Mobile Bay Financial Solutions 4.15.2025

Episode Transcript

Speaker 1 (00:07):
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 six

(00:30):
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

(00:50):
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

(01:14):
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

(01:36):
to suit any individual. So John McNeil, how are things
going this week at Mobile Bay Financial Solutions?

Speaker 2 (01:41):
Well, as we record this, we're wrapping up tax season,
Uncle Henry. And it's always buzzing around here because people,
you know, a lot of people procrastinating. I'm not looking
at you like a procrastinator, yes, but they wait until
April fifteenth to make their deposit into their IRA to
get the tax reduction for last year. And so it's

(02:03):
it's always fun. Riba here at the office, the dog
that greets everybody loves people just walking in and you know,
but it's it's been, uh, you know since the last
time we were together. The market has really been on
everybody's mind.

Speaker 1 (02:18):
It well, because it's been here and there and everywhere.

Speaker 2 (02:21):
I mean, it is had some historical swings that we've
never seen before, up and down and enter day moves
you know, three thousand points and one day, you know,
up one thousand, down fifteen hundred and back of you know,
it's it can drive people crazy. For the for the
people out there that sit at their office or sit

(02:42):
at home and look at their computer and watch the
watch the ticker symbols in the market, it drives them crazy.
And they don't need to be doing that if they
if they prepare.

Speaker 1 (02:51):
Correctly, and that's something you can help out with.

Speaker 2 (02:53):
That's something we can help out with.

Speaker 1 (02:55):
Well, we've got a lot of things to talk about
here with John McNeil of Mobile Bay Financial Lotions. Let's
start about talking about opportunities in a crisis. They say
that the Chinese character for the word crisis is most
accurately translated as opportunity riding on a dangerous win. Now

(03:17):
I don't speak Chinese, so I can't really verify that.
So it's possible that somebody might have made that up,
but the sentiment has to be true when it comes
to financial decision making in a difficult market environment like
the one that we find ourselves in. So, John Mina,
would you please talk about possible opportunities that away people
in this current financial crisis or just volatility that we're

(03:40):
going through.

Speaker 2 (03:41):
Yeah, let's talk about some of the opportunities and things
that you know, obviously, with anybody that's in the market,
our clients, some of them are saying, you know, is
this a good time to get in more? Or should
I get out? And those type things, and so it's
never moving target. But there are some opportunities in a

(04:01):
christ I say, we're not in a crisis. You know,
the market has kind of settled down from a couple
of weeks ago and last week. I'm not to say
it's not going to come roaring back to volatility. But
one of the things that is an opportunity is to
increase your savings rate. Okay, so the market's going down,
should have put more in the market. If you're in
a four o one K or something like that where

(04:24):
you're saving for retirement, it's a great time. Real short story,
my oldest son when he got out of college and
got his first job and he had the opportunity to
put money in four oh one k. It was back
during the two thousand and eight problems. And after a
couple of months he called me. I've said, Dad, I'm
putting in the maximum like you told me. And every

(04:45):
time I put money in, I look at my statement
online and I've got less money than I had before
I put the money in. It just keeps going down.
I said, well, do you have room to increase? You
need to put more in. You need to put more
in to it hurts.

Speaker 1 (04:59):
You know.

Speaker 2 (04:59):
It wasn't married time, so he had very low expenses.
But it is an opportunity to to people have heard
the term dollar cost average. If the market's going down
and you've got time, you know, if you're still putting
money in to some type of a plan, Uh, it
is a good time to increase that because you know

(05:20):
history will tell us it will come back. Of course
it did.

Speaker 1 (05:23):
Well. Is this Uh, to really simplify it, is this
when the when the when the situation where you do
have time, because that's the key, that's the key time.

Speaker 2 (05:32):
Yeah.

Speaker 1 (05:32):
But when the market go goes down like that and
you're continuing to contribute to the four one K, that's
buying low right, right, We're supposed to buy low and
sell high.

Speaker 2 (05:40):
That's the that's the whole plan, right, is to do that.
So if you're if you're in the market is going
up up up, and you're putting money in, you're buying
more and more shares at a higher price. If the
market is going down. You're buying more and more shares
as it's going down at a lower price. So UH,
that is an opportunity to UH to increase your savings

(06:00):
wherever you're putting it and talk to your advisor whoever
about the process. There Another opportunity is, you know, we've
talked a number of times about wroth conversions. We have
people ask us all the time, should I convert some
of my IRA to wroth iray? Depends depends on your age.

(06:21):
You know you are the better opportunity because when you
convert from a traditional iray to a wroth iray. Let's
just say you want to convert twenty five thousand dollars
of your IRA to a wroth iray. What you have
to do is you have to claim that twenty five
thousand is income because the traditional iray has never been taxed.
Now you're going to put it into a roth iray,

(06:41):
so you'll have another twenty five thousand of ordinary income
of the year that you do that put The opportunity
in a crisis is if your portfolio, if your IRA
is down or certain things in your IRA are down,
now is a good time to convert because you're converting
or with less tax and now you have time for

(07:03):
it to grow tax free in the wroth iray. I
say that the time and age is important. Usually it's
more beneficial if you're under the age of fifty five,
okay to do a wroth conversion, because if you think
about it, twenty five thousand dollars of it in that example,
twenty five thousand of extra income in the year you

(07:23):
do it, depending on what your tax bracket is. But
let's just say you have to pay five thousand dollars
in taxes, all right, so now it's in the wroth ira. Well,
we got to make back that five thousand dollars to
get back to even and we hadn't even made anything yet.
So when we look at that, the more time we have,
the better opportunity we have to grow that wroth ira.

(07:45):
And a lot of times when we're putting when Virginia
is putting together the portfolios for a wroth iray, we
tend to be a little bit more sorry about that phone.

Speaker 1 (07:54):
I like that, I like the sounds of the office.

Speaker 2 (07:57):
Yeah, but we tend to be a little more aggressive
with a wroth ira because we want it to really grow.
Whether you're going to use it for income or whether
you're using it as a legacy benefit to go tax
free of the kids. That's the place we usually are
a little more aggressive in the investing part of it
for the wroth ira. You know, some people say another

(08:18):
opportunity is getting aggressive. Should should I now that the
market is now, should I and it's going to come back?
Should I get into a more aggressive portfolio? Usually not,
We're not. We're not. When we set a plan up,
it's based on a lot of things. And just because
the market has a downturn doesn't mean you ought to

(08:39):
jump in and and get all into you know, get
out of good dividend paying stocks and get into you know,
tax stocks or you know those type things. Usually not
a good idea. But what a what an opportunity in
a crisis should do is give you a wake up
call and sit down with your advisor and make sure

(09:02):
you're on the right track. Make sure you don't need
to make some revisions in the plan. You know, you
might not be at a time where you're taking money
out of your investments yet, but the time will come.
And if you're taking money out and the market takes
money out, call that double dipping and that's not good.
So we've got to be a positioned for the for
the next correction.

Speaker 1 (09:22):
You're listening to John McNeil of Mobile Bay Financial Solutions,
you can call his office at two five one sixty
sixty six five thousand. That's two five one sixty sixty
six five thousand to make an appointment with John McNeill
and Virginia O. Brian of Mobile Bay Financial Solutions. Now,
most people probably think that your primary job is picking investments.
It's an ideal from well, I've learned from being around

(09:45):
you in Virginia for so many years that what you
really do is help people achieve their goals. People come
in and tell you this is where we want to be,
this is if what can we get there? Can you
help us get there? You help them solve those problems
and find solutions to get them where they want to go.
So let's pick some scenarios here and have you described

(10:08):
how you handle these situations. Okay, let's say somebody comes in.
We've just been through the tax season. What if somebody
comes in and they say they've got a tax related problem.

Speaker 2 (10:18):
We have had quite often fortunate, We've got a lot
of affluent clients that you know, invest in different things.
A lot of our clients invest in real estate, you know,
rental properties and that type stuff. Or they own a
small business and they own the building separately, and they
rented from themselves, and then they got to retire and
now they got to sell the building. Usually, so he

(10:39):
creates some problems. We had client last right toward the
end of the year, middle of December. He had sold
a big piece of property and had a pretty if
he was if he sold it, and without doing some planning,
he was going to have a tax liability of somewhere
around one hundred and eighty thousand dollars of taxes. So

(11:00):
he created a trust and he transferred some of the
property before he sold it to this trust. He sold
all the property, the property that he put in trust
and the property he held outside of trust, and the
trust created a tax deduction for the amount he put
in there, which offset all the taxes that he didn't
put in the trust. He put about thirty five percent
of the property into the trust, and that created a

(11:22):
big enough tax deduction to where he owed no taxes
on the other sixty five percent that he didn't put
in the trust, so he didn't have to pay any taxes.
Very very good situation. We also use tax related problems.
If somebody does want to do a Roth conversion, we
can do something very similar, put some assets in the trust,
created a tax deduction like that example I used earlier.

(11:44):
If somebody wanted to do a twenty five thousand dollars conversion,
we put enough property or stocks or whatever into the
trust to create a twenty five thousand dollars income tax deduction,
and then he converts to the Wroth and he pays
no taxes. So there are a number of tax for
related problems that we can we can help with.

Speaker 1 (12:02):
Now here's another scenario, and you probably saw a lot
of this right around COVID, is where somebody is forced
into an early retirement. They didn't they didn't want to
retire this soon.

Speaker 2 (12:13):
Right they you know, they got cut back, And it's
still happening. It really happened a lot like you said
during COVID, but it still happens. Companies are readjusting and
getting rid of older employees and hiring younger, cheaper employees.
But it's very important to have a plan while you're
working and have the plan and corporate we can see
every year in our dream catcher plan we put together

(12:35):
for everybody, we can show every year you may be
let's say seven years away from retirement, Well, we can
show you what we're going to have five years from now,
you know.

Speaker 1 (12:45):
Uh.

Speaker 2 (12:46):
And if you get laid off five years from now
rather than retiring seven years from now, how is the
plan going to be affected? Showing you real numbers and
UH and those type of things. But it's very important
to make sure you're up to date on what your
so security benefits are going to be. And it's very
important the closer you get to retirement and the possibility
of being laid off, is to make sure you're you've

(13:08):
got a defensive posture built into your overall portfolio, protect
what you've got so that when you do get to
that point and you're forced in there, we can generate
the income we need.

Speaker 1 (13:18):
What about clients where where one of the spouses passes
away way earlier than expected.

Speaker 2 (13:25):
Yeah, that's one. Emotionally, it's a big shot. People don't
realize how much work there is to do when somebody
passes away. All kinds of things have got to be done.
And depending on what the assets are and that type thing,
whether things have to be probated or if everything just
passes to the surviving spouse. But we sit down and

(13:47):
talk to the clients and we handle all this far
them walking in through it. But people don't realize it
doesn't It doesn't cost any less for a husband and
wife to maintain a home and live together. It doesn't
cost any less if it's just a single person. You
think about, the house still costs the same groceries aren't

(14:08):
going to be that much difference, you know, So there
is a need to maintain the income that both spouses have. Well,
when one spouse dies, the surviving spouse is going to
lose the deceased spouse suss of security. Okay, so we're
gonna lose whatever that is. They're also they don't realize

(14:31):
that they're going to automatically be in a higher tax
bracket because they're married filing jointly, and the different tax
brackets for that. And then there's single head of household,
which income thresholds you get to a higher tax bracket quicker.
Plus you don't have the standard deduction that you had before.
You know, standard deduction this year I think is twenty

(14:53):
seven thousand dollars for a couple, but it's only sixteen
thousand or something like that for or twelve thousand for
an individual. So you don't have the deductions and you're
in a higher tax bracket and you've lost income. Even
though you've got less income, you're in a higher tax bracket.
So all that planning is something that when you lose

(15:15):
a spouse that we sit down and talk about.

Speaker 1 (15:18):
What about somebody that has a health problem that has
affected their financial planning.

Speaker 2 (15:23):
Yeah, it's usually when we look at the health problems,
usually it's due to the fact of somebody having to
have long term care, developing dementia, like we were talking about
before the show, having to have somebody come in the
house and help take care of them because the spouse
is not able to or whatever, or there's just a
single individual, especially a single female. It's very important, and

(15:47):
going back to our dream catcher, we build into our
plan those type things so that we can have more
income without depleting assets at an an opportune time if
the market down. We don't want to be selling stocks
to fund, you know, long term care, so we build
that into the plan and making sure that you've got

(16:08):
that all set up.

Speaker 1 (16:10):
What about somebody who hates their job or just hates
working in general, and they want to retire as quickly
as they possibly can.

Speaker 2 (16:18):
Those are fun cases when we have and we have,
you know a number of clients who came to us
years ago and said, you know, I want to retire
as soon as possible. I want to retire at fifty
nine and a half. Fifty nine and a half is
a key age because that's when you start tapping into
your iras. So we had somebody. We had one lady
came to a single and she wanted to retire at

(16:40):
fifty nine and a half. She hated her job, just
like this thing says, and she retired two months before
she was fifty nine and a half, so she couldn't
take money out of her iras, but she had enough
savings built up because we were planning on this. And
then two months later we started taking money out of
her irais. And that was two or twelve years ago.

(17:00):
Another story was we had a client came in. She
was referred to us, and she listened to us on
the radio, and she worked for a big company and
she was kind of a big wig in the company
and she was making a presentation to all the employees.
It was about eighty to one hundred people in this
big conference room and she was making the presentation. So

(17:21):
she had her laptop computer and she was setting it
up before everybody before she was supposed to talk, and
it went to sleep while she was waiting to talk,
and went to sleep and went to her screensaver, and
her screensaver was a countdown clock to retirement, which on
her thing it was like six months, eight days, you know,

(17:42):
all this kind of stuff. It popped up there. She
didn't see it was on the big screen. She didn't
see it. Everybody started laughing.

Speaker 1 (17:49):
So that was her announcement.

Speaker 2 (17:50):
Yeah, and her boss said, do you have something to
tell us? Countdown to retirement. She got to that point
and she got to sixty two. It worked out perfect.
But you know, if you if you, if you plan
ahead things like that, we can we can usually solve
them and help you get there.

Speaker 1 (18:09):
You're listening to John McNeil of Mobile Bay Financial Solutions.
The website is MB financial Solutions dot com. That's mbfinancial
Solutions dot com. Call the office making appointment at two
five to one, six sixty six five thousand that's two
five to one sixty six six five thousand. Have a
few emails to get to before we're at a time here.

(18:29):
If you the listener, would like to send an email
to John and Virginia, you can send that email to
info at mobifs dot com. That's info at mobifs dot com.
We've got an email from Stan in Wesmobile. Stan writes,
I have a substantial military retirement that covers all of
our income needs, and all of my investments are basically

(18:52):
earmarked to be passed down to our three daughters. Since
I won't need the money, should I just use the
money to buy a lot of life insurance so that
I don't have to worry about managing it.

Speaker 2 (19:04):
We've we've had several cases exactly like this, and we
have a big population of retired military in our area.
We'll stand the question I would ask you if you're
talking about our income and pass down to our three daughters. UH,
just want to make sure what your retirement benefits are

(19:24):
or are they just for your life or did you
choose the option to have your in your retirement income
continue for both.

Speaker 1 (19:30):
Of y'all's lives.

Speaker 2 (19:31):
That's key, okay, but yes, life insurance if he wants
to do that. Life insurance is the most effective way
to create on a state, very inexpensively pennies on the dollar,
So depending on how stand is. If it's designed to
go to the daughters after both of them pass away,
you buy what's called a survivorship policy, and he uses

(19:52):
his investments periodically, liquidating them and paying the premium. But
an insurance policy on the husband and wife is a
lot cheaper than just on one person because life expectancy
for two people is substantially longer than life expectancy of
one person, and so the insurance costs very little. We
had a couple that was eighty one and seventy she

(20:16):
was seventy six, he was eighty one. We bought a
three million dollar life insurance policy, and it costs a
little over six thousand dollars a year to create that
kind of wealth, tax free to the children, and some
of it was going to charity too. But there are
a number of ways that and you don't like he
said he doesn't have to worry about anything. He can

(20:37):
just buy the life insurance and off he goes. Usually
we set it up into a trust so that you
know different things, but it is a viable option. Plus
he's got the ability to draw on the cash inside
the life insurance policy before he passes away.

Speaker 1 (20:53):
Okay, Hey, one more quick email before we're at a time.
This comes from Harry and Daphne. Harry Rights. I'm sixty
three and wanted to work for another four to five years. However,
it seems my company has a different idea and it's
essentially forcing me into an early retirement this summer. Getting
a new job of my age seems like a lot

(21:13):
of trouble, and I'm not completely confident that my savings
will be enough to get me through. What's your advice
for somebody like me?

Speaker 2 (21:21):
Come see Virginia and No, because a lot of people
don't realize that what they have maybe will produce more
income for a longer period of time than they really think,
because we break it down and show them, Look, you know,
this is what you got, This is the income y'all need,
this is the income y'all want. We can do both
of those, and you're not going to run out of

(21:42):
money during the rest of your life, So you know,
depending on what he has, just it all depends. But
usually they're pleasantly surprised when we get through analyzing it.

Speaker 1 (21:53):
All right, you've been listening to John McNeil of Mobile
Bay Financial Solutions. You can find Mobile Bay Financial Solutions
online at mbfinancial Solutions dot com. Again, you can call
their office at two five one sixty six six five thousand.
That's two five one sixty six six five thousand, John McNeil,
thank you, and roll tide, roll tight, Uncle Henry