule out there that says if you are eligible for the required minimum distribution RMD, you can actually withdraw from any combination of those IRAs to satisfy the RMD, so let’s say on IRA one I have an RMD amount of $15,000 on IRA two I have an RMD amount of 25,000 What I’m allowed to do is go to IRA two and take out $40,000 and actually that satisfies not only the distribution for IRA two, but IRA one as well. So, aggregating your IRAs together to take out your distributions is one thing that you can do to help optimize your retirement and RMD plan. You just want to make sure that it’s well thought out and that it has a purpose. Behind it, number two is taking advantage of what’s called the QCD. It stands for Qualified Charitable Distribution. If you’re eligible to take RMDs, you can donate that RMD directly from your IRA to a charity like a 501 c3 and by doing so, you actually do not need to pay tax on that charitable deduction, you’re taking that deduction, so you don’t pay tax on it. So that’s a tax saving tip. If you’re giving money anyway, might be better to consider giving it directly from your IRA, where you can at least avoid the income tax that comes with that transaction.
Speaker 2 25:41
We are talking about again, as you move into retirement. At this point, it’s the end of the year. Things you can be doing, what last-minute retirement account contributions right now, Prashant, are still possible? Because we are getting down to the wire.
Speaker 1 25:54
Yeah, don’t forget about the catch-up here. Okay, the catch-up contribution is for people that are age 50 or older, you can make catch-up contributions to your retirement account. That’s an extra amount that you’re allowed to put in over and above the traditional 401 k maximum to save a little bit more, to give you a little bit more extra juice before you get to retirement. So, remember, these contributions help people that are closer to retirement boost their retirement savings as they get closer to sunsetting out of the workforce, so if you’re not yet taking advantage of the catch up, it could be a great way to save some additional money, so that you can save more and have a bigger nest egg, potentially as you get closer to retirement,
Speaker 2 26:42
tell you, when you talk about getting towards the end of the year, I mean, most people are thinking about their taxes and making sure everything’s filed, but when it comes to retirement planning, there are some things that you can do, and you really need to be on top of it. So, again, optimizing the required minimum distributions, you know what last-minute retirement account contributions are still possible. Make sure you’re making those, especially if you’re over 50. Make sure your catch-ups are in there. What about Roth conversions? Year-end, good time to do it, Prashant. I think the best time to do Roth conversions is right around the year end. And remember, folks, a Roth conversion is when you take your pre-tax retirement account, and you convert it into a Roth. Okay, by doing that conversion, any subsequent growth that you get on the Roth now
Speaker 1 27:30
becomes tax free, because that’s the benefit of a Roth IRA. That being said, you have to pay taxes on the converted amount. So, let’s say I have a million dollars in my IRA, and I converted 100,000 into a Roth. That 100,000 is income to me in the year that I make the conversion, so I do have to pay taxes on it. But let’s think about this for a second. Do we think taxes are going to go up in the future? Do we think they’re going to go down? My
Speaker 2 27:57
hands up, my hands up, my hands up. I’m going to say up.
Speaker 1 28:00
You’re going to say up. I’m gonna say up. By the way, I talked to a lot of different people during my seminars, and those types of things. I ask every room that I talk to, does anybody in this room think taxes are gonna be lower in 15 years? I’ve done a ton of seminars, Morgan. No one has ever raised their hand. Everybody thinks taxes are going up, so if you think that your future tax rate is likely to be higher than your current tax rate, doesn’t it make sense to pay the current tax rate today, so that we never have to pay taxes again? I think that’s something that potentially makes a ton of sense. Now, I’m not saying that every single person should go do a Roth conversion, but what I am saying is every single person should evaluate whether or not a Roth conversion is the right thing to do, and folks, you got to remember the Tax Cuts and Jobs Act of 2017 reduced marginal income tax rates from about one to 4% for five out of the seven brackets. Okay, the Tax Cuts and Jobs Act expires at the end of 2025 and so we really only have one more full calendar year to take advantage of ultra low tax rates. We’re in one of the most tax favorable environments that we will ever be in, in my opinion, and quite frankly, one of the most tax favorable environments that we’ve ever seen, we should be taking advantage of it before it expires. It expires december 31 2025 unless they make a decision to extend the current tax cuts, which, personally, I don’t know about you, Morgan, but I don’t think that that’s going to happen.
Speaker 2 29:37
Yeah, yeah, I tell you, end of year gets you thinking, and you really need to have almost like this checklist. Make sure you’re optimizing your RMDs, last-minute retirement account contributions. Make sure you’re doing those. Maybe have that conversation about a Roth conversion, see if it’s a good fit for you at this point. This next term, bunching I. What are the potential benefits of bunching charitable donations?
Speaker 1 30:04
So, bunching charitable donations is a strategy where you group multiple years worth of donations in a single year to exceed the standard deduction threshold. Okay, and what that allows you to do is really itemize your deduction and potentially get a larger tax benefit, whereas in alternate years, if you weren’t doing this, you would just take the standard deduction, so retirees, other donors, you can really maximize some of the tax advantages of your charitable giving, especially in years where your total deductions surpass the standard deduction amount, you know, I actually serve on what’s called the Plan Giving Advisory Council for the Baltimore Symphony Orchestra, and so one of the things that we do as part of the BSOS PGAC is we talk about how to reduce tax liability through charitable giving, so if that is important to you, whether it’s to something like the BSO or to something like any other charitable cause out there, you should be working with your CPA, with your accountant, to talk about how to maximize your charitable deductions for the purposes of not only doing something that’s really good, but also mitigating your tax responsibility, not just in the current year, but in future years as well.
Speaker 2 31:23
Yeah, it’s called planning, that’s what this is. We’re talking about end of year stuff right now, checklist. I do want to hit this real quickly, and just reviewing health care expenses, and we can hit it real quick. We want to make sure we give people an opportunity to get into the office. Prashant,
Speaker 1 31:37
yeah, that’s exactly right. I think that if you have not considered taxation, if you haven’t considered whether a Roth conversion is the right thing to do, pick up the phone and give us a call. We’re coming into year end, and we’re getting to that point where we should be checking off the boxes on that retirement checklist that Morgan talked about. If your advisor hasn’t done that for you, or if you haven’t done that yourself. Pick up the phone and give us a call. It’s 800-653-8404 It’s 800-653-8404 It’s totally free of cost, folks. When you come in to visit with us, there’s no obligation to do any business with us. You’re not agreeing to become a client. In fact, we’re not agreeing that we’re going to take you as a client. All we’re trying to do is figure out where your concerns lie. What strategies may exist for you to address those concerns, and lastly, see whether or not me and my team are even the right fit for you. If we find that we’re all the right fit for each other, maybe there’ll be an opportunity for us to work together. If not, I give every single person who comes in to visit the opportunity to tell me, hey, I don’t think we’re the best match, and we go our separate ways. No hard feelings. I will still see you around town. I’ll still shake your hand. I’ll still say hello. It starts with that phone call: 800-653-8404
Speaker 2 32:52
We are back with more Retire Smart Maryland Radio. We’ll wrap it up after this, you Retire Smart Maryland Radio, hosted by Prashant Sabapathi. You can find him at Elite Income Advisors, headquartered in Ellicott City. They have a satellite office in Annapolis for your convenience. Prashant is an independent fiduciary, he’s also a published author, two books already: Physical Health, Retirement Wealth, and Retire Abundantly. I’m Morgan Patrick, and each and every week, it’s retirement discussion, and the importance of having a plan. And there are a lot of you out there that have done an amazing job saving, putting the money away into your retirement accounts, but folks, that is not a retirement plan. So make sure you’re working with a fiduciary, work with a professional, and map this out. And there are another group that’s halfway down the path, and you’ve started the planning process, but you’re frustrated. Maybe those calls aren’t being returned. Well, get a second opinion. You can do it by simply calling 800-653-8404 These are complimentary appointments, exclusive for our radio listeners. And you can call right now and get to the front of the line and get you that Retire Smart roadmap put together free of charge. 800-653-8404 Did you know get this, that over 90% of Americans in their 50s and 60s rate their health as one of their top concerns, that’s from the AARP, Charles Atkinson, with that, and then as health care costs rise, longevity increases, planning for medical expenses and long-term care more critical than ever before. In fact, get this number, and we’ve talked about this number before, Fidelity estimates that a 60-five year old couple retiring right now will need around $315,000 just to cover health care in their retirement again sourced from AARP, and folks, that doesn’t include long-term care, that’s just your health care. So, how do you ensure that your retirement plan can handle what has to be a massive fine. Financial burden when it comes to health care, so question number one, here it is to you, Prashant. How should we factor in the rising health care costs into our long-term overall retirement plan?
Speaker 1 35:12
Look, I think before we can factor in rising health care costs, we actually have to factor in health care costs, and the reason I say something that sounds so rudimentary, like that is that I see advisors all the time. People come in to visit with us. My advisor has put together this plan, and then I ask that monthly target of income that you want to, that you want to get to. Let’s say it’s $8,000 a month. Does that include, include the cost of health care and Medicare? Oh, what do you mean, Prashant? What? What’s Medicare going to cost me? I thought Medicare was a government-subsidized program. Isn’t that what I’ve been paying all my taxes for all these years? And so I can’t tell you how many times people come in and not only have they not accounted for rising health care costs, they haven’t accounted for any health care costs in retirement, and it’s one of the biggest concerns out there. So, the first step in dealing with this is understanding how the Medicare system works. Okay, when you put together a retirement plan with us, when we partner with you to help you do that, one of the things that we’re going to explain is exactly how Medicare works, you don’t pay a premium for Part A, you do pay a premium for Medicare Part B. Oftentimes, you’ll take a Medicare Advantage plan or a Medicare Supplement plan, and then you have a prescription drug plan that you have to typically get involved with, and so if that’s the case, that could be an extra 345, $600 a month, depending on your monthly income that you have to account for in your retirement plan. So, the best place to start is work with a professional who knows what they are doing, and I can’t tell you how many times I see people working with accumulation advisors, people that have helped them accumulate money, and they’re going to their accumulation advisors with a distribution problem. Okay, work with a distribution specialist who’s well versed in Medicare, in taxes, and in investments in income to create the most comprehensive plan possible.
Speaker 2 37:15
Again, big concern when we get into retirement. The survey: 90% of Americans 50 to 60 years old, health is one of their top concerns as they move towards their retirement years. So, how you know, are you going to factor in the rising healthcare prices and also have that fit into your long-term retirement plan? So, the next question, the follow-up question to that is, what if there’s something above and beyond normal healthcare. What if there’s a crisis, and you have to face it? Are you ready for that with your retirement plan?
Speaker 1 37:50
Yeah, it’s a good question. And remember what I said earlier in the show, is typically the answer to some of these unexpected problems is more income, right? And I believe that I believe that to my core, and one way to get more income, especially in a situation where you have nursing care, skilled nursing care, or home health care, is to explore the idea of long-term care insurance, right? And long-term care insurance isn’t a fun thing to ever have to plan for, but I’ll tell you what, it can save you a ton of money and give you a lot of extra income in the event that you have to go to a nursing home, so having an emergency fund to spend fund health care specifically, having a long term care plan to help protect against nursing care expenses, even doing something as simple as potentially setting up a health savings account can offer you not only the means to help pay for care, but also tax savings and tax advantages that could be baked into your financial plan as well, that could be extremely advantageous as you head for the more unexpected part of planning for health care and retirement.
Speaker 2 38:59
We are talking about again the latest survey, AARP Charl Atkinson, giving us that 90% of Americans in their 50s and 60s, they are putting health right there as one of their top concerns, and how are you going to pay for it with the rising costs of health care, also long-term care possibilities. Now an opportunity to have these types of conversations and making sure that healthcare and long term care are part of the conversation, when you’re making your plan, grab one of these appointments, get that RetireSmart roadmap put together, and one of those rest stops on your way to retirement, one of those, you know, key factors for your retirement plan is going to be a healthcare conversation and a possible long-term care conversation. Again, call the number 800-653-8404 That’s 800-653-8404 All right, so we’re getting back to the questions, and we’re kind of intermingling all of these. So we’ve talked about the rising health care costs, and should you have that long. Term retirement, you know, long term care in factored in there. And should I consider now? You mentioned long term care insurance. At what age should I consider it, if at all? And I say, if at all, because we, you know, we have to plan for the what ifs.
Speaker 1 40:14
Look, I think in an ideal world, where everything was perfect, you’d get long term care as soon as you possibly can, while you’re healthier, while you’re younger, and that’s to keep the costs down. Now, in reality, what we kind of, the rule of thumb is, is start educating yourself around 50 years old, start seriously looking at 55 and start buying in your late 50s or early 60s to secure lower premiums, while ensuring that you get that coverage before you develop any additional health risks or pre-existing, uh, conditions that may be considered. That being said, if you have the resources, if you have the tools, if you have the education to do so, you want to look at this stuff as earlier, as early as possible. I mean, the simple fact is, if all else was equal health wise, you’re going to pay less for long term care insurance when you’re 45 rather than when you are 65 assuming that your health was exactly the same. And so, starting early, even if that doesn’t mean buying it, just starting the process of exploring it early can be an integral part of how to properly plan for long-term care.
Speaker 2 41:28
Retire Smart Maryland Radio. Prashant Sabapathi, your host. We are talking about again one of the top concerns of those that are in their 50s and 60s, and they are, man, they are pedaled down. Retirements right there. They’re concerned about health care, the price of health care, what they can do about it, how they can plan for it. And again, folks, if you’re just sitting on a portfolio, that is not a plan. So have these types of conversations. We’re gonna give you that opportunity to get on the calendar with Prashant and his team at Elite Income Advisors here in just a second.
Speaker 1 42:00
So you did mention health savings accounts. Let’s, let’s dive a little deeper there. How can that play into retirement planning and help people out when it comes to these expenses? Yeah, so health savings accounts, what they are is they’re effectively tax advantaged accounts that allow you to save for medical expenses, and you know the contributions that you put into them, the growth that you have in those are going to be tax deferred, which is really good. You don’t pay taxes as your account’s growing. When you take withdrawals from the account, as long as the withdrawals are used for qualified medical expenses, those withdrawals are going to be tax free, which makes them, makes them being HSAs an essential tool for healthcare planning in retirement and tax planning. Quite frankly,
Speaker 2 42:51
tell you, when you think about it, I mean, we’re having these conversations about all the ins and outs when it comes to one of the top concerns for those that are nearing retirement. Man, it takes a plan, it takes that conversation, mapping it out, and we get so dialed in on the numbers, you know what’s in my portfolio from $1 amount, am I going to be able to withdraw a certain amount, so I can just live the lifestyle that I want. Well, there are a lot of support columns, Prashant, when it comes to doing just that. I mean, you want to be in the best health that you possibly can, but if something happens, you need to be prepared and ready to pay for it. And you’ve said this before, you know, having enough income to cover up any kind of issue you have with a band aid, or whatever it needs to be, you know, creating that income and making sure that income is there for you all the way through retirement, it’s vital.
Speaker 1 43:42
Yeah, that’s exactly right. Look, I go back, I say this all the time. If you’ve been listening to the show, if you’ve seen my TV show, you know my philosophy. Hopefully that’s been clear from now. At this point, based on what we’ve said, it’s all about your income. At the end of the day, it is all about income. When you have all the income that you could ever want or you could ever need coming in, it empowers you to do different things with the rest of your money to position yourself to be protected against things like rising health care costs, against things like inflation or market downturn. So, yeah, we can take advantage of HSAs, we can take advantage of annuities to create more income, we can use the stock market to our advantage, we can use tax loss harvesting to do these types of things. So, that being said, it all comes back to the fact that you must have a coordinated plan together. The solutions are not quite as important as making sure that all the solutions are working together. Okay, so dial the phone number. Last opportunity for today’s show: 800-653-8404 It’s 800-653-8404 Come on in to visit with us. We’ll help you put together a comprehensive, a coordinated plan that it. Specifically addresses the concerns that you outlined for us, whether it’s health care, taxes, risk in your portfolio, or where is your retirement paycheck going to come from. Again, last opportunity for today’s show: 800-653-8404 Another edition of Retire Smart Maryland Radio in the books for Prashant. I’m Morgan. We’ll see on the radio next week.
Announcer 45:32
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Unknown Speaker 46:42
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