10/25: 10 Retirement Planning Myths

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Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Talks with Blake Sandfold. Today,
Terry Sandfold is off Blake. You've got an intriguing show
title today.

Speaker 2 (00:09):
We do ten Retirement Planning Myths Busted. So very excited
for this.

Speaker 3 (00:15):
You know, as many longtime listeners know, Terry always likes
the theme, so we thought we do this in spirit
of his thoughts and mentality today. So very very much
looking forward to it. And we've got Halloween right around
the corner. Yeah, amazing how fast this year is going.

Speaker 1 (00:32):
I know, I know, I mean we're the first month
of Q three is almost shot, and I'm assuming your
little ones have chosen their Halloween gear by now.

Speaker 3 (00:41):
They are all ready to go. So I think they're
going as butterflies this year. So three little girls, six,
four and an eighteen month old, so they're all excited
about it and getting ready to go. And I have
tried it on a number of times as he can imagine,
and it should be.

Speaker 2 (00:59):
A good go ahead. Nice.

Speaker 1 (01:01):
Well, you know, I love the show MythBusters, so anytime
we can find something and smash it, I'm in.

Speaker 2 (01:08):
So you know, it's always one of my favorites.

Speaker 3 (01:11):
So I absolutely love science and anything we can do
around that is fun.

Speaker 2 (01:15):
So we'll see what we can do today.

Speaker 1 (01:18):
Absolutely, so, Blake, what are I mean? Are you going
to start with the biggest one or are we going
to count down from ten to one.

Speaker 2 (01:25):
I think they're all good. I think they're all good, Kelly.

Speaker 3 (01:28):
But you know, we'll try to separate fact from fiction
and help you feel a little bit more confident about
a retirement plan.

Speaker 2 (01:34):
So that'll be the goal of today.

Speaker 3 (01:36):
So the first one is I'm too young to think
about retirements. I can't describe how many times we've heard
this over the years, and you know everyone says, well,
I'm going to get focused on that at a different time,
you know, forties, fifties. You know we've had stories of
someone the weekend before essentially saying that it's time to

(01:57):
start think about retirements.

Speaker 2 (01:58):
It's not the most ideal.

Speaker 3 (02:00):
It is a good story though fortunately it worked out
for But you know the reality is the earlier to start,
the more your savings can grow. Do the power of
compound interest. So let that be your ally as you're
going through the savings timeline. See how many times you
can get your money to double for you.

Speaker 2 (02:18):
And you know.

Speaker 3 (02:19):
That's what everyone used always say the first one hundred
thousand dollars to save is the hardest and the most important,
and just letting that grow. So starting young allows their
small contributions to add up significantly over time to make
a big impact. You know, it's kind of the notion
of time in the market beats time in the market.
Everyone wants to time each side. You know, myself is

(02:41):
our investment officer. We try the best we can to
find some of the big moves in the market on
the upside or downside. But you can't time every event.
It's just not.

Speaker 2 (02:50):
Possible, especially these days. Especially these days.

Speaker 3 (02:54):
I mean it's a you know, a post online or whatever,
it may be, a new geopolitical events turn on a
dime pretty quick. And you know, we always say the
markets overreact, so use that as an opportunity more than anything.
But we've got an interesting little scenario here, So this

(03:14):
is an example of starting at two different ages. We're
not talking about taxes anything like that. So this is
just a pure investment type growth idea assuming a seven
percent rate to return, so kind of a simple long
term average. So if you started at age twenty five,
deposited ten thousand dollars, you and said you retired at

(03:36):
sixty five, just as an example here, so you'd have
your money invested for forty years. Ending balance would be
one hundred forty nine, seven hundred and forty four.

Speaker 1 (03:46):
Dollars, just letting it sit there.

Speaker 2 (03:48):
Just letting its sit there, letting a girl one deposit.

Speaker 3 (03:51):
Now, on the flip side of you said I'm going
to start at age forty five, and you know it's
easy to conceptualize that with some people and saying, you know,
I had all these student loan, dead side family, et cetera.
I couldn't do it, and you know it was tough
to find funds around for that. So starting out forty five,
you've got twenty years to have the funds invested again.
Just with that simple ten thousand dollars investment, the ending

(04:15):
value would be thirty eight thousand.

Speaker 2 (04:16):
Six ninety six.

Speaker 3 (04:18):
Oh wow, so you know, roughly a quarter. And you know,
you think about that, that's that's pretty staggering.

Speaker 2 (04:26):
You know, it just just shows the value.

Speaker 3 (04:28):
Of being in there longer term over time, and you
know it can be smaller amounts that that you can
do earlier on. But it's also if you if you're
able to do those and stay consistent over time and
keep that going. At the later ages it can be
you know, even more dramatic in that. Yeah, you know,
it's it's really starting early. And that's something where we

(04:50):
love talking to our clients about that and saying, let's
get your kids going, let's get your grandkids going. You know,
if we can get a ug my UPMA account set
up for a for a minor and you know, maybe
they don't need those and just let that that funds
grow for them, that could be a great retirement option,
you know, if you've got other assets. So get in

(05:10):
early and get focused.

Speaker 1 (05:11):
Yep, for sure. I mean real quick, Blake, you went
by those two words that amuse me every time we
bring them up on the show, UGMA and ATMA. But
just for people who haven't heard us talk about that before,
just give a quick shout out to what those are.

Speaker 2 (05:24):
Yeah.

Speaker 3 (05:24):
So it's Uniform Gift to Miners Act or Uniform Transfer
to Miners Act. So it's essentially sitting up in after
tax brokerage accounts for the benefits of a minor, some Minnesota,
someone under the age of eighteen, and you know you
can give funds to them. You can give stock to
them through this type of accounts. You know, you can

(05:46):
do up to current gifting annual gifting limits without any
gift implication at all.

Speaker 2 (05:53):
Wow.

Speaker 3 (05:54):
So it can be a pretty stagerant way to give
money away.

Speaker 2 (05:58):
And you know, in Minnesota you get to.

Speaker 3 (05:59):
Chew whether you want the age of majority to be
eighteen or twenty one, meaning when the child reaches that age,
the assets are theirs. And you know that's where I
tell some people there's good and bad with that, right yeah,
And you know they can have flexibility around that. It
can be a great way to educate and you know,
get them focused on their own savings.

Speaker 2 (06:19):
But on the flip side.

Speaker 3 (06:21):
It is their money. You know, if they want to
access it, they can. You know, it's their funds. So
that's where you know, with a lot of our clients
who have that set up. You know, when the minor
turns fifteen or sixteen years old, we're typically recommending let's
sit down together and go through the long term power
of this and the impact of it. And you know,

(06:41):
we found a lot of success in that by saying
let's make this formal. You know, they feel they need
to come in, they need to talk to an advisor
to get educated around it. The psyche changes a lot,
you know, when it becomes serious.

Speaker 2 (06:54):
In that manner. Oh yeah, yeah.

Speaker 3 (06:58):
And I've had clients that have shared, you know, with
the child. You know, here's sacrifices we made, Here's the
hard work that we put in to give you this opportunity,
and don't squander it, right, they make the most of it,
so can be a great, great instrument.

Speaker 1 (07:14):
Yeah, No, I mean, and I think that that is
such an important piece of because I think one of
the things that people are reticent about doing setting something
like that up is they're afraid they're going to hit
that age, be at eighteen or twenty one, and just
go grab the money and go spend it foolishly. Whereas
if you build in you know, a process like that
starting early, I mean, that could be not just life

(07:35):
changing from the monetary standpoint, Blake, But you know, I
think one of the biggest things I hear from people
all the time is like, oh, I was never taught
about money by my parents.

Speaker 2 (07:43):
So huge, It's huge.

Speaker 3 (07:46):
And you know, as a side tagent, you know, I've
heard so many people out there said, well, it should
be the family teaching, it should be the school teaching.
They might not be the best teachers at that. You know,
it's you know, it's very important to I think, formalize
it in that type of setting, get that professional advice.

Speaker 1 (08:03):
Yeah.

Speaker 3 (08:03):
And you know what I find with a lot of
the children that we do that that become young adults,
they take it serious afterwards a lot of times. And
you know, we'll we'll help them when they get a
job to say, let's get your four to one k
set up the first time. Let's make sure you're you're
you're contributing, get that ten percent put away day one,
get that match, and.

Speaker 2 (08:23):
Let's talk about rock dollars, et cetera.

Speaker 3 (08:25):
And it's it's fun for them, you know, if they
if you get in that psyche of just saying this,
this is what you do, this is what life is. Uh,
you know, it's it's you know, I think a much
better way to long term success by by just being disciplined.

Speaker 1 (08:38):
Absolutely one hundred percent. So before we you know, need
to take our first break here, let's go ahead and
talk about the moneytox mailer of the week, because this
is a pretty beefy one blake.

Speaker 2 (08:47):
Yeah, what it is.

Speaker 3 (08:48):
Yeah, this is a great booklet's five Ways to Stay
Confidence in retirements. Uh, you know, I think it's something
a lot of people are thinking about, interested in right
now in this day and age goes through a number
of different strategies scenarios, calculating actual costs, managing debt, forecasting income,
build savings, retire, continue working, et cetera, and more. So,

(09:09):
if you'd like your copy, give our office a call
nine to five to two five four four two eight
three seven, or go online to sandvoldfg dot com.

Speaker 1 (09:20):
You're listening to Money Talks with Blake Sandbold. Terry Sandbold
has this weekend off, but Blake, you're at the Helm
and we've got a killer topic this week.

Speaker 2 (09:29):
I love it.

Speaker 3 (09:30):
So we've got a great one today. Ten retirements planning
myths busted. So in the spirit of Halloween, we've got
got some fun facts and figures to go through today.
So next myth that we have, Kelly, I can get
the same performance investing on my own if I'm paying
a management fee, I'll get a lower return. So it's
something we hear a lot, and you know it's so interesting.

(09:54):
I mean, you know, when you look at investing in
our minds, it really is whole braind and investing, and
you need to use the left side of your brain
and right side of the brain. And you know what
I mean by that is it takes being, you know,
to an extent unbiased coming into a lot of it.
And you know, it's it's very difficult to stay unemotional

(10:15):
with your own assets. You know, finances are one of
the most emotional topics out there for everybody, and you know,
personal finance to managing a portfolio. You know, it's very
difficult to stay completely disciplined through market cycles. And that's
that's really what investment advisors like ourself pride ourselves on
is saying, you know, let's let's be disciplined. If we

(10:35):
see a dip in the markets, has the narrative changed
or not? Meaning is this something we should buy into
or should we be selling as well? And you know
it's very easy, you know when we always give this
scenario when stocks are down fifty percent, are you running
in or are you running out? And a lot of
people are running out at that point, and you know,
it's tough to say, I want to look for opportunities

(10:57):
within this, but that's what a group like us to
stay disciplined in and saying where where are opportunities out there?

Speaker 2 (11:03):
And in a more.

Speaker 3 (11:06):
Quickly evolving environments I guess that we're in right now.
I think it's more important than ever. And you know,
you looked at a lot of consumer sentiment charts this year.

Speaker 2 (11:15):
We're not that.

Speaker 3 (11:16):
Positive on things, and you know, outlook for markets, we're
not that positive. But we really looked at things and said,
we think this is actually gonna be a pretty good year.
And you know it's it's turned out to be a
strong year at this point. So I think that's that's important.
And it's also important to look creatively and abstractly at things.
So that's why I say it's both sides of brain,

(11:36):
and that's really what a group like us tries to do.
You know, stay, stay disciplines for the long term growth.
And this was interesting. This is something that Fidelity puts together.
Percentage of investors who say they feel confident about reaching
their goal saving for retirement without advice. People without advice,

(11:58):
seventy six percent of them said they feel confident. Those
receiving advice ninety percent, so fourteen percent. Additional by advice
estate planning seventy four percent without ninety one percent with
saving for a vacation, So it seems like a simple
thing for a lot of people. Seventy eight percent without

(12:19):
ninety two percent with advice.

Speaker 2 (12:21):
Oh okay, that that one I always think is interesting.

Speaker 3 (12:23):
So you know it, you know, I talked to our
team about that and say, you know, it really shows
the impact of what we can do. You know, it's
it is holistic planning. It's not just the dollars of cents.
It's making that lifestyle fit for people well.

Speaker 1 (12:37):
And the idea. I think it also is an indicator
blake of how it shows that the people who understand
the value of a trusted advisor, like you guys, they
bring them in on more aspects of their life, Like
a vacation is not something that people never well, I
want to go on vacation. I think I'll call a
financial planner. But if you already have one, you know,

(12:57):
and you incorporate that into the conversation, it's like then
it becomes just normal for them, and then luckily you
can help expand you know, so that everything becomes that
holistic you know sort of net that you talk about.

Speaker 3 (13:10):
You're completely right, you know, And we always talk to
our clients, it's a relationship working with us.

Speaker 2 (13:16):
The more you know, the more we know about you,
the better.

Speaker 3 (13:19):
The more you know about us it can be the
better as well, because you want that open dialogue going
back and forth. And you know, that's that's where you know,
it's not just some of the chit chat. It's it's
understanding what drives you. And that's that's why that that
is so important. And you know, for for some of
our clients, what we do is we drop essentially a
life map, you know, essentially showing your age, your life expectancy,

(13:41):
what are personal things you want to do, what our
business or career goals that you have, and map those
out relative to each other. And you know, it's it's
such a wonderful experience and conversation I think for people
to think about that, because you know, most don't look
to say I'm going to go through that with my
financial advisor. You know, just uh, just tell me how
my portfolio is doing. It's my growth, all right, move

(14:02):
on from there. But if we can actually match that with.

Speaker 2 (14:05):
Your life goals, you know, I think you do get
a lot more comfort to say, yeah, I'm on track
or I'm not on track and how can we adjust things. So, yeah,
very important to go through that.

Speaker 1 (14:16):
That's that is such a great idea.

Speaker 3 (14:18):
Yeah, so next myth, we have social security will cover
all my expenses in retirement. Oh wow, this is a
one you hear a lot of the time, and you know,
people are often disappointed, you know when they hear, well,
that's not going to cut it.

Speaker 2 (14:34):
No, it's not designed to.

Speaker 3 (14:36):
So social Security is designed supplement retirement income, not replace
the entire paycheck. Typically for most people to cover only
about forty percent of pre retirement income, but depending on
your salary in earning history, can be twenty to seventy
nine percent. So role of social securities to pride a
monthly benefit for those that paid into the system for

(14:57):
at least ten years. It's rucial to have additional savings
from four one k's i RAS after tax investments in
addition to that, and.

Speaker 2 (15:05):
So it really is just one bucket.

Speaker 3 (15:07):
And that's where I think it's you know, it's changed
a lot over the last thirty years, forty years. I
mean a lot of people used to look at and say, well,
I'm gonna get my SOIB security, I'm gonna get my pension,
go live on the beach. The rest is golden, right,
And you know, the onus has been put more and
more on individuals to say, you know, you're living longer,
you need to create that saving you know, fill that

(15:29):
savings gap and void. Yeah, and you know that's that's
what other instruments can do. And you know, I think
from a holistic planning standpoint, it's important to have multiple
tax buckets in there. You know, it's not just the
four one K. It's not just Social Security having after
tax funds, having wroth dollars that can grow tax preferred

(15:50):
in different ways and have different liquidity options.

Speaker 2 (15:53):
It all comes together. But social Security as a standalone
cannot do it.

Speaker 1 (15:57):
Good point, So think about.

Speaker 3 (16:00):
Something, to think about something considered. Next one we have,
I'll spend lesson retirements again. Yeah, it's a common one.
And you know it's you know many spend people spend
more in the early years of retirements as they travel,
pursue hobbies, or tackle.

Speaker 2 (16:20):
You know, home improvement projects. I mean, we see that
all the time.

Speaker 3 (16:23):
And you know, I think a lot of the times
it can be helpful to phase it into multiple different
buckets of retirements. And what I mean by that is
you can have the early years, the go go years,
and you know, maybe that's the first ten to fifteen
years where you're doing a lot of travel, hobbies, activities.
You know, we've had clients that have I think climbing

(16:44):
Mount Kilimanjarro and you know beyond. So I think, you know,
being really focused and seeing that that first bucket of years, Yeah,
there's gonna be some stuff that may come down. You know,
maybe I'm not you know, I don't need to save,
I don't need to invest. Maybe I'll have one car
and set of two. On the other hand, maybe I'll

(17:05):
have three cars instead of two. You know, it can
be different for everybody, but really focusing on what are
those discretionary objects that are going to change versus what
are those ones.

Speaker 2 (17:15):
That will not.

Speaker 3 (17:16):
Right then, after that you've got the slogo years. Maybe
you're settling down a little bit more into retirements. Maybe
it's a little more local pickleball and instead of some
of the travel less travel less exploration. So we usually
see the expenses dip after that. Okay, on the flip side,
health costs may increase, so you know, it's making sure

(17:38):
that you have that proper insurance intact there so it
doesn't blow out the retirement picture. Then later on you've
got the no go years slow down significantly. Healthcare expenses
may become primary focus, increase medical needs, cis living, long
term care, et cetera. And you know, the what additional
costs that we do see sometimes in that we've actually

(17:59):
seen more of the last couple of years is people
moving again and saying, during those first years, I was
very comfortable being down in Florida, Arizona, Texas, whatever that
may be, But maybe I want to come back home
be close to family now. I want someone to be
able to help take care of me. So we talked
of a lot of our clients and saying, if that's
a goal, let's make sure you have options for that

(18:21):
when that time comes, you know, stay plugged into the
credit marketing some capacity in case you need to redo
a mortgage at some points. Very very important considerations there,
for sure.

Speaker 1 (18:33):
And you know that that is one of the other
that goes back to your life map, Blake, you know,
I mean, some of these things you can predict, but
others you can't. So yeah, so there's the you know,
contingencies and potential eventualities that you want to build into that,
and I believe you have a very nice resource that
can help people do that. Before we go to the news,

(18:53):
we've got a great Money Talks mailer of the week.
What is it this week, Blake? And how can you
get theirs?

Speaker 2 (18:58):
Yeah? So great one this week.

Speaker 3 (19:00):
Five ways to say confident retirement go through a number
of different conversation points that we have today at more
So I think it's very insightful, ashally for people of
all ages. If you'd like your copy, give us a
call at nine five two five four four two eight
three seven or go on line to Sandbold fg dot com.

Speaker 1 (19:20):
It's Money Talks with Blake Sandbold today. Terry Sandbold has
taken a great day off. We hope he's having a
good time. And Blake, we're doing a little myth busting.

Speaker 2 (19:29):
Today, little myth busting today.

Speaker 3 (19:31):
So love love the spirit of Halloween this time of year,
so it's encroaching on us, and I guess everyone in
Minnesota right now is saying, you know, gosh, I hope
it's not going to be the snow one again this year?

Speaker 2 (19:41):
Are we going to get? Doesn't look like that right now,
So fingers crossed.

Speaker 1 (19:46):
Oh my god, you know that my mother, I was
still in California. My family's from California, was here visiting
my sister who was the first one to become a Minnesotan.
She was here for that infamous snowstorm and she didn't
get home in time because she was here for several
more days. But I mean she she came back. She's like,
never seen anything like it. And I hope we don't
this year either.

Speaker 3 (20:05):
I hope we don't, so fingers crossed on that. I
know my girls are hoping for.

Speaker 2 (20:10):
A nice night, so hopefully it doesn't disappoint for sure.

Speaker 3 (20:15):
Yeah, So going through number of myths, so we are
up to our myth number five for today. I should
pay off my mortgage before retiring. And you know, this
is one where I think it's really important to look
under the hood at the details on this. So while
being debt free can be ideal, paying off a low
interest rate mortgage may not always be the best financial decision,

(20:38):
especially if it depletes liquid assets.

Speaker 2 (20:40):
And you know, that's.

Speaker 3 (20:42):
Where this is really dependent on what rate your mortgage
is at, and it's not an all encompassing statements, and
I think that's the really important thing. You know, as
an example. I mean, we've got a lot of clients
that took out a two and a half to three
percent mortgage during twenty twenty. Yep, they're very happy be
just saying I'm going to make the three hundred and
sixtieth payments on this, you know, especially when you've still

(21:06):
got money market funds CDs generated in a higher interest
rate than that. So in cases like that, it may
not be the best financial choice to have that paid off.
And if you're itemizing, you know, or trying to itemize,
that can help you get a little bit closer to that,
you know, so that does help on that front. You know,

(21:27):
on the flip side, you know, if you've got a
seven percent mortgage, well that that might be a little
bit more of a conversation of saying, what is your
risk lance? What is your profile? Should you pay larger
chunks off to get that depleted? And you know, all
of that comes into mind where we will talk through
with our clients what do we see as the best
financial choice, But it's also a conversation of what is

(21:47):
your what does your risk comfort level look like? You know,
is that something do you have the means to pay
it off? Is that something that's just stressing you out.

Speaker 2 (21:54):
All the time. We'll show it side by side to
show what the impact is.

Speaker 3 (21:58):
But you want to at least be educated to say,
you know, is this the right thing for me to
do or not? And I think that's our key takeaway there.
It's not a blanket statement that it's good to pay
it off in all cases. So sometimes having that liquidity
or something like that may be helpful. Okay, And you know,
I'll go step further to say a lot of our

(22:18):
clients what we recommend doing is have a line of
credit on your.

Speaker 2 (22:22):
Home as well.

Speaker 3 (22:23):
And you know, even if you're not tapping into that,
just having additional funds accessible when liquidity, you know, you
could run into liquidity crunch that can be worth a lot,
so that that can be very helpful. So it's I
think those are are good things to look at and consider.
You know, we've had people that have said, well, you know,

(22:44):
maybe stock market's been good to me this year. I've
realized more capital gains than I necessarily may want to.

Speaker 2 (22:52):
I need some funds.

Speaker 3 (22:53):
Well, you could pull from that and then sell stock
next year to pay it off, you know. So there's
things like that that you can do just to help
bridge things out and gain flexibility. And you know, having
options in retirements is one of the most important things.

Speaker 1 (23:06):
Oh for sure.

Speaker 3 (23:08):
Yeah, next one that we have, I don't need to
adjust my portfolio after I retire.

Speaker 2 (23:15):
Oh yeah, that's a big eie.

Speaker 1 (23:18):
Yeah done once you get there, you're still working it, right.

Speaker 2 (23:21):
You're not done.

Speaker 3 (23:22):
And you know that's it's kind of amazing. I mean,
on my side, I had heard Terry make that comment
growing up, and you know, it just just seemed obvious
to me. And it's like it but it was also
it seemed obvious because I always heard Terry talk about it.
And you know, when when I got into you know,
truly giving financial advice, you realize that is actually a

(23:42):
thought process for a lot of people. You know, I
don't need to change it, so I can just keep doing
how how I've always done. Yeah, it worked twenty years
ago for me. It should keep working going forward. And
that's not necessarily the case. And one, you know, did
you set it up the right way the first time?
Margie get lucky on something. So past decisions shouldn't you know,

(24:05):
you know, fulfill what your future decisions are, so to speak.
But potentially a more conservative investment strategy can make more
sense and retirements, but that doesn't mean abandoning growth investments entirely.
So diversification is really key. And you know why we
say that. You know, you look at someone, we have
a lot of clients that may retire between fifty five

(24:27):
and sixty five. You could be in retirement thirty forty
plus years. So that's that's definitely important to say. There
still needs to be portfolio growth in there. I mean,
in general, you look over the last five years, cumutive
inflation was about twenty eight twenty nine percent, so you know,
having assets that can grow to keep up with that

(24:48):
inflation over time is huge. You know that that's incredibly important.
But that being said, with your entire portfolio, you don't
necessarily want to be fully aggressive as you used to be,
just because you don't have the same time for him
to recover. So having different buckets of assets that are
accessible at different timelines can be important on that. So

(25:09):
meaning you know, having cash available, having short term bonds
available that you're driving some of the income off of
that can be a strategy. And then letting your other
accounts grow and you know, as you know as your
bonds get depleted, potentially as you're drying money, you can
sell stock off when it's at a game to replenish
some of that. Sure, So things like that can be
a natural strategy. So it's it can be you know

(25:31):
a lot of times where it's a range that you're
going to be between. But know what a minimum and
a maximum threshold is for your portfolio.

Speaker 2 (25:38):
Yep.

Speaker 3 (25:40):
The other thing that I like talking about with that
is you know, it can be a different risk allocation
depending on which account.

Speaker 2 (25:46):
You're looking at.

Speaker 3 (25:47):
And you know, as we draw a financial plan, there's
different accounts that you're probably going to draw income from
at different stages. If you have different tax type accounts,
you know, a roth Ira as an example, that might
be the single lad to count that you draw money from,
so or maybe you won't. Maybe that's a legacy option,
so you may want to be more aggressive there and
more conservative with your liquid dollars. So it can be fluid,

(26:11):
but it absolutely merits looking at and seeing if changes
need to be made.

Speaker 1 (26:15):
Well, yeah, I kind of going back Blake to to
the initial myth that you laid out here about how
your strategy doesn't need to be changed after you retire
that you just leave it in place. I mean, think
about this. You're different, your your lifestyle is going to change,
but think about what is different in the last five
and ten years here.

Speaker 2 (26:33):
You know, in the world.

Speaker 1 (26:34):
I mean, so that alone, right, is a really good
bolster for your point.

Speaker 2 (26:39):
Yeah, you know, Kelly, it might be easier to make
a list to say what's the same over the last
five ta, sure, that's for sure. Yeah, but you're totally right.

Speaker 3 (26:49):
I mean, so much has changed, and you know, from
I'll focus on from a purely investment standpoints, marked change
a lot. You know, the types of stocks that we
think have leadership going forward are very different. You know,
how many people were talking about AI and data center
built outs five ten years ago, a pretty select group
and now it's a mainstream on things.

Speaker 2 (27:13):
So that's changed.

Speaker 3 (27:14):
Interest rates have changed, which means you know, home values,
home prices, home mortgages have all changed, your bond portfolio, cash,
it's all changed.

Speaker 2 (27:22):
So solely looking.

Speaker 3 (27:24):
At the investment side and leaving out the rest of
the world, there's a lot that's changed over the last
five to ten years, So you do definitely need to
be dynamic as you're looking through this to say, how
should my portfolio change with all of this in mind?

Speaker 1 (27:36):
Yeah, no, it's a really great point. So what's the
next one?

Speaker 2 (27:41):
Next one we have healthcare costs will be low.

Speaker 1 (27:43):
Things to medicare, ooh, I bet a lot of people
think that, a.

Speaker 3 (27:47):
Lot of people think that. So Medicare doesn't cover everything.
You know, long term care, dental, vision, and hearing aids
often require out of profit expenses or supplemental insurance.

Speaker 2 (27:59):
So I hear that all the time.

Speaker 3 (28:01):
I'm gonna get Medicare, It's gonna be super cheap, and
I'm just set. No, not necessarily. So depending what what
your needs are, you may need supplemental plans. You know,
in Minnesota there's a huge change going on with advantage plans,
and you know, with one insured pulling out of the
state right now, so a lot of people are scrambling
trying to figure out where we should go for coverage.

(28:23):
What does that look like? You know, I think it's
going to continue to change a lot. You know, I
look at our own company insurance health insurance plan. You know,
it's you know, double digit increase in pricing cost going
into next year. So it's expensive there. But Medicare is
definitely it's you know, there's grades on it depending what

(28:44):
your income looks like. So that's an important consideration to
have in there. You really need to talk to Medicare professional.
So that is something we strongly urge. We work with
a number around here. We're happy to give contacts. We
don't currently do it in house, just as we think
you do need that exact specialties. But it's also, as
we mentioned, important to look at largeterm care and the

(29:06):
right insurance coverage. So that's that could be a very
important considerations for some you know, we hear that all
the time, Well, Medicare is going to take care of
my lar term care needs. If I need assisted living,
they'll take care of me. They don't that that's not
what they do. That's not what it's designed for. You know,
Medicaid can can kick in, but that's essentially after assets

(29:29):
are depleted to three thousand dollars and you get some
of an exclusion for a home as well in there,
but you know, it's it's designed to be desolate, you know,
kind of last last minute care. So very important to
look at that early insurance during the retirement years is vital.

Speaker 1 (29:45):
Absolutely, let's go ahead and take our last break here
on this edition of Money Talks with Blake Sandbold and
we'll be back in just a moment. It's Money to
and Blake Sandbold is at the Helm this week. Terry
Sandbold is off and Blake. We're talking about retirement myths

(30:07):
and we're busting.

Speaker 2 (30:08):
Them retirement myths.

Speaker 3 (30:10):
So in the spirit of Terry, gotta love a good theme,
so I have to be doing this. Yeah, So we've
gone through a number already. Next one that we have
myth number eight for today, estate planning is only for
the wealthy. You know, maybe I'll add in there only
for the wealthy and old. So you know, that's probably

(30:33):
two of the most common caveats that we hear out there.

Speaker 2 (30:36):
Reality is everyone.

Speaker 3 (30:38):
Needs an estate plan, regardless of wealth and sure as
your assets are distributed according to your wishes and can
prevent disputes among family members.

Speaker 2 (30:46):
Yeah, it's it's.

Speaker 3 (30:48):
Huge to look at that. And you know, we've we've
had a number of attorneys on over the years, Kelly,
and you know what they've always said is everyone has
an estate plan. It's just do you have one specialized
for you or is it the one the government has
created for you right, and I always look at it.
I want to have control over over what I'm doing.
I want to make sure it's things that are going

(31:09):
exactly the way I want. And that's that's really what
good estate planning can help with, you know, to understanding
what type of different options are out there, you know,
a will, a trust, healthcare directive, power of attorney, et cetera,
and making sure they do exactly what you want for
your situation.

Speaker 2 (31:26):
Beneficiary designations. I guess as as.

Speaker 3 (31:28):
The fifth one in there, and you know, that's that's
an important thing. You know, when you when you essentially
create a trust, it's always important to go the next
step to say, have I actually funded the trust or
have I listed as a beneficiary if that's what my
intention is. You know, just signing the document in itself
doesn't necessarily do much, you know, you actually you have

(31:49):
to take that next step to make sure that it's
actually funded or titled in the way that you want
it to be. So I think that's that's an important consideration.
You know, a will, as an example, I think there's
a lot of misconceptions out there that if you have
a will, you're done, You're you're fine from a state standpoint,
but it's really a document that goes to probate courts.

(32:09):
So it still does go through probate, but it just
it expedites it to an extent, you know, by giving direction.
But again probate means disclosure of assets, and.

Speaker 2 (32:20):
That a lot of people don't want to do that.
A lot of people don't want to do that. I
don't want to do that. I know that. So, uh, look,
you know, look at it.

Speaker 3 (32:29):
Understand those beneficiary designation We always say that's that's a
great thing to look at annually. You know, make sure
beneficiaries are who he wants, percentages are he wants. You know,
if someone's name has changed, you know, do you need
to update that, et cetera. Uh, if you've gone through
a marriage change, make sure it's updated the way that
you intend it to be. And you know, it's important

(32:51):
to note that when it's a beneficiary designation such as
something on an IRA, UH, that's contract law.

Speaker 2 (32:58):
So it's going to pass exactly to that. So if
you have a trust that says something else, but your
beneficiary designation says, you know, it's going to my kids,
it's going to follow whatever the beneficiary designation is because
that's contract law, so you do need to have you know,
it's important to make sure that those are working in
conjunction with each other if you have done that work.

(33:18):
So large considerations there.

Speaker 3 (33:21):
But you know, again as I added that it is
also it's not just for the old. It's really helpful
at any age. You know myself we went through that
when we started having kids, and you know, to say,
we'd obviously name our kids as our contingent beneficiars in
some capacity, but they can't control the assets. They don't
know what to do with that, so you need you know,

(33:43):
a type of trust type documents is what we did
to make sure that the assets are guided. There's a trust,
a success or trustee that we have on there that's
taking care of the kids. And you know, you think
about it, it's not uncommon for someone in their twenty
late twenties, thirties with kids to have a million dollar
insurance policy. Well that's you know that that can be

(34:04):
a decent start and a state for someone. And you know,
making sure that you have everything done and titled the
right way for the long long haul is incredibly important.

Speaker 1 (34:16):
Yeah, you know, and the other thing is too, I
mean when you said the kids can't manage the assets,
I mean a lot of that has to do with
the age and Blake. I do want to ask though,
when you said a million dollars worth of life insurance,
it kind of go into that. I love the example
that Terry talks about because a lot of people only
see it as, you know, just a one time thing,
like oh, well, you can pay off the house. But

(34:38):
it's also for income replacement, especially when kids are little.

Speaker 2 (34:42):
Yeah.

Speaker 3 (34:42):
Absolutely, So simple way to think about it, just for
a kind of easy math on this is say that
you'd received that million dollar insurance policy and you wanted
to take income off it, keep the principle intact. So
you're generating a five percent annual return that could kick
off fifty thousand dollars a year income on that that
that could help maintain some of the lifestyle for the family,

(35:04):
et cetera. And so that's where I think it is
important to look at insurance more broadly than just a
debt or an asset replacement. You know, it's it's really
there's a term out there, it's called the human life
value approach, and you know, it's essentially trying to sum
up you know, financially, what what impact do you have
on the on the household, on the family, And you

(35:25):
know that the debt is one part of it, but
it's also a lifestyle et cetera. And you know it's
essentially making sure that as as you look at those expenses,
you can essentially subtract the assets and the asset growth
that you have on a portfolio against that and use
life insurance to fund the difference. So I think it's
a it can be a great way to look at it.

(35:45):
You know, that's the way we can sceptualize it with
a lot of our clients. But yeah, insurance, you know,
it can be it can do a lot of different
things for you. So I think you know, as you're
looking at an overall estate, it's it's a vital to
take into consideration. Absolutely absolutely, So next one we have
myth number nine, I'll have fewer taxes in retirements not

(36:10):
always the.

Speaker 2 (36:10):
Case, it doesn't.

Speaker 1 (36:13):
It seems like you should, right, I mean, it seems
like that would be nice. Yeah.

Speaker 3 (36:17):
Yeah, IRIS is still knocking though, So depending on your
income sources for O k IRA, pension, social security, you
may still have a significant tax obligations in retirements. I mean,
we we've we have some clients where it doesn't take
down a penny in retirements unfortunately. You know, I'll maybe
add to that as well, what does retirement look like

(36:38):
and is there part time consulting? Is there other type
of income that that may come in there as well?
You know, retirement isn't black and white fully retired for everybody,
but there can be tax strategies such as ROTH conversions,
qualified charitable distributions that can help alleviate some of that

(36:59):
pain and may things more tax efficient over time. So
you know, as an example, a strategy that we do
for a lot of people saying, well, you know, if
you're retiring around sixty five, the current arm d age
is age seventy three I meaning that's when you're you
have to start pulling funds out of your four one
k ira four o k if you're retired from that.

Speaker 2 (37:21):
Every year. So for someone who.

Speaker 3 (37:25):
Has maybe after tax dollars WROTH dollars and pre tax dollars,
what we could look at doing is saying, for those years,
you're going to spend more on your pre your after
tax dollars, like a brokerage account or trust or something
like that and that's semi more tax efficients and then
during those years where it's maybe a little bit lower,

(37:45):
convert dollars from your IRA the four to one to
WROTH dollars, which end up being tax free long term
growth after that conversion. So it can be a way
of trying to essentially level out your tax liability over
a number of year and you know, pay that tax
when you're in a lower tax bracket, so they're strategizing
around that. Qualified charitable distributions again, when you're age seventy

(38:11):
and a half in older, you can send funds directly
from your IRA four one K to a nonprofit and
avoid taxes.

Speaker 2 (38:19):
It used to be the same age as the rm
d AH.

Speaker 3 (38:22):
When rmdas changed, they didn't change this age for whatever reason,
so you can give one hundred and eight thousand dollars
a year directly to nonprofit. So it's pretty substantial. So
if you are charitably inclined, that can be a great
way to give money, and it's one of the most
efficient buckets to give. Nice last myth that we have

(38:45):
quickly here, I can set it and forget it. So naturally,
the retirement planning is dynamic and should be reviewed regularly
to adapt to market conditions, changes in health, and evolving goals.
And that's that's really what a group like us does
is you know, continue looks at what does that financial
plan look like? That live vision tool that we talked about, Kelly,

(39:08):
how has that changed? You know?

Speaker 2 (39:10):
And that's that's going to change for people every couple
of years.

Speaker 3 (39:13):
You know, your health may mandate a change, or your
psyche may just change and say, you know what what
used to be important to me is no longer important,
or I have have new priorities. So you need to
evolve and adapt with that. And you know that's where
we joke sometimes and say, you know, the first financial plan.

Speaker 2 (39:32):
That you have is probably the one way life won't
work out.

Speaker 3 (39:35):
And you know it's just because life is going to
change and your your goals are going to change. Uh So,
so we need to be be with you every step
of the way on that evolving path.

Speaker 1 (39:45):
Absolutely Well, Blake, great job myth busting today. And as
a sort of courtesy for the audience, you've got a
great moneytox maniler of the week. It's easy to get.

Speaker 2 (39:55):
What is it?

Speaker 3 (39:56):
Yeah, so it's five ways to say confident and retirement
goes through umber of different discussion topics that we had
today as well as uh uh some key points for
retirement hears So, if you'd like your copy, give us
a call at nine five two five four four two
A three seven, or go online to sampled f G
dot com