Speaker 1 0:00
You coming up, could you imagine the government giving stock options to every kid in America? Well, President Trump is having Congress vote to make that happen. Stick with us as we cover this story and discuss the future of retirement planning in our country.
Announcer 0:17
Welcome in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:24
Welcome into Retire Smart Maryland Radio. Your host is John DeFeo. You can find him at Elite Income Advisors Independent Fiduciary, and again, it’s all about helping you get ready for your retirement. They’re headquartered in Ellicott City, and they have a satellite office in Annapolis. I’m Morgan Patrick. My pleasure to go back and forth with the advisors each and every week, and we want to remind you, too, a great resource outside of our radio show is the website Elite Income advisors.com that’s Elite Income advisors.com So, before we dive in on the latest from Capitol Hill, and as it pertains to retirement, John, how’s the week?
Speaker 1 1:03
It’s been great. It’s been busy. Definitely sound like a broken record at this point, but very busy week. We’ve been getting out into the community, doing a lot of seminars, staying engaged that way, trying to push as much content out as we possibly can. So, I’ve been staying busy with that, as well as client meetings. You know, folks are coming in, and typically this time of year is slower in the financial industry. Is you know, the schools are getting out, people are going on vacation. There’s a lot of transition from, you know, the school year to summer, but we’re still getting a lot of folks that are reaching out with questions, especially with this new big beautiful bill that we’re, you know, following and watching through the passes of the Senate, a lot of, you know, turmoil internationally, you know, with the Middle East and everything going on over there, so a lot of things for people to talk about. We’re staying busy, it’s always good.
Speaker 2 1:54
Yeah, just an average walk in the park, right? Right, yeah, all this, all the stuff that’s going on that could impact your retirement, it gets you thinking about your money. We’re gonna give you something else to think about. I know we’ve got some parents that are listening to this show, and imagine this scenario, just for a moment. You just had your first child, maybe your second child, and the government steps in and says, you know what, we’re gonna give this child a cool $1,000 would you be okay with that? And is this a good idea? So, this is the plan that President Trump just announced, and I’m not kidding. You may have missed it, but he said that kids in America should be getting some seed money from Uncle Sam for investments, and is this the future of American retirement? Just listen to this:
Speaker 3 2:39
every US citizen born after december 31 2024 before january 1, 2029 the federal government will make a one-time contribution of $1,000 into a tax-deferred account that will track the overall stock market. In other words, it will be pegged to an index that will pick is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation.
Speaker 2 3:08
All right, John, so government-seated investment accounts for babies, just your thoughts.
Speaker 1 3:13
I think it’s interesting. I mean, I think his heart’s in the right place, you know. I definitely think there will be some, some challenges with this. I mean, as a dad of a two year old and a one month old daughter, I can already see how there’s going to be a bit of infighting, right? So, my daughter was born to, born, you know, about a month and a half ago, so she would be entitled to this $1,000 My son was born in 2023 so he wouldn’t – you’re gonna get a bit older, and he’s like, “What the heck, why don’t I get one right, but in all seriousness, I think that could be a very small issue. I mean, I think it’s great to be able to start the youth out with a savings account in that regard. I do personally think there are other ways that could potentially have better tax savings for the contributors, for the child itself, in terms of like education accounts, Roth IRAs, there’s other strategies, but I think all together it’s, it’s, you know, it’s a good idea. I think Trump’s heart’s in the right direction with this, but you know, we’ll just have to pay attention to it, track it, and see how it goes.
Speaker 2 4:13
Yeah, I was going to say it’s, it’s part of that big beautiful bill, and depending on how that goes, you know, this is how this policy could possibly either soar or get grounded, so there are other parts to this too. The private contributions and guardian control, there’s an angle here.
Speaker 1 4:34
Yes, so with the private contributions, I think you can contribute, the guardians can contribute up to like $5,000 annually to the account, you know. I think some private sector CEOs have pledged billions to support these types of accounts, but you know what we found, I think, is that would probably, you know, help out the more wealthy families more than the lower income families, because these folks have more money to put away for their kids. Right, you know, I think it’s important to be able to make these contributions for your children. You know, $5,000 annually is a good bit of money to be putting into an account like this, especially at that age. You know, with that being said, though, with the Guardian control, I don’t know how deep they go into what their ability is to pull that money out. You know, is this being afforded to the kids that parents now have the ability to go in and pull this out whenever they want, you know, and just they have to take a penalty on it. I think there are rules that it has to be for the kid, it has to be longer term for them to take it out, but who knows what rules might change, you know. This isn’t set in stone, so again, I, you know, need to learn a little bit more about it, you know. I did a bit of research on it, you know, just reading over the big beautiful bill, and it seems like it could be a good idea. I think the problem with the big beautiful bill is that it is so big that it’s so hard to understand, right? I mean, trying to get through that is difficult. Well,
Speaker 2 5:50
well, hard to understand. And guess what? There is a price tag, and that is our next conversation piece, the funding of this and what it’s going to add to the deficit.
Speaker 1 6:01
Yeah, I mean, we’re already north of $37 trillion in national debt, right? $1 trillion every year, just to the interest on the national debt. You know, I think that is where I have more of a problem with this, is that we’re looking for ways to cut spending meaningfully, and I don’t know that $1,000 investment account for a newborn is the way to do that meaningfully, right? In terms of spending the right way, so you know, we talk about government spending all the time. You know, we had the Department of Government Efficiency work to try and cut $2 trillion of spending. They didn’t get anywhere close to that. So I think up to this point in history, you know, we’ve identified that the politicians are either unwilling or unable to make meaningful spending cuts, and introducing, like, something like this into a bill. We’re already $37 trillion in debt, I think, could cause problems down the road. I think we need to really rein it in, allow parents to be able to contribute for their kids, you know. If anything, enforce financial literacy classes in high school, you know, teach these kids how to invest their own money, maybe go get a part-time job, right? That’s instead of just handing them money and you know, doing it for them, that’s not teaching them to work hard, it’s handing them something.
Speaker 2 7:11
Yeah, and you think about this too. I mean, we’re talking about it here on the radio, because, you know, President Trump started talking about seed money for the next five years to newborns that gets the conversation going about, you know, retirement being ready and planning. If the bill doesn’t pass, if this part of the bill doesn’t pass, at least we’re having these types of conversations, and people are going to be more aware. Now that being said, we have an opportunity for you to come in, talk about your situation when it comes to retirement. A lot of you are sitting on portfolios, haven’t started planning, or you need a second opinion. John, we’ve got the appointments. Walk us through what’s going to happen if they call our number.
Speaker 1 7:53
Yeah, you’re going to have the opportunity to come to our office, talk to us about your ultimate goals, priorities, concerns about retirement. We’ll walk through how you’re going to fund your lifestyle, what it’s going to cost you, where you’re going to get your income. We’ll talk through the tax implications, you know, where to draw your funds from. We’ll do an X-ray of your investment portfolio to ensure that it is aligned appropriately. We’ll talk through your estate plan. We’ll work on your Medicare and Social Security strategy. I mean, everything you could think about in a financial plan is going to be covered in our office. We’re a one-stop shop. We’ve got in-house CPAs, attorneys that we refer to, we’ve got an in-house Medicare specialist, we’ve got in-house social security specialists, in addition to our financial advisors, our fiduciaries, our financial planners. So, great team, take care of you. Come in for that appointment.
Speaker 2 8:38
10 appointments, we call it our top 10. You can grab one right now. They’re complimentary: 800-653-8404 That’s 800-653-8404 Again, you’re leaving the checkbook at home. This is an opportunity for you to test drive and get to know Elite Income Advisors. Call now: 800-653-8404 When we return, what if the key to better financial decisions isn’t just about the numbers, but it’s your mindset that’s what we’re talking about next, right here on Retire Smart Maryland Radio. We are back on Retire Smart Maryland radio. Your host is John DeFeo. You can find him at Elite Income Advisors, and they’ve got a crew there, folks, Full Office, Prashant Sabapathi, Ozzie, again, more advisors to help you with your retirement planning. If you’ve got any questions about where you currently are, and we know for a fact that there’s a large percentage of you that have saved really, really well, and you’ve got these wonderful portfolios, but you haven’t started the planning process. We’re going to give you an opportunity to at least test drive elite income advisors, but we also know there’s a good percentage of you that have already started, but you’re a little frustrated, maybe the core. Calls not being returned, maybe the appointments getting moved around, that can be frustrating. Go get a second opinion. You can grab one of our appointments at any time. We have 10 this week, we call it our top 10. And to grab one, all you’ve got to do is call 800-653-8404 These are complimentary, that means you’re not paying for it, you’re not agreeing to become a client, and they’re not agreeing to take you as a client. This is a get to know you. It is a test drive, 800-653-8404 So today we’re going to get into the findings of the Mind Over Money study from Capital One in the Decision Lab. The research reveals how our mindset profoundly influences our financial behaviors that kind of makes sense. We’re going to explore how adopting a big picture perspective, right, can alleviate financial stress and lead to healthier money habits. That’s a good thing. All right, so the first one, just John, financial stress, I mean, it’s it’s a big, big concern. There’s, we talked about it when we opened up the show. Gosh, the headlines, everything that’s going on around the world, how it’s going to impact our money.
Speaker 1 11:07
Yeah, I mean, emotions are some of the main drivers of decision making. I would argue that people act emotionally and not logically on most things, right? And stress is one of the most severe emotions of them all, it can cause poor health, it can cause irrational decision making. I mean, throw some facts at you. About 77% of Americans report feeling anxious about their financial situation, and 58% feel that finances have control over their lives, right? So that’s a pretty large majority of the population that worry about money, and if you spend so much time worrying about money, and you know, stressing about what you don’t have, or what you’d like to have, or did I save enough, have I done this, have I done that, you might even be causing yourself to have health issues and make more poor decisions, and do things that you might not want to do, you know, so how does this stress impact our daily lives and the way that we make decisions? I mean, I know personally when I’m stressed, I’m more likely to pick the quickest way out of it, right? I’m like, how do I, how do I feel less stressed, right? What’s the best way to get me from feeling this way? That might be some people as well, right? Where you want to be able to, you know, alleviate the stress as quick as possible, and that might not be the best decision, you know, it can also cause issues with communication, your family, again, your health, you know, stress is one of the number one leaders of heart disease, and in other issues, so it’s important to, you know, not put too much weight into it, and if you really are having concerns, reach out to a financial professional, get a check-in, right, get a checkup, like you do with your doctor. See if you’re on the right track, doing the things you’re supposed to do, and that should be able to help calm some of that. I mean, I joke that in this industry our main role is providing peace of mind. I mean, people ask me what I do. I provide peace of mind for folks in retirement, that’s what we do. I
Speaker 2 12:58
think about this. I mean, you’re out there and you’re sitting on your portfolio and it’s your money, but I mean, you’re, you’re it, you’re your captain, right, you’re, you’re, you’re at the front of the ship, you’re steering the ship. How nice would it be to have a professional, someone that has operated ships for many, many years and has guided that ship through all these very treacherous channels to the safety of the open sea or the port where it’s safe to stay, I mean, think about that. Working with a professional, someone that you can lean into, is a huge stress reliever. Can’t take it all away, but it can certainly help. So we’re talking about, again, Mind Over Money study, Capital One Decision Lab. They came out with these numbers, the impact of basically financial stress, and what that means, and it is a widespread concern. Obviously, it’s going to impact your financial behaviors. The study did say that financial stress leads to fatigue, 43% difficulty concentrating at work, 42% because think about it, you’ve got your money on your mind, right. And then sleep, which is huge, and its impact 41% So, moreover, think about it, the individuals are less likely to save regularly and more likely to spend impulsively because of the stress. So, take some of that stress out of there. Work with a professional that does this on a daily basis. So, again, back to the study, thinking about the bigger picture, right? Sometimes we get so tunnel visioned, John, we’re looking right in front of us, we need to look a little bit further down the road,
Speaker 1 14:32
we call this zooming out, right, everybody’s so zoomed in to what’s right in front of them, we have to zoom out sometimes, and really, you know, take a step back and look at the full scenario. Look at the big picture. I think that focusing just on your short-term goals is going to cause problems, it’s going to cause stress, right? Because if you’re not attaining the things you want to do immediately, and you’re getting impatient with that, how can you really drill down and go after your long-term goals, right? So I think focusing on on long-term goals is important, you know. It’s, it’s building blocks, if you would, you have to go slowly and surely to win that race. I know I’m using a lot of analogies, but it is important. I mean, I think that focusing on, on the long term, ensuring that you’re doing the right things now will be the best thing for you, right? I mean, if all you’re looking at is what can I do to make myself better today, 10 years down the road, you’re going to be missing out.
Speaker 2 15:28
Yeah, I mean, it would be nice to win the lottery, but we know the odds, right? It’s rare, it’s few and far between, almost impossible. But planning for the long term with a steady, you know, steady role in mind, that is what we are talking about today. And again, this mind over money study, Capital One and Decision Lab, just talking about financial stress. It is a big, big concern, and how you deal with it. The opportunity to come in and talk with elite income advisors, meet with the John DeFeo, a Prashant Sabapathi, and their host of advisors. This is complimentary. You don’t have to bring your checkbook. You’re not obligated to become a client, but you can get information. You can find out if you’re ready to retire. You can find out if you’re headed in the right direction. All you got to do is call 800-653-8404 That’s 800-653-8404 10 spots are 10. top 10, and when they’re gone, they’re gone. So call now, 800-653-8404 So, so John, some just some practical tips for smarter money mindset. We want to get into this mindset. This is where we need to be.
Speaker 1 16:37
Yeah, yeah, I think the number one thing, this is what I do, you need to keep your goals visible, right? Write them out, write them in a journal, put them in your phone, you know, whatever works for you. I think that writing out your goals makes them real, right? You’re not just writing them, you’re reading them, you know, read them out loud, continue to drill them, instill that into your mindset, so you’re not just thinking about them consciously, you’re thinking about it subconsciously, everything that you’re doing throughout your day is working to achieve that goal, whether you know it or not. I think that’s that’s a huge, huge up on other people. If you’re able to identify your goals, track the progress, you know, keep tabs on that and keep it written. You know, we talk about having things in writing, you know, we are very large performance. I mean, one of our top considerations, or one of our top recommendations, is having a written retirement plan, having a real written out retirement plan that you can refer back to during the bad times to give yourself the confidence you need to know you’re going to be all right, right. So, I think keeping your goals visible is boot is huge. I also think that focusing on values over features is important, right. So, when you’re making purchases, consider how they’re going to align with your long-term goals, rather than just getting lost in the product details, right. Figure out what’s the best for you in the long term, not just the nitty gritty, you know, and what it could do for you today. You know, look at the long term for that. And then, now I’d also say using goal-directed accounts, right, so creating separate savings accounts for different objectives, like a vacation fund, your emergency savings, maybe a wedding fund, you know, I, you know, personally I have different buckets of savings for those types of things, I’m already married, so we don’t have a marriage fund, but we have a vacation fund, you know, we have, we have the college funds for the kids, we’ve got a say, you
Speaker 2 18:24
got a daughter, you got to think about the marriage down the road, right.
Speaker 1 18:26
Well, that, but yeah, it’s true. I guess I guess I need to start up another bucket, start
Speaker 2 18:30
early, compound interest, John, compound interest.
Speaker 1 18:33
Well, I’m waiting on this $1,000 from Trump first, we’ll see if that comes through. And now, good point, I guess I got to get working on that, and you know, I think that’s smart. And then finally, I think just honestly being kind to yourself, not to be cheesy, but acknowledge your past financial mistakes without judgment, use them as learning opportunities, and don’t just look at your mistakes, but also look at your successes. You know, we’re always forward looking about what we’re trying to accomplish, we’re always, you know, holding ourselves to these high standards and expectations. I’m guilty of this myself, and we don’t take time to see how far we’ve come. We don’t look at where we were two years ago and think, “Wow, this is where I wanted to be. And all we’re thinking about is, “Well, I want to be here in two years. I’m not where I want to be. We watch all these people doing all these things. Social media is toxic. It shows all of these, these, these, these, you know, sides of people that might not be real, but you think they are. You want to be there, you know, and you forget how far you’ve come. So, it’s important to be kind to yourself, give yourself a little bit of grace, and learn from your mistakes. As long as you’re doing that, then you’re moving forward, in my opinion. I
Speaker 2 19:39
mean, think about this, we’re just kind of hitting mind over money. It’s a study from Capital One in the Decision Lab, and it’s centered on financial stress, and it is a big, big concern, but it impacts your financial behavior. You’ve got to take a look at the bigger picture and think about long term, even though that’s tough to do. And then the tips you gave, and the one you started. Off with I think is key, because you hold yourself accountable. If you write things down, you know it’s in front of you. There it is. Okay, this is what we want to do. I’m putting my goal out there, and just holding yourself accountable, that’s a great step.
Speaker 1 20:14
Great, yeah, 100%
Speaker 2 20:16
All right. Well, we have an opportunity for you, and it is right now to get on the calendar, this is an opportunity for elite income advisors to take a look at how you’re doing, and you might just have the portfolio, that’s fantastic, but maybe a plan is needed, and you could start talking about that, and these appointments, they’re complimentary, and there’s no obligation, meaning you’re not agreeing to become a client, they’re not going to try to sell you anything. This is a test drive. John, kind of walk us through how this appointment is going to go.
Speaker 1 20:48
It’s just a conversation, right? Come in, let us know what your retirement dreams and goals are, what concerns you have about your current plan, if you have one. We’re going to identify where your income is going to come from, we’re going to talk through the tax implications of where to draw the money from, and how to get in front of taxes in the future. We’ll talk about risk management, we’ll talk about your existing portfolio, and suggest any potential tweaks. We’ll talk through Medicare and Social Security strategy, estate planning, really again touching on all of those aspects of a holistic financial plan, you know, and again we’re able to do all that in house as a one stop shop. So great place to be.
Speaker 2 21:28
10 spots, and again, we call it our top 10. They are complimentary, meaning you’re leaving the checkbook at home. This is a real opportunity for you. Call this number: 800-653-8404 That’s 806 5384 538404 and you’re probably in one of two places. You haven’t started planning, but you’ve saved well, and you’re sitting on the portfolio. You can see your retirement on the horizon, but you know you’re 10 years out now is an opportunity to start the planning process and have that conversation, or you’re already there, you’re working with someone, but you’re a little bit frustrated. It’s okay to go and get a second opinion. And guess what? As fiduciaries, if you’re good, they’re going to tell you, “Hey, look, looks great, and you can continue on again, no obligation. So, grab one of the appointments right now: 800-653-8404 That’s 800-653-8404 800-653-8404 When we return on Retire Smart Maryland Radio, saving for retirement essential, but saving alone isn’t a plan. So today we’re going to unpack some steps to turn your retirement savings into real strategy. Retire Smart Maryland Radio, hosted by John DeFeo. Where can you find him? Elite Income Advisors, headquartered Ellicott City Satellite Office in Annapolis, for your convenience. He’s an independent fiduciary, and again, great team at Elite Income Advisors. The power behind this program. Check out the websites, nice resource, Elite Income advisors.com That’s Elite Income advisors.com I’m Morgan Patrick. My pleasure to go back and forth with the advisors each and every week. The importance of having a plan, that’s our overall theme, you know. Be ready for it, be proactive, don’t be reactive. You need to get ahead of this, and planning is a great way to start. So, a lot of people believe that simply having that nest egg means that they are prepared for that retirement, but once you retire, the question isn’t how much you’ve saved, it’s how you’re going to use it. So, today we’re going to break down some crucial areas that can turn your savings into true retirement income and an income plan. So, this first one, income distribution, the 4% rule – we have talked about this up one side and down the other in past shows, we’re going to hit it again, but 4% may be outdated.
Speaker 1 24:03
Yeah, from the research that we’re reading, it’s not going to be the sustainable way to distribute your assets in retirement. I mean, this was the rule of thumb that I have subscribed to for years, and traditional financial planners that subscribe to this ideology, and the gentleman that came up with this idea had done so based on the economy of the past, the markets of the past, right. We are in a completely different world today. We’re in a world of instant trading, of volatility in the market we’ve never seen before. You know, think of how you had to place a trade 30 years ago, right? You had to call your broker, they had to make a call, they sent a stock certificate out. You know, it was a pretty long transaction. Now I can go on my phone, and I can place a trade in a heartbeat, right? And we’re also in the age of information, so I can see what’s going on throughout the world in an instant at any time, and that causes volatility in the market. So the 4% rule, again, was based on all of this outdated data, and if we look at the moving forward, what we expect, it’s. Not as feasible, so there have been studies done by Princeton, The Wall Street Journal, that suggest that there’s a 57% chance that the 4% distribution rule does not actually pan out, and people run out of money. Now, we joke, you know, if you’re hopping on a plane at retirement, you’re heading out to Hawaii, and the pilot gets on the intercom and says, “Hey, guys, getting ready to ship out, you know, sunny and 85 in Maui, going to be about 11 hour flight. Just a heads up, there’s a 57% chance this plane goes down in the Pacific before we get there. You getting on that plane, Morgan?
Speaker 2 25:33
I am not getting on that plane.
Speaker 1 25:35
I didn’t think so, right. And you know, I don’t think you’re getting on that plane unless it’s a point 00000 1% chance, right. So, why are we taking that same risk with our retirement money? And I think it’s because we are focused on outdated planning and outdated data. So, as you meant, you know the way that we look at this is, how do we ensure that your income and retirement is predictable? Right, we don’t believe that you should be relying on the stock market and selling assets out to provide your income, right. You don’t want to sell at a loss, you know. The market’s down, you can’t call BG and say sorry, I’m not paying the bill this month, the market’s down, right. Probably not going to be a great thing for you. So, so how do we get in front of that? And again, the way that we do that is through bucketing. We create different buckets with different goals, different strategies, you know, you’ve got your bank money that you’re using for operational strategies, like your, your expenses from day to day, your emergencies, and that’s kind of your cash reserve bucket. And then you have a pension bucket, if you would, or a safe bucket that produces the income that you need, that’s not going to be subject to market volatility, doesn’t have the ability to go down. We can accomplish this through things like fixed indexed annuities, through just fixed annuities, through different types of bond ladders and strategies. There, so there’s different ways to produce that income without the volatility. And then finally, you do want to have money in the risk bucket. You want to be able to grow the assets, invest in the market, take advantage of that market growth for inflation and building your legacy. So, again, you know, having different buckets of money with different goals, we feel like is the best way to do it. We find more success, it’s more predictable, and you’re not wondering if that 4% rule is going to actually work out.
Speaker 2 27:17
We are talking about your savings for retirement and just ways that you can turn those savings into a true retirement income plan. So, again, that 4% rule, it is outdated. You need to make sure that you have an overall plan. And, speaking of overall plan, within your own retirement plan, John, how important is just handling the taxes, planning for what taxes you know are going to be, as opposed to where they are now. Right now, taxes – we’ve said this before on sale, but we all believe at some point they’re going to go north. So, if you do not have a tax plan and you’re in all these tax-deferred accounts, and here comes retirement, you could be in real trouble.
Speaker 1 27:58
100% Yeah, I mean, we preach this every day. We’re in a very low marginal income tax bracket environment today, with the tax cuts and jobs act expecting for these to be extended with the big beautiful bill, but that’s only until the next administration comes in and reverts that tax code to something else, right? So we have to be mindful of that. I mean, I think between taxes and inflation, if you don’t have a plan in place, that’s the top two eroders of your assets and purchasing power, you know. At the end of the day, you’re netting whatever the government doesn’t get, so the less you have to pay the government, the more in your pocket. Our job as advisors is to maximize our clients’ income, minimize taxes paid, so you have to look at strategies, you know, look at things like the strategic distributions to fill up tax brackets, look at Roth conversions, look at using different types of tax advantage accounts. So, there’s a lot that we can do with the tax planning, and in fact, we have in-house CPAs to help mock out these types of situations to ensure that we’re doing the right things. So, you can be confident that if you have a large pre-tax account, we are well equipped to diagnose the issues with it and ensure that it’s managed properly and the taxes are handled properly.
Speaker 2 29:08
You’re locked into Retire Smart Maryland Radio, hosted by John DeFeo. And John, this next one, I think a lot of people fall into this because they are sitting on the portfolios and they’re saving and they’re doing a nice job of that, but they’re getting closer and closer to their retirement date, and they haven’t shifted any kind of risk in that portfolio. So, not knowing your risk number as you approach retirement, and not having a plan for it, that could be a big problem.
Speaker 1 29:38
Yeah, yeah, we preach this as well. I mean, a big problem we see with folks about to retire is that they don’t know when to turn down the knob, right? You know, if you’ve won the game, why are we still trying to score? I mean, that’s that’s a big deal. So, we had a lot of people that we saw this happen with in, oh, wait, you know, you were about to retire a year away from retirement, they were investing. Sit heavily in equities, because they were in accumulation mode. No one talked to them about shifting their strategy to distribution, and you know, going from growth to income. They got to 08 they lost half their money, they sold out, and they never recovered, right? So, it was a bad situation. We see this happen time to time again. So, it’s extremely important when you’re getting close to retirement to review with an advisor a strategy to turn down the risk, you know, maybe you know, shave some of your, your winnings off the top and create a strategy that is predictable, right? I mean, you go to the casino, you drop $1 into the slot machine, and you win $5,000 you putting that whole five grand back in and risking it all. No, you’re probably pulling some of that out and going back to the table with a little bit. So, why wouldn’t you do the same thing with your retirement plan? You know, I think it’s very important to shift to a different strategy. You know, the sequence of returns in your investments during the first three to four years of your retirement can make or break your plan, right? You head into a recession or a bear market for multiple years, and you’re taking money out, you might never recover from that. So that’s why we look at planning a little bit differently. And if you know you’re open to a different perspective, I think our office is the place to be.
Speaker 2 31:11
Well, thinking about your options, talking about your goals, but also sitting across the table from a fiduciary and having just a real conversation about retirement, and things you’re going to need, and there may be some things that pop up you hadn’t really thought about, and that’s our next one, John. We’ll hit it really quickly. Healthcare, long-term care. Hey, man, I’m healthy, I’m ready for my go-go, but you really need to think about slowing down, and when things do slow down, health pops up
Speaker 1 31:37
100% Yeah, once you start to travel and do all these fun things you didn’t do, you know, that can be pretty costly, and you’ll start to slow down a bit, your expenses might come down a little there, but then you start to get older and you start to have health elements come up, right, whether it just be your normal health conditions, whether it be a long-term care situation, you’re going to have to plan for these things, so building that into the plan is imperative, you know, it’s assuming that you’re never going to have a medical issue or that Medicare is going to cover everything is not a strategy, because Medicare does not cover everything. It’s important to look into supplemental plans. You know, Medicare only covers the first 100 days in the long-term care facility. Aside from that, you have to fund it, and once you run out of money, then Medicaid kicks in, right? But you have to be poor, and the level of care you’re going to get in a Medicaid facility is likely not going to be the same that you get in a private facility that you’re funding.
Speaker 2 32:27
Got to be ready for retirement, folks. Got to have a plan, and we give you an opportunity to get on the calendar with the Elite Income Advisors. John, tell us, how these appointments are going to go. If they call the number,
Speaker 1 32:37
yeah, if you call, well, you’re going to come into our office, we’re going to have a conversation on your goals, your concerns, talk through what retirement looks like, what it’s going to cost you, where you’re going to bring your income in to cover those costs. We’ll talk through your taxes, we’ll look at your estate plan, once your assets are aligned the way that they should be, the right amount of equities to fixed investments, we’ll identify all of that. We’ll go through your Medicare and Social Security strategy and hit on all of those, those different topics.
Speaker 2 33:07
All right, we’ve got 10 appointments. Get into our top 10 by calling this number: 800-653-8404 These are complimentary. You’re leaving the checkbook at home. If you’ve got any questions about where you sit for retirement, if you’re just on a portfolio, that’s not a plan, folks. Or, if you need a second opinion, call now: 806 5384041 more time, 800-653-8404 When we return, it’s time for scenarios. I’ll throw him at John. We’ll see what he comes up with. That’s next, you. To retire Smart Maryland Radio, your host is John DeFeo. You can find him at Elite Income Advisors Independent Fiduciary. They’re headquartered in Ellicott City, and they have a satellite office in Annapolis for your convenience. I’m Morgan Patrick. My pleasure to go back and forth each and every week with the advisors on the importance of being ready for retirement, having a plan, having that roadmap to get you to and through retirement. Again, it takes planning, and we wrap up most shows with scenarios. These happen all over the country. We gather them, so they happen out in LA or Seattle or maybe Chicago or down in Austin, Texas. So these are scenarios that can occur anywhere to retirees, and we’ve gathered them, and now we’re John would do. All right, so here’s the first one. They’ve been steadily contributing to a traditional 401 k for over 25 years, and now they’ve got right shy of $1 million 950,000 They’ve got it saved. There it is. They’re wondering if it makes sense to reduce contributions in their final working years to free up cash for possibly paying down their mortgage. What’s the trade off between retiring with less debt versus. This is a slightly bigger 401 k,
Speaker 1 35:03
so tricky one, right? A couple of moving parts here, you know. Number one, I’d look at if they’re receiving an employer match, right? You never want to give up that free money, so if they’re getting an employer match, and I don’t know that I would suggest giving that up to accelerate mortgage payments, I think you’d also want to look at the mortgage rate, you know, if these are one of the people that refinanced, you know, during, during COVID, you know, when interest rates were at two, 3% it might behoove them to actually maintain the mortgage and continue to invest, because you’re likely to get a higher rate of return at the bank or in your account then you’re paying to your mortgage, right? So you have to look at that variable, and then you also have to look at what retirement will look like for you, right? I mean, are you planning to relocate? Are you planning to sell that house to begin with? You know, is a million dollars enough to generate the income that you need in retirement, or do you need to have more than that? Right. So, I think you have to look at all of that, but certainly the trade off is that you’re giving up additional savings that could be compounding and growing in the market for you in order to pay off a debt that would potentially free up income down the road, but a lot of variables that we’d have to look into to determine what the right move would be, but I think you know they’re in the right thought process of, you know, how do we make sure when we get out of retirement, or so we get out of work into retirement, we don’t have a mortgage to pay. I mean, we have a lot of clients that have that goal, so just a lot more we’d have to look into for that.
Speaker 2 36:28
Yeah, and a big part of planning is being flexible, talking about options, and obviously seeking professional advice, you know, working with a fiduciary, they’re going to act in your best interest, so sitting down and talking about what you want out of retirement, that’s going to be the heart of the discussion. All right, next scenario, their will hasn’t been updated since the kids were in high school, and now they’re in their 60s with grandbabies and a small vacation property. They’ve heard that trust might help avoid probate, but don’t fully understand the difference. What’s the simplest way to start updating an outdated estate plan to match today’s goals?
Speaker 1 37:08
Ooh, this is a good one. So, number one, yeah, I would say if they haven’t updated their wills in, you know, 3040 years, definitely a good time to do so. I mean, we typically recommend updating your will, power of attorney, and medical directive every 10 years or so, but to identify how to update it, my suggestion would be to meet with a certified financial planner like myself. Explain what your ultimate goals are with your wealth, how you would like it to be shifted, what your intentions are with the taxes for your kids. Are you charitably inclined? You know, where do you want the money to go? How do you have your assets set up and titled? And we can help create the framework of what we would suggest, and we can say, based on what you’re looking to do, it’s probably best to just seek out a will, or a trust could be a great idea in this circumstance to prevent a control of assets to a young person, or you know, to prevent tax situations certain places. For instance, you know, if the vacation property is in a different state, it might make sense to put that in a trust, because if you have property in a different state than you reside, then you then have to go through probate in two separate states, which is a pain in the butt, it’s additional dollars that you have to pay, so it might make sense to title that into a trust to avoid probate and avoid the, you know, the cost and the headache of having to go through probate in a separate state, right? So that’s an idea, but I think ideally, you know, again, get an idea of how you want it set up, and then sit down with an attorney, right at our office. We don’t write the estate plans, we don’t write the wills, the power of attorney, or medical directive, but we can advise you on the best route to go and refer you to a great attorney in the area to actually write the documents and get
Speaker 2 38:54
it done. Okay, it’s about teamwork and having those partners that can handle this part of it again, one stop shop. They say it all the time. It’s about getting you ready for your retirement again. If you want one of our complimentary appointments, you better call quickly. We only have 10, so get into our top 10 by calling 800-653-8404 That’s 800-653-8404 There’s no cost to it, and there’s no obligation, meaning you’re not agreeing to become a client. This a way to test drive elite income advisors. 800-653-8404 All right, next up, their mother just entered assisted living, and it’s going to cost between eight and 15,000 a month, depending on where they go. They’re now in their early 60s, wondering if they should buy long term care insurance for themselves while they still qualify, or if it’s already too late. What are the pros and cons of getting long term care coverage, and you’re in your 60s?
Speaker 1 39:54
Yeah, that’s tough, because at that age. The underwriting is going to be difficult to get through. The cost of the premium is going to be pretty significant, and the coverage provided or offered by that policy, we’re not sure what that’s actually going to cover at that age. So, you know, we get this question from a lot of folks that are at that age, and you know, it comes down to a few things, right. How probable is it that you will have some sort of extended long term care needs, so if one of their mothers just entered a long term care facility at that expense, then it could be likely that they’ll have some sort of long term care event in the future, but can you afford it? Right, does it fit into your cash flow? Are you able to self insure on your own? I mean, our suggestion to a lot of folks is to invest the money that you don’t need, don’t touch it, allow that to grow, and build a long-term care fund for yourself down the road, right? You know, I think that is the ideal way to do it, is to be able to self-insure, you know, maybe you get to that point, you use the equity in your home to fund that, there’s different scenarios you can look at the concept behind a long term care policy at that age could be viable. It’s just going to be a very expensive solution. I mean, these long term care policies were underwritten very poorly 2030 years ago, and I don’t think that’s any fault to the insurance industry, as I don’t think anybody realized that life expectancy and longevity would be where it is today, and the cost of health care and extending these lives to be where it is, and they underwrote them at a cost that’s much lower than it is today, and they wouldn’t be in business if they didn’t raise the premiums to where they are now. So I think you know it’s important to figure out what you’re looking to do. I mean, one other option that we’ve seen, and I’ve helped clients with in the past, is what’s called universal life insurance with a long term care rider, and what this allows you to do is buy life insurance that holds a cash value that’s real money, and you can tap in and use those assets for long term care rather than a death benefit, so you need it right, and if you don’t ever need long-term care, then you have a life insurance policy with a death benefit to it. So, those can have advantages, but again, has to fit into your cash flow needs. If you have enough money to fund it on your own, outside of it, I don’t know that it makes sense. We’d have to take a bit deeper of a look at their plan itself, their assets, and see if it makes sense.
Speaker 2 42:20
Well, it’s all about options, and if you’ve got some concerns in that category, that scenario we just talked about, jump on the calendar, grab one of our 10 appointments, come in and talk about it. 800-653-8404 that’s 800-653-8404 It’s cost free, and there’s no obligation, meaning you’re not agreeing to become a client. Great way to test drive elite income advisors. Final scenario, and we’ll hit it real quick. Feeling anxious with the market bouncing all over the place. About 60% of the retirement portfolio, guess what, still in stocks, and they’re thinking of shifting all of it to bonds or possibly cash. How do you balance the need for growth with the fear of the loss when you already are in retirement.
Speaker 1 43:04
Yeah, this is another tough one. I mean, you know, if they were our client, they wouldn’t have been positioned this way prior to retirement. So, it’s hard to figure out what to do when you’re in the midst of retirement. The market’s crashing, and you have money that’s tied to your income in the market, right. This is something that we try to avoid at all costs at Elite Income, and you know, number one, we never want to shift all of our money into cash, right? I mean, you’re eliminating the ability to recover, you know, you are locking in what you have, but when the market jumps back, you’re not participating in the recovery, you’re sitting on the sidelines, you’re locking in your losses, but at the same time, if you’re taking income out of that account while it’s down, you’re forced to sell at a loss anyway. So, that’s that’s challenging. I certainly would not suggest moving everything into bonds. Bonds have shown us that they have the ability to decline in value as well. If you don’t hold the bond to maturity and interest rates rise, the value of your bonds can fall. I mean, look, in 2022 bonds or bond funds were down 12 13% That hadn’t happened since 1980 So they’re not a safe investment as they used to be, at least in terms of the correlation to stocks. You know, we have to seek out other opportunities, right? So that’s why we believe in siphoning a portion of your growth, your grown assets into an account that doesn’t have the opportunity to lose money. It will pay you out a consistent income. It might not grow at the speed it did when you were working, but it’s not going to lose at the speed when we have a bad market, right? So, I think looking at the financial plan in a different perspective is extremely important, you know. The old 6040 rule of a balanced portfolio has really gone out the window as the rule of thumb. I mean, it was, hey, if you’re retired, 60% stocks, 40% bonds, the stocks will provide the growth you need, the 40% will provide the income and stability. If we just saw 6040 portfolio. Was down 20% in 2022 that’s a problem. So, there has to be a different way to do it.
Speaker 2 45:04
All right. Well, I tell you, it’s all about having options, talking about your planning. We’ve got 10 appointments. John, walk us through what’s going to happen if they call.
Speaker 1 45:11
Yeah, you’re going to come in, you’re going to tell us about your goals, about your life. We’re going to have a conversation on what’s important to you. We’re going to map out your lifetime income. We’re going to talk about your tax implications now and in the future. Going to build out an estate roadmap, talk through social security, medicare, you know, we’re going to go through your assets to ensure they’re aligned appropriately again. Put together a holistic financial plan that can all be managed and handled in our one stop shop office,
Speaker 2 45:41
10 appointments again, complimentary. Get into our top 10 by calling 800-653-8404 Again, 800-653-8404 Call now, don’t hesitate, take charge. 800-653-8404 Another edition of Retire Smart Maryland Radio. In the books for John DeFeo. I’m Morgan Patrick. We’ll see on the radio next week.
Speaker 4 46:12
Fund money guarantees are subject to the 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 comments 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 advisor has achieved a specific level of skill or ability. Content should not be viewed as personalized financial advice. Insurance and 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 and annuity products are sold separately to Retirement Planning Services Incorporated. President Ozer Culhagil, Prashant Sabapathi, and Jonathan DeFeo receive commissions for the sale of insurance products as insurance agents for Retirement Planning Services Incorporated. Insurance and annuity product guarantees are subject to financial strength and claims paying ability 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 Retirement Maryland. The program is paid production of elite income advisors.
