Planning a Proper Withdrawal Rate

Episode Transcript

(00:00):
And our phone lines are open foryou right now at six oh eight three
two one thirteen ten. That's sixoh eight three two one thirteen ten.
Gets you on the air with ourretirement planning professionals from Class Financial join this
week by CJ. Closs and MaliaQuavis. You can learn more about Cjmalia
and the whole team at Loss Financialon their website Class Financial dot com.
That's k l aa S Financial dotcom. Also great website and resource to

(00:23):
learn about the separate divisions of ClassFinancial, how they can help you or
if you're an employer, some greatgreat information there, as well as an
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atlass Financial dot com. Again,that's k l aa S Financial dot com.
Telph a number for the office righthere in Madison six oh eight four
four two five six three seven.No charge for that initial get to know

(00:44):
you appointment at COSS Financial. Itwill be complementary to you. Again their
number for the office six oh eightfour four two five six three seven.
And if you'd like to join usthis morning, all I gotta do is
pick up phone, give us aring six oh eight three two one thirteen
ten. That's six oh eight threetwo one thirteen ten. As mentioned joined
this morning by CJ Closs and MaliaQuavis. CJ, how you doing this
week? I am doing great.It's kind of rainy out there today,

(01:07):
a little drizzly, and I guessApril is the March showers. Bring something
I don't know. We'll figure,yeah, cloth exactly exactly. Malia,
how are you doing this morning?Very good, happy to be here,
Great to have you along. Keepit dry, I hope, I hope.
So a good inside good day todo just that, and of course
listen to some great, great conversationto get some fantastic information. Speaking of

(01:29):
getting fantastic information, we've got agreat show ahead. We're going to be
talking about the proper withdrawal rate whenit comes to money from your investments in
retirement. We're going to get someof the details on that from CJ and
Malia in just a moment. Don'tforget. Phone lines are open at six
oh eight three two one thirteen ten. That's six oh eight three two one
thirteen ten. Got a chance foryou also to win a twenty five dollars

(01:49):
gift card. Oh yeah, tobe to Buffalo Wild Wings. And I'm
just now, I'm just off inLa la land here, and I don't
think I could win this one.It Closs Financial Land provided that twenty five
dollars gift card to Buffalo Wild Wings. We'll tell you a little bit later
on the program how you can winit. With the class quiz question the
week Little Tipto, if you listenclosely to the program, I both the

(02:12):
question and answer come up during theshow. Speaking of the class quiz question
the week, we did one lastweek. Let's get a review of last
week's question and get the answer thereas well. Malia. Yeah, so
last week we talked about having aroadmap to retirement to make sure you're on
the right going the right direction soyou can get to where you want to
go to. And our question reallytalked about what you can do now to

(02:37):
prepare for the eventual retirement. Ourquestion last week was when you reach age
fifty five, how much extra canyou save into your HSA, which is
your health savings account if you haveone available? Is it five hundred dollars
or one thousand dollars a year?And Jerome of Wana Key was our first
correct answer that called in. Hecorrectly answered one thousand dollars. Dollars is

(03:00):
the amount extra you can put intoyour HSA once you reach reach age fifty
five. So if you want tolook at where you're at on the map
to retirement, listen to last week'sshow and listen carefully for today's question.
Nice work, Jerome, and youtwo can be like Jerome. As Malia
mentioned, you can listen back tolast week's program get all that information.
Also have a chance to win likeJerome this week with the class quiz question.

(03:23):
We will do that a little bitlater on in the program. Again,
phone lines, they are open foryou. Six oh eight three two
one thirteen ten. That's six oheight three two one thirteen ten. Love
to have you joined, Cjmalia andmyself of course. Is Money in Motion
brought you by Closs Financial, theirwebsite classfinancial dot com. That's Klaasfinancial dot
com and their telephone number six soheight four four two five six three seven.

(03:46):
So this wee're going to be talkingabout planning for a proper withdrawal rate
from your investments in retirement. I'vegot to assume it's important with people sometimes
retiring sooner and living longer. Thisis something you're really going to want to
pay attention to, isn't. It'sej it is. So cash flow as
you enter retirement is obviously critical.It is often what keeps people from retiring

(04:09):
is they think to themselves, Hey, for forty, sometimes fifty years,
I've been receiving income from a jobevery two weeks hitting my bank account,
and there's this unknown of where it'sgoing to come from once you retire.
Where is that cash flow going tocome from? And is it sustainable and
how much will it be? Andso there's a lot of fear and uncertainty
when it surrounds this topic. Butwhen re tirees think about risk, many

(04:32):
say that outliving their money is theirnumber one fear. The three elements that
most significantly affect planning are the needfor real, not nominal cash flow.
When we say real, that's kindof a financial term. Real means an
income stream that increases with inflation.So said another way, if I have

(04:53):
one thousand dollars a month today,a year from now, that thousand dollars
a month will buy me less goodsand services, So I will literally be
experiencing a decline in my income ifI don't keep it up with inflation.
So that's one of those risks.Another risk would be the risk of having
to sell assets to provide income atthe wrong time, think of, you

(05:14):
know, during a bear market.And then number three would be the likelihood
of future decades of historically low marketreturns. There's also within all of this
discussion this concept of sequence of returnsthat we'll talk about a little bit more
as we go ahead. So asfinancial planners, managing the withdrawal rate from
your investments that is sustainable over thecourse of your retirement will play an essential

(05:36):
role in your retirement income plans.But that being said, the first thing
we need to discuss is what kindof withdrawal rate would be considered a safe
withdrawal rate. So this is therate to determine how much money you can
withdraw from your investment accounts each yearwithout running out of money before reaching the
end of your life. The ideais to have a balance or to balance

(06:00):
having enough money or income to livecomfortably without depleting your retirement savings prematurely,
which again is the number one fearfor most retirees, and obviously, your
withdrawal rate from your investments is notonly affected by the income you need,
but also by the other various sourcesof income as you enter retirement that you
might have available to you think socialSecurity, pension, maybe espousal, part

(06:26):
time working income, things like that. And then depending upon your age at
retirement and special expenses, there couldbe things like health insurance that pops up.
If you retire prior to sixty five, you might have expensive Affordable Care
Act premiums. So it's not onlyjust what is my safe withdrawal rate,
it's what other income sources do Ihave available that are outside of my portfolio?

(06:49):
And then secondarily, what are additionalexpenses that will pop up that I
did not have prior to retirement.Talking this morning with our retirement planning professionals
from Class Financial, CJ. Cossand Malia Quavis. If you've got a
question for CG and Malia, wewould love to have you join us this
morning. All I gotta do ispick up phone gifts call six oh eight
three two one thirteen ten. That'ssix soh eight three two one thirteen ten.

(07:10):
The website for Class Financial it isClossfinancial dot com. That's Klaas Financial
dot Com and They're telephone number forthe office right here in Madison six oh
eight four four two five six threeseven. Again, that's six oh eight
four four two five six three seven. Sorry to interrupt you, cig.
I know you're on a roll there, what about And I know we just
did a show a couple of weeksago about debt. I've got to guess
that factors into this as well,doesn't it. It does. Yeah,

(07:33):
So so back to you know,if if we've got to think about our
income streams, which of course willimpact how much income we need out of
our portfolio, which impacts safe withdrawalrates, which Molia will get into what
that rate actually is, because I'msure a lot of you are going,
well, you keep talking about thoserate, what is the rate? But
then we also need to look atwhat debt do you have, you know,

(07:55):
coming into retirements. So it's oneof the reasons that we have done
entire shows on debt to managements becausewhen you're working and like you can just
always kind of earn more or earnyour way out of trouble is what we
call it. When you're in retirement, that no longer exists, and so
your ability to earn your way outof higher interest rates, or earn your
way out of higher inflation, orearn your way out of debt. Payments

(08:16):
goes away, and therefore not havingdebt becomes a really positive impact on your
the stability of your future retirement.So these are all things to consider.
But in a moment here Malie's gonnaactually talk about that rate and we'll get
into that, and we'll of coursetake your call if you've got a question,
love, do you have you joinus this morning six oh eight three
two one thirteen ten. That's sixoh eight three two one thirteen ten.

(08:37):
We'll get you on the air withour retirement planning professionals from Class Financial CJ.
Coss and Malia Quavis don'tgag. Youcan learn more about Class Financial their
website Coss Financial dot com. That'sKlaas Financial dot com and the telephone number
six o eight four four two fivesix three seven. Don't forget no charge
for that initial get to know youappointment at Class Financial. It will be
complimentary to you again their number sixoh eight four four two five six three

(09:01):
seven. And to join us,so I gotta do is give us call
six oh eight three two one thirteenten. That's six oh eight three two
one thirteen ten. We'll find outfor Malia about that reasonable withdrawal, right,
what that is and how that's calculated. We'll get the details on that
and take your call next as Moneyin Motion with Coss Financial continues here on
thirteen ten. Wiv A full linesare open for you right now at six

(09:22):
oh eight three two one thirteen ten. That's six oh eight three two one
thirteen ten. Gets you on theair with our retirement planning professionals from COSS
Financial. Don't forget about the websitecoss financial dot com. That's k Laasfinancial
dot com. Great website. We'regonna sign up while you're there for the
weekly Market Pulse newsletter. I didthat a couple of years ago. I've
absolutely loved it. Gives you alink to some stuff going on in the

(09:43):
market, as well as our linkto the most recent podcast that available to
you at COSS Financial. Their telephonenumber six soh eight four four two five
six three seven. No charge forthe initial gets to know your appointment tech
WUTS Financial. It will be complimentaryto you again. Their number six oh
eight four four two five six threeseven to get on the air this morning
the regular studio number six oh eightthree two one thirteen ten. That's six

(10:03):
h eight three two one thirteen ten, talking this week about the proper withdrawal
rate, and we got just tothe point we were going to reveal how
that's calculated, what that is,and we said, oh, we got
to take a quick break. Butnow we're going to find out. Malia
did a drum roll. So whatis a reasonable withdrawal rate so we don't
run out of money? Which Ithink is probably the goal of all of

(10:26):
this. Isn't it correct? Correct? And so you know, no letdowns
are allowed on this show, butfor everyone, and truly you'll everyone should
love to hear this. No one'saverage, right, and we like to
lump everyone into you know, wellgenerally speaking, I mean for most situations
we see this particular amount being withdrawnover the course of their lifetime should work

(10:50):
out. Again, none of usis average, and we all have different
situations. So our answer is itdepends. It really does depend. We'll
give you some framework care, butit depends on your age, it depends
on your overall financial situation, andultimately it really is affected by your goal

(11:13):
with regards to how much money youwant to leave behind. So we're talking
about two different things here. Howmuch money can I safely take out so
I can live my lifetime and nothave to worry about money. But secondly,
many of our clients are like becausethey have honestly been very very frugal
as they have prepared for retirement,and they want to leave the biggest nut

(11:37):
available for their children or grandchildren.So there's some legacy planning that happens.
So there's a whole bunch of differentways to slice and dice this answer.
And really, since none of usknows how long we're going to be around,
this is where the estimations come inlooking at your cash flow. So
when we're looking at constructing a balancedor conservatively growing part folio for people and

(12:01):
understanding longevity plays a big, bigpart in all this, this is where
we have to be very, verycareful. And what everyone has heard out
in the media is generally speaking,you hear about this four percent rule,
which is literally just a simple ruleof thumb saying that you know you could

(12:22):
pull four percent from your investments inorder to see that being sustained over time.
But again, there's so many factorsthat affect that four percent rule that
we hear out there. It couldbe your own risk tolerance, it could
be the tax rates or the taxstatus of your current portfolio. So we

(12:43):
do look at the ratio you havein tax deferred assets as compared to taxable
assets, and then we look atinflation. So for many many situations,
we might be looking at only athree percent pull for some people depending on
the amount of that nest egg,depending on the age that they need to
start pulling from that, and ofcourse trying to stay ahead of inflation,

(13:09):
and ultimately it depends on what youreally want to do in retirement. So
we do have a lot of peopleare just happy living from their homes,
you know, a walk in thepark, walking their dogs. It doesn't
take a lot of money to dothat. But other people are saying,
nope, we're going to start travelingthe world, and they actually might need
more than their current income. Sothat's where we get a little crazy with

(13:33):
defining what that percentage is going tobe across the board. And another thing
that comes up sometimes is, youknow, everyone could look back at twenty
twenty two and go who that was? That was a difficult ear in the
market. For returns. But thenin twenty twenty three we saw some really
nice returns. So the question comesup as well, if my portfolio returned

(13:54):
ten percent last year, shouldn't Itake out ten percent? I mean,
when it's really good, should Ijust take out as much as it's given
me? And we would say we'vegot to be really careful because when you're
in retirement and suddenly your portfolio maysway the other direction minus ten percent,
does that mean you're going to stopliving? You're going to stop pulling that
money. And that's why we haveto have a guided plan according to what

(14:16):
your assets currently are. As CJmentioned, are you getting a pension?
Social Security comes into play, andhonestly where you're at with your debt,
so so many factors to really diginto. It's an important conversation to have
and of course an important thing tobe thinking about and as kind of what
we're all saving the money for isof course to have those great days in

(14:37):
retirement. If you want to learnmore about costs financial, don't forget about
the website colssfinancial dot com. That'sk l aas Financial dot com. Delp
it up for the office here inMadison six oh eight four four two five
six three seven. No charge forthat initial get to know you appointment tech
loss financial. It will be complementaryto you again their number six oh eight
four four two five six three seven. So, Malia, how much can

(15:00):
cash flow or income should we planthen in retirement versus our pre retirement income
and lifestyle? Yeah, so youknow, and what's funny is this really
has to do with how long you'reable to work, how long you want
to work, and what that incomelooks like. So, based on what
we have observed, is likely you'rereally going to need seventy to one hundred

(15:22):
percent of your pre retirement income whenyou retire. As most people really don't
generally want to change their lifestyle.They don't want to, you know,
stop eating, stop eating out.They actually maybe want to eat out more
things get expensive, right, So, so calculating how many years might I
be retired, and this is agood question for our younger listeners because we

(15:46):
do see so many people starting toretire in their mid fifties. So you
know, consequently we could be lookingat forty years of retirement for those folks.
So even at age sixty five,we could be looking at thirty years,
and what we saw in the USCensus Bureau said that currently the length

(16:07):
of retirement in the US, theaverage is eighteen years. So you just
multiply current income or seventy percent ofyour current income times eighteen years. That's
kind of the nugget you might belooking at as far as potentially how long
you're going to live and not wantto run out of your income. The
age that people tend to retire issixty five for men here in the US,

(16:33):
slightly lower for women, currently sitsat sixty two. Again, there's
this whole idea how long do Iwant to want to work for my employer?
How long can I physically work forthem or mentally work for them?
That's another big question. Sometimes peopleend up retiring sooner than they think they
want to, and sometimes they're letgo, so a lot of things come

(16:56):
into play. Bottom line is wereally want you to have maybe more stored
away in order to enjoy that longerretirement. And again it depends what you
want to do in your retirement.Really important stuff and just a great conversation
to have. And these are aswe work and talk each week with CJ
and Malia. They love to workand talk with you. Oh, you

(17:18):
got to just pick a phone,give a call the telephon number at the
office here in Madison six o eightfour four two five six three seven.
No charge, but initial get toknow you appointment at COSS Financial. It
will be complementary to you. Againtheir number six oh eight four four two
five six three seven, the websitecolss financial dot com. That's k l
Aasfinancial dot com. And again thewebsite Cossfinancial dot com. And we'll continue

(17:41):
our conversation with Cjenmalio. Also getto the class quiz question week and we
will talk about what happens when heturns seventy three. There's some important things
to know about there. We'll getthe details on that next as Money in
Motion with Coss Financial continues right hereon thirteen ten wu ib A. We're
talking withdrawal rates this week with ourfriends from Loss Financial here on Money in
Motion thirteen ten WIBA. The websitefor Coss Financial it is Clossfinancial dot com.

(18:07):
That's k l aas Financial dot com. There telephon number six oh eight
four four two five six three seven. No charge for that initial get to
know you appointment. Tech co LossFinancial it will be complimentary to you.
Again. They're number six oh eightfour four two, five, six three
seven a little bit later on thesegment Wallso do our closs quiz question of
the week your chance to win afantastic prize this week a chance to win
a twenty five dollars gift card toBuffalo Wild Wing. So, as we're

(18:30):
talking about this stuff this morning,CJ, one of the things I think
about is, you know, whenyou turn seventy three and you got to
take out money, how much withdrawaldo I have to then then take each
year? I've never heard of thisconcept. No, none, this is
new. No fortant. Oh,we like to have a little fun on
this show. Yes, required minimumdistributions is what this is called. And

(18:55):
since we're discussing with draw rates,then this is obviously a perfect topic.
So rmds or MrDs as they're commonlyreferred to, is an age of which
the IRS says, hey, onany of your pretax retirement accounts, assuming
you're no longer eligible to contribute toa company sponsored plan, then you must
start making these minimum distributions. Sofor now, that age is seventy three.

(19:18):
And yes, for those of youwho are listening, you're going,
wait, seventy three. It wasseventy and a half for me. That's
true for some of you listening whoare say mid to late seventies, it
was seventy and a half for you. For some of you listening, you
had to start at seventy two.But for those who are not yet seventy
three but will soon be seventy three, then your age is your required minimum

(19:40):
distribution age is seventy three. Andfinally, for anybody born after nineteen sixty,
so again i'm raising my hand.I was born after nineteen sixty,
your minimum required distribution age is seventyfive. So it just depends upon when
you were born as to when thatage kicks in. But again, the
IRS does require you to take acertain amount of money out of certain retirement

(20:03):
accounts every year, which is thatRMD. These will be coming from any
of your old four to oh oneKS, four to HO three b's and
iras unless you are still working,as there are some minor exceptions to that.
And then of course people say,well, why does the HI r
S require me to do this?And the answer is time to pay taxes.
So there's this concept in finance,which is known as cycling money for

(20:26):
Uncle Sam. And if too muchmoney gets out of the cycling of the
system. Think I earn money andpay taxes. I buy something in pay
a sales tax. They then takeand pay people who pay an income tax,
who then buy something in pay asales tax. This is the cycle
of money and what allows the governments, whether it be local or national,
to run their operations. If theyallowed you to just put all your money

(20:48):
into retirement accounts and never have topull it out, well you see the
problem, don't you. All ofthat money, millions, if not trillions
of dollars would get out of thatcycling system, and suddenly you wouldn't be
able to run the federal government.Now. I know there's people on right
now who are going exactly that's theproblem, and I'm sure there's anger and
frustration around all of that. I'mjust the messenger. I'm not saying this

(21:10):
is right or wrong. I'm justthe messenger. But the pre tax money
that you have put away in anticipationof retirement, that's been deferred for all
of these years, does have tobegin coming out at these ages, even
if you don't need it, Andwhen it comes out, it gets added
to your taxable income and whilst youpay tax on it, which gets it

(21:33):
back into the cycling. Now,this does not apply to your Wroth I
rays and Wroth four owin Caves bythe way, So if you have Wroth
money, you've already paid tax onthat money and the growth is tax free.
It's only the pre tax accounts thathave this required minimum distribution. Fantastic
stuff this morning speaking with CJ.Closs and Malia Quavis. They are our

(21:53):
retirement planning professionals from Class Financial.Don't forget you to learn more about Class
Financial on their website Claw Financial dotcom. That's CLSs k l a A
S Financial dot com. They're telephonenumber six oh eight four four two five
six three seven. No charge forthat initial get to know you appointment tech
Class Financial. It will be complementaryto you again their number six oh eight

(22:14):
four four two five six three seven. There's some other important things to know
about as far as when you shouldstart taking your RMD, isn't there CJ.
Yeah, So, as though it'snot complicated enough to know, you
know, when is my minimum distributionage based upon when I was born?
Well, there's another layer of complexityhere, which is when, actually do
I have to pull out that firstminimum minimum distribution known as your RBD,

(22:38):
your required beginning date. And soit's simple in concept, we say,
well, when you turn seventy three, and somebody says, but wait a
minute, what if I turn seventythree on April or I'm sorry, on
December thirtieth of twenty twenty four,does that mean that I have to have
a minimum distribution for the end hireyear in the year twenty twenty four.

(23:03):
And actually the answer is no,not in the year in which you first
are required to pull a minimum distribution. So at that required beginning date,
it is actually April first of theyear following when you turned required minimum distribution
age, So again April first ofthe year after you turn seventy three.
In this example, however, yougot to be cautious with that because if

(23:25):
you push off that minimum distribution.So take my example, I turn seventy
three on December thirtieth of this year, but I decide to wait to pull
it out until next year, andI have to get it out by April
first of next year. Then everyyear thereafter, including next year, I
have to get that year's RMD outby December thirty first, So if I

(23:47):
push off my first year's minimum distributionto the following year, then I have
to double up in the following year, and then every year thereafter it has
to be out by the end ofthe year. This is confusing stuff to
actually think about the radio, SoI do encourage you to talk to your
financial advisor, your accountant. Theseare things you're going to want to work
with a professional just to make sureyou have your arms around it and can
can manage it. But of coursethen the next question becomes how much do

(24:11):
I take out? And this hasto do with life expectancy tables that are
dependent upon or. It basically calculatesa life expectancy formula that tells you that
gives you a divisor that you haveto divide into the value of all your
pretax retirement accounts on December thirty first, and it gives you a percentage.

(24:32):
For those who want to kind ofquick and easy sample of this, in
your first year in which you havea minimum distribution at seventy three, it
ends up being right around three pointseven percent. So if I have one
hundred thousand dollars IRA and I turnseventy three, I need to pull out
about thirty seven hundred bucks for thatyear that gets added to my taxable income.
But you got to be cautious.If you have a spouse who is

(24:55):
more than ten years younger than you, then you have a different table to
use, just a lot of differentthings to be aware of here. And
unfortunately, this simple concept that cameout from Uncle Sam, which was while
we can't let people defer forever,the simple concept has all these tentacles of
exceptions and formulas and tables and calculatorsthat you have to get involved in.

(25:18):
Not to mention, well, whathappens if I die and leave my money
to my children. I've heard theyhave a minimum distribution. Oh boy,
Well, now we've got a wholeanother set of rules and calculations and ten
year timelines and distributions and all kindsof fun things to look at. So
unfortunately, what is simple in conceptis very complex actually in carrying it out.

(25:40):
So I just can't encourage you enough. Work with your advisor, work
with your accountant. If you haveany questions on this, can I also
ask speaking of working with an advisorand an accountant and working hard and saving
three years, and sometimes folks sendup with the with you know, a
little extra. What are you requiredthen to you know, let's say you
need to obviously have to take thatmoney out. There's some avenues, avenues

(26:00):
that you can put that money togood use if you don't need it,
right there are. Yeah, thanksfor mentioning that, Sean. So so
for those as Sean just said,Hey, I've done well and maybe I've
maybe I inherited some money, andso the money I save for myself in
retirement accounts, I don't need asmuch of that anymore. Or or I've
been blessed with a great job,and so again I don't need all this
money in a pre tax retirement account. But now I have these minimum distributions

(26:23):
that are coming out that is reallyincreasing my taxable income and increasing the tax
I have to pay. Well,there is a little bit of a bailout
here. We think it's a greatbailout known as qualified charitable distributions. So
if you choose to do this,you can donate up to one hundred and
five thousand dollars per year per individualwith no taxes that counts towards meeting your

(26:45):
minimum distribution. So now again there'ssome things you need to be aware of.
You can't do qualified charitable distributions untilyou reach age seventy and a half.
And yes I did say seventy anda half, which is not the
minimum distribution age for a lot ofpeople. But or qualified charitable distributions,
you have to be seventy and ahalf. And again these can count towards

(27:06):
your minimum distributions if you are minimumdistribution age, but they are limited to
one hundred and five thousand dollars peryear per kind of per IRA account owner
and it only applies to iras.You cannot do a qualified charitable distribution from
an old four to oh one Kplan. So again, a lot of
things to be aware even in thissimple concept. But the good news is

(27:27):
that if I have been blessed andI don't need that income, there is
a way to keep that income offmy text return, so to speak,
by just giving it to a charitydirectly. Again, speak to your accountant,
to your financial advisor about how todo this. We cannot emphasize enough
If you are giving to charities andyou are taking a standard deduction on your

(27:51):
tax return and you are over seventyand a half with an IRA, you
should probably talk to your financial advisorabout changing the way in which you give
and to give out of your IRAinstead of out of your checking and checking
account. And we've done some greatshows in the past where we really dug
into qcds as well. You canlisten back to those at class financial dot
com. That's k l a AS Financial dot Com. There telling number

(28:14):
six so eight four four two fivesix three seven before we get to the
class quiz question a week as wellas the listener question corner real quick.
As we've been going through this conversationthis week, liquidity and of course savings
keep popping into my head and that'san important aspect of this planning as well,
isn't it? Did we? Uhsee? J Yeah? Ken you

(28:37):
sorry, Sorry, that's okay.I was just I was just asking about
liquidity. I had mute button.Oh I was talking. It was really
good, Sean everyone the greatest pieceof radio. Yeah. Yeah, So
we want to remind our listeners whoare in the thick of retirement planning to
also remember the importance of having liquidityand emergency reserves. So we've done entire

(28:59):
shows in this concept. But againyou want to have a solid cash emergency
reserve at your bank that represents threeto six, even three to nine months
worth of living expenses, and itonly takes one unexpected event event or medical
bill or a job loss to makeyou recognize just how important this is.
We'll often talk to young people whoare still in almost the romantic phase of

(29:22):
like, oh, I've never losta job. I don't know what you're
talking about and why I would needthese reserves, and then life beats them
up a little bit and they go, I get it. I get it
now, I understand what that reserveis for. And then just create a
process. We've talked about this before, but a systematic savings plan to carry
out both your retirement savings goals andyour emergency goals and your debt elimination goals.

(29:45):
If you rely on emotional decision making. Also said another way, if
you rely on what is left atthe end of a month to make your
debt service payments and your savings patterns, you will never meet your goals.
That if you rely on what isleft at the end of a month to
make your debt service payments and yourretirement savings savings patterns, you will never

(30:08):
meet your goals. Instead, makeit your first fruits. Right, so
as soon as you get paid,or prior to even getting paid, you're
immediately almost robotically taking care of thesecore patterns. That is what drives the
greatest successful outcomes from what we've seentalking this morning with our retirement planning professional
CJ. Closs and Malia Quavis.The website Coss Financial dot com. That's

(30:30):
Coss Financial dot com. You canalso submit a question to be answered here
on the program right from the websiteand the Money in Motion listener question corner.
And this week Paul writes and hesays, last week I began a
new job that offers a four hone K plan. Should I consider rolling
over my old four h one Kplan into this new plan? Or should
I leave it at the old employer. Yeah, so that's a great question,

(30:52):
Paul. And honestly, again itdepends, that's my favorite answer today.
Really, it depends on the sizeof the old four oh one k
might be able to leave it behind. Sometimes companies that you've previously worked for
will force you to roll it ifin fact the balance is too low.
But if it's not too low,you certainly can leave it right where it's
at. If you're comfortable with theinvestment choices, that's the first first thing

(31:15):
you can do. Number two,you could could consider rolling it into your
new plan. Oh that's assuming thatthe new plan allows for that. Most
of them do. And then finallyyou could look at potentially rolling it into
an IRA. You want to becareful, You want to make sure you
understand your choices as you would enterthat IRA, as far as are the
investment choices something that you want aswell. Generally speaking, you have a

(31:38):
lot more choices in an IRA,but that's not necessarily the right answer for
you. What we would suggest yoube careful of is many people say,
well, it's an old four ohone K, I'll just cash it out
and I'll put the money in mybank. A. No, that's usually
not the right answer, and thereason for that is number one, you're
going to pay taxes for that moneythat you deferred previously. So with all

(32:01):
these questions, this is a perfectsituation where you should, you know,
speak to a financial planner, lookat your your situation, see what's the
best choice for you. Great question, Paul don't forge. You can submit
your question online at Cossfinancial dot com. That's k l Aasfinancial dot com.
Great website and resource to learn moreabout COLSS Financial as well. You can

(32:21):
listen back to this in previous showspodcast as well. Right at class Financial
dot com. There telephone number sixoh eight four four two five, six
three seven. No charge for thatinitial get to know you appointment at COSS
Financial. It will be complimentary toyou again. They're number six oh eight
four four two five six three seven. Can you want to hold on to
that telephon number now because it's timefor the COSS Quiz Question of the Week.
Works like this, just a moment, I'll ask you the Class Quiz

(32:43):
question of the Week. You willthen have thirty minutes from the interday's program
to call the Class Financial office righthere in Madison at six oh eight four
four two five six three seven.If you are the first call with correct
answer, you will win this week'sprize, which is a twenty five dollars
gift card two Buffalo Wild Wings.This week's Clus Quiz question the week is
this true or false? Per theirs, You must begin taking your required

(33:07):
minimum distribution from your retirement accounts byApril first of the year. Following the
year you turn seventy three? Isthat true or is that false? Telephone
number six so eight four four twofive six three seven first goalth crid answer.
We'll win that twenty five dollars giftcard to Buffalo Wild Wings and don't
forget as well. That's Coss Financial'soffice right here in Madison, ce Jmileia.

(33:28):
It is always great chatting with bothof you guys. Enjoy this beautiful
day. Thanks Chan. This isMoney in Motion with Coss Financial Asset Advisors,
LLC, a registered investment advisor registeredwith the SEC. The contents of
this show are for informational purposes onlyand should not be considered individual investment advice.
Class Financial does not offer tax orlegal advice. Any opinion offered during

(33:51):
the course of this show is theopinion of that particular investment advisor representative and
not necessarily the opinion of Cost Financial. New Ooz comes your way next right
here on thirteen ten. WIBA