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Speaker 1: Tonight, your retirement number just changed, but have you adjusted?

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Speaker 1: You're listening to simply money, said by all Worth Financial.

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Speaker 1: I'm Bob Sponseller along with Brian James Well. Twenty twenty

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Speaker 1: five was another big year. Markets were up nicely again

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Speaker 1: and while inflation stayed around three percent, and I know

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Speaker 1: we're talking about how sticky it still is. You know,

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Speaker 1: the markets have gone on up for the third year

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Speaker 1: now in a row, and that combination may have changed

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Speaker 1: the maths on your retirement plan, whether you realize it

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Speaker 1: or not. And then there are those who have a

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Speaker 1: financial plan that they haven't looked at or changed or

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Speaker 1: adjusted perhaps four years. That could be a problem. And

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Speaker 1: it's really the point of tonight's segment. Brian walk us

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Speaker 1: through what we're talking about here.

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Speaker 2: Well, by let's start with inflation stayed steady right around

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Speaker 2: three percent all year. Not scary and tear terrifying like

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Speaker 2: it wasn't twenty two when we hit nine percent and

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Speaker 2: everybody got excited about ibonds briefly, but still enough to

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Speaker 2: erode our purchasing power.

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Speaker 3: Right, three percent isn't what we want. We really want

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Speaker 3: to be closer to the load to low twos.

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Speaker 2: If we could be there at all, and we're in

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Speaker 2: the ballpark, which means it's not time to panic about it.

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Speaker 3: But at the same time, it's having an impact.

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Speaker 2: So you know, for example, if you're a couple and

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Speaker 2: you've saved three million dollars and you're targeting about one

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Speaker 2: hundred and fifty thousand dollars in retirement spending in twenty twenty,

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Speaker 2: that might have been enough to get you through for

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Speaker 2: a thirty year retirement, but with that high inflation that

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Speaker 2: came immediately after that and then kind of sticking around

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Speaker 2: now that same lifestyle costs even more and you don't

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Speaker 2: even realize it, right, two percent three percent increase on

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Speaker 2: one hundred and fifty million dollars is almost another ten

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Speaker 2: million off off of your base rate there.

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Speaker 3: Yeah.

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Speaker 1: Can I see that come up periodically with client reviews, Brian,

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Speaker 1: I'm sure you do too. I mean, we build these

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Speaker 1: plans and we have these spending numbers in place, and

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Speaker 1: people occasionally come in as say, man, I just did

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Speaker 1: not expect this or that to be expect to it

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Speaker 1: as it is, and therefore we have to adjust those numbers.

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Speaker 1: And for those folks that are just sticking with that,

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Speaker 1: I'll call it decades. All rule of thumb of hey,

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Speaker 1: just take a four percent withdraw rate on your money

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Speaker 1: and set it and forget it. I think that's oversimplifying things,

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Speaker 1: to be sure, and because of some of the sticky inflation,

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Speaker 1: it could be draining your purchase eat power and therefore

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Speaker 1: your portfolio over time if you don't make some adjustments.

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Speaker 3: That's exactly right.

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Speaker 2: So you know, we've talked for a very long time

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Speaker 2: about what what can we get away with? And the

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Speaker 2: important part is the first of all, I think most

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Speaker 2: people just really haven't even taken.

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Speaker 3: The time necessarily figure out what they do need.

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Speaker 2: So you know, if you if you have to understand,

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Speaker 2: you know exactly what the needs are and how to

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Speaker 2: combine them with the resources, then you'll understand where that

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Speaker 2: gap is and that door swings both ways. There are

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Speaker 2: people out there who who have no idea what they need,

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Speaker 2: and there are people out there who haven't taken the

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Speaker 2: time to simply sit down and look at it, and

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Speaker 2: therefore just assume that there's not enough and they and

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Speaker 2: they wind up you know, working a heck of a

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Speaker 2: lot longer than they need to. So that's the point

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Speaker 2: of a financial plan, where we make sure that you

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Speaker 2: understand what the resources are and how you're going to

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Speaker 2: meet the gaps with whatever you've built on your own

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Speaker 2: between your needs and your Social Security pensions and all

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Speaker 2: those kinds of things.

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Speaker 1: Yeah, and I'll pound the table off that point one

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Speaker 1: more time. I feel like I do it once a

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Speaker 1: week right now. But I continue to be shocked at

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Speaker 1: the number of people that come into the office. And

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Speaker 1: I'm talking about people that are worth three four five

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Speaker 1: million dollars and they have no idea what they actually spend.

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Speaker 1: And we joke around a little bit about it, you know,

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Speaker 1: I said, I don't care how much you spend on

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Speaker 1: a haircut or a pick a ball racket or anything

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Speaker 1: like that. Those are just rounding airrors. But we do

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Speaker 1: need to at least know what you're spending in aggregate,

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Speaker 1: you know, on a monthly basis or an annual basis,

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Speaker 1: just to make sure we keep this financial plan on track.

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Speaker 1: That and that's just you know, one of my call

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Speaker 1: outs here for twenty twenty six for those that haven't

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Speaker 1: looked at this in a while. Make sure you just

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Speaker 1: take stock of what you're gonna need or want in

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Speaker 1: the way of income and make sure your financial plan

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Speaker 1: is updated accordingly. All right, Brian, let's switch gears to

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Speaker 1: social Security, because with a lot of these tax law

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Speaker 1: changes and the nuances of some of the senior deductions

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Speaker 1: and ARMA taxes and everything else out there, you really

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Speaker 1: do need to look at that social security claiming strategy

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Speaker 1: rather than just assume, Wow, I'm gonna take it at

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Speaker 1: sixty two or sixty five and not even look at

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Speaker 1: the numbers.

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Speaker 3: Yeah, that's right.

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Speaker 2: So if your number has changed, meaning if you've determined

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Speaker 2: that you've got a different a dollar amount in mind

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Speaker 2: that is your go time, then that also is going

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Speaker 2: to affect your social security claiming strategy. And it's not

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Speaker 2: always about delaying to seventy anymore. Right, So let's set

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Speaker 2: the table here for those who might not be quite

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Speaker 2: as up to speed. The earliest anybody can file for

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Speaker 2: Social Security is age sixty two. That is the lowest

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Speaker 2: check that you'll ever get, of course, but you can

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Speaker 2: if you want to. The latest you can file age seventy. Now,

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Speaker 2: what that means is that there's no benefit to waiting

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Speaker 2: beyond seventy anymore. But between sixty two and seventy you

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Speaker 2: literally get an eight percent increase and you can see

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Speaker 2: this on your Social Security report. You can work in

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Speaker 2: a math out for yourself eight percent increase for simply

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Speaker 2: delaying every single year, and better than that, Bob, It's

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Speaker 2: actually not an annual increase. It's a monthly increase. So

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Speaker 2: if you wait six months, then you're going to get

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Speaker 2: a four percent increase for example. So that means there

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Speaker 2: are benefits and drawbacks to doing this. You know a

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Speaker 2: lot of people might you might have more room to

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Speaker 2: draw from your investments a little earlier, or let your

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Speaker 2: benefits continue to grow, meaning still retire early, but rely

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Speaker 2: on your own investments and savings and let those benefits

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Speaker 2: continue to grow by simply not filing for them. Or

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Speaker 2: if you're trying to reduce your RMD require minimum distribution

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Speaker 2: exposure a little bit later, you might actually want to

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Speaker 2: take Social Security sooner and then start converting those dollars

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Speaker 2: while you're in those lower brackets. There's a lot of

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Speaker 2: lot of different pros and cons, a lot of different

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Speaker 2: paths that the people can take here. But again it's first.

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Speaker 2: It all starts with what do we need to make

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Speaker 2: sure the ship floats? You got to pay your bills first,

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Speaker 2: paying your bills and generating the income necessary to do

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Speaker 2: that will put you in a floor bracket anyway, right,

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Speaker 2: nobody's gonna avoid that. Then on top of that you

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Speaker 2: can layer possible wroth conversions, and then also the decision

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Speaker 2: to look into whether you want to file for Social

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Speaker 2: Security now versus later.

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Speaker 3: When I do these.

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Speaker 2: Analyzes for clients to help them to determine what is

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Speaker 2: the right situation for them, what we look at this

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Speaker 2: is for people who you know, are in a situation

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Speaker 2: where we've kind of won the game, there's gonna be enough.

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Speaker 2: But that actually makes things a little more complicated because

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Speaker 2: now we're comparing good versus better versus best, as opposed

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Speaker 2: to bad idea.

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Speaker 3: Versus good idea.

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Speaker 2: That is a lot harder because now we've got to

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Speaker 2: make a decision between the three. The way I look

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Speaker 2: at it there is after we've modeled all those outcomes,

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Speaker 2: is when in a given situation, what gives me the

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Speaker 2: biggest pile of money in the future, taking Social Security

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Speaker 2: earlier or taking it later, that's the best way to

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Speaker 2: determine what the You know, there's a lot of math involved,

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Speaker 2: but to me, that's the best way to determine the

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Speaker 2: most the most advantageous will.

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Speaker 3: Be time to file for Social Security for a given couple.

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Speaker 1: All right, Brian, I'm gonna put you on the spot

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Speaker 1: here for a second.

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Speaker 3: Are you ready? Sure?

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Speaker 1: Hit me all right, because I know you're an absolute

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Speaker 1: ninja when it comes to these wroth conversion strategies. So

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Speaker 1: you know, you just you just spewed out a lot

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Speaker 1: of things to think about, a lot of math, a

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Speaker 1: lot of moving parts. Can you walk us through an

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Speaker 1: actual client meeting that you've conducted, say over the last

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Speaker 1: six to twelve months, where maybe walking in the door,

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Speaker 1: some of the presuppositions that perhaps you and the client

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Speaker 1: had about when to take social Security actually changed once

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Speaker 1: you look looked under the hood, put the car up

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Speaker 1: on the rack, so to speak. It took a look

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Speaker 1: at what the impact is to taking it at sixty two,

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Speaker 1: sixty five, and seventy and and maybe some surprises that

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Speaker 1: came out of that discussion.

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Speaker 3: Yeah. It's one thing to.

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Speaker 2: Watch TikTok videos and Instagram videos of other people using

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Speaker 2: random numbers to make these calculations. But it's another thing

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Speaker 2: entirely to see your own iras and your own social

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Speaker 2: Security reports and your own dat figured into one plan. Right,

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Speaker 2: None of this stuff is a black and white everybody

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Speaker 2: should go do this. If that was the case, then

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Speaker 2: there would then we could all rely on TikTok videos

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Speaker 2: because the advice would be the same for absolutely everybody.

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Speaker 2: But the situation differs greatly, and the difference between the

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Speaker 2: two in terms of timing of social Security tends to

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Speaker 2: be what do your assets look like?

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Speaker 3: Otherwise, if you have the ability to draw.

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Speaker 2: On assets that are either wroth or or in a

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Speaker 2: taxable account meaning not pre pre tax IRA, not pre

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Speaker 2: tax four Okay, then that tends to favor Okay, go

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Speaker 2: ahead and spend your investments down a little bit and

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Speaker 2: push social Security out. On the other hand, if all

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Speaker 2: of your assets or the majority of them are pre tax,

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Speaker 2: then the math tends to favor turn on social Security later,

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Speaker 2: because if all that's going to be ordinarily income taxed,

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Speaker 2: and that's going to take a larger chunk earlier in

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Speaker 2: your life than it should. That's the That's the most

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Speaker 2: basic rule of thumb that I can give, is that

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Speaker 2: you're if you're gonna be relying on pre tax assets,

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Speaker 2: that's going to favor filing for Social Security earlier. And

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Speaker 2: then the opposite is true as well. But that's not

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Speaker 2: even a rule of thumb. I don't believe in rules

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Speaker 2: of thumb. But that's usually the pivot point in the math.

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Speaker 2: But again, what we do is most people will come

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Speaker 2: in and they've either got the idea that I'm going

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Speaker 2: to go at sixty two because it's going away, which

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Speaker 2: that's that's a whole fallacy anyway, or they're gonna say

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Speaker 2: I'm going to wait till seventy if I can, because

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Speaker 2: then I'll get the biggest check ever.

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Speaker 3: Well, a lot of times, the phrase I always use

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Speaker 3: is that I have.

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Speaker 2: A lot more fifty five year olds to talk about

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Speaker 2: waiting till seventy than sixty five year olds are. Our

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Speaker 2: thinking tends to change as we age, and you start

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Speaker 2: not to want, not wanting to fight the government so

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Speaker 2: much anymore, and just to get what's there while it's

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Speaker 2: there because of the way your life is, you know,

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Speaker 2: is going so yeah, a lot of.

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Speaker 1: The money, Show me the money, Brian, give it to me. Now,

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Speaker 1: that's all right, right, Hey, another topic to bring up,

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Speaker 1: you know, just another thing that comes up and we

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Speaker 1: need to address. This is just the whole issue of

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Speaker 1: real estate and illiquidity. You know, Brian, you and I

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Speaker 1: both have clients that went out and bought that vacation home,

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Speaker 1: you know, tied up a million or more dollars in

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Speaker 1: various pieces of real estate, whether it be rental properties,

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Speaker 1: lake houses, some even and invest in commercial buildings. But

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Speaker 1: the question here, if you update your financial plan and

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Speaker 1: take the time to do it, the question you got

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Speaker 1: to ask is can you access that money in a

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Speaker 1: timely manner when you actually need it, Because, let's face it,

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Speaker 1: during COVID and the pandemic, you know, we could flip

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Speaker 1: real estate in days, if not hours, and oftentimes at

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Speaker 1: a handsome profit. Things have slowed down a little bit. Rates,

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Speaker 1: interest rates and buyer demands have changed. And if real

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Speaker 1: estate is part of your retirement equation, the money you're

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Speaker 1: relying on to replace your paycheck in retirement, have you

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Speaker 1: thought of a plan b if we have a market downturn,

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Speaker 1: and do you have a plan to access liquidity. It's

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Speaker 1: something we need to continue to talk to folks about,

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Speaker 1: you know, especially after this big three year run up

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Speaker 1: in the market, because we talk about all the time.

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Speaker 1: It's not a matter of if, it's a matter of

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Speaker 1: when we get another correction in the stock market or

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Speaker 1: recession or something else coming down the pike that we

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Speaker 1: can't even guess or know about today.

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Speaker 3: That's absolutely true.

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Speaker 2: And then the important point is hopefully you're already in

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Speaker 2: a position to take that on. Because we just said

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Speaker 2: the same thing a year ago, We just said the

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Speaker 2: same thing two years ago. The market's been at a

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Speaker 2: peak for basically non stop for the last three years.

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Speaker 3: So yes, there's always.

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Speaker 2: Something coming around the corner, but it's not necessarily the

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Speaker 2: next corner. So let's just make sure that our plan

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Speaker 2: is in a position where if it happens tomorrow, that's

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Speaker 2: not that.

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Speaker 3: Big of a deal.

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Speaker 2: And the way we do that is by, just like

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Speaker 2: Bob said, make sure you've got liquidity. If that money

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Speaker 2: is tied up in real estate, you know, for folks

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Speaker 2: out there with a paid off home and maybe thinking

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Speaker 2: about selling it kind of sort of maybe someday, but

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Speaker 2: haven't really pulled the trigger. Make sure you have a

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Speaker 2: home equity line of credit in place. Nobody wants to

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Speaker 2: borrow against their house. But at the same time, if

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Speaker 2: we go through another twenty two where the stock market

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Speaker 2: is down, your investments are down, you're going to be

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Speaker 2: a lot happier having borrowed against your house, maybe ten

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Speaker 2: twenty thousand dollars or something, just just a deal with

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Speaker 2: a short term situation and then as things recover.

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Speaker 3: Pay it off.

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Speaker 2: It's that's something like that is not going to cost

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Speaker 2: you nearly as much an interest as you might think.

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Speaker 2: Lot of people come to this and they think, I

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Speaker 2: don't want to bar against the house. That's a mortgage,

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Speaker 2: that's a thirty year mortgage with eighty percent of my house.

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Speaker 3: No it's not.

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Speaker 2: It's a credit card against your house that sits at

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Speaker 2: zero until you use it. It's the best kind of

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Speaker 2: debt you could give yourself access to in an emergency.

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Speaker 2: And again, the whole point is not to use it.

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Speaker 2: The point is to have a parachute. They have parachutes

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Speaker 2: and airplanes that I hope I never use, but I'm

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Speaker 2: glad they're in there.

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Speaker 1: Here's the all Worth advice. Your retirement plan is not

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Speaker 1: just a number. It's a constantly moving target. And if

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Speaker 1: you haven't adjusted it lately, now now's the time to

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Speaker 1: dust it off and take a look. Coming up next,

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

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Speaker 1: the wrong way can cost you big in taxes, penalties,

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Speaker 1: and perhaps lost opportunities. You're listening to Simply Money presented

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Speaker 1: by all Worth Financial on fifty five KRC the talk station.

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

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Speaker 1: on Bob Sponseller along with Brian James. Are you still

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Speaker 1: picking your own stocks? Wondering how to turn company shares

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Speaker 1: into real retirement income? From withdrawal strategies to covered call ETFs.

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Speaker 1: We tackle smart investing moves of all kinds straight ahead

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Speaker 1: at six forty three. Let's paint a picture here. You

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Speaker 1: did everything right, She saved diligently, You invested wisely, and

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Speaker 1: now you're sitting on say three million, five million, shoot,

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Speaker 1: maybe even eight million dollars heading into retirement. But here's

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Speaker 1: the twist. No one tells you about. Getting money out

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Speaker 1: of your portfolio is a whole lot trickier than putting

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Speaker 1: it in. We'll call this the millionaire's income problem if

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Speaker 1: we can call an eight million dollar net worth of problem. Brian,

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Speaker 1: 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: Oh pm, Well, you got to create your own. Now

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Speaker 2: it's your own money. The risk isn't just running out

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Speaker 2: of money, it's triggering massive tax bills, Medicare penalties, maybe

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Speaker 2: even undoing decades of careful investing you've worked very hard

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Speaker 2: to put in place. So we're gonna go through a

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Speaker 2: few strategies today that you can go you can use

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Speaker 2: to turn income on the smart way. Here's a fun one.

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Speaker 2: ROTH conversion ladders after retirement. We see this all the time.

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Speaker 2: Clients retire at sixty two and are looking for more

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Speaker 2: tax efficient Man, I have a few low income tax

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Speaker 2: years here before social Security and rm ds kick in.

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Speaker 2: So if I'm retired, I don't have salary anymore. That

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Speaker 2: means a significant source of income and income taxation has

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Speaker 2: 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.

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Speaker 3: Ira.

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Speaker 2: Well that's not that that is a math calculation. It

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Speaker 2: is very very much a sacrifice in exchange for a

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Speaker 2: game later. It can be a great idea, but don't

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Speaker 2: come in thinking it's just, hey, I'm gonna make everything

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Speaker 2: a wroth.

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Speaker 3: Ira doesn't work that way.

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Speaker 2: But anyway, if it does, if you do the 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 requirementimum 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 stick it from dividend stocks. And

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Speaker 1: that's not a bad strategy unless they mess with your

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

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

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

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Speaker 1: understand and they don't take the time time to evaluate.

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Speaker 1: For higher networth, high income people. Here we're talking about

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Speaker 1: municipal bonds. It's something to at least consider for folks

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Speaker 1: in high tax brackets. The interest, just as a reminder,

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Speaker 1: from municipal bonds is generally tax free at the federal level,

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Speaker 1: and if you buy in state bonds, they're often tax

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Speaker 1: state tax free as well. So it's it's a good

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Speaker 1: time to sit down and look at the after tax

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Speaker 1: yield on what you could get from you know, let's

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Speaker 1: be real here, some safer income alternatives like municipal bonds

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Speaker 1: versus just taking dividend income from stocks, where the stocks

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Speaker 1: can become volatile. You know, they will move up and

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Speaker 1: down and sometimes violently. And if you just rely on

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Speaker 1: dividends from stocks to generate the income that you need,

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Speaker 1: you might end up with a more way, more volatile

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Speaker 1: portfolio and retirement than you want to hold.

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Speaker 2: You could too And while we're talking about municipal bonds, Bob,

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

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Speaker 2: we'll see people who maybe are in a low bracket

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

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

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

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

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

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

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

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Speaker 2: be 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 gonna see

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Speaker 2: your tax equivalent yields be worthwhile. But if you're underneath that,

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Speaker 2: unis might not be helping 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 the 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 laddered 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 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 rets 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 lasso across a lot of things, commercial properties, apartments,

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

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Speaker 2: deal with that phone call about the broken water heater

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Speaker 2: or whatever. Rather than locking money into an annuity. Now

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Speaker 2: this can be a better alternative and annuities are okay,

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Speaker 2: but they can also limit your flexibility. They've got high

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Speaker 2: fees involved and can underperform. You can design your own

439
00:19:55,240 --> 00:19:58,439
Speaker 2: income stream through these different portfolio pieces, but you have

440
00:19:58,480 --> 00:20:01,600
Speaker 2: to understand how all the puzzle pieces together, the benefits

441
00:20:01,600 --> 00:20:03,600
Speaker 2: you're getting and the sacrifices you're making.

442
00:20:04,160 --> 00:20:05,280
Speaker 3: Here's the all Worth advice.

443
00:20:05,440 --> 00:20:08,720
Speaker 1: Just because you're wealthy doesn't mean you can't make sometimes

444
00:20:08,920 --> 00:20:13,400
Speaker 1: very expensive mistakes. Income planning is where fortunes are either

445
00:20:13,440 --> 00:20:18,600
Speaker 1: preserved or slowly drained. This is a hard conversation, but

446
00:20:18,720 --> 00:20:21,679
Speaker 1: maybe the most important one you can ever have with

447
00:20:21,760 --> 00:20:25,439
Speaker 1: your spouse. What happens if I die first? How to

448
00:20:25,480 --> 00:20:30,080
Speaker 1: prepare your partner emotionally and financially. Next, you're listening to

449
00:20:30,080 --> 00:20:32,520
Speaker 1: Simply Money presented by all Worth Financial on fifty five

450
00:20:32,640 --> 00:20:41,159
Speaker 1: KRC the talk station. You're listening to Simply Money presented

451
00:20:41,160 --> 00:20:43,560
Speaker 1: by all Worth Financial on Bob's fond Seller along with

452
00:20:43,600 --> 00:20:46,679
Speaker 1: Brian James. Well, this is one of those segments that

453
00:20:46,840 --> 00:20:50,800
Speaker 1: might be uncomfortable to hear, but it might be exactly

454
00:20:50,840 --> 00:20:53,720
Speaker 1: the one you'll be grateful you listen to later on

455
00:20:53,840 --> 00:20:56,679
Speaker 1: down the road. We're gonna call this the if I

456
00:20:56,840 --> 00:20:59,960
Speaker 1: die First segment, and it's not meant to be drum,

457
00:21:00,600 --> 00:21:05,159
Speaker 1: it's meant to be honest and practical. This is important stuff, Brian,

458
00:21:05,960 --> 00:21:07,800
Speaker 1: and it's an important topic to get out in front

459
00:21:07,840 --> 00:21:10,560
Speaker 1: of you and I have both lived through this situation

460
00:21:10,680 --> 00:21:12,120
Speaker 1: with clients many times.

461
00:21:12,280 --> 00:21:15,040
Speaker 3: What are we talking about here, Well, this is important stuff.

462
00:21:15,080 --> 00:21:17,320
Speaker 2: So if you're in a partnership, maybe a marriage, or

463
00:21:17,359 --> 00:21:19,840
Speaker 2: some other kind of domestic arrangement, well, somebody's going to

464
00:21:19,880 --> 00:21:23,159
Speaker 2: go first. And unfortunately, whether you're the money spouse, the

465
00:21:23,160 --> 00:21:25,440
Speaker 2: one who pays attention and makes the decisions and knows

466
00:21:25,440 --> 00:21:27,560
Speaker 2: where all the bodies are buried, or the one who

467
00:21:27,560 --> 00:21:30,000
Speaker 2: prefers to stay out of the financial details and only

468
00:21:30,000 --> 00:21:31,719
Speaker 2: be informed of the big picture, you know, like what

469
00:21:31,720 --> 00:21:33,840
Speaker 2: what we call, like to call the CEO versus the

470
00:21:33,880 --> 00:21:35,080
Speaker 2: CFO in a household.

471
00:21:35,320 --> 00:21:36,800
Speaker 3: Well, we've seen far too many.

472
00:21:36,640 --> 00:21:39,520
Speaker 2: Cases where that surviving spouse is not only left grieving,

473
00:21:39,800 --> 00:21:43,040
Speaker 2: which is hard enough as it is, but completely financially unprepared,

474
00:21:43,080 --> 00:21:45,159
Speaker 2: which can just be overwhelming to go through all that

475
00:21:45,240 --> 00:21:47,359
Speaker 2: at once. So let's talk about the you know, the

476
00:21:47,600 --> 00:21:51,600
Speaker 2: different roles that spouses tend to play that we see

477
00:21:51,640 --> 00:21:54,400
Speaker 2: in these planning relationships that we have, Well, one spouse,

478
00:21:54,440 --> 00:21:56,840
Speaker 2: and it's usually but this is going to sound sexist,

479
00:21:56,840 --> 00:21:58,920
Speaker 2: this is the way it works. It's usually, but not always,

480
00:21:58,920 --> 00:22:02,080
Speaker 2: the husbandand one spouse is normally the one who really

481
00:22:02,080 --> 00:22:03,359
Speaker 2: wants to take care of I would say this is

482
00:22:03,400 --> 00:22:06,560
Speaker 2: probably three out of four times one spouse wants to

483
00:22:06,600 --> 00:22:08,520
Speaker 2: take care of all the finances, the other one wants

484
00:22:08,520 --> 00:22:10,119
Speaker 2: nothing to do with it. And this is a relationship

485
00:22:10,160 --> 00:22:12,320
Speaker 2: that actually works pretty well. You know, show me two

486
00:22:12,359 --> 00:22:14,800
Speaker 2: people who want to be neck deep in every part

487
00:22:14,800 --> 00:22:16,440
Speaker 2: of the household, and I'll show you two people aren't

488
00:22:16,440 --> 00:22:17,240
Speaker 2: gonna stay married.

489
00:22:17,080 --> 00:22:17,680
Speaker 3: For very long.

490
00:22:18,160 --> 00:22:20,359
Speaker 2: Separation of duties is very important, But that's the one

491
00:22:20,359 --> 00:22:23,200
Speaker 2: who handles the investments, taxes, pays the bills, runs the budget.

492
00:22:23,359 --> 00:22:25,800
Speaker 2: The other spouse perfectly capable of it, but just isn't

493
00:22:25,800 --> 00:22:27,760
Speaker 2: involved and therefore doesn't know the day to day and

494
00:22:28,240 --> 00:22:30,040
Speaker 2: there's gonna be a run up to kind of a

495
00:22:30,160 --> 00:22:33,040
Speaker 2: learning curve to understanding how that household worked. So this

496
00:22:33,040 --> 00:22:35,600
Speaker 2: can be by choice. Maybe they chose that, or maybe

497
00:22:35,640 --> 00:22:37,560
Speaker 2: they were just told don't worry, I'll take care of it,

498
00:22:37,600 --> 00:22:39,439
Speaker 2: and they didn't push back at the time. Well, the

499
00:22:39,520 --> 00:22:41,960
Speaker 2: risk here is that if the money spouse dies first,

500
00:22:42,040 --> 00:22:44,879
Speaker 2: obviously there's enough going on with the grief, but also

501
00:22:45,040 --> 00:22:47,560
Speaker 2: this person is suddenly a CFO when maybe they've never

502
00:22:47,600 --> 00:22:48,960
Speaker 2: had that role in their entire lives.

503
00:22:49,320 --> 00:22:52,160
Speaker 1: Brian, I've told this story at least once on this show,

504
00:22:52,200 --> 00:22:54,800
Speaker 1: and I think it's worth repeating. One of my first

505
00:22:54,840 --> 00:22:59,439
Speaker 1: ever clients, and they were wonderful people, wonderful marriage. But

506
00:22:59,680 --> 00:23:01,879
Speaker 1: you know, they really did live, you know, in what

507
00:23:01,960 --> 00:23:05,280
Speaker 1: I would call the Flintstone generation. The husband did everything.

508
00:23:05,400 --> 00:23:08,840
Speaker 1: The wife was just a great mother and took care

509
00:23:08,840 --> 00:23:11,080
Speaker 1: of the home, you know, more of an old time

510
00:23:11,280 --> 00:23:14,879
Speaker 1: traditional way of doing things. And all this husband told

511
00:23:14,920 --> 00:23:19,720
Speaker 1: his wife was if I die, call Bob. Well, she

512
00:23:19,880 --> 00:23:22,320
Speaker 1: called me on my cell phone at four fifteen in

513
00:23:22,359 --> 00:23:24,720
Speaker 1: the morning one day and said, you know, my husband

514
00:23:24,760 --> 00:23:28,040
Speaker 1: died and and these people, Brian, they were worth several

515
00:23:28,119 --> 00:23:31,159
Speaker 1: million dollars back in nineteen ninety two, so that's a

516
00:23:31,160 --> 00:23:35,199
Speaker 1: lot of money. And her first and only question to

517
00:23:35,240 --> 00:23:38,440
Speaker 1: me was do I have enough money to go down

518
00:23:38,640 --> 00:23:42,320
Speaker 1: to the UDF and buy some eggs and milk. And

519
00:23:42,400 --> 00:23:45,320
Speaker 1: it was a very sad conversation to have because to

520
00:23:45,359 --> 00:23:48,080
Speaker 1: your point that you just made, she's grieving the loss

521
00:23:48,080 --> 00:23:51,960
Speaker 1: of her husband. She has no idea whether she's penniless

522
00:23:51,960 --> 00:23:54,439
Speaker 1: and can even afford groceries that day. That is a

523
00:23:54,600 --> 00:23:58,399
Speaker 1: very sad situation to put someone in. It wasn't it

524
00:23:58,440 --> 00:24:02,399
Speaker 1: wasn't done intentionally. Again, wonderful marriage, but there was no

525
00:24:02,560 --> 00:24:06,679
Speaker 1: planning put in place whatsoever to prepare this woman to

526
00:24:06,760 --> 00:24:10,560
Speaker 1: be the new financial CEO over home. It was a

527
00:24:10,640 --> 00:24:14,080
Speaker 1: sad I will never forget that phone call, and I

528
00:24:14,160 --> 00:24:16,720
Speaker 1: try to help people avoid that situation.

529
00:24:16,320 --> 00:24:17,160
Speaker 3: At all costs.

530
00:24:17,240 --> 00:24:19,679
Speaker 1: So let's pivot to what we should be doing for

531
00:24:19,720 --> 00:24:20,440
Speaker 1: our loved ones.

532
00:24:20,760 --> 00:24:23,000
Speaker 2: So the very first thing is make sure everybody knows

533
00:24:23,040 --> 00:24:26,320
Speaker 2: where all this stuff is, right, don't overthink this. The

534
00:24:26,400 --> 00:24:27,879
Speaker 2: very first thing we need to do is just make

535
00:24:27,920 --> 00:24:30,879
Speaker 2: sure we're clear where the inventory is. So maybe something

536
00:24:30,920 --> 00:24:34,680
Speaker 2: like a financial instruction manual that would contain a list

537
00:24:34,680 --> 00:24:37,160
Speaker 2: of all your investment accounts, bank accounts, maybe the.

538
00:24:37,080 --> 00:24:39,240
Speaker 3: Last year end statement. It can be this easy.

539
00:24:39,520 --> 00:24:42,239
Speaker 2: Every December, grab that or January when the statements show up,

540
00:24:42,359 --> 00:24:44,000
Speaker 2: grab that statement, throw.

541
00:24:43,840 --> 00:24:45,120
Speaker 3: It in a folder and you don't have to worry.

542
00:24:45,119 --> 00:24:46,280
Speaker 3: You don't even have to look at it.

543
00:24:46,760 --> 00:24:48,520
Speaker 2: You know, even if this is just a digital folder

544
00:24:48,600 --> 00:24:50,159
Speaker 2: or something on dropbox, you don't even have to look

545
00:24:50,200 --> 00:24:51,800
Speaker 2: at it's just a place where you can say, oh,

546
00:24:51,840 --> 00:24:54,719
Speaker 2: here's what it was, you know whatever December. This account

547
00:24:54,760 --> 00:24:57,480
Speaker 2: existed at one point and then you're surviving spouse and

548
00:24:57,520 --> 00:25:00,680
Speaker 2: whoever is helping them organize things will know where to look.

549
00:25:00,720 --> 00:25:03,520
Speaker 2: They can always go get the latest information, but they

550
00:25:03,560 --> 00:25:06,280
Speaker 2: just need to know that the account exists. Passwords, and

551
00:25:06,359 --> 00:25:09,000
Speaker 2: this is a little bit tougher because I used to

552
00:25:09,000 --> 00:25:10,919
Speaker 2: try this years ago when the Internet was first a thing,

553
00:25:11,000 --> 00:25:14,119
Speaker 2: but passwords nowadays changed so often there's just no way

554
00:25:14,280 --> 00:25:16,320
Speaker 2: and it's actually dangerous to be writing them down on

555
00:25:16,359 --> 00:25:18,680
Speaker 2: a piece of paper. Or what really frightens me, bob

556
00:25:18,920 --> 00:25:22,000
Speaker 2: the shared spreadsheet in Google docs or something like that

557
00:25:22,000 --> 00:25:25,160
Speaker 2: that has the keys to your kingdom somewhere out there online.

558
00:25:25,720 --> 00:25:28,560
Speaker 2: But you know, so there's a little tougher. Different things

559
00:25:28,600 --> 00:25:30,560
Speaker 2: have to happen there. I would suggest again, just just

560
00:25:30,600 --> 00:25:33,439
Speaker 2: make sure everybody knows where the accounts are and the

561
00:25:33,600 --> 00:25:37,040
Speaker 2: individuals can contact those financial institutions one by one and

562
00:25:37,040 --> 00:25:38,480
Speaker 2: make sure they get the appropriate access.

563
00:25:39,040 --> 00:25:40,240
Speaker 3: But here's an important one.

564
00:25:40,560 --> 00:25:42,520
Speaker 2: If there's a financial advisor in the mix, where if

565
00:25:42,520 --> 00:25:44,960
Speaker 2: there's some central point who knows where all this stuff is,

566
00:25:45,119 --> 00:25:47,399
Speaker 2: please make sure your spouse knows who that person is

567
00:25:47,440 --> 00:25:49,600
Speaker 2: and ideally can pick them out of a crowd. I

568
00:25:49,680 --> 00:25:52,919
Speaker 2: do have a handful of clients where the non money

569
00:25:52,920 --> 00:25:55,400
Speaker 2: spouse is so far away from the money they don't

570
00:25:55,440 --> 00:25:56,639
Speaker 2: even want to come in and meet me. And that

571
00:25:56,680 --> 00:25:58,600
Speaker 2: scares me to death because this person is going to

572
00:25:58,600 --> 00:26:00,359
Speaker 2: call me in tears wanting to know if they can

573
00:26:00,400 --> 00:26:02,520
Speaker 2: afford eggs. That's not a good thing. Make sure your

574
00:26:02,720 --> 00:26:05,320
Speaker 2: spouse knows where your advisor is. You're a state attorney,

575
00:26:05,359 --> 00:26:08,080
Speaker 2: your CPA, and anybody else you're working with, business cards

576
00:26:08,119 --> 00:26:09,360
Speaker 2: in a fold or something like that.

577
00:26:09,920 --> 00:26:11,880
Speaker 1: Well, I'm gonna jump on that point you just made

578
00:26:11,880 --> 00:26:14,040
Speaker 1: because I think it's a critical one. You know, it's

579
00:26:14,080 --> 00:26:18,280
Speaker 1: not just about money and passwords and account numbers. Both

580
00:26:18,440 --> 00:26:22,480
Speaker 1: spouses or both partners should know these advisors, not just

581
00:26:22,600 --> 00:26:24,240
Speaker 1: know their names or how to pick them out of

582
00:26:24,240 --> 00:26:26,600
Speaker 1: a lineup. They should know them a little bit. They

583
00:26:26,640 --> 00:26:29,000
Speaker 1: should have attended a few meetings because at the end

584
00:26:29,040 --> 00:26:31,879
Speaker 1: of the day, when that spouse who passes away is

585
00:26:31,920 --> 00:26:34,280
Speaker 1: no longer here, it is going to come down to

586
00:26:35,000 --> 00:26:38,360
Speaker 1: do I connect with these advisors and the surviving spouse.

587
00:26:38,400 --> 00:26:41,800
Speaker 1: If they have no relationship with those advisors, they haven't

588
00:26:41,800 --> 00:26:45,080
Speaker 1: built any trust. They haven't gotten to know one another.

589
00:26:45,560 --> 00:26:48,200
Speaker 1: Things can change in a hurry, and the whole plan

590
00:26:48,680 --> 00:26:52,000
Speaker 1: that this couple put together for decades could get unwound

591
00:26:52,040 --> 00:26:55,119
Speaker 1: overnight if you fall into the hands of a you know,

592
00:26:55,240 --> 00:26:58,920
Speaker 1: unscrupulous advisor, or just get bad advice, or get non

593
00:26:58,960 --> 00:27:02,239
Speaker 1: informed advice because there was not a relationship for him.

594
00:27:02,680 --> 00:27:05,040
Speaker 1: You can tell I'm on my high horse here. I

595
00:27:05,040 --> 00:27:08,480
Speaker 1: think this is a really important thing. Both spouses need

596
00:27:08,520 --> 00:27:12,200
Speaker 1: to attend these meetings, even if one spouse has no

597
00:27:12,359 --> 00:27:14,840
Speaker 1: interest in the numbers and the spreadsheets and all that,

598
00:27:15,040 --> 00:27:19,320
Speaker 1: simply to feel comfort level with who the advisory team

599
00:27:19,440 --> 00:27:22,960
Speaker 1: is because it will come into play very quickly, and

600
00:27:23,720 --> 00:27:24,440
Speaker 1: it's important.

601
00:27:24,680 --> 00:27:25,600
Speaker 3: It's important to get it.

602
00:27:25,800 --> 00:27:27,600
Speaker 2: Even if you don't understand the numbers or how it

603
00:27:27,720 --> 00:27:30,159
Speaker 2: go works together and you hate hate this stuff, you

604
00:27:30,160 --> 00:27:32,399
Speaker 2: should get a vibe from the advisor do you like

605
00:27:32,480 --> 00:27:34,919
Speaker 2: them or not? Because that person one day was going

606
00:27:35,000 --> 00:27:36,440
Speaker 2: to have to be your partner, whether you like it

607
00:27:36,520 --> 00:27:36,719
Speaker 2: or not.

608
00:27:37,760 --> 00:27:39,840
Speaker 1: Here's the all Worth advice. The best gift you can

609
00:27:39,920 --> 00:27:45,520
Speaker 1: leave your spouse isn't just money. It's clarity, stock options,

610
00:27:45,680 --> 00:27:50,359
Speaker 1: smarter withdraws, and income strategies. All of the above Coming

611
00:27:50,440 --> 00:27:53,800
Speaker 1: up next, we break down real world money moves for

612
00:27:53,920 --> 00:27:58,080
Speaker 1: investors with more to lose if they don't plan accordingly.

613
00:27:58,280 --> 00:28:01,000
Speaker 1: You're listening to Simply Money present by all Worth Financial

614
00:28:01,040 --> 00:28:09,520
Speaker 1: on fifty five KRC, the talk station. You're listening to

615
00:28:09,680 --> 00:28:13,040
Speaker 1: Simply Money presented by all Worth Financial Unpop sponseller along

616
00:28:13,040 --> 00:28:15,760
Speaker 1: with Brian James. Do you have a financial question you'd

617
00:28:15,840 --> 00:28:17,879
Speaker 1: like for us to answer. There's a red button you

618
00:28:17,920 --> 00:28:20,720
Speaker 1: can click while you're listening to the show. If, if,

619
00:28:20,760 --> 00:28:22,760
Speaker 1: and only if you're listening to the show on the

620
00:28:22,800 --> 00:28:26,359
Speaker 1: iHeart app, simply record your question there and it will

621
00:28:26,400 --> 00:28:29,920
Speaker 1: come straight to us. All right, Brian, here's Allan from

622
00:28:29,960 --> 00:28:33,840
Speaker 1: Milford who says we inherited a whole mix of investments

623
00:28:33,920 --> 00:28:37,280
Speaker 1: from my parents and honestly, I don't know what half

624
00:28:37,280 --> 00:28:40,600
Speaker 1: of this stuff is. How do you modernize a portfolio

625
00:28:41,080 --> 00:28:42,960
Speaker 1: without completely blowing it up?

626
00:28:43,560 --> 00:28:46,080
Speaker 2: Well, the first thing is don't rush into any decisions.

627
00:28:46,120 --> 00:28:48,680
Speaker 2: The biggest mistake that people often make is thinking you

628
00:28:48,720 --> 00:28:51,719
Speaker 2: gotta fix everything at once. This was mom and dad's portfolio.

629
00:28:51,720 --> 00:28:54,720
Speaker 2: This is a portfolio for little elderly people, and that's

630
00:28:54,720 --> 00:28:56,720
Speaker 2: not me. So I need to change everything right now today.

631
00:28:56,840 --> 00:28:58,600
Speaker 3: You might not understand what it is.

632
00:28:58,640 --> 00:29:01,920
Speaker 2: So start with a full invent every holding, every fun class,

633
00:29:01,960 --> 00:29:05,920
Speaker 2: all the stocks, most importantly cost basis, and understand how

634
00:29:05,920 --> 00:29:08,560
Speaker 2: the impact of this works. If those assets got to

635
00:29:08,560 --> 00:29:11,120
Speaker 2: step up in bases at death, that often gives you

636
00:29:11,240 --> 00:29:12,400
Speaker 2: it's going to give you a tax.

637
00:29:12,160 --> 00:29:13,160
Speaker 3: Free reset button.

638
00:29:13,200 --> 00:29:15,120
Speaker 2: Most of the stuff that is not inside of some

639
00:29:15,200 --> 00:29:17,520
Speaker 2: kind of retirement plan that should have come to you

640
00:29:18,320 --> 00:29:21,440
Speaker 2: in a taxable portfolio, which means it's as if you

641
00:29:21,520 --> 00:29:25,680
Speaker 2: bought it the day your benefactor passed away, so you

642
00:29:25,720 --> 00:29:28,040
Speaker 2: get at the moment you inherit it, you should be.

643
00:29:27,960 --> 00:29:30,240
Speaker 3: At a pretty low cost basis. Don't let those run

644
00:29:30,280 --> 00:29:30,680
Speaker 3: forever though.

645
00:29:30,680 --> 00:29:32,400
Speaker 2: Matter of fact, I look at those first, because people

646
00:29:32,400 --> 00:29:34,800
Speaker 2: will come in two years after the fact going well

647
00:29:34,800 --> 00:29:36,000
Speaker 2: I didn't really like these investments.

648
00:29:36,000 --> 00:29:37,080
Speaker 3: I wanted to make some changes.

649
00:29:37,280 --> 00:29:39,360
Speaker 2: Well they've gone up a bit, so now we have

650
00:29:39,440 --> 00:29:41,520
Speaker 2: taxes where if we had looked at it a little

651
00:29:41,520 --> 00:29:43,239
Speaker 2: more quickly, we could have made the adjustments that are

652
00:29:43,240 --> 00:29:45,760
Speaker 2: more appropriate before the tax bite happened.

653
00:29:46,320 --> 00:29:47,840
Speaker 3: And then you'll put these into buckets.

654
00:29:47,920 --> 00:29:49,720
Speaker 2: Right you might have keepers and stuff that you're not

655
00:29:49,760 --> 00:29:51,600
Speaker 2: sure about and stuff you're going to dump right away.

656
00:29:51,800 --> 00:29:54,240
Speaker 2: The keepers would be your low cost index funds, diverse

657
00:29:54,240 --> 00:29:58,960
Speaker 2: fight ETFs. Questionable stuff is anything with a high internal fee,

658
00:29:59,040 --> 00:30:02,640
Speaker 2: like expensive mutual funds, maybe old share classes B shares

659
00:30:02,760 --> 00:30:05,080
Speaker 2: or heaven Forbid C share or something like that. Those

660
00:30:05,200 --> 00:30:07,560
Speaker 2: might not make any sense, and then exit candidates would

661
00:30:07,560 --> 00:30:09,640
Speaker 2: be those little spinoffs. You know, everybody who has P

662
00:30:09,720 --> 00:30:11,640
Speaker 2: and G also got smuckers in a handful of other

663
00:30:11,680 --> 00:30:13,440
Speaker 2: little tiny positions. You might not want to deal with

664
00:30:13,440 --> 00:30:15,200
Speaker 2: that stuff at all. It's all gonna spit out little

665
00:30:15,240 --> 00:30:17,800
Speaker 2: tiny things, so tidy it up. But it's nothing to

666
00:30:17,800 --> 00:30:19,960
Speaker 2: be afraid of. You don't have to do it immediately.

667
00:30:20,000 --> 00:30:21,680
Speaker 2: But at the same time, don't let it go for twoe, three,

668
00:30:21,720 --> 00:30:23,360
Speaker 2: four or five years. It's not going to be very

669
00:30:23,360 --> 00:30:26,480
Speaker 2: efficient to handle it that way. Okay, moving on to Greg.

670
00:30:26,520 --> 00:30:28,880
Speaker 2: Greg's down in Fort Thomas loved the forts down there.

671
00:30:29,760 --> 00:30:32,080
Speaker 2: I always picked my own stocks. But now our portfolio

672
00:30:32,120 --> 00:30:33,640
Speaker 2: is get a little bigger and he's wondering if they've

673
00:30:33,640 --> 00:30:35,720
Speaker 2: got any blind spots. Well, how do you know when

674
00:30:35,760 --> 00:30:37,640
Speaker 2: doing it yourself becomes too risky?

675
00:30:39,240 --> 00:30:40,560
Speaker 3: Well risk, Greg?

676
00:30:40,600 --> 00:30:43,080
Speaker 1: It all comes down to do you have a financial plan?

677
00:30:43,120 --> 00:30:45,400
Speaker 1: In other words, what does your money need to do

678
00:30:45,560 --> 00:30:48,440
Speaker 1: for you? And win so you know, we start there,

679
00:30:48,520 --> 00:30:51,000
Speaker 1: do you have a financial plan and if not, maybe

680
00:30:51,080 --> 00:30:54,080
Speaker 1: think about getting one. In terms of stock picking, there's

681
00:30:54,080 --> 00:30:57,040
Speaker 1: nothing wrong with doing it yourself, you know, in terms

682
00:30:57,080 --> 00:31:00,440
Speaker 1: of building a portfolio, as long as the portfolio is

683
00:31:00,480 --> 00:31:03,880
Speaker 1: going to accomplish. Again, back to that financial plan, what

684
00:31:03,960 --> 00:31:06,760
Speaker 1: you needed to do and win a couple of blind

685
00:31:06,760 --> 00:31:09,280
Speaker 1: spots that typically come up with folks that you know,

686
00:31:09,400 --> 00:31:12,760
Speaker 1: I see that are doing it yourself and buying individual stocks.

687
00:31:13,600 --> 00:31:14,680
Speaker 3: This this comes into.

688
00:31:14,520 --> 00:31:17,360
Speaker 1: Play, you know, more often with men than women, because

689
00:31:17,400 --> 00:31:19,719
Speaker 1: men tend to tie we tend to tie our ego

690
00:31:19,840 --> 00:31:23,600
Speaker 1: to everything is we love to look at those winners

691
00:31:23,720 --> 00:31:26,960
Speaker 1: on that spreadsheet that we've owned for years, if not decades,

692
00:31:27,000 --> 00:31:29,200
Speaker 1: and we can get lulled to sleep. Think, you know,

693
00:31:29,280 --> 00:31:32,920
Speaker 1: seeing a three four gain on a spreadsheet, and you

694
00:31:33,120 --> 00:31:36,520
Speaker 1: love looking at the fact that you picked a winning stock. Well,

695
00:31:36,680 --> 00:31:39,440
Speaker 1: maybe most of that return happened, you know, in the

696
00:31:39,520 --> 00:31:42,000
Speaker 1: last ten or twenty years, and maybe the stock has

697
00:31:42,000 --> 00:31:44,480
Speaker 1: declined or just been flat or kind of dead money

698
00:31:44,520 --> 00:31:47,280
Speaker 1: for the last three, five or ten years. So you know,

699
00:31:47,400 --> 00:31:50,720
Speaker 1: looking at performance, you know, not just over the last

700
00:31:50,760 --> 00:31:54,120
Speaker 1: thirty years, but what's likely to happen going forward, and

701
00:31:54,160 --> 00:31:56,680
Speaker 1: how how are things you know moving right now, and

702
00:31:56,840 --> 00:31:59,640
Speaker 1: what are some of the other alternatives out there, uh

703
00:31:59,720 --> 00:32:02,080
Speaker 1: that you might be considering. That's a blind spot to

704
00:32:02,080 --> 00:32:04,320
Speaker 1: take a look at. I know people never want to

705
00:32:04,360 --> 00:32:07,120
Speaker 1: sell a stock because of taxes. Again, this comes back

706
00:32:07,160 --> 00:32:10,920
Speaker 1: to your financial plan. Are you charitably inclined? Do you

707
00:32:10,960 --> 00:32:13,920
Speaker 1: do some regular charitable giving? This is where you know

708
00:32:13,960 --> 00:32:16,440
Speaker 1: you could take some of those appreciated shares fund a

709
00:32:16,480 --> 00:32:19,240
Speaker 1: donor advice fund, or give the shares directly to charity.

710
00:32:19,440 --> 00:32:22,920
Speaker 1: It's a great way to diversify a portfolio. So those

711
00:32:22,960 --> 00:32:24,880
Speaker 1: are two. You know, a third one would just be

712
00:32:24,960 --> 00:32:29,920
Speaker 1: stress tests portfolio. There's wonderful software out there that would say, hey,

713
00:32:30,240 --> 00:32:33,120
Speaker 1: what happens if any of these stocks or you know,

714
00:32:33,320 --> 00:32:36,400
Speaker 1: twenty percent of your individual stocks go down thirty or

715
00:32:36,400 --> 00:32:41,440
Speaker 1: forty percent, Because that's a real possibility in any economic situation.

716
00:32:41,600 --> 00:32:45,880
Speaker 1: So sometimes when people see that portfolio actually stress tested,

717
00:32:46,800 --> 00:32:50,320
Speaker 1: the light belt, the bells and whistles go off and say, wow,

718
00:32:50,360 --> 00:32:52,880
Speaker 1: I don't want that kind of exposure. Let's talk about

719
00:32:53,200 --> 00:32:57,280
Speaker 1: how to responsibly diversify over a reasonable period of time

720
00:32:57,640 --> 00:32:59,440
Speaker 1: with reasonable tax exposure.

721
00:32:59,720 --> 00:33:01,240
Speaker 3: Hope that helps Greg all.

722
00:33:01,200 --> 00:33:03,640
Speaker 1: Right, Paul and Oxford Bryan says, we've been told that

723
00:33:03,680 --> 00:33:07,520
Speaker 1: our withdrawal plan should quote unquote adapt to markets.

724
00:33:07,920 --> 00:33:10,120
Speaker 3: What does that actually look like in real life.

725
00:33:10,320 --> 00:33:12,760
Speaker 2: Well, a lot of people think of retirement withdrawals as

726
00:33:12,800 --> 00:33:15,440
Speaker 2: a fixed paycheck. We're all used to fixed paychecks because

727
00:33:15,440 --> 00:33:17,280
Speaker 2: we've been getting one every month or every two weeks

728
00:33:17,400 --> 00:33:21,680
Speaker 2: or every week for however long. But when it's my

729
00:33:21,760 --> 00:33:23,720
Speaker 2: own money, then I can kind of turn this bigot

730
00:33:23,760 --> 00:33:24,840
Speaker 2: on and off as I need.

731
00:33:24,920 --> 00:33:26,600
Speaker 3: And then then the question becomes, how do I know

732
00:33:26,640 --> 00:33:27,280
Speaker 3: when I need what?

733
00:33:27,720 --> 00:33:31,320
Speaker 2: Well, the safest financial plans offer or have the ability

734
00:33:31,320 --> 00:33:33,920
Speaker 2: to kind of breathe with the markets. They flex They

735
00:33:34,000 --> 00:33:36,840
Speaker 2: kind of contract when the markets are rough, and they

736
00:33:36,880 --> 00:33:37,560
Speaker 2: open up when.

737
00:33:37,440 --> 00:33:38,200
Speaker 3: Markets are strong.

738
00:33:38,600 --> 00:33:42,080
Speaker 2: So the thinking here would be make sure you're stay flexible.

739
00:33:42,080 --> 00:33:43,880
Speaker 2: People get so tempted to I just want I want

740
00:33:43,880 --> 00:33:45,400
Speaker 2: to never worry. Right, I didn't have to worry when

741
00:33:45,400 --> 00:33:47,080
Speaker 2: I had a paycheck, and I don't want to worry anymore.

742
00:33:47,080 --> 00:33:49,240
Speaker 2: So I want to just program this in and just

743
00:33:49,280 --> 00:33:51,760
Speaker 2: make sure I have this exact amount coming in every

744
00:33:51,760 --> 00:33:54,200
Speaker 2: month and then never think about money again. Well, unfortunately,

745
00:33:54,200 --> 00:33:55,760
Speaker 2: if you have money, then you're going to be thinking

746
00:33:55,760 --> 00:33:57,680
Speaker 2: about it for the rest of your life, because once

747
00:33:57,680 --> 00:34:00,560
Speaker 2: you retire, you've won freedom. But freedom means now you

748
00:34:00,560 --> 00:34:04,200
Speaker 2: own your own company whose product is you making sure

749
00:34:04,200 --> 00:34:07,360
Speaker 2: you're financially stable. So where it's tempting to say I

750
00:34:07,440 --> 00:34:09,400
Speaker 2: want X amount of dollars every single month on this

751
00:34:09,520 --> 00:34:12,120
Speaker 2: date to cover absolutely everything, I think that's great, but

752
00:34:12,160 --> 00:34:14,240
Speaker 2: I think we really should focus on what's the money

753
00:34:14,239 --> 00:34:17,279
Speaker 2: we know we are going to spend. Let's focus on that.

754
00:34:17,360 --> 00:34:19,680
Speaker 2: Let's make that predictable. Then the rest of it can

755
00:34:19,719 --> 00:34:22,640
Speaker 2: be flexible, and that gives you the ability to keep

756
00:34:22,640 --> 00:34:24,640
Speaker 2: things invested when the markets are running and you don't

757
00:34:24,719 --> 00:34:27,000
Speaker 2: need the money. But also if we've also taken the

758
00:34:27,000 --> 00:34:29,760
Speaker 2: step of setting aside and being aware of what expenses

759
00:34:29,760 --> 00:34:32,080
Speaker 2: are coming up via financial plan, then we will have

760
00:34:32,120 --> 00:34:34,359
Speaker 2: already carved out the dollars we know we're gonna need,

761
00:34:34,640 --> 00:34:37,200
Speaker 2: Versus saying here's what I'm gonna spend I think this

762
00:34:37,320 --> 00:34:39,719
Speaker 2: year and then dividing that by twelve every single month.

763
00:34:40,000 --> 00:34:42,360
Speaker 2: The fixed costs, yes, do that, But the stuff you

764
00:34:42,440 --> 00:34:45,000
Speaker 2: might maybe do but you also might rule out, don't

765
00:34:45,000 --> 00:34:46,239
Speaker 2: lock that into your income plan.

766
00:34:46,360 --> 00:34:47,200
Speaker 3: Keep that flexible.

767
00:34:48,200 --> 00:34:51,319
Speaker 1: Coming up next to real pros and cons of retiring

768
00:34:51,360 --> 00:34:55,359
Speaker 1: overseas and what you need to consider before you pack

769
00:34:55,440 --> 00:34:58,200
Speaker 1: that suitcase. You're listening to Simply Money, presented by All

770
00:34:58,200 --> 00:35:06,000
Speaker 1: Word Financial on fifty five KRC the talk station. You're

771
00:35:06,040 --> 00:35:08,440
Speaker 1: listening to Simple Money. You've got to buy all Worth Financial,

772
00:35:08,719 --> 00:35:12,440
Speaker 1: Bob's fund seller along with Brian James. The dream of

773
00:35:12,480 --> 00:35:16,880
Speaker 1: retiring overseas has never been more popular, especially with Americans

774
00:35:16,920 --> 00:35:21,239
Speaker 1: looking to lower cost chase adventure, or just escape the

775
00:35:21,440 --> 00:35:25,840
Speaker 1: US healthcare system. But there are real financial and lifestyle

776
00:35:25,920 --> 00:35:29,799
Speaker 1: considerations that come with that dream. Let's break some of

777
00:35:29,800 --> 00:35:32,319
Speaker 1: those down, Brian. What are the pros and cons of

778
00:35:32,400 --> 00:35:33,640
Speaker 1: retiring abroad?

779
00:35:34,520 --> 00:35:36,719
Speaker 3: Yeah, so the biggest one will you can you can

780
00:35:36,800 --> 00:35:39,200
Speaker 3: find a lower cost of living. There are people who go.

781
00:35:39,120 --> 00:35:41,480
Speaker 2: Who move down to you know, Central America, nice places

782
00:35:41,480 --> 00:35:43,319
Speaker 2: with beaches and monkeys. You can get a lower cost

783
00:35:43,400 --> 00:35:45,600
Speaker 2: of living down there, and that's where we come up

784
00:35:45,640 --> 00:35:48,440
Speaker 2: with these ideas. So five thousand dollars a month can

785
00:35:48,480 --> 00:35:50,440
Speaker 2: go a lot further than it does here in the

786
00:35:50,520 --> 00:35:52,560
Speaker 2: United States. You know, places like Portugal.

787
00:35:52,760 --> 00:35:56,359
Speaker 1: Answer to AI, Brian is just retired down in the

788
00:35:56,480 --> 00:35:58,960
Speaker 1: Southern Hemisphere and get a few monkeys to do your

789
00:35:59,040 --> 00:35:59,520
Speaker 1: chores for you.

790
00:36:00,120 --> 00:36:02,480
Speaker 2: In monkeys, everybody needs a monkey Barler, Right, isn't that

791
00:36:02,640 --> 00:36:03,360
Speaker 2: the hidden dream?

792
00:36:03,719 --> 00:36:03,959
Speaker 3: Yep?

793
00:36:04,239 --> 00:36:07,439
Speaker 2: But yeah, those countries all show up on the list

794
00:36:07,520 --> 00:36:10,600
Speaker 2: for all those reasons because of the cost of living

795
00:36:10,600 --> 00:36:13,560
Speaker 2: down there. Another plus can be tax advantages. Some countries

796
00:36:13,600 --> 00:36:15,960
Speaker 2: have favorable tax treaties with the United States, or maybe

797
00:36:16,000 --> 00:36:18,640
Speaker 2: they don't tax foreign retirement income at all. In a

798
00:36:18,640 --> 00:36:21,839
Speaker 2: lot of cases, your Social Security benefits still get paid overseas. Now,

799
00:36:21,840 --> 00:36:23,799
Speaker 2: for those of you who might be frustrated with, you know,

800
00:36:23,880 --> 00:36:25,839
Speaker 2: just things in general here and are thinking the heck

801
00:36:25,880 --> 00:36:27,719
Speaker 2: with it, We're just gonna not be American anymore. We're

802
00:36:27,719 --> 00:36:29,960
Speaker 2: gonna go away. There are a handful of people like

803
00:36:29,960 --> 00:36:32,359
Speaker 2: that out there. Google the term exit tax. You don't

804
00:36:32,400 --> 00:36:34,239
Speaker 2: get to take all your money and run away. You're

805
00:36:34,239 --> 00:36:35,839
Speaker 2: gonna have to pay taxes on it, just as if

806
00:36:35,880 --> 00:36:37,640
Speaker 2: you were just gonna liquidate everything and put it in

807
00:36:37,640 --> 00:36:40,160
Speaker 2: a suitcase. Not that easy exit tax what you want

808
00:36:40,200 --> 00:36:40,560
Speaker 2: to look at.

809
00:36:40,719 --> 00:36:45,359
Speaker 3: Let's talk about lifestyle, Bob, This is all you Well,

810
00:36:45,400 --> 00:36:47,839
Speaker 3: I'll give you an actual example of what we're talking about.

811
00:36:47,880 --> 00:36:50,000
Speaker 1: I was on a flight a month or so ago

812
00:36:50,239 --> 00:36:53,960
Speaker 1: with a lady who was flying back to Cincinnati for

813
00:36:54,040 --> 00:36:58,080
Speaker 1: her fiftieth high school reunion. She went to Walnut Hills

814
00:36:58,120 --> 00:37:02,120
Speaker 1: High School and very nice lady. But here's the interesting part.

815
00:37:02,239 --> 00:37:05,600
Speaker 1: She she and her husband are preparing right now as

816
00:37:05,600 --> 00:37:09,479
Speaker 1: we speak, to retire in Portugal. And we had an

817
00:37:09,520 --> 00:37:12,120
Speaker 1: opportunity to talk about that, you know, on the flight

818
00:37:12,160 --> 00:37:15,560
Speaker 1: from Denver to Cincinnati. And I'll tell you this, Brian,

819
00:37:15,719 --> 00:37:19,640
Speaker 1: she had no stress on her face whatsoever about any

820
00:37:19,680 --> 00:37:22,879
Speaker 1: of this stuff. They had to the prior points we

821
00:37:23,000 --> 00:37:25,640
Speaker 1: brought up early in the show. They have been test

822
00:37:25,719 --> 00:37:30,080
Speaker 1: driving this thing for months. They found the right neighborhoods,

823
00:37:30,200 --> 00:37:35,040
Speaker 1: the right community of people, found their healthcare solution. I mean,

824
00:37:35,080 --> 00:37:37,680
Speaker 1: she was all jacked up and ready to go, and

825
00:37:38,280 --> 00:37:42,080
Speaker 1: so it's very doable if you do your homework in advance,

826
00:37:42,960 --> 00:37:46,960
Speaker 1: and she and her husband had clearly done that. Portugal,

827
00:37:47,040 --> 00:37:49,080
Speaker 1: I guess, is the new place to check out. Never

828
00:37:49,120 --> 00:37:51,239
Speaker 1: been there I heard that before. So those are those

829
00:37:51,239 --> 00:37:52,719
Speaker 1: are all the good reasons that people want to do this.

830
00:37:52,760 --> 00:37:54,279
Speaker 1: So what are the cons? Well, Bob just kind of

831
00:37:54,320 --> 00:37:56,279
Speaker 1: hinted that at healthcare is a big one. It can

832
00:37:56,360 --> 00:37:57,959
Speaker 1: be cheaper, but is it as good?

833
00:37:58,000 --> 00:38:00,319
Speaker 3: Are you going to have access to specialists? Is there

834
00:38:00,320 --> 00:38:01,799
Speaker 3: a language barrier? That's a huge one.

835
00:38:01,800 --> 00:38:03,560
Speaker 2: Specialists can be great, but not if you're not speaking

836
00:38:03,560 --> 00:38:06,400
Speaker 2: the same language. Medicare well, that doesn't travel. You're generally

837
00:38:06,400 --> 00:38:09,440
Speaker 2: on your own there. Here's a huge one if you're

838
00:38:09,480 --> 00:38:12,919
Speaker 2: from Cincinnati, specifically the West Side, where things a little

839
00:38:12,960 --> 00:38:16,040
Speaker 2: tighter over there. Well, distance from family, that's huge. What

840
00:38:16,160 --> 00:38:19,400
Speaker 2: seems fun at sixty five might feel really really isolating

841
00:38:19,400 --> 00:38:20,200
Speaker 2: at seventy five.

842
00:38:20,239 --> 00:38:22,399
Speaker 1: You know, hard to go to an elder football game

843
00:38:22,440 --> 00:38:25,319
Speaker 1: when you live in Portugal Brian virtually impossible.

844
00:38:25,640 --> 00:38:27,520
Speaker 2: You can stream those games now, it's not as hard

845
00:38:27,520 --> 00:38:29,120
Speaker 2: as it used to be, but at the same time,

846
00:38:29,160 --> 00:38:30,840
Speaker 2: you know you're still gonna have to, you know, have

847
00:38:30,960 --> 00:38:33,440
Speaker 2: your price Hill chili shipped out to you over overseas.

848
00:38:33,840 --> 00:38:35,759
Speaker 1: Those are just a couple things to think about. Here's

849
00:38:35,760 --> 00:38:38,960
Speaker 1: the all Worth advice. Retiring overseas can stretch your dollars

850
00:38:39,280 --> 00:38:43,080
Speaker 1: and expand your horizons, but make sure your money, your healthcare,

851
00:38:43,400 --> 00:38:47,520
Speaker 1: and your expectations can handle the move. Thanks for listening tonight.

852
00:38:47,520 --> 00:38:49,560
Speaker 1: You've been listening to Simply Money Present up by all

853
00:38:49,600 --> 00:38:52,840
Speaker 1: Worth Financial on fifty five KRC, the talk station