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Speaker 1: Tonight something we call the Financial Freedom Test, drive the

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Speaker 1: Millionaire's income problem and how to protect your spouse if

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Speaker 1: you die. First, you're listening to Simply Money, presented by

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Speaker 1: all Worth Financial on Bob Sponseller along with Brian James. Well,

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Speaker 1: here's a question, if you stop working tomorrow, how confident

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Speaker 1: are you that your plan actually works in the real world,

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Speaker 1: not just hypothetically on paper. And you know, that's a

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Speaker 1: lot of question. That's that's a question that a lot

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Speaker 1: of clients eventually get around to talking to us about. Brian,

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Speaker 1: you not can I retire? But what happens if I

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Speaker 1: try out financial freedom before I fully commit to it?

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Speaker 1: So let's get into something tonight we'll call the dry

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Speaker 1: run challenge. Talk about what that is. Brian.

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Speaker 2: Yeah, I think this is a great idea for people,

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Speaker 2: and a lot of people kind of come to this

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Speaker 2: conclusion on their own. We'll have people that'll come in

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Speaker 2: and I'll say, well, I'm going to back off of

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Speaker 2: work a little bit and change these things around, and

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Speaker 2: we're just going to take a look at what the

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Speaker 2: income looks like.

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Speaker 3: You know, and just see what it feels like. So,

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Speaker 3: so let's say you're still working, bringing in that great income.

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Speaker 2: But at some point, you know, you want that freedom

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Speaker 2: to step away, as we all do eventually, so you know,

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Speaker 2: start living as if that paycheck is already gone. See

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Speaker 2: what it looks like. Try not to touch your salary

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Speaker 2: maybe for a little while, put one hundred percent of

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Speaker 2: your salary into your four oh one.

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Speaker 3: Kay, go ahead, you can do that. Nothing's stopping you.

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Speaker 2: And instead build that monthly income somehow from whatever sources

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Speaker 2: you plan to use when you're no longer working full time.

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Speaker 3: That could be using withdrawals from your portfolio.

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Speaker 2: And Bob, that's a you know this, but that is

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Speaker 2: a huge hurdle for people to get over right. People

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Speaker 2: have this psychological block too. I'm not allowed to touch

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Speaker 2: my nest egg.

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Speaker 3: That's for the future.

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Speaker 2: Even when they know they know very well that they're

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Speaker 2: in the future, they're now retired, we still don't want

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Speaker 2: to touch that nest egg. It feels irresponsible. Well, force

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Speaker 2: that out of your brain. You're going to have to

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Speaker 2: tamp that voice down and start doing it. So you

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Speaker 2: might be withdrawing.

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Speaker 3: From your portfolio.

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Speaker 2: Perhaps there's rental income that you've been socking away somewhere, dividends, maybe.

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Speaker 3: A roth ladder.

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Speaker 2: Whatever that strategy is, go ahead and try on that

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Speaker 2: machine for a little bit, a few months, maybe a

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Speaker 2: year or so.

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Speaker 3: And just see how it works. See what it feels like.

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Speaker 2: You're gonna learn real fast whether your plan's gonna work.

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Speaker 2: You'll start to notice is money building up in the

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Speaker 2: checking account or is it draining?

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Speaker 3: Are these withdrawal sustainable? Are taxes a little higher than

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Speaker 3: we thought they might be? And are we spending more

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Speaker 3: than we thought?

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Speaker 1: Brian, I want to kick this idea around with you

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Speaker 1: a little bit, because I'm gonna be brutally honest. I

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Speaker 1: have never asked a client to do this. I've never

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Speaker 1: had anyone do it. What I have done and done

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Speaker 1: often is focus on the spending profile. Because with people

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Speaker 1: that have high incomes, you know, they say, well, we

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Speaker 1: were gonna be able to retire on this much income,

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Speaker 1: and they don't test drive that at all. So I

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Speaker 1: have had people test drive that spending profile, you know,

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Speaker 1: prior to retirement, But as far as like not living

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Speaker 1: off your salary and starting to withdraw assets from your

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Speaker 1: portfolio before you retire, I've never done that. What am

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Speaker 1: I missing here? And have you done that with some

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Speaker 1: of your clients I'm genuinely interested.

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Speaker 2: Well, I think more frequently these types of motivations tend

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Speaker 2: to come when there's a windfall, right if I inherit money,

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Speaker 2: or you know, I sold a business, sold something and

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Speaker 2: generated some level of assets. One thing that occurs to

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Speaker 2: people is, you know what, maybe I don't have to

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Speaker 2: buy wrote put this money into investments like I always do.

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Speaker 2: Maybe I can do something different with it, so it

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Speaker 2: can be that windfall that perhaps is sitting in the bank.

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Speaker 2: So it's not really necessarily a withdrawal out of investments,

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Speaker 2: which can be uncomfortable for some people. It's just a

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Speaker 2: machine they've never turned on. It's just literally spending down

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Speaker 2: savings for a little while.

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Speaker 1: I think it could be tax of inefficient too, which

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Speaker 1: is why I brought that up.

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Speaker 2: Yeah, of course, But at the same time, you know, yeah,

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Speaker 2: nobody's going to start taking iraway withdrawals or turn on

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Speaker 2: their social security, you know, just to kind of test drive.

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Speaker 2: Those are more permanent decisions. We're really just talking about

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Speaker 2: see if you can carve your spending down. That's really

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Speaker 2: what this discussion is. Doesn't really matter where you get

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Speaker 2: the dollars from, however, you're just trying to test drive

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Speaker 2: your spending profile.

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Speaker 3: What is it that you need? What does your lifestyle

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Speaker 3: really cost? Because a lot of people just don't know.

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Speaker 2: If you're in a i'llid financial position, you don't really

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Speaker 2: worry about a budget and you may not have any

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Speaker 2: idea really what you spend. You just know there's more

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Speaker 2: coming in every month than going out, and therefore that

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Speaker 2: must be Okay, that's gonna get real scary when it's

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Speaker 2: time to retire and you are relying on that nesting.

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Speaker 1: All right, I knew you'd be able to dumb that

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Speaker 1: down even for people like me, So thanks for that.

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Speaker 1: All right, here's another way that we do need to

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Speaker 1: test drive retirement. And we'll just call this something we'll

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Speaker 1: call say, pretend every day becomes Saturday. This is where

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Speaker 1: we see a lot of folks get caught off guard.

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Speaker 1: People think the big question is do I have enough money?

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Speaker 1: But really it's what am I gonna do with all

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Speaker 1: of my discretionary time? Well, when every day becomes Saturday,

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Speaker 1: things change. The structure disappears. You wake up with no meetings,

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Speaker 1: no commute to work, and for a lot of people

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Speaker 1: that sounds amazing until it doesn't. This is something that

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Speaker 1: I talk to folks about. And I've had people, you know,

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Speaker 1: not a lot, but a few people have called after

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Speaker 1: retirement saying I don't know what I'm gonna do. Those

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Speaker 1: are people that did not do this test drive, and

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Speaker 1: I highly recommend this.

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Speaker 2: Brian, Oh, absolutely, this is a more important test drive,

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Speaker 2: I think than the income side. Right, what are you

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Speaker 2: gonna do with that vacuum of time? That can be

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Speaker 2: very jarring, and all of a sudden, you know, you

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Speaker 2: go from being a pretty important person in the work world.

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Speaker 2: You know, you've got people underneath, You've got people that

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Speaker 2: rely on you because you are the one that has

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Speaker 2: the knowledge in the room, and all of a sudden,

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Speaker 2: you don't even know where.

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Speaker 3: The coffee is in the kitchen because that's all that's

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Speaker 3: on your mind. Anymore.

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Speaker 2: That the walls can close in a little bit, it

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Speaker 2: can be kind of jarring to to to to make

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Speaker 2: that big shift.

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Speaker 3: So yeah, absolutely think about what you're gonna do.

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Speaker 2: I always use the example of you know, it's it's

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Speaker 2: it's the it's ten o'clock and I'm on my fourth

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Speaker 2: cup of coffee and my spouse and I are staring

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Speaker 2: at each other from either end of the couch.

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Speaker 3: What are we gonna do today?

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Speaker 2: You know, when I get tired of drinking coffee, and

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Speaker 2: you know, think about how you're gonna spend that time.

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Speaker 2: And because a lot of times with the risk can

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Speaker 2: be actually financial in terms of when we get bored,

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Speaker 2: we tend to spend money. Uh, you know, I we'll

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Speaker 2: want to do this project, or you know what, I

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Speaker 2: think it's time. Maybe that cars getting a little old,

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Speaker 2: let's go research cars. Maybe we'll go buy one today,

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Speaker 2: something like that just to pass the time. So that

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Speaker 2: can catch a lot of people off guard.

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Speaker 1: In terms of or that rolling hunk of depreciation called

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Speaker 1: an RV. Brian, we want to avoid those.

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Speaker 2: Yes, exactly because or if you're gonna do what you

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Speaker 2: gotta scratch that in, go find somebody who did it

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Speaker 2: three four years ahead of you and now they're tired

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Speaker 2: of it, and that they're dumping that RV on Facebook,

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Speaker 2: marketplace or something like that. You can find some good

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Speaker 2: deals in really good shape from people who made a mistake.

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Speaker 1: Yeah, in all seriousness, and I think this is a

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Speaker 1: great idea. You know, if you're one to two years

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Speaker 1: away from retirement, take one of your vacation weeks and

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Speaker 1: really map that out, you know, to be a test

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Speaker 1: drive on retirement. Spend that week as though you were retired,

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Speaker 1: and fill up those hours, fill up those activities, figure

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Speaker 1: out what you do and don't want to do together

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Speaker 1: as spouses, and really test drive that whole situation out

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Speaker 1: and then discuss it in advance. I think it's a

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Speaker 1: wonderful way to spend a week before you pull the

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Speaker 1: ripcord on retirement. All right, let's get into some of

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Speaker 1: the spending surprises that no one tells you about in advance.

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Speaker 2: Brian, Yeah, so we hear this all the time too.

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Speaker 2: I thought I'd spend less when I stopped working. Well,

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Speaker 2: you might eat, but.

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Speaker 3: You might not.

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Speaker 2: So you know, the things that people come up with

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Speaker 2: in terms of what am I not going to spend

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Speaker 2: money on more, Well, I don't have to worry. I'm

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Speaker 2: not gonna have to worry about the urge to eat out,

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Speaker 2: eat lunch out anymore. You know, I don't have to

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Speaker 2: worry about buying work clothes or dry cleaning that kind

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Speaker 2: of stuff.

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Speaker 3: But now all of a sudden, you've got time.

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Speaker 2: So those daily lunches that you were, you know, kind

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Speaker 2: of forced to run down to the local diner and

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Speaker 2: grab lunch and then get back to the office.

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Speaker 3: Well, now it's going to be like, you know.

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Speaker 2: What, it's a nice day outside, let's go to that

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Speaker 2: one with the patio and let's sit there and have

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Speaker 2: a nice leisurely lunch, maybe with mimosas. And then tomorrow

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Speaker 2: we'll have more mimosas, because we've got time for mimosas

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Speaker 2: these days. So we've seen a lot of families spend

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Speaker 2: a lot more getting used to that in the first

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Speaker 2: years of financial freedom than they ever budgeted for. Even

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Speaker 2: if we've got a plan in place, we still tend

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Speaker 2: to find more things to spend money on. As you're

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Speaker 2: getting your sea legs in retirement. So if you're healthy, active,

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Speaker 2: you want to enjoy this phase of life just undertand

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Speaker 2: that's going to come along with a desire to spend more.

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Speaker 2: And that is not a bad thing. You don't have

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Speaker 2: to feel guilty about it. Just make sure you see

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Speaker 2: it coming. That's what this test drive is for. Go

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Speaker 2: find these things that might sneak up on you.

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Speaker 1: Forget about momosa's. I mean, what about maybe just dropping

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Speaker 1: two hundred and fifty thousand dollars on a custom card

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Speaker 1: just to try that out.

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Speaker 3: What about not everybody?

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Speaker 2: Not everybody is Bob Sponseller, Right, we all can't just

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Speaker 2: pick one up on the way home and a gallon

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Speaker 2: of milk at the grocery store and a maserati.

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Speaker 3: But you know you do you nobody's judging here, all right.

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Speaker 1: I appreciate that, all right. Hey. Another thing to do

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Speaker 1: is test your tax plan in real time. Most people

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Speaker 1: think tax planning ends on April fifteenth, but when you're

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Speaker 1: living off your investments, how you withdraw your income makes

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Speaker 1: a massive difference. This is especially true the more money

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Speaker 1: you have. If you start pulling too much money from

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Speaker 1: your IRA too soon or in the wrong order, you

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Speaker 1: might push yourself, you know, unknowingly into a higher tax bracket,

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Speaker 1: have your Medicare premiums go up without realizing it. You

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Speaker 1: really do need to sit down and test drive in

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Speaker 1: advance how your retirement income strategy is going to work

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Speaker 1: before you just you know, hang up your shingle and

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Speaker 1: turn on the income and just hope it's all going

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Speaker 1: to work out.

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Speaker 2: Yeah, tax planning. Tax planning is different than tax prep.

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Speaker 2: Tax prep ends on April fifteenth, or maybe October fifteenth.

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Speaker 3: If you're going to get an extension. Tax planning.

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Speaker 2: I'm going to be realistic here. Tax planning ends around

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Speaker 2: December fifteenth, December twentieth of the current tax year. And

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Speaker 2: I say that because there's going to be very little

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Speaker 2: time left, and your financial institutions are all getting swamped

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Speaker 2: with the roth conversion requests and the tax loss harvesting

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Speaker 2: requests and all those kinds of things. So we're really

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Speaker 2: at crunch time if you're doing any tax planning at all.

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Speaker 2: Tax planning is I want to do some things to

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Speaker 2: affect a different outcome in April, but as soon as

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Speaker 2: New Year's Day comes, then the tax year is closed.

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Speaker 2: You can't do anything anything else other than make an

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Speaker 2: IRA contribution if that's your thing.

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Speaker 1: That's a really nice way for all you listeners out

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Speaker 1: there that work with Brian James, do not call Brian

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Speaker 1: James after December fifteenth. He's really trying to structure, you know,

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Speaker 1: a two and a half week vacation here to end

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Speaker 1: the end of the year. That's a great way to

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Speaker 1: put it though, Brian.

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Speaker 3: I'm right, hey, you're on the way out today.

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Speaker 1: Okay. Last thing, and I do think this is important,

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Speaker 1: this whole downsizing discussion that always comes up or often

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Speaker 1: comes up when people retire. Are we talking about downsizing

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Speaker 1: mentally or physically. Maybe you're not ready to move out

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Speaker 1: of that five bedroom house or sell your second home.

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Speaker 1: That's fine, but maybe use a test drive to think smaller,

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Speaker 1: if even temporarily, it could mean spending a little bit

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Speaker 1: less each month. The whole discussion about moving closer to

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Speaker 1: grandkids comes off, you know it, or comes up do

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Speaker 1: we buy a place near our grandkids. I don't recommend

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Speaker 1: that because you'll be chasing kids all over the country

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Speaker 1: from now. Because people move, they move a whole lot,

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Speaker 1: you know, more often than they used to. But and

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Speaker 1: the big one is this vacation stuff. Rather than just

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Speaker 1: going and dropping money on a condo because you love

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Speaker 1: to be in a certain spot and buying something, go

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Speaker 1: rent something on a temporary basis in a place you

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Speaker 1: think you might want to live or vacation in. It's

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Speaker 1: another way of test driving without making a huge financial

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Speaker 1: commitment that you might regret down the road.

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Speaker 3: Yeah.

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Speaker 2: I think that's a huge one because in this area,

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Speaker 2: the people have talked about, well, all we're gonna get

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Speaker 2: a place in Hilton Head, We're gonna get a place

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Speaker 2: in destin.

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Speaker 3: Everybody has their place that they've.

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Speaker 2: Been going to for years and it's always been the

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Speaker 2: lifelong dream to go to because of the week that

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Speaker 2: they had there every single year. Well, going somewhere and

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Speaker 2: staying there for months at a time is a very, very,

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Speaker 2: very different experience. You may or may not love it

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Speaker 2: for that long as opposed to when you were squishing

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Speaker 2: it in between baseball games and whatever kid stuff you

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Speaker 2: had going on back in the day. So be okay

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Speaker 2: with the idea of spending a little more to stay longer,

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Speaker 2: stay at a nicer place, and just realize what figure

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Speaker 2: out what it's like to actually live there and actually

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Speaker 2: do the tasks that a person who is not living

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Speaker 2: out of a suitcase has to do. That's the difference

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Speaker 2: between owning property somewhere and just renting for a week.

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Speaker 2: All these test drives are very important. Be okay with

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Speaker 2: spending a little more to make sure that a bigger investment,

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Speaker 2: should you want to buy, makes sense.

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Speaker 1: Here's the all Worth advice. Don't just plan for the

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Speaker 1: next chapter, practice it. A financial freedom test drive can

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Speaker 1: help turn your vision into reality with fewer surprises and

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Speaker 1: way more peace of mind. Coming up next, we tackle

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Speaker 1: the millionaire's income problem, because pulling money out the wrong

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Speaker 1: way can cost you big in taxes, penalties, and lost opportunities.

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Speaker 1: You're listening to Simply Money presented by all Worth Financial

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Speaker 1: on fifty five KRC the talk station. You're listening to

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Speaker 1: Simply Money presented by all Worth Financial on Bob Sponseller

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Speaker 1: along with Brian James. Are you still picking your own

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Speaker 1: stocks wondering how to turn company shares into real retirement

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Speaker 1: income from withdrawal strategies to covered call ets, smart investing

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Speaker 1: moves of all kinds straight ahead at six forty three,

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Speaker 1: let's paint a picture here. You did everything right, saved diligently,

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Speaker 1: you invested wisely, and now you're sitting on say three million,

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Speaker 1: five million, shoot, maybe even eight million dollars heading into retirement.

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Speaker 1: But here's the twist, no one tells you about. Getting

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Speaker 1: money out of your portfolio is a whole lot trickier

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Speaker 1: than putting it in. We'll call this the millionaire's income

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Speaker 1: problem if we can call an eight million dollar net

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Speaker 1: worth of problem. Brian, what are we talking about here?

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Speaker 2: Well, once you stop getting that paycheck from some employer,

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Speaker 2: you know, like what I like to call other people's money,

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Speaker 2: O PM, Well you got to create your own.

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Speaker 3: Now it's your own money.

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Speaker 2: The risk isn't just running out of money, it's triggering

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Speaker 2: massive tax bills, medicare penalties, maybe even undoing decades of

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Speaker 2: careful investing that you've worked very hard to put in place.

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Speaker 2: So we're gonna go through a few strategies today that

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Speaker 2: you can go you can use to turn income on

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Speaker 2: the smart way. Here's a fun one. ROTH conversion ladders

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Speaker 2: after retirement. We see this all the time. Clients retire

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Speaker 2: at sixty two and are looking for more tax efficient Man,

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Speaker 2: I have a few low income tax years here before

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Speaker 2: Social Security and rm ds kick in. So if I'm retired,

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Speaker 2: I don't have salary anymore. That means a significant source

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Speaker 2: of income and income taxation has now gone away.

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Speaker 3: And what else can we do? So this is a

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Speaker 3: tax planning window.

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Speaker 2: These are the best years to convert money from traditional

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Speaker 2: to a ROTH. Of course, yes, you're gonna you're paying taxes, right,

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Speaker 2: you are taking money from pre tax to post tax.

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Speaker 2: Of course, that means the only way to get there

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Speaker 2: is to pay taxes.

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Speaker 3: Right.

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Speaker 2: A lot of people will come in and they'll say, hey,

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Speaker 2: I got this pile of money, I want to poof

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Speaker 2: turn it into a roth ira. Well, that's not that

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Speaker 2: that is a math calculation. It is very very much

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Speaker 2: a sacrifice in exchange for a game later. It can

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Speaker 2: be a great idea, but don't come in thinking it's just, hey,

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Speaker 2: I'm gonna make everything a wroth ira.

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Speaker 3: Doesn't work that way.

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Speaker 2: But anyway, if it does, if you do those conversions,

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Speaker 2: of course that money is now growing tax free and

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Speaker 2: it comes out tax free. Also will not count against

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Speaker 2: Medicare premium thresholds via IRMA.

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Speaker 3: That is a big big deal.

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Speaker 2: Your required minimum distributions out of your pre tax I rays,

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Speaker 2: those absolutely will affect your Medicare premiums.

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Speaker 1: Let's talk about another strategy, evaluating municipal bonds versus dividend portfolios.

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Speaker 1: You know from when it comes to generating income. And

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Speaker 1: let's face it, a lot of folks have built a

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Speaker 1: lot of wealth the right way. They have invested diligently

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Speaker 1: and have been very disciplined, and they've done those dividend

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Speaker 1: reinvestments for years and years, if not decades and decades,

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Speaker 1: and they now want to say, hey, we want to

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Speaker 1: win from all this work we put in. Let's just

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Speaker 1: turn on the income stickt from dividend stocks, and that's

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Speaker 1: not a bad strategy unless they mess with your tax

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Speaker 1: efficiency if you're not careful. And this is where you know,

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Speaker 1: and Brian, you know, bonds tend to be a very

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Speaker 1: boring topic that a lot of people don't understand and

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Speaker 1: they don't take the time to evaluate. For higher networth,

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Speaker 1: high income people. Here we're talking about municipal bonds. It's

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Speaker 1: something to at least consider for folks in high tax brackets.

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Speaker 1: The interest, just as a reminder, from municipal bonds is

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Speaker 1: generally tax free at the federal level, and if you

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Speaker 1: buy in state bonds, they're often tax state tax free

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Speaker 1: as well. So it's it's a good time to sit

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Speaker 1: down and look at the after tax yield on what

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Speaker 1: you could get from you know, let's let's be real here,

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Speaker 1: some safer income alternatives like municipal bonds versus just taking

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Speaker 1: dividend income from stocks, where the stocks can become volatile.

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Speaker 1: You know, they will move up and down and sometimes violently,

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Speaker 1: and if you just rely on dividends from stocks to

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Speaker 1: generate the income that you need, you might end up

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Speaker 1: with a more way, more volatile portfolio. In retirement than

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Speaker 1: you want to hold.

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Speaker 3: You could too.

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Speaker 2: And while we're talking about municipal bonds, Bob, I want

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Speaker 2: to throw another thought out there. I frequently will see

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Speaker 2: people who who maybe are at a low bracket right

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Speaker 2: now because they just don't have any They don't have

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Speaker 2: much in the way of income. They might have millions

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Speaker 2: in their retirement plans and sitting in the bank and

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Speaker 2: all that, but they haven't turned on any of their

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Speaker 2: income streams. And then I'll see that they're sitting on

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Speaker 2: a bunch of municipal bonds that are maybe yielding them

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Speaker 2: three percent or something like that, when they could be

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Speaker 2: in a corporate bond portfolio that's spitting out five percent.

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Speaker 2: So the idea is not to poke the irs in

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Speaker 2: the eye by not paying any taxes. If you're in

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Speaker 2: a low bracket and you have municipal bonds, you're leaving

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Speaker 2: a lot of money on the table. I'd rather pay

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Speaker 2: taxes on five percent worth of income and get four net,

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Speaker 2: then get three without paying any taxes at all. So

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Speaker 2: be sure you understand the purpose of your municipal bond.

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Speaker 3: I'll be honest.

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Speaker 2: Unless you're in the thirty two percent bracket, which is

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Speaker 2: close to four hundred thousand for a married couple or

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Speaker 2: two hundred or so for an individual. If you're in

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Speaker 2: the thirty two percent bracket, then yes, you're going to

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Speaker 2: see your tax equivalent yields be worthwhile.

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Speaker 3: But if you're underneath that, unis might not be helping

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Speaker 3: you as much as are hurt.

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Speaker 1: Yeah, great point. And for folks with larger portfolios, this

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Speaker 1: is where a laddered bond strategy with individual bonds makes

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Speaker 1: a lot of sense because you can actually see how

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Speaker 1: the sausage is made, you can actually see the bond

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Speaker 1: you own. You can stagger them maturities, so you're not

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Speaker 1: locking in anything for the long term because things do

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Speaker 1: and will change in terms of tax policy, interest rates,

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Speaker 1: all of that. So ladder bond portfolios, and as you said,

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Speaker 1: mixing and matching various sources of that bond income can

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Speaker 1: be a great thing to take a look at. Let's

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Speaker 1: talk about real estate, Brian. We occasionally have people that

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Speaker 1: want to live off of rental income from you know,

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Speaker 1: rental homes that they've acquired over the years, and they

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Speaker 1: are used to fantastic cash flow. There are pros and

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Speaker 1: cons to taking that strategy into retirement.

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Speaker 2: So yeah, a rental income, of course, can be a

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Speaker 2: fantastic source of cash flow. Right, there's no income like

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Speaker 2: passive income. However, those of you who own real estate

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Speaker 2: or have in the past, you know there is nothing

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Speaker 2: passive about owning rental real estate. You've got maintenance, you've

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Speaker 2: got vacancies, and worst of all, you've got the human

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Speaker 2: being communications with the tenants. Those can all create headaches.

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Speaker 2: There's no timing, there's no rationality to them other than

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Speaker 2: the way the universe works. All this stuff tends to

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Speaker 2: blow up when you don't have the time for it

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Speaker 2: to blow up. So this is where you know, people

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Speaker 2: might consider hiring a property manager or maybe shifting to

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Speaker 2: just plain investments like real estate investment trusts also known

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Speaker 2: as reats for some exposure real estate without taking the

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Speaker 2: toilet plumbing responsibilities. So these can be okay publicly traded reads.

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Speaker 2: Private real estate funds can throw off steady income and

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Speaker 2: you know, systematically and predictably, and they give you some

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Speaker 2: diversification loss across a lot of things, commercial properties, apartments,

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Speaker 2: business locations, and those kinds of things. Not having to

437
00:19:30,240 --> 00:19:32,639
Speaker 2: deal with that phone call about the broken water heater

438
00:19:32,720 --> 00:19:35,720
Speaker 2: or whatever. Rather than locking money into an annuity. Now,

439
00:19:35,960 --> 00:19:38,679
Speaker 2: this can be a better alternative, and annuities are okay,

440
00:19:38,720 --> 00:19:41,080
Speaker 2: but they can also limit your flexibility. They've got high

441
00:19:41,119 --> 00:19:44,560
Speaker 2: fees involved and can underperform. You can design your own

442
00:19:44,600 --> 00:19:47,800
Speaker 2: income stream through these different portfolio pieces, but you have

443
00:19:47,840 --> 00:19:50,480
Speaker 2: to understand how all the puzzle pieces fit together, the

444
00:19:50,560 --> 00:19:52,960
Speaker 2: benefits you're getting and the sacrifices you're making.

445
00:19:53,520 --> 00:19:56,399
Speaker 1: Here's the all Worth advice. Just because you're wealthy doesn't

446
00:19:56,440 --> 00:20:01,200
Speaker 1: mean you can't make sometimes very expensive mistakes. Income planning

447
00:20:01,440 --> 00:20:06,479
Speaker 1: is where fortunes are either preserved or slowly drained. This

448
00:20:06,560 --> 00:20:09,840
Speaker 1: is a hard conversation but maybe the most important one

449
00:20:10,160 --> 00:20:13,120
Speaker 1: you can ever have with your spouse. What happens if

450
00:20:13,200 --> 00:20:18,639
Speaker 1: I die? First? How to prepare your partner emotionally and financially. Next,

451
00:20:18,800 --> 00:20:21,280
Speaker 1: you're listening to Simply Money, presented by all Worth Financial

452
00:20:21,280 --> 00:20:29,520
Speaker 1: on fifty five KRC, the talk station. You're listening to

453
00:20:29,520 --> 00:20:31,960
Speaker 1: Simply Money. You're sided by all Worth Financial on Bob's

454
00:20:31,960 --> 00:20:35,240
Speaker 1: Fonseller along with Brian James. Well, this is one of

455
00:20:35,240 --> 00:20:38,840
Speaker 1: those segments that might be uncomfortable to hear, but it

456
00:20:38,920 --> 00:20:42,119
Speaker 1: might be exactly the one you'll be grateful you listen

457
00:20:42,200 --> 00:20:44,800
Speaker 1: to later on down the road. We're gonna call this

458
00:20:45,200 --> 00:20:48,800
Speaker 1: the if I die first segment, and it's not meant

459
00:20:48,800 --> 00:20:52,359
Speaker 1: to be dramatic. It's meant to be honest and practical.

460
00:20:52,880 --> 00:20:56,440
Speaker 1: This is important stuff, Brian, and it's an important topic

461
00:20:56,440 --> 00:20:57,800
Speaker 1: to get out in front of you and I have

462
00:20:57,920 --> 00:21:01,879
Speaker 1: both lived through this situation clients many times. What are

463
00:21:01,880 --> 00:21:02,760
Speaker 1: we talking about here?

464
00:21:03,320 --> 00:21:04,359
Speaker 3: Well, this is important stuff.

465
00:21:04,400 --> 00:21:06,639
Speaker 2: So if you're in a partnership, maybe a marriage, or

466
00:21:06,680 --> 00:21:09,639
Speaker 2: some other kind of domestic arrangement, well somebody's gonna go first.

467
00:21:09,720 --> 00:21:11,760
Speaker 3: And unfortunately, whether you're the.

468
00:21:11,720 --> 00:21:13,800
Speaker 2: Money spouse, the one who pays attention and makes the

469
00:21:13,800 --> 00:21:16,399
Speaker 2: decisions and knows where all the bodies are buried, or

470
00:21:16,520 --> 00:21:18,600
Speaker 2: the one who prefers to stay out of the financial

471
00:21:18,600 --> 00:21:20,720
Speaker 2: details and only be informed of the big picture, you know,

472
00:21:20,800 --> 00:21:22,600
Speaker 2: like what what'll we call, like to call the CEO

473
00:21:22,760 --> 00:21:24,400
Speaker 2: versus the CFO in a household?

474
00:21:24,640 --> 00:21:26,120
Speaker 3: Well, we've seen far too many.

475
00:21:25,960 --> 00:21:28,840
Speaker 2: Cases where that surviving spouse is not only left grieving,

476
00:21:29,119 --> 00:21:32,360
Speaker 2: which is hard enough as it is, but completely financially unprepared,

477
00:21:32,400 --> 00:21:34,480
Speaker 2: which can just be overwhelming to go through all that

478
00:21:34,560 --> 00:21:34,960
Speaker 2: at once.

479
00:21:35,359 --> 00:21:36,359
Speaker 3: So let's talk about that.

480
00:21:36,440 --> 00:21:42,160
Speaker 2: You know, the different roles that spouses tend to play.

481
00:21:40,480 --> 00:21:42,960
Speaker 3: That we see in these planning relationships that we have, well.

482
00:21:43,080 --> 00:21:45,520
Speaker 2: One spouse and it's usually but this is going to

483
00:21:45,600 --> 00:21:47,399
Speaker 2: sound sexist, this is the way it works. It's usually,

484
00:21:47,400 --> 00:21:50,720
Speaker 2: but not always the husband. One spouse is normally the

485
00:21:50,720 --> 00:21:51,880
Speaker 2: one who really wants.

486
00:21:51,640 --> 00:21:52,000
Speaker 3: To take care.

487
00:21:52,080 --> 00:21:53,560
Speaker 2: I would say this is probably three out of four

488
00:21:53,600 --> 00:21:57,119
Speaker 2: times one spouse wants to take care of all the finances.

489
00:21:57,160 --> 00:21:58,600
Speaker 2: The other one wants nothing to do with it. And

490
00:21:58,600 --> 00:22:01,119
Speaker 2: this is a relationship that actually works pretty well. You know,

491
00:22:01,160 --> 00:22:03,480
Speaker 2: show me two people who want to be neck deep

492
00:22:03,560 --> 00:22:05,119
Speaker 2: in every part of the household, and I'll show you

493
00:22:05,119 --> 00:22:06,320
Speaker 2: two people aren't going to stay.

494
00:22:06,160 --> 00:22:06,960
Speaker 3: Married for very long.

495
00:22:07,480 --> 00:22:09,679
Speaker 2: Separation of duties is very important, But that's the one

496
00:22:09,680 --> 00:22:12,520
Speaker 2: who handles the investments, taxes, pays the bills, runs the budget.

497
00:22:12,680 --> 00:22:14,639
Speaker 3: The other spouse perfectly capable.

498
00:22:14,280 --> 00:22:16,359
Speaker 2: Of it, but just isn't involved and therefore doesn't know

499
00:22:16,400 --> 00:22:18,280
Speaker 2: the day to day and there's gonna be a run

500
00:22:18,359 --> 00:22:20,679
Speaker 2: up to kind of a learning curve to understanding how

501
00:22:20,680 --> 00:22:23,480
Speaker 2: that household worked. So this can be by choice. Maybe

502
00:22:23,480 --> 00:22:26,240
Speaker 2: they chose that, or maybe they were just told don't worry,

503
00:22:26,280 --> 00:22:27,719
Speaker 2: I'll take care of it, and they didn't push back

504
00:22:27,760 --> 00:22:29,840
Speaker 2: at the time. Well, the risk here is that if

505
00:22:29,840 --> 00:22:32,919
Speaker 2: the money spouse dies first, obviously there's enough going on

506
00:22:33,000 --> 00:22:35,480
Speaker 2: with the grief, but also this person is suddenly a

507
00:22:35,520 --> 00:22:37,560
Speaker 2: CFO when maybe they've never had that role in their

508
00:22:37,640 --> 00:22:38,280
Speaker 2: entire lives.

509
00:22:38,640 --> 00:22:41,480
Speaker 1: Brian, I've told this story at least once on this show,

510
00:22:41,520 --> 00:22:44,119
Speaker 1: and I think it's worth repeating. One of my first

511
00:22:44,160 --> 00:22:48,760
Speaker 1: ever clients, and they were wonderful people, wonderful marriage, but

512
00:22:49,040 --> 00:22:51,199
Speaker 1: you know, they really did live, you know, in what

513
00:22:51,280 --> 00:22:54,600
Speaker 1: I would call the Flintstone generation. The husband did everything.

514
00:22:54,720 --> 00:22:57,920
Speaker 1: The wife was just a great mother and and took

515
00:22:58,000 --> 00:23:00,400
Speaker 1: care of the home, you know, more of an time

516
00:23:00,600 --> 00:23:04,200
Speaker 1: traditional way of doing things. And all this husband told

517
00:23:04,240 --> 00:23:09,040
Speaker 1: his wife was if I die, call Bob. Well, she

518
00:23:09,200 --> 00:23:11,639
Speaker 1: called me on my cell phone at four fifteen in

519
00:23:11,680 --> 00:23:14,040
Speaker 1: the morning one day and said, you know, my husband

520
00:23:14,080 --> 00:23:17,360
Speaker 1: died and and these people, Brian, they were worth several

521
00:23:17,440 --> 00:23:20,480
Speaker 1: million dollars back in nineteen ninety two, so that's a

522
00:23:20,480 --> 00:23:24,520
Speaker 1: lot of money. And her first and only question to

523
00:23:24,560 --> 00:23:27,760
Speaker 1: me was do I have enough money to go down

524
00:23:27,960 --> 00:23:31,639
Speaker 1: to the UDF and buy some eggs and milk? And

525
00:23:31,720 --> 00:23:34,639
Speaker 1: it was a very sad conversation to have because to

526
00:23:34,680 --> 00:23:37,399
Speaker 1: your point that you just made she's grieving the loss

527
00:23:37,400 --> 00:23:41,280
Speaker 1: of her husband. She has no idea whether she's penniless

528
00:23:41,280 --> 00:23:43,760
Speaker 1: and can even afford groceries that day. That is a

529
00:23:43,920 --> 00:23:47,720
Speaker 1: very sad situation to put someone in. It wasn't It

530
00:23:47,760 --> 00:23:51,719
Speaker 1: wasn't done intentionally. Again, wonderful marriage, but there was no

531
00:23:51,880 --> 00:23:56,040
Speaker 1: planning put in place whatsoever to prepare this woman to

532
00:23:56,080 --> 00:23:59,840
Speaker 1: be the new financial CEO over home. It was a

533
00:24:00,520 --> 00:24:03,720
Speaker 1: I will never forget that phone call, and I try

534
00:24:03,760 --> 00:24:06,639
Speaker 1: to help people avoid that situation at all costs. So

535
00:24:06,760 --> 00:24:09,200
Speaker 1: let's pivot to what we should be doing for our

536
00:24:09,240 --> 00:24:09,760
Speaker 1: loved ones.

537
00:24:10,080 --> 00:24:12,320
Speaker 2: So the very first thing is make sure everybody knows

538
00:24:12,359 --> 00:24:15,639
Speaker 2: where all this stuff is, right, don't overthink this. The

539
00:24:15,720 --> 00:24:17,199
Speaker 2: very first thing we need to do is just make

540
00:24:17,240 --> 00:24:20,200
Speaker 2: sure we're clear where the inventory is. So maybe something

541
00:24:20,240 --> 00:24:24,000
Speaker 2: like a financial instruction manual that would contain a list

542
00:24:24,000 --> 00:24:26,680
Speaker 2: of all your investment accounts, bank accounts, maybe the last

543
00:24:26,760 --> 00:24:27,600
Speaker 2: year end statement.

544
00:24:27,640 --> 00:24:28,520
Speaker 3: It can be this easy.

545
00:24:28,800 --> 00:24:31,560
Speaker 2: Every December, grab that or January when the statements show up,

546
00:24:31,680 --> 00:24:33,920
Speaker 2: grab that statement, throw it in a folder, and you

547
00:24:33,920 --> 00:24:35,600
Speaker 2: don't have to worry, don't even have to look at it.

548
00:24:36,080 --> 00:24:37,840
Speaker 2: You know, even if this is just a digital folder

549
00:24:37,920 --> 00:24:39,600
Speaker 2: or something on dropbox. You don't even have to look at.

550
00:24:39,600 --> 00:24:41,400
Speaker 2: It's just a place where you can say, oh, here's

551
00:24:41,400 --> 00:24:44,399
Speaker 2: what it was, you know whatever December. This account existed

552
00:24:44,400 --> 00:24:47,159
Speaker 2: at one point and then you're surviving spouse and whoever

553
00:24:47,240 --> 00:24:50,000
Speaker 2: is helping them organize things will know where to look.

554
00:24:50,040 --> 00:24:52,840
Speaker 2: They can always go get the latest information, but they

555
00:24:52,880 --> 00:24:55,639
Speaker 2: just need to know that the account exists. Passwords, now,

556
00:24:55,680 --> 00:24:58,320
Speaker 2: this is a little bit tougher because I used to

557
00:24:58,320 --> 00:25:00,280
Speaker 2: try this years ago when the internet was first thing,

558
00:25:00,320 --> 00:25:03,480
Speaker 2: but passwords nowadays changed so often there's just no way

559
00:25:03,600 --> 00:25:05,639
Speaker 2: and it's actually dangerous to be writing them down on

560
00:25:05,680 --> 00:25:08,000
Speaker 2: a piece of paper. Or what really frightens me, Bob,

561
00:25:08,240 --> 00:25:11,320
Speaker 2: the shared spreadsheet in Google Docs or something like that

562
00:25:11,320 --> 00:25:14,400
Speaker 2: that has the keys to your kingdom somewhere out there online.

563
00:25:15,040 --> 00:25:17,880
Speaker 2: But you know, so there's a little tougher. Different things

564
00:25:17,920 --> 00:25:19,879
Speaker 2: have to happen there. I would suggest again, just just

565
00:25:19,920 --> 00:25:22,760
Speaker 2: make sure everybody knows where the accounts are and the

566
00:25:22,920 --> 00:25:26,359
Speaker 2: individuals can contact those financial institutions one by one and

567
00:25:26,359 --> 00:25:27,800
Speaker 2: make sure they get their appropriate access.

568
00:25:28,359 --> 00:25:29,560
Speaker 3: But here's an important one.

569
00:25:29,880 --> 00:25:31,840
Speaker 2: If there's a financial advisor in the mix, where if

570
00:25:31,840 --> 00:25:34,280
Speaker 2: there's some central point who knows where all this stuff is,

571
00:25:34,440 --> 00:25:36,720
Speaker 2: Please make sure your spouse knows who that person is

572
00:25:36,760 --> 00:25:38,919
Speaker 2: and ideally can pick them out of a crowd. I

573
00:25:39,000 --> 00:25:42,240
Speaker 2: do have a handful of clients where the non money

574
00:25:42,240 --> 00:25:44,720
Speaker 2: spouse is so far away from the money they don't

575
00:25:44,760 --> 00:25:45,960
Speaker 2: even want to come in and meet me. And that

576
00:25:46,000 --> 00:25:47,919
Speaker 2: scares me to death because this person is going to

577
00:25:47,920 --> 00:25:49,679
Speaker 2: call me in tears wanting to know if they can

578
00:25:49,720 --> 00:25:51,840
Speaker 2: afford eggs. That's not a good thing. Make sure your

579
00:25:52,040 --> 00:25:54,640
Speaker 2: spouse knows where your advisor is. You're a state attorney,

580
00:25:54,680 --> 00:25:57,400
Speaker 2: your CPA, and anybody else you're working with business cards

581
00:25:57,440 --> 00:25:58,680
Speaker 2: in a fold or something like that.

582
00:25:59,200 --> 00:26:01,200
Speaker 1: Well, I'm gonna jump on that point you just made

583
00:26:01,200 --> 00:26:03,360
Speaker 1: because I think it's a critical one. You know, it's

584
00:26:03,400 --> 00:26:07,600
Speaker 1: not just about money and passwords and account numbers. Both

585
00:26:07,760 --> 00:26:11,800
Speaker 1: spouses or both partners should know these advisors, not just

586
00:26:11,920 --> 00:26:13,520
Speaker 1: know their names or how to pick them out of

587
00:26:13,560 --> 00:26:15,919
Speaker 1: a lineup. They should know them a little bit. They

588
00:26:15,960 --> 00:26:18,320
Speaker 1: should have attended a few meetings because at the end

589
00:26:18,359 --> 00:26:21,199
Speaker 1: of the day, when that spouse who passes away is

590
00:26:21,240 --> 00:26:23,600
Speaker 1: no longer here, it is going to come down to

591
00:26:24,320 --> 00:26:27,680
Speaker 1: do I connect with these advisors and the surviving spouse

592
00:26:27,720 --> 00:26:31,120
Speaker 1: if they have no relationship with those advisors. They haven't

593
00:26:31,119 --> 00:26:34,359
Speaker 1: built any trust, they haven't gotten to know one another.

594
00:26:34,880 --> 00:26:37,520
Speaker 1: Things can change in a hurry, and the whole plan

595
00:26:38,000 --> 00:26:41,320
Speaker 1: that this couple put together for decades could get unwound

596
00:26:41,359 --> 00:26:44,439
Speaker 1: overnight if you fall into the hands of a you know,

597
00:26:44,560 --> 00:26:48,280
Speaker 1: unscrupulous advisor, or just get bad advice, or get non

598
00:26:48,280 --> 00:26:51,560
Speaker 1: informed advice because there was not a relationship for him.

599
00:26:52,000 --> 00:26:54,359
Speaker 1: You can tell I'm on my high horse here. I

600
00:26:54,359 --> 00:26:57,800
Speaker 1: think this is a really important thing. Both spouses need

601
00:26:57,840 --> 00:27:01,520
Speaker 1: to attend these meetings, even if one spouse has no

602
00:27:01,680 --> 00:27:04,159
Speaker 1: interest in the numbers and the spreadsheets and all that,

603
00:27:04,359 --> 00:27:08,639
Speaker 1: simply to feel comfort level with who the advisory team

604
00:27:08,760 --> 00:27:12,280
Speaker 1: is because it will come into play very quickly, and

605
00:27:13,040 --> 00:27:13,760
Speaker 1: it's important.

606
00:27:13,960 --> 00:27:16,160
Speaker 3: It's important to get it. Even if you don't understand

607
00:27:16,160 --> 00:27:16,720
Speaker 3: the numbers or.

608
00:27:16,720 --> 00:27:19,320
Speaker 2: How it go works together and you hate hate this stuff,

609
00:27:19,400 --> 00:27:21,520
Speaker 2: you should get a vibe from the advisor do you

610
00:27:21,640 --> 00:27:24,119
Speaker 2: like them or not? Because that person one day was

611
00:27:24,160 --> 00:27:25,679
Speaker 2: going to have to be your partner, whether you like

612
00:27:25,720 --> 00:27:26,040
Speaker 2: it or not.

613
00:27:27,040 --> 00:27:29,160
Speaker 1: Here's the all Worth advice. The best gift you can

614
00:27:29,240 --> 00:27:34,960
Speaker 1: leave your spouse isn't just money. It's clarity, stock options,

615
00:27:35,000 --> 00:27:39,320
Speaker 1: smarter withdraws and income strategies of the all of the above.

616
00:27:39,400 --> 00:27:43,000
Speaker 1: Coming up next, we break down real world money moves

617
00:27:43,000 --> 00:27:47,359
Speaker 1: for investors with more to lose if they don't plan accordingly.

618
00:27:47,600 --> 00:27:50,360
Speaker 1: You're listening to Simply Money, presented by all Worth Financial

619
00:27:50,359 --> 00:27:58,800
Speaker 1: on fifty five KRC, the talk station. You're listening to

620
00:27:58,920 --> 00:28:02,000
Speaker 1: Simply Money, If I all Worked Financial Lumpops fun seller

621
00:28:02,040 --> 00:28:04,800
Speaker 1: along with Brian James. Do you have a financial question

622
00:28:04,840 --> 00:28:07,080
Speaker 1: you'd like for us to answer. There's a red button

623
00:28:07,080 --> 00:28:10,000
Speaker 1: you can click while you're listening to the show. If, if,

624
00:28:10,040 --> 00:28:12,000
Speaker 1: and only if you're listening to the show on the

625
00:28:12,040 --> 00:28:15,639
Speaker 1: iHeart app. Simply record your question there and it will

626
00:28:15,640 --> 00:28:19,160
Speaker 1: come straight to us. All right, Brian, here's Allan from

627
00:28:19,200 --> 00:28:23,120
Speaker 1: Milford who says we inherited a whole mix of investments

628
00:28:23,160 --> 00:28:26,560
Speaker 1: from my parents and honestly, I don't know what half

629
00:28:26,560 --> 00:28:29,880
Speaker 1: of this stuff is. How do you modernize a portfolio

630
00:28:30,359 --> 00:28:32,240
Speaker 1: without completely blowing it up?

631
00:28:32,800 --> 00:28:35,400
Speaker 2: Well, the first thing is don't rush into any decisions.

632
00:28:35,400 --> 00:28:37,960
Speaker 2: The biggest mistake that people often make is thinking you

633
00:28:38,000 --> 00:28:40,040
Speaker 2: got to fix everything at once. This was mom and

634
00:28:40,120 --> 00:28:43,360
Speaker 2: dad's portfolio. This is a portfolio for little elderly people.

635
00:28:43,600 --> 00:28:45,320
Speaker 2: And that's not me, So I need to change everything

636
00:28:45,360 --> 00:28:47,840
Speaker 2: right now today. You might not understand what it is.

637
00:28:47,880 --> 00:28:51,200
Speaker 2: So start with a full inventory, every holding, every fun class,

638
00:28:51,240 --> 00:28:55,200
Speaker 2: all the stocks, most importantly cost basis, and understand how

639
00:28:55,200 --> 00:28:57,800
Speaker 2: the impact of this works. If those assets got to

640
00:28:57,840 --> 00:29:00,400
Speaker 2: step up in bases at death, that often gives you

641
00:29:00,520 --> 00:29:02,680
Speaker 2: it's gonna give you a tax free reset button. Most

642
00:29:02,680 --> 00:29:04,600
Speaker 2: of the stuff that is not inside of some kind

643
00:29:04,600 --> 00:29:07,600
Speaker 2: of retirement plan that should have come to you in

644
00:29:07,840 --> 00:29:11,040
Speaker 2: a taxable portfolio, which means it's as if you bought

645
00:29:11,040 --> 00:29:15,200
Speaker 2: it the day your benefactor passed away, so you get

646
00:29:15,640 --> 00:29:17,400
Speaker 2: at the moment you inherit it, you should be at.

647
00:29:17,360 --> 00:29:19,959
Speaker 3: A pretty low cost basis. Don't let those run forever though.

648
00:29:19,960 --> 00:29:21,680
Speaker 2: Matter of fact, I'd look at those first, because people

649
00:29:21,680 --> 00:29:24,040
Speaker 2: will come in two years after the fact going well

650
00:29:24,080 --> 00:29:25,280
Speaker 2: I didn't really like these investments.

651
00:29:25,280 --> 00:29:26,360
Speaker 3: I wanted to make some changes.

652
00:29:26,560 --> 00:29:28,640
Speaker 2: Well they've gone up a bit, so now we have

653
00:29:28,720 --> 00:29:30,760
Speaker 2: taxes where if we had looked at it a little

654
00:29:30,800 --> 00:29:32,520
Speaker 2: more quickly, we could have made the adjustments that are

655
00:29:32,520 --> 00:29:35,000
Speaker 2: more appropriate before the tax bite happened.

656
00:29:35,600 --> 00:29:37,120
Speaker 3: And then you put these into buckets.

657
00:29:37,160 --> 00:29:39,000
Speaker 2: Right, you might have keepers and stuff that you're not

658
00:29:39,000 --> 00:29:41,120
Speaker 2: sure about and stuff you're gonna dump right away. The

659
00:29:41,200 --> 00:29:44,240
Speaker 2: keepers would be your low cost index funds, diverse fight ETFs.

660
00:29:44,520 --> 00:29:48,400
Speaker 2: Questionable stuff is anything with a high internal fee, like

661
00:29:48,480 --> 00:29:52,120
Speaker 2: expensive mutual funds, maybe old share classes B shares or

662
00:29:52,120 --> 00:29:54,600
Speaker 2: Heaven Forbid C share or something like that. Those might

663
00:29:54,640 --> 00:29:56,880
Speaker 2: not make any sense. And then exit candidates would be

664
00:29:56,920 --> 00:29:58,920
Speaker 2: those little spin offs. You know, everybody who has P

665
00:29:59,000 --> 00:30:00,920
Speaker 2: and G also got small and a handful of other

666
00:30:00,960 --> 00:30:02,680
Speaker 2: little tiny positions. You might not want to deal with

667
00:30:02,720 --> 00:30:04,480
Speaker 2: that stuff at all. It's all gonna spit out little

668
00:30:04,480 --> 00:30:07,040
Speaker 2: tiny things, so tidy it up, but it's nothing to

669
00:30:07,080 --> 00:30:09,200
Speaker 2: be afraid of. You don't have to do it immediately.

670
00:30:09,240 --> 00:30:10,920
Speaker 2: But at the same time, don't let it go for twue, three,

671
00:30:10,960 --> 00:30:12,600
Speaker 2: four or five years. It's not going to be very

672
00:30:12,600 --> 00:30:15,720
Speaker 2: efficient to handle it that way. Okay, moving on to Greg.

673
00:30:15,800 --> 00:30:18,160
Speaker 2: Greg's down in Fort Thomas. Love the forts down there.

674
00:30:19,000 --> 00:30:21,360
Speaker 2: I'll always picked my own stocks. But now our portfolio

675
00:30:21,360 --> 00:30:22,920
Speaker 2: is gett a little bigger, and he's wondering if they've

676
00:30:22,920 --> 00:30:24,960
Speaker 2: got any blind spots. Well, how do you know when

677
00:30:25,040 --> 00:30:26,960
Speaker 2: doing it yourself becomes too risky?

678
00:30:28,520 --> 00:30:31,160
Speaker 1: Well risk, Greg, It all comes down to, do you

679
00:30:31,240 --> 00:30:33,720
Speaker 1: have a financial plan in other words, what does your

680
00:30:33,760 --> 00:30:36,880
Speaker 1: money need to do for you and win? So you know,

681
00:30:36,920 --> 00:30:39,400
Speaker 1: we start there, do you have a financial plan and

682
00:30:39,440 --> 00:30:42,120
Speaker 1: if not, maybe think about getting one. In terms of

683
00:30:42,120 --> 00:30:45,600
Speaker 1: stock picking, there's nothing wrong with doing it yourself, you know,

684
00:30:45,680 --> 00:30:48,840
Speaker 1: in terms of building a portfolio, as long as the

685
00:30:48,880 --> 00:30:52,400
Speaker 1: portfolio is going to accomplish. Again, back to that financial plan,

686
00:30:52,960 --> 00:30:55,680
Speaker 1: what you needed to do and win. A couple of

687
00:30:55,720 --> 00:30:58,560
Speaker 1: blind spots that typically come up with folks that you know,

688
00:30:58,640 --> 00:31:02,000
Speaker 1: I see that are doing it yourself and buying individual stocks.

689
00:31:02,840 --> 00:31:05,200
Speaker 1: This this comes into play, you know, more often with

690
00:31:05,400 --> 00:31:08,000
Speaker 1: men than women, because men tend to tie, we tend

691
00:31:08,080 --> 00:31:11,680
Speaker 1: to tie our ego to everything is we love to

692
00:31:11,720 --> 00:31:14,680
Speaker 1: look at those winners on that spreadsheet that we've owned

693
00:31:14,720 --> 00:31:17,480
Speaker 1: for years, if not decades, and we can get lulled

694
00:31:17,480 --> 00:31:19,880
Speaker 1: to sleep. Think, you know, seeing a three four hundred

695
00:31:19,920 --> 00:31:23,160
Speaker 1: percent gain on a spreadsheet and you love looking at

696
00:31:23,160 --> 00:31:26,280
Speaker 1: the fact that you picked a winning stock. Well, maybe

697
00:31:26,280 --> 00:31:29,000
Speaker 1: most of that return happened, you know, in the last

698
00:31:29,080 --> 00:31:31,800
Speaker 1: ten or twenty years, and maybe the stock has declined

699
00:31:31,880 --> 00:31:33,840
Speaker 1: or just been flat or kind of dead money for

700
00:31:33,880 --> 00:31:36,560
Speaker 1: the last three, five or ten years. So you know,

701
00:31:36,640 --> 00:31:40,000
Speaker 1: looking at performance, you know, not just over the last

702
00:31:40,040 --> 00:31:43,680
Speaker 1: thirty years. But what's likely to happen going forward, and

703
00:31:43,440 --> 00:31:46,160
Speaker 1: how are things you know, moving right now, and what

704
00:31:46,280 --> 00:31:49,120
Speaker 1: are some of the other alternatives out there, uh that

705
00:31:49,200 --> 00:31:51,520
Speaker 1: you might be considering. That's a blind spot to take

706
00:31:51,520 --> 00:31:53,840
Speaker 1: a look at. I know people never want to sell

707
00:31:53,880 --> 00:31:56,560
Speaker 1: a stock because of taxes. Again, this comes back to

708
00:31:56,600 --> 00:32:00,320
Speaker 1: your financial plan. Are you charitably inclined? Do you do

709
00:32:00,400 --> 00:32:03,320
Speaker 1: some regular charitable giving? This is where you know you

710
00:32:03,360 --> 00:32:06,040
Speaker 1: could take some of those appreciated shares fund a donor

711
00:32:06,080 --> 00:32:08,880
Speaker 1: advice fund, or give the shares directly to charity. It's

712
00:32:08,880 --> 00:32:12,640
Speaker 1: a great way to diversify a portfolio. So those are two,

713
00:32:12,840 --> 00:32:16,000
Speaker 1: you know, a third one would just be stress test portfolio.

714
00:32:16,040 --> 00:32:19,600
Speaker 1: There's wonderful software out there that would say, hey, what

715
00:32:19,760 --> 00:32:22,920
Speaker 1: happens if any of these stocks or you know, twenty

716
00:32:22,960 --> 00:32:26,240
Speaker 1: percent of your individual stocks go down thirty or forty percent,

717
00:32:26,280 --> 00:32:31,040
Speaker 1: Because that's a real possibility in any economic situation. So

718
00:32:31,080 --> 00:32:36,120
Speaker 1: sometimes when people see that portfolio actually stress tested, the

719
00:32:36,240 --> 00:32:39,600
Speaker 1: light belt, the bells and whistles go off and say, wow,

720
00:32:39,600 --> 00:32:42,120
Speaker 1: I don't want that kind of exposure. Let's talk about

721
00:32:42,440 --> 00:32:46,560
Speaker 1: how to responsibly diversify over a reasonable period of time

722
00:32:46,880 --> 00:32:50,640
Speaker 1: with reasonable tax exposure. Hope that helps Greg all right,

723
00:32:50,680 --> 00:32:53,080
Speaker 1: Paul and Oxford. Bryan says, we've been told that our

724
00:32:53,120 --> 00:32:57,560
Speaker 1: withdrawal plan should quote unquote adapt to markets. What does

725
00:32:57,600 --> 00:32:59,280
Speaker 1: that actually look like in real life?

726
00:33:00,000 --> 00:33:02,960
Speaker 2: Lot of people think of retirement withdrawals as a fixed paycheck.

727
00:33:02,960 --> 00:33:04,920
Speaker 3: We're all used to fix paychecks.

728
00:33:04,480 --> 00:33:06,320
Speaker 2: Because we've been getting one every month or every two

729
00:33:06,360 --> 00:33:10,400
Speaker 2: weeks or every week for however long. But but when

730
00:33:10,480 --> 00:33:12,320
Speaker 2: when it's my own money, then I can kind of

731
00:33:12,360 --> 00:33:14,120
Speaker 2: turn this pigot on and off as I need.

732
00:33:14,160 --> 00:33:14,840
Speaker 3: And then then the.

733
00:33:14,840 --> 00:33:17,160
Speaker 2: Question becomes, how do I know when I need what? Well,

734
00:33:17,160 --> 00:33:20,640
Speaker 2: the safest financial plans offer or have the ability to

735
00:33:20,720 --> 00:33:23,440
Speaker 2: kind of breathe with the markets. They flex, they kind

736
00:33:23,440 --> 00:33:25,960
Speaker 2: of contract when the markets a rough a rough, and

737
00:33:26,000 --> 00:33:29,080
Speaker 2: they open up when markets are strong. So the thinking

738
00:33:29,120 --> 00:33:31,840
Speaker 2: here would be, make sure you're stay flexible. People get

739
00:33:31,840 --> 00:33:33,840
Speaker 2: so tempted to I just want I want to never worry, right,

740
00:33:33,880 --> 00:33:35,280
Speaker 2: I didn't have to worry when I had a paycheck,

741
00:33:35,280 --> 00:33:36,720
Speaker 2: and I don't want to worry anymore. So I want

742
00:33:36,720 --> 00:33:39,040
Speaker 2: to just program this in and just make sure I

743
00:33:39,080 --> 00:33:41,440
Speaker 2: have this exact amount coming in every month and then

744
00:33:41,480 --> 00:33:44,160
Speaker 2: never think about money again. Well, Unfortunately, if you have money,

745
00:33:44,160 --> 00:33:45,560
Speaker 2: then you're going to be thinking about it for the

746
00:33:45,560 --> 00:33:48,560
Speaker 2: rest of your life, because once you retire, you've won freedom.

747
00:33:48,800 --> 00:33:50,680
Speaker 2: But freedom means now you own your own company.

748
00:33:50,720 --> 00:33:54,520
Speaker 3: Who's who? Whose product? Is you? Making sure you're financially stable?

749
00:33:54,840 --> 00:33:55,760
Speaker 3: So what what where?

750
00:33:55,760 --> 00:33:57,760
Speaker 2: It's tempting to say, I want X amount of dollars

751
00:33:57,760 --> 00:34:00,600
Speaker 2: every single month on this date to cover our actually everything.

752
00:34:00,640 --> 00:34:02,240
Speaker 2: I think that's great, but I think we really should

753
00:34:02,240 --> 00:34:04,480
Speaker 2: focus on what's the money we know we are going

754
00:34:04,520 --> 00:34:07,760
Speaker 2: to spend. Let's focus on that. Let's make that predictable.

755
00:34:07,920 --> 00:34:10,400
Speaker 2: Then the rest of it can be flexible, and that

756
00:34:10,440 --> 00:34:12,799
Speaker 2: gives you the ability to keep things invested when the

757
00:34:12,800 --> 00:34:15,160
Speaker 2: markets are running and you don't need the money. But also,

758
00:34:15,239 --> 00:34:17,920
Speaker 2: if we've also taken the step of setting aside and

759
00:34:17,960 --> 00:34:19,880
Speaker 2: being aware of what expenses are coming up via a

760
00:34:19,880 --> 00:34:22,279
Speaker 2: financial plan, then we will have already carved out the

761
00:34:22,320 --> 00:34:24,840
Speaker 2: dollars we know we're gonna need, versus saying here's what

762
00:34:24,880 --> 00:34:27,440
Speaker 2: I'm gonna spend I think this year and then dividing

763
00:34:27,440 --> 00:34:30,560
Speaker 2: that by twelve every single month. The fixed costs, yes,

764
00:34:30,680 --> 00:34:32,560
Speaker 2: do that, But the stuff you might maybe do but

765
00:34:32,640 --> 00:34:35,000
Speaker 2: you also might rule out, don't lock that into your

766
00:34:35,000 --> 00:34:36,480
Speaker 2: income plan, keep that flexible.

767
00:34:37,480 --> 00:34:40,560
Speaker 1: Coming up next to real pros and cons of retiring

768
00:34:40,600 --> 00:34:44,600
Speaker 1: overseas and what you need to consider before you pack

769
00:34:44,680 --> 00:34:47,359
Speaker 1: that suitcase. You're listening to Simply Money is to buy

770
00:34:47,360 --> 00:34:55,239
Speaker 1: Allword Financial on fifty five KRC, the talk station. You're

771
00:34:55,280 --> 00:34:57,640
Speaker 1: listening to Simply Money is that to buy all Worth Financial.

772
00:34:57,760 --> 00:35:01,480
Speaker 1: I'm Bob's fund seller along with Brian James. The dream

773
00:35:01,560 --> 00:35:05,440
Speaker 1: of retiring overseas has never been more popular, especially with

774
00:35:05,520 --> 00:35:10,320
Speaker 1: Americans looking to lower cost, chase adventure, or just escape

775
00:35:10,400 --> 00:35:14,480
Speaker 1: the US healthcare system. But there are real financial and

776
00:35:14,560 --> 00:35:18,880
Speaker 1: lifestyle considerations that come with that dream. Let's break some

777
00:35:18,960 --> 00:35:21,440
Speaker 1: of those down, Brian. What are the pros and cons

778
00:35:21,480 --> 00:35:22,840
Speaker 1: of retiring abroad?

779
00:35:23,719 --> 00:35:25,960
Speaker 2: Yeah, so the biggest one will you can you can

780
00:35:26,040 --> 00:35:28,160
Speaker 2: find a lower cost of living. There are people who

781
00:35:28,200 --> 00:35:30,319
Speaker 2: go who move down to you know, Central America, nice

782
00:35:30,360 --> 00:35:32,359
Speaker 2: places with beaches and monkeys. You can get a lower

783
00:35:32,400 --> 00:35:34,640
Speaker 2: cost of living down there, and that's where we come

784
00:35:34,719 --> 00:35:37,520
Speaker 2: up with these ideas. So five thousand dollars a month

785
00:35:37,520 --> 00:35:39,600
Speaker 2: can go a lot further than it does here in

786
00:35:39,600 --> 00:35:41,319
Speaker 2: the United States, you know, places like.

787
00:35:41,320 --> 00:35:45,239
Speaker 1: Portscore answer to AI, Brian is just retired down in

788
00:35:45,360 --> 00:35:48,040
Speaker 1: the Southern Hemisphere and get a few monkeys to do

789
00:35:48,080 --> 00:35:48,840
Speaker 1: your chores for you.

790
00:35:48,960 --> 00:35:51,600
Speaker 2: Beaches and monkeys. Everybody needs a monkey buttler, right, isn't

791
00:35:51,640 --> 00:35:52,720
Speaker 2: that the hidden dream?

792
00:35:52,960 --> 00:35:53,160
Speaker 1: Yep?

793
00:35:53,480 --> 00:35:56,640
Speaker 2: But yeah, those countries all show up on the list

794
00:35:56,760 --> 00:35:59,759
Speaker 2: for all those reasons because of the cost of living

795
00:35:59,760 --> 00:36:02,800
Speaker 2: down there. Another plus can be tax advantages. Some countries

796
00:36:02,840 --> 00:36:05,200
Speaker 2: have favorable tax treaties with the United States, or maybe

797
00:36:05,200 --> 00:36:07,880
Speaker 2: they don't tax foreign retirement income at all. In a

798
00:36:07,880 --> 00:36:11,040
Speaker 2: lot of cases, your Social Security benefits still get paid overseas. Now,

799
00:36:11,080 --> 00:36:12,920
Speaker 2: for those of you who might be frustrated with, you know,

800
00:36:13,080 --> 00:36:15,080
Speaker 2: just things in general here and are thinking the heck

801
00:36:15,120 --> 00:36:16,960
Speaker 2: with it, We're just gonna not be American anymore. We're

802
00:36:16,960 --> 00:36:19,160
Speaker 2: gonna go away. There are a handful of people like

803
00:36:19,200 --> 00:36:21,600
Speaker 2: that out there. Google the term exit tax. You don't

804
00:36:21,640 --> 00:36:23,480
Speaker 2: get to take all your money and run away. You're

805
00:36:23,480 --> 00:36:25,040
Speaker 2: gonna have to pay taxes on it, just as if

806
00:36:25,080 --> 00:36:26,800
Speaker 2: you were just gonna liquidate everything and put it in

807
00:36:26,880 --> 00:36:27,480
Speaker 2: a suitcase.

808
00:36:27,719 --> 00:36:29,799
Speaker 3: Not that easy exit tax. What you want to look at.

809
00:36:29,960 --> 00:36:32,160
Speaker 3: Let's talk about lifestyle, bob. This is all you.

810
00:36:34,320 --> 00:36:36,560
Speaker 1: Well, I'll give you an actual example of what we're

811
00:36:36,560 --> 00:36:38,800
Speaker 1: talking about I was on a flight a month or

812
00:36:38,840 --> 00:36:42,200
Speaker 1: so ago with a lady who was flying back to

813
00:36:42,280 --> 00:36:46,120
Speaker 1: Cincinnati for her fiftieth high school reunion. She went to

814
00:36:46,520 --> 00:36:50,080
Speaker 1: Walnut Hills High School and a very nice lady. But

815
00:36:50,280 --> 00:36:53,880
Speaker 1: here's the interesting part. She and her husband are preparing

816
00:36:54,080 --> 00:36:57,879
Speaker 1: right now as we speak, to retire in Portugal, and

817
00:36:58,160 --> 00:37:00,680
Speaker 1: we had an opportunity to talk about that, you know,

818
00:37:00,760 --> 00:37:04,160
Speaker 1: on the flight from Denver to Cincinnati. And I'll tell

819
00:37:04,160 --> 00:37:07,440
Speaker 1: you this, Brian, she had no stress on her face

820
00:37:07,560 --> 00:37:11,000
Speaker 1: whatsoever about any of this stuff. They had to the

821
00:37:11,080 --> 00:37:14,200
Speaker 1: prior points we brought up earlier in the show. They

822
00:37:14,239 --> 00:37:18,120
Speaker 1: have been test driving this thing for months. They found

823
00:37:18,160 --> 00:37:22,680
Speaker 1: the right neighborhoods, the right community of people, found their

824
00:37:22,719 --> 00:37:25,680
Speaker 1: healthcare solution. I mean, she was all jacked up and

825
00:37:25,719 --> 00:37:29,799
Speaker 1: ready to go. And so it's very doable if you

826
00:37:29,880 --> 00:37:33,200
Speaker 1: do your homework in advance, and she and her husband

827
00:37:33,200 --> 00:37:37,080
Speaker 1: had clearly done that. Portugal, I guess is the new

828
00:37:37,080 --> 00:37:39,560
Speaker 1: place to check out. Never been there I heard that before.

829
00:37:39,640 --> 00:37:41,560
Speaker 2: So those those are all the good reasons that people

830
00:37:41,560 --> 00:37:42,880
Speaker 2: want to do this. So what are the cons? Well,

831
00:37:42,920 --> 00:37:44,560
Speaker 2: Bob just kind of hinted that at healthcare is a

832
00:37:44,560 --> 00:37:47,200
Speaker 2: big one. It can be cheaper, but is it as good.

833
00:37:47,239 --> 00:37:49,520
Speaker 2: Are you going to have access to specialists? Is there

834
00:37:49,520 --> 00:37:51,960
Speaker 2: a language barrier? That's a huge one. Specialists can be great,

835
00:37:51,960 --> 00:37:54,359
Speaker 2: but not if you're not speaking the same language. Medicare well,

836
00:37:54,360 --> 00:37:57,280
Speaker 2: that doesn't travel. You're generally on your own there. Here's

837
00:37:57,320 --> 00:38:00,640
Speaker 2: a huge one. If you're from Cincinnati, specific the West

838
00:38:00,640 --> 00:38:03,920
Speaker 2: Side where things a little tighter over there. Well, distance

839
00:38:03,960 --> 00:38:06,759
Speaker 2: from family, that's huge. What seems fun at sixty five

840
00:38:06,880 --> 00:38:09,399
Speaker 2: might feel really really isolating at seventy five.

841
00:38:09,480 --> 00:38:11,640
Speaker 1: You know, hard to go to an elder football game

842
00:38:11,680 --> 00:38:14,560
Speaker 1: when you live in Portugal Brian virtually impossible.

843
00:38:14,880 --> 00:38:16,719
Speaker 2: You can stream those games now, it's not as hard

844
00:38:16,760 --> 00:38:18,319
Speaker 2: as it used to be, but at the same time,

845
00:38:18,400 --> 00:38:20,080
Speaker 2: you know you're still gonna have to, you know, have

846
00:38:20,160 --> 00:38:22,680
Speaker 2: your price Hill chili shipped out to you over overseas.

847
00:38:23,080 --> 00:38:25,000
Speaker 1: Those are just a couple things to think about. Here's

848
00:38:25,000 --> 00:38:28,200
Speaker 1: the all Worth advice. Retiring overseas can stretch your dollars

849
00:38:28,520 --> 00:38:32,320
Speaker 1: and expand your horizons, but make sure your money, your healthcare,

850
00:38:32,640 --> 00:38:36,720
Speaker 1: and your expectations can handle the move. Thanks for listening tonight.

851
00:38:36,760 --> 00:38:38,839
Speaker 1: You've been listening to Simply Money present up by all

852
00:38:38,840 --> 00:38:42,080
Speaker 1: Worth Financial on fifty five KRC, the talk station