Episode Transcript
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(00:01):
In your corner, saving one investorat a time, working for clients,
not companies, all while bullyproofing portfolios, totally committed to sharing academic truths,
a bottom missing, always representing MainStreet and not Wall Street. Team,
It's your Son Money team and thisis the Sound Money Investment Show with John
(00:22):
Financial Advisors. Hello and welcome tothe Sound Money Investment Show with Brown Financial
Advisors. I'm Greg Brown and I'mJames Borth And we are a regishirted investment
advisory firm. We are independent.We do work for clients and not companies.
To receive your complimentary and personalized financialincome plan, give us a call
(00:42):
it five one three, five sevenfive nine sixty five four. If you're
seeking advice on old four one Kfour to three B some type of employer
sponsored plan even in Innuay analysis.Here's the point. If you're no longer
with the company, then as arule, your money should not be there
either. It can help you rollthat out take control, whether it be
(01:02):
an a tax neutral I ray giveus a call five one three, five
seven, five nine sixty five four. Our website Brownfinancial Advisors dot com.
Email show your thoughts to team atBrownfinancial Advisors dot Com. Our home offices
in Milford, but we also havelocations in blue Ash, Westchester, and
Florence, greg Well. Today we'regoing to be discussing financial goals to hit
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before retirement, excuse me. Andthen, for many people can be a
milestone to some sort. It couldbe the true planned completion of leaving the
workplace, maybe a signed more betweenyou and your employer, something you've kind
of negotiated, or it could belike for so many it's a milestone,
it's more of a milestone birthday,and it's a good reminder. As life
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changes, so do needs and circumstances. So for you, whether it's the
big five, oh, the sixto zero, the six five age,
well, age might be just anumber. But obviously when you're no longer
a kid and maturity is much betterthan it's cracked up to be. I
think maturity it's been a pretty decentride. I wish I knew then what
I know now. That should bea song. Yeah, maybe it is.
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I mean if it's not, weneed to work that one up.
But you know, birthdays, insteadof really dreading them, you could do
some things productively, like enjoy them, embrace the wisdom, update your financial
life by hitting certain targets and embraceoverall becoming decades ahead because you need to
plan for it. Again, theseare going to be a couple of decades
in a row, you know,consecutively where you're constructively unemployed. So what's
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the plan? I guess the milestoneof a birthday can be a reminder to
get the plan dusted off, orget one together and get it ready to
be implemented. But James, you'regoing to be covering several of these goals,
and why don't you take us throughone. Well, when it comes
to retirement, what is that retirementdate? Does it coincide with one of
these milestone birthdays? I know somepeople they want to work until the age
of sixty five because well that's whenmedicare kicks in for most people. But
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again, does that fit your particularplan? Are you in control of when
you're going to retire or is thecompany the one who's going to be dictating
maybe when you retire. So thoseare maybe some issues that might be i'd
say, stuff to deal with andthen we'll try to help throughout this show
today. That's one of those thingstoo, when you think about can you
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retire? Do you have enough enoughmoney? Well enough money relative to what
maybe James, maybe it's relative todebt. Yeah, the first two are
really about debt and spending having theseunder control. And as far as debt
is concerned, first and foremost,it's a cost of money issue. And
you know, when we look atpeople with a mortgage, well, what's
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your cost of the mortgage, what'syour interest rates that you're paying. Hopefully
it's a fixed interest rates, sowe have a fixed cost. But is
it under control based on what yourspending habits and also your income your inflows
versus your outflows. So when welook at what you might call industry rules
of thumb, there's the twenty eightpercent thresholders, So thirty six percent threshold.
Twenty eight means that you have nomore than twenty eight percent of your
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pre tax household income going to servicingyour home debt. That means your principle,
your interest, your taxes, yourinsurance, your PIITI if you like
acronyms about that, thirty six percentthreshold means thirty six percent again of your
pre tax income should go to allof your combined debt. That includes,
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of course, your mortgage, butit also includes your credit card debt,
your student loan debt, if youstill have automobile debt, you know,
car loans, et cetera. Allthose add up, and once again,
depending upon if you're carrying monthly balanceson some of these different accounts, your
interest rate starts creeping up, especiallywith those credit cards where you might be
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paying double digit interest rates. That'sespecially destructive when we look at the cost
of money issue, Greg, whatare some approaches, Well, you can
add new debt only when how aboutyou can easily handle it. You pay
off credit card balances before the interestis applied, if you do any of
the those one year same as cashdeals. I have nothing against that,
as long as you honor the oneyear before interest starts to pile on,
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because, like you mentioned, James, those interest rates are not friendly whatsoever.
And then listing all your debts exceptfor say, well the house,
all of those other types of monthlyexpenses. You know, for many you'll
have a house payment for most ofyour life. If you do resolve to
pay it off, then good foryou. If you determine that's a cost
of money at a reasonable interest rate, that'll just be a foundational expense that
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you'll pad into your budget for therest of your forever. Then so be
it. I mean, that's allwhat planning's about. There is not necessarily
one shoe fits all. But whenyou list all these debts, the smallest
balance should be the number one priority. Now, I'm going to call this
avalanche because I'm not a fan ofsome people who are in the money business
who are really many. If we'retalking about snowfall, whether it be a
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snowball or an avalanche, it stillmeans you're productively finding ways to pay off
your debt. Yes, So inthis case, we'll call it the avalanche
approach because once it starts, itjust starts to roll all downhill into a
point to where, wow, youjust accomplished it. I mean, it's
a new face of the mountain side. But you list those smallest balances first
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of all the balances, and youstart knocking out the smallest payments, of
course, and then once you completethe monthly amount do on the smaller payment.
You have that money to apply tothe next and then the next and
the next, and then before youknow, you have an avalanche of solution
going in your favor. The windis to your back. So it makes
a huge difference in everyday life whenyou use this methodology, because you do
knock out your debts one by oneuntil small still largest, they're all eventually
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gone. And then if you'll resistthe temptation to replace the cash flow with
a new debt, it's like,wow, we got that knocked out.
Let's do something else and go indebt all over again. Now resist that.
As you approach retirement, you needto systematically get to where you're de
leveraged and to where only the mostbasic of more like variable expenses are in
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your favor. The fixed costs needto be kind of like something you've resolved
by and large pay off the firstExcuse me, when you pay off that
first debt of the smaller debt,and then you tackle the next and the
next, you get the ideas.It's not complicated, it's just doing it
like so many things in life.And each debt's paid off in your cash
flow increase, and the bigger debtswill be gone sooner then later, before
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you know it, they'll just begone. Then you can turn your guns
of cash flow, excess cash flowtowards other things, other priorities, maybe
splitting it up between additional paydown onmortgage. If you have a low interest
rate, maybe don't do that.If you have ten or fifteen years away
from retirement and you can pay yourmortgage and it's it's satisfied on or before
the time you retire, anyway,well just let it be. Use all
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that other extra cash flow for yourfinancial future. Don't worry about the vulture
bankers of the world. They're goingto be fine. They made the deal
with you when they did the mortgage. Let them live with it, let
them stew over it, let themmarinate with that three or four percent interes
or whatever you might be fortunate tostill have in a today's seven plus percent
interest rate environment. I mean,anyone who tells you to pay off a
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low interest loan prematurely is an idiot. I mean idiots. It's not a
financial guru. They're not someone tobe worshiped for their knowledge as it relates
to financial services because they have none. That's just that's boulder dash. Everything's
relative, everything matters, everything's ametric that lines up to the best decision.
There's no just cart blanc do thisbecause everyone does that. Where would
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that have gotten you in life ifyou follow that advice anyway, the concept
if your mortgage eats a quarter ora third of your monthly pay then yeah,
it's likely getting a tax free raiseof that amount when you can get
those those paychecks to stop going thatdirection. I mean again, in a
plan. In the context of aplan, you'll know what debts need to
be tackled, which ones can bemaintained, which ones are a fair way
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to return on cost of money.As James said, it's a cost of
money story. And then which oneswill be resolved on time prior to your
retirement. So it all just linesup. That sounded a lot like a
plan, the elements of a plan, But anyway, first and foremost,
do a cost money analysis. Seewhere you're at. Itemize your debts.
If the cost of money is relativelycheap three to five percent, then consider
the potential benefits of just leaving someof that leverage in place. It's called
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an arbitrage anytime you can do somethingwith a higher purpose, higher rate of
return, or higher benefit or valuewith your money than carrying the cost of
something that hasn't cost of money associatedwith it. The difference the difference between
those two is called an arbitrage.That's a positive benefit. That's exactly what
banks do. They acquire money ata lower cost, they deployed at a
higher rate, and they live offthe difference. And don't you stay up
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worried about them late at night.They're doing just fine. And you can
replicate that policy, that process insome areas of your life too. It's
as if you're being your own bank, is what Greg is saying on that
one. All right, Next oneis about spending having that under control.
So once again, if you're let'sjust say an empty nester, the children
or as we'd like to say,the Chutlans have gone from the home,
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they're out of school. You mayhave more money on hand now and it's
tempting to spend it. Here wego back to this again. After all,
you know the neighbors, the Joneses, they might be living it up.
And yes, you've worked hard toget there. It's nice to have
all these expensive toys. Yes,have fun, enjoy life, but don't
short change your retirement goals. Staywithin the plan. That's even if you
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have a plan, right, So, if you're well employed, and that's
typically when you're in your forties,and the fifties, and sometimes for people
in their sixties, think of itas like a gift. It's probably the
best earning years of your life.This is when it should be that you
start doubling down on savings. Thatmeans putting more into those retirement plans at
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work. That means your four onek's, your four or three b's,
if you have additional cash flow,put moneys into I rays and also into
non qualified retirement accounts. Yes,it all starts adding up over time.
And that's the other point is retirementis likely going to last a long long
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time. That's when you also needto start thinking about how or maybe if
you'll change your spending patterns and yourhabits once you are in retirement. Greg
Any thoughts, No, not really. I do think that that's clearly a
go to. Keeping spending under control, let your excess cash go into your
future, and prepare for retirement thatcould last much longer than you might anticipate.
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So and when we come back,we'll continue with some of the financial
goals to hit before retirement. Andyou're listening to well the how many Investment
show right here on fifty five KRCDETOC Station opinions expressed are solely those of
Brown Financial Advisors and should not beinterpreted as specific advice. Materials presented are
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believed to be from reliable sources,and no representations can be made as to
its accuracy. All ideas and informationshould be discussed in detail with one of
our qualified investment advisors prior to implementation. Market based investments involve risk, and
past performance is no guarantee of futureresults. Insurance based investments offer guarantees based
upon the claims paying ability of theissue company. All insurance, tax and
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mortgage services are offered through Brown Insuranceand Tax Advisors LLC. Brown Financial Advisors
and Brown Insurance and Tax Advisors areaffiliated companies and may only transact business in
those states in which registered or wereotherwise legally permitted. Welcome back to the
Sound Money Investment Show with Brown FinancialAdvisors. I'm Greg Brown and I'm James
Borth and we are an independent RIA. That's our registered investment advisor firm.
(12:24):
We do what for clients, notcompanies. That's Main Street and not Wall
Streets. Our fund number at theoffice five months, three five seven,
five nine sixty five four. Ourwebsite. Brownfinancial Advisors dot com. Email
team at Brownfinancial Advisors dot com andour home office is in Milford, but
Welso locations in blue Ash, Leicesterand Florence, greg So. Hitting financial
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goals that you need to do sobe for retirement, and we talked about
you know, it might be anage, a milestone that you're targeting at
sixty five. James through in thatthat's a good age for some because it's
medicare get some health insurance working foryou when you leave the company, or
a group plan. And we talkedabout taming your debt, being aware of
what percentage of your money and cashflow is going out the door towards debt
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and as you get deleveraged, keepit that way, keep spending under control,
make wise decisions and then transition herelike number three, retirement goals defined,
set concrete goals for retirement savings.Just do it. It's not can
do itself. It's something you canalways push off till tomorrow, but you'll
regret doing so. Just do itnow, do it today, and if
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necessary, you know, the kidscan find a way to pay for their
own things. I'm going through apainful transition in my life. I think
we've all been. There's adults andas parents and when to throttle back and
what to do what not to do. In terms of support, the old
saying is, you know, youcan provide a roof, some food and
a place to sleep and some prayer. But beyond that, when they're north
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of you know, say twenty oneeven, it's time to get serious about
pushing babybird out of the nest andseeing if they can learn to fly.
And gosh, that's a bit medicineright there, but you got to do
it. So set retirement income goalsnow so that if you're short financially and
you're doing some projections and you findthat it's just not on track, there's
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still time to improve things, right, So there's several approaches. One is
to shoot for savings of ten timesyour annual household income by your mid fifties
to early sixties. Ten times yourannual household income. That's the target to
have productively in savings in a nestegg. So if you collectively earn eighty
thousand dollars a year, your IRAfour to one K or similar retirement bucket
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of money should approach eight hundred thousand, ten times that collective earned annual household
them ount. So another let's seehow far your current retirement savings might take
you. In this example, let'slook at a nest egg of a million
dollars that will last twenty years ifyou withdraw fifty thousand a year at five
percent annual return on that residual money. So, assuming your investment simply keep
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placed within in pace with inflation,you should see that that would work that
way, right. I mean,if inflation's running three to five percent and
you're growing five percent, and yourmoney's growing at that five percent at fifty
thousand years and a million dollars shouldlast twenty years. But what if you
only have one hundred thousand dollars savedouch, it'll buy you two years of
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retirement. You need to die ontime? Who wants to do that?
You don't want to outlive your money. So now is the time to not
only come and see us our phonenumbers five one three five seven five nine
six five four five seven five ninesix five four or business online Brownfinancial Advisors
dot com or send us an emailteam at Brownfinancial Advisors dot com and we'll
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help you with this. Because partof knowing how much to save and how
much what you have will last.Is to project it, to plan for
it. We'll put together complementary financialplan. We'll assess where you're at.
We'll look at your current investments.We'll show you the internal spread, spees,
margins, loads and expenses and ifyou're taking too much risk, what
kind of risk, inefficiencies, theredundancies. We'll pull it all out.
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We'll put it back together like puttinga puzzle together by peace to match the
picture on the box, so it'sall beautiful and wonderful and awesome, and
get you on track, and we'llbe able to determine your shortfall what you
need to do about it on amonthly basis. Get your debt in the
line. We'll be able to showyou that you'll succeed on purpose, not
happenstance. It's a good thing.It's all complimentary. Let us help you
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help yourself. Just take that step. You'll invest a little time with us.
We'll invest time and resources in you, and I think you'll be very
well pleased. But James, that'sa little bit about retirement goals defined what's
next. Well, part of theretirement goal should be how are you getting
there in the first place. Partof that is tied to your rate of
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your contribution. So the point andthe goal of this one on your retirement
contributions. That means your retirement plansto work. That also might mean you're
privately invested retirement savings, make ortry to make your contributions where they're inching
up state. So what that meansis, if you're deferring, let's just
say five percent into your savings yourinvestments, bump it up to eight percent,
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or maybe if cash flow is okay, do ten percent. Then six
months later give yourself another raise.Keep it going until you've reached your goal.
So if you're saving ten percent,can you do twelve or maybe even
fifteen percent and automate the deduction sothat you don't see the money. So
you know, that's the beauty oftax withholdings. And I'm saying this maybe
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as a compliment to the government becausethey know the game. If you never
had the money, it's as ifyou never missed it. Right, Yeah,
Yeah, I was thinking that oldJourney song, be good to yourself,
be good to yourself, and isyour future self in particular, do
these things, do these steps.You'll be surprised how you can start living
without some of this money. It'llforce you into a different spending trend and
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a better savings trend. Well.Another decision tree also comes in whether you
put monies into your traditional accounts versusyour ROTH accounts, especially at work,
and as far as your contribution percentis also at work, is there an
employer match? And if there isan employer match, by all means,
make sure you get that particular match. Otherwise you're almost It's as if you're
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turning down free money, you're turningdown a raise if you will. So
if the employer matches three percent,that's amendmum. You should contribute is three
percent. If they're doing five percent, well then that's amendmum you should do
is five percent. And then thedecision tree about traditional versus roth. Think
of that as do you want yourtax breaks now or do you want your
tax breaks later? Do you wantto pay taxes on the seed or do
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you want to pay taxes on theharvest? And you know, maybe an
approach doesn't have to be maybe either, or it could be a combination of
both. So, if you arein a relatively high tax bracket and you
put moneys into the WROTH. Justknow that you're foregoing that tax deduction when
you're in a higher tax bracket.That's the incentive that the government provides to
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put moneys into a traditional account isthat you get a large tax deduction up
front, but then you pay taxeslater at time of distribution. Yeah,
I just have I have a problemwith tax trapped money. I know there's
a certain amount of free money youshould take advantage of, but any amount
that you're able to save above thefree match of the company, consider investing
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into your individual your private retirement planlike one that we've been set up together.
Age is also a factor, andthen the younger you are, the
more you should put into the ROTHis as a rule what you should do.
Just imagine what that will do.And never forget money and tax deferred
accounts is forever taxed, and wewant you to change your mindset towards to
never tax money. That's the ticket. Taxes will go up. There's a
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ninety five percent probability. I justsaw some statistic. I should know the
source statistic, but it said thereis a ninety five percent chance that taxes
will be higher in your retirement tenyears from now than they are today.
Taxes are lower. We always thinktaxes are high. Historically they're pretty low.
Right now, interest rates seven pluspercent, they're your mortgage people are
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just just screaming. But you knowwhat, in the context of time,
they're still pretty low. So allthings relative, we can't be caught flat
footed and short sighted in any ofthese financial matters. So let's transition to
some social security. Social security willhelp you with so security maximization, pension
maximization. Just come in. We'llgive you direction on how to do that.
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If you're looking at a company buyout, or you're leaving a company and
you need to roll over your fourone k, or you have highly appreciable
stock like a P and G orCallogs or GE or any number of the
old companies that are around, largecompanies that just put a lot of their
own company stock into your four onek, we need to talk about maybe
the NUA strategy and approach. Greg. What's INUA, James, Oh,
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Tex, I'm glad you asked.NUAY stands for net unrealized appreciation. It's
a way, sometimes a very effectiveway for those who are fortunate enough to
have highly appreciated company stock inside theretirement plane at work to separate the cost
basis from that appreciation, pay ordinarytax rates on the basis, and pay
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capital gains tax rates on that appreciation. Yeah, it's it's interesting. Let's
say you had a seven hundred andfifty thousand dollars account balance of company held
stock, and one hundred thousand ofit was cost basis. Okay, so
the one hundred thousand to be taxesordinary income. The difference the other six
hundred fifty thousand be tax on longterm capital gains, So somewhere between zero
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and fifteen percent or maybe twenty percent, but still twenty percent versus thirty five,
thirty seven or forty percent. Yeah, that's a tremendous savings. And
that's an upfront savings. And thenthat money still left in your investment coffers
will have the benefit of exponential timeand time value of money to expand and
flourish at a point in time whereyou're not going to be working anymore.
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Right, we just gave the ANALYSIyou you just stepped into retirement, so
I can't tell you how often thisis not done correctly. You got to
a brokerage firm, a bank,and really a financial advisor want to be
and their go to is just takeyour four one K roll to an IRA.
Boom. You just lost that.You just lost that value. That's
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bad advice and there's plenty of itout there, plenty of it. It's
not for everyone. You should definitelytake that in consideration, though. It's
like that analogy about measure twice andthen cut once. So before you make
that faithful decision of rolling something outinto an IRA, at least do the
analysis of the innu way to seeif it does or does not make sense
in your particular situation. There's more, there's much more off on Ember at
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the office five one, three,five, seven, nine sixty five four
call us. We can help,but stay tune. You're listening to the
Sound Money Investment Show with Brown FinancialAdvisors here on fifty five krc DE talk
station. Welcome back to the howMany Investment Show with Brown Financial Advisors.
(23:04):
I'm Greg Brown and I'm James Boorthand we are a registered investment advisor firm.
We are independent. We do itfor clients and not companies, and
it does all start with the plan. That means actually having a plan,
knowing what you own and why youown it so when you're seeking advice on
OLD four one K four to threeb IRA, rollover, investment planning,
(23:26):
retirement planning, income planning, taxplanning, it's that time of the year
again. Social security maximization, ROTHconversion analysis, INNUA analysis and for some
perhaps even in service rollover. Allthose and more we can help five one,
three, five, seven, fivenine sixty five four. Our website
Brownfinancial Advisors dot com, email teamat Brownfinancial Advisors dot com, and our
(23:48):
home office is in Milford, butwe have some locations in Blue Ash,
Westchester and Flauren Shaw. Well,we left off with our financial goal of
social security maximization, make sure it'son track. We will do social curity
maximization reports, pension maximization reports,and help you with any buyouts or transitions
you might be making from the company, all things that are relevant to income
(24:11):
planning, financial planning. It'll becomplementary. We just want to get you
on the right track and then seehow we can work together. And everything
will be quite transparent in terms ofwhat we do, how we do it.
Holistic insurance, taxes, investments,estate planning, investment management, income
of financial planning, social curity maximization, pension maximization, company buyouts, rollovers,
(24:33):
the whole the kitchen sinc. Weare truly the Mayo Clinic of Financial
Services want to help you out ineach of these areas. And it comes
up a lot about folks being pessimisticabout the sociecurity program and their chances of
getting their benefit, and it's justyou need to find better things to worry
about, folks. Really, don'tlet this get into your head. Congress
has increased taxes how many times overthe years, James, Well there are
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forty you know, let's say itthat way. It comes time to do
bailouts or adjustments or tweaks to socialsecurity, they show up just in time
with your money, our money,taxes. So we talked about the likelihood
and probability taxes continue to go upin the future, and we need to
get wise about how we transition fromforever tax and never tax with our investment
dollars and just do better at allthis. Well, this area is true
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too. Some of the taxes willbe paired out, parsed and put towards
a social security program. It reallyis part of the social fabric of our
country. So just again, findsomething else to worry about. May there
be changes in the program sure adjustmentsand benefit at some point. What age
group's affected. Probably not sixty andabove, if you're sixty and above today,
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probably not at all. Somewhere betweenthe forty and sixty age band could
be some changes in terms of costcontributions to the program, reduction of payroll
through taxation, and maybe even deferralsof later points in time for certain age
group people to start taking Social Security. You know, it's sixty two early
today. Who knows, maybe that'llchange later, but there will be viable
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adjustments throughout. So just don't stayup late worried about that. Well,
just some additional details about this,and this is going back to the milestone
birthdays. For some people, itis sixty two because that's when for retirement
benefits you can start drawing your retirementbenefits. For others as sixty six or
sixty seven, because that is fullretirement age, depending upon the year you
were born. Maybe it's somewhere inbetween sixty six and sixty seven. But
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that's a you know, when wesay ways that the government has raised taxes
on the Social Security program, they'vechanged the full retirement age from sixty five
to sixty six, and now it'ssixty seven. For people born after nineteen
sixty, it's a flat sixty seven. You now have to work two additional
years to get to the same benefitsthat you would have otherwise had before.
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And there's also the higher payroll taxes, so typically the payroll tax increases are
more, sometimes dramatically more than thecost of living as for the benefits coming
out. So there's always ways thatthey've done, you know, to increase
taxes, sometimes overtly, sometimes covertly. A covert way that they've raised taxes
(27:11):
in the program is by the taxationthreshold. That threshold was set back in
the nineteen eighties and has never beenindexed to inflation, so you almost cannot
escape getting tax on your Social Securitybenefits. And then for those who are
drawing benefits, say at age sixtytwo or sometime before their full retirement age,
they also they the government, ifyou decide you're also going to work
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during those years, put on anearnings test that says, well, depending
upon how much you earn currently it'sbasically twenty thousand dollars and above, you're
subject to the earnings limit. Thenthey start doing a tape back of your
benefits. I know it sounds likea mugging and a beating. Sometimes it's
just a mugging. But anyways,just know that all these different parts of
(27:53):
the program should be a component ofthe plan that means your retirement plan.
You're in plan, which are differentthings that we can help you with at
Brown Furnas Advisors and our fund numberagain five one three five seven, five
nine six five four call us wecan help Greg. Well, let's look
at investments. Some of the aspectsof investments not being fee wise in performance
(28:15):
foolish. Okay, sometimes fees areover emphasized. You can have a reasonable
fee with exceptional service and performance alsoknown as value the old price versus value
conundrum where someone will be penny wisepound foolish. We run into that a
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lot. Major brokerage firms and platformsWall Street in general will lost lead fees
and what you get in exchange isa lower perceived fee but a higher total
cost of doing business shown inefficiencies,lagging performance, redundancy in internal cost,
and loads that they extract from theinside out to get paid more so that
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their fee plus all these other componentcost equal a much higher total cost of
ownership. Wow, that's a lot. But whendn't you know? It's just
like the magician. Do you watchthe sleeve or do you watch the hat
or do you watch the hand.Either way, a rabbit's gonna pop out
of a black top hat. Youdon't even know how the same things happening
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to you over time. That iswhy these these people have football stadiums named
after themselves. That's why they haveSuper Bowl commercials, all with your money.
These excuse me, these lavish facilitiesthat ought to be a turn off
to you if you do the analysis, which takes about this much. Hey,
that's my money, right. Sothis area of fees is very sensitive
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because you don't really know the totalcosts. We need to analyze that together.
So fee's paid to manage retirement savings. Well, it might appear low,
about what's an extra two or threepercent? That's common with vir With
virtually any variable annuity, we seethree to five percent actually an internal cost
if you have a variable annuity,come see is you need to know there
are problems with that. Many investorsout there, James are just kind of
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like unwittingly paying far too much infees direct and indirect, mostly indirecting,
and it's the hidden cost losing tensof thousands of dollars that can be actually
used for their own retirement. It'sdiminishing the dollars that are rightfully theirs saved
worked for. Then at risk peopleare taking too much risk with their money
and don't even know the actual riskthey're at. I mean, I could
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go on. We need to doan analysis, and that's what we offer.
Yes, it's what we call ourPAR process. So once again we
love acronym, so does the government, So should you write so? Our
five step Portfolio Analysis Review, otherwiseknown as the PAR takes an inventory of
your portfolio and does a comprehensive whatwe call a three hundred and sixty degree
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approach. It's an effective way inhelping you know, really to map your
route to financial clarity. Helps provideanswers on the following questions regarding your investments
for starters, how many brokerage accountsdo you have at each different custodian,
How many redundancies, overlaps in efficienciesdo you own in each account? Sometimes
when you look at your different fundsand we pop open the hood and see
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what's underneath. You'll find that youhave the same underlying investments. That means
the stocks or the individual positions,sometimes four or five, eight times all
because you have different funds that haveoverlaps, which are inefficiencies and redundancies in
your portfolio. How much income doyou receive from your investments? You know
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in retirement income, cash flow cashflows King, How is your portfolio's risk
balance with your potential rewards? Doyou know the fees and expenses direct and
direct for your brokerage accounts and howcould they affect your portfolio's long term returns?
Yeah, the power process at theportfolio review process complimentary again just we
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need to know what you have.You need to know what you have.
How can you perceive forward when youdon't have the foundation clearly understood? So
it creates the detailed account of yourinvestments. Organizing your portfolio makes it easier
altogether to comprehend. And there aredifferences not just in total cost and methods
and approach. What we have tooffer in our arsenal James, things like
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buffer index portfolio. Now that isa naming convention we've given to an active
strategy. It's a market strategy.But I bet it's so highly unique.
You don't have one because we're boutique. We work for you. We're not
Wall Street. We're main Street workingfor main Street. So one example here,
let's say over eighteen months time.Actually, yeah, let's look at
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the one. That's eighteen months abegin an endpoint of eighteen months from now
through eighteen months later. You takethe result that occurs based on the lesser
performing the SMP in the Dow.So whatever that publicly published index is,
it's very visible data. You justlook eighteen months from oun and say what
was the result. We take thatresult, and you have two simple things
to apply, a cap and abuffer. The cap in this case is
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twenty nine percent. What is acap. It's the participation of the upside
you get of the result, theupside potential. So what's a buffer.
It's the amount that the strategy willabsorb of the downside, the downside protection.
So in this case, if thecap is twenty nine percent and the
result of the s and P orthe Dow, the lesser of the two
eighteen months later is up thirty percent, you get twenty nine percent. That's
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the cap. If it made twentyfive and the CAP's twenty nine, you
get twenty five. What if it'snegative fifteen, What if from where the
market is now it goes lower byanother fifteen percent, The buffer is twenty
percent, it'll absorbed the first twentypercent. So if it's down fifteen,
you're down zero. If it's downtwenty, you're down zero. If it's
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down twenty five percent and the buffer'stwenty the first twenty percent being absorbed,
you're down five. Where do youget things like this? We have them.
We have one that caps at twentytwo percent the upside and one hundred
percent buffer the downside. There's nodownside exposure. That's an annuity killer.
You don't need an annuity when youhave product or strategies like this. Anyway,
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we'll talk about more when we returnand our funderbought the office five one,
three, five, seven, fivenine sixty five four. But stay
tuned listening to the sound Maney InfesstmentShow with Brown Financial advisorshow on fifty five
KRC Detok station. Welcome back tothe sound Many Investment Show with Brown Financial
(34:29):
Advisors. I'm Greg Brown and I'mJames Boordhen. We are a registered investment
advisory firm. We are independent.We do our for clients and not companies.
That's Main Street and not Wall Street. Our fun number five one,
three, five, seven, fivenine sixty five four, website, Brownfinancial
Advisors dot com. Email team atBrownfinancial Advisors dot com. Home offices in
(34:50):
Milford, butts of locations in Blue, Leicester and Florence, greg We'll continuing
financial goals to hit before retirement,whatever age it might be for you or
time point in time. We surewant to be prepared. Want you to
give us a call, let ushelp you, contact us, email,
visit online, just request an appointment. It'll be complimentary and there's a lot
we're going to do to help youget started down the right path. We've
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covered a lot of items so far, but one of the areas you want
to be sure to address is yourwill, the legal aspects, the estate
planning related components. We have someservices that will take you down the path
too. In this area, wecall it enhanced legacy planning, and there's
a lot that can go into that, but it can be as simplest as
too. So many people we meetmean to catch up on their will or
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get a will, power of attorney, healthcare directives, a trust, if
they need a trust and just don'tget around to it. So, do
you need a will? If youdon't have one, probate is going to
be the way for you. Doyou want probate? It's very public,
it's time consuming, it's costly,it leads to delays, it takes a
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lot of time from interested parties andpeople you love, and to some extent
unnecessarily can burden people you care about. Right, So I would say,
yes, you need a will,and do you have an estate? That
the old saying is if you foga mirror, you have an estate.
So let's deal with this. Ifyou actually want to control over what happens
to your investments, your property,your assets, your stuff, then you
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need to have some things done andwe'll help you get that done. And
we have our state planning attorney inthe wings, ready, willing and able
and predetermine the cost. And James, this is sensitive spot for me.
I can't tell you how it wearson me to get these these direct mail
things from estate planning attorneys locally whenI know the gig. And if you're
getting these things and you're going tothese workshops with these estate planners, buy
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or beware what's really happening is you'rebeing led through a couple of complimentary engagements
and then about the second meeting inyou're going to be told that, well,
the delio is going to be threeto five thousand dollars initially. Then
there's going to be costs to settleyour estate. These attorneys are going after
this. They're after the money upfrontand the money in settling your estate when
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the day comes, and whether it'sa trust or will, it's not cheap,
so you need to know as muchabout the upfront cost. Well,
you need to know as much aboutthe total overall and ending cost when you're
not here, and some executors startingto write checks and didn't know the difference
as you need to know about theupfront cost. And here's something else.
It's a bait and switch. AndI'm not going to name any names,
although I have a list of themon my top right hand drawer. And
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what they do is they'll flip youinto their financial service buddy, and it's
really a trust mill where they leadyou into some scare tactics over nursing home.
What are you going to do?You're gonna let the state take all
your money? And leave your spousestranded. They work on fear and that's
some of the top fears James isfear of running out of money and fear
of going to a nursing home.So they know the fear buttons to push,
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and then they in the back doorof their office almost like a casino
where there's a different game going onthe back of the old Italian restaurant.
They'll get you in and where they'regoing to flip your financial services into these
five, seven and ten year annuitizationswhere it's a longevity annuity so that you
get paid some income, you losecontrol most of your estate through cleverly created
irrevocable trust that you don't see coming. But you're still trying to solve for
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the nursing home fear bug, andthen you end up getting into these financial
service products where they're getting big fatcommissions through their buddy who their cross licensed
and are sharing. I just Iguess the bottom line is, and here
here are turning. We have allthe estate products and services laid out at
a very fair price a fraction ofthose costs of those trust mill environments,
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and no one's going to come panderingto you trying to listen and take your
financial services away from you. Yourencounts, your investments, it's just clean.
You need legal and estate help youget it. You get it at
a very fair price, and wequarterback and champion it and watch over it
and safeguard you and keep you underour wing. So if you're getting those
in the mail, throw them away, give us a call. We'll take
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care of you, right, becauseI see it happen too oft and our
clients even get picked off occasionally fromthese things. It's very irritating. Anyway,
You need your financial documents in orderwill help you get it done.
Get it behind you so you canenjoy your retirement and one less thing that
you have to worry about. Youknow that old saying say it often on
the show. I heard it froma pastor one time that a man and
woman should live their life in sucha way that when they die, that's
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all they had to do. Thisis one of those things we need to
get off your list. Here's acouple reminders, So think of it this
way when we'll hear this, becauseit gets asked a lot. You know
when people say do I need atrust? And maybe the decision tree for
that is, do you need toor do you feel that need to be
able to speak from beyond the grave. So there are times when a trust
is relevant and is necessary, especiallyif you have maybe one of your loved
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ones has special needs. That's acommon reason why people do need a trust.
It also can help provide more control, maybe even privacy, over your
assets. It does help to avoidprobate courts and sometimes he with complex assets
as far as how do you properlydivide those amongst your beneficiaries. But I
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want to caution with this. Whereyou can go a very long way towards
doing everything properly is just having yourbeneficiary designation forms up to date. Properly
named beneficiary forms will supersede your willand oftentimes that's what a trust is designed
to accomplish. When you can simplydo the same thing by simply putting beneficiaries
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properly named and updated on each ofyour accounts, including your bank accounts,
it will definitely do a beneficiary reviewas part of the analysis and review process
because we structure accounts in our relationshipswith clients and approbate free fashion, so
it can again eliminate some of theseunncessary steps. People pay out the nose,
get highly confused, and get drawninto things they have no business even
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being involved in. James, howabout giving back? Yes, committing to
doing good in the world is apart of maturing. That means if you
have maybe a budget small or largephilanthropy, there's that word allows you to
express your values and connects you tothe world in new terms. There's also
maybe i'd say, the personal satisfaction. And this is where you transition from
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being a child to being an adultat Christmas time when really the gift of
giving brings you more joy than receiving. So true, that's so true.
And for those who have iras beyonda certain age, there's also a potential
tax deduction. And there's also anew acronym to get familiar with. It's
called QCD. It stands for qualifiedCharitable Distributions. So, as the rule
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currently states, if you're above ageseventy and a half, which is not
the same as the R and Dage for people now, which is seventy
two maybe seventy three heading upwards toseventy five. But as the rule currently
states, if you're above seventy anda half, you can do a qualified
charitable distribution up to one hundred thousanddollars, which means it may or may
not coincide with your R and Damount at any particular age. But here's
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the point. If you take adistribution from your IRA as a qualified charitable
distribution, it satisfies or go.It counts towards satisfying your R and D.
But most importantly, it does notcount as income on your tax return.
That's a huge benefit for people whenthey're trying to decide if I'm going
to donate to charity, church orotherwise, should I do that from,
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for example, our checking account orshould I donate from my IRA? Yeah,
I definitely say. And if you'rein the rm D years for sure,
and you're giving what you give eachyear anyway, just align it up
through the qcds from your IRA andget kind of a double benefit from that.
And if you're not otherwise getting adeduction on your tax return that means
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from your checking account, that's allthe more reason to donate from your IRA,
especially if you don't need the cashflow for living expenses. Definitely.
Well, next up, long termcare a plan in mind, usually by
say fiftieth birthday or so. Itfinally occurs to many of us that just
maybe as we get older, wemight change addresses. Since many of us
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may end up in a skilled nursingfacility in our old age, at least
for a short time, how dowe pay for it? What's the best
way? You're going to pay dollarfor dollar out of your checkbook. You
have the right resources and assets,maybe that's the best way. At least
consider planning. What's the plan,whether it involved getting insurance, financing it
yourself. We just we don't wantto be surprised when the time comes and
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you're confronted with this. We wantto have a plan in a playbook to
pull out and implement that we alreadyknow some of the outcomes to navigate through
long term care insurance, asset basedlong term care protection plan. There are
some excellent tools out there. There'sthe traditional userer lose it right. You
pay so much a month, youget a benefit for two or three years
worth of long term care, ifwhen, wherever you need it on a
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daily rate. Maybe it as aninflation writer increases each year. With those
oftentimes costs jump up every three tofive years, and sometimes later in life
you can't really afford it, butyou can't afford to lose it and do
without it because you're close and everbefore needing. Long term care counting becomes
a conundrum of its own. Andthen there's long term care asset protection based
planning, where it's really it's alife insurance plan that's not underwritten too much
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on your actual health status. It'spretty forgiving, pretty flexible. What it
really is is a large amount ofmoney you put into a policy that then
doubles the triples for a death benefit, and doubles triples sometimes quadruples for a
long term care benefit. Never needa long term care but you still die.
It'll pay a tax free death benefitsmore than the premium that you ever
paid in it. So it's nota user lose it. You're going to
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use it one way or the other. Right, and then just having insurance
in different policies and things that youhave. As life change is reviewed,
we need to look at all ofthat and whether it be life insurance,
disability insurance, or when it comesto age sixty five typically and above,
medicare insurance. So we do helpwith the medicare planning that means Medicare maybe
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supplements, Medicare advantage, prescription drugplans. Those are all individually based coverages,
so your individual situation versus the spouseis may be completely different. There's
so much more off Frontderbette Office fiveone, three, five, seven,
five nine sixty five four call uswe can help and on behalf of Greg
myself James who we want to thankyou for listening today. Have a great
(45:12):
week and remember this sound money wheregood things are believable, achievable and true for you