Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight, we're asking the question. More and more successful investors
are starting to ask is retirement even real anymore? You're
listening to Simply Money presented by all Worth Financial. I'm
Bob sponseller along with Steve Ruby. Retirement used to mean
one thing. You worked for forty years, You got the
gold watch, and then disappeared into a quiet life of golf,

(00:30):
early dinners and maybe even a Winnebago.

Speaker 2 (00:34):
Sounds nice.

Speaker 1 (00:35):
But for today's successful investors, especially those of you with
a higher net worth, that version of retirement just doesn't
fit anymore.

Speaker 2 (00:44):
So retirement to find this this was actually relatively new
information to me. Apparently comes from a French word that
I have no idea how to pronounce. Do you speak French?

Speaker 1 (00:52):
Don't. Don't start using foreign languages with me.

Speaker 2 (00:55):
I was gonna ask you to try, but I got stuff.
But it means to withdraw. So think about that, to retreat,
to pull back. And yet almost well, I wouldn't say
almost everyone, but a lot of the folks that we
talked to and that we work with, you know, they're
not retreating from life. They're doubling down on it. They
want to stay sharp, they want purpose, and yes, they
want flexibility.

Speaker 1 (01:16):
Well, and I'm finding this Steve as someone someone who
has helped dozens and dozens of people retire over my
you know, over thirty years.

Speaker 2 (01:24):
At least ten or twenty people, right, A.

Speaker 1 (01:25):
Few, yeah, now, but in all serious there's people, you know,
we're more and more getting that question. When folks come
in for review meetings, you know, prior to or just
after retirement, they're asking, Hey, what do I actually want
my days to look like? You know, what energizes me,
not just what pays me. You know, they want to

(01:47):
know how to structure their time, their income, and their
investments so they're free to do more of what matters
to them. And oftentimes, Steve, these discussions have absolutely nothing
to do with money. It's all about planning your retirement,
you know, activities in advance.

Speaker 2 (02:05):
Yeah, I mean this is a good point because there's
there's folks that I've worried about in the past making
that transition into retirement, that that title lot of their
identities to their work, to their job, to the structure
that that created a lot of their friendships, a lot
of their social lifes were tied to their day to
day experiences through work. So you know it's it can
certainly be a challenging entering that new phase, a challenge

(02:28):
entering that new phase of your life.

Speaker 1 (02:30):
I don't know about you, Steve, but I find that
there's a few, just a few main areas of what
we'll call life planning that usually need to be in
place to help folks live a truly rich and meaningful life.
And that's what we want to get into today. The
first one, obviously is money. I mean, you do need
a solid sustainable income strategy, but beyond that, it's time

(02:53):
to ask, you know, what's my spending freedom level? Can
I afford to take a sabbatical before I officially quote
unquote retire? You know, what does inflation and taxation look
like for me over the next twenty years? All the
basic things that folks think about when they when they
consider retirement planning, and for those investors have had options,

(03:15):
it's not just about maximizing returns, it's about minimizing regret,
not running out of money, but also not underliving because
you were too cautious.

Speaker 2 (03:26):
That's a good point. So one of the keys for
financial planning, I would argue, is maintaining your lifestyle. Today.
I was actually let me phrase that living the life
you wanted to live today while while maintaining that lifestyle
in retirement and having a financial plan on hand can
help you kind of organize the building blocks. That's the money,

(03:47):
the investments. The financial plan is the blueprint. So the
more building blocks we have, the more robust the blueprint
can be. But it also answers that question about you know,
what's what's like you said, my spending freedom level? How
much can I spend without running out of money? But
it's not just the money, it's not just the building blocks.
It's it's it's passion. I mean, what what do you

(04:09):
do when when you don't have to work? What would
you still choose to do if you didn't have to work?
For some you know, there's there's consulting. I've seen plenty
of folks in in you know, highly specified specialized fields
make that transition into retirement and and then they they
get bored. They want to have some purpose, they have
some high earning potential, so they go back and they

(04:29):
do do some consulting work. Others, uh, maybe a transition
to some kind of nonprofit work that could be fulfilling
tied to a passion of theirs. Some go back to
school to follow that passion that that they may be
left behind for a better paying career. You know, you
don't need to earn income. That's that doesn't mean that
you need to stop feeling like you're creating some kind

(04:52):
of value.

Speaker 1 (04:53):
I'm finding this more and more with folks, Steve. In
other words, you know, we always hear about, hey, you
should retire first the first day you have enough money
so you don't have to work, as if work is
this some evil thing that you must do every day,
and then you must avoid it the first chance you get.
That's not how a lot of people feel about their job.

(05:14):
In other words, some of the conversations I have with
folks goes something like this, Hey, imagine you could go
into work today and not worry about the next promotion
or the corporate politics, or having to be there for
sixty to seventy hours a week. Imagine going there and
getting to do the things you love to do for

(05:36):
the period of time you want to be there. Is
that something that you still want to do? And I
find for a lot of folks, the answer to that
question is yes, I still want to work. I still
love what I'm doing. I just want to do it
on my own terms. Mine is a little more crass.
I say, if you have a bad day at work,
you don't have to go back anymore. And I think

(05:57):
that does hit some people over the head sometimes.

Speaker 2 (06:00):
I'm a you know a guy that I work with,
you know, he had a review meeting recently and he
came in and he told me, you know, Steve, I
wake up every morning and I sit there and I
stare at the floor. You know, I put my legs
over the side of the bed and I stare at
the floor. I'm thinking, do I really want to go
back today?

Speaker 1 (06:17):
Yeah? You're listening to Simply Money, presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby. This next area,
you know, we talked about money and we talked about passion.
To me, this is where retirement gets really fun and exciting,
and it's blending passion with This next topic we want
to cover is purpose. And this one sneaks up on

(06:39):
a lot of people. You can only play so much golf,
you know, and go out to so many six o'clock
you know, eating out dinners. The happiest retirees that I
see that we work with. They're mentoring, they're volunteering, they're teaching,
they're writing, they're creating things. In other words, they are

(07:00):
finding a way to serve other people. And when folks
come in to my office for those review meetings, I
can usually tell right away the people that have that
glow and smile and a little kick to their step
because they're doing something creative to serve other people as
opposed to just living life solely for themselves. Yeah.

Speaker 2 (07:22):
I mean, we've all heard of situations where people that
have worked for forty years doing the same job make
that transition into retirement and their health maybe spirals because
now they just stay up late at night watching TV
and sleeping late and not being particularly active. They don't
have that purpose. So making sure that you have a

(07:44):
plan of attack for how you're actually going to spend
your time in fulfilling ways when you make that transition
into retirement is very important, and that is something that
a good fiduciary financial planner is at least going to
try to have that conversation with you to find you
know what not only what your needs are, but what
your wants and your wishes are as far as your

(08:05):
financial plan is concerned. So mapping that out and having
a plan so that you have that passion and that
purpose I think takes us to our next point, which
is ensuring that that we maintain health in retirement as
well well.

Speaker 1 (08:18):
In these last two areas, I mean, to me, the
sweet spot is finding things that you're really good at,
that you enjoy doing, and combining that with ways you
can serve other people and serve the community. And those
people are usually the most healthy people in retirement. And
that's our fourth category. We do need to pay attention
to our health because it's such an important part of

(08:41):
your retirement year so that you can actually live with
some joy and you know, some comfort in retirement and
not have to be going to the doctor's office three
times a month.

Speaker 2 (08:52):
Yeah, when you make that transition into retirement year in
your go go years, and then you get a little
bit older and you're in your slogo years, and then
you're towards the end of the plan, you're in your
Nogo years. Ideally, those go go years last as long
as they possibly can, and oftentimes that's directly tied to health. Now,
when you're working with a fiduciary financial planner, most of
the time, I would argue that they're going to be

(09:14):
planning for some extreme longevity, maybe even to figures that
you would particularly disagree with, because I'm talking about, you
know the fact that a man, if he hits sixty five,
there's a twenty five percent chance that he lives past
ninety two years old. A woman hit sixty five, there's
a twenty five percent chance she lives past ninety four
years old. Combine that, there's a fifty to fifty shot

(09:36):
that one of you lives past ninety.

Speaker 1 (09:38):
And don't you find that that when we share those
statistics with folks in meetings, they are shocked at those numbers.
Very few people expect to live.

Speaker 2 (09:46):
Into their early to mid ninety Yeah, the oh, I'm
not going to make it past seventy six years old.
And maybe family history ties into that, maybe your own
health ties into that. You know, you know, you've been
shared some unfortunate information from a doctor in a situation
like that. Sure, we need to plan around that. That's
a whole other topic of conversation. But when it comes
to just stress testing a plan, there's always going to

(10:08):
be assumptions about longevity, about poor market performance, about spending
more than you anticipated. But what we're talking about here
is making sure that you're maintaining that health because that
can be a major disruptive force in your retirement planning,
especially if there's not a plan for some kind of
long term care strategy as you hit those no go

(10:32):
years of retirement.

Speaker 1 (10:34):
So bottom line is retirement still a thing, not in
the old sense. It's no longer a finish line. It's
a fork in the road. And if you've done the
right things, you've built wealth, you've made smart decisions. The
question isn't can I retire? It's what do I want
this next chapter to look like? And how do I
structure my finances to support it. Here's the all Worth advice.

(10:55):
Stop thinking about retirement as the end of the road.
Start thinking of it as a reallocation of time, money,
and purpose. Next, why taxes in your fifties and sixties
and beyond might look very different than they do in
your forties. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC the talk station Money

(11:26):
presented by Allworth Financial. I'm Bob sponseller along with Steve Ruby.
If you can't listen to Simply Money, every night. Subscribe
to get our daily podcast. Just search simply Money on
the iHeart app or wherever you find your podcast. Straight
ahead of six forty three, we are going to play
a game, Steve. Do you like games? Of course I
like games. All right, We're going to play a game

(11:47):
with the goal of great financial decision making. All right, Steve,
Tonight we're talking about taxes, but not the kind you
remember from your working years, because once you hit your sixties,
the rules of the game change, and they change considerably,
sometimes in your favor and sometimes not so much.

Speaker 2 (12:08):
Yeah, So let's talk about first, when you're in your
accumulation phase of retirement planning. So thinking about maybe in
your forties, for example, it's simple, get a salary, maybe
you're fortunate enough to have stock options or some kind
of added bonuses. You pay taxes and what you earn.
But in your sixties, especially if you're retired semi retired,
the IRS starts taxing you potentially differently and sometimes more aggressively.

(12:32):
And that's because in your sixties, or I should say,
when you're making that transition into the distribution phase of
retirement planning, you're likely to start pulling money from buckets
that you spent decades building. That means your tax picture
might get a whole lot more strategic chaotic depending on
how you approach it.

Speaker 1 (12:51):
In other words, your income is not just a paycheck anymore.
It becomes kind of what we like to call a
puzzle exactly. In other words, in your four your income
showed up every two weeks, you get a W two,
you give that to your CPA at the end of
the year, pretty straightforward. But in your sixties you got
to craft an income strategy or should. Your income might

(13:14):
come from, say half a dozen different places. Social Security
require minimum distributions, investment dividends or capital gains, rath IRA withdraws,
maybe even part time work or rental income. And the
challenging thing here, Steve, is every one of those income
sources is taxed differently. So it really does become critical

(13:37):
that you develop a strategy on how to put all
this together.

Speaker 2 (13:41):
Ohely absolutely, Like you said, it's a puzzle here. So
you know, you mentioned rm ds. That would be in
your sixties if you have like inherited accounts or something
like that, because rmds those those don't start until seventy
three or seventy five depending on when you were born.
But it's still this puzzle to put together, and if
you're not careful, you might have some kind of a

(14:01):
tax bomb blow up in your face. So to elaborate
a little bit, pushing yourself into a situation where you
have to pay more taxes on Social Security or potentially
a higher Medicare premium via what's called IRMA, Yeah, I.

Speaker 1 (14:16):
Mean social Security. For most of our clients, I mean,
you got your income's got to be pretty low to
avoid paying taxes on your Social Security anymore. So I mean,
I we don't want to make too much of this topic.
Most people are going to pay taxes on their Social Security.
That's just kind of the way it is. But talk
Steve about this Medicare IRMA situation. Talk about what it

(14:40):
is and some of the steps we take to avoid
paying too much on those Medicare premiums.

Speaker 2 (14:45):
So Medicare means testing IRMA is It actually stands for
income related Monthly Adjustment amount. So it's a bit of
a mouthful. I prefer IRMA translation. If you make too
much money, Medicare actually charges you more. So let's say
you're married and you're mo fight to justic gross income
is over it's a little over two hundred thousand dollars
for twenty twenty five. Two hundred and ten. I think

(15:06):
it is you're paying higher premiums for Medicare Part B
and Part D. Now this isn't a one time penalty.
It's ongoing and it's based on your income from two
years ago. So a big IRA withdrawal capital gains from
a property. I've seen this before. People make that transition
into retirement, they sell a property because they don't want
to have a rental anymore, and boom, all of a sudden,

(15:29):
they get higher Medicare premiums, which can be a very
frustrating situation. Same thing goes for if you're planning roth
conversion strategies and you're not careful filling up the twenty
two percent tax bricket. Married filing jointly actually aligns with
that first threshold for IRMA. So a lot of people
twenty two percent tax bracket and then pump the brakes.
If you go into the twenty four percent, then you're

(15:50):
going to have to deal with IRMA.

Speaker 1 (15:52):
Unfortunately, Steve for folks that don't have an advisor or
don't contact their advisor to walk through these things in
advance of making some of the these decisions. There's not
much we can do about it in the rear view mirror.
But if you get out in front of it and
allow a good fiduciary advisor to run some of these
numbers in advance of when you pull the trigger on
some of these income sources, we can help folks reduce

(16:15):
these taxes. And it's a critical part of what we
do for our clients.

Speaker 2 (16:18):
Rmds are a good example of that because there's almost
a tax planning window from when you retire to when
you start collecting your required minimum distributions. Because what happens
with rmds, that's where Uncle Sam wants to squeeze tax
money out of you while you're still alive. That's really
what it is. That's the short of it. So when
you turn seventy three or seventy five, depending on when
you were born, because that age has gone up over

(16:40):
the years, you're going to be forced to take money
out of four to one k's traditional eyries. These are
pre tax dollars that once upon a time you got
a deduction for and you've been deferring taxes for potentially
decades or more on those dollars. What happens when you
reach r MD age is maybe you don't need that income,
but you've accidentally built a tax bomb, because if you're

(17:02):
fortunate enough to have three or four million dollars in
a traditional IRA, all of a sudden, you're gonna have
to do some very large as the IRS is saying
you might not need or want the income, but you
shall have the income. Too bad, give me money tracks
out of it. Yeah, too bad, give me your taxes.
That's what it boils down to. Now, there are strategies

(17:23):
to help minimize some of that, like qualified charitable distributions
when it's already too late if you didn't get ahead
of it by doing Roth conversions qcds, you can give
money directly to charities and in that situation there's there's
no taxes on that distribution as long as you give
it directly to the charity.

Speaker 1 (17:41):
Well, and for folks you know seventy and a half
and older that are doing some charitable giving every year,
and I've got a lot of those kind of clients, Steve,
they are shocked to know that, you know, with a
married filing joint, you know, standard deduction of thirty thousand dollars. Now,
it really does not make much sense from a text
standpoint to just keep writing those checks to your church

(18:04):
and charities. I don't let us do the charity, you know,
charitable giving right out of your IRA, because none of
that money hits your tax return. People are shocked and
very pleased to know the tax result of getting out
in front of changing the paradigm once you hit seventy
and a half of how you do your charitable giving.

Speaker 2 (18:25):
It is a beautiful thing. It's something that I've coached
people for years about making a pivot and how they give.
Because let's say if you give to your church weekly,
you could look at calculating how much that would be
over the course of the year, and then once you're
seventy and a half, that's when you can actually begin
qualified charitable distributions. Maybe at that point you're also doing
roth conversions before you actually have to do R and ds,

(18:47):
but you're pivoting how you're giving the money, and everyone
is getting a tax benefit out of it when it's
a qualified charitable distribution. Exactly.

Speaker 1 (18:54):
It goes back to know how we started this segment.
It really does become a puzzle and to get out
with a good advisor and do some proactive planning and
scenarios on how to properly piece together your income strategy
to be the most tax efficient you can. Here's the
all Worth advice. Taxes in your sixties aren't just different.

(19:15):
They are more complicated, but that also means they're more
manageable if you've got the right strategy. Coming up next,
what would you do if five hundred thousand dollars suddenly
landed in your lap? How to handle the surprise inheritance
the right way. You're listening to Simply Money presented by
all Worth Financial on fifty five KARC the talk station.

(19:43):
You're listening to Simply Money presented by Allworth Financial. I'm
Bob Sponseller along with Steve Ruby. All right, imagine this.
You open your mailbox and inside is a certified letter
from an attorney. Oh boy, yeah, you find out you
just inherited five hundred thousand dollars from a distant relative.
You barely knew. Your first reaction obviously shock. The second reaction,

(20:08):
what do I do with this money?

Speaker 2 (20:10):
This happened to somebody that I worked with last year.
A distant cousin somewhere down in the Carolinas that he
wasn't particularly close to as far as I remember, left
some money behind unexpectedly. So it can happen more than
you think. It's not always a large sum, whether it's
you know, half million dollars or fifty thousand dollars, depending

(20:30):
on where you are in your own financial plan. Obviously
some kind of an inheritance like this could be life changing,
but it could also be a bit of a mess
if you don't handle it carefully. So today we just
want to talk through exactly what to do and some
ideas around what not to do if you suddenly come
into a windfall.

Speaker 1 (20:49):
All right, So, whether it's a half a million dollars
or fifty thousand dollars, a surprise inheritance can be life
changing or it can be a financial mess if you
don't handle it carefully. And I think I think we've
all read these stories in the media when folks win
the lottery and they get this windfall of money. How
many folks are believe it or not penniless within a

(21:11):
couple of years, you know. So today we're walking you
through exactly what to do and more importantly, what not
to do. If you suddenly come into a windfall. Yeah.

Speaker 2 (21:21):
Step one, don't do anything yet. That's it might sound
kind of people don't want to hear that. Yeah, do nothing,
park it in a safe interest bearing account while you
figure out a plan. So when we say do nothing,
what that really means is don't go by a boat,
don't pay off your your cousin's credit card bill or whatever.
Don't make any snap decisions because emotions could potentially be

(21:44):
running high. And whether it's grief, surprise, sometimes guilt comes
into play. You need some time to process. So let
the dust settle and give yourself permission to pause and
do nothing.

Speaker 1 (21:55):
Well, and I've seen this several times now throughout my career.
I mean, these emotions are real. You know, at the
same time you're grieving the loss of a loved one,
you get a big financial windfall and you've got often
competing emotions coming in. And when you're making decisions, you know,
rash decisions based on immediate emotions. Usually those decisions tend

(22:20):
to not be good ones.

Speaker 2 (22:21):
Yeah, they might not make the most sense. Step two
understanding tax implications. So good news. In most cases, you
actually don't pay income tax and an inheritance. But this,
this is a big butt. You know, you could still
owe taxes, you know, five hundred thousand dollars. Let's say
that came from a traditional IRA. You would pay income
taxes on withdrawals. So in a situation like this, you

(22:44):
would certainly want to explore spreading out those distributions. You
have to if it's a traditional IRA. In most cases,
you're gonna have ten years to drain the account. So
mapping out a strategy that makes sure that you're not
getting kicked in the teeth with taxes is a good idea.
If it's from a brokerage account and you sit or
I should say investments in a brokerage account and you

(23:05):
sit on it, there would have been a step up
and basis when the person who passed the assets do
you passed away? But if you sit on them and
on those securities and they gain, then you could own oh,
capital gains taxes when you sell.

Speaker 1 (23:20):
That sounds like a lot of stuff to think about, Steve.
I just want to take that check and cash it
and go buy a new car. What I should be
doing is step three, which is what Steve.

Speaker 2 (23:31):
Assemble a team. So a good financial advisor somebody that's
a fiduciary with your best interests front and center, probably
in a state planning attorney if the dollar amounts are
large enough, some kind of tax professional which could be
the fiduciary financial planner, but a CPA might need it
to be folded in depending on the complexity of the

(23:52):
assets that you've inherited. Ultimately, it's not really a DIY moment,
especially if you've never handled that much money before.

Speaker 1 (24:00):
You're listening to simply money presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby and speaking of
not being a DYI R or getting a team in place.
That leads us into step four. Actually make a plan
before you spend. Imagine that. Make a plan, Steve. Now
we get to the fun part. You can absolutely use

(24:20):
some of that money to improve your life, but build
a plan first. Do you have high interest debt and
you want to pay that off? Great idea max out
retirement accounts. Even better, maybe start a five twenty nine
plan for your kids or grandkids.

Speaker 2 (24:36):
Perfect.

Speaker 1 (24:37):
The key point is here is sit down with a
good fiduciary advisor and weigh out all your options before
you start doling out and allocating that money because it
can make a huge difference, you know down the road.

Speaker 2 (24:49):
Yeah, I mean maybe investing part of it. If you're
fifty years old and you just got a half million bucks,
you know, maybe you're in a situation where you do
have some debt still, you have some children that you
want to help with some with their expenses. You also
have done your own retirement savings, so maybe you allocate
half of it for improving lives, your life and the
lives of those around you, and then the other half

(25:09):
goes into investments. In a situation like that, that could
really beef up your own savings and con grow to
something very comfortable in addition to the retirement nest egg
that you've accumulated.

Speaker 1 (25:21):
All Right, we just talked about several of the responsible
things we can and should do. Let's talk about some
of the common pitfall common pitfalls that we've got to
make sure we avoid. Let's talk about mistakes. The first
big one giving too much money away too fast. Obviously,
generosity is wonderful, but people often feel obligated to quote

(25:44):
unquote share the wealth immediately, and they dole out that
money very quickly, before they've had time to really think
it through. So the key point here is take your time.

Speaker 2 (25:56):
Yeah, I mean, that's why we say the first thing
you should do is nothing to make that plan and
decide a plan of attack for how that those dollars
should be allocated. Another one you need to be careful of.
It could be tempting. You know, a half million dollars
seems like a lot of money, and it is a
lot of money. But when it comes to no longer working,

(26:18):
retiring because of an inheritance like that, that's something you
need to be very careful about. I'm talking about quitting
your job too early. Five hundred thousand dollars probably isn't
going to give you the financial freedom that you desire
in retirement, Depending on, of course, your your age, your lifestyle,
your goals, it would not last as long as you

(26:38):
would think. Not the downplay receiving that inheritance, but without
a proper plan and other assets and goals and understanding
of how to fund those goals, there's a big risk
of just up and quitting your job and thinking that
you can retire on an inheritance like that.

Speaker 1 (26:55):
And the other common pitfall to avoid falling for bad
investment advice, The minute people know you've come into some money,
expect the sales pitches to come. They come from everywhere,
from real estate schemes to quote unquote can't miss opportunities.
Be very careful who you trust. Here's the all Worth advice.

(27:15):
A surprise inheritance is a rare opportunity and one that
can literally transform your financial future if you're thoughtful about it.
But it's also a moment to be careful, patient and strategic.
Coming up next, would you rather give money now or
leave it to your estate? It's one of many questions

(27:37):
we're tackling. Next, you're listening to Simply Money, presented by
all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sconseller along with Steve Ruby. Do you have
a financial question you'd like for us to answer. There's

(27:58):
a red button you can click on. You're listening to
the show right there on the iHeart app. Simply record
your question and it will come straight to us. All right, Steve,
Time for a game that may it appear to be
childish but contains some really great lessons for you. And
we're going to talk about that age old game of

(28:19):
would you Rather?

Speaker 2 (28:20):
Yeah, my daughter just turned ten and she plays this
all the time with us, would you rather? And they're
pretty funny sometimes. The creativity that she comes up with
is now you speak.

Speaker 1 (28:30):
Of my language, putting the two of us in a
room with ten year olds that's.

Speaker 2 (28:33):
To play would you rather?

Speaker 1 (28:34):
Yeah, it sounds like a lot of fun.

Speaker 2 (28:37):
Yeah, well these ones are going to be fun too,
you know, would you rather? Would you rather gift money
now or leave it in your estate?

Speaker 1 (28:47):
I I've got an answer for this one both, you know,
because I'm thinking about this now personally, you know, with
my own kids, and I've also dealt with this issue
with clients for years and years. And it's really interesting
how your perspective on this changes as your kids get
older and you watch them start to navigate into and
through adulthood. You know, there are some differences, key differences

(29:12):
we can make in our kids' lives now that really
change the game for them, you know, from helping them
buy a first house to helping you know, educate grandkids,
things like that that really make a meaningful difference in
their life now. Instead of just dumping a boatload of
money on them when they're sixty five years old when

(29:32):
we die, you know. And so it really comes down
I think to two things, in my opinion, making sure
your kids are prepared to handle money responsibly, and then
factoring all the goals that are going on in your
family and family dynamics. It can really be a wonderful
time to do some planning, but you got to be

(29:54):
proactive about it, and you've got to have effective, proactive
communication with your It's.

Speaker 2 (30:00):
The way I summarize this for for folks that are
struggling that maybe they want to start gifting, but they're
struggling with the idea of it. You could say, better
from a warm heart than a cold hand. I mean, really,
that's that summarizes it well, because you're actually going to
see the impact those dollars have today versus you know,
leaving that money behind when when somebody is already when

(30:21):
your children, for example, or potentially already transitioned into retirement.

Speaker 1 (30:25):
Well and all kidding aside, you know, I've seen this firsthand,
just the sheer joy on the faces of my clients
when they've actually been able to watch money deployed that
they've given away during their lifetime, whether that's charitable causes, grandkids,
their kids, or combination of all the above. It's very

(30:47):
meaningful to watch folks deploy money responsibly while they're alive.
It's a it's a huge part of allowing folks to
experience some joy in their retirement years.

Speaker 2 (31:00):
Let's keep playing the game. Would you rather buy long
term care insurance or self insured?

Speaker 1 (31:03):
Neither?

Speaker 2 (31:04):
Neither.

Speaker 1 (31:06):
I don't want to get old. I don't want to
think about being in a retirement.

Speaker 2 (31:09):
You said neither to my ten year old daughter while
playing would you rather? She would? She would lay into you.
You can't say neither. You got to choose one here.

Speaker 1 (31:16):
All right, Well give us the answer.

Speaker 2 (31:17):
The answer is easy, but it's like it's a trick question.
Self insure means I have enough money to not even
have to think about long term care. I mean, that's
the reality of the situation. What happened when long term
care came out is it was underpriced to the point
where these insurance agencies that offered them as solutions were
losing money on them, so that they can be quite
expensive in this day and age. And as fiduciary financial planners,

(31:41):
very were fair and balanced and honest about whether or not,
people actually need long term care, and oftentimes, if there's
enough money left over at the end of the plan,
the solution is simply self insure. Self insure means you
didn't buy long term care and you're going to pay
out of pocket.

Speaker 1 (31:54):
Well, you want to know what I've done personally?

Speaker 2 (31:57):
What have you done personally?

Speaker 1 (31:58):
Neither of these? And here that's why. The way I
look at it, I got a bought a coin flips
chance of needing to be in a nursing home. But
last time I checked, there's a one hundred percent chance
that I'm gonna die someday. So I bought some permanent
life insurance that's enough to take care of any long
term care need. And if I never need the long

(32:19):
term care, it's tax free dollars that are going to
go to my wife and my kids, And that way
I figure I win.

Speaker 2 (32:25):
Either way, I would ever think of that station. It's
self insuring without long term care.

Speaker 1 (32:29):
Okay, all right? Would you rather, Steve? Would you rather
use a donor advise fund or give directly right to
the charities? Oh?

Speaker 2 (32:38):
Boy, This depends on if you're taking a standard deduction,
if you're itemizing, Because you can bunch your tax filing.
What I mean by that is, let's say you normally
take the standard deduction, but you have a lot of
money to give, and you have some charitable goals that
might be hefty over the next several years. You can
put a lump sum into a donor advice fund to
the point where it could kick you above the standard

(33:01):
deduction benefits and actually step into itemizing territory so that
you can gather those benefits that say, five years of
donations into a donor advice fund, itemize, get the tax savings,
and then not have to worry about itemizing for the
next several years as you claim the standard deduction. So

(33:21):
this is you know, I just gave you a hard
time for not choosing one or the other. This one
is also it depends, but I'm a huge fan of
donor advice funds when they're deployed properly well.

Speaker 1 (33:34):
And this is one of those things where you can
do both. So you can put money in a donor
advice fund and then turn right around and give some
of that money to charity today. I love these things.
My wife and I have one. I recommend them to
clients all the time. They love them strategy. All right,
would you rather, Steve, would you rather leave a lump

(33:54):
sum or an income stream to your errors?

Speaker 2 (34:00):
I mean, at this point I've put some thought into
it based on you know, estate planning documents that we have,
and you know, my daughter, for example, she's not going
to get a huge alump sum until she's thirty five
years old, So it's contingent on I think where you
are in life and what you know about your errors. Yeh,
at that point, you know, my daughter's ten, so you know,

(34:22):
what do I do with that? I think that that
income stream to support in the event that something happened
to you know, my wife and I together would be beneficial.
But I think later on in life a lump sum
is is is fine?

Speaker 1 (34:35):
Yeah, the great And that's the great thing about trust
and proper planning. They're revocable. They're changeable exactly.

Speaker 2 (34:41):
So it changed this later on, and I might, but
for now it's it's a bit of both. Sounds again,
sounds good to me.

Speaker 1 (34:49):
Coming up next, a gem of advice from mister Steve Ruby.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station BA. You're listening
to Simply Money present up by all Worth Financial IMBOP
sponsorller along with Steve Ruby. We're ready for another one

(35:11):
of your gems of advice? Steve? What do you have
for us today?

Speaker 2 (35:15):
So most of the time that that I have this
opportunity to provide gems of advice, it's based on recent
meetings that I had with folks that I work with,
and and this one comes from uh just yesterday actually,
so uh some some folks that I work with UH
married older eighties and you know, the wife has had
thoughts about maybe transitioning and it's some kind of an

(35:36):
independent uh living facility. For a couple of years, they've
been putting it off. The husband now is is having
some health issues and is probably ready to make that
transition himself. The place that they want to get into
has a two to four year weight limit. So what
are you doing? Yeah, I know that that's that's the

(35:59):
big question. What do you do? Some of these places?
You know, if you're fortunate enough to have uh this
is a little unfortunate too. You can essentially skip the
line by by paying This is a real thing that
exists at some of these places, but that can be
extraordinarily expensive getting ahead of it. You know, this is
something that I've been bugging them about for for years. Uh,

(36:19):
you know, contact information for a placement specialists that can
help them navigate facilities across town that might fit their
their their needs and goals and their price range. So
having that conversation early, getting on a wait list at
somewhere you want to be early because you don't know
when you're going to actually need to make that transition.

(36:40):
Sometimes the no goo years of retirement planning can can
sneak up on you a little bit more quickly than
you thought possible.

Speaker 1 (36:47):
I've had this topic come up, and I've I've even
suggested the topic come up in several meetings with my clients.
And and the thing I'd like to add to this,
you know conversation is it never hurts to go out
proactively visit some of these places and figure out where
you'd actually like to live and feel comfortable living, and
then get your name on that wait list. Worst thing

(37:08):
that can happen is they'll call you and say they
have space available. I'm not ready yet, But at least
you've gotten out in front of it and visited some
of these places and you have a plan and you
know where you want to be, and then you're not
stuck waiting for two to four years when you really
need to be somewhere.

Speaker 2 (37:27):
Today, you might think that this is outside the realm
of what a financial advisor helps with, but that's just
not accurate, because we plan for longevity, and part of
longevity is making sure that there's a plan for long
term care, whether or not that's via long term care
insurance or via self insuring. This couple is fortunate enough
to be able to self insure, meaning they never bought

(37:48):
long term care and they're going to pay out a
pocket for a facility, but actually getting into that facility
is a different story. So, like you said, making sure
that you get your name on a list to some
capacity least have a place to go in the event
that life creeps up on you and all of a sudden,
you do need to have a little bit more support
than historically has been needed.

Speaker 1 (38:10):
Yeah, in the case of the situation you just spoke about,
sounds like there's a little more work to be done. However,
they're blessed to have you on their team and helping
you not navigate through them. And I mean that Steve,
thanks for listening. You've been listening to Simply Money, presented
by all Worth Financial on fifty five KARC, the talk
station