Episode Transcript
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Speaker 1 (00:06):
Tonight your mind and your money and does your investment
strategy match your retirement goals? And of course we've got
much more to talk about. You're listening to Simply Money
presented by all Worth Financial. I meany Wagner along with
Bob' sponseller, what is your money mindset and how could
it be affecting every money.
Speaker 2 (00:25):
Decision you make? What do we mean by that? Well, Bob,
I think let's get into this.
Speaker 1 (00:29):
You know, after we've been doing this for years and
years and years, you start to realize there's some categories
that some of the people.
Speaker 2 (00:36):
We work with tend to fall into. I would throw
one of those out there.
Speaker 1 (00:40):
As those who get to retirement and kind of want
to curl up in the feedo position around their money,
Meaning even if they had lots of market exposure when
they were working, once those paychecks stop coming in, they
want to pull everything out of the market and maybe
even put it under their mattress.
Speaker 3 (01:00):
Yeah, I mean you brought up categories of people we
work with. I mean the number one category of people
we work with is human beings.
Speaker 2 (01:08):
And good point.
Speaker 3 (01:09):
Human beings, like all of us, have emotions and especially
emotions around money, and we all know that fear and
greed are at the top of the list, and it
is totally natural as somewhat approaches retirement and then enters retirement,
when you go from not having a paycheck anymore to
your portfolio having to become your paycheck, you know, supplemented
(01:32):
by you know, things like social Security. That's a that's
a mindset change, and it requires an adjustment and a
lot of times a little bit of coaching from a
good fiduciary financial advisor.
Speaker 2 (01:43):
I had a.
Speaker 1 (01:43):
Couple of clients in my office a few weeks ago,
and they'll both retire sometime this year. The wife, the
reality of that money no longer coming in.
Speaker 2 (01:55):
Was actually in tears. She's so afraid of it.
Speaker 1 (01:59):
Even though we've run plan, their plan is successful, it
just makes her so nervous.
Speaker 2 (02:04):
And I don't think it doesn't matter if.
Speaker 1 (02:05):
You're you're thirty or sixty or seventy. I think this
is a reality you have to plan for. There is
an emotional component to getting to this point, and I
think the way that you get around it and find
really the right place for you, as far as how
much stock versus bond exposure is educating yourself is knowledge
(02:27):
is understanding what your plan.
Speaker 2 (02:29):
Needs to work right, how much you have, how.
Speaker 1 (02:32):
Much you're going to need to spend every year, what
that draw down strategy looks like from those assets that
you've accumulated. That kind of knowledge can put a lot
of this fear to rest.
Speaker 3 (02:45):
And you hit on the right two terms Amy, in
my opinion, you know, education and knowledge. Education and knowledge,
and then an advisor that will actually listen to you
rather than just talk to you.
Speaker 4 (03:00):
Yeh.
Speaker 3 (03:01):
I find that that brings the fear quotient down for
a lot of people. So let's talk about what we
mean by that. You talked about risk profile questionnaire. That's
where we start with a financial plan, talking about what
your money needs to do for you and when, and
then dovetail that with how much financial risk you're willing
(03:21):
to take on emotionally and how much your plan can
sustain or needs to take on in order to have
a high probability of meeting your goals. And what I
find is once we walk people through that process and
actually listen to people and listen to their fears and
their goals and their dreams, they walk out of the
office feeling much better about everything.
Speaker 1 (03:44):
You know, I was just thinking about this man who
several years ago would come to every all Worth workshop
that we would have sat in the front row, came
up to me after every single one of them with
the same question, I've worked really really hard for my money.
I want it to grow, but I don't want any risk.
(04:05):
What can I invest in? And I would be like,
I'm sorry, there's you know, there is inherently some risk
to being, you know, in the markets. I'm so grateful
for the evolution of our industry because now we can
have somewhat different conversations with the.
Speaker 2 (04:22):
People that we're working with. We've got options things like.
Speaker 1 (04:25):
Buffered ETFs that can protect you from the first fifteen
percent of the downside of a market, or you know,
structured nodes that you know, maybe that money is tied
up for some time, but there is potentially more of
an upside to it than a downside.
Speaker 2 (04:38):
So we have more options.
Speaker 1 (04:40):
Now, I think than we ever have for those who
do get to this place in retirement and are really
really nervous about having market exposure. Because my concern for
people who feel like that, and you mentioned kind of
that fear component is going broke safely in retirement, right
the cost of what we're buying is going to go
up every year in that form of inflation, and inflation
(05:03):
can be the silent killer of retirement. So we have
to make sure that your portfolios are growing enough in
retirement that it's not eroding your purchasing power and that
you're not having to go from eating out once a
week to eating raw and noodles every night exactly.
Speaker 3 (05:20):
And I'm thinking of one client in particular that I've
met with, you know, over the last several years, and
just like your client, amy huge fear of losing money.
Fortunately in this client situation, they they have spent or
they have saved and saved, and they're conservative enough and
they're spending that they really don't have to take on
(05:41):
a lot of risk and still have a ninety nine
percent chance of meeting all their goals. So you know what,
to your point, what we're able to do for them
is look at some things like structured notes where we
can give them one hundred percent one hundred percent guarantee
of getting their money back over a certain period of time,
(06:01):
but giving them a little bit of exposure to upside
where their portfolio can outpace inflation. To your point, of
the silent killer is inflation. You can feel safe while
the purchasing power of your money just erodes, and that's
not a good place to be either.
Speaker 1 (06:19):
You're listening to Simply Wheney presented by all Worth Financial.
I'm Ami Wagner along with Bob Spahn s Oeutler. You
do this job for long enough, you start to realize
that people can fall into different buckets, and as you're listening,
I would just ask you any idea.
Speaker 2 (06:31):
Where you fall. There are those who get really really.
Speaker 1 (06:35):
Conservative in retirement understandingly, so right, those paychecks aren't coming in,
that account balance isn't going up on that floor one
k because you're not making contributions anymore. We would say, hey,
you gotta find your kind of goldilocks point right, what's
your risk tolerance of how we can still make that
portfolio grow and also protect you.
Speaker 2 (06:55):
On the flip side, there are.
Speaker 1 (06:57):
Those who are soonop were risky, always chasing returns. Bob,
you mentioned those those two number one emotions that kind
of can really harm you when it comes to your money,
Fear and greed. Well, these are the people that tend
to react to greed.
Speaker 3 (07:16):
Yeah, and a lot of our you know, more affluent
successful clients, and I mean successful meaning financially successful. There
are a lot of different definitions of success. We're talking
about people that have saved and invested well and have accumulated,
you know, a nice sizable estate and wealth. What we
(07:36):
find sometimes with those folks is they are so entrepreneurial,
and you know, they love to do projects, and they
love to invent, and they just love to make things
happen that they forget about the possibility of investment volatility
when they retire and you know, when that paycheck's coming in,
you're not too worried about market volatility because we're always
(07:59):
taught and we know inherently that the market what it
always comes.
Speaker 2 (08:03):
Back yep, rebound the new highs.
Speaker 3 (08:05):
Yeah. But when you have to turn that life's work
in that portfolio now into a paycheck, there's just some
simple mathematics that come into play where volatility needs to
at least be talked about, Yeah, and planned for in
your retirement income strategy.
Speaker 1 (08:23):
Well, and there's a point where you don't have to
take on too much risk, right if you've saved well
and you've planned well for retirement, you know, ed think
one of our founders used to always say a lot
of people can mistake a bull market for Brain's right, Like,
you check that portfolio, it's going up and up and up,
and then you start to feel like you can do
(08:43):
no wrong and you start taking on more and more risk.
Put more of my money in the market, chase this return,
invests in this individual company. I heard about cryptocurrency, and
I want to go all in on that. Whatever that
looks like for you, I've seen it happen where the
right bubble burst. When that happened, you know, Noah family,
(09:04):
who would have been able to retire probably a decade early.
They went all in on that, got a little bit greedy,
and it came back and bit them. They ended up
working another decade longer than they had planned because they
were chasing returns and they got a little too greedy.
Speaker 3 (09:21):
Yeah, greed. And then you know the term recency bias.
Are two big risks that we need to help clients mitigate.
You know, the fear of missing out, the thought that hey,
this went up by fifty percent over the last eighteen months,
it's going to continue to go there, and I need
to get on that train. That's a risk that we
(09:42):
you know, have to coach people through sometimes, you know,
and then.
Speaker 1 (09:45):
I think about the third bucket of people, and these
are we were talking about, being educated and knowledgeable.
Speaker 2 (09:52):
They have a plan.
Speaker 1 (09:53):
You know, when I think about those who are either
too conservative or too aggressive, one of the things is
what you forget about is a normal market cycle. Every
four to six years, there's going to be a twenty
percent downturn.
Speaker 2 (10:06):
If you're too aggressive, right, that's going to hit you hard.
Speaker 1 (10:10):
And if you're too conservative, then you're not going to
be able to take advantage of the upswing coming out
out of that market downturn. So, first of all, understanding
market cycles is one part of this, but second of all,
having a plan where you know how much risk you're
going to need to take in order to meet your
goals and to have a successful plan where there are
(10:32):
dollars there left when you could potentially be in your nineties.
Speaker 2 (10:35):
That kind of education when it comes to fear and.
Speaker 1 (10:39):
Greed, can completely overpower those emotions in a really, really
good way.
Speaker 3 (10:45):
Yeah, it comes down to telling your money what it
needs to do for you and when, And a lot
of times we find portfolios get way oversimplified. Somebody does
a simple risk questionnaire and says, well, I'm a sixty
five investors sixty percent stop, I'm throwing the whole thing
in sixty forty and that's going to solve all my
problems for the rest of my life. Not necessarily meaning.
(11:09):
We've got clients and we talk to them all the time,
and one of the things we ask is what is
your vacation budget? What is your home improvement budget? When
do you need to replace vehicles? Well, things that have
a twelve to eighteen to twenty four month you know,
time horizon. That shouldn't be an all stop. Yeah, should
be in the mind I like to use when I'm
(11:32):
advising clients a bucket approach. Again, Let's let's identify what
little blocks of money need to be used when, and
then plan accordingly in terms of the amount of risk
we are and are not taking that with that chunk
of money designed for a specific purpose.
Speaker 2 (11:49):
Here's the all Worth advice. By recognizing and addressing right these.
Speaker 1 (11:53):
Kind of psychological traps that everyone can fall into and
that could really influence your money decisions, you can definitely
develop a more balanced approach to your money and your
financial planning. Coming up next, speaking of financial planning, We're
going to work on aligning your investment strategy with your
money goals.
Speaker 2 (12:13):
That's next.
Speaker 1 (12:13):
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
you Wagner along with Bob sponseller. If you have to
miss our show one night, you don't have to miss
anything we're talking about because we have a daily podcast
(12:34):
for you. Just search Simply Money. It's on the iHeart
app or wherever you get your podcast. Coming up at
six forty three Retirement fact or fiction with a focus.
Speaker 2 (12:43):
On long term care and life insurance.
Speaker 1 (12:46):
This is an area that I get lots and lots
of questions about, so we'll get to that in just
a few minutes. You know, when it comes to retirements,
you know there are there's not a one size fits
all approach to everyone's goals. There are those two want
to retire comfortably, sure, but beyond that, many you know,
want to maintain their current lifestyle, or to be able
to travel more, or to start legacy planning for the
(13:10):
next generation and for their loved ones. Right, there can
be lots of different goals here, and that's kind of
where we start as financial planners, right, We're figuring out
what are your goals, and then what is the investment
strategy that we need to help you employ to get
you there.
Speaker 3 (13:28):
Yeah, and this is a conversation that should be at
the beginning of any new relationship with your financial advisor.
And this is where I always put my foot down.
You know, typically in a first meeting with a client,
I'm talking to one of the spouses, but not both, uh,
And I won't get into the male and female thing
because it's different for each and though it is assuming
(13:50):
the couple's married. Yeah, but at some point when it
comes time to talk about real goal setting, you better
have both spouses in the room and looking them both
in the eye and getting this stuff down and writing
on how they're thinking and feeling about their goals. Because
I've made this mistake before, Amy, I've had a husband
(14:10):
come in and say, well, my wife and I agree
on this goal and this goal and this goal, and
I start to build a financial plan and then when
I finally get her in a meeting, things quickly take it.
Speaker 2 (14:25):
Is that feel quite right to her?
Speaker 3 (14:27):
No? No, And we both know that well, they're both
going to have a seat at the table, and they're
both going to have a vote, and sometimes that vote
is more than fifty to fifty in one direction, if
you know what I mean. So you better get both
spouses on board and do some real listening, real goal setting,
(14:48):
and quantify what's important to both spouses in the relationship.
Speaker 4 (14:53):
Yeah.
Speaker 1 (14:53):
And I think there's different things that are important to
you at different points in your life when it comes
to money. You know, one of them is growing your money,
one of them is protecting your money. But it can
even get more nuanced than that. Do you need your
investments to generate income for you?
Speaker 2 (15:10):
Right?
Speaker 1 (15:10):
That's another option, And so you kind of get start
thinking through what do we really really need this money
to do for us? And there's different strategies that we
can employ depending on what your goal is for those dollars.
Speaker 3 (15:24):
Yeah, and it goes back to what I talked about
in the last segment. And you know, this is the
hill that I'm always going to die on, is we
got to tell our money what's supposed to do for
us and win. And there are different timeframes and different
uses for money, and therefore there should be different amounts
of risk that we take with each bucket of money,
depending on the timing and what it's supposed to do
(15:47):
for us.
Speaker 1 (15:47):
And I think, as you're thinking through what your goals are,
there's a few things I want to make sure that
you're taking into account. I come across lots of people
who do their own retirement planning. They've got color coded
space and sheets, you know, Excels with eighty seven different tabs,
but sometimes they miss certain things like planning for inflation,
(16:09):
planning for health care.
Speaker 2 (16:10):
Costs, and retirement.
Speaker 1 (16:12):
So one of the ways that we build our plans
at all Worth is that the cost of healthcare inflates
at a faster rate than your.
Speaker 2 (16:18):
Normal basic living expenses.
Speaker 1 (16:20):
Why Well, because that's what happens in reality for anyone
who has.
Speaker 2 (16:24):
Had a cope. Your prescription is specialist that you've had
to pay. You already get this.
Speaker 1 (16:29):
And so these are the kinds of things that we're
thinking through as we need to assign a.
Speaker 2 (16:33):
Job for our dollars.
Speaker 1 (16:35):
They have to grow to outpace inflation, to outpass out
or outpace what healthcare is going to cost in the future.
Speaker 3 (16:43):
Well, and Amy, as you walk through that, I think
of health savings accounts, And I know that's something that
you talk about at nauseum with you're done, so you
do a great job on it. You could and probably should,
do seminars on that topic, you're so well versed on it.
But it's a great planning point, the triple tax advantage
of taking advantage of your HSA account. The money goes
(17:05):
in tax deferred, it grows tax free, and if use
for qualified medical expenses, the money comes out tax free.
And we all know, you know, we're all going to
need money for healthcare costs at some point. Why not
cut the irs out of our health care spending.
Speaker 1 (17:22):
Yeah, you know, as we talk about to the different
buckets right that you that you can have as.
Speaker 2 (17:28):
You get closer to retirement, one of the reasons why
you want.
Speaker 1 (17:30):
To do that is because there's tax implications, you know,
tied to each of those buckets of money. For instance,
you know, I'm working with some younger folks right now.
Speaker 2 (17:39):
In one of the goals is that they want.
Speaker 1 (17:41):
To retire early. Okay, Well, if you want to retire
before the age of fifty nine and a half, and
you're salking away a ton.
Speaker 2 (17:48):
Of money, but it's all in a four to one k.
Speaker 1 (17:51):
The problem is you're going to pay a ten percent
penalty on those dollars if you try to touch them
before fifty nine and a half. So one of the
buckets we can put money in is in a tax accounts,
which is taxed. You know, if that money isn't there
for more than a year long term capital gains, that
can be a great asset for you.
Speaker 2 (18:08):
I love Wroth dollars where at.
Speaker 1 (18:10):
The point that you convert that money or you put
the money into that Wroth account, yes, you're paying taxes now,
but that growth is tax free. The more buckets that
you have, the more options you have later in life.
Speaker 3 (18:22):
Great point. And another thing to consider, and something we
talk about with our clients all the time is Wroth
conversion strategies. And this gets into actual income planning versus
just saying do I have enough to retire? Those are
two completely different conversations, and it gets into tax efficiency
and from from where, you know, where should we take
(18:44):
the money from. For example, if you're retiring at age
sixty two and you've got plenty of money to retire,
and to your point, Amy, you've got a bunch of
money socked away and there's four to one K plans.
You've got till age seventy three where the require minimum
distribution start. While that run between sixty two and seventy three,
there might be some years in there where your tax
(19:05):
bracket drops and we can get very strategic about doing
some WROTH conversions in those years and say, folks, quite
a bit of money down the road.
Speaker 4 (19:15):
Yeah.
Speaker 1 (19:15):
And you know, as a fiduciary, these are the conversations
that if you're working with someone, they should be having
with you. It always makes me sad when someone ends
up in my office who has been working with another
advisor for years and all they were talking about was
the investment strategy, their returns. You know, maybe they're checking
in once a year, oh hey your accounts did really
well this year, but they're not having these conversations. Which
(19:38):
the more you're thinking through these things, the more options
you give yourself when you get close to retirement. Here's
the all Worth Advice retirement planning. Understand this. It is
not a one size fits all approach. It requires careful
consideration of your goals, your family's future, and the potential
risks you may face along the way. Coming up next
with taking a deep dive into reverse mortgages. Maybe this
(19:59):
is something that's so someone is talking to your parents about.
We want you to fully understand these you're listening to
Simply Money presented by all Worth Financial here on fifty
five KRC, the talk station.
Speaker 2 (20:13):
You're listening to.
Speaker 1 (20:14):
Simply Money presented by all Worth Financial, Ammy Wagner along
with Bob Sponseller. Every once in a while, someone ends
up in my office who just for whatever reason hasn't
been able to save a lot of retirement assets, a
lot of investments, and they have some concern.
Speaker 2 (20:30):
About, you know, how am I going to make this work?
Speaker 1 (20:33):
What could you rely on the equity in your home.
Joining us tonight is Britt Scarce, our credit expert, to
kind of walk us down the path of reverse mortgages,
what they are and who they can make sense for
brit this is not something that we kind of want
to have to do, but it is an option for
(20:55):
those in certain circumstances.
Speaker 4 (20:58):
That's right, Amy. You know a lot of folks are
being approached with these reverse mortgage products. You know, once
you get into your golden years and you know, you know,
maybe you've lived in your home for a long time
and you have a lot of home equity built up,
or maybe you've paid off your home. A lot of
folks are being approached by reverse mortgage offers, and of
(21:20):
course you see it on the TV. You know, some
of your favorite actors are hawking these. So a lot
of people have curiosities about it. And and some people,
you know, they've been they've heard things that aren't true
about reverse mortgages, you know, like you know, like you know,
you sign over your house to the bank, and you
know you're you know, that sort of thing. And a
lot of a lot of children, you know, with elderly parents,
(21:44):
you know, think that somehow their their parents are going
to be kicked out of their home and that sort
of thing. So let's let's kind of, you know, debunk
some of those. So reverse mortgage is basically a mortgage
product that allows someone who is over the age of
sixty two to access the equity that's in their home.
So they either have to have quite a bit of equity.
They could still have a mortgage that they're continuing to pay,
(22:06):
but you have to have a lot of equity in
their home, or they have to have a free and
clear home. And this product allows you to tap into
that home equity that you have in your home to
assist you with living expenses. It can also be used
for purchasing a property. Sometimes people sell a house and
want to purchase another one and they could use a
reverse mortgage to purchase another home to retire in. And
(22:30):
there's and there's multiple ways that you can access the
funds from a reverse mortgage. You could set it up
as a line of credit, use it as needed. You
can get a lump sum and the money sits there
in a cruise interest and so forth. Or you can
get basically the equivalent of like an annuity payment, you know,
monthly payments on a monthly basis as part of your equity.
(22:52):
Now the way, there is no there are no monthly
payments required from the homeowner on these mortgages, which is
a big difference from an normal mortgage. You know, normally,
when you have mortgage, you think I have to make
a monthly payment. On a reverse mortgage, you're not doing that.
You're you're actually utilizing the home equity in your home
to pull some equity out, either in a lumsum line
of credit or in a monthly amount, and you don't
(23:12):
make payments on that mortgage. The balance on the mortgage
grows on a monthly basis and in a crew's interest,
and the money isn't paid back until the homeowner either
decides to sell the property or they pass away. So
that's that's kind of the gist of it.
Speaker 3 (23:29):
Now, all right, great job you're giving us a sorry
for interrupting. You've done a great job of giving us
a very quick overview of what the product is and
how it works in your practice of dealing with clients
in the greater Cincinnati area. What would you say are
the one or two most popular applications of this strategy
(23:50):
from folks that you deal with here in Cincinnati.
Speaker 4 (23:55):
So let's say you find yourself in your sixties, you know, sixty,
I'm seventy years old or something like that. You know,
you're a little bit older, and maybe you didn't save
quite enough money for retirement and you're on a fixed income.
Maybe you have a pension or you have Social Security
and it's not quite enough with all the inflation that
we've seen over you know, the last few years, but
(24:16):
the cost of living is much more expensive, and maybe
you have prescription you know, expenses and things like that
that are kind of costing you a lot every month
and making things tight. Well, if you have a home
that has equity in it or it's completely paid off,
a reverse mortgage would give you the access to some
of that home equity to give you some relief there. Now,
(24:37):
I've also seen folks that maybe they are almost done
paying off their mortgage, but because they're on a fixed income,
they're struggling to make the mortgage payment and with the
other cost of living. This is a way to basically
refinance your forward mortgage, your current mortgage on your house,
and put it into a reverse mortgage, and then that
(24:58):
would eliminate monthly payments. Now, the only thing that you
have to really make sure that you still take care
of with a reverse mortgage. You don't have monthly payments
on the reverse mortgage, but you do still have to
maintain the home and pay it for insurance and property taxes.
Speaker 2 (25:11):
Okay, bred, I want to run something by you.
Speaker 1 (25:13):
Okay, So many times we'll have someone who has saved
enough as long as something major doesn't go wrong, like
they end up in assisted living or a nursing home
for two years, right.
Speaker 2 (25:29):
Like they don't have the investment assets to cover that
could they do a reverse.
Speaker 1 (25:35):
Mortgage on their home, but not tap it and have
it there as the potential safety net if they need it,
or would they wait until they got to that place.
Speaker 4 (25:47):
Yes, you would want to put that in place ahead
of time, and you can set up a reverse mortgage
as a line of credit, which case it's there and
it only is going to you know, crew a balance
or interest if you use it, just like a normal
line of credit. The difference between a reverse mortgage line
of credit option and let's say going to your bank
(26:11):
or credit union and just obtaining it a normal home
equity line of credit. With a normal home equity line
of credit, you're going to have to make, you know,
a monthly payment and pay that money back. With a
reverse you could actually utilize the reverse mortgage line of
credit as needed, and that abount would would grow in
(26:31):
a crew, but you would not need to make any
monthly payments unless you want it to. There is an
option you can make payments on it if you wanted to,
but most most of the time it's it's there to
be able to use and tap into without having to
make any payments on it. So that is an option there, all.
Speaker 3 (26:48):
Right, Hey, Britt, in a couple of minutes we have
left you talked about at the top here. These are
products and strategies that are marketed often you know, on
TV news and all that. So what are a couple
of the watchouts that we got to let people know about?
You know, a lot of times any of these products
that are sold and marketed, everything's not always disclosed up front.
(27:10):
What do we need to watch out for when we
consider one of these things?
Speaker 4 (27:15):
Well, the only downsides that I really you know, see, obviously,
people don't like to have to utilize you know, a
lot of folks want to be able to leave their
you know, their home equity and their home and assets
to their you know, to their errors. And one of
the misconceptions out Yeah, one of the things people think
that all you know, mom and dad are going to
you know use up all the home equity you know
(27:37):
in their home and I'm not going to be left
with anything. So a lot of a lot of you know,
kids sometimes you know, have fears about that. But with
a reverse mortgage, typically they're only going to be able
to utilize between you know, forty and seventy percent of
the equity in their home over time. So they're not
going to be utilizing all of the home equity in
the home. So that's that kind of dispels that a
(27:58):
little bit. There's still going to be most likely equity
available after you know, mom and Dad were to pass away.
But some of the downsides, you know, these are somewhat
expensive to set up. I mean, you could you could
possibly be looking you know at eight to fifteen thousand
dollars to you know, to set up a reverse mortgage,
just in the upfront costs of the closing costs, the
(28:18):
upfront mortgage insurance premium. These these are insured by by FAHA,
and you know, there are some upfront costs and so
forth for setting them up. But once they're set up,
you know, they can be a real blessing to folks.
But you know, you do have to make sure that
you don't have like financial you know, investment advisors trying
(28:41):
to encourage people to get a reverse mortgage to invest
you know in the market and that sort of thing.
But you've got to make sure that that kind of
predatory stuff is not happening in order to obtain a
reverse mortgage. A lot of this is done in the
uh the counseling that is required to obtain a reverse mortgage.
You have to take how to Prove counseling course that
(29:01):
does kind and give you a lot of these You
know a heads up on a lot of this stuff,
But you.
Speaker 1 (29:06):
Think it's important to educate yourself right If this sounds
like a situation that you could find yourself and fully
educate yourself on, you know what this would mean for
you or potentially your parents whoever might be impacted by this.
Speaker 2 (29:18):
Great advice as always on reverse mortgages from Britt Scares,
our credit expert.
Speaker 1 (29:22):
You're listening to Simply Money presented by all Worth Financial
here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
Wagner along with Bob Spontell or do you have a
financial questions.
Speaker 2 (29:38):
Keeping you up at night?
Speaker 1 (29:39):
Or maybe you and your spouse just are not on
the same page about it.
Speaker 2 (29:42):
We can help you out.
Speaker 1 (29:43):
There's a red button you can click them while you're
listening to the show. It's right there on the iHeart app.
Record your question.
Speaker 2 (29:48):
It's coming straight to us. Okay, retirement fact or fiction.
Speaker 1 (29:52):
But this is a slightly different slant on this than
we've ever taken before focusing on long term care and
life insure. And Bob, I like that we're doing this because,
as you know, this is a question that so many
people that we work with have. You can have the
best laid plan, but if you have not thought through
these issues, you know, it can really disrupt a plan.
Speaker 2 (30:13):
So let's get into these first. One fact or fiction.
Speaker 1 (30:17):
Long term care insurance premiums are tax deductible under certain conditions.
Speaker 4 (30:22):
That is a fact.
Speaker 3 (30:24):
The tax deductibility depends on your age, and there's a
bracket for that, just like there is for an income bracket,
So it depends on your age. The one thing I'll
say is some of these hybrid long term care insurance
policies typically do not qualify for tax deductible premiums.
Speaker 1 (30:42):
Well, I'm glad you brought up hybrid policies because that
takes us to the next fact or fiction. Hybrid insurance
products that can combine life insurance or annuities with long
term care benefits are the best policies.
Speaker 3 (30:58):
I'm never going to say fact or fiction here, you know,
and it's one of these It depends.
Speaker 1 (31:04):
And it often is that way in our industry, right
It does depend on your specific circumstances.
Speaker 3 (31:11):
There are pros and cons to both types of policies
that I will say that the hybrid policies are becoming
more popular because nobody likes to pile thousands of dollars
into long term care policies over the years and then no,
they're not going to get anything out of them unless
they actually use the policy. Those type of policies are
kind of like fire insurance. If your house doesn't burn down,
(31:33):
you never get anything out of it. The hybrid policies
have a life insurance component to them, where there is
a death benefit that in most cases pays you back
all the premiums you paid in plus a little bit.
So again it depends on your individual circumstances and your
individual financial plan.
Speaker 2 (31:51):
Factor fiction.
Speaker 1 (31:52):
You can aim a trust as the beneficiary of your
life insurance policy.
Speaker 3 (31:57):
Fact and we see that done more and more and more.
Folks using trust to avoid probate, and folks using trust
also because they're not particularly comfortable with leaving their kids
or grandkids a huge chunk of money all at once,
and that's where a trust can dole this money out
(32:20):
over time. It could put stipulations on when the heirs
get the money. Naming a trust as a beneficiary of
your life insurance policy can often be a great planning
opportunity if you.
Speaker 1 (32:31):
Were one of those people who it keeps you up
at night when you think about, oh, what about this
kid or what about their spouse, I don't trust whatever, like,
a trust can be a great tool for you to
have some control.
Speaker 2 (32:42):
Over what happens to your money after you're gone.
Speaker 1 (32:44):
So yes, you can absolutely name a trust as the
beneficiary of your life insurance policy.
Speaker 2 (32:49):
Fact or fiction.
Speaker 1 (32:50):
Once you purchase a life insurance or long term care policy,
your premium can never increase.
Speaker 3 (32:59):
That's another It depends on the policy. Folks you know
who buy whole life policies, and I mean whole life here.
That's one of the main benefits of it is you know,
you have a guarantee that if you pay this premium
for the rest of your life, you're always going to
have coverage, and that coverage is never going to increase.
(33:22):
What a lot of people I find get caught up
on is they buy, you know, and often for good reason,
by a twenty or thirty year or fifteen year level
term policy and you get underwritten there for a very
nice premium for a specific number of years. In most cases,
you know twenty or thirty years is going to give
(33:42):
you that runway to raise your kids and hopefully grow
assets to replace your need for life insurance. But if
all that doesn't happen, and then year twenty one comes
down the pike, boom, the premium goes up four or
five times, and no one saw it coming because no
one talked to their advisor and no one kept on
(34:03):
on top of your life insurance. So it's important to
just review your policies, know what you purchased, know what
the when the thing turns into a pumpkin sometimes so
to speak, and have a plan and knowing when.
Speaker 1 (34:18):
It should turn into a pumpkin. I'm glad we're talking
about this because I've actually weirdly come across this several
several times recently where someone ends up in my office
and there may be in their seventies, kids aren't relying
on them, there is no income, they have been fully retired,
they have Social Security benefits that are coming in, and
they've got good retirement assets, lots of investment assets. And
(34:42):
I asked like and they'll say, like, gosh, my premium
for this term policy.
Speaker 2 (34:45):
It's so expensive. I'm like, why are you paying it?
Speaker 1 (34:48):
You don't need to pay it. The point of that
life insurance policy has you know, you recovered all of
those years when if something were to happen you needed
your income or placed. At this point you don't need
so you do not need to pay these high premiums.
Speaker 3 (35:04):
Right, And that's why an annual review of your comprehensive
financial plan makes so much sense. And your advisor should
be doing that. I know we do that with all
of our clients. Things do change and do evolve, and
like all the other moving parts of your financial world,
all of this stuff needs to be looked at and
(35:24):
reviewed and then decisions should be made accordingly.
Speaker 1 (35:28):
Coming up next, are you phoning it in like face
in your phone all the time? What can that bean
to your money? We'll get into it. You're listening to
Simply Money presented by all Worth Financial here on fifty
five KRC the talk station. You're listening to Simply Money
presented by all Worth Financial. I mean you Wagner along
with Bob Sponseller. All right, this is a know yourself
(35:52):
kind of a situation. Self awareness here everyone, are you
buried in.
Speaker 2 (35:57):
Your phone day after day and maybe hardly.
Speaker 1 (36:01):
Realize that there are financial consequences to this, and I
think many of you aren't even thinking about them.
Speaker 3 (36:10):
Yeah, this is one of those things that makes me
pull out whatever remaining hair I have out of.
Speaker 2 (36:16):
My head, which isn't a lot, by the way, which
is a.
Speaker 1 (36:19):
Lot that they mean that.
Speaker 3 (36:21):
According to a recent Gallup survey, six and ten adults
say they use their smartphones too much. And here's the
shocking thing to me. According to a recent LinkedIn survey,
job candidates are increasingly looking at their phones during job interviews.
Amy help me here.
Speaker 1 (36:41):
Oh my god, I'm thinking about the fact that I
have four teenagers, two in college, one will be in
college next year, and I'm like, I would be so
mortified if I knew that my child went into a
job interview and could not keep their phone down. But listen,
this generation is different than we are, right. I always
say we're the first generation who didn't grow up with
(37:02):
these phones, who are raising kids who are make sure
first and foremost that they know when is time to
pick up the phone and when is it not not
during an interview, and certainly when they're working there shouldn't
be the concern that this person is never going to
get the work done because they constantly have their phone
in their face.
Speaker 3 (37:19):
That does not I swear, I'm going to sound like
the curmudgeon old man here. I have two words, grow up.
Speaker 2 (37:28):
I'm going to agree with you sitting in.
Speaker 3 (37:30):
If somebody's sitting in front of me interviewing for a
job and I see them start playing with their phone,
that interview is ov R. I don't care if you
have a PhD from Harvard and your resume just jumps off,
it's over. Because if you can't sit for twenty minutes
and have an adult conversation with somebody without looking at
(37:51):
your phone, I'm just thinking, imagine what you're going to
do when you're not under one hundred percent supervision throughout
the day. You're not going to be getting a whole
lot of work done for our company. Therefore, we've got
no use for you here.
Speaker 2 (38:04):
Yeah.
Speaker 1 (38:05):
Well, and I think your phone also probably makes you
spend more money than you would other size otherwise. And
I think this comes in two forms, the keeping up
with the joneses of I'm on social media and I'm
seeing this person that I went to college with and
they went on this vacation. Maybe I can't really afford it.
Speaker 2 (38:20):
But I mean they are, so we're gonna do that too.
Speaker 1 (38:23):
And then also these marketers are brilliant on social media.
Speaker 2 (38:26):
I don't even know how it happens.
Speaker 1 (38:27):
You speak a word and all of a sudden, something
about that pops up in your Facebook feed, and now you're.
Speaker 2 (38:33):
Going down this rabbit hole of how much does this cost?
And maybe I should buy this even if you don't
really need it.
Speaker 1 (38:39):
So you have to understand how smart phones affect how
you're spending.
Speaker 2 (38:44):
Money and put some controls in place. If you can't
ever put it down, well.
Speaker 3 (38:51):
Talk about some of the controls, Amy, because again I
need your help here.
Speaker 1 (38:55):
And there's different apps. And one of my best friends
call me about this last week. She said, I'm done
with my kids faces and their phones. But also I'm
doing it too. There are apps that can limit how
long you are on different social media platforms, different sites
that can help protect.
Speaker 2 (39:11):
You from these kinds of things. Here's the all Worth advice.
Speaker 1 (39:13):
Technology it can be a blessing and a curse. Do
your best to make sure it's not sucking your soul
dry and also your bank account Thanks for listening. You've
been listening to Simply Money and presented by all Worth
Financial here on fifty five KRC, the talk station
Tonight your mind and your money and does your investment
strategy match your retirement goals? And of course we've got
much more to talk about. You're listening to Simply Money
presented by all Worth Financial. I meany Wagner along with
Bob' sponseller, what is your money mindset and how could
it be affecting every money.
Speaker 2 (00:25):
Decision you make? What do we mean by that? Well, Bob,
I think let's get into this.
Speaker 1 (00:29):
You know, after we've been doing this for years and
years and years, you start to realize there's some categories
that some of the people.
Speaker 2 (00:36):
We work with tend to fall into. I would throw
one of those out there.
Speaker 1 (00:40):
As those who get to retirement and kind of want
to curl up in the feedo position around their money,
Meaning even if they had lots of market exposure when
they were working, once those paychecks stop coming in, they
want to pull everything out of the market and maybe
even put it under their mattress.
Speaker 3 (01:00):
Yeah, I mean you brought up categories of people we
work with. I mean the number one category of people
we work with is human beings.
Speaker 2 (01:08):
And good point.
Speaker 3 (01:09):
Human beings, like all of us, have emotions and especially
emotions around money, and we all know that fear and
greed are at the top of the list, and it
is totally natural as somewhat approaches retirement and then enters retirement,
when you go from not having a paycheck anymore to
your portfolio having to become your paycheck, you know, supplemented
(01:32):
by you know, things like social Security. That's a that's
a mindset change, and it requires an adjustment and a
lot of times a little bit of coaching from a
good fiduciary financial advisor.
Speaker 2 (01:43):
I had a.
Speaker 1 (01:43):
Couple of clients in my office a few weeks ago,
and they'll both retire sometime this year. The wife, the
reality of that money no longer coming in.
Speaker 2 (01:55):
Was actually in tears. She's so afraid of it.
Speaker 1 (01:59):
Even though we've run plan, their plan is successful, it
just makes her so nervous.
Speaker 2 (02:04):
And I don't think it doesn't matter if.
Speaker 1 (02:05):
You're you're thirty or sixty or seventy. I think this
is a reality you have to plan for. There is
an emotional component to getting to this point, and I
think the way that you get around it and find
really the right place for you, as far as how
much stock versus bond exposure is educating yourself is knowledge
(02:27):
is understanding what your plan.
Speaker 2 (02:29):
Needs to work right, how much you have, how.
Speaker 1 (02:32):
Much you're going to need to spend every year, what
that draw down strategy looks like from those assets that
you've accumulated. That kind of knowledge can put a lot
of this fear to rest.
Speaker 3 (02:45):
And you hit on the right two terms Amy, in
my opinion, you know, education and knowledge. Education and knowledge,
and then an advisor that will actually listen to you
rather than just talk to you.
Speaker 4 (03:00):
Yeh.
Speaker 3 (03:01):
I find that that brings the fear quotient down for
a lot of people. So let's talk about what we
mean by that. You talked about risk profile questionnaire. That's
where we start with a financial plan, talking about what
your money needs to do for you and when, and
then dovetail that with how much financial risk you're willing
(03:21):
to take on emotionally and how much your plan can
sustain or needs to take on in order to have
a high probability of meeting your goals. And what I
find is once we walk people through that process and
actually listen to people and listen to their fears and
their goals and their dreams, they walk out of the
office feeling much better about everything.
Speaker 1 (03:44):
You know, I was just thinking about this man who
several years ago would come to every all Worth workshop
that we would have sat in the front row, came
up to me after every single one of them with
the same question, I've worked really really hard for my money.
I want it to grow, but I don't want any risk.
(04:05):
What can I invest in? And I would be like,
I'm sorry, there's you know, there is inherently some risk
to being, you know, in the markets. I'm so grateful
for the evolution of our industry because now we can
have somewhat different conversations with the.
Speaker 2 (04:22):
People that we're working with. We've got options things like.
Speaker 1 (04:25):
Buffered ETFs that can protect you from the first fifteen
percent of the downside of a market, or you know,
structured nodes that you know, maybe that money is tied
up for some time, but there is potentially more of
an upside to it than a downside.
Speaker 2 (04:38):
So we have more options.
Speaker 1 (04:40):
Now, I think than we ever have for those who
do get to this place in retirement and are really
really nervous about having market exposure. Because my concern for
people who feel like that, and you mentioned kind of
that fear component is going broke safely in retirement, right
the cost of what we're buying is going to go
up every year in that form of inflation, and inflation
(05:03):
can be the silent killer of retirement. So we have
to make sure that your portfolios are growing enough in
retirement that it's not eroding your purchasing power and that
you're not having to go from eating out once a
week to eating raw and noodles every night exactly.
Speaker 3 (05:20):
And I'm thinking of one client in particular that I've
met with, you know, over the last several years, and
just like your client, amy huge fear of losing money.
Fortunately in this client situation, they they have spent or
they have saved and saved, and they're conservative enough and
they're spending that they really don't have to take on
(05:41):
a lot of risk and still have a ninety nine
percent chance of meeting all their goals. So you know what,
to your point, what we're able to do for them
is look at some things like structured notes where we
can give them one hundred percent one hundred percent guarantee
of getting their money back over a certain period of time,
(06:01):
but giving them a little bit of exposure to upside
where their portfolio can outpace inflation. To your point, of
the silent killer is inflation. You can feel safe while
the purchasing power of your money just erodes, and that's
not a good place to be either.
Speaker 1 (06:19):
You're listening to Simply Wheney presented by all Worth Financial.
I'm Ami Wagner along with Bob Spahn s Oeutler. You
do this job for long enough, you start to realize
that people can fall into different buckets, and as you're listening,
I would just ask you any idea.
Speaker 2 (06:31):
Where you fall. There are those who get really really.
Speaker 1 (06:35):
Conservative in retirement understandingly, so right, those paychecks aren't coming in,
that account balance isn't going up on that floor one
k because you're not making contributions anymore. We would say, hey,
you gotta find your kind of goldilocks point right, what's
your risk tolerance of how we can still make that
portfolio grow and also protect you.
Speaker 2 (06:55):
On the flip side, there are.
Speaker 1 (06:57):
Those who are soonop were risky, always chasing returns. Bob,
you mentioned those those two number one emotions that kind
of can really harm you when it comes to your money,
Fear and greed. Well, these are the people that tend
to react to greed.
Speaker 3 (07:16):
Yeah, and a lot of our you know, more affluent
successful clients, and I mean successful meaning financially successful. There
are a lot of different definitions of success. We're talking
about people that have saved and invested well and have accumulated,
you know, a nice sizable estate and wealth. What we
(07:36):
find sometimes with those folks is they are so entrepreneurial,
and you know, they love to do projects, and they
love to invent, and they just love to make things
happen that they forget about the possibility of investment volatility
when they retire and you know, when that paycheck's coming in,
you're not too worried about market volatility because we're always
(07:59):
taught and we know inherently that the market what it
always comes.
Speaker 2 (08:03):
Back yep, rebound the new highs.
Speaker 3 (08:05):
Yeah. But when you have to turn that life's work
in that portfolio now into a paycheck, there's just some
simple mathematics that come into play where volatility needs to
at least be talked about, Yeah, and planned for in
your retirement income strategy.
Speaker 1 (08:23):
Well, and there's a point where you don't have to
take on too much risk, right if you've saved well
and you've planned well for retirement, you know, ed think
one of our founders used to always say a lot
of people can mistake a bull market for Brain's right, Like,
you check that portfolio, it's going up and up and up,
and then you start to feel like you can do
(08:43):
no wrong and you start taking on more and more risk.
Put more of my money in the market, chase this return,
invests in this individual company. I heard about cryptocurrency, and
I want to go all in on that. Whatever that
looks like for you, I've seen it happen where the
right bubble burst. When that happened, you know, Noah family,
(09:04):
who would have been able to retire probably a decade early.
They went all in on that, got a little bit greedy,
and it came back and bit them. They ended up
working another decade longer than they had planned because they
were chasing returns and they got a little too greedy.
Speaker 3 (09:21):
Yeah, greed. And then you know the term recency bias.
Are two big risks that we need to help clients mitigate.
You know, the fear of missing out, the thought that hey,
this went up by fifty percent over the last eighteen months,
it's going to continue to go there, and I need
to get on that train. That's a risk that we
(09:42):
you know, have to coach people through sometimes, you know,
and then.
Speaker 1 (09:45):
I think about the third bucket of people, and these
are we were talking about, being educated and knowledgeable.
Speaker 2 (09:52):
They have a plan.
Speaker 1 (09:53):
You know, when I think about those who are either
too conservative or too aggressive, one of the things is
what you forget about is a normal market cycle. Every
four to six years, there's going to be a twenty
percent downturn.
Speaker 2 (10:06):
If you're too aggressive, right, that's going to hit you hard.
Speaker 1 (10:10):
And if you're too conservative, then you're not going to
be able to take advantage of the upswing coming out
out of that market downturn. So, first of all, understanding
market cycles is one part of this, but second of all,
having a plan where you know how much risk you're
going to need to take in order to meet your
goals and to have a successful plan where there are
(10:32):
dollars there left when you could potentially be in your nineties.
Speaker 2 (10:35):
That kind of education when it comes to fear and.
Speaker 1 (10:39):
Greed, can completely overpower those emotions in a really, really
good way.
Speaker 3 (10:45):
Yeah, it comes down to telling your money what it
needs to do for you and when, And a lot
of times we find portfolios get way oversimplified. Somebody does
a simple risk questionnaire and says, well, I'm a sixty
five investors sixty percent stop, I'm throwing the whole thing
in sixty forty and that's going to solve all my
problems for the rest of my life. Not necessarily meaning.
(11:09):
We've got clients and we talk to them all the time,
and one of the things we ask is what is
your vacation budget? What is your home improvement budget? When
do you need to replace vehicles? Well, things that have
a twelve to eighteen to twenty four month you know,
time horizon. That shouldn't be an all stop. Yeah, should
be in the mind I like to use when I'm
(11:32):
advising clients a bucket approach. Again, Let's let's identify what
little blocks of money need to be used when, and
then plan accordingly in terms of the amount of risk
we are and are not taking that with that chunk
of money designed for a specific purpose.
Speaker 2 (11:49):
Here's the all Worth advice. By recognizing and addressing right these.
Speaker 1 (11:53):
Kind of psychological traps that everyone can fall into and
that could really influence your money decisions, you can definitely
develop a more balanced approach to your money and your
financial planning. Coming up next, speaking of financial planning, We're
going to work on aligning your investment strategy with your
money goals.
Speaker 2 (12:13):
That's next.
Speaker 1 (12:13):
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
you Wagner along with Bob sponseller. If you have to
miss our show one night, you don't have to miss
anything we're talking about because we have a daily podcast
(12:34):
for you. Just search Simply Money. It's on the iHeart
app or wherever you get your podcast. Coming up at
six forty three Retirement fact or fiction with a focus.
Speaker 2 (12:43):
On long term care and life insurance.
Speaker 1 (12:46):
This is an area that I get lots and lots
of questions about, so we'll get to that in just
a few minutes. You know, when it comes to retirements,
you know there are there's not a one size fits
all approach to everyone's goals. There are those two want
to retire comfortably, sure, but beyond that, many you know,
want to maintain their current lifestyle, or to be able
to travel more, or to start legacy planning for the
(13:10):
next generation and for their loved ones. Right, there can
be lots of different goals here, and that's kind of
where we start as financial planners, right, We're figuring out
what are your goals, and then what is the investment
strategy that we need to help you employ to get
you there.
Speaker 3 (13:28):
Yeah, and this is a conversation that should be at
the beginning of any new relationship with your financial advisor.
And this is where I always put my foot down.
You know, typically in a first meeting with a client,
I'm talking to one of the spouses, but not both, uh,
And I won't get into the male and female thing
because it's different for each and though it is assuming
(13:50):
the couple's married. Yeah, but at some point when it
comes time to talk about real goal setting, you better
have both spouses in the room and looking them both
in the eye and getting this stuff down and writing
on how they're thinking and feeling about their goals. Because
I've made this mistake before, Amy, I've had a husband
(14:10):
come in and say, well, my wife and I agree
on this goal and this goal and this goal, and
I start to build a financial plan and then when
I finally get her in a meeting, things quickly take it.
Speaker 2 (14:25):
Is that feel quite right to her?
Speaker 3 (14:27):
No? No, And we both know that well, they're both
going to have a seat at the table, and they're
both going to have a vote, and sometimes that vote
is more than fifty to fifty in one direction, if
you know what I mean. So you better get both
spouses on board and do some real listening, real goal setting,
(14:48):
and quantify what's important to both spouses in the relationship.
Speaker 4 (14:53):
Yeah.
Speaker 1 (14:53):
And I think there's different things that are important to
you at different points in your life when it comes
to money. You know, one of them is growing your money,
one of them is protecting your money. But it can
even get more nuanced than that. Do you need your
investments to generate income for you?
Speaker 2 (15:10):
Right?
Speaker 1 (15:10):
That's another option, And so you kind of get start
thinking through what do we really really need this money
to do for us? And there's different strategies that we
can employ depending on what your goal is for those dollars.
Speaker 3 (15:24):
Yeah, and it goes back to what I talked about
in the last segment. And you know, this is the
hill that I'm always going to die on, is we
got to tell our money what's supposed to do for
us and win. And there are different timeframes and different
uses for money, and therefore there should be different amounts
of risk that we take with each bucket of money,
depending on the timing and what it's supposed to do
(15:47):
for us.
Speaker 1 (15:47):
And I think, as you're thinking through what your goals are,
there's a few things I want to make sure that
you're taking into account. I come across lots of people
who do their own retirement planning. They've got color coded
space and sheets, you know, Excels with eighty seven different tabs,
but sometimes they miss certain things like planning for inflation,
(16:09):
planning for health care.
Speaker 2 (16:10):
Costs, and retirement.
Speaker 1 (16:12):
So one of the ways that we build our plans
at all Worth is that the cost of healthcare inflates
at a faster rate than your.
Speaker 2 (16:18):
Normal basic living expenses.
Speaker 1 (16:20):
Why Well, because that's what happens in reality for anyone
who has.
Speaker 2 (16:24):
Had a cope. Your prescription is specialist that you've had
to pay. You already get this.
Speaker 1 (16:29):
And so these are the kinds of things that we're
thinking through as we need to assign a.
Speaker 2 (16:33):
Job for our dollars.
Speaker 1 (16:35):
They have to grow to outpace inflation, to outpass out
or outpace what healthcare is going to cost in the future.
Speaker 3 (16:43):
Well, and Amy, as you walk through that, I think
of health savings accounts, And I know that's something that
you talk about at nauseum with you're done, so you
do a great job on it. You could and probably should,
do seminars on that topic, you're so well versed on it.
But it's a great planning point, the triple tax advantage
of taking advantage of your HSA account. The money goes
(17:05):
in tax deferred, it grows tax free, and if use
for qualified medical expenses, the money comes out tax free.
And we all know, you know, we're all going to
need money for healthcare costs at some point. Why not
cut the irs out of our health care spending.
Speaker 1 (17:22):
Yeah, you know, as we talk about to the different
buckets right that you that you can have as.
Speaker 2 (17:28):
You get closer to retirement, one of the reasons why
you want.
Speaker 1 (17:30):
To do that is because there's tax implications, you know,
tied to each of those buckets of money. For instance,
you know, I'm working with some younger folks right now.
Speaker 2 (17:39):
In one of the goals is that they want.
Speaker 1 (17:41):
To retire early. Okay, Well, if you want to retire
before the age of fifty nine and a half, and
you're salking away a ton.
Speaker 2 (17:48):
Of money, but it's all in a four to one k.
Speaker 1 (17:51):
The problem is you're going to pay a ten percent
penalty on those dollars if you try to touch them
before fifty nine and a half. So one of the
buckets we can put money in is in a tax accounts,
which is taxed. You know, if that money isn't there
for more than a year long term capital gains, that
can be a great asset for you.
Speaker 2 (18:08):
I love Wroth dollars where at.
Speaker 1 (18:10):
The point that you convert that money or you put
the money into that Wroth account, yes, you're paying taxes now,
but that growth is tax free. The more buckets that
you have, the more options you have later in life.
Speaker 3 (18:22):
Great point. And another thing to consider, and something we
talk about with our clients all the time is Wroth
conversion strategies. And this gets into actual income planning versus
just saying do I have enough to retire? Those are
two completely different conversations, and it gets into tax efficiency
and from from where, you know, where should we take
(18:44):
the money from. For example, if you're retiring at age
sixty two and you've got plenty of money to retire,
and to your point, Amy, you've got a bunch of
money socked away and there's four to one K plans.
You've got till age seventy three where the require minimum
distribution start. While that run between sixty two and seventy three,
there might be some years in there where your tax
(19:05):
bracket drops and we can get very strategic about doing
some WROTH conversions in those years and say, folks, quite
a bit of money down the road.
Speaker 4 (19:15):
Yeah.
Speaker 1 (19:15):
And you know, as a fiduciary, these are the conversations
that if you're working with someone, they should be having
with you. It always makes me sad when someone ends
up in my office who has been working with another
advisor for years and all they were talking about was
the investment strategy, their returns. You know, maybe they're checking
in once a year, oh hey your accounts did really
well this year, but they're not having these conversations. Which
(19:38):
the more you're thinking through these things, the more options
you give yourself when you get close to retirement. Here's
the all Worth Advice retirement planning. Understand this. It is
not a one size fits all approach. It requires careful
consideration of your goals, your family's future, and the potential
risks you may face along the way. Coming up next
with taking a deep dive into reverse mortgages. Maybe this
(19:59):
is something that's so someone is talking to your parents about.
We want you to fully understand these you're listening to
Simply Money presented by all Worth Financial here on fifty
five KRC, the talk station.
Speaker 2 (20:13):
You're listening to.
Speaker 1 (20:14):
Simply Money presented by all Worth Financial, Ammy Wagner along
with Bob Sponseller. Every once in a while, someone ends
up in my office who just for whatever reason hasn't
been able to save a lot of retirement assets, a
lot of investments, and they have some concern.
Speaker 2 (20:30):
About, you know, how am I going to make this work?
Speaker 1 (20:33):
What could you rely on the equity in your home.
Joining us tonight is Britt Scarce, our credit expert, to
kind of walk us down the path of reverse mortgages,
what they are and who they can make sense for
brit this is not something that we kind of want
to have to do, but it is an option for
(20:55):
those in certain circumstances.
Speaker 4 (20:58):
That's right, Amy. You know a lot of folks are
being approached with these reverse mortgage products. You know, once
you get into your golden years and you know, you know,
maybe you've lived in your home for a long time
and you have a lot of home equity built up,
or maybe you've paid off your home. A lot of
folks are being approached by reverse mortgage offers, and of
(21:20):
course you see it on the TV. You know, some
of your favorite actors are hawking these. So a lot
of people have curiosities about it. And and some people,
you know, they've been they've heard things that aren't true
about reverse mortgages, you know, like you know, like you know,
you sign over your house to the bank, and you
know you're you know, that sort of thing. And a
lot of a lot of children, you know, with elderly parents,
(21:44):
you know, think that somehow their their parents are going
to be kicked out of their home and that sort
of thing. So let's let's kind of, you know, debunk
some of those. So reverse mortgage is basically a mortgage
product that allows someone who is over the age of
sixty two to access the equity that's in their home.
So they either have to have quite a bit of equity.
They could still have a mortgage that they're continuing to pay,
(22:06):
but you have to have a lot of equity in
their home, or they have to have a free and
clear home. And this product allows you to tap into
that home equity that you have in your home to
assist you with living expenses. It can also be used
for purchasing a property. Sometimes people sell a house and
want to purchase another one and they could use a
reverse mortgage to purchase another home to retire in. And
(22:30):
there's and there's multiple ways that you can access the
funds from a reverse mortgage. You could set it up
as a line of credit, use it as needed. You
can get a lump sum and the money sits there
in a cruise interest and so forth. Or you can
get basically the equivalent of like an annuity payment, you know,
monthly payments on a monthly basis as part of your equity.
(22:52):
Now the way, there is no there are no monthly
payments required from the homeowner on these mortgages, which is
a big difference from an normal mortgage. You know, normally,
when you have mortgage, you think I have to make
a monthly payment. On a reverse mortgage, you're not doing that.
You're you're actually utilizing the home equity in your home
to pull some equity out, either in a lumsum line
of credit or in a monthly amount, and you don't
(23:12):
make payments on that mortgage. The balance on the mortgage
grows on a monthly basis and in a crew's interest,
and the money isn't paid back until the homeowner either
decides to sell the property or they pass away. So
that's that's kind of the gist of it.
Speaker 3 (23:29):
Now, all right, great job you're giving us a sorry
for interrupting. You've done a great job of giving us
a very quick overview of what the product is and
how it works in your practice of dealing with clients
in the greater Cincinnati area. What would you say are
the one or two most popular applications of this strategy
(23:50):
from folks that you deal with here in Cincinnati.
Speaker 4 (23:55):
So let's say you find yourself in your sixties, you know, sixty,
I'm seventy years old or something like that. You know,
you're a little bit older, and maybe you didn't save
quite enough money for retirement and you're on a fixed income.
Maybe you have a pension or you have Social Security
and it's not quite enough with all the inflation that
we've seen over you know, the last few years, but
(24:16):
the cost of living is much more expensive, and maybe
you have prescription you know, expenses and things like that
that are kind of costing you a lot every month
and making things tight. Well, if you have a home
that has equity in it or it's completely paid off,
a reverse mortgage would give you the access to some
of that home equity to give you some relief there. Now,
(24:37):
I've also seen folks that maybe they are almost done
paying off their mortgage, but because they're on a fixed income,
they're struggling to make the mortgage payment and with the
other cost of living. This is a way to basically
refinance your forward mortgage, your current mortgage on your house,
and put it into a reverse mortgage, and then that
(24:58):
would eliminate monthly payments. Now, the only thing that you
have to really make sure that you still take care
of with a reverse mortgage. You don't have monthly payments
on the reverse mortgage, but you do still have to
maintain the home and pay it for insurance and property taxes.
Speaker 2 (25:11):
Okay, bred, I want to run something by you.
Speaker 1 (25:13):
Okay, So many times we'll have someone who has saved
enough as long as something major doesn't go wrong, like
they end up in assisted living or a nursing home
for two years, right.
Speaker 2 (25:29):
Like they don't have the investment assets to cover that
could they do a reverse.
Speaker 1 (25:35):
Mortgage on their home, but not tap it and have
it there as the potential safety net if they need it,
or would they wait until they got to that place.
Speaker 4 (25:47):
Yes, you would want to put that in place ahead
of time, and you can set up a reverse mortgage
as a line of credit, which case it's there and
it only is going to you know, crew a balance
or interest if you use it, just like a normal
line of credit. The difference between a reverse mortgage line
of credit option and let's say going to your bank
(26:11):
or credit union and just obtaining it a normal home
equity line of credit. With a normal home equity line
of credit, you're going to have to make, you know,
a monthly payment and pay that money back. With a
reverse you could actually utilize the reverse mortgage line of
credit as needed, and that abount would would grow in
(26:31):
a crew, but you would not need to make any
monthly payments unless you want it to. There is an
option you can make payments on it if you wanted to,
but most most of the time it's it's there to
be able to use and tap into without having to
make any payments on it. So that is an option there, all.
Speaker 3 (26:48):
Right, Hey, Britt, in a couple of minutes we have
left you talked about at the top here. These are
products and strategies that are marketed often you know, on
TV news and all that. So what are a couple
of the watchouts that we got to let people know about?
You know, a lot of times any of these products
that are sold and marketed, everything's not always disclosed up front.
(27:10):
What do we need to watch out for when we
consider one of these things?
Speaker 4 (27:15):
Well, the only downsides that I really you know, see, obviously,
people don't like to have to utilize you know, a
lot of folks want to be able to leave their
you know, their home equity and their home and assets
to their you know, to their errors. And one of
the misconceptions out Yeah, one of the things people think
that all you know, mom and dad are going to
you know use up all the home equity you know
(27:37):
in their home and I'm not going to be left
with anything. So a lot of a lot of you know,
kids sometimes you know, have fears about that. But with
a reverse mortgage, typically they're only going to be able
to utilize between you know, forty and seventy percent of
the equity in their home over time. So they're not
going to be utilizing all of the home equity in
the home. So that's that kind of dispels that a
(27:58):
little bit. There's still going to be most likely equity
available after you know, mom and Dad were to pass away.
But some of the downsides, you know, these are somewhat
expensive to set up. I mean, you could you could
possibly be looking you know at eight to fifteen thousand
dollars to you know, to set up a reverse mortgage,
just in the upfront costs of the closing costs, the
(28:18):
upfront mortgage insurance premium. These these are insured by by FAHA,
and you know, there are some upfront costs and so
forth for setting them up. But once they're set up,
you know, they can be a real blessing to folks.
But you know, you do have to make sure that
you don't have like financial you know, investment advisors trying
(28:41):
to encourage people to get a reverse mortgage to invest
you know in the market and that sort of thing.
But you've got to make sure that that kind of
predatory stuff is not happening in order to obtain a
reverse mortgage. A lot of this is done in the
uh the counseling that is required to obtain a reverse mortgage.
You have to take how to Prove counseling course that
(29:01):
does kind and give you a lot of these You
know a heads up on a lot of this stuff,
But you.
Speaker 1 (29:06):
Think it's important to educate yourself right If this sounds
like a situation that you could find yourself and fully
educate yourself on, you know what this would mean for
you or potentially your parents whoever might be impacted by this.
Speaker 2 (29:18):
Great advice as always on reverse mortgages from Britt Scares,
our credit expert.
Speaker 1 (29:22):
You're listening to Simply Money presented by all Worth Financial
here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
Wagner along with Bob Spontell or do you have a
financial questions.
Speaker 2 (29:38):
Keeping you up at night?
Speaker 1 (29:39):
Or maybe you and your spouse just are not on
the same page about it.
Speaker 2 (29:42):
We can help you out.
Speaker 1 (29:43):
There's a red button you can click them while you're
listening to the show. It's right there on the iHeart app.
Record your question.
Speaker 2 (29:48):
It's coming straight to us. Okay, retirement fact or fiction.
Speaker 1 (29:52):
But this is a slightly different slant on this than
we've ever taken before focusing on long term care and
life insure. And Bob, I like that we're doing this because,
as you know, this is a question that so many
people that we work with have. You can have the
best laid plan, but if you have not thought through
these issues, you know, it can really disrupt a plan.
Speaker 2 (30:13):
So let's get into these first. One fact or fiction.
Speaker 1 (30:17):
Long term care insurance premiums are tax deductible under certain conditions.
Speaker 4 (30:22):
That is a fact.
Speaker 3 (30:24):
The tax deductibility depends on your age, and there's a
bracket for that, just like there is for an income bracket,
So it depends on your age. The one thing I'll
say is some of these hybrid long term care insurance
policies typically do not qualify for tax deductible premiums.
Speaker 1 (30:42):
Well, I'm glad you brought up hybrid policies because that
takes us to the next fact or fiction. Hybrid insurance
products that can combine life insurance or annuities with long
term care benefits are the best policies.
Speaker 3 (30:58):
I'm never going to say fact or fiction here, you know,
and it's one of these It depends.
Speaker 1 (31:04):
And it often is that way in our industry, right
It does depend on your specific circumstances.
Speaker 3 (31:11):
There are pros and cons to both types of policies
that I will say that the hybrid policies are becoming
more popular because nobody likes to pile thousands of dollars
into long term care policies over the years and then no,
they're not going to get anything out of them unless
they actually use the policy. Those type of policies are
kind of like fire insurance. If your house doesn't burn down,
(31:33):
you never get anything out of it. The hybrid policies
have a life insurance component to them, where there is
a death benefit that in most cases pays you back
all the premiums you paid in plus a little bit.
So again it depends on your individual circumstances and your
individual financial plan.
Speaker 2 (31:51):
Factor fiction.
Speaker 1 (31:52):
You can aim a trust as the beneficiary of your
life insurance policy.
Speaker 3 (31:57):
Fact and we see that done more and more and more.
Folks using trust to avoid probate, and folks using trust
also because they're not particularly comfortable with leaving their kids
or grandkids a huge chunk of money all at once,
and that's where a trust can dole this money out
(32:20):
over time. It could put stipulations on when the heirs
get the money. Naming a trust as a beneficiary of
your life insurance policy can often be a great planning
opportunity if you.
Speaker 1 (32:31):
Were one of those people who it keeps you up
at night when you think about, oh, what about this
kid or what about their spouse, I don't trust whatever, like,
a trust can be a great tool for you to
have some control.
Speaker 2 (32:42):
Over what happens to your money after you're gone.
Speaker 1 (32:44):
So yes, you can absolutely name a trust as the
beneficiary of your life insurance policy.
Speaker 2 (32:49):
Fact or fiction.
Speaker 1 (32:50):
Once you purchase a life insurance or long term care policy,
your premium can never increase.
Speaker 3 (32:59):
That's another It depends on the policy. Folks you know
who buy whole life policies, and I mean whole life here.
That's one of the main benefits of it is you know,
you have a guarantee that if you pay this premium
for the rest of your life, you're always going to
have coverage, and that coverage is never going to increase.
(33:22):
What a lot of people I find get caught up
on is they buy, you know, and often for good reason,
by a twenty or thirty year or fifteen year level
term policy and you get underwritten there for a very
nice premium for a specific number of years. In most cases,
you know twenty or thirty years is going to give
(33:42):
you that runway to raise your kids and hopefully grow
assets to replace your need for life insurance. But if
all that doesn't happen, and then year twenty one comes
down the pike, boom, the premium goes up four or
five times, and no one saw it coming because no
one talked to their advisor and no one kept on
(34:03):
on top of your life insurance. So it's important to
just review your policies, know what you purchased, know what
the when the thing turns into a pumpkin sometimes so
to speak, and have a plan and knowing when.
Speaker 1 (34:18):
It should turn into a pumpkin. I'm glad we're talking
about this because I've actually weirdly come across this several
several times recently where someone ends up in my office
and there may be in their seventies, kids aren't relying
on them, there is no income, they have been fully retired,
they have Social Security benefits that are coming in, and
they've got good retirement assets, lots of investment assets. And
(34:42):
I asked like and they'll say, like, gosh, my premium
for this term policy.
Speaker 2 (34:45):
It's so expensive. I'm like, why are you paying it?
Speaker 1 (34:48):
You don't need to pay it. The point of that
life insurance policy has you know, you recovered all of
those years when if something were to happen you needed
your income or placed. At this point you don't need
so you do not need to pay these high premiums.
Speaker 3 (35:04):
Right, And that's why an annual review of your comprehensive
financial plan makes so much sense. And your advisor should
be doing that. I know we do that with all
of our clients. Things do change and do evolve, and
like all the other moving parts of your financial world,
all of this stuff needs to be looked at and
(35:24):
reviewed and then decisions should be made accordingly.
Speaker 1 (35:28):
Coming up next, are you phoning it in like face
in your phone all the time? What can that bean
to your money? We'll get into it. You're listening to
Simply Money presented by all Worth Financial here on fifty
five KRC the talk station. You're listening to Simply Money
presented by all Worth Financial. I mean you Wagner along
with Bob Sponseller. All right, this is a know yourself
(35:52):
kind of a situation. Self awareness here everyone, are you
buried in.
Speaker 2 (35:57):
Your phone day after day and maybe hardly.
Speaker 1 (36:01):
Realize that there are financial consequences to this, and I
think many of you aren't even thinking about them.
Speaker 3 (36:10):
Yeah, this is one of those things that makes me
pull out whatever remaining hair I have out of.
Speaker 2 (36:16):
My head, which isn't a lot, by the way, which
is a.
Speaker 1 (36:19):
Lot that they mean that.
Speaker 3 (36:21):
According to a recent Gallup survey, six and ten adults
say they use their smartphones too much. And here's the
shocking thing to me. According to a recent LinkedIn survey,
job candidates are increasingly looking at their phones during job interviews.
Amy help me here.
Speaker 1 (36:41):
Oh my god, I'm thinking about the fact that I
have four teenagers, two in college, one will be in
college next year, and I'm like, I would be so
mortified if I knew that my child went into a
job interview and could not keep their phone down. But listen,
this generation is different than we are, right. I always
say we're the first generation who didn't grow up with
(37:02):
these phones, who are raising kids who are make sure
first and foremost that they know when is time to
pick up the phone and when is it not not
during an interview, and certainly when they're working there shouldn't
be the concern that this person is never going to
get the work done because they constantly have their phone
in their face.
Speaker 3 (37:19):
That does not I swear, I'm going to sound like
the curmudgeon old man here. I have two words, grow up.
Speaker 2 (37:28):
I'm going to agree with you sitting in.
Speaker 3 (37:30):
If somebody's sitting in front of me interviewing for a
job and I see them start playing with their phone,
that interview is ov R. I don't care if you
have a PhD from Harvard and your resume just jumps off,
it's over. Because if you can't sit for twenty minutes
and have an adult conversation with somebody without looking at
(37:51):
your phone, I'm just thinking, imagine what you're going to
do when you're not under one hundred percent supervision throughout
the day. You're not going to be getting a whole
lot of work done for our company. Therefore, we've got
no use for you here.
Speaker 2 (38:04):
Yeah.
Speaker 1 (38:05):
Well, and I think your phone also probably makes you
spend more money than you would other size otherwise. And
I think this comes in two forms, the keeping up
with the joneses of I'm on social media and I'm
seeing this person that I went to college with and
they went on this vacation. Maybe I can't really afford it.
Speaker 2 (38:20):
But I mean they are, so we're gonna do that too.
Speaker 1 (38:23):
And then also these marketers are brilliant on social media.
Speaker 2 (38:26):
I don't even know how it happens.
Speaker 1 (38:27):
You speak a word and all of a sudden, something
about that pops up in your Facebook feed, and now you're.
Speaker 2 (38:33):
Going down this rabbit hole of how much does this cost?
And maybe I should buy this even if you don't
really need it.
Speaker 1 (38:39):
So you have to understand how smart phones affect how
you're spending.
Speaker 2 (38:44):
Money and put some controls in place. If you can't
ever put it down, well.
Speaker 3 (38:51):
Talk about some of the controls, Amy, because again I
need your help here.
Speaker 1 (38:55):
And there's different apps. And one of my best friends
call me about this last week. She said, I'm done
with my kids faces and their phones. But also I'm
doing it too. There are apps that can limit how
long you are on different social media platforms, different sites
that can help protect.
Speaker 2 (39:11):
You from these kinds of things. Here's the all Worth advice.
Speaker 1 (39:13):
Technology it can be a blessing and a curse. Do
your best to make sure it's not sucking your soul
dry and also your bank account Thanks for listening. You've
been listening to Simply Money and presented by all Worth
Financial here on fifty five KRC, the talk station
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