Episode Summary:
In today's episode, Russ and Mike unpack their insightful five-pillars framework for Social Security optimization and reveal strategies that could help maximize retirement benefits. With pensions disappearing and Social Security representing 30-50% of retirement income for many Americans, making the right claiming decision is crucial. The authors highlight a startling reality: 80% of men die married while 80% of women die single, yet most claiming strategies overlook this fact. Their approach moves beyond simple break-even analysis to consider timing, taxation, coordination, longevity, and legacy planning. They also discuss the hidden danger of "dollar cost ravaging" and share their "Solve for Zero" strategy to potentially eliminate federal taxes in retirement.
About the Guests:
- Mike Hoeflich is a career changer who worked as a systems analyst, then in human resources and trust plans administration before becoming a teacher. He's now in his 10th year as a certified Social Security claiming strategies specialist helping people with retirement income planning.
- Russ Gaiser spent nearly nine years on active duty in the Air Force as a surgical tech, then seven years as a healthcare administrator before transitioning to financial planning during COVID. He's in his fourth year specializing in retirement planning and social security optimization.
The Five Pillars of Social Security Optimization:
1. Timing: Considers survivor benefits, inflation protection, and integration with other retirement assets
2. Taxation: Examines how benefits are taxed federally and by state, and strategies to manage tax brackets
3. Coordination: Addresses spousal benefits and healthcare cost planning
4. Longevity: Mitigates inflation risk and market risk for long-term income security
5. Legacy: Focuses on increasing excess capital for charitable giving and passing wealth to heirs
Key Concepts Explained:
Dollar Cost Ravaging: Unlike dollar cost averaging during the accumulation phase, retirees face "sequence of returns risk" when they start withdrawing money. The order in which market returns occur matters significantly during retirement, and can ravage portfolios if withdrawals continue during market downturns.
Solve for Zero Strategy: A method to determine how much additional income (from part-time work, IRA distributions, dividends, etc.) you can have alongside Social Security benefits while still maintaining zero federal tax liability.
Client Success Story:
Russ shared a story about a 67-year-old client who discovered she was eligible for survivor benefits from her ex-spouse who had passed away. This revelation resulted in approximately $61,000 in benefits that she could pass on to her children as a legacy from their father.
Get the Book:
Readers can download a free ebook and audio version of "Beyond Break Even" at beyondbreakevenbook.com
Connect with the Authors:
For a complimentary retirement income stress test, call 1-888-280-PLAN.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Are you worried about making the wrong Social
Security claiming decision?
In today's episode of theInfluential Advisor podcast,
we're joined by Social SecurityOptimization experts Russ Geiser
and Mike Hoflich, authors ofthe best-selling book Beyond
Break Even.
Here's a startling reality 80%of men die married, while 80% of
(00:23):
women die single.
Yet most claiming strategiescompletely overlook this crucial
fact.
With pensions vanishing andSocial Security often
representing 30-50% of yourretirement income, your claiming
strategy could mean thedifference between comfort and
hardship.
Russ and Mike unpacked theirinsightful five pillars
(00:47):
framework.
Reveal how to shield yourselffrom the hidden danger of dollar
cost ravaging, and share theirsolve for zero strategy that
could help eliminate federaltaxes in retirement.
The claiming decisions you maketoday will impact your
financial security for decades.
So grab a pen and paper,because what you learn in the
(01:09):
next half hour could be worththousands in additional
retirement benefits.
Hey, Russ and Mike, how are youguys doing?
Speaker 3 (01:24):
Doing great.
Thank you, paul.
Good Paul Can't complain.
Speaker 1 (01:28):
I'm used to seeing the two of you in the same
location, so this is a littlebit strange for me to have you
guys in separate locations.
Is everything okay?
Speaker 2 (01:36):
I'm probably the more fortunate one.
I'm down in our Florida officein the Jupiter Florida area.
Speaker 3 (01:41):
Yeah, and I'm freezing up in Buffalo.
It's like 16 degrees here andit's been snowing since january
1st, so wow.
Speaker 1 (01:48):
But I hear west you'll be headed down to jupiter
soon as well.
So it'll, it'll get better foryou soon it will, it will.
I'm not complaining if thewinter's not forever yeah, I'm
excited to have both of you onthe show today and I'm just
really excited about your bookand just recently when you
launched it on Amazon, you guyshit bestseller status and
(02:11):
typically when we work withclients to do that, usually we
target get bestseller in onecategory and best three
categories.
That's like the best rightThree categories.
You guys hit bestseller statusin four categories.
That's awesome, congratulations.
Speaker 3 (02:29):
Thank you.
Thank you, yeah, we're stokedabout that, but we really.
That's to your credit forhelping us plot a good path
forward for that.
Speaker 1 (02:38):
I would say it redounds to you.
You must have a lot of fans andclients that really appreciate
the work you do, lot of fans andclients that really appreciate
the work you do.
And so in today's show we'regoing to get into your new book
Beyond Breakeven and what that'sabout.
But before we dive into thebook itself, I'd love just to
hear a little bit more aboutboth of your personal journeys.
(02:58):
How did you start your careerand get to where you are today?
Speaker 2 (03:02):
And maybe we'll start with Mike and get to where you
are today, and maybe we'll startwith Mike.
Sounds good, sounds good.
I'm a career changer.
I started my working career Iguess my first real job as a
systems analyst, and then Imoved into human resources and
trust plans administration andthen I became a teacher, and so
my career is certainly not thetraditional entry into the
(03:24):
financial advisory industry.
I certainly wouldn't do it anyother way.
I think everything I ever did,every degree I've gotten, all
the experiences I've ever had,have now led to this kind of
skill set that I now have tohelp people and actually
continue to educate people.
And so I'm actually in my 10thyear in this journey with a
(03:46):
certified in social securityclaiming strategies, designation
and helping people doretirement income planning.
Interesting.
Paul, I came into this, I guess,area, this very ever-changing
area, back in the fall of 2015.
And there were some significantchanges going on with social
security and some of theadvanced strategies that were
allowed, so I literally got acertification and then, month
(04:07):
after month, for about four tosix months, I was seeing 60 to
80 to up to upward of 100 peoplein workshops, all just scared
to death wondering how willthese changes impact my
retirement?
Mike, help us.
What's going on here.
So, literally, it's neverreally slowed down because every
single year there are peopleturning 62 and that's the
(04:28):
traditional eligibility age forsocial security claiming and
I'll tell you what I love itevery day even more and more,
helping people and educatingthem, as I have now again in a
10th year.
Speaker 1 (04:39):
That's fantastic, Russ.
How about you?
Speaker 3 (04:42):
So much.
Like Mike, I'm also a careerchanger.
I spent the first almost nineyears of my career active duty
Air Force, where I was asurgical tech basically the guy
that hands the surgeon theinstruments in the operating
room and I was specialty trainedin urology.
I went to school, I got abusiness degree and healthcare
administration degrees and gotinto management and leadership,
(05:04):
and then I ended up for aboutseven more years becoming a
healthcare administrator where Iwas helping health systems
acquire physician practices andoperationalize them and so doing
all that work physiciancontracting and I'm in my fourth
year of financial planning workand I changed careers Really.
It was during COVID and when Iwas in my business school
(05:25):
studies, I took an elective infinancial planning and
investment management and Ithought to myself wow, I could
really see myself liking to dothis.
This intrigues me and, as youknow, in 2020, healthcare became
very difficult for reasons Idon't really want to go back
into, of course, as we moveforward now.
But that's when I took theopportunity to say you know what
(05:46):
I'm going to make the careerchange, and so I did that, and
so I got licensed and so on andso forth, and then, a couple of
years into that, most of theclients we were working with in
the firm Mike and I workingtogether really are between the
ages of 55 and 65.
So getting ready to retire, anda lot of people during that
time they wanted to see hey, I'mdone, I don't want to deal with
this anymore, can I retire?
(06:07):
So retirement income planningwas really where I was focusing
my practice and I realized Isaid, well, social security is
such a big benefit and I reallyfeel like I need more like more
education in this.
It's more important than just,yeah, take it, because you'll
never get it all out and that'swhat you hear when the advice
(06:30):
people generally get.
And so I wanted to go beyondthat and that's how I ended up
specializing in becomingcertified in social security,
claiming strategies, and reallyspurred Mike and I's partnership
.
Speaker 1 (06:36):
That was my next question.
So the two of you areco-authors of this book.
What's the story behind the twoof you coming together and
starting to partner or workcloser together?
Speaker 2 (06:45):
I'd see Russ walking by my office window and I said,
man, does that guy seemmotivated, does he seem driven?
Does he ever walk with purpose?
And the types, paul, you cansort of spot them from a mile
away.
You see those around you,competent, but maybe not nearly
as committed as some others.
And I'll tell you what.
(07:06):
I'm forever grateful to Russ fordeciding that I could be a good
partner and mentor to him,because everything we've now
done in the past I'm going tosay, geez, it's got to be about
two and a half to three yearsit's all better because we
collaborate and we are inlockstep with one another in our
commitment to care, thecommitment to take care of
(07:26):
clients, the commitment to dothe things that really matter.
And, honestly, russ is not onlya business partner.
He's become a very good friendto me.
I think that's what reallymotivated us to do something
together, because what you cando alone is pretty special, but
when you can do something withsomeone else and do it with such
energy and enthusiasm, I'lltell you what it really brings
(07:48):
out the best.
And that's what it did for me.
I think it did the same for us.
Speaker 1 (07:51):
I have to ask.
So I heard Mike say that yousaw you from his office window
and you were walking withpurpose.
Did you like walk by and belike wow, this guy's really
working hard.
Speaker 3 (08:05):
Well, so we work in an office at the Financial Guys
where I'm a wealth manager and Ido retirement income planning,
social security optimization.
Now, of course, I was justdoing retirement planning at the
time.
The Financial Guys it's theone-stop financial shop, so we
have specialists in the broadfinancial planning realm.
We have different specialistsand we all work as teams to help
the clients that come in.
I knew Mike, of course, and Iknew Mike was certified in
social security claimingstrategies.
I didn't really know what thatmeant when I first started with
(08:26):
the firm.
I think we had a conversationabout three years ago.
I was helping a client and Iwanted to know hey, what's the
best way to claim these benefits?
How do we actually coordinateit in harmony with all their
other assets?
Here's what I'm thinking, butyou're the expert in this, I
need some help.
And then we just had a reallygood conversation and I realized
(08:50):
the significance of needingthat.
And then our relationship kindof blossomed from there in terms
of taking it to another levelthrough our own firm Retirement
Income Headquarters, same brokerdealer, same investment
management firm but we justsimply focus on doing workshops
and retirement income planningaround social security.
So it's all the work we do withthe financial guys, but we're
doing it and taking it toanother level across the country
, nationally.
Speaker 1 (09:08):
You just said something that struck me is at
that initial point, mike was thespecialist and you were
starting to think about, as awealth manager yourself, what's
the best way to do this and whatis the average or typical
wealth managers approach to it.
That doesn't have the specialtyIn my experience a lot of
wealth managers do.
Their clients are typicallyretirees and they're looking at
(09:30):
retirement income planning.
But just that difference in,let's say, your average wealth
manager versus someone who hasthe expertise that you do.
I just listened to your audiobook yesterday and I was blown
away by all the different waysthat you guys talked about in
terms of being able to reallymaximize the benefits.
It's not as simple as hey, I'mgoing to start taking the social
(09:51):
security at whatever age.
There's a lot of thought thatyou guys that goes into this.
Speaker 3 (09:56):
I was just going to say.
I think that what we hear fromprospective clients and then
people that actually then becomeclients is that if they work
with someone their advisors justdoesn't know, and so they defer
them or refer them, I shouldsay, to social security to get
the answers that they need.
To me, that's just not, I don'tknow.
I just feel like we have abigger responsibility than that,
(10:19):
especially when we're talkingabout someone's retirement and
trying to help them stave offthe risks that are inherent in
retirement inflation, taxes,longevity so it's really
critical that and, by the way,this is likely their biggest
guaranteed retirement incomesource, with the fact that
pensions are becoming far andfew between.
So I think it's really thatit's you hear.
(10:40):
Go talk to Social Security.
You have to get the informationfrom them, them, or it's an
emotional decision.
Speaker 1 (10:45):
Well, it might not be there in 10 years.
You better just get it now.
That's my sense, is that mostpeople know this is my.
I could be wrong, but it's just.
I better get it before it goesaway, and that's about the
extent of the strategy that goesinto it.
I realized, though, that I amputting the cart in front of the
horse, as they say.
So let me back up a little bit,and I want to just pivot and
just kind of start with the bookitself, beyond Break Even, and
(11:09):
tell me what that title means.
What does that title stand for?
What does that mean?
Beyond Break Even?
Speaker 3 (11:13):
Yeah, so the title, it's the social security
claiming decisions should not bemade in a vacuum you just kind
of alluded to it or in a silo.
I like to say so it requiresmuch more careful planning than
a simplistic break-even analysis.
Most people and this goes backto your question about what we
hear that most advisors do well,how long do I have to live to
(11:33):
make it make sense to claim itlater to break even?
And it's really a short-sightedway of doing it because of all
of the other benefits nuancesthat can be applicable to that
family.
In regards to the benefit, nowdon't get me wrong.
There are some scenarios whereyou might just have to take it
right away because you have noother assets, right, if you've
saved in your 401k plans and youdon't have a pension and you
(11:57):
really need to make a decisionof, or maybe you don't think you
saved enough.
How do we use the benefit?
How does this all tie intogether and what's the right
claiming decision for thatperson, specifically, when they
want to retire, how much moneythey want to spend, how long
they think they'll live, what istheir tolerance for risk, how
much have they saved?
What is their feeling abouttaxes and taxation and their
goals, their legacy goals.
(12:18):
And then bringing that alltogether to give them the best
advice around when they shouldbe claiming as part of their
retirement income plan.
Speaker 1 (12:24):
And just in listening to the audio book and we'll get
into more detail, but it also.
What I learned is that itreally depends on things such as
if you're a married couple, areyou the man or the woman?
What's the age difference?
There's an interestingstatistic in the book, which is
80% of men die married, while80% of women die single.
Speaker 2 (12:43):
I think the interesting thing and I'm going
to generalize a little bit and Idon't want this to sound
stereotypical but if 80% of mendie married and they are often
the biggest breadwinner and theyare often the one who is making
the financial decisions theymay have the stronger interest
in watching investments.
I'm not saying they're reallygood at it.
All I'm saying is they're moreinclined to do that than maybe
(13:05):
their wife, Maybe the wife'smore concerned with the children
and maybe even their parentsthe wife's parents and the
husband's parents and caretaking, because that's what women do.
They're wonderful at that.
So you put all this togetherthat the man is going to try to
make the decisions.
The man's thinking about hisown life.
Unfortunately, he's not reallyputting all these pieces
(13:25):
together and he's not thinkingbeyond both of them being around
.
And so when 80% of married menare dying married, that means
80% of women are dying single.
It's a really unfortunatesituation and these are probably
the most profoundly impactingsituations for Russ and I to
encounter, whether it's atworkshops or actually right in
our office.
What I think people need to do,they need to know these
(13:48):
strategies are.
They're great for single peopleor those that were divorced, or
even widows, but for marriedcouples, we can really come up
with some of the most, I guess,the strongest plans, the plans
that really will last the testof time, not only for the
husband's life but also thewife's life, and so it's just
super important to us to notjust think in terms of your own
(14:09):
breakeven analysis.
So, for instance, if someonesaid, Mike, I did the numbers,
and this happens all the time,Paul, all the time I did the
numbers, and if I don't claim at62, if I waited until 66, I
won't get the same amount ofmoney out of the trust fund
until age 78.
And I say good for you, that'sthe number I come up with every
time.
I do that Excel spreadsheet too.
And we could do that same thingfor every age difference, right
(14:32):
From 62 to 70,.
How long would you have to live?
And we're not interested inhearing when do you think you're
going to die?
Calculator answer.
We want to know what is yourlife like, who are you as people
?
What are you trying toaccomplish?
Tell us more about you, Be partof a process where we can keep
revisiting these things with youand your spouse.
And, unfortunately and ithappens longer as I'm in this
(14:54):
business longer and longer,there will inevitably be people
getting widowed.
If we can look at a widow andsay it is heartbreaking to have
gone through this loss, but howgrateful are we that we can now
help you.
And if there's a woman who isthe surviving spouse, it's
(15:25):
highly likely they may liveanother 15 years after the
husband has died.
So we have to secure thatwidow's retirement alone.
Speaker 1 (15:34):
And just to build off of that, I think you alluded to
a earlier and you talk aboutextensively in the book, but for
most people, social Securityreally is the cornerstone of the
retirement income plan.
Tell me more about that, andjust in this context of the
widow, why is this so important,given Social Security's unique
position when it comes toretirement income?
Speaker 3 (15:54):
So I think one of the biggest concerns is that
pensions are becoming far andfew between Social Security is
going to be their largestguaranteed income source and,
with that in mind, when you havea couple and you have both of
them claiming a Social Securitybenefit, there might be a
spousal benefit number one.
But when there's a sole survivorsituation, the higher of the
(16:14):
two benefits stay in thehousehold, and so the impact on
a widow, based on whatever theclaiming decision is and how
their retirement ended upplaying out, which is really the
lottery ticket.
We have no idea how the marketwill sequence right through
retirement, but think about itthis way, because we've seen
this happen If you have two oryou have a couple, and they both
file at 62, the earliest thatthey can, they're putting much
(16:36):
more pressure on their portfoliofor longer.
And if they spend more moneythan they thought, or the
markets didn't do well in thatearlier period of their
retirement in particular, orthey invested, or whatever the
case might be, and they'redepleting their wealth more
rapidly than they thoughtbecause they just predicted good
markets or just looked ataverage returns, or whatever the
(16:57):
case might be.
Widow situation happens Now thewidow has the bigger of the two
, but it's almost 30% reducedbenefit that they would have
taken at that point, and so theyhave way less guaranteed income
and now a depleted, maybe anempty, nest egg, and widow
poverty climbs fivefold in thatsituation.
So, and it provides socialsecurity, provides a big
(17:19):
majority of their specificincome.
So let's flip that though, thatscenario.
This is why it's so importantIf we figure out the claiming
decision we're looking at whatthe widower survivor benefit is
before retirement starts and ifwe can outline what the widower
benefits look like up front, wecan mitigate that issue from
ever happening, because youcan't just squeeze blood from a
(17:41):
stone if it is that former casethat I had talked about.
So that's the importance of theclaiming strategy when it comes
to how can we improve the lifeof a widow.
Speaker 2 (17:50):
That will inevitably happen.
One of the things that's sorewarding to Russ and me is that
we sometimes uncover thesethings for people and it comes
down to people don't know whatthey don't know, that you can
read all you want and get asmuch info as you want, but you
might not uncover it all andunfortunately, even if you do,
you might misinterpret.
This.
Comes down to the generalistadvisor, the generalist who
(18:14):
claims to be able to do it all.
They can plan, they can helpyou with every single financial
decision, they can help youbudget, they can even manage
your money.
They can do it.
All these generalists.
When they're faced with thesequestions, hey, I'll be retiring
.
I know I have Social Securitybenefits coming, what should I
do?
And unfortunately, thegeneralists will often, as Russ
said, defer to Social Security.
(18:35):
Well, it's in their ProgrammerOperations Manual system, poms,
that they're not supposed togive guidance to anyone claiming
benefits, which literally meansdon't give advice to these
people.
So advisors that don't knowenough defer to the group who
isn't even supposed to giveadvice.
The next thing is this If youhave an advisor who's helping
(18:56):
with financial planning andthey're managing someone's money
, they get paid in many casesunder an asset, under management
fee basis.
So one of the last things thatadvisors want people to do is
start taking distributions right.
They don't want you to takemoney out of the accounts.
They want to have more moneyput in, because that's their
lifeblood, that's how they getpaid, that's how they make a
living.
(19:16):
In our opinion, we've got to dothe fiduciary responsibility for
people, and one of the biggestones is how are we going to
tackle the decision making onwhat might be?
In many cases, when you have amarried couple, might be all
they need.
Everything they might needmight come from social security
income, and that meanseverything they've ever saved is
then excess capital.
In some cases, if it's 30, 40to 50% of their income streams
(19:40):
in retirement, that's huge.
It's a monumental amount ofincome that they'll get to meet
their retirement income goals.
So to us, the scenario youpainted where your wife walks
out on you these are obviouslyemotional moments.
These are life-changing moments.
You need a specialist at thesemoments.
You need someone who can helpyou with the things you probably
(20:01):
just never thought could happenand never knew the rules about,
and I think that's what we do,and I think we laid out a lot of
real life scenarios in the bookto help people and enlighten
them to the idea that this couldhappen to you.
We have people who this didhappen to and they thought one
thing and we guided them in adifferent direction to come out
with a favorable outcome.
Speaker 1 (20:21):
That leads me to one more question about scenarios,
which is what if someone, beforethey heard, before they read
the book, before they hear thisinterview, maybe they're in
their sixties and they justdecided, hey, social security is
running out of money, I need tostart now.
And they got it at 62, withoutthinking through all the
different scenarios that you'retalking about.
Is there a do-over?
Is there the option to be likeokay, I want to change what I
(20:42):
just did and go back?
Is that possible?
Speaker 3 (20:51):
Yeah, it is.
You have one year from thepoint in which you file for
benefits to basically rescindyour application.
However, you will owe the money.
If you've collected any, youowe it all back, and you can
only do that one time.
While not ideal, you would haveideally had your strategy done
first, or maybe you listened tous after you filed, but you
filed the claim three monthsfrom now and have it start, so
you haven't received a paymentyet.
That'd be the easiest way to go, the easiest scam to pull off.
(21:12):
You can do it one time withinthe first 12 months of filing.
If you really think you got it.
You got it wrong.
Speaker 1 (21:26):
There's a couple concepts specifically from the
book that I want to ask you guysabout.
One of them is what you guysdescribe as the five pillars of
social security optimizations.
Can you walk us?
Speaker 3 (21:30):
through what these five pillars are.
The five are timing, taxation,coordination, longevity and
legacy.
Why do they all matter?
When we refer to timing, it'sreally all about survivor
benefit considerations, which wespent some time talking about.
Inflation protection thatfactors into that.
Integration with otherretirement assets, portfolio
withdrawal strategies, thosetypes of things.
(21:51):
Taxation, specifically how arebenefits taxed?
How will your benefits be taxed?
Because the answer is itdepends.
And that's for federal andstate, depending on what state
you live in.
Of course, federally applies toanyone in the US.
How to manage tax bracketsmaybe we're doing spend-down
strategies, roth conversions.
When I say spend-downstrategies, maybe there's a
bunch of tax-deferred wealth ina 401k plan and we're deferring
(22:13):
Social Security while we'respending down some of that 401k
to minimize the impact ofrequired minimum distributions
later.
And even so, the same idea withRoth conversion strategies.
Coordination that's whatspousal benefits that might be
available.
Cost planning around healthcareperhaps.
And then really long-termincome security we mentioned
earlier, the higher the twobenefits stay in the household.
Longevity is the idea of thethree biggest risks any retirees
(22:36):
will face is inflation, taxesand longevity.
And so inflation risk, survivorbenefits, market risk
mitigation, all those things.
The longer you live, the moreheavily weighted your portfolio,
or the more heavily yourportfolio relies on markets, the
more risk there is.
Retirement income planningbecomes really risk mitigation
(22:56):
essentially.
Speaker 1 (22:57):
And it's just the idea that you guys are dealing
with the one thing that none ofus actually know, which is when
are you going to die?
It's how do you plan for thishuge uncertainty?
Maybe it's at 60, maybe it's at70, maybe it's at 80, maybe
it's at 90, maybe it's at 100.
I don't know and I don't wantto run out of money.
Speaker 3 (23:15):
Correct.
Speaker 1 (23:16):
How the heck do you plan for that?
Speaker 3 (23:18):
You have to essentially plan for the best,
or the best case scenario isjust living long.
I've had people do this theycome in and say oh my parents
died in their 50s or their 60sand I'm not going to live long
enough.
How do you actually know that?
And if you're going to severelybe a detriment to yourself if
(23:43):
you end up living in your 80s oreven your 90s or your spouse,
it not just you, it's you andyour spouse.
You would probably rather notbe poor and elderly.
If you die with too much money,it doesn't matter, you don't
need it anymore.
The idea is we have to balancethese things.
So some people may firmlybelieve they won't live that
long.
Maybe they have a healthcondition or something, but
their spouse may have longevity.
So we have to look at thosescenarios, at least be aware of
them and it's.
Speaker 1 (23:59):
it's really interesting just to underscore
that point.
If you're married, it's notabout just you, it's about the
spouse, and it plays heavilyinto their long-term income
security, for sure.
Speaker 3 (24:10):
And we often find too , with proper planning, because
a lot of people will come to usand there's a stat we talk about
in our workshops and in thebook Most people I believe it's
77% of people in a recent surveybelieve that they're not on
pace to meet their savingstarget.
That's meaning they don't thinkthey've saved enough.
Speaker 2 (24:28):
And if they're in that scenario.
Speaker 3 (24:29):
They like to shortchange their retirement
efforts and they think only whatthey can afford.
But with credible science andclaiming strategies we can often
get them to live where theywant to not shortchange
themselves and on the back 40,last third of their lives,
potentially but also resurrectthe idea of legacy leaving
something to your kids, to yourgrandkids.
When we talk about legacy,that's the last pillar
(24:51):
increasing excess capital, whichis the wealth you don't need to
fund your retirement lifestylegoal, your income plan.
So we reduce the overall costof the retirement and then that
leads to enabling charitablegiving goals, if those are
something that of interest.
Passing on tax-free wealththrough Roth conversions or
maybe just leaving yourtraditional IRAs, whatever the
case, would be being intentionalwith passing that on to the
(25:14):
next generation.
Speaker 1 (25:16):
With the many couples that you've worked with and
this is just out of pure morbidcuriosity do you find that most
people are like legacy minded,where they want to leave money
to their children or causes, orthey're like, hey, I just want
to spend this down and enjoylife while I'm still here.
Speaker 3 (25:30):
I feel like it's usually they're either on one
end of the spectrum or the other, meaning oh, we really want to
maximize what we give to ourkids or no, they're good, we
want to maximize our lifestyle.
But ultimately it's in themiddle, like let's make sure
you're taken care of.
And when they say maximize ourlifestyle, they want to make
sure that they can do what theywant to do and they just don't
(25:53):
think there's enough leftover.
If we show them a way to dothat, how much truly an excess
capital they do have, then thatcan become a consideration for
them.
But yeah, usually it's likeboth ends of the spectrum, it
seems.
Speaker 1 (26:05):
Now, in my case and again, I'm just using this as an
excuse to get free advice here,but in my case I don't have
children, I have a dog.
What is the legacy strategy forme?
Any suggestions?
Speaker 2 (26:15):
I think, to answer that question, it's always going
to be unique to you and yourwife.
It's unique to what people wishto do.
One thing I think they mostlywould want to do is, as they
near or are at that precipice offull-time work into retirement
years, the last thing you wantto do is think you need to now
scale back on what you've donein life, scale back on
(26:37):
activities, on fulfilling travel, on gifting, on the things you
want to do to enjoy not onlyyourself but each other.
And I think that that's oftenthe case.
People will be super hesitantas they enter retirement and
they'll give up on experiences,thinking that's not for us.
We're not working now and we'vegot to squeeze as much out of
(27:00):
every penny that we've everaccumulated.
And they do this.
I think it's natural.
You're used to living on whatyou've made while you're working
.
You're not used to the use ofyour own wealth.
You're used to maybe preservingor just accumulating wealth.
But I think we often and Russalluded to this we kind of
resurrect the idea of legacy.
A lot of people have given upon it.
They think we've been toldwe're poor savers, we've been
(27:23):
told we didn't do enough.
We are now facing inflation.
We're facing taxability.
There's no retiree taxation,it's taxability.
It's the same tax code forthose who work and those who are
retired, but they don't knowhow to navigate through it.
I think what we can do is wecan really clearly paint a very
vivid picture of what theirretirement might look like.
(27:45):
And if we can reduce people'sanxiety and stress as they enter
retirement and then, year afteryear, they can live to their
fullest, that's a victory.
And if you do end up finding outyou're terminally ill hopefully
you don't.
But if it's early 70s, mid 70s,I think the last thing you're
going to do is worry about whatyour claiming decision was, or
(28:07):
that you claimed a little bittoo late.
I think you're going to belooking at it and saying, boy,
what a great number of years Idid have, because I planned it
outright, as Russ said, withintent.
I did the right thing, not onlyfor myself, but for my spouse.
I think what we have to do andthis is all part of the planning
is hey, first let's determinehow much of your capital do you
(28:28):
need for income?
How much, then, is excesscapital Meaning extra?
It's for discretionary use,it's for legacy, right out of
the gates.
We don't have to wait 10 or 12years to know if you have extra
money for legacy.
We'll know right away and thenwe can employ other things.
I call it pivoting to otherstrategies like the qualified
charitable deductions or Rothconversion strategies or gifting
(28:52):
.
Speaker 1 (28:52):
Digging a little bit deeper in the book you mentioned
that there's nearly 3,000filing rules and 500 ways for
married couples to claim socialsecurity benefits.
Let me say it again 500 ways.
He also said that if you go tothe social security office and
say, knock, knock, which oneshould I do that they are, I
guess, by law, instructed not togive you any advice.
(29:15):
Thank goodness you wrote thisbook To the end.
Can you give us an example ofhow this complexity has played
out?
Just maybe give us a case studyor a client story that could
help illustrate this.
Speaker 2 (29:26):
I think Ross and I both have some really good
stories and some just stick withus because of how profoundly
different these people's liveswere because of what we knew.
And one was a woman I met.
She was the sister of anotherclient and I got to know Carol
and basically in getting to knowher, in our discovery phase, as
(29:47):
we call it she just sort ofmatter-of-factly said yeah, and
unfortunately I was alone thenbecause I ended up being widowed
years ago.
And I said, oh, wait a second.
I don't think I remember youtelling me that.
And she says, oh, wait a second, I don't think I remember you
telling me that.
And she says, yeah, and I'vehad people tell me you might be
eligible for Social Securitybenefits based on his record.
And she said, oh, it's been solong, come on, I don't think so.
(30:10):
So she pursued it a little andshe was told, no, I was told I
can't get benefits from mydeceased husband's record
because I make too much.
And I said, whoa, now I reallyhave to break this down.
So there are rules, even forwidows, that if you make too
much money in a job that you mayhave forfeiture.
It's something that it impacts.
(30:32):
You called the earnings incomelimit and I said I need to know
more, carol, because you may beforfeited, but you might not be
forfeited a whole year's worthof income from his record.
So we broke this down, paul,and this was so meaningful to
her because she was just tryingto make it work, being alone,
trying to pay down her mortgage,pay down some debts, and just
(30:53):
make it work until she wouldretire in maybe three to four
years.
And so we figured out that shewas eligible for about $1,700 a
month and she could get that forabout seven months in a year.
She'd be forfeited because shebroke through an earnings limit,
but not so much that she'd beforfeited all of that income.
So you can imagine $11,000 to$12,000 more for about three
(31:15):
more years before she would thenswitch to her own Social
Security benefit.
It was amazing what she felt.
She was in tears, saying thisis unbelievable to me, mike.
I can't get over how differentmy life now can be.
I have no more stress aboutworking and having to work,
maybe extra years, and I wouldhave never known.
(31:35):
She would have never knownabout the earnings limit and how
it truly worked.
She would have never known ofthe switching abilities to take
her deceased husband's recordfirst and switch to her own
later.
So just doing those things notonly makes a difference in
people's lives, like immediately, but it can forever change the
trajectory of what theirretirement might look like.
Speaker 1 (31:55):
That's amazing.
I would never have even thoughtabout it.
Speaker 2 (31:58):
She gave up on it, right, she gave up because of
what people told her.
They told her only what theyknew, only what maybe they
experienced because of their ownsituations, but not knowing a
full context of someone's life.
It's so imperative that peopledon't try to give others advice.
To be honest, find a specialist, find someone who actually
knows how these rules can workto help you navigate through
(32:18):
these times, especially ifthey're troubled times.
Speaker 1 (32:20):
Yeah, definitely.
All right.
A couple more questions while Ihave you guys.
So you talk about a concept ofdollar cost ravaging.
What is dollar cost ravaging,and how does this and why is
this something that a retireeneeds to be aware of?
Speaker 3 (32:34):
Yeah.
So I think a lot of peoplemaybe not, but most people that
we seem to come across they'veheard and understand the concept
of dollar cost averaging.
So that's the concept ofmarkets are up and down and
you're consistently putting andsaving money away and you're
buying in the market.
When it's low, you're buyingwhen it's high and you're buying
in the middle.
So over the course of yourretirement you've bought the
(32:55):
average cost of a security,whatever you're investing in,
and you have the growth abovethat when you're accumulating
and you're putting money in themarket.
All you really care about is,of course, you want the market
to be down to buy more shares,but what you really care about
is what was your average annualrate of return over that period?
And the thing is, the gamechanges when you go to the
retirement income phase.
(33:16):
We call it the distributionphase or in the book we refer to
it as the spended phase save itand spend it.
So the spended phase.
We have something calledsequence of returns, risk and we
refer to that as dollar costravaging and what that is,
because we again, we'rebelievers in the stock and the
bond market.
The stock market, of course weknow it's volatile, though it
doesn't grow in a straight line,so you can't look at your
(33:38):
average annual rates of returnover and what you might have
done in the first part while youaccumulated.
The order in which the marketgrows or goes down every year
matters much more, and the factthat we can't predict year to
year if it'll be way up or waydown or whatever, or how it will
sequence.
It's risky and your riskincreases of running out of
money the more that you need torely on the markets to produce
(34:03):
the wealth or the income thatyou need, because you can't time
it.
You have to understand and weuse probabilities of success in
the last hundred years ofmarkets and if we ran a thousand
up to 10,000 tries, what's yourprobability of this working?
Speaker 1 (34:18):
And by working just to clarify getting to the end
with still having money.
Speaker 3 (34:23):
At least $1 left.
Speaker 1 (34:24):
At least $1.
Speaker 3 (34:27):
That's success, right ?
So if someone tells us we wanta 30-year retirement period, we
want a 95% probability that thiswill work and we want to be
invested in a balanced, morelike moderate or a 60% stock,
40% bond, then we can then runthe market trials and basically
say, okay, here's what you cantake out based on your
parameters, your safe withdrawalrate.
(34:48):
Because if you don't and youjust assume you're going to earn
8% a year on average and itgoes straight up, so we're going
to pull 8% a year out of ourportfolio, you're going to be a
detriment to yourself and likelyburn out of your assets.
So we have to make sure wehighlight what those risks are.
A lot of people don'tunderstand the shift.
It's always oh yeah, myinvestments just go straight up
(35:09):
every year.
It's not the way it works.
Speaker 1 (35:10):
Interesting A dollar is the goal, at least.
Speaker 3 (35:14):
And that's based off of Bill Bangan's research, the
4% safe withdrawal rule and allthat which.
Now we have a hundred years ofmarket research and all those
things.
4% was what Bill Bengen, whodid the research over a 50-year
market period 1929 to 1979, hefound that you could withdraw 4%
inflation adjusted for 30 years, with a 50-50 stock to bond
(35:36):
portfolio mix and an 80%probability of success.
Meaning having $1 left at theend of that 30-year period, no
matter how the market'ssequenced over that period.
And that's a gross number.
But now we have IRAs which areall taxable, so less than that
because of taxes.
And of course, if we want ahigher probability, the safe
withdrawal rate number comesdown.
(35:57):
If we have a longer retirementperiod, it comes down.
If it's shorter, it goes up.
So all these differentparameters and what the client's
risk tolerance is, that allfactors into what their safe
withdrawal rate is.
Plus we have another 50 yearsof markets to look at.
So it's specific to what theclient needs and what they're
looking for and what they cantolerate.
So it's very dangerous, just toassume 4%.
Speaker 2 (36:19):
And I think, Paul, the crux of this comes down to.
People don't have to leave thisto chance.
They don't have to be thinkingwill I get the correct sequence
of returns to meet my incomerequirements?
Will the market simply agreewith me, or will they be
disagreeable?
This seems very stressful.
It's a horrible way to approachretirement.
(36:39):
Honestly and that might be oneof the reasons many people delay
and delay retirement.
They think I better not, Ibetter not, I don't think I'm
ready, I don't think I can.
This is what the mindset needsto be.
It has to be a paradigm shift.
It has to be as you approachretirement.
What will the cost of myretirement be?
How much of my wealth will Ineed to meet the retirement
(36:59):
income goals that I've set forth?
And I have to do this over along period of time.
But what will the cost be?
In the book we describe this.
We think of, let's say, you andyour wife.
You go to Myrtle Beachfrequently and you finally
decide we're going to buyanother place and it's going to
be right on Myrtle Beach, andthese three beachfront homes
present themselves, beautifulsunset, and it's on the same
(37:19):
exact beach and every house isidentical.
All three homes identicalexterior interior, all the same
sizes, everything samebeachfront access.
And the realtor says let'sstart here.
This one costs $1.2 million.
Here's the one next store itcosts $830,000.
And then the one on this farleft, exactly the same home it
costs $538,000,.
(37:41):
Paul, which one are you going totake?
Are you going to say well, forprestige and status, I'm going
to go buy one of the moreexpensive homes?
Most people are racing over tothe $538,000 home saying this is
the one, where's the contract?
This is what we have to do whenwe approach retirement.
It's not about accumulatingwealth anymore, although we
think you still can if you havea proper plan developed but it's
(38:02):
about what's the best use ofour wealth now, and that's when
a specialist and, as Russ and Ibelieve, firmly believe we can
be the specialist to help guideyou, from the moment you've
accumulated, you're ready toleave full-time employment.
How do we best deploy theassets for you to make sure that
retirement works and notworrying about, year after year,
(38:22):
what the markets might do toyou?
Speaker 3 (38:24):
And say something on that.
The worry I think peopleoverlook that, but I've actually
just read recently that stresscan be the equivalent of smoking
the health impacts it has onyour body.
So there's a lot to be saidwith longevity and stress and
that correlation too.
You want to live how you wantto live without being stressed
and to be able to really enjoyit.
Speaker 1 (38:46):
Definitely All right, a couple more questions.
So you introduced something inthe book called solve for zero
strategy.
What is that?
Speaker 2 (38:53):
Solve for zero is the concept that, upon retirement
and once you've begun takingsocial security benefits, the
idea of how much other incomemight you still be able to have?
Other income like maybe it ispart-time income or IRA
distributions, the use of thattax-deferred account that you've
accumulated for many years,dividends, interest, tax-exempt
(39:16):
income, all of those things howmuch more of that can you still
have when paired up with theSocial Security income in your
household yourself or yourselfand your spouse, and still be a
federal tax of zero?
And I mean zero meaning thebottom line of your 1040, where
it says taxable income, thenumber is a zero.
We can help people calculatethat and, while you might not
(39:38):
immediately experience that,maybe we have you draw down some
of your investment income orIRA type income in earlier years
.
But upon claiming SocialSecurity benefits, if we can
have a highly leveraged, heavilyweighted plan that has a lot of
Social Security income and lessneeded from other sources, you
might achieve solving for zeroor having zero federal tax.
(40:00):
Now we don't know what the taxrates will be from year to year
but given what we know, we knowthat according to the
provisional income formula, thatonly 50% of Social Security
income is counted in thatprovisional income formula.
All of the other income is then100% counted and when you get
through to getting a provisionalincome figure you go through a
(40:20):
couple of thresholds todetermine how much of your
social security income is thentaxable.
When you pair that up with allthe other 100% taxable income,
even without a standarddeduction, you might be highly
tax favorable.
But with a standard deductionyou might completely erase any
of the adjusted gross income youhave with the standard
(40:41):
deduction and be a zerotaxability.
So we say this in our workshopsall the time.
This is just an additionalbenefit of proper planning.
We're not saying that you'llalways be tax efficient, but
many can achieve even taxefficiency in addition to having
the robust income plan and thevery fortified income plan that
we've developed with them.
Speaker 1 (41:02):
I have to ask there's so much knowledge that's in the
book and that you've sharedjust during this interview, for
that person who's facing thesequestions when can I retire?
When should I retire?
When should I take socialsecurity?
How does this impact my spouse?
All these different thingswhat's the reaction been?
And I know sometimes you don'tnecessarily see the reaction
from a book, and maybe you haveif you've talked to anyone, but
what's the reaction and I knowsometimes you don't necessarily
see the reaction from a book,and maybe you have if you've
(41:22):
talked to anyone but what's thereaction you typically get,
whether it's from the bookitself or whether it's from
doing these workshops that youdo, because I can imagine that
you're just that peace of mindand that ability to have a plan
that you're confident in andremoving stress is huge for
people.
It's huge for people.
Speaker 2 (41:37):
I'll let Ross answer this in a moment.
The two words that come to mindfor me, Paul, are relief and
gratitude.
That's what the people thatwe've helped feel.
They feel relief, they feelgratitude that there was someone
there that could actually helpthem in a meaningful,
intentional way.
Put these pieces together.
Speaker 3 (42:16):
Because until then, if they were trying to go it
alone or they were going withsome misguided advisory, say,
yeah, this should be good, right, if things cooperate.
And so people are very gratefulwhen they actually understand
that we're taking the time andwe have the knowledge to know
how we're going to use the leastamount of their own wealth and
give them the right claimingstrategy to really enhance their
lifestyle and to make sure andthey know it's going to work in
(42:37):
a highly probable way.
The other thing is too I'llgive you an example, a quick
story of someone I helpedrecently.
I would say trust is anotherthing.
It builds a lot of trust withpeople when they see the impact
we make.
And here's this because this iswhat this woman actually told
me.
She's like I trust youimplicitly.
Speaker 2 (42:54):
Now, she wasn't even a client yet.
Speaker 3 (42:55):
So we had met with her, we being me, and she came
in and she wanted to figure outokay, with her, we being me, and
she came in and she wanted tofigure out okay, when should I
claim Social Security?
She was already going to workuntil 70 anyways.
So she's 67.
She achieved her fullretirement age and she wanted to
know should I claim SocialSecurity now, because I can and
not be reduced, I'm going towork till 70 anyways, and how do
I manage my assets?
The whole thing, how do I putthis together?
And this is our discovery phase.
(43:17):
And so when I'm figuring outwith her, I'm talking through
her and figuring out her story,and I unpacked that she had been
married and divorced and raisedher kids, basically her whole
life on her own.
And I just happened to ask herI said how long were you married
?
11 years she was married andshe was divorced for 30
something.
But she was married over 10years.
And I said is your ex-husbandstill alive?
(43:38):
By chance?
She said no, he passed away.
And I said okay, here's what Ineed you to do.
While you're going through ourhomework process and all that I
said, I need you to call socialsecurity and say my ex-spouse
passed away and I believe I'meligible for a survivor benefit
from his record.
Can you please run the numbersfor me and compare them to my
benefit, cause they will do that.
They'll compare the two.
(43:59):
She comes back to me and I askedher how did it go with Social
Security?
She said you'll never believeit.
She's like, and I trust you nowwith everything, and I'm not
even a client.
She said I'm going to become aclient and she did.
But what she said was I'm goingto be claiming his benefit and
it's going to startretroactively back six months
and to take it monthly and allI'm going to do is give it all
to my kids because I don't needit.
(44:20):
That was their father, so itwas a great way to give him a
legacy to their kids.
And it ended up being a totalof about $61,000 that she was
going to get from socialsecurity and then she'd switched
to her own at 70 when sheactually retires.
You're not going to get aletter from social security
saying you have benefits thatare waiting for you.
No, so essentially we found her61 000 that she knew, that she
(44:46):
never knew it would even bepossible to be, to exist, and it
built, like I said, it builds alot of trust with people
helping them utilize that, getthe most out of their benefits
essentially their specificsituation.
So that was a huge one thatimpacted me greatly.
That you share that and I sharethat pretty much at every
workshop we do, because it'sincredible to me.
Speaker 1 (45:04):
I really appreciate your time today.
This has been fascinating.
It's something I'm myself.
I'm let's see how old am I?
I'm 49.
I'm still a few years away, butI see the impact that social
security has for my parents andI've learned so much from you
guys and just listening to yourbook and talking to you that I
really appreciate all the wisdomthat you've shared.
Before we wrap up today'sinterviews, are there any final
(45:24):
thoughts that you'd like toshare with our audience?
Speaker 2 (45:27):
The thoughts I would have are a great thank you to
you, paul, your team, helping ussee this project through to
completion, publishing numberone Amazon bestseller.
We are so excited every singleday to help more and more people
, and you've allowed us now tohelp even more people than we
were before.
We can now promote this book.
(45:48):
We can hopefully have peopleread this and again change their
mindset a little bit.
Don't jump to a conclusion thatyou're faced with the same, I
guess, predicament or the sameclaiming decision as your
neighbor or your sister or whatyour parents did.
It should be very unique, thedecision-making that you have
when it comes to social security.
Claiming Again.
(46:08):
We think it can be acornerstone.
Russ and I have embraced thecomplexity of the rules and the
filing strategies.
We have trademark software thatcan help people with this,
again, deducing what the leastamount of capital needs to be to
have the retirement that youwish for.
So you have excess capitalbeyond break even bookcom,
(46:30):
beyond break even bookcom to getessentially the free ebook and
audio version of our book.
Speaker 1 (46:37):
Tell us just briefly.
So the two of you co-narratedthe audio book.
What was that experience like?
Speaker 3 (46:42):
Yeah, it was actually kind of boring because we would
go back and forth with thechapters and we were in our
studio and he'd be reading andit'd be going on and on and on
and I'd be reading and it washarder than we thought because
it's just, it's like a marathonand reading out loud is tiring.
It was like reading to my kidsto put them to bed, except
bedtime was a long ways away.
Speaker 1 (47:03):
But it was great.
It was great.
I just listened to it.
It came out very well and Ipersonally love how the two of
you bounce back and forth.
I think it brings in somecontrast and some more interest.
Any final thoughts before wewrap up.
Speaker 3 (47:16):
I'd say that we help people.
We're physically located in NewYork State and we have an
office in Jupiter.
We teach our workshopsphysically in New York and in
South Florida and in Texas andTennessee, but this is a
national program and we haveclients in almost every state
and so no matter where you liveit doesn't matter where you live
(47:36):
In the US we help everybody.
And again,beyondbreakevenbookcom is where
you can read more about how wehelp people really through our
book complimentary PDF and audiobook and then, if you have any
questions, you can call usdirectly at 1-888-280-PLAN
P-L-A-N and you can schedule acomplimentary retirement income
stress test is what we call itto see where you stack up and
(47:58):
what you think you might do.
And if you have the right,claiming decision and strategy
for you and your family Verycool, thank you so much for your
time today.
Speaker 1 (48:09):
I've enjoyed the conversation.
We have too.
Thanks for having us.
Thank you, Paul.
All right Bye for now.
Are you worried about making the wrong Social
Security claiming decision?
In today's episode of theInfluential Advisor podcast,
we're joined by Social SecurityOptimization experts Russ Geiser
and Mike Hoflich, authors ofthe best-selling book Beyond
Break Even.
Here's a startling reality 80%of men die married, while 80% of
(00:23):
women die single.
Yet most claiming strategiescompletely overlook this crucial
fact.
With pensions vanishing andSocial Security often
representing 30-50% of yourretirement income, your claiming
strategy could mean thedifference between comfort and
hardship.
Russ and Mike unpacked theirinsightful five pillars
(00:47):
framework.
Reveal how to shield yourselffrom the hidden danger of dollar
cost ravaging, and share theirsolve for zero strategy that
could help eliminate federaltaxes in retirement.
The claiming decisions you maketoday will impact your
financial security for decades.
So grab a pen and paper,because what you learn in the
(01:09):
next half hour could be worththousands in additional
retirement benefits.
Hey, Russ and Mike, how are youguys doing?
Speaker 3 (01:24):
Doing great.
Thank you, paul.
Good Paul Can't complain.
Speaker 1 (01:28):
I'm used to seeing the two of you in the same
location, so this is a littlebit strange for me to have you
guys in separate locations.
Is everything okay?
Speaker 2 (01:36):
I'm probably the more fortunate one.
I'm down in our Florida officein the Jupiter Florida area.
Speaker 3 (01:41):
Yeah, and I'm freezing up in Buffalo.
It's like 16 degrees here andit's been snowing since january
1st, so wow.
Speaker 1 (01:48):
But I hear west you'll be headed down to jupiter
soon as well.
So it'll, it'll get better foryou soon it will, it will.
I'm not complaining if thewinter's not forever yeah, I'm
excited to have both of you onthe show today and I'm just
really excited about your bookand just recently when you
launched it on Amazon, you guyshit bestseller status and
(02:11):
typically when we work withclients to do that, usually we
target get bestseller in onecategory and best three
categories.
That's like the best rightThree categories.
You guys hit bestseller statusin four categories.
That's awesome, congratulations.
Speaker 3 (02:29):
Thank you.
Thank you, yeah, we're stokedabout that, but we really.
That's to your credit forhelping us plot a good path
forward for that.
Speaker 1 (02:38):
I would say it redounds to you.
You must have a lot of fans andclients that really appreciate
the work you do, lot of fans andclients that really appreciate
the work you do.
And so in today's show we'regoing to get into your new book
Beyond Breakeven and what that'sabout.
But before we dive into thebook itself, I'd love just to
hear a little bit more aboutboth of your personal journeys.
(02:58):
How did you start your careerand get to where you are today?
Speaker 2 (03:02):
And maybe we'll start with Mike and get to where you
are today, and maybe we'll startwith Mike.
Sounds good, sounds good.
I'm a career changer.
I started my working career Iguess my first real job as a
systems analyst, and then Imoved into human resources and
trust plans administration andthen I became a teacher, and so
my career is certainly not thetraditional entry into the
(03:24):
financial advisory industry.
I certainly wouldn't do it anyother way.
I think everything I ever did,every degree I've gotten, all
the experiences I've ever had,have now led to this kind of
skill set that I now have tohelp people and actually
continue to educate people.
And so I'm actually in my 10thyear in this journey with a
(03:46):
certified in social securityclaiming strategies, designation
and helping people doretirement income planning.
Interesting.
Paul, I came into this, I guess,area, this very ever-changing
area, back in the fall of 2015.
And there were some significantchanges going on with social
security and some of theadvanced strategies that were
allowed, so I literally got acertification and then, month
(04:07):
after month, for about four tosix months, I was seeing 60 to
80 to up to upward of 100 peoplein workshops, all just scared
to death wondering how willthese changes impact my
retirement?
Mike, help us.
What's going on here.
So, literally, it's neverreally slowed down because every
single year there are peopleturning 62 and that's the
(04:28):
traditional eligibility age forsocial security claiming and
I'll tell you what I love itevery day even more and more,
helping people and educatingthem, as I have now again in a
10th year.
Speaker 1 (04:39):
That's fantastic, Russ.
How about you?
Speaker 3 (04:42):
So much.
Like Mike, I'm also a careerchanger.
I spent the first almost nineyears of my career active duty
Air Force, where I was asurgical tech basically the guy
that hands the surgeon theinstruments in the operating
room and I was specialty trainedin urology.
I went to school, I got abusiness degree and healthcare
administration degrees and gotinto management and leadership,
(05:04):
and then I ended up for aboutseven more years becoming a
healthcare administrator where Iwas helping health systems
acquire physician practices andoperationalize them and so doing
all that work physiciancontracting and I'm in my fourth
year of financial planning workand I changed careers Really.
It was during COVID and when Iwas in my business school
(05:25):
studies, I took an elective infinancial planning and
investment management and Ithought to myself wow, I could
really see myself liking to dothis.
This intrigues me and, as youknow, in 2020, healthcare became
very difficult for reasons Idon't really want to go back
into, of course, as we moveforward now.
But that's when I took theopportunity to say you know what
(05:46):
I'm going to make the careerchange, and so I did that, and
so I got licensed and so on andso forth, and then, a couple of
years into that, most of theclients we were working with in
the firm Mike and I workingtogether really are between the
ages of 55 and 65.
So getting ready to retire, anda lot of people during that
time they wanted to see hey, I'mdone, I don't want to deal with
this anymore, can I retire?
(06:07):
So retirement income planningwas really where I was focusing
my practice and I realized Isaid, well, social security is
such a big benefit and I reallyfeel like I need more like more
education in this.
It's more important than just,yeah, take it, because you'll
never get it all out and that'swhat you hear when the advice
(06:30):
people generally get.
And so I wanted to go beyondthat and that's how I ended up
specializing in becomingcertified in social security,
claiming strategies, and reallyspurred Mike and I's partnership
.
Speaker 1 (06:36):
That was my next question.
So the two of you areco-authors of this book.
What's the story behind the twoof you coming together and
starting to partner or workcloser together?
Speaker 2 (06:45):
I'd see Russ walking by my office window and I said,
man, does that guy seemmotivated, does he seem driven?
Does he ever walk with purpose?
And the types, paul, you cansort of spot them from a mile
away.
You see those around you,competent, but maybe not nearly
as committed as some others.
And I'll tell you what.
(07:06):
I'm forever grateful to Russ fordeciding that I could be a good
partner and mentor to him,because everything we've now
done in the past I'm going tosay, geez, it's got to be about
two and a half to three yearsit's all better because we
collaborate and we are inlockstep with one another in our
commitment to care, thecommitment to take care of
(07:26):
clients, the commitment to dothe things that really matter.
And, honestly, russ is not onlya business partner.
He's become a very good friendto me.
I think that's what reallymotivated us to do something
together, because what you cando alone is pretty special, but
when you can do something withsomeone else and do it with such
energy and enthusiasm, I'lltell you what it really brings
(07:48):
out the best.
And that's what it did for me.
I think it did the same for us.
Speaker 1 (07:51):
I have to ask.
So I heard Mike say that yousaw you from his office window
and you were walking withpurpose.
Did you like walk by and belike wow, this guy's really
working hard.
Speaker 3 (08:05):
Well, so we work in an office at the Financial Guys
where I'm a wealth manager and Ido retirement income planning,
social security optimization.
Now, of course, I was justdoing retirement planning at the
time.
The Financial Guys it's theone-stop financial shop, so we
have specialists in the broadfinancial planning realm.
We have different specialistsand we all work as teams to help
the clients that come in.
I knew Mike, of course, and Iknew Mike was certified in
social security claimingstrategies.
I didn't really know what thatmeant when I first started with
(08:26):
the firm.
I think we had a conversationabout three years ago.
I was helping a client and Iwanted to know hey, what's the
best way to claim these benefits?
How do we actually coordinateit in harmony with all their
other assets?
Here's what I'm thinking, butyou're the expert in this, I
need some help.
And then we just had a reallygood conversation and I realized
(08:50):
the significance of needingthat.
And then our relationship kindof blossomed from there in terms
of taking it to another levelthrough our own firm Retirement
Income Headquarters, same brokerdealer, same investment
management firm but we justsimply focus on doing workshops
and retirement income planningaround social security.
So it's all the work we do withthe financial guys, but we're
doing it and taking it toanother level across the country
, nationally.
Speaker 1 (09:08):
You just said something that struck me is at
that initial point, mike was thespecialist and you were
starting to think about, as awealth manager yourself, what's
the best way to do this and whatis the average or typical
wealth managers approach to it.
That doesn't have the specialtyIn my experience a lot of
wealth managers do.
Their clients are typicallyretirees and they're looking at
(09:30):
retirement income planning.
But just that difference in,let's say, your average wealth
manager versus someone who hasthe expertise that you do.
I just listened to your audiobook yesterday and I was blown
away by all the different waysthat you guys talked about in
terms of being able to reallymaximize the benefits.
It's not as simple as hey, I'mgoing to start taking the social
(09:51):
security at whatever age.
There's a lot of thought thatyou guys that goes into this.
Speaker 3 (09:56):
I was just going to say.
I think that what we hear fromprospective clients and then
people that actually then becomeclients is that if they work
with someone their advisors justdoesn't know, and so they defer
them or refer them, I shouldsay, to social security to get
the answers that they need.
To me, that's just not, I don'tknow.
I just feel like we have abigger responsibility than that,
(10:19):
especially when we're talkingabout someone's retirement and
trying to help them stave offthe risks that are inherent in
retirement inflation, taxes,longevity so it's really
critical that and, by the way,this is likely their biggest
guaranteed retirement incomesource, with the fact that
pensions are becoming far andfew between.
So I think it's really thatit's you hear.
(10:40):
Go talk to Social Security.
You have to get the informationfrom them, them, or it's an
emotional decision.
Speaker 1 (10:45):
Well, it might not be there in 10 years.
You better just get it now.
That's my sense, is that mostpeople know this is my.
I could be wrong, but it's just.
I better get it before it goesaway, and that's about the
extent of the strategy that goesinto it.
I realized, though, that I amputting the cart in front of the
horse, as they say.
So let me back up a little bit,and I want to just pivot and
just kind of start with the bookitself, beyond Break Even, and
(11:09):
tell me what that title means.
What does that title stand for?
What does that mean?
Beyond Break Even?
Speaker 3 (11:13):
Yeah, so the title, it's the social security
claiming decisions should not bemade in a vacuum you just kind
of alluded to it or in a silo.
I like to say so it requiresmuch more careful planning than
a simplistic break-even analysis.
Most people and this goes backto your question about what we
hear that most advisors do well,how long do I have to live to
(11:33):
make it make sense to claim itlater to break even?
And it's really a short-sightedway of doing it because of all
of the other benefits nuancesthat can be applicable to that
family.
In regards to the benefit, nowdon't get me wrong.
There are some scenarios whereyou might just have to take it
right away because you have noother assets, right, if you've
saved in your 401k plans and youdon't have a pension and you
(11:57):
really need to make a decisionof, or maybe you don't think you
saved enough.
How do we use the benefit?
How does this all tie intogether and what's the right
claiming decision for thatperson, specifically, when they
want to retire, how much moneythey want to spend, how long
they think they'll live, what istheir tolerance for risk, how
much have they saved?
What is their feeling abouttaxes and taxation and their
goals, their legacy goals.
(12:18):
And then bringing that alltogether to give them the best
advice around when they shouldbe claiming as part of their
retirement income plan.
Speaker 1 (12:24):
And just in listening to the audio book and we'll get
into more detail, but it also.
What I learned is that itreally depends on things such as
if you're a married couple, areyou the man or the woman?
What's the age difference?
There's an interestingstatistic in the book, which is
80% of men die married, while80% of women die single.
Speaker 2 (12:43):
I think the interesting thing and I'm going
to generalize a little bit and Idon't want this to sound
stereotypical but if 80% of mendie married and they are often
the biggest breadwinner and theyare often the one who is making
the financial decisions theymay have the stronger interest
in watching investments.
I'm not saying they're reallygood at it.
All I'm saying is they're moreinclined to do that than maybe
(13:05):
their wife, Maybe the wife'smore concerned with the children
and maybe even their parentsthe wife's parents and the
husband's parents and caretaking, because that's what women do.
They're wonderful at that.
So you put all this togetherthat the man is going to try to
make the decisions.
The man's thinking about hisown life.
Unfortunately, he's not reallyputting all these pieces
(13:25):
together and he's not thinkingbeyond both of them being around
.
And so when 80% of married menare dying married, that means
80% of women are dying single.
It's a really unfortunatesituation and these are probably
the most profoundly impactingsituations for Russ and I to
encounter, whether it's atworkshops or actually right in
our office.
What I think people need to do,they need to know these
(13:48):
strategies are.
They're great for single peopleor those that were divorced, or
even widows, but for marriedcouples, we can really come up
with some of the most, I guess,the strongest plans, the plans
that really will last the testof time, not only for the
husband's life but also thewife's life, and so it's just
super important to us to notjust think in terms of your own
(14:09):
breakeven analysis.
So, for instance, if someonesaid, Mike, I did the numbers,
and this happens all the time,Paul, all the time I did the
numbers, and if I don't claim at62, if I waited until 66, I
won't get the same amount ofmoney out of the trust fund
until age 78.
And I say good for you, that'sthe number I come up with every
time.
I do that Excel spreadsheet too.
And we could do that same thingfor every age difference, right
(14:32):
From 62 to 70,.
How long would you have to live?
And we're not interested inhearing when do you think you're
going to die?
Calculator answer.
We want to know what is yourlife like, who are you as people
?
What are you trying toaccomplish?
Tell us more about you, Be partof a process where we can keep
revisiting these things with youand your spouse.
And, unfortunately and ithappens longer as I'm in this
(14:54):
business longer and longer,there will inevitably be people
getting widowed.
If we can look at a widow andsay it is heartbreaking to have
gone through this loss, but howgrateful are we that we can now
help you.
And if there's a woman who isthe surviving spouse, it's
(15:25):
highly likely they may liveanother 15 years after the
husband has died.
So we have to secure thatwidow's retirement alone.
Speaker 1 (15:34):
And just to build off of that, I think you alluded to
a earlier and you talk aboutextensively in the book, but for
most people, social Securityreally is the cornerstone of the
retirement income plan.
Tell me more about that, andjust in this context of the
widow, why is this so important,given Social Security's unique
position when it comes toretirement income?
Speaker 3 (15:54):
So I think one of the biggest concerns is that
pensions are becoming far andfew between Social Security is
going to be their largestguaranteed income source and,
with that in mind, when you havea couple and you have both of
them claiming a Social Securitybenefit, there might be a
spousal benefit number one.
But when there's a sole survivorsituation, the higher of the
(16:14):
two benefits stay in thehousehold, and so the impact on
a widow, based on whatever theclaiming decision is and how
their retirement ended upplaying out, which is really the
lottery ticket.
We have no idea how the marketwill sequence right through
retirement, but think about itthis way, because we've seen
this happen If you have two oryou have a couple, and they both
file at 62, the earliest thatthey can, they're putting much
(16:36):
more pressure on their portfoliofor longer.
And if they spend more moneythan they thought, or the
markets didn't do well in thatearlier period of their
retirement in particular, orthey invested, or whatever the
case might be, and they'redepleting their wealth more
rapidly than they thoughtbecause they just predicted good
markets or just looked ataverage returns, or whatever the
(16:57):
case might be.
Widow situation happens Now thewidow has the bigger of the two
, but it's almost 30% reducedbenefit that they would have
taken at that point, and so theyhave way less guaranteed income
and now a depleted, maybe anempty, nest egg, and widow
poverty climbs fivefold in thatsituation.
So, and it provides socialsecurity, provides a big
(17:19):
majority of their specificincome.
So let's flip that though, thatscenario.
This is why it's so importantIf we figure out the claiming
decision we're looking at whatthe widower survivor benefit is
before retirement starts and ifwe can outline what the widower
benefits look like up front, wecan mitigate that issue from
ever happening, because youcan't just squeeze blood from a
(17:41):
stone if it is that former casethat I had talked about.
So that's the importance of theclaiming strategy when it comes
to how can we improve the lifeof a widow.
Speaker 2 (17:50):
That will inevitably happen.
One of the things that's sorewarding to Russ and me is that
we sometimes uncover thesethings for people and it comes
down to people don't know whatthey don't know, that you can
read all you want and get asmuch info as you want, but you
might not uncover it all andunfortunately, even if you do,
you might misinterpret.
This.
Comes down to the generalistadvisor, the generalist who
(18:14):
claims to be able to do it all.
They can plan, they can helpyou with every single financial
decision, they can help youbudget, they can even manage
your money.
They can do it.
All these generalists.
When they're faced with thesequestions, hey, I'll be retiring
.
I know I have Social Securitybenefits coming, what should I
do?
And unfortunately, thegeneralists will often, as Russ
said, defer to Social Security.
(18:35):
Well, it's in their ProgrammerOperations Manual system, poms,
that they're not supposed togive guidance to anyone claiming
benefits, which literally meansdon't give advice to these
people.
So advisors that don't knowenough defer to the group who
isn't even supposed to giveadvice.
The next thing is this If youhave an advisor who's helping
(18:56):
with financial planning andthey're managing someone's money
, they get paid in many casesunder an asset, under management
fee basis.
So one of the last things thatadvisors want people to do is
start taking distributions right.
They don't want you to takemoney out of the accounts.
They want to have more moneyput in, because that's their
lifeblood, that's how they getpaid, that's how they make a
living.
(19:16):
In our opinion, we've got to dothe fiduciary responsibility for
people, and one of the biggestones is how are we going to
tackle the decision making onwhat might be?
In many cases, when you have amarried couple, might be all
they need.
Everything they might needmight come from social security
income, and that meanseverything they've ever saved is
then excess capital.
In some cases, if it's 30, 40to 50% of their income streams
(19:40):
in retirement, that's huge.
It's a monumental amount ofincome that they'll get to meet
their retirement income goals.
So to us, the scenario youpainted where your wife walks
out on you these are obviouslyemotional moments.
These are life-changing moments.
You need a specialist at thesemoments.
You need someone who can helpyou with the things you probably
(20:01):
just never thought could happenand never knew the rules about,
and I think that's what we do,and I think we laid out a lot of
real life scenarios in the bookto help people and enlighten
them to the idea that this couldhappen to you.
We have people who this didhappen to and they thought one
thing and we guided them in adifferent direction to come out
with a favorable outcome.
Speaker 1 (20:21):
That leads me to one more question about scenarios,
which is what if someone, beforethey heard, before they read
the book, before they hear thisinterview, maybe they're in
their sixties and they justdecided, hey, social security is
running out of money, I need tostart now.
And they got it at 62, withoutthinking through all the
different scenarios that you'retalking about.
Is there a do-over?
Is there the option to be likeokay, I want to change what I
(20:42):
just did and go back?
Is that possible?
Speaker 3 (20:51):
Yeah, it is.
You have one year from thepoint in which you file for
benefits to basically rescindyour application.
However, you will owe the money.
If you've collected any, youowe it all back, and you can
only do that one time.
While not ideal, you would haveideally had your strategy done
first, or maybe you listened tous after you filed, but you
filed the claim three monthsfrom now and have it start, so
you haven't received a paymentyet.
That'd be the easiest way to go, the easiest scam to pull off.
(21:12):
You can do it one time withinthe first 12 months of filing.
If you really think you got it.
You got it wrong.
Speaker 1 (21:26):
There's a couple concepts specifically from the
book that I want to ask you guysabout.
One of them is what you guysdescribe as the five pillars of
social security optimizations.
Can you walk us?
Speaker 3 (21:30):
through what these five pillars are.
The five are timing, taxation,coordination, longevity and
legacy.
Why do they all matter?
When we refer to timing, it'sreally all about survivor
benefit considerations, which wespent some time talking about.
Inflation protection thatfactors into that.
Integration with otherretirement assets, portfolio
withdrawal strategies, thosetypes of things.
(21:51):
Taxation, specifically how arebenefits taxed?
How will your benefits be taxed?
Because the answer is itdepends.
And that's for federal andstate, depending on what state
you live in.
Of course, federally applies toanyone in the US.
How to manage tax bracketsmaybe we're doing spend-down
strategies, roth conversions.
When I say spend-downstrategies, maybe there's a
bunch of tax-deferred wealth ina 401k plan and we're deferring
(22:13):
Social Security while we'respending down some of that 401k
to minimize the impact ofrequired minimum distributions
later.
And even so, the same idea withRoth conversion strategies.
Coordination that's whatspousal benefits that might be
available.
Cost planning around healthcareperhaps.
And then really long-termincome security we mentioned
earlier, the higher the twobenefits stay in the household.
Longevity is the idea of thethree biggest risks any retirees
(22:36):
will face is inflation, taxesand longevity.
And so inflation risk, survivorbenefits, market risk
mitigation, all those things.
The longer you live, the moreheavily weighted your portfolio,
or the more heavily yourportfolio relies on markets, the
more risk there is.
Retirement income planningbecomes really risk mitigation
(22:56):
essentially.
Speaker 1 (22:57):
And it's just the idea that you guys are dealing
with the one thing that none ofus actually know, which is when
are you going to die?
It's how do you plan for thishuge uncertainty?
Maybe it's at 60, maybe it's at70, maybe it's at 80, maybe
it's at 90, maybe it's at 100.
I don't know and I don't wantto run out of money.
Speaker 3 (23:15):
Correct.
Speaker 1 (23:16):
How the heck do you plan for that?
Speaker 3 (23:18):
You have to essentially plan for the best,
or the best case scenario isjust living long.
I've had people do this theycome in and say oh my parents
died in their 50s or their 60sand I'm not going to live long
enough.
How do you actually know that?
And if you're going to severelybe a detriment to yourself if
(23:43):
you end up living in your 80s oreven your 90s or your spouse,
it not just you, it's you andyour spouse.
You would probably rather notbe poor and elderly.
If you die with too much money,it doesn't matter, you don't
need it anymore.
The idea is we have to balancethese things.
So some people may firmlybelieve they won't live that
long.
Maybe they have a healthcondition or something, but
their spouse may have longevity.
So we have to look at thosescenarios, at least be aware of
them and it's.
Speaker 1 (23:59):
it's really interesting just to underscore
that point.
If you're married, it's notabout just you, it's about the
spouse, and it plays heavilyinto their long-term income
security, for sure.
Speaker 3 (24:10):
And we often find too , with proper planning, because
a lot of people will come to usand there's a stat we talk about
in our workshops and in thebook Most people I believe it's
77% of people in a recent surveybelieve that they're not on
pace to meet their savingstarget.
That's meaning they don't thinkthey've saved enough.
Speaker 2 (24:28):
And if they're in that scenario.
Speaker 3 (24:29):
They like to shortchange their retirement
efforts and they think only whatthey can afford.
But with credible science andclaiming strategies we can often
get them to live where theywant to not shortchange
themselves and on the back 40,last third of their lives,
potentially but also resurrectthe idea of legacy leaving
something to your kids, to yourgrandkids.
When we talk about legacy,that's the last pillar
(24:51):
increasing excess capital, whichis the wealth you don't need to
fund your retirement lifestylegoal, your income plan.
So we reduce the overall costof the retirement and then that
leads to enabling charitablegiving goals, if those are
something that of interest.
Passing on tax-free wealththrough Roth conversions or
maybe just leaving yourtraditional IRAs, whatever the
case, would be being intentionalwith passing that on to the
(25:14):
next generation.
Speaker 1 (25:16):
With the many couples that you've worked with and
this is just out of pure morbidcuriosity do you find that most
people are like legacy minded,where they want to leave money
to their children or causes, orthey're like, hey, I just want
to spend this down and enjoylife while I'm still here.
Speaker 3 (25:30):
I feel like it's usually they're either on one
end of the spectrum or the other, meaning oh, we really want to
maximize what we give to ourkids or no, they're good, we
want to maximize our lifestyle.
But ultimately it's in themiddle, like let's make sure
you're taken care of.
And when they say maximize ourlifestyle, they want to make
sure that they can do what theywant to do and they just don't
(25:53):
think there's enough leftover.
If we show them a way to dothat, how much truly an excess
capital they do have, then thatcan become a consideration for
them.
But yeah, usually it's likeboth ends of the spectrum, it
seems.
Speaker 1 (26:05):
Now, in my case and again, I'm just using this as an
excuse to get free advice here,but in my case I don't have
children, I have a dog.
What is the legacy strategy forme?
Any suggestions?
Speaker 2 (26:15):
I think, to answer that question, it's always going
to be unique to you and yourwife.
It's unique to what people wishto do.
One thing I think they mostlywould want to do is, as they
near or are at that precipice offull-time work into retirement
years, the last thing you wantto do is think you need to now
scale back on what you've donein life, scale back on
(26:37):
activities, on fulfilling travel, on gifting, on the things you
want to do to enjoy not onlyyourself but each other.
And I think that that's oftenthe case.
People will be super hesitantas they enter retirement and
they'll give up on experiences,thinking that's not for us.
We're not working now and we'vegot to squeeze as much out of
(27:00):
every penny that we've everaccumulated.
And they do this.
I think it's natural.
You're used to living on whatyou've made while you're working
.
You're not used to the use ofyour own wealth.
You're used to maybe preservingor just accumulating wealth.
But I think we often and Russalluded to this we kind of
resurrect the idea of legacy.
A lot of people have given upon it.
They think we've been toldwe're poor savers, we've been
(27:23):
told we didn't do enough.
We are now facing inflation.
We're facing taxability.
There's no retiree taxation,it's taxability.
It's the same tax code forthose who work and those who are
retired, but they don't knowhow to navigate through it.
I think what we can do is wecan really clearly paint a very
vivid picture of what theirretirement might look like.
(27:45):
And if we can reduce people'sanxiety and stress as they enter
retirement and then, year afteryear, they can live to their
fullest, that's a victory.
And if you do end up finding outyou're terminally ill hopefully
you don't.
But if it's early 70s, mid 70s,I think the last thing you're
going to do is worry about whatyour claiming decision was, or
(28:07):
that you claimed a little bittoo late.
I think you're going to belooking at it and saying, boy,
what a great number of years Idid have, because I planned it
outright, as Russ said, withintent.
I did the right thing, not onlyfor myself, but for my spouse.
I think what we have to do andthis is all part of the planning
is hey, first let's determinehow much of your capital do you
(28:28):
need for income?
How much, then, is excesscapital Meaning extra?
It's for discretionary use,it's for legacy, right out of
the gates.
We don't have to wait 10 or 12years to know if you have extra
money for legacy.
We'll know right away and thenwe can employ other things.
I call it pivoting to otherstrategies like the qualified
charitable deductions or Rothconversion strategies or gifting
(28:52):
.
Speaker 1 (28:52):
Digging a little bit deeper in the book you mentioned
that there's nearly 3,000filing rules and 500 ways for
married couples to claim socialsecurity benefits.
Let me say it again 500 ways.
He also said that if you go tothe social security office and
say, knock, knock, which oneshould I do that they are, I
guess, by law, instructed not togive you any advice.
(29:15):
Thank goodness you wrote thisbook To the end.
Can you give us an example ofhow this complexity has played
out?
Just maybe give us a case studyor a client story that could
help illustrate this.
Speaker 2 (29:26):
I think Ross and I both have some really good
stories and some just stick withus because of how profoundly
different these people's liveswere because of what we knew.
And one was a woman I met.
She was the sister of anotherclient and I got to know Carol
and basically in getting to knowher, in our discovery phase, as
(29:47):
we call it she just sort ofmatter-of-factly said yeah, and
unfortunately I was alone thenbecause I ended up being widowed
years ago.
And I said, oh, wait a second.
I don't think I remember youtelling me that.
And she says, oh, wait a second, I don't think I remember you
telling me that.
And she says, yeah, and I'vehad people tell me you might be
eligible for Social Securitybenefits based on his record.
And she said, oh, it's been solong, come on, I don't think so.
(30:10):
So she pursued it a little andshe was told, no, I was told I
can't get benefits from mydeceased husband's record
because I make too much.
And I said, whoa, now I reallyhave to break this down.
So there are rules, even forwidows, that if you make too
much money in a job that you mayhave forfeiture.
It's something that it impacts.
(30:32):
You called the earnings incomelimit and I said I need to know
more, carol, because you may beforfeited, but you might not be
forfeited a whole year's worthof income from his record.
So we broke this down, paul,and this was so meaningful to
her because she was just tryingto make it work, being alone,
trying to pay down her mortgage,pay down some debts, and just
(30:53):
make it work until she wouldretire in maybe three to four
years.
And so we figured out that shewas eligible for about $1,700 a
month and she could get that forabout seven months in a year.
She'd be forfeited because shebroke through an earnings limit,
but not so much that she'd beforfeited all of that income.
So you can imagine $11,000 to$12,000 more for about three
(31:15):
more years before she would thenswitch to her own Social
Security benefit.
It was amazing what she felt.
She was in tears, saying thisis unbelievable to me, mike.
I can't get over how differentmy life now can be.
I have no more stress aboutworking and having to work,
maybe extra years, and I wouldhave never known.
(31:35):
She would have never knownabout the earnings limit and how
it truly worked.
She would have never known ofthe switching abilities to take
her deceased husband's recordfirst and switch to her own
later.
So just doing those things notonly makes a difference in
people's lives, like immediately, but it can forever change the
trajectory of what theirretirement might look like.
Speaker 1 (31:55):
That's amazing.
I would never have even thoughtabout it.
Speaker 2 (31:58):
She gave up on it, right, she gave up because of
what people told her.
They told her only what theyknew, only what maybe they
experienced because of their ownsituations, but not knowing a
full context of someone's life.
It's so imperative that peopledon't try to give others advice.
To be honest, find a specialist, find someone who actually
knows how these rules can workto help you navigate through
(32:18):
these times, especially ifthey're troubled times.
Speaker 1 (32:20):
Yeah, definitely.
All right.
A couple more questions while Ihave you guys.
So you talk about a concept ofdollar cost ravaging.
What is dollar cost ravaging,and how does this and why is
this something that a retireeneeds to be aware of?
Speaker 3 (32:34):
Yeah.
So I think a lot of peoplemaybe not, but most people that
we seem to come across they'veheard and understand the concept
of dollar cost averaging.
So that's the concept ofmarkets are up and down and
you're consistently putting andsaving money away and you're
buying in the market.
When it's low, you're buyingwhen it's high and you're buying
in the middle.
So over the course of yourretirement you've bought the
(32:55):
average cost of a security,whatever you're investing in,
and you have the growth abovethat when you're accumulating
and you're putting money in themarket.
All you really care about is,of course, you want the market
to be down to buy more shares,but what you really care about
is what was your average annualrate of return over that period?
And the thing is, the gamechanges when you go to the
retirement income phase.
(33:16):
We call it the distributionphase or in the book we refer to
it as the spended phase save itand spend it.
So the spended phase.
We have something calledsequence of returns, risk and we
refer to that as dollar costravaging and what that is,
because we again, we'rebelievers in the stock and the
bond market.
The stock market, of course weknow it's volatile, though it
doesn't grow in a straight line,so you can't look at your
(33:38):
average annual rates of returnover and what you might have
done in the first part while youaccumulated.
The order in which the marketgrows or goes down every year
matters much more, and the factthat we can't predict year to
year if it'll be way up or waydown or whatever, or how it will
sequence.
It's risky and your riskincreases of running out of
money the more that you need torely on the markets to produce
(34:03):
the wealth or the income thatyou need, because you can't time
it.
You have to understand and weuse probabilities of success in
the last hundred years ofmarkets and if we ran a thousand
up to 10,000 tries, what's yourprobability of this working?
Speaker 1 (34:18):
And by working just to clarify getting to the end
with still having money.
Speaker 3 (34:23):
At least $1 left.
Speaker 1 (34:24):
At least $1.
Speaker 3 (34:27):
That's success, right ?
So if someone tells us we wanta 30-year retirement period, we
want a 95% probability that thiswill work and we want to be
invested in a balanced, morelike moderate or a 60% stock,
40% bond, then we can then runthe market trials and basically
say, okay, here's what you cantake out based on your
parameters, your safe withdrawalrate.
(34:48):
Because if you don't and youjust assume you're going to earn
8% a year on average and itgoes straight up, so we're going
to pull 8% a year out of ourportfolio, you're going to be a
detriment to yourself and likelyburn out of your assets.
So we have to make sure wehighlight what those risks are.
A lot of people don'tunderstand the shift.
It's always oh yeah, myinvestments just go straight up
(35:09):
every year.
It's not the way it works.
Speaker 1 (35:10):
Interesting A dollar is the goal, at least.
Speaker 3 (35:14):
And that's based off of Bill Bangan's research, the
4% safe withdrawal rule and allthat which.
Now we have a hundred years ofmarket research and all those
things.
4% was what Bill Bengen, whodid the research over a 50-year
market period 1929 to 1979, hefound that you could withdraw 4%
inflation adjusted for 30 years, with a 50-50 stock to bond
(35:36):
portfolio mix and an 80%probability of success.
Meaning having $1 left at theend of that 30-year period, no
matter how the market'ssequenced over that period.
And that's a gross number.
But now we have IRAs which areall taxable, so less than that
because of taxes.
And of course, if we want ahigher probability, the safe
withdrawal rate number comesdown.
(35:57):
If we have a longer retirementperiod, it comes down.
If it's shorter, it goes up.
So all these differentparameters and what the client's
risk tolerance is, that allfactors into what their safe
withdrawal rate is.
Plus we have another 50 yearsof markets to look at.
So it's specific to what theclient needs and what they're
looking for and what they cantolerate.
So it's very dangerous, just toassume 4%.
Speaker 2 (36:19):
And I think, Paul, the crux of this comes down to.
People don't have to leave thisto chance.
They don't have to be thinkingwill I get the correct sequence
of returns to meet my incomerequirements?
Will the market simply agreewith me, or will they be
disagreeable?
This seems very stressful.
It's a horrible way to approachretirement.
(36:39):
Honestly and that might be oneof the reasons many people delay
and delay retirement.
They think I better not, Ibetter not, I don't think I'm
ready, I don't think I can.
This is what the mindset needsto be.
It has to be a paradigm shift.
It has to be as you approachretirement.
What will the cost of myretirement be?
How much of my wealth will Ineed to meet the retirement
(36:59):
income goals that I've set forth?
And I have to do this over along period of time.
But what will the cost be?
In the book we describe this.
We think of, let's say, you andyour wife.
You go to Myrtle Beachfrequently and you finally
decide we're going to buyanother place and it's going to
be right on Myrtle Beach, andthese three beachfront homes
present themselves, beautifulsunset, and it's on the same
(37:19):
exact beach and every house isidentical.
All three homes identicalexterior interior, all the same
sizes, everything samebeachfront access.
And the realtor says let'sstart here.
This one costs $1.2 million.
Here's the one next store itcosts $830,000.
And then the one on this farleft, exactly the same home it
costs $538,000,.
(37:41):
Paul, which one are you going totake?
Are you going to say well, forprestige and status, I'm going
to go buy one of the moreexpensive homes?
Most people are racing over tothe $538,000 home saying this is
the one, where's the contract?
This is what we have to do whenwe approach retirement.
It's not about accumulatingwealth anymore, although we
think you still can if you havea proper plan developed but it's
(38:02):
about what's the best use ofour wealth now, and that's when
a specialist and, as Russ and Ibelieve, firmly believe we can
be the specialist to help guideyou, from the moment you've
accumulated, you're ready toleave full-time employment.
How do we best deploy theassets for you to make sure that
retirement works and notworrying about, year after year,
(38:22):
what the markets might do toyou?
Speaker 3 (38:24):
And say something on that.
The worry I think peopleoverlook that, but I've actually
just read recently that stresscan be the equivalent of smoking
the health impacts it has onyour body.
So there's a lot to be saidwith longevity and stress and
that correlation too.
You want to live how you wantto live without being stressed
and to be able to really enjoyit.
Speaker 1 (38:46):
Definitely All right, a couple more questions.
So you introduced something inthe book called solve for zero
strategy.
What is that?
Speaker 2 (38:53):
Solve for zero is the concept that, upon retirement
and once you've begun takingsocial security benefits, the
idea of how much other incomemight you still be able to have?
Other income like maybe it ispart-time income or IRA
distributions, the use of thattax-deferred account that you've
accumulated for many years,dividends, interest, tax-exempt
(39:16):
income, all of those things howmuch more of that can you still
have when paired up with theSocial Security income in your
household yourself or yourselfand your spouse, and still be a
federal tax of zero?
And I mean zero meaning thebottom line of your 1040, where
it says taxable income, thenumber is a zero.
We can help people calculatethat and, while you might not
(39:38):
immediately experience that,maybe we have you draw down some
of your investment income orIRA type income in earlier years
.
But upon claiming SocialSecurity benefits, if we can
have a highly leveraged, heavilyweighted plan that has a lot of
Social Security income and lessneeded from other sources, you
might achieve solving for zeroor having zero federal tax.
(40:00):
Now we don't know what the taxrates will be from year to year
but given what we know, we knowthat according to the
provisional income formula, thatonly 50% of Social Security
income is counted in thatprovisional income formula.
All of the other income is then100% counted and when you get
through to getting a provisionalincome figure you go through a
(40:20):
couple of thresholds todetermine how much of your
social security income is thentaxable.
When you pair that up with allthe other 100% taxable income,
even without a standarddeduction, you might be highly
tax favorable.
But with a standard deductionyou might completely erase any
of the adjusted gross income youhave with the standard
(40:41):
deduction and be a zerotaxability.
So we say this in our workshopsall the time.
This is just an additionalbenefit of proper planning.
We're not saying that you'llalways be tax efficient, but
many can achieve even taxefficiency in addition to having
the robust income plan and thevery fortified income plan that
we've developed with them.
Speaker 1 (41:02):
I have to ask there's so much knowledge that's in the
book and that you've sharedjust during this interview, for
that person who's facing thesequestions when can I retire?
When should I retire?
When should I take socialsecurity?
How does this impact my spouse?
All these different thingswhat's the reaction been?
And I know sometimes you don'tnecessarily see the reaction
from a book, and maybe you haveif you've talked to anyone, but
what's the reaction and I knowsometimes you don't necessarily
see the reaction from a book,and maybe you have if you've
(41:22):
talked to anyone but what's thereaction you typically get,
whether it's from the bookitself or whether it's from
doing these workshops that youdo, because I can imagine that
you're just that peace of mindand that ability to have a plan
that you're confident in andremoving stress is huge for
people.
It's huge for people.
Speaker 2 (41:37):
I'll let Ross answer this in a moment.
The two words that come to mindfor me, Paul, are relief and
gratitude.
That's what the people thatwe've helped feel.
They feel relief, they feelgratitude that there was someone
there that could actually helpthem in a meaningful,
intentional way.
Put these pieces together.
Speaker 3 (42:16):
Because until then, if they were trying to go it
alone or they were going withsome misguided advisory, say,
yeah, this should be good, right, if things cooperate.
And so people are very gratefulwhen they actually understand
that we're taking the time andwe have the knowledge to know
how we're going to use the leastamount of their own wealth and
give them the right claimingstrategy to really enhance their
lifestyle and to make sure andthey know it's going to work in
(42:37):
a highly probable way.
The other thing is too I'llgive you an example, a quick
story of someone I helpedrecently.
I would say trust is anotherthing.
It builds a lot of trust withpeople when they see the impact
we make.
And here's this because this iswhat this woman actually told
me.
She's like I trust youimplicitly.
Speaker 2 (42:54):
Now, she wasn't even a client yet.
Speaker 3 (42:55):
So we had met with her, we being me, and she came
in and she wanted to figure outokay, with her, we being me, and
she came in and she wanted tofigure out okay, when should I
claim Social Security?
She was already going to workuntil 70 anyways.
So she's 67.
She achieved her fullretirement age and she wanted to
know should I claim SocialSecurity now, because I can and
not be reduced, I'm going towork till 70 anyways, and how do
I manage my assets?
The whole thing, how do I putthis together?
And this is our discovery phase.
(43:17):
And so when I'm figuring outwith her, I'm talking through
her and figuring out her story,and I unpacked that she had been
married and divorced and raisedher kids, basically her whole
life on her own.
And I just happened to ask herI said how long were you married
?
11 years she was married andshe was divorced for 30
something.
But she was married over 10years.
And I said is your ex-husbandstill alive?
(43:38):
By chance?
She said no, he passed away.
And I said okay, here's what Ineed you to do.
While you're going through ourhomework process and all that I
said, I need you to call socialsecurity and say my ex-spouse
passed away and I believe I'meligible for a survivor benefit
from his record.
Can you please run the numbersfor me and compare them to my
benefit, cause they will do that.
They'll compare the two.
(43:59):
She comes back to me and I askedher how did it go with Social
Security?
She said you'll never believeit.
She's like, and I trust you nowwith everything, and I'm not
even a client.
She said I'm going to become aclient and she did.
But what she said was I'm goingto be claiming his benefit and
it's going to startretroactively back six months
and to take it monthly and allI'm going to do is give it all
to my kids because I don't needit.
(44:20):
That was their father, so itwas a great way to give him a
legacy to their kids.
And it ended up being a totalof about $61,000 that she was
going to get from socialsecurity and then she'd switched
to her own at 70 when sheactually retires.
You're not going to get aletter from social security
saying you have benefits thatare waiting for you.
No, so essentially we found her61 000 that she knew, that she
(44:46):
never knew it would even bepossible to be, to exist, and it
built, like I said, it builds alot of trust with people
helping them utilize that, getthe most out of their benefits
essentially their specificsituation.
So that was a huge one thatimpacted me greatly.
That you share that and I sharethat pretty much at every
workshop we do, because it'sincredible to me.
Speaker 1 (45:04):
I really appreciate your time today.
This has been fascinating.
It's something I'm myself.
I'm let's see how old am I?
I'm 49.
I'm still a few years away, butI see the impact that social
security has for my parents andI've learned so much from you
guys and just listening to yourbook and talking to you that I
really appreciate all the wisdomthat you've shared.
Before we wrap up today'sinterviews, are there any final
(45:24):
thoughts that you'd like toshare with our audience?
Speaker 2 (45:27):
The thoughts I would have are a great thank you to
you, paul, your team, helping ussee this project through to
completion, publishing numberone Amazon bestseller.
We are so excited every singleday to help more and more people
, and you've allowed us now tohelp even more people than we
were before.
We can now promote this book.
(45:48):
We can hopefully have peopleread this and again change their
mindset a little bit.
Don't jump to a conclusion thatyou're faced with the same, I
guess, predicament or the sameclaiming decision as your
neighbor or your sister or whatyour parents did.
It should be very unique, thedecision-making that you have
when it comes to social security.
Claiming Again.
(46:08):
We think it can be acornerstone.
Russ and I have embraced thecomplexity of the rules and the
filing strategies.
We have trademark software thatcan help people with this,
again, deducing what the leastamount of capital needs to be to
have the retirement that youwish for.
So you have excess capitalbeyond break even bookcom,
(46:30):
beyond break even bookcom to getessentially the free ebook and
audio version of our book.
Speaker 1 (46:37):
Tell us just briefly.
So the two of you co-narratedthe audio book.
What was that experience like?
Speaker 3 (46:42):
Yeah, it was actually kind of boring because we would
go back and forth with thechapters and we were in our
studio and he'd be reading andit'd be going on and on and on
and I'd be reading and it washarder than we thought because
it's just, it's like a marathonand reading out loud is tiring.
It was like reading to my kidsto put them to bed, except
bedtime was a long ways away.
Speaker 1 (47:03):
But it was great.
It was great.
I just listened to it.
It came out very well and Ipersonally love how the two of
you bounce back and forth.
I think it brings in somecontrast and some more interest.
Any final thoughts before wewrap up.
Speaker 3 (47:16):
I'd say that we help people.
We're physically located in NewYork State and we have an
office in Jupiter.
We teach our workshopsphysically in New York and in
South Florida and in Texas andTennessee, but this is a
national program and we haveclients in almost every state
and so no matter where you liveit doesn't matter where you live
(47:36):
In the US we help everybody.
And again,beyondbreakevenbookcom is where
you can read more about how wehelp people really through our
book complimentary PDF and audiobook and then, if you have any
questions, you can call usdirectly at 1-888-280-PLAN
P-L-A-N and you can schedule acomplimentary retirement income
stress test is what we call itto see where you stack up and
(47:58):
what you think you might do.
And if you have the right,claiming decision and strategy
for you and your family Verycool, thank you so much for your
time today.
Speaker 1 (48:09):
I've enjoyed the conversation.
We have too.
Thanks for having us.
Thank you, Paul.
All right Bye for now.
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