Episode Transcript
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Speaker 1 (00:05):
This is News Radio seven to ten WNTM. Uncle Henry
here with John McNeil and Virginia O'Brien of Mobile Bay
Financial Solutions. You can find Mobile Bay Financial Solutions online
at MB financial Solutions dot com. That's MB financial Solutions
dot com. Telephone number two five to one sixty sixty
(00:28):
six five thousand if you'd like to call and make
an appointment or just call and ask a question. Two
five to one six sixty six five thousand. That is
the number for Mobile Bay Financial Solutions. The commentary presented
herein contains the opinions of Mobile Bay Wealth Management LLC,
a registered investment advisor. This information should not be relied
(00:48):
upon for tax purposes. Is based on sources believed to
be reliable. No guarantee is made to the completeness or
accuracy of this information. Mobile Bay Wealth Management LC shall
not be responsible for any trading decisions, damages, or other
losses resulting from or related to the information, data, analysis,
or opinions contain herein, or their use which do not
(01:12):
constitute investment advice, are provided as of the date written,
are provided solely for informational purposes, and therefore are not
an offer to buy or sell a security. Investments and
securities are subject to investment risk, including possible loss of principle.
Prices of securities may fluctuate from time to time and
may even become valueless. This information has not been tailored
(01:34):
to suit any individual. John McNeil, how are things going
at Mobile Bay Financial Solutions this week? Oh?
Speaker 2 (01:40):
It's great, uncle, Henry.
Speaker 3 (01:41):
Busy, busy, you know this. Here we are in the
fourth quarter. Yeah, things tend to get busy. People who've procrastinated, yes,
and hadn't done what we've been talking to them about
all through the year and the end of last year,
the things we need to do this year, and so
now we're in the fourth quarter. But we can overcome
those things. There are a lot of things that you
(02:01):
have to do in the taxable year to take advantage
of it, and there are other things you can do
after the year for the past year, like making a
contribution to your IRA. You can do that up and
you can do that in twenty twenty six for the
twenty twenty five years, as long as you do it
before you file your tax return, so you can sit
(02:21):
down with you count it and figure out how much have
a little effect my taxes if my wife and I
each put in the maximum the IRA, and.
Speaker 2 (02:30):
Usually it's a good idea to do that.
Speaker 3 (02:31):
If you've got the cash, you know, you rob Peter
to pay Paul, but you get the tax reduction, and
if you're over fifty nine and a half, you can get
it right back out if you don't need it. So
there are a lot of things that we try to
point out that they need to set up this year
to take advantage of tax reductions in this year, and
a few things you can do next year for this year.
(02:53):
So it's kind of complicated, but we're doing a lot
of that right now. We're doing a lot of the
required minimum distributions. The time of year we start kicking
out if people aren't taking it monthly or take it
earlier in the year, they've got to take the rm
DS before December thirty one, and we sit down and
talk to them before we send it to them if
they want to do any charitable giving, because if you're
(03:15):
over seventy and a half, you can give money to
charities directly from your IRA and not have to take
it out of your IRA, pay taxes on it, and
then give a check to the church or the school
or the hospital or whatever.
Speaker 2 (03:26):
You can go.
Speaker 3 (03:27):
It'll be a non taxable event to you, but can
save you in some taxes. So there are a lot
of those planning things that happened this time of year
every year, year in, year out. So if you're not
planning right now the end of the year, you need
to get on it.
Speaker 2 (03:45):
Well.
Speaker 1 (03:45):
You can call John McNeil and Virginia Brian at Mobile
Bay Financial Solutions at two five one sixty six six
five thousand. That's two five one sixty sixty six five thousand,
all right, So let's answer some emails. Would you like
to give If.
Speaker 3 (03:57):
You have some emails stacking up, so let's answer some
of those.
Speaker 1 (04:00):
You can email Johnny Virginia. The email address is info
at mobaifs dot com. That's info at mobifs dot com. Now,
the first email we have is from Tom in Mobile Alabama.
Tom writes, I've always wanted a lake house and would
love a place to bring the kids and grandkids for
(04:20):
years to come. If I buy one, should I make
it into a retirement income stream by renting it out
when we aren't there, or just keep it for the
family only, even though it's a bigger financial hit.
Speaker 2 (04:35):
That's a good question.
Speaker 3 (04:36):
And Tom, you know, he lives right here, and if
he's in Mobile, Alabama, he's got the water right here.
Speaker 2 (04:40):
But I guess to get.
Speaker 3 (04:41):
Away from the moving tide and get up on a
lake somewhere.
Speaker 1 (04:46):
Well, he's probably read about Nick Saban's place. Would love
to be up there.
Speaker 3 (04:50):
That'd be nice. I assume Tom has about fifteen to
twenty million. I was to villeion one like that, but
that's okay. But my first suggestion I would be to
talk to you CPA, because there are a lot of
rules the irs has if if you have rental property,
and of course there are a lot of benefits to
having rental property where you get to deduct you know,
(05:12):
a lot of things, all the expenses in the house
and depreciation and things that really look good on your
tax return. However, if it is a rental property, there
are certain restrictions on you using the house for personal use.
It's usually not a CPA, but it's usually limited to
no more than fourteen days in the year, okay, or
(05:34):
it can't exceed ten percent of the number of days
it is actually rented out, or something like that. So
if you can afford it and you really want to
use it, then you don't want to turn into rental
and jump through a bunch of hoops. But I would
talk to you, CPA, before you make that financial decision
to sink a bunch of money in the lake house
that you're planning on getting some tax benefits from and
(05:57):
that doesn't materialize.
Speaker 1 (05:59):
Does this question them up a lot? Because I know
a lot of people love getting condos and down at
the down at the golf and probably the same type
of conversations.
Speaker 3 (06:07):
Same thing we say, yeah, you know, look, if you've
got the cash flow, you've got the you know, preferably
you don't have to put a mortgage on your your
second home, your vacation home. But if you do, uh,
and you've got the cash flow and you want to
use it and entice the kids and grandkids to come
visit more often, we have that a lot. But a
lot of people say, you know, right, than on in
(06:29):
something and sinking all that money into it. If we're
not gonna rent it out and just use it, why
don't we just rent a place every year? We don't, right,
locked and going to the same place every year, right,
you know, you can go the same place. A lot
of people have condos at the beach. Have you know
the snowbirds that come down, and they'll the same. People
rent for long terms, like a month at a time,
sometimes three months at a time during the winter. But
(06:53):
sometimes it's cheaper to rent than to own if you're
not gonna be using it all the time.
Speaker 2 (06:59):
So that's that.
Speaker 3 (07:00):
Don't get into a timeshare situation, but just rent and
go different places with the family.
Speaker 1 (07:06):
Okay. Next email is from Michelle in sarah Land, and
Michelle writes, I'm helping my daughter plan her upcoming wedding
and having so much fun. But my son, who is
ten years older than her and hasn't been in any
serious relationships, asked if he would get an extra inheritance
(07:26):
if he never has a big, expensive wedding like his
sister is getting. Should we consider a way to even
it up later on?
Speaker 3 (07:36):
That's a good question, you know, people Sometimes people go
overboard on their children's weddings. I mean, I've spent a
lot of money, a lot of money sometimes, yeah, right right,
as you get a bill for eighteen thousand dollars for
flowers that you have a view for you know, four
hours or something. But it is easy to do if
you think it, if the sun's upset about it or whatever,
(07:59):
it's easy to equalize the estate. So let's just say
Michelle ends up spending fifty thousand dollars all in on
her daughter's wedding. Okay, and Michelle and her husband, if
they're if she's married, sets up their will to say
we want little Timmy to get fifty thousand dollars and
(08:23):
the rest of the estate is split fifty to fifty. Okay,
So you just equalized it right there, now, you am.
It's not counting time, use of money and all that
kind of stuff. But if you've got the wherewithal, you
can give Michelle her wedding and you have little Timmy
a check for fifty thousand dollars, you know whatever, it's
fairly easy to do. But he's specifically mentioned inheritance, so
(08:45):
that would be taken care of either in a trust
or in the will or both to equalize it.
Speaker 1 (08:50):
Now, she asked, she didn't ask you if she could?
She said, should we? Now? Is this something you try
not to get involved in? Is helping them decide should
they or not do this?
Speaker 3 (09:01):
We just bring up topics when people say should we
do this or should we do that? You know, we're
not psychologists, you know, but we do kind of we
know what other people have done, have they've made mistakes,
and how the family members get kind of upset that
they got cut out, you know, or something like that.
We can we can make those suggestions like I just did.
(09:22):
You can solve this by just leaving timmy fifty in
the will and then he gets fifty percent and Michelle
and his sister gets fifty percent of everything that's left.
Speaker 2 (09:30):
Now it's equal, okay.
Speaker 1 (09:32):
Next email is from Stephen in Spanish Ford. He writes,
I have about four years left until retirement and i'd
really like to have that. I'd really like to have
one million dollars in my four o one K at
the time I finish working. I should be able to
achieve that if I save aggressively. But I also have
a lot of debt. Should I focus more on paying
(09:54):
off the debt or piling up more money in my account?
Speaker 3 (09:59):
Well that's a good question, and Steven, uh, it'd be
a good idea to sit down, come sit down with
us and let's uh, let's look at where you are
and uh, you know it, do you have other investments,
other savings other than your four oh one K. If
you're gonna have a millionaires in four to one K,
what else are you going to have other than the debt?
Speaker 2 (10:19):
Uh?
Speaker 3 (10:19):
As far as that we can turn into an income
stream down the road, because if you retire in four
years and all you've got is money in a four
oh one K, that makes your retirement income planning uh
more difficult because everything you take out of the four
one K, which at that time will be an IRA,
(10:40):
it's all going to be taxable, and tax rates probably
aren't coming down again uh after the current administration leaves.
But it depends.
Speaker 1 (10:50):
UH.
Speaker 2 (10:50):
You can do both.
Speaker 3 (10:51):
You can start, we'll ship we'll we'll sit down with
you and say, okay, what are your debts? Boom boom
boom boom boom. Here they are. You know, you've got
your mortgage out and he doesn't say what kind of debts.
If you've got your mortgage probably the best interest rate.
You may have five credit cards that are maxed out
at twenty two percent interest and these type things. So
we sit down and say, okay, we need to knock
(11:11):
out these credit cards first because the interest rate's so high.
But we can do both as far as putting money
in the four on one K and paying down debt
during the next four years, it depends on what kind
of debt you've got going into retirement. With mortgage, a
lot of people want to pay off their mortgage for
they retire. Well, we don't want to pay off the mortgage.
(11:32):
If you've got a two point nine percent interest rate,
there's no sense on paying that off. You know, you
can have money in your retirement account just in the
money market earning double debt. So we want to make
sure you're paying off the right debt at the right
time and fring up cash flow when you do retire
(11:53):
so that the money you have in the four on
one K after taxes will be sufficient for your lifestyle.
All right, love moving parts, but we can figure that out.
Speaker 1 (12:03):
You're listening to John McNeil of Mobile Bay Financial Solutions.
The website is mb financial Solutions dot com. Telephone number
two five to one sixty six six five thousand. That's
two five one six sixty six five thousand to call
Mobile Bay Financial Solutions. Now, let's talk about retirement variables.
If the variables were the same for everybody, retirement planning
(12:26):
would be much simpler. Yeah, But the fact that everybody's
different is what makes it fun. So I'm gonna ask
you to explain why the answers to these questions are
different for everybody. Okay, so the question how much income
will we need? Why is that going to be different
for everybody?
Speaker 3 (12:44):
Well, everybody is going to be doing different things in retirement,
and every one of the plans we put together our
retirement dream catcher as we call it, it's specifically designed
for their situation. So how much income will you need?
We're gonna we're gonna get that out of you. Are
you and your spouse what are your plans in retirement?
For example, travel plans? Are you and your spouse planning
(13:06):
on traveling to Dauphin Island for a week once a
year or are you planning on travel to traveling to
Europe for a month once a year? You know, these
type things is a big difference in what we're going
to be spending. What are your hobbies? Do you play
golf or are you planning on doing something that is
a lot more expensive than golf. Golf is very popular
(13:29):
in retirement and even before retirement. Man, it's fairly inexpensive
compared to if you do a lot of fishing, and
you have to have a fishing boat and all this stuff.
It can get out of hand. The other thing is
how much income do you need? Go back to what
the what Stevens said, is your house paid off, or
(13:49):
is if you've got a six hundred dollars a month,
or let's you'll say a thousand dollars a month mortgage
on your house one thousand dollars a month. It's required
to have a thousand dollars a month to make the
note payment. And it's coming out of a retirement account.
So now we have to take twelve hundred dollars a
month out of your retirement, out of your IRA and
(14:09):
pay the taxes and then pay the thousand dollars house notes.
So it depends on what your expenses are going to be.
We always we give people a worksheet to take home
as they are approaching retirement or if they're already in retirement,
and it's a post retirement budget. And a budget's not
a bad word. Doesn't mean this is all you can spend.
It just gives you an idea how much you're going
(14:30):
to need to spend. So it's very important to have
that set up usually before you retire, so you know
if you can retire that makes sense.
Speaker 1 (14:40):
It does all right, And that kind of ties into
the question how much will we pay in taxes? Now
that a lot of people are going to understand that's
going to be different for everybody.
Speaker 2 (14:51):
That's going to be different for everybody.
Speaker 3 (14:52):
It depends on what you're modified adjust to gross income
is And go back to one of the other questions
about the rental house, do you have rental properties. I've
got a number of retirees that have an ice portfolio invested,
but they also have a nice portfolio of rental houses
that produce rental income and they get a lot of deductions,
so they pay very little in taxes. But it depends
(15:14):
on how much will we pay in taxes? It depends
on who's in the White House and in Congress they
set the rules for the irs. Depends on what deductions
you have, and it depends on what types of accounts
is going to produce the income. Like I was saying
about Steven, I think in the question answers, is it
(15:34):
all going to be coming out of a four to
one case slash IRA account which means it's all taxable,
or is it going to be comeing out of some
non qualified investment accounts that he may have. It totally
depends on where what the source of the income is
going to be. And we show that in the retirement
DreamCatcher's showing you green money and pink money and what
(15:55):
the difference is. And it depends on the taxes that
we're gonna have to pay.
Speaker 1 (16:00):
Another question, how long should we expect to live?
Speaker 3 (16:04):
Okay, well, it depends a lot. And we talk about
this in the first meeting. What about your family history
or your mother and we ask them when they come
in the first time, or either one of your parents
still alive. Mom's still alive, she's ninety three, but dad
passed away at eighty one. Okay, what about siblings? You know, well,
i've lost too, blah blah blah. That tells us we've
(16:26):
got some longevity in the family. No matter what that
what that looks like. As far as longevity, we're gonna
take the retirement DreamCatcher out to age ninety five. We're
gonna assume you're gonna live to be ninety five, and
there's a sixty percent chance if a husband and wife
are both sixty five. Now there's a there's I think
(16:47):
it's around a sixty percent chance that one of them
is gonna live to be ninety five, and it's usually
the wife, right, okay, But we need to look at
family history, current your current health, you know, or you're
a king survivor or you know what, what's the situation.
We ask all those questions, and we also want to
know what their expected life retirement lifestyle is. Are they
(17:11):
playing golf, traveling, doing things that they enjoy or are
they just sitting on the porch sipping sweet tea, you know,
waving at everybody that goes by. It has a lot
to do with the how long are you going to live?
So those are some of the things we build in.
But we're going to assume you're going to live to
be ninety five. And if you say, well, I'm not
gonna live that long, well, what.
Speaker 2 (17:32):
If you do?
Speaker 3 (17:33):
We want to make sure we're not gonna run out
of money. Number one fear of Americans over sixty five
is running out of money. So we want to make
sure we're not going to do that.
Speaker 1 (17:41):
All right, What about this question when should I start
Social Security?
Speaker 2 (17:46):
That is different for everybody.
Speaker 3 (17:49):
It depends on you know, we have a lot of
people that see people already calling Uncle Henry wonderful. It
depends on if you're married, if both of you worked,
then we have a lot of variables in there. We
may turn on one of the incomes as soon as
we can age sixty two and let the other other
(18:11):
person who may still be working, let it grow and
maybe grow all the way to age seventy. We may
turn on an income once somebody, once one of the
spouses reach full retirement age, if they're still working, they
can draw SOCE security and let the other higher bread
winner keep working, keep paying in and let it so security,
(18:31):
let their SOB security build up as much as possible.
That's what I've done. In my particular case. I'll be
seventy but get my first sub security check in January. Uncle,
I turned seventy in December. My wife turned hers on
at sixty six and six months. She's still working also,
but she's a couple of years younger than me. But
she's drawing hers because when I when I turn on mine,
(18:53):
she'll stop getting hers and she'll get half of mine,
exactly half. So she'll get a big pay raise because
she she didn't work the whole time. She raised three kids, right,
and so she is working now, but we waited till
sixty six and six months she turned on hers, and
(19:13):
then when I get start getting mine in January, she'll
get a big pay raise. And then when I pass away,
she'll step up to my full benefit. So there's some
logic in why we do certain things. Again, it goes
back to life expectancy. But if you tell us when
you're gonna die, we can tell you exactly when to
turn it on. So you don't want to wait till
(19:34):
seventy if you're going to die at seventy five, that's
one of the things we want to look at. So
it does depend on other available income streams. Do you
have debt and you're still working, we can turn on
SOB security and apply all that too. You're wiping out
your debt.
Speaker 1 (19:50):
You know, I think you told me several years ago
that the number of variables for a couple with turning
on Social Security is just tremendous.
Speaker 2 (20:00):
Yeahs in hundreds.
Speaker 1 (20:01):
Most people would would never realize that there are that
many variables.
Speaker 3 (20:06):
Yeah, there's a lot of variables. There's survivor benefits, there's benefits,
survival benefits for children under the age of eighteen. You
need to just look at everything before you make a
decision because once you turn on SO security, you're locked in.
Well you've got a year to reverse it, but you've
got to pay the money back that you got during
that year. So made a mistake, but after a year,
(20:26):
there's no turning back. So let's make the right decision
from the get go.
Speaker 1 (20:29):
Okay, we're almost out of time. Time for one more
of these retirement variable questions, the question how much money
should be at risk when we retire.
Speaker 3 (20:38):
We're going to give you a risk tolerance questionnaire while
you're here. It's sixteen different questions to figure out your
risk tolerance. But we start with a baseline called the
rule of one hundred. The rule of one hundred of
basic formula for investing is your The rule of one
hundred is your age should be protected from risk. So
(21:01):
if you're fifty years old, the rule of one hundred
says you can stand to have fift percent of your
money at risk in the market. Now, there's different types
of risk in the market, but risk in the market
eighty You should have eighty percent of your money somewhere
that's not at the mercy of the market. And then
we couple the rule of one hundred with how you
(21:22):
scored on your risk tolerance, and we come up with
your actual risk tolerance based on those factors.
Speaker 1 (21:27):
All right, we are out of time. You can call
John McNeill and Virginia O'Brien of Solutions at two five
one sixty six six five thousand. That's two five one
sixty sixty six five thousand for Mobile Bay Financial Solutions
and John McNeill, thank you for having me and roll
time
Speaker 2 (21:44):
Roll tight, Uncle Henry,
This is News Radio seven to ten WNTM. Uncle Henry
here with John McNeil and Virginia O'Brien of Mobile Bay
Financial Solutions. You can find Mobile Bay Financial Solutions online
at MB financial Solutions dot com. That's MB financial Solutions
dot com. Telephone number two five to one sixty sixty
(00:28):
six five thousand if you'd like to call and make
an appointment or just call and ask a question. Two
five to one six sixty six five thousand. That is
the number for Mobile Bay Financial Solutions. The commentary presented
herein contains the opinions of Mobile Bay Wealth Management LLC,
a registered investment advisor. This information should not be relied
(00:48):
upon for tax purposes. Is based on sources believed to
be reliable. No guarantee is made to the completeness or
accuracy of this information. Mobile Bay Wealth Management LC shall
not be responsible for any trading decisions, damages, or other
losses resulting from or related to the information, data, analysis,
or opinions contain herein, or their use which do not
(01:12):
constitute investment advice, are provided as of the date written,
are provided solely for informational purposes, and therefore are not
an offer to buy or sell a security. Investments and
securities are subject to investment risk, including possible loss of principle.
Prices of securities may fluctuate from time to time and
may even become valueless. This information has not been tailored
(01:34):
to suit any individual. John McNeil, how are things going
at Mobile Bay Financial Solutions this week? Oh?
Speaker 2 (01:40):
It's great, uncle, Henry.
Speaker 3 (01:41):
Busy, busy, you know this. Here we are in the
fourth quarter. Yeah, things tend to get busy. People who've procrastinated, yes,
and hadn't done what we've been talking to them about
all through the year and the end of last year,
the things we need to do this year, and so
now we're in the fourth quarter. But we can overcome
those things. There are a lot of things that you
(02:01):
have to do in the taxable year to take advantage
of it, and there are other things you can do
after the year for the past year, like making a
contribution to your IRA. You can do that up and
you can do that in twenty twenty six for the
twenty twenty five years, as long as you do it
before you file your tax return, so you can sit
(02:21):
down with you count it and figure out how much have
a little effect my taxes if my wife and I
each put in the maximum the IRA, and.
Speaker 2 (02:30):
Usually it's a good idea to do that.
Speaker 3 (02:31):
If you've got the cash, you know, you rob Peter
to pay Paul, but you get the tax reduction, and
if you're over fifty nine and a half, you can get
it right back out if you don't need it. So
there are a lot of things that we try to
point out that they need to set up this year
to take advantage of tax reductions in this year, and
a few things you can do next year for this year.
(02:53):
So it's kind of complicated, but we're doing a lot
of that right now. We're doing a lot of the
required minimum distributions. The time of year we start kicking
out if people aren't taking it monthly or take it
earlier in the year, they've got to take the rm
DS before December thirty one, and we sit down and
talk to them before we send it to them if
they want to do any charitable giving, because if you're
(03:15):
over seventy and a half, you can give money to
charities directly from your IRA and not have to take
it out of your IRA, pay taxes on it, and
then give a check to the church or the school
or the hospital or whatever.
Speaker 2 (03:26):
You can go.
Speaker 3 (03:27):
It'll be a non taxable event to you, but can
save you in some taxes. So there are a lot
of those planning things that happened this time of year
every year, year in, year out. So if you're not
planning right now the end of the year, you need
to get on it.
Speaker 2 (03:45):
Well.
Speaker 1 (03:45):
You can call John McNeil and Virginia Brian at Mobile
Bay Financial Solutions at two five one sixty six six
five thousand. That's two five one sixty sixty six five thousand,
all right, So let's answer some emails. Would you like
to give If.
Speaker 3 (03:57):
You have some emails stacking up, so let's answer some
of those.
Speaker 1 (04:00):
You can email Johnny Virginia. The email address is info
at mobaifs dot com. That's info at mobifs dot com. Now,
the first email we have is from Tom in Mobile Alabama.
Tom writes, I've always wanted a lake house and would
love a place to bring the kids and grandkids for
(04:20):
years to come. If I buy one, should I make
it into a retirement income stream by renting it out
when we aren't there, or just keep it for the
family only, even though it's a bigger financial hit.
Speaker 2 (04:35):
That's a good question.
Speaker 3 (04:36):
And Tom, you know, he lives right here, and if
he's in Mobile, Alabama, he's got the water right here.
Speaker 2 (04:40):
But I guess to get.
Speaker 3 (04:41):
Away from the moving tide and get up on a
lake somewhere.
Speaker 1 (04:46):
Well, he's probably read about Nick Saban's place. Would love
to be up there.
Speaker 3 (04:50):
That'd be nice. I assume Tom has about fifteen to
twenty million. I was to villeion one like that, but
that's okay. But my first suggestion I would be to
talk to you CPA, because there are a lot of
rules the irs has if if you have rental property,
and of course there are a lot of benefits to
having rental property where you get to deduct you know,
(05:12):
a lot of things, all the expenses in the house
and depreciation and things that really look good on your
tax return. However, if it is a rental property, there
are certain restrictions on you using the house for personal use.
It's usually not a CPA, but it's usually limited to
no more than fourteen days in the year, okay, or
(05:34):
it can't exceed ten percent of the number of days
it is actually rented out, or something like that. So
if you can afford it and you really want to
use it, then you don't want to turn into rental
and jump through a bunch of hoops. But I would
talk to you, CPA, before you make that financial decision
to sink a bunch of money in the lake house
that you're planning on getting some tax benefits from and
(05:57):
that doesn't materialize.
Speaker 1 (05:59):
Does this question them up a lot? Because I know
a lot of people love getting condos and down at
the down at the golf and probably the same type
of conversations.
Speaker 3 (06:07):
Same thing we say, yeah, you know, look, if you've
got the cash flow, you've got the you know, preferably
you don't have to put a mortgage on your your
second home, your vacation home. But if you do, uh,
and you've got the cash flow and you want to
use it and entice the kids and grandkids to come
visit more often, we have that a lot. But a
lot of people say, you know, right, than on in
(06:29):
something and sinking all that money into it. If we're
not gonna rent it out and just use it, why
don't we just rent a place every year? We don't, right,
locked and going to the same place every year, right,
you know, you can go the same place. A lot
of people have condos at the beach. Have you know
the snowbirds that come down, and they'll the same. People
rent for long terms, like a month at a time,
sometimes three months at a time during the winter. But
(06:53):
sometimes it's cheaper to rent than to own if you're
not gonna be using it all the time.
Speaker 2 (06:59):
So that's that.
Speaker 3 (07:00):
Don't get into a timeshare situation, but just rent and
go different places with the family.
Speaker 1 (07:06):
Okay. Next email is from Michelle in sarah Land, and
Michelle writes, I'm helping my daughter plan her upcoming wedding
and having so much fun. But my son, who is
ten years older than her and hasn't been in any
serious relationships, asked if he would get an extra inheritance
(07:26):
if he never has a big, expensive wedding like his
sister is getting. Should we consider a way to even
it up later on?
Speaker 3 (07:36):
That's a good question, you know, people Sometimes people go
overboard on their children's weddings. I mean, I've spent a
lot of money, a lot of money sometimes, yeah, right right,
as you get a bill for eighteen thousand dollars for
flowers that you have a view for you know, four
hours or something. But it is easy to do if
you think it, if the sun's upset about it or whatever,
(07:59):
it's easy to equalize the estate. So let's just say
Michelle ends up spending fifty thousand dollars all in on
her daughter's wedding. Okay, and Michelle and her husband, if
they're if she's married, sets up their will to say
we want little Timmy to get fifty thousand dollars and
(08:23):
the rest of the estate is split fifty to fifty. Okay,
So you just equalized it right there, now, you am.
It's not counting time, use of money and all that
kind of stuff. But if you've got the wherewithal, you
can give Michelle her wedding and you have little Timmy
a check for fifty thousand dollars, you know whatever, it's
fairly easy to do. But he's specifically mentioned inheritance, so
(08:45):
that would be taken care of either in a trust
or in the will or both to equalize it.
Speaker 1 (08:50):
Now, she asked, she didn't ask you if she could?
She said, should we? Now? Is this something you try
not to get involved in? Is helping them decide should
they or not do this?
Speaker 3 (09:01):
We just bring up topics when people say should we
do this or should we do that? You know, we're
not psychologists, you know, but we do kind of we
know what other people have done, have they've made mistakes,
and how the family members get kind of upset that
they got cut out, you know, or something like that.
We can we can make those suggestions like I just did.
(09:22):
You can solve this by just leaving timmy fifty in
the will and then he gets fifty percent and Michelle
and his sister gets fifty percent of everything that's left.
Speaker 2 (09:30):
Now it's equal, okay.
Speaker 1 (09:32):
Next email is from Stephen in Spanish Ford. He writes,
I have about four years left until retirement and i'd
really like to have that. I'd really like to have
one million dollars in my four o one K at
the time I finish working. I should be able to
achieve that if I save aggressively. But I also have
a lot of debt. Should I focus more on paying
(09:54):
off the debt or piling up more money in my account?
Speaker 3 (09:59):
Well that's a good question, and Steven, uh, it'd be
a good idea to sit down, come sit down with
us and let's uh, let's look at where you are
and uh, you know it, do you have other investments,
other savings other than your four oh one K. If
you're gonna have a millionaires in four to one K,
what else are you going to have other than the debt?
Speaker 2 (10:19):
Uh?
Speaker 3 (10:19):
As far as that we can turn into an income
stream down the road, because if you retire in four
years and all you've got is money in a four
oh one K, that makes your retirement income planning uh
more difficult because everything you take out of the four
one K, which at that time will be an IRA,
(10:40):
it's all going to be taxable, and tax rates probably
aren't coming down again uh after the current administration leaves.
But it depends.
Speaker 1 (10:50):
UH.
Speaker 2 (10:50):
You can do both.
Speaker 3 (10:51):
You can start, we'll ship we'll we'll sit down with
you and say, okay, what are your debts? Boom boom
boom boom boom. Here they are. You know, you've got
your mortgage out and he doesn't say what kind of debts.
If you've got your mortgage probably the best interest rate.
You may have five credit cards that are maxed out
at twenty two percent interest and these type things. So
we sit down and say, okay, we need to knock
(11:11):
out these credit cards first because the interest rate's so high.
But we can do both as far as putting money
in the four on one K and paying down debt
during the next four years, it depends on what kind
of debt you've got going into retirement. With mortgage, a
lot of people want to pay off their mortgage for
they retire. Well, we don't want to pay off the mortgage.
(11:32):
If you've got a two point nine percent interest rate,
there's no sense on paying that off. You know, you
can have money in your retirement account just in the
money market earning double debt. So we want to make
sure you're paying off the right debt at the right
time and fring up cash flow when you do retire
(11:53):
so that the money you have in the four on
one K after taxes will be sufficient for your lifestyle.
All right, love moving parts, but we can figure that out.
Speaker 1 (12:03):
You're listening to John McNeil of Mobile Bay Financial Solutions.
The website is mb financial Solutions dot com. Telephone number
two five to one sixty six six five thousand. That's
two five one six sixty six five thousand to call
Mobile Bay Financial Solutions. Now, let's talk about retirement variables.
If the variables were the same for everybody, retirement planning
(12:26):
would be much simpler. Yeah, But the fact that everybody's
different is what makes it fun. So I'm gonna ask
you to explain why the answers to these questions are
different for everybody. Okay, so the question how much income
will we need? Why is that going to be different
for everybody?
Speaker 3 (12:44):
Well, everybody is going to be doing different things in retirement,
and every one of the plans we put together our
retirement dream catcher as we call it, it's specifically designed
for their situation. So how much income will you need?
We're gonna we're gonna get that out of you. Are
you and your spouse what are your plans in retirement?
For example, travel plans? Are you and your spouse planning
(13:06):
on traveling to Dauphin Island for a week once a
year or are you planning on travel to traveling to
Europe for a month once a year? You know, these
type things is a big difference in what we're going
to be spending. What are your hobbies? Do you play
golf or are you planning on doing something that is
a lot more expensive than golf. Golf is very popular
(13:29):
in retirement and even before retirement. Man, it's fairly inexpensive
compared to if you do a lot of fishing, and
you have to have a fishing boat and all this stuff.
It can get out of hand. The other thing is
how much income do you need? Go back to what
the what Stevens said, is your house paid off, or
(13:49):
is if you've got a six hundred dollars a month,
or let's you'll say a thousand dollars a month mortgage
on your house one thousand dollars a month. It's required
to have a thousand dollars a month to make the
note payment. And it's coming out of a retirement account.
So now we have to take twelve hundred dollars a
month out of your retirement, out of your IRA and
(14:09):
pay the taxes and then pay the thousand dollars house notes.
So it depends on what your expenses are going to be.
We always we give people a worksheet to take home
as they are approaching retirement or if they're already in retirement,
and it's a post retirement budget. And a budget's not
a bad word. Doesn't mean this is all you can spend.
It just gives you an idea how much you're going
(14:30):
to need to spend. So it's very important to have
that set up usually before you retire, so you know
if you can retire that makes sense.
Speaker 1 (14:40):
It does all right, And that kind of ties into
the question how much will we pay in taxes? Now
that a lot of people are going to understand that's
going to be different for everybody.
Speaker 2 (14:51):
That's going to be different for everybody.
Speaker 3 (14:52):
It depends on what you're modified adjust to gross income
is And go back to one of the other questions
about the rental house, do you have rental properties. I've
got a number of retirees that have an ice portfolio invested,
but they also have a nice portfolio of rental houses
that produce rental income and they get a lot of deductions,
so they pay very little in taxes. But it depends
(15:14):
on how much will we pay in taxes? It depends
on who's in the White House and in Congress they
set the rules for the irs. Depends on what deductions
you have, and it depends on what types of accounts
is going to produce the income. Like I was saying
about Steven, I think in the question answers, is it
(15:34):
all going to be coming out of a four to
one case slash IRA account which means it's all taxable,
or is it going to be comeing out of some
non qualified investment accounts that he may have. It totally
depends on where what the source of the income is
going to be. And we show that in the retirement
DreamCatcher's showing you green money and pink money and what
(15:55):
the difference is. And it depends on the taxes that
we're gonna have to pay.
Speaker 1 (16:00):
Another question, how long should we expect to live?
Speaker 3 (16:04):
Okay, well, it depends a lot. And we talk about
this in the first meeting. What about your family history
or your mother and we ask them when they come
in the first time, or either one of your parents
still alive. Mom's still alive, she's ninety three, but dad
passed away at eighty one. Okay, what about siblings? You know, well,
i've lost too, blah blah blah. That tells us we've
(16:26):
got some longevity in the family. No matter what that
what that looks like. As far as longevity, we're gonna
take the retirement DreamCatcher out to age ninety five. We're
gonna assume you're gonna live to be ninety five, and
there's a sixty percent chance if a husband and wife
are both sixty five. Now there's a there's I think
(16:47):
it's around a sixty percent chance that one of them
is gonna live to be ninety five, and it's usually
the wife, right, okay, But we need to look at
family history, current your current health, you know, or you're
a king survivor or you know what, what's the situation.
We ask all those questions, and we also want to
know what their expected life retirement lifestyle is. Are they
(17:11):
playing golf, traveling, doing things that they enjoy or are
they just sitting on the porch sipping sweet tea, you know,
waving at everybody that goes by. It has a lot
to do with the how long are you going to live?
So those are some of the things we build in.
But we're going to assume you're going to live to
be ninety five. And if you say, well, I'm not
gonna live that long, well, what.
Speaker 2 (17:32):
If you do?
Speaker 3 (17:33):
We want to make sure we're not gonna run out
of money. Number one fear of Americans over sixty five
is running out of money. So we want to make
sure we're not going to do that.
Speaker 1 (17:41):
All right, What about this question when should I start
Social Security?
Speaker 2 (17:46):
That is different for everybody.
Speaker 3 (17:49):
It depends on you know, we have a lot of
people that see people already calling Uncle Henry wonderful. It
depends on if you're married, if both of you worked,
then we have a lot of variables in there. We
may turn on one of the incomes as soon as
we can age sixty two and let the other other
(18:11):
person who may still be working, let it grow and
maybe grow all the way to age seventy. We may
turn on an income once somebody, once one of the
spouses reach full retirement age, if they're still working, they
can draw SOCE security and let the other higher bread
winner keep working, keep paying in and let it so security,
(18:31):
let their SOB security build up as much as possible.
That's what I've done. In my particular case. I'll be
seventy but get my first sub security check in January. Uncle,
I turned seventy in December. My wife turned hers on
at sixty six and six months. She's still working also,
but she's a couple of years younger than me. But
she's drawing hers because when I when I turn on mine,
(18:53):
she'll stop getting hers and she'll get half of mine,
exactly half. So she'll get a big pay raise because
she she didn't work the whole time. She raised three kids, right,
and so she is working now, but we waited till
sixty six and six months she turned on hers, and
(19:13):
then when I get start getting mine in January, she'll
get a big pay raise. And then when I pass away,
she'll step up to my full benefit. So there's some
logic in why we do certain things. Again, it goes
back to life expectancy. But if you tell us when
you're gonna die, we can tell you exactly when to
turn it on. So you don't want to wait till
(19:34):
seventy if you're going to die at seventy five, that's
one of the things we want to look at. So
it does depend on other available income streams. Do you
have debt and you're still working, we can turn on
SOB security and apply all that too. You're wiping out
your debt.
Speaker 1 (19:50):
You know, I think you told me several years ago
that the number of variables for a couple with turning
on Social Security is just tremendous.
Speaker 2 (20:00):
Yeahs in hundreds.
Speaker 1 (20:01):
Most people would would never realize that there are that
many variables.
Speaker 3 (20:06):
Yeah, there's a lot of variables. There's survivor benefits, there's benefits,
survival benefits for children under the age of eighteen. You
need to just look at everything before you make a
decision because once you turn on SO security, you're locked in.
Well you've got a year to reverse it, but you've
got to pay the money back that you got during
that year. So made a mistake, but after a year,
(20:26):
there's no turning back. So let's make the right decision
from the get go.
Speaker 1 (20:29):
Okay, we're almost out of time. Time for one more
of these retirement variable questions, the question how much money
should be at risk when we retire.
Speaker 3 (20:38):
We're going to give you a risk tolerance questionnaire while
you're here. It's sixteen different questions to figure out your
risk tolerance. But we start with a baseline called the
rule of one hundred. The rule of one hundred of
basic formula for investing is your The rule of one
hundred is your age should be protected from risk. So
(21:01):
if you're fifty years old, the rule of one hundred
says you can stand to have fift percent of your
money at risk in the market. Now, there's different types
of risk in the market, but risk in the market
eighty You should have eighty percent of your money somewhere
that's not at the mercy of the market. And then
we couple the rule of one hundred with how you
(21:22):
scored on your risk tolerance, and we come up with
your actual risk tolerance based on those factors.
Speaker 1 (21:27):
All right, we are out of time. You can call
John McNeill and Virginia O'Brien of Solutions at two five
one sixty six six five thousand. That's two five one
sixty sixty six five thousand for Mobile Bay Financial Solutions
and John McNeill, thank you for having me and roll
time
Speaker 2 (21:44):
Roll tight, Uncle Henry,
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