Real Retirement Planning

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Episode Transcript

(00:00):
The advice given on the following programdoes not necessarily represent the views of iHeartMedia
It's management and staff. Since individualsituations ken and 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 Pete Simbolac

(00:21):
and Nick Toman CFP. Reach outto the Empowered Financial Team now at six
eight two one two seventy three hundredor visit their website Empowered appm dot com.
Now here's your host, Pete Simblacand Nick Tomy. Welcome back to
everybody on this frigid fall after fallmorning. This is the Empowered Retirement Radio

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Show. Pete Simblac here Nick Toman, certified Financial Planner. You can always
find it's at Empowered Financial Management sixzero eight to one two seven three zero
zero or our website Retiremadison dot com. It has been so nice to be
able to say he's mild all thoseother things for fall. The colors have

(01:03):
been outstanding this year, but itis just today cold. It's gonna be
cold for all those attending the BadgerGame the night Ohio State. I will
be there, and we are lookingfor that perfect acclamation of all the right
things coming together for the Badgers tosomehow steal a victory. Wouldn't that be
fantastic? It would be at OhioState, even though it does you said

(01:26):
this fall Saturday, what do Isay after Labor Day? Pete? It
could snow we're on the verge again. That so right, and there's a
chance at game day they said apossibility of some mix or something like that.
But you know what, We're gonnabe loyal Badger fans. We're gonna
have fun. My father in lawis a big Ohio State grew up outside

(01:46):
of the Ohio State area there andit's a big fan. So yes,
I bring him and he usually getsto cheer when they're in town. I
got to go to the game lasttime when they were in town. And
hopefully we you know, get abetter result. But nonetheless, it's bucky
and we want a good plan tocome together. We're hoping our coaches have

(02:06):
the plan. We're hoping that theplayers right. They had a good fourth
quarter against Illinois last week, andyou know, coach Fickle was like,
I hope they've turned the corner andwe're all hoping then turned the corner too.
But now relating that to retirement,right, I think fall is kind
of like as far as seasons go, is that perfect relation to you know,

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the time of year of fall isfor retirement and the beautiful colors and
the sunsets and the cooler temperatures.It's brisk and fresh and all those cool
things things. But you want aplan to come together. You want so
we're talking about the Badgers. Wewant this game to come together when it
comes to retirement. So often peopledon't even realize that they need to game

(02:51):
plan that's right for that game ofretirement. When you relate it to something
like football, there's a lot ofwork thatchoes in behind the scenes and the
office in the summer, in theweight room that might not be the most
exciting. We see the results onSaturday or Sunday or Monday, whatever day
it is, and that's very similarto retirement. There is work and effort

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that should be going into preparing forthat amazing retirement. We see when you
have the results of the plan andyou're sixty five and seventy and done the
right things the right way, howawesome that can be. But we also
have seen the other side of ittoo. Okay, so now the other
side of it, right, theGreen Bay Packers. No boy without Rogers,
right, I mean, maybe Rogerswas really masking some really bad coaching

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and now all of a sudden,you don't have Rogers there, and all
of a sudden that's exposed. Andthat relates back to retirement as well,
because you might have the best playerin the league or one of the best
players in the league, but yougot to have the right team around them
as well. Up until last year, Pete, you know what I think
that Aaron Rodgers was to people gettingready to retire. It was thirteen years

(03:59):
of the good market and the goodtimes we had in the thirteen and fourteen
percent that masked many of the problemsthey were going to see because they were
happy. They looked at those returnsand thought, i can ride off into
retirement in perpetuity. I'm going tomake this kind of money and life's going
to be good. And then whathappened last year and what are we going
through right now? So I thinkthat relates to That's a good example.
I think he relates really well.And folks, we're not here to talk

(04:23):
about football. We're here to havesome fun and talk about retirement. And
really what we want to do istalk about that game plan and the tools
you use. And for us,we use the six pillars. That's our
strategy. So if you think ofthat offensive coordinator to write game planning,
what kind of schemes and players arethey going to put out there? That's
what we're talking about. These arethe tools we use. So this program,

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we're going to talk about those sixpillars that everybody needs to have a
successful retirement. This is the EmpoweredRetirement Radio. You've got to come back
because this is where we make yourretirement dreams become a reality. Welcome back

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everybody on a fall Saturday morning.This is Nicktoeman and Pete Simblack, the
Empowered Retirement Radio Show, here tohelp make your retirement better. There's two
ways you can get in contact withus. The first, if you'd like
to give us a call at sixoh eight two one two seventy three hundred.
Remember if you call us on theweekend to schedule a time with one
of our advisor staff is off,so leave your name and number. Also,

(05:30):
you can go to Retiremadison dot comcheck out our updated website. A
lot of good content there, Pete, past episodes of some of our radio
shows, articles that we've written forKiplinger Magazine, just a lot of good
information about retirement. So check outretire Madison dot com. So Pete,
we were talking today. We werelating in that first episode the show today

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to a good plan, and specificallya good plan for the Badgers. It's
a Badger Saturday, and we hopethat they have a good game plan to
ack of Ohio State. But we'renot here to talk about football. We're
here to talk about and also,I want to really bring up that opposite
side where I brought up Rogers andthe Packers, because without Rogers, it's
obvious that they had Rogers and dida whole lot of good things with him.

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But without him, I'm not sayingLove isn't a good quarterback. We're
not getting the personnel. It's obviousthat the game planning is not so good.
He was able to overcome that gameplan. And the danger I think
that's for so many people going intoretirement is they had that superstar player those
thirteen years. The last thirteen years, it did so well. Now we're
back to normal kind of markets wherethere's a lot of uncertainty and things like

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that, you better game plan reallywell well not only may you have that
thing that is masking some of thechallenges ahead, like the performance of the
market of the last thirteen years investmentreturns. Add to that PETE, that
retirement and how you handle your moneyand your resources and your wealth is completely
different than when you accumulated your wealth. You always use this analogy, and

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I love it when you do itin the classes that you tea is climbing
up the mountain is a lot differentthan going down the mountain. So we're
talking today about some of those things. Get your juices flowing a little bit
when you start going down the mountain, and if you're within three years of
going down that mountain, five years, maybe you've been going down the mountain.
It's a little slippery and you're startingto stumble, and you just retired.
That's what we're here to talk about. So we're going to go a

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big picture and talk about some ofthe core tenants that we teach people when
they start to think through this PETE. So I think the first thing for
people to understand when we go throughour pillars, our pillars are just our
pictures that we're trying to put outthere for you to get the concept first
of all, that you have tobreak down the planning process into pieces.

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So we use pillars as an example. We often draw a house, so
poorly drawn house, but it's ahouse nonetheless on the board when we're teaching
classes. And why do we dothat because we teach people about diversification,
about placement of money, having purposefor your money, all sorts of things.
And when you think of a storm, a financial storm as well as

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a fiscal storm, Right, bigstorm comes down, and where do you
go if there's a tornado in thearea, the sirens are going off,
where do you go? Right?Downstairs? Right? You run downstairs again
in the basement and you protect yourself. Okay, well, first part of
the pillars. There's six pillars thatwe go through. Hopefully we'll get through

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them. All depends on how deepwe get into some of these, right,
But the first one, nothing happensin retirement if you don't have income.
So everything in retirement starts with income. So do you have an income
planned? Where are your sources ofincome going to come from? Yeah,
social Security? Maybe there's a fourtoh one K, or maybe you've got
a pension, or maybe you've gotsome real estate, or you know,

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there's various ways you've got some inheritances, possibly coming all sorts of directions that
you know income comes from. Thequestion comes, all right, we're going
to have these sources of income,how do we apply it to where we
can actually live out the dreams thatwe had for retirement? So maybe this
is step two as opposed to stepone. Step one is really knowing what

(09:09):
you want in retirement, that's right. But income is the driver of this
whole thing because without it, Andby the way, I like to preface
this conversation by saying, this ismore than a water cooler discussion, meaning
this is customized and specific and particularto everybody, because your sources that are
going to provide you cash flow andretirement are going to look different than your

(09:31):
coworker, your neighbor, your cousin. Well, first of all, right,
you got to decide how much incomeyou actually need or want or have
available to get. So, forexample, you got to know your budget.
Now I know that's a dirty word, budget constricting all that, but
in retirement, we're talking about cashflow. That's right, And then you
have to determine what's a want versuswhat's a need, and how much of

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those wants on top of the needsdo you want to cover. Maybe I
should ask it a differ. Howmuch your income are you making while you're
working. How much of that doyou want to give up just because you
stopped working. Most people naturally drop, but they're dropping because they're told they're
supposed to drop. When given anoption, people tell me all the time

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they don't want to drop. Theywant to maintain the same standard of living.
Okay, if you want to maintainthe standard of living, let's put
together a plan that allows you toknow where your income is coming from from
multiple sources to cover enough of yourneeds, right basics, shelter, food,
clothing, transportation, stuff like that, and your wants. You want

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to travel, see the kids,do your hobbies, whatever it may be.
So what we're asking you to dois think deeper about this than just
what you've been taught. Because wegrow up and I think about my parents
or my grandparents, and life wasjust easier. They wrote off into the
sunset with their little pension and theirsocial security, and they didn't think through
it like this. Life is justdifferent. It's more complicate. We're living

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longer, there's so many more leversand things to pull and decide that if
you just stop and think through yourbudget, and nobody wants to take a
pay cut, or they don't.They say they don't want to, but
yet they're taught you spend seventy percentof which you were spending pre retirement,
So that's what I'm gonna do.Maybe maybe that's what you're gonna do.
But is that why you deferred pleasureall these years to take a pay cut.

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And the problem I also see,nick, is is that most people
actually drop to about fifty percent rightbecause they're afraid to spend, because they
don't want to run out of money. Folks, you probably will not run
out of money, Don't get mewrong. I think there's real chances.
I've seen people run out of money, but most people won't, especially if
they've been a good saver, becausethey won't spend it. That's not retirement

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either. You are supposed to spendthat money to accomplish the goals that you
deferred your pleasure from, but youwon't do it if you don't do the
proper planning that goes beyond in classes, I use a risk wheel. That's
what I call it, right,because it just uses descriptions of lots of
risk to your income we don't realize, right. And we'll talk about the

(12:11):
pillars and they do interconnect. ButI mean, and I'm gonna list some
things, folks for you to thinkabout. Get some pen get some people
write this down so that you canthink these things through. But this is
just going to barely glaze over them. I mean market risk to your income.
Yeah, that seems pretty obvious.What about death of a spouse,

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what about long term care healthcare issues? What about inflation? M what about
interest rates that are out there?What about taxes that people don't think about.
I mean, that's just a namea few that all want to erode
your income in retirement because that's howthe world works, right, So you

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have to protect yourself and that's wherethese other pillars come in as well.
That's what we're talking about, Pete. That's why as we talk through this
during our retirement courses, or whenwe sit down and get in a room
together, Pete, we talk aboutthese things one at a time, step
by step. If you don't havea retirement plan and you're heading into retirement
within three years, five years you'veretired. This is just overwhelming. It
just feels like there's no one,there's no certainty anymore, and what's going

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on? And you want more certaintyinto your life and you've deferred your pleasure
and you're trying to craft that amazingretirement and you want guidance. Come see
us, Come talk to us.Give us a call today at six o'
eight two one two seventy three hundred. If you call us today and you
want to spend an hour, hourand a half with one of our advisors
talking about this, talking through whereyou're at, what you feel positive about,

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what keeps you up at night?Pete. Last year I got to
write an article for Kipling, yourmagazine, on that exact topic, what
is keeping people up at night?And when I sit and talk with folks,
it's amazing the stress and the worrieswhen they don't have a plan,
they don't have a clear path inthe retirement. That's what we're here to
do. Pete. Let's give youthat clear path. And let me just
say this, people think they havea plan in They do think they have

(14:01):
a plan but why do they worry, Why do they hold back? Why
are they uncertain? Because they reallydon't plan. They know intuatively that that
plan is not complete. So geta second opinion. If you have a
plan and you think you upon comein, get a second opinion. We're
fiduciary is We're going to tell youif you're on the right track, if
there's gaps, there's holes. That'swhat our job is. Our job is

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not to tell you what you wantto hear, is to have the right
conversations to get you on the pathto a retirement that you envision so you
can go, spend time with yourgrandkids, do your hobbies, whatever it
is you want to do. Butyou need to call us today six oh
eight two one two seventy three hundred. As I said at the top of
the show, our staff is offon the weekend, so you're going to
leave your name number, request thatvisit. Caleb will call you back on

(14:43):
Monday to schedule some time. Petethose visits we can do them in our
office out in Middleton, or wecan do them via zoom. We prefer
to get in the room with thefolks over a cup of coffee and the
only thing we're going to decide whenwe're done with that meeting is if we
want to go to a second visit. And that's where we really did,
and that's where we get into thebalance sheet and the money and things like

(15:03):
that. That first visit is foryou to get to know us, us
to get to know you, andjust see if it's a fit to work
together. Yeah, it's perfect.So I'm gonna jump back on the subject
of income, you know, anotherthing that's a real threat to people's income
in retirement, and then we're gonnawe'll finish up on this and then head
to the next subjects. But whatabout longevity. People aren't living longer.

(15:24):
You hear that water cooler conversation aroundsocial Security and the timing to take it
and all this, Well, youought to take it at sixty two because
your break even time is seventy eightto eighty. But people are living into
their mid eighties. But that's whatpeople now think about, right, that's
true. I mean people are livingolder, they're longer. I mean the
people centennials, is that what they'recalled. When they live to one hundred.

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That's the fastest growing demographic in theUnited States. People are living longer.
And I'm not here to tell youeverybody's gonna live to one hundred,
but I am here to tell youthat the average person your age sixty five
today a mail. You don't havecancer, you're living down average eighty five,
eighty four, eighty five and womeneighty nine ish. And even if

(16:07):
you haven't health issues in your family, let's say you have hereditary issues.
With the advances in medicine, we'reliving longer with some of these things.
So even if you do have cancer, God forbid or whatever it is,
the advances in today's medicine are allowingus to live into our eighties, midies,
late eighties with some of these issues. Well that's a whole other topic.
How to deal with that and payfor that. So it's a double

(16:30):
edged sword. We're living longer,but we have to make our money last.
You know, my parents, mymom had cancer back when she was
in her late fifties. She's eightyseven, right, and that was ovarian
cancer. You don't survive that,but she did thirty over thirty years ago.
That was a long time ago.And that's my point, right,
advancement in medicine, things happened thatare good as well. But now what

(16:52):
they're not always so good at isthe lifestyle along the way right morbidity.
But that's a whole other subject alittle bit later on down the road.
So when we talk about income,you need to have a scheduled outplan of
what your income needs to be,your needs and your wants. How much
of your wants do you want coveredto be predictable income and that could be

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from multiple sources. We'll talk aboutwhen we get to investing a little bit
about that diversification, but we wantdiversification in our income as well. So
folks, as we go through,we're going to wrap up this segment here,
but as we go through, rememberwe've got six pillars. We've got
income, We've got investments, wehave taxes, we have healthcare, we
have legacy, and then we havethat advice or relationship that you need to

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have to help you walk through thistime of life together so you can go
enjoy it. Super important. Wejust covered one. We're going to cover
the others in the next couple segments. This is the Empire Deternment Radio Show
where we bring your retirement dreams tolife. Enjoying a little rolling stones on

(18:07):
a Saturday morning. This is theEmpowered Retirement Radio show. Pete some in
black here, Nick Tooman, certifiedfinancial planner with Empowered Financial Management over on
the West Side in Middleton, andyeah, I'm ready to go. This
is exciting. We're talking about thesix pillars making your retirement better. We're
talking about planning, folks, andsometimes it doesn't sound so sexy. Sometimes

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in retirement, you don't want yourplan to be sexy, right, you
want it to be nice and boring. And I think what we're trying to
also do is describe or make sureyou understand the difference between just generic planning,
which sometimes code for just managing moneyor investments. That's a real code
work for actually helping you diversify thedogs, right, But we're talking about

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making sure your retirements structure their strategiesand diversified. So I like to use
that d word when it comes toyour overall retirement. Are you diversified in
your retirement when it comes to yourincome and your investments and taxes all those
and often we think it's just investments. That's where we have a tendency.
We just brought it up a littlebit in income. But again, the
six pillars, income, investments,taxes, healthcare, legacy, and then

(19:17):
of course the advisor that you workwith, the relationship, you have,
the team. But diversification needs tobe paramount inside that investment portfolio. And
that's the part we're going to starttalking about now, because folks, what's
that old adage we've been told byour mom, right, don't have all
your eggs in one basket? Right, that's stuff you say that, Pete,

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I'm thinking Eastern Right, Well,you know, there we go,
eggs in one basket. You wantlots of eggs in that basket. When
you're out there doing the the yeah, picking up what's it called? Thank
you? Yes? Sorry, No, that's okay. But when it comes
to investing, folks, think aboutyour money for a moment, right,
how well diversified are you? Andthis is this a little quiz for you

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while you do this. You know, maybe how much do you have in
large caps, how much do youhave in small caps? How much do
you have in mid caps? Howmuch do you have in energy? How
much do you have in tech international? How much do you have international?
How much do you have in utilities? How about how much do you have
in just the general stock market,right, d that's a P five hundred

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or the Nasdaq or the Dow Jonesor how about you know that we could
split this up a thousand different ways. So we feel pretty good, right
because we're well diversified, maybe evensome bonds in there. How many baskets
is that, folks, Well,it's one when one basket, one basket,

(20:47):
folks, lots of eggs. We'reout on our Easter egg hunt,
right, We're just doing it withmutual funds or ETFs or individual stocks.
But it's the same thing, folks. We got to do better than that.
We have to diversify. Don't haveall your eggs in one steakon.
So you're telling me, Pete,when you look at your retirement plan,

(21:07):
your four oh one K or fouroh three B and you look at that
statement basket, it's got that piecharred Pete, it says ask fifty five,
forty five or seventy thirty or sixtyforty one basket. But Pete,
it's bonds and stocks. It's amix, one box. It's one basket.
By the way, Pete, thatsixty forty portfolio that I just asked
you about back during the financial crisisin two thousand and seven to two thousand

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and nine. Do you know howmuch that was down from its high point?
And now it was over thirty threepercent thirty four percent? Yeah,
and its changed to the exact Doesthat sound like a diversified basket? Does
that sound like a moderately allocated me? If you're thirty five years old,
right, But when you're fifty fivegoing on sixty, sixty going on sixty
five, I would say, now, well, by the way, our

(21:49):
listeners who were probably in their fortiesback then, thirty forties, fifties maybe
at the time, if they wereworking and they were putting money away,
it probably was the worst thing inthe world because they got to buy them
mar Can on sale for a coupleof years. This is part of that
going up the mountain versus going downthe mountain thing, and how things are
different when you're going up the mountainputting that money away. You're also dollar
cost averaging. Right. We havethese conversations with our clients all the time,

(22:11):
and you should have these conversations witheach other all the time. Dollar
cost averaging is a wonderful thing,but it is a horrible thing on the
other side when you're going down themountain and you're taking money from from the
market that portfolio. So, folks, what are some of those other baskets
that you need to impart Well,there is real estate, right, there

(22:32):
is energy, there is private equity, there are structured notes, there are
annuities, there is life insurance.There are many different tools to use inside
and outside the market. Why dowe diversify? Well, if one company
goes under, right, we've allheard that story, and it could bankrupt
you. But what if you haveall the companies go the wrong direction at

(22:56):
the same time, how do youavoid that? Well, then you have
to be in completely different baskets,right, and that's how you avoid So
real estate acts different than private equity, acts, different than structured notes,
acts different than large caps versus.Do you understand what I'm saying, folks?
It's really important. This is thatpart that most people don't seem to

(23:18):
really understand. And not only thatwe should diversify not just by our baskets,
but by our time frames. Right, part of our portfolio is going
to be designed for the next fiveyears. Part of our portfolio is going
to be designed for the next fiveto ten, and some of it's going
to be from the next five toten to fifteen or fifteen to twenty.

(23:38):
And by the way, you don'twant that all in one basket, you
want that in different baskets too.How much do you want predictable versus non
predictable? Why do I tell peoplethey're probably not going to run out of
money? Because how many people aregoing to spend money when the market's down?
Right? The market right now hasbeen dropping again. In fact,
it's back in correction territory. Areyou spending money, folks A are you

(24:00):
starting to turnle up and not spendmoney? How many of you pulled back?
Well, that's what people do unlessyou have predictable income, that's there
no matter what. Again, thisis all about mitigating risk, Pete.
It's about living the lifestyle whether themarket's up or down. And by the
way, for everybody out there thatsays I will just let my investments come

(24:21):
back when they're down twenty percent,that's a whole nother discussion. If you're
taking money or you need money whenthe market's down. So it's about understanding
what you want your money to do. And those are the conversations we should
in need to have. If youhaven't had those conversations. We're here to
have those conversations with you. Ifyou'd like to talk with one of our
advisors about an income plan, aboutan investment strategy, these pillars we're talking

(24:44):
about, all these things that helpyou navigate down the mountain and retirement.
We are here. Call us todaysix oh eight two two seventy three hundred
and you can schedule a one hourcomplimentary visit with one of our advisors to
talk about these things, to getto know us and how we've helped clients
navigate retirement, how we help themtransition cross that bridge from accumulating wealth to

(25:07):
preserving and distributing wealth. That's whatwe're here for. That's what we're offering
you today, if you want tocall us to schedule that time. By
the way, it's Saturday, andif you call our office, our staff
is off, So you're going toleave your name, your number, and
you're requesting a one hour complimentary visitwith one of our advisors. That can
be done in Middleton, at ouroffice or via zoom. We prefer to
have it done in person. Welike to roll up our sleeves, over

(25:30):
a cup of coffee and get toknow you. You get a chance to
get to know us and how wehelp people and figure out if how we
help people navigate retirement is what youneed and what you want Pete six zero
eight two one two seven three zerozero. Come and see us. Set
up an appointment's complimentary. It'll beworth your time. Hopefully we'll be able

(25:51):
to add value to you. Iwant to finish up of this segment on
this thought. As you into retirement, what type of advisor are you working
with? Are they covering all thebases that we're talking about now, even
your investment advisor that you're working withtoday. I'm not putting them down,
but do they talk about diversification thisway or do they just keep you in
Wall Street, whether it's on thebond side or whether it's on the investment

(26:15):
side, that the stock side.If they're only talking about those things,
folks, there's nothing wrong with them. But that's all they do. They
pretty much manage money, and theymanage money in the market. Is that
good enough for you? Well,it depends on what you want to do
with your retirement. But the factis you need to diversify outside and so
this comes up with that subject.We'll talk a little bit more about later,

(26:38):
but it's really important to know thattype of advisor you're working with to
get the kind of conversations we're talkingabout. So, folks, when we
come back on the other side ofthis break, we're going to finish up
and we're gonna hum through right healthcarelegacy and the advisor relationship. This is
the Empowered Retirement Radio Show, preparingyou for the next step the best way

(27:03):
possible. Good time. Welcome backeverybody to the Empowered Retirement Radio Show,
Nick Toman and Pete Cymbalac here ona Saturday morning, A Badger Saturday morning,
a Rolling Stone Saturday morning, hereto make your retirement better. You

(27:27):
can reach us at six oh eighttwo one two seventy three hundred. Pete,
what a great show we've been talkingabout. You know, those core
tenants of ours, what we teachin class and what we work through with
our clients every day, and that'show to go down the mountain, how
to get ready for retirement properly,Pete. And you know, I just
got to interrupt and say that oneof the things that people don't know,

(27:47):
you know, I'm really passionate aboutthe things we're going to talk about we
have the least amount of time totalk about these things, and often they're
the hardest and maybe feel like themost negative, the darkest part of it.
But this is my passion because thisis what I've gone through with my
family and with my parents. AndI'm not going to go into all the
details on the program right now,but you know, when long term care,

(28:11):
we'll talk about healthcare. Well,obviously we were going to talk about
taxes before then, but the realityis this side of it doesn't often get
covered by most advisors, and wehave through time. I mean, if
you listen to our programs from twentyyears ago, Yeah, we didn't talk
about this either. It's as lifehas happened, both to myself, my

(28:32):
clients, my parents, that wesee holes and we cover those holes.
I don't think most people change thebusiness to cover their holes. We have
over the years, and that's whywe do what we do. So I
just had to throw that in thereas we start to Pete, as we
talk about some of these topics,it takes them digging in and as I
said a couple segments ago, Pete, it's not always the fun or the

(28:53):
exciting conversations but it's the right thingsto take some time to focus on,
because if we can do these thingsright, it doesn't assure us that bad
things aren't going to happen, butit does mitigate risk in your overall success
of retirement to have a successful retirement. So if you can talk through these
things and go step by step,there are things you can do to mitigate

(29:18):
risk to yourself in retirement, absolutely, and some of the risk people need
in to mitigate. Right now,it's on taxation. It's right. Taxes
is the next pillar that we needto talk about, and we got this
one segment to talk about it aswell as a couple others. So the
fact of the matter is, folks, are tax is going to go up
in the future or are they goingto go down? Well, we might
have a problem. If you've donea good job putting your money away in

(29:41):
your four oh one K, fourH three B four fifty seven iras,
we still have taxes to pay.And if taxes go up, and according
to former comp Controller of the UnitedStates Government David Walker, that taxes,
by his estimation, by twenty thirtyare going to have to average on the

(30:02):
average person forty five percent. Taxationto pay for the debt that the US
government has got. Now, Idon't know whether that's going to be true
or not, but just keep thatin mind. Folks. Are you going
to pay more out of your retirementaccounts than what you would have paid had
you paid it upfront while you wereworking, and now are you going to
pay it when you might not needit? That's right, And the real

(30:23):
problem Pete comes in because about seventypercent, this is statistics. You can
look up surveys and studies, aboutseventy percent of the wealth that people accumulate
is through tax deferred type tools likefourrowin k's and four H three piece.
And it's not a tax perce.It's just a tax deferrals. I like
to say, we kick the candown the road and can I also an
adjustable rate mortgage. It's an adjustablerate mortgage because you don't know what the

(30:45):
tax rates are going to be inretirement. And let's just for arguments,
say taxes stay the same. Let'ssay we renew these rates, and you
would do a good job with yourtax strategies. You tax engineer your money
so that you have more tax freeand retirement. That's still a good thing.
Yes, still the thing, becauseif you're not mentally accounting for taxes
coming out, even if they staythe same, you have to you have

(31:06):
a problem. So it's still agood thing even if taxes stay the same.
People, absolutely, and folks,we know taxes are going to go
up two ways. Number One,at the very least, we know at
the end of twenty twenty five,the current tax brackets are going to sunset.
They're going to go back to whatthey were previous, so we know
they're going to go up there.We also know just with the death tax,
right the inheritance tax, that they'rebringing that back down. Right now

(31:30):
it's at what ten thousand, tenten point five, about twelve per person
almost their twelve, yeah, almosttwelve, but they're going to be dropping
it down to five mil. Andin the past now still five mil.
That's a lot for people, Iget it. But in the past they've
dropped it as low as one million. So that's going to hit a lot
of people, especially if you've beenone of those four oh one case superstars

(31:51):
putting all that money away. Folksshould have a tax problem. So what
we're saying is tax planning should bea discussion. It should be part of
the process and not just talking abouttaxes. Tax planning, that's right,
and it's more than just roth conversionsand that's one of them, moving money
from n IRA to a ROD.That's one strategy, But Pete, there's
three, four, five different strategies, and just like social security timing,

(32:12):
it's very different, very unique toeach person and how they should do this.
If you are a small business owner, you should be listening close because
you're probably one of them that'll gethit the hardest during this whole transition retirement
and selling your business and all thatwith taxes. Yeah, so we've got
very little time to go through here, so let's jump on the next one.
What's the next pillar? The nextone is we were just referencing health,

(32:34):
Pete, and in this case,if you have a big health event
and you do need care as youget older, and two thirds of US
studies say that two thirds are goingto need it. And again, this
isn't the fun conversation. It's thereal conversation that has to be factored in
some way, shape or form,and that's what we're here to talk about,
is get your thoughts going, makesure that you don't avoid this topic,
but you address it head on withthe right solutions. Pete Nick,

(32:59):
what's an accident? Something unexpected,right, something that happened that was unexpected,
unintentional, wasn't supposed to be there, but it happened, right.
I mean, I tell the storyabout being on Mineral Point Road and I
turn left, big old truck turnsright and a little bit down the road,
all of a sudden he comes intomy lane. He's in millane,

(33:19):
comes over to my lane and totallyjust side swipes me. I got those
big old Knaviy tires all up anddown the side of my car and it
just kind of demolishes the car.Right, it's an accident. The person
didn't see me there, they maynot have looked it. Just who knows.
It doesn't matter. It happens,it's unfortunate, and then damage is
done and you got to go fromthere. Well, accidents happen in our

(33:44):
life all the time. We don'twant this accident of healthcare to hit your
retirement money, right, most people, Let's just say for a moment so
you can understand what I'm trying tosay, Let's say you have a million
dollars in your four to one k. Well, theoretically, if we're going
to take income to put some ofthe other pillars in there, we're going

(34:04):
to take forty thousand dollars a yearout that's that four percent rule that people
go by. Well, and thenthe market drops. So now we got
the investments in there, and itdropped thirty percent. We were in that
sixty forty portfolio two thousand and eighthits. Again we dropped thirty percent.
So now we're taking forty thousand dollarsa year and we only have seven hundred
thousand dollars in there, and wehave a health of it. Oh boy,

(34:27):
perfect storm all at once, right, and it does happen. That's
the whole point. You may ormay not recover from the first part of
it, but you're not going torecover when the second part of it's in
there unless you have resources dedicated tohealthcare. And it's hard and people don't
want to do it, and you'vegot to separate your money if you're going
to have the money to do it. What's the average cost to a long

(34:49):
term care facility in Dane County rightnow? Oh, it's probably over sixty
seventy. No, it's over onehundred. Yeah, it's over one hundred
and going up and going up.Folks, you got to prepare for this.
It can devastate and not just you, but your spouse, your loved
one, your significant other, yourheirs, your heirs as well. Right,
a lot of times people don't spendthat money. Why because they want
to pass to the kids. Well, guess what, the healthcare is going

(35:12):
to eat it up. So youhave to have proper planning. And that's
not just like a spend down plan. But you know, can you get
long term care in there? Canyou protect what are what are some of
those tools that you can use?Well, we know there's about six or
seven, maybe eight tools that youcan use that if you combine two,
three or four of those together,you could successfully fight that off. And

(35:35):
oh, by the way, thereis a thirty percent chance or so that
you might need it, right,you might not need it at all.
And just like taxes, pete,if you do a good job preparing and
you stay healthy and you live along life and this accident never happens,
guess what, you're still gonna beokay, that's right, and your airs
are going to be okay. Andalong the way you have a little bit
more peace of mind. And nowwe're going to talk about your errors and
the next pillar because we're talking aboutlegacy planning. We've only got a few

(35:58):
minutes to talk about this. Butfolks, you want to control your money
from the grave so that you're notone of the statistics where the statistics tell
us that the average inheritance is spentin seventeen months. That is a fascinating
statistic about narrative. It's scary ifyou've been a good saver. Well,
if you've put away two or threeor four million dollars and all of sudden
you find out it's gone in twoyears, who won't have it me?

(36:22):
Come on, we all have thosekids. There are spend thrifts, right,
I'm two of them. That's yeah. But you want planning in there,
and a will that you did twentyyears ago is not enough. You
want to control that money from thegrave so that your family does not break
up when they fight over the money. If they fight over the money,

(36:44):
and you can control the money,especially if they're special needs, there's all
sorts of things you could do.The other benefit to planning properly, pete,
whatever it is, if a will, you need to go beyond a
will, which maybe you do withthings like a trust. If you do
plan correctly when something happens, whenlife happens and you pass away, you're
not leaving it as much for otherpeople to deal with a mess. You

(37:06):
know, you tie up those things. That's right. You're not leaving it
to the courts or other people becausethat's when your kids or your kids.
Yes, there's still some decisions thatneed to be made no matter how much
you plan, but how much doyou want to take care of in advance
so when life happens as we getolder, you're not leaving it to family
to clean up. Absolutely right,And look, Nick, we're running through
this fast and furious. But thefact is you need the right team of

(37:30):
advisors working with you to make sureall of these first five pillars actually happen
in your planning and in your lifeso you can go live the retirement you
are looking for. Are you lookingfor an investment advisor or are you looking
for a financial planner that actually helpsyou with all of these areas put together,

(37:52):
including working with lawyers and CPAs ontaxes, and you know, legacy
planning and things like that time,team of people. You just refuentate a
team of people. And that's whatwe help people do, is we coordinate
those teams of people so that we'rehelping direct you and creating that vision.
It's that vision that's coming to life. Right you sit down, you have

(38:14):
the vision, and that's why youteach class. We've been teaching classes and
we talk about these things. So, folks, I heard a statistic recently
that Vanguard says that a financial plannershould add about three percent to your portfolio,
and it's on average, if theydo good, it's about one percent
in your portfolio and the other twois helping you make good decisions and avoid
bad decisions. I can't tell youhow many times I'm asked about various things

(38:38):
and we get to help people avoidlandmines. Folks, this is what it's
about. Give us a call sixo eight two one two seven three zero
zero. If you are not workingwith a retirement planner who is a financial
planner, I'd say get a secondopinion. Time to give us a call
six two two seventy three. HFolks. This has been the Empowered Retirement

(39:02):
radio show. It has been apleasure. Go Bucky have a great weekend
and make your retirement visions come tolife. Investment advisory services offer through Trek
Capital Management LLC and SEC Registered Investmentadvisor. Information presented is for educational purposes

(39:22):
only and it should not be consideredspecific Investment advice. Does not take into
consideration your specific situation, and doesnot intend to make an offer or solicitation
for the sale or purchase of anysecurities or investment strategies. Investments involve risk
and are not guaranteed, and pastperformance is no guarantee of future results.
For specific tax advice on any strategy, consult with a qualified tax professional before

(39:47):
implementing any strategy discussed here in