December 4, 2025 • 38 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian introduce the “financial freedom test drive”—a bold way to rehearse retirement before you take the plunge. Learn why trying out your withdrawal strategy and lifestyle early could save you from major surprises later. Then, they tackle the “millionaire’s income problem,” where pulling money out of your portfolio the wrong way can cost you in taxes, Medicare premiums, and peace of mind.
They’ll cover Roth conversion ladders, municipal bonds, rental income strategies, and real-world withdrawal tactics for people with significant assets. Plus, the guys share the uncomfortable but crucial conversation every couple should have: “What happens if I die first?” And finally, they break down the dream—and reality—of retiring overseas. From taxes to healthcare to missing Elder football games, this episode is packed with practical insight for high-net-worth families preparing for the next chapter.
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
Tonight something we call the Financial Freedom Test, drive the
Millionaire's income problem and how to protect your spouse if
you die. First, you're listening to Simply Money, presented by
all Worth Financial on Bob Sponseller along with Brian James. Well,
here's a question, if you stop working tomorrow, how confident
are you that your plan actually works in the real world,
(00:29):
not just hypothetically on paper. And you know, that's a
lot of question. That's that's a question that a lot
of clients eventually get around to talking to us about. Brian,
you not can I retire? But what happens if I
try out financial freedom before I fully commit to it?
So let's get into something tonight we'll call the dry
(00:50):
run challenge. Talk about what that is. Brian.
Speaker 2 (00:52):
Yeah, I think this is a great idea for people,
and a lot of people kind of come to this
conclusion on their own. We'll have people that'll come in
and I'll say, well, I'm going to back off of
work a little bit and change these things around, and
we're just going to take a look at what the
income looks like.
Speaker 3 (01:04):
You know, and just see what it feels like. So,
so let's say you're still working, bringing in that great income.
Speaker 2 (01:09):
But at some point, you know, you want that freedom
to step away, as we all do eventually, so you know,
start living as if that paycheck is already gone. See
what it looks like. Try not to touch your salary
maybe for a little while, put one hundred percent of
your salary into your four oh one.
Speaker 3 (01:21):
Kay, go ahead, you can do that. Nothing's stopping you.
Speaker 2 (01:24):
And instead build that monthly income somehow from whatever sources
you plan to use when you're no longer working full time.
Speaker 3 (01:30):
That could be using withdrawals from your portfolio.
Speaker 2 (01:32):
And Bob, that's a you know this, but that is
a huge hurdle for people to get over right. People
have this psychological block too. I'm not allowed to touch
my nest egg.
Speaker 3 (01:40):
That's for the future.
Speaker 2 (01:41):
Even when they know they know very well that they're
in the future, they're now retired, we still don't want
to touch that nest egg. It feels irresponsible. Well, force
that out of your brain. You're going to have to
tamp that voice down and start doing it. So you
might be withdrawing.
Speaker 3 (01:53):
From your portfolio.
Speaker 2 (01:54):
Perhaps there's rental income that you've been socking away somewhere, dividends, maybe.
Speaker 3 (01:57):
A roth ladder.
Speaker 2 (01:58):
Whatever that strategy is, go ahead and try on that
machine for a little bit, a few months, maybe a
year or so.
Speaker 3 (02:02):
And just see how it works. See what it feels like.
Speaker 2 (02:04):
You're gonna learn real fast whether your plan's gonna work.
You'll start to notice is money building up in the
checking account or is it draining?
Speaker 3 (02:10):
Are these withdrawal sustainable? Are taxes a little higher than
we thought they might be? And are we spending more
than we thought?
Speaker 1 (02:16):
Brian, I want to kick this idea around with you
a little bit, because I'm gonna be brutally honest. I
have never asked a client to do this. I've never
had anyone do it. What I have done and done
often is focus on the spending profile. Because with people
that have high incomes, you know, they say, well, we
were gonna be able to retire on this much income,
(02:38):
and they don't test drive that at all. So I
have had people test drive that spending profile, you know,
prior to retirement, But as far as like not living
off your salary and starting to withdraw assets from your
portfolio before you retire, I've never done that. What am
I missing here? And have you done that with some
of your clients I'm genuinely interested.
Speaker 2 (02:59):
Well, I think more frequently these types of motivations tend
to come when there's a windfall, right if I inherit money,
or you know, I sold a business, sold something and
generated some level of assets. One thing that occurs to
people is, you know what, maybe I don't have to
buy wrote put this money into investments like I always do.
Maybe I can do something different with it, so it
(03:20):
can be that windfall that perhaps is sitting in the bank.
So it's not really necessarily a withdrawal out of investments,
which can be uncomfortable for some people. It's just a
machine they've never turned on. It's just literally spending down
savings for a little while.
Speaker 1 (03:31):
I think it could be tax of inefficient too, which
is why I brought that up.
Speaker 2 (03:35):
Yeah, of course, But at the same time, you know, yeah,
nobody's going to start taking iraway withdrawals or turn on
their social security, you know, just to kind of test drive.
Those are more permanent decisions. We're really just talking about
see if you can carve your spending down. That's really
what this discussion is. Doesn't really matter where you get
the dollars from, however, you're just trying to test drive
your spending profile.
Speaker 3 (03:54):
What is it that you need? What does your lifestyle
really cost? Because a lot of people just don't know.
Speaker 2 (03:59):
If you're in a i'llid financial position, you don't really
worry about a budget and you may not have any
idea really what you spend. You just know there's more
coming in every month than going out, and therefore that
must be Okay, that's gonna get real scary when it's
time to retire and you are relying on that nesting.
Speaker 1 (04:12):
All right, I knew you'd be able to dumb that
down even for people like me, So thanks for that.
All right, here's another way that we do need to
test drive retirement. And we'll just call this something we'll
call say, pretend every day becomes Saturday. This is where
we see a lot of folks get caught off guard.
People think the big question is do I have enough money?
(04:33):
But really it's what am I gonna do with all
of my discretionary time? Well, when every day becomes Saturday,
things change. The structure disappears. You wake up with no meetings,
no commute to work, and for a lot of people
that sounds amazing until it doesn't. This is something that
I talk to folks about. And I've had people, you know,
(04:56):
not a lot, but a few people have called after
retirement saying I don't know what I'm gonna do. Those
are people that did not do this test drive, and
I highly recommend this.
Speaker 2 (05:06):
Brian, Oh, absolutely, this is a more important test drive,
I think than the income side. Right, what are you
gonna do with that vacuum of time? That can be
very jarring, and all of a sudden, you know, you
go from being a pretty important person in the work world.
You know, you've got people underneath, You've got people that
rely on you because you are the one that has
the knowledge in the room, and all of a sudden,
you don't even know where.
Speaker 3 (05:24):
The coffee is in the kitchen because that's all that's
on your mind. Anymore.
Speaker 2 (05:27):
That the walls can close in a little bit, it
can be kind of jarring to to to to make
that big shift.
Speaker 3 (05:32):
So yeah, absolutely think about what you're gonna do.
Speaker 2 (05:34):
I always use the example of you know, it's it's
it's the it's ten o'clock and I'm on my fourth
cup of coffee and my spouse and I are staring
at each other from either end of the couch.
Speaker 3 (05:43):
What are we gonna do today?
Speaker 2 (05:44):
You know, when I get tired of drinking coffee, and
you know, think about how you're gonna spend that time.
And because a lot of times with the risk can
be actually financial in terms of when we get bored,
we tend to spend money. Uh, you know, I we'll
want to do this project, or you know what, I
think it's time. Maybe that cars getting a little old,
let's go research cars. Maybe we'll go buy one today,
something like that just to pass the time. So that
can catch a lot of people off guard.
Speaker 1 (06:05):
In terms of or that rolling hunk of depreciation called
an RV. Brian, we want to avoid those.
Speaker 2 (06:11):
Yes, exactly because or if you're gonna do what you
gotta scratch that in, go find somebody who did it
three four years ahead of you and now they're tired
of it, and that they're dumping that RV on Facebook,
marketplace or something like that. You can find some good
deals in really good shape from people who made a mistake.
Speaker 1 (06:26):
Yeah, in all seriousness, and I think this is a
great idea. You know, if you're one to two years
away from retirement, take one of your vacation weeks and
really map that out, you know, to be a test
drive on retirement. Spend that week as though you were retired,
and fill up those hours, fill up those activities, figure
(06:47):
out what you do and don't want to do together
as spouses, and really test drive that whole situation out
and then discuss it in advance. I think it's a
wonderful way to spend a week before you pull the
ripcord on retirement. All right, let's get into some of
the spending surprises that no one tells you about in advance.
Speaker 2 (07:05):
Brian, Yeah, so we hear this all the time too.
I thought I'd spend less when I stopped working. Well,
you might eat, but.
Speaker 3 (07:11):
You might not.
Speaker 2 (07:12):
So you know, the things that people come up with
in terms of what am I not going to spend
money on more, Well, I don't have to worry. I'm
not gonna have to worry about the urge to eat out,
eat lunch out anymore. You know, I don't have to
worry about buying work clothes or dry cleaning that kind
of stuff.
Speaker 3 (07:23):
But now all of a sudden, you've got time.
Speaker 2 (07:25):
So those daily lunches that you were, you know, kind
of forced to run down to the local diner and
grab lunch and then get back to the office.
Speaker 3 (07:32):
Well, now it's going to be like, you know.
Speaker 2 (07:33):
What, it's a nice day outside, let's go to that
one with the patio and let's sit there and have
a nice leisurely lunch, maybe with mimosas. And then tomorrow
we'll have more mimosas, because we've got time for mimosas
these days. So we've seen a lot of families spend
a lot more getting used to that in the first
years of financial freedom than they ever budgeted for. Even
if we've got a plan in place, we still tend
to find more things to spend money on. As you're
(07:55):
getting your sea legs in retirement. So if you're healthy, active,
you want to enjoy this phase of life just undertand
that's going to come along with a desire to spend more.
And that is not a bad thing. You don't have
to feel guilty about it. Just make sure you see
it coming. That's what this test drive is for. Go
find these things that might sneak up on you.
Speaker 1 (08:10):
Forget about momosa's. I mean, what about maybe just dropping
two hundred and fifty thousand dollars on a custom card
just to try that out.
Speaker 3 (08:18):
What about not everybody?
Speaker 2 (08:19):
Not everybody is Bob Sponseller, Right, we all can't just
pick one up on the way home and a gallon
of milk at the grocery store and a maserati.
Speaker 3 (08:27):
But you know you do you nobody's judging here, all right.
Speaker 1 (08:31):
I appreciate that, all right. Hey. Another thing to do
is test your tax plan in real time. Most people
think tax planning ends on April fifteenth, but when you're
living off your investments, how you withdraw your income makes
a massive difference. This is especially true the more money
you have. If you start pulling too much money from
(08:51):
your IRA too soon or in the wrong order, you
might push yourself, you know, unknowingly into a higher tax bracket,
have your Medicare premiums go up without realizing it. You
really do need to sit down and test drive in
advance how your retirement income strategy is going to work
before you just you know, hang up your shingle and
(09:11):
turn on the income and just hope it's all going
to work out.
Speaker 2 (09:14):
Yeah, tax planning. Tax planning is different than tax prep.
Tax prep ends on April fifteenth, or maybe October fifteenth.
Speaker 3 (09:21):
If you're going to get an extension. Tax planning.
Speaker 2 (09:23):
I'm going to be realistic here. Tax planning ends around
December fifteenth, December twentieth of the current tax year. And
I say that because there's going to be very little
time left, and your financial institutions are all getting swamped
with the roth conversion requests and the tax loss harvesting
requests and all those kinds of things. So we're really
at crunch time if you're doing any tax planning at all.
Tax planning is I want to do some things to
(09:44):
affect a different outcome in April, but as soon as
New Year's Day comes, then the tax year is closed.
You can't do anything anything else other than make an
IRA contribution if that's your thing.
Speaker 1 (09:54):
That's a really nice way for all you listeners out
there that work with Brian James, do not call Brian
James after December fifteenth. He's really trying to structure, you know,
a two and a half week vacation here to end
the end of the year. That's a great way to
put it though, Brian.
Speaker 3 (10:07):
I'm right, hey, you're on the way out today.
Speaker 1 (10:10):
Okay. Last thing, and I do think this is important,
this whole downsizing discussion that always comes up or often
comes up when people retire. Are we talking about downsizing
mentally or physically. Maybe you're not ready to move out
of that five bedroom house or sell your second home.
That's fine, but maybe use a test drive to think smaller,
(10:31):
if even temporarily, it could mean spending a little bit
less each month. The whole discussion about moving closer to
grandkids comes off, you know it, or comes up do
we buy a place near our grandkids. I don't recommend
that because you'll be chasing kids all over the country
from now. Because people move, they move a whole lot,
you know, more often than they used to. But and
(10:54):
the big one is this vacation stuff. Rather than just
going and dropping money on a condo because you love
to be in a certain spot and buying something, go
rent something on a temporary basis in a place you
think you might want to live or vacation in. It's
another way of test driving without making a huge financial
(11:14):
commitment that you might regret down the road.
Speaker 3 (11:17):
Yeah.
Speaker 2 (11:17):
I think that's a huge one because in this area,
the people have talked about, well, all we're gonna get
a place in Hilton Head, We're gonna get a place
in destin.
Speaker 3 (11:24):
Everybody has their place that they've.
Speaker 2 (11:25):
Been going to for years and it's always been the
lifelong dream to go to because of the week that
they had there every single year. Well, going somewhere and
staying there for months at a time is a very, very,
very different experience. You may or may not love it
for that long as opposed to when you were squishing
it in between baseball games and whatever kid stuff you
had going on back in the day. So be okay
(11:47):
with the idea of spending a little more to stay longer,
stay at a nicer place, and just realize what figure
out what it's like to actually live there and actually
do the tasks that a person who is not living
out of a suitcase has to do. That's the difference
between owning property somewhere and just renting for a week.
All these test drives are very important. Be okay with
spending a little more to make sure that a bigger investment,
(12:08):
should you want to buy, makes sense.
Speaker 1 (12:11):
Here's the all Worth advice. Don't just plan for the
next chapter, practice it. A financial freedom test drive can
help turn your vision into reality with fewer surprises and
way more peace of mind. Coming up next, we tackle
the millionaire's income problem, because pulling money out the wrong
way can cost you big in taxes, penalties, and lost opportunities.
(12:34):
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 on Bob Sponseller
along with Brian James. Are you still picking your own
stocks wondering how to turn company shares into real retirement
(12:55):
income from withdrawal strategies to covered call ets, smart investing
moves of all kinds straight ahead at six forty three,
let's paint a picture here. You did everything right, saved diligently,
you invested wisely, and now you're sitting on say three million,
five million, shoot, maybe even eight million dollars heading into retirement.
(13:18):
But here's the twist, no one tells you about. Getting
money out of your portfolio is a whole lot trickier
than putting it in. We'll call this the millionaire's income
problem if we can call an eight million dollar net
worth of problem. Brian, what are we talking about here?
Speaker 2 (13:33):
Well, once you stop getting that paycheck from some employer,
you know, like what I like to call other people's money,
O PM, Well you got to create your own.
Speaker 3 (13:41):
Now it's your own money.
Speaker 2 (13:42):
The risk isn't just running out of money, it's triggering
massive tax bills, medicare penalties, maybe even undoing decades of
careful investing that you've worked very hard to put in place.
So we're gonna go through a few strategies today that
you can go you can use to turn income on
the smart way. Here's a fun one. ROTH conversion ladders
after retirement. We see this all the time. Clients retire
at sixty two and are looking for more tax efficient Man,
(14:05):
I have a few low income tax years here before
Social Security and rm ds kick in. So if I'm retired,
I don't have salary anymore. That means a significant source
of income and income taxation has now gone away.
Speaker 3 (14:16):
And what else can we do? So this is a
tax planning window.
Speaker 2 (14:19):
These are the best years to convert money from traditional
to a ROTH. Of course, yes, you're gonna you're paying taxes, right,
you are taking money from pre tax to post tax.
Of course, that means the only way to get there
is to pay taxes.
Speaker 3 (14:31):
Right.
Speaker 2 (14:32):
A lot of people will come in and they'll say, hey,
I got this pile of money, I want to poof
turn it into a roth ira. Well, that's not that
that is a math calculation. It is very very much
a sacrifice in exchange for a game later. It can
be a great idea, but don't come in thinking it's just, hey,
I'm gonna make everything a wroth ira.
Speaker 3 (14:46):
Doesn't work that way.
Speaker 2 (14:47):
But anyway, if it does, if you do those conversions,
of course that money is now growing tax free and
it comes out tax free. Also will not count against
Medicare premium thresholds via IRMA.
Speaker 3 (14:56):
That is a big big deal.
Speaker 2 (14:58):
Your required minimum distributions out of your pre tax I rays,
those absolutely will affect your Medicare premiums.
Speaker 1 (15:04):
Let's talk about another strategy, evaluating municipal bonds versus dividend portfolios.
You know from when it comes to generating income. And
let's face it, a lot of folks have built a
lot of wealth the right way. They have invested diligently
and have been very disciplined, and they've done those dividend
reinvestments for years and years, if not decades and decades,
(15:27):
and they now want to say, hey, we want to
win from all this work we put in. Let's just
turn on the income stickt from dividend stocks, and that's
not a bad strategy unless they mess with your tax
efficiency if you're not careful. And this is where you know,
and Brian, you know, bonds tend to be a very
boring topic that a lot of people don't understand and
(15:48):
they don't take the time to evaluate. For higher networth,
high income people. Here we're talking about municipal bonds. It's
something to at least consider for folks in high tax brackets.
The interest, just as a reminder, from municipal bonds is
generally tax free at the federal level, and if you
buy in state bonds, they're often tax state tax free
(16:10):
as well. So it's it's a good time to sit
down and look at the after tax yield on what
you could get from you know, let's let's be real here,
some safer income alternatives like municipal bonds versus just taking
dividend income from stocks, where the stocks can become volatile.
You know, they will move up and down and sometimes violently,
(16:33):
and if you just rely on dividends from stocks to
generate the income that you need, you might end up
with a more way, more volatile portfolio. In retirement than
you want to hold.
Speaker 3 (16:44):
You could too.
Speaker 2 (16:45):
And while we're talking about municipal bonds, Bob, I want
to throw another thought out there. I frequently will see
people who who maybe are at a low bracket right
now because they just don't have any They don't have
much in the way of income. They might have millions
in their retirement plans and sitting in the bank and
all that, but they haven't turned on any of their
income streams. And then I'll see that they're sitting on
a bunch of municipal bonds that are maybe yielding them
(17:05):
three percent or something like that, when they could be
in a corporate bond portfolio that's spitting out five percent.
So the idea is not to poke the irs in
the eye by not paying any taxes. If you're in
a low bracket and you have municipal bonds, you're leaving
a lot of money on the table. I'd rather pay
taxes on five percent worth of income and get four net,
then get three without paying any taxes at all. So
(17:27):
be sure you understand the purpose of your municipal bond.
Speaker 3 (17:29):
I'll be honest.
Speaker 2 (17:30):
Unless you're in the thirty two percent bracket, which is
close to four hundred thousand for a married couple or
two hundred or so for an individual. If you're in
the thirty two percent bracket, then yes, you're going to
see your tax equivalent yields be worthwhile.
Speaker 3 (17:42):
But if you're underneath that, unis might not be helping
you as much as are hurt.
Speaker 1 (17:45):
Yeah, great point. And for folks with larger portfolios, this
is where a laddered bond strategy with individual bonds makes
a lot of sense because you can actually see how
the sausage is made, you can actually see the bond
you own. You can stagger them maturities, so you're not
locking in anything for the long term because things do
and will change in terms of tax policy, interest rates,
(18:08):
all of that. So ladder bond portfolios, and as you said,
mixing and matching various sources of that bond income can
be a great thing to take a look at. Let's
talk about real estate, Brian. We occasionally have people that
want to live off of rental income from you know,
rental homes that they've acquired over the years, and they
are used to fantastic cash flow. There are pros and
(18:31):
cons to taking that strategy into retirement.
Speaker 2 (18:35):
So yeah, a rental income, of course, can be a
fantastic source of cash flow. Right, there's no income like
passive income. However, those of you who own real estate
or have in the past, you know there is nothing
passive about owning rental real estate. You've got maintenance, you've
got vacancies, and worst of all, you've got the human
being communications with the tenants. Those can all create headaches.
(18:56):
There's no timing, there's no rationality to them other than
the way the universe works. All this stuff tends to
blow up when you don't have the time for it
to blow up. So this is where you know, people
might consider hiring a property manager or maybe shifting to
just plain investments like real estate investment trusts also known
as reats for some exposure real estate without taking the
toilet plumbing responsibilities. So these can be okay publicly traded reads.
(19:18):
Private real estate funds can throw off steady income and
you know, systematically and predictably, and they give you some
diversification loss across a lot of things, commercial properties, apartments,
business locations, and those kinds of things. Not having to
deal with that phone call about the broken water heater
or whatever. Rather than locking money into an annuity. Now,
this can be a better alternative, and annuities are okay,
(19:38):
but they can also limit your flexibility. They've got high
fees involved and can underperform. You can design your own
income stream through these different portfolio pieces, but you have
to understand how all the puzzle pieces fit together, the
benefits you're getting and the sacrifices you're making.
Speaker 1 (19:53):
Here's the all Worth advice. Just because you're wealthy doesn't
mean you can't make sometimes very expensive mistakes. Income planning
is where fortunes are either preserved or slowly drained. This
is a hard conversation but maybe the most important one
you can ever have with your spouse. What happens if
I die? First? How to prepare your partner emotionally and financially. Next,
(20:18):
you're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money. You're sided by all Worth Financial on Bob's
Fonseller along with Brian James. Well, this is one of
those segments that might be uncomfortable to hear, but it
(20:38):
might be exactly the one you'll be grateful you listen
to later on down the road. We're gonna call this
the if I die first segment, and it's not meant
to be dramatic. It's meant to be honest and practical.
This is important stuff, Brian, and it's an important topic
to get out in front of you and I have
both lived through this situation clients many times. What are
(21:01):
we talking about here?
Speaker 3 (21:03):
Well, this is important stuff.
Speaker 2 (21:04):
So if you're in a partnership, maybe a marriage, or
some other kind of domestic arrangement, well somebody's gonna go first.
Speaker 3 (21:09):
And unfortunately, whether you're the.
Speaker 2 (21:11):
Money spouse, the one who pays attention and makes the
decisions and knows where all the bodies are buried, or
the one who prefers to stay out of the financial
details and only be informed of the big picture, you know,
like what what'll we call, like to call the CEO
versus the CFO in a household?
Speaker 3 (21:24):
Well, we've seen far too many.
Speaker 2 (21:25):
Cases where that surviving spouse is not only left grieving,
which is hard enough as it is, but completely financially unprepared,
which can just be overwhelming to go through all that
at once.
Speaker 3 (21:35):
So let's talk about that.
Speaker 2 (21:36):
You know, the different roles that spouses tend to play.
Speaker 3 (21:40):
That we see in these planning relationships that we have, well.
Speaker 2 (21:43):
One spouse and it's usually but this is going to
sound sexist, this is the way it works. It's usually,
but not always the husband. One spouse is normally the
one who really wants.
Speaker 3 (21:51):
To take care.
Speaker 2 (21:52):
I would say this is probably three out of four
times one spouse wants to take care of all the finances.
The other one wants nothing to do with it. And
this is a relationship that actually works pretty well. You know,
show me two people who want to be neck deep
in every part of the household, and I'll show you
two people aren't going to stay.
Speaker 3 (22:06):
Married for very long.
Speaker 2 (22:07):
Separation of duties is very important, But that's the one
who handles the investments, taxes, pays the bills, runs the budget.
Speaker 3 (22:12):
The other spouse perfectly capable.
Speaker 2 (22:14):
Of it, but just isn't involved and therefore doesn't know
the day to day and there's gonna be a run
up to kind of a learning curve to understanding how
that household worked. So this can be by choice. Maybe
they chose that, or maybe they were just told don't worry,
I'll take care of it, and they didn't push back
at the time. Well, the risk here is that if
the money spouse dies first, obviously there's enough going on
with the grief, but also this person is suddenly a
(22:35):
CFO when maybe they've never had that role in their
entire lives.
Speaker 1 (22:38):
Brian, I've told this story at least once on this show,
and I think it's worth repeating. One of my first
ever clients, and they were wonderful people, wonderful marriage, but
you know, they really did live, you know, in what
I would call the Flintstone generation. The husband did everything.
The wife was just a great mother and and took
care of the home, you know, more of an time
(23:00):
traditional way of doing things. And all this husband told
his wife was if I die, call Bob. Well, she
called me on my cell phone at four fifteen in
the morning one day and said, you know, my husband
died and and these people, Brian, they were worth several
million dollars back in nineteen ninety two, so that's a
lot of money. And her first and only question to
(23:24):
me was do I have enough money to go down
to the UDF and buy some eggs and milk? And
it was a very sad conversation to have because to
your point that you just made she's grieving the loss
of her husband. She has no idea whether she's penniless
and can even afford groceries that day. That is a
very sad situation to put someone in. It wasn't It
(23:47):
wasn't done intentionally. Again, wonderful marriage, but there was no
planning put in place whatsoever to prepare this woman to
be the new financial CEO over home. It was a
I will never forget that phone call, and I try
to help people avoid that situation at all costs. So
let's pivot to what we should be doing for our
(24:09):
loved ones.
Speaker 2 (24:10):
So the very first thing is make sure everybody knows
where all this stuff is, right, don't overthink this. The
very first thing we need to do is just make
sure we're clear where the inventory is. So maybe something
like a financial instruction manual that would contain a list
of all your investment accounts, bank accounts, maybe the last
year end statement.
Speaker 3 (24:27):
It can be this easy.
Speaker 2 (24:28):
Every December, grab that or January when the statements show up,
grab that statement, throw it in a folder, and you
don't have to worry, don't even have to look at it.
You know, even if this is just a digital folder
or something on dropbox. You don't even have to look at.
It's just a place where you can say, oh, here's
what it was, you know whatever December. This account existed
at one point and then you're surviving spouse and whoever
is helping them organize things will know where to look.
(24:50):
They can always go get the latest information, but they
just need to know that the account exists. Passwords, now,
this is a little bit tougher because I used to
try this years ago when the internet was first thing,
but passwords nowadays changed so often there's just no way
and it's actually dangerous to be writing them down on
a piece of paper. Or what really frightens me, Bob,
the shared spreadsheet in Google Docs or something like that
(25:11):
that has the keys to your kingdom somewhere out there online.
But you know, so there's a little tougher. Different things
have to happen there. I would suggest again, just just
make sure everybody knows where the accounts are and the
individuals can contact those financial institutions one by one and
make sure they get their appropriate access.
Speaker 3 (25:28):
But here's an important one.
Speaker 2 (25:29):
If there's a financial advisor in the mix, where if
there's some central point who knows where all this stuff is,
Please make sure your spouse knows who that person is
and ideally can pick them out of a crowd. I
do have a handful of clients where the non money
spouse is so far away from the money they don't
even want to come in and meet me. And that
scares me to death because this person is going to
call me in tears wanting to know if they can
afford eggs. That's not a good thing. Make sure your
(25:52):
spouse knows where your advisor is. You're a state attorney,
your CPA, and anybody else you're working with business cards
in a fold or something like that.
Speaker 1 (25:59):
Well, I'm gonna jump on that point you just made
because I think it's a critical one. You know, it's
not just about money and passwords and account numbers. Both
spouses or both partners should know these advisors, not just
know their names or how to pick them out of
a lineup. They should know them a little bit. They
should have attended a few meetings because at the end
of the day, when that spouse who passes away is
(26:21):
no longer here, it is going to come down to
do I connect with these advisors and the surviving spouse
if they have no relationship with those advisors. They haven't
built any trust, they haven't gotten to know one another.
Things can change in a hurry, and the whole plan
that this couple put together for decades could get unwound
(26:41):
overnight if you fall into the hands of a you know,
unscrupulous advisor, or just get bad advice, or get non
informed advice because there was not a relationship for him.
You can tell I'm on my high horse here. I
think this is a really important thing. Both spouses need
to attend these meetings, even if one spouse has no
(27:01):
interest in the numbers and the spreadsheets and all that,
simply to feel comfort level with who the advisory team
is because it will come into play very quickly, and
it's important.
Speaker 3 (27:13):
It's important to get it. Even if you don't understand
the numbers or.
Speaker 2 (27:16):
How it go works together and you hate hate this stuff,
you should get a vibe from the advisor do you
like them or not? Because that person one day was
going to have to be your partner, whether you like
it or not.
Speaker 1 (27:27):
Here's the all Worth advice. The best gift you can
leave your spouse isn't just money. It's clarity, stock options,
smarter withdraws and income strategies of the all of the above.
Coming up next, we break down real world money moves
for investors with more to lose if they don't plan accordingly.
(27:47):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money, If I all Worked Financial Lumpops fun seller
along with Brian James. Do you have a financial question
you'd like for us to answer. There's a red button
you can click while you're listening to the show. If, if,
(28:10):
and only if you're listening to the show on the
iHeart app. Simply record your question there and it will
come straight to us. All right, Brian, here's Allan from
Milford who says we inherited a whole mix of investments
from my parents and honestly, I don't know what half
of this stuff is. How do you modernize a portfolio
(28:30):
without completely blowing it up?
Speaker 2 (28:32):
Well, the first thing is don't rush into any decisions.
The biggest mistake that people often make is thinking you
got to fix everything at once. This was mom and
dad's portfolio. This is a portfolio for little elderly people.
And that's not me, So I need to change everything
right now today. You might not understand what it is.
So start with a full inventory, every holding, every fun class,
all the stocks, most importantly cost basis, and understand how
(28:55):
the impact of this works. If those assets got to
step up in bases at death, that often gives you
it's gonna give you a tax free reset button. Most
of the stuff that is not inside of some kind
of retirement plan that should have come to you in
a taxable portfolio, which means it's as if you bought
it the day your benefactor passed away, so you get
(29:15):
at the moment you inherit it, you should be at.
Speaker 3 (29:17):
A pretty low cost basis. Don't let those run forever though.
Speaker 2 (29:19):
Matter of fact, I'd look at those first, because people
will come in two years after the fact going well
I didn't really like these investments.
Speaker 3 (29:25):
I wanted to make some changes.
Speaker 2 (29:26):
Well they've gone up a bit, so now we have
taxes where if we had looked at it a little
more quickly, we could have made the adjustments that are
more appropriate before the tax bite happened.
Speaker 3 (29:35):
And then you put these into buckets.
Speaker 2 (29:37):
Right, you might have keepers and stuff that you're not
sure about and stuff you're gonna dump right away. The
keepers would be your low cost index funds, diverse fight ETFs.
Questionable stuff is anything with a high internal fee, like
expensive mutual funds, maybe old share classes B shares or
Heaven Forbid C share or something like that. Those might
not make any sense. And then exit candidates would be
those little spin offs. You know, everybody who has P
(29:59):
and G also got small and a handful of other
little tiny positions. You might not want to deal with
that stuff at all. It's all gonna spit out little
tiny things, so tidy it up, but it's nothing to
be afraid of. You don't have to do it immediately.
But at the same time, don't let it go for twue, three,
four or five years. It's not going to be very
efficient to handle it that way. Okay, moving on to Greg.
Greg's down in Fort Thomas. Love the forts down there.
I'll always picked my own stocks. But now our portfolio
(30:21):
is gett a little bigger, and he's wondering if they've
got any blind spots. Well, how do you know when
doing it yourself becomes too risky?
Speaker 1 (30:28):
Well risk, Greg, It all comes down to, do you
have a financial plan in other words, what does your
money need to do for you and win? So you know,
we start there, do you have a financial plan and
if not, maybe think about getting one. In terms of
stock picking, there's nothing wrong with doing it yourself, you know,
in terms of building a portfolio, as long as the
(30:48):
portfolio is going to accomplish. Again, back to that financial plan,
what you needed to do and win. A couple of
blind spots that typically come up with folks that you know,
I see that are doing it yourself and buying individual stocks.
This this comes into play, you know, more often with
men than women, because men tend to tie, we tend
to tie our ego to everything is we love to
(31:11):
look at those winners on that spreadsheet that we've owned
for years, if not decades, and we can get lulled
to sleep. Think, you know, seeing a three four hundred
percent gain on a spreadsheet and you love looking at
the fact that you picked a winning stock. Well, maybe
most of that return happened, you know, in the last
ten or twenty years, and maybe the stock has declined
(31:31):
or just been flat or kind of dead money for
the last three, five or ten years. So you know,
looking at performance, you know, not just over the last
thirty years. But what's likely to happen going forward, and
how are things you know, moving right now, and what
are some of the other alternatives out there, uh that
you might be considering. That's a blind spot to take
a look at. I know people never want to sell
(31:53):
a stock because of taxes. Again, this comes back to
your financial plan. Are you charitably inclined? Do you do
some regular charitable giving? This is where you know you
could take some of those appreciated shares fund a donor
advice fund, or give the shares directly to charity. It's
a great way to diversify a portfolio. So those are two,
you know, a third one would just be stress test portfolio.
(32:16):
There's wonderful software out there that would say, hey, what
happens if any of these stocks or you know, twenty
percent of your individual stocks go down thirty or forty percent,
Because that's a real possibility in any economic situation. So
sometimes when people see that portfolio actually stress tested, the
(32:36):
light belt, the bells and whistles go off and say, wow,
I don't want that kind of exposure. Let's talk about
how to responsibly diversify over a reasonable period of time
with reasonable tax exposure. Hope that helps Greg all right,
Paul and Oxford. Bryan says, we've been told that our
withdrawal plan should quote unquote adapt to markets. What does
(32:57):
that actually look like in real life?
Speaker 2 (33:00):
Lot of people think of retirement withdrawals as a fixed paycheck.
Speaker 3 (33:02):
We're all used to fix paychecks.
Speaker 2 (33:04):
Because we've been getting one every month or every two
weeks or every week for however long. But but when
when it's my own money, then I can kind of
turn this pigot on and off as I need.
Speaker 3 (33:14):
And then then the.
Speaker 2 (33:14):
Question becomes, how do I know when I need what? Well,
the safest financial plans offer or have the ability to
kind of breathe with the markets. They flex, they kind
of contract when the markets a rough a rough, and
they open up when markets are strong. So the thinking
here would be, make sure you're stay flexible. People get
so tempted to I just want I want to never worry, right,
I didn't have to worry when I had a paycheck,
(33:35):
and I don't want to worry anymore. So I want
to just program this in and just make sure I
have this exact amount coming in every month and then
never think about money again. Well, Unfortunately, if you have money,
then you're going to be thinking about it for the
rest of your life, because once you retire, you've won freedom.
But freedom means now you own your own company.
Speaker 3 (33:50):
Who's who? Whose product? Is you? Making sure you're financially stable?
So what what where?
Speaker 2 (33:55):
It's tempting to say, I want X amount of dollars
every single month on this date to cover our actually everything.
I think that's great, but I think we really should
focus on what's the money we know we are going
to spend. Let's focus on that. Let's make that predictable.
Then the rest of it can be flexible, and that
gives you the ability to keep things invested when the
markets are running and you don't need the money. But also,
if we've also taken the step of setting aside and
(34:17):
being aware of what expenses are coming up via a
financial plan, then we will have already carved out the
dollars we know we're gonna need, versus saying here's what
I'm gonna spend I think this year and then dividing
that by twelve every single month. The fixed costs, yes,
do that, But the stuff you might maybe do but
you also might rule out, don't lock that into your
income plan, keep that flexible.
Speaker 1 (34:37):
Coming up next to real pros and cons of retiring
overseas and what you need to consider before you pack
that suitcase. You're listening to Simply Money is to buy
Allword Financial on fifty five KRC, the talk station. You're
listening to Simply Money is that to buy all Worth Financial.
(34:57):
I'm Bob's fund seller along with Brian James. The dream
of retiring overseas has never been more popular, especially with
Americans looking to lower cost, chase adventure, or just escape
the US healthcare system. But there are real financial and
lifestyle considerations that come with that dream. Let's break some
(35:18):
of those down, Brian. What are the pros and cons
of retiring abroad?
Speaker 2 (35:23):
Yeah, so the biggest one will you can you can
find a lower cost of living. There are people who
go who move down to you know, Central America, nice
places with beaches and monkeys. You can get a lower
cost of living down there, and that's where we come
up with these ideas. So five thousand dollars a month
can go a lot further than it does here in
the United States, you know, places like.
Speaker 1 (35:41):
Portscore answer to AI, Brian is just retired down in
the Southern Hemisphere and get a few monkeys to do
your chores for you.
Speaker 2 (35:48):
Beaches and monkeys. Everybody needs a monkey buttler, right, isn't
that the hidden dream?
Speaker 1 (35:52):
Yep?
Speaker 2 (35:53):
But yeah, those countries all show up on the list
for all those reasons because of the cost of living
down there. Another plus can be tax advantages. Some countries
have favorable tax treaties with the United States, or maybe
they don't tax foreign retirement income at all. In a
lot of cases, your Social Security benefits still get paid overseas. Now,
for those of you who might be frustrated with, you know,
just things in general here and are thinking the heck
(36:15):
with it, We're just gonna not be American anymore. We're
gonna go away. There are a handful of people like
that out there. Google the term exit tax. You don't
get to take all your money and run away. You're
gonna have to pay taxes on it, just as if
you were just gonna liquidate everything and put it in
a suitcase.
Speaker 3 (36:27):
Not that easy exit tax. What you want to look at.
Let's talk about lifestyle, bob. This is all you.
Speaker 1 (36:34):
Well, I'll give you an actual example of what we're
talking about I was on a flight a month or
so ago with a lady who was flying back to
Cincinnati for her fiftieth high school reunion. She went to
Walnut Hills High School and a very nice lady. But
here's the interesting part. She and her husband are preparing
right now as we speak, to retire in Portugal, and
(36:58):
we had an opportunity to talk about that, you know,
on the flight from Denver to Cincinnati. And I'll tell
you this, Brian, she had no stress on her face
whatsoever about any of this stuff. They had to the
prior points we brought up earlier in the show. They
have been test driving this thing for months. They found
the right neighborhoods, the right community of people, found their
(37:22):
healthcare solution. I mean, she was all jacked up and
ready to go. And so it's very doable if you
do your homework in advance, and she and her husband
had clearly done that. Portugal, I guess is the new
place to check out. Never been there I heard that before.
Speaker 2 (37:39):
So those those are all the good reasons that people
want to do this. So what are the cons? Well,
Bob just kind of hinted that at healthcare is a
big one. It can be cheaper, but is it as good.
Are you going to have access to specialists? Is there
a language barrier? That's a huge one. Specialists can be great,
but not if you're not speaking the same language. Medicare well,
that doesn't travel. You're generally on your own there. Here's
a huge one. If you're from Cincinnati, specific the West
(38:00):
Side where things a little tighter over there. Well, distance
from family, that's huge. What seems fun at sixty five
might feel really really isolating at seventy five.
Speaker 1 (38:09):
You know, hard to go to an elder football game
when you live in Portugal Brian virtually impossible.
Speaker 2 (38:14):
You can stream those games now, it's not as hard
as it used to be, but at the same time,
you know you're still gonna have to, you know, have
your price Hill chili shipped out to you over overseas.
Speaker 1 (38:23):
Those are just a couple things to think about. Here's
the all Worth advice. Retiring overseas can stretch your dollars
and expand your horizons, but make sure your money, your healthcare,
and your expectations can handle the move. Thanks for listening tonight.
You've been listening to Simply Money present up by all
Worth Financial on fifty five KRC, the talk station
Tonight something we call the Financial Freedom Test, drive the
Millionaire's income problem and how to protect your spouse if
you die. First, you're listening to Simply Money, presented by
all Worth Financial on Bob Sponseller along with Brian James. Well,
here's a question, if you stop working tomorrow, how confident
are you that your plan actually works in the real world,
(00:29):
not just hypothetically on paper. And you know, that's a
lot of question. That's that's a question that a lot
of clients eventually get around to talking to us about. Brian,
you not can I retire? But what happens if I
try out financial freedom before I fully commit to it?
So let's get into something tonight we'll call the dry
(00:50):
run challenge. Talk about what that is. Brian.
Speaker 2 (00:52):
Yeah, I think this is a great idea for people,
and a lot of people kind of come to this
conclusion on their own. We'll have people that'll come in
and I'll say, well, I'm going to back off of
work a little bit and change these things around, and
we're just going to take a look at what the
income looks like.
Speaker 3 (01:04):
You know, and just see what it feels like. So,
so let's say you're still working, bringing in that great income.
Speaker 2 (01:09):
But at some point, you know, you want that freedom
to step away, as we all do eventually, so you know,
start living as if that paycheck is already gone. See
what it looks like. Try not to touch your salary
maybe for a little while, put one hundred percent of
your salary into your four oh one.
Speaker 3 (01:21):
Kay, go ahead, you can do that. Nothing's stopping you.
Speaker 2 (01:24):
And instead build that monthly income somehow from whatever sources
you plan to use when you're no longer working full time.
Speaker 3 (01:30):
That could be using withdrawals from your portfolio.
Speaker 2 (01:32):
And Bob, that's a you know this, but that is
a huge hurdle for people to get over right. People
have this psychological block too. I'm not allowed to touch
my nest egg.
Speaker 3 (01:40):
That's for the future.
Speaker 2 (01:41):
Even when they know they know very well that they're
in the future, they're now retired, we still don't want
to touch that nest egg. It feels irresponsible. Well, force
that out of your brain. You're going to have to
tamp that voice down and start doing it. So you
might be withdrawing.
Speaker 3 (01:53):
From your portfolio.
Speaker 2 (01:54):
Perhaps there's rental income that you've been socking away somewhere, dividends, maybe.
Speaker 3 (01:57):
A roth ladder.
Speaker 2 (01:58):
Whatever that strategy is, go ahead and try on that
machine for a little bit, a few months, maybe a
year or so.
Speaker 3 (02:02):
And just see how it works. See what it feels like.
Speaker 2 (02:04):
You're gonna learn real fast whether your plan's gonna work.
You'll start to notice is money building up in the
checking account or is it draining?
Speaker 3 (02:10):
Are these withdrawal sustainable? Are taxes a little higher than
we thought they might be? And are we spending more
than we thought?
Speaker 1 (02:16):
Brian, I want to kick this idea around with you
a little bit, because I'm gonna be brutally honest. I
have never asked a client to do this. I've never
had anyone do it. What I have done and done
often is focus on the spending profile. Because with people
that have high incomes, you know, they say, well, we
were gonna be able to retire on this much income,
(02:38):
and they don't test drive that at all. So I
have had people test drive that spending profile, you know,
prior to retirement, But as far as like not living
off your salary and starting to withdraw assets from your
portfolio before you retire, I've never done that. What am
I missing here? And have you done that with some
of your clients I'm genuinely interested.
Speaker 2 (02:59):
Well, I think more frequently these types of motivations tend
to come when there's a windfall, right if I inherit money,
or you know, I sold a business, sold something and
generated some level of assets. One thing that occurs to
people is, you know what, maybe I don't have to
buy wrote put this money into investments like I always do.
Maybe I can do something different with it, so it
(03:20):
can be that windfall that perhaps is sitting in the bank.
So it's not really necessarily a withdrawal out of investments,
which can be uncomfortable for some people. It's just a
machine they've never turned on. It's just literally spending down
savings for a little while.
Speaker 1 (03:31):
I think it could be tax of inefficient too, which
is why I brought that up.
Speaker 2 (03:35):
Yeah, of course, But at the same time, you know, yeah,
nobody's going to start taking iraway withdrawals or turn on
their social security, you know, just to kind of test drive.
Those are more permanent decisions. We're really just talking about
see if you can carve your spending down. That's really
what this discussion is. Doesn't really matter where you get
the dollars from, however, you're just trying to test drive
your spending profile.
Speaker 3 (03:54):
What is it that you need? What does your lifestyle
really cost? Because a lot of people just don't know.
Speaker 2 (03:59):
If you're in a i'llid financial position, you don't really
worry about a budget and you may not have any
idea really what you spend. You just know there's more
coming in every month than going out, and therefore that
must be Okay, that's gonna get real scary when it's
time to retire and you are relying on that nesting.
Speaker 1 (04:12):
All right, I knew you'd be able to dumb that
down even for people like me, So thanks for that.
All right, here's another way that we do need to
test drive retirement. And we'll just call this something we'll
call say, pretend every day becomes Saturday. This is where
we see a lot of folks get caught off guard.
People think the big question is do I have enough money?
(04:33):
But really it's what am I gonna do with all
of my discretionary time? Well, when every day becomes Saturday,
things change. The structure disappears. You wake up with no meetings,
no commute to work, and for a lot of people
that sounds amazing until it doesn't. This is something that
I talk to folks about. And I've had people, you know,
(04:56):
not a lot, but a few people have called after
retirement saying I don't know what I'm gonna do. Those
are people that did not do this test drive, and
I highly recommend this.
Speaker 2 (05:06):
Brian, Oh, absolutely, this is a more important test drive,
I think than the income side. Right, what are you
gonna do with that vacuum of time? That can be
very jarring, and all of a sudden, you know, you
go from being a pretty important person in the work world.
You know, you've got people underneath, You've got people that
rely on you because you are the one that has
the knowledge in the room, and all of a sudden,
you don't even know where.
Speaker 3 (05:24):
The coffee is in the kitchen because that's all that's
on your mind. Anymore.
Speaker 2 (05:27):
That the walls can close in a little bit, it
can be kind of jarring to to to to make
that big shift.
Speaker 3 (05:32):
So yeah, absolutely think about what you're gonna do.
Speaker 2 (05:34):
I always use the example of you know, it's it's
it's the it's ten o'clock and I'm on my fourth
cup of coffee and my spouse and I are staring
at each other from either end of the couch.
Speaker 3 (05:43):
What are we gonna do today?
Speaker 2 (05:44):
You know, when I get tired of drinking coffee, and
you know, think about how you're gonna spend that time.
And because a lot of times with the risk can
be actually financial in terms of when we get bored,
we tend to spend money. Uh, you know, I we'll
want to do this project, or you know what, I
think it's time. Maybe that cars getting a little old,
let's go research cars. Maybe we'll go buy one today,
something like that just to pass the time. So that
can catch a lot of people off guard.
Speaker 1 (06:05):
In terms of or that rolling hunk of depreciation called
an RV. Brian, we want to avoid those.
Speaker 2 (06:11):
Yes, exactly because or if you're gonna do what you
gotta scratch that in, go find somebody who did it
three four years ahead of you and now they're tired
of it, and that they're dumping that RV on Facebook,
marketplace or something like that. You can find some good
deals in really good shape from people who made a mistake.
Speaker 1 (06:26):
Yeah, in all seriousness, and I think this is a
great idea. You know, if you're one to two years
away from retirement, take one of your vacation weeks and
really map that out, you know, to be a test
drive on retirement. Spend that week as though you were retired,
and fill up those hours, fill up those activities, figure
(06:47):
out what you do and don't want to do together
as spouses, and really test drive that whole situation out
and then discuss it in advance. I think it's a
wonderful way to spend a week before you pull the
ripcord on retirement. All right, let's get into some of
the spending surprises that no one tells you about in advance.
Speaker 2 (07:05):
Brian, Yeah, so we hear this all the time too.
I thought I'd spend less when I stopped working. Well,
you might eat, but.
Speaker 3 (07:11):
You might not.
Speaker 2 (07:12):
So you know, the things that people come up with
in terms of what am I not going to spend
money on more, Well, I don't have to worry. I'm
not gonna have to worry about the urge to eat out,
eat lunch out anymore. You know, I don't have to
worry about buying work clothes or dry cleaning that kind
of stuff.
Speaker 3 (07:23):
But now all of a sudden, you've got time.
Speaker 2 (07:25):
So those daily lunches that you were, you know, kind
of forced to run down to the local diner and
grab lunch and then get back to the office.
Speaker 3 (07:32):
Well, now it's going to be like, you know.
Speaker 2 (07:33):
What, it's a nice day outside, let's go to that
one with the patio and let's sit there and have
a nice leisurely lunch, maybe with mimosas. And then tomorrow
we'll have more mimosas, because we've got time for mimosas
these days. So we've seen a lot of families spend
a lot more getting used to that in the first
years of financial freedom than they ever budgeted for. Even
if we've got a plan in place, we still tend
to find more things to spend money on. As you're
(07:55):
getting your sea legs in retirement. So if you're healthy, active,
you want to enjoy this phase of life just undertand
that's going to come along with a desire to spend more.
And that is not a bad thing. You don't have
to feel guilty about it. Just make sure you see
it coming. That's what this test drive is for. Go
find these things that might sneak up on you.
Speaker 1 (08:10):
Forget about momosa's. I mean, what about maybe just dropping
two hundred and fifty thousand dollars on a custom card
just to try that out.
Speaker 3 (08:18):
What about not everybody?
Speaker 2 (08:19):
Not everybody is Bob Sponseller, Right, we all can't just
pick one up on the way home and a gallon
of milk at the grocery store and a maserati.
Speaker 3 (08:27):
But you know you do you nobody's judging here, all right.
Speaker 1 (08:31):
I appreciate that, all right. Hey. Another thing to do
is test your tax plan in real time. Most people
think tax planning ends on April fifteenth, but when you're
living off your investments, how you withdraw your income makes
a massive difference. This is especially true the more money
you have. If you start pulling too much money from
(08:51):
your IRA too soon or in the wrong order, you
might push yourself, you know, unknowingly into a higher tax bracket,
have your Medicare premiums go up without realizing it. You
really do need to sit down and test drive in
advance how your retirement income strategy is going to work
before you just you know, hang up your shingle and
(09:11):
turn on the income and just hope it's all going
to work out.
Speaker 2 (09:14):
Yeah, tax planning. Tax planning is different than tax prep.
Tax prep ends on April fifteenth, or maybe October fifteenth.
Speaker 3 (09:21):
If you're going to get an extension. Tax planning.
Speaker 2 (09:23):
I'm going to be realistic here. Tax planning ends around
December fifteenth, December twentieth of the current tax year. And
I say that because there's going to be very little
time left, and your financial institutions are all getting swamped
with the roth conversion requests and the tax loss harvesting
requests and all those kinds of things. So we're really
at crunch time if you're doing any tax planning at all.
Tax planning is I want to do some things to
(09:44):
affect a different outcome in April, but as soon as
New Year's Day comes, then the tax year is closed.
You can't do anything anything else other than make an
IRA contribution if that's your thing.
Speaker 1 (09:54):
That's a really nice way for all you listeners out
there that work with Brian James, do not call Brian
James after December fifteenth. He's really trying to structure, you know,
a two and a half week vacation here to end
the end of the year. That's a great way to
put it though, Brian.
Speaker 3 (10:07):
I'm right, hey, you're on the way out today.
Speaker 1 (10:10):
Okay. Last thing, and I do think this is important,
this whole downsizing discussion that always comes up or often
comes up when people retire. Are we talking about downsizing
mentally or physically. Maybe you're not ready to move out
of that five bedroom house or sell your second home.
That's fine, but maybe use a test drive to think smaller,
(10:31):
if even temporarily, it could mean spending a little bit
less each month. The whole discussion about moving closer to
grandkids comes off, you know it, or comes up do
we buy a place near our grandkids. I don't recommend
that because you'll be chasing kids all over the country
from now. Because people move, they move a whole lot,
you know, more often than they used to. But and
(10:54):
the big one is this vacation stuff. Rather than just
going and dropping money on a condo because you love
to be in a certain spot and buying something, go
rent something on a temporary basis in a place you
think you might want to live or vacation in. It's
another way of test driving without making a huge financial
(11:14):
commitment that you might regret down the road.
Speaker 3 (11:17):
Yeah.
Speaker 2 (11:17):
I think that's a huge one because in this area,
the people have talked about, well, all we're gonna get
a place in Hilton Head, We're gonna get a place
in destin.
Speaker 3 (11:24):
Everybody has their place that they've.
Speaker 2 (11:25):
Been going to for years and it's always been the
lifelong dream to go to because of the week that
they had there every single year. Well, going somewhere and
staying there for months at a time is a very, very,
very different experience. You may or may not love it
for that long as opposed to when you were squishing
it in between baseball games and whatever kid stuff you
had going on back in the day. So be okay
(11:47):
with the idea of spending a little more to stay longer,
stay at a nicer place, and just realize what figure
out what it's like to actually live there and actually
do the tasks that a person who is not living
out of a suitcase has to do. That's the difference
between owning property somewhere and just renting for a week.
All these test drives are very important. Be okay with
spending a little more to make sure that a bigger investment,
(12:08):
should you want to buy, makes sense.
Speaker 1 (12:11):
Here's the all Worth advice. Don't just plan for the
next chapter, practice it. A financial freedom test drive can
help turn your vision into reality with fewer surprises and
way more peace of mind. Coming up next, we tackle
the millionaire's income problem, because pulling money out the wrong
way can cost you big in taxes, penalties, and lost opportunities.
(12:34):
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 on Bob Sponseller
along with Brian James. Are you still picking your own
stocks wondering how to turn company shares into real retirement
(12:55):
income from withdrawal strategies to covered call ets, smart investing
moves of all kinds straight ahead at six forty three,
let's paint a picture here. You did everything right, saved diligently,
you invested wisely, and now you're sitting on say three million,
five million, shoot, maybe even eight million dollars heading into retirement.
(13:18):
But here's the twist, no one tells you about. Getting
money out of your portfolio is a whole lot trickier
than putting it in. We'll call this the millionaire's income
problem if we can call an eight million dollar net
worth of problem. Brian, what are we talking about here?
Speaker 2 (13:33):
Well, once you stop getting that paycheck from some employer,
you know, like what I like to call other people's money,
O PM, Well you got to create your own.
Speaker 3 (13:41):
Now it's your own money.
Speaker 2 (13:42):
The risk isn't just running out of money, it's triggering
massive tax bills, medicare penalties, maybe even undoing decades of
careful investing that you've worked very hard to put in place.
So we're gonna go through a few strategies today that
you can go you can use to turn income on
the smart way. Here's a fun one. ROTH conversion ladders
after retirement. We see this all the time. Clients retire
at sixty two and are looking for more tax efficient Man,
(14:05):
I have a few low income tax years here before
Social Security and rm ds kick in. So if I'm retired,
I don't have salary anymore. That means a significant source
of income and income taxation has now gone away.
Speaker 3 (14:16):
And what else can we do? So this is a
tax planning window.
Speaker 2 (14:19):
These are the best years to convert money from traditional
to a ROTH. Of course, yes, you're gonna you're paying taxes, right,
you are taking money from pre tax to post tax.
Of course, that means the only way to get there
is to pay taxes.
Speaker 3 (14:31):
Right.
Speaker 2 (14:32):
A lot of people will come in and they'll say, hey,
I got this pile of money, I want to poof
turn it into a roth ira. Well, that's not that
that is a math calculation. It is very very much
a sacrifice in exchange for a game later. It can
be a great idea, but don't come in thinking it's just, hey,
I'm gonna make everything a wroth ira.
Speaker 3 (14:46):
Doesn't work that way.
Speaker 2 (14:47):
But anyway, if it does, if you do those conversions,
of course that money is now growing tax free and
it comes out tax free. Also will not count against
Medicare premium thresholds via IRMA.
Speaker 3 (14:56):
That is a big big deal.
Speaker 2 (14:58):
Your required minimum distributions out of your pre tax I rays,
those absolutely will affect your Medicare premiums.
Speaker 1 (15:04):
Let's talk about another strategy, evaluating municipal bonds versus dividend portfolios.
You know from when it comes to generating income. And
let's face it, a lot of folks have built a
lot of wealth the right way. They have invested diligently
and have been very disciplined, and they've done those dividend
reinvestments for years and years, if not decades and decades,
(15:27):
and they now want to say, hey, we want to
win from all this work we put in. Let's just
turn on the income stickt from dividend stocks, and that's
not a bad strategy unless they mess with your tax
efficiency if you're not careful. And this is where you know,
and Brian, you know, bonds tend to be a very
boring topic that a lot of people don't understand and
(15:48):
they don't take the time to evaluate. For higher networth,
high income people. Here we're talking about municipal bonds. It's
something to at least consider for folks in high tax brackets.
The interest, just as a reminder, from municipal bonds is
generally tax free at the federal level, and if you
buy in state bonds, they're often tax state tax free
(16:10):
as well. So it's it's a good time to sit
down and look at the after tax yield on what
you could get from you know, let's let's be real here,
some safer income alternatives like municipal bonds versus just taking
dividend income from stocks, where the stocks can become volatile.
You know, they will move up and down and sometimes violently,
(16:33):
and if you just rely on dividends from stocks to
generate the income that you need, you might end up
with a more way, more volatile portfolio. In retirement than
you want to hold.
Speaker 3 (16:44):
You could too.
Speaker 2 (16:45):
And while we're talking about municipal bonds, Bob, I want
to throw another thought out there. I frequently will see
people who who maybe are at a low bracket right
now because they just don't have any They don't have
much in the way of income. They might have millions
in their retirement plans and sitting in the bank and
all that, but they haven't turned on any of their
income streams. And then I'll see that they're sitting on
a bunch of municipal bonds that are maybe yielding them
(17:05):
three percent or something like that, when they could be
in a corporate bond portfolio that's spitting out five percent.
So the idea is not to poke the irs in
the eye by not paying any taxes. If you're in
a low bracket and you have municipal bonds, you're leaving
a lot of money on the table. I'd rather pay
taxes on five percent worth of income and get four net,
then get three without paying any taxes at all. So
(17:27):
be sure you understand the purpose of your municipal bond.
Speaker 3 (17:29):
I'll be honest.
Speaker 2 (17:30):
Unless you're in the thirty two percent bracket, which is
close to four hundred thousand for a married couple or
two hundred or so for an individual. If you're in
the thirty two percent bracket, then yes, you're going to
see your tax equivalent yields be worthwhile.
Speaker 3 (17:42):
But if you're underneath that, unis might not be helping
you as much as are hurt.
Speaker 1 (17:45):
Yeah, great point. And for folks with larger portfolios, this
is where a laddered bond strategy with individual bonds makes
a lot of sense because you can actually see how
the sausage is made, you can actually see the bond
you own. You can stagger them maturities, so you're not
locking in anything for the long term because things do
and will change in terms of tax policy, interest rates,
(18:08):
all of that. So ladder bond portfolios, and as you said,
mixing and matching various sources of that bond income can
be a great thing to take a look at. Let's
talk about real estate, Brian. We occasionally have people that
want to live off of rental income from you know,
rental homes that they've acquired over the years, and they
are used to fantastic cash flow. There are pros and
(18:31):
cons to taking that strategy into retirement.
Speaker 2 (18:35):
So yeah, a rental income, of course, can be a
fantastic source of cash flow. Right, there's no income like
passive income. However, those of you who own real estate
or have in the past, you know there is nothing
passive about owning rental real estate. You've got maintenance, you've
got vacancies, and worst of all, you've got the human
being communications with the tenants. Those can all create headaches.
(18:56):
There's no timing, there's no rationality to them other than
the way the universe works. All this stuff tends to
blow up when you don't have the time for it
to blow up. So this is where you know, people
might consider hiring a property manager or maybe shifting to
just plain investments like real estate investment trusts also known
as reats for some exposure real estate without taking the
toilet plumbing responsibilities. So these can be okay publicly traded reads.
(19:18):
Private real estate funds can throw off steady income and
you know, systematically and predictably, and they give you some
diversification loss across a lot of things, commercial properties, apartments,
business locations, and those kinds of things. Not having to
deal with that phone call about the broken water heater
or whatever. Rather than locking money into an annuity. Now,
this can be a better alternative, and annuities are okay,
(19:38):
but they can also limit your flexibility. They've got high
fees involved and can underperform. You can design your own
income stream through these different portfolio pieces, but you have
to understand how all the puzzle pieces fit together, the
benefits you're getting and the sacrifices you're making.
Speaker 1 (19:53):
Here's the all Worth advice. Just because you're wealthy doesn't
mean you can't make sometimes very expensive mistakes. Income planning
is where fortunes are either preserved or slowly drained. This
is a hard conversation but maybe the most important one
you can ever have with your spouse. What happens if
I die? First? How to prepare your partner emotionally and financially. Next,
(20:18):
you're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money. You're sided by all Worth Financial on Bob's
Fonseller along with Brian James. Well, this is one of
those segments that might be uncomfortable to hear, but it
(20:38):
might be exactly the one you'll be grateful you listen
to later on down the road. We're gonna call this
the if I die first segment, and it's not meant
to be dramatic. It's meant to be honest and practical.
This is important stuff, Brian, and it's an important topic
to get out in front of you and I have
both lived through this situation clients many times. What are
(21:01):
we talking about here?
Speaker 3 (21:03):
Well, this is important stuff.
Speaker 2 (21:04):
So if you're in a partnership, maybe a marriage, or
some other kind of domestic arrangement, well somebody's gonna go first.
Speaker 3 (21:09):
And unfortunately, whether you're the.
Speaker 2 (21:11):
Money spouse, the one who pays attention and makes the
decisions and knows where all the bodies are buried, or
the one who prefers to stay out of the financial
details and only be informed of the big picture, you know,
like what what'll we call, like to call the CEO
versus the CFO in a household?
Speaker 3 (21:24):
Well, we've seen far too many.
Speaker 2 (21:25):
Cases where that surviving spouse is not only left grieving,
which is hard enough as it is, but completely financially unprepared,
which can just be overwhelming to go through all that
at once.
Speaker 3 (21:35):
So let's talk about that.
Speaker 2 (21:36):
You know, the different roles that spouses tend to play.
Speaker 3 (21:40):
That we see in these planning relationships that we have, well.
Speaker 2 (21:43):
One spouse and it's usually but this is going to
sound sexist, this is the way it works. It's usually,
but not always the husband. One spouse is normally the
one who really wants.
Speaker 3 (21:51):
To take care.
Speaker 2 (21:52):
I would say this is probably three out of four
times one spouse wants to take care of all the finances.
The other one wants nothing to do with it. And
this is a relationship that actually works pretty well. You know,
show me two people who want to be neck deep
in every part of the household, and I'll show you
two people aren't going to stay.
Speaker 3 (22:06):
Married for very long.
Speaker 2 (22:07):
Separation of duties is very important, But that's the one
who handles the investments, taxes, pays the bills, runs the budget.
Speaker 3 (22:12):
The other spouse perfectly capable.
Speaker 2 (22:14):
Of it, but just isn't involved and therefore doesn't know
the day to day and there's gonna be a run
up to kind of a learning curve to understanding how
that household worked. So this can be by choice. Maybe
they chose that, or maybe they were just told don't worry,
I'll take care of it, and they didn't push back
at the time. Well, the risk here is that if
the money spouse dies first, obviously there's enough going on
with the grief, but also this person is suddenly a
(22:35):
CFO when maybe they've never had that role in their
entire lives.
Speaker 1 (22:38):
Brian, I've told this story at least once on this show,
and I think it's worth repeating. One of my first
ever clients, and they were wonderful people, wonderful marriage, but
you know, they really did live, you know, in what
I would call the Flintstone generation. The husband did everything.
The wife was just a great mother and and took
care of the home, you know, more of an time
(23:00):
traditional way of doing things. And all this husband told
his wife was if I die, call Bob. Well, she
called me on my cell phone at four fifteen in
the morning one day and said, you know, my husband
died and and these people, Brian, they were worth several
million dollars back in nineteen ninety two, so that's a
lot of money. And her first and only question to
(23:24):
me was do I have enough money to go down
to the UDF and buy some eggs and milk? And
it was a very sad conversation to have because to
your point that you just made she's grieving the loss
of her husband. She has no idea whether she's penniless
and can even afford groceries that day. That is a
very sad situation to put someone in. It wasn't It
(23:47):
wasn't done intentionally. Again, wonderful marriage, but there was no
planning put in place whatsoever to prepare this woman to
be the new financial CEO over home. It was a
I will never forget that phone call, and I try
to help people avoid that situation at all costs. So
let's pivot to what we should be doing for our
(24:09):
loved ones.
Speaker 2 (24:10):
So the very first thing is make sure everybody knows
where all this stuff is, right, don't overthink this. The
very first thing we need to do is just make
sure we're clear where the inventory is. So maybe something
like a financial instruction manual that would contain a list
of all your investment accounts, bank accounts, maybe the last
year end statement.
Speaker 3 (24:27):
It can be this easy.
Speaker 2 (24:28):
Every December, grab that or January when the statements show up,
grab that statement, throw it in a folder, and you
don't have to worry, don't even have to look at it.
You know, even if this is just a digital folder
or something on dropbox. You don't even have to look at.
It's just a place where you can say, oh, here's
what it was, you know whatever December. This account existed
at one point and then you're surviving spouse and whoever
is helping them organize things will know where to look.
(24:50):
They can always go get the latest information, but they
just need to know that the account exists. Passwords, now,
this is a little bit tougher because I used to
try this years ago when the internet was first thing,
but passwords nowadays changed so often there's just no way
and it's actually dangerous to be writing them down on
a piece of paper. Or what really frightens me, Bob,
the shared spreadsheet in Google Docs or something like that
(25:11):
that has the keys to your kingdom somewhere out there online.
But you know, so there's a little tougher. Different things
have to happen there. I would suggest again, just just
make sure everybody knows where the accounts are and the
individuals can contact those financial institutions one by one and
make sure they get their appropriate access.
Speaker 3 (25:28):
But here's an important one.
Speaker 2 (25:29):
If there's a financial advisor in the mix, where if
there's some central point who knows where all this stuff is,
Please make sure your spouse knows who that person is
and ideally can pick them out of a crowd. I
do have a handful of clients where the non money
spouse is so far away from the money they don't
even want to come in and meet me. And that
scares me to death because this person is going to
call me in tears wanting to know if they can
afford eggs. That's not a good thing. Make sure your
(25:52):
spouse knows where your advisor is. You're a state attorney,
your CPA, and anybody else you're working with business cards
in a fold or something like that.
Speaker 1 (25:59):
Well, I'm gonna jump on that point you just made
because I think it's a critical one. You know, it's
not just about money and passwords and account numbers. Both
spouses or both partners should know these advisors, not just
know their names or how to pick them out of
a lineup. They should know them a little bit. They
should have attended a few meetings because at the end
of the day, when that spouse who passes away is
(26:21):
no longer here, it is going to come down to
do I connect with these advisors and the surviving spouse
if they have no relationship with those advisors. They haven't
built any trust, they haven't gotten to know one another.
Things can change in a hurry, and the whole plan
that this couple put together for decades could get unwound
(26:41):
overnight if you fall into the hands of a you know,
unscrupulous advisor, or just get bad advice, or get non
informed advice because there was not a relationship for him.
You can tell I'm on my high horse here. I
think this is a really important thing. Both spouses need
to attend these meetings, even if one spouse has no
(27:01):
interest in the numbers and the spreadsheets and all that,
simply to feel comfort level with who the advisory team
is because it will come into play very quickly, and
it's important.
Speaker 3 (27:13):
It's important to get it. Even if you don't understand
the numbers or.
Speaker 2 (27:16):
How it go works together and you hate hate this stuff,
you should get a vibe from the advisor do you
like them or not? Because that person one day was
going to have to be your partner, whether you like
it or not.
Speaker 1 (27:27):
Here's the all Worth advice. The best gift you can
leave your spouse isn't just money. It's clarity, stock options,
smarter withdraws and income strategies of the all of the above.
Coming up next, we break down real world money moves
for investors with more to lose if they don't plan accordingly.
(27:47):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to
Simply Money, If I all Worked Financial Lumpops fun seller
along with Brian James. Do you have a financial question
you'd like for us to answer. There's a red button
you can click while you're listening to the show. If, if,
(28:10):
and only if you're listening to the show on the
iHeart app. Simply record your question there and it will
come straight to us. All right, Brian, here's Allan from
Milford who says we inherited a whole mix of investments
from my parents and honestly, I don't know what half
of this stuff is. How do you modernize a portfolio
(28:30):
without completely blowing it up?
Speaker 2 (28:32):
Well, the first thing is don't rush into any decisions.
The biggest mistake that people often make is thinking you
got to fix everything at once. This was mom and
dad's portfolio. This is a portfolio for little elderly people.
And that's not me, So I need to change everything
right now today. You might not understand what it is.
So start with a full inventory, every holding, every fun class,
all the stocks, most importantly cost basis, and understand how
(28:55):
the impact of this works. If those assets got to
step up in bases at death, that often gives you
it's gonna give you a tax free reset button. Most
of the stuff that is not inside of some kind
of retirement plan that should have come to you in
a taxable portfolio, which means it's as if you bought
it the day your benefactor passed away, so you get
(29:15):
at the moment you inherit it, you should be at.
Speaker 3 (29:17):
A pretty low cost basis. Don't let those run forever though.
Speaker 2 (29:19):
Matter of fact, I'd look at those first, because people
will come in two years after the fact going well
I didn't really like these investments.
Speaker 3 (29:25):
I wanted to make some changes.
Speaker 2 (29:26):
Well they've gone up a bit, so now we have
taxes where if we had looked at it a little
more quickly, we could have made the adjustments that are
more appropriate before the tax bite happened.
Speaker 3 (29:35):
And then you put these into buckets.
Speaker 2 (29:37):
Right, you might have keepers and stuff that you're not
sure about and stuff you're gonna dump right away. The
keepers would be your low cost index funds, diverse fight ETFs.
Questionable stuff is anything with a high internal fee, like
expensive mutual funds, maybe old share classes B shares or
Heaven Forbid C share or something like that. Those might
not make any sense. And then exit candidates would be
those little spin offs. You know, everybody who has P
(29:59):
and G also got small and a handful of other
little tiny positions. You might not want to deal with
that stuff at all. It's all gonna spit out little
tiny things, so tidy it up, but it's nothing to
be afraid of. You don't have to do it immediately.
But at the same time, don't let it go for twue, three,
four or five years. It's not going to be very
efficient to handle it that way. Okay, moving on to Greg.
Greg's down in Fort Thomas. Love the forts down there.
I'll always picked my own stocks. But now our portfolio
(30:21):
is gett a little bigger, and he's wondering if they've
got any blind spots. Well, how do you know when
doing it yourself becomes too risky?
Speaker 1 (30:28):
Well risk, Greg, It all comes down to, do you
have a financial plan in other words, what does your
money need to do for you and win? So you know,
we start there, do you have a financial plan and
if not, maybe think about getting one. In terms of
stock picking, there's nothing wrong with doing it yourself, you know,
in terms of building a portfolio, as long as the
(30:48):
portfolio is going to accomplish. Again, back to that financial plan,
what you needed to do and win. A couple of
blind spots that typically come up with folks that you know,
I see that are doing it yourself and buying individual stocks.
This this comes into play, you know, more often with
men than women, because men tend to tie, we tend
to tie our ego to everything is we love to
(31:11):
look at those winners on that spreadsheet that we've owned
for years, if not decades, and we can get lulled
to sleep. Think, you know, seeing a three four hundred
percent gain on a spreadsheet and you love looking at
the fact that you picked a winning stock. Well, maybe
most of that return happened, you know, in the last
ten or twenty years, and maybe the stock has declined
(31:31):
or just been flat or kind of dead money for
the last three, five or ten years. So you know,
looking at performance, you know, not just over the last
thirty years. But what's likely to happen going forward, and
how are things you know, moving right now, and what
are some of the other alternatives out there, uh that
you might be considering. That's a blind spot to take
a look at. I know people never want to sell
(31:53):
a stock because of taxes. Again, this comes back to
your financial plan. Are you charitably inclined? Do you do
some regular charitable giving? This is where you know you
could take some of those appreciated shares fund a donor
advice fund, or give the shares directly to charity. It's
a great way to diversify a portfolio. So those are two,
you know, a third one would just be stress test portfolio.
(32:16):
There's wonderful software out there that would say, hey, what
happens if any of these stocks or you know, twenty
percent of your individual stocks go down thirty or forty percent,
Because that's a real possibility in any economic situation. So
sometimes when people see that portfolio actually stress tested, the
(32:36):
light belt, the bells and whistles go off and say, wow,
I don't want that kind of exposure. Let's talk about
how to responsibly diversify over a reasonable period of time
with reasonable tax exposure. Hope that helps Greg all right,
Paul and Oxford. Bryan says, we've been told that our
withdrawal plan should quote unquote adapt to markets. What does
(32:57):
that actually look like in real life?
Speaker 2 (33:00):
Lot of people think of retirement withdrawals as a fixed paycheck.
Speaker 3 (33:02):
We're all used to fix paychecks.
Speaker 2 (33:04):
Because we've been getting one every month or every two
weeks or every week for however long. But but when
when it's my own money, then I can kind of
turn this pigot on and off as I need.
Speaker 3 (33:14):
And then then the.
Speaker 2 (33:14):
Question becomes, how do I know when I need what? Well,
the safest financial plans offer or have the ability to
kind of breathe with the markets. They flex, they kind
of contract when the markets a rough a rough, and
they open up when markets are strong. So the thinking
here would be, make sure you're stay flexible. People get
so tempted to I just want I want to never worry, right,
I didn't have to worry when I had a paycheck,
(33:35):
and I don't want to worry anymore. So I want
to just program this in and just make sure I
have this exact amount coming in every month and then
never think about money again. Well, Unfortunately, if you have money,
then you're going to be thinking about it for the
rest of your life, because once you retire, you've won freedom.
But freedom means now you own your own company.
Speaker 3 (33:50):
Who's who? Whose product? Is you? Making sure you're financially stable?
So what what where?
Speaker 2 (33:55):
It's tempting to say, I want X amount of dollars
every single month on this date to cover our actually everything.
I think that's great, but I think we really should
focus on what's the money we know we are going
to spend. Let's focus on that. Let's make that predictable.
Then the rest of it can be flexible, and that
gives you the ability to keep things invested when the
markets are running and you don't need the money. But also,
if we've also taken the step of setting aside and
(34:17):
being aware of what expenses are coming up via a
financial plan, then we will have already carved out the
dollars we know we're gonna need, versus saying here's what
I'm gonna spend I think this year and then dividing
that by twelve every single month. The fixed costs, yes,
do that, But the stuff you might maybe do but
you also might rule out, don't lock that into your
income plan, keep that flexible.
Speaker 1 (34:37):
Coming up next to real pros and cons of retiring
overseas and what you need to consider before you pack
that suitcase. You're listening to Simply Money is to buy
Allword Financial on fifty five KRC, the talk station. You're
listening to Simply Money is that to buy all Worth Financial.
(34:57):
I'm Bob's fund seller along with Brian James. The dream
of retiring overseas has never been more popular, especially with
Americans looking to lower cost, chase adventure, or just escape
the US healthcare system. But there are real financial and
lifestyle considerations that come with that dream. Let's break some
(35:18):
of those down, Brian. What are the pros and cons
of retiring abroad?
Speaker 2 (35:23):
Yeah, so the biggest one will you can you can
find a lower cost of living. There are people who
go who move down to you know, Central America, nice
places with beaches and monkeys. You can get a lower
cost of living down there, and that's where we come
up with these ideas. So five thousand dollars a month
can go a lot further than it does here in
the United States, you know, places like.
Speaker 1 (35:41):
Portscore answer to AI, Brian is just retired down in
the Southern Hemisphere and get a few monkeys to do
your chores for you.
Speaker 2 (35:48):
Beaches and monkeys. Everybody needs a monkey buttler, right, isn't
that the hidden dream?
Speaker 1 (35:52):
Yep?
Speaker 2 (35:53):
But yeah, those countries all show up on the list
for all those reasons because of the cost of living
down there. Another plus can be tax advantages. Some countries
have favorable tax treaties with the United States, or maybe
they don't tax foreign retirement income at all. In a
lot of cases, your Social Security benefits still get paid overseas. Now,
for those of you who might be frustrated with, you know,
just things in general here and are thinking the heck
(36:15):
with it, We're just gonna not be American anymore. We're
gonna go away. There are a handful of people like
that out there. Google the term exit tax. You don't
get to take all your money and run away. You're
gonna have to pay taxes on it, just as if
you were just gonna liquidate everything and put it in
a suitcase.
Speaker 3 (36:27):
Not that easy exit tax. What you want to look at.
Let's talk about lifestyle, bob. This is all you.
Speaker 1 (36:34):
Well, I'll give you an actual example of what we're
talking about I was on a flight a month or
so ago with a lady who was flying back to
Cincinnati for her fiftieth high school reunion. She went to
Walnut Hills High School and a very nice lady. But
here's the interesting part. She and her husband are preparing
right now as we speak, to retire in Portugal, and
(36:58):
we had an opportunity to talk about that, you know,
on the flight from Denver to Cincinnati. And I'll tell
you this, Brian, she had no stress on her face
whatsoever about any of this stuff. They had to the
prior points we brought up earlier in the show. They
have been test driving this thing for months. They found
the right neighborhoods, the right community of people, found their
(37:22):
healthcare solution. I mean, she was all jacked up and
ready to go. And so it's very doable if you
do your homework in advance, and she and her husband
had clearly done that. Portugal, I guess is the new
place to check out. Never been there I heard that before.
Speaker 2 (37:39):
So those those are all the good reasons that people
want to do this. So what are the cons? Well,
Bob just kind of hinted that at healthcare is a
big one. It can be cheaper, but is it as good.
Are you going to have access to specialists? Is there
a language barrier? That's a huge one. Specialists can be great,
but not if you're not speaking the same language. Medicare well,
that doesn't travel. You're generally on your own there. Here's
a huge one. If you're from Cincinnati, specific the West
(38:00):
Side where things a little tighter over there. Well, distance
from family, that's huge. What seems fun at sixty five
might feel really really isolating at seventy five.
Speaker 1 (38:09):
You know, hard to go to an elder football game
when you live in Portugal Brian virtually impossible.
Speaker 2 (38:14):
You can stream those games now, it's not as hard
as it used to be, but at the same time,
you know you're still gonna have to, you know, have
your price Hill chili shipped out to you over overseas.
Speaker 1 (38:23):
Those are just a couple things to think about. Here's
the all Worth advice. Retiring overseas can stretch your dollars
and expand your horizons, but make sure your money, your healthcare,
and your expectations can handle the move. Thanks for listening tonight.
You've been listening to Simply Money present up by all
Worth Financial on fifty five KRC, the talk station
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