Your Retirement Conspiracies

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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 Nicktoman and

(00:22):
Caleb Simbola. Reach out to theEmpowered Financial Team now at six eight two
one two seventy three hundred, orvisit their website empowered FM dot com.
Now here's your host, Nick Toomanand Caleb Simbolac. Good morning, everybody.
This is the Empowered Retirement radio Show. Here on a Saturday morning,

(00:44):
Nick Tooman and Caleb Simbolac helping tomake your retirement better. If you're listening
today throughout the show, you cancall us at six to eight two one
two seven three zero zero, orbetter yet, visit our updated website at
retire Madison dot com. That isretire Madison dot com. It's a Saturday

(01:07):
morning, we're in the middle ofMay. It's a Mother's Day weekend,
a Mother's Day edition, so HappyMother's Day to all the moms out there
listening. Caleb, how are youdoing today, Nick, I'm doing good.
You know, today's sun here thentomorrow. Okay, like you said,
Happy Mother's Day to all the momscelebrating today. In the event that
you're trying to get out in somesunshine, you know, I feel bad
for the moms the last three tofour years the weather has not been Now

(01:30):
all that nice. Doesn't look thatgood tomorrow. I remember a few years
ago my wife and daughter were standingout on the deck. I was taking
a picture and the big snowflakes werecoming down on a Mother's Day. But
in any event, we're appreciative ofall the moms out there, my wife
and mother in lawn mom, we'reall appreciative of what they do for us.
But we're here to help make yourretirement better, as we always are

(01:51):
on a Saturday. And I wantto talk about retirement in terms of conspiracies.
Yeah, right, And we liketo think of, or we love
of. I guess a good conspiracy. Maybe we're reading a book, you're
on the internet, social media.It's just full of myths, conspiracies,
you know. JFK is the yourflat? Is it around? Free Masons?

(02:13):
They're everywhere around the water cooler.We talk about them. But in
retirement, we think about money inour finances, things like social security,
timing, when to take that,buying annuity, not buy an annuity,
trust, Wall Street by Gold,all these things, the financial systems falling
apart. We can kind of goon and on and on, and a
novel or a movie might be basedon a conspiracy, but your retirement shouldn't

(02:38):
be based on a conspiracy, andit should be designed to stay the course,
and it should be designed with somedirection and not a thought or not
just a hope and a prayer.Yeah, a lot of people, you
know, they think that there arejust kind of one size fit all.
You know, that's kind of conspiracyor a myth behind I think there are
these one size fit all rules thatapply in retirement, right, So,

(03:00):
like you know, broadly, youknow, everybody should take social Security when
they first retire, right right,one that we'll be talking about today.
Or you know, you should withdraw two point eight percent from your investments
each year, which used to befour percents, used to be four percent
by the way, right, Andso there are a lot of there's a
lot of advice given to people inwhich they think it's actually a sover bullet.
But really I mean to us,obviously we specialize in retirement planning,

(03:23):
those are really more miss and conspiracies. And when we are here on a
Saturday morning or during the retirement coursesand we're educating people and we're talking theoretically
or we're just talking from ten thousandfoot view and thinking of retirements totality,
that's different than telling somebody listening specificallythat, like you mentioned social security,

(03:45):
it's right to take soul security rightwhen you hit age sixty two, or
how specifically to take a pension,or what to do with their investments.
So we're getting people, I think, Caleb, you know, the right
mindset to prepare properly for retirement.And that's what the show's all about,
you know, and that's what we'regoing to keep talking about today. Yeah.
Absolutely, when it comes to retirement, there is no one size fit

(04:08):
all right, There is no justone general rule that is going to be
able to apply to your situation.You have your own financial history, you've
done you know, you've accumulated moneyand preserved it up until this stage of
life, and how you actually preserveyour money and how you distribute it in
retirement. It's different for everybody.It is, and there's many moving parts.
We haven't even talked about health asa consideration, family dynamics. Are

(04:32):
you going to work in retirement,You're not going to work in retirement.
There are just so many what ifs. Even when we help people navigate retirement
and prepare and design a retirement specificplan, even that situation has to be
flexible and you have to be ableto pivot because as we get older.
I've said this for years, lifeis just going to happen for the good,

(04:54):
for the better, for the worse. But you have to be able
to pivot. So that's why it'scustomized to you. So we hope that's
what this show is going to beabout. Folks. We're here on a
Mother's Day edition of the Empowered RetirementRadio Show, Here to make your retirement
Better. Join us on the otherside. We're going to talk about some
of these conspiracies or myths in retirementand how to mess prepare and navigate.

(05:15):
We're here every Saturday, make yourretirement better. This is Nick Tom and
Caleb Simbolac, the Empowered Retirement RadioShow, Here to make your retirement awesome.
Welcome back, everybody to the EmpoweredRetirement Radio Show. This is Caleb

(05:35):
Simbolac here with Nick Toome in CFPas always to make your retirement better on
a Saturday morning, folks, ifyou want, We actually just updated our
website so you can find us onlineor at tire Madison dot com. There's
a lot of great resources on there. Nick's written some articles for Kiplinger that
you can find on there. Youcan listen to past radio shows, which
we had some pretty great episodes inthe past, and oftentimes, you know,

(05:58):
we kind of continue a lot ofour epis so as we do multiple,
you know, same similar themed episodesweek after week, so you can
find those there, and if youwant to contact us, you can also
contact us through our website as well. So today we're talking about, you
know, conspiracies or myths that areoften shared, you know, maybe around
the bubbler or you know, you'regoing to a barbecue with some friends who
just stepped into retirement, and youknow these myths about retirement that you know,

(06:21):
there's they're typically general rules that arelike okay, people will say it's
one size fits all, and we'llbe talking about a good amount of them
today, but to kind of setthe stage for this and when it comes
into retirement. Let's let's think aboutlike the game of poker. Right,
So let's say you're dealt pocket ass. Okay, now that's it's a really
strong hand, right, But there'sa lot more nuance going on on the

(06:42):
board. You don't know what youknow once you get to the end of
the hand. Maybe there's no otheraces on the board, there's flush draws,
or maybe somebody else is bluffing,and so there's a lot more just
to take in than just like,Okay, I have pocket ass, I'm
going to go all in regardless ofthe circumstances around me. Because this is
the general rule that I've heard.Okay, retirements the same way. The
retirement is absolutely the same way.So the first example I want to talk

(07:03):
about, which most people are probablyfamiliar with, and that is the ability
to contribute to a retirement plan atwork. You're four oh one K,
you're four h three B four fiftyseven. These are retirement plans that really
have taken hold since the mid tolate nineteen eighties and are the primary source
for many people of wealth accumulation priorto retirement. So that conspiracy or that

(07:29):
myth that we should be contributing toour four oh one k and maxing that
out of year. Now, forsome people, Caleb, that can be
true, But let's talk about someof the challenges that can come with maxing
out a four oh one K.So let's talk about it, for instance,
from a tax perspective. Yeah,absolutely, So you're right, this
is this is totally a tax issue, right, because there's many different things

(07:50):
at play. Where are you atin your income earning years right? Are
you your highest income earning years?Are you in a super high tax bracker
right now? You know, dowe think taxes are going to be going
up in the future, How canwe really balance and mitigate to make sure
that we're just not putting a tonof deferred comp Maybe in your case,
you don't want to be just deferringa ton of compensation and potentially getting hit
by higher taxes later. You know, there's a lot of moving parts even

(08:13):
in just what it looks like tocontribute to your retirement accounts. Sure,
and you use that word defer taxes. This is not a tax free account.
And it's nice to have tax deferralwhen you're working in some cases.
But you mentioned something they're Caleb thatI think people have to make sure they
get their arms around, and thatis the real possibility that taxes will be

(08:35):
increasing in the future, tax rateswill go up in the future. And
you hear us then more shows talkabout the debt that our country faces,
the thirty one trillion encounting of debtand things or stuff that we have to
pay for. And if that's thecase, and if we stay on this
trajectory, there's a good possibility thattax brackets and tax rates will go up.

(08:56):
So if you've deferred your taxes throughfour one K contributions, and by
the way, we're not saying youshouldn't have money going into a tax deferd
bucket, but if all your moneyis going into a tax DeFord bucket and
all your money is going to comeout as ordinary income and be taxed at
higher rates, that could be aproblem. A real quick example would be
like going into retirement with a variablerate mortgage. Who wants to do that?

(09:18):
Right? You don't want to beuncertain about how much your interest rate
it's going to be on your mortgage. And that's kind of like what we're
facing with our money. If it'stax defer not knowing what tax brackets maybe
in the future, absolutely, andthen you know there's a lot of legislation
that's pushed forth. Firstly, let'stalk about like the debt ceiling. Right.
This is a hot topic right nowbecause as of you know, the

(09:39):
moment that we're talking there really hasn'tbeen much introduced to whether or not we're
going to raise the debt ceiling comeJune, and whether or not the US
is get default on its obligations.And the problem with this is that,
you know, especially with the USdollar and its legitimacy, is you know,
we kind of have to raise thedebt ceiling inevitably. How we pay
it off, whether we can reduceit, that's another story. But for
the most part, right we're goingto be raising debt ceiling and the state's

(10:01):
going to have to increase revenue,which they do that through taxes. Also,
we have rmds, right, wesee them pushing back required minimum distributions
and a lot of people see thatas a positive thing. And you know,
if you strategize right, it couldbe. But what's happening, you're
deferring your nest deck. It's accumulatingmore and when it accumulates more. That
means you're gonna to withdraw a higheramount, correct, and you're gonna be

(10:24):
getting hit more on taxes, andso there is a lot of strategy that
goes into preparing this sure and peopleneed to understand, I believe, what
their options are. So, forinstance, if you're let's go back to
that four oh one K example,and somebody who is contributing urin and y're
out, and the limits this yearhad gone up. So somebody under the
age of fifty years old, ifthey'd like to continue contributing this year,

(10:45):
can put up to twenty two fivehundred dollars into a four oh one K
or a four h three B orfour fifty seven and over fifty years old,
you have those catchup contributions, soyou can go up to thirty thousand
dollars a year, which again isbetter than doing nothing. So to have
a strategy of deferring income differing pleasureto retirement, that's a good step.
But putting into that tax to furtaccount could be a problem. So what

(11:07):
alternatives may we have besides just thetraditional contribution? And the first one,
maybe if your employer offers it toyou, is a ROTH option within your
four oh one case. So talka little bit about the advantages of a
ROTH four oh one K, oreven a Roth IRA for that matter.
Yeah. Yeah, So WROTH accounts, you're paying with money that you have

(11:28):
already paid tax on, right soyou're putting money that you already paid taxes
on in the current rate that you'rethat you're in right now. It's going
into that account, and the onlything you're getting tax down when you withdraw
on it is the gains. Andso what it does is reduces your tax
liability a lot. And the benefitof that is because then that tax free
money gets to compound tax free upuntil the moment that you withdraw There's also

(11:50):
additional benefits when it comes to rulesand withdrawing from them in retirement. You
don't have rmds on WROTH accounts,so roth irase and so you know there's
advantages to that as well. Yeah, and that helps create what I would
call tax diversification. We love thatword diversification. So what we're describing here
is to create some tax diversification.So if you have money going into a

(12:13):
traditional four o one K option,which by the way, you might be
getting a match from your employer.Players like to match sometimes up to six
percent, and they match that traditionaloption. Some of your money might be
going into a ROTH four O oneK option or a roth iory. Now
there is income limitations that have tobe considered for roth IRA contributions, and

(12:35):
there's some other alternatives like backdoor waysto do this. But again just to
keep this simple, ROTH options areattacks. After tax contribution, money comes
out tax free. What about anothertool sometimes gets overlook when it comes to
tax engineering, and that is lifeinsurance and the accumulation of cash and a
permanent policy. Yeah, so lifeinsurance is really great, right because in

(12:58):
the tax code you can actually weoftentimes for our clients if it fits in
there in their retirement plan, willuse universal index life insurance. And so
what happens is is you have acash value account that you can contribute to
you you know, you pay taxeson it and it goes in there and
it works very similar to the wrathright, and so it's going to be
compounding and you'll be able to accessthat money and you actually won't even have

(13:20):
to file that is as income.It's just you get that money tax free.
And so again that's another tool thatyou can utilize. Maybe instead of
just deferring compensation more deferred compensation intoyour nest egg, you can take some
of that money and you could putit into a life insurance policy. Let
that cash value account grow and thenwhen you need it, you know,
and maybe certain instances you can withdrawfrom it and you're not going to get

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taxed. And this is a perfectexample of using the best tools in various
financial worlds. You know, we'retalking investments, we're talking insurance. So
you have Wall Street and the worldof insurance, and sometimes those don't play
very nice together. But I thinkit's important when you're creating diversification in totality
and retirement, it's to use thebest of All Street, to use the

(14:05):
best of the insurance world, touse the best of the banking world.
You know. So if you're listeningto the show today and maybe you're within
three years of retirement, maybe Caleb, you've recently sold a business that you've
worked hard to build. You're justgoing through some type of transition in life
and are looking for some guidance.Maybe you'll listen to us in the past.
Then you said, now is thetime to figure out if in what

(14:28):
I need to get ready for mynext phase of life to make your retirement
amazing or that next part of lifeamazing. If you're out there listening and
you want a second opinion or aplace to start, call us today at
six eight two one two seventy threehundred or you know what, better yet,
go to our website. Yes,look at our new website retire Madison
dot com and for the first sixpeople that inquire with us before the end

(14:52):
of this weekend. Okay, someof you are out there driving your car
and you'd like to connect with us, schedule a time to meet. We
are offering a one hour complementary visitwith one of our advisors. Sit down
over a cup of coffee at ouroffice out in Greenway Station or via zoom
if you prefer to one. Letus better understand what it is you want
and need to have a great nextphase of your life, and learn more

(15:16):
about how we help people navigate preparingfor retirement. We go through our process
in detail, how we help peopledesign a proper income plan, investment strategies,
taxes, healthcare legacy. But thatfirst meaning is very casual. It's
really an opportunity for us to getto know each other. We don't dive

(15:37):
too deep into the finances. Butafter that first meaning, if we feel
like we can get along and whatwe do is what you need, then
we go to a second complementary visitand that's where we dig in. We
get into the sandbox. We lookat the financials and we start determining are
there gaps in your plan? Whatare those gaps and start proposing solutions.

(15:58):
And at that point, if wecontinue moving through the planning process, we'll
set up some next steps. Yeah. Absolutely, And you know, like
Nick was saying, like you don'tthat first meeting is really just to get
to know you know, we arefidiciaries, and so when we make recommendations,
if we move on to that secondmeeting, like we are obligated to
know your financial history, to knowyou know, your retirement goals, what

(16:18):
that looks like, and how we'dbe able to help in and maybe in
some instances, right, like,we're not going to buy any means for
somebody into that second meeting. Ifyou've done a great job and you you
know it might not actually be abeneficial relationship, that's okay. Or if
we could point you in a directionof a certain place that it would be
beneficial over you to go to.That is also okay as well. One
of three things happens when we gettogether in that first meeting or even in

(16:40):
that second meaning, we might getto a second visit where we dive deep
and we figure out one of threethings is going to happen. Either one,
we determine that what we do isretirement planning specialists can help and we're
a good fit to help you intothat next part of life. That would
be one. Number two, youmight not need to adjust anything you're doing.

(17:00):
You might have a plan in placethat you came to us for a
second opinion. It looks good,as fiduciaries will tell you that if there's
no adjustments needed or minor adjustments thatyou can do on your own if you
want to continue doing that. Ornumber three, if we're not a fit,
we will attempt to direct you tosomebody that is a better fit that
provides what it is that you needand want. So I think it's a

(17:22):
good one hour, or as youlike to kid me about it, if
it's with me, it might bean hour in seventeen minutes, whatever the
case might be. But it's importantwe have a baseline understanding because I've said
for years it bothers me to noend in our industry when people are making
recommendations without taking the time to reallygo through this step those first couple visits,

(17:44):
because it's impossible as a fiduciary tomake good, strong, proper recommendations
without sitting down and understanding you assomebody who's getting ready for a retirement,
what your situation is specifically. Sowe're going to continue our show. A
lot of good stuff in the show. Today. We're talking about conspiracies,
retirements and myths, conspiracies, thingsthat we want to clear up for people,

(18:07):
and we're going to continue to dothat. On the other side,
this is Nicktoman Caleb Simbolac, theEmpowered Retirement Radio Show, Here to make
Your Retirement Better. Welcome back everybodyon a Mother's Day edition of the Empowered

(18:29):
Retirement Radio Show, Nicktoman and CalebSimbolac, Here to make Your Retirement Better.
You can reach us at six toeight two one two retire Madison dot
com. So, Caleb, agood show so far. Why do you
just bring everybody up to speed onwhat we've talked about and then we'll get
into that next conspiracy. Yeah.Absolutely, So for the folks who are
just joining us, we're talking aboutmyths, and by miss we're about just

(18:52):
like general recommendations of rules of retirementthat have kind of just for some reason,
they've just been sticking around. Andin the last second, and we
talked about the myth that you shouldjust defer taxes and your retirement count as
long as you can, because formany people, what that's gonna do is
that's going to create a really badtax infestation because then the time you need
to reach your nest egg. Imean, you know, taxes we think

(19:14):
are obviously going to go higher.Our debt's only increasing. There's going to
have to be some sort of revenuebrought in from the government, and a
lot of that is going to comefrom your taxes. And so we talked
about some alternatives of how you canmaybe diversify your tax liability and using roth
accounts and using life insurance. Wealso didn't talk about maybe some conversions as
well. Right, we talked aboutcontributions to a wrath, but we didn't

(19:37):
necessarily talk about conversions, and sowe really just wanted to attack that idea
that that general rule of deferring yourtax liability as long as you can that
is not always the right recommendation forindividuals. You've all come from different financial
histories, and that don't apply thatto any in all situations. And so

(19:57):
Nick, this next one, thisit's probably the one that's talked about the
most at barbecues, right especially forpeople who might have just stepped into retirement
or who are going to be steppingin retirement soon. And that's the topic
of social security election and when totake it. Oh my gosh, that
is in the pantheon of retirement topics. It's probably in the top two or

(20:19):
three that people want to have adefinitive answer for. And that is when
do I start my social Security benefits? Whether you're married, whether you're single.
That is what's on everybody's mind.And I can tell you that is
almost by far the biggest conspiracy outthere when it comes to people having an

(20:40):
absolute or a definitive answer to thatquestion. And let me preface what we're
going to talk about by saying itall depends. And I know that's not
a popular answer, but it verymuch depends. So if there's one thing
you can take away from what we'retalking about today. When to time up
your SOULI security been start taking thoseis very specific and very customized to your

(21:06):
situation. Yeah, and you know, Nick, so we talk about it,
we teach retirement courses, right,And this is always a fun topic
to engage with people on because somany people have differing opinions that again they
see it very black and white socialsecurity this you know, when to take
it. People present it as ifit's a really easy question to answer,
but the reality is is that,as you said, it varies drastically from

(21:29):
individual to individual or a couple tocouple, and how you could actually strategize
your elections. It's far more complicatedthan people realize. And so it's often
interesting that social security is typically oneof the conversations that people who are confident
in sure when it comes to talkingabout retirement. But that's just simply now.
Well, and first of all,let's just be clear, when can
we begin social security at what age? Caleb sixty two? At sixty two,

(21:55):
and you can defer taking benefits allthe way up until age seventy and
that it doesn't make much sense afterthat. But almost seventy percent of people
when they file for Social Security doso early, right around age sixty two.
That might be a why strategy dependingon your circumstance. Maybe you absolutely
need that income coming in, oryou have some health issues, there's some

(22:18):
longevity issues in a family, andthat could be a reason. But social
Security, when it comes to beingpart of your income plant, probably the
biggest piece of your income plant.That's what it is. It's a puzzle
piece. So for instance, ifyou're out there and you are someone who
has a pension waiting for you,that's a little bit different than somebody that
does not have a pension, doesnot have any guaranteed income. So that

(22:40):
person with the pension, if youcoordinate that and your Social Security benefits,
that's going to look a lot differentthan somebody has no pension to rely on
maybe minimal savings. So those arejust two easy compare and contrast examples.
But that's what we mean when itcomes to being customized and specific to you.
Yeah, absolutely, folks, I'mnot going to try to overwhelm you
with this, but I'm just gonnalob some like factors that come in into

(23:03):
considering your Social Security right, likeare you married, right, do you
plan on working, you know,maybe part timer retirement just to kind of
enjoy yourself, to bring in someextra additional income. Right, what does
your longevity of life look like?Do you have health issues? Do you
have a pension? Right? Thereis a lot of factors. What about
your nest egg? How much?How many tax liabilities are you going to

(23:23):
have later on down the road?Right, Like all of these things kind
of cohesively come together and kind ofand this right, all these questions not
only applied to you as an individual, but if you're a couple, what
about for the both of you?Correct? Right? What if one of
you has a lesser longevity the other, but you're the higher earner and you
have the higher social security. Right, there's a lot of factors that come
into this equation. And you mentionedworking in retirement. So if you're taking

(23:45):
your social security benefits sorry early atage sixty two, prior to full retirement
age for most of our listeners outthere, Caleb, but it's going to
be right around age sixty seven.Yeah, you're taking those benefits early and
you're continue to work. There areearnings limits that your social security gets reduced
if you go beyond that. Sofor twenty twenty three. If you make

(24:07):
more than twenty one, two hundredand forty dollars and you're taking your Social
Security benefits prior to full retirement age, that so security check is going to
be reduced and those benefits are goingto be deferred till later on. So
just something to think about because manyof our listeners out there, they might
leave their job in corporate American decidethey're going to work part time, which
is fine, and combine that withtaking Social Security early. But just be

(24:30):
aware that there are those limitations.And you mentioned factors. One factor might
be if you're healthy and you havea passion for doing something, maybe you
work from age sixty two to agelet's say sixty seven or seventy, and
you fill the gap with some incomeso you can defer your benefits. Because
what happens each and every year thatyou defer benefits, those benefits grow by

(24:52):
approximately eight percent. So if you'rea married couple, and remember if you're
married and somebody passes away, oneof those spouses passes away, the larger
those two SOLI Security checks lives andlives on. So that's a strategy and
something to consider, right and Ithink the couple one that you just touched
on, that's that's that's one thatpeople do not think about often, is
what does it look like to strategizeyour social security so that you're leaving your

(25:15):
spouse right with the more optimal situation, because, like you said, if
one of the spouses dies, they'regetting the higher of the two right,
and so maybe attempting to try tomaximize the higher earner social security so in
the off chance that that higher earnerpasses away, that that spouse is then
going to be left with more inthe receiving more in social security exactly.

(25:37):
You can hear us talking. There'sso many different iterations of what if and
then this what if then that there'sjust too many iterations even to go through
today. But you get the point. We're talking about making sure you have
a customized approach, and that's thatyour mindset going into this decision. So
if you're out there, maybe you'reon the cusp of making that decision,
maybe you've already made that decision,and then you're building out that retirement strategy

(26:02):
around a decision you've already made.Whatever the case might be, you're looking
for some guidance call us today toschedule a one hour complimentary visit. We've
made this offer for the first sixpeople that contact us via the website Caleb
before the end of the weekend,by going to retire Madison dot com and
request that complimentary visit, which canbe a second opinion of what you've done,

(26:26):
it could be a starting point.But that visit is with one of
our advisors. We sit down.During that time together, we just get
to understand what it is that youneed and what you want to make your
retirement amazing. It's really over acup of coffee. We do that at
our offices out in Middleton, rightnear Greenway Station, or we can do
it via a zoom meeting if youprefer. But if you go to our

(26:47):
website, retire Madison dot com andrequest that complimentary visit today, Caleb,
I believe you'll get back with thefolks on Monday to set that up.
And by the way, there's nota lot of preparation for that first get
together with us. You come in, we sit down, you get to
know us, You get to knowthe types of clients that we best serve,
and we figure out can we getalong, Do we like each other?

(27:08):
And does it make sense to goa little bit deeper than that first
meeting. And if we do,that's where we go to a second visit,
which is also complimentary. We takea deeper look into what's going on,
look for those blind spots in yourplan, and then start making recommendations
and suggestions at that point and ifwe agree to keep moving forward, then
we'll lay out that process, thatEmpowered Retirement planning process for you. But

(27:32):
it's certainly a good one hour toone hour and fifteen minutes spent getting to
understand where you stand going into thatnext phase of life. So, folks,
this is the Empowered Retirement Radio Show. We're going to be back with
the last segment. This is Nick, Tom and Caleb Symbolack here to make
your retirement better. Welcome back everybodyto the last segment of the Mother's Day

(27:59):
edition of Empowered Retirement. Get thatMother's Day in the absolutely figure we get.
We get the one chance right theone weekend, So happy Mother's Day
again to all the mothers out there. So Nick, thus far, we've
talked about some missing in conspiracies,these general rules of retirement that people unfortunately
typically apply in many cases that justyou know, they don't always work.

(28:22):
So we talked about talk you know, deferred compensation. A rule is that
are a general rule that people oftenrecommend is that you just want to defer
your taxes for as long as youcan vocate. Then you have a big
nest day tax problem, right,And so we talked a little bit about
diversifying your tax liabilities. And thenwe discuss social security, which you know,
we get it a lot. Thisis one of the hotter topics of

(28:44):
retirement and how there are just somany different factors that come into planning your
social security, you know, right, like you know, what's your health
look like, longevity of your life, who's the higher earner, what does
it look like to make sure thatyour spouse is taken care of in the
event that you pass sooner? Andso we talked about that last session.
Yeah, session, Yes, Andnow we're going to talk about spending and

(29:08):
retirement because a lot of people think, oh, well, I'm retired now,
I'm going to be maybe a littlebit more frugal and my expenses are
actually gonna go down. Well that'sboth up and down. I would say
this that there is a conspiracy ora myth that automatically when we retire.
Let's start with people that think thatthat automatically their expenses are going to go

(29:30):
up every year, and we'll talkabout that conspiracy about them going down as
well. But government studies show peopledo spend less as they get older in
retirement, right, So you mayspend a little bit more on those earlier's
those go go years right when you'rea young retire e so to speak.
But then as you get older andwe have those end of life type scenarios,

(29:52):
that's maybe where your expenses go up. So it's not just a straight
line. It's more of a spendingsmile where you spend a little bit more
early on and then a little bitlast a little bit more. So the
idea that automatically your expenses and retirementwill go up every year isn't necessarily true.
But then there's the other side ofit, where people automatically think that

(30:14):
they're not working anymore and their expensesare going to go down. So let's
talk about that a little bit.Yeah, absolutely, and you know,
we joke about it, but it'swhat day of the week to you typically,
like if you're working, right,I mean, we have our work
week Monday through Friday for most people, right, And so what day do
we spend the most money on?Saturday? Yeah, the weekend, right,
because that's our day off. Well, news flashman, you're retired,

(30:36):
every day is Saturday because you're nolonger working. And so people get bored.
What do they do? They goout and they spend their money.
And so, like you said,you know, especially early on a retirement,
people have been working their whole lives. They want to do something,
and so they go out and theyspend money. Who wants to take a
pay cut automatically when they leave,maybe their corporate job or they sell their

(30:57):
business. Seriously, if you're outthere, raise your hand if you want
to automatically take a twenty percent paycut, just because you've heard that conspiracy
out there around the water cooler,around the bubbler that says when you retire,
you're going to spend eighty percent lessthan you did when you were working.
Yeah, and you just made agood point. And I love that
Saturday analogy. We used to usethat all the time. That was kind

(31:18):
of one of our go to analogies, and I love we brought that back
because it is true. Think abouton Saturdays when you're out and about,
and how much you spend, youspend more freely and in retirement that very
well could be the case. Now, all of this is specific to you
and health and family dynamics and whereyou live and whatnot. But there isn't
one hard and fast rule that you'regoing to spend more or less. But

(31:41):
if you're afraid or you're uncertain asto what you can spend, many people
what they do is they hold backand through their retirement probably end up spending
less than they could and they don'tget all the pleasure that they had prepared
for and they work so hard for. So you work hard, and you
accumulated well, and may you havegrandkids, and then all of a sudden
you get to retirement and you don'thave a strategy for spending or an income

(32:05):
strategy. What's your natural tendency?It is to pull back and hold back.
And yes, maybe you pass awaywith a lot of money left in
your pocket or bank accott, youpass out of the kids, But wouldn't
you rather know and have some directionsso you can enjoy retirement without as much
concern or worry. Yeah. Thegreat thing about you know, being in

(32:28):
today's day and age, is there'sso much data right where we're able to
collect data so easily, and there'sa couple of things going on. Seventy
percent of people don't touch their nestegg until they have to with their RMDS.
Okay, So why is that.Well a lot of people who are
afraid that they're going to run outof money. There's also been studies that
show the individuals with pensions or annuitiesspend a lot more of their money comfortably

(32:51):
and happily in retirement. And thereason for that is because they have income
that they know is coming in.Right, Like, the biggest a judgment
adjustment for most people stepping into retirementis that they've had a paycheck coming in,
you know, whatever your payment dateslook like, maybe bi weekly,
one time a month, whatever.But going from that phase of life where
you have those paychecks coming in andthen you retire and for you know,

(33:14):
if you don't have a pension oryou don't have an annuity, that ceases,
right. And so having that predictabilityin retirement, setting up a guaranteed
source of income that you know it'sgoing to be there, that it's principal
protected those individuals spend money much morecomfortably, and they're oftentimes a lot happier
in retirement. And why wouldn't they, Because what you're describing is transitioning from

(33:35):
what I call earning a living.You've earned your paycheck to creating a paycheck.
Have you ever had to create yourown paycheck? For most people,
creating a paycheck means going out andhaving a skill and getting paid for that
or building a business, and that'swhat they're good at. Most of people
listening today are good at something.They have a skill, they can earn
a living, they accumulate wealth thatway. But when you have to create

(33:57):
a paycheck, where do you evenbegin. Well, the first thing is
you need to have a budget andunderstand what your expenses look like. And
we can talk about that on anothershow. But once you do that,
it's lay your puzzle pieces out onthe table. What are your puzzle pieces?
Social Security? Are you married?You have two soul securities? Do
you have a pension, do youhave cash? Do you have bonds?
Do you have an annuity? Doyou have life and jury? You see

(34:19):
where we're going with this, Andthose people that are the happiest and most
content are the ones that have themost predictability in their monthly income. So
I'm going to just take a minuteand talk about income security score. I
love talking about this because it's aneasy to understand concept, folks. Income
security score is this. If yourbudget, let's say every month is five

(34:39):
thousand dollars of fixed expenses and regulardiscretionary spending five thousand dollars and three thousand
dollars of that is eaten up oris accounted for by reliable and guaranteed sources
like your pension, like your soulsecurity. So three thousand of the five
thousand is reliable, you have twothousand that you have to fill. Come

(35:01):
up with two thousand dollars with Whereare you going to get that? And
that example, your income security scoreis sixty percent. Yeah, the goal
should be to try to get thatas close to one hundred percent as possible.
You're not always going to get there. There might be a little bit
of a gap, but having aforty percent gap every month would have to
be filled. And if you're justdefaulting to going to your investments, going

(35:23):
near IRA and taking distributions, boyor boy, if we have a couple
two three bad years in the stockmarket, and that's where you're taking your
money from to fill that forty percentgap. That can be dangerous. So
what we're offering, Caleb, isalternative solutions to diversify your retirement and specifically
diversify your income. Yeah. Nick, you know you asked them the question

(35:44):
at the beginning of this segment.You know, who wants to take a
haircut off their quality of life?And not many people do. And so,
honestly, a really popular investment strategyis withdrawing from your investments. Right.
It used to be four percent.Now I think it's two point eight
percent. And my question is tothe audience. If we're down, you
know the market is down twenty percentin a year, are you going to
be withdrawing less for your income forthat year? Right? Because maybe you

(36:07):
don't want to stump with the losses, you don't want to lock them in.
But okay, so say you don'twant to do that, well,
now you're deteriorating your quality of life. Or maybe you can't do that.
You have to lock those losses inbecause you have specific debt obligations that you
have to meet. And this iswhere the cohesiveness, Like you know,
we talked about it in the lastsegment of social security of really making sure
you're utilizing all of these pieces,whether it might be an annuity, maybe

(36:28):
you have an a pension. Howyou can you maybe reduce your tax liability.
Take some of that money that you'rereducing your tax liability with put it
into some form of income producing investmentor policy. Right, there's a lot
at work here and being able toset up an income plan so that you
can have that security of knowing thatpaycheck is going to be coming in.
You're creating that paycheck to uphold yourquality of life, that you know that

(36:52):
money is going to be either sitethat you can a spend consistently and happily
and comfortably, but also maintain yourquality of life. It's not the easiest
thing to do, and a lotof people think that these generalized silver bullet
rules are actually effective, and we'reasking you to think through this and over
the last probably thirteen years leading upto twenty twenty two, I don't know

(37:12):
necessarily call that everybody took the timeto think through this. Because we looked
at our accounts, money that wehad invested. We turns most years,
with the exception of twenty fifteen andtwenty eighteen, people were making ten eleven,
twenty percent, and the consensus seemedto be that if we continue to
make double digit returns, we canlive off those earnings comfortably and go on
our merry way. And twenty twentytwo happened, and it hit us like

(37:36):
a brick wall, and now we'reasking people to think through this a little
bit. Yea beat, Diligent havea strategy, and that's what we've been
offer up the show as an opportunityto meet with one of our advisors for
a one hour complimentary visit, eitheras a second opinion to how ready you
are to retire or as a startingpoint. You've been listening to this show

(37:58):
maybe for a few years and you'rewith in three years of retirement, or
maybe you retired a year ago andyou've been just doing this on your own,
trying to figure all this stuff outon your own, or you've gone
through a big transition in life,like selling a business, something like that.
We've been offering throughout the show forthe first six people that reach out
to us via the website at retireMadison dot com to request that complementary visit

(38:22):
with one of our advisers. That'san opportunity for you to come in and
start that process, get a secondopinion, meet with one of us at
our office out in Middleton. We'renear Greenway Station or via zoom. It's
complimentary, and it's a chance forus to get to know you a little
bit, for you to get tounderstand us and the people that we serve

(38:44):
best. And if after that timetogether, that one hour or one hour
and fifteen minutes together, we decideto take another step together, that's where
we're going to ask you to dosome more preparation, give you a little
bit of homework, dive deeper intothe sandbox with you, figure out where
your gaps might be, and beginto make some recommendations. And then from
their walk through the planning process,if we mutually determine it's a good fit.

(39:07):
But as fiduciaries, that first andsecond meeting is so important because it
allows us to understand you before weeven begin to make recommendations. So go
to retire Madison dot com, requestthat complimentary visit, and then Caleb,
we'll get back to you on Monday. Absolutely, yeah, folks, it
is not easy or as easy aspeople say to plan for retirement. There

(39:27):
are a lot of moving pieces andespecially stepping into the promised land. You
know you've worked your whole life toget here. Make sure that you're doing
it right, and make sure thatyou're doing it right with somebody that you
like, that has your back,so that you can have that security and
peace of mind. That's why we'rehere to help every Saturday, folks,
I hope you have a fantastic weekend. To all the moms out there again,
Happy Mother's Day. This is NickToman and Caleb Simbolock. We'll be

(39:50):
back with your next Saturday, Makeyour retirement better on the Empowered Retirement Radio
Show. Go have a great weekend, Happy Mother's Day. Investment advice reservices
offered through Trek Capital Management, LLC, a SEC registered investment advisor. Information
presented is for educational purposes only andit should not be considered specific. Investment

(40:12):
advice does not take into consideration yourspecific situation and does not intend to make
an offer or solicitation for the saleor purchase of any securities or investment strategies.
Investments involve risk and are not guaranteed, and past performance is no guarantee
of future results. For specific taxadvice on any strategy, consults with a
qualified tax professional before implementing any strategydiscussed here in