Retirement Planning

Episode Transcript

Speaker 1 (00:00):
Hello, everybody, Welcome to the Greg Hicks Show. We're glad

(00:02):
you tuned in. It is around the Labor Day world, yes,
and we got hurricanes blowing by us in North Carolina
and that's normal, but welcome to the Greg Hicks Show.
We're all about financial planning. We're all about money and
how to fect your life and impacts you well, hopefully well.

(00:24):
And our show will give you abundant information on how
to do that right. And I'm here today with Greg,
with Wanda Cooper and Bo Nicholson. We're all with a
small firm that I started years ago on a wing
and a prayer called Financial Resource Management, and we're all
financial advisors and we are all about helping people succeed financially.

(00:45):
And if you've tuned in for the first time, welcome
to the show. We have a lot of loyal listeners
because we get a lot of feedback about our show.
We're glad you tuned in. And for you people that
have heard us over the years, we're grateful for your
hearing us and giving us great feedback. And we love
talking to radio listeners and we will periodically through the

(01:07):
show give our phone number out nine nine eight five
six nineteen sixty eight, and that rings into our main
office in Raleigh. We have a nice three thousand square
foot office near North Hills in Raleigh, and then we
have a beautiful little office we call it our satellite
office in Atlantic Beach, right on the Causeway with a view.

(01:27):
It's really cool. So anyway, glad you tuned in, Thank
you for listening. You might be listening on a podcast
and it's midnight in your house, so welcome to the show.
But we always start our show with what's going on
currently in the world that affects your life financially particularly,

(01:47):
and then we to go. We have multitude of topics.
We have about sixty or seventy different topics that we
rotate on our show, and today we have a really
cool one, a very important one, but I'll get it started.
One of our guests occasionally on our show is a
guy named Hal Eddens, and he's a money manager. We
work with him, some share clients with him, and he

(02:10):
also is a pretty good historian of what's going on.
So his latest August newsletter, I thought I would write
this because on our show we have talked recently about,
you know, the market feels funny it's like overcooked. It's
too high. We've described in a multitude ways. But anyway,
let me read you just a few comments from how

(02:31):
it was very intuitive twenty five years in nineteen ninety nine,
the Nasdaq was on Hal's screen. That was the dot
com bubble happening right before our eyes when the Internet
took off. And then he said, twenty five years later,
the same picture is back the Nasdaq, one hundred big
stocks closing at a high, but fewer than half of

(02:51):
them are above their fifty day moving average. In normal
times that number is closer to three quarters. So it
was like, wait a minute, that maybe it heads up.
And then he says, remember, August is a month that
never quite feels right anyway. Markets don't seem to like
it either. Post election of a second term presidenting presidency

(03:12):
can have a habit of peaking now sliding in October,
only to find their footing for the potential holiday push
at Christmas to be blunt. August, under the contentions mentioned,
has never closed positive since Eisenhower was present, and we
just had a big swoon down this week with tech stocks.
But anyway, his point is something doesn't feel quite right.

(03:35):
But at the end of the year. Usually it works out,
and he points out history leaves bread clunk crumbs. Ryan
Dietrich at Carson notes the S and P five hundred
just ended a sixty eight day run above its twenty
day moving average, is one of the longest streaks in decades.
The last eight times that streak happened to stocks were

(03:55):
hire a year later, seven out of eight times, with
a ten point four average. But anyway, it's good to
go back in history. We can't predict the future, but
we can learn from history. And I thought those words
were pretty enlightening considering that's how we feel.

Speaker 2 (04:11):
That I want to listen to How.

Speaker 3 (04:12):
Yeah, you know, he's a historian when it comes to
the market, and it's always important to look back at
history because they say history often rhymes, it never repeats,
and so it gives us a good foundation for what
might be to come. But one thing I'll say about How,
and I've joked with him about this, I'd say it
to his face, and How if you're listening, he's a
perma bull and basically he's always optimistic about the market,

(04:34):
and so you have to also.

Speaker 2 (04:36):
Kind of be cautious.

Speaker 3 (04:37):
There's a lot of fear out there right now around valuations.
There's something called the Shiller Pe index, and basically what
that means is it's the valuation of all the companies
in the S and P five hundred. PE is the
price that a company's trading at divided by their earnings.
If you think about it, Okay, that's a good way
to value a company. There's a lot more to a
company's valuation in that, but that's a quick and fast

(04:59):
way to do it. Right now, that Schiller Pe is
at its highest levels since nineteen ninety nine, which is
right before the tech bubble crash, and so a lot
of people who are arguing that the AI bubble is here,
it's overvalued. That's kind of the case that they're leaning on.
But here's the counter argument is that the innovation that

(05:21):
we have right now is unprecedented. I mean, the growth
rate that we have in these companies, the earning growth
rate is also unprecedented. But another thing I'll say is
there are seven companies right now that make up a
third of the entire S and P five hundred index,
the Magnificent seven that you've heard about. They are one
third of the entire index. One company alone in video.

(05:43):
It's over a four trillion dollar company right now, it's
eight percent of the index. And so think about it
this way. If you're going out and you're buying an
S and P five hundred index fund like Warren Buffett
told you to do, and you're just shutting your eyes
and letting it ride.

Speaker 2 (05:56):
Sure, if you're young, that's probably a good way to
do it.

Speaker 3 (05:59):
But if Nvidia dropped by fifty percent like it did
three years ago, and every other company in that state equal,
so four hundred and ninety nine companies did not move,
but one company got cut in half, your fund would
be down by four percent. That's a pretty big move
based on one five hundredth of the actual index. And

(06:20):
so it's important to kind of understand these little nuances.

Speaker 2 (06:22):
And when you.

Speaker 3 (06:23):
Think you're diversified in a certain portfolio or maybe in
your four oh one K plan through these funds that
you have, take a closer look. We can do what's
called an X ray on it and see, all right,
you've got all these fifteen different mutual funds in your
four oh one K or whatever it is, you actually
nine percent of your exposure right now is in Nvidia.

(06:44):
Nine percent of your portfolio is in nvidio because of
what all of these companies, all of these funds own,
and so again, understanding is a big thing. Hiring somebody
who can take a lot of that pressure off of
you is probably a good idea. So give our office
a call. Nine one nine eight five six one nine
six eight. If you like Greg mentioned, feel like the

(07:05):
market's a little wonky right now and you're unsure about
how you're positioned, we can help you out. Nine one
nine eighty five six one nine six eight.

Speaker 4 (07:12):
Yeah. I was meeting with someone that recently was a
radio listener. She became a client and she inherited an
account Greg that was well way up into half half
a million and is all in Amazon stock, every bit
of it. And she called me, she said, you need
to hurry up and get my account because it's already

(07:33):
fallen eleven thousand dollars. And when I got this statement,
I was like, oh, well, that explains it, because Amazon
took a little dip recently and that's the point of diversification.
And she's in her seventy so well, Amazon stock is
great and all the techy kind of things and all that,
and I don't know if y'all read this or not,

(07:53):
but Hurts is even partnering with Amazon to sell used
cars through Amazon, so pretty soon you can.

Speaker 2 (07:59):
Buy a car industry.

Speaker 4 (08:01):
Yeah so, but anyway, the point being diversification, no matter
what your age, is very very important. It had another
client call and well she was emailing me, calling me
and she's my account went down fifteen thousand dollars. What
in the world. Well, most of our account is an
IBM stock and that was a legacy stock. So that's
hints is when you inherit legacy holdings and you want

(08:25):
to keep them, that's the ride that you have to
be willing to take.

Speaker 3 (08:28):
And with legacy holdings you get the stepped up cost basis.
So that's a great time to diversify.

Speaker 2 (08:33):
So if mom and.

Speaker 3 (08:33):
Dad time, Yeah, at that time, if mom and dad
were holding on to applestock or Amazon stock or whatever,
but they bought years ago and they were trapped due
to a gain, but then they passed and they left
it to you and your sister.

Speaker 2 (08:44):
Well, that's the.

Speaker 3 (08:45):
Perfect time for you to go in and diversify and
sell it because you're not going to pay taxes. That's
one of the benefits of inheriting money.

Speaker 4 (08:51):
But the problem is that they don't. They don't want
to let go of them attachment exactly.

Speaker 1 (08:57):
Yeah, and we've talked about that anytimes on the show.
Emotion can kill you when investing because you're excited. When
it goes up, you hear your friends, you buy it
at the wrong time, and then when it goes down
you sell it too quick. And so there's all kinds
of studies on that, and one thing a good advisor does,
of course, is take the emotion out. Now, by the way,

(09:17):
we're emotional too. Sometimes we pretend like, oh, we nail
it every time. No we don't. We're emotional too, and
sometimes we make bad decisions. And that's the whole point
of diversification. Nobody is. My joke to my clients is
if God had an eight hundred number, I could make
you filthy rich because he could tell me the future
and I can tell you what to sell and what
to buy. But when I call that number, it's busy. Yeah.

(09:41):
So anyway, it just smart things, and one of them
is diversification. The other one is getting a good advisor
to monitor all the time on a regular basis. So
with that, we're going to finish our first segment today,
we have a really cool show it's super important for
almost any age groups called retirement planning. We're going to
cover the rad arena of all the things. We have

(10:02):
nine bullet points and all of them are big deal.
So stay tuned and welcome back to the second segment
of the Great Hicks Show. We're glad you're here today.
You may be listening to this show this week and
then because the Labor Day, we're going to repeat the
show again. So some of you listeners listened so diligently,
you're going to go, I think I just heard that,

(10:24):
And the issue is you did just hear it. But
we felt like we'll have a lot of new listeners
during the Labor Day weekend shows, and so we are
just going to do a repeat, and so heads up
on that. But we have a lot of great shows
when we come back in September in October, I mean,
we just roll shows over and over and over. One
of my favorite shows, it's actually a two part series

(10:45):
coming up in a few weeks, is the Miss of
Investing the Urban Miss we call them, and that is
so fun because we get to unpack all the theories
and things that people say and we go time out
that's not true, and we kind of just straighten out
your bent thinking. And that's something important for you in
the financial world. But if you want to talk to
us personally, call us at our office address eight hundred

(11:07):
and four to eight seven one seven eighty six. We
also have a website and our companies called Financial Resource Management.
We have two offices in North Carolina at the Beach
office in Atlantic Beach and then in Raleigh. So the
website is the initials of our business, frm NC dot com.

(11:27):
That's it, frm NC dot com. So go in there
and check us out. We have all kinds of data
on there, all kinds of fun information, including copies of
the radio show. You can scroll down and listen to
any topic you want to in the last fifty or
fifty two weeks. Pretty cool website. All right, y'all, we're
going to talk about a super important subject and I

(11:49):
dare say that we spend I'm going to say we
spend about seventy percent of our time with clients talking
about the servery topic. So we're going to hit the
big bullet points and there's a lot of great information
you might want to hear it's called planning retirement. How
do you plan? When do you plan? How do you
know when to retire? There's a multitude of things, and

(12:12):
so we're going to hit those topics that really really matter,
and we're just going to give you a quick summary
of the knowledge you need to be hearing and listening
to and applying to your life as you head up
into those years. And you may be thirty five, but
you have parents that are sixty five and getting into retirement.
Or you may be fifty five and you can see

(12:33):
the light at the end of the tunnel when you're
going to quit working. So this show's related to almost
everybody listening. So I'll hit the first bullet point social
security and Medicare? What is it? When do you start?
How does it work? And I thought Bow and Wanda.
I thought I would give the big bad bill that
was just passed recently by conres C. Everybody talking about it.

(12:55):
There's a lot of misinformation about Medicaid and Medicare. I
just want to and this is more or less setting
it straight by the Wall Street Journal, because there's a
lot of hype and line going on. No offense, but
politicians lie only when their lips move, and this is
what it says. The Republican law will soon toss millions

(13:16):
from Medicaid and cut the program to the bone. And
the Democrats were just, oh, you're going to send people
to the poorhouse. Here's what actually happens. The annual spending
on the health and titlement will grow over the next decade,
grow over the next decade roughly to one tree in savings.
Medicaid spending has risen sixty percent since twenty nineteen. Sixty percent.

(13:40):
I don't think inflation rate went up sixty percent. The
CBO letter, which is a government agency that attracts financial stuff,
in a letter last month to the House, set four
point eight million people won't comply with the bill's part
time work requirement. Here's the requirement. If you can work
or volunteer, you get to keep Medicaid. If you slatch

(14:04):
off and sleep, I'm paraphrasing, you ain't going to get it.
So four million of you lazy people out there are
not going to get it. I feel so sorry for you.
But if you get government tax money from us who
pay taxes, you need to work twenty days, even if
you volunteer. Here's another point, just to make everything clear.
The GOP bill also includes sensible measures such as asking

(14:26):
states to check their Medicaid expansion roles every six months,
not every six years, and more scrutiny on the Obamacare
subsidies accountability. This is necessary because, and I'm quoting the
Wall Street Journal, the Biden administration waived millions of people
onto the health entitlement. The Paraguny Institute estimated that six

(14:48):
point four million people are enrolled in fully subsidized Obamacare
plans but don't meet the eligibility criteria no accountability.

Speaker 4 (15:00):
Six yeah.

Speaker 1 (15:02):
I mean, there's only what thirteen billion in the state
of North Carolina, so half the people here are in
there getting money from.

Speaker 2 (15:09):
Tax and they don't meet the elegi they don't.

Speaker 1 (15:10):
Meet the adan. I mean, it's insane.

Speaker 2 (15:12):
One of the reasons.

Speaker 4 (15:13):
And the other thing they should do is add assets
in there.

Speaker 2 (15:16):
That's exactly right.

Speaker 4 (15:17):
If you've got a million to two to three million
dollars in assets, you don't need to be on a bum.

Speaker 3 (15:21):
There is a huge loophole there. I mean, there's a
reason that our healthcare system is broken. It's because it's
not what Wan is talking about, means testing and so
I literally have clients. It's a strategy for if you
retire before Medicare age, which we're getting back.

Speaker 4 (15:34):
To the subject exist.

Speaker 3 (15:35):
If you retire before Medicare age, you can get free
health insurance if you can keep your income low. Yes,
even if you have fifteen million dollars in the bank
and a bunch of real estate, as long as you're
not showing income. I have a client I showed this too,
and I show this to all my clients who retire
early as one of the strategies for how do we
do what do we do about health insurance? Unless you're
a government employee or you have an awesome benefit plan,

(15:57):
you're probably not going to have health insurance as part
of your retirement package.

Speaker 2 (16:01):
So this is an option.

Speaker 3 (16:02):
When you're all from your raw FIRA, we keep your
reportable income low. That's great. Well, one of the clients
I showed it to said, look, bo, I appreciate you
showing this to me. But the sweet woman who cleans
my house doesn't.

Speaker 2 (16:15):
Qualify for this.

Speaker 3 (16:16):
She's always talking about how much and how expensive her
health insurance is.

Speaker 2 (16:20):
She barely has two pennies to rupt together.

Speaker 3 (16:22):
Yeah, she cannot qualify for free health insurance that she needs. Meanwhile,
my millionaire clients.

Speaker 2 (16:28):
Can qualify for it.

Speaker 3 (16:29):
That is, the system is broken. The Democrats out there
that want to help the people who need it. I
totally agree with that. Wanta and Greg totally agree with that.
We have to.

Speaker 2 (16:37):
Fix the system first though.

Speaker 3 (16:39):
Yeah, but in the meantime, getting back to that, there
are loopholes if you retire before Medicare age, and a
lot of people do that foolishly sometimes because they say
social Security is at sixty two, I'll go ahead and
crank it on and then they're like, uh, oh, what
do I do about health insurance? It's wildly expensive.

Speaker 1 (16:54):
Well.

Speaker 4 (16:54):
The other myth that's out there too is that they
are not taxing social Security. That's not true. I mean,
there's an income level, you know, but and most of
our clients don't meet that, so there's social Security still
tax So I get this all the time with some
wealthy clients. Well, he's not going to tax social Security eventually,

(17:15):
Well that wasn't even it didn't end up in the
final legislation. Yeah, So, as it now stands, still up
to eighty five percent of Social Security income can be taxed,
depending on how much you make right.

Speaker 1 (17:27):
Yeah, and if you under the threshold, you did get
a six thousand dollars exemption. Yes, so you've saved maybe
one thousand dollars that.

Speaker 4 (17:34):
Until an income level type thing.

Speaker 1 (17:36):
It is, so yeah, yeah, So all the rules have
a bunch of regulations built into them. But anyway, the
good news is Medicare is extremely helpful once you hit
sixty five. It's very inexpensive. My wife Laurie is not
quite sixty five, so her healthcare insurance cost me eleven

(17:56):
hundred and fifty months. Yeah, so Medicare is about one
hundred and eight. So actually I don't want her to
get old, but I can't wait till she turned Yes.

Speaker 4 (18:04):
That well, here here's the deal too. People don't people
most advisers out there don't take this in consideration. If
you're out there with a regular brokera's account and you're
taking income from your IRA and you're getting all this money,
your Medicare Part B can go up. I think it's
two hundred and twelve thousand for married filing jointly. And

(18:24):
while you might say I don't make that much money.
Will sell a stock, sell a piece of land, sell
investment property, and you're there.

Speaker 2 (18:33):
And they'll hit you for two years.

Speaker 4 (18:34):
With two years, and a lot of advisors out there
that are managing money for clients they don't even address that.
They just go ahead and sell sales.

Speaker 1 (18:41):
They don't even know the rule exactly.

Speaker 4 (18:43):
So we take that in consideration. So remember, if you're
going on Medicare, you just have to be careful what
you do tax wise, and if you have if you're
out there and this has happened to you, we don't
let it happen to our clients if we can help it.
Nine one, nine eight five six nineteen six D eight
is the number to call for complementary consultation to check

(19:04):
your situation out, and we're happy to do that.

Speaker 2 (19:07):
That's exactly right.

Speaker 3 (19:08):
A lot of advisors are too hyper focused on the
investment portfolio that they manage for a client, and they
don't think about what Wine is talking about, the nuances
and the ripple effects that doing one thing here might
have somewhere else. Social Security would be docked by up
to six hundred dollars if your advisor makes a mistake
leaves you with the big tax bill one year. First

(19:29):
of all, you get that tax bill in the mail
that hurts. Second of all, you notice your income has
gone down for two years in a row because the
government's now taken out six hundred dollars for Medicare when
they were previously taken out maybe one hundred bucks. Last
thing I'll say about Medicare, Medicare Part D is kind
of tricky. Not all plans are created equal. There was
a study by good RX that looked at the difference

(19:52):
between expensive drugs under twenty different of the plans that
are out there. There's an oral cancer medication called Reveled
or something. It costs some rollies two thousand dollars out
of pocket and others twenty thousand dollars out of pocket.
That's an eighteen thousand dollars swing by picking the wrong plan.
Another thing I'll say about our team, because again this

(20:14):
is our show and we're kind of here to advertise,
is that we have built out a network of professionals
to help clients and areas that we might not know
everything about. This includes the state planners, CPAs, mortgage brokers,
divorce attorneys if you need that unfortunately, as well as
Medicare advisors. We have people that can help you through
this Medicare space. And so again it's complex if you

(20:37):
work with an advisor right now, or you don't work
with an advisor, and you're looking up the mountain of
all these decisions you have to make with retirement. Understand
that we're going to help you with more than your
investment and financial planning piece, all the little pieces that
are important to consider. You can come to us nine
one nine eight five six one nine six eight.

Speaker 1 (20:54):
There you go. The second bullet point is a simple one,
and yet out income versus expenses, I mean yeah, and
so I always say whenever somebody says can I afford
to retire? And then when can I afford to retire?
Those two questions come up a lot in our business.
And we're going to go heading up to a break here,

(21:17):
but I want to say one thing. We always start backwards.
We always say what is your lifestyle? Now you want
to keep that right? Everybody says yes, We'll say what
are your monthly expenses? And I call it a moment
of silence because nobody really nice. But the target and
retirement is living your lifestyle with your current expenses plus

(21:37):
inflation in the future. That's really the bulls I target.
And then we take everything about it, social Security, income, pension, IRA,
dividend income, all kinds of stuff, and we match up
the buckets of incomes to your expenses, so we work backwards.
It's not how much can you accumulate to retire? Can

(22:00):
you retire and keep your lifestyle? And we're going to
come back and talk in detail about that after this break.
Hang on and welcome back to the second half of
the Greg Kicks Show. I'm Greg Hick, certified financial planner,
along with Wanda Cooper financial advisor and bo Nicholson, certified
financial planner. We are working in a business called Financial
Resource Management. It's headquartered in Raleigh with an office at

(22:23):
Atlantic Beach. We're so glad you tuned into the second
half today. Our shows on retirement planning. Planning retirement is
actually the name of it. We're also going to repeat
the show on Labor Day weekend for our holiday listeners,
so we're going to come back in September with a
bunch of great news shows. Stay tuned. We're always on
the radio side. We're on the weekends. We're on Saturday

(22:43):
and Sunday both in the Moorheads City, Crystal Coast area
and also in the Raleigh area on Saturday and Sunday.
In Raleigh it's three o'clock. It's two o'clock Saturday afternoon,
two o'clock Sunday afternoon. At the Beach Radio station it's
seven am Saturday morning for Early Bird and then three
pm Sunday afternoon. So listen to the shows. We have

(23:07):
all kinds of topics. They're fun. We also love to
talk to radio listeners. The number to call you can
call now and leave a message. It's if it's the
weekend nine nine eight five six nineteen sixty eight. But
the best number is eight hundred four eight seven one
seven eight six. Leave a message, we'll call you back.

(23:28):
Some of our great administrative staff were good at talking
to you and gathering a place to meet. We'll look
forward to meeting with you too. We love meeting people. Anyway,
back to our show, Retirement Planning, Planning Retirement, So we
talked a little bit about cash flow, how to create
cash flow, and so let's talk about you know, the
target is your lifestyle expenses after tax. By the way,

(23:51):
if you say well I need I need five thousand
a month to live my lifestyle, well, actually you need
six thousand a month before tax. So we always we
always account for taxes. There are financial advisors who don't,
by the way, so you need someone who understands taxes
to help you make it. Anyway, let's talk about the

(24:12):
idea of first of all, controlling your expenses. But secondly,
where does the income come from.

Speaker 4 (24:17):
Well, you know, and everybody forgets that even in retirement,
you need a budget, so you have to talk through that.
And that's the first thing I have people do is
talk through what the must have expenses are because you
got to cover those. You know, you have the discretionary,
but you have the must haves. They're not going to
go away and they have to be paid. So I
think it's all about the dividends and pairing that with

(24:38):
guaranteed moneies like your Social Security any pension. And if
there's not a pension, then I look to create a
pension and we use those big bad boys called annuities
for that. But again, unlike some of the other people
that have radio shows out there that are call themselves
investment advisors, I don't ever look put everything in an annuity.

(25:01):
It's just enough to cover those guaranteed the guaranteed monies
and the expenses, and I feel really I feel like
clients are really cheated or radio listeners are really cheated
when they go somewhere and they don't get a second opinion.
I've seen it happen. I'm unwinding some things right now
with some annuities that people will put in under the

(25:24):
guise of bonus. I'm getting a bonus that's a smoking
mirror if I ever heard it. Do not buy it.
Get a second opinion. If you don't like me, Bo
or Greg and we're the second opinion, that's fine, but
at least get it. Do not sign on the dotted
line I'm winding for right now of people that feel trapped.

(25:46):
They were sold under the guise of lots of terminology
out there. You know you're not going to lose a dime,
you're getting a bonus. You can get lifetime income. And
I got the document as annuitization at all day long,
So don't do it. I feel really bad for these people,
and I'm trying to help them, but there's not a

(26:06):
whole lot I can do. And they've got you on
a sixteen year surrender and you're one year in, So
give us a call before signing anything with anybody. If
you want to meet with every advisor on this radio show.
Then't do it, but don't sign anything until you do. So,
give us a call at nine one nine eight five
six nineteen sixty eight to see if you're in that

(26:27):
situation and you need some help.

Speaker 2 (26:29):
Yeah, and you know this.

Speaker 3 (26:30):
Is an important segue. We're kind of a little off topic,
but this is very important for our listeners to understand
because we know a lot of our listeners probably listen
to some of these other financial shows that are out there,
and again, some of these people put them out as fiduciaries.
I would argue the contrary is true. There's a lot
of bad actors out there that are just trying to
sell things. Want to mention the bonus. You get a

(26:51):
twenty percent bonus or a fifty percent bonus. That's not
a real number. That number is not on the actual
cash that you have in the annuity. I repeat, that
is not a real number on the cash you have
and the annuity. It's what your income is based off of.
It's not a real number. You might be locked up
for ten to fifteen years in this one product. Oh,
but the guarantees are great. Guess what those guarantees after

(27:11):
the first year can and will likely change. Okay, so
you can get up to ten percent or fifteen percent
throughout the course of this thing. That company can drop
that ten percent guarantee down to four percent the second year,
and guess what, You're still stuck in that thing for
fourteen more years. There's so many reasons to be careful.

(27:32):
You have to find someone you trust. You have to
get that warm and fuzzy feeling when you sit down
from the advisor, not the feeling that you're being sold
or that you're scared into doing something that you don't
really understand. That is not how we operate. That is
not how anyone should operate. So if you've been hoodwinked,
we're sorry. If you're in the process of interviewing some
people right now, we hope you'll consider us so that

(27:53):
we can show you maybe some considerations to make back
to the income versus expenses really quick. Though you've probably
heard about the four percent rule, the four percent rule
was put in place, or that it was a study
done by a guy for you. His first name, last
name is Bingen b E N G N. And effectively
what he did was he looked at a balanced portfolio
that was partially in stocks and partially in bonds, and said, okay,

(28:15):
four percent is the sustaining withdrawal that you can take
out of that investment over any period.

Speaker 2 (28:21):
Now that four.

Speaker 3 (28:22):
Percent, and then basically what that means is, if you
have a million dollar portfolio, you can take out forty
thousand dollars per year, and if it's a balanced portfolio,
your portfolio will continue indefinitely. Now he can't say guarantee
on that, but he's done the study, and that's the
way the.

Speaker 2 (28:36):
Math works out.

Speaker 3 (28:37):
That four percent rule was put in place to basically
give you a withdrawal in the worst possible periods. He
tested it in the Great Depression, he tested it in
the inflationary seventies. The actual withdrawal number is a little
bit higher. It's like five point two to five point
five percent. So that's like kind of the safe amount.
But you can draw from your portfolio every year. Everything

(29:00):
factored in another way to look at that four percent
rule was called a twenty five times rule. Greg mentioned earlier.
We have to find your spending number. If you're spending
ten thousand dollars a month, but you have rental income,
pension income, social security income that takes care of six thousand,
You only need four thousand dollars a month. Take that
four thousand dollars a month. Multiply at times how much

(29:21):
you need per year. That's forty eight thousand dollars per year.
Multiply that number times twenty five. That is the size
of the portfolio that you need. And that answers the
question how much can do I need to retire? Do
I need a million bucks? Do I need two million bucks?
As Greg mentioned, we put that back on you. What
do you need? What does your lifestyle look like? That's

(29:41):
what we want to plan for, and that's what we'll
solve for. Last thing I'll say about income and expense
is I don't know if y'all agree with this. I'd
be interested to hear your take. I spend ninety percent
of my time with my retired clients encouraging them to spend.

Speaker 2 (29:56):
More, yes, yes, so much more than I do, telling
them to reel it back. And I think the reason.

Speaker 3 (30:01):
That is is because it's a psychological thing. They have
this large portfolio, because they've spent forty years of their
lives making sacrifices for this elusive thing called retirement and
they've become a frugal person. When they finally get there,
they don't just flip a switch and start spending so
much more money. They're used to this lifestyle that they've
created for themselves. Their portfolio continues to build, and I say, look,

(30:24):
you've made these sacrifices so that you can get to
where you are now with the comfort you that you
should have. Go out and take those trips you want
to spend. Bless your kids, Bless your grandkids. Load up
those five twenty nine plans, do the things you want
to do. And it's an interesting conundrum. Most clients just
are terrified to spend.

Speaker 4 (30:42):
And I think the study, and maybe I might be wrong,
but I think the study was talking about withdrawing and
not necessarily dividends creating some of that. And I am
big on the dividend picture, especially with required distributions, because
they start out pulling about four percent or requiring you
to when you're seventy three and above and all that.

(31:03):
So imagine if you're creating four percent of dividends you know,
so I like and I think that the study probably
didn't it didn't include that, or maybe it did. But
I think the dividends a critical and retirement. I think
that gives people another way of creating discretionary money because

(31:24):
then you can liquidate capital gains to create the money
to fund money. So we cover all of that with
our clients. I don't think any of us have a
client that's upset with how we created their retirement income.
I don't get any complaints about that, do you. And
we used annuities in a lot of situations. Everybody's happy.

Speaker 1 (31:45):
Yeah, yeah, it's funny and both One more point, I
just had a really great call with a client who's
done incredibly well. I mean I went back nine years
ago and just looked at her accounts and they've all
doubled in the last nine years, which is really sweet.
And she was taking income all other than nine years

(32:08):
from them and it's still double now. Not everybody has
that kind of fortune. I'm not saying we can guarantee
that either, no way. But on the other hand, kind
of like both said, I had to talk her into
not worrying about giving more money away to charity. I
had to talk to her about if you pull money
out a lot more money out of your IRA, you're

(32:29):
going to pay taxes. And I just went back last
year and she's up several hundred thousand, and she's worried
about paying another ten or twenty thousand in taxes. So
I said, let me just say this. I'm an old
chemical engineer graduate from NC State. Let me talk about
numbers and math, and I want you to lay your
emotions off the table. If you're up three hundred thousand

(32:53):
and you're going to pay ten thousand in taxes, why
are you so worried? It's mathematically not a problem. Matter
of fact, you could pay fifty thousand more taxes. It's
not a problem this year, especially this year. And then
I said, and you don't have to do it again
next year. You're acting as if if you pull out
fifty extra this year from your IRA, you're going to
do it again and again, or do a Roth conversion.

(33:16):
We talked about that, so see mathematically, oh my gosh,
it was not a big deal.

Speaker 3 (33:21):
But that goes back to the emotions that we talked
about earlier. You know, people get hung up on these things.
A lot of people that have company stock, for example,
and high concentration risk.

Speaker 2 (33:29):
Greg and wand I know you'll have seen this.

Speaker 3 (33:31):
They have hundreds of thousands of dollars in their company
stock and they refuse to sell it because they don't
want to pay that capital gain.

Speaker 2 (33:37):
Well, then they miss an earnings report and.

Speaker 3 (33:39):
That stock drops by twenty percent and they look in
the rearview mirror saying, shoot, I could have had this
money after tax already and it would have been more.
So again, get an objective advisor nine nine eight five
six six eight.

Speaker 2 (33:51):
With that will take our last break. I'll stick with us.
We got a lot more to talk about.

Speaker 1 (33:54):
And welcome back to the Greg Hicks Show. I'm here
with Wand and Bow. We're here talking about retirement planning
or planning retirement. It's a great topic. Matter of fact,
we have several shows related to this area that you
can tune in and find out on podcasts or whatever,
and even our website at FRMNC dot com. So, hey, y'all,
we got about six bullet points, so let's talk quick.

Speaker 2 (34:17):
In short, I got to make this a two part show.

Speaker 1 (34:19):
That's right. That's right. So the next one is the
state planning, wills Trust, Charitable remainder Trust, planning on an
illness in case, long term care will loop. The estate
planning and long term care bullet points together, those are
just tremendously important things. Don't be caught unaware. You have
to plan in advance, not only for fun and growth

(34:41):
and all that, you have to plan for risk and
the estate planning and long term care is all about
risk and doing it right and leaving a great legacy.

Speaker 4 (34:50):
Well. Doing a will and things like that doesn't mean
you're signing your death into existence, but it is something
important to think about, especially those that have accumulated wealth.
I've got a couple of clients that are in their
late fifties. They've been with me since my old banking days.
That's how far back we go. And I looked at
them this week and I said, did you ever think

(35:12):
that together you would be at this point? And they
said no. But anyway, now they've got to plan because
they've got grandchildren now. And I knew them when they
got married. So think of you that late fifties, see
a late fifties or maybe early sixties. But I knew
them when they got married, and you know, they had
children shortly after, and you know, so anyway, bottom line

(35:34):
is they came in and they said, we've we've got
some issues with a couple of our kids, which I
knew about, and so they each developed a trust, one
for her and one for him, and so if they
both die, fifty percent goes here and fifty percent there.
Very very smart because they can each speak from the grave,
you know. They also put long term care insurance into play,

(35:56):
which is kind of cool. They also put a guaranteed
lifetime income anuity into place so they could use their
other money to have fun, because they're still young enough
to have fun. I mean, he's well, he's sixty two.
She's younger than him. But anyway, he didn't want to
wait till sixty five, sixty eight seventy to retire, and
so we're strategizing now with his income. So see, there's

(36:17):
all kind of ways, but a state planning is very
critical when you've amassed wealth. It really is.

Speaker 3 (36:22):
We say on the show all the time, and I
think I think the listeners can probably gauge this themselves.

Speaker 2 (36:28):
We're not pushy.

Speaker 3 (36:29):
We're in the business of giving people information and saying, hey,
here's what you here's what we've seen other people in
your situation do and it's worked for them, and this
is what we'd recommend.

Speaker 2 (36:37):
But you've got to be comfortable with that. You got
to understand it.

Speaker 3 (36:40):
I am pushy in one area, and that is a
state planning because I can't tell you how many times
that I have like given a recommendation, Hey, yeah, you
should call this person. You should call this a state
planning attorney. Mister and miss Smith. They'll come in for
their next annual review. Y'all got your will done?

Speaker 2 (36:55):
Yeah?

Speaker 3 (36:55):
Ah, well that went in the do later pyle, you know.
And so what I'll do is I willt them with
that estate planning attorney and send a three way email
and say, hey, mister a state planner, missus a state planner.
These are my clients, mister and Smith. They need to
get their situation done. They need to get their estate
planned done. Seventy percent of North Carolinians don't have a will.

(37:15):
You're in good company, but it's not.

Speaker 2 (37:17):
Good company to be in.

Speaker 3 (37:18):
So go ahead and get it done, because either you
make the decision or the state makes the decision about
what happens to all your hard earned money for the
people that you leave behind.

Speaker 1 (37:28):
And by the way, just one simple point, long term
care is really needed. Only half of eighty five year
olds need long term care. Income for health problems. The
other half don't. So you're fifty to fifty. You know,
you play the odds, but when you need it, it
can just devastate your nest egg because it's an average
expense of about eight thousand a month now for full

(37:50):
time healthcare. So there's all kinds of incredibly creative ways
to do long term care. So call us on that,
by the way, if you're concerned. That's an eight five
six nineteen sixty eight is our office number, particularly about
his state and long term care planning. Another thing that
just seems mundane is keeping your documents in a safe place,

(38:13):
and I'll add a part two to that, telling your
adult kids where they are. I had a client die.
He told me, his wife, his kids, everybody that would listen.
He had a will when he died accidentally with a
car wreck. We never found a will, found it, and
then you're in probate for a year because of that.
They own land, and I mean, yikes. You know, just

(38:34):
prepare yourself and then tell your loved ones where the
documents are very important.

Speaker 2 (38:40):
So we can help you with this.

Speaker 3 (38:42):
We can help you build like an everything binder where
everything is the passwords to your phones and your and
your log ins, as well as who your estate planning
attorney is, who's your CPA, who's your advisor. That's the
easiest way to do it is to connect your kids
to your family's kind of CFO team, and you know,
we have that foundation in place, so if you want

(39:03):
to work with us, then we oftentimes will do family
calls when when their clients are in our seventies or
their eighties, Hey, let's get you know, who's going to
be the executor of your state. Let's get them on
the phone or in the office so that we can
sit down and kind of set those expectations. We have
a whole show on this, It's part of our Legacy
Planning Show.

Speaker 2 (39:23):
Go back to the archives, listen to that.

Speaker 3 (39:25):
It's on Spotify, Apple Music, or better yet, give us
a call nine one nine eight five six one nine
six eight and see how we can help you prepare
for this thing that too many people aren't prepared for.

Speaker 1 (39:35):
I love it when an older client and says, can
I bring my adult son and daughter to the meeting?
I just jump out of my chair. Why yeah, including that,
But I mean I love it when they're thinking ahead
and in the daughter and son feel a little awkward,
but in thirty seconds they feel comfy, and then now
they know everybody's on the same page and you don't

(39:57):
have these mysterious things when someone passes away. Another area,
just kind of two bullet points together. We mentioned long
term care insurance, but life insurance and health insurance and medicare.
We talked about life insurance can still be Why do
you mention second marriage. I have a second marriage because
my first wife died, But now I've got my second

(40:18):
wife on a life insurance policy. You know, it's a
simple way to make things fair to the new spouse
that you love and not jeopardize the relationship with your
kids from the first spouse. And that's important in sitting
down with them pre marriage. Before we got married, we
sat down with both of our families and explain how

(40:38):
our assets are going to go down when we die.
That's super important. We have a whole show on second marriage,
just by the way, well.

Speaker 4 (40:45):
And other things. With life insurance, it not only can
protect you with the second spouse or protect her or him,
it's also good when you own a business. And we
have a lot of family owned businesses out there and
a lot of partnerships and that kind of thing, and
they come in and they go, I said, well, have

(41:06):
y'all talked about what happens when when he passes away?
He's the partners is going he's the person. And the
wife said, yeah, what what does happen? Because she doesn't
even know. So he said, well we've talked about I said,
were you talking about? It is not securing the plan.
So life insurance can oftentimes be used to get the

(41:26):
wife out of the picture and living on her style,
while the partner can just continue going with the business.
So there's a lot of life insurance needs there that
could life insurance could use to take care of.

Speaker 3 (41:38):
I lost, unfortunately a big client recently, and she was
a business owner and she's got one child that works
in the business and the other child as well to do.
But fortunately she agreed to have this conversation and she
moved forward with my recommendation, which was, Hey, the one
child who's not involved in the business, you want it
to be equitable when you pass away and you leave

(41:58):
your money behind, right, Yeah, okay, Well instead of giving
that daughter all the liquidity, let's instead just have an
insurance policy that the business pays for big business. You know,
millions of dollars in his insurance policy. That insurance policy
when my client passed away, paid to the daughter leaving
the sun the business which he has been you know,

(42:22):
working in for a very long time. And it totally
makes sense, and there's no bad blood between the two siblings,
and it works out well. And so it's these things
that you have to think about from a planning perspective.
Another thing I'll say about life insurance. This is kind
of a cautionary tale. I've had a lot of people
come in and ask about, well, you met with this
guy and he's recommending this like super funded life insurance
because he says, I can withdraw tons of money tax

(42:44):
free and retirement and.

Speaker 2 (42:45):
It works like a roth ira.

Speaker 3 (42:47):
And he gave me this illustration, and you know, my
X amount of dollars turns into ten x amount of
dollars down the road. And I'll just look at them
and stay silent for a second and then say, look
that old rule that you heard years ago about if
something's too good to be true, it probably is that
applies here. And we'll go to the back of that
illustration and we'll look at the assumed interest.

Speaker 2 (43:06):
Rates were ridiculously high.

Speaker 3 (43:08):
What I'm trying to say is I'm not a huge
believer in life insurance as an investment vehicle. Life insurance
certainly has a purpose. I think Greg and Wanda agree.
We haven't done a lot of life insurance for clients
as an investment piece. As a high level investment piece.
We use it for what Wanta talked about. We use
it for life planning and estate planning and that kind
of stuff. But as an actual investment piece, it's different.

Speaker 4 (43:30):
Yeah.

Speaker 2 (43:30):
So anyway, and if.

Speaker 1 (43:31):
You you know, back one thing we wanted to say
it a while ago. If you owned a business or
have a partner, you really do need to sit down
with an advisor, both together with your partner. We had
a case one time where these two guys were just
killing it that net worth was huge in the millions
or income. Everything was hockey dory, and we just brought
up one question. Now, if you die tomorrow, your half

(43:57):
of the partnership goes to whom And they looked at
each other, and it goes to the wife. And then
I looked at the I looked at both of them.
I said, do you like the other partner's wife? And
they went yeah, well, when they die in a plane
crash or something, that wife's gonna have half control of
this business? Are you going to talk over decision making

(44:18):
with the wife. And there was a moment of silence.
It was like they had built this wonderful business. It
never occurred to them if they died the wife's in
charge of half the business.

Speaker 2 (44:30):
What if he and his wife were to pass away together,
then then the.

Speaker 1 (44:33):
Kids get it. So we did a life insurance deal
and solve the problem. So again again, life insurance is
not some old, boring thing. It can be extremely useful.

Speaker 4 (44:44):
And if you're healthy, it doesn't mean that it's gonna
be there's a certain age you have to get it by.
If you're healthy, you can still get.

Speaker 1 (44:49):
It, that's right. And one last thing, a lot of
I've run across this several times. I have a special
needs adult kid, and some some of my clients do.
If you have that situation, there's something called a special
needs trust, and those are things you have to factor
in in your retirement planning. Your special needs kids are
not just going to go away and.

Speaker 4 (45:09):
Suddenly on these adults.

Speaker 1 (45:10):
That's right, Yeah, that's right, So don't forget that either.
That's part of retirement planning. Listen if we tweet your interest,
I hope we have listen to this show again. It's
recorded on the website FRMINC dot com. It's recorded on
the Raleigh station one oh six one FM Talk and
all of our shows are by the way and you
can go back and listen to them. But the most

(45:31):
important thing is you need to call us and sit
down and let's talk turkey about your situation and not
feel so insecure about what's going on in your future.
And that number to call is nine one, nine eight
five six nineteen sixty eight. Call it today and remember this.
It's your money, it's your future, it's your it's your money,

(45:52):
it's your future. Don't blow it.

Speaker 3 (45:54):
Advisory services through Couple Investment Advisory Services LLC. Security is
offered through Capital Investment Group Bank Remember Finra and SIPIK
one thousand six Forks Road, Raleigh, North Carolina. Nine one
nine eight three one twenty three seventy.

Speaker 2 (46:04):
Past performance is not indicative of future results.