Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Thirteen ten Wi b A and Ask the Experts, joined
this morning by chartered financial analyst Tom Plumb. Of course,
Tom comes to us from Wisconsin Capital Management. You can
learn more about Tom as well as Wisconsin Capital Management
all on their website whiz cap dot com. That's wy
s c ap dot com. It's a great day to
(00:23):
start that journey and head on over to the website
and learn more about making appointments and other things as
well online whiz cap dot com. That's wy s c
ap dot com. As mentioned, joining us this morning is
Tom Plum with Wisconsin Capitol Management. Tom, how you doing
this week?
Speaker 2 (00:38):
Oh? Doing wonderful. We've got a beautiful week are starting
out here and Wisconsin in July.
Speaker 1 (00:46):
We ask, I know it's been it's been a great
year and yeah nice uh nice temperate weather. We will
definitely take it. I know, uh, I know it's been
a little warm for some but uh we'll remind everybody
in in you know, in January about these in February
about these days as well. Tom. We've got, as always,
a very full show ahead. We're going to talk about,
(01:06):
you know, one of the big questions you get about
about retirements, folks asking kind of the very basic question,
which is how do I know when I can afford
to retire? And we're going to talk about that and
some of the other aspects that come into play with
making that decision. But first and foremost, let's just real quick.
As a financial planner, as a chartered financial analyst, let's
talk a little bit about how you help people in
a little bit for folks that have gotten to know
(01:27):
you through this radio show and been listening to the program,
a little bit about how they can get to know
you a little bit better.
Speaker 2 (01:34):
Well, certainly we have some information on wiskcap dot com.
We can call us talk to us about the individual situations.
As we've said before, we've got our start as security
analysts and portfolio managers, and then we had a strong
desire to make sure that we were applying that expertise
(01:56):
to individual situations. And that's why in the past we've
had a trust company and we've had a wild management company.
But right now we're focusing on our proprietary neutral funds
and basically helping our individual clients navigate through the complexities
of the market situation and basically make sure that we
(02:19):
have the right portfolio for the right.
Speaker 1 (02:21):
Times, Tom, do you get folks who come to you
from maybe you know, there's obviously a variety of different
options out there and other opportunities here. We hear from
folks and I've heard this from folks sometimes they said
I was working with somebody, but I'm not entirely sure what,
if anything, they were really doing. And we talk about
kind of your hands on approach. Do you hear that
from folks a lot that are coming to you saying
(02:43):
I want a little bit more personalized, I want to
actually understand a little bit more about what my financial
planner does.
Speaker 2 (02:50):
I think that's a real great case, Droum. You think
about it, when you are working with certain types of
financial planners, they come up with a lot, they are
maybe compensated by having commission paid when they sell you that,
and then they really have no more financial interests. We've
always set up our business so that our best interests
(03:13):
aligned with the client's best interests, and we think that
fee based portfolios make the most sense for doing that.
Speaker 1 (03:21):
Talking this morning with Tom Plum, he is, of course,
a chartered financial analyst with Wisconsin Capital Management. You can
learn more about Tom and the team all online wiz
cap dot com. That's wyscap dot com. If you've been
asking those questions, great data, get get some insight into
Tom and a little bit what he has to offer
on the folks at Wisconsin Capital Management. It's always a
great day to start that conversation as well. And Tom,
(03:43):
this week we're going to be talking about one folks
can afford to retire. And I remember the movie Austin
Powers when it first came out, and Doctor Evil is
threatening everybody and he says basically holding world ransom for
one dollars, and of course he's been held frozen in
time for a couple of decades. And one looks on
like a million dollars that's not a lot. And you
(04:05):
were telling me about a recent article you read about
kind of how perspectives and priorities and understanding of what
quote unquote folks consider to be rich and how much
that has changed over the years, hasn't it?
Speaker 2 (04:18):
Oh, definitely, Sean when you think about it of the
generation where a million dollars was a real significant call.
Speaker 1 (04:25):
Yeah.
Speaker 2 (04:26):
Financier retirement articles recently are indicating that people don't consider
other people rich for themselves rich until they have an
investment networth of about two point three million dollars. If
you have a networth of a million dollars, that's very significant,
very good. But if a significant portion of that is
(04:48):
your home, it's really not an asset that's going to
be supporting you in the future.
Speaker 1 (04:54):
So let's kind of get to the basics, then, Tom.
For folks that are saying, okay, we look to what
what type of investment network which considers folks that are
to be rich, how do you kind of get to
the basics and kind of figure out what kind of
money you're going to need to have saved for a
comfortable retirement.
Speaker 2 (05:13):
Well, I think, Sean, the main thing. People have different
expanse levels, they have different lifestyles, they have different goals needs,
and I think you have to establish what those are
and take a realistic, honest approach to what the costs
are going to be for your lifestyle in the near future,
(05:34):
and also understand that those current expectations gools will change
as you hit to your retirement ages. This Social Security
Department tells us that once you turn sixty five, if
you're a male, your life expectancy is the last till
eighty five, and if you're a female on the average
(05:56):
life expectancy is eighty seven. But if you are a
couple and you both are sixty five, there's over a
fifty percent chance that one of you will lived to ninety.
So you have some long term planning and that time
will changed dramatically as you in your retirement your financial
(06:16):
plans to take into consideration how those goals will evolve
over that time.
Speaker 1 (06:22):
Well, and Tom, I've got to ask that as we
look at that God cast a huge fear for folks,
is is that running out? How do you determine that?
Is there a rule of thumb or what should people
be focusing in on there?
Speaker 2 (06:36):
Oh, there are rules of thumbs shown, and they're worth
you know, they're basically worth being a good starting Okay.
They change based on a lot of factors, including your
personal health, longevity that you might expect, you know, and
one of the best characteristics to look at is how
(06:57):
long your parents lived. But it's still has to deal
with a lot of uncertainty because you may under or
overlive the averages or the life expectancy. But the rule
of thumb that a lot of people have applied starting
with is that you think it earned four percent beginning
of time of their retirement. You can adjust that for
(07:20):
inflation and historically that's covered about seventy five percent of
the time to making sure that you didn't run out
of money. So again you have to start with the basics,
what are my expenses? Because my housing EXPANSE, my food expanse,
my insurance, all those things don't disappear just because you retire.
Speaker 1 (07:42):
How about taxes? Do those finally go away? Tom?
Speaker 2 (07:47):
Actually, the Big Bill does have some tax benefits for
those on fixed income in retirement. They phase out after
a certain amount of income. Taxes are going to be
a part of it, especially if you're withdrawing some of
the funds necessary to live on from retirement plans or
(08:10):
from annuities and things like that. You're actually going to
have to make sure that you incorporate that tax liability
your planning because a big number can become a less
big number once you take that tax of that.
Speaker 1 (08:26):
That is for sure. Talking this morning with Tom Plum,
chartered financial analyst with Wisconsin Capital Management. Their website whizcap
dot com. That's wiscap dot com. If you've got questions
about Tom, you want to get to know him, learn
a little bit more about Wisconsin Capital Management. The website
whizcap dot com is a great starting point for you
(08:46):
as you head into the office this morning. Take note
wyscap dot com. Check that out when you get in.
Maybe you're maybe you've got the day off this morning,
Head on over there right now. I know we've all
got those smartphones. Put the Internet right in your hand again,
that website whiz cap dot com. And before we talk
about some of the some of the the other aspects
of the financial picture there, Tom, you mentioned something about
(09:09):
about looking to your looking to your family. Is that
something that that folks should be considering is looking at
their parents and kind of how long they were with
us as kind of like a as like a good
guide for kind of project our life expectancy.
Speaker 2 (09:25):
It's a guide, Okay, it's it is important. It's actually
probably has the highest correlation. But but that doesn't mean
it's going to be full put to any means. But
I think that it is a good place to start
and looking at your own health situation. Obviously, by the
time you're approaching retirement, you you may have dealt with
(09:48):
some health problems, you may not. But at the same time,
you have to have a practical viewpoint on where to start,
and then you take and adjust that for the black
Swan events, dying sooner, living longer.
Speaker 1 (10:04):
I want to ask you about sources of income in
just a minute, but one of the things to you
also had mentioned. I mean think about you know, lifestyle,
you know, our lifestyles and trying to figure out what
our expenses will be. I think of, you know, where
where a lot of us, a lot of us start,
as you know, when using moving through real estate, we
start with the starter home, and maybe as our family grows,
we look to expand our home, more bedrooms, more space,
(10:27):
especially you know you've got kids, they're a bit rambunctious,
have a place to escape, maybe got a weekend home.
Is that one of those areas as well that folks
might want to analyze, as far as places that that
there may be potential for equity or areas that that
may be able to say, you know, maybe looking to
downsize a home, or maybe moving from from the the
you know, the property on the isthmus looking towards one
(10:49):
of the surrounding counties, especially now that we're not commuting
to work. Are those some of those areas where there
might be some opportunity to reduce expenses and maybe add
a little bit more to that overall network.
Speaker 2 (11:01):
You know, Sean For a long time, for people who
are currently in retirement anyway, their real estate was look
at one of the most important investments, and often there
was a feeling that when I'm ready, i will downsize
and I'll get to something that's less maintenance. For example,
and I've had a number of clients who have lived
(11:23):
out in beautiful homes out in the country and thought,
at some point in time, I'm going to take this
equity and built up and I'm going to move to
a house that's less maintenance, smaller and in the city
and more convenient to healthcare, shopping, et cetera. And they've
been surprised because because of moving into town, if you will,
(11:46):
maybe are not as much of a savings as you
would have thought. And their houses, for example, they may
end up buying a house with a lot less space
and a lot less amenities in town, and basically you
have basically something that was just even push between real
(12:08):
estate that they've had for all these years. So again
it depends you can honders move to apartments or assisted living,
but those things have to come into the financial projections,
then what is it actually going to cost? And will
I really have an equity build up that I can
apply to my daily living in the future.
Speaker 1 (12:29):
It's interesting perspective. As we talked this morning with Tom Plumb.
Of course Tom is with Wisconsin Capital Management. You can
learn more about Tom and the team the website, of course,
whiz cap dot com. Real easily remember whiz cap dot com.
That's wi s c ap dot com. To continue our
conversation with Tom, as we talked a little bit more
about retirement planning, we'll talk about sources of income, where
(12:51):
where that money in that financial picture, where things come
from when it comes to comes to retirement, and things
that may seem kind of simple, so security, the complexities
of it, and of course we're probably just going to
scratch the surface this week, probably get made way more
in depth into things like social skin and other things
on future programs that we're gonna get into those sources
of income with Tom. We'll do that next to the meantime,
if you haven't had a chance to check out the website,
(13:12):
head on over to whizcap dot com. That's wiscap dot com.
You can learn more about Tom and the whole team
over at Wisconsin Capital Management. Again that website whizcap dot com.
More of asked the experts with Wisconsin Capital Management comes
your way next right here, I'm thirteen ten Wi B A,
(13:34):
thirteen ten Wi b A and ask the experts talking
this morning with Tom Plumb with Wisconsin Capital Management. Of course,
Tom is a chartered financial Analyst. We'll talk a little
bit about that designation what that means a little bit
later on in the program. Don't forget though, if you
want to learn now, you can always head on over
to whizcap dot com. That's wiscap dot com. Talking this
(13:55):
week a little bit about retirement planning and some of
the things that folks need to think about when it
comes to putting that plan together. And of obviously a
big part of this time is sources of income and
social security is a big one. As mentioned, We're probably
going to go into an entire show or two on
this very specific topic, but just kind of a broad overview.
What role does social security play in planning for people's retirement?
Speaker 2 (14:20):
Well, of social security can be a very important part
and having a specific strategy if you haven't started to
take your required distributions from Social Security. There are many
different strategies on when to take it, how to take it,
and your personal financial situation really comes in as well
as your health and your tax situation. But if you
(14:44):
think about it, you can acquire or take Social Security
basically starting at age sixty two, and you are required
to start by the time you're seventy. Every year that
you defer taking you miss a year of payment, but
the payments that you received go up about eight percent.
(15:04):
So you can start at you required or the I'm sorry,
the full retirement benefit, and if you look at that number,
and for people who haven't retired yet, it's probabe around
sixty seven years old. It's moved up to sixty six
point eight to sixty seven in the next year or so.
(15:26):
But at that point that full benefit, which you can
calculate and the IRS T wills to give you. You can
see that if I take at sixty two, for example,
I get about seventy percent of that number. If I
take it at seventy, I get one hundred and twenty
four percent. So you can look at what you expect
(15:50):
your life expectancy to be. There's no guarantees, of course,
but I give you an idea of whether or not
there's a trade off that's good for you in different
for when you take Social Security. But as you said,
this is a whole program in itself because there's so
many strategies, especially if you're married, if you have been
(16:12):
married for ten years and divorced, if your other income,
what sources that come in there. So we'll talk about
that more in the future, as we'll talk about how
your asset allocation should change or be reviewed as your
approaching retirement and then after your hid retirement.
Speaker 1 (16:34):
You know, tom another one of those areas I think
a lot of folks think is maybe overly simplified and
can have pretty significant complications if done wrong. And I
know here in the in the state's capital, we do
have a number of folks that have work for government,
you know, government agencies that offered pensions or work for
some of the some of those other companies that may
(16:54):
have pensions. Pensions is another one of those areas. It
can be quite complicated. It's a great benefit if you
have one, but you don't want to you don't want
to just assume that it's a real simple thing. That's
an important decision to be making when it comes to
choosing choosing how you're going to handle that in retirement,
isn't it.
Speaker 2 (17:11):
Yeah, I know, we talked about pensions again. It's an
annuity where you're going to receive a fixed amount every month,
So on some aspects it makes you finding a little
bit easier going. I can get a specific secial security benefit,
a specific pension benefit. For most of us though, who
didn't work for the government or a large corporation, you
(17:34):
have more of that put on your own shoulders. So
you're basically going to look at your personal savings in
your iris, your roth irais and basically any other savings
that you have and look at that as your source
of income. And that income then is going to be
very significant determinant about what your lifestyle is going to
(17:57):
be at the end. That's why we've told people for
a long period of time, and we talked about this
on this show, Sean, that you need to get that
compounding effect on your own personal savings because your responsibilities
have grown in managing your retirement assets as we've become
(18:18):
less and less dependent or have less availability of these
annuity type engines.
Speaker 1 (18:25):
Tom, what about folks you know kind of I think
probably the most common we think of, you know, personal savings,
having the four roh one k or the IRA and
those type of things. Let's talk a little bit about
about where those the role that those play, and of
course there are obviously we're talking earlier about things like
taxes and other things there are. There are a lot
of strategies that go into into managing these different types
(18:48):
of accounts, and there's also great advantages if done properly,
aren't there?
Speaker 2 (18:52):
Oh? Definitely, And we're told people for a long long time,
if your company offers a match program, take that free
money because that's very important for building up the space
because again, the compounding depends on when you start, how
much money goes in and what your real return is.
So when we look at these different things, remember if
(19:15):
you have a four to one K or an IRA,
we have to take into consideration that taking money out
of those is a taxable event. So if you look
at it and if you had five hundred thousand dollars
in your IRA and you thought, okay, I can take
four percent out a year, that's twenty thousand dollars. Remember
(19:38):
that's a taxable event. Now, a roth ira IRA is
not taxable when you take the money out in retirement,
and so there's tax considerations for how you take money.
When you take money from your different sources is very
important for your financial security.
Speaker 1 (19:57):
Talking this morning with Tom Plumb, of course, Tom to
us from Wisconsin Capital Management. Their website whizcap dot com.
That's wiscap dot com. Hope you get a chance this
morning stop by check them out, learn more about Tom
and the team is son Nathan as well. Again that
website whizcap dot com and Tom as we as we
kind of talk a little bit about different savings opportunities
in different areas where folks maybe looking to when it
(20:20):
comes to assets, what about the distribution and starting to
find ways to feel confident to say, you know what,
as I as I've built this nest egg, now I
want to withdraw from it. How can I do that
without running out of money and feel safe and secure.
Speaker 2 (20:35):
Well, again, we use history as a guide, and history
is only a guide. It's not something that guarantees. But
when we look at historical times and we'd say how
long is this money going to need to last? We
can lay some probabilities out at different withdrawal rates we
have historically what has been safe, and again it's dependent
(20:59):
on how long When you start looking at your numbers
when you're sixty five, remember you may be talking about
a twenty five year time frame or even longer. For
a lot of us. We're starting to see people lasting
over one hundred years, So it's very important to look
at what history has gone as a guide and what
(21:20):
type of what we call sustainable withdrawals is reasonable given that,
and expecting that you can take a significant amount of
money out of your retirement plan at the beginning means
that you won't have that money for the compounding effect
in the future, so it's very important that you look
(21:41):
at that. Historically, people throw in as this rule of thumb.
As we've said, four percent, that's not a bad place
to start, but again it depends on how your money's
invested and where you are in the cycle, and you
need to work with someone who is a good quality
(22:02):
financial planner who can go through what these different scenarios
mean to you personally.
Speaker 1 (22:08):
Tom, I've got to ask too if for folks I know, obviously,
as people are a couple few years out of retirement,
that's probably a time where you're hearing from a lot
of folks the first time. But it's never too early
for folks to start this conversation, is it.
Speaker 2 (22:22):
Oh No, definitely, Sean. There's an old thing. I think
John Elway used to tell all the beginning Brookie football
players that he would meet with, don't ever give up
what you want most in life, or what you want
most this moment. So you need to balance that and
(22:42):
think about the quality of life that you would like
to have as you're in retirement, and that means that
you have to set some plans in motion to get there,
because a lot of us are not going to win
the lottery and a lot of us are going to
have to take out these plans ourselves because the corporate
(23:03):
America no longer takes care of you with pensions and
in many cases even when there's social security. I think
the average right now is about twelve hundred dollars a month.
But some people are getting more, some people getting less.
But you need to understand that these things were probably
(23:24):
not going to be enough to sustain a quality of
flight for you in retirement.
Speaker 1 (23:29):
Really important day to start that conversation, start putting that
plan together, regardless of where you are. It's a great
day to learn more about Wisconsin Capital Management and Tom
Plumb and the whole team, the website whizcap dot com.
That's wiscap dot com. And again the website whizcap dot com.
Tom always insightful. Thank you so much for your great information.
You have a fantastic day.
Speaker 2 (23:50):
Thank you Sean and you two, and I hope everyone
listening to us.
Speaker 1 (23:54):
It's great to hear from you as always, Tom Plum,
Wisconsin Capital Management. That website whizcap dot com News comes
your way next right here on thirteen ten WIBA
Thirteen ten Wi b A and Ask the Experts, joined
this morning by chartered financial analyst Tom Plumb. Of course,
Tom comes to us from Wisconsin Capital Management. You can
learn more about Tom as well as Wisconsin Capital Management
all on their website whiz cap dot com. That's wy
s c ap dot com. It's a great day to
(00:23):
start that journey and head on over to the website
and learn more about making appointments and other things as
well online whiz cap dot com. That's wy s c
ap dot com. As mentioned, joining us this morning is
Tom Plum with Wisconsin Capitol Management. Tom, how you doing
this week?
Speaker 2 (00:38):
Oh? Doing wonderful. We've got a beautiful week are starting
out here and Wisconsin in July.
Speaker 1 (00:46):
We ask, I know it's been it's been a great
year and yeah nice uh nice temperate weather. We will
definitely take it. I know, uh, I know it's been
a little warm for some but uh we'll remind everybody
in in you know, in January about these in February
about these days as well. Tom. We've got, as always,
a very full show ahead. We're going to talk about,
(01:06):
you know, one of the big questions you get about
about retirements, folks asking kind of the very basic question,
which is how do I know when I can afford
to retire? And we're going to talk about that and
some of the other aspects that come into play with
making that decision. But first and foremost, let's just real quick.
As a financial planner, as a chartered financial analyst, let's
talk a little bit about how you help people in
a little bit for folks that have gotten to know
(01:27):
you through this radio show and been listening to the program,
a little bit about how they can get to know
you a little bit better.
Speaker 2 (01:34):
Well, certainly we have some information on wiskcap dot com.
We can call us talk to us about the individual situations.
As we've said before, we've got our start as security
analysts and portfolio managers, and then we had a strong
desire to make sure that we were applying that expertise
(01:56):
to individual situations. And that's why in the past we've
had a trust company and we've had a wild management company.
But right now we're focusing on our proprietary neutral funds
and basically helping our individual clients navigate through the complexities
of the market situation and basically make sure that we
(02:19):
have the right portfolio for the right.
Speaker 1 (02:21):
Times, Tom, do you get folks who come to you
from maybe you know, there's obviously a variety of different
options out there and other opportunities here. We hear from
folks and I've heard this from folks sometimes they said
I was working with somebody, but I'm not entirely sure what,
if anything, they were really doing. And we talk about
kind of your hands on approach. Do you hear that
from folks a lot that are coming to you saying
(02:43):
I want a little bit more personalized, I want to
actually understand a little bit more about what my financial
planner does.
Speaker 2 (02:50):
I think that's a real great case, Droum. You think
about it, when you are working with certain types of
financial planners, they come up with a lot, they are
maybe compensated by having commission paid when they sell you that,
and then they really have no more financial interests. We've
always set up our business so that our best interests
(03:13):
aligned with the client's best interests, and we think that
fee based portfolios make the most sense for doing that.
Speaker 1 (03:21):
Talking this morning with Tom Plum, he is, of course,
a chartered financial analyst with Wisconsin Capital Management. You can
learn more about Tom and the team all online wiz
cap dot com. That's wyscap dot com. If you've been
asking those questions, great data, get get some insight into
Tom and a little bit what he has to offer
on the folks at Wisconsin Capital Management. It's always a
great day to start that conversation as well. And Tom,
(03:43):
this week we're going to be talking about one folks
can afford to retire. And I remember the movie Austin
Powers when it first came out, and Doctor Evil is
threatening everybody and he says basically holding world ransom for
one dollars, and of course he's been held frozen in
time for a couple of decades. And one looks on
like a million dollars that's not a lot. And you
(04:05):
were telling me about a recent article you read about
kind of how perspectives and priorities and understanding of what
quote unquote folks consider to be rich and how much
that has changed over the years, hasn't it?
Speaker 2 (04:18):
Oh, definitely, Sean when you think about it of the
generation where a million dollars was a real significant call.
Speaker 1 (04:25):
Yeah.
Speaker 2 (04:26):
Financier retirement articles recently are indicating that people don't consider
other people rich for themselves rich until they have an
investment networth of about two point three million dollars. If
you have a networth of a million dollars, that's very significant,
very good. But if a significant portion of that is
(04:48):
your home, it's really not an asset that's going to
be supporting you in the future.
Speaker 1 (04:54):
So let's kind of get to the basics, then, Tom.
For folks that are saying, okay, we look to what
what type of investment network which considers folks that are
to be rich, how do you kind of get to
the basics and kind of figure out what kind of
money you're going to need to have saved for a
comfortable retirement.
Speaker 2 (05:13):
Well, I think, Sean, the main thing. People have different
expanse levels, they have different lifestyles, they have different goals needs,
and I think you have to establish what those are
and take a realistic, honest approach to what the costs
are going to be for your lifestyle in the near future,
(05:34):
and also understand that those current expectations gools will change
as you hit to your retirement ages. This Social Security
Department tells us that once you turn sixty five, if
you're a male, your life expectancy is the last till
eighty five, and if you're a female on the average
(05:56):
life expectancy is eighty seven. But if you are a
couple and you both are sixty five, there's over a
fifty percent chance that one of you will lived to ninety.
So you have some long term planning and that time
will changed dramatically as you in your retirement your financial
(06:16):
plans to take into consideration how those goals will evolve
over that time.
Speaker 1 (06:22):
Well, and Tom, I've got to ask that as we
look at that God cast a huge fear for folks,
is is that running out? How do you determine that?
Is there a rule of thumb or what should people
be focusing in on there?
Speaker 2 (06:36):
Oh, there are rules of thumbs shown, and they're worth
you know, they're basically worth being a good starting Okay.
They change based on a lot of factors, including your
personal health, longevity that you might expect, you know, and
one of the best characteristics to look at is how
(06:57):
long your parents lived. But it's still has to deal
with a lot of uncertainty because you may under or
overlive the averages or the life expectancy. But the rule
of thumb that a lot of people have applied starting
with is that you think it earned four percent beginning
of time of their retirement. You can adjust that for
(07:20):
inflation and historically that's covered about seventy five percent of
the time to making sure that you didn't run out
of money. So again you have to start with the basics,
what are my expenses? Because my housing EXPANSE, my food expanse,
my insurance, all those things don't disappear just because you retire.
Speaker 1 (07:42):
How about taxes? Do those finally go away? Tom?
Speaker 2 (07:47):
Actually, the Big Bill does have some tax benefits for
those on fixed income in retirement. They phase out after
a certain amount of income. Taxes are going to be
a part of it, especially if you're withdrawing some of
the funds necessary to live on from retirement plans or
(08:10):
from annuities and things like that. You're actually going to
have to make sure that you incorporate that tax liability
your planning because a big number can become a less
big number once you take that tax of that.
Speaker 1 (08:26):
That is for sure. Talking this morning with Tom Plum,
chartered financial analyst with Wisconsin Capital Management. Their website whizcap
dot com. That's wiscap dot com. If you've got questions
about Tom, you want to get to know him, learn
a little bit more about Wisconsin Capital Management. The website
whizcap dot com is a great starting point for you
(08:46):
as you head into the office this morning. Take note
wyscap dot com. Check that out when you get in.
Maybe you're maybe you've got the day off this morning,
Head on over there right now. I know we've all
got those smartphones. Put the Internet right in your hand again,
that website whiz cap dot com. And before we talk
about some of the some of the the other aspects
of the financial picture there, Tom, you mentioned something about
(09:09):
about looking to your looking to your family. Is that
something that that folks should be considering is looking at
their parents and kind of how long they were with
us as kind of like a as like a good
guide for kind of project our life expectancy.
Speaker 2 (09:25):
It's a guide, Okay, it's it is important. It's actually
probably has the highest correlation. But but that doesn't mean
it's going to be full put to any means. But
I think that it is a good place to start
and looking at your own health situation. Obviously, by the
time you're approaching retirement, you you may have dealt with
(09:48):
some health problems, you may not. But at the same time,
you have to have a practical viewpoint on where to start,
and then you take and adjust that for the black
Swan events, dying sooner, living longer.
Speaker 1 (10:04):
I want to ask you about sources of income in
just a minute, but one of the things to you
also had mentioned. I mean think about you know, lifestyle,
you know, our lifestyles and trying to figure out what
our expenses will be. I think of, you know, where
where a lot of us, a lot of us start,
as you know, when using moving through real estate, we
start with the starter home, and maybe as our family grows,
we look to expand our home, more bedrooms, more space,
(10:27):
especially you know you've got kids, they're a bit rambunctious,
have a place to escape, maybe got a weekend home.
Is that one of those areas as well that folks
might want to analyze, as far as places that that
there may be potential for equity or areas that that
may be able to say, you know, maybe looking to
downsize a home, or maybe moving from from the the
you know, the property on the isthmus looking towards one
(10:49):
of the surrounding counties, especially now that we're not commuting
to work. Are those some of those areas where there
might be some opportunity to reduce expenses and maybe add
a little bit more to that overall network.
Speaker 2 (11:01):
You know, Sean For a long time, for people who
are currently in retirement anyway, their real estate was look
at one of the most important investments, and often there
was a feeling that when I'm ready, i will downsize
and I'll get to something that's less maintenance. For example,
and I've had a number of clients who have lived
(11:23):
out in beautiful homes out in the country and thought,
at some point in time, I'm going to take this
equity and built up and I'm going to move to
a house that's less maintenance, smaller and in the city
and more convenient to healthcare, shopping, et cetera. And they've
been surprised because because of moving into town, if you will,
(11:46):
maybe are not as much of a savings as you
would have thought. And their houses, for example, they may
end up buying a house with a lot less space
and a lot less amenities in town, and basically you
have basically something that was just even push between real
(12:08):
estate that they've had for all these years. So again
it depends you can honders move to apartments or assisted living,
but those things have to come into the financial projections,
then what is it actually going to cost? And will
I really have an equity build up that I can
apply to my daily living in the future.
Speaker 1 (12:29):
It's interesting perspective. As we talked this morning with Tom Plumb.
Of course Tom is with Wisconsin Capital Management. You can
learn more about Tom and the team the website, of course,
whiz cap dot com. Real easily remember whiz cap dot com.
That's wi s c ap dot com. To continue our
conversation with Tom, as we talked a little bit more
about retirement planning, we'll talk about sources of income, where
(12:51):
where that money in that financial picture, where things come
from when it comes to comes to retirement, and things
that may seem kind of simple, so security, the complexities
of it, and of course we're probably just going to
scratch the surface this week, probably get made way more
in depth into things like social skin and other things
on future programs that we're gonna get into those sources
of income with Tom. We'll do that next to the meantime,
if you haven't had a chance to check out the website,
(13:12):
head on over to whizcap dot com. That's wiscap dot com.
You can learn more about Tom and the whole team
over at Wisconsin Capital Management. Again that website whizcap dot com.
More of asked the experts with Wisconsin Capital Management comes
your way next right here, I'm thirteen ten Wi B A,
(13:34):
thirteen ten Wi b A and ask the experts talking
this morning with Tom Plumb with Wisconsin Capital Management. Of course,
Tom is a chartered financial Analyst. We'll talk a little
bit about that designation what that means a little bit
later on in the program. Don't forget though, if you
want to learn now, you can always head on over
to whizcap dot com. That's wiscap dot com. Talking this
(13:55):
week a little bit about retirement planning and some of
the things that folks need to think about when it
comes to putting that plan together. And of obviously a
big part of this time is sources of income and
social security is a big one. As mentioned, We're probably
going to go into an entire show or two on
this very specific topic, but just kind of a broad overview.
What role does social security play in planning for people's retirement?
Speaker 2 (14:20):
Well, of social security can be a very important part
and having a specific strategy if you haven't started to
take your required distributions from Social Security. There are many
different strategies on when to take it, how to take it,
and your personal financial situation really comes in as well
as your health and your tax situation. But if you
(14:44):
think about it, you can acquire or take Social Security
basically starting at age sixty two, and you are required
to start by the time you're seventy. Every year that
you defer taking you miss a year of payment, but
the payments that you received go up about eight percent.
(15:04):
So you can start at you required or the I'm sorry,
the full retirement benefit, and if you look at that number,
and for people who haven't retired yet, it's probabe around
sixty seven years old. It's moved up to sixty six
point eight to sixty seven in the next year or so.
(15:26):
But at that point that full benefit, which you can
calculate and the IRS T wills to give you. You can
see that if I take at sixty two, for example,
I get about seventy percent of that number. If I
take it at seventy, I get one hundred and twenty
four percent. So you can look at what you expect
(15:50):
your life expectancy to be. There's no guarantees, of course,
but I give you an idea of whether or not
there's a trade off that's good for you in different
for when you take Social Security. But as you said,
this is a whole program in itself because there's so
many strategies, especially if you're married, if you have been
(16:12):
married for ten years and divorced, if your other income,
what sources that come in there. So we'll talk about
that more in the future, as we'll talk about how
your asset allocation should change or be reviewed as your
approaching retirement and then after your hid retirement.
Speaker 1 (16:34):
You know, tom another one of those areas I think
a lot of folks think is maybe overly simplified and
can have pretty significant complications if done wrong. And I
know here in the in the state's capital, we do
have a number of folks that have work for government,
you know, government agencies that offered pensions or work for
some of the some of those other companies that may
(16:54):
have pensions. Pensions is another one of those areas. It
can be quite complicated. It's a great benefit if you
have one, but you don't want to you don't want
to just assume that it's a real simple thing. That's
an important decision to be making when it comes to
choosing choosing how you're going to handle that in retirement,
isn't it.
Speaker 2 (17:11):
Yeah, I know, we talked about pensions again. It's an
annuity where you're going to receive a fixed amount every month,
So on some aspects it makes you finding a little
bit easier going. I can get a specific secial security benefit,
a specific pension benefit. For most of us though, who
didn't work for the government or a large corporation, you
(17:34):
have more of that put on your own shoulders. So
you're basically going to look at your personal savings in
your iris, your roth irais and basically any other savings
that you have and look at that as your source
of income. And that income then is going to be
very significant determinant about what your lifestyle is going to
(17:57):
be at the end. That's why we've told people for
a long period of time, and we talked about this
on this show, Sean, that you need to get that
compounding effect on your own personal savings because your responsibilities
have grown in managing your retirement assets as we've become
(18:18):
less and less dependent or have less availability of these
annuity type engines.
Speaker 1 (18:25):
Tom, what about folks you know kind of I think
probably the most common we think of, you know, personal savings,
having the four roh one k or the IRA and
those type of things. Let's talk a little bit about
about where those the role that those play, and of
course there are obviously we're talking earlier about things like
taxes and other things there are. There are a lot
of strategies that go into into managing these different types
(18:48):
of accounts, and there's also great advantages if done properly,
aren't there?
Speaker 2 (18:52):
Oh? Definitely, And we're told people for a long long time,
if your company offers a match program, take that free
money because that's very important for building up the space
because again, the compounding depends on when you start, how
much money goes in and what your real return is.
So when we look at these different things, remember if
(19:15):
you have a four to one K or an IRA,
we have to take into consideration that taking money out
of those is a taxable event. So if you look
at it and if you had five hundred thousand dollars
in your IRA and you thought, okay, I can take
four percent out a year, that's twenty thousand dollars. Remember
(19:38):
that's a taxable event. Now, a roth ira IRA is
not taxable when you take the money out in retirement,
and so there's tax considerations for how you take money.
When you take money from your different sources is very
important for your financial security.
Speaker 1 (19:57):
Talking this morning with Tom Plumb, of course, Tom to
us from Wisconsin Capital Management. Their website whizcap dot com.
That's wiscap dot com. Hope you get a chance this
morning stop by check them out, learn more about Tom
and the team is son Nathan as well. Again that
website whizcap dot com and Tom as we as we
kind of talk a little bit about different savings opportunities
in different areas where folks maybe looking to when it
(20:20):
comes to assets, what about the distribution and starting to
find ways to feel confident to say, you know what,
as I as I've built this nest egg, now I
want to withdraw from it. How can I do that
without running out of money and feel safe and secure.
Speaker 2 (20:35):
Well, again, we use history as a guide, and history
is only a guide. It's not something that guarantees. But
when we look at historical times and we'd say how
long is this money going to need to last? We
can lay some probabilities out at different withdrawal rates we
have historically what has been safe, and again it's dependent
(20:59):
on how long When you start looking at your numbers
when you're sixty five, remember you may be talking about
a twenty five year time frame or even longer. For
a lot of us. We're starting to see people lasting
over one hundred years, So it's very important to look
at what history has gone as a guide and what
(21:20):
type of what we call sustainable withdrawals is reasonable given that,
and expecting that you can take a significant amount of
money out of your retirement plan at the beginning means
that you won't have that money for the compounding effect
in the future, so it's very important that you look
(21:41):
at that. Historically, people throw in as this rule of thumb.
As we've said, four percent, that's not a bad place
to start, but again it depends on how your money's
invested and where you are in the cycle, and you
need to work with someone who is a good quality
(22:02):
financial planner who can go through what these different scenarios
mean to you personally.
Speaker 1 (22:08):
Tom, I've got to ask too if for folks I know, obviously,
as people are a couple few years out of retirement,
that's probably a time where you're hearing from a lot
of folks the first time. But it's never too early
for folks to start this conversation, is it.
Speaker 2 (22:22):
Oh No, definitely, Sean. There's an old thing. I think
John Elway used to tell all the beginning Brookie football
players that he would meet with, don't ever give up
what you want most in life, or what you want
most this moment. So you need to balance that and
(22:42):
think about the quality of life that you would like
to have as you're in retirement, and that means that
you have to set some plans in motion to get there,
because a lot of us are not going to win
the lottery and a lot of us are going to
have to take out these plans ourselves because the corporate
(23:03):
America no longer takes care of you with pensions and
in many cases even when there's social security. I think
the average right now is about twelve hundred dollars a month.
But some people are getting more, some people getting less.
But you need to understand that these things were probably
(23:24):
not going to be enough to sustain a quality of
flight for you in retirement.
Speaker 1 (23:29):
Really important day to start that conversation, start putting that
plan together, regardless of where you are. It's a great
day to learn more about Wisconsin Capital Management and Tom
Plumb and the whole team, the website whizcap dot com.
That's wiscap dot com. And again the website whizcap dot com.
Tom always insightful. Thank you so much for your great information.
You have a fantastic day.
Speaker 2 (23:50):
Thank you Sean and you two, and I hope everyone
listening to us.
Speaker 1 (23:54):
It's great to hear from you as always, Tom Plum,
Wisconsin Capital Management. That website whizcap dot com News comes
your way next right here on thirteen ten WIBA
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