Getting Your Retirement in Order - Back to the Basics Pt. 2

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Episode Transcript

(00:00):
The advice given on the following programdoes not necessarily represent the views of iHeartMedia,
its management and staff. Since individualsituations canon will be different. Please
consider this when exercising any options givenby our guests. It's time to get
your retirement plan in order. Welcometo the Empowered Retirement Show with Nick Tooman

(00:22):
and Caleb Simbolac. Reach out tothe Empowered Financial Team now at six eight
two one two seventy three hundred,or visit their website empowered FM dot com.
Now here's your host, Nick Toomanand Caleb Simbolac. Good Saturday morning,
everybody. This is Nick Tooman andCaleb Simbolac. I'm the Empowered Retirement

(00:44):
Radio Show. You can reach usat six oh eight two one two seven
three zero zero or go to retireMadison dot com. Retire Madison dot com.
Good morning, Happy Saturday. Caleb. How are you doing? Nick?
Tide outside, but it's in thestudio. It feels good in here.
Hot. I would say, we'vebeen waiting for this all year.
I don't know if everybody has beenwaiting for ninety degrees, but I have,

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and it is certainly summertime. We'repast Memorial day of the year is
flying by, but it is certainlysummertime, and I want to talk a
little bit this morning about things thatmake us think of summer. You know,
we just had the Memorial Day weekend. By the way, we want
to mention to all those people thathave served and died for this country that
we are glad that we had thechance last week to celebrate. Yeah,

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and we're thankful for their service.But Memorial Day is the unofficial kickoff to
summer. And when we think ofsummertime activities, I think of barbecuing and
grilling. And what are some ofthe things you think of in the summer.
The farmers market is probably the biggestone, right, and that's like
the best go to activity if youhave a wife or a spouse. Just
go downtown beautiful Saturday morning, getssome vegetables, just maybe some cheese that's

(01:52):
always in. That is a goodone. Sean. Now, Sean's in
the studio today, the music behindthe operation. They're Sean. So what
are some of your go to summertimego to summertime things, windows down,
cruising, getting some fresh air,spending time at the park with my kiddo.
Yeah, I love it all.Those are great things. I think

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also of summertime movies. I thinkof specifically baseball is Baseball is a sport
that we play all summer summer long, day in and day out. And
one of my favorites is the movieField the Dreams. I'm assuming both of
you have seen that. It's onevery other week. I have, it's
been a long time, but youcan't. I mean the iconic field,
right, like the iconic field downin Iowa, which I visited. You
can go visit that. I spenta lot of time in Iowa. My

(02:36):
kids play some ball down there.But that iconic line in the movie.
I was thinking about this the otherday when we were preparing for the show,
that iconic line where they say,if you build it, they will
come, or if you build it, he will come, And all throughout
the show we're trying to figure outwhat do they mean, what do you
mean build it? And ultimately theyjust build this big baseball field for the
actor's father and it's again, greatbaseball movie, iconic. But I was

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thinking about that because it does relateto retirement. And over the last couple
of weeks, Caleb, we havebeen and you've been talking with Pete about
building that perfect retirement. Yeah,And when you think of how we build
that perfect retirement, there's a couplethings that go into that. First of
all, it's visualizing your dream,just like they visualized in the movie that

(03:21):
perfect baseball field. Understanding what arethe tools and materials you need to build
that dream retirement, and then findingthe right builder or build it yourself.
And that's why I thought it wasa great segue into this show, is
if you build it, he willcome, absolutely. And I think that's
one thing a lot of people don'tunderstand is that, especially when it comes

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to their personal retirement, right,there's no silver bullet. Generic advice is
not going to apply to every situation, right, And so understanding what you
want in retirement, understanding the toolsthat you have and maybe the tools that
you need to move forward, andhow you can really orchestrate those things together,
which is why, as you said, it's important to find somebody to
come alongside of you, and thatso that all of the stress and burden

(04:03):
is not you or your spouse,and that you know that there's somebody coming
alongside of you analyzing and taking careof your plan as it goes. And
we are here to help and tobe alongside of you if that is what
you need and if you're ready atthis point in life to take that next
step and you're maybe a few yearsfrom leaving a career and living that dream

(04:24):
retirement. So that's what this showis about. That's why we do this
every week. That's why we teachretirement courses. We help people get ready
for that next phase of life tobuild that dream retirement. Just like in
the movie, if you build itright and you'll have that dream retirement,
can live happily ever after. Butwe're going to continue in this show,

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Caleb build on the last couple ofweeks where we've talked about those anchors or
those pillars of a retirement blueprint.We're going to get into that in the
next couple of segments, So staywith us. We got a great show
on tap here as we kick offsummer. This is Nick Toman Caleb Simbolac,
the Empowered Retirement Radio Show here tohelp you build your dream retirement underneath

(05:05):
the boys to them oh Cud,Welcome back everybody to the Empowered Retirement Radio
Show. This is Caleb Simbolac herewith Nicktone and CFP as always to make

(05:27):
your retirement better. You can reachus at six oz eight two one two
seventy three hundred, or you cango to our website at Retiremattison dot com.
So, Nick, two weeks ago, Pete and I started a new
series where we're going over the sixpillars and what we mean by the six
pillars or these are the six areasof retirement that you have to purpose your
money and have a plan for twomore or less ensure success. And so

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in that session, we covered thefirst two pillars, which is income planning,
which, as if you've ever listenedto our show before a lot of
you probably know, we consider thisto be the driver of her time,
arguably the most important aspect of retirement. We talked about investments and a lot
of the times those two can gohand in hand and they have to operate

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very succinctly. Today we're gonna betalking about taxes, We'll be talking about
maybe some healthcare, some estate planning, which are some other pillars. And
then lastly, the last pillar iswho you choose to come alongside of you
in retirement. And that's a goodway to set this segment up because those
six pillars are something we deeply believein teaching people about as they get ready

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for retirement. And the reason whywe believe in these six pillars and preparing
this way is because, as youand I have talked about over the years,
the accumulation part of your life,which is what most people are in
when they're working, when they're savingmoney. And by the way, most
people out there that are listening toour show and are engaged in the show

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have been good savers. They're puttingmoney away in their four O one case
or their four or three beings ortheir brokerage accounts, and they're building Well.
Yeah, but when you retire,we consider that the time of life
where it's the preservation and distribution phaseof life where you have to combine the
strategies to preserve your money, todistribute your money, and, by the

(07:13):
way, to grow your money.And those are two different things. If
I can sum it up this way, it's you're going from earning a living
to creating a retirement. Think aboutthat for a second. You're earning a
living, which most of our listenersare doing right now, to creating a
retirement. And if that's the case, we don't think that life can just

(07:34):
be on autopilot anymore. When youget to retirement or prepare for retirement,
those six pillars that you described canno longer be on autopilot. Absolutely,
and I think a big thing aswell as to notice that your money is
going to be purposed differently. Right, and so people in that accumulation phase,
they're just receiving a paycheck, they'reyou know, they're sending off the

(07:56):
deferred comp they're going to let themgrow or whatever. But when you retire,
right, I mean, unless youhave a pension, right, Pensions
are a lot less common nowadays asthey were fifty sixty years ago. Now
four one ks are more predominant.So it's okay, maybe you have to
create your own paycheck. Do youwant to take a paycut on your standard
of living knowing that there might notbe money there depending on the ebbs and
flows of the market if you're justchoosing to withdraw from your four oh one
key for income? So okay,how do we create an income? How

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do we know that our quality oflife is going to be more or less
the same? How can we upholdit with guaranteed income that we know is
going to be there? Right,So maybe using an annuity, maybe using
a different product, maybe you havean a pension, or you know you're
timing out your social Security in aspecific way. But how can you make
sure that you know you have apaycheck coming in, that you have guaranteed
income coming in, and then howare we also going to grow our money

(08:41):
as well? Right, so asa growth component on that as well your
investments. You're really at Caleb describingan active approach to preparing or managing your
money. You described income, whichis the driver in retirement because without a
paycheck you don't really have anything investments. How you manage money invest money should
be a little bit more active.The old set it and forget it that

(09:01):
we're used to when we're thirty nineor forty years old and or four oh
one k, which, by theway, probably worked, Okay, you
didn't get too upset when the marketwas down, you took advantage of it,
you contributed. But when you're retiringand early on, if the market's
down, that could be troubles.So that active approach the same thing with
taxes. When you're thirty five,forty fifty, you get into a rhythm
every year of what your tax liabilityis going to be. But now when

(09:24):
you start dipping into retirement tools,it's going to look a lot different because
you have to factor and how it'sso security taxed and do you have tax
deferred tax rate? So we'll getinto that. Healthcare when you're younger is
usually the insurance that you have throughyour work and you're a little healthier,
and all of a sudden you getolder, you're talking metacare, long term
care, different elements that weren't inplay. And then the legacy piece.

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Many of our listeners out there haveput together wills when their kids were younger
to establish guardianship. But now we'retalking about something different when you're in your
sixties and seventies, is having acustomized way to leave assets to your charities
and your kids. So these areall active thoughts about retirement, absolutely,
and you know, we live insuch different times and even just like twenty

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or thirty years ago, and youoften use the saying what is it that
you guys use This isn't your father'sretirement exactly right, where you can't just
withdraw four percent now it's like twopoint eight percent from your investment account now,
right because in retirement, do youwant to live off commission? That's
that's kind of what we call it. And so there's really a lot that
goes into retirement planning folks. Andso what we do each week is we

(10:26):
make an offer out to those listeningand what we'll typically leave it up what
you want to do five people?Yes, we'll do five people. So
for the first five callers to contactus, we will schedule a free consultation
just for you to sit down forabout forty five minutes to maybe an hour
hour and a half depending. Wealways joke with Nick it's going to be
a little bit longer, but justto sit down for us to get to
know each other, to see whatyou have done in that accumulation phase of

(10:46):
life, to see where you havecome in preparing for your retirement, to
see even if we get along andlike each other, and to see if
there could be a mutual benefit thereand if so, and you'd like to
move on to a second meaning thatwe will do that. It's it's pretty
low maintenance. You don't have todig through everything, bring all of your
statements. Like we said, wejust really want to get to know where
you're at, where you've come fromand see if we can actually provide any

(11:07):
benefit. And if you want todo that and you made an offer for
the first five people, we dobudget some time each week for those meetings.
You can contact us two different ways. Caleb, We're gonna make this
very flexible. You can call usat six to eight two one two seventy
three D. And remember, folks, when you call us over the weekend,
you are going to get a voicemail. So you just need to leave
your name and phone number and letus know you're calling. The schedule that

(11:31):
visit, and then Caleb, youcontact the folks back on Monday to set
up that time over the next weekor so. If you like to do
this online, you can go toour revised website at retire Madison dot com
and there's a spot there where youcan fill out just a little bit of
information requesting a visit, and thesame thing applies. You'll get back to
them on Monday for that time.And as you said, there isn't really

(11:54):
a lot of preparation and a lotof prep work for that visit. It
is almost over, just a cupof coffee and once we're done at that
the end of that hour, wecan decide, like you said, do
we want to do a deeper diveand start lifting up the hood and figure
out where the gaps are. Andjust so you know, if we do
go to a second visit, thatis also complimentary, So there's really two

(12:16):
complimentary and visit potentially involved. Andhopefully that gets you on your way to
figuring out where you are, whatto look forward to, if we're what
you need at this point in life, so again, give us a call
six o eight two one two seventythree hundred one. Other thing I just
want to say about having life onautopilot and now being more active is in

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that first segment we were talking aboutmovies Field of Dreams, and I think
back to a movie in the lateseventies. I believe Sean probably knows this,
the movie Airplane. Seeing that movieand you're too young, Caleb,
people looking at me like it wasa comedy in the late nineteen seventies and
had some big name actors at thetime. But for the listeners out there,

(12:58):
I bring it up because many ofthem are probably saw this movie and
it's funny and it's again just aparody on some different things in life.
But they're taking this flight and thepilots get sick and they can't fly the
plane anymore. So as they're cruisingalong, they have this blow up pilot
and he's just autopilot. That's theirautopan. They're just cruising along and it's
fine for most of the movie untilthey have to land the plane. And

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when they have to land the plane, they have to get rid of the
autopilot and direct this amateur on howto land that plane safely. And that
is retirement. Is when you're cruisingalong and you're working and you're doing a
good job saving that's great. Butwhen you have to prepare for this next
part of life, that's where thesestrategies and there's a lot of moving parts
and things that you really need toeducate yourself on. And that's what we're

(13:43):
here to do. Yeah. Absolutely, and especially when it comes to their
risks. You know, I thinkretirement planning really is nitty gritty. There
are a lot of components that areintertwined. Right, even when it comes
to producing your income, how areyou going to purpose your money to make
sure you have that paycheck coming inregardless of what the market does. Okay,
so about your investments, there's alot more risks at alt right.
You have sequence of returns risk regardingmarket performance. You have sequence of returns

(14:05):
risk regarding inflation. Right, howinflation can affect your money and its growth
factoring, And so like you're saying, yes, it is very beneficial to
have somebody come alongside of you,because I think the plane illustration is great
as well, because all the pilotis pretty easy, but it's up to
the landing that it's like, Okay, you probably want somebody a little bit
more. Yeah, I'm just I'mlaughing because I saw that about a month

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and a half ago, was onand I saw that scene and it does
very much. It's funny, butretirement this is serious stuff, and as
we're going to talk about throughout theshow, sometimes the conversations are tough ones
to have, you know, youand Pete we're talking in the last show
about income and a little bit aboutinvestments, and those are some of the
fun topic, especially the investments.Now, the last year or so,

(14:48):
the market spent a little bit challengingand we can kind of throw the rules
out the window. It seemed likein twenty twenty two. Yeah, we're
just talking about that before the show. But that's the sexy part of money.
People want to know what's the marketgoing to do, and what can
I expect to make next year andall of that. But the other pieces
of retirement we're going to talk about, taxes and healthcare and leaving a legacy,
those are just as important. Ifyou don't get those right, those

(15:11):
dominoes could tip over and upend yourretirement. So let's just in the last
few minutes here, let's start talkingabout our favorite uncle, and that is
Uncle Sam, and that is taxes. And I think that is something that's
probably on the minds of most peoplein this country. We're just going through
right now the death ceiling and tryingto negotiate that situation. And when we

(15:33):
talk about the debt ceiling, wealso then have to understand how much debt
we've accumulated as a company and whydoes that affect us because we're going to
have to pay the bill at somepoint and that means taxes, right,
And I mean honestly, I meanso with the Deat Sitting Bill just being
passed, like for those who arestepping into retirement now is arguably one of
the most important times ever to starttax planning more efficiently. Right, we

(15:56):
have taxes sunsetting here in the nextcouple of years, which means there's going
to be new tax brackets released.I don't know if people realize. So
with this new debt ceiling deal thatwent through, there is no cap through
twenty twenty five. So what doesthat give the government a lot of leeway
to do to spend a lot ofmoney, which in return means okay,
depending on where it's coming from.Right, So they really only negotiated about
eleven percent of the bill. Notmuch revenue was cut. It's not as

(16:18):
much revenue as people think. Soour spending, I should say, not
revenue, and I guess that's moreor less my point. We're going to
be spending more, revenue is goingto need to be increased, and so
where's that going to come from?Imarely through taxes and so making sure for
those of you, I mean alot of you have accumulated in your nest
egg, your four ohn K,your IRA, a lot of deferred compensation,
getting a plan now and understanding yourtax liabilities, especially with what is

(16:42):
coming with the taxes sun setting,with our country continuing to spend more,
taxes are going to go up,So how can you deal with that potential
tax infestation? And you just describeboth sides of the equation. The first
one was the national debt and howwe pay for that, and the probability
the taxes will go up in thefuture, even though in retirement the old
adage is your taxes are gonna godown because you're gonna spend less. We

(17:03):
can talk about that on another show. That's not necessarily true. When do
you sumend the most money each dayof the week, Saturday? What does
retirement like every Saturday? Right,So you're not necessarily going to spend lesson
of retirement. You want to takea pay cut. So if tax rates
go up, that could be aproblem. And like you just said,
so much of our wealth, overseventy percent of our wealth according to many

(17:25):
studies recently, has been accumulated intax to furd accounts that our listeners are
familiar with four O one k's irasfour O three b's. So that does
not mean tax free. It means, for lack of a better way of
saying it, we've kicked the candown the road ourselves, and now we're
going to have to pay the bills. So we're going to continue this topic.
On the other side. We're alsogoing to talk a little bit about

(17:48):
that elephant in the room topic andlegacy planning and those other elements of a
good retirement blueprint. Those pillars.We're going to keep talking about this.
We're glad you guys are joining uson a beauty full Saturday summer Saturday morning.
This is Nick Tooman and Caleb Simbolac, the Empowered Retirement Radio Show,
here to help you create your dreamretirement. Welcome back, everybody to the

(18:23):
Empowered Retirement Radio Show on a Saturdaymorning. This is Nick Tooman and Caleb
Simbolac here to help make your retirementbetter. Remember, folks, if you
do want to reach us, takeadvantage of that offer that we made earlier
in the show, and we'll makeagain here in a bit, you can
call us at six to eight twoone two seventy to retire Madison dot com.

(18:44):
You know, Caleb, in thatlast segment we were talking about several
of the pillars. We recap whatyou and Peter talked about last week with
investment planning and the driver of retirement, that's income planning, and we also
started talking about the importance of taxesin retirement, and I like to say
the importance of tax engineering your portfolio, because for many years life's on autopilots.

(19:07):
You're putting money away, you're usingtax deferred tools like I R raise
four one case four or three bs, and that is fine, but in
many cases we're just kicking the candown the road. So now here we
are, maybe you're a few yearsfrom retirement, maybe retired of ready,
and you're trying to figure out,Okay, what does that mean? How
can I begin to tax engineer?What are the tools that I can use?

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Because quite frankly, there are nota ton of tools out there that
are tax favorable to us anymore,right, but there are a few.
So let's go ahead and talk abouta couple of tools that people may be
familiar with and how we could usethem. Yeah. Absolutely. I think
one thing that's important to note isabout almost three quarters, just a little
under of three fourths of people waitto distribute their money from the retirement counts

(19:51):
until their RMDS comes. So theyrequired minimum distributions, and as you know,
in the past couple of years,they bumped it back to seventy two
and then they're most likely going tobump it back to even they're even talking
about maybe seventy five here in thenew future, So you're kind of seventy
two, seventy three, and nowin a few years probably your right cabe
going to be seventy five. Butthat's right, So let's talk about the
impact of that. Yeah, andabsolutely, and so on the surface,
it sounds good, right, Okay, we could delay our tax implications,

(20:14):
but what happens to your nest eggin that time period is that it grows,
Okay, and so ultimately you're goingto have a higher tax liability.
You know, the way that theycalculate rmds is based off of your life
expectancy, so that's gonna be cuta little bit shorter, and so you
don't have to a draw more fromthat account, and so you're gonna get
hit hard with taxes. And soone of the ways that we really love,
and this is just you've probably heardof it before. It's really basic,
but it's very underutilized. Especially Ilike the way you term it tax

(20:37):
engineering, especially making sure that youhave a tax engineered plan is roth conversions.
Okay, so you have your taxableaccounts, you can convert money,
you can pay the tax on itnow, and you can put it into
a ROTH account and it gives youreally good tax advantages where that money can
grow and accumulate in a much moretax favorable sense. And those ROTH conversions
when you bring that topic up,and most of our listeners have heard of

(21:00):
roth iraise and some of them useROTH four O one case. But the
idea of behind the ROTH is thatif you take it out and you let
that account season long enough, whenyou take the money out, it comes
out tax free. And by theway, roth iraise do not require minimum
distributions, so that's another benefit ofthe ROTH. But here's the thing you

(21:22):
mentioned Roth conversions, and I'm suremost of our listeners have heard somebody that
have done a ROTH conversion. Someof them have done them roth conversions themselves.
But it's similar to filing for SocialSecurity. I would equate it that
way, meaning there is no onesize fits all, and when you take
your benefits is very customized to everyone. It shouldn't be a water cooler discussion.
Well, I took it early,my friend took it early. So

(21:44):
this is what we're going to do. Same thing with Roth conversions. Some
people will be aggressive and convert theirmoney from tax deferred to tax free all
at once, some will do itover time, whatever the case is.
But it's very customized. So that'swhere that engineering and partnerships become even more
important. Absolutely. I don't thinkwhat a lot of people realize is,
especially when it comes to retirement andtax engineering, is there's a tax tolerance,

(22:07):
right, Just like when it comesto investments, people have tolerances for
how much they can stomach and aloss and that kind of judges Okay,
maybe we can get little more aggressivewhatnot. But even when it comes to
taxes, right, how much doyou want to how much are you willing
to sacrifice now or to take thebite the bullet down a specific tax bracket,
and how much you're willing to doso, and you know, stomach
seeing that money go to the governmentand the hopes or in the advantage of

(22:30):
not having to pay that tax lateron down the road when tax brackets might
be a little bit higher. Andso, as you were saying, it
really depends on that individual, right, what is their income, how much
can they actually stomach, how closeare they to be able and to utilize
the standard deduction of their taxes,and how can we know, over a
certain amount of period of time,reduce that liability for the time or maybe
even you know, take it allaway by the time that they get to

(22:51):
their R and d's. And whenwe're talking about this is what I'm visualizing
is having tax diversification. So whenwe're partnering with people to help work through
these conversions and how to convert them, it doesn't necessarily mean we're converting all
the money. We're just creating bucketsso that, yes, you may still
end up with a bucket of taxdeferred money and that's okay, but we've

(23:12):
engineered that hopefully correctly, so youalso have a tax free bucket and then
maybe have an after tax bucket that'smore capital gains taxed, so you have
tax diversification so in retirement you're nothit so hard where all your wealth is
in or primarily in that tax deferredbucket, and now you're going to be
subject to those higher interest rates.Yeah, so let's go on and just

(23:37):
talk about another tool that is alsotax favorable. And we're not going to
get into the weeds, and we'renot promoting one particular product, but that
is using, if you use itproperly, cash value life insurance or the
cash value in life insurance, thatcan also be a tax favorable tool.
Absolutely, So we'll just focus onthe tax aspect of the US the index

(23:57):
universal life insurance policies, but werefer to them as like the Swiss Army
knife of retirements. They can beused for so many different things. You
can use it to really benefit healthcare. Right. You obviously have the death
benefit protection, but in this casewe're gonna be talking about the cash value
aspect of it. So when youbuy a life insurance policy and you're paying
premiums towards it, there's going tobe a cash value account associated with that

(24:19):
policy. And so what's really niceabout this cash value account is it acts
very similar to a ROTH in thissense of that money you can access it
and you don't actually have to reportit as income. You get that money
tax free, and so you canuse that really advantageously. Right of just
Okay, you need some income,maybe you're buying a home, Maybe you
need it for some healthcare expenses.Maybe you just want to go on vacation

(24:40):
and you don't want to increase yourtax liability to do so well. Great,
you've been funding an IULL and indexeduniversal life policy that you can access
that cash value life insurance account.That's principle protected, right, So it's
accumulating, it's probably going to bemeasured to some kind of a benchmark of
an index like the SMP five hundred, and it's principle protected. But it's
going to be compounding as well,and it could be used excuse me,

(25:00):
for a big purchase you mentioned,for income or to go on vacation.
I'll give an example. I hadsomebody a few years ago that was looking
to buy a plot of land downsouth to build on and they had tax
engineered their plan well, and sothat was an option a resource to go
into to take a large psalmba distributionto fund that. So again, very

(25:22):
customized to everybody out there. Again, we're not talking today, we're not
going to get in the weeds getvery granular about iuls, but just know
that's also a tax favorable tool thatcould be in play to help create that
tax engineering strategy that works well foryou in retirement. So as you're listening
out there today, just like wedid in segment number one, we're going

(25:45):
to continue to make an offer forthose out there that maybe our two or
three years from retirement, that haveretired recently, have sold a business,
that have gone through a life transition, that are looking for somebody to partner
with to help guide them into thatnext phase of life. If you're looking
for somebody to actually help you designa customized retirement plan, give us a

(26:07):
call today. Our number is sixh eight two one two seventy three hundred,
or go to retire Madison dot comand request a one hour complimentary visit
with one of our advisers to comein and let's sit down, get to
know you a little bit, getto know us a little bit, and
figure out if what we do isretirement planning specialists can help prepare you for

(26:27):
that next phase of life. Sowhen you call us, remember you're going
to leave a message because it's ona Saturday. Everybody's off on Saturday.
Or if you go to our websiteand request that visit, Caleb will reach
back out to you on Monday toset that up. We do that at
our office over your Greenway station inperson, or we can do it via
zoom, whatever is more convenient.But during that time there really isn't excuse

(26:49):
me any preparation other than you comein. We sit down over a cup
of coffee. I listen, Caleb, you and Pete listen to what's on
your mind, what you think you'vedone well, where there might be gaps.
And if at that point we decideto go a little bit deeper,
we'll schedule another meeting that's also complimentary, and that will help us figure out

(27:10):
other gaps in retirement. And ifwhat we do is what you need.
So we're having a great show today. We want you to stay with us
for that last segment, we'll pickup on these six pillars. This is
the Empowered Retirement Radio Show, NickTooman Caleb Simbolac here to make your retirement
awesome. But baby, if yourun on the big grain tractors. Welcome

(27:36):
back everybody to the Empowered Retirement RadioShow. This is Caleb Simbolac here with
Nick Tooman CFP as always on aSaturday morning, to make your retirement better.
You can reach us at six Oeight two one two seventy three hundred,
that is six eight two one twoseventy three hundred, or you can
go to our website at retire Madisondot com. So Nick, we've been
going through We started a series Peteand I did a couple weeks ago going

(28:00):
through the six pillars or the sixareas of retirement that we believe you absolutely
have to have money purposed out too, in a manner catered and tailored specifically
to that individual's needs. And sowe touched on in that first episode on
income the driver of retirement investments,which people always love to talk about how
those two things are intertwined. Andthen today we talked a lot about taxes

(28:21):
and really about a lot of people'stax liabilities in retirement, how they can
maybe tax engineered a little bit moreefficiently, and again ultimately that you know,
when it comes to tax engineering yourretirement, it's going to be very
specific as to where you've been inthat accumulation phase which your tax liability is
now a bunch of other things.But we talked about that, So if
you missed that segment, go backand listen to that, folks. And
this next pillar, this is thefun one. Everybody loves talking about this

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one, right, it's you know, healthcare and retirement, and we call
it the elephant in the room.It is the elephant in the room,
and we've referred to it as theelephant in the room for years because it
isn't always the most fun to talkabout, but it's probably just as important,
if not more important, than anyother pillar, probably besides income in

(29:03):
retirement planning, and that is healthcareand medicare and all the choices that are
involved with that. But even moreso, the one thing that you and
I know can devastate somebody's retirement ifit hits you, and that is if
you or your spouse ever need carefor an extended period of time. Absolutely,

(29:25):
and so people might not know this, but around seventy percent of individuals
are, in some way, shapeor form, we going to end up
in a long term care facility.And that's based on several reason studies,
whether it's gen Worth and you cango out there and you can look at
studies that have been done. Butapproximately two thirds or around seventy percent of
us, at some point we'll needcare, yes, for about how long?

(29:48):
So those studies are telling us howabout how long? The stay is
about three years, okay, Andwhen it comes to long term care and
the facilities, the quality difference isfar and wide, especially when it comes
to good care. It's expensive.And like, if you actually want good
long term care in Madison right now, it's going to cost you about one
hundred thousand dollars a year. That'sreally expensive to me if you have not

(30:11):
planned for it or don't have moneypurpose aside for specific tools. That's a
lot of money to be forked outthat a you know, could leave your
spouse. Maybe you end up dyingand it's the first spouse to go leave
them with a huge, massive lossof expenses cut out, and then you
know, what are they going todo? They bumping up in a bigger
tax back if they have way lessmoney now. And so it's really important
for many reasons, right I thinkthe spouse one is just a really big

(30:33):
one. To make sure that youhave a plan for healthcare well. And
that's why we want to address thisissue head on. We don't want to
talk about it, we don't wantto think about it. But if you've
ever had a parent that has gonethrough this, and I recently, over
the last six seven months, havehad quite a few conversations with people that
have had to help parents or brothersor somebody they know deal with this.

(30:55):
And if I could tell you howmany times people said, boy, I
just don't want this to be me. You realize it has to be dealt
with head on it. Here's Iguess a takeaway from all this, and
then we'll just touch on a fewthings that you can do. But here's
the thing, folks, you dothis to create one flexibility in your life.
When that happens too, It's likeputting a fortress or a wall.

(31:15):
If you have a plan to dealwith this around your wealth, it's putting
guardrails around your wealth. If youdeal with this topic properly. In three
you're doing it for your significant other, your spouse, or your kids.
That's why you do this is becausethe spouse or the adult children usually take
the brunt of a family member thatneeds care. So this might not be

(31:37):
the fun conversation, but as aCFP and as a fiduciary that help people
prepare for retirement, it's the rightconversation to tackle head on, absolutely,
and it's really important to have aretirement plan that is built around this as
well. Right, this isn't justa topic like when it comes to healthcare
and retirement, that you can justpush off until you know, maybe ten
or fifteen years in your retirement becauseyou don't know when the health events are

(32:00):
to hit, but also because theimplications of how you purpose your money early
on in retirement, I mean,longevity is a huge risk for people nowadays.
Right, we're in a totally newtime where I mean, when Social
Security started, you know, theaverage life expectancy was sixty years, right
for not very long. Now we'reliving i mean women eighty eight, men
eighty six, and eighties both menand and it's only going to increase,

(32:20):
right, And so making sure thatour money is going to make you make
it to the end of retirement aswe're living longer is extremely important. And
so especially if these long term careevents are happening later on in your retirement,
making sure that you have that principlethere and that you've already built that
wall around using specificitactics to know thatyou're going to be taking care of or
that even in the event that youneed to go in that there's gonna be
money left for your spouse very important. That's that's correct, Caben. The

(32:44):
bad news is that most people don'treally or truly understand what there are options
are to protect themselves, to putup that wall. It's not our parents
retirement. It's not just a situationwhere we're out there buying long term care
insurance or else going on medicaid.Yeah, those seem to be the two
options people think about right or knowabout. That's the bad news. The

(33:07):
good news is, though, ifyou do this the right way and you
plan the right way, you dohave options. And I just want to
we want to touch on these justbriefly, and we're not going to go
into the weeds. We're not goingto get too granular with the tools.
We're just going to mention there isgood news and there are tools out there.
We're going to tease a little bit. But if you take two or

(33:27):
three of these things that we're talkingabout and you put them together, that
could create the barrier or the wallwhere it doesn't use all your resources,
because I think pel people are afraidthey're going to use all their resources if
they have to protect themselves against thisevent, and they're not going to be
able to grow their money and distributethat. And that's the good news is
there are things we can do,right, So let's just talk briefly about

(33:49):
a couple of those tools out there. First, is you can go and
buy long term care interns. Now, I'm not and we're not huge fans
of that because there's not many companiesanymore that even offer launch care insurance.
That used to be hundred companies orso, and now there's what six,
yeah, five, and I mightn'tbe less. It might be like three
now. And the problem with standardlong term care insurance is your subject to
premium increases or benefit reduction. Soif somebody's out there listening and they have

(34:13):
long term care insurance, we generallydon't tell them to get rid of it.
You just build a plan around it. But you can still buy it
right, and it's very advantageous,like if you use it right, if
you actually end up in a longterm care facility, the coverage is typically
great. But it's not like cashvalue life insurance in a sense of like
you're paying these premiums towards it,and if you don't use it then you
get it back at some capacity.That's right, It's not like that,

(34:34):
that's exactly right. You could alsoif you're a veteran, there are some
VA benefits, there are some limitationsand income requirements things like that. But
if you're a veteran and serve thiscountry. There are some options there.
There's things called asset base long termcare insurance CALEB. That is where maybe
you inherited some money. And I'llgive an example. A couple of years
ago, I had some clients inheritlump some of money. They were trying

(34:59):
to deploy that different ways into themarket, and they took some of that
and put together a policy that hasnot only long term care features, but
has a death benefit provision to itcash back. So it wasn't a user
or lose it proposition. But that'sasset base long term care. Absolutely.
So let's talk about things that wesee quite often, and that's cash value

(35:21):
life insurance or we talked about inthat last segment IULS index universal life insurance.
Why would that be an option ora tool as you kind of mention,
it has tax benefits, right,also has healthcare benefits for obvious reasons.
And so you can actually get whatare called writers on these specific policies
and say you fail certain aspects ofdaily living, they will actually increase potential

(35:42):
income drawn from those policies. Andeven when it comes to an IUL and
index universal life policy, you havethat money there that you could to withdraw.
That's tax free, right, soin the event that you have to
fork out a lot of money wouldbe able to withdraw it from that policy
and you're not going to have toincrease your tax liability. That's a great
point if you own even whole lifeinsurance and there's a cash value component that

(36:04):
could be a resource to fun longterm care. Iuels mentioned the Swiss army
knife. It's a tax deferred tool. I love that term Swiss army knife
because there's just a multiple things youcan do with it. A state planning
long term care, so that isa great option, but you stl have
to qualify for it. Let's prefacewhen you're using that kind of a strategy,
still have to qualify for the insurance. If you've owned an annuity in

(36:29):
the past, you might want todouble check does it have what's called a
doubler feature, So if you boughtan annuity or have it annudity. I
hate to use the word bot becauseI don't like to sell a news.
I like to use them as atool or implement those when needed. But
if you have something like that,it may have a feature on there that
if you need care for an extendedperiod of time. The income you're getting
from that made double for three,four or five years. So there's tools

(36:52):
in the marketplace that can help.It's not going to solve the problem,
but it could be a way toget there in a better way. And
then there's things like home equity,how do you use equity and home reverse
mortgages. That industry has changed overthe years. So in the past three
or four years, it's been kindof cleaned up, right, we'd like
to say it's been cleaned up comparedto what it was years ago. Yep.

(37:14):
And you know a lot of peoplelike you know, we talk about
it on retirement courses. This one'sa little bit of a mix, right.
We're just doing like options that youcould have and build a defense around
because it might fit in your inyour retirement plan, right. But I
think a big one, especially whenit comes these reverse mortgages, is you
want us be able to stay home, right, Like you're going to be
able to have the equity, andyou want to be able to live in
your house as well. You know, if you have to go into a
long term care facility and you're forkingon a ton of money and you're gonna

(37:37):
end up having to leave the placethat you've been at for most of your
retirement. Right. That's that's justnot a fun position to be in.
So that's also why it's a reallygood considered option, because you would you
want to stay in your home.You do, and you have to be
careful when you use this tool,or any of these tools matter, right,
You have to be careful how muchyou use them, the specific tools,
whether it's insurance or equity or reversemortgage, because if you don't do

(38:00):
it the right way that fits you, you could get yourself in trouble,
right, you could overextend yourself.So it is an option if you want
to stay in your home strategically usingequity. And then the last thing is
you just simply self fund, meaningyou do take some of your wealth and
you set it aside to pay forthis care of yourself. So you see

(38:21):
where we were going at the beginning. Two or three of these things,
maybe a self fund a little bitof it, Maybe you dip into that
cash value life insurance, you usea little bit of equity. You blend
three of them together so you canthen still use your resources and your wealth
to grow and to distribute things likethat absolutely, and like we said,
there is no silver bowl in thislist, and it's really important, Like

(38:42):
I want to emphasis reaching out tosomebody and having somebody come alongside of you
in this because all of this isinterconnected, right, Which ones you use
has implications on your income, hasit all wraps together with your tax plan,
your investment plan, and so reallyhaving somebody come alongside of you to
put this plan together. It's reallyyep. And if you want to do
that, folks, call us todayat six eight two on two seventy three,

(39:04):
go to retire Madison dot com andschedule that one hour complimentary visit.
It is for the first five peoplethat contact us during the show, and
if you call us or go online, we'll contact you back on Monday.
Caleb will to schedule that time withone of our advisors. Again, just
a complimentary visit to see if whatwe do can help you prepare for that
next phase of life. Boy,this hour goes fast, as it always

(39:28):
does. We are excited. We'regoing to continue this discussion next week.
You're going to round out those pillarsto join us next week on a Saturday
morning for the Empowered Retirement radio show. Folks, go have a great week
and enjoy the toasty weather out thereat summertime. This is Nick Tom and
Caleb Simbilac here to make your retirementbetter. Investment advisory services offer through Track

(39:49):
Capital Management LLLC and SEC Registered Investmentadvisor. Information presented is for educational purposes
only and it should not be consideredspecific and investment advice does not take into
consideration your specific situation and does notintend to make an offer or solicitation for
the sale or purchase of any securitiesor investment strategies. Investments involve risk and

(40:12):
are not guaranteed, and past performanceis no guarantee of future results. For
specific tax advice on any strategy,consults with a qualified tax professional before implementing
any strategy discussed here in