Speaker 1 0:02
You’ve worked hard, saved wisely, and now you deserve to enjoy your retirement without guilt or fear. But how much extra can you spend without derailing your plan? In this segment, we’ll unpack practical spending rules that give you permission to splurge smartly, safely, and without second guessing all this coming up on Retire Smart Maryland Radio. Welcome
Announcer 0:25
in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:32
Welcome in to Retire Smart Maryland Radio, your host John DeFeo. You can find him at Elite Income Advisors, the power behind this program. He’s an independent fiduciary. The website the company’s put together as a resource, Elite Income advisors.com Again, Elite Income advisors.com Links to the TV show. Our radio shows are in podcast form. Just really good information on retirement, and there’s background information on John and the team. Headquartered Ellicott City Satellite Office in Annapolis, for your convenience. Again, I’m Morgan Patrick. Pleasure to jump on, and we are going to get started with our first topic. But before we do, we always ask, John, how was the week?
Speaker 1 1:12
It’s been good so far. Yeah, we’ve had a lot of foot traffic in and out of the office, a lot of our existing clients coming in to take care of some of their end of year financial planning, also a lot of new faces coming into the office as well, you know, looking to get some assistance and guidance on their retirement planning. Also been doing a lot of workshops in the community, as we typically do a couple of those a week, you know, just trying to get out, talk to people, you know, all things retirement, if you would, so been a great week, super busy, which we’re always happy for. Very great, yeah. For
Speaker 2 1:44
these seminars, just give us some background as far as what’s the attendance level like. I mean, people are very interested in information.
Speaker 1 1:52
Oh, absolutely. I mean, every one of our workshops has a wait list on it, so we book out fully, you know, most of the people end up showing up, and if not, we’ve got a wait list of people that are, that are looking to come, so it’s always a packed house, you know. We do some dinner seminars, so you get a free meal, but more importantly, you got a lot of knowledge and information that you might not have had before. So it’s a great event. Again, we have very high attendance, so if you go to our website, Elite Income advisors.com we have a whole list of the seminars each month, locations you can reach directly out to us through the website, and our marketing and our marketing coordinator will be able to get you booked into the most, most you know, near one that we have.
Speaker 2 2:33
Yeah, advantageous to what you are looking for. Again, it’s all about education, information, knowledge is power when it comes to retirement again, Elite Income advisors.com and you can track down that seminar, that meeting that you’d like to attend. Again, it’s complimentary. All right, so many retirees, John, especially those that have achieved high income, high wealth, find it emotionally difficult to move from, you know, the saving part to the actual spending part, and spend beyond some pretty rigid withdrawal rules. They’re kind of holding it close to the vest. So, Kiplinger has put out an article, permission to spend, and it’s the frameworks that let you enjoy more life without compromising longevity. So, we wanted to kind of dig into some of these rules, how to adapt them to high asset portfolios, and how they should, or maybe shouldn’t, be used in your broader decumulation strategy. And the first one we want to talk about today is just the emotional block on spending. How do you help high net worth clients overcome the guilt or fear about spending their own money?
Speaker 1 3:40
Believe it or not, this is very common, right? And I think the psychology behind this is, you know, they didn’t spend a whole lot while they were working throughout their careers, and that’s the reason they have the wealth that they had. That’s a lot of the, you know, the answers that we’re hearing. We ask, why are you having these reservations? Well, I’ve never really spent like this before. That’s how I’ve accumulated this money, and I think the best way to get over this hurdle is to just show the data, right, map it out in a written financial plan, show them exactly where their income is coming from, exactly how distributions on their portfolio can affect them over time, and realistically give them a spending target that we’re confident in, that they can, they can meet, right? You know, at the end of the day, we are professionals, you know. Certified financial planner, I’ve put a lot of time and effort into, you know, learning this craft, and one of the things that I’m very confident and very happy to do is tell someone that you are in a position to spend more money. That’s one of my favorite things to do, is say, hey, you have this spending target, but you can actually spend more if you want to, so it’s a tough hurdle to get over for a lot of people, especially when you’ve been in save mode your whole life. How do you flip the spike to spend mode? So, there’s a lot of psychology behind it. I think it takes coaching, it takes time, it’s not something that happens overnight, believe it or. We have clients that two three years into retirement are just now feeling comfortable with the spending that we have told them that is reasonable, so I’d say mapping it out, showing the numbers, showing the details is the best way to do it, right? Seeing is believing, people need to see the outcomes, and that’s what we do for our clients.
Speaker 2 5:18
We are discussing again the latest Kiplinger article, and introducing permission to spend frameworks, so you can enjoy more of the life that you’ve planned for, instead of compromising. We’re all living longer, and people are scared they’re going to run out of money, so that emotional block on spending that comes getting over that block is going to come with planning, working with professionals, mapping this out, and having the confidence as you move towards your retirement and through your retirement that you’ve got the money and you can go spend it and you can enjoy it. All right, so guardrails, thresholds, and monitoring. Here’s the question for you: When it comes to this, What kinds of guardrails or automated checks, do you recommend for the affluent retiree?
Speaker 1 6:04
Yeah, I think the number one thing that we do is we identify that cap of spending that we feel comfortable with on an annual basis, where we don’t have any fear that you’re going to run out of money. Another thing that we’re big believers in is bucketing your money, right, creating a bucket of money where you’re going to draw your income that’s not dependent upon the market, and in terms of fluctuations up or down, the last thing that you want to be doing is taking out a chunk of money from your portfolio while the market’s down. It makes it very difficult to recover. Folks want to be able to live off of the interest on their principal if they can, they don’t want to have to sell at a loss, lock in those types of losses in their account. So we’re big on bucketing, you know, having a bucket for growth, the bucket for income, your operational cash bucket, just, you know, allow yourself to have different strategies to fund your income. So having a spending target in terms of what you’re comfortable spending once you hit that, you know, maybe don’t go past it, you know, building in those types of boundaries and buffers are important, but I would say, you know, at the end of the day, it all comes down to having a written plan in place. If you don’t know what your spending number is, if you don’t know what an efficient distribution rate or amount is from your portfolio, if you don’t have protection against the market when you’re taking money out, all of those can cause problems in the long run, and that’s what we seek to try and get in front of when we build out our financial plans.
Speaker 2 7:26
Yeah, plan, plan, plan, plan, plan. We talk about it each week, the importance of having this, having the confidence, knowing that you, you know, you’ve got permission to spend your own money. Now, the opportunity, you’re out there and you’re sitting on a portfolio, you have not started planning, take this opportunity, or if you’re halfway down the path, and you feel like you need a second opinion, grab one of our appointments. We’ve got 10 of them. John, kind of walk us through what’s going to happen if they dial our number.
Speaker 1 7:52
Yeah, it’s just a conversation, right? We’re going to talk through what your goals in retirement are, what you want to be doing, what it’s going to cost you ultimately. We’re going to review your foundational income sources. We’re going to map out if you have to take money from your dish, your portfolio, and how to do that. We’re going to walk through the tax implications of those distributions. We’re going to try and plan for the future to minimize what you pay to Uncle Sam and the state. We’re going to build out a legacy plan and talk through how to efficiently transition your wealth to your beneficiaries, Medicare, long-term care, all of these things packaged into one financial plan that we review and adjust over time if we find that we’re a good fit to work together. So, a lot that’s in that package, but again, it has to be a good fit between the both of us in order us to make sense.
Speaker 2 8:35
Absolutely, these are complimentary appointments. We have 10 of them. They won’t last long, so dial now: 806 5384 538404 There’s no cost, there’s no obligation to become a client. This is a great way to test drive elite income advisors. Call our number, secure one of our 10 appointments, 800-653-8404 Again, the number 800-653-8404 When we return on Retire Smart Maryland radio, don’t let your retirement strategy live in the past. We are going to talk about the five essential upgrades to bring your retirement plan into the 20-first century. That’s next. We are back on Retire Smart Maryland Radio. You are hosted by John DeFeo, Elite Income Advisors, where you can find him. They’re the power behind the program. Elite Income advisors.com is a resource website for you. Elite Income advisors.com links to the TV show. Our radio shows are in podcast form, but just really good information on retirement planning, and again, background information on John and his team. He is an independent fiduciary and a certified financial planner. Now, folks, a lot of things going on here today. We’re talking about just the importance of being proactive with your planning. We want to remind. You, that again, Elite Income Advisors has two offices for your convenience. Ellicott City is the headquarters. Annapolis satellite office. Again, we are here to help you with your retirement. So many retirees, John, they approach retirement with models and assumptions that were built decades ago, the 6040 portfolio, fixed withdrawal rules, the passive investing as the backbone, but the world, guess what has changed. What’s one thing that’s constant? Change markets are more volatile, costs are rising like crazy, tax rules are shifting, uh, huh, and new asset classes are emerging. So today we’re going to get into this. How to modernize your plan to make sure you’re not stuck in the past, but ready for whatever comes next, whatever’s in your future. So, let’s five upgrades that we can talk about. Look into alternative investments for income enhancement. So, here’s the question: How do you evaluate alternative income streams, and what allocations make sense in a high asset retirement portfolio.
Speaker 1 11:03
Yeah, this is a great question. And before I get into this, we’re going to.. I want to go back to something that you said, because I think it’s really important, and that’s that today’s economy, today’s market, today’s tax environment is so much different than it was 2030 years ago, when a lot of these rules of thumb were established, right? The 6040 portfolio, the 4% rule. These were all based on the market conditions, the interest rates, the economic conditions, back, you know, 30 to 40 years ago. And where we are today is so much different, right? The market moves in ways that we haven’t seen before, you know. Back 30 years ago, if you wanted to place a stock trade, you probably called your broker, they probably made another phone call, there was probably some paperwork exchange. It was a lengthy process, where you know where we are today. I mean, I can see what’s going on halfway across the world at any second, and go on my phone and place a stock trade immediately, right? And that’s why we see the movements that we see. Interest rates are constantly changing, the tax laws are constantly changing. So, in our, you know, our philosophy, we have to also change our planning style, right, in terms of keeping up with the trends, and one thing that we are seeing are different strategies for creating income for our retirees. You know, we talk about the bucketing strategy, right, where we want to have a majority of your assets growing for the long term, right, in terms of high growth, you know, in the stock market, but we also want to have a portion of that that creates income, and there are different strategies that folks can use to create income, you know, there are things like private credit, real estate debt, different types of real estate investment trusts, those are somewhat illiquid at times, but there are a lot of strategies that you can incorporate, believe it or not, one that we have been using for folks that are in need of income are fixed indexed annuities, and these are solutions that allow you to protect the downside of your investment while having some market-linked returns. Some of these will actually pay you out an income for the rest of your life. Some of them protect your assets and allow you to pull from it without the subject of market volatility, and a lot of our higher net worth clients are actually moving towards these solutions to protect a portion of their wealth that they’ve built up over time. Right, you’ve been saving over your career, maybe you’ve built a nest egg of 3, $4 million then when you get to retirement, we have to turn that into income. We’re effectively tasked with being our own pension managers, where we have to distribute this money over our lifetimes, navigating the taxes, the investment volatility, ensure that we’re keeping up with inflation. So, how do we do that? We have to do that through different strategies, and again, one of the that we’re using for some of our clients are those fixed index annuities that allow us to have protection and create income, so just one example of an alternative investment that we’ve been utilizing some for some of our clients. Now it’s not the right fit for everybody, but certainly if income is a requirement for your plan, it could be a good solution.
Speaker 2 13:53
I mean, such a good point. I mean everybody is going to have their own situation. You need to plan for that. You need a customized approach. The opportunity to get on the calendar with Elite Income Advisors is ongoing. During the course of this show, we have 10 appointments, and again, there’s no cost to this, and you’re not obligated to become a client. But this is a great way to test drive elite income advisors, see if it’s a good fit, and that’s a two-way street. See if you’re a good fit for them and they’re a good fit for you, call the number, grab one of the appointments, 800-653-8404 that’s 800-653-8404 So, again, the upgrades that you possibly be making to the portfolio, so diversification, diversify your income sources, not just your asset classes. So, the question is this, Which income legs do your clients often neglect, John? And how do you bring them into the mix and do it with confidence?
Speaker 1 14:48
Yeah, I mean, I think a lot of folks rely just on one or two income streams and retirement, and you know it doesn’t offer as much flexibility or variation down the road, you know, most. People are starting out with their foundational income being made up of social security, maybe a pension that you have, maybe you bought an annuity back in the day, or you have some rental income. These are the typical foundational income sources, but we also have to layer that on with 401 k distributions, maybe you have a Roth IRA, maybe you have a life insurance policy with a cash value or some non-retirement investment accounts that might have capital gains implications, so by having a plethora of options to pull from, you have flexibility, right? It gives you the ability to strategize where to pull money from, how to do it most efficiently to navigate the taxes. It also allows for a more efficient transfer of wealth down the road. A great example of this would be on non-retirement assets that you have in terms of stock. Your beneficiaries actually get a step up in the cost basis when you pass away, so whatever you bought the stock for moves up to the market value at the time of your passing for your beneficiaries. So, a great tax strategy, whereas your retirement accounts, like your IRAs and 401 Ks, those are passed on to your beneficiaries, fully taxable. Then, if it’s your kids, your grandkids, your nieces, or your nephews, they have a 10 year window to distribute that money and pay the taxes. So, two completely different implications for that distribution of wealth. So, what do we take out first? How do we ensure that we minimize taxes for us, minimize taxes for our beneficiaries. It’s simply by diversifying your different income sources in retirement. So, gives you strategy while you’re retired, it gives you a strategy for your legacy planning. We’re big proponents of this in terms of trying to have multiple streams of income, different types of assets when retirement.
Speaker 2 16:39
We are basically giving you a wake-up call if you’re following some of the old standards, man. Things have changed over the last 2030 years, and you may need to upgrade a little bit of your approach. So, maybe look into alternative investments for income enhancement, also diversifying your income sources, not just your asset classes. A couple of good upgrades there. This next one, I mean, we’re in the middle of this one, John, that’s just embracing technology and use the smarter tools. So, here’s the question: What tech or planning platforms do you lean on to give your clients more clarity, more control?
Speaker 1 17:16
Yeah, I mean, technology is a big part of the financial industry today, if you’re not using the technology that we have at our disposal today, then you’re probably not planning properly, in my opinion. You know, there are financial planning software, such as a company called eMoney, that has a holistic financial planning software that allows us to really map out your entire financial life, use all sorts of assumptions for tax planning, estate planning, income planning. That’s a big part of it. We’re also using social security timing reports that allow us to enter in your potential social security income, you know, in terms of your full retirement age, and it punches out all of the different ranges of options you have, and that helps us pick the best or most optimal point to actually take the benefit. We also have, you know, analysis on different stock portfolios, so we have a way to do an X-ray on your existing stock portfolio, determine the approximate risk return, you know, comparison, the potential internal, external fees, all of that, you know, correlation, non-correlation, we can really dive into your portfolio, figure out where there can be some adjustments made. Now that’s a big one. There’s a lot of budgeting tools that are great for folks that are trying to figure out their spending target, right? You know, there’s a number of them out there that you can use. So, there’s just.. there’s so many tools that we have. There’s even AI out there that helps to reallocate and move portfolios around. Now I’m still a little bit hesitant with those, because you know AI is still still under construction. If you would, it’s still being built out, so I still trust our money managers and ourselves when it comes to the money management of our clients. But there are AI platforms out there that will literally trade based on the objective you give it, but I think that also leads into the difference in the market that we’re in, right? If we have algorithms that are trading large volumes of equities, and the market does not make the market more volatile than when it was 30 to 40 years ago, when it was a slow process to place trades. I think it does. I mean, looking back into April when those tariffs were first announced. Within three days, the market was down 15% The fourth day after Trump kind of back backpedaled a little bit on on the aggressiveness of the tariffs, it was back up another 9% We’re at all-time highs today, right? So we just have to be cognizant of what the difference in software is today. How life is changing, of course. Use these technology platforms to our advantage, but also be mindful of some of the problems that they can potentially present in the future.
Speaker 2 19:51
Yeah, we’re talking about kind of wiping away some of the cobwebs off of some of the older strategies that are out there that are a couple of decades old, and you really need to. Kind of get on board here and do the investigative work, work with professionals that are already using these types of techniques, and again have your customized plan. So, look at alternative investments for income enhancement, diversify your income sources. That goes without saying. Embrace technology, I mean, use the smarter tools, they’re there for you, but also work with a living, breathing professional that can walk you through it and knows your situation. Last one we have time for, we’ll hit it really quickly, and that’s just reevaluate your withdrawal strategy, do it dynamically. So, here’s the question: What frameworks or guardrails do you recommend for clients to adjust their withdrawals without second guessing themselves,
Speaker 1 20:42
yeah. This is an easy one, and I’ll keep it quick. It’s the bucketing strategy, right? You lock in the money that you need for income, for your expenses, into something that does not have market volatility, and the rest of your money you’re able to comfortably invest in the market without worrying about what it’s doing, right? You have everything you need and a safe bucket to pull from for income, and the rest of the money can ride in the market. It’s up, it’s down, it’s sideways, but it doesn’t matter to you, because you don’t pull from that in the short term. That’s your legacy bucket, your long-term care bucket. So create a strategy where you can pull from the money, where it’s safe, have everything else invested. That’s the best way to create the guard, well, in our opinion.
Speaker 2 21:17
All right, we’ve got an opportunity for you. It’s 10 appointments, they’re complimentary. Come in and talk about your situation, your scenario, and again, you’re not paying for this, and you’re not obligated to become a client. But John, walk us through what’s going to happen if they dial our number.
Speaker 1 21:31
Yeah, we’ll just have a conversation, right? Talk through what your goals are, what retirement looks like for you, what it’s going to cost you. We’ll walk through your income sources, determine distributions from your portfolios help you out with tax navigation now and in the future, help you bid out an efficient estate and legacy plan, identify your health care long term care costs, the full gambit there, and if it is determined that we’re the right fit for each other, we’ll partner together and evaluate and adjust that plan on a regular basis, opportunity right now. 10 appointments. Call our number 800-653-8404 That’s 800-653-8404 There’s no cost, there’s no obligation. See if you’re on track for your retirement. If you’re sitting on a portfolio, that is not a plan. If you’re halfway down this path and you’re frustrated, get a second opinion. You can do it right now. 800-653-8404 This that’s 800-653-8404 When we return on Retire Smart Maryland Radio, what if retirement isn’t
Speaker 2 22:30
just a 20 year journey, but maybe 30 or even 35 years? You need to plan extra. That’s coming up next, you John, welcome back. In, you’re listening to Retire Smart Maryland Radio, hosted by.. well, we’ve got John DeFeo this week, Prashant Sabapathi, normally joining us. He’s on assignment this week. They are both located at Elite Income Advisors, the power behind this program resource website. Check it out, Elite Income advisors.com Links to the TV show, and also our shows, our radio shows, and podcast forum. Check out Elite Income advisors.com And again, John is an independent fiduciary. I’m Morgan Patrick. Absolute pleasure to jump on. Want to remind you, too, Elite is headquartered Ellicott City satellite office in Annapolis for your convenience. Now we get into all kinds of retirement topics, but the most important thing you need to remember is make sure you’re planning for your retirement, being proactive, not reactive. Again, customized plan to you, and through the course of this show, we offer up 10 complimentary appointments. You can call at any time and grab one of the 10. Once those 10 are gone, you have to wait until next week. Call this number: 800-653-8404 Slide into one of our 10 spots: 800-653-8404 No cost, no obligation. See if you’re on track for your retirement. So, retirement, it used to be 1015 years, you know, that’s kind of what people thought of retirement, but now today many people are retiring in their mid 60s, and they could easily live to 9095 and we’re seeing more triple digits, more one hundreds, and that’s not science fiction, folks, it is a trend, and thanks to better health care, lifestyle changes, just rising longevity. It is a theme that we need to be following, and that shift has led a new way of thinking. It’s called the 90 plus rule of retirement. It means that planning as though you are going to live well into your 90s. That might sound simple, but it changes the whole game, how you withdraw money, when you take social security, how you plan for long-term care, and how you protect your legacy. So today we’re going to break down just how the mindset creates a stronger, more resilient retirement plan. So why thinking beyond 90 isn’t pessimistic, it can. Be very, very powerful, so why longevity planning matters. So, the question is, I mean, think about it, you’re living longer, so you’re gonna need more money. John,
Speaker 1 25:12
certainly, are we preach this on a regular basis, and I think a lot of folks still picture retirement as a 20 year glide path, but with modern life expectancy, the advancements in medicine, I think we’re looking at a lot longer period of time, right? People are living well into their 90s. Heck, my great grandmother made it till 99 My grandmother is 88 right now. She still travels around the country, following, following Keith or Sutherland, Sutherland, of all people. She loves him, she follows him around, she’s in great health at 88 years old, right.
Speaker 2 25:42
Whoa, Kiefer, as in the actor,
Speaker 1 25:44
as in the actor. Yeah, apparently he’s a great singer as well. She follows him around, and she’s gotten dozens of pictures with him. I’m sure he’s probably, he’s probably creeped out by now, but you know, but yeah, she’s in great health, and a lot of people are doing the same things, right. So we have a long time to plan for, we have to ensure that our money lasts, you know. We don’t have the same guaranteed income streams that are our parents and grandparents did. You know, we’re looking at about 15% of retirees today retiring with a traditional pension, which means we’re on the hook for distributing our wealth over our lifetime and making sure that it lasts, right? So, it’s very important to plan for the long term. We map out our clients’ income. We’re usually looking out to 9095 and our clients joke with us, “If I’m 9095 years old, you know, I’m probably going to be in a hole somewhere. You know, I’m not going to be doing much at that point. But again, my great grandmother was 99 and still going to concerts at 95 so it’s very possible, it’s all mindset, as long as your health is good, and you know we would prefer to be on the upside of this if you do live until 9095 instead of planning till 85 and you end up living a lot longer, right? Yeah,
Speaker 2 26:54
you want a longer runway plan for it, and then you know if you have these, you know you really want to do it, just go ahead and look at your legacy plan for 95 plan for 100 and then also have that legacy plan in case you go a little bit earlier. But I mean, it really is when you think about it, the 90 plus rule of retirement. People are living longer, so things need to be adjusted. You need to plan for this. So, what about working longer, John? I mean, is this the secret weapon?
Speaker 1 27:21
Well, for some people it’s a requirement, unfortunately. But I wouldn’t say it’s necessarily a secret weapon. There are actually a lot of folks that come in to visit with us that think that they have to work for another couple of years in order for them to retire successfully. And after we take a look at their plan and crunch the numbers, it actually turns out they can retire a lot sooner. Our objective is to be able to get you retired as soon as we can with the most successes we can, right. You know, I think that there’s research out there, if you work a couple months longer, it might be able to extend the amount of savings that you have, reduce pressure on the portfolio, which is certainly true, but I could also argue that some people can retire three to six months earlier than they planned, because they did such a good job saving that they’re in a position to do so. So, I think that working longer is a requirement for some people. If you haven’t saved enough money to provide the lifestyle that you’re looking to live in retirement, maybe you have to work a little bit longer. And, in fact, some people just want to work part time in retirement. I was
Speaker 2 28:20
going to say, just for the mental aspect, the socializing, you think about it, I mean, we complain sometimes about our job, but at the same time, I mean, that’s that’s our life, that’s our working life, and a lot of times that kind of structure, that kind of purpose, it goes a long way, so you know, don’t snub your nose at possibly maybe working a little bit longer or picking up that part-time gig in retirement, but make sure it fits into your overall plan and what you want to do, and mental health is a big thing when it comes to retirement. You want to be mentally healthy as you make your way through. So, again, just talking about this 90 plus rule of retirement, so longevity planning matters. You need a little bit more, you might want to work a little bit longer, and that might be for financial reasons. It might just, it might be for emotional reasons. You want that, that mental health. What about rethinking your expenses again? Some may go down, but, man, we’ve seen it. Every day is a Saturday. Inflation is there, prices are pricey. I mean, it’s going to be expensive when you’re in retirement, especially if you’re 90 plus.
Speaker 1 29:23
Certainly, yeah. And I’m sure our audience has heard of the go-go years, the slow-go years, and the no-go years, right? The beginning of your retirement, you’re trying to get into all the things that you couldn’t do while you were working, whether it’s travel, you know, fixing up the house, working on projects, so you’re typically spending a lot of money at that point, and then you know, you get maybe 10 years in, you start to slow down a little bit. There’s only so many trips to Europe and the Caribbean that you can take before you’ve done it to, you know, so many times. And then, by the time you get into your, you know, mid 80s to 90s, you’re really starting to slow down, right? And clients will say, well, by the time I get to my mid 80s, I’m not going to be spending 1015, $1,000 a year on travel, and I would probably agree with that, but what other expenses could be coming up as you get older, right? As you mentioned, Morgan, medical expenses continue to go up, and with inflation, medical expenses, long-term care, hospital, you know, hospital costs are one of some of the highest inflationary pressures that we see in the economy when it comes to rising expenses, so argument would be that you actually could end up spending more money in terms of medical costs and care when you get to that age, that would, that would basically replace the travel and fun expenses that you have now. We also find that as you get further into retirement and as you get older, you become, you know, a bit more giving with your money, we have a lot of clients that want to be able to give to their grandkids, their great grandkids, their the charities that they support. They want to be able to see the impact of the gift that they’re providing, rather than just leading that wealth when they pass away. So I would say that, you know, when we plan for our clients, unless there is a specific event that we know an expense is going to fall off, such as a mortgage being paid or something like that. At that point, we continue to assume that your spending level continues on throughout your lifetime at the same level that you started with. Of course, we inflate that every year to account for the increase to cost to goods and services, but we don’t assume that at 80 you stop spending as much, because it’s likely you’re going to have an additional cost to health care.
Speaker 2 31:23
We are talking again in and around that 90 plus rule of retirement. You’ve got to rethink things. Things have changed, people are living longer, you’re living longer. Make sure you’re planning for it, so longevity planning matters. Maybe working a little bit longer could be a secret weapon for you, either financially or just emotionally, and then your expenses. Make sure you understand that prices have gone up. It’s going to be expensive. Last one we’ve got time for, John, is this, and that’s income streams, not just assets. You’ve got to have the income,
Speaker 1 31:56
that’s right. I mean, that’s that’s what we preach here on a daily basis at Elite Income Advisors. It’s all about the income. The success that you have in retirement is all about the income that you bring in. So, you start out by identifying your foundational income sources, and then add on to that. You use your assets to create income. We had a somebody visit with us, actually last week, that said, “How do I take the money from my profit-sharing plan that I’ve accumulated and turn some of this money into an income stream. How do I make that happen? We walked through our process, we showed them the way to do that, and they’re actually coming on board with us this week, and we’re working all of that out. So, you know, it really is all about the income. You know, the assets certainly support and produce income, but at the end of the day, it’s about what you bring in and what goes out in success in retirement.
Speaker 2 32:41
All right, let’s help some people out. We’ve got 10 appointments, they’re complimentary, you’re not paying for it, you’re not obligated to become a client. John, walk us through it.
Speaker 1 32:48
Yeah, it’s again, it’s this every time, it’s just a conversation. There’s no sales pitch, we don’t even know if we’re the right fit to help you with your goals, but you’ll come in, you’ll talk to us about your concerns, your goals in retirement, what you want to be doing, what it’s going to cost you. We’ll help you figure out how to create income for your retirement plan that’s consistent, will help you navigate the taxes that you could potentially have to pay. Create an efficient estate plan, help navigate the health care costs that could be coming down the road. Put that together and work through that.
Speaker 2 33:19
All right, we’ve got 10 appointments. Call this number now. They’re cost-free. 800-653-8404 No obligation to become a client. 800-653-8404 10 appointments, and when they’re gone, they’re gone. 800-653-8404 We’re back on the other side of the break with scenarios, you A retire Smart Maryland radio. Your host is John DeFeo, Elite Income Advisors, headquartered Ellicott City Satellite Office in Annapolis. John’s an independent fiduciary, and it’s all about helping his clients get ready for retirement. I’m Morgan Patrick. Absolute pleasure to jump on and hit these different topics, but also understand that we’re here to help our listeners, that would be you, may have a lot of questions about where they are, and if you’re just sitting on a portfolio, you’re just in the starting gate, you haven’t even thought about the planning aspect of this, and it takes a plan. So, when we open up our appointments, they’re complimentary. Grab one and get out of the starting gates and get started on your planning. And again, no obligation to become a client. And if you’re in that other boat, maybe you’re halfway down the front stretch, you’re frustrated, calls aren’t being returned, appointments getting bumped around. Get a second opinion, use one of our appointments for that as well. All right, so scenarios – these happen all over the country. I’ve gathered a few. I’m gonna throw them at John, see what he comes up with. So, first one, they’ve got about 800 cases saved, no pension, just turned 66 They’re thinking of claiming Social Security right now, but still working part time at. Hardware store for fun and a little bit of cash. Is there a sweet spot between claiming early and letting it grow, especially if they don’t need the income yet?
Speaker 1 35:10
Yeah, I think when it comes to claiming social security, there are so many variables to consider. You know, they turn 66 you know, depending on when their full retirement age is whether it’s 66 and some odd months or 67 it’s a range based on your birthday. They could be limited to actually taking the benefit based on their income. So, if you are under full retirement age and you earn over $23,400 for 2025 they’re actually going to reduce your social security benefit for $1 for every $2 you earn over that amount, right. So, there could be an argument that it doesn’t make sense to take it if their income from the hardware store is somewhat significant. I would also argue that if they don’t need the income, then maybe it does make sense to allow it to grow to get that additional benefit. If they actually delay past social, assuming past full retirement age, they get an 8% increase to that social security benefit every year. Now, one strategy that a lot of people incorporate is a staggered social security approach, where one spouse will wait all the way until 70 to provide the highest survivor benefit, and the other spouse will actually take it a bit earlier just to take advantage of that income stream, even if you don’t need it, you can reinvest it just to start drawing off of that benefit that you’ve paid in to Social Security over your working career. Now, what this does, again, it allows the surviving spouse, once one passes away, to continue on with the highest Social Security benefit possible, and it allows the other spouse to start taking advantage of some of that income that they I’ve put away over time, so that’s just one strategy, but I really think it all comes down to their preference, their need for income, you know, their full retirement age, in terms of whether there’s a sweet spot to take it early or let it grow, and that comes down to everybody, depends on your longevity as well, if they have people that you know are only living to their mid 70s, then it probably is time to turn it on. Whether you’ve got longevity, like me, maybe it makes sense to wait till 70. So, lots of variables. If you’re looking for help making this decision, we do this every day for our clients. Come in and visit, we’re happy to help you with that.
Speaker 2 37:18
All right, the phone number to grab one of our complimentary appointments is 800-653-8404 Again, that’s 800-653-8404 There’s no cost, you leave the checkbook at home, and there’s no obligation to become a client. But see if you’re on track for your retirement. And again, I say this all the time, if you’re sitting on a portfolio that is not a plan, start this thing, get it rolling. Call our number: 800-653-8404 It’s a complimentary appointment, again, no obligation. 800-653-8404 All right, here’s the next scenario. Adult kids keep boomeranging back home between jobs, and now they’re helping with daycare for the grandbaby too. How does this retirement couple balance wanting to help family without draining their retirement accounts or losing their sanity?
Speaker 1 38:08
Well, I don’t know how I can help you maintain your sanity when your kids are coming back and forth, and you know you’re looking for peace, but I can certainly talk about the financial aspect, you know, this is actually a concern that we hear from a lot of people, and not even just, you know, boomerang, boomerang between jobs, just the difficulty in this younger generation, and purchasing homes with interest rates being as high as they are, home prices being as high as they are, it’s become a bit difficult for some of these folks to be able to purchase homes without, you know, paying a mortgage that’s three four times what it should be, in my opinion. So, you know, we see this a lot. I would say that looking at your financial plan and determining whether the additional expenses for helping out the kids and the grandkids is reasonable, whether it fits into the plan, right? If you identified a $10,000 a month income target, and now you’re spending $15,000 a month to help out the kids. We have to revisit the plan, we have to rework the numbers, and determine if that’s sustainable. And if not, there might be a tough decision to make. Right, you might have to tell your kids that you’re not able to financially assist them, because if you do, you’re going to run out of money, and then at some point you’re going to be a burden on them, right? That’s one of the things we hear from our clients time and time again. I do not want to become a burden on my children. Then, inherently, if the children are coming to them for money constantly, and they’re draining their retirement accounts, if your parents run out of money, then ultimately, where are they going to go? Are you going to let them, you know, run out of money and live on the streets, or are they going to come and move in with you? So, I think it’s a, you know, it’s a trade off as well, but identifying whether you can afford it is important. Having those important conversations, I think, also is imperative. I mean, one of the things that we encourage our clients to do is bring their kids in. To meet with us, yeah, understand the financial plan, understand where your parents are, you know, and be involved with that, right. So I think it’s important to keep them involved, understand what your situation looks like, so they’re not jeopardizing your retirement. Yeah,
Speaker 2 40:13
I mean, we use the analogy all the time, you know, you go flying, you get on the plane, they go through that safety measure about, hey, if the cat, if the cabin decompressorizes, you know the mask is going to jump out of the ceiling. What are you going to do first? You put it on yourself. If you’re, if you’re passed out, you can’t help anybody else. Same thing goes for your retirement dollars. You want to be able to help family, obviously, but make sure your retirement is secure, and then you do the helping part, all right.
Speaker 1 40:42
And Morgan, I want to clarify something. That you know, I’ve got two young kids myself. I’ve got a two year old and an almost six month old, which is crazy to say. She’s almost six months. I understand the desire to help out your kids, right? I’m definitely not saying that you just let your kids struggle, but there’s also a time where they have to be able to do their own thing and be responsible and not affect your retirement, and that’s what I’m saying, is that you know, help out your kids, but do so in a way that does not jeopardize your own retirement. Yeah,
Speaker 2 41:10
and that takes planning, and if you’ve got some access and you want to help the kids, absolutely, positively. But yeah, this is this is something, the boomerang thing is real, and a lot of kids are coming back home. Make sure you’re planning for something like that. If indeed it does happen, so here’s your next scenario. If they’ve always handled the finances, but their partner isn’t as involved, how should this couple plan in case one of them becomes unable to manage the money? Should they be looking at powers of attorney, or is it time for a family meeting before it gets a little awkward?
Speaker 1 41:46
Yeah, I mean, I think everybody should have a power of attorney, you know. It allows your whoever you elect as a power of attorney to help control the assets, move money around if you become incapacitated. I think that’s so important. You know, we’ve seen situations where a spouse has been in an accident, they, you know, or they’ve had a stroke and they’ve not been able to cognitively do things the way that they used to, and now the other spouse is on the hook for it. But I also think it’s important to work with a financial planner, have someone that understands the situation to be able to navigate those things. Right, we see time and time again where couples come in, and either the husband or the spouse manages the finances, and the other one has no interest in it. They don’t care to understand it, you know, it’s not in their interest, and that can actually cause pretty significant issues if the spouse that handles the finances passes away or becomes incapacitated, because if you’ve never looked into this, if you’ve never understood the situation, it’s very, very overwhelming, not only to deal with your spouse that’s either incapacitated or maybe, God forbid, passed away, but now you have to figure out how to manage the money that you’ve never had to do before. So this is actually a very prime reason why folks work with us. It’s because there’s a third party that has a more objective opinion on the situation that can help guide you through the process. In fact, we have a couple that’s working with us strictly because of this. They say, “Look, you know, he said, ‘I’m uncomfortable managing my money, you know, I’ve been doing the investing, I even have the credentials to do this. I was an advisor in my past career, but I don’t want my wife to be on the hook to manage this and do this, God forbid something happens to me, and he’s not in the greatest of health, so you know it’s probably something that’s going to be coming in the near future, but he hired us simply for that reason, to have someone help her and watch over the finances when he’s not here, so I think that number one, having a plan in place, having someone that’s familiar with the situation that can jump in, God forbid the person that manages it is not able to, is important, but also working with an advisor, someone that’s objective, that can give you that guidance, is also a great strategy. I
Speaker 2 43:53
tell you, it’s a conversation that needs to happen sooner than later. Be proactive. We’ve got 10 appointments, they are complimentary. There’s no obligation to become a client. So, this is an excellent opportunity to test drive elite income advisors. John, walk us through how the appointment is going to go.
Speaker 1 44:11
Yeah, the appointment is really just a way for us to get to know you a little bit better, determine what your goals, priorities are with retirement, where you are financially, determine whether we’re the right fit to help you with those goals. If we align philosophically, we like each other. I think that’s really important. You got to like the advisor that you partner with, and if all of that lines up, then we’re going to put together an income plan for life that identifies exactly where your income is coming from, how we’re going to navigate the taxes now and in the future. We’re going to help you create an estate plan that allows for an efficient transfer of wealth, give you a roadmap of what happens if you pass away and what happens to those assets. God forbid you’re in a situation where one of the spouses is not in the know. We’re also going to help you with the Medicare, the long-term care, all of those medical expenses. How do we navigate that environment when we get to that point? Point, put all of this into a package and monitor it over time, right. It’s a, it’s a fluid process. Things are constantly changing in your life, in things out of your control as well. Tax law changes, the market’s changing, the economy changes. So, adjusting that plan is, is pretty impactful, and it’s necessary. So, we’ll do all that for you. That’s what we do for our clients. If we find that we’re the right fit,
Speaker 2 45:24
10 appointments again, it’s all about feeling comfortable, having that confidence, and moving forward. Again, complimentary appointment awaits you. Call now, 800-653-8404 Get in line, get one of these 10 with elite income advisors. Come in and talk about your retirement scenario. 800-653-8404 That’s 800-653-8404 Call now. 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, you
Speaker 3 46:05
Federal guarantees are subject to the claims paying ability 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 legally 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. The investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. Investment advisory services offered through Elite Income Advisors Incorporated, a registered investment advisor located in Ellicott City, Maryland. The firm only conducts business in states and jurisdictions in which they are properly registered or exempt from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the advisors achieve a specific level of skill or ability. Content should not be viewed as personalized financial advice. Insurance 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 through Retirement Planning Services Incorporated. President Ozer Culhagil, Prashant Sabapathi, and Jonathan DeFeo receive commissions for the sale of insurance products as insurance agents for Retirement Planning Services Incorporated. Insurance annuity product guarantees are subject to the financial strength and claims payability of the issuing insurance company. Morgan Patrick is not a client of or affiliated with Elite Income Advisors. However, he has a financial incentive to promote our services because he was compensated for his work on Retirement Maryland. The program is paid production of Elite Income Advisors.
