Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Loving the conversation today. I'm Thomas Lipscomb in studio with bestselling author Coach Pete D’Arruda, also joining us today, host of the One of a Kind Financial Show. He's an author. Mike Milligan, catch up on the show by heading over to FinancialSafari.com. Hey, Mike, do you do any QLACs? Yeah, I've been doing QLACs for like the last 11 years. Oh, okay, yeah. A lot of people don't understand them, so we don't talk about them too many times on the show. QLAC stands for Qualified Longevity Annuity Contract. Yep. You know, you've lived in a world for so long where you've deferred, deferred, deferred, and then all of a sudden you hit an age, and the IRS and the government says it's time to take a required minimum deposit. And you notice I say deposit there, right? Yep. Not distribution. Correct.

00:45 Because it's a required minimum deposit back to their company, right, to the IRS first, right, in taxes, and then you get what's left over. The required minimum deposit that goes to the IRS in the form of taxes is because they're your business owner. So what a QLAC allows you to do is take a little bit of your IRAs, a little bit of your 401k money, and defer it out a little bit longer so those RMDs don't begin, you know, to as late as 85. Yeah. And most find it. You know, the interesting thing about QLACs, Pete, is most firms don't even know they exist. They, they, and then, and then when they hear the word that it's QLAC and they hear annuity, they're like, oh, that's bad. It's got to be bad. It's not bad, folks.

01:31 Right? It's, it's longevity insurance. Right? It's a promise. Yeah. But Pete, did you find the name of the book? Yeah, Quiet Place. Quiet Place. And it's, it's a book about the QLAC, but it's also about how to, how to make sure you have the lifetime income. Now, here, here's one of the misconceptions about QLACs. It's a funny name. It sounds like Aflac a little bit. Yes, it does. That's what I thought. A duck. But a lot of people thought, Mike, and this is a misconception, and I think it's been fertilized by some people who, who don't want you to put money in a QLAC, fertilized, in other words, growing the rumor, the bad rumor, is that you could not touch the money once you put it in until age 85. But the, that's the exact opposite. You have to start taking the money by age 85. You could put it in today at age 65 and take it, start taking it out at age 66.

02:18 Correct? Yeah. It is. Yeah. You know, the technical, I mean, what a QLAC really technically is, is a deferred income annuity. That's really all it is. Zadia. Right? It just has contract language from the IRS code that allows you to avoid RMD on that for a long period of time. It's a good way to pay less RMDs if you're not needing the money. Then put it in a long-term contract where the government can't touch it. Makes sense. And guess what you could do if you, and guess what you could do if you don't need the RMDs? You could use it for something like maybe a Roth conversion. A lot of people do that. Or, you know, you could lower, yeah, I mean, you could lower your tax bracket. The other thing that most people don't realize, too, about, like, later in life is your medical expenses are going to be a whole lot higher. They're just going to be higher when you're that age. And that's going to be for most people, not for everybody, but they're going to be higher.

03:04 The good news is if your medical expenses are over 7.5% of your total income, guess what? You get to itemize that. Right? So there's a potential for even that QLAC income when it starts at 85 to be tax-free if you're using it for medical. QLAC, to me, is also, like, it's just another way to, like, protect long-term care without necessarily having to pay the premiums of long-term care insurance. It's a great strategy to use. You can self-protect yourself or self-fund yourself if you put enough money away. Self-fund. That's exactly right. That's a good way. And you're not paying tax every year on it while you're deferring, which is a very big part. That's right. Compared to anywhere else people have money, you're going to get taxed every year on that. So this way you're not. Exactly. I want to jump in and ask, what happens to a spouse or beneficiary when the person who owns the QLAC passes?

03:54 It goes to the beneficiary. It's still an IRA, right? So it hasn't mysteriously gone to some new world of taxation, right? Okay. The government still wants their required minimum deposit on it. They still want their taxes. They want their share, right? But it goes to the beneficiary. The most important form in that QLAC when you sign up is something called the beneficiary designation form. So basically you assign ahead of time what's going to happen if you're not here anymore. Okay. And that's where people say, what happens if I die early? Does all that money disappear? No. It goes on to whoever. Money never disappears. It goes on to whoever you assign. Okay. Now, if you don't assign anybody, it will go to your will or your estate. And that creates a couple situations you don't need to create if you make sure you have those beneficiary designations. And if you have financial products now, which most people listening do, do you have your bank account set up POD?

04:45 That means payable on death. Do you have your brokerage account set up TOD, transfer on death? These bypass probate if you set them up right. And your beneficiary designations, I've seen people in the past, Thomas and Mike, where they met with me. And when we had this beneficiary form designation conversation, we'd bring out some of their old forms and they were ex-spouses still on there. That creates a nightmare if you didn't correct that, right? So we luckily were able to correct that. So if you'd like a true beneficiary review, give us a call right now. We'll do it at no cost or obligation. We've seen others charge a lot of money for this, Thomas, because this could cost you a whole lot of money if you don't do it right. Let's make sure to get it done at no cost and make sure it doesn't cost you in the future. The lines are open. Take advantage of this opportunity. 800-661-7383. 800-661-7383.

05:32 Or text keyword plan to 600-700. That's keyword plan to 600-700. All right, Mike, annuity. We've been talking about annuities a little bit because I think they're good to talk about. There's nothing to be ashamed of of annuity. There are some bad ones. There are some good ones. But when someone says, I don't want to look at any annuities because of the fees, what would you tell them? Well, good. Let's dissect them. Right? Some don't have them. That's right, because some don't have them. Like, it's so good. If you think annuities are good minus the fees, guess what? We can find one like that. It's just like anything in life, Pete, right? If you, you know, take a pie, for instance, right? There's some pies that I hate. There's some pies in it. But like, would you, if like, I don't want, like, I don't want a cherry pie.

06:21 And you may say I love cherry pies, but I don't want a cherry pie. I like the song. But if I don't like cherry pies, are all pies bad? No. Are all pies bad because cherry pies bad? No, not at all, right? I mean, there's different types. There's fruit pies. There's sweet potato pies. There's savory pies. Guys, annuities, if you're fee adverse, there's annuity solutions for you. Annuities also come with a lot of benefits. A lot of people don't know, right? There's tax deferral if you're in a tax bracket. You don't get like a double tax deferral if you're in an IRA and the annuity. There's also every annuity comes with guaranteed lifetime income in the contracts, right? Already, every annuity, I don't care which one you have, it's in there. And then it comes with, and then, you know, state regulators say, you know, always supposed to talk about this,

07:10 but there is state insurance guarantee funds on annuities. Every state's have them, right? For up to a certain amount. The people that say annuities are bad, grouping them all together, are people with an agenda, right? If somebody tells you, though, that the only thing they do is an annuities, guess what? They also have an agenda. You need to work with a firm, work with a group that has a total picture, right? Everything from CDs to Bitcoin, boy, those things have attributes for investments. They don't mean they have attributes for you, right? But we have to come up with a plan that includes everything. We have to analyze everything. That's good. And then get you that life that you really want to live. And again, you can begin that process by calling 800-661-7383, 800-661-7383.

08:00 You can also connect by texting that keyword plan to 600-700. That is keyword plan to 600-700. You know, it's funny. The people that have asked me about fees and annuities over the years seem to be the people that have been getting feed to death with financial termites on the risk side. So they assume that the safe side is going to be as bad as the risk side. And there are some bad safe options too, Thomas. And that's why you need to deal with a fiduciary who sits down and analyzes. I would never put anyone in something I wouldn't put myself in. Exactly. Like the Mikey, the financial world. It's true. Hey, what would you tell somebody when you're having an annuity conversation with them about this lifetime income, Mike? And they say, I can do better in the market. Well, I mean, you know, the market has performed well historically over time. And so I'd agree with you, right, that there's the potential that you could do better in the market. Well, probability.

08:46 There's also the potential that the market can do what it did in 2007, 2008. There's the potential that the market could do what it did after Y2K. There's the potential that 1987 rears this ugly head again. And do you want to really put your plan based off potential now? On the other hand, our plan, we can set some money over for guaranteed income that you need and that you want for life. And we can still take that potential to help you keep pace with inflation, to give you growth that you want, to leave that legacy, that big legacy you want for your family. So why don't we take some potential for downside off the table? You know, people are mostly optimistic. They only think about the good that can happen.

09:31 They don't think about the bad. And so that's the one thing that we're here to remind people that potential also has the potential for loss. It has the potential to go against you. And that's how I talk to people about it. You're cleaning out your grandparents' house. You find this little vase. You start rubbing it because you're trying to clean it a little bit, and a genie pops out. You say, I got you one wish, but in this one wish, I can give you four things. I can give you an ability to share in the gains of the market. I can let you share. After you share in the gains, lock those gains in so you never lose them. You'll never lose due to the market. And whenever you decide you can get a lifetime income, you can never outlive. That'd be a pretty good genie, wouldn't it? What would you say to that genie? Would you give that genie some money to put that in action for you?

10:20 Absolutely, I would, because at the end of the day, that genie is giving you upside potential, right? But he's also giving you what you need for your life. And, you know, sometimes when we think about that whole genie analogy, you want something that's beyond our reach. If you're in the market, there is for certain a market downturn coming in the future. There is for certain. And if you want to reduce your income, take less income, if you're using a market-based approach on your income, you also have to be disciplined enough that when that 20% or 30% downturn comes, to reduce your income by 20%, 30%. Most people don't want less income in retirement. No, they want more and more.

11:05 Here's three questions I want you to ask yourself, folks, out there. And number one, when your paycheck from work stops, what's the plan for the paycheck that's supposed to take its place? Big one. Okay? That's good. Number two, do you have even $1 in your plan that is guaranteed to show up every month as long as you live? Think about it. Be honest with yourself. Husband and wife now, looking at each other. Somebody's getting mad at somebody right now. And number three, if you live longer than you expect, and most people do, what happens to your income in the later years? Three powerful questions that you need to ask yourself, and you need to ask your broker if they have you in a brokerage-type plan with no income, no true retirement plan. Mike, I mean, how important is that? It's imperative, right? Nobody wants to outlive their money.

11:51 Nobody wants to end the rest of their life having to be a dependent. See, we're dependents when we're infants in life. You know, really, a child is homeless just by the good grace of their mom or dad who allows them to save their house. You don't want to end your life in the guest bedroom of your kids. You don't want to end your life, you know, sharing a room with a stranger in a nursing home facility. That's why having guaranteed income is so important. All right. Wow. Thomas, do you have a trivia question for the week? I absolutely do. Here. Just a minute. All right. So we're going to be texting true or false to the number 600-700.

12:38 So tell me, what do you think? Is this true or false? An income rider can be designed to provide income for as long as you live. An income rider can be designed to provide income for as long as you live. True or false to the number 600-700. Again, that's the keyword true or keyword false to 600-700. Hey, Mike, remember having a substitute teacher and they give you an easy quiz? I do. I do. So here's what you're going to win. Again, the first 15 people to answer correctly are going to get my brand new book called Red, Yellow, Green Light. A hundred more real life money decisions. Good call? Cost of a mistake? Or does it depend? It's basically a game show in book form. A hundred different scenarios. And you decide red, green, or yellow light. And then turn the page and see if you're right or not. You can play this at home. It's a great game to learn financial.

13:24 Again, red, yellow, green light. Very important book. We will send it to you. We've already bought them. Going to send it to you at our expense. Call right now. All right, that number is 800-661-7383. 800-661-7383. Or text keyword plan to 600-700. That's plan to 600-700. Well, for Jose, Thomas, Jackie sitting there watching us this week. She didn't really get to talk much. And we have Mike Milligan joined us here from Puerto Rico. Mike, thanks for your time today. Absolutely. It was good seeing you, Pete. Yeah, and folks, we'll see you next week. And you too, Thomas. Thomas too. Absolutely. Folks, we'll see you next week right here on the Financial Safari.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 And welcome back into the Financial Safari, having a great conversation today. I'm Thomas Lipscomb in studio with America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. Also joining us from Puerto Rico, Mike Milligan of One Oak Financial. Thomas, let's give a couple of websites out. Yes. I'm going to give one, and I want you to give it. We have so many. I love it. We really need one site where people go and have all our sites on there. We're going to do that. Master site, yes. We're going to do the master site coming up. Let's do it. Coach Pete's master site. Let's do it. But right now, we don't have it. Until then. But we're going to. So you see, you're getting a look inside my mind right now, folks. I've got over 700 domains, Thomas. I'm sure we can find one. I'm sure. So the one I want to give out is a very good one. It's about my new book, Modern Planning. But the site is planonceplanforlife.com. Planonceplanforlife.com.

00:47 Go there. You can download the e-book right now. We're working on an audio book coming up. But right now, you can download the e-book by going to planonceplanforlife.com. It's about 250 pages. And it really puts things in perspective about lifetime income. We're talking about today. The financial termites. How much 2% or 3% fees can cost you as far as what you could have had in your retirement and what you don't have in retirement. And making sure that you have income you can't outlive. Principle that cannot lose due to the market. That's important, too, by the way. Yes, it is. A floor under the spouse. In other words, making sure your spouse always gets income even if you're not here anymore. Ah, yes. And so that's what I call a floor under the spouse. Not knocking your spouse on the floor. And making sure your money isn't doing nothing. It is doing something. It needs to be doing something at all times.

01:33 Going up, not down. So planonceplanforlife.com. Now, what do you want to say? I love it. So the one I am going to focus on is a great do-it-yourself tool at asapplan.com. That's asapplan.com. As you folks know, if you're a regular listener to the show, Coach Pete has a 22-step total retirement plan process. And what we want to do is to try to enable you to take those steps yourself. Kind of figure out what are you missing? What do you have in hand? What questions do you need to be asking? We are developing a new electronic device. It's a calculator on steroids. But take your time. Go over there. I personally would love to hear your feedback. I'm helping develop this. And we want to make sure it's a tool that's beneficial to you. And again, that's at asapplan.com. Again, asapplan.com.

02:18 And we also are keeping track of when you go there because we're going to give an award of a $100 gift card to Ruth Chris for people that go there and give us any feedback. So we're going to draw the name out here in a couple weeks on the show. There you go. Help me out and I'll help you out. asapplan.com. You can't win unless you go and visit and let us know you visited, right? So that's kind of... That's it. That's what Mike thinks. What else? We've got financialsafari.com too if you want to ask a question on the show. Always. Yeah. If you want to ask a question or just catch up on podcasts, check out the television show. And that leads into the Financial Fill-Up Challenge. If you go to financialfillup.com, we would love to have contestants or audience members for our financial game show. You can also subscribe to the channel. Check out our past episodes. It's a really, really fun game show. A great way to look at retirement. Find out how much you actually know about the process.

03:04 We film episodes every three weeks, folks. So call, get on the list. Either be a contestant or if you want to be in the live studio audience. A lot of good giveaways there during the show too. Oh, it's fun. Yeah, we get gift cards we give away for winners too when they win. Yes, we do. And hey, it's a great way to learn the financial world rather than sitting in class trying to learn it. There you go. Hey, Mike, if you ever ask this question to somebody, you say, when the market had its worst week in years, did you have a single dollar sitting somewhere that you couldn't lose a dime? Oh, that's a great question. I mean, it's a fantastic question and one that a listener should listen to, right? Is, you know, I've never asked anybody that question, but one of the questions I ask is, what's the amount of money that you're willing to lose? Yeah. Because it's a similar question that you're just asking there.

03:53 Because at the end of the day, right, when you go to retirement, you don't want to have to continually watch CNBC or Bloomberg every day. You want to spend time with grandkids. You want to go make an impact in the community. You want to travel. And, you know, like having that stress and fear of watching the news every day becomes depressing, right? Because it's almost like riding a roller coaster. And as you get older, roller coasters are not as fun because of like just your age. And so that whole idea of losing money in retirement is not something that at least the people I talk to in our practice won't want to partake of. Unfortunately, a lot of people that we talk to, I wrote another book called Retirement Deja Vu. It's that feeling that you get when you hear the same story over and over again.

04:41 You know, deja vu. We all get that eerie feeling. And retirement deja vu is what I actually experience when I sit down with a new client because I hear the same story. If I talk to somebody from Edward Jones, like a client of Edward Jones, it's the same story. If I talk to a client from Merrill Lynch, it's the same story. If I talk to, you know, if I talk to people at different firms, I know what that firm's doing. They're just, they're selling the same investment plan in their 9, 11, and 1 o'clock meetings every day. And we actually want people to break away from retirement deja vu. And, you know, ours is the one-of-a-kind financial plan. Yours is the fill-up. And we want to make sure that everybody is getting what they need out of life. Because this life is about you folks. It's not about us. It's not about our life.

05:27 It's this life's about yours. Yours is the only one you can live. And you want to make sure your money lasts as long as you do. You know, we get to share our knowledge with folks. I mean, we've seen, I think I could say this, 34 years. I've seen about every kind of situation you could ever imagine. And I would rather, like my dad used to tell me, that a smart person learns from their mistakes. Like if you're trying to hammer a nail in and you hit your thumb, you won't do that again, will you? Let somebody else hammer. But the genius learns from other people's mistakes. So I've seen all the mistakes out there. And when people come in, I already know what kind of mistakes they're making. I can tell them right away. And Mike, a lot of times it goes back to, like you're saying, which company they're utilizing, which investment advisor or investment company. Because certain companies we can already identify. We know they're going to have a mutual fund strategy as well as a variable annuity in there when we meet with them.

06:13 We already know when they say what company their money is with. So I think it's just important to make sure you understand that there are solutions out there that don't involve taking risk. And not all the money should be there, but some of the money needs to be there because we never know what's going to happen the next year. And it brings back memories. 2006, I used to do a live show on WFNC. That's in Fayetteville, North Carolina, right off of Bragg Boulevard. It was a Krispy Kreme donut that I used to always go there. I would get because it was a live show. So I'd get to the Krispy Kreme about five in the morning on Saturday because the show was at seven. Because, Thomas, you never want to be late to your own show. Sure. And so anyway, I met a whole lot of friendly people in Fayetteville. And then I was at a kitchen table with a couple that had called from the show. This was 2006. 2006. And I was sitting at the kitchen table.

06:59 And the husband and wife were on the other side of the kitchen table. And I had the wife's attention. But I kept noticing that the husband, even though he acted like he was looking at me, he was looking over my shoulder. And so the paranoid person in me, because I've seen, I think, psycho movies were out there. I was wondering who was standing behind me because I thought I was getting ready to get tomahawked or something. But I turned around. I casually dropped my pen. And I looked around. There was a TV behind me. And guess what channel it was on? Tell me. CNBC. The price is right. Yeah, CNBC. And he was watching. And his wife said, when his wife finally noticed what I was doing, she said, let's just call him Harry. Harry always has that stupid channel on. And we can never have any fun because we always have to be watching our retirement. Ooh. And long story short, they got two financial fill-up strategies.

07:45 And they've been happy ever after. And so that's what you have to have. And we took the warrior out of living retirement. We left some money in the stock market so we could still play around. But he wasn't glued to the TV anymore because he knew his retirement was safe. His income was safe. And he always had that monthly check coming, regardless of what happens in the market. And there's another thing. When we talk about income riders and we talk about monthly checks, usually they're associated with annuities, Mike. And so somebody's listening now. They say, oh, God, annuities are bad. My broker told me annuities are bad. I heard they are ripoff. What would you say if somebody said that? You know, in the last segment, we talked about how annuities work for business models. All these financial companies, right? Goldman Sachs, all the big firms, right? Yep. Fees every month is an annuity. It's an income stream for them folks. It works for the big banks.

08:30 It works for the big investment companies. And yet they tell you it doesn't work for you. To me, that sounds like they're being hypocritical. But what annuities are they usually selling with those fees, though? They're not usually the friendly annuities that we like, are they? But it's the variable annuity side. Those can have up to 4% or 5% fees a year. Yeah. And those are the ones that hurt performance. Because they're saying, let's use a variable annuity because we can still participate in the market. What they're saying is we can still participate in the upside and the downside of the market with a high cost. There's a lot of strategies out there, like fixed index annuities, where you can participate in the market, but none of the downside. Right? There's strategies. Like even MYGA's right now, multi-year guaranteed annuities. 5.5%, 6% income payments off of those for a fixed period of time.

09:17 But the income riders, when you put that on an annuity stream, even when your dollars may run out, right? Even if you outlive your money, you can never outlive the income that comes from those. That's the insurance company making a promise to you, making a guarantee statement. And listen, you shouldn't guarantee, you know, annuities are bad, right? Because the insurance company promised me they must be making money. Well, yeah, man, the insurance company's making money. There's nobody in the insurance business that is nonprofit out there. Right. There's no banking that's nonprofit. Well, there's no business anywhere that's nonprofit, even though they call themselves not some of these nonprofit places. They're making a lot. If you look at the owners, they're making a lot of profit. Correct. But listen, don't worry about their business model.

10:05 And that's when, unfortunately, when people say, I don't like annuities, what you're really saying is, I don't understand the business model. How can they do that? It sounds too good to be true. That's when you work with somebody who's done this. Pete, you've been in the business for how long? 34 years. In those 34 years, you have worked with thousands upon thousands of retirees, correct? Yes. Correct. So a lot of times when people go into retirement, they're going there for the first time. Yeah. Don't you want to work with somebody who's been to retirement, who's lived in retirement? Who's worked in retirement? For people, thousands and thousands of times. That's why working with a certified financial planner, a fiduciary, working with a group like Pete and the team there, they live retirement.

10:58 They work retirement. And they understand strategies and techniques that's going to make you feel more comfortable and safe in retirement. Don't work with somebody who lives in the market. Work with somebody who lives in retirement. I'm a retirement income certified professional, RICP. That's from the American College, same place where the CFP is. And I'm trained on income because that's what I've done for my clients. And honest answer, some annuities are lousy. They have high fees, long surrender periods, and they're sold to the wrong person. I would never defend one of those. But there are plain vanilla income tools that do one honest thing, a paycheck for life. The word annuity covers both. The way a car covers a lemon and a Toyota. See? So the word annuity gets people in trouble because they haven't defined what kind of annuity it is.

11:44 And my job as your personal CFO is to shop, to guarantee, read you the fees out loud, if there are any, and check the insurer's rating. And if it doesn't fit you, I tell you it won't fit you. So, you know, we basically are like the tailor. We'll come and custom fit the retirement plan just like the tailor custom fits the outfit to you. So if you'd like your very own tailor fit, total retirement plan and income, taking that worry out of planning and living in retirement, call now. We'd be very happy to sit down with you next week. And the lines are open. The number to call is 800-661-7383. 800-661-7383. You can also reach out to the team by texting the keyword plan to 600-700. Plan to 600-700. Procedure on called 300-600.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Loving the conversation today. I'm Thomas Lipscomb in studio with bestselling author Coach Pete D’Arruda, also joining us today, host of the One of a Kind Financial Show. He's an author. Mike Milligan, catch up on the show by heading over to FinancialSafari.com. Mike, I'm sure you've been talking to clients for years, and when you talk to them about a true retirement plan, true or false, I mean, we really haven't talked about this ahead of time, so I'm kind of leaving myself out there. But do you believe that if someone is approaching retirement, they need to have some of their money dedicated to lifetime income? Oh, yeah. Like, you know, the book that I'm most famous for is a book called The One of a Kind Financial Plan. Our company, One Oak Financial, stands for one of a kind. So the one of a kind financial plan, the book I wrote,

00:46 says that you have to answer the question, why is money important to you? Because if you don't answer that question, how can an advisor really do their job, right? So answer the question, why is money important? You have to put a vision for what your life's going to be like. You know, what your community is going to be, what your focus on health is, and what's your impact. But then we get to, like, the actual tactical side. Taxes being the biggest expense you ever have, that's what we start with. Number two, then we go to retirement income. Because at the end of the day, right, most investment people, most one-size-fits-all advisors out there, they actually want to talk investments because that's how they get paid, and then they abdicate responsibility. They say, go to this CPA, go to this attorney, go to this insurance guy.

01:32 Because what they want to do is they want to solely focus on investments. But if you don't focus on taxes being your biggest expense, and retirement income being guaranteed that keeps up with inflation, you're just going to be finding a new advisor in retirement, and nobody really wants that. Because at the end of the day, the biggest thing that keeps people up at night is the fear of running out of money. And if I've done my math right, Pete, you can tell me this, but guaranteed means that you would never run out of money. Is that still true? Yeah, and the guarantees, again, they are only as good as the institution backing them. So you need to make sure you only put your money away long-term with companies that are going to be here for a long, long time, if not forever, right? And so how do you really know that? Well, you have to trust the numbers they put out, their books.

02:20 We've analyzed that all the time. We don't let our clients get in any company that's below an A rating. And so because of B or C rated companies, of course, they're going to offer more. But I'm not willing to take that risk with my clients. So they've got to be at least A rated. And there's something called an income rider that some insurance companies offer on annuities. And annuities are great because there are streams of income you can't outlive. The Roman Empire days, annuities were there. The soldiers would give some, when we're going to battle, they'd find the local financial guy. They'd put money in an annuity, which basically said, I want to make sure my spouse gets income when I'm gone. And if I don't show up back, I want that spouse to get the income forever. And that's how long annuities have been. And so the income riders, we've heard some objections, though, usually ignited by the advisor who doesn't want to let go of the money they have in the market, right?

03:07 Because if they let go of the money they have in the market, they lose their planning fee, their quarterly fee, which they call a fee. I call it commission, money's coming out. But here's one, Mike. I don't want to lose control of my money, somebody would say about an income rider. What would you say about that? Well, I mean, like, you're not going to take all of your money at one time. So, you know, the biggest question is, is what's the biggest check you've ever written in your life? So, you know, a listener out there has $2 million, and I'm like, I don't want to put a million of that into an annuity because I lose access to that. Well, what's the biggest check you ever wrote in your life? It's probably the purchase of a car. Maybe it's a college loan payment, or maybe it was that last check you wrote to pay off your mortgage. But for most people, that biggest check they ever wrote written in their life

03:52 is $10,000, $20,000, $30,000, $40,000. Why do you need access? Well, going back to that advisor for a second, Pete, that says they want to keep control of the money, most advisors out there don't leave all the money in the market because their compliance arms make them spread risk around between stocks and bonds. Yep. Well, you know, those income riders, you know, not to talk product or anything, but there's 6% and 7% withdrawal rates that you can get on that guaranteed income. Well, right now, what's the best bond investor in the world getting? Three and a half? Yeah, maybe four. Yeah, I was going to say between four and a half. Yeah, and so, but that's not a guarantee. The bonds can't guarantee you a lifetime income, can they?

04:38 No, no. 2022, bonds went down just like the stock market did, right? Because interest rate risk is a real thing. It's a big one. And so, like, using an income rider from an insurance company is a promise. It's a promise that the money's going to show up every month. It's a promise that it will never end, and it's a promise that you don't have to worry that money's going to be in your account. It's a promise that you won't run out of money. And that's the benefit of an income rider. And that's a big one. And so, like, the strong institutions that offer them, and again, we only talk about the strong ones, and some of them don't fit. I mean, everybody's different. So, there's all different ones. I like to put two different streams of income together for my clients. One for their bills. Those are the bills that are going to come, the housing, the car, whatever else,

05:25 and a little bit extra for emergency bills, or we factor inflation in, too, so put more than you're paying now because we've seen how inflation can affect your net worth down the road. And we also put a stream of income together for you that's going to come every single month all the way through retirement for fun, fun money. Who doesn't want some fun money? You're allowed to spend it for fun. You know, the reason why people don't spend, Mike, is because they're worried in their go-go years, they're worried that they're not going to have enough money. But if you have a guarantee in place that a new check is going to come every 30 to 31 days, showing right up, we call it the green flag on the mailbox, there's no worries anymore. Matter of fact, that's why people pass away when they have too much risk. They're always worried about spending, and they usually don't spend what they should or could. Holy cow, preach it, buddy. Keep going. Keep going, man. That's good. I mean, it's just mind-splitting sometimes how people don't take the right step for themselves,

06:12 and the right step for you listening is to get your very own total retirement plan. But inside there, make sure if you have a retirement plan, make sure it has the retirement income you deserve and you need, and you've been told you need to have. So if you don't have income that's guaranteed, you're not. You're just guessing. Thomas, we got the e-book on lifetime income. Probability is shot down by certainty. You've got to have certainty first. Let's get that e-book in people's hands. All they have to do is call right now. And that number is 800-661-7383, 800-661-7383, or just text keyword PLAN to 600-661. 700, that is keyword PLAN to 600-700. So, Mike, why do you think, you know, well, I know, but why do you think that this one side of the financial world that is constantly lobbing grenades over to the fixed side, the side that guarantees income?

06:58 Well, listen, guys, it comes down to that word fiduciary. A fiduciary is going to do what's in the best interest of the client. Yep. But these firms that manage money for a fee have owners, stockholders, board of directors that are telling you, keep the stream of money coming over to our business over and over again. Pete, do you know what a stream of income is? Oh, yeah, I do. It's an annuity. Yes. It's an annuity. Right. So an annuity, you know, staying in the market, paying a fee every month or every quarter is a stream of income to the business. And so why is an annuity, the stream of income, good for the business, but they will tell you it's bad for you as the consumer?

07:43 It's, you know, it's people who act one way and say something another way. I think we call those hypocrites. And there's a lot of hypocrites in the financial market because how they run their business is how they tell the consumer to not run their household. And all the risk is put on the individual. People, if you have money invested in the market, you have control of that. If you're paying somebody a fee, you have control of that. You can end that. You can use their business model, guaranteed streams of income in your life to reduce fear, stress, and anxiety in your life. And that's probably worth a call in to the show today to see if the model that works for these companies that are earning record dollars.

08:32 Guys, go look at the earnings of Goldman Sachs, JPMorgan Chase, Bank of America, Wells Fargo over the last quarter. Record numbers, record revenue because they have annuities baked in their business, right? Take back control, right, of your future. Get guaranteed income because it's better in the long run. If it wasn't good as a business model, Wall Street wouldn't be doing it. You need to be doing it on Main Street, in Raleigh, in Apex, Chapel Hill, all across the country. You need to take control and call in to make sure you have that guaranteed income. Well, nobody starts a long drive with a quarter tank of gas. Everyone in retirement needs that financial fill-up strategy. Folks, if you want to find out how it could be customized for you based on your numbers, we're not saying take all your money from risk.

09:22 We're saying take enough money to make sure you never have risk with your retirement income in the future. Thomas, let's do this for the next 15 people. Not only are we going to give a total retirement plan, we're going to give them that book, the 22-step total retirement plan. Oh, fantastic. It's a $99 value when you come in. And we're also going to give you a golden ticket where you can share it with a friend or family if they want to get that plan as well. And I'm going to give you three of the books I've written. When you come in, you'll get to choose which ones you want. Thomas, tell folks that I can do that right now. Yeah, super easy. Just call the number 800-661-7383. 800-661-7383. Coach and his team will help you understand what an income rider could provide for you and how it fits into your retirement plan. You can also text us by texting keyword plan to 600-700. That is keyword plan to 600-700. So take that quarter tank and fill it up every single month with that financial fill-up strategy.

10:11 You never – hey, Mike, you've had that feeling. You've gambled before when you're riding down the road. And you say, well, gas is more – it's cheaper down the road. I'm going to keep going. But you see that little red. It's bouncing to the bottom of the red, the gauge. We can't have income like that. No, you can't do that in income, guys. Listen, I don't drive in Puerto Rico. I walk everywhere I go or I get in an Uber. But every time when I go back to Norfolk, you know, that's when I drive. And I have my SUV there that's parked in my garage in Norfolk, Virginia. The last two times I've been back to Norfolk, I'm not going to tell you that I ran out of gas both times. But I barely got to the gas station. Oh, no. You've been pushing your luck a little bit. Yeah, yeah. Because when you don't have somebody or you're out of practice when it comes to driving, you don't always notice what's there.

11:01 This is where that call in and meeting with Pete and the team will actually get you, you know, it'll get you somebody looking under the hood of what your investments are, looking at what the performance is, telling you what your real fees are, and telling you if you really got an income plan or you just got an investment account. Well, green money never sleeps, and it pays whether the market is open or not, whether the market is up or down. And, folks, that financial fill-up strategy. Remember when you used to pull – I remember being in the back seat, Mom would pull into the gas station. Mike, you probably remember this, too. Three or four guys would run out. They'd pop the trunk. They'd check the oil. They'd fill the windshield wiper stuff up. They would fill the car up with gas, all done from the comfort of Mom just sitting in the seat.

11:49 Thomas, those were the days, as they say, in Archie Bunker, right? That's a dream, right? So let's make sure you get your very own financial fill-up strategy, and it really does take the worry out of living in retirement. When you can have certainty and not worry about probability anymore – probability is for Vegas, and that's fine with your leftover money, but not money you're going to need the rest of your life, folks. And I've been saying this for 34 years, and I still mean it today. Thomas, tell folks that they can get their very own financial fill-up strategy. All right. Just call 800-661-7383. 800-661-7383. And you can ask Coach's team to run those numbers with you. Make sure you understand how Income Rider works and that you have enough income in your retirement savings that gives you that certainty as you go through retirement. The keyword as well, plan, to 600-700. Just text keyword plan to 600-700.

12:35 That's it.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome into the Financial Safari. Excited for our show today. I'm Thomas Lipscomb in studio alongside bestselling author Coach Pete D’Arruda. And joining us, we have on the line Mike Milligan, founder of One Oak Financial, host of One of a Kind Financial Show, and a friend of the show as well, a friend of Coach Pete's for a very long time. Hey, Mike, how you doing? I'm good, Pete. How are you? Good. Hey, Thomas, tell everybody where Mike is joining us from. So Mike is joining us from the beautiful land of Puerto Rico. Oh, Michael would say beautiful, right? Is it beautiful down here today? Oh, my gosh. It's 84. It's 84, 85 every day. It's absolutely gorgeous down here. And it's a little bit of a breeze. We haven't had that heat that you guys have had back in North Carolina, right? That has just kind of been stifling over the last month or so.

00:46 It's been crazy. Same every day. Same every day. Watching the U.S. Open on TV the other day. And the players who aren't used to humidity, like even in the first set, they were like, they look like we're getting ready to die. We're used to this, Mike. I mean, I worked in the watermelon fields one year when I was in high school. And remember, I'd been working in the fields back in the day. I don't know if you ever did that. But you're a Scotland County guy, too, by the way, aren't you? Yeah, yeah, that's right. That's right. Coach Willard. Yeah, Coach Willard. Willard's watermelon. So a little history, folks. Mike Milligan there. My mom taught him seventh grade, and we found that out a couple years ago when we met. I didn't know who he was because I'm a little older. But my mom taught you, and that's pretty funny. That's funny, yes. That's right. Small world. Ten years different in age. We ran the same streets. As a matter of fact, we were talking, you know, before the show today,

01:33 we were talking about just some things, you know, that happened back in Scotland County. Good old LBG. You had to make your own fun back in the day. Yes, you did. The good thing there was no social media to tell everyone about the fun you were making. Yeah. Nowadays, kids are getting into trouble. They post everything. Thomas, we always talk about, like, Pete and I, when we went through elementary, middle school, and high school in Scotland County in North Carolina, North Carolina was the 50th ranked school in education in the nation. Oh, wow. I didn't know that. Wow. There are 100 counties in North Carolina. Scotland County was 100th. So we literally got the worst education in America. The lowest below. Wow. Hey, you're talking junk about my mom? And yet, here we are. The college goes back in the road.

02:20 You cannot be serious. Be serious. I said U.S. Open. So might as well play a little macro there. No, I mean, it is. My mom took it serious. My dad was a college professor. But, yeah, unfortunately, they don't put in. Well, back in the day, we had the mobile home classrooms, and we had the cinder block schools. Look at these Taj Mahals they're building now. I think they're putting money into the wrong places these days. Instead of building big buildings, they should build big mines. That's good. I like that. And the problem was is, like, when your mom had us in her class, right, there were 28 middle school kids in there, right? And we were more worried about, like, man, that girl looks good now because hormones were kicking off. Right? We weren't worried about, like, you know, Pythagorean's theorem or, you know, the atomic symbol of hydrogen. Right? We just weren't interested in it.

03:06 We were interested in what we're going to do in the field later today and what we're going to do in the break. Unless you're going to be a chemist in the future, it really doesn't matter what the atomic symbol of hydrogen is. It's more important to worry about life. And what the most important thing is is to establish a plan in your life, even if you're not the kind of person that likes to write things down, at least have it in your mind. And when we do a plan, Mike, we like to call it Plan Once, Plan for Life. And it's how to give every dollar you own a color and a job and put a check back in your mailbox every single month for as long as you live when you retire. And stop the quiet leaks that have been eating your money alive while you weren't looking. Those are called financial termites. We put a plan together. We eliminate those financial termites, which could save you 2% to 3% to even 4% hidden fees a year not coming out of you, not evaporating out of your portfolio, staying there.

03:55 Over the course of a 25-, 30-year growth cycle, you're talking about about a million dollars you're losing when you talk about the money you lost plus the interest you could earn. How embarrassing is that in the financial world that some advisors are doing that to people? It's absolutely crazy. But think about this, though, Pete. Like when people go to their job, you know, most people work 30, 40 years at a job. When they go into their job, they have a written job description that they know exactly what they're going to get paid for doing that work. And they have somebody helping them along the way, a manager or a coach or a supervisor, right, helping them in their job. And then they go into retirement and they're, you know, they're trying to do it themselves with something that's not written down without a plan. You would never go to work without a plan, right? You would never try to build a house without a plan. You would never try to go on a trip without some type of, you know, some type of itinerary.

04:45 And most people are just, they don't treat their money the same way. And that's what we, I mean, that's what you guys do at your firm when people call into your show is you put this plan in place. That eliminates, right, a lot of things that people don't even know they have, just like termites, right? Most people don't know they have their termites until they're too late. Most people don't realize what advisors are actually charging because, you know, maybe we can talk about this, the things that we've heard advisors say. Yeah. I've heard advisors say, just trust me. Just trust me. You've got my word on it. That's right. Follow the green line, right? I mean, all of these marketing slogans are the best one. The best marketing slogan out there right now, I am a fiduciary.

05:31 Oh, we hear that all the time. Right. Sometimes I say, well, if you are a fiduciary, why aren't you offering a true income plan to folks so that when they hit retirement, they never have to worry about where the income is going to come from? Why haven't you given them a green flag on their mailbox where every month the postman is going to bring you a check? I mean, you have to spend it because the next month another one is coming. So the game here is spending your money, not trying to save it because you've got to spend it because it's coming in faster than you can spend it. That's the ultimate goal of retirement. Well, the biggest asset you have in your life is your income. And most people just don't realize that. Income is an asset. Yeah. Right. Income in retirement is what helps you sleep at night, what keeps you from being fearful. And it's what keeps you motivated.

06:17 Pete, you've seen studies before, right, that people who have guaranteed lifetime income live longer. Why do they live longer if they have guaranteed lifetime income? Less worry, man. And they're not worrying themselves. You heard that phrase, I'm worrying myself to death. Well, I mean, it's truer than you think. It is. Absolutely. Absolutely. Emotion matters so much in so many different things. And I want to make sure our listeners know that you can connect with Coach Pete's team here at Capital Financial. Just give us a call. You can get these questions answered that Mike and Coach Pete are talking about right now. Again, the number 800-661-7383. 800-661-7383. You can also text us if you'd like to take that method as well. Just text the keyword plan to the number 600-700. That's the keyword plan to the number 600-700. Mike, I agree. I think the most important asset class is lifetime guaranteed income.

07:05 Without that, you really don't have a retirement plan. And if we're truthful, and if we all were truthful, if the listeners would just sit back and just be honest with themselves right now, most of the advisors out there do not give you a guaranteed income plan. They give you an investment account and say we're going to take 4% of it. They say let's put this money in this sleeve and you'll just draw down on it. That's not a plan, folks. That's the investment guys still capitalizing by keeping more of your money so they can charge more fees. And at the end of the day, a written income plan is something totally different than a 401k, an IRA, or a brokerage account. A written income plan says what's going to show up in my account on the second Tuesday of every month.

07:51 What's going to show up on the 17th of every month in my checking account so I can pay my bills. A written income plan is something that helps you no matter what's happening in the stock market. We've got something we call a WSST. It's a Wall Street sales tool, WSST. And the biggest Wall Street sales tool we see that is used to put people in the wrong place for retirement, I feel, is something called the Monte Carlo simulation. Are you familiar with that, Mike? Oh, 100%. It's the thing that it's, you know, I mean, what most people don't know about me is we talk about me being the founder of One Oak Financial. And I've written books and, you know, we've done all this. But I'm also a professor at Old Dominion University just across the border in North Carolina, in Norfolk, Virginia. I teach personal financial planning and principles and ethics of financial planning there. I do one class a semester just so I can stay up with what's going on college campuses.

08:40 But Monte Carlo simulation is just, it's just, today it's just AI. AI saying what's the probability I'm going to run out of money? Yep. Yep. It is, it was made, but it looks in the past, guys. Monte Carlo simulation doesn't look into the future to see what's happening today. It doesn't, it doesn't, it doesn't, a Monte Carlo simulation will not pay the bills. It will not get you to your grandkids' first day of kindergarten. It will not get you on that vacation to Europe that you want to go on. And it doesn't provide the legacy that your family really wants. It's investor talk to keep more money so they can keep paying fees. Back in the day, there was, I think it was like Times Square usually got the rap for there.

09:26 Even Myrtle Beach down at Broadway area, there'd be a guy with a table set up and he'd have three solo cups and one ping pong ball. And you put bets on where the, you know, at the end, you'd watch, you'd start where the ball was at the start, and then you'd put bets at where it was at the end. It's the old hidden ball trick kind of thing. And so Monte Carlo simulations is similar to that, in my opinion, because it's all depending on what age you say. Because you're saying based on if I kept all my money at risk and I got income from it and they put at, and I live to age 80, what's my percentage chance of it being okay? And usually that's like 94, 92 to 94%. But then, Mike, if they put 85 or 90, the numbers get worse. And, you know, I want my clients to live to be 100. And if you put 100 in a Monte Carlo simulation, you're going to fail a bunch.

10:12 But even just failing one out of 12 times, that's what 92% is. Are you willing to be that one out of 12 that fail by keeping all your money at risk? And if the answer is no, there are solutions. Matter of fact, we have a, I've got a brand new research paper I wrote this week called The Power of Income Riders. How do you get guaranteed lifetime income for isolating some of the money you have? Not all, but just get enough income or two or three streams of income. If you'd like to get a copy of this, let's say, e-book, and it's about 40 pages. Call right now. We'll send it to you. All right. Very easy to do. Just call 800-661-7383. 800-661-7383. Or text keyword plan to 600-700. Plan to 600-700. But, Mike, I guarantee you when people have that, when the broker gives them that Monte Carlo simulation

11:01 or the guy claiming to be a fiduciary that keeps all their money at risk, I bet they don't tell them what age they run it to. Or they brush past that. Because if they told me here, if you live past 85, we really can't guarantee these numbers. Well, heck, I want to live past 85. This isn't Logan's run where they eliminate you at 30. Yeah. Right. Hey, Pete. Hey, Pete. You fly a lot. Yeah. I mean, you move around a lot. If you were to. On a plane. The next time you get on an airplane. Yeah. If the pilot gets on the air, says, you know, thank you for, you know, hopping on today. You know, we've had a little technical difficulty with the plane coming in today. They didn't have a lot of gas. We have a, we have an 86% chance to get to our destination safely. Would you stay on that plane? That's more than one of 10 chance we're not going to get there.

11:46 So, no, I'd be the first one off. If they said, I said, pilot says, well, you know, hey, we just found a little more gas just sitting out there. Now we have a 92% chance of flying. Would you still stay on that plane? I'd be gone, man. I just want to make sure. Right. No, and we have to take that same correlation with retirement. So, folks, if you want to make sure to get your own retirement plan, then you don't worry about the market. And it's going to be there. Certainty, not probability. That's what we're offering here. Call right now. The next 10 of you will put together a true Coach Pete's power plan. Total retirement plan for you. No cost or obligation. We're here for you. 800-661-7383. 800-661-7383. Or text keyword plan to 600-700. That is keyword plan to the number 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Consumer advocate Thomas Lipscomb here with you alongside Phil Graham, special friend of the show here alongside bestselling author, America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. Get your own questions answered or tune in to past episodes and check out all of our free resources by heading over to FinancialSafari.com. Again, that's FinancialSafari.com. And don't forget to subscribe to us on YouTube. FinancialSpeakeasy.com is the way to get there. Again, that's FinancialSpeakeasy.com. We're releasing new videos all the time. Great way to make sure that you are up to date on what you need to know heading into retirement. Let me give you one more site while we're doing it. PlanOncePlanForLife.com. That's where you can, if you go there right now, we'll send you one of these e-books out right away. The Modern Planning, PlanOncePlanForLife.com.

00:47 Thomas, there's five, and Phil, and everybody else out there in Radio Land, there are five quiet drains on your retirement paycheck, all right? These are quiet assassins. We don't like quiet assassins when it's touching our money. None of these is a scam, and nobody's going to call you about them. Every one is a rule working exactly the way it was written, and every one of them is far easier to deal with before it applies than after. Very, very important. That's why we're going to talk about it. That's good. Now, I've sat across the table from people who did everything right. They saved steadily. They stayed out of debt. They retired with more than they needed, and still watched a few thousand dollars a year walk out the door for reasons they never saw coming. So we're going to talk about what they are. And it's not because anyone cheated them, Thomas and Phil and everybody out there. It's because a threshold moved past them, or a look back caught them, or a rule that they had never heard of finally applied.

01:42 That always stinks to be zinked by something like that. So what follows? We're going to talk about the five I see the most, the five quiet drains on your portfolio. And all the figures are 2026 figures that we're going to talk about here. So they're pretty up-date. But the first one is something that, Phil, we've talked about this, Thomas, as well, off show. And it's one that came out of nowhere. It's called your Aunt Irma. I-R-M-A-A look back. Thomas, not a good thing. Doesn't sound like a good thing. And when I first heard this word, I thought, because my wife is from Holland. Hold on. I feel like I've heard that as a name before. All right. Let me tell you what it stands for. It stands for Income-Related Monthly Adjustment Amount. In plain language, it's your income. If your income is above a certain line, you pay more for Medicare Part B and D.

02:31 And these are two things about it that catch people. All right. The two big things. First, it looks backward two years. So your 2026 Medicare premium is set by your 2024 tax return. Whoa. Now, a lot of people didn't realize that. No, that's interesting. And not this year's income. Not last year's. The one you filed in 2025 for the year 2024. Talk about confusing. Phil, what do you think about that? Can you repeat the question? Can you just listen to it? I was listening to the years, and in my brain, I'm trying to track. And then that last part, I'm like, now I'm lost again. I don't know. That was the correct answer right there. You're lost. Yeah, I can't figure it out. Yeah. So keep in mind, if 2024, we're talking about 2024 and you're in retirement now, possibly

03:18 that was your last full year of work. Or the year you sold a rental property. Or the year you did a large Roth conversion. And now it puts you way over that threshold. And second, it is a cliff, not a ramp. You know, ramps are easy to deal with because they're slow and steady and gradual. A cliff. Now, I've never jumped over one or walked through one or walked over one of you. You wouldn't be here. Exactly. No. You know, I think of those movies, though, where you see all the buffalo or wherever it is, and they're following each other, and they'll just go right over this. Yeah. So what do I mean when I say a cliff? Well, there's no gentle phase in. One dollar over the line. One dollar over that line that they say, the line of demarcation. Just one dollar. And the full surcharge applies for the entire year. Talk about a government penalty. Wow. How does that make you feel? Don't like it. Now, there's something called a QLAC.

04:06 QLAC. Qualified Lifetime Annuity Contract. Now, these have been developed. They've been around for years, but a lot of people don't realize what they are. And what this is, is for IRA money, which really can kill you when you start doing those minimum required distributions, right? MRDs. You can take the money off that MRD equation by every dollar you put into a QLAC. So let's say you have $500,000 in a regular IRA, and you don't want to keep paying those minimum required distributions on that. So you transfer, let's say, $300,000 into a QLAC. Okay. Now, the QLAC now, that takes $300,000 off of your MRD equation. In other words, you're not taxed on that each and every year. You don't have to take the money out. Oh, nice. And the QLAC says, and this is what confuses people, the QLAC says you have until age 85

04:51 to start taking that money out. The confusion, Phil, and I think you'll agree with that, is a lot of people thought that once you put money in a QLAC, you could not touch it until age 85. Is that correct? That's what people thought. Correct. But that's not the case. No. You can basically take it anytime you want. But when you take it out, now you have to start reporting it again on the MRD equation. Yeah. Uncle Sam's usually flexible when it means that they're going to get tax money sooner. Yeah. So I wrote a book about this called Quiet Money. And when you think about it, the money you put in a QLAC turns quiet. It's not sitting there yelling at Uncle Sam saying, hey, come over here and tax me. It gets really quiet and it hides legally. I like that. So that's a good one. That helps with a tax torpedo. We don't like tax torpedoes. Most people believe Social Security either is or isn't taxed.

05:37 It is neither. How much of it lands on your return depends on a number called combined income, which is your adjusted gross income plus any tax exempt interest plus half of your Social Security benefit. Cross that first threshold and up to half of your benefit becomes taxable. Cross the second one and up to 85% of your Social Security, which was a tax to begin with, by the way, is now taxable. Wow. Oh, man. Thanks, Uncle Sam. Here's the part that makes it a torpedo rather than a bump. Those thresholds have never been adjusted for inflation. Think about that. Have we had inflation the last few years? That means they're low is what you're saying. In other words, a lot of people are triggering that and didn't even know it.

06:23 So $25,000 was a real income in 1984. It is not one now, is it? 1984, $25,000. The Social Security Administration's own historians note that the thresholds were deliberately left unindexed and they document the result. The share of beneficiaries owing tax on their benefits has climbed steadily. In other words, if you have money, you're going to pay taxes now for Social Security because they're not adjusting that inflation amount up. So, I mean, it's $25,000. It's nothing anymore, but that starts triggering things. Yeah, sure. Yeah, that makes a lot of sense. Wow. Phil, how does that make you feel on that? Not good. And when I think about that, Coach, we always talk about it's based on your taxable income. Is there a way to get not taxable income that doesn't trigger that so I can still put the money in my pocket and spend it, but I'm not triggering all these phantom taxes?

07:10 Well, one of the ways is a Roth conversion. And a lot of folks, like David Walker, when he was on here, was talking about he has most of his money in Roth IRAs. And he should know he was our former comptroller general. And he said, Coach, the taxes are going up. There's no doubt. He said, so converting to Roth, it does hurt a little bit. Having to pay the taxes, he said, but now I pay taxes once and never pay again. Again, plan once, plan for life. And you don't have those required minimum distributions where you're forced to take it and your beneficiaries inherit it tax-free. Uncle Sam shows up next year. The tax man says, well, let me start taxing you on your IRAs and say, you know, I don't have any IRAs anymore. I have Roth IRAs. And so you just slam the door in his face. So if you want to find out about the Roth conversion strategies that make sense to make sure you don't get tax torpedoed, call right now. We'll do a plan for you that encompasses everything we've talked about today.

07:57 When you come in, you'll leave with three books. One being this new book, Modern Planning. Plan once, plan for life. You'll also leave with the 22-step total retirement plan. It's a workbook. It's $99. We're going to give it to you. But it's an interactive one. We will cover every step with you or behind the scenes for you and we'll categorize everything on one color-coded page that makes a lot of sense when you see it. There's no need for hundreds and hundreds of pages to confuse you. Put it all on one page and understand exactly what's going on, not only now, but later and after you're not here. All on one sheet. Thomas, tell folks how I can get this. Glad to. That number, 800-661-7383. 800-661-7383. Or you can text the keyword plan to 600700. That is the keyword plan to 600700.

08:43 And it's true. A total retirement plan is a lot more than that IRA or two or that 401k or two that you have. It is a true total plan. Well, here's a good question. Ask yourself, how much bigger would your nest egg be today if 10 years of fees had stayed in your account instead of leaving it? Oh. Bill, you've got a second point on that, don't you? Yeah. I look at it as, I used to say, coach, when is a 2% fee not a 2% fee? It's my little riddle. Yeah? Batman. Because 2% doesn't sound bad, right? It's only 2%. Well, but it's every year it sounds bad. But let's think of it, if you earned 10% in a year and you subtract 2%, that's actually 20% of your gains.

09:29 So that 2% fee actually wasn't 2%, it was 20% of your gains. Wow. So if you're giving up 20% of your gains or more, that starts taking a huge chunk of what could have been credited to your account. And again, what's the value for it? What did you get for it? Are you getting any value? Is it just evaporating and it's just coming out every quarter every year? Those are things that need to be addressed and looked at. And I think the consumer needs to understand where those fees are coming from. And most people have no idea what the total fees are because there's also the internal fees that you can't see in a lot of contracts. Financial termites. You know, it's not only where the fee's coming from, but where are those fees going?

10:18 Good question, huh? Good question for your broker. Right. What are you getting for those fees? So, you know, let's put this 20%. Now, 20% sounds bad enough, but let's look at a $100 bill. So a $100 bill comes in to your house. Before you touch it, it turns into an $80 bill. There's no such thing as an $80 bill. It turns into the 420s. One of the 20s goes away every single time you get that fee. And then that money that should have been your account's not there anymore. So now we have compounding badness. That's a good way to look at it. Yes, it is. And we've done a report before looking at a 2% fee over 20 years. If you had an account with no fees, and they both are in the same interest. So the only thing different was an account with no fees and one with 2% fees. It's about $500,000 difference. Phil, there's where the money went. Wow. That's a lot of money. That's a lot. That's the difference between a beach house in retirement or a trailer park in retirement.

11:07 That's right. There you go. Not good. So let's do this. Let's put a total plan together. It's been a great show, by the way. I appreciate your time today, Phil, coming in. Absolutely. Always love it. And it's very enlightening on some of the taxes that are out there and some of the ways we can bypass it, though. So it's been a positive show. We're talking about ways to bypass the will and the trust and the court, and also bypassing a tax man as much as possible. And legally, by the way, there's no such thing as illegal. You've got to pay some taxes, but there's nothing that says you have to overpay. So if you want a true total retirement plan, folks, we're going to make that offer for the next 10 of you to call. There'll be no fee or obligation. We've seen others charge over $1,000 for plans that I don't think are anywhere near as good as this. But you're also going to get that financial termite inspection report, which will identify these fees we're talking about here. Put it in real black and white. And then now you'll know if it makes sense to continue paying those fees or not.

11:55 Thomas, next 10 people, no cost, no obligation. And that number is 800-661-7383. 800-661-7383. You can also connect with the team at Capital Financial by texting keyword plan to 600-700. That is keyword plan to 600-700. Well, for Phil Graham joining us from the Charlotte area, Thomas, Denise, Jose working the board. It's Coach Pete. We'll see you next week. Same time, same station, right here on the Financial Safari.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. I'm having a great conversation. Thomas Lipscomb here with you alongside bestselling author, Coach Pete D’Arruda. Also in studio with us, veteran of the financial arena, financial strategist, Phil Gramming. Have a great conversation. If you want to catch up on it, just head over to FinancialSafari.com. Again, that's FinancialSafari.com. Not only can you catch up on this episode, you can catch up on past episodes, as well as check out all of the great resources Coach has made available right there, FinancialSafari.com. Yeah, I wrote a book called Plan Once, Plan for Life. Modern Planning. And modern planning, what is that? Well, I mean, our planning now, Phil, is a lot different than what our grandparents were planning because our grandparents had a pension. That's right. Most people listening now don't. And so this modern planning techniques, and if you're going to plan and spend all the time putting a plan together.

00:46 Thanks to the government. Yeah. But if you're going to spend all this time putting a plan together, do it once and don't worry about it anymore. So Plan Once, Plan for Life is our motto here. And let me ask you this question out there in Radio Land. Listen, how many times a year do you catch yourself checking, worrying, and second-guessing your money? And be honest with yourself. Now, if your spouse is right next to you, don't give it away with a look on your face because you might be in trouble. But I really think I worry about money. Thomas, you ever worry about money? Oh, certainly. I mean, who doesn't worry about money? Oh, yes. But the worries need to have some action attached to it. Worrying all the time is not good. That's what they call the – something called an ulcer develops if you do that. So what we need to do is get rid of that. And how do you get rid of it? Well, you don't go see a pharmacist because they'll give you drugs for it, right? And then that covers it up.

01:32 That really doesn't get rid of it. How you get rid of it is you rearrange your money. There you go. We're not talking about a Titanic, Thomas, by the way. You know, rearranging the furniture on the deck, was that a good job? It doesn't matter. It doesn't matter. So that's what happens a lot of times when people say, well, yeah, I'm just going to move from this brokerage house to this other brokerage gal. Well, that's just rearranging the furniture on the Titanic because the money is still all at risk. Correct? It's true. It is very true. And what was your point? And something else that you've mentioned in the past is paralysis by analysis where people get confronted with this, I think, of a tsunami coming at you and just don't know where to tackle it. And that can be very frustrating when you don't have a professional with you. Yeah. Well, it makes a lot of sense. So here's a question. Remember full service, Phil, at the gas station? Yeah. I think even in New Jersey, they still do that.

02:18 They still do. Yeah, they do. So you drive up, go over that little thing, and then that little bell would ring. I remember back in the day, of course, I was little Pete back in the Ambassador Station Wagon days with the wood panel. It looked like Chevy Chase's station wagon. Dad would buy them from the state auction. They were cheaper, like they were state cars. But we'd pull in, and Mom would be driving, and I think Bob or Jeff would be in front. I like to be in back so I could stay out of trouble. Mom didn't see what I was doing a lot of times. But we'd pull in, and two guys would run out. They would pop our trunk. They'd check the oil. They'd refill the windshield washer stuff, and they would fill the car up. And we didn't have to get out. And so that same kind of theory is what we built the financial fill-up strategy around. And let me ask you this question. What if filling up your retirement income worked like filling up your car?

03:07 You just pull in, and they top it off once a month, and it just keeps running all the way through your life. That's the everlasting gobstopper in the financial world. Remember Willy Wonka? Yeah. Yeah, I could get bored with the same candy, though, wouldn't you? I would. What if it kept putting new flavor, I guess? Remember the everlasting gobstopper? I mean, as a candy connoisseur, Thomas, growing up, I loved to watch Willy Wonka chocolate fag. Oh, me too, me too. And I'll tell you, I can always go back to a butterfinger. Never lay a finger on my butterfinger, as they say. But, Phil, we're talking about the financial fill-up. And a lot of people, again, ask yourself that question. What if you could just every month wake up, and there's a new check in your mailbox? How would that make you feel? That would make me feel fantastic. I would love to have my bank account get refilled every month. Yeah.

03:52 Well, it's possible. It's not one of those improbable things. The problem is a lot of people have their money at too much risk. And when you put your money at risk, what I've seen over my lifetime is if there's risk attached, there's commissions attached. And the commissions are called fees instead of commissions. But it hurts just as much when the money comes out. That's when they can say, well, we don't charge commissions. Well, what is this thing coming out of my account every quarter then if you don't charge commissions? Well, that's a fee. Oh, okay. Well, that makes sense. No, it doesn't. In perpetuity. Phil, does that make sense to you? If it's coming out of your money, who cares what they call it? It's the same thing. I call it a financial termite. That's good. Whether you make money or lose money. I've never seen somebody say that if they manage your money and they lose money, in that quarter, they won't take a fee out of you. Was it like stockbrokers and weathermen are the only people that get paid whether they are right?

04:41 Oh. Yeah. And, you know, the weather, you know, just canceling the cookout is a lot better than losing a lot of money in the market. There you go. Truly. Now that we have microwaves, always cook that hot dog in the microwave. Ballpark Franks, Phil. Remember those? They're still around. They're still around. What do you mean remember? Well, because they're different. What was their saying back in the day? Didn't they fill up the whole bun? They plump. When do you cook them? Ah, there we go. And they used to plump. I used to love that stuff. I'd take it out of the microwave. It'd be double the size. Sure. Not happening anymore. So I'm just wondering what kind of chemical was in there that shouldn't have been. Good stuff. Remember those balloons you'd grow and you'd blow yourself? You'd put the red tube. You'd put that chemical stuff that had a smell to it and you'd blow in the tube and it would make a big ball? Mm-hmm. Yeah. Remember the smell, Thomas? Oh, yeah. Did it remind you of model glue a little bit? I mean, you know. Thomas, don't admit stuff. But, you know, it's funny.

05:27 They don't make that anymore either. And I did some research on it. It was some chemical that has like 30 letters in it. Oh, Lord. Dialed methyl. You know, one of those things. Something that the Breaking Bad guy would probably use. Yes. So let's make sure that our plan is doing what it's supposed to do. And I want you guys, Thomas, do you have a trivia question? Because I want to give a couple of these new books out. Always, always. All right. You got it handy? Let's do it. Let me put the trivia music. All right, folks. So you're going to be able to text your response to the number 600-700. Yes or no? Can a beneficiary designation on certain accounts override what your will says? Yes or no to 600-700. What do you think?

06:13 Good trivia question there. Can a beneficiary designation on certain accounts override what your will says? Text yes or no to 600-700. That is either yes or no to 600-700. And again, you can also call and let us know your response there as well. 800-661-7383. 800-661-7383. And the book is brand new, hot off the press, Modern Planning, Plan Once, Plan for Life. Phil, I've got to get you a copy of this book. It's over 250 pages, and it is a instruction manual for a successful retirement, not just trusting what you hear, but verifying and writing. How important is that? So not hope and pray? No. That's not a strategy? No. And we're going to send this out to you, folks.

06:59 We're not going to charge you anything. I've already bought the books, and I'm going to buy the postage. All you have to do is buy the time, that minute, to text us your address. Truly. And if you have any questions, we can answer those, too. You're also going to get a golden ticket in this book, which will give you the ability to get your very own total retirement plan done for you. You can give it as a gift to somebody else if you want. If you come in and have the plan done, we'll give you another one to give to one of your closest friends or relatives. I just think it's important that we get educated, folks, and make sure our plan is doing what it's supposed to do, what we understand it to do, what we've been told it's going to do. Phil, let's return back to the six places you can put your money to bypass probate. Now, earlier we've talked about 401Ks, 403Bs, TSPs. They bypass any will or trust and probate. We have bank accounts with the POD, brokerage accounts with the TOD form.

07:45 They bypass probate and, again, the courts. And then life insurance, as long as it has a beneficiary form filled out correctly, it'll bypass probate. There's two more. Two more? That's right. You want me to tell you what they are? Do you consider annuities the same as life insurance? Life insurance, well, slash annuities, yes, because annuities have a beneficiary form that bypass probate. Good point. We also have traditional and Roth IRAs, individual retirement accounts. If you put a beneficiary on there, don't put beneficiary my will because it'll go right to will and it'll go right through probate. So you can bypass the will. And, again, we're talking about forms that, Thomas, I don't think people even remember what they filled out many times. No, it's true. You know, I was just going over my life insurance a few days ago and realized, oh, my gosh, I haven't updated my beneficiary designation.

08:31 Yeah, and you do the show every week, so that's no excuse. It's true, exactly. You know who has the worst yard in the neighborhood? The landscape. Yeah, because he's too busy doing stuff for everybody else. Exactly. So, Phil, that's five of the six. And number six, and Thomas, we used to have a drum roll. I don't have it anymore. But number six is joint accounts with survivorship. Phil, you want to talk about that? Yeah, and I'm always careful with the joint conversation on bank accounts because you could have joint signer, which confuses people, or joint owner with rights of survivorship. People hear joint, and they automatically think that it's set up properly, and a lot of times that's not the case because what did you ask the bank teller to actually do? And so, yes, joint bank accounts, if they're set up properly, can avoid probate, but it can't be a joint signer.

09:25 That rights of survivorship is a key element to that. Again, folks, that is Phil Graham, our financial strategist from the Charlotte, North Carolina area, friend of the show, and friend of Coach Pete for over 30 years. Phil is an expert whenever I want some information like this, and thanks, Phil, for that answer. Sure. Thomas, very important that people make sure that they have these forms reviewed. Yes. And, you know, you've got to ask yourself, when's the last time you really thought about this? And most people, it's been a while. You're thinking about paying your mortgage and everything else. You're not thinking about something more important, which is this. It's true. And once you die, it's too late. Oh, yeah. Well, yeah. You can't change it after you die is the problem. If you can figure out a way to do that, you should patent it. Right. Casper, the friendly ghost. Yeah, well, there you go. And so, yeah, it's just very important that we make sure that we're doing the right thing.

10:13 And a lot of times, we don't know right for wrong. And that's why we talk about it in this book, Modern Planning, making sure that you get those six bypass ways, ways to bypass the probate process in your mind. But not only in your mind, in your wallet. Because your money's in your wallet, your money's on your mind, on your money, on your mind, on your wallet, whatever that song was, Thomas. You know what we're talking about? I know exactly what you're talking about. Phil, you know what we're talking about, too. You've got a son. I know that song. Money on my mind and mind on my money. Got my mind on my money. That was Dr. Dre. Oh, yeah. Was he a real doctor? What was he doctorate? Music. Usually when I say something like that, I see Thomas typing away. He wasn't even typing. No, I wasn't even going to try. Phil, the financial fill-up strategy. How important is it? We've got about 40 seconds now.

10:59 How important is it for everybody out there to make sure they have their very own financial fill-up strategy that gives them that monthly check for the rest of their life? The key word you said, Coach, is strategy. It's not just a plan. It's not something you do after the fact. It is a true financial fill-up strategy. That lifetime income or that guaranteed paycheck coming in every month, and we can talk about this on a different episode, but it's been proven that people actually live longer in retirement when they have that money hitting their account every month guaranteed versus the hoping and wishing of just pulling it from their market accounts and praying it doesn't go down. And so I think it's one of the most important pieces of a retirement plan, and it's the foundation that the rest of your retirement, the rest of your estate plan is built around that financial fill-up strategy.

11:49 Yeah, very important. And financial termite's another culprit. Matter of fact, we have an e-book here on financial termites. If you want a copy of this financial termite e-book to help you identify unnecessary risk, fees, or commissions in your portfolio, we will send it right out to you if you call right now. And that number is 800-661-7383, 800-661-7383, or just text that keyword plan to the number 600-700. That is keyword plan to the short code 600-700. When we come back, we're going to talk about five quiet drains on your retirement portfolio, folks. Very important.

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Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Having a wonderful show today. I'm Thomas Lipscomb here in studio with bestselling author, Coach Pete D’Arruda. We also have Phil Graham on the line, a friend of the show, who has been a financial strategist for going on 30 years. Coach, you have such great friends. Well, yeah, I keep good friends around. If they're very nice people, then I get along good with them. They're not trying to jump off a bridge, right? No, we don't want any of that. You know, we talked, I teased people before we left. I said six accounts that never read your will. And that's a strange way to look at it, but what does that mean? Well, you spend a lot of money on a will or even a trust, and some accounts that don't depend on that or don't even look at it, or you can bypass that. And so people spend real money on a will and then assume it governs everything they own. For a great many households, it governs almost none of it.

00:48 In other words, it doesn't really handle much at all. So the largest accounts pass from a form somebody filled out years ago. It's a form you fill out when you get in certain things. We're going to talk about that. And the will never gets a vote. In other words, there's some ways to bypass that will or trust. This is not a loophole, and it's not a mistake in the law. It's just how these accounts were designed to work quickly, privately, and outside of court. That's a good thing, by the way. The trouble is that the form is usually signed on the first day of employment, filed away, and never looked at again through a marriage, a divorce, a death, and 30 years of life. So, Phil, in other words, the 20-year-old Coach Pete has nothing to do with the 60-year-old Coach Pete. Right? A whole different thing. What if I had filled out a form when I was 23 and I started a 401K with a company, and now I'm 60?

01:36 I don't remember filling that form out. I don't remember what I did yesterday these days sometimes. What I had for dinner, that kind of thing. So there's six accounts, though, that you can buy. This is a good thing. I set it up to make it sound like it was maybe mysterious or not good. These are good things to bypass the court, bypassing probate and bypassing even trust a lot of times. You have to know what forms. A lot of people write all the language in the will or trust, but no one will ever read that because they filled out a form that bypasses it. So, Phil, do you want to give one of the six that don't depend on the trust or will? I would say probably 401K because it has a beneficiary. Exactly. But the real question is, do you know who the beneficiary is you have on your 401K? Could be an ex-spouse.

02:22 Is it your ex-wife? Yeah. So you never know. That's why we encourage people to review your beneficiary forms. And a lot of people don't even remember filling it out. But once a year, if you can, at least every five years. And when we get closer to retirement or in retirement, maybe every year because things speed up. That's right. I mean, years seem to go faster. So 401Ks, 403Bs, and TSPs. Now, TSPs are the Thrift Savings Plan. We've got a brand new book out called Thrift or Thrive. And if you're a federal employee, you really need to get your hands on this. And by the way, I love federal employees, Thomas. That's our mail people, and they do a great job. Anyone who works for FBI people. I love my FBI people. Don't want to get mad at me. But, you know, federal employees, you spend all your time. I mean, think about the mailmen and women. They're working seven days a week now, it seems like.

03:07 I'm getting mail all the time. So I really appreciate them. So I want to donate to them my appreciation. I've got the book, Thrift or Thrive. If you are a federal employee, all you have to do is call now, and I will send you a copy of this book. It's over 100 pages of very helpful tips and techniques to make sure you can maximize and truly benefit from your retirement plan and make sure you're doing the right things. So, Thomas, federal employees, the next 20 right now. All right, folks, just call 800-661-7383, 800-661-7383, or you can text keyword free to 600-700. That is keyword free to 600-700 because, Coach, great gift here. Yeah. Phil, this is just a fun topic to me because this is talking about bypassing probate. We've heard that phrase before. I just rephrased it a little bit. But bypassing probate. So we've got the 401Ks, 403Bs, and TSPs.

03:53 We count that as just one group. So there's five more places that you can make sure to fill out correctly and bypass that trust or will. Do you want to give another one or do you want me to? Well, one that I talk about a lot because there's certain accounts that don't naturally have beneficiaries. Sure. Bank accounts or certain investment accounts don't naturally have beneficiaries. So you have to add a TOD or POD, a specific form to specific people to transfer that money on death or pay that money on death, which does avoid probate to allow those accounts to go around them too. I've been amazed over 34 years of talking to folks in the financial arena that most people have never heard of this and many times didn't fill it out, especially when you open a bank account.

04:40 POD. Phil, basically you gave me two answers, too. You gave me two of the six right there. That's right. I'm an overachiever, Coach. But POD is payable on death, and you fill that out ahead of time. And that means when you pass away, as long as the death certificate is supplied, that money goes right to the beneficiary. You don't have to go through probate. That's the POD with the bank account. Your CDs, anything you signed up with the bank. Call your banker if you don't have that or don't see it or can't find it or don't remember it. Or bring in what you have here. We can call the bank for you, with you. And then we talked about brokerage accounts. That's where you have signed up, you know, online, maybe the E-Trades or wherever you have a brokerage account at. You probably either did or don't remember or maybe didn't do a TOD form. That means transfer on death. Phil, big question to you. Why do they just name them both the same thing?

05:26 I mean, they both do the same thing. They just want to be different, I guess. TOD for brokerage accounts and POD for bank accounts. Is there a reason? My understanding is the transfer on death transfers ownership, so that way you don't have to liquidate those investment holdings to pay it out. Whereas at the bank, it's just cash. You know, you're not worried about is the stock market up or down. Now, tell folks a very important thing about when we die, the money in our stock accounts, when the money passes on or transfers on to the next of kin. What kind of taxes are owed on that stock? Let's say granny bought UPS at, let's say, $5 a share. And that's $500 a share when she passed away. That's a $495 per share capital gain. What did the beneficiaries owe that day they inherited that money on granny buying that five, and now it's worth $500.

06:14 What do you owe capital gains-wise? If it's set up correctly, you can get a stepped-up basis. So what does that mean? It means you don't have to pay any tax, and me as the person inheriting the money, my new cost basis, what my future tax is going to be based on is that higher value, which is what a lot of wealthy people do, is they borrow from their brokerage accounts versus actually liquidating so they avoid the capital gains or at least defer it almost in perpetuity. Now, that's great. If you can afford that and don't need the money, then that's the best way to pass it on. Unfortunately, a lot of people have most of their money tied to the stock market, and they need to fund their retirement plan. And I've heard this phrase now three times from my advisors in the last couple weeks where people have said, I've got too much of a gain. I don't want to liquidate my stock right now, but they need the money to live on.

07:02 But they're worried about paying taxes. And my phrase, and I've used this phrase, well, I'd rather pay tax on a gain than have a write-off on a loss. And let me ask you this question, Phil. Do you think we are in, historically, are we in a good or bad tax environment for capital gains tax? We are in some of the greatest tax rates in history. So they're on sale right now. And with our debt going up every day, with more people needing Medicare, more people needing Social Security, and fewer people actually paying taxes, I think tax rates have – mathematically, they have to go up. Yeah, and whoever's paying taxes is going to be left footing the bill.

07:48 And now they're starting to go after your retirement income heavily from a tax perspective because that's where the bulk of the income is coming from. Yeah, well, we had David Walker on, former U.S. Comptroller General under Clinton and Bush. So he's on both sides. And he said, Coach, I had to resign because I got tired of signing checks and we're going to bounce. And he is agreeing where tax rates are going to go up like crazy. And so if you're delaying liquidating a gain now because you want to somehow hope for some imaginary tax deduction, I don't think those days are coming. And if you need that money, you're torturing yourself right now by not paying those taxes. And you're going to torture yourself in the future when you could have paid tax rates at what it is today. And what if we do this wealth tax they're talking about where they're going to tax you on all your gains anyway?

08:35 Or all the money you have in your accounts, by the way, not just gains. It doesn't make any sense. And taxes have been as high as 99%. Ronald Reagan, when he was an actor, it was the reason he got into politics is because any dollar he made over $100,000, they taxed at 99%. So he only did two films a year at $50,000 each because he goes, why would I work for a penny on the dollar? Yeah. So if you're in this situation, and a lot of you are, where you need money, but you're going without now because you don't want to pay capital gains tax, but you've got plenty of money sitting there captive in the market. And the only reason it's captive is because in your mind, you don't want to pay taxes. Folks, I don't either. I hate taxes. But you're going to have to pay some. But pay it now and get it moved before, number one, let's say that gain turns into a loss.

09:21 Well, now you're going to kick yourself if you didn't maximize your gain. And if you sell way up here, even if you pay taxes, you're going to have more than if you wait for it to go down and then sell at a loss. Amen. So call right now. We can go through with you all the different options you have, and there are more than you think. So Thomas, give our number out. The next 10 people call. We'll do a full review for you. And we'll also do that financial termite inspection report. You really need to know how much money is coming out that doesn't need to be. And it's hidden a lot of times. We have special tools and techniques. You can identify that. Call it a financial termite inspection report. It's included in my recipe for success. So call right now. We'll do it at no cost or obligation. And you'll leave with three books when you come in. And that number is 800-661-7383. 800-661-7383. Or text keyword plan to 600-700.

10:08 Keyword plan to 600-700. All right, Phil. That's six places that you could bypass basically probate. We looked at 401Ks, 403Bs, and TSPs. That counted as one. We looked at bank accounts with a POD form that's payable on death. We looked at brokerage accounts with a TOD form that's transfer on death. So that's three of the six. What's number four? I would have to say life insurance. I don't think we've said that yet. No, we haven't. Very good one, too, isn't it? And that's the one I think most people think of first is life insurance. Yeah. Well, the only thing that's required then is, number one, you have a policy. Well, true. And number two, you answered the questions truthfully on the life insurance app. Phil, we see with any kind of insurance that you have to be honest.

10:54 And so if you were a smoker and didn't say you were a smoker and you died, they're going to deny that claim when they figure out you were a smoker. They're going to give your beneficiary the premiums you paid back, but they're not going to give you the death benefit. So make sure you're honest on the life insurance contract. We talked about Ronald Reagan. We talked about Abe Lincoln. Honest Abe. Be honest Abe when you're filling out a life insurance app. There you go. Because they have a whole FBI-type staff there to make sure you're telling the truth. But all that's really required for life insurance is a death certificate. And number one is your beneficiaries, your folks that you're leaving the money to, they need to know you have that. And so we have the little green book of life I wrote a couple years ago. And it's 100 pages, interactive pages, which you fill out yourself. And it asks you all these questions. And you fill it out with policy numbers and phone numbers so that when you pass away, your next of kin doesn't have to waste years, if not even not finding things,

11:45 not knowing where you put stuff. So this is your treasure map for the grave. And so I'm going to give this out, Thomas, to the next 20 people who call and come in for their no-cost total retirement plan. Folks, this is invaluable. It puts you ahead of the financial world and tell folks how they can do that, get that. And we also leave with my book, the Total Retirement Plan. That's 22 steps. It's $99 on Amazon, but it's free if you call right now. And that number is 800-661-7383. 800-661-7383. Or text keyword plan to the number 600-700. That is keyword plan to the number 600-700. And we're going to cover the rest of the list when we come right back.

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Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome into the Financial Safari. Excited for the show today. Consumer advocate Thomas Lipscomb with you here in studio alongside best-selling author Coach Pete D’Arruda. We also have a special guest on the line with us, Phil Graham, friend of the show, financial strategist that Coach Pete has known for a very long time, nearly three decades in the financial arena. Welcome in, guys. What's happening, Thomas? Oh, everything. I'm loving it. I'm excited for the show today. We haven't had you on in a few months here now, and every time we have you on the show, Coach, I got to say it. It's just a fantastic program. So much insight comes out. I've known Phil for over 20 years now, probably more than that, Phil. I mean, who knows? It's been a long time. We're getting older. Good thing, though. I like getting older. Better than the alternative. And he's in the Charlotte area, an area called Cornelius.

00:47 And when I hear that, I think of playing the Apes because I'm older. Ah, yes, yes. I think of Vanderbilt. I think of the Biltmore House. So, Cornelius Vanderbilt. Oh, there you go. He's in our series, Grow It or Blow It, Volume 1. Yes, he is. Bryson, he was a blow it, wasn't he? Not him, but his next generation and generation after that. His posterity. Yeah. Yes, absolutely was. Yeah, unfortunately. No, Phil, it's just a fast-moving world. We see this every single day and every single year, and it's been a great time knowing you. And every time we've got together, we've talked about some different financial things that have come up. So, one of the things is, the question we always ask each other, and it's good to think about, when the market had its worst week in years, did you have a single dollar sitting somewhere that couldn't lose a dime? That's what we ask people a lot of times.

01:33 And a lot of people can't answer that honestly or truthfully and say, no, all my money was exposed to bad things. Is that a good thing to have all your money exposed if and when the market's going all the way down or down? Even if it's not necessarily a good or bad thing, is it a scary thing? I think that would be frightening if I didn't know whether my money was safe or not, especially if I'm close to retirement. I think that would be a scary thing. Yeah. I mean, what if there's a lot of financial termites in there, too? I mean, and the first question you have to ask yourself is, what is a financial termite? You hear this guy on the radio talking about it. And then you ask your advisor, oh, don't worry, that guy doesn't know what he's talking about. That Coach Pete guy? No, he's just stupid. No, financial termites are unnecessary. And there's a lot of unnecessary things.

02:18 We needed to go to Webster's Dictionary and look up that term, what unnecessary is. But unnecessary fees, risks, and commissions. Now, what's an unnecessary commission in your mind, Phil? I call it Dr. Phil, but Phil? Something I don't get value from. Yeah. Yeah. I would look at that as unnecessary. Hey, Thomas, Phil didn't know he was going to come on and get drilled today, did he? No, it's, you know, unnecessary. Thomas, I saw you typing. Did you look it up? I looked it up. There you go. So it means not necessary, believe it or not, is what Webster's is telling me on the interwebs here. What was the definition? Not necessary. Of what? Of what word? Unnecessary. So unnecessary is not necessary. Well, yeah, Webster did a lot of work on that one.

03:04 I know, really? Oh, man. I think that person was taking the day off when he wrote that definition. Oh, this is funny. Check this out. Browse nearby words. Unnecessarness and unnecessated. Coach, it sounds like you and I wrote this dictionary. Yeah, yeah. Thomas, like they do when they're stalling on the spelling bee. Can you give that to me in a sentence? Hey, no. No, unfortunately, I cannot. When you say, Coach, that's unnecessary. Yay. I like that. That's good. That's a good one. That's a good one. Hey, Phil, while I got you on the phone, you know, we learned this a couple of weeks ago or probably a couple of months ago now. It seems like just yesterday on the show. But, you know, we have borders on our country between us and Canada and us and Mexico. What do the people in Finland call their border? Let me think for a second.

03:50 Thomas, you got the Jeopardy music? Tick, tock, tick, tock, tick, tock. I have no idea, Coach. I can't wait to hear the answer, though. Well, it's the finish line, of course. Dang it. There you go. Sounds like a morning show to me. I love it. I love it. But it's just important, and there's nothing to make fun of, but there's too many people out there that don't realize what's really going on in their wallet. So, folks, do you really, and ask yourself this honestly, do you really know where every dollar in your portfolio is going, has been, or will go, depending on what happens in the market or what your advisor has built into your plan that might not be necessary? Again, there's that word again, unnecessary or necessary. So, it's a good question to ask. And, Phil, you know, you've been around advisors for over three decades now.

04:36 And what do you think some of the main concerns when they're meeting with clients or people that they're meeting with that are concerned? Maybe they're not clients yet. But what do you think some of the, like, let's go over three main concerns. Somebody who is approaching that financial red zone. Let's say somebody 60, in the early 60s. What do you think three main concerns that they need to be paying attention to that they really haven't thought about the last decade or even their whole life? Because it's a whole different time of your life when you approach this retirement world. I mean, it seems like so far away, then it's here. But what do people need to do to make sure they're successful in retirement? What I've seen is a lot of people actually are closer to being able to retire than they think as long as they don't lose a lot of money right before they retire.

05:22 To me, that's a big threat is, hey, I want to retire in a couple years, coach. And then all of a sudden, there's a market correction. We should look up that definition. I don't know who the market is correcting for, but it's not me. But if the market goes down right before you retire, that's not a good thing or something you want to happen is to lose money right before retirement. I think that's something they need to look at. Yeah. Well, because it's not just losing money. Now you're losing time. What do you mean, coach? Well, you can't retire now. Right. I mean, you were just getting to that finish line where you were going to, in your mind, just have enough to retire. And then somebody takes 30 or 40% away. What happens next? And on top of that, do you know to the dollar what you paid your advisor last quarter, or

06:08 does it just quietly come out? Think about that. And even psychologically, even if you could technically get enough income to retire, having a big portion of your nest egg evaporate might make you reconsider retiring. And that's not a good mindset that you want to be in either. That's a financial evaporation. We can't have that either. And so, folks, if you are curious about what's going on in your own portfolio, if you weren't able to answer these questions we've gone over in a positive way, or maybe it just aroused some curiosity, call right now. Our team will go over with you from point A to point Z what's going on in your wallet, where those financial termites are, if there are any. If there aren't, it's great to get that financial termite inspection report and get an A-plus on that. That's good. That means none.

06:54 We go from A-plus to F. We've seen too many Fs lately. I don't want you to have an F. That's right. We need to at least, my brothers and I, because my dad was a college professor, we had to have A's and B's. If we approached the C level, we were in a lot of trouble. And that's when the report cards used to come in the mail at the summertime. We'd get that last report. Now it's through the internet. But luckily, back then, it was through the mail. And it was usually a week or two after school was out. And if it came on a Friday, my brothers and I would always get the mail. We would make sure to lose it until Monday. We didn't lose the weekend. So we can't have, we really need A's or B's. Anything below a B would not be acceptable to my dad. And it's not acceptable to me either, as far as the financial world. So call right now. We'll do that financial termite inspection report. We'll also put together for you the total retirement plan and color code your money so you know your red, green, yellows.

07:44 When we get closer to retirement, it's more important to have green with lifetime income than it is to have red with maximum risk. Thomas, tell folks how to get that. The next 20 people will do this at no cost or obligation. We have seen others charge over $1,000 for things that don't even come close to this. And the question we're going to help you answer is where are your advisor's fees coming from each quarter? Are they coming from your pocket? Or somewhere else? And if it's coming from somewhere else, that means your money stays the same as far as fee-wise. Ask your advisor that. Where are your fees that I pay you? Where are they coming from? Thomas, tell folks that they can call us right now and get on that list to make sure they get that peace of mind, that financial freedom in your mind. Folks, it's a great feeling when you approach where you need to be. And you'll know when you get there that you're in the place you need to be.

08:30 Thomas, give them the number. Absolutely. Connect with Coach Pete's team at Capital Financial. 800-661-7383. 800-661-7383. Or text keyword PLAN to the number 600-700. That is keyword PLAN to 600-700. Phil, you want this question? I'll give it to you. And I want everyone else out there in Radioland to listen to this and think about this as well. Because this is very, very thought-provoking, Thomas. Okay. When was the last time your advisor called you before the market moved instead of after? Think about that, Phil. We have any Jimmy the Greeks out there? Probably. It's rare. I can't say never, but I know that it's rare. Okay. Okay. Okay. Now, I'm having to look this one up. Here goes, Thomas. Jimmy the Greek. Yep. Jimmy the Greek. Now, he was from Durham, North Carolina originally.

09:17 He was one of the famous sports predictors back in the day. Ah, yes. Jimmy the Greek. A famous American sports commentator, Las Vegas odds maker. But he was also, well, Las Vegas. Everybody goes to Las Vegas when they get famous. He was from Durham, though. Yeah, that's incredible. That is absolutely incredible. I don't know his real name. His name, you know, they used to have him on CBS. James Snyder. James Snyder. Well, Jimmy the Greek sounds better, doesn't it? Actually, check this out. So, it says James Snyder is his real name, but then over here it says born Demetrios Georgios Sinodinos. Okay, James Snyder. So, there you go. There's Jimmy the Greek. What about that? Remember him, Phil? Well, I definitely know the name, 100%. They used to have him on one of the pregame shows. I think it was the CBS NFL shows back in the 70s or 80s. Oh, wow. Yeah, I know I'm old. But he was pretty accurate. And so, we need to be accurate in our financial world, too.

10:04 We need to make sure our advisor is doing what they're supposed to be doing, not gambling with our financial future. You know, it's easy to take risk with other people's money. Yes. And I can't do that. I mean, we have to do safety first at my firm because I don't want to look you in the eye when you're getting ready to retire and tell you you can't now because we had that movement downward in the market. And unfortunately, all your money was exposed. So, ask yourself this, folks. How much of my money is exposed to the market? And how would it hurt me if the market went the wrong way right when I didn't need it to? And if the answer is, you don't know, or I need some help, or let's get the real plan, or let's get this financial fill-up strategy in place, by the way, financial fill-up, and make sure that we have that monthly check coming regardless of what happens in the market. And our money is going to come for the rest of our lives. And if we pass away, our spouse also continues to get that money for the rest of his or her

10:52 life. That's a true financial freedom plan. We call it the financial fill-up strategy. Of course, that's trademark, folks. You can look it up at financialfillup.com. We even have a game show we built around the financial fill-up. Oh, yes. Yeah, but if you want your very own financial fill-up strategy, we can tell you to the penny or the dollar. Let's just stretch it to the dollar, Thomas, with inflation. We can tell you to the dollar what your monthly income will be as soon as next year or all the way 30 years from now, depending on when you want to activate your financial fill-up strategy. You can activate it in a week from now, or you can activate it in 10, 15, 20, 30 years, or never activate it and have it go on to your kids. It's up to you. It gives you that full financial freedom, and that's what you're aiming for, I think. Thomas, give folks the number, and we'll do that financial fill-up action plan for you for the next 20 people to call. There's going to be no cost, no obligation.

11:38 You'll even get a three-book set of three of the books I've written when you come in. I love it. Folks, it's your retirement. Get that power. Put the choices in your hands. Connect with Coach Pete's team at Capital Financial by calling 800-661-7383. 800-661-7383. You can also text us by texting the keyword plan to 600-700. That is the keyword plan to the number 600-700. You know, there's six accounts that never read your will. I'll explain that more when we come back.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Consumer advocate Thomas Lipscomb here with you alongside America's wealth, financial, and income coach, best-selling author, Coach Pete D’Arruda. Excited for the show today. Coach, you always have such special guests that come on the program, no less this weekend as well. Well, it's been about 20 years since I've known David, and we're having David Walker, folks, former U.S. Comptroller General, and over with both different parties, so it's not like one party. And I remember, David, we saw each other in 2012 when you were in Chapel Hill, North Carolina. You were on your 10 million a minute bus tour. Remember that day? I remember. It ain't worse now. I know. I was telling Thomas and my daughter Carrie, who's my summer intern here, I told those guys, I said, I'm going to talk about it being 10 million a minute, and David's going to get mad about that.

00:45 Now, what is it now, you think, David? It's over 10. I haven't calculated. Let's put it this way. You know, back then, our total liabilities and unfunded obligations were $70 trillion. Now, they're $136 trillion plus and going up rapidly. And so, you know, we've lost control. There's just absolutely no question. You know, when do you think, because Congress, both sides, they meet, you know, they meet all the time, and who knows what they do up there, but they never accomplish what they're supposed to. They kick this can down the road. They can't even agree on a spending bill anymore. We keep having these government shutdowns. How are they ever going to agree to pay this debt? Well, first, Congress is very good at doing nothing. And that's okay when things are going well. But when things aren't going well and they're getting worse with the passage of time, it's

01:34 not acceptable. And it's a bipartisan problem. It is. You know, whether the Democrats are in charge or Republicans, they've both been kicking the can down the road. You know, there's only one thing in the Constitution that Congress is supposed to do every year, only one. And that's passed all the appropriations bills on time. The last time they did it was 96. They've only done it four times in my lifetime. That's an F minus. So look, here's what it's going to take, Pete. You know, it's going to take a statutory, meaning by law, fiscal commission that will educate, engage the American people on the facts, the truth, the tough choices, solicit input, make a package of recommendations for up or down vote in Congress. And secondly, a constitutional amendment that limits how much debt we can take on as a percentage

02:23 of the economy, absent limited and extraordinary conditions. A constitutional amendment is the only thing that will force the Congress to restore and sustain fiscal sanity. They're not going to, I mean, why would they do that? I mean, I can't even get folks a lot of times to pay attention to the fact that a Roth IRA is a great place. You pay the taxes now, you put the money away, you never have to worry about taxes again. People don't want to even think about spending or paying money right now. And same thing with Congress. It seems like they, you know, they can't get enough traction. I mean, you tried very hard there in 2012 to get attention. How far up did we get in the polls as far as people being aware of the debt and wanting to get something done? Do you remember? Well, first, I have done Roth transfers last year and this year. Okay. So I believe in leading by example. Yes. Secondly, people are getting more concerned about it.

03:11 And it's not just Main Street America. It's our investors. We're starting to have a supply and demand imbalance. We need to issue a lot more debt and the appetite for our debt is going down. China has significantly reduced its debt holdings. Other countries are becoming reticent about buying as much of our debt as they have historically. You know, we're having to pay higher interest rates in order to be able to finance our deficits. The second largest expense is interest. The fastest growing expense is interest. And what do you get for interest? Nothing. And so things are changing. I'm about ready to go back on the road again in late 26 and 27 because while these issues won't be a top priority for the midterms, they will be for the 28 election.

03:58 And I've got a new book coming out this fall that hopefully will be a basis to be able to get people much more informed and engaged. Do you have a title for the book yet? Yes. Saving Social Security in America. Common Sense Solutions. What do you think of the top two or three solutions people can push their congressmen or woman to do now? Well, you know, we need that commission. There are bipartisan bills in both the House and the Senate that hopefully can get moved to the lame duck session. Nothing's going to happen before the midterms. Congress is not going to pass a constitutional amendment. And so we need to go with Plan B. Plan B is what the founders envisioned. The states need to get together, propose an amendment. But Congress should have called a state-led convention as far back as 79.

04:44 They didn't do it. They're stiff in the states. And now I'm trying to get a state attorney general to sue the Congress for failing to call the convention. I think these are very two significant things that are either going to happen or not happen in calendar 2026. And so let's hope that they do. You know, Social Security, the trust fund goes to zero in 2032. That's an action-enforcing event. And that's why I say that while it's not going to be a big issue in this year's midterms, it will be in 2028. We need to start telling the ground on it, turning the heat up. It's right when I was supposed to start getting Social Security in 67. I hear you, my friend. By the way, the 67 is probably going to go up one month a year over 24 years.

05:31 Wow. Yeah. Well, I mean, you can't afford to pay us. We're living longer. And we don't have that money there. It's not there. So the Roth IRA, it makes a lot of sense now because at least we know where the tax rates are now. And if we put it in a place that the government supposedly can't touch, I mean, how confident are you that they won't try to change those rules going down the road? Well, your grandfather, okay, even if they try to change the rules going, they're not going to do it retroactively. And I do think that the individual income tax rates are as low as they're ever going to be. And while the problem to be able to put our finances in order are primarily a spending problem, we're going to have to have more revenues. And the single largest source of revenue is individual income taxes. That's not the one I want them to get revenue from. I understand that.

06:17 Yeah, that was raising tax rates. Folks, we're talking to former U.S. Comptroller General Mr. David Walker joining us on the show today. David, it's just frustrating when we all can see this, but it doesn't seem like Congress really cares. Well, the biggest deficit that we have, Pete, is a leadership deficit. You know, we have too many laggards, not enough leaders, too many people living for today rather than help create a better tomorrow. You know, the sad thing is, is for the first 200 years roughly of our republic, we believed in the concept of stewardship, which is not just generating positive results today, not just leaving things better off when you leave them when they came, but leaving things better positioned for the future. We've abandoned that.

07:29 People in it. And it's called Grow It or Blow It. Grow It or Blow It. And it's about, like, people you remember in the past, like the Commodore Vanderbilt, all the famous people, the big millionaires and billionaires who made the money. And within three generations, many of their fortunes they left was gone because the grandkids never saw mom and dad working as hard as they did. The kids usually kept it alive for the most part. It's the grandkids because they didn't see all the sweat and equity that went into building this empire. And so fast, the empire disappeared a lot of times. And that's what's happening here with our government, if we're not careful. Our whole U.S. system could go the same route as some of these inherited wealth folks had the trouble with. Well, we need to learn from history. We need to learn from others.

08:15 There are plenty of superpowers that have existed in the past that no longer exist. The leading indicator on the way up is economic power. The leading indicator on the way down is loss of economic power. We're not exempt from the laws of prudent finance. If you can't put your finances in order, you will lose economic power with adverse consequences both internationally and domestically. Not only economic consequences but also national security consequences. Now, a lot of people listening say, ah, this doesn't really apply to me. I don't really care. The government's going to do it or they don't do it. But what can we really do? Let's take it down to the grassroots level. People are listening. They're getting mad. They should be getting mad because the dollars, folks, that you've been putting aside are worth less and less because of this. And especially if taxes keep going up, the money you thought you were going to have isn't going to be there anymore.

09:00 And, David, what can the average consumer, the average citizen that's listening right now, how can we get this to a point where we can get that grassroots to grow to 60%, 70%? If we can get up to 70%, 80% of everyone on Congress, they'll have to do something. Well, I'm president of a new and emerging effort that has not gone public yet called We the People. And we're going to try to have a major citizen education activation campaign for the 28th election to get 50 million Americans engaged and communicating with their current and prospective elected officials to make these issues a top priority in the 2028 election. And let me give you some numbers, Pete, that I think people can relate to more.

09:47 Most people can't relate to billions, much less tens or hundreds of trillions. So let's say that Uncle Sam is a real person. And I'm going to take the financial statements for the U.S. government for the year ended September 30, 2025. And all I'm going to do is drop eight zeros. So this is what Uncle Sam's finances look like. He made $52,000. He spent $73,000. He's in the hole for the year $21,000. He's got total liabilities and unfunded obligations of $1,362,000. But don't worry. He's got $61,000 in assets. So he's only underwater $1,301,000. Would you lend Uncle Sam money?

10:33 No. Get out of my office, I'd say. By the way, Jamie Dimon, who's a pretty smart guy, chairman and CEO of JPMorgan Chase, was asked this past week, would he buy long-term U.S. bonds? Personally, he said no. Yeah. I mean, so it's just frustrating when we talk about these kind of things. Folks, if you're interested in finding out how to get that Roth conversion started, because you're going to have to pay taxes when you convert the money from a regular IRA or 401K or 403B or thrift savings plan over to a Roth. But you better pay it now than pay it later over and over again. It's the analogy of a farmer who has a bunch of IRS agents come up when he's planting the seeds one season, and they say, hey, Mr. Farmer, we can either tax you on these seeds and never come back again, or we can let you not pay tax on these seeds today but come back every year at harvest and tax you over and over again.

11:26 I think we all know where we'd stand on that. When we come back with David in a little while, we're going to talk about the We the People tour. We're also going to talk about common-sense strategies we can all employ to make sure that we're on the right track. We'll be right back after this. Loving the conversation today. This really, truly is a special interview that we're having today. Coach, you've brought in David Walker, former Comptroller General of the United States. Folks, if you want to catch up on the conversation, maybe the radio dial has just tuned in to us. Find podcasts online at FinancialSafari.com. Again, that is FinancialSafari.com. David, it's frustrating because you and I both can see this happening, and I know a lot of folks out there can see what's going on with the government. But nobody wants to do anything about the debt. And it's, you know what happens, it's going to keep growing.

12:13 Can't ignore it. Ignoring is not going to make it go away. No one wants to make these uncomfortable decisions. They don't want to get voted out, I guess. So it's a lot easier to promise people a lot of free stuff than it is to tell people we need to tighten the belt a little bit. Well, everybody wants something for nothing. I mean, you know, one party wants to have tax cuts. The truth is not all tax cuts stimulate the economy. Very few pay for themselves. The other party wants to grow government even more, even in circumstances where we're not generating the results that we need to achieve. The truth is we're going to have to reform Social Security and make it solvent, sustainable, secure. We're going to have to do the same thing for Medicare. But we've way overpromised on health care. We're going to have to dramatically reform our health care system. We can get into that if you want. Yes. Social Security is very easy to solve.

13:00 We can exceed the expectation of every generation of Americans. We can talk about that a little bit if you want. But the toughest choices are going to have to be on health care and taxes. Those are going to be the toughest choices. Well, we were talking when I told Thomas that I was going to have you on this week. Well, last week we started talking and I said, you know, this debt is out of control and people don't realize it. And David's been talking about it for a long time. The Social Security aspect, the health care aspect, and nothing is good about this. So Thomas was excited to have you on because he did want to hear about your opinions on, I know, Thomas, you mentioned the health care there, because the Obamacare, when it came in, was supposed to lower prices and all it has done. It was a big time bomb, wasn't it? It was. It's been especially having four kids now. We have to have these conversations.

13:46 It feels like every month or two, do we go to the doctor or not? And I can't believe in America I'm having to ask that question. Yeah. So what do you think about the health care, Dave? Well, first, we've over-promised, over-subsidized, and we have failed on the three elements you have to have to have a successful and sustainable system. Now, we're in baseball season. Let me tell you what those three are. Number one, you have to have properly designed incentives that encourage people to do the right thing and discourage them from doing the wrong thing. You need to have adequate transparency, including things like cost and quality, to provide reasonable assurance they will do the right thing and discourage them from doing the wrong thing. And then you have to have appropriate accountability, which means positive reinforcement when people do the right thing and accountability when they don't.

14:35 In the case of health care, we're zero for three. That's a strikeout, okay? And so we need to step back and ask ourselves how much universal health care, and I did use the word universal, how much universal health care is appropriate, affordable, and sustainable? And most Americans believe that's preventable wellness and catastrophic care that everybody ought to get. If you want more than that, then you get it from your employer, you get it from your union, you get your industry association, or maybe you buy it through the Affordable Care Act, which is, by the way, misnamed, just like the Inflation Reduction Act. How does that work out, okay? But, you know, you've got to keep in mind Congress is not subject to truth in advertising laws, okay?

15:22 If they were, a lot of people would be in trouble. But, so, you know, we need a dramatic reform because we spend about 50% more of our economy on health care than other industrialized nations as a percentage of GDP, and we get below average results. Yeah. Well, you know what's been very troublesome to me is the amount of fraud we keep seeing, like billions and billions of dollars of fraud. I'm kind of mad that I didn't think of one of these things and open up some phony companies with phony patients and no beds and bill the government for billions a year and just get away with it. Because I really haven't seen anyone, you know, we're not seeing these perp walks. And if you don't see the perp walk, I mean, you start thinking maybe I should try something. Well, you know, criminals go where the money is. You know, remember, you know, people asked in the past, why do you rob banks?

16:07 That's where the money is. That's Willie Sutton. Yeah, yeah, I remember they said. Health care is where the money is, okay? Right. But understand this. The federal government needs to learn a lesson. You need to have adequate controls up front before the money goes out. Because once it goes out, you're probably not getting it back. The other thing you need to do is you can't have self-certification. Newsflash. Criminals have no problem self-certifying if they're eligible for something they're not eligible for. And then thirdly, you have to have information systems that will share information, you know, across these different systems. You know, so you're not paying things to dead people. So you're not, you know, very simple things. But again, the government is a lag indicator when it comes to these things.

16:56 And so, like, Social Security, what's the solution for that? Because we're coming right up. I mean, we're right here on the deadline now. It's just a few years ago where people are going to start feeling catastrophic changes. Well, here's where I think we're going, okay? As I said, we can exceed the expectation of every generation of Americans because young people don't think they're going to get it. And they're wrong. They are. They're going to get it probably at a different age and maybe a different amount. Seniors think they're going to get cut dramatically. That's not going to happen either. So we can reform it, phase in the changes, and everybody gets more than they think they're going to get. I think that's exceeding expectations. So what are some of the things? I think we're probably going to see a further gradual increase in the normal retirement age because we are living longer. Secondly, I think we're going to see a significant increase in the taxable wage-based cap, but not an elimination of the taxable wage-based cap.

17:48 I think we're going to see an effort to try to prevent, or if we can't prevent it, minimize tax rate increases because that's a very regressive tax. I think we're going to see adjustment in the benefit formula so we end up keeping more people out of poverty, but we don't turn it into a means-tested welfare program. But upper-middle and upper-income individuals get somewhat less of a replacement rate than otherwise. I think we're going to see changes in the cost-of-living formula, if you will. And I think we're also going to see, for people that don't have an employer-sponsored retirement plan, an automatic savings supplement that would come on on top of the reform-defined benefit system.

18:34 And I think we'll keep the defined benefit system because most everything else you have in the retirement world is defined contribution, where the individual ends up bearing the investment risk. Again, folks, we're talking to former U.S. Comptroller General, Mr. David Walker, joining us, generous enough to join us for two segments today. David, here's what Thomas said to me the other day, and I looked at him and he said, I could say it. We did this little back and forth, and he said, oh, you could say it. We were doing our little communications by sign, baseball signs. I was throwing signs to him. And he said this to me. He said, Coach, if they would have let us have our own individual Social Security accounts when we first started this system, we could have all picked where we had our money, but we all would have had our own money in our own little accounts. Why did the government not do it like that? Well, for one thing, the government created this program in 1935.

19:21 It started paying benefits in 1940. It's a pay-as-you-go system, and therefore the people who ended up getting the early benefits got a huge return on investment, okay? You know, the simple fact of the matter is is that most people don't understand that Social Security is three insurance programs. It's just not a retirement savings account. It is retirement income. It is disability income. And it is survivor's income. And one of the guys that's going to be going on tour with me is a guy by the name of Joe Penland Sr., Joe from Texas. And you can find out more about it at his website, Joe from Texas. And he benefited from all three of those programs when he was young. And he's lived the American dream. He's now wealthy.

20:07 He's a very successful entrepreneur. But, you know, you need to understand what the system is. Insurance system, not just, you know, a savings and retirement account. Yeah. Well, it wasn't designed to be that. It was designed to be a safety net, which that's – Correct. We want to keep that safety net. We can't live – like, you need other money to supplement that, but it's a good way to help pay the bills, I guess, to the living expenses. Well, you know, when we formed it, it was intended to be the foundation. And like a house, you can't just live on a foundation. You need – Get rain done. You need a sponsored plan. You need personal savings on top of that in order to have a habitable dwelling. Yeah. We've got a couple minutes here before we let you go. I want to ask you what you think about this, what appears to be a push towards socialism. Where do you think the money is coming to get all these political ads to push socialism?

20:55 Do you think it's coming from other countries that are trying to bring us down by making us try to get too many people interested in socialism? They've never told them the bad things about socialism, have they? Unfortunately, many Americans don't learn from history and don't learn from others, and this is a perfect example of that. There has never been a true socialist, which many times converts into communism, that's been successful, that stood the test of time. And if you want to scare the bejesus out of somebody, have them read the platform for the Democrat Socialists of America. It's basically paralleling Saul Alinsky's, you know, communist principles, you know, take control of education, take control of health care, don't worry about deficits and debt, tax the rich.

21:43 I mean, it's, you know, it won't work, okay? But again, the problem is people don't learn from history and people don't learn from others. If they did, they wouldn't have anything to do with this. And I'm one of the national co-founders of a group called No Labels, and No Labels is trying to fight the wingnuts, including the Democratic Socialists of America, and provide support to the Sensible Center, which is mainstream America, no matter what your political affiliation is. I think the Sensible Center is about 80% of the people, and like you call them, the wingnuts are 10% on either side, right around there. Yeah, the Sensible Center is at least 60%, at least 60%, and last time I checked, that's a winning formula. It is. It's a majority. Let's say change those rules. That doesn't meet the filibuster requirement, but yeah.

22:29 You know, once I started studying Saul Alinsky, you see it all the time these days. I mean, if you study his rules for radicals, I mean, you can, I can see it. I said, oh, here, they're trying that method. And you know why? Because it works, because nobody's really, nobody calls them out on it. But we see it. I mean, you can see it, and once you see it, you never don't see it, can you? Nope, that's right. Folks, his name is David Walker. David, when is the book coming out, and when is the tour? I think the book will probably come out on Amazon around October time frame, and you know, we're going to start doing some events later this year and continuing into 2027, because as I said, this is not going to be a big issue for the midterms, but it will be. It must be for the 28th election. Well, when the book comes out, we're going to have you back on. How's that? That'd be great. All right, folks, David Walker, former U.S. Comptroller General, thanks for your time today, and folks, we'll be right back after this.

23:18 Thanks, David. Thanks, Coach Pete. Take care. Thomas will get you a copy of this when we get it done. Yes, sir. Sounds great. Take care. Take care. Bye-bye. Bye. Bye. Bye.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 We're going to offer this to listeners. If you have anyone trying to peddle a non-traded REIT, I would say stay away and run. What do you think about non-traded REITs? Yeah, anything that has limited liquidity, just stay away. There's too many good products out there that you don't have to go searching for some weird thing. And then all of a sudden, the real estate market takes a turn, and those things are worth half of what they were. And then you can't get out of it because there's a thing that you can only get out once a year, once every three years or whatever. I would stay away. There's too many great products out there. It's just amazing. People are trying to come up with income alternatives when the best alternative is right there with a fixed index annuity, a fixed annuity a lot of times with income. What do I tell you, the people that are saying, and again, this is usually coming from the brokerage side, your money's not liquid if you put it into a fixed annuity. Is that true or false?

00:46 That's false. Liquidity is a lifetime event. It's not a one-time event. And any time you're in, let's look at both types of annuities for, you know, if you're getting income, that automatically increases your liquidity, okay? And nobody's saying put all of your money into an annuity. Nobody says that, okay? You need to have some money liquid. We're saying you should at least have enough income to cover your basic living expenses. As far as a fixed annuity or fixed indexed annuity, most of them have 10% withdrawals each year that you can take out penalty-free. Some of them have cumulative penalty-free windows where, you know, if you don't take it for three years, then you can take out 30%. So there's all kinds of liquidity things. And again, don't put all of your money into any one thing. You should have some money liquid for emergencies. You don't want to cash in your 401k because your roof has a hole in it or something or that you, you know, that you need a new car so you're going to cancel your or take money out of your 401k.

01:38 That'd be crazy. So, you know, have some liquidity, have some guaranteed lifetime income, have some investments for growth to fight inflation. That's, it's all based in math and science. You can read the books. You can read the research yourself. There's white papers on this. And coach, here's the bottom line. There's three reasons why you need to put an income annuity into your portfolio, retirement portfolio. Number one, it will improve portfolio performance. And the reason it will is that annuities outperform bonds. So don't compare them to stocks, compare them against bonds, and you're going to be great. Number two, the research shows you're going to be happy in retirement with guaranteed lifetime income. And number three, the research now shows you're going to live longer if you have guaranteed lifetime income. And I can show you numerous studies that have all documented all of this. So all those brokers who are anti-annuity, they're saying they want you to die younger and they don't want you to be happy and they want your portfolio to perform worse.

02:30 And I just don't see why anybody would be for that. Why do you think that people live longer when they have guaranteed lifetime income? The number one killer of people, believe it or not, is not cancer. It's not heart attacks. It's not heart disease. It's financial stress. That has been the number one killer in the National Bureau of Economic Research, NBER. You can Google it. They just came out with a report. 2026, they studied 600,000 people. And it was clear. People with guaranteed income don't just live a little longer. They live significantly longer. There was an article by attorney Patrick Tricker in the Journal for Financial Service Professionals. And he said the average 65-year-old male who purchases a lifetime income annuity can expect to live 20% longer than a 65-year-old male. It's not. You know, Jane Austen wrote about it back in 1811 in the book Sense and Sensibility, that people who have annuities live longer than people who don't.

03:20 So, I mean, this has been known for hundreds of years. You talk to thousands of people a year about retirement. Why do you think so many people keep taking on more market risks than they really can afford to lose even after they've retired and don't have years to recover from a bad market cycle? Why do people continue to pile money onto that risk train that you can see is going to go off the tracks down the road a little bit? Because we've been in about a 15-year bull market that just has been ridiculously to the high side, which I think is great. I mean, I own some stocks. I own some cryptos. I mean, I participate in that. But I don't put all of my money there. I have paychecks and playchecks. I have guaranteed lifetime income, you know? I mean, because retirement is about peace of mind. You don't want to be worried, oh, the market's down 30. My goodness, now I can't have dinner tonight or something.

04:06 That's ridiculous. Have a floor of guaranteed income so that no matter what happens, you're fine. And then invest. And then if that goes up and down, you can let it go up and down. But you do not want to have a portfolio where you're taking money out of the portfolio while the portfolio is going down. Here's my rule. You will never, ever, ever, ever take money out of a portfolio that's going down. If you're going to do that system, you better have a buffer plan. You better have like a whole life policy or a money market fund or a CD or something that's guaranteed. That in those years when the market's down, you take money out of there. Never, ever take money out of a decreasing portfolio. Because when you do that, you're taking all that money out. Or when the market goes back up, none of that grows back. And that's the fastest way to run out of money is to take money out of a portfolio that's going down in value.

04:55 Never do that. If you're going to be the portfolio, if you're anti-annuity, then you better have a buffer. You better have something else where you can take money out if the market's down. Yeah, I mean, it's one thing to be against something. But if you don't have an alternative, like if you're talking to somebody and say, oh, those are bad, bad, bad. Well, you say to them, what do you have that does everything I just told you annuity does? And they'll get quiet or they'll come up with something that's not true. That's what I hear. Yeah, well, if you remember back in the great financial crisis, 2009, what went down? Everything. Stocks went down. Bonds went down. Housing went down. Gold went down. Bitcoin went down. Everything went down. You know what didn't go down? My annuities didn't go down. You know what didn't go down? My life insurance didn't go down. And so you want to have some things, not everything, just some things that when everything else goes down,

05:43 that you say, wow, I'm so sure glad I got this financial bunker right here because this can take care of me until things get back to normal. Now, I say a term, and it's not going to resonate with a lot of folks, but I think anyone listening who it does, it really needs to pay attention. Wealth transfer. So why do you consider life insurance one of the most efficient tools for passing wealth to the next generation, especially compared to just leaving it in a lump sum and throwing it through the tax game to give your next of kin some money? Yeah, don't leave your kids money. That's the stupidest way to leave money. If you say, I just got this money and this is going to my kids, put that into life insurance because you'll double, triple, quadruple, quintuple it depending on your age, depending on your health. You can leverage it. Plus, they'll get it tax-free. You know, I see way too many retirees who say, well, I'm going to just leave that IRA to my kids.

06:31 Don't leave your IRA to your kids. You didn't save your IRA and your 401k for your kids. You saved it for your retirement. Guess what? You're in retirement. Spend it. That is the worst money to leave to your kids. They might not even get 40 cents on the dollar after they pay federal tax, state tax, and who knows? Sometimes there's estate taxes. No, don't leave that to your kids. Leave your kids life insurance. You get leverage and it's tax-free. Talked to a planner once and he said he had a client who, instead of doing the 401k when he started work, just started funding a life insurance policy. And that client passed away at age 48. If he had been doing the 401k, there wouldn't have been much money there and it would have been taxable and all get out, go into the next again. It wouldn't have been any money. But instead, he had been funding a big life insurance policy.

07:17 So his children, he had three of them. Each one was a millionaire when he passed away. You could not do that with a 401k. That's the self-completing feature of a life insurance policy. Do you want to explain to folks what self-completing means? Well, self-completing means while you're paying it, if you live, guess what? You got all these living benefits. You got money for yourself. But if you die, the plan is complete and it pays your kids out. And you can even have a disability waiver that if you're disabled, the company will pay your premiums for you. There's all kinds of different bells and whistles you can put on it. But the key is you have an ability to leave generational wealth to your family. And you can do it for pennies on the dollar with life insurance. You can't do it if you're just trying to leave them a bunch of money. Like if you saved up $2 million to give to your kids, if you put that $2 million in life insurance policy,

08:04 you might be able to give $6 million or $8 million to the kids. Folks, we're talking to Tom Hegday. He's internationally known in the financial circles. He's a speaker. You've seen him. Maybe you've seen him. Maybe you've heard of him. He's been on public TV. Don't Worry, Retire Happy is the name of his public TV special, as well as the book he's written, as well as Paychecks and Playchecks, two outstanding bestsellers. Thomas, when we talk about Roth, you've mentioned Roth-based annuities and tax-free positioning as a big part of your own plan. How does life insurance fit into that same tax-free strategy or maybe even better than that? Yeah, well, so, and I will even say, I wish I wouldn't have converted all of my IRAs because there's a code in the provision that you can do qualified charitable distributions out of your IRA. And I wish I would have saved a bucket of money for, because we give to charities and we give to our church.

08:54 And I could have been giving out of that bucket and had Uncle Sam helping me. But anyway, I did it. I converted it all. I'm glad. I'm glad I moved the money I did into whole life insurance. Now I got a fully funded, beautiful policy there. And it's like a freight train. You know, people who pick on whole life, they say, well, you know, you put this money in, and for the first year, there's hardly any money. It's all going to that greedy agent or whatever. No, whole life is like a freight train, okay? If you watch a freight train, it goes slow. But when it gets going, you can't stop the freight train. You can't stop the freight train. And that's like whole life. It starts out slow, but boy, you can't stop it.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 your book, Paychecks and Playchecks. For folks who've never heard that phrase, can you tell the difference between a paycheck and a playcheck in retirement? Yeah, so that book is really based in math and science. It's the research of the leading PhDs around the world who write these white papers that people don't read while I happen to read them. And really, the paycheck is what you should live on in retirement. And that should be covered with guaranteed lifetime income. So Social Security, pension, lifetime income annuities from an insurance company, that should cover your basic living expenses. That's the paycheck. And then the playcheck, you can invest however you want in stocks, real estate, bonds, crypto, whatever you want. And that's for the travel, the fun, the cruises, the pickleball, the golf, all that kind of stuff. So you want to have both paychecks and playchecks

00:45 to have a successful retirement. Yeah, and retirement's very important. And here's something that let's say you had 50 advisors, different financial advisors, you sat them all down in one room. And you asked them how to build a secure retirement. And you said you probably get 50 different opinions. Why is there so little agreement in this financial industry on something so important as lifetime income? The advisors have kind of followed the baby boomers, all right? And so for 40 years, they were advising them how to diversify their portfolio and accumulate wealth and what stock should I be in and all that kind of stuff. That has nothing to do with retirement. Retirement is totally different, okay? Retirement, you want to make sure that you have increasing income for the rest of your life and that you're managing the risks. You got to manage inflation risk, market risk. You could live a long time. They can raise your taxes. You might need long-term

01:37 care. You might die. There's all these different risks in retirement. So retirement is not about accumulation and diversification and asset allocation. Yeah, those can play a role. But retirement is really about having increasing income for life and managing those key risks. That's what a successful retirement needs. You said they could raise our taxes, Thomas. They will. They will raise our taxes. They're going to have to. I mean, it's math. Yeah. Well, the national debt is kind of scary, isn't it? We're over $40 trillion now that they admit to. That's funded and unfunded liabilities. When you get to look at the promised pensions and all that, we're over $100 trillion in debt that we have a response. Yeah. I've seen, I've seen numbers where it's over $200 trillion for unfunded obligation for social security, Medicare, Medicaid, government pensions, military pensions. I mean, yeah, we're in big trouble. And so, you know, what I've done is first of all, I converted all of my

02:27 IRAs and 401ks to Roth. So, and most of those are in income annuities. So I got all this tax-free income coming in. I moved more of my personal wealth to cash value life insurance. I just finished a 12 pay whole life policy where my premium was 226,000 a year. So, I mean, I'm serious about it. I moved a whole bunch of money into cash value life insurance. And now I I'm sitting in just a great spot because I have all this money that I can get out tax-free. My, my, my annuities are coming to me tax-free. I mean, that's pretty powerful position to be in. And I would encourage your listeners to really, really look at that because what happens if taxes double and, and honestly, to get us out of this mess, they're either going to have to cut spending significantly or raise taxes significantly, and they don't like cutting spending. And so, you know, I think they're going to be raising taxes.

03:14 Lately, we've been having a lot of those Roth conversations with listeners. I think people are starting to realize it makes sense to convert regular IRAs to Roth IRAs. Even if you have to bite the tax bullet right now, you'll never have to bite it again in the future. And that's what people overlook. They like to kick the can down the road, but if you leave all your money in regular traditional IRAs or traditional 401ks, you're going to owe tax every single year, every single year in retirement. And that's going to be money you could have spent on yourself. Now you have to give to the government. And those taxes are going to have to go up, I think significantly. I mean, again, it's just math. You just look at it. You talk to any half smart person who knows numbers and math and any economist, anybody who knows this kind of stuff. And they're going to tell you that we're in a huge, difficult situation and taxes are going to have to go up a lot.

04:00 Well, let's look at your decision process because you said you put about $226,000 a year in a whole life policy and now you're paid off. But what led you to do that? Well, you know, I've been in this industry for 35 years and I've seen how wealthy people use whole life to their advantage. I mean, it's a great bond substitute. It's not a stock substitute. When people try to compare it to stocks, it's not going to beat stocks, but it will be bonds. Okay. And it's tax-free and I can leave life-changing legacy to my family. You know, I wasn't raised, my parents were teachers in the small towns in Minnesota. They didn't make much money. I grew up in a lower middle-class family. When I moved to Arizona, when I first went in the army, everything I owned was in my Masta 626, everything I owned, you know? And so I started with nothing and now I have the ability to not only

04:47 live a great life with my wife and I, but to really have generational wealth transfer to my children and grandchildren. So let's talk about, when we look at Nelson Nash, he was a friend of mine. He wrote the book, Be Your Own Banker. He said, treat a life insurance policy as your own bank. And a lot of folks don't realize that concept, but I think that's what you're doing with the whole life. You also, there are a lot of life insurance policies now that let you use the death benefit to pay for long-term care. So you don't need a standalone long-term care policy anymore. Absolutely. You can solve a lot of problems. And you know, I bought my last two houses with money out of my life insurance policy. Because think about it, we're in Arizona. You had to be a cash buyer to get the good deal down here. If you were going to do a mortgage, you weren't going to get the deal. They wanted cash. Well, where do you come up with one or two million cash in a couple

05:32 days? I, you know, you can't do that at the bank. They're going to fill out this form. We've got to underwrite it. We go see, and then they're going to charge you nine or 10% interest. No, I just call up. In fact, I think I did it all online out of my phone. Two days later, I got, you know, over a million bucks sitting in my bank account to close on the house. And then I, then I pay back, you know, the loan on my, my life insurance policy. So for me, it's been, it's been a really a great blessing. And, and, uh, you know, people don't understand life insurance. In fact, my own son is buying a policy now and he's like, well, dad, you know, I'm looking for a lower premium. I say, Sean, you don't want the lowest premium in life insurance. You want the highest premium. You want to put as much money in there as you can. You know, you want to overfund these policies. You want to put extra money into them. That's, you know, everybody wants a lot of tax-free money. Well, to get a lot of tax-free money, guess what? You got to put some tax-free money. You got to put

06:19 some money in there in order to get it out. And so I don't, you know, I, you know, but I deal, we'll tell you 226,000 was harder than I thought, because that's like 400 something pre-tax to put 226 after tax. So it was a little harder than I thought, but I'm glad I did it. And folks, we're talking to Tom Hegna. He's the author of the really bestselling book, Don't Worry, Retire Happy. A great, great name, great title, Tom, by the way. And, uh, you wrote about the go-go, slow-go and no-go years. And so can you go through those real quick for us? Yeah. Well, you know, a lot of people think retirement's going to be 30 or 40 years of golf, tennis, pickleball, line dancing, and cruises. And that's not true. You go through three distinct phases. The first phase is what I call the go-go years. I'm in my go-go years. I'm about 70% retired. I play golf four to five days a week. I play pickleball two days a week. My wife and I

07:05 travel all over the world. So, uh, but I still do things like this, you know, on my schedule when I'm able to, and when I want to, but that's the go-go years when, when you're, when you're out and you're active and that you actually need a little more income. You know, people say, Oh, when you retire, you'll need 70% of your working income. No, no. For the go-go years, you're going to need more because every day is Saturday and you're out there spending money. The second phase is what I call the slow-go years. Now the slow-go years, you can still do everything in the go-go. You just don't want to anymore. You know, you don't want to go downtown after four 30 because dad can't see when it's dark out. And then the no-go years, the no-go years are those years when you're probably not leaving the building till you're leaving the building. If you know what I'm talking about. So in the go-go years, what's important is having income. That's the most important thing, not assets, assets. I don't care about assets, income. You want to have as much income as you can in your go-go

07:54 years so that you can go, go and have a lot of fun. The slow-go years, it's all about long-term care. And just like you said, any plan is better than no plan. So people can buy a traditional long-term care insurance policy. But I think what makes sense for more people is to get the life insurance policy with a long-term care benefit because that way, if you don't need the long-term care, you still have a death benefit for your kids or you still have an emergency fund. It does three things in one. And then, or if you've got somebody who's medically unable, they, oh, I can't buy life insurance. I can't buy long-term care insurance. I have too many medical problems. There are annuities out there, coach, that will double or triple the income for a period of, you know, three to five years, depending on the company. So that, and most, most long-term care events are three to five years. And so that normally works out pretty well. I say any plan is better than no plan. And then the no-go years,

08:43 that's where life insurance fits. And people say, well, life insurance has nothing to do with retirement. Well, I already told you, I moved more of my personal wealth to cash value life insurance. And by the way, Ernst & Young says the optimal retirement portfolio is 30% income annuity, 30% whole life insurance, 40% investment. So I'm not alone in this. This is researched and documented. All right. But we have four kids. And one of the reasons many retirees don't fully enjoy their retirement is because they think they got to leave some money to their kids. And so one day we were sitting around and my wife said, you know, we were talking about how much we leave the kids. And my wife said, I don't know what you think. And I said, well, if we bought a $1 million second to die life insurance policy, name the four kids beneficiary. When we're both gone, they're going to get a million dollars tax-free. That's 250,000 a piece tax-free plus whatever's left over. I said, let's start there.

09:30 So we bought that $1 million second to die life insurance policy, name the four kids beneficiary. That policy is completely paid up. The total cost of that policy was 150,000. Now think about that for 15 cents on the dollar, we get to transfer a million dollars tax-free to our kids. But here's the best part who gets to spend the other 850,000 we do. So I tell people all the time, don't leave your kids any money. You're supposed to spend your money, leave them life insurance because you can do it for pennies on the dollar. Tom, you famously said that every day is Saturday in retirement. Most people think retirement means spending less. Why do you say it often means spending more, especially early on? Yeah. Well, I think Dr. Wade Fowler did a really good job on this. He calls it the retirement smile. And he says the spending is like a smile. So early in retirement, you're going

10:19 to spend more because those are the go-go years. That's when you're traveling, you're spending time with your grandkids, you're buying, you're still buying stuff, you're maybe get another new car or something. And so you spend more at the beginning. And then when you go into the slow-go years, you typically spend less because now you're not traveling, you're sitting at home more, you're watching TV, the grandkids come to you, you don't go to them. And so you spend less in that slow-go period. And then as you get older, that's when long-term care things kick in. That's when medical problems happen. That's when you need your house redone, you need a walk-in bathtub, you need grab bars in the toilet or whatever. And so then you spend more. And so that's what he calls the retirement smile. You spend more at the beginning, then you spend less, and then you spend more as you age. Yeah.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Consumer advocate Thomas Lipscomb here with you once again, continuing the conversation with best-selling author Coach Pete D’Arruda. Also in studio with us is Alan Grissom, tax strategist and entrepreneur. Coach, you were talking about how to avoid some of these nasty, nasty taxes through something called harvesting. Any tax is a nasty tax, Thomas. Right? I agree with that. But if you do the right strategies, you can have more in your pocket. That's what it comes down to. You have to do them legally because you don't want to end up in a jail cell. And so there's great ways. You know, we do a lot of research for that book, Tax Savvy Retirement, that I came out with last year. We talk a little bit briefly about tax loss harvesting there. But, Alan, you've taken it to a different level with what you've developed. Yeah, we really have.

00:47 I mean, when you think about how money is managed for people in the United States, it's managed vastly differently for Uber affluent. Yep. All right? So let me kind of start with that, right? Family offices manage. If an individual has a tremendous amount of money, they may have what they call a family office, meaning that they hire someone who manages their money. They may rent cars for them or buy cars or make investments. There's all kinds of things that kind of go with a family office. But at the core of it, they manage their money. Right. And, you know, at scale, when you have a lot of money, you can afford to pay someone to do that. Yeah. When you are, you know, from, you know, modern income to even, you know, fairly affluent,

01:36 that's still not, you know, at scale, that doesn't make any sense because you're going to lose all your returns paying somebody to manage that money. Right. So what we noticed in the U.S. during my time at S&P was that technology was allowing that management of money to happen at more and more at scale, meaning that you could do it with less money and make it work. So one person now could manage two people or 10 people or 100 people, et cetera. And that was, that's really great because now you can move more at scale. And also the people, you don't have to have quite so much money to have special access to certain investments, et cetera. That's good, by the way.

02:21 Yeah, I think so. Absolutely. So, you know, when you kind of look at that, we were paying attention to that at S&P. But one of the things that was very, very interesting to me was how do you manage your money at, so if I'm a wealthy guy, I could buy the S&P 500, all the stocks, right? Each one of the 500 stocks. 500 stocks. Right. 500 stocks, but you also, it's cap weighted, so meaning that I'm going to have to buy certain, I'm going to buy more. More shares of some, less of other, yeah. So it takes a lot of money to actually do that, just to have one, what, you know, you can buy it in an ETF, which is like a... It's a balance already done for you. It's already done for you, right? Yeah, yeah. And so you're just buying a slice of that, you know, how much money you put in. But if you had to do that individually, it takes a lot of money to do.

03:09 But if you have it, if you could do that, you can also deselect companies. So maybe you already had a lot of, let me work for Apple, and you had a lot of Apple stock. You don't need more Apple stock in the S&P 500. Because that would overweight you in Apple. It would overweight you in Apple, right? Yeah. But so technology allowed companies to start managing individual portfolios in that way. So meaning you could select or deselect each one of the individual stocks. That's pretty neat. That's called direct indexing. So essentially, Coach Pete, it's like with you, we would say, all right, so you can own all the stocks if you wanted to, or you can own fractional shares. So if someone had less money than you, and they wanted to have fractional shares, they could still own that in the same weights, et cetera, and deselect or select each one of

03:57 the stocks. Right. That makes a big difference in how you manage your money and your risk. Because if you work for a corporation for a long time, you've got a lot of risk in that one particular stock that's built up. Seen that from a lot of people, by the way. Yeah. Way overweight at many times. It's very common. And you've seen, like, even the past couple of years, like the NVIDIA multimillionaires, right? Rocket ship. Yeah. Yeah. For everybody. Like, if you own some NVIDIA stock, you know, you've had a high concentration buildup on those. So when I was at S&P, I saw an opportunity to leave and build a company that was focused on this direct indexing, which we did. That allowed us to push that technology out into the marketplace to allow people to manage their money in a better way, in my opinion.

04:43 And so ultimately, that's been very successful, but a key part of it was actually how do you manage the taxes? So Uber wealthy families, a lot of their work and a lot of that money management is all around tax strategies. How do we minimize taxes? And how do you take that to the middle market? How do you take that to the upper markets? You know, how do you bring that down in scale from, you know, the guys who are worth $100 million or $50 million or below, how do you bring that into, you know, mom and pop's guy who has $500,000 that they've saved for, you know, they deserve the same strategies that the Uber affluent. And saving on taxes is even more valuable for folks with a million or under or two million or under, like that kind of category right there. That is exactly what I thought as well.

05:31 Yes. So one of the things that we're really focused on in this industry has really changed is how do you create better tax strategies? How do you mitigate those tax loss harvesting, meaning that you sell your gains and you sell offsetting losses of stocks? Yes. Allows you to do some of that, right? So, you know, really, this is where direct indexing comes in. The S&P 500 stocks don't all move in the same direction every day, right? You're going to have maybe Apple's up one, maybe, you know, maybe Nvidia's down that day or Intel or whatever you would say, right? So ultimately, with direct indexing and tax loss harvesting, you own the fractional shares so you can sell those individuals each day to offset the gains. And so ultimately, you're generating losses that allow you to offset the gains, but you

06:17 keep your portfolio essentially the same while you do it. So it's a, to me, it's a next level strategy that individuals should be using. So at the end of the year, when you have a profit on paper, then you go back and because you're using this tax loss harvesting method here, the profit disappears on paper because you had losses the same day when you're having the gains. That's right. Thomas, it's pretty neat when you think about it. It is incredible. You know, you're smart. It's the only way I'd ever want to lose is if you've got to do it that way. Right, right, right, right, right. Well, you know, the way it works too with watch sales, et cetera. So it's fairly complicated. That's why technology, so that's why the scale and the technology is only, you know, it's fairly recent in terms of being able to do this. But it's actually massive for individuals because, you know, we all, every dollar that

07:06 we save on taxes is actually a fantastic return. It's as good as a really good investment, right? So understanding that fundamentally, you really want to approach things from a tax, you know, viewpoint really kind of plays out really well for tax loss harvesting. So we, I'll have to start a company on those things, which I have sold. We'll probably do more again. But it was very, very successful in the space. And ultimately, you know, I think these solutions, we've seen them really grow. And that is, that's why, because everyone sees the value in it. Let's talk about, you know, when you were doing this full time, the tax loss harvesting methods. And what was the, I know you met with people, I'm sure you saw somebody all distraught saying, I'm going to have this gigantic tax bill. Alan, what should I do?

07:51 And what was the best success story you had on that? So ultimately, there was a lot of very high net worth individuals who really jumped on this early on. So when you're looking at that, I know of one case where an individual had a $30 million company sale, all right, in July, and he's able to use tax loss harvesting strategies to mitigate his taxes by about 90% over the year. So you got 30 million. He sold it in July. And by the time January came around, he was able to reduce his taxes by 90%. Yeah, so he paid taxes. He paid about $3 million worth of gains on that. Instead of $30 million worth of gains. Wow.

08:37 That's amazing. That is amazing. All by using the strategy you developed. Mm-hmm. I mean, that's where people, you know, you throw your arms in the air sometimes saying, Uncle Sam's going to get me. Well, there's one more time. There's one person you called, maybe have him not get you as bad. Hey, there you go. Yeah, there you go. And look, it's all by the code, right? So ultimately, it's how do you do these things? How do you work through it? There's a lot of white papers on this. There's a lot of really smart people who've been behind it. This has been something that's been available for the Uber affluent for years, right? And so the technology has allowed this to be able to be moved where, you know, individuals who have, you know, maybe they've had a million dollars gain. That's still a lot of taxes. Hell yeah. On things, right? It really matters. So you have a white paper, right? Well, yes. Get us that white paper. Okay. And then we'll share it with the audience, Thomas.

09:23 Great. We can collect the information from folks who want it, and then we'll get it to you from when Alan gives us a white paper. We'll get it to you. Sure. So give the number out where people can contact us to get that white paper. Absolutely. Just call 800-662-6808. 800-662-6808. Or text keyword TAX to 600-700. That's keyword TAX to 600-700. Just amazing. We all just thought, you know, when it comes to taxes, we just have to throw our arms up in the air in the surrender mode and just take whatever they're going to give us in a bad way. But there are some ways. It's just amazing that the sale was in July, which is month seven. I can do math, right? And it's 12 months. So they only had five months to enact the strategies and still came out with a tax bill that was 90% less than it would have been.

10:08 Right. Amazing. That's extreme cases. Yeah, but that's what happens. But that's what happens, right? So, you know, look, you know, ultimately, I think that that ends with a great outcome for the individual. And ultimately, you know, that's a it's a really a proof that these strategies do work. So there was a car commercial years ago and the guy would say, everybody wins. Everybody wins except for Uncle Sam. And we don't want him to win anyway. So great strategy. You know, we did a lot of research on that book, The Tax Savvy Retirement. And that was one of the number one ways to shelter on taxes is the tax loss harvesting, the mitigation, the using the tax law in your favor. Like a lot of people get distraught when they see how big the tax code is. But there's a lot of things in that tax code that are in our favor.

10:55 Right. We just we look at the bad things, but there's some good things in there. You know, they have to be you almost need a decoder ring used to get out of a box of Cracker Jacks to figure it out. But I mean, that's why you deal with people that are smarter than you are to do it. And I'm talking about me talking to you because you're smarter than I am when it comes to tax loss harvesting. Yes. There's a lot. You know, when you kind of look at that that business and how it's evolved, there's been a lot of great minds who've moved into that space who are doing a lot of research around it. Right. And delivering better solutions. And, you know, it's been fun to be part of that that growth because it was it is the time where technology has been able to come in and make that happen. Yeah. And what I've been really proud to be a part of is we've been able to take that from the Uber affluent to push this down towards middle markets. Right. So everyone can enjoy our benefit from from these types of strategies.

11:41 So that's really what's important. Used to be something only available to the people in the ivory towers. Right. Now it's available to everyone. And so I'm going to do this, Thomas. Here's my friend. Gold and silver. Silver and gold. That's Yukon. This week is the guy who is making a little announcement. We have a free book to give away. I'm going to give for the next 26 of you who call, you're going to get we're going to actually I'm going to buy the book. It's twenty five dollars on Amazon. I'm going to buy it for you. We're going to send it to you free. We're going to pay the postage and handling the tax savvy retirement. I mean, that's the most important thing in retirement is to make sure you keep what you got instead of sharing it with everybody else. So call now. We're going to share this book with you. No cost or obligation. All right. That number 800-662-6808 800-662-6808 or text keyword tax to 600 700.

12:29 That's keyword tax to 600 700. Alan, really appreciate your time today. Hope to have you on more in the future. Thanks, coach. Yeah.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. I'm consumer advocate Thomas Lipscomb, still here with you, alongside best-selling author Coach Pete D’Arruda. And Coach, you have brought a friend into the studio today. Would you like to introduce him, or shall I? Well, go ahead and introduce him, and I'll talk about him. Let's do it. Let's do it. So we have Alan Grissom, tax strategist and entrepreneur, has flown in from Nashville. We've got him in the studio here. Happy to have you here, Alan. Nice to have you, Alan. Thanks, Coach. Thanks for having me on. Yeah. You and I have known each other for a while. Well, and in the financial community, like you and I are kind of veterans in the financial community, you kind of start knowing some people or start recognizing some people. And you've done a great job with indexing the market, having indexed. Do you want to tell folks about that real quick? Yeah. So it kind of goes with my history. So I've got a long-standing history in the financial services space.

00:48 The last 12 years before, I had a business with S&P Dow Jones Indices, which is like the S&P 500, the Dow Jones Industrial Average, and a million other indices that you may or may not have heard of. All right. So yeah, we were involved in those businesses or those indices for a long time. And I left in 2022 to create what I thought were investment strategies or indices that would be used in space. And it turned out to have a really successful run. So why do people need indices? Well, for a lot of different reasons. Indices, if you kind of look at that, they're a measure, right? And they can be a tool that can be used in investment vehicles. Like most people don't really think about it this way, but the S&P 500 is an index.

01:36 It measures the U.S. economy, right? It's one of the best measures of the U.S. economy. Yes. And so if you want to tell how we're doing as a country, it's a good way to look at it, right? It may not be perfect in the way it measures it, but it gives everyone a lot of confidence in how we're doing in general in the country. So when you think about that, there's a lot of use cases for it. People invest money in the S&P 500 and a lot of the NASDAQ 100 and a lot of other indices that are out there. And ultimately, the idea, because they're rules-based, they're passive in nature, the idea is that over time, those should perform, and they typically have outperformed active management. Because like most people, even active managers make bad investment decisions over time.

02:24 Yeah. And so that's what a lot of people need to know. I mean, passive is better than active a lot of times, right? It's really proven to be true. I mean, Warren Buffett, he's one of the greatest investors of all time. Hedge funds are supposed to be some of the greatest investors as well. And a few years ago, in the late 2000s, Warren Buffett bet the hedge funds a lunch versus a million dollars. He would give them a million dollars or they could buy him lunch if they could outperform the S&P 500. And over three years, most of them had dropped out. By the seventh year, all of them had dropped out of that bet and bought him lunch. So those are the best investors in the world. So it's really tough for individuals to really outperform active managers.

03:10 Can you do it? Absolutely. Yeah. But it's a tricky world out there. But can you do it consistently? You know, anybody can go to Vegas and win on one spin of the wheel, but can you keep winning when the wheel keeps spinning? So that's where people make mistakes in the market many times. And it's also, it's a lot of work. Yeah. Yeah. Do you really want to put that much time in it? You know, we study the markets actively every day, our team. And ultimately, that's a 24-7 job. Well, yeah. So you're an individual investor back home listening now and you say, I can beat the markets. But when you're trying to beat the markets, you're going against teams of people, not just you. And they've got research teams assigned to one stock. Like some of the big companies assigned five different analysts to one stock. Oh, yeah. That's incredible.

03:55 You know, they're full-time researching and they get a lot more information than we as individual investors can get a lot of times, too, because they're closer to the situation. Got to say that it's really tilted in institutions' favor. Yeah. In a lot of ways. Plus, they have psychologists who know exactly when you're going to sell. And they will move, you know, they can move the markets to certain numbers to make you sweat. And absolutely, turn it over. No moss. No moss is a common term, right? You know, I remember Roberto Duran said that back in the day, remember? No moss. No, yeah. Now, speaking of back in the day, I remember growing up and my parents would always have Walter Cronkite on and he would talk about the Dow Jones industrial average. That's about the only thing you ever heard of back then. And a lot of folks didn't realize that Dow was only 30 stocks. So it's really not as good of a barometer as an S&P 500 kind of index with 500 companies.

04:45 Right. In my opinion, because you get more of an overall view with 500 companies. Makes sense. Right. Well, if you look at this, the history of indexing itself, it goes back to what are you trying to measure? Charles Dow in the late 1800s created the Dow Jones Industrial Average. Before that, he had the Dow Jones Transportation Index, which is the first index. Yep. So why were they doing that? At the time, they were, again, trying to measure what was going on in the United States at the time. Right. And so in the 50s, when we did the S&P 500 was launched, as we know it, it really took a different view because there was more companies or more corporations in the 1950s than there were in the late 1800s. Yeah. And so ultimately, this measure, which is mostly stayed in the same framework, has been a really

05:40 good measure of the economy. And also large cap companies are different than small cap. And so you kind of go through those things. And it really depends on what you're trying to measure, right? So. You know, looking at the transportation, Dow Jones Transportation Index was at 1800s, you said, right? What they have to, would they have horse and buggy and maybe a train? Well, you know, that's a great question. That's a great question. What they had were trains. Okay. Yeah. So when you think about the 1800s and really why corporations are around, early Wall Street, the Buttonwood Tree, and then the early exchanges, they basically traded stocks. But there weren't many stocks. There were a few insurance companies and they traded revolutionary bonds.

06:25 And so for a long time, our financial institutions really were not in place, right? Our government, our federal government was really small. But if you look into the 1840s, 1850s, that's really when we started building railroads and trains. And that became, you know, the jet planes of, you know, of the day, right? So massive improvements in terms of how we could move people, how we can move product around the country. And that became an interest of investing. And there was one guy, Cornelius Vanderbilt, who had enough money to do it himself. Most, the rest of America did not. And so ultimately, that was a big catalyst of creating corporations, was raising money

07:11 by getting other people to invest to create this company to build a railroad. So you and I talked about railroads last night. It's amazing. Back in the 1800s or before that, when they built train tracks, Thomas, they didn't have all the modern technology they had these days to make sure it was level. Sure. When you come up to a hole, how do you put a train track over a hole? You build a bridge. I mean, you think about how long it took to build a bridge. Some of those trellises, you see, are amazing how far up they had to put the wood to get that, to keep the track level. And the amount of weight going over that. Oh, my gosh. It's amazing, really. Yeah. Well, and you look at all the technology and the wealth that came from that, right? Yep. So, you know, the Andrew Carnegie, so the steel, right? Rockefeller. Yep. You know, so John D was, you know, ultimately, you know, a lot of what they were involved

07:58 with as well was, you know, the oil, rock standard oil, all those things, those evolution of what we were doing at the time really drove a lot of wealth and really catapulted us into, you know, the 20th century and beyond. When you think about the game Monopoly, I don't really know. I should know when they developed that, but it had trains. Remember, they had three, four different railroads on there. For sure. They didn't have airlines, did they? But, you know, to invest in the trains and you make money with those trains. And so Vanderbilt, Commodore Vanderbilt did. Then he left his money, and that's a whole other story, to the kids and like grandkids, I guess, whatever. And most of them blew it. There weren't many that survived or the money didn't survive too many generational shifts there. Yeah, that's terrible. It's unbelievable. When you think about the wealth, because most people would consider Vanderbilt the richest

08:48 man who's ever lived. Maybe they could make the argument for John D. Rockefeller. But at the same time, when you kind of look at where the United States was at the time, it's pretty easy to make the argument that Vanderbilt was the richest man. If you look just a few generations away, a guy who was, I think, I've read, and people have made the argument, he was probably the first trillionaire as it relates to not trillion at the time, but relative to the U.S. GDP. Yep. Even that vast wealth was gone by just a few generations. He controlled the flow of goods, right? Oh, yeah. That's the railroad. Because we were talking about, it used to be by water. So you had to build the cities next to a stream or a river or something like that back in the day. And now the train tracks opened it up.

09:33 Or maybe the ocean, maybe the ships would come from the ocean. Now they come to the ocean, they load it on the train and get that stuff all the way out west. He was such a believer in that. But the reason he's called the Commodore is because he was involved in the shipping to start with. Yeah. Trains and boats. That's all he needed right there. Yeah. And so he was vastly invested and very successful in the shipping side of the business. Very ruthless at that side. But then after he saw the trains and he saw the future and he literally sold his ships and bet the future, bet the farm on the future. Wow. And he did that a few times. That guy was, you know, what I love about reading about him was, you know, he recognized what was going on and he wasn't afraid to risk it all. I mean, there were times he went down to Wall Street in panics and cornered the entire

10:22 market. So there's fascinating stories about a guy who I think didn't have even a sixth grade education, but built the wealthiest empire that the United States has ever known. And, you know, and did that with conviction. He understood stocks. He understood corporations. He understood debt. He understood all these things. And it's unbelievable that a guy, you know, which most society would have actually when he was young and making his way, was really shunned by the aristocracy of New York. And they really looked down their noses at him. And over time, he owned them all. Yeah. They weren't looking down too much, were they? That's after a while. It's just funny how a simple idea or an idea turned into a real reality with him. We take railroads for granted these days.

11:11 A lot of people complain about being too close to the train, hearing the trains whistle and getting mad about that. But what if we didn't have that kind of development? How would you move goods across? Because there were no roads back then, or there were dirt roads. I mean, they didn't have tractor-tiller trucks. You had trains. Well, you think about the gold rush and what was happening in the United States at that time, right? So you had the gold rush in California in 1849. You had, how do you get goods and things out west? How do you get people out west? How do you get things back east, right? How do you get the money back east? And so that was a big part. Like, the money part was really what was mattering. You had the great train robbery then. Here comes the money train. I didn't really care about the people part. But essentially, you either had to take wagon trains across or you had to take a boat all the way around.

11:56 You had to move all the way around a terra de fuego around South America and come back up, which was a long and pretty treacherous trip. There was no Panama Canal back then, wasn't there? There was no Panama Canal. In fact, he worked on building. They really explored building a Panama Canal at the time. It wasn't Panama. I think they were looking at another Central American country to go across. But he pushed the envelope in every avenue about how to build at scale. Well, he made a lot of money. And when we come back, we're going to talk about the power of tax harvesting and how you can save a lot of money on taxes by doing the efficient management of your taxation. We'll be right back after this.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Loving the conversation today with bestselling author Coach Pete D’Arruda. Also in the studio with us is Phil Graham as well as Gary Marriage. I'm trying to keep all of these boys on track. I'm consumer advocate Thomas Lipscomb. Catch up on that conversation by heading to FinancialSafari.com. Again, that is FinancialSafari.com. Coach, I see you itching over there. Well, subliminally, as we've grown up, we've always been told to put a plan together. Yeah. And we've been hearing it. But a lot of times we procrastinate, put it off. And so people are saying, well, Coach, what do you mean we've been told about it? Well, there's a show here. Maybe you remember this guy. The plan. The plan. It's a little guy on Fantasy Island. He always pointed out and said, the plan. The plan. So important. Tattoo. We just overlook it. Yeah, tattoo. He was really saying the plane, but it sounds like he's saying the plan. Yeah, it does.

00:45 And so the plan is important. You remember Fantasy Island? Oh, yeah. That was a cool show, wasn't it? Oh, yeah. That guy's name was Ricardo Montalbano or something like that, wasn't it? Or the big guy. Between that and the love boat. Oh, the love boat. Now, I had Gopher on the show years ago. Oh, did you? Fred Grandy. Yeah, really cool guy. Cool. It's probably one of those that got lost when we moved offices, Thomas. That was back in 2011. I had Fred Grandy on. The ones and the zeros have disappeared, unfortunately. We had Klinger from MASH. Shoot, do we still have that one? Yeah, I'll have to look it up and see. Yeah, see, I got some things to do here. Chuck Woolery? The Chuck Woolery one we still have. We have that one. The dating game? Yeah, he was good. Oh, yeah. I had him take us out. He said, we're back in two and two, he said. That's what he used to say. Now, he's passed away also, you know, unfortunately. When you come on my show, you don't stand a good chance. Sorry, boys. Welcome in, Phil and Gary.

01:31 Because Charlie Daniels came on, then he passed away. And Eddie Money came on, then he passed away. Yeah, yeah. And I wanted to have both of those guys back on. Because, you know, Charlie Daniels is from Gulf, North Carolina. He's a North Carolina guy. I didn't realize that. So, Charlie, really cool guy to talk to. Was it a rainy night? That's Eddie Rabbit. Oh. Wrong Eddie. Oh. Remember Eddie Rabbit? Yeah, I remember him, too. I was thinking Eddie Money, Eddie Rabbit. Yeah, yeah, yeah. Eddie Money had 21 top 20 hits. He did, yeah. Take Me Home Tonight. Rainy Night was not one of them. No, it was not. Two Tickets to Paradise, one of my favorite ones. Two Tickets to Paradise, great song. So, I was at Madison Square Garden a couple weeks ago for the Big East Tournament. And you ever been to Madison Square Garden? Yes. My first time I've ever been. Really cool place. Oh, wow. But on the entrance, at the entrance, they have this big old glass room. You're not allowed. Cops watch you when you get close to it.

02:18 And inside that glass room is a piano. So, Billy Joel donated to him at his 150th concert he did over there. He said, the 150th concert's Billy Joel, the piano man. Wow. I don't know what I had to do with anything. But, well, we do. Now, I had an autographed song sheet of Billy Joel in one of his first cassettes in our office. So, we get that as a collectible item. Yes, you did. But Billy Joel's one of my favorite artists, too. And don't worry, folks. I'm not going to have him on the show. Yeah. We don't want to curse him, do we? But I've never seen him in concert. I thought it'd be cool to see Billy Joel in concert. I agree. I agree. I agree. What's your favorite concert you ever saw in person, Phil? Oh, man. Ever saw in person. I did front row center stage for Jimmy Buffett one year. Jimmy Buffett was always fun. Came to Raleigh a lot back in the day. He'd come for two nights, and they'd extend it a third night. And I'd go every single night.

03:05 And I had tickets for one of the nights. But it was more fun in the parking lot with all the pair of hats. Oh, yeah. And you could still hear the concert on the inside. Nice. And my buddies and I would walk around. Every now and then, somebody would leave a grill with some food on it to go into the concert. We'd eat very well in the parking lot. Very nice. Very nice. How about you, Gary? What's your favorite concert you ever saw? I've got to tell you, it was Kenny Chesney. Kenny Chesney is a great performer, right? I like country music, too. But he... Doesn't he do Nationwide? Is it on your side? No. No, that's the other guy. That's Brad Paisley. Oh, Brad Paisley. Okay. See? We all confused. The other guy. So you're talking about the parking lot parties, right? Those are like the best. That's right. It's like before football games. But Kenny Chesney concert, somebody brought a pontoon boat. They dragged it behind their truck and they had it in the parking lot. Yes. Kenny finds out about it, comes out in the crowd and decides to start playing on a pontoon

03:53 boat that's in the parking lot. And it was sick. It was so cool. That's so great. Like a private concert with him. Just a good guy. You talk about a way to party. They do have a party bringing a pontoon boat. I've heard of RVs before, but not a pontoon boat. Too bad they didn't have to go to Lake. They could have put it in. He was having so much fun. They had to rush him back to the stage. They're like, hey, you're going to actually do a concert now. Oh, how cool is that? Thomas, what about you? Oh, yeah. You know, I love a lot of different music. Lately, I went with my kids to see Big Bad Voodoo Daddy, which is a swing band. So if you go back to the 20s, 30s, that kind of style of music sounds like that. Wasn't that Brian Sitzler from the Stray Cats? Yeah. So Brian said he does that same style of music. Yeah. He had a huge hit a while back. Yeah. I love that. I got one right, coach. Yeah. Good job. And we did the book, Through the Years, it's called. So we go from 1909 all the way to 2024, tell you relevant facts about each year.

04:41 And then I said, Thomas, I said, we need to make a soundtrack for the book. You know, you have movies have soundtracks. Why don't books? Exactly. Right. Come on. So then we came up with one. For each decade, we had a song. And now we're going to have a second soundtrack coming out because there were songs that were really close. We had to decide between the two. And I said, Thomas, let's go ahead and have a set two come out. There you go. And then we're going to have a country set come out for the decades, each decade country song. But do you have, I know this is random, Thomas, but do you have a song we can get real quick on one of the decades? Well, you know, talking about Big Bad Voodoo Daddy, let's go back to the 30s. All right. The rain gave out the dust blew in.

05:37 We stuffed the cracks with cloth and tin. Five cents for beans, a dime for rice. And bread stayed cheap in half the size. The 30s hit like iron rain. But Seabiscuit ran through the strain. Shirley smiled on silver screens and Mickey's dark broken dreams. A Sears vest cost us 49. But hand-me-downs still fit just fine. One farm and four lost crops to spoil.

06:25 So supper came from garden soil. The bread line stretched a block away. So great, so great. Well, all right, so to the average person listening saying, well, that's just a song. But the cool thing was you had, you designed the lyrics of every song. So every song's lyrics have something to do with that decade. They do. Every single line is mixing. You can learn history by listening to songs. I probably could have learned that way. So we have that book available, folks. It's on Amazon. What is it, $24.99? I believe so, yes, sir. Yeah, it's called Through the Years. And you can get the soundtrack for free. Thomas, tell folks how they can listen to, like, all the decades of the songs anytime they want. Well, and again, freely available. Of course, you can go on Amazon or Apple and buy it. But also the streaming platforms, Apple Music, Amazon, iHeartMedia, Spotify, you name it.

07:12 Just search Through the Years Coach Pete, and it'll come right up there for you. Through the Years Coach Pete. It has a great, colorful cover. And we go all the way from 1910 on this album all the way through 2020. Tried to style each decade as if it was coming right out of that time. You know, my wife, she's a teacher, and she said, Thomas, I got to bring this to middle school next year because this is the way I can teach my kids about the difference. Like I said, it's a good way to learn. Yeah, yeah. Now, what about, do we have electronic book posted for the Through the Years book? We do, yes. You can find it at CoachPete.com. Very easy website to remember, CoachPete.com. So here's what I'd recommend, folks. Go to CoachPete.com, download the book for free, and then go online to any, wherever you get your music from, Spotify, iTunes, whatever, iHeart. I love iHeart. That's what I use. But anyway, you've searched Through the Years Coach Pete. You can read the book, different decades, with your kids or yourself or your family,

08:00 and then play the song. There you go. And see how relevant it is. Did I see some on vinyl somewhere, too? We do have the vinyl. We have the records, too. Yes, that was a fun thing. We're not, I don't think they're for sale, though. No, these are limited edition. But, you know, we do have CDs. Contact me directly on eBay. But by the way, by the way, here's an interesting stat for all you guys listening. Yes. First year, this year or last year, was the first year that vinyl has sold as much as it did back in 1982. So it's as popular today as it was in 1982. Well, I know that because my daughter wanted a record player. I said, gosh, Daddy had one in an attic somewhere. Yeah. But we went and bought her a new one on Amazon. Sure. Where else does everything come from? Sure, sure. But they sell vinyl. Like, the record's now a lot more expensive. Like, back when I was listening to records, I worked at Kmart in 1984, and the records were $7.99.

08:46 So I would get my sticks and, you know, all the, like, Eddie Money, all the albums there, $7.99. Wow. Nowadays, she's paying like 30 or 40 bucks because these are special ones. They're different color. Back in the day, our records were black. Remember the black records? Yeah. Now they have red ones, blue ones, you name it, right? Fancy, fancy. And even ours is splash colored. Yeah, we have some very cool pink and blue splash colored ones. Yeah. So folks, go to coachpete.com, download the book for free. There's other books you can download for free there, too. Or you can go to Amazon and buy them. I really appreciate it when you go to Amazon and buy them because it helps me out a little bit. But you're welcome to go download it for free. We have that service for you. Yeah. We want to make sure you get all the facts you need to make sure your retirement is successful as it should be. It's true. And as you head into retirement, you want to make sure that these things that might have, you know, we've heard about in history class that happened in the 30s, that happened in the 70s, they can happen just as easily today.

09:33 So make sure all of these crazy concepts that we don't hear about until the financial red zone, sequence of risk return, all these different things to make sure that we actually have a plan as we head into retirement. It's fun to talk about through the years. But at the end of the day, you need to have a plan, an actionable plan that you understand. And that can begin by contacting Coach Pete's team at Capital Financial, 800-661-7383, 800-661-7383. You can also reach out via text, just text keyword plan to 600-700. That is keyword plan to 600-700. And maybe you're out there, you just have a question for coaching the team. Just text that to 600-700 as well. Whatever your question is, we'll be here to answer. Well, that's a sound where you can get ready for retirement. Buckle up, folks, because I've got a free book offer for you as we leave for the week.

10:21 I've got my book, The Tax-Savvy Retirement. Now, you can buy it on Amazon for $24.99, or you can call right now or text right now. If you're one of the next 26 people who will call or text, we're going to mail this book out to you at our expense. We're going to pay for the book. We're going to pay the postage. We're even going to pay for the handling, whatever that is. And so if you're one of the next 26 people who call, this book is over 230 pages. Tax strategies you may be overlooking that will help you keep more of your money in your pocket, not only now, not only later, but all the way through retirement. And when you're gone, making sure that more money goes to your family tax efficiently by reading the strategies in this book. We put it all in writing for you so there's no excuses if you're paying too much in taxes. A lot of advisors won't talk about this.

11:07 We pride ourselves in talking about tax planning, and we have a lot of strategies here that your current advisor might not be explaining to you. They're all packed in this book. And you get this book right now if you call the number Thomas is going to give you. And the number is the same, 800-661-7383, 800-661-7383. Remember, this is no cost, no obligation. We will get it out the door, and you can get this educative material to make sure that you are being most tax advantageous as possible as you head into retirement. You can also text keyword free to 600-700. That is keyword free to 600-700. People love it when we give the book away. Yes. And we have a lot of you calling. And we're happy to have you call, and we're happy to get you a book. You can, if you're impatient and don't want to wait for the book to come, even after you

11:53 call, you can download it, you can download the PDF at coachpete.com. If you have any questions for the show, if you'd like to hear your own voice, ask a question, go to financialsafari.com and click that little button there that says ask a question, and we'll make sure to answer it on a future show. And if we do, if you submit a question and we ask that question on air, I will get you a bottle of my wine for doing that. We have to come pick it up. We're not allowed to send wine. We're not bootleggers here. But we will give you a bottle of my newest wine. So, for Coach Pete, right here. For Thomas Lipscomb, back there with Jose working behind the board. And our special guests, Phil Graham and Gary Marich. It's Coach Pete. We'll see you next week, right here, same time, same station, on the Financial Safari.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Loving the conversation today. I'm consumer advocate Thomas Lipscomb here with America's Wealth Financial and Income Coach, Coach Pete D’Arruda. Also in studio with us this week is Gary Marriage as well as Phil Graham. If you want to catch up on the conversation, just head over to FinancialSafari.com. Again, that is FinancialSafari.com. Coach Pete has been on air for decades. We have much of that content available right there. So if you are in that financial red zone and you want to check out some of our past episodes, catch up on the education that is freely available or check out some of Coach Pete's latest resources, including the 22-step total retirement plan. Make sure you're not leaving anything to the side as you head into retirement. That journey begins at FinancialSafari.com. Again, that is FinancialSafari.com. Now, Coach, I was perusing the internet the other day, the interwebs,

00:48 and I came across a clip that was kind of fun. Have you seen that 70s show? Phil, Gary, have you guys seen that 70s show? Yes. Yes. So, okay. From a long time ago now. A long time ago now. Yeah. So Mila Kunis got her start there. Ashton Kutcher got his start on there. A lot of different people. But if you weren't aware, she started acting when she was 14. And here's a clip on her finances. I don't think I did. I was very naive. And I went to public high school. And I looked at acting as, like, the world's greatest hobby that I was, I had the privilege of pursuing. I didn't know it was a hit until I knew what my bank account was. And I didn't know what my bank account was until I was 18.

01:34 No kidding. Yeah. And then my dad sat me down. I was, like, maybe 17. I had just graduated high school. And because I didn't care. I could care less about money. I was like, I don't care. And people were like, we're negotiating. And I was like, I don't care. I just want the shit. I love working. And I was moving out. And my dad's like, look, I need to sit you down. We need to talk about your finances. And I was like, I don't care. And he goes, you have to sit down and listen to me. And then he, like, showed me my finances. And I was like, hoo, hoo, hoo, hoo. I was like, I'm missing. Like, it was just, like, icing on the cake. But could care less. Could care less. Now, I'm sure you guys have run into situations throughout your decades of experience where you have a gentleman or maybe the lady come in and be the guy. They're a geek about the plan. They know all their numbers. They know everything that's going on. And then the spouse, the partner, whoever it is, is like, I really don't care.

02:22 I just want to know I can go to the mall this weekend. How does that weave into the planning process? Because you have to think a lot of people probably fear, you know, if I've been doing all of this planning for her, for him, what happens when I'm gone? Or how do I make sure I select best strategies in this, that, or the other? Mina was wondering why dad kept having new Lamborghinis pull up all the time. Right. They're wearing all her money. Oh, man, that happens too, doesn't it? Oh, man. I mean, you know, it's more about when we talk about retirement planning, it's more about the income you're going to get than the balance you have now. Yeah. And what does that mean? Well, you have these 401Ks that most people do listening or 403B or a thrift savings plan. Those are big retirement savings places or regular IRAs. And they all have a lump sum, Thomas. That means they're balanced. So you look at what the balance is.

03:07 Say that's a nice big balance. Let's say it's a million dollars. Sure. Makes you happy. It's a million. Now you're a millionaire like the guy on Gilligan's Island, Mr. Hall. Da, da, da, da, da. You and Lovey. You can have your own trust now. Yeah. But a million dollars isn't what it used to be, but it's important to have it. And once you have it, what can it translate to as far as a lifetime income? I would argue that knowing what your income is going to be every month in retirement is a lot more important than what your lump sum is. Yeah. That makes a lot of sense. And knowing that income can pass to your spouse or partner as well, I think, is very, very important. And this is a part of the whole planning process that you put together is not just making sure that you're okay, but legacy, estate, your spouse, whatever it may be that's important to you is taken care of as well. What do you think, Gary? Important? Oh, yeah. Very important. I mean, definitely. I mean, what spouse doesn't want to make sure that they're okay?

03:54 I mean, I think so. Yeah. And the peace of mind knowing not just the lump sum. Yeah, you've got a lump sum. That's great. But how can I make sure I won't outlive this money? Well, number one, you put some of that money to an income plan that promises you won't in writing. And you can blow the money one year, and you know you're going to have the money coming back next year. That's always good, too. If you have a lump sum and you blow the money, it's not coming back. It's gone. Now you have a 201K instead of a 401K. Well, that happened to a lot of people in 2007, 8, 9, is your 401K turning into a 201K. And if you're going to retire in 2009, now you're not anymore because your 401K is a 201K. So you had to wait five or six years to get it back to a 401K. You know, I always ask this question, especially with folks with a million, and they're all in the market, all at risk. Phil, this is a good one. You know, I've talked about this before. I say, you know, if you gain 20% next year, I don't know why you're keeping your money all at risk.

04:44 You must be trying to get at least 20%. So if you gain 20% next year on that million, you'd have another 200,000. So you'd have 1.2 million. Would that change the way you live going forward? Would you be able to buy more cars or houses or feel richer? And the answer is usually no. And I say, well, let's look at the other side of that coin because when you flip a coin, there's a heads. And what else is there? A tails. A tails. So let's say it lands on tails and you go down 20% or more, but let's just say it's 20%. So now that million-dollar portfolio is now $800,000. Do you think that would affect the way you approach retirement? And the answer is, heck, yes, it would. Because, number one, you probably wouldn't be able to retire anymore because you've got to get it back up to that million. So now you're going to play financial catch-up. You already won the race. You ran around. You went through that little tape first.

05:30 You ran through it. You see it on TV. They go through their first one there. Yet you stay on the track and you decide to run around another lap and you get beat. You already won the race when you have a million dollars. Don't leave it all at risk. Yeah. And that's why we use income planning techniques and tools to make sure you have that financial fill-up strategy, which gives you a peace of mind and takes all the worry out of living and getting income and retirement because now you know new checks coming every year. Yeah, very true. Again, we're here with best-selling author, Coach Pete D’Arruda. Connect with him and his team and make sure that you have that plan in place. Maybe you just have a couple of questions about your current plan, and you want to make sure that you're on the right track, that your advisor is truly working in your best interest. We're happy to give second opinions as well. The number to call to take advantage of this right now, 800-661-7383, 800-661-7383,

06:18 or text keyword plan to 600-700. Now, Coach, let me ask you this. People hear risk. They hear a lot of different things. What kind of risk do you think they should really be thinking about in retirement? Obviously, market risk is the big one. That's the most important one. We look at inflation risk, but if we use some of the steps in our total retirement plan, we can pretty much eliminate that inflation worry off the table. Yes. The Social Security claiming strategy risk is a big one. Are you really claiming the right strategy to make sure you're getting the maximum benefit? I mean, you paid in the system for years and years. I did too, Thomas. I actually got a statement the other day because I'm getting ready to turn 60, and I heard they send the statements, the physical statements out. And it showed you, you know, if you retire at this age, here's how much you're going to get. Sure. But then also the fine print there says that in 2032, they might not be able to give me what I was entitled to anyway.

07:03 Say it, Anso. Yeah. 2032, which used to seem like a long way away. Phil, it's 2032 a long way away. It is not. And the Social Security office is not designed to help you maximize your Social Security income. They're designed to process the paperwork in which you turn in. Yep. So they're not designed to give you help. It's not their job. I'm not saying that they don't care. They're paid to do a job, and they do a great job of helping you file the paperwork, but they're not going to give you consultations on if you're doing the right thing or not. Well, and they probably shouldn't because they're looking at Social Security. They're not looking at your entire retirement plan. Well, there's no way to give you the right answer anyway. Exactly, yeah. It's like going to a CPA sometimes and asking about financial planning. The CPAs do a good job of being historians and reporting your tax situation of last year. Yep. They don't do a good job a lot of times of tax planning, looking ahead to protect your behind from the tax man,

07:50 but they sure don't understand the complex financial strategies that are out there these days. Because I'm in this field 60, 70, 80 hours a week, and it's hard enough to understand some of the things. So someone who's specialized in the tax or estate planning is not going to be a good person to ask about financial planning. It's true. But yet people do. How many people do? Gary, when you have people come in, they say, well, I talked to my CPA. My CPA said, whatever, fill in the blank. And I'm always saying, well, number one, you might as well talk to your dentist about the tooth fairy. Right. Because it really doesn't matter. They don't understand. Nobody understands how the tooth fairy can. You can put a tooth under a pillow and all of a sudden a couple dollars arise. I used to try to. Back then it was a quarter. But my daughter was like a $2. I'd give her a $2 bill. Nice. So she was like, the tooth fairy gave her $2 bill. So that was pretty cool. Old Jefferson.

08:36 But just don't get the wrong advice from the wrong person. Right. Yeah. It's true. By the right question, but you're asking the wrong person and getting the wrong answer. Yeah. That's very, very good. So, you know, it's just important to make sure we have that plan. And we do offer plans for folks. As a listener, you're entitled to a no-cost plan. We've seen others charge over $1,000 for not anything even close to what we do with the 22-step total retirement plan. I've designed it. This is Coach Pete's invention. And we have a booklet for it. You'll see it advertised on the airport. You'll see it everywhere. But you can get it as a listener before anybody else can. And if you're one of the next 26 callers now, we're going to get you that plan at no cost or obligation. And Thomas is going to tell you how to do that. Yeah. It's very easy. Just call the number 800-661-7383.

09:24 800-661-7383. You can also text keyword plan to 600-700. That is plan to 600-700. And as you can tell from our conversation here, retirement isn't just about building wealth. It is about defending it. This is a part of Coach Pete's book, the big book on retirement. He has a whole section on defense. Because at the end of the day, right, you would agree with this, Coach. Life doesn't care what your spreadsheet says. You've got inflation. You've got health care. Health care emergencies happen. Long-term care. If you talk about continuing education, people look at long-term care as if it was 1982, not realizing all of these new things you can do with it. Yeah. I mean, that's important, too, as is managed money. You know, a lot of people say, I'm taking risk, Coach. I'm taking a lot of risk. I say, well, who are you doing that with? Well, I'm doing my own investing. I say, well, all right. Well, that's okay. But who are you going to blame if you mess up? Seriously, though.

10:10 Seriously, right? Yeah. Then we have managed accounts. And, Gary, we talk about managed accounts. Managed accounts is when you're paying a money manager. So if you're paying a money manager, they better be doing a good job of managing your money. That's right. And if you're underperforming the S&P and you're paying a fee to underperform the S&P, why not go get an S&P ETF? Save the fee. Save some money and outperform. I think statistics have shown about the S&Ps outperform about 80% of the money managers. Yeah. How about this? The best beef comes from the local farmer. Well, if you can even find one these days. Yeah, that's true. You know what I'm saying. I grew up in Wisconsin. My dad bought a hit with another professor. That was his first teaching job at University of Wisconsin Richland Center. It was in the Wisconsin system. Yeah. But I remember back then it was a lot of money to me. I was like eight years old. And he said, I paid $300 for a half of a cow.

10:57 Yeah, yeah, yeah. I'd give all sorts of money to get $300 for a half of a cow. But we had a meat walker. So we'd go to the meat walker with mom every week. And we'd get the meat out for the week. Wow. The meat walker was a big freezer storage place. That's cool. And we'd get all sorts of cuts of meat there. And it was right from the local farm. That's where we got our milk, too, right from the local cows. That's very cool. And it wasn't pasteurized. I remember putting that. We had these glass gallon jugs, put them in the refrigerator, get three of them at a time. We used to drink a lot of milk. I didn't. My brothers did. I hated milk. You hated milk. I know. So you put it in. I like heavy cream in my coffee, though. But we'd put it in the refrigerator and it would separate. You'd see the milk and the cream would really separate back then. Try that these days. Not going to work. Smilk. But it's just important. Let's get the right plan in place for the right time of your life.

11:43 Come on in. I mean, we're local. I've been doing this. I feel old these days. 33 years now. Yeah. 33 years. Doing the right thing, in my opinion, for everybody that we've ever seen. And everyone's plan is customized for what you are doing, what you want, what your money is. We don't pull plans off the shelf. We design plans just for you. So come on into the financial lab. Let's design a plan that fits you and your family. Call right now, and it'll be no cost or obligation for that. The number, in case you missed it earlier, 800-661-7383. 800-661-7383. Or just text that keyword, keyword plan, to the number 600-700. It's shorter than a typical phone number. Just type in 600-700 there at the top of the screen. And plan in the message. Hit send, and we will be in touch. Yeah.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari, having a great conversation today. I'm consumer advocate Thomas Lipscomb, still with you alongside best-selling author Coach Pete D’Arruda. We're very happy this week to have guests in studio with us today, Gary Marriage. He's the host of Coasting Into Retirement from Tampa, Florida. Also with us is Phil Graham. He's from Charlotte, North Carolina, who's helping advisors address immediate liquidity needs for families. We've been talking about Coach Pete's 22-step total retirement plan, which is available by just visiting TotalRetirementPlan.com. This is a new resource being made freely available if you are in that financial red zone, that 5, 10 years before or after retirement. Take advantage of this. Go over there, download it, find out what you may be missing. The website, again, TotalRetirementPlan.com.

00:47 Again, that is TotalRetirementPlan.com. It just makes a lot of sense to make sure you have everything lined up. And, you know, Gary, you've talked to a lot of people over the years. What do you think the main concern is that people that are getting close to retirement have when they come see you? Most of them are probably the same with you. They're scared, right? They don't know what to do. They don't know how to navigate this whole retirement thing. And, you know, they've hopefully saved up this one bucket of money that's that 401K that they've been putting money into years, but they just don't know how to access that. They're scared they're going to run out of money, right? It's the biggest fear. And they don't have a plan, exactly, like what you talked about before. And those ones you do, too, the clients you know that have a plan when things happen. There's crises like COVID was a bad time. April last year was a bad month, too, right?

01:35 You know, people that have a plan know that they're going to be okay. The ones that don't are the ones that are panicking and having anxiety and, you know, can't sleep at night. But, yeah, I think it's the same thing that you've probably seen, too. It's just they don't have a plan. They don't know where to go. They don't have to navigate this retirement and want to make sure they're going to have enough money to live on as long as they do all the things they want to do, too. And then they're going to go to retirement. So if you don't have a plan, it's a lot easier to mess something up because you really don't know where you're going to begin with, right? That's right. Yeah. Yeah. Yeah. So what do you think about that? I think my dad put it in a perspective for me when he retired. And I remember him being very nervous. And I'm like, Dad, you have this bucket of money. Like, you're going to be okay. And he goes, Son, I've been working since I was 14 years old. And every month I had a new deposit in my account.

02:22 If we had an emergency and we spent all the money, I knew the next week I was going to get another paycheck. He said, for the first time in my life that I can remember, there's no new money, no new money being deposited. And what I have has to last me and your mother for an indefinite period of time. So it was a worry about running out of money. It was a worry about running out of money. And we spent a lot of time talking about, you know, paychecks and playchecks and different things and talking about how, well, you can create a paycheck in retirement. So when we created that paycheck in his retirement, that personal pension, whatever you want to call it, that eased his biggest fear, which was, I know I got this bucket of money, this 401k or whatever it is.

03:08 But how does it last? Yep. Yep. Yeah. Went back to his comfort zone having that paycheck. He knows every month he's getting that deposit. And we talked about inflation. We talked about taxes. I know we're going to talk about that on a different episode, but like he was worried about inflation. He was worried about taxes and he was worried about what happens to my mother if he passes away. Yeah. Those were his three concerns. And if I think about, you know, at the time this week that this is airing, we're worried about what is oil going to go to. But every week there's a different concern that is out there. If you're listening to our podcast two years from now, you know where it went. We wish we knew. Yeah. But it's true. You don't know where your future is if it rise and falls only with the stock market or with things that are out of your control. And how can people help figure out what their real retirement – you were talking about paychecks and playchecks.

03:55 What do they need to figure out to find out what that needs to be? Well, I like to put a spending plan together and not a budget, but a spending plan. Budgeting is restrictive. It's what you can't do. That doesn't sound like fun. Spending plan looks as fun. What do we want to do? So it's your want list, not just your needs. Your needs are what you have to have, like your housing and food. But what do you want to do besides that? You just live in your house and eat? No, you want to travel? You want to do things? You want to go visit the grandkids? Whatever you want to do. And we look at today's dollars, and then we price it forward. Say, well, what if inflation is this? How much will that cost in 10 years, 20 years, 30 years? And then that goal, Thomas, is to make sure we have enough money in your accounts that you – when you get to that 20 or 30 years later, you have more than enough money to do what you want to do, not enough money.

04:41 And there's no worse feeling than getting someplace and figuring out you didn't plan or you don't have enough money to do what you want to do. Well, and I think this can be scary for a lot of people. They may be thinking, well, if I go see Coach Pete and his team, they're going to tell me, oh, no, you're not good enough. You're not going to have saved enough. You can't do what you want. But many, many times we've talked on this show, Coach, about how people are thrilled with the outcome and they didn't realize what they actually would be able to do or how soon they would be able to retire. And you shouldn't let yourself get in the way of yourself, right? Is that a sentence? Sure. Yeah. Don't let yourself – Get out of my way. Exactly. No, we all do that. Procrastination is a huge one. Yeah. Huge one. Yeah, you're right. And so, Phil, have you seen people procrastinate in the past and get themselves in trouble by putting things off? A hundred percent. Like, I think procrastination happens a lot when either it's an uncomfortable conversation or you're unsure of what the outcome is.

05:36 But when it comes to financial planning, that's the whole purpose of working with an expert is all you have to do is initiate the conversation and that financial planner will guide you through that conversation. You don't have to be honest. You don't have to be honest. Yeah. Yeah, and that's important. All you have to be honest. All you have to do is be honest and say, this is what I want. I like to equate it to like if you're building your dream home, throw everything in there. Maybe you don't put the pool in when you build under construction. Maybe you put it in later, but go ahead and throw it in the initial plan. And everything you ever dreamed of, put it in there and see what's within budget, see what's possible. But that only works if you're working with an expert that can help guide you through that process. And spoiler alert, it's not painful.

06:26 It can actually be extremely fun and enjoyable to see how amazing your retirement can be by working with someone that's been doing that for decades. It can actually help you build that dream plan. Yeah, it's very true. Again, we're here with bestselling author, Coach Pete DiRuta. Make sure you get your questions answered. Make sure you have a true plan when it comes to retirement. Contact the team today, 800-661-7383, 800-661-7383. You can also text keyword plan to 600-700. Again, that's plan to 600-700. So, Gary, when you see mistakes people have made in the past, a lot of times it's because they assumed things were going to be fine or the person they were working with told them everything's going to be fine, but they were going in the wrong place.

07:11 Have you seen that in the past? Oh, yeah. Yeah. Have you ever met somebody who said, I wish I'd have met you sooner? Oh, yeah. Yeah. Happens a lot, unfortunately. Yeah, quite a few times, too. But, yeah, it's just seen somebody different, too. And they probably haven't worked with somebody that's, like, independent like us as well, right? Have an independent advisor, very important. Phil, how important is it to have an independent advisor on your side? Well, you want someone that can look at all the options, not just the options they're allowed to look at. And I think I heard the analogy recently where it talked about, you know, it takes one guide to get you up the mountain. It takes a completely different set of skills as a guide to get you down the mountain. It's different tools. It's different products. It's different investments. So what got us up the mountain to retirement isn't what's going to get us down the other side safely.

07:56 Absolutely. It's the – and that's where – there was a statistic I saw a long time ago that people that climbed Mount Everest, more people got hurt or killed on the way down than the way up. Because they planned, planned, planned for the way up, but on the way down, they had no plan. That's like when we get to retirement, that's when the planning really needs to start. We're in that financial red zone. We need to have that total income plan in place. We need to know where money's going to come from. Gary, if you reach retirement and you have all your money still at risk, are you really ready to retire? No. Because you really have no income plan, do you? No, you don't. And if you're relying on all that for your income too, your income's going up and down, right? Yeah. It's good when it's good, but when it's bad, it's bad. I mean, remember COVID, right? Well, that's why – yeah. And so the happiest people that I've ever met over my 33 years in this financial arena were people who had that financial fill-up strategy in retirement.

08:46 That means every single year for the rest of their lives and the rest of their spouse's life, they're going to get a check. Right. Regardless of what's happening in the market. And that check's going to always be the same or greater than it was last year, regardless of what happens in the market. Now, if the market goes up, they get the share and the gain. But if the market goes down, they don't lose anything. And that's the magic, and that's what people overlook, and brokers don't like it when I say this because brokers always tell you to hope and pray because there's no real strategy. They always say, if the market goes up, we're going to be fine. I always say, if the market goes down, what happens? In certain strategies, you're not going to do well. And my goal is to make sure that I don't have to walk the other way when I see you walking down the street. If you're a client of mine, if I put you in the wrong place, I'm going to have to run to a different city. And I don't want to do that. And so I've never had a problem putting together proper income plans.

09:33 And that's why I am a retirement income certified professional. That's RICP is a designation for the American College. I'm trained to give you lifetime income. And so a lot of you out there are dealing with folks that don't have the training. So what do I go into a doctor and he's going to do surgery on you in his garage? Every now and then you read about that. Cheaper plastic surgery. Yeah, go to my garage and I'll fill your butt up with some of the cement. You wrote about that story, right? You read about that story. People have died before from bad, unlicensed medical people. And I say a lot of people get in trouble in the financial world and the advisor just gets slapped on the wrist and they're still out there a lot of times. So make sure you know who you're dealing with. Make sure you ask specifically, do you have a plan that will give me lifetime income that will be there regardless of what happens in the stock market and will never go away? And if they can't answer that, then you're in the wrong place.

10:19 Thomas, the next 20 people call, we're going to put together for them their very own total retirement plan using all 22 steps that we put together. We're going to give you that workbook along with it. But we're going to guide you and make sure you understand every single step so there's never any confusion as you approach, enter, and with through retirement. No one's going to take a wrecking ball to your portfolio disguised as a friendly plan. We're going to put a plan together in writing that makes sense and can be verified and documented in writing every single step that will happen. So call right now and get the surety plan, not a guessing plan. Very true. Again, to connect with Coach Pete and his team here at Capital Financial, 800-661-7383. 800-661-7383.

11:04 You can also text us by texting the keyword plan to the number 600-700. That is keyword plan to the number 600-700. Yeah, it just makes a lot of sense to get that plan put together. Gary, you and I have been talking for a long time, and we've exchanged stories about people who had misconceptions about lifetime income. How important is it for someone to have a lifetime income plan? Well, how long do you want your income for? Forever, man. That's lifetime. That's all you have to ask is how long do you want this income for? Well, for as long as I need it. And then I've got to make sure that my spouse is going to have that income, too, or she's going to be covered at the same time, or he's going to be covered at the same time as well, right? It's important. Very important. Yeah, I mean, because this is retirement, right? And you want to make sure that you're going to be able to afford the things you want to do. I mean, how awesome is it to have every day for the rest of your life be Saturday?

11:51 Well, not have to worry anymore. Good to go. So, you know, in retirement, every day is a Saturday, but you need to have that income, so it needs to be payday. Friday and Saturday. Friday's payday. So you need the Friday-Saturday plan forever. There you go. I like that. I like that. Yeah, and so it's just important, folks. So if you want to get your very own total retirement plan, go to TotalRetirementPlan.com. That's TotalRetirementPlan.com. And, folks, we'll be right back after this.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome into the Financial Safari. Excited for the program today. I'm consumer advocate Thomas Lipscomb in studio today with America's Wealth Financial and Income Coach. Coach Pete D’Arruda also in studio with us. We have Gary Marriage. He is an independent insurance and financial services agent based out of Tampa, Florida. Also the host of Coasting Into Retirement. We also have Phil Graham with us who helps advisors address immediate liquidity needs for families while creating a bridge to the next generation of clients. And Phil is from the Charlotte area. Yes, he is. So welcome in guys. Yeah, thanks for having us. First time we've all been together in studio like this. Now Phil, you've been on the show before. Gary, first time on the show. Yeah, it is. Tell me about your show. I like the name of that show. Coasting Into Retirement, right?

00:45 Coasting Into Retirement. Yeah. So, you know, everything in Florida is the coast, right? So I had to come up with that several years ago. Good play on words. Hope people coast into it too. Now Phil, you've known Gary for a while as well, right? Yeah, we were just reminiscing in the green room about some golf trips and some other fun stuff we've done over the last 15 plus years probably. Yeah, probably 97 of them was 20 years. Yeah, it flies, doesn't it? Wow. Getting old. And we look the same, you know? It's great. I'm twice the man I was. It's all good. I'm half. I'm about half the man I was. I've lost weight. That's good. Well, Gary and I are working together on a movie with Kathy Lee Gifford. And that was a couple years ago. We were in Franklin, Tennessee, which is an awesome little city outside of Nashville. And it reminds me of Back to the Future, you know, where they're at that courthouse. They're

01:30 trying to get the things hooked up so the car can get the lightning kind of thing. Remember we were downtown Franklin. I said, Gary, this looks just like Back to the Future set up right here. They have a big courthouse with a big clock on it. And I said, all we need now is one of those cool cars. DeLorean. Yeah. If only we could have that. But man, that is a cool town though, right? Just the nicest people around there too. Just a great community. We met the mayor that night, Phil. We were at a restaurant there and the mayor just happened to be there of the town. And he took us around and showed us some of the bar scene there. Oh, cool. The mayor of the town. That's always fun. We went to a speakeasy. That's right. He took us a speakeasy. You know how much I love speakeasies. Oh, yeah. It wouldn't surprise me if you had a key to the city now. We were working on it. I was trying that night. It was fun. You never know who you're going to meet. It's pretty fun to be out there in the world. But the Kathy Lee Gifford movie will be out later

02:16 on this year. We'll talk about it when it comes on. It's a really good story Kathy has. Yeah. Yeah. Very much. Very much. Now, Coach, and folks, there are a lot of things going on in the world. We like to kick off the show with a little bit of recent what is going on. And I got a clip here from former St. Louis Federal Reserve President Bullard on the PPI. Something that may lead towards higher, yeah, you heard it, inflation. I think this was a hot report. It's just one report, but a disturbing trend toward somewhat higher inflation where the committee has been arguing that if you're patient enough and you look past one-time effects, that you'd eventually get back to 2% inflation. It's pretty crazy. And when I was perusing the interwebs, I came across this. This is from

03:02 John Hillensrath. He's a senior advisor with Yahoo Finance, talking also about interest rate projections, Fed projections. What's going on on that whole side of the world? You know, the Fed has had an easing bias. The market has been expecting the Fed to cut rates another one or two times this year. And the inflation numbers have already not been cooperating. And now we have an oil price shock on top of that. I think there's a decent chance that the medium dot, the inflation projections, I'm sorry, the interest rate projections that they put out could indicate that the critical mass of officials is leaning towards no cuts this year. And I think that I'm listening for, in the press conference, when Jay Powell was asked, is anyone talking about raising rates this year? He dismissed the question in January. I don't think

03:54 he can dismiss it anymore. I think that one of the conversations going on inside the Fed this week is going to be, should we accept the possibility, you know, in light of stubborn inflation, that the next move might have to be rates going higher and not lower? So talking about federal interest rates, where are they going? I'm sure you're in the same boat, coach. When I get home, I'll turn on. And for me, it's, you know, YouTube, I look for the latest news of what's going on on Reuters or whatever it may be. But at the end of the day, it's anxiety. And I think I'm 20, 25 years away from retirement. The person who's right there, this has got to be very troublesome. Well, it is, if you let it be, if you keep paying attention to it all the time. I mean, it hasn't really affected my day-to-day life. I mean, the gas prices have a little bit. They make me mad. So we have the

04:40 cool thing about the gas prices being high is when you get to the pump, you look around, you have a common ground of things to talk about with people when you're pumping. Yeah, there you go. Everybody looks mad. You say, I'm mad too. And he high fives. That kind of thing. But no, the interest rate thing is crazy because having interest rates where they are is not a bad thing for some people. Higher rates is good for you if you have money in a CD at a bank. If you're saving, high interest rates are good. And a lot of people complain when interest rates were very low, I can't make any money in my CDs anymore. They call them certificates of disappointment, not the certificates of deposit. So, Gary, your opinion. I mean, I think a lot of people, if you let the news drive you crazy, it will drive you crazy. If you just sit there and watch it all day long, it's doom and gloom. There's not a lot of positivity out there, right? It's true. It really is.

05:25 So what do you think? I mean, what do you tell people when they say, well, these interest rates are killing me? And you say, well, do you find out why they're killing them? If you have a lot of money you're borrowing, it's not a good time. If you're using margin in the market, you're getting killed right now. Not only are you paying high interest rates to borrow the money, but the stocks you're owning are going down and you're getting something called margin calls. And those are not fun. No fun to get a margin call. Yeah. And you just find out too, and you probably do as well. You see a lot of people that have a lot of cash and they're not making any money on it, right? They're actually losing money on it because it's just sitting there in cash. Losing money safely, we call it. What does that mean? Well, if you're only earning like two or 3% in a CD and the inflation rate is four or five or six, you're losing that buying power. Phil, what do you think about it? We've been around a while in the money world and we see things come and go, the trend of the day. And what do you really think the

06:11 interest rate argument is really about? Well, I see two types of clients, ones that have a plan and ones that don't have a plan. Right. And I've always, for almost 30 years now, I like to plan for the worst and hope for the best. And we plan for inflation. We plan for higher interest rates. So the people that have a plan don't panic because they go, wait, we plan for this. My paycheck's coming in, my retirement paycheck, my personal pension, whatever you want to call it, my income is coming in. Maybe it increases with inflation. So that's actually a positive thing that they know they're covered. Where we find the scariness is when someone doesn't have a plan. They didn't plan for higher interest rates. They didn't plan for inflation. And that is scary.

06:57 And I think they should be scared. That's right for them to be scared. But I always come back to when you have a plan in retirement, especially a written plan, you're expecting it. Because I knew interest rates weren't going to stay at 2% or 1%. Like I talked to a neighbor the other day and they're like, man, I'm at 2% for 30 years. I'm never moving. Oh, in the house? In their house. Yeah. And I'm going, I don't blame you. I probably wouldn't move either. I would just maybe renovate or do something like, but you know, why aren't mortgages portable? They used to be. Yeah. Why can't you take your 2% loan? Maybe you owe 400,000, take that 400,000 you have at 2% and put it into the house. Maybe you're going to get a $600,000 house. So now you have a loan for 200,000 at whatever rates are today, but you bring over that 400,000 at 2%.

07:47 Well, you know why you can't do it? It's because banks don't want you to. Correct. Well, that's why. Banks aren't making enough money, right? Because they said so. That's why. There is no legal reason other than they don't want you to. They want the new closing costs. Of course. They want you to pay the higher interest rates. Of course. I mean, they're only, what, loaning it out seven times the way it is? Well, we talk about inflation. That's on everyone's mind now. And Thomas, you know that I've been talking about the total retirement plan for over 10 years. You've been on the show with me for 10 years I've been talking about it. Yes, sir. And we've got the booklet now. We put it in writing. We used to talk about it, Phil. We'd have a little sheet on the total retirement plan. Now we have a whole booklet. It's a guidebook. It's over 100 pages. And we've got the PDF for it now. We've got the books on order. We're coming in from the publisher. And who knows how long that'll take these days. And then we're going to have a workbook

08:32 to go along with the guidebook. The workbook's going to be about 30 pages. But if you want a copy of the first book when it comes out, we'll get you the PDF right now. But if you are one of the... Let me do this here. If I had a million dollars, I'd be rich. It's the bare naked ladies. It's four guys that sing. But whenever you hear that sounder, that means coach is getting ready to give you something at no cost. And here's what I'm going to do. For the next 26 of you who call, we're going to get you that workbook and guidebook when it comes in, the physical copies. And I'll pay the postage on it. I'll pay... That's going to... On Amazon, I think we got it for like $99. $99, folks. But we'll send it to you at our cost. We're going to pay for the book. I'm going to pay for the postage.

09:17 For the next 26 of you who call. Now, we're also going to get now, if you call now, we're going to get you the PDF of it while we're waiting for the real book. And it's not going to cost you a penny. It actually costs you money if you don't. Because we talked about inflation. There's five different of the 22 checkpoints in here. Five different ones that deal somewhat with inflation. Checkpoint number two, income planning strategy. Well, if you're going to have income in the future, we've always factored inflation in to make sure you have proper income. What does proper income mean? Enough money to do what you like to do. And not have the fact where you can't do it because stuff costs too much. Checkpoint number five, spend and leave plan. Well, you can spend all you have now and leave an amount equal to or greater than what you started with your kids and grandkids. That also is an inflation buster. Checkpoint six, inflation protection plan. Well, what good is it to have a plan if

10:04 you don't have inflation protection in it? Checkpoint eight, emergency accounts. Make sure you have emergency accounts that can overcome inflation. And checkpoint nine, managed growth plan. Make sure you have the right growth plan to keep up with inflation. So there's a lot of different, there's 22 different checkpoints, but five of them deal somewhat with inflation. There's a lot more to planning a proper retirement plan than just inflation though. So we're going to go through all the different tactics, techniques. How about having retirement spending plan, have the powers of attorney, all the different things you can think about. Medicare planning, social security planning, everything that goes into proper retirement so that you can hit retirement and not worry. You ever stay up at night saying, gosh, I'm worried about this because I didn't do this, this or that. What if you had a written plan that got all the worries out of the way so you never have to worry again? That's what we've put together with the total retirement plan. We call it coach Pete's power plan. If you ever watch hockey, the team that's

10:51 on the power play usually wins. They're always on offense and a good defense leads to a good offense, but here you can be offense and defense all the time and never worry about it anymore by getting the total retirement plan. So the next 26 of you call to be no cost or obligation and you will get these to you right away. Call right now. Take advantage folks. The number you can call to take advantage is 800-661-7383, 800-661-7383. You can also text keyword free to the number 600-700. That is free to the number 600-700 and you can get your free PDF right now, as coach Pete said, by just heading over to total retirement plan.com. Again, that's total retirement plan.com. What a great place to begin, coach. I'll tell you, you know, when I first started working with you, we talked about the

11:39 seven blind spots and it talked about things that you need to avoid, which also is available by the way at coach Pete.com. But these 22 steps give you true indicators of where you need to be as you head into retirement. So if retirement is important to you, maybe you're in that financial red zone, that five to 10 years before retirement, you want to know what are your blind spots? What do you need to be looking at? What checkpoints do I need to have as a head in? Call now, take advantage, 800-661-7383, 800-661-7383, or text keyword free to 600-700. That is keyword free to 600-700. Just make sense. We'll be right back after this, folks.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Folks, this is Coach Pete. We're back with Professor Cam Harvey from Duke University. Cam, so many different choices for the, like, let's say someone's watching this and they're 55 years old. And they've been watching all these news programs. You know, you can't help it. You turn the TV on, there's Kramer saying buy, buy, buy one day and then sell, sell, sell the next. And you go online. There's all sorts of places you can get on that freeway of buying and selling your own stuff. You don't need a broker anymore. Why do we even need brokers anymore, people say. Many times you don't. But how important is it to have a real plan, though, as we are 55 and up, a real plan for income and retirement? Because we don't want to work all our lives. So we get to that checkered flag, let's say age 65. That's what we were always told retirement age was. So we're there, time to retire.

00:46 But then we realize all I have is my 401K and it has over 403B or TSP and it has a big balance on it. But it doesn't tell me how much I can take out of this balance to make sure I don't outlive this money. I mean, that's a big problem for anybody as we get older. Because, number one, I've seen we're going to live longer. Peter Diamandis, who's a futurist, told me years ago, he said, Coach, you'll be able to buy years in the future. And I think we're coming, you know, all the fancy DNA technology and all that. Maybe you can. How important is it, though, for anyone watching to make sure they have lifetime income, not just Social Security income? Yeah. Yeah. So, number one, you cannot count on Social Security. Yep. So that trust fund will run out of money in 2033. We're getting close.

01:32 We are close. Yeah. And there is very little disagreement about this. It's very easy to forecast. And that means if nothing is done, there'll be at least a 20% haircut in the Social Security. So you cannot rely upon that. So it makes it even more important to plan for retirement. And I do believe that this 65 retirement is becoming a little more fluid. And people actually think, well, 65, I've got at least 20 years. And I want to continue working. And it might not be 35 hours a week. So what I see happening in the economy is that people will continue to work, but at reduced hours.

02:21 So you come in a couple of days a week. Just to keep your mind moving. Exactly. Exactly. Yeah. But never, so that's important because it means you've still got some income. Right. But it is just much more relaxed than today. The other part is your financial portfolio. So that needs to be carefully structured. And again, you're investing for the next 20 years. You're not investing for what's going to happen tomorrow or next week. Right. So you need to have a longer term perspective. And indeed, it would be, for example, a mistake if you've got a 20-year perspective to be 100% in a money market fund. Yeah. So you need to still take some risk. And there's so many opportunities in the U.S. given what's happening with so many disruptions.

03:13 AI is in our face, obviously. But there's other things going on. So our financial system becoming much more efficient with decentralized technologies, quantum computing, and you mentioned biomedical. Yeah. So this confluence of DNA, RNA, and proteins, dealing with them all at the same time. So this will extend life. And I'm a big believer in that. All of these demographic projections are wrong. So again, you need to plan. You cannot rely upon a government that's got a $38 trillion debt right now. Yeah. And a $1.9 trillion deficit at a time where we've got decent economic growth, low unemployment, inflation that is below 3%, and a stock market that's at near record highs.

04:11 So it doesn't make any sense. So you cannot rely upon somebody handing the money out. So when the time comes, I mean, yeah. So again, it's even more important now to depend on yourself instead of other people. So if someone's watching now and they're just starting to work, save some money every year somewhere, right, to save for retirement. Earmark it for 40, 50 years down the road, a time capsule. Pay yourself first, we always say. But let's say someone's watching now, they're in their 50s, or let's say 40-something, and they do have a good balance in the 401k, but they've never thought about having to turn that balance into a stream of income they cannot live. That's going to be more and more important as we get older because we're going to get older and older. So the key thing is to have a diversified, balanced portfolio.

05:00 Right. And the focus, when you're younger, let's say 55, is on building the capital. And you need to be careful here. So it would be a mistake to take an unreasonable, undiversified risk on a certain sector. And you could be just a giant loser on that. It's also, in my opinion, a mistake to just invest passively. You can do better than that. There are low-cost products that are available that I've got a recent paper, for example, that I didn't know this. It's kind of remarkable that if you take a portfolio of like Russell 1000 value and then blend it 50-50 with Russell 1000 growth, you exactly get the Russell 1000.

05:54 And I'm thinking about that with some co-authors. And that's not really what you want because it means that you're investing in expensive, low-growth stocks. That's a pretty bad combination. That's a bad idea. So it's really hard to justify that. So doing very simple things like structuring a portfolio that's got a balance between value and growth, which are well accepted in terms of risk premia, but excluding those stocks that are expensive and low-growth at the same time. You can be expensive and have high growth. That is fine. But there's no economic or financial justification for investing in expensive, low-growth stocks.

06:44 Strip those out. Folks, what would Professor Cam Harvey from Duke University say, yeah, when you talk about expensive and low-growth, sometimes they do a good job of disguising that, though, for the average investor. I mean, you have to look behind the scenes to see because no one's going to admit they're low-growth. I mean, no one would invest in it, right, especially if it's expensive. Yeah, so this research, the paper's called Fundamental Growth. It looks at very simple measures of growth. So things that we can easily observe, like sales growth or R&D growth. Like, that's fundamental. If you're investing in R&D, that's growth. Yes. And then it's easy to identify these stocks that are super expensive and low-growth and just exclude them from your portfolio.

07:32 And the results are remarkable. Peter Lynch founded the Fidelity Magellan Fund back in the day. And I still remember his quote. He said, invest in companies you know. So if you use it, like Facebook, that's why I invested in Facebook years ago when they IPO'd, then they went way down. When the insider's lock expired, they were able to dump. I got my Facebook at $17 a share because that's the first place I always go. You know, I admit it. When I log on in the morning, I check Facebook, see what my friends are doing. See, nowadays, I see who's, unfortunately, who's passed away or who's had bad news in there. That's where we go for our news. I went to my 40-year high school reunion last year, and I almost didn't even want to go because I already knew everything about everybody there. We saw it on Facebook. But we look at, like, index.

08:19 Like, Vanguard has VOO. It's S&P 500. It's where I put a lot. To me, I call that a passive fund for me because I'm not buying and selling it. I just put money in there every month. I'm double-cost averaging in. And the S&P over history has done pretty well. But if someone wants to totally eliminate any chance of loss with some money, we do this with some fixed annuities that are out there that tie their return to a share of some market index. I kind of like the S&P because not many games can be played there, but there's some other indexes out there in the annuity world, again, protecting the principal but have a chance of growth. And if the market goes down, you don't get any share of the loss, which, to me, that gives people peace of mind. Annuities are great for income like that. But we also need some more maximum potential horsepower somewhere else.

09:05 So if you had a strategy like that where you were using, let's say you're 60 years old and using the rule of 100, maybe put 50% of the money in annuity with income for the future, so now you know what your income's going to be, what would you advise for the other 50%? Somebody like that. What do you think would be a good place for them? So I totally agree that this idea of a fixed index annuity is a good idea in that it provides peace of mind. Yeah. So you don't have to bear that downside. And I think psychologically, that's really important. So as for the other part of your portfolio, again, I would be hesitant to do just purely passive investing. Some blend of value and growth for equities is, I think, important.

09:54 But it's not just equity. So a portfolio needs to be diversified. There should be some fixed income, high-quality fixed income in the portfolio. And there should also be a safe portion of your portfolio in addition to the FIA component. And that safe component might be inflation-protected bonds. It might be some commodities like gold. So to have part of your portfolio ultra-safe, I think, is important also. Gold's been fun to watch. I watch this show on Friday night. They go out and they look for gold in Alaska. And they used to say when they'd find like 10 ounces, it was worth $10,000.

10:41 Now 10 ounces are worth almost $50,000. It's crazy how the gold market is going crazy. What about silver? Silver's done pretty well, too. And silver has an industrial use. Of course, there's a lot more silver out there, right? Yeah, so silver is the number two. And there is a lot of distance between gold and silver. Yes. So both in the past have been currencies. And we kind of lost the gold standard in August of 1971. It's been a while now. Yeah, it's been a while. Gold also has tangible uses. So 5% of gold is used in technology. So your mobile phone has got gold in it. 2% in dentistry. And over 50% in jewelry. And that's not going away.

11:27 So gold has got this tangible use. Plus, it has got this track record of millennia in terms of the world's oldest financial asset. It's been a currency before. It is held by central banks and reserves. So there's a lot of like check, check, check for gold. And now it's just incredibly easy to hold, either through an ETF like GLD or in your wallet as tokenized gold. So like a stable coin but backed by gold. See, that's going to be interesting as more and more people hear about tokenization in the crypto world because you'll have a real-world asset behind the crypto. So that's a great combination. So your point is super interesting. Yep. So we lost the gold standard August 15, 1971.

12:17 So the tokenized gold holds the possibility. I know it sounds crazy. The possibility of a de facto return to a type of gold standard that is opt-in. No central bank needs to be involved. But you've got something else that is a medium of exchange, a store of value that you can use to pay for stuff. Yeah. Very easy to do. So it's a very intriguing idea that, you know, forget the Fed or the Bank of England or Bank of Japan. And we can return to a type of gold standard. And it's your choice. So I think it's very exciting. Do you think there may be some folks out there that don't want to go back to the gold standard? It's their choice. Totally.

13:03 If they don't want it, fine. Well, the people get away with a lot of stuff because we're not on the gold standard. You can leverage crazily without being on the gold standard. So I think it'll be more controlled to the consumer if we go back to the gold standard. It is true that today the central banks have a monopoly over fiat. And we see what happens with that. They print more money and then we suffer the inflation that results. It was out of control a few years ago. This is different. So gold's inflation is very steady. And what I mean by gold inflation, the new mining. So the mining adds to the gold above ground. For the last 10 years, that inflation is less than 2%. So think of that as roughly real economic growth. So this is an asset with a long track record that over the very long term has held its value.

13:59 And it is a credible currency because it's been a currency. It's been around since King Tut before that. Two questions. That's it. We'll finish up with two. Number one, flavor of the day. All right. So we get this every single year. People start calling our show or ask me when they meet me in person, in public. And they say, Coach, what do you think about blank and how can we get in it? Right now, SpaceX. We're hearing about SpaceX all the time. What's your opinion on these flavor of the day kind of stocks? Because I know people run into them when it's going to be a crazy IPO when it comes out. That's when a lot of people get hurt, right? When they're buying on the run up. Yeah. So it is the greatest investment mistake that people make. Yeah. And they continue to make it. And that is buying high and selling low.

14:47 My students know that that's one of the main lessons in my course, to do the opposite. You buy low and sell high. Yes. But it is just so tempting to extrapolate, to jump on the bandwagon. And as people are jumping on the bandwagon, the price continues to go up. Validating this hypothesis. And fear of missing out. People jump in. This is Warren Buffett's words. Until... Tipping point. The tipping point. And it unravels. So you need to exercise discipline. And buying at all-time highs is generally a bad strategy. That's a good point on that. Finally, now we've seen this happen a lot locally.

15:32 Lately I've seen a lot of it. Your opinion on non-traded REITs. You're familiar with that. It's an illiquid investment. You're investing in real estate. It's sold a lot of times. Like, hey, you can't afford to buy your own nursing home, but why don't you invest with a thousand other people that are all going to pull the money and buy this nursing home. The problem with non-traded REITs that I see is that they're non-traded. Once you put your money in, it's very illiquid. And we've seen several of these lately go Chapter 11. So they're sold as an income stream, what I hear. And can it really be sold as a lifetime income stream if there's no chance a lot of times of having lifetime income from them? So it's an excellent question. And this has to do with an illiquidity premium. So if something is not liquid, you've got a lockup, there's a premium associated with that.

16:22 So if you're able to hold something for the longer term, you can reap that premium. This is the reason that university endowments invest in venture capital and highly illiquid investments. Because time's on their side. Exactly. They've got a 50-year horizon, and they can harvest that illiquidity premium. So I don't have a problem with an investor that's got a long horizon, that doesn't need the money in the short term. Yes. Investing in something like that. However, let's be careful here. People need to look at their portfolio as a whole.

17:09 Your portfolio is not just the stocks you're invested in, but your human capital. And also include your house. Yeah. And that's real estate. So you don't want to be undiversified. And if you're investing in some illiquid, non-traded REIT, make sure it's more than one. Yeah. So you just don't want to hold one because you're correct. Yeah. That it could go Chapter 11. Yeah. So you need more than one. And one of the great things with kind of tokenization and things like that is you can hold a very small fraction of many. So instead of having one, you've got 100. So now you're really diversified in a good way. Well, Professor Kim Harvey, thanks for your time today. Thank you. 800-661-7383.

17:55 800-661-7383. Or text the word plan to 600-700. That's plan to 600-700. 800-800-800.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Well folks, today we have a very special guest. His name is Professor Cam Harvey. He's the professor at Duke University. Doc, welcome in. Thank you for inviting me. It's a strange financial world. I've been around the financial arena for 33 years. I've watched it before I got into the financial arena. The market goes up, down, all around. People get influenced and enticed, sometimes by big market swings either way. A lot of people sell when they should buy and buy when they sell. But overall, do you think that headlines influence people's investing habits too much? I mean, get in the way, in other words, of people's success sometimes. Yeah, I think so. One of the key things is that the stock market is volatile. And some of that volatility is just what we call noise.

00:47 So there's some short-term news. People overreact to it or underreact to it. And that leads to mistakes in the short term when people should be thinking about longer term investing. It's one of the biggest mistakes that investors make. They look and judge the short-term news to make very consequential decisions for their portfolio. So they should have a longer-term perspective. You know, I grew up, as you did, when we had newspapers. That's how we got our stock news. Like you'd look at, you'd try to find your stocks the next day in the paper and see if you were up or down. Before the internet. Remember those days? Yes. Do you think the internet has sped up the market cycles in people's heads? I mean, we used to say if you didn't have 10 years to wait and leave a stock alone,

01:34 you really shouldn't get into a stock because of the cycles of the market. Your opinion on just overall the rapidity, I don't know if that's a name, but people are trading so rapid they're not really giving time a lot of times for their stocks to grow. Sort of like if you planted a seed and if a seed didn't sprout in a day, you re-till the soil and plant another seed. Do you think patience has suffered because of social media? Definitely. So, it's interesting you give the newspaper analogy. So to get a story into a newspaper was vetted. So you've got professional reporters, you've got professional editors, and you've got this lag of 24 hours. So what it does is it reduces some of this noise.

02:21 Now anybody is a reporter. Nobody is a blogger. There's almost no editorial control. And, and this is a fundamental difference, the more outrageous your comments, the more eyeballs or page views that you actually get. So there's an incentive to actually say things that are exaggerated and that influences people. So I think that the internet and the rapidity of the information has made things worse. And I come from the University of Chicago, the School of Efficient Markets, but I'm not afraid to say that the market today is less efficient today than it was 20 years ago.

03:08 And the reason being because people aren't educated enough or what's the main reason why it's not quite as good as it used to be? Yeah. So people naively measure the efficiency of a market by things like, well, transactions costs, which have come down dramatically. Yes. And you've got online brokers that make it very easy to trade. So what this has done paradoxically, it's increased the number of retail investors. And those retail investors are operating at a very large disadvantage. They do not have big data and quantitative models working for them. And the second thing that's really important is the explosion of passive investing.

03:59 So passive investing is more than active investing now. It's about 53% of all investing. And a passive investor doesn't care about fundamentals. That's completely irrelevant. They just buy according to market capitalization. And what that means, it hardwires into a portfolio a mechanical overinvestment in overvalued stocks and underinvestment in undervalued stocks. So this is very negative for price discovery. It's negative for liquidity. It's negative for systemic risk because these giant buys of everything happen and they can be giant cells of everything. So you put these things together and markets are not what people thought they would be 20 years ago.

04:54 And we've kind of degraded. So the individual investor, I think they're more and more at a disadvantage if they're trying to swing trade or day trade, right? Because you're going against these massive algorithms and AI computerized trading. You really don't stand a chance. You're being led to slaughter as a sheep a lot of times, aren't you? Oh, this is definitely the case. There's a reason that the transaction fees are so low on Robinhood. That's because Robinhood sells their order flow. And you think, well, who would want to pay for the quarter flow? Well, it turns out Robinhood and not just Robinhood, but other online brokers, mainly retail investors. And the hedge funds actually want to trade against a retail investor.

05:43 So a hedge fund doesn't want to trade against Jane Street or Citadel. So they want to trade against a retail investor. If they are, let's say, buying securities from Citadel, they're thinking, well, what does Citadel know? They might know something that I don't. That's a dangerous trade. But if they're trading against a retail investor, no big deal. They're willing to pay for it. And this is just another layer here. And it's not just buying. They're shorting into the buying a lot of times. That's what I see a lot of times is in dark pools they're called too. A lot of times some very mysterious shorts, we'll say. We'll say it nicely that you really don't stand a chance. If you're trying to beat the big boys in this kind of game, sort of like going to Vegas with

06:28 a couple hundred dollars and thinking you're going to beat the big bookies there who know what the spreads are and the games and all that kind of stuff. When did you see a change? I mean, back in the day, because I remember I had a, I think my first, JB Oxford was my first online trading account back in the late 90s. And it was $300 a trade plus a penny per share. And that's when we had the 12 and a half cent kind of levels too. So there's a lot of, a lot of money was made on each transaction. And now they're making money on making it affordable to get in because they can short, when you're buying, they know you're buying. So they can even take your shares sometimes and then they can we short them. Yeah, definitely. So the acceleration really happened about four years ago when the amount of online trading

07:14 really exploded and the price, like the cost of trading just went down dramatically. Yeah. So on your mobile phone, you're checking and trading all the time. So that's when it really took over. The passive investing has been increasing very steadily. So I've actually done calculations and looked at the degree of passive compared to overall investing. So as I said, it's like 53% now, but it is on trend to go to 80%. Wow. And at some point, like what, what is the threshold where markets become really dysfunctional? Yeah. Well, and then you add a lot of these brokerages will let you go on margin. And you know, maybe people are doing home equity lines and that happened in 2008.

08:03 And I saw a lot of people getting a lot of trouble for doing that financially. But people are still doing it because it's like, it's like an online casino. You know, it's fun to win. That's right. And you, a lot of times you lose and now you're trying to play catch up. And that's where people are getting in trouble. They're putting their retirement, what worries me the most is people are doing this with their retirement money. I mean, that's, what's one thing to do with money you can afford to lose, but you can't afford to lose the retirement money. Yeah. So again, the online brokers make it so easy to trade and it's not just stocks. Yeah. So we've got prediction markets also that are increasingly popular. Yes. We can gamble on almost anything. We've got crypto on the side. Yeah. So, so this is basically enabling a large scale kind of gambling.

08:50 Right. It used to be that you needed to get on a plane to go to Vegas. Yeah. You don't need to anymore. That was expensive to do. Vegas is having less people come out there now, mysteriously. Yeah. They had to restructure. Yes. It is. Again, we're with Professor Cam Harvey, folks, a great professor in finance here at Duke University, right down the road from where we're taping this. Crypto, you mentioned that. Your opinion on crypto. I mean, it's come out of nowhere. And, you know, we watch Bitcoin go way up and go way down, has 90% swings. It's not for the light at heart, is it? No. So, Bitcoin is extremely volatile. So, think of Bitcoin as four times as volatile as the S&P 500. Wow. So, think of Bitcoin.

09:35 And it is sometimes sold as a substitute for gold, as a safe haven asset. But, let's consider the following fact. Over the last 14 years, Bitcoin has had a drawdown of 60%, six zero percent, six times. And that's not including what's happening today. So, any asset that's got drawdowns like that, so frequently, is hardly a safe haven asset. So, it is also important to actually differentiate the different types of crypto. Right. So, Bitcoin is a crypto that originally was going to be a method for peer-to-peer transactions.

10:28 That was the original model of Satoshi Nakamoto. Right. It's not. It's a store of value. It doesn't have much throughput. It's got value because people believe it's got value. There's other cryptos that have, like, more utility. So, Ether, which is the crypto of Ethereum, you can do the transfers from one person to another, but you can also use that currency to pay for computing time on the Ethereum system. So, it actually has a value. It has something of use. So, you pay Amazon Web Services for computing time. So, you pay Ethereum. So, it's got some tangible value. And these computer programs are very interesting because they enable yet another layer.

11:16 And that is the collateralized crypto. So, think of stablecoins. Okay. So, these are not volatile. Or, they're only as volatile as the underlying asset. Yes. And these stablecoins are extremely useful. We now have regulations in the US with the Genius Act. And they really disrupt the banking system. So, think of a transfer anywhere in the world in 1 to 12 seconds. That's amazing. Compared to 3 to 5 days. Yeah. So, it really does change the game. So, I would say that I'm more enthusiastic about the cryptos that actually have some fundamental value than ones that are just used for speculation. I was talking to some friends about that same thing.

12:03 Because Bitcoin was originally built to be the transactional coin. Yeah. But no one's transacted. They're buying it and storing it. And so, until it actually proves its worth. Now, I did have in 2012, I had a guy on the show and he talked about the million dollar pizza. Yes. Because the guy used Bitcoin to buy a pizza. And actually, it's two pizzas. It must have been good at Caesars. Right. And that was a million dollars worth of Bitcoin back in 12. And I think Bitcoin right then was around $1,000. It's a billion dollar pizza now. It's crazy. Exactly. So, it's just looking at anything in this world, it has to have a use. And it has to have a use to the general public. Not just like if me and you use it, but nobody else uses it. It has to have a real big use to get the value it's basically claiming right now. I mean, even right now, it's around, as we taped this, around $60,000 a coin.

12:49 We do need to be careful because it's not just the use today, but the potential use in the future. Yes. So, there's always some option value that things could change. But you're right. There's got to be a use case. Yes. And that use case might be viable today and it might be viable in the future. Yeah. Well, fascinating. Folks, this is Professor Cam Harvey. When we come back, we're going to dive a little bit into precious metals and safe retirement strategies. 800-661-7383. 800-661-7383. Or text the word PLAN to 600-700. That's PLAN to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Loving the conversation today, and you can catch up on it by heading over to FinancialSafari.com. Again, that's FinancialSafari.com. I'm consumer advocate Thomas Lipscomb here with you, as always, alongside America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. Also in studio with us today, friend of the show, friend of Coach Pete's, Amanda Daughtry. Amanda, it's great to have you here. Thank you for having me, Coach. Lord, I might say whatever. She's fun to talk to, isn't she, Don? You never know what I'm going to say. Hey, let me ask you this. It's American Idol. Remember that show? Yeah. Maybe it's still on. I don't know. My wife used to watch it, and I would watch it. By default, I'd have to watch it. It's on in the bedroom. Yeah, I get that. My daughter loved it, too. Yeah. But there was a guy named, he had a last name Daughtry, right? There was a Daughtry, he was a North Carolina guy. Yeah. Greensboro. You're not related to him, are you?

00:45 They ask me all the time at the bank, and I'm like, well, what kind of money does he have in his account? Well, I think he made some, what was his first name? Chris Daughtry. Chris Daughtry. Yeah. Yeah. Yeah. So that's pretty funny. It's a small world sometimes. A small world after all. Somewhere on that tree, you're a branch over there on the Daughtry tree. Never seen him at a family reunion, but it's never too late. But I haven't heard much from him either lately, but I mean, that's pretty cool to have the same last name. But you're pretty famous, too. Okay. Okay. Well, yep. I do the morning show with Mike Wheelis at 94.7. Oh, yeah. And we have a really good time here in the Raleigh Market. Yeah. Just trying to give back to the community. Trying to survive. Now, one of the things I did with you at the end of the last year is we filmed a series, and we also put together a book called Women and Money. Six very important chapters here. The big picture is the first chapter.

01:30 The moment is here. In other words, when should I start planning, Coach? Now. Right now. When you ask Coach if you should start planning, yes. Right? Never too young or too old to get a real plan together. Coming out of college, building your foundation. So when people come out of college, they're always saying, well, I need to find a job first. Once you find a job, then you start spending money like crazy. You buy a house, and then, you know, it's not cheap to buy a house. That's the cheapest part almost sometimes is buying a house. Then you have to furnish it and all the other stuff, right? Yes. And it never stops. It never stops. But getting started, because then you start building equity that way. Then getting married. So we go into little steps, right? So you get that job, and then you get married. And merging your money with your spouse. That's a tough one. Uh-oh. I'm going to have to sit down with you, Ryan. We're going to make sure. Uh-oh. Because I always recommend, and what I've seen, I've seen a lot of people, over 33 years get divorced, unfortunately.

02:17 It happens. Life gets in the way or whatever. But one of the main causes of that is fighting over money. Yeah. And so I advise that the husband and wife have their own joint checking account, which they figure out what their bills are, their mortgage payment, the utilities, and maybe an emergency account. And they both contribute an equal amount or whatever ratio they want to that joint account every month. But then they have their separate checking accounts. Because it's no fun as a spouse to get a gift for, like, Christmas or a birthday. When it came from the joint account, you already knew the money got spent anyway. So it's no fun to get it from somebody else. So you have your separate accounts. And therefore, you're never fighting about money. And you have little meetings. You have team meetings. We do this with our clients every year. We sit down and have that team meeting. I feel like I'm Dr. Phil sometimes, the Dr. Phil of the financial. Yeah. Sometimes it gets a little heated. But it's better to have a referee around than try to have that conversation together

03:05 with nobody around, right? So, and I don't take sides. I give, I'm just an impartial judge. See, I got a little gavel here. I make my ruling, right? So you can choose to ignore it or whatever. But so that's getting married, making sure that everything goes right. But then the next chapter we covered is getting divorced. That's the logical step after you get married for a lot of people. By the way, I'm getting married in August. Yeah, there you go. So we're going to walk through this and make sure you guys are on that right path and try to make sure that the bad stuff doesn't happen. But if you do become suddenly single, many times the man has handled the finances. That's just by default that's happened a lot of times. And so the female, when they get divorced, they have no idea what's going on and they get half the money. So you need to do the right thing. And that's when the sharks appear. When they find out you're divorced, you'll suddenly a new friend will appear and want to help you.

03:51 And a new man friend maybe sometimes. And all of a sudden they want that money and they'll spend through your money and then it'll be on to the next victim like that. It happens. Yeah. It's almost like they make these news magazine shows and they could do a whole, like they did to catch a predator, to catch a scam artist kind of thing. Oh my God, that's scary. Yeah. I'm scared about it. So now you plan your financial future without losing yourself when we have divorce planning or widow planning. Like that happens. You become single. It could be divorce or widowing or whatever. It's hard to talk about, but it's real. Yeah, we need to talk about it now. You're either going to talk about it now or later. There used to be candy called now or later. Now or later? I'm going to tear my feelings out and get in trouble. But then we have approaching retirement, securing lifetime income. And we call that, of course, the financial fill-up strategy.

04:37 And if you have these accounts, and a lot of people do, 401Ks, IRAs, 403Bs, Thrift Savings Plans, all these lump sum accounts, stock accounts, you have a big lump sum there. It's fun to look at. But then you say, well, gosh, I don't know how long I'm going to live. I want to live as long as I can. But I want my money to be there, too. So I have to start taking money out of this lump sum. How do I know I'm not taking too much out? How do I know I'm not cheating myself and not spending enough? So we put together a true spending plan. Not a budget. A spending plan. So we can figure out how much you can spend. And then we also say, well, gosh, we want to spend this amount of money because we have these needs in retirement. But we also want wants. We want to go on vacation. So we need to build up enough money that we can do fun things, too. And so we put the money in a place now that guarantees you lifetime income. That's where we get that financial fill-up strategy from.

05:23 So then now you're in control of retirement. You approach retirement on your terms. Thomas, you've seen this happen all the time. I have. And people are happy now. And here's what happens, Amanda. Like we get this set up. Somebody retires. They come to see me year one. And I make them spend some money because they have the money coming in. And sometimes they come in. They haven't spent it yet because they still don't trust the plan or whatever. But new money is going to come every single year. And you don't want to build up a gigantic dam of money. Right? Right. Picture the Hoover Dam of all that money you could spend. Because when you have spending money, you need to spend it. And even dams have an emergency thing where the water runs over. Truth. That is true. But we want to make sure you have more than enough money to enjoy retirement. And we do that with a true spending plan inside our financial fill-up strategy, inside the total retirement plan. So if you'd like your very own plan, call now. And matter of fact, Thomas, it is time.

06:10 E-A-B-A-B-A-B-A-D-O! For Mr. Fred Flintstone. Oh, yes. If you call now, you'll get the plan done. But if you're calling, you're a female. And you want a copy of our video series and the book right here, Women and Money, we will send you the Women and Money book. And then we'll put you on the video series. Every single week, you'll get a video on each chapter showing you the important information in the book, just in case you don't feel like reading. Yep. Right? Or you want to figure out what you just read. So that's the worst thing. Somebody hands you a book, goes home, it ends up on the bottom of a stack somewhere, and then on a bookshelf or maybe at the thrift store, and you never read it. This is a book meant to be read, but meant to be read over and over and used and even written in because we want to help you design your very own total retirement plan, income plan, and peace of mind plan. So call right now.

06:56 The next 26 of you, though, we'll send you this book before you even meet with us to make sure you're on the right track. All right, folks, that number to call is 800-661-7383, 800-661-7383, or text keyword plan to 600-700, plan to 600-700. I wish I would have had a copy of that years ago. I mean, when I was, I was married before in Nashville, when I lived in Nashville. Right. And it didn't work out, but I found out that there were a lot of things that were hidden from me. There you go. And I didn't know about. You didn't know what to ask. Oh, yeah. You didn't know what to look. I didn't, but I also was, I wasn't mature enough to have that conversation. Right. Well, when we, before we got married going, hey, you know. It's not your fault. What do you have? And what do, I mean, because, you know, it's like uncomfortable. We're like, well, what kind of finances do you have? Or what kind of stocks do you have?

07:42 And I didn't know. And then we bought Bitcoin together. Uh-oh. And then he was trying to hide some of the returns on that. Wow. I mean, it was kind of scary and messy. And money makes people crazy. It does. And marriage and death and all the things. But being informed puts you in control. So, Thomas, let's open those phone lines up right now. The next 26 of you, you'll get a copy of this book, Women and Money. We'll send it to you ahead of time. You also qualify that golden ticket. You have your very own total retirement plan to get all the worry out of planning and living in retirement. No doubt. So, Thomas, tell folks that I can do that. Absolutely. We have two easy ways to do this. Just call 800-661-7383. 800-661-7383. Or text a special keyword, keyword free, to 600-700. That's keyword free to 600-700.

08:30 And we're going to build a TV show around this, too. You guys have got to be on the Financial Speakeasy Network. You and Jana and Jackie are going to be on there every week. So, folks, get started now. Make sure to bookmark. Go to FinancialSpeakeasy.com. And then it will give you the option. You can either go to YouTube or Rumble. And you sign up there to make sure you get updates every single day. A new show will come out. Well, we do a lot of shows. But going live in about a month. Yes. So, get set up now and you'll be notified. We already have this. The Speakeasy Network is already going 24-7. But we're going to have a man to show there in the next couple months there on there about women and money. So, every week a new situation, a new hypothetical situation or maybe something you've seen. You'll learn a lot about me. But it's important, I think, to not be scared about the money world or not be uninformed.

09:16 So, if you're uninformed, you believe anything because you don't know. 100%. And so, we need to make sure that we have the right plan but the right team behind us. And, you know, I've done this for 33 years. We kind of know what we're doing here. We want to make sure that everybody understands you don't have to be alone approaching this big topic. But you can also do it yourself with our help. There are a lot of do-it-yourselfers. Yes. So, we can help you do it yourself but make sure you have income and everyone needs at least one financial fill-up strategy. A guy I know who was a retirement planner for 30-some years, his name is Tom Hegna. He has 14 different financial fill-ups, 14 different streams of income. Goodness. And I wish I was Tom too. But he's already retired but he's not even taking most of the streams of income because the first three streams are getting him all he needs right now.

10:04 Let's go. So, he can leave whatever he doesn't spend to his kids and grandkids too. So, again, get your very own total retirement plan but the financial fill-up strategy is the most important part. And we're going to have a show on the financial fill-up strategy on the Financial Speakeasy Network as well. So, all the different terms you hear on the radio, you'll be able to see them every day on the Financial Speakeasy Network. That's right. That's right. And all that journey begins at FinancialSpeakeasy.com. Got a great website there. The resources we are mentioning are there as well. FinancialSpeakeasy.com. FinancialSpeakeasy.com. We're going to have some live studio audience shows there. And we're building right now. We're trying to build a game show. Oh, my gosh. Yeah. Yeah. And I've been in talks with Greg Fischel. Remember, he used to do the brain game back in the day. Oh, that's so cool. And so, we're going to try to design a financial-type game show to be filmed in our new studio.

10:54 That is awesome. So, we're looking to do a lot of exciting things coming up this year. Yes, yes. And so, Amanda, we've got about a minute left. Anything? What's next on your list? You're getting married? What's going to happen next? Getting married and taking our honeymoon at the end of the year. Where are you going? I think we're going to go to Greece. Oh, okay. I've never been to Greece. I actually told him, Ryan, my other half, or as I say, Ryan, that's what I call him when I'm mad at him. He's planning. So, he knows where I might want to go. But it's his thing now because I planned the last two trips. So, he's planning the honeymoon. So, we may end up somewhere on a ranch because if it were up to him, it would be that. Go to a dude ranch and rope some cattle? Oh, man. I would believe that he would do that. Yellowstone Ranch? Yeah. He would 100%. Montana, Jackson Hole. Yeah. We went to Montana this past year and I loved it out there.

11:40 So, that's next. And then, after that, we're going to start saving for some land and we want to build a house. Yeah. You never go bad buying land. Land never goes to zero. The only problem with land is you have property taxes and they keep jacking those up every single year. Yeah. Another 10%, 10%. Don't get me started on that. Yeah. So, unfortunately, that's one of the main things. You never really own the land even if you pay off the mortgage. True. Because if you don't pay the tax on it, you're going to be in it. Or somebody gets hurt on your land, they can sue you. So, you need a good insurance. So, it's all sorts of things. We never thought about growing up, did we? Yep. Things that, the hidden costs that never go away. Yes. Yes. But, most importantly, when we get to retirement, we need to, and this is something people don't think about, having a lifetime income plan. Having your own personal pension. Our relatives used to work for companies. They'd retire and the company would give them a check every single year for the rest of their life. Not anymore. That's a pension. So, we can design your own pension.

12:26 If you call right now, the next 26 of you will do it at no cost or obligation. The number to call, 800-661-7383. 800-661-7383. Or text keyword PLAN to 600-700. Oh, well, Thomas Lipscomb for Amanda Daughtry. For Jose behind the screen working the board, it's Coach Pete. We'll see you next week. Same time, same station, on the financial. Safari! Safari! Safari! lid

See omnystudio.com/listener for privacy information.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 All right, welcome back into the Financial Safari. Having a wonderful show today. I'm consumer advocate Thomas Lipscomb here with America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. If you want to catch up on that great conversation we just had with Sheridan Murphy or check out past episodes, just head over to FinancialSafari.com. Again, that is FinancialSafari.com. And, Coach, we are continuing this great show with another special guest in studio. It's not every day you get to have a former Nashville star in studio with you. Okay. I'll tell you. I'll tell you. Amanda Daughtry. Ah, thanks for having me. Coach has been a fan of 94.7 QDR for some time, and I'm on the morning show there with Mike Wheelis. And as many know in the area, he's a fellow UNC guy like you, and he has been on the air there almost 34 years. Wow. And I'm joining him from JoCo, Johnson County.

00:48 Johnson County. People from there know, right? So if you know, you know. If you know, you know. And I've been on the show five years. Luckily, we've had you on air with us for over three doing some wonderful commercials to educate our listeners. Yeah. And I'm pumped. I've got your through the years book. And if you don't have the book, you have got to go to Coach's website, CoachPete.com, and you're going to get this book. He's going to give it to you if you sign up for. Those are awesome. We'll come in for a review. We'll go. You'll leave with a bunch of books, but that's one of them that we like people to have because it's 1909 through 2024. Every single year it's featured, showing you important information that's the same information each year. So what did a loaf of bread cost this year? What did it cost that year? Inflation. Price of gold. Who was born that year? Who died that year? What famous things happened? All sorts of cool stuff. Yeah. And we also have a soundtrack with it.

01:34 I see you working over there, Thomas. We have a soundtrack. So Amanda, I want you to pull, randomly pull out a year, and then Thomas will get you to play the soundtrack for that year. Okay. Awesome. I am just going through here. Let's see. I was on a page earlier. Let's see. Let's see. 1961. 1961, Thomas. The 60s. Oh, here we go. Oh, the 60s. There's that soundtrack. We've got a soundtrack for every decade. Now, Thomas, to lower that volume a little bit, let's talk about some of those facts. Okay. 1961. All right. We've got inflation at .7. So that's not too bad. No. Actually, that's awesome. Under one point on inflation. That's amazing. Yeah, 9% a couple years ago. 9% inflation. We didn't want that. A dollar from 1961 in 2024 would be $10.53.

02:20 Yeah, man. So it costs you $10 in today's dollars to buy what a dollar bought you back in 1960. Wow. That's what they call inflation. That's the damage inflation does. That's why I call it a financial termite. Inflation, taxation, unnecessary commissions, fees, expenses, and taxes are all financial termites that can eat away what you thought you had. That is crazy. All right. The cost of living. Let's go down some of these. Right. Bread was 15 cent a loaf. Good old days. Wow. There's probably better bread back then, too. Probably. Probably. Milk was $1.04 a gallon. Man. $1.04. Gold was $35.50. Smack your mama. That is nuts. Don't you wish you'd get in a time machine and go back there? Of course, that's more than 60 years ago. Good gosh. And I mean, that was a lot of money then, too. Yeah. Well, yeah. Well, yeah. Again, it was worth 10 times that.

03:06 So, when gold was, what did you say, $34 an ounce? $35.50. So, multiply that times 10 because you said it would take $10 today to buy what $1 did then. So, basically, adjusted for inflation, that's how they do it, $350 an ounce. Good gosh. But still cheap compared to when you saw gold hit like 5,000 ounce. Yeah. That's true. Around there. Yeah, that's true. Yeah. And if you were at the candy shop and you're buying my favorite candy, Snickers bar is $0.25. There you go. Nice. $0.25. Mortgage. Oh, I wish I would have bought a house then. 4%. You know, candy bars. I used to get candy bars for a nickel and a dime. So, I don't know. Maybe that was a misprice here. Because I'm not that old, by the way. Yeah. In the 70s, I was buying candy bars for nickel. Wow. Real candy bars. Maybe that's when the Snickers came out. And we had a Kmart there. It used to be a nickel. Then they went $17 for $1.

03:51 So, you can only get 17 of them. Good gosh. And when I was working at Kmart in, was it 1984? Right before I went to college. I worked the summer at Kmart. And it was $5 for $1 back then, candy bars. Still a good deal compared to today. Five real. And the candy bars were bigger back then. You know. They shrunk the candy bars now. Look at the little bite-sized ones for Halloween. Oh, they're so tiny. It can't even fit the logo. It has one little N for Snickers on it now. Truly, truly. That's just enough to make it mad. It's smaller than a Hershey's Kiss. And they rebranded them, too. You know, it started as snack size. And then they started calling it bite size. Probably because they got called out on it. They should have a microscope size. Really not. Inflation. Yeah. That's what happens. So, that's deflation, too. So, inflation is when things get more expensive. Deflation is when they shrink the size of things. Like a Krispy Kreme donut. It's nowhere near as big as it used to be. Don't even get me started.

04:37 Because what you buy at certain stores, you have to look at the ounces. They'll try to give you a better deal. Oh, yeah. And it's just a different package. And I'm like, okay, uh-uh. I'm getting too smart for that. Well, there used to be a pound bag of potato chips. A pound bag. Now it's six ounces. Oh. And they pump it full of air. So, 16 ounces in a pound, by the way. So, it's 10 ounces less for about five times more than it used to be. That's ridiculous. Ridiculous. But, anyway, hey, it's forced dieting. Forced dieting. I can't afford all that state chips. All right, Coach. The average home was $11,900. Wow. You know, I remember my parents bought their first house in 1974 in Laurenburg, North Carolina. Three bedrooms, two baths, nice big backyard and a deck. Two-car garage. $34,000. Oh. What? And then that sold back in the 90s. They sold it like it ended in like 1996. Sold it for $300,000.

05:23 So, that's where, you know, stuff started going up. But, back then, in the 70s, the mortgage rates were a lot higher, too. So, again, everything works out. And that's why you should never delay buying a house. Say, I'm going to wait for the mortgage rates to come down. I'm going to wait to buy this house. Yeah. Well, if that happens, then it'll be more of a seller's market because everyone will want a house then. And so, there'll be a lot more competition. So, the price of the house may go up. So, the best strategy is to find the house you like right now because houses are a lot cheaper than it will be if rates go down. Lock in the house. Get in the house. And then, when rates go down, do a no-closing-cost mortgage and refinance down to the rate you deserve at that time. Yeah. But now, you don't have to compete with other people for the house. Because you remember back in the day when a house would come on the market, there'd be bidding wars breaking out. And a house that listed for, let's say, a million would go for $1.3 million because too many people wanted it. Yeah, that's true.

06:08 And so, now you cost yourself $300,000 by being in that bidding war instead of buying it when no one else wanted it. So, shoes are always on special when you don't need new shoes. Oh. 100% true. When you need them, you can't find them or they're more expensive. So, again, buying on your terms, we call it. But also planning your retirement plan on your terms. So, if you want a true retirement plan and you're not in retirement, that's the best time to get a retirement plan. So, call now. We have a 22-step Coach Pete's Power Plan, we call it, which includes the biggest step. It's that financial fill-up strategy. But it's 22 steps. We do the work behind the scenes. We're going to waive our fee, our planning fee. We've seen others charge over $1,000 for plans like this. But for the next 26 callers, Amanda, we're going to do it at no cost or obligation. So, Thomas, tell the listeners how they can call in right now.

06:53 Yeah, happy to. The number to call, 800-661-7383, 800-661-7383. You can also connect with us by texting that keyword plan to 600-700. That is keyword plan to 600-700. So, Amanda, tell me about Nashville. How do you like it there? Oh, Nashville was great. I was there 10 years. But now, remember, I was in Nashville. When I moved there, let's see, 2010 is when I started kind of going there and saying, okay, I'm going to move here. 2011 made the final full move. There were still taxis downtown. There wasn't an Uber. There wasn't a Lyft situation. And you could park in front of the bars downtown and play as you get. Oh, right on Broadway right there? You could park right on Broadway. Wow. There wasn't even a meter or anything. You just pull your car up, get a spot, load out, and watch your car from the stage. Now, I mean, they call them bollards.

07:39 There's those things that line the streets where you can't even get on the sidewalk easily. There's Lyft. There's Uber. They're starting to shut the streets down on the weekend. It's like Beale Street in Memphis. So, you can't even get dropped off at all in front of the bars. Yeah, you've got to walk like 1,000 miles. And, of course, every star has a bar now. But when I moved there, it was different. You had your three bars that were owned by the same guy. I've been there since 19-whatever. Layla's. Layla's one of the oldest bar on the street. How about Tootsie's? Did you ever play at Tootsie's? I never played at – that's the Steve Smith bar. I never played at any of the Tootsie's. But I played the Stage, Legends Corner, Second Fiddle. All those are owned by Rubel Sanderson, who's still there. Second Fiddle actually just closed. Oh. But he still has – That's a cool name, Second Fiddle. It is. He still has the Stage and Legends Corner, which was my favorite spots, right next to the Ryman, right next to Tootsie's.

08:26 I played there every Saturday and Sunday. Those were my bread and butter gigs. So you worked on tips only back then, right? Because when I'm in Nashville, I see the tip jars are out there. The bands are all like – Tootsie's has three different bands going at one time, Thomas. Front stage, backstage, and upstairs. And upstairs. Well, now we got a bass, but when I first started down there, Second Fiddle was my first gig. It was a Monday night. Nobody wanted that shift. It was a late shift, too. So the band started at 10 o'clock in the morning, and then they end at 2.30 a.m. And so that was the late shift. I'd get on stage at 10.15 p.m. I'd play until 2.30 in the morning. On Monday. On a Monday. Nobody's in there. And our bass was, I think, $35 a person. And then we'd be lucky to make $5 to $10 in tips apiece. It was rough, but you had to pay your dues, you know? And that's what – a lot of folks do that because they want to be noticed by somebody.

09:12 And there are a lot of famous people that go in and out of those bars down there in Nashville scouting out the next talent, I guess, right? It's true. I actually just listened to a podcast with Haley Williams. She was a singer from the band Paramore, and she was discovered at 12, 13 years old. Actually, she said in the interview, they won't let you sing if you're 12, so they might have fibbed a little bit early on. But it started in 13. That's where she was discovered. That is crazy. I was singing at Second Fiddle one night. At that point, I'd had gigs at a lot of the different bars. But I was there on a different night. It was in a Monday. I think I might have been moved up to a Friday at this point. And a girl was sitting at the bar who has been working for Alan Jackson for over 25 years. And she would always come in, but I never knew what she did. And super friendly. And she pointed at me when I was running the tip jar, and she said,

09:58 I'm going to have a job for you at some point. I'm going to have something cool for you. And it had been a year since I'd seen her. And next time I saw her, she said, hey, Alan Jackson is opening a bar across the street where the Full Moon Saloon is. Full Moon Saloon. That sounds like a whole name. Or actually, it shared the wall with the wheel. They kind of did some things there. So it was really the wheel. It used to be a Civil War hospital. That's a whole other segment. Oh, wow. But really cool spot. And she said, he's going to open a bar there, and we're going to ask you to play Friday night more than likely. And I said, oh, heck yeah. But if I had a dollar for every time I met somebody in Nashville that said, I know somebody who knows somebody. Everybody knows somebody. Make you famous or whatever. I mean, I'd be rich as you know what right now. But it worked out a year later. I got the gig. And then two years later, they said, hey, Alan's taking some of the talent from the bar on the road.

10:48 Do you want to go on tour? And I'm like, do I want to go on tour and play some marinas with Alan Jackson? Like, pinch me. Does the folk wear a funny hat? Yeah. Sure does. I'll be going. That was a fun time. And we got paid a little bit. We sold a ton of merchandise, which I thought. So where'd you guys on tour? Where'd you go? We went to Jacksonville. We went to Pennsylvania. Jacksonville, Florida. Florida, Pennsylvania. We went to. Can't wait to go to Jacksonville, North Carolina. We did play Winston-Salem. Oh, Weston. Did you go Ziggy's up there? Or where'd you play? We played all the arenas. Okay, the arenas. Okay. And so we were playing. And Winston-Salem, they gave us jerseys. So I got a jersey for the Deacons, I guess that's who they are. Yep, yep. And I got my name on the back of that. Where else did we go? We went one other place. And I'm drawing a blank right this second. Demon Deacons. It was a lot of fun.

11:34 It was an incredible run. And I had a good time. And you know what? And that's what I tell people. It's a joy, parts of life. Because you wouldn't worry about certain things. Now you're worried a little bit about planning for retirement. But you're still only 40. So you've got plenty of running. I was broke as you know what back then. You've got 25 years at least to the traditional 65. And I got my Social Security statement the other day. It said I can't retire to 67, even though I'm never going to retire. So you have plenty of time to get on the right track. And if you're listening now, if you want your very own total retirement plan, call right now. We'll put together a total retirement plan at no cost or obligation for you right now. All right, folks. That number to call is 800-661-7383. 800-661-7383. Or text keyword PLAN to 600-700. PLAN to 600-700.

12:20 And we'll be back with more with Coach Pete D’Arruda and Amanda Daughtry after this.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari, having a great conversation here with bestselling author Coach Pete D’Arruda, as well as NHL Hall of Fame broadcaster Chuck Kaiton, former voice of the Carolina Hurricanes, also in studio with us is the voice of the Wolfpack, Tony Haynes. I'm consumer advocate Thomas Lipscomb. If you want to catch up on this conversation that we're having, just head over to FinancialSafari.com. Again, that's FinancialSafari.com. By the way, we got a great video there where Coach Pete is interviewing one of his friends who just went to CES 2026. You can see how robots can fold your clothes, flying cars, all sorts of crazy crap that's going on out there. His name is Joe Casey. He was an MIT grad, and he went to Ohio State and then MIT. So he's a pretty smart guy, and it was amazing to hear how fascinated he is.

00:45 He's a tech guy, but he was fascinated with what he saw at CES. It was about a 40-minute interview, and you can watch it and listen to it. It's about FinancialSafari.com. It's also, if you just want to listen to it, it's like CoachListens.com. That's correct. That's correct. It's such a great website and great interview at the end of the day. Again, flying cars, robots that fold your clothes. What can you not want, right, guys? I mean, it's just amazing to be able to talk to people like that, and it's amazing to have both of you guys in the studio. I mean, people that are listening, they've heard you on the radio for years and years. Carolina Hurricanes, if you ever listened to Hurricanes, the game on the radio, Chuck Kaiton was doing the game. Matter of fact, I recognized his voice one time. I didn't know what he looked like, but I heard his voice at a golf tournament. We were in the 18th hole little, what do you call that thing? The 19th hole. Yeah, the box. Yeah, the box. Yeah, the sky box. We were watching a golf tournament, and I just heard this voice bellowing

01:31 from the other side of the box. Nice. I went over, I said, you're Chuck Kaiton. You're Coach Pete. And I didn't get into any trouble because nobody was putting at the time I was talking. So that was good news. They used to do the quiet sign. They'd be waving all over the place. And then, wow, Tony. I mean, it seems like just yesterday I was listening to you do the Wolfpack games on the radio. Well, it was a little bit almost yesterday. I'm only a month into retirement. And what's different about this month? No more paychecks. Well, the paychecks have to come from you. That's right. Their own personal pension, basically. You have to set it up correctly. That's why I'm sitting here. And make sure to, yeah. And it's scary, but it's not complex if you do the right thing. And unfortunately, people wait until the last minute. They start making impulsive decisions and do the wrong thing. So it's important to plan it out, sort of like a game plan. And we're talking about your retirement. You're basically in the first quarter of retirement.

02:16 We've got a four-quarter game, at least. We need to make sure that money lasts longer than you do, not runs away when you're still here. All right. Well, speaking of that, before we get to Chuck's real fun questions, here's mine. Most of my money is tied up in a traditional IRA. Right. I'm at the point now where I have to look at different options. Maybe rolling over part of it anyway to a Roth IRA or annuities or something else. What should be my strategy at this point? A good time to roll to a Roth is when you don't have much income. If you don't have much income, you don't have to pay many taxes. You're in a better position than if you have a bunch of income. And many people can't even qualify for a Roth if they have a lot of income. So there's backdoor IRA options, too, to get a backdoor Roth, it's called. But you're in a good position now to look at how much you still got to pay taxes when you roll it from a traditional IRA or 401K into a Roth.

03:03 So we have to see, well, what's the break-even point? How many years will we have to go now that you have to make up for the taxes you just paid in a lump sum to move that money over? And we do that side-by-side comparison. It makes sense. One thing we can't control is how high taxes are going to go in the future. We don't know what they're going to be tomorrow, much less next year, next decade. And I think it's real important what you said. Coach, when you talk about a Roth conversion as opposed to a contribution is what you're saying. And we had to do that in 2019. We bit the bullet and did the taxes. But we love it now because we have that Roth and both my wife and I have it. You don't have to worry about taxes anymore. Basically, you isolated. You put an offensive line around there that can never – like they protect that quarterback forever. Right. You're never going to get to that money. The IRS can't because you've already fulfilled what they told you how to do.

03:51 Yeah. So that's important for you. Your point was well taken because I did it well after I left the hurricane. So I didn't have to worry about added income. Yeah. And that sometimes throws a wrench in the play and makes it less advantageous than now when you don't have any income. Exactly. You see how savvy Coach is? He uses sports analogies so we can understand what he's saying. I hear you. Well, I love sports too. Offensive line. I mean, Coach beat offensive line. What's important, like you see how powerful and how important a good offensive line is when you don't have a good one. That's right. So when you watch a team consistently getting sacked or if you have a planner who keeps fumbling your retirement, then you're in wrong place. That's true. You don't have to be in a place like that. Great question, Tony. And then also maximizing Social Security, what you're entitled to. Make sure you claim it at the right time. I'm about to start that. Yeah. And then your MRDs later on start taking some money out that the government makes you take out.

04:38 Chuck, you kind of like that MRD because it gives you suspended money every year. That RMD, I mean, yeah, I guess so. I mean, it's, again, one of those bittersweet things. We have to pay taxes because we were, you know, in a situation where we deferred them for a long time. In my case, 30 years of it. So time to pay the piper. But you do it with the strategies that you're talking about here at Capital Financial and the people that help me through it. Yep. We minimize those. We mitigate those taxes. And we also have that lifetime income that you're talking about. And right now I just set up a plan, not only getting the RMD in January because I put that money into a savings account, but now I'm going to start taking money every month. Like you say, that lifetime income. And I'm going to actually turn that faucet on starting in a couple of months.

05:25 That's good. I mean, that's just another stream of income coming in. Absolutely. And so with the IRS, it's either pay me now or pay me later. They're going to get their money. The beautiful thing there, the money you did convert to a Roth, you don't have MRDs on there. You don't have to take any money out of the Roth unless you want to. That's a beautiful thing, too. So it puts you more, Tony, it's all about putting you in control and staying in control, sort of like a driverless car that you're in control of. But you basically have the comfort and safety of having a driverless car. You're never going to get me in one of those. I saw that in the video, but I'm not sure I'm ready to get in that. I don't think our generation is going to be good with driverless cars. I guess I, you know, my nephew in San Francisco took one of those cabs, driverless, and he left his wallet in there by accident. Nobody left to find it. No. Right.

06:11 The next person in there got a windfall. That next person was so honest that they looked at his identification. He had a couple hundred bucks in there along with his credit cards. And the other money again, the wallet came back. And the guy traced him back to the next passenger and gave him his wallet back. There aren't many people like that these days, unfortunately. That's a good American. That's good. Now that you drop a credit card, it's being used within five minutes. Yeah, it really does. Yeah, true story. That was my story. That's amazing. Pretty cool. So it's about automatic pilot, making sure you have your total retirement plan in place when you get to retirement or right after. You don't have one yet, Tony, but at least you're smart enough to be thinking about things like that. And it's important for everybody to at least have a plan in mind. You don't have to have the plan done. Have it in mind. So, Thomas, folks that are listening now, if they have a plan in mind or they want to get a plan.

06:59 And so folks have asked me, well, Coach, when's a good time for us to call, like age-wise? And I always say when you're in that financial red zone, which is age 50 and above, it's time to start mapping out, getting your ducks in a row, mapping out what you have already put aside, looking at maybe Roth conversion strategies, looking at tax reduction strategies. So it is never a bad time, but 50 or older, that's when you're in the ultimate time to get everything organized right. And so if you call right now, we'll help you get that organized. We have an organizer that will help you get organized, and we'll do it all for you at no cost or obligation. If you call right now, we'll introduce you to the firm and make sure that you get comfortable with us, just like we get comfortable with you, and put a plan together that will take you all the way through retirement with no worries on the safe side at all. It's true. Lifetime income. So tell folks how to get that. The next 26 of you call, we'll let you come in, and we'll give you three of the books I've written, and we'll give you a plan.

07:49 It's a golden ticket. It's worth over $1,000. Call right now. All right, folks. You may be sitting on the edge. Remember, the average investor underperforms the market by over 4% a year simply to emotional trading. And we don't want to worry about emotion. We want to worry about the process. We want to develop the plan. The number to call, take advantage of this. 800-661-7383. 800-661-7383. Or you can text keyword plan to 600-700. That is plan to 600-700. Coach, you were talking about running plans earlier. And I'm a soccer guy, so I go back to Germany when they were. Football! Yes. But the German national team, when they were playing the World Cup, and this has been several years back now, you could just see them executing plans as if it was nothing. They would just walk out onto the field.

08:35 It didn't matter if it was, you know, if it was Spain or Holland or France or whoever they were going against. It was a... And granted, they didn't win the series in this instance. But you could tell they had that plan and they were driving. And I think you guys see this. Chuck, I'm sure you see this with Brenda Moore, process over emotion. Well, that's what makes him a great coach because he doesn't vary or vacillate away from the plan, the team. You know, we talk about the team here at Capital Financial. The team comes first. And how you contribute to that team. And it's the same thing in basketball and football, as Tony could tell you. And that's what makes him a special guy with the Hurricanes. You're pretty close to Rod still, right? Oh, absolutely. You just had dinner with him the other night, I think, didn't you? Yeah, I had it with him. What's his favorite meal? Oh, my God.

09:20 You're not going to believe this. He actually, you know, he's the most fit 52-year-old. Well, he's the most fit coach in the NHL, easily, because he still works out like a maniac. Good for him. But he did have hamburger and french fries. I hope I'm not breaking his cover. But he does. Let's go. He eats like normal or obese people like myself. Well, if you're working out all the time, though, it's good. He needs some carbs in here to work out. I thought you said he likes sushi, too, right? Yeah, he does like it. But the bottom line to me is that he'll go off the wagon, so to speak, once in a while. Well, you've got to cheat on a diet every now and then. Especially in the summertime, you know, when he's not stressed out as much. So he'll eat pretty big, but he'll work for two or three hours, work out. Wow. He's a terrific guy, and he's done a great job.

10:08 It's all about balance. Never in my life did I have a workout for two hours. Even when I was in good shape. I know. He's crazy, but he's obsessed. He loves it. Try to maximize the workout time in 30 minutes, get all the stuff done. Tony, what's your favorite food? Oh, goodness. You know, I've always been fond of Italian food. I had a really good chicken parm last night, if that's done right. Spectacular. The power of advertising. Anytime anyone says chicken parm, who do I think of these days? Ray Ferraro. Oh, that's who I think of. Peyton Manning. Oh, yeah. Remember, he would do the chicken parm all the time. The commercials would always happen. Well, he does great commercials, too. He does. You know, I mix it up, though. I think I have a very diverse taste in food. Most recently, I made a salmon piccata at home. You like to cook? Yeah, I do.

10:54 Nice. People customarily like a chicken piccata. Chicken piccata. I watch a lot of YouTube videos, yours included, but many of them are chefs, and you get these great ideas for recipes. That's pretty cool. So I just made the piccata sauce, but over salmon, it was spectacular. We need to have maybe a recipe show on our Financial Speakeasy network, Thomas. That would be very cool. By the way, folks, we have a 24-7 video network on YouTube and Rumble. It's called Financial Speakeasy. So all you have to do is go to YouTube and say, put in there for the search bar, Financial Speakeasy, or go to FinancialSpeakeasy.com, and it'll take you right to the choice between YouTube and Rumble. It is easy. It's easy. And it's such great content on there. We also have the interview with Joe Casey about CES 2026 on there. We go live every weekday with new stock just happenings and things happening in the business

11:39 world. Great channels. We've got a bucket list show coming. Morgan Patrick's going to be doing that. Maybe get Tony on there about bucket list items, too. That's always fun to do. Chuck will be good on there, too. Yeah, thank you. I would love to help you. Well, we've got to run away, and I know you guys are both out of here after this, so I want to thank Tony Hayes and Chuck Kaiton for coming in and visiting with us on the Safari. And folks, we'll be right back after this.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Having a great time here on Financial Safari. I'm consumer advocate Thomas Lipscomb in studio with best-selling author Coach Pete DeRue. The studio here has gotten a little bit bigger. We've got some great voices in the studio with us, Coach. Yeah, before we tell folks who's here, do you have a sound clip you want to play? Maybe it'll get people an idea who's here on one side of the studio. Then I'll introduce who's on the other side. Yes, let's do it. All right, check this out. The end of the football season, Tony has worn a variety of hats during his 28-year tenure. He has served as a game day host and sideline reporter for football. Broadcast also served as a host for football and men's basketball coaching shows. Tony, a proud NCC graduate, has brought joy to Wolfpack fans everywhere. Wolfpack fans, please give it up for Tony Haynes.

00:51 Well, Tony Haynes, welcome in on the left side of the studio. Raise the roof. And now, Thomas, do you have a sound clip for the other side? I do. Here we go. With a 3-1 decision, a complete reversal of form from game number six, where it looked like the sun was setting on their hopes. They have come up and have risen from the hockey morgue and have won this Stanley Cup of 06 with a tremendously large team effort. And as they are mobbing each other, as I said earlier, John, 9,393 days of frustration.

01:40 And on the 9394th day of NHL existence, the Carolina Hurricanes, the final organization till 97, have won the Stanley Cup. And my friend, I am so happy you are at my side to see it. Wow. And that was in reference to... What a moment. Yeah, who was I talking to? John Forslund was the color man at that time. Because TV doesn't do hockey after the first round of the playoffs. Doesn't he say, oh, man, now I want wings. And we would have wanted the wings in 0-2, but we lost in five games to them. Hey, you know the story, Chuck.

02:26 We've talked about this. But do you know where I was in 2006 when they were winning the Stanley Cup, that Game 7? Guess where I was? Where? In Arupa. And I talked a bar. They love soccer over there. But I talked a whole bar into becoming Carolina Hurricane fans. Hey! Beautiful. And I talked him out of the soccer game that it was on, which is football. Yeah, sure. Into watching the Carolina Hurricanes. That's amazing. So we were all, I was buying beers all over the place. It was fun. Nice. Fun time. I was at Emerald Isle, family beach vacation. The whole, like, my father's six siblings were there. It was a huge time. Huge time. All right, so Chuck Kaiton, NHL Hall of Fame broadcaster, former voice of the Carolina Hurricanes, and Tony Haynes, voice of the Wolfpack, who just retired. Oh, yes. Well, we got an all-star cast here. And then, of course, me and Thomas. We have a cast here today, don't we? And when you were in Aruba, they were saying ice.

03:12 What's that? Yeah, ice, ice. Exactly. Careful when you say ice these days. Ice, ice, baby. So, yeah, that clip you play was the last home game I did at Carter-Findley Stadium. Yep. And NC State and Wolfpack Sports Properties were so nice to honor me on the field with two minutes to go in the first half. And it was such a surreal moment because, you know, I'm somebody who has called NC State games for all these 26 years and seen the greatest stars like Phillip Rivers and Russell Wilson and Bradley Chubb get standing ovations. And there I am standing there with two minutes to go in the first half. And all of a sudden, the ovation is directed towards me. Yeah. Wow. That's like something you'll – It's pretty awesome, huh? It's surreal, but it'll be with you for the rest of your life.

03:58 Phillip Rivers now, he just played again. How about that? He came out of retirement. Now he has to wait five more years to get to the Hall of Fame. Well, I've said it, and being around Phillip when he was at NC State, there's no one player that I've been around, and I've been around a lot of them, that loves football, playing football more than Phillip Rivers. So I wasn't totally shocked that he actually came back as a grandfather at age, whatever, 44, 45, like that. He has a bunch of kids, too, doesn't he? Yeah, he's 10, I think. Does he have any that are going to be really good athletes like he was? Yes. He has one. His oldest son is actually being recruited right now by many of the major schools around the country. Yeah, we call that, Thomas, we call that a retirement plan. Oh, yes. Yeah, there you go. Phillip has his own money, but I mean, if you have a good athlete in the family. Just saying, just saying. You know the best thing for Phillip, though? He came back, played those four games with the Colts.

04:44 You know what that does for him? That gives him- Health insurance. Health insurance for five more years. For 10 people. For a very big family. Wow. Hey, I read that article. It's pretty smart. That's right. That's good. Because health insurance ain't cheap at all. Oh, no. Considering, you know. So, Chuck, how have you been doing? I've been doing very well in retirement, thanks to you and the team here at Capital Financial. Well, we just try to do what's best for everybody. Absolutely. And it's worked very well. I'm in that situation where I take those RMDs. Some call them the dreaded RMDs. Required minimum distributions. That's right. Because I had a 401k plan with the Whalers and Hurricanes for a number of years that we converted to an IRA. And it was the- I didn't know what a qualified account was from an unqualified account, but I learned very quickly.

05:30 It's still funny terminology. Well, gee, all I tell people is it means you're qualified and have to pay taxes on that account. There you go. Exactly. Well, I don't want to pay taxes. I don't. Too bad. I know I'm qualified. And when Chuck and I are having dinner, he uses another word to describe those RMDs. Oh? We probably can't talk about that. No, we can't. I'll keep it adrened. Yeah, exactly. It's almost like McEnroe, isn't it? But again- McEnroe. You cannot be serious. You're serious. That's what you think about when taxes come over. Yeah, I know. We do live in the greatest country in the world, so I can't complain. And you're right. They were deferred for many, many years, 39 in all for me. And so I can't go- Actually, not 39, because the 401k plan started in Hartford in 1987. So 30 years, yeah. Well, the theory is if you defer pay in taxes, that means the money you would have lost in

06:16 taxes stay in your account and earn interest. Exactly. Or participate in market gains. And that's the only problem is then when you get to time to retirement, then you have to pay tax on any gain. Yeah. And so, hey, it's good and bad, but it's better to have the money than not have the money. Absolutely. And you've got to tell young people, and I'm sure many of them listening here, hey, save that money. Make sure if you've got a job that pays you matching money from your 401k, maximize it. Yep. Because over the years, it worked for us. Put the money away. You get a tax write-off, too, when you put the money in. And now you're building up your retirement account, and you're building your confidence. Exactly. When you retire on your terms, like both of you guys have, which I'm proud of both of you guys to retire when you wanted to, instead of being told to retire or being forced out. Right? That happens a lot in our business. It does. It does. Again, we're here with best-selling author, Coach Pete D’Arruda.

07:01 If you want to make sure that you are on the right track into retirement, give us a call right now and secure that complimentary consultation with a member of his team, 800-661-7383, 800-661-7383, or text keyword PLAN to 600-700. Coach, I'd like to say, you know, we listen to Chuck, we listen to Tony there, having thousands of fans in the stadium, just cheering them on at different points in their career. And I think we all can minimize ourselves because we think we don't have those thousands of fans around us. But every day that we're saving for retirement, every day that we're putting that money aside for us, we're creating that quote-unquote fan base that's going to applaud us later on. But you have to make sure that those fans are happy. Well, everybody wants to be a retirement hero for their family. In other words, you don't want to be a burden. You'd rather be a hero.

07:46 In other words, being able to do things for your family instead of asking them for money. Yes. And that's a big difference. Really? Everyone knows the person that's always asking for money. Truly. So be the person that has the money and make sure you have the plan. Yeah, absolutely. And that's the most important thing. Tony, 28 years, a long time. What was your most fondest? And this may be a tough question because you probably have a lot of them. But what's your fondest memory of broadcasting at NC State? Nothing tops what the basketball team did two years ago. Oh, that's amazing, wasn't it? That was the most incredible run. Yes, it was. I still think about it. And I still don't believe it, what I actually watch. You're talking about a men's basketball team that lost their last four regular season games. You go into the ACC tournament. Everybody knows the coach is going to get fired after the next loss. And what they do is unthinkable. They proceed to win five games in five days at the ACC tournament.

08:34 That's amazing in itself. And the last three wins were over Duke, Virginia, North Carolina. I know. That was an all-star lineup. At that point, you say, okay, I've seen it all now. No, we hadn't seen it all because they get in the NCAA tournament. They win four more games. Find themselves in Glendale, Arizona for the final four. You found yourself there, too, didn't you? I was there. Yes. That's a nice place out there. That is an amazing facility. It is. It's just so huge. And I actually went up to some of the Bob Euchre seats in the stadium during one of the practice days. And literally, the court looked like a little post-it stamp. Now, Thomas, Bob Euchre was a famous broadcaster back in the day. Sorry, Thomas. He was always joked on about being put in the worst places and not getting any respect kind of thing. Ah, I got you, got you. No, I love it. I love it. So, for our listeners who don't know, I'm the music head.

09:21 They're the sports guys. I am fitting in. Well, that's a little older. Thank you for the definition. Thank you for the definition. Bob used to be on TV with a beer commercial, just a bit outside. That's right. I was in the movie Major League. Major League. Oh, yeah, yeah, yeah, yeah. Nice. He's the guy that says, just a bit outside when the ball was way over there. Okay, okay, okay. So, that's your fondest memory, and I'll tell you, I'm a Carolina guy. I went to Carolina, and I did get into NC State, almost went there. You had to select your major ahead of time, and I was pre-dental. Imagine that. But I ended up getting to Carolina. But I rooted for NC State in 1983 back in the day. Yeah, I was in school. Remember the cardiac pack days? Yeah, I was in school. And so they were an easy team to root for, and I don't hate anybody. Right. But, you know, it's like you guys hate us, I have to hate your pack sometimes. But, I mean, I was rooting for State a couple years ago, too. That was an amazing run. It was an amazing run. It was an amazing run, wasn't it? You can't make it up.

10:06 No. Especially a team that was stumbling into the postseason the way they were. They were missing a couple of guys, and there was no sign that they could somehow create some momentum in the tournament and do what they did. But that's the beauty of sports. I've always said about sports, it's the ultimate reality show. It is. There's no script. Oh. So, you don't know what's going to happen. Yeah, you hope there's no script. That's right. These days, I hear people talking about some things. Well, there you go. That's a good point. Yeah, but, no, it's just fun. And it's real team ball. They were playing team ball. And we work as a team here when we build retirement plans. And I want people to know that you have a team here on call anytime you need help on planning for retirement, making sure you get that tax reduction strategies in place before and during retirement. That's important. When you're having to send checks to Uncle Sam, it's less money you can send on fun things for you and your family.

10:56 Can I say this? Yes. Because one reason NC State got hot at the right time, they made adjustments. Yeah. Half time. And you and your team have to make adjustments. Constantly making adjustments. Chuck, we've made adjustments. Absolutely. So, it's about getting a plan first and then making the correct adjustments as you go forward. And so, what we want to do here is offer you a golden ticket. But I'm going to do even better here. I've got a Fred Flintstone. Hee! Abba-dabba-doo! They came in last week on the show. That means the next 26 of you who call, we're going to send you a book at our expense. There'll be no fee, no obligation. We're going to send it to you. All you have to do is give us your address. There's going to be no postage and handling. We're going to pay that. It's the Tax Savvy Retirement Book. It's over 250 pages on how to reduce taxes and maximize retirement income. And this is going to go out next week to you if you call right now. Thomas, tell folks that they can get this book and a golden ticket that will get them their very own total retirement plan as well.

11:45 Very easy to do. Just call 800-661-7383. 800-661-7383. Or text keyword plan to 600-700. That is the keyword plan to 600-700.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome into the program. Consumer advocate Thomas Lipscomb here with you alongside Dave Perkins, as well as author of Wall Street is Not Your Friend, Russell Hackman, also in studio with us. America's wealth, financial, and income coach, bestselling author, Coach Pete D’Arruda. How are we doing today, boys? Doing great. Awesome. How about you? I'm excited for this segment. I'm very excited for this conversation. This is going to be great. We're going to be talking about how the market is up double digits, but should we still be worried considering this? What are your guys' thoughts on that? Well, I'll tell you, yeah, you're looking at, you know, when we meet folks and it's like, hey, guys, the, you know, the S&P's up 100% over the last five years, you know, last three years have been double digits. And, you know, coaches, you say, it's like, hey, like, and your big box advisor, your 800 number, you know, advisor

00:51 is not diversifying you. And, you know, all you got to do is look at history and be like, at some point, we're going to get a 30, 40% drawdown. And if, you know, it's one thing to lose money, but it's another thing to lose money you made. Right, Coach? Yeah, you don't want to lose that money. No, in doing some research before this, I found out in 1987, the markets jumped 40% and then dropped 22% in a single day. Oh, yeah. In a single day. It's important to lock those gains in. So what good is it to have a gain if you lose it? I always tell my clients, you're not up until you're out. Yeah. See, I got a good gain. I said, did you liquidate? No. I said, you don't have a good gain yet. Right. So not liquidate all of it, but liquid, you know, lock in. I always say if you're up, if a stock hits an all-time high, I sell a third of it.

01:39 Right. Because, and then it goes up and hits another all-time high, I sell another third. You're always going to have some because you're only selling a third of a third. So you're not going to say, well, if I sell it three times, I'm out. No. Yeah. Because a third of the two-thirds is still a number. So you're still going to have some, even if you do it 15 times, a third of that. And so therefore, you never are going to be at a point where you say, well, I used to have that stock and now I don't, when it's like an Nvidia kind of thing that keeps going up. But at least you're locking profits in so you can play another day, we say. And that's important, Russ, because the stock market doesn't go up forever. And a lot of these stocks from back when we were growing up aren't even around anymore. Remember Hungry Jack Biscuits? They actually still are around. Oh, they are. Okay. Well, they used to advertise all the time. Remember Pudding Pops? They're gone. Yellow Pudding Pops. Oh, yeah.

02:24 So things come and they go. We all remember Mr. Whipple back in the day squeezing the Sharmin. That's right. He didn't like people squeezing the Sharmin. Well, we don't want people squeezing the money that we have for retirement and taking it away. And so the way you can do this in the retirement game is to make sure you're always winning, not losing. And when you lock your gains in, at least taking some profits, you're never going to lose. Russ, that's just my philosophy. How about you? Yeah, I agree. You can either, you know, and there's so many solutions now that people are just not aware of either. Well, first of all, we talked, Coach, about like, hey, if you have stocks and you have bonds, that's not diversification. And bonds are probably going to be lousy for the next several years as inflation is still around 3%, right? So, but then you have all these great alternatives and whether it's terrific annuities, these are not

03:14 your grandfather's annuities, but ones that provide income for life for you or your spouse, or they put a floor under your gains and give you upside. There's the ability to do that in securities form. There's some novel exchange traded funds that, again, have that profile where, hey, if the market takes a big beating, you're going to be fully or partially protected. And who wouldn't want to switch from, at least for part of your stock portfolio, to switch from an expected gain over the very long term to 10 years, but knowing you could lose 30, 40, 50 percent to something where you're never going to lose more than 10 percent or you're fully principal protected and your expected gain is 7 percent. I mean, that's just a smart trade-off for some.

04:02 It's true. And there's a recent Fidelity survey. It says 61 percent of investors admit that they're waiting for the crash. And so there's obviously a lot of folks out there who know, you know, we've had a few good years here. And the big question is, why do people stay all in? This is a great time, like you said, Coach, to push some of those gains to the side and make a clear path forward. Well, fear and greed get people in the wrong times, those two emotions. And so the greed is why people stay in. Like, oh, I'm just going to, oh, I'll liquidate tomorrow. Well, as soon as it gets to here, I'm going to liquidate. Then it never gets there and goes back down. So you're always waiting. And I'm sure everyone listening has been in that situation where you have a stock, it's a high flyer, and all of a sudden it's not a flying high anymore. And so we can't have that happen, Russ, can we? Well, you were talking, Coach, about, you know, the biscuits. And I couldn't.

04:53 Do you remember when the hot stock was Krispy Kreme? Oh, yeah. Like it was the hottest stock. Sure was. And I remember, I can't remember if that was 1999 or when that was on, but it was like, are you kidding me? These are like donut stocks. So at least we got better stocks now that are doing okay. But again, I mean, we make this point that, hey, 45% of the stock market is technology. 35% of the stock market is seven stocks. And there's a lot of debate about, you know, there just ain't anything that goes up forever. And they're underperforming now, right? Russ, the Magnum 7. Way, way underperforming. They're way down Krispy Kreme. And number one is, they've raised their prices outrageously. And they've shrunk the size of the donuts.

05:40 Speaking of greed. You can't do both. That's a shrinkflation where you're cutting the size and raising the price. It's ridiculous for dough. It's dough with sugar and a little yeast. A lot of sugar. Yeah. And so it's just ridiculous. It's about $20 a dozen if you want the specialty donuts, which is crazy. Anyway, they're making Dunkin' Donuts, same problem. I remember Dunkin' Donuts used to make the donuts right in each shop. They had a guy in there, the commercial, the guy would wake up at three in the morning trying to make the donuts. And they don't do that anymore. They don't. And it's ridiculous. I used to, my favorite one was only available in the New England area at Dunkin' Donuts, but they had donut sticks. And so they had an apple donut stick, which was, it was an apple filled stick. It was a stick for them. And it was cinnamon on the outside. Oh, that sounds good. Awesome. And it was crispy too. A little crispy. And then they had a lemon stick, which was

06:25 powdered sugar on the outside and lemon on the inside. And then they had a jelly one, which was like a jelly donut, but it was crispier. Again, a stick with jelly in it. Those are my favorite sticks. My grandpa used to get those all the time. And they're, why they have, coach, why would they have a stick for them? So you could dunk them in the coffee. Right. Exactly. That's the name. I love that. Yes. And so they stopped doing it. And it was easier donut to make than the round ones. Why would they stop? Well, because, because, because, just because the money got involved and you got investors coming in and say, how can we make more profits? Right. We can make the donut smaller. And when they do that, they make the boxes smaller too. So they fit in the box perfectly because they're smaller. Russ, it makes me mad. I, you know, I'm a food guy, so I hate it when they mess with my food. And my palate hasn't changed that much over the years, but the taste sure has it, the donuts. Yeah.

07:11 Oh yeah. Well, well, speaking of, you know, sort of shrinkage and inflation, you know, coach, both you and I do with our teams. When folks come in to see us, we address like, hey, what if inflation, and we've run the numbers, what if inflation is two and a half, three percent for the next 25, 30 years? You break out your super calculator on that. And that has prices doubling or even tripling. And Thomas, maybe you can give us some guidance on how folks can get a plan, get a consultation, get a plan and discuss like, how do I keep my purchasing power up over the next 25, 30 years when I don't have a paycheck and they're going to keep shrinking my donut? Yeah, it's very, very true. And we have a very easy way to connect so that you can get

08:00 your own desires, your dreams for retirement, make sure that they're lined out in a true written total retirement plan. Just give us a call right now, 800-661-7383, 800-661-7383. You can also text keyword plan to 600-700. We're having a great conversation here with Russell Hackman, Hackman Wealth Management. He's the author of Wall Street is Not Your Friend. I'm consumer advocate Thomas Lipscomb in studio alongside Dave Perkins, as well as bestselling author, Coach Pete D’Arruda, better known as America's wealth, financial and income coach. Going to have a great conversation today about the hidden issues investors don't realize they have. Makes me think of the movie Jaws. And in this movie, you might have seen the shark that got you, but it's often not the shark you see that bites you. It's the one that's kind

08:48 of hidden under the portfolio, as it were. Sure. You guys have been working in the financial arena a long time. Coach, you've developed the seven financial blind spots. And when we talk about hidden issues investors don't realize they have, blind spots are huge. And I'm going to open this up with you, Russ. What are some blind spots you see that investors have out there? Yeah. And I'd love to hear Coach's seven. I think I've seen them before, but he's going to knock me over the head and give me a reminder of them. But I think blind spots, again, just letting equities run and thinking they're going to do the job for you forever. Yeah. Not understanding that your fiduciary actually probably does have conflicts of interest. In my book, Wall Street

09:35 is not your friend. We explain, and Coach talks to his listeners as well, about, hey, these big box firms and these 800 number firms, they do have conflicts of interest, yet their lawyers are so good at writing four pages of documents that it's in there that they, oh, we're allowed to have a conflict of interest as long as it's disclosed here. Like, oh, we can only choose from these 10 mutual funds because they actually pay us to be on the platform. Right? So that's a blind spot. And taxes are very often a blind spot. And the ability to influence how much tax you pay in the future, that's a big one that I know that we talk about with folks when they come in,

10:25 and so do you guys, Coach. What are your seven blind spots? Tell us about your blind spots, Coach, as you frame them. Well, I don't want to bore people at all seven because I wrote a whole book on that. But let's talk about the number one blind spot. It is not having a lifetime income that will never go away, not only for you, but for your spouse, using the money you've already put aside, by the way. It's not like you have to make money to put this. You've already got the money. You've got it in your 401ks a lot of times, but you have a lump sum there. So we have to convert that lump sum into what a monthly or yearly income would be from that for life. An income that will never go away, an income that could increase as we are still working. We can be working and have that income account continue to grow. And it ties itself to the stock market on the upside, a stock index,

11:12 but it never goes down. So when the market goes down, you don't get anything but a zero. If the market goes up, you get the share and the gain. And then when you decide to flip that income switch, you have income forever. So that is the most blaring weakness in most people's plans is they don't have an income plan. So I always say, if you don't have lifetime guaranteed income built into your plan, you do not have a retirement plan. You've just got a financial plan, which is okay. That's step one, getting money put aside in a financial plan. But step two, the most important step is converting that to lifetime income. Well, I agree with that, Coach. And unless you got $10 million in the bank, but even $1, $2, $3, $4, $5 million in this world, we've talked about how prices can double or triple

12:01 over a 30-year retirement. Yeah, you better have something besides Social Security that you can't now live. Correct. Right? Yes, absolutely. And the thing is, is a lot of people want to run to cash, you know, liquidity is good, but you can't live on idle money. You've talked about, Coach, losing money to inflation and these things. And you need to have that method that still gets you a return without giving you all of the headache, you know, as my mom has experienced in risk of the market. Yeah. Well, idle money is like having that lazy roommate you had that would always leave the dirty dishes in the sink. And so you need to make sure that your money works for you just as hard as you did to get that money. And a lot of people forget that. And how does the money work for you? Well, if it can give you lifetime income you never outlive, you've got what we used to call a pension

12:47 now. And that's what kept our grandparents and aunts and uncles from back in the day when they were enjoying their retirement. That's what kept them from worrying because they knew they were going to get a new check every month. And that's an important thing that most people overlook here as we approach retirement in this modern age of turn the TV on and watch Kramer and watch stocks all day long up and down. And then you always feel like you're missing something because you're not in the newest hot stock. So you sell your good stocks and you convert to these hot stocks and then you lose all your money. And you forget about the main thing is converting some of that money to lifetime income that's not tied to the stock market on the downside. Very important to get those income plans. Yeah, I totally agree with that. And yeah, it also, as you say, Coach, this is can often be a matter of just deploying the money that you have. So you know, you said perhaps

13:36 it's in your 401k. Sometimes we see, hey, somebody, you know, big box advisor or 800 number firm put a portion of folks' portfolio in bonds, our bond funds. And these bond funds are actually basically flat or negative over the last like four or five years. They all got crushed during the big inflation in 2022. Correct. And it's instead, you got to make sure all your assets are being used effectively. So sometimes you could just take some of that. You don't want to have any dead money in your portfolio. Take some of that dead money and turn it into something that is income producing. Right.

14:22 Right. And again, I think that's what inspired you to write the book. Wall Street's not your friend because Wall Street's about Wall Street, not about your safe and comfortable and reliable retirement, is it? That's absolutely right. No, Wall Street is about, you know, and I was on some of those fancy trading desks back in the day. But, you know, just like the those casinos in Vegas weren't built on winners, neither were the fancy buildings in Manhattan and Boston and everywhere else. Right. So, yeah, no, they're looking for their own edge. And the good news is with the right tools and the right guide, you can find and put together a plan that actually is tailored to you. It avoids, I tell people there's about, you know, five things worth investing in and about 10,005 not worth

15:13 investing in. And the key is to know which ones to avoid. Yep. And so we offer folks that chance, to come in and actually work on a real plan. Let's let's hear how that works, Thomas. Yeah, I agree with you. The thing is, you don't need to be Googling retirement or GPTing retirement. Folks out there, you have worked so hard for your money and you deserve a true map from a fiduciary planner, someone who doesn't just have one tool in their toolbox, but really wants to make sure that you have a holistic plan looking at what you need as you head into retirement. The number to call to get your own questions answered by the team here is 800-661-7383. 800-661-7383. You can also text keyword plan to the number 600-700. That is plan to the number 600-700. And what's going to happen

16:02 is we're going to be able to sit down with you and simplify the complexities of retirement planning into clear, actionable steps. And you're going to receive that tailored financial roadmap that we like to talk about that shows you not only where you are now, which is important to understand clearly, but also where you need to go. It's a chance to have that real conversation about your retirement and make sure that your plan really is aligned with your goals, your dreams, your risk tolerance. The number again, 800-661-7383. 800-661-7383. Or text keyword plan to 600-700. Welcome back into the program. Having a great conversation here. We're going to continue with Russell Hackman, author of Wall Street is Not Your Friend. I'm consumer advocate Thomas Lipscomb

16:47 here in the studio alongside Dave Perkins, as well as bestselling author, Coach Pete D’Arruda. Now, guys, we have had a lot of great conversations together. And what I want to talk about today is interesting. It's the turn off the TV strategy. And, you know, the more you watch CNBC or whatever it may be, the more your blood pressure owns, let's say, some stock in Lipitor. And I think my mom can relate to this. You know, she's called me. She just headed into retirement in the last couple of months. And as she's headed into retirement, she said, Thomas, I want to understand what's going on here. You know, my father, my mother, whomever, had pensions, they had their investments, and they kind of knew what was going on. All I have is this 401k with a health insurance company that she worked with. Is she more in tune since retiring to it? Well, after getting a plan together. And

17:37 that's the thing is, is obviously I have great connections here with you guys. She's come in, she's gotten that plan together, and she feels so much more secure. She actually transitioned about, oh, it's been about a month now. And she's very, very happy. She says, Thomas, you wouldn't think your time would fill up as much as it does after retiring. Right. But let's talk about this. I want to talk about the idea of turning off the TV and that strategy of not letting those everyday headlines become your everyday concern. I just paused for one second. I was just blanked out for one minute, but you just teed me up to talk about the TV plan, turn off the TV plan. Yeah. Yeah. Okay. All right. Perfect. Well, here we go. So yeah, turn off the TV plan. Well, as you allude to Thomas and the coach,

18:23 I'm sure you'd agree with this. Yeah. People spend too much time watching financial television and also just news in the first place. Right. And there's actually a friend of mine. I know she's sort of semi-retired and all that she watches is the Hallmark channel. You know, the Hallmark channel is good because every story is happy in the end. Right. Yep. And so, but if you turn on the, you know, CNBC, if you turn on the news networks, it's obviously it's the opposite. Right. Cause they, they thrive on scaring you. Right. Or as coach sometimes points out saying, Hey,

19:11 why don't you buy this hot stock and everyone's getting rich and buying stocks, but you, right? So we coined a term, turn off the TV plan, which is, which comes after you come in and sit down with our team or coaches team, you make sure you have an adequate amount of safe assets. They're going to be okay. No matter what, uh, in, um, in terms of, you know, if the market takes a big hit, these assets are going to remain stable, right. And income producing. And if you have the right amount of assets doing that in retirement, then, you know, to me, the, the, the reason we coined a term is,

19:59 is it like, Oh, Hey honey, I saw that the market dropped 20% today. Well, Hey, turn off, turn that off. And we have in our page, the one page lifetime income plan, turn off the TV plan, which is basically a summary of our plan. We worked on with Russ and his team, our coach and his team. And what it does is it says, Hey, here's how even in a down year, we have the same amount to spend. We're still taking that same, that same vacation. And we have a good sense of no matter what happens with inflation, market fluctuations, interest rates, that with the right tools and the right partnership, we know that we're going to be okay, virtually no matter what. Now, no one can prevent us all from

20:48 being hit by a meteor, right? But in that case, you know, we're going to have bigger problems. And I encourage people to, you know, give us a call, give coach pizza team a call that what that does is that allows you to, you want some boundaries to know that you're going to be okay. Right. And I think that's the biggest thing that is missing from wall street is they're kind of like, here's your portfolio. I'm managing it. Here's your, you know, rubber chicken, 25 page, you know, plan with, with multicolored graphs in it. And don't you feel just fine. And most people come in and talk to me and my team and say, well, no, I don't really feel just fine. How about you, coach?

21:37 Yeah. I mean, feeling is not, is, is not a good thing. I mean, you need to have proof. And why, why do you feel fine? Well, I mean, if you don't have an income plan, Russ, you shouldn't feel fine because you're going to go to retirement. You're going to start taking money out of your stock accounts. If you don't have a real income plan and you're never going to have fun because you're always going to be worried if you're taking too much. And if the market's in a, in a downward cycle, you're never going to be able to come back because you're going to liquidate those losses because you need the money to live on. That's why we can't have all the money we need for income in the stock market, period. And so if you want a real income plan, Thomas, tell folks how they can get that real income plan. Yeah, I'd be happy to. It all begins with a conversation that discusses where you are right now and where you want to be in retirement. To begin that conversation, start it with a phone call, 800-661-7383, 800-661-7383. We also have a great way you can

22:28 text us. Maybe you're a bit of an introvert like me, or you're in the car and you just want to start with that text message. Get the conversation started. That's the most important thing more than anything. And that keyword is plan because that's what it's all about. Keyword plan to the number 600-700, plan to 600-700. That number again, 800-661-7383, 800-661-7383. You know, guys, while you've been talking, I've tried to pull up some stats here. And it's interesting. Did you know that people who check their portfolios daily earn 40% less on average? I had to pause there for a minute. I was shocked by it. Well, the worst enemy of the investor is themselves because emotions get in the way and the fog of war, they call it. When you're watching a stock go down, you might make some bad decisions. When it goes up, the same thing. You might start buying more when it goes up.

23:17 What we see is people usually sell when it goes down and buy when it goes up. And it's exactly opposite about what Warren Buffett always said. It's the truth, though. I have Morningstar here says investors trade four times more after negative news weeks. So there you go. What do you think? Right. And Wall Street loves that because they just, when you trade, they make money, right? If you avoid short-term trading, then you make money because you make money off things that generate income. You make money off the companies that produce profits, right? But if you try to do a bunch of back and forth, back and forth, you're just competing with a million other people, some of whom are just, and about a thousand computers, by the way. And you're trying to add value when there really is no value to be added.

24:08 If you're paying someone to manage your money, they better be managing your money. That's all I have to say. We see a lot of folks that are just collecting fees and not doing anything for their clients, and that's not good. So again, get the plan that is something you deserve, the plan that's going to be one that's customized for you. I know, Russ, you do a great job of customizing plans, folks. So if you want to get your customized lifetime plan that not only has income, but also has proper balance of where your money is right now, where it should be, and keep some money in the stock market, but has true managed growth attached to it, or the attempt or the chance of managed growth, wait, that has true managed growth attached to it, Thomas, that's what they need to get. So call right now and get an appointment with Russ and his team. All right, folks, listen, if you're wondering if your retirement plan is set up to handle these future challenges, the number to call is 800-661-7383, 800-661-7383, or text keyword plan to the number

25:01 600-700, plan to 600-700. Welcome back into the program, having a great conversation here, going to continue it with Russell Hackman, author of Wall Street Is Not Your Friend. He's with Hackman Wealth Management. Also in studio with me is Dave Perkins. I'm Thomas Lipscomb, and leading the charge bestselling author, Coach Pete D’Arruda. And today we're going to be talking about why today's annuities aren't the lousy ones you've heard about. And I think this is going to be a great conversation because I think a lot of us can hear a rumor or think something and apply it across the whole spectrum of things when it's completely not true. I think of like, you know, eight tracks. They were clunky, they were confusing, hard to get in and out, but that doesn't mean music is bad. Right, right. Or that other forms of ways to get it were bad. Exactly, exactly. So let's start

25:53 at the beginning where, you know, not everybody has, you know, a bad taste in their mouth with the word annuity, but for those who do, why do you think that happened? Well, I mean, for one thing, there's some money managers out there, we'll leave them unnamed for now, that basically market against annuities and say, hey, and they just sort of wave their hands and say, hey, all annuities are terrible and too expensive. And what you need is us charging you a point and a quarter, a point and a half forever. So there's a lot of self-serving advertising. You know, number two is there are some previous generations of annuities that were kind of lousy and some people are still in them. And, you know, if you're out there and in these, don't fear there, there are remedies out there,

26:43 but there's a class of products that call that's called variable annuities, right, that can have like 3% fees again, you know, an annuity is just an investment contract with an insurance company. So when you did, when you generalize and say just, hey, annuities are terrible, you know, that's like saying all mutual funds are terrible, you know, it's just not true. And, you know, today's annuities, as Coach and I talk about, you know, they can give you guaranteed lifetime income for you and your spouse. And someone, and by the way, if something happens to you in the early years, your beneficiaries, you know, get the money. So someone tell me what's wrong with lifetime income, right?

27:31 Well, you know, it's misunderstood, but you have some, a lot of folks on the radio or in the media that are talking negative about annuities all the time. Matter of fact, I used to be a Dave Ramsey, SmartVestor Pro. And I decided to resign last year because Dave kept slamming annuities all the time. And I said, Dave, it's malpractice to be saying bad things about annuities all the time when you're cheating people out of a lifetime income by saying that, because a lot of people do whatever Dave says they do. And then it turns out Dave isn't even licensed in the financial world to be giving any advice. And therefore people are, it's sort of like a guy who's not a doctor telling you to cut your hand off if it hurts. It won't hurt anymore. Got some leeches for you. So I just couldn't, I couldn't stand it anymore. I said, it doesn't make any sense for you to be slamming annuities. Now I said, I did admit there are some bad annuities out there, but they're not all bad. Sort of like,

28:21 you know, I had a bad car once. I had a 1968 Volkswagen Bug. I had to push start it. I had to push it, jump in and pop the clutch. But just because I had bad experiences in that car didn't mean I never bought a car again. Cars have improved every year, just like annuities. So if you haven't looked at an annuity in the last 10 years, even the last five years, you're cheating yourself out of a potential worry-free retirement that you're not going to get in the stock market. And I would love to focus on that because that's really what it's all about. People can focus on a name, but what we're trying to do here is drive a solution to a worry-free retirement. And the way that we like to focus on that is by focusing on two aspects of a retirement plan in general. That's the core, that's the explorer. And unfortunately, social security can't help us completely satisfy

29:06 our core. And this is where elements like the annuity are able to come in and be that superpower to fulfill that. Isn't that right, Coach? Yeah, it's just important. I mean, you know, superpower is a good thing. I've pictured missile silos. So you've got plenty of income missiles, missile silos when you have the income annuity. Every single year, it reloads it and then it fires off more income. You're never going to run out of money if you have a lifetime income annuity. And nothing else, Russ, nothing else I know of, your piggy bank will run out of money eventually. Your stock market, if it's stocks, especially if the market's down, your bonds, cash them in, they're gone. Savings bonds, everything runs out except for a lifetime income annuity. So now it's not a perfect fit for every part of your money, but for money you're going to need for income, we need to figure out how much income you need. And then let's

29:51 make sure we get you that income with 100% certainty it's going to be there every single year for the rest of your life. Now, that's not rocket science. That's just common sense 101. And a lot of people overlook that, again, trying to chase the best returns or listening to the wrong people on the radio, unfortunately. That's absolutely right, Coach. And it's not like you own no equities when you have a lifetime income annuity. You can have 30, 40, 50% of your money in equities, and you should have a decent amount because that really helps you keep up with inflation over the very long term. Correct. But you can't be having 70 or 80% of your money in stocks and funds, or you certainly

30:41 shouldn't be having any money in bond funds. That's just dead money. And if someone wants to explain to me why bond funds are better than something that pays lifetime income, I mean, I think that that's just a debate that's over before it starts. Well, in the money world, it's widely known that we should follow something called the investment rule of 100. And it takes your age. Whatever your age is, put a percentage after that. So I'm 59. So 59% of my money should be in a safe place. Well, if I'm going to be in a safe place, I might as well have lifetime income with that safe place. So 59% of my money should be in a lifetime income annuity. And so again, rule of thumb, if you're a very big risk taker, you love to go to Vegas every couple of months and lose money, then maybe you don't need as much money in safe places. But me, I never want

31:27 to have to worry about where the money's going to come from. And I never want to have to worry if the money's there at all. And so I really do endorse the lifetime income annuity for the retirement plan. And so Thomas, tell folks how they can get their own review. And we will go over the complete investment rule of 100 with them and put together a total retirement plan that does encompass some of the lifetime income plans in there. And that's why I'm proud to be here because it's all about that total retirement income plan. Folks, pick up the phone right now and take advantage of this opportunity to speak with a true fiduciary advisor, not someone who's just going to take that one hammer off his tube belt, but someone who truly has a range of tools to be able to help you create a balanced plan. The number 800-661-7383, 800-661-7383. You can also text keyword plan to the number 600-700. That is plan to the

32:18 number 600-700. Now get this statistic. And you're going to call me out on this, coach. I know you are, because I'm going to say AARP. And you're going to say, what does that mean? Because we define our terms. Is it the American Association of Retired Persons? Anyways, I haven't joined yet. I don't know. Get this. Six in 10 retirees wish they had invested in a safe product sooner. That's experience right there talking. Well, because, I mean, we get caught up in the euphoria of a market going up. And so we throw money in. We never should have put in there. Then we don't realize it until the market's way down that we made a big mistake. So don't make the mistake. Let me tell you right now, before you do it, don't do that. You know, again, have that proper balance that Russ talks about. Have the proper plan. Have a total retirement plan that has risk, safety, and lifetime income. Thomas, everyone

33:06 listening is entitled to that if they call right now. All right, folks, let's do this. Listen, Wall Street bets on volatility, but Russ and coach can bet on sleep at night. Income is how you win the game. The number 800-661-7383. 800-661-7383. Or text keyword plan to the number 600-700. Plan to 600-700. For Russ Hackman, for Dave, for Thomas, and for Jose, it's Coach Pete. We'll see you next week right here on the show.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the program. Coming up, we're joined by Joe Casey, who just got back from CES 2026 in studio with me. Consumer advocate Thomas Lipscomb is America's wealth coach and best-selling author, Coach Pete D’Arruda. Thomas, what do we do on our show? We define our terms. Yes, what is CES? Oh, please don't. Joe, can you help me? Consumer Electronics Show, Thomas. That's right. That's absolutely right. Consumer Electronics Show, where they show all the neat stuff that's coming up that you can't afford. Yeah, exactly. And they tease you because a lot of this stuff's not available yet, probably. But I didn't go, and it's been a long time since I went to CES, probably about 10 years, a decade. But back when I was growing up, my dad had computer stores, and we would go to a show once a year in Atlanta and Vegas called Comdex.

00:47 It was a show with all the new computer stuff that was coming up. Nice. I was geeking out there. But, Joe, how was the event? Was it worthwhile attending? Absolutely. The event was eye-opening. And, you know, I thoroughly enjoyed it. Saw a lot of cool stuff. I mean, just like you said, stuff that's not available yet, but is coming. And got to play off a few gadgets. And, you know, some of the things, and, of course, I won't get into it just yet, but some of the stuff that I just walked out of the CES show and said, you know what, I understand AI now much, much better. Well, yeah, right now it's just basically a Google on steroids is what AI is for most people. But what do you see AI becoming here in the next, let's say, five years and a decade?

01:34 Well, I see it really being a game changer. You know, when you look back at the Internet and when the Internet came out, it gave such usability. It gave companies a way to scale. And you see companies today coming online. I kind of like to look at it like, you know, like Starbucks. Those are what I call atom companies. Those are companies that have to have thousands of stores to, you know, service millions of customers, right? Well, today, AI, you're able to deploy very, very sophisticated software using a cloud base. And companies are able to scale like nothing you've ever seen. I mean, they can go to these billion-dollar valuations literally in a very, very short period of time.

02:21 And just to hear about what AI is becoming and what it is, it just opened my eyes. This year was fantastic. So when you're a startup company, one of the main problems is finding enough people to help you get to become a big company. So I think AI can eliminate that need for a lot of employees, can't it? Absolutely. Absolutely. And, you know, when you look at AI's, the trajectory of AI, and of course, I'm guilty of just using it for, like you said, Google on steroids, going to chat GPT and asking, you know, can you reword this letter for me? Yeah. And, you know, that's just the way I've used it. But there's so much more application when it comes to AI. So who were the big attendees, like who had the biggest booth there at the CES? I would say NVIDIA probably had the biggest display.

03:09 Okay. They had all of their robots and cars. And probably the most interesting thing that I saw, which I saw a lot of interesting things, was the Tensor. I don't know if you've heard of that name before, but Tensor has a robo car that you're going to be able to buy. And this is an autonomous, a Gen Tech type of AI that basically the steering wheel disappears, the foot pedals disappear, and this thing takes you to where you're going. And it was absolutely mind-boggling to watch this. It was just like out of a sci-fi movie. So do you get in the car and you see the steering wheel and the gas pedals and they disappear in front of you? Or do you mean they're not even there to begin with? No, no. They're there. You can drive. Oh, okay. And then when the car takes over, the steering wheel pulls into the dashboard, a screen goes over, the pedals disappear into the floor.

04:00 And that way the driver can't, you can't do anything. Yeah. You just sit back and enjoy. Keeps user error from happening. That reminds me of the movie iRobot with Will Smith and the police were coming after him and the whole car basically could shut itself down. Yeah. What was that show, the movies that the kids liked with the Transformers? Yeah. Where things were turning into different things right in front of you, right? Yeah, totally. Wow. That's pretty cool. Did they have rides available in that car or was it just a display thing? You know, they had it displayed in the Fountain Blue Hotel, and I'm sure at some point, you know, certain folks probably could take a test ride. But it wasn't there for me to do the test ride. I'd love to have done it, but it was in the hotel. You could get in it. You could check it all out.

04:45 It was amazing. The Fountain Blue is an amazing hotel over there. It's a gigantic place. It's a gigantic place. Exactly. You know, I have an office in Vegas, so after work that day, I went over to Capitol Grill, which is right across from, like, Wynn and all the, like, where all a lot of stuff was going on. And in the bar, I looked around the restaurant. I didn't see a single woman in that restaurant. It was all techie kind of guys, so that explains it. It looked like a bunch of NVIDIA guys in there at Capitol Grill. Well, that would explain it for sure. Now, NVIDIA had probably a big display, too, right, because they're a big AI company with the chips. Oh, yeah. Yeah, they had, you know, some of their servers out there. They had some of their robots. They had some video of, you know, futuristic goals that they're pressing toward.

05:33 And, you know, just a huge display. All right. So autonomous cars, that's what I think about the future. You know, that would not have surprised me when I go to CES because you see the futuristic things like that, a lot of AI stuff. What really surprised you? Like, you weren't expecting to see at CES this year. Well, I would say, you know, obviously, AI was going to be there, no doubt. Oh, yeah. But probably the thing that it wasn't, I guess it wasn't so much of what I saw. It was the impression that I took away. And it was like embracing AI as more of a platform that you put in your business, that you put to work in your life.

06:19 That was probably the greatest thing that I took away. Probably the coolest things that I saw was the RoboCar. That was off the chart. A lot of the smart glasses. I don't know if you've ever tried those, but the smart glasses, especially if I was a retiree, I'm 52, the smart glasses is going to be a game changer. If I was a retiree, you know, 60, 65, I'll tell you right now, I would 100% get these smart glasses because they're freaking amazing. I don't know if you've ever tried any. Well, if you haven't. I bought them twice and never used them. I got the first generation, and then I just got the, well, I didn't buy the second one. I got it as a gift at Christmas time, but I haven't ever used them. But I have seen online, there are some, like, non-name brand smart glasses.

07:07 You know, you get these ads on Facebook all the time. One would translate for you. One would tape every single minute of your day just in case you forgot what was going on, which, again, is good for people as we get older, we forget things. So you can't say you don't remember anymore. So you just look at it through the glasses and say, hey, remind me of what this looks like. So I don't know. I kind of like playing dumb sometimes. For sure. Not going to be able to do that anymore. Check. All right. Personal robots. Go ahead. Sorry. I was going to say another thing I saw that was good because I brush my teeth. I know it's kind of corny. But I brush my teeth. I floss. But I hate doing it. But I still do it two times a day. And they had toothbrushes there that you were able to brush and floss at the same time.

07:54 And so it was made by company Soccas. I believe. S-O-C-C-A-S. And check that out if you ever get a chance. It was really, really cool. C-C-A-S. S-O-O-C-A-S. Yeah. I can't pronounce it. Now, that's pretty funny because, I mean, in order to, because there's a gap between your teeth, that's where the floss has to go. So how does it know that? Does it have a camera built into the toothbrush? Well, it has a water. It has a water spout on it. Okay. Yep. That it shoots the water between your teeth. Okay. Well, I have one of those things that squirts water into whatever you call it. Water pick. Water pick. Yeah. Water pick. And when I used to use it, I would never have cavities.

08:40 So it really worked. I have to go to the dentist tomorrow. Well, I was really impressed. You've got the brush and you've got the water pick all in one. And I'm definitely going to get me one of those and try them out. Yeah. Well, that makes sense. I thought you were going to say you just put it in your mouth and it brushes your teeth for you and then you spit it out when you're done. That's the next generation. Nanobots going in and just doing their job for a few seconds. Now, speaking of bots, what kind of personal robots did you see? Well, you know, they had robots folding clothes. They had them moving dishes around in the kitchens. And so a lot of, you know, homemaking type robots that I found very cool because, you know, most of the ones you see are the ones that's, you know, sweeping up the floor. Yeah. And, you know, the little black thing running around.

09:27 We have a couple of those here. We have a couple of those here. You know, I think of when you talk about folding clothes, I think about the Jetsons. Rosie. Rosie was a little maid robot. And so one thing I hate doing is laundry, but I do my own laundry and I really hate folding. So that would be, I would buy a robot today if they would get promised to fold my clothes and hang them. Well, it was a little slow, but I could see over some time that the technology is really, really going to emerge. Now, I met the new owner of Napster while I was there. And, you know, Napster, you know, you remember from the 90s. Yeah, a long time ago. Yep. This guy, he bought the Napster company and he now, that program now, you can use it for

10:12 like young artists. Any artist could use it. And basically, it will take your music that you're making and license it. I mean, it does the whole thing for you. It's really, it's something you probably should check out at some time. That's pretty neat. You know, I remember Napster. I mean, that was the first place I got free music from back in the day. Exactly. That was me too. Yep. Me too. That's great. It's the whole industry and the industry has not stopped since then, really. That's true. How about new players? I mean, like Napster's a new player from an old name, but what about the new ones that are coming that are like, all right, so we got the robots, we got the cars. Oh, Thomas wanted to ask about TVs. Oh, yeah, yeah, yeah. So, I saw an announcement that, and I'm not sure the brand, it might have been LG, but they did a wallpaper television that was less than a centimeter thin.

11:01 Did you see that? Yeah. Yes, yes, that was really cool. I took a bunch of pictures, got some info, and that's something that I'm very interested in purchasing. Yeah, that's pretty amazing, isn't it? I mean, the technology. Absolutely. And there were several different brands there. You know, they had some from China, some various places, but yeah, your major TV brands were there. They had their displays, but the TV, I mean, that screen was super, I mean, you could literally glue it to the wall. Wow. It was crazy. What do you think the price point for something like that's, I guess, a good, the size? What about a 50-inch one of those? What do you think those are going to go for? You know, it's going to be hard to say, but I would say at least, at least, probably you're

11:46 in the lower thousands at this point. Wow. But that stuff will come down quickly as more competitors emerge. You know, we just ordered 200-inch ones for our new auditorium we have on our third floor, and one of them was cracked when we got it, but we didn't know it until we opened it four months later. Well, now you're going to be able to get just these panels and just lay them out across the wall wherever you want. That's amazing, isn't it? It's true, though. It's amazing. Yeah. Well, we grew up with the big, fat TVs. Remember how heavy those were? Oh, yeah. The 32-inch one was gigantic, and it took two guys to move it. Yeah, yeah. Crazy. The tube. Remember the big tube? So we got rid of the tubes, and we had plasma. I mean, I haven't heard the word plasma TV in forever, have you? I mean, those are the big things that never really came.

12:32 Sort of like Blu-ray. Remember, Blu-ray was out, then it was gone. Yeah, that's true. I mean, it's funny how fast things change. I mean, I grew up in, I missed eight-track cassettes, but I had regular cassette. That's what Columbia House was nice enough to send me a bunch of times. The cassette tapes. I still got my collection. I've got a big old tote tray full of them. Nice. So how big was this? Did they have it in the convention center, and they're already spread out to different hotels, or did they have it all over different hotels? That was a little overwhelming. You had several of the convention halls set up, and then they had five of the major hotels. They had speakers and panelists off and on all day long. I thoroughly enjoyed listening to some of the panelists talk, and just hearing some of the techie guys

13:21 and some Hollywood producers and CEOs, just hearing them all collaborate together was very powerful. Well, you know, Hollywood's not going to have to have these gigantic scenes anymore. They're not going to have to pay a whole bunch of people. They'll just have it all in CG. Well, something more advanced than CGI, but they'll be able to do it all on a computer. Sort of like Game of Thrones. Game of Thrones did a lot of that, by the way, too. They did a lot of the graphics added on. One of the gentlemen from Warner Brothers, he was talking about that. I don't know if you know this yet, but they're coming out with a Barbie 2. That's what he said, that they're making the Barbie 2 movie, and it's going to have some of these effects and all this stuff in it, and it's going to be really, really good. Pretty amazing. Now, tell folks, you're not just a normal person that's going to CES. You've got a pretty big tech background. Where'd you go to college? Well, I went to Ohio State, and I've attended MIT, and I love tech.

14:11 I love digging into the stuff. I'm the guy that wants to know how the watch works. I get it. Now, you said Ohio State. Usually when someone says Ohio State, they say the Ohio State. The Ohio State, yeah. Thomas, you've heard that before, right? You watch any football game when the guys announce where they're from. The Ohio State. Which I've been to Columbus. It's a nice place. I mean, I've been to Notre Dame, too. Those are like nice college towns. Yeah. Yeah. I had a subway store not far from campus there on 23, and it was the number one subway store in Columbus because of the college. There you go. It was good old days back then. Nice, nice. Now, you were looking at a lot of things there, and I'm sure, because you're a big investor, too.

15:02 You like to invest in stocks and play the market the right way. Do you see any – did you notice any maybe small companies that no one's ever heard of that you might think are ready to explode with the products they have? You know, I'm still compiling that thought. I'm doing some research, and, you know – Thomas, he doesn't want to share, in other words. He's going to his beard. When he goes to his beard, you know, he's thinking. Contemplating, contemplating. No, I mean, it's pretty neat, though. It's a great way. Oh, yeah. I mean, anyone who's up and coming is going to be at CES, and if they're not there, it may not be tomorrow, but it may not be next year. But the next five years, some of those companies you saw are going to be big names. Oh, absolutely. And, you know, the one thing that I'm looking for when I'm looking for these types of investments, I'm looking for people that have big vision and that are looking to be a disruptor.

15:59 You know, you take Elon Musk. You know, his goal is to colonize Mars. I mean, that's just like way up there. And, you know, these companies, fortunately, you know, when you aim high, that, you know, you might not hit the stars, but you're going to get into the atmosphere of space. And that's what – when you're looking at these companies, seeing the technology and hearing their ambitions, you know, do they have an open architecture that you could see this company really, really making some waves. And I think a recent example – And really the cloud – I would say a recent example of that is NVIDIA. We just had a clip on our show recently where the president was talking about because we provide the chips to everybody. They're that foundational structure. Yes. Yeah. Well, that's important to get those kind of companies.

16:44 But then also the ones that are – no one's heard of yet. Exactly. And then all of a sudden everyone hears about. But it's too late to get in almost. So true. So true. It's the meteoric rise, they call it. So how about Elon's tunnel? Did you get a ride down there in his tunnel? You know, I didn't get in the tunnel, but I saw cars coming out of it, and I was very impressed. I wanted to get in there, but it didn't happen. C'est la vie. What was your favorite interactive display? Because, you know, a lot of these companies spend millions sometimes on their displays. Oh, yeah. Well, one of the displays that really caught my attention was they had a display there where they had an omnidirectional treadmill. And there was a guy that was in the VR suit, and basically he was in Ready Player One total.

17:31 I mean, he had the whole getup. And, you know, they had a bunch of demonstrations going on, lots of people in those suits. And I was watching what they were seeing in the TV, and I thought, oh, my God. Gaming is coming a long way. And this is the evolution of the gaming industry right here. You know, when you think about gaming growing up, it was the fat kid that would just sit inside and play on the, like, sit in front of the TV. But now you have interactive gaming where you can get in shape by playing games. And that makes sense. I told Thomas, and Jose, you've probably heard this too, back in the day I played a game called Halo. Oh, yeah. Halo was on the Xbox back then. And my rule back then, and my bedroom was underneath my workout room, so my wife would hear me because I'd start playing the game like at 12 at night and go all the way.

18:19 But my rule was I had to ride the exercise bike while I was playing Halo. Nice. So it's funny. So when I started being chased, I would pedal faster, even though it had nothing to do with the game. But I was in really good shape, so I made myself work out to play the game. But now you're going to have to work out to play the games because if not, you're going to get killed too easily. Yeah. So it makes sense. Yeah. Good incentive. One thing that did stand out too that I just, I don't know, I just never had thought of this, but listening to a lot of the CEOs of these different companies speak and some of the producers at Hollywood, they are bringing influencers out now and allowing them to stream from the TV set. They're bringing them into these companies and allowing them to stream to their audiences.

19:09 And that's how these movies, they clearly said it. That's how these movies go through these huge ticket sales prior, you know, as the movie's coming out because they let these streamers are coming in. And I thought that was very, very interesting. You have to build the excitement because back in the day, they would maybe six months before a movie would come out. You started hearing about it. Then you started seeing advertisements on TV. But it would be like a six-month runway into the movie. Nowadays, the movies don't even go to this theater a lot of times. They come right to Netflix or Amazon or something like that. So everything's changing. And influencers are becoming a big part of that too. Oh, big part. I was very impressed with that. One word I'll drop in there for you is agentic AI. It's something that you probably want to get to know better. That's going to probably be a trillion-dollar industry before you know it.

19:59 And that's something to really, you know, explore, find companies that are focused on agentic top of AI. That's going to be your autonomous top AI. And that's going to be the big, big thing here down the road. So AI without you having to be around, I guess, right? That's exactly it. Okay. A self-driving car, for example, would be agentic AI. Okay. That's what we always hear about, self-driving car. What else could we, like, what other? You think it would be self-driving planes down the road? You get on a plane and there's no pilot up there? You know, I'm sure that'll eventually be the case. It's kind of scary. I don't want to be that first few guys that get in there and, you know. So anything else that excited you during the show?

20:46 You know, I just going through and just seeing the technology, seeing the massage chairs, that was pretty exciting. Because now they've got them where they'll stretch your whole body out. And so that was pretty nice. Really, just being overwhelmed is probably the word. You can only see so many things before your brain's just, ugh. But it was so many cool things. There was a couple. Oh, I'll tell you something that I saw that was really interesting. And you may have seen these before and you may not have. They had crafts there that are full size. And you can put one or two people in and fly them around.

21:31 It's a giant drone that you can fly your body around in. Like, I could buy this thing, get in it here at my house, and fly on the other side of town to my buddy's house. That would come in handy in New York City where they have a lot of traffic, wouldn't it? You know, you just fly over the traffic. Oh, man. That's pretty neat. I couldn't believe what I was seeing. When I was looking, I was like, wow. Either I'm behind on my knowledge here or this is new. So do you get in it like, I remember Orville and Wilbur Wright, they get in there like Superman. Is that what you do? Is it big enough? It's a big drone, then. It's a big drone. It's got big blades on it. And I'm sure it has some limitations, but you can literally get in this thing and fly over to your buddy's house. You've got to make sure you don't cut somebody's head off with those blades, too, right?

22:17 Oh, yeah. Yeah. The blades were no joke. They were huge. What is it? Battery-powered, I guess, right? Yeah. So did it have new battery technology coming out? Did you see anything like that? Because that's always a big thing. You know, I didn't see very much on that. I'm sure it was there because, you know, obviously the battery is powering all of our stuff. We want better and better. You know, Jackery had some great solar batteries there. They had a huge gazebo design that you can buy and put in your backyard. At the same time, it's a whole charging station. So that was kind of cool. That's pretty cool, yeah. How much was the big drone that could fly you around? I'm interested. You know, I didn't see the price on that. I didn't see no price out there.

23:03 I just think of the last time I tried to fly a drone. It would be like me real life morrowing something. Oh, my God. Well, we had Caesar in our office. He got his drone stuck in a tree. I wouldn't want to get stuck in a tree if I'm in a drone. Oh, my God. You heard about your cat being stuck in a tree. You had to call the fire department to get the cat out of the tree. Now you have to call the fire department to get people out of the tree. Get people out of the tree. Well, my husband's in the tree again. All right, we'll be right over. That's good. That's good. So how did they have the show? I know you said it was spread out all amongst a bunch of different hotels and the conference, whatever they call it, the convention center. How did they have the booths divided? Did they have them in different sections? Like you went to Tomorrow World over here and you went to sort of like Disney. You had different places? Yes. They had it customized by theme.

23:50 And so you could see some of the cars here. You could see some of the health and nutrition things. Oh, that's another thing I saw. I saw this one workout gym. It's called Monster Gym, I believe was the name of. Gym Monster. That's the name of it. And this is the granddaddy of home fitness. It's a very small thing that you can literally fold up, but it's got the technology built into it. It's like having two, 300-pound weights that you can bench press. You can do all kinds of stuff. And it's the whole thing that folds out. And it was made really, really well. I was like, wow. But when you're done, you just literally fold it up and it's like hardly anything. Because that's a complaint a lot of times people have. And they have to go to the gym because they don't have enough room at their house for all that equipment and everything.

24:39 So that's pretty neat. I was really impressed of how functioning this thing was. And you literally pull it out. You do whatever workout. I mean, from squats to bench press. I mean, the whole thing. And then you just kind of package it right back up and boom, it's done. It reminds me of that bed that people used to have. They'd pull it out of the wall and the bed would come out. When you're done, you'd throw the bed back in the wall. That's pretty much it, yeah. But they did have it all divided up by sections. Okay. And it was really neat. So what innovation made you say, why hasn't this existed before? That's a good question. And I would say that it's hard to really pinpoint something. Because I was like a kid in a candy store just walking around.

25:27 The clothes folding thing sounds cool to me. Oh, that's number one. That and the flying, the little drone that can fly from one side of the city to the other. That's neat. Yeah. I would say the drone was probably that. I was like, wow, I'm surprised it's kind of taken this long. Because drones have been out for a long time. Yep. And, you know, and again, I may just be behind in that area. But when I saw that, I was like, wow. The gaming, I'll tell you, the gaming had came a long, long way. Just seeing those people in the full gear. I can't remember the name of what you call that. But just seeing the folks in the VR glasses and the suits. And then watching them play the game on the TV.

26:14 It was just amazing. All right. Two more points and then I'll let you go. But, I mean, your phone. I've always told Thomas, you know, there's going to come a time where we're not carrying our phone around all the time. I mean, it's a burden. But I have my credit cards in here, too. So this is my wallet, basically. But, I mean, is there going to come a time where you don't have to have a phone, but you can still have all the functionality you have with the phone right now? I think so. I think eventually you're going to have some type of futuristic device that, whether that's a band you put around your wrist and it has a small projection that when you hit the button, it kind of pops up and, you know, you got everything kind of almost in the air. Yep. I did see a phone there, though, that was really, really amazing. It was a very, very thin phone that it was like a tri-fold.

27:00 It folded out and it was the size of an iPad. And it was big. But then when you folded it back up, it was basically like this iPhone I got right here. Yeah. That was really interesting. Samsung, it was one of their brands and it was pretty much brand new. So eventually you'll probably see that hit the market at some point. Because you know all these companies are trying to come out with the thing that replaces the phone, right? Oh, yeah. But I guess it's a ways down the road. Now, this wasn't your first trade show. You've been to CES before, right? Yeah. How do you compare this to others? Well, it had been a while since I had been. And this one just seemed to have a lot more action. You just saw a lot more people.

27:46 There were a lot more gadgets. And just I think the thing that I believe really made the difference was the panelists that they had pulled together. And I'm sure they're going to keep doing this more and more in the future. And that was really impressive. So did you go to some of those speeches? Yeah. It was like I went to a conference. I went to a conference and I went to a trade show. What was your favorite speaker? Who was your favorite speaker? It was a panelist that basically was speaking on the future of the coaching and digital marketing industry. Ah, that's cool. And it was a combination of you had a guy there from Twitch. You had a guy. One of them was a Hollywood producer. Substack had a big presence there. I don't know if you know what Substack is.

28:32 It's like YouTube except you own your own stuff. So that was probably some of the highlight of the speaking and panelists. I've told my staff we need to have a Substack page, but it never happens. Yeah. I guess I'm going to do it again. Thomas is getting worried. I see him over there. I was very impressed. The owner of Substack was there and he was talking about where they're at, where they're going, and just how they work with the people that's on their site. So definitely check that out. So you say this year is just more bigger, more faster, more better. It sounds like just everything, the excitement level seems to be higher. I think the excitement level was super high because AI was just everywhere. And if you could just put yourself back in those couple days, you were there for two or three days probably.

29:21 What was the most exciting moment that you had where you just felt excited about the future? Oh, that's when I won. I pulled the handle and all of a sudden this big thing started flashing. It said I won. Oh, yeah? How much did you win? How much did you win? You win a lot? For IRS purposes, we'll keep it under $10,000. Yeah, we'll keep it under $10,000. But I would say probably the biggest thing was leaving the show, I felt like I had a new perspective on what AI is really going to become down the road. And it got me really fired up. I'm thinking about going back and taking some classes at MIT on a GenTech and on some of that AI so that I can better incorporate it into my business and so forth.

30:09 So very excited about it. Well, here's one thing I just forgot. I said it was my last question, but I've got one more here. But blockchain, we've heard so much about blockchain over the years. Were there any blockchain-type companies there showing you what the future is going to be in blockchain? Yes, yes. There were some companies there illustrating some of their stuff and blockchain. Absolutely. And blockchain is going to continue to emerge, especially with quantum computers. And you put blockchains and quantum computers together, that's going to be a huge deal, especially when we have access to it. Yeah, I really think that that's the future of voting. If we can perfect the voter ID, then if people vote on the blockchain, there'll be no more cheating anymore. That's exactly right. And so that's the way to go. One final thing, your favorite restaurant while in Vegas.

30:56 My favorite restaurant, believe it or not, it was just Gordon Ramsay's Burger Bar at the Planet Hollywood. I've heard good things about that, actually. Some of his other places, like Hell's Kitchen is good, but it's expensive and it's a long wait. But the Burger Bar is good. The best steakhouse I've ever been to there is the Golden Steer. Oh, yeah. It's featured in the movie Casino. It's one of the old-timey ones. But it's one of the best steaks ever. So just keep that in mind. You've probably been there before. I'll check that out. All right. His name is Joe Casey, and he's one of the guys that I like to talk to when we talk about tech and also investing. Joe, thanks for your time today. Hey, thanks for having me, Coach Pete. Love it. Look forward to seeing you again soon and hanging out with you anytime, man. Call me anytime. Hey, if people wanted to contact you, how could they do that?

31:41 They could simply just go to CatalystWealthCoaching.com, and you'll find all my information right there. There you go. Thanks a lot, Joe. Take care. We'll look forward to talking to you again in the future. Yes, sir. Have a good one. Bye-bye. Folks, we'll be right back after this. Bye-bye.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Thomas Lipscomb here, consumer advocate in the studio alongside America's Wealth Financial and Income Coach, Coach Pete D’Arruda, as well as Stan Moore, CPA. We're calling him Stan the Taxman. What you got for us, Coach? Well, Stan, all right, so we've got one more segment here on the show, and the tax code is 70-something. I lost track, but 70,000 or more pages, right? And we're featuring good things in the tax code today, and we don't have enough time for everything, but we've got a little grab bag segment here now on things maybe when we were doing the first three segments. We said, God, I wish I would have told Coach I want to talk about this, this, or that. So what are a couple topics we can talk about here? Let's tell folks we're going to talk about, then we'll talk about them. What are two big topics that we haven't talked about yet? Well, we touched on depreciation, but one thing we didn't dig into was depreciation for real estate,

00:46 and one of the biggest things that has been out there for a while, not in the – it's in the new tax code, it's in the old tax code, it's called cost segregation. So cost segregation is basically when you look at business real estate, you think about real estate, what is that? Well, it's land, and then it's the improvements that you build on top of the land. It's both. You can't depreciate the land, so you really can't write that off as an expense, but you can depreciate the improvements, and the question is what improvements can we depreciate? Number one, and number two, how fast, right? Yes. So the cost segregation rules allow you to make a special election, and if you identify assets that fall into younger year categories, like you think about your business, the building that you're in, it's made up of a lot of screws, it's made up of a lot of small pieces of metal, it's things that you could go buy in the store and expense it,

01:36 but once you put it all into a piece of real estate, you think, oh, well, it's just one giant piece of real estate. No, it's not. It's really made of a bunch of little things. Breaking it down to the very ingredients. So if you break it down to the little ingredients, it's kind of like deconstructing a Lego figure, right? If you break it down into those little bitty Legos, there's a certain amount of those Legos, which is usually a high, pretty 40, 50, 60% of those Lego pieces of your building can be written off now, and that's what cost segregation does. It usually entails hiring an outside third party that's a specialist in real estate and identifying all of the screws and nails and pieces that go into the entire building. And when you break down those Legos, we write them off, and the depreciation in the tax code will help us do that. So are taxpayers allowed to amend previous years to claim those benefits as well?

02:25 Great question. Yes. You can amend. Sometimes you'll look at a return and see, oh, this should have been done. They had a bunch of improvements in a certain year. And you can go back and amend that. That's a big one, Thomas. I was wondering. I was wondering. I've been doing a lot of work on the home. If people didn't have a good CPA to recommend it, then they might have never known they could have filed something like that. Right. It's not like something that comes up on TurboTax when you're trying to do your return. Not yet, but it could, right? Yeah, it could. But the tax code that we have had extended for 2025 with that bonus depreciation, that's where all of these assets that have the fast write-off and the fast tax impact, it's happening within that bonus depreciation. So if they had not extended that law for bonus depreciation, it would have hurt cost segregation strategy.

03:10 However, we've got it back so it all works together. So it's a win-win now. It's a win-win. We've got another double dip there on the cost segregation and depreciation. I know about, I think, 2022, you helped me with that on my building here, and we did save some pretty good money that year, Thomas. And we've done some more renovation since then, so we're going to look at that here in 2026, another one, another cost segregation. Absolutely. If you look at this tax- It's good segregation. Good segregation. That's the good kind. That's the good kind. That's the kind we want. But you look at the savings, whatever tax bracket you're in, that highest tax bracket will be the dollars that you save times the amount that you spent within the cost segregation rules. You know, the media will title Stan a separationist or a segregationist. Oh, no. We're all about segregation. We want unity the right way.

03:58 This is a good thing in the money. It's the green segregation we're talking about, the good green. We're going to try to make sure to keep as much of that segregated in your pocket than Uncle Sam's pocket. So that makes a lot of sense. So if you're curious about that, all you have to do is text Stan, because it's Stan the Taxman, Stan, to 600, 700. If you have a building, maybe you've made some improvements or you're not sure if the improvements you made qualify. It never really hurt to ask a question, did it, Thomas? No, it doesn't. You've asked me a couple questions over the years you were probably afraid to ask because you say, Coach, Coach, probably he's going to think I'm dumb. But the dumbest thing is to not ask the question. It's true. My dad was a college professor for 44 years. He said the dumbest questions were the ones people did not ask. There you go. There you go. And so remember, he's sitting in a class and you're always hoping, because you didn't understand it, but you didn't want to be the dummy in your mind, raising a hand, so you were hoping somebody else would raise their hand. And every now and then they did. And you'd say, oh, what a dumb question.

04:44 But you were listening. Exactly, exactly. Well, and that's just being together for each other, working for yourself, not having that high school mentality of, oh, what is the cheerleader going to say if I raise my hand or whatever. You don't know until you ask, right? Exactly. You never know until you ask. But Stan, that's a great point right there, and that's something a lot of people have overlooked. I had overlooked it myself, and that's why I have a tax planner. I'm on call with Mr. Stan Moore, Stan the tax man. So, Stan, that's a good one. We have time just to reach back into that grab bag. What else are people overlooking in their favor in the tax law? Well, Coach, you talk about retirement day in, day out. And the Roth IRA was a great retirement vehicle that was created. And we've had it for a while. However, there's been some strategies that have had to be created legally,

05:30 loopholes within the tax code, because if you make too much money, you cannot contribute to a Roth IRA directly. So there's a strategy that says, hey, how can we get the money into the Roth but still not break the rules? And they've created a backdoor Roth strategy. Now, backdoor Roth is not in a tax code. That's just a strategy that advisors have created. And basically what you're doing is you're taking money, putting it into a non-deductible IRA, so you don't get a deduction. But the strategy is to put it there first, and then if you roll it over from a non-deductible IRA into a Roth, then you've kind of circumvented the direct method into the Roth.

06:17 You're just going through a backdoor. Now, there's still some pitfalls. You still have to do some calculations, and you still may have a portion of it or maybe even all of it taxable, because depending on how much the balances are in your other deductible and non-deductible IRAs at the end of the year, you get those forms, $54.98, it's got the fair market value of your IRAs. We have to do calculations on that to see if any of it's going to be taxable with this backdoor. But it is a possibility, and it's a strategy that you have to look into and weigh out the cost. We've utilized it over the years for clients, and they've come out way ahead when it's in their favor. If it's not, you don't do it. But if it is, you do it. And so the strangest thing is you're putting the money into a non-qualified, non-deductible IRA. So every penny you put in, you've already paid tax on it.

07:03 That's right. And so it's important to remember, if you backdoor Roth it, there could be some more taxes due. But all that money now will be tax-free forever, so that's something to look at too. But again, this is why we call it planning. It's because you have to look at it, do the calculations beforehand. We can make really, really good estimates, especially if we're past halfway into the year and say, hey, what's the cost? What's the benefit? Is it worth it to do it? And a lot of times people want to do this in big chunks. So we're usually talking big money, $100,000, $200,000. And it's like you don't want to make that mistake of missing the boat and having more of it taxed than you realize. Yes. Or miss the boat and maybe not have any of it taxed if you do it at the right time. That is a key strategy. But again, we're back to the fundamentals, blocking and tackling and planning ahead.

07:48 My retirees who are now on limited income or getting income from the retirement plans are the happiest when they have some tax-free money coming to them so they don't have to report on that tax return each year. It doesn't seem like much until you get there, but if you can keep more of the money in your pocket and less to Uncle Sam, you come out ahead in retirement too. Sure. Most people retiring are paying at least 15% average federal tax and probably 4% to 5% on the state. So at least 20%. I mean, 20% of something is going to add up on a monthly basis. So again, we're back to planning. It's the tax strategy. It's making sure you know what's out there and looking ahead. Well, you talk about a senior discount. If you can save 20% on your money in retirement, it's almost like getting a 20% discount. So that's a better senior discount than that 10% that gave me at Biscuitville the other day.

08:34 Absolutely. That's good. So that's a big point there. So if you're curious, folks, if you may be in that situation where you might be able to deduct a lot more money than you realize or build up a tax-free income using the backdoor IRA or the backdoor Roth, if you've never heard about that or you heard about it but don't understand it, now's a great time to call. We'll sit down with you and educate you on all the different techniques and tools that you could qualify for to make retirement a lot more advantageous than you ever thought it would be and having all the income that you can in a tax-free manner. Thomas, tell folks, again, if you call right now, let's do this. Let me hit this button too. If I had a million dollars, I'd be rich. All right. So radio, here's what happens. You get in and out of the car or maybe you're in front of your computer at home.

09:20 You listen. You go into the other room. You get a drink. And you missed me in the first segment when I gave away 26 copies of Tax Savvy Retirement, 250-page book that was written in 2025, all about ways that you may be missing out on tax savings in retirement. So somebody who is in retirement and they are taking advantage of the tax law, they are in a tax-savvy retirement. You're in control, in other words. And so I've got a way you can have the at-home manual on how to save as much as you can. And we've also got the in-office manual. That's Stan, the tax man. But we're going to send you a copy of this book and inside it will be a golden ticket. Will you qualify for your no-cost total retirement plan that includes tax planning and financial and retirement planning as well as income planning, very important, making sure you have a lifetime income

10:05 all the way through retirement. But this book explains a lot of those tools and techniques. Thomas, we're going to mail these books out. I know we filled up these segments right in segment one. So if you joined the show late, you would have missed out. But we're going to offer it again for the next 26 people who call or text. We're going to send you a copy of this book at no cost. We're even going to pay the postage and handling for you. So again, it's a true no cost. And then we'll put you on a list where you get the video series along with this book. So each week you'll get a new video on another chapter from chapters one all the way through chapter 15. You'll get 15 different videos. You'll have your own collection in it and explains the chapter in detail. How many times have you got a book, Stan, and you get it and you put it on the bookshelf and it never comes off the bookshelf again? Very often. Because you really don't know why you should open the book. That's right. So if you look at these videos,

10:51 these videos will tell you what page to go to and why it's important for you to pay a lot of attention to certain charts and tools and techniques in this book. And you're going to become an expert overnight in financial, retirement, and tax law by reading this book. And we're going to direct you on how to find the right information in the book. What a great idea. It's almost like a video cliff note version. And so, again, for the next 26 of you who call, you're going to get this book and you also qualify for a tax plan if you're a business owner and you meet what Stan's looking for and you guys can make an agreement there. But you also get a no-cost total retirement plan as well. Thomas, this is a great gift. This is awesome. We're keeping the gift-giving alive here in 2026. I love it. So this is celebrating our 250 years as a country coming up here. Amazing. Again, I've been to Uncle Sam hat on the book. So now, the next 26 people,

11:37 you can have this book as well. All right, let's go, let's go. That number, 800-661-7383, 800-661-7383, or text keyword FREE to the number 600-700. That's right, that's a special keyword to take advantage of this free tax-savvy retirement opportunity. FREE to 600-700. That's keyword FREE to 600-700. Still have the Christmas props in the studio, so might as well use it, folks, for Coach Pete here, Stan Moore, Stan the Taxman, for Thomas, and for Cesar, who's been working the board today. We'll see you next week. Same time, same station, on the Financial Safari! Thank you.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari. Consumer advocate Thomas Lipscomb here with you again alongside Stan Moore, CPA, better known as Stan the Taxman, and America's Wealth Financial and Income Coach, best-selling author, Coach Pete D’Arruda. Catch up on the story by heading over to FinancialSafari.com. Again, that is FinancialSafari.com. You can also check out Coach's free resources over there when it comes to financial planning or ask a question that you maybe want to get in front of him or the team. Again, FinancialSafari.com. Now, if you're in real estate or you're planning to, cost segregation can be a very powerful thing. We've got a lot that President Trump is doing right now. We've been having a great conversation about everything from bonus depreciation, business depreciation, through taxes and overtime and tips.

00:46 There's a lot going on. Lots of positive changes here in the tax code for everybody listening, and that's why this is one of the happiest tax shows I've ever done. I'm loving the conversation. It's hard to say happy in taxes in the same sentence. Yes, rare. I'd be even happier on April 15th. When have we heard that before? Never. So, Stan, what do we have here? I'll tell you. We were talking about the unborn and how can taxes affect the unborn. Well, this is for children. Brand new. We've never seen anything like this before. It's called the Trump Savings Accounts. Now, this starts in 2026. It is basically like a retirement account. It's deferred tax on this, just like an IRA or 401K. And the government's saying, hey, you can put up to $5,000 a year into this tax-deferred account per beneficiary,

01:38 and the government is going to put in $1,000 the first year. Got to like that. When is the IRS giving us money? Hey, before these kids are even filing a tax return, they're going to get $1,000 from our federal government, literally. Now, the boundaries around this is- Here comes the fine print, Thomas. Okay, here's the fine print. But you're going to remember it because on July the 4th, 2026, our country's 250th anniversary, that is the first contribution date for the Trump Savings Accounts, okay? So if you put money in there from July 4th on, it's going to be qualified, and the child has to be born from January 1st, 2025 on. So it might be for the unborn that's not born yet.

02:24 It might be for children that were born in 2025, but that's the basic parameters. But when have we seen anything like this before? Never. Trump Savings Account, and the acronym is TSA. This is a good TSA for once in a while. It is. This show is all sorts of upside down. Nobody likes the TSA at the airport, but everybody likes the TSA when we're talking about saving money. That's amazing then. So July 4th of this year is going to be the first contribution. Wow. And think about this. Not only can the parents put money in, other family members, employers. We're back to businesses again. We've got another double dip here, Coach. Double dip ice cream cone. Here we go. It's not just the child that's going to benefit, not just the family, but employers can put in up to $2,500 that will be excluded from your W-2.

03:10 So normally when your employer gives you anything at all, you get taxed on it. And in this case, they can put up to $5,000, but up to $2,500 is not going to be taxed to you. So there's a big benefit. It could be a charity putting money in. It could be an employer. It could be another family member. It's pretty neat. Yeah. It's amazing. And so just think about this. All that money that's going into investment, that money is going to go into the stock market. The stock market is going to be flush with all this cash coming out of the- Sort of like when they did the 401ks. Yes. It's coming out of the government coffers where Doge has found a lot of poor spending habits, right? Poor spending habits. And it's going to go into a child's account, and the parents are going to be able to invest that money in the market.

03:58 It's going to be a huge influx of capital into our market. Too bad they didn't let us do Social Security that way, right? Oh, boy. Manage your own money in the market. Yeah, you wish. Money that took out of your paycheck. We wish. We wish. So that's good. So what are the fine print levels here? The gotchas? What are people going to look at? Yeah, the gotchas. The tax gotchas. So no distributions before the child is 18, which makes sense. You don't want to blow in it before they're 18 anyway. You don't want to blow it, right? It's just like a regular IRA. 18 is kind of too soon. I would say until 30. Like, leave it alone and go to college for a second. I would think. But they give it to 18. 18 is very generous. You could take the money out, but you're going to have a penalty, right? And it's going to be taxed, just like on an IRA. So you don't want to take it out early. Hey, an IRA, you've got to be 59 and a half, right? So this is 18. It's much, much better. And you'll be able to do rollovers from a Trump account to another Trump account.

04:44 So a lot of details that will be coming out. So that'll be a tax-free roll if you do it the right way. You could do a tax-free rollover. And so that's the long and short of it, but I think it's another double dip. Well, it's another good one in there, right? So they really took some time and put some of these tax write-offs together. And this is a good way to help save some money, too. Now, that's on the younger age spectrum. Now, let's go to the senior, the other side of the age spectrum for our seniors, specifically 65 years or older. 65 plus. 65 plus. Coach, it's not too far away from me. Hey, you know, somebody the other day gave me a senior discount. I didn't complain. I'm only 59, but only 59. But I guess some of them start at 55. So there you go. So there was a lot of back and forth politically on what was going to be taxed,

05:34 what was not as far as Social Security and some of this new tax law. And there's been a lot of questions to me with seniors about, hey, does this mean that I'm going to get a deduction and my Social Security income is not going to be taxed? No, no, no. It doesn't. Social Security income is still taxed, which is a real bummer. People hate the fact that they paid all the Social Security tax in and then one day they take it out and it's being taxed. That has not changed. But what has changed is if you're a senior, 65 years or older, they're in the tax year, you will have a new $6,000 deduction per person. So if you're married, that's $12,000. That's at least a $2,400 to $2,800 tax savings just because you are 65. It does not matter if you're retired.

06:20 It does not matter if you're on Social Security income. It does not matter anything else. You don't even have to itemize. You get this right off the top. Are there income phase-outs on that one too? Oh, coach, the catch. The catch. Yes, there is an income phase-out. So if you're single between $75,000 and $175,000, this deduction will phase-out. Or if you're married between $150,000 and $250,000, which is a pretty decent size, this will phase-out. So if you give everyone that doesn't have much money deductions but then punish everyone who does have a little money and don't give them deductions, sooner or later you're socialism because everyone has the same amount of money. That's a good point. It doesn't matter what you give them. If you don't let them save anything or take it away from them, then you end up with the same kind of mean income, they call it. And it is mean. The means testing.

07:07 Yeah. So, all right. Anyway, it's good to know that a lot of people are going to have some good windfalls, though. That is. And, you know, the Social Security income inflation increases have been very, very small. We've had the largest one in a while, but I know it was only maybe 3%. It was small. And so here is it. You know, more bang for your buck again from our tax bill. It's just coming right off the top. You don't have to do anything special. You just have your age has to qualify. And that's it. Back in the 90s, I was a road warrior. So I basically did all my appointments at folks' houses. And I was all through North Carolina. And North Carolina is a big state when you have to drive it. So I would put over 60,000 miles a year on my car. And it would be a good windfall at the end of the year because I'd get a certain amount of money back per mile, 50 cents or whatever it was back then, per mile. What is the mileage deduction these days as far as what do you get to write off if you're a road warrior like I was back then?

07:53 Is it fairly high? Because gas has gone up a lot. But back when I got to write 50 cents off, gas was basically around 99 cents a gallon. You know, and cars have got a lot more expensive than parts have, too. I don't think the government's kept up with that should be like $5 a mile now compared to like everybody else. What is it now? Is it like it's not about a dollar a mile? It's 70 cents a mile. So it's gone up, but not enough. Well, they really haven't kept up with that at all, have they? Because it's got to keep up with not only with the cost of the gas, but the repair on the car, the depreciation in value. How much the car itself costs, too. Exactly. It's not keeping up with that. And unfortunately, you know, there's some deductions for mileage that you used to be able to get in certain ways that have gone away. But 70 cents is where we're at. That would take Coach Pete from having to write a check to getting a check back. That's right. That was a big amount right there. That would really make a big difference for me.

08:40 And it really saved me because I probably would have been out of business back then if it wasn't for that. That's right. Yeah. So many things are against you as starting a small business. And so it's good to have some things on your side back then. I don't know about these days. Especially if you're investing in assets and purchasing in that small or growth phase. Trying to employ people. Trying to employ people. When you're getting started, hey, at least you're going to have some tax breaks. Now, speaking of automobiles here, we're talking about mileage. There is also a new consumer. This is not really for businesses but for consumers. The car loan interest. Now, remember, we used to have an itemized deduction for car interest. Now, so this is kind of coming back just in a little bit different flavor. However, if you buy a qualified vehicle with a certain qualified type of a loan, okay, we've got some brackets and some loopholes we've got to follow.

09:27 But you can get up to $10,000, again, off of your gross income. You don't need to itemize. Off the top, you can get $10,000 for your interest payments on a new automobile. But it's for personal use only. This is huge, Thomas, when Stan says you don't have to itemize. Yes, because itemization, a lot of people procrastinate and they never get around to it so the government wins. And, in fact, you don't have to itemize, Stan. It's just a check-in-the-box kind of thing. It really is. I mean, it makes a whole lot of sense. And this is something I think many people listening need to take advantage of. Yeah, it's true. And I want to make sure that we get that number out there so people can connect. So, folks, connect right now. The number 800-661-7383. 800-661-7383. You can also text keyword PLAN to the number 600-700. That is PLAN to the number 600-700.

10:14 Now, Stan, the tax man, over there to my left, folks. Stan Moore. And, Stan, if you were doing, like, you've got about a minute now. If you could put a minute ad out right now and tell folks who you're looking forward to represent, who you're taking as new clients here in 2026, who would be the people that are listening now that you open your doors to and welcome as new clients? Business owners that are in North Carolina that value their time and they love to plan ahead because they value their cash flow in their business. You know, I like dealing with people that want to be a good steward of what God's given them, which includes their business. But, you know, one thing God has given us that you can't take back and you can't buy is time. So what's our value? Well, it's our owners' and our clients' time, right? We want to be able to give them time to go out and maximize what they do best, dream big, think big, work well,

11:03 and we take care of the accounting, the planning, and the taxes. You take all that tax worry. Leave the worry to us. That's right. You're like Greyhound and the tax man. That's right. Sounds good to me. If you want to give up your stress, you know, we'll help you with that. Yeah, because taxes can cause a huge stress on people. And, you know, a lot of folks, after they meet with you, they leave happy because they know that it's not as bad as they thought it was going to be because now they have someone on their side. And that's why you become my chief CFO, my chief financial officer for my tax. My tax is every year. It's, again, back to the blocking and tackling. Coach, you know how it is. When you're in the red zone, right, you got to – when it gets really tough, what really matters is the blocking and tackling. If you keep up with the basics, you stay ahead. You know, let us keep up with your books. Let us keep up with your accounting. Hey, we'll know six months ahead before you have a tax bill.

11:49 Who wants to wait until the last second and get surprised? No one likes surprises. If you have a question for Stan, folks, all you have to do is text STAN, S-T-A-N, to 600-700. That's STAN to 600-700. We'll be right back after this.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Welcome back into the Financial Safari, having a great conversation with America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. I'm Thomas Lipscomb, and in studio with us is Stan Moore, CPA, dubbed by a coach himself, Stan the Tax Man. Stan loves that, Thomas. He loves it. He's smiling over there. I'm getting the thumbs up. If you want to, maybe you're just joining us and you want to catch up on the conversation, just head over to FinancialSafari.com. Again, that's FinancialSafari.com. You can also find us on Apple, Spotify, Pandora, YouTube, all the different outlets to find great conversation, because that was a great conversation on depreciation there. Stan, speaking of depreciation, see what I got in my hand? I have the Reserve Bank of Zimbabwe, and it's a $10 trillion bill. Has it depreciated? I am rich. Drillian. Thomas, I think we did a lookup on $10 trillion in Zimbabwe about four or five years ago when I first got this, and what was it worth, like five cents?

00:49 Oh, it was nothing. Yeah, yeah. That's where you don't want bad things happening. And this is when government gets out of control and starts printing too much money, and there's nothing being produced in that government. Then all of a sudden, your currency's worth nothing, and we don't want that to happen here. And that's why we encourage businesses to do well in our economy. And Stan, you've got some good news for not only business owners, but for people who work for businesses, too. Coach, remember, everybody knows when they were a kid, they loved the swirly ice cream cones, and you would dip it in the chocolate. What do you mean when they were kids? I still love them. Okay. We're kids at heart, but everybody likes the double dip, right? Oh, double dip. So, Coach, this is a double dip, bro. We've got double dip new tax law, and this is brand new. This isn't like something they've been resurrecting from the IRS in the old part of the code. This is brand new stuff.

01:35 So, the genius here is it is a double dip, meaning that the no tax on tips and the no tax on overtime, these are double dips. Why? Because it helps the consumer, the people making the money that are working, making the tips, doing the overtime, working hourly, but it also helps the businesses. It's like the businesses are giving their employees a raise with this tax deduction. And the business gets the benefit as well, which I didn't realize that. So, tell me how the business benefits. Well, with the restaurant industry was one that comes to mind with tips, right? So, tips can happen in a lot of hospitality areas, but the restaurant industry just alone, think about this. All of the tips that go through the business, now the employers, the businesses, they get a tip credit. So, that flows through their tax return, they get a tip credit, which is a benefit, okay?

02:23 It helps them on their taxes that they have to pay for the employees. But then the employees get that tip money, and the new tax law is saying, hey, you can get up to a $25,000 deduction, whether you're single or married, a $25,000 deduction, just because you have tips. And so, you put that in dollars and cents. I mean, we're talking on average a $5,000 tax difference. It's a big winful. It's a big winful. It's like you got a $5,000 raise on a $25,000 deduction that you didn't do anything more to earn. It's just straight off the top. Well, it's just where you categorize the numbers, in other words. Exactly. It's at a good place instead of a bad place now. And some people, a lot of the tax law in the past, you'd have to be one of those people that has enough itemized deduction, mortgage interest.

03:11 This is not that. All of a sudden, you don't qualify anyway, right? Exactly. But this one, it avoids it. So, no matter if you itemize or not, it's right off the top of your adjusted gross income, as they call it. You take that deduction, whether you're single or married, up to $25,000. So, the tip industry, Coach, it's big for the employers, employees. Again, we got to double dip. Well, who doesn't remember the campaign promise, no tax on tips? Remember, we heard that over and over again. As a matter of fact, both parties started talking about it, even though Donald Trump talked about it first, and Harris' campaign started talking about it as well. But it benefits the average citizen. That's why both parties liked it so much. It really does. And, again, with tax law, usually there's these catch phrases in there that, like, oh, what's the gotcha moment? Yeah, we're always waiting for a gotcha moment these days. So, there's a little bit of a gotcha moment, but it's a pretty decent gotcha moment.

03:56 The gotcha moment is, okay, if your income and you're single is between $150,000 and $400,000. So, if you're single and you're making $150,000. Doing pretty well. I mean, you're making some good tips. You must be working at the Angus barn. Yeah, exactly. You're doing very well. Thank you very much. But the deduction phases out. But think about it. If you're making $400,000 and you're making tips, I mean, wow, you're doing great anyway. It phases out after you make that much money, and it's zero. And if you're between $150,000 and $400,000, it kind of phases down. But still, that's a lot of money before they start taking the benefit away. Yeah. Back in the day, they'd do that $60,000 or something like that. Oh, that's usually the case. And then the overtime issue, hey, a lot of people that are making tips, they may have overtime-type hours as well.

04:46 All of the industry in the United States that pays on an hourly basis, wow, all the folks on overtime not paying tax on that? Think about it. For the people that are working hard and getting that extra time, and they want to get the bang for their buck, now you're going to get it. Guess what? Another $25,000 deduction if you're married. Now, on this one, it's a little different. And if you're single, that's cut in half down to $12,500. But it's another deduction, another kind of income phase out, but it's still going to bring home $5,000 plus in tax savings. So no tax on overtime. So this has to be someone who's paid on an hourly basis. Because if you get paid a salary, a lot of times you're basically at the whim of however long the employer wants to keep you working. It's not overtime. It's just salary. That's right. So it helps the entire economy that's paying on an hourly basis, which is huge.

05:34 I mean, this is a base of our economy that is the primary base of this country. So all of those employees, again, another $5,000 raise. And so does that have the similar kind of limits, the overtime, the $150,000 phase out to $400,000? Or is it different kind of rules there with that? It's very similar. It's in that $150,000 to $275,000 for singles and $300,000 to $550,000 for married filing jointly. So again, you're married and you're making over $300,000. This thing starts phasing out up to half a million dollars. If you're doing between $300,000 and a half a million, you're doing well anyway, right? I mean, you don't need a whole lot of tax benefit, but it still is going to help a lot of people. So you could be making tips and working overtime, so you've got a double positive thing for yourself, right?

06:22 There you go. There's the double dip. It just doesn't have chocolate. So where are the gut-cha clauses? Where can people make a mistake or where are they going to make a mistake and cost them money in taxes using these rules? Are there any bad things that could happen if people do something the wrong way or don't file right? Well, you know, because neither of these are subject to itemizing, meaning it just comes right off the top whether you itemize or take the standard deduction, and it's applicable to single or married, you'd have to really do something really bad or stupid to avoid the benefit. But I'd say probably the one gotcha is if you're married and you file separate. Okay. You can be married and literally want to file separate for other reasons. But if you think about doing that, this will be a gotcha because it's going to not be to your benefit if you do that.

07:11 Sometimes when people get separated or are getting divorced or maybe they just have out-of-state income issues as to why they might do that. But you've got to weigh the benefit with the cost before you take that step. Okay. Good to know, Thomas. That is very good to know. Tell people if they have a question how they can get that answered. Absolutely. A lot of great information here, and I think it matters as we head into planning for retirement, planning for finances, just generally in life. The number to call, 800-661-7383. 800-661-7383. You can also connect with us by texting. Just text the keyword plan to the number 600-700. That is plan to the number 600-700. We're going to have daily updates if needed on the tax law as we go forward with Stan the Taxman on our Financial Speakeasy network, by the way, folks. He has a 24-7 financial network you can pick up on your own computer, your own phone, your own iPad.

08:00 You don't have to have a TV to get the 24-7 live streaming network. FinancialSpeakeasy.com. You can see it live on YouTube and also on Rumble. You decide which place you want to go. But go to FinancialSpeakeasy.com and select either YouTube or Rumble, and you can be watching the Financial Speakeasy within the next couple minutes. And we're going to have updates. Again, we'll break in with breaking news on tax law as it changes so you don't have to wait to the weekend to find this information out any day of the week. And you can also subscribe to our newsletter to get that relevant information when it happens. Thomas, tell folks that I can do that. Absolutely. Very easy. Just head over to FinancialSpeakeasy.com. Again, that's FinancialSpeakeasy.com, and you will see the opportunity available right there on the site. Awesome. Stan, I mean, it's a constantly changing environment we're in now, and I'm happy to see good news to deliver good tax news for once instead of bad tax news.

08:51 There you go. Seems to be all that's available in the archives of the, I guess, consumer archives of people with bad problems with the tax man. But there are some good ways. And you never hear about people with success stories because it doesn't make the bad news. No, it doesn't. It's true. And we have so many. Actually, I have a clip right here where someone started out with a hairpin. You might have seen this making its waves around the Internet and was able to trade it all the way up to, well, I don't want to give it away. Welcome to Financial Success Stories and how they went from rags to riches. Today's story is about an incredible young lady by the name of Demi Skipper. Let me tell you her story. Well, let Demi tell you herself. My name is Demi. I live in San Francisco, California. I'm 29 years old, and I'm trading a single bobby pin until I get to a house.

09:37 So what that means is that I make one-for-one trades until I can get myself a house. All right, Demi. How did this all get started? From that bobby pin, I traded for a pair of earrings. Those earrings then went for margarita glasses. It was a set of four. And then after that, a vacuum, then a snowboard. That snowboard then went for an Apple TV. Well, it certainly wasn't easy for Demi. After a year and a half of pouring blood, sweat, and tears, she finally took that one more step from that single hairpin and traded all the way up to a house. And as the late Paul Harvey used to say, now the rest of the story. Peloton, and then from the Peloton, a Mustang, a Jeep, a tiny cabin on wheels, a Honda CRV.

10:27 Then the Honda went for three tractors, and then the three tractors went for the Chipotle celebrity card. Only a few months later than hope, Demi was handed the keys to a little house near Nashville, Tennessee. The modest fixer-upper, complete with a big garden, was her 28th trade since she embarked on her project. After such a back-breaking challenge, Demi's ready to do it all over again. This time, she's hoping to donate the next house to someone who really needs it. The trading, it makes it feel like the barrier to entry is not as scary. You can have your own financial success story. Get on the right path to financial freedom and keep listening for more success stories. That is pretty crazy right there. Well, you never know, do you? You don't. I mean, it's sort of like buying a lottery ticket every now and then just because you don't want to be the one who,

11:13 like if you go by this gas station every day and it turns out somebody bought the winning ticket at that same gas station, you'd kick yourself over and over again. You would. You've got to take that stuff. You buy it to keep yourself from having lifetime FOMO. There you go. Fear of missing out, right? So let's do this. Don't have FOMO, fear of missing out, when it comes to having the right plan for the right time of your life. If you're interested in getting the total retirement plan, we call it Coach Pete's Power Plan. And the next 10 of you call, we're going to do that at no cost or obligation. We've seen others charge at least $1,000 for something not even as good as this. But this will be giving you 22 steps behind the scenes to put together for you the perfect retirement plan for what you want to do in your life. And, Thomas, tell folks how to qualify at no cost or obligation. Absolutely. Very easy to do. Just call 800-661-7383. 800-661-7383. Or text keyword plan to the number 600-700.

12:00 Plan to 600-700.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 All right, it's that time of day, time for the financial safari. Consumer advocate Thomas Lipscomb here with you alongside America's Wealth, Financial, and Income Coach, best-selling author, Coach Pete D’Arruda. He spent decades helping build retirement plans that don't just survive the market. They thrive. They thrive. They thrive. Hey, and you've got someone with us here, Coach, because we've got a lot of shifting laws right now. Well, over the years, I've had the pleasure of meeting some really intelligent individuals, Thomas. Yes. And this one individual always keeps popping up because he's my CPA. I have to talk to him every year, and we used to have him on the show, and he got too busy. Life took over, and now I've talked him into making regular appearances again, and I think it'll be beneficial to the whole audience to listen to what Stan the tax man has to say. Stan Moore, welcome in. Coach, good to see you.

00:46 Great to be here. Thank you. We've known each other for a while, haven't we? We have. It's been good. So, Thomas, Stan's going to give us some relevant tax tips and techniques and tell you what's changing here in 2026. I am excited. Let's dive right into it. What's at the top of your mind, Stan? Well, the one big, beautiful bill. That's right. We've all heard about it, right? It's been out there with President Trump. He talked about it on a campaign trail. He is now putting it into action. Here we are in 2026. So, we've got new tax law, and I tell you, it really impacts everybody. If you're a business owner, small business, medium, whatever, or you just work for someone else, or even if you're retired, even if you're a child, you know what? Even if you're unborn.

01:32 This affects unborn children, Coach. Pay attention, unborn children. Yes. Listen closely. I mean, this tax law, it goes deep and wide. Turn off the classical. Turn on the coach. And, you know, we were talking earlier this week, Stan, and you were talking about all the good things that are in this tax code for the average consumer. It really is. What's in there? Because the media really hadn't harped on it too much. It really is. You know, and taking all politics out of it, you just look at the tax code itself. You look at the brackets. You look at how the income falls into the brackets, the rates themselves, the pluses and minuses as far as deductions and what's being taxed. And, Coach, we have new stuff in here, but, you know, it's really the best structured tax law for everybody.

02:17 I mean, really, from children to unborn to senior citizens, everybody in between, this is a plus. And if you are living under the assumption that your money is best spent and best invested when you have control over it, then this is the tax bill for you. Because it really puts money back into the consumer and the business owner's pockets so you can invest in the best way for the amount of risk and return, which you talk about all the time. And you've got your financial assets in the right buckets. This gives the consumer the power of the dollar. And it literally is the best tax code that I've ever seen. It's a novel concept to give the consumer the control of their own money, isn't it? Go figure. I mean, that's how our economy was built.

03:03 Yeah, the way government has turned into here, it seems like lately, is give us your money. We'll do better with it. Exactly. And are they? Hadn't seen it yet. Where's all the money going sometimes? It sure doesn't look like it's going to where it needs to go. That's the question. So let's keep it where it needs to stay. And so let's talk about the first two things that come to your mind when you talk about the good things in the tax bill right here. What are the first two that always, when you consult with your clients, when they come in and say, Stan, tell me about what's going on with Trump's tax bill as a CPA. You say, well, here's my two favorite things for you. I guess they've changed this for person to person. But for the average consumer listening, what are the two best hidden gems here in the tax code? I would say that for business owners, the bonus depreciation. That's probably the biggest one. Now, what happened was with the old tax law that was in place was getting ready to expire from the 2017 Tax Cuts and Job Act.

03:56 That was going to expire in 2025. Some of it actually started phasing out. It was getting scary. Yeah, it was getting scary. And so bonus depreciation, meaning when you purchase assets, what can you write off when you purchase those assets, depending on what they are? And that was getting ready to go away. And it was going down, down, down, almost gone, gone, gone. And so here we are in 2020, we were in 25, and we got this tax bill passed, basically extending out bonus depreciation, which is a huge, huge economic impact, literally for the entire country, because it is an incentive for business owners to invest in assets that are going to be productive in their business, as opposed to taking that money and giving it to Uncle Sam, where the government might not take that money and invest it as efficiently. Go figure.

04:41 Oh, you think. So putting that money back in the business owners, what does that do? It reinvests in the economy to buy the assets. Then those assets are put to work more productively. It's a higher return on investment for the business owner. And so we got this back, and they made it permanent. So those are the two big things, is that it didn't get worse, but it actually got better for a permanent. Now, when we say permanent in tax law, you could always have the politicians change it, right? They could go in there. But as far as permanent as it can be, we got that back. So that's the big number one. You know, really, it does. If you encourage spending by businesses and they're able to write off things, then when they spend the money, it helps somebody else's business because you're buying from them. And it really does trickle down because it trickles through the whole economy.

05:28 That's why our country was built. We're getting ready to come upon our 250th anniversary, right? Yeah, it's going to be an exciting year. It's going to be an exciting year. And if you think about that, part of it was that we were created with what God gave us as inalienable rights, right? And it should be self-evident, the rights that we have. And those rights, when we broke off from Britain, was that, hey, we want the right not to be under your thumb. We want to make our own decisions, and we want to make our own business decisions. And this is really part of that essence of our country. You know, we're getting old, Stan, because I remember 1976, the bicentennial. Thomas, were you here yet? I was a coin. The bicentennial coin. Yeah, they had a $2 bill that had a special first day of issue on there. My grandpa got a couple of those for us. In 1976, when the $2 bill came out, they put a $0.13 stamp on there because that's how much it cost to mail a letter back then, $0.13.

06:15 Wow. And they postmarked it first day of issue, and I've got a couple of those. It's pretty neat. Wow, that's cool. But, yeah, the more things change, the more they remain the same. And now I wonder if they'll have a special $250-year kind of $2 bill or something like that. You've got a little set right there together. They might, but it's celebrating the country, but, you know, we usually don't have tax celebrations, right? Yeah. But this literally, I believe, anyone listening, for 2026, you're doing your 2025 tax returns. Right. Business owners, non-business owners, it's good for everybody. It's business depreciation. So this is anything you bought for your business, right? So this can be, it's certain type of assets. They started writing this code a while back, and it's assets that are classified, certain types of assets, you know, 20-year life or less.

07:00 So you think about the big ones, you know, equipment, some pieces of real estate, not all the real estate, but certain improvements on the inside. So there's a classification. A lot of small businesses, it's really the vehicles, the equipment, the heavy equipment, moving equipment, things like that. You know, those are the things that really impact business owners, that they can take 100% depreciation. Even if it causes a loss, they can still take it, and that is the kicker, is you get all of the tax bang for your buck. When you say heavy equipment, could it be considered like a big SUV, or is that phased out before you get the heavy car? Well, automobiles have their own special piece, but they call them luxury automobiles, which is really just a personal passenger vehicle has a limit.

07:46 It's around $20,000 the first couple years, and you can take the rest over, you know, the next three or so years. But big equipment, you know, excavators or even machinery in your shop, it can be furniture, you know, those type of things that most businesses are buying on a regular basis. Things that move are basically the big ones. And then some of it on real estate, we can get into complex things, but it is just the fast write-off, and to be able to take it no matter what it does to your P&L, you get all the bang for it. You get the return on your investment through taxes. Thomas, could we use a bulldozer or anything? You know, we could try. I'd love to learn how to use one. It'd be fun to drive a bulldozer around. You might need one now. But, Coach, that brings up a good point is that a lot of people really do do tax planning thinking that, hey, if I get a tax write-off, I need to go buy it.

08:36 And I'm opposite on that. That's not the best economic decision. We want to make economic decisions because it's a good investment. In other words, I want to spend $100,000 on this equipment because it's good for my business. I'm going to get a return on my investment. And secondly, it's a good tax move. We don't want to make a tax move a priority. We don't want the tail wagging the dog. I understand that because all of a sudden you're in a lot of trouble then when you let the tail control it, right? Absolutely. It leads to bad decisions. Yep. All right. So that's a big one. If someone has a question about that, let's talk about who's your average client. Who does Stan Moore deal with on a day-to-day and who is he looking to serve in the future? So business owners that really want to plan ahead, people that want to plan.

09:21 And you talk about planning all the time, where you put your income in your buckets, risk and return, those things, life annuities of cash flow income. We focus on that. We want to plan cash flow. We want to be able to plan for taxes. We keep your books up to date. Coach, it's just like being in the red zone in football. It's the blocking and the tackling. This is the same thing for business owners. You don't want to make mistakes at that point of life either. Right. You don't want the flags flying up. You don't want the penalties going. So you want to be able to take what you have, do a good job, plan ahead, and be ready. What we don't like is tax surprises. Right? I mean, April 15th should not be a surprise. We want to be able to plan six months ahead and know what kind of cash I need to save, what I need to put in tax, what's the minimum, what's the maximum, and avoid the penalties. Yeah, it's called tax planning.

10:07 Tax planning. To protect your behind from the tax man. And, Thomas, a good time here as we kick off the new year to make the first offer of the new year. Yes. And it's going to be people that respond right now are going to get a copy of my brand new book, Tax Savvy Retirement. We're going to send it to you at no cost or obligation. We're even going to pay the postage and the handling. I love it. It's what he gets you online. Say, free book. And then you sign up and it says, oh, only pay $15.95 for postage and handling. I hate it. No, this is zero. So if you call, you have to text. Let's do the text. If you text, and Thomas is going to tell you how to do that, but we will send you, we'll verify your address and send you out a copy of the book. And a golden ticket where you can get your very own financial plan done. And we can get a couple tax questions put in the queue for you, too, with Stan the Tax Man.

10:55 There you go. So, Thomas, this will be for the next 26 people who respond right now. We're going to send these books out. So tell folks how they can do that. All right. Very easy, folks. Just call the number, 800-661-7383. If you have a question for Stan or Coach Pete and the team here at Capital Financial about what's going on in your own plan, again, that number, 800-661-7383. Or text keyword plan to 600-700. And take advantage of this opportunity of getting Coach Pete's free book, Tax Savvy Retirement. This is a physical book being mailed out at absolutely no cost. You're going to remember this because this is the keyword for it. Free to 600-700. That's keyword free to 600-700 to take advantage of that great offer. As we go into this year, I'm going to try to talk Stan into writing a chapter in this book and republishing it.

11:41 Oh, I love it. Some of the tools and techniques as we go forward from Stan to Tax Man. Folks, we'll be right back after this. We'll be right back.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Folks, we have a very interesting guest this week. Matter of fact, if you've ever heard of something called the 4% rule in the money world, we're going to have the inventor of the 4% rule, Mr. Bill Bengenon. And Bill is joining us from Tucson, Arizona today. Bill, welcome in. Thanks for joining me. Looking forward to it. Yeah. Now, like I said, you're the inventor of the 4% rule. How did you come about that and what inspired the research behind this 4% rule that we hear about? Sure. I was a relatively new financial planner back in the early 90s. Not a young one. It was a second career, but I got into that. And I started fielding questions for my clients who are, you know, basically baby boomers with about 20 to 25 years to retirement. And they were just starting to think seriously about how much they should be saving

00:48 and what they could spend in retirement. And I tried to find guidance on, you know, the spending withdrawals. And I couldn't find anything anywhere, no books, no magazines. Other finance advisors were all over the map with their answers. So I decided to sit down at the computer and find solutions myself. Well, you know, you said this is your second career. And I want to tell folks a little bit about you. You were born in Brooklyn, New York in 1947. And then you went to MIT as a rocket scientist. You had a BS in aeronautics and astronautics from MIT. That is fascinating. Then you worked for your family soft drink bottling company after that. So you have a research mentality, don't you? Yeah, I learned something from every career I was in.

01:35 Tell me a little bit about the bottling career. That's a fascinating concept to me. Yeah, well, our business had been in our family since the 1880s. It started out as a small backyard soft drink business in Brooklyn. In those days, you know, soft drinks were not consumed year-round. So generally, they would shut down after Labor Day and open up, you know, sometime in the spring, which is pretty amazing. We consider what the business is like today. But the business grew. They picked up the 7-Up franchise in the 1930s. The business grew and became substantial. And I was very disillusioned with what was happening with the space program. So I decided to accept for invitation to join. And I'm glad I did. I learned a lot there. Yeah. Well, so you got your degree, you did the bottling, and then something must have gone off in your head about 17 years into that career as a bottler,

02:27 working in a bottling plant and working behind the scenes, and you decided to be a financial planner. Tell me about that. Yeah, sure. Well, first thing, we sold the business. In the 100th year, I was in the family. So I no longer had employment. But so I had to find it. And I spoke to my wife and kids. And let's say, let's not get stuck here in the cold Northeast. Let's go somewhere where it's nice and warm in the winter. So we ended up in San Diego for many years. And then finally here in Tucson. And so you were in the financial planning career. There's a lot of us out here. You must have been sitting down one night, and you said, well, I need to figure out how much someone could take out of their portfolio and not run out of money. Is that how you – I mean, what was the thought process to come up with the 4% rule, and what year was it?

03:15 Sure. That was 19 – I did the research in 93 and published a paper in 94. And essentially what I was trying to answer was, what was the worst-case situation in history? If you wanted to be ultra-conservative and would draw out a rate which guaranteed 30 years based on anything that's happened in the last 100 years, what would it be? It turned out to be about 4.15 percent was the worst case, which applied to the person who retired in October of 68. It ran into a buzzsaw market, bear markets, one after the other, and then terrible inflation, which was an increase of withdrawals. We call that sequence of return risk when you retire into a bad environment like that. And so you tested those back in the 90s.

04:01 And what surprised you most when you were doing this research on the 4% rule? Well, I was surprised at first when I looked at the asset allocation. You know, I wasn't sure how much you need in stocks and bonds. And when I ran the numbers, it clearly indicated you need a very substantial position stock, 60%, 65% probably, and bonds not so much. If you go much higher than that in stocks, you get hit with a bad, bear market. You get devastated. If you go low and with more bonds, you won't have enough home from the portfolio to generate the returns you need to get the withdrawals. Right. And when we say stocks these days, you know, there's so many stocks. And people need to diversify properly or they can pick the wrong stock and be bankrupt in two days if it's a bad stock.

04:48 You know, you see some of these stocks like a rug pull and they don't exist anymore. So how can someone make sure they're picking the right stocks to go along with the 4% rule? Well, I think diversification is the key. Invest in funds that are broadly diversified across markets, across countries, across industries. Good, high quality funds. There are plenty of those. Most of them are index funds at very low cost so that they are easy to swallow. You know, you're not dealing with friction of commissions and so forth. Yes. So it can be done. People today are very fortunate to have this available to them. Now, when we hear about different rules of withdrawals that you can make sure to have a successful retirement, Susie Orman saying 3%. I've even heard someone say Dave Ramsey says 8%.

05:34 What are your opinion on those or that range? What do you think about that? Well, you know, I haven't sat down with either of them to discuss the basis of their feelings. But just looking at my own data, I use historical data. I basically reconstruct the portfolios of investors retiring in 1926 to date. I have seen nothing in history that indicates anything less than 4.7%, which is the new number, my updated number. And to get below that, we would have to have something like in the 60s and 70s again, if you remember. We just had terrible bear markets followed by years of high inflation. And I don't see that on the horizon yet, at least. What's your opinion on the S&P 500? Is that a good, like, I know Vanguard has a really good one.

06:21 VOO is a symbol. That's a pretty nice S&P 500 fund. What do you think about that one as far as being included in that portfolio to get this 4.7% you're talking about? It probably makes sense to do that over the long term. Although, on the short term, you're going to have to be careful because stocks are very highly valued and very concentrated in a few names. So, that not always doesn't end well. Now, you said you've been quoted that the 4% rule was never meant to be a law, more of a process. How should people use it today without locking themselves into a rigid number, I guess we say? Yeah, I've identified in my book eight, what I call eight elements, which are basically assumptions that you can use to personalize your withdrawal plan.

07:09 They include things like the planning horizon, you know, how long you're planning to withdraw money, what type of account taxable, non-taxable. Do you plan to leave a balance at the end of the account for your heirs and so on? There are those eight factors. You get values for each of those. And then, the next step is to take a look at stock market valuation and inflation. And using those two factors, I've got tables set up so people can just look up their number. Nice. Now, folks, we're talking about Bill Bengen, and he is the founder of the 4% rule. And, Bill, for retirees worried about inflation today, what's the best way to protect their spending power long term? Well, that's the real concern. I always say that inflation is the greatest enemy of retirees. I think in the bond portfolio, they could use tips, significant exposure to tips.

07:58 And I think also they want to invest in top-quality companies that go through, you know, a rough period of time of inflation and come out okay. They've got pricing power. This is more of a psychological question than a financial question. But do you think retirees today are more likely to run out of money or leave too much unspent out of fear? You know, the biggest problem I'm aware of is not spending enough. A lot of folks think that they can just spend off their interest in the dividends and live off that. That really constrains you tremendously. You can have a much richer lifestyle. I imagine the heirs must be very pleased with that. It means they're going to hurt a lot of money. But it doesn't help to retire any much. Bill, I had a client about 20 years ago. And I said, I noticed, I said, John, you're not spending much money. You've got all this money.

08:44 He had millions of dollars. I said, you need to start spending it, having some fun because you're retired. And he said, that's a good point, Coach. Because my friend, he had a friend who said, if he doesn't spend it, his kids will go first class and spend all his money. So he was still afraid to spend it. But his friend was putting pressure on him to start spending it because he said, if you don't spend it, your kids will. That's about what you were saying right there. What's the biggest misconception about your rule? And what do you like to clear up now, once and for all, that we're on the air? What do you think that people just don't understand about the 4% rule? I think a lot of people think 4% or 4.7%, as I now phrase it, means that you take out 4.7% of your portfolio value every year. And that's not the system that the rule is based on.

09:31 It's based on more like a Social Security system. When the first year you use your percentage, it's 4.7%. You have a million dollars. In an IRA, you take out $47,000. After the first year, you throw away that 4.7%. And just simply give yourself a cost and a little adjustment like Social Security. So you increase a little bit every year, over and above that what it was. Okay. And even in a down market? Yes. My methods are designed to get you through bear markets. I mean, one thing about bear markets, we know that they're nasty and they can reduce your withdrawal rate, but they don't last forever. You get us a recovery and you'll come back. So it shouldn't be too impatient when that happens. Now, tell us about A Richer Retirement, a book you wrote.

10:17 And what can readers expect and how can they learn more about your latest research as well? Sure. Well, my book is basically designed like a cookbook where people can go to it and find recipes for a way to construct a withdrawal plan during retirement. Using, you know, 10 basic fundamentals. And then my website, bengenfs.com, I have developing a whole library of scenarios that people can look up something that's close to their own situation in terms of the eight elements and then possibly use that as a template for their own retirement plan. You know, a lot of times I'll sit down with a couple and one of the two in this couple will be very risk adverse and the other one will be a very big risk taker.

11:04 How do you deal with a couple like that? Well, fortunately, I don't have to deal with it anymore. Back in the day, back in the day, how'd you do that? How'd you deal with it? It was tough to reconcile. You had to try and sit with them and sort out some of these financial issues. Some people are just very fearful of certain things. It's irrational and there's not much that can be done. Just reach a compromise if you can. Now, finally, I want to wrap it up on a subject that a lot of people have heard about because critics have said that 4% rule is obsolete after the 2021 to 2023 inflation shock. Is that fair or is that fear, Marguerite, that they're saying that? No, it seems to have survived it okay.

11:51 Now, of course, that's only a few years ago. Right. We don't know what will happen over the next 10 to 15 years, which will have a lot to say about what happens when people retired back then. But right now, they're starting out okay. They got hit with a bear mark, but then they got a huge recovery after that. So they're back in Clover, I think. We've been very, very lucky, haven't we, with these V-shaped recoveries we've had in the last 20 years. Yeah, that's right. Look at Japan. I mean, it took them forever to recover or get back on the right track. And that's the only thing that worries me, Bill. And I think that these days, though, I think the average investor is a lot more astute than they have been in the past. I think that's why they may help the recovery more than the stock companies themselves help the recovery. Because people have the fear of missing out.

12:36 So when the stock goes down, they jump in and buy many times. And that's usually the correct strategy. Whether it is today, I'm not so sure. But, yeah, I agree with that. You know, back in the day, they say trying to buy a falling stock was, right, trying to catch a falling knife. And that is true on some of these penny stocks that go down. But for the traditional S&P 500 companies, that doesn't really apply these days, does it? I mean, it is good to buy low and sell high. Yeah, I think if you're investing in a broadly derisified fund, you're protected against individual business risk. Yes. And you should just be fine over the long term. Well, folks, his name is Bill Bengen. And his book is Richer Retirement. And he is the inventor of the 4% rule. Bill, thanks for your time today. Thanks for having me, Pete. Appreciate it.

13:22 And, folks, we'll be right back after this.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 And welcome back into the Financial Safari. Consumer Advocate Thomas Lipscomb here with you once again alongside best-selling author, Coach Pete D’Arruda. Coach, I'm excited. You always bring in some great guests into the program, and you've got someone else with us here today. We have an author who I've followed for years. Her name is Cheryl Moore. She's president and CEO of Moore Market Intelligence. She's co-author of the Encyclopedia to Index Products, Annuity, and Life, and her research and articles are regularly featured in a lot of different insurance trade publications and also Forbes, Fox Business, Wall Street Journal, New York Times, and a lot more different places. And Ms. Moore works closely with regulators. Her research is regularly presented to the National Association of Insurance Commissioners Conference. And here's a good thing. Neither Cheryl Moore nor Moore Market Intelligence sell or endorse any financial services or products.

00:48 So she's basically a research company. She's not trying to get paid by anybody. Tom Hegna calls her one of the best sources on annuities he's ever talked to. So does Wade Fowle. These are two big names. We've had them on our show before. And we hope to have Cheryl on in the future again to talk about this in more detail. But we're going to talk about a book she came out with just recently, Why I Bought Indexed Annuities. Cheryl, welcome in. Thanks so much, Coach. Now, where are you joining us from today? Des Moines, Iowa, the insurance capital of the U.S. Here we go. I've been out of Des Moines. I've been out there in the wintertime, too. Good for you. Hey, let's start from the beginning. What is an annuity? So an annuity is a financial services instrument that can help you save for your retirement. And when you're ready to retire, you can actually receive a paycheck every month until the day

01:39 you die with these products, even if you live to be 150 years old. Yeah, that's the amazing part of the annuity world. The insurance company is taking all the risk for longevity, we call it. If you live longer, they're still paying. And we like to set up joint annuities. So if a spouse passed away, the other spouse continues to get that same payment. Yeah, they're very flexible and provide a ton of great benefits, Coach. Yeah. Now, in the book, you write about he or she who controls the media controls the financial world and the financial services world. What does that mean? Well, a lot of people don't realize that the media actually has an agenda and their agenda is to serve the advertisers that pay for ads with them. And often that means that the financial services media is catering to stockbrokers and Wall Street,

02:26 not necessarily the insurance industry who sells products like annuities. That's a good point. Right. So yeah, whoever pays gets the better press is what you're saying. Absolutely. Pay to play. We've talked about it for years, Thomas. I mean, the big guys are spending millions of dollars a day on advertisements. They're also, when you got the advertisements or somewhere, they're on the media. And the media knows that if they start saying bad things about that company, that the advertisers may go away. So they want to keep saying good things to keep getting that ad revenue. Because that's what it all comes down to. It's all about money. Unfortunately. Yeah, unfortunately. But who really benefits from that? I mean, the consumer doesn't benefit when the articles are slanted the wrong way, do they? No. And that's kind of what motivated me to start my business. I just run a market research firm that has actual information on these products,

03:14 and I use it to fact check for the media. Yeah. That word fact check these days. This is good fact checking right here, folks. This is your money, keeping your money in the right place by fact checking, not political fact checking. This is money fact checking. Big difference these days. Yes. But now, speaking of fact checking, let's just spell some common annuity myths. You do a great job in your book. Let's go through a couple of the myths that you featured. One is, quote, if I purchase an indexed annuity and I die the next day, the insurance company keeps my money. True or false? Absolutely false. With an indexed annuity, your beneficiaries or loved ones are going to receive the full value of your annuity regardless of when you die. Very, very important, isn't it? It is.

04:00 Now, another one is indexed annuities or annuities in general, when I see the featured articles, but when I read articles or myths, a lot of times they really do feature the indexed annuity, which lets you participate in the upside of different market indexes, but not on the downside. In other words, you get to share in the gains, but not the losses, which is, that's my kind of strategy right there. But why do they say that indexed annuities have high fees? Well, really, the most common type of annuity historically has been a variable annuity. And variable annuities do have fees. And sometimes the media just tended to assume that all annuities are variable annuities. And today, variable annuities don't sell as well as they used to. In fact, indexed annuities are about to eclipse variable annuities on sales, and they don't have fees largely.

04:52 So, it's a really huge misunderstanding. 32 years I've been in the financial arena, and not one time did offering a variable annuity make sense to my clients. So, I've never offered one. Yeah, I understand. They don't make sense for me either, Coach. You know, the people that talk about the fees a lot of times are the people on the managed money side or the brokerage side. They talk about fees on safe instruments, yet they forget the fact that they're charging a quarterly management fee if they're a managed money person. When you look at a 10-year period, you'll pay a lot more in fees on managed money than you'll ever pay on an annuity. Matter of fact, there's no fees, and most annuities have set up correctly. Well, and what's interesting, Coach, is that I did some market research and found that annuities that are sold by commissioned salespeople are actually more consumer-friendly for the client in the long run.

05:39 Yeah, because when we offer annuity, and I make sure to say this on the show, when we offer annuities, we are compensated by the insurance companies, not by the client. In other words, the client puts $100,000 in, $100,000 goes into their annuity. Whereas on the other side of the equation, on the managed money side, many times if you're dealing with a broker, by the way, if you put $100,000 into, let's say, a real estate investment trust, you'll get $90,000 going to your account. $10,000 goes to the broker who sold you the real estate investment trust. Right. That's a fee. All right. Yeah. So again, folks, we're talking to Cheryl Moore, and her book is Why I Bought Indexed Annuities. Very good read, by the way. Available everywhere good books are sold. Here's another myth, Cheryl. My money is locked up and away with an annuity. True or false? Absolutely false.

06:26 Almost every annuity gives a penalty-free withdrawal provision that allows you to take about 10% of your annuity's value every year. Plus, there's other features like surrender charge waivers and withdrawal benefits that allow you to take money out of your annuity, and it's not, quote-unquote, locked up the way people may think. Yeah. Well, the people that are talking about your money being locked up, when you think about it, if you buy a stock, and I'm a money manager, too, so when we tell people to take a managed account or buy stocks, that's about a 10-year time horizon. We say you really shouldn't touch your money for 10 years to give the market the real chance to work through its cycles. So, in effect, your money is locked up longer in a stock account than it ever is in an annuity, because you do have that liquidity every single year with some of your money in an annuity. Not enough people talk about it.

07:12 Well, but you don't want to spend all the money anyway, because this is your retirement account. I mean, who's going to blow through all the retirement? But, really, it is a preventive measure to keep you from blowing all your money on things you shouldn't be buying many times. So, we always encourage you to have some liquid money anyway. So, keep liquidity and use that for emergencies and vacations, and keep your money for retirement, your annuity, ready to go and give you that great retirement you deserve. Absolutely. Here's another myth. Indexed annuities don't include the dividends on the S&P in their performance. True or false? That's actually true for most indexed annuities, but what most people don't realize is that although you're not receiving the dividends off the index, you're also not receiving the losses in your value due to the index's performance. It's a little bit of a trade-off.

07:59 Yeah, I mean, it makes sense. I mean, there's no perfect situation anywhere in the world. So, you basically take the ones that are closest to what fit what you're looking for. I mean, it's not a Cinderella account. Well, the other thing people don't realize is that because you're not directly invested in the index when you buy an indexed annuity, you can't receive the benefits of the index because you're not invested in it. Right. Here's one final one. You can build a better annuity on your own with some stocks and a bond fund. And I've seen a lot of this lately because the money management world doesn't like losing their money over to the annuity world. And I've seen these articles come up on how you can build your own annuity. I mean, why would you try to do it yourself when there's something already built? Well, and the important thing to remember is that if you bought some stocks and a bond fund, they can't promise you a paycheck every month until the day you die.

08:44 That's something that's very exclusive to an annuity. An annuity is the only instrument that will provide you a paycheck for life. That's very important, by the way, because the reason why I set up annuities for my clients is to make sure they have that pension like we talked about earlier, making sure you have a stream of income you can never outlive. That gives you peace of mind to approach retirement on your terms. Absolutely. One chapter I wanted to talk about, which I liked, it was home runs are possible. What would you have in mind when you wrote that chapter about home runs being possible? Well, you know, there's so many people that say we don't know how indexed annuities perform or a lot of money managers tend to, say that indexed annuities don't perform because they're comparing them to equity. And what I wanted to do was provide real life examples that show the power of indexed annuities.

09:33 So those are actual policyholder annual statements that I've put into the book that show fantastic gains. Now, that's not a realistic expectation for regular performance on indexed annuities, but it does show that home runs are possible. The beautiful thing about this is strikeouts aren't. So as long as you have the money in the annuity, you may not hit a home run every time, but you're not going to strike out. And striking out is where you get in trouble. That's why you say in one chapter, zero is your hero. That's exactly right. Good analogy, Coach Pete. Well, thinking of home run, I think of Babe Ruth, because you know what? During the when he was hitting all his home runs back in the 20s when everybody else was losing money, he had all his money in annuities. He probably went up to the home plate with a lot of confidence in his head. He wasn't worried about having his money all lost in the market because he had the money in annuities.

10:19 He was hitting home runs because he had nothing else on his mind but hitting home runs. And studies do show that people who purchase annuities sleep soundly at night and have less anxiety about retirement. Yeah, I agree. Well, I've purchased my own annuities. And I know you talked to Tom Hegna. He said he's got like 12 or 13 different annuities all ready to give him a retirement. He's retired now. He basically still speaks because he wants to, not because he has to. Well, you know, I bought my first annuity when I was 29 years old and I own several of them now. And like most people, I sleep soundly at night. Well, and you know, we're going to have to cut the segment here because we're running out 11 minutes. This is the fastest 11 minutes I've ever had on the radio. Cheryl, I hope we can have you on again soon in the future to talk about this because I think a lot of people listening need to find out the true story about how annuities can help. Absolutely. Thanks for helping me to get the word out, Coach. Folks, again, her name is Cheryl Moore.

11:04 It's S-H-E-R-Y-L and M-O-O-R-E. And the book title is Why I Bought Indexed Annuities, available on Amazon and anywhere else books are sold. Cheryl, thanks for your time today. Thanks so much, Coach. And folks, we'll be right back after this. .

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 And welcome back in to the Financial Safari. Consumer advocate Thomas Lipscomb here with you in studio alongside best-selling author Coach Pete D’Arruda. Coach, I'm excited for this segment. You have a special guest for us here. Yeah, you know, I spend a lot of time on planes, and luckily these days planes have Wi-Fi, so it's not a waste of time up there. I'm up in the air, I'm reading different things, reading posts. Economic posts usually are people that have economic points. And I found a fellow there, I started watching him, and he had one good point after another, Thomas. You know how you start watching people, I didn't know who this guy was, at one point after another, God, that's a good point. I started thinking about it, yeah. And I started thinking about it the next day. I said, wow, that's what Nate said. Nathan, his name is. Nathan Guta. And he's from Georgia. And he's a Facebook friend of all places. You know, it's funny how we have different friends these days from different circles. This is a Facebook friend because he's talking economics, and he's talking sensible economics.

00:50 And Nathan, welcome in. How you doing? I'm doing well, Coach Pete. How are you? I really appreciate you taking time today to come on with us. And you've got so many good points. But today, we're going to talk about a very important point. And it's everybody out there listening has the same concerns about the cost of fuel and the cost of goods. Let's start with fuel and give me your opinions on what's been going on in the fuel world, diesel and regular gas. Lately, of course, they've been back on the uptick again. Not so much diesel. That is the one lone wolf. Oddly enough, prices were basically bottomed during the most recent cycle. But, you know, you're looking at oil prices. WTI has gone up about 20%. Brent crude has gone up about 17%, a little more than that.

01:36 RBOB gas prices have actually, that is reformulate. That is basically wholesale gasoline before they have oxygen, before it gets to our retail prices. But that's gone up over 20% since mid-December. And like I said, diesel prices have barely budged. But that's going to change. And as we've seen, I follow the stuff pretty much really every day. But we're seeing now 35 states and D.C. are seeing higher gas prices year over year. And last night, diesel finally might have started moving. Because we haven't seen prices nationally go up in quite some time. They had actually been down both on a weekly, monthly and year over year basis.

02:26 But last night, they ticked up a bit. And... Overnight, 40 states and D.C. saw their prices go up, their average retail prices. And so once we start seeing diesel prices move and become higher year over year, we're going to see the rate of inflation tick up on a month over month. We've been seeing it for a while now, going up on a month over month, a three-month and a six-month annualized basis. Which leads higher rate of inflation on a year over year basis. And sure enough, in February, year over year CPI, that's consumer product inflation, and the PPI, which had basically producer inflation. Both of those were higher on now on a year over year basis.

03:11 And it's all being driven by fuel and energy costs. Well, when you think about diesel fuel going up, that's anything you go... When you go into a store, anything you see there got there because of diesel. That's diesel fuel, ships, whatever. Anything that's powered with diesel had to get your ingredients there with your items that you're buying. And then the cost is going to get passed on. That's what always happens. That's exactly right. That's why you've seen in some of my recent posts, I've been saying once diesel prices catch up... Because oil and gas, we be at Brent or WTI, have gone up quite a bit over the last three months. I showed you 20%, 17%, and gas prices were, what, 8.1% or so. But diesel prices are actually down a little bit month over month.

03:59 And they actually reached a peak back on February 9th, a little over a month ago. And we're still down about 20 cents a gallon. Once that plays catch up with oil and gas prices, which is going to do it, just common economics tells you, supply and demand tells you that. Once it does, you're going to see the rate of inflation increase at a faster rate than what we've seen over the last two to three months. Because, like you said, everything is delivered on diesel fuel. Even locomotives primarily run on diesel fuel. Yeah, cars are going to cost more. But, you know, what's happened, though, is, like you said, diesel's been lower. And it hadn't really been that bad. It's actually gone down a little bit. But the prices at the store haven't. They haven't seen the prices. So what they do in the retail markets, they never lower the price.

04:46 They just hire, when there's an event to bring prices up, they bring them up. Are we ever going to see prices back down like we saw in 2020 when you go shopping at the grocery store? You know, the one thing people, you know, we come to realize is when prices go up, manufacturers, I don't care if it's food or what you buy at Walmart, you know, furniture store, whatever, cars. They usually don't drop prices. OK. That's what worries me. That's not necessarily entirely true all the time. I actually was looking at it the other night. So, CPI, you know, prices were going down the last Trump's last full year in office. And I should have pulled up that information. But, you know, we're seeing energy prices go down. So prices do go down. But you need fuel that the fuel that actually runs our economy. Those prices have to go down and stay down for a sustained period of time for it to begin to bring down prices of consumer goods.

05:38 Let's try to peel the onion a little bit. Let's see what is causing the fuel prices to go up so bad. You know, well, a lot of it is, you know, recent events. You know, the EIA and other, you know, outlets or, you know, organizations see demand going up. And we've been seeing, of course, OPEC has kept their, you know, one, one and a half million a day, built million barrels a day cuts. They're extending it into the latter part of the year. Russia actually had two of their refineries hit by Ukrainian drones. And they're missing out on 600,000 barrels a day. Iraq or Iran just said they're going to be reducing their exports to make up for increased exports a couple months before.

06:24 So you're seeing a lot of it. A lot of oil disruption. And then, you know, our wonderful president, who used damn near half of our SPR, has been refilling it for the last six, eight weeks. But he's basically taking 700,000 barrels a week off the market. That's 100,000 barrels a day. And when you're looking at 600,000 barrel production cut in Russia, which Russia is still selling plenty of oil, despite, you know, the sanctions that are not never enforced. Right. But OPEC's reducing and production. And we're taking oil off the market as well. Then Russia, of course, their supply disruption with Ukrainian drones. So oil markets don't produce 10 million more barrels a day than the world uses.

07:13 They try to produce just enough to keep prices steady and keep them from going up for the most part. Well, right. Because they want to make money. That's what it is all about, money. So if I have a bunch of oil and I know people need it, I'm going to cut supply and make prices go up. I mean, that's just common sense. But as a country, we could be drilling our own oil and lowering the prices if we wanted to. But we're not doing it. Oh, absolutely. And we'll look at it this way. The Keystone XL pipeline, which everybody knows, Biden's first day, he canceled it. It was well under construction, you know, and what have you. But that would have been operational. OK, if it weren't, it's been now or three years later. And so that would have been operational and bringing in another 800,000 barrels a day. We'd be at $2 gas. Yeah. And, oh, we'd probably be lower than that.

07:59 $1.50. To be honest with you, because we were about those prices when Trump left office. Yeah. Right. And another 800,000 barrels a day. People don't realize it. But over half of our monthly crude imports come from Canada. Yeah. People don't realize that. Between Canada and Mexico, it's about 65% of oil imports. OK. Every month that we get from the entire world. The Middle East and Russia shouldn't be as much as an effect on our economy as it is, then, when you think about it. Say that again. The Middle East and Russia that we always point to when we say prices are going up, they shouldn't be as much of a culprit because we're getting 65% of our imports from from right here in North America. Exactly. Exactly. Exactly. And we're also getting some from Venezuela.

08:46 And we're also getting some from Brazil, rather. I'm sorry, Brazil. And other South American countries. Very little. A lot less oil than people think actually comes from the Middle East. Yeah. Here in America. Not the world, you know, but for us. OK. And if we had someone in office that was not seemingly doing everything in their power to, you know, handcuff the oil and gas industry, we would see production. We're still producing 13.1 million barrels a day. We still produce more than everybody in the world. We still produce more natural gas than everybody in the world. We export more natural gas, leucified natural gas than anybody in the world. But if it wasn't for, you know, who we have in office now, we'd be producing probably 14 and a half million, you know, three, three years later down the road.

09:34 Certainly we're producing another one and a half, two million barrels a day. It's kind of scary. Right. And that changes dynamics tremendously. Yeah. Got about 30 seconds left here. I want to ask you if you understand why they use the word transitory when they were talking about inflation. When Yellen, Janet Yellen used to call it transitory. Did she really know what she was talking about when she said that word? You know, put it this way. I think Democrats always, because again, you heard a lot of them say the same thing, not just Janet Yellen. But they absolutely knew it was false. But you're not going to say, oh, yeah, inflation is here to stay, man. It's only going to get worse in the months ahead. You have to say, oh, yeah, it's only transitory because that means it's only going to take a little bit of time. Right. Next thing you know, price will start going down again.

10:21 But as we've seen, you know, the rate of inflation has gone down, but inflation is still going up at 3.8 percent, 3.2 percent, you know, from a CPI perspective last month. 3.8 percent year over year, that is from core CPI. So we're still seeing inflation go up. And the big issue here is now we're seeing producer price inflation go up. Yeah. Right. And we could get into those numbers in a little bit or later on at another date, what have you. But they're going up. And when producer prices are going up on a month over month basis, it's passed on to you and me. Well, that's another segment. Folks, we're right against the clock right now. Nathan, I really appreciate your time.

11:06 Folks, his name is Nathan Guta. He's from Georgia. Great economist to me when we're talking about different aspects of what's happening here with our personal economies. Nathan, we hope to have you on again in the future to talk about the CPI and the PPI. We can do that anytime. All right, folks. We'll be right back after this. Bye. Bye.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Hi, this is Coach Pete, and if you've got questions on how to properly structure your assets and build retirement income, you're in the right place. Welcome to the Financial Safari. Broadcasting from coast to coast, it's the Financial Safari with your host, Coach Pete DeRuta. Coach Pete and his guests are some of the nation's top financial professionals. They make it their mission to guide investors through the treacherous jungle of the financial world, showing them how to grow, keep, and leave their money for their loved ones. Coach Pete is a frequent contributor to Fox Business Network, CNBC, The Wall Street Journal, and many other news outlets. They come to Coach Pete for their answers, and now so can you. So stick around and find out how to make it through the jungle of the financial world on

00:48 the Financial Safari. Welcome back into the Financial Safari. consumer advocate Thomas Lipscomb in the studio alongside bestselling author Coach Pete D’Arruda having a fast-paced show. Coach, you've got a special guest for us here, though. We sure do. A few months ago, I was in New York City at a special conference, and when you go to these conferences, you meet people. You have to. You have to. Well, some people don't. Some people sit in the corner and are unfriendly. Thomas, you know those kind of people. That's me. I try to at least meet people. And it was a smaller group. It was a mastermind group on how to maximize income while minimizing taxes. And we had a great speaker that day, and it was fascinating, some of the techniques and tools he was sharing. And I said, gosh, there's got to be a way to get this guy on the radio. And matter of fact, he's right in Raleigh, North Carolina.

01:35 We're in our offices in Apex, our studio. Big studio is here right here at Apex. His name is Chris Gaddis, and he's a benefit specialist from Raleigh, North Carolina. Chris, welcome in. Well, thank you, Coach. Now, let's talk about this. What is a main problem? As business owners, we have a lot of problems. What's one of the main problems business owners, every single business owner has, don't even realize it sometimes to the end of the year, but at the end of the year, they realize they have a problem. What is that? Taxes. Paying too many? Too much in taxes or paying less? Too little? Too much is usually the problem. Yeah. So you've got some really good strategies to help business owners reduce taxes. So let's go through a couple of them. Yeah. Yeah. I think what's interesting with the first one I want to share is that it helps benefits the employees as well. Okay. So it's a double win. It's going to benefit your employees and benefit you as a business owner by paying less taxes.

02:23 Absolutely. All right. Let's go through that. Yeah. Yeah. So it's actually pretty simple and it comes by way of the ACA, which we all love from 2010 Affordable Care Act that brought into place the ability to expand wellness programs that have typically been bolted on to medical plans. So these wellness plans are usually underutilized. They've been underutilized. They're things where you get smoking cessation programs, weight loss. Oh, who doesn't want to hear about weight loss these days? Yeah. I know a couple of pharmaceutical companies are making a fortune on that, right? Yes. And so, you know, it's one of the things that really opened up this way for wellness plans to expand and to create an opportunity for this win-win scenario. So in a nutshell, employers can save on average almost $500 per employee per year. $500 per employee per year.

03:10 That adds up. You have a lot of employees. And the nice thing is it's not a credit or something they have to wait for. It's coming right around in their payroll every time. Immediate. Okay, good. Right to their bottom line. Payroll reduction plan. Reducing taxes. Yes, sir. Sounds good to me. Yeah. And also the employees themselves, they save on average a little over $100 each as well. So the employees save money too. And that's a month, a month. So about $1,200 a year. Wow. All right. That's a nice benefit. All right. So what else can you tell us about that? Yeah. So I think there's a couple unique things about it. But that program in general, it's made to be proactive, help with wellness, help reduce health insurance claims and costs, which is great. Health insurance has kind of had this trend where the deductibles keep going up, premiums keep going up, but the coverages are not. Tell me about it. My daughter had appendicitis last year.

03:56 And the appendix actually burst and got her into the hospital emergency room. We're happy to... Number one, I want to phrase this. I'm very happy we have the medical situations we do now. Sure. Because she was taken care of and she was back out and fine in two days. She was at her friend's at Sheetz eating a hot dog or something like that. They hang out at Sheetz all the time. By the way, that's a hangout place. Thomas, do you know that? When your kids get a little older, my daughter's 18 now, but they don't really have a hangout place for the kids that are too young to go to bars, right? So they hang out at the Sheetz on Friday and Saturday nights. Where oddly enough, you can get everything from a milkshake to a taco to a burger. She gets a lot. She's never had a hot dog there. She'd be mad at me if I said that. I was just exaggerating. She has smoothies. She gets a smoothie there. Smoothies. And so that's the hangout place. They got it all. But it ended up costing about $50,000.

04:41 Not out of pocket, but that's what it would have cost if we didn't have health insurance. But then we keep getting these bills like one doctor must have poked his head in and signed the little clipboard and here comes the bill. So we had a lot of bills coming in. So anytime we can reduce healthcare costs or improve health so we don't have healthcare costs, it makes a lot of sense. So this program encourages, I take it, this program encourages that. Absolutely. Yeah. ACA came into play in wellness plans and really expanding that to help employees actually take advantage of it. Yeah. And there's really a unique byproduct of the program that comes after all of this, which is those dollars when employees use them to buy benefits. Right. They remain, we call them tax efficient dollars. So they're not taxed on those dollars that become that hundred or so dollars that's increased. So the money that they free up, they don't get taxed on too. So it's a really, you know, it's always fun when you say, yeah, I got a hundred dollar

05:28 raise from my boss. And then I said, well, have you spent that hundred dollars? Well, it's only about 60 by the time it gets home. Yep. So in this case, it's real hundred. Yeah. So it is what it is. It is. Which is amazing sometimes. It is. And you see the trend, the trends, you know, that we see are, are not good. Employees are foregoing benefits. They're having, you know, to choose between putting Sally or Susie or Jimmy into baseball or gymnastics or get braces or do a little things like that. Absolutely. So this gives an opportunity to buy benefits for their family and themselves and not feel guilty that they're taking money away from their family and put food on the table or whatever they're concerned about. By the way, folks, we're talking to Chris Gattis, who's a benefit specialist right here in Raleigh, North Carolina. And if you're interested in finding out how to save taxes or save some taxes and help your employees out at the same time, Thomas will tell you how you can do that. Absolutely. It's very easy. Just call 800-661-7383.

06:16 800-661-7383. You can also text the special keyword tax to 600-700. That's tax to 600-700. Now, what kind of fees are involved in this, Chris? Yeah, that's really another cool thing about the program. That's why I really call it triple win because it's net of fees. So there are fees that come out, but it's out of that savings. So the $100 and the $500, and I'm using averages there, obviously that changes, but our net of those fees, so the fees that are internal to the program, depending upon what there's different programs, you know, the employer groups have the option to kind of choose what's best for their employees in that case. So that's really the nice thing. There's no additional fees on top of it. Nothing's coming out of their paycheck. They're still walking home with the same paycheck. So what's the minimum number of employees a company should have or could have to have this benefit them? Yeah, five employees. We want to see five or more employees there. And in this case, actually, the owner is not eligible because they're ultimately benefiting

07:06 anyway on the back end. Right. So it's really one of those tax kind of loopholes almost that benefits employees and employers. We're used to seeing this for the rich and all that stuff. We hear about all these things that the rich do to avoid paying taxes. So here's an option for everybody. The evil rich people paying about 98% of all taxes. Exactly. And not paying their fair share. Yes, sir. You hear that all the time, right? Uh-huh, all the time. And nothing makes me madder because I pay a lot in taxes and I hear about not paying my fair share. No one's ever said that to me, but I hear people on radio or TV, oh, the rich people aren't paying their fair share. Well, how much are you paying? Right. The guy who's saying we're not paying the fair share. Yeah. Well, I don't pay. Well, then, can't say it. If I was Dan Bongino and had a podcast, I could say what I want to say. Yeah, yeah. I get it. But I'm not. I'm on the radio. Yeah. So it's a friendly program.

07:53 It sounds like. Yeah. When did you start working with this program? And have you seen? Give me an example of how it's really benefited somebody. Yeah. Well, we use it with our own employees. So in our company. How many employees do you have? We got a little over 20. I think 23 employees. Okay, good. Good size. Yeah. And so we put this program into place. And I can tell you one of our employees, we use this example in our slide deck. And he put it into place. We pay. You have to have medical insurance as a part of this. So that's an important aspect. So the company has to offer medical insurance. Yes. Or MEC equivalent. Okay. Effective coverage. Yep. But our employee in particular had no previous deductions, joined the team. And he was able to buy eight new benefits, short-term disability, long-term disability, life insurance, cancer, critical illness, gap plan. I like to talk about the gap plan, too, because that's a really big benefit.

08:39 So he bought eight new benefits. And in the end, his pay went up $4. So he got a lot of new benefits, and he got $4 more. Yeah. I mean, he's mid-20s, so he was a little cheaper on some of the benefits. But still, it afforded him the opportunity to buy benefits without any reduction in net pay. Let's talk about the gap plan. This is the one I think is really interesting. One, we get the most excitement over, because usually when we're talking to a company, we're talking to HR, we're talking to decision makers, but maybe not the owner that cares about the bottom line. They don't necessarily profit from that. And so when you put benefits into place, they're used to having that medical. We talked about the problem with increasing deductibles, right? We've seen that happen. Employers have had to do that to kind of keep the premiums somewhat level over the years. It's a give and take. Absolutely. And unfortunately, right? Unfortunately. And so the employees are struggling there. You're like one of these balloons you see, the hot air balloons.

09:26 You have to keep throwing sandbags over, except the sandbags are the important aspects of your company. Just to stay afloat. Right. And then we don't want to do that. So there's ways where you can keep the sandbags and keep afloat at the same time. Absolutely. Because we've seen things like HSAs come into play with these high deductible plans. Correct. Having to pay full amount going in. So yeah, with the gap plan, it's really nice because similar to most people have this on their car when they buy a new car. If you have a $5,000 deductible, you can reduce that to $100,000, $500,000. There's a number of different options there. Where if I've got four kids, I've had similar incidents. Nothing is serious, luckily, but we've had our breaks and falls and things. Thomas has four kids, too. Oh, yeah. That's sad. You've got something to look forward to, Thomas. Knock on wood. Yeah. And so walking into an emergency room, it's a couple grand out of pocket. Yeah. And as we know, I mean, we read all the stories.

10:12 Most Americans don't have that sitting around just waiting for it. You need an emergency account, and most people don't have that yet. Yeah. So this is a way to fill the gap in, I guess, right? Yeah, absolutely. Gap insurance that instead of that $5,000, it might be $500,000. It might be $100. It might be $0, depending on what the company chooses to do. And that's one that we see everyone kind of get excited about, and that's a missing benefit. I think it's a nice benefit to add because it's not super cheap, usually $50, $60 an employee. But here we pay for it out of that net savings, and it's not something to come out of their pocket. So it's a really nice benefit to have just in case. It's a great benefit as an employer to offer your employees because it's something they probably aren't getting anywhere else. Right. And in this case, the employer kind of looks like a hero, too, in that they're putting this into place, giving their employees this ability to have these programs to choose from them, not reduce their net pay. So in today's climate, it acts as a retention tool as well for employers.

10:59 So, yeah, it's a really unique program. Is there a maximum number of employees you can have to qualify for this plan? No. Bring them all. Okay. Yeah, that's good. So the more, the merrier. Yeah. The minimum is five, and the maximum is whatever. Yep. Yep, absolutely. It makes a lot of sense. What's the biggest company you've set up on this? Man, thousands. We're working on a franchise right now that will be probably over 500 franchises coming in. So, yeah, you start adding all those employees. Do you guys help with the enrollment to make sure it's seamless for the company owner? Yeah, absolutely. That's the biggest piece to this is education. We make sure we educate the employees because there's a couple components. Dealing with taxes always, you want to make sure everyone's educated. Absolutely. So that's a big part of it. So, yeah, enrollment. We work with enrollment teams, firms, technology. That all backs that up. Well, I wish we had more time, but we're coming up against a hard break. But, Thomas, tell folks if you're a business owner and you've got five or more employees, you really need to hear about this because it's a net out of cost of zero for you,

11:46 and it really maximizes benefits for your employees. Thomas, tell folks I think you can get more information on this. All you have to do is call 800-661-7383. 800-661-7383. You can also text that special keyword, TAX, to 600-700. That's TAX to 600-700. Coach P Radio. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Peter J. Deruta or his guests are liable for the usage of information discussed. Always consult with a qualified investment, legal, or tax professional before taking any action. Annuity guarantees are based solely on the financial strength and claims paying ability of the issuing company.

12:36 Individuals should thoroughly review the contract for specific details of the product features and costs. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income in the year they are taken.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Folks, this is the time of the show where we go out around the world and find someone who's making a difference, in my opinion, in the financial world. And today is no exception. Today, we're going to join with Mr. Tom Haynes, who is Executive Vice President, Head of Index Solutions at Annexus. Tom, welcome in. Well, thank you so much, Coach, for having me on your show today. Yeah. Now, where are you joining us from? I'm actually in Scottsdale, Arizona this week at the Annexus offices, even though I'm based outside New York City and North Jersey. But I'm down, getting our final meetings in. We have an advisor event. So it's a beautiful, sunny Scottsdale. Not a bad time to be in Scottsdale, is it? No, it's better than in July. So tell me, they've told me that you have a patent. And I'm always curious when I talk to folks who

00:45 have gone to the trouble and all the process to file a patent. What's your patent in? Well, it's nothing that you could use in the kitchen or a holiday gift they could buy on Amazon. But my background, as you know, Coach, has been developing indices as well as developing the way to package them and deliver them. And obviously at Annexus, we're a leader developing index annuities. But my whole career on Wall Street, you know, I actually, before getting involved in building index annuities, I was on Wall Street. I led solutions structuring at UBS, Royal Bank of Scotland. And I also was at the New York Stock Exchange for four years, which we still work with today as a partner through our NYC Bridge Index. And while at the New York Stock Exchange, when you think about the stock exchange, you think about papers and trading and ringing bells. But the stock exchange,

01:33 that company actually also has some of the biggest futures exchanges in the market, including trading of oil contracts, frozen concentrated arches, like trading places. And when I was very involved as well with that futures business, I figured out a way to develop a method to get strategies, almost like an annuity, but for institutional needs through a structured future. So I worked on that design. We filed the patent application in 2009. And I left to the NYC to go into the banking side again. But the NYC did receive that patent, and I am the lead inventor for that. Now, did you say, did you drop a trading places reference in there? I did. It's one of my favorite movies. And it's the holiday season, so I do recommend it. And I'm

02:18 also a Philadelphia native. So it's dear to my heart. I actually always reference the trading places when I talk about strategies. A lot of times people shy away from commodities. And I am a big advocate of commodities and strategies. And I joke, just because you saw trading places, don't shy away from using commodities appropriately. But do shy away from naming your child Mortimer. Yes, that is for sure. So tell me now, folks, again, we're talking to Tom Haines, who's Executive Vice President, Head of Index Solutions at Adnexus. Tom, tell us, because you've been on both sides of the equation now, the risk side and the safe side. And tell me your fascination with index annuities and being able to create that safety net underneath an underlying investment.

03:07 Absolutely. Retail clients have really have been underserved with an asset management product. And I'm not going to be here to be challenging those asset managers in Boston or New York that have driven the concept of a stock bond portfolio. That's what the regulation allowed for. And that's what evolved. But ultimately, as we have a retirement crisis in America, stocks and bonds are just not enough. The worry when you see the 4% rule year in, year out is in question, depending on the whims of the stock and bond market and further longevity. At the end of the day, people need to have a comfortable retirement. They need to have a plan in place. And unfortunately, stocks and bonds don't do

03:57 that. And the benefit of the index annuity product and retirement products with the insurance companies we work with, we're able to tailor protected exposure where you get market upside, the ability to get a market upside without having the downside protection so you can sleep at night. As our partner, Jeremy Siegel says, to allow one to adjust to their sleeping point with an index annuity allocation, then further such benefits as guaranteed lifetime income, which is so important as more and more people live healthier lives, better lives, and living longer. The biggest risk out there as we get older is something, well, one of the biggest risks is called longevity risks. Do you want to talk about what that is and how having an indexed annuity with that income rider added to it will take that risk right off the table? Absolutely. So, because people are living longer, what are they going to live off

04:47 of? Social security, well, that's in question. But let's say you're near retirement age and you think the social security benefit will continue to pay out. Well, that's not enough to live off of for people. It's just not. When we talk about inflation, as I highlighted earlier. So, if you come in with, let's say, a 401k nest egg of equity and bonds, you're running into a market scenario like what we just had over the last few years, right? Where we saw equities and bonds have bad bear markets. And then you're starting off your retirement there. And then you're trying to live a comfortable life. You're trying to go on a vacation to Scottsdale. You're trying to continue to have a car that works in your home. With all this inflation, you're ending up spending more than what you've saved for. And if you live long, you're going to run out of money. And the challenge with that is there's no solutions

05:40 with equity and bond funds to protect that. You either have to live less, have less spending, which is sometimes hard to control when you have unfortunate needs later in life, such as healthcare costs or unexpected maintenance costs to homes and so forth. So, the insurance companies have the benefit of what we call risk pooling because they work with thousands of people that come to them for life insurance, the ability to buy an annuity that guarantees lifetime income through one's entire last breath, including for couples. They have other business lines of insurance. So, as a major well-rated insurance company, such as a nationwide per se, they're able to then offer the policies that provide upside participation in the market, downside protection, but also include guaranteed income.

06:30 And that allows for people to rest assured that no matter what happens to market conditions, they're getting that income through their entire life. Yeah, very, very important. I think it's overlooked a lot of times when we're talking about approaching retirement. People are always talking about what they want to do in retirement. They forget about putting together the plan to make sure they can do what they want to do in retirement. Oh, that is for sure. And unfortunately, America is so good in the financial marketplace, just talking about how things project when you put more money to work. But what happens when we say decimulation? You're no longer working. So, where are you going to get the money if the market goes down? If you say, oh, don't worry, you're 55 years old, you have another 10 years to work, market goes down, you have more money, you're buying at lower prices.

07:18 Well, once you stop working, you don't have any more money to put to work. And now that's the risk. True or false? We're in the worst bond market in U.S. history. That is true. It's a scary statistic, but it is true. Here, going back to the 1700s, Deutsche Bank, last year, was able to see that going all the way that far back, really, from the times of Alexander Hamilton, those that understand the play and the history. He's got to play, yeah. Yeah, exactly. When he started issuing U.S. government bonds before he got shot by Aaron Vert, through that time, the jump in rates has been the most drastic. And when interest rates jump so much so quick, that causes bonds to go down. And in going from literally, and during the

08:07 pandemic, 50 basis points to the U.S. Treasury, so 0.5% was the yield on the Treasury. And here in October, now we're in November, I get going into December, but in going into November, we had over 5% on the 10-year. That drastic move. And a lot of people say, well, in the 1970s, we had double digit interest rates with high inflation. Even in that period of time, we didn't have that bond market that big, because ultimately, it took about 15 to 20 years for rates to rise. But on a flip of a dime, in three years, we've gone from 50 basis points all the way up to 5%. That drastic move is what caused the bonds to go down. And the other thing that's a misnomer is people think, okay, when equities go up, bonds go down. When bonds go up, stocks go down. That isn't true. My friend

08:58 and mentor, Professor Roger Ibbotson of the Yale School, who we've built indices with, the Zebra Hedge indices, Roger will highlight through his research that there has been many times where both markets go down. And that's a situation, the only thing you can hide to is something that has full downside protection. Guaranteed lifetime income, i.e. the index annuities. So, if someone is just hearing about these today, or have been considering it, what would you tell somebody about adding index annuities to make it a part of their retirement portfolio? It definitely has a place, especially when you're thinking through the concept that you can't hide from market risk with equities and bonds. If you're just looking at the idea of accumulation and having

09:45 full downside protection in a piece of the portfolio, you should have a third of it there. I will tell you, my own mother, my own mother is going to be 77 in a few weeks. My father, we did 27 years at Sunoco. He rolled his money over to an IRA. At retirement, he lived through 08 and ultimately recovered, ups and downs. Well, now she's a widow. My father passed a few years back. And as a widow, her portfolio, we do it really a third, a third, a third. A third equities, a third smarter bond strategies, and a third annuities with downside protection. And that allows for, again, that one piece of the puzzle that won't have losses. Then coupled with the other idea we talked about, longevity risk. So those that have not enough save for retirement and they're getting worried,

10:33 guaranteed lifetime incomes should be a real big piece of that. And arguably could even be a bigger piece of that. My, you know, even in putting the context, I know we're talking more micro here with my own parents, my in-laws. Polish immigrants have been in the United States working full time for 40 years. The comfort, my father-in-law did not have a lot of time for retirement. And ultimately, the comfort they have is they actually utilize a guaranteed income life annuity solution to give them that comfort that they can live through retirement. Yeah. It just makes a lot of sense. And Tom, we're coming up against the clock here, but we really appreciate your time. Again, folks, his name is Tom Haynes, Executive Vice President, Head of Index Solutions at Anexus. Tom, we hope to have you on again in the future. Thank you so much, Coach. And everyone, happy holidays.

11:20 Thank you. And folks, we'll be right back after this. 800-661-7383. 800-661-7383. Or text PLAN to 600-700. That's PLAN to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Well, folks, this is the time of the show where we go out across the world and find someone I think who's making a difference in the financial world. And today is no exception. We have David Dooley, who's the founder and CEO of PlanGap and Social Security Risk Score. Folks, when you get close to retirement, you start thinking about Social Security, and then you start thinking about how you can get your most bang for your buck and make sure you're doing the right thing. And I think David's in a really good niche right now because a lot of folks that I talk to are curious about finding out, number one, making sure they're doing the right thing when claiming Social Security, and two, making sure they're getting the best bang for their buck. Dave, welcome in. Hey, great to be here, Pete. Now, your company is located in Atlanta, Georgia. Am I correct? Yes, sir. Right down the street. I'll tell you, the last time I went to Atlanta, it's been like three or four years ago now, but I've never seen, besides Nashville, Tennessee, in the last three decades,

00:48 I've never seen so many building cranes as I have in Atlanta, Georgia. It's been crazy, and the traffic hasn't gotten better. Well, I'm 57. I'm old enough to remember when Spaghetti Junction, you were still out about 30 minutes from Atlanta, but you were close. But you were still able to go 60 or 70 miles an hour coming down the road there. Now, I heard that's where the traffic starts. That is totally true, and it keeps going for another 40 miles. Well, I guess growth is good, as growth is bad. But let's talk about what caused you to develop the company you have right now. Yeah, you know, I've been an entrepreneur all my life, and I had the fortunate luck of being born in Flint, Michigan, of all places, a place that got rid of their traffic problem because of economic malaise.

01:38 And, you know, it was the birthplace of General Motors. Watch my family and others sort of suffer as General Motors kind of went through bankruptcy and other bad stuff, and it was a thought that really no one could imagine. Right. Could General Motors ever go bankrupt? Oh, yeah. And so, you know, a few years ago, I was on a flight, and I overheard this couple talk about, you know, what's going to happen when Social Security runs out of money. Right. And as a younger guy, I never really gave much thought to Social Security, but the fear in their voice reminded me of the fear I heard growing up in Flint, right? And I just thought to myself, wow, I'm sure other people worry about what's going on with Social Security. It's kind of used as a political wedge these days.

02:23 And so what's the truth? What are some of the proposals out there? And that sort of led to the genesis of the Social Security. Social Security risk score and then also the development of products that address what happens if Social Security does, in fact, change the rules on people. Yeah. And when I hear changing rules on people, I think back in my childhood days, we used to watch Charlie Brown, and Lucy was always pulling the ball out from Charlie Brown when he was running up to kick the football. And so that's what changing the rules. It's not something we as Americans respond friendly to. No. And look, this is an election year. You've heard a lot about what's going to go on with Social Security. I mean, there's people on both sides talking about the unsustainability of it, where are the cuts going to come, what are the reform looks like, who's going to pay their fair share.

03:09 And so there's a lot of insecurity and bad information out there, and we're trying to kind of get a place where people can go to get good information. Yeah, I mean, good information, that's the key. Unbiased information, when we hear people talking about what they really want in life, especially from their financial advisor or people giving them that kind of financial advice, is people who aren't motivated by commissions to tell you to do something that isn't good for you. That's right. That's right. And so that's what people always ask, what is a fiduciary? Well, a fiduciary, number one, has to put your needs first, but also they need to do what's right. And we've been doing that forever. But, I mean, isn't it a shame, though, Dave, when we have to have government issue laws to make people do what's right? Well, completely. And what's even more of a shame, especially as it relates to Social Security, is to see how it's used as political football to wedge people into voting a certain way,

04:00 or this person's good, this person's bad. And sort of you asked sort of the genesis of the idea. I mean, wouldn't it be amazing if we could create retirement plans that weren't subject to political football and took that risk specter out of it? And so that's really why we built Plan Gap and Social Security Risk Score. And by the way, folks, we are talking to Dave Dooley, who's founder and CEO of Plan Gap and the Social Security Risk Score. Let's talk about Social Security now and the risk. How dependent are Americans on Social Security these days? You know, it's really shocking. About 90 percent of Americans, basically, if you have two, two and a half million dollars or less of retirement savings assets, Social Security income is going to play a major role in your income plan.

04:46 And you have the government talking about, wow, you know, we might run out of money in 10 years. And then there's a 25 percent cut across the board, roughly. And what that does is even for the average American that's done all the right things, saved a million bucks for retirement, they can have almost near certainty of a great retirement plan, kind of living off $100,000 a year, maybe have a 98 percent Monte Carlo success rate on that because Social Security will make up maybe 50 percent of that income, which a lot of people are shocked about. All of a sudden, if that 25 percent cut, that's the success of that retirement plan goes to a coin flip. And so what's amazing is and what we really try to do is work with people, give advisors tools that allow them to say,

05:36 wow, we think there's another risk out there. We think there's maybe policy risk, government policy risk. You know, people talk about longevity risk and other things like that. But what happens if, again, the government changes the rules and you have to adapt? And so we want Americans with good information to make good decisions today so they don't have to worry about it in the future. Yeah. Now, let's get into this. Now, the Social Security risk score, what is it and how could somebody benefit from it? Yeah. What it is, is it's sort of like a diagnostic tool. It's the first diagnostic tool that takes an individual's unique situation. So ask a little bit about them. They fill out a quiz. Then all of a sudden it says, based on your where you are financially, your age, et cetera.

06:22 This is the probability that you might be affected by Social Security reforms. Here are some of the reforms being proposed. And here's how you would match up against that. And so what's fascinating is we can just look as early as back as COVID to see means testing. Remember? Remember when COVID stimulus checks started being phased out from $75,000 up to $100,000? And a lot of people didn't receive COVID stimulus checks. That was a method of means testing. And you're already seeing politicians say, you know, we might need to means test Social Security. Unfortunately, you know, the government thinks $75,000 a year is rich. Well, the first four letters mean it all to me. It's mean. It's not good for anybody who has any money.

07:07 You don't get any money. So I see why they call it means testing. It's bad for most people listening to the show. That's right. That's right. And again, this is the first sort of blood test. Think of it as almost a credit report, which gives you your own risk factors of where you might be subject to, quote unquote, the potential fixes of Social Security. Because Social Security will be fixed one way or the other. Either they will pay less benefits, tax more, or probably do what I believe is a combination of both. But they will politically target, quote unquote, the rich to pay their fair share. Unfortunately, the definition of rich, you know, falls kind of back into that working class American that's done all the right things, but still could be subject to political football.

07:58 Yeah. When I grew up, $10,000, the $10,000 pyramid, $10,000 was a big thing. These days, it won't even get you a Yugo. I don't make Yugos anymore, but you know what I'm saying? And it's not a big amount of money anymore. Yes. So let's look at this. Now, your program, you can come up with a Social Security risk score for anyone out there, and it weighs all the different factors on what they've saved and what they could qualify for Social Security and gives them a number grade, correct? That's exactly right. And then you can work with an advisor to say, look, what do I do about this risk? Just like you would any other risk in retirement. Yes. Yes. Well, you've been generous. Well, you've shared this with us. We're going to use this software for folks what they call from this radio interview and show them what their real risk score is. Now, if somebody has a low risk score, is it correctable?

08:44 Yeah. You know, we can't necessarily change what the government might do. And so it's really showing what is the likelihood you might be affected by government, you know, fixes of Social Security. But by planning early, sort of planning now, you can take the impact of those changes away, right? So if you wait until the last minute, it's sort of like walking between a balance beam. Easy to do if it's one foot off the ground, right? And you have a 10% chance of failure. But if you put that balance beam across skyscrapers, then, you know, you might not be so willing to take that chance. I've seen those old pictures of the guys who were building the skyscrapers and they were balancing on one beam. I don't know how they did it. That was a real balance beam right there. That was a real balance beam. And so, again, what we want to do is say, hey, here's where your risk exposure might be.

09:33 Let's talk about that today so we don't wait until the last minute and put your, you know, hard work retirement plan in peril. Let's say someone's listening and they've got about, or they're 55 years old, let's say, and they've got about $500,000 saved for retirement. And they're starting to think about, we call it the financial red zone. They're starting to think about what's going to happen next. What's going to happen when they reproach retirement and how do they claim Social Security and how do they make sure they have the right money? Is that too soon for someone at age 55 to do the Social Security risk score? No. In fact, that's right in the sweet spot. Because what's going to happen, the government, frankly, is saying, we might run out of money 2033. So now that's 10 years out. That person, that 55-year-old, is now 65. So they're in the Social Security claiming zone.

10:19 Now their full retirement age will be 67. But as you know, they can claim it as early as 62 and up to age 70. And so what the risk score does is sort of gives them maybe a future look on, is that promised amount of money actually going to be there for me in full? And if not, what can I do today to shore up the retirement income needs that I have for the future? Well, it just makes a lot of sense. Dave, we really appreciate your time. We're going to give the number out in a minute for folks to get your own Social Security risk score done. But Dave, I just wanted to make sure we express our gratitude for you coming on and expressing or showing us what your program is all about. Well, thank you. And thank you for letting people know. I think they'll find a ton of value out of taking it. I really appreciate your time today. Thank you, Pete.

11:04 Take care. So, Thomas, before we go to break, I just want to make sure everyone knows the power of this. I mean, you can see ahead of time where the deficiencies are in your portfolio and make corrections before it's too late. It's never too soon to get started right here. Thomas, let's open it. We got the software. I mean, Dave's been generous enough to share it with us just for a couple months. And it's going to cost a lot of money. But we're going to use it here for the next 40 people who call. Let's make it for 40 people. Let them see what's really going to happen. It's a great opportunity. Real Social Security risk score. Let's open his phone lines up. Make sure we have a bunch of people ready to answer the phones. All right. 800-661-7383 is the number to call. 800-661-7383. You can also connect with us. Start this process by texting keyword PLAN to 600-700. PLAN to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Welcome into the Financial Safari. Consumer Advocate Thomas Lipscomb in studio alongside best-selling author Coach Pete D’Arruda. Coach, got a couple of special guests in the house don't we? Got a couple of retirement masters out here. We got Mr. Ray Lucia who's a retired financial consultant and with retired master. Ray welcome in. Well thanks to you I am now in your beautiful studios and it is pretty darn nice. Yeah and we

00:46 have Mady Amini who's with he's CEO of United Legacy. Welcome in. He does a lot of real estate. He does capital markets and alternative investments. Thank you Coach. Yeah. Pleasure being here. Good to see you guys. Absolutely. Thank you for having us. Both of these guys, Thomas, from San Diego area in California. So really nice area. I visit them every now and then and I really enjoy myself when I'm there. It's nice to be here with you. I knew you back when you had hair. Where'd it go? We had the great hair migration. It moved from the top to the sides now. I've got a beard instead of a head hair. So it's a fast-moving money world so I thought I'd have you guys on today just to go over some things. I mean there's so many different places people turn for their advice and they put their money in places they shouldn't many times. Ray we've seen over the years so many

01:32 mistakes people make with money. No question as you know I've retired several years now. Right. But I still stay pretty close to the industry. I do some mentoring as you well know and some training and so forth. And what I've found most often is advisors getting it wrong and it's frustrating and a little bit depressing. But for the most part they have good intention, Coach. Yep. But unfortunately they haven't kept pace with the times. We see that right there today especially when the interest rate environment is going crazy. A lot of advisors are still giving advice based on interest rates being under one. Well you know the bond market was pretty crazy itself last year. And anybody that was involved in bonds and there's trillions of dollars out there. And they're

02:21 looking for alternatives but don't know where to turn. There's a lot of financial contamination as far as the information out there too. You hear something and then now all that becomes you hear it from a couple people and it becomes fact in your mind. But it could be two people saying the wrong thing and they heard it from the wrong place. So how do you really know fact from fiction these days? Well that's a really good point. I don't want to be sacrilegious here but those of us and I've been in the business and was in the business for 40 years plus. And a successful radio show too. Don't give yourself, don't short sell yourself. Well yeah don't short, don't short side me. It was radio and television. That's right. Just like you. You're my idol now. I'm like you with hair. Well your hair is perfectly combed by the way. Yeah I gotta work hard. So is yours. I see one of them.

03:09 Comb my beard here. No no but my point is that we've been taught in this industry and you go back a long ways too. We've been taught that modern portfolio theory is the way to go. You know you draw a big pie chart and you got small cap, large cap, domestic, international, all that stuff. Right. And then you rebalance the portfolios every year and you do a target date fund. And based on like now the last few decades of research most of that is really not cool anymore. It's just not the right thing to do because by the time you pay for the advisory fee, by the time you pay for the management fees, you could have just bought a simple index fund and done better than most money managers. Now what about a money manager who's charging a fee and they put you an index fund? Well I mean

03:57 does that make sense? Talk about sacrilegious and I used to discuss this all the time on my show and I've certainly advised many and I've written about it too. You and I have co-authored some things together in the past and I've written about the fact that an advisor that does that is just a lazy advisor because a client could do the same thing themselves. But there are ways and there are several different ways I can go through a couple if you want. Sure. That individuals can in fact beat the market by themselves. But as you also know I've written a whole booklet on the value a financial advisor brings to the table. And with not only there's a Vanguard study which is interesting because they invented the index fund. But they even wrote I think it was back in 2000 when they first came out

04:48 with their advisor alpha thing. I think that's what they call it now. That said an advisor that does their clients right by you know behavioral coaching and all the different criteria can add three percent net of fees to the ultimate return to their clients. And so I used to when I advised and did my consulting with advisors I would say you know what don't spend so much time talking about how you're going to pick better stocks because you're not. Right. I mean there are a few really good stock pickers. I know a couple you know a couple. But where you're going to make your money for the client where they're going to make their money is in the way you handle their portfolio. The way they handle your behavior.

05:36 The way they handle timing out what you do with your stocks. Your bonds. Your safe money. Your risky money. Yeah and getting into risk. Now you you've we were talking about this earlier. A lot of people think risk equals volatility. That's that's not true is it? No it's it's not true but that's the whole concept of modern portfolio theory. The way it was sold. Harry Markowitz by the way I had him on my show. He was he died six or eight months ago. Many years ago. I had lunch with he and his wife. Fantastic guy. But you know he was an institutional guy. And and what he did is he created this thing called asset allocation. Go figure. And that was back in 1952. I think that was like three years before Steve Jobs was born. So so the fact is nowadays you got AI you got all kinds of technology. Right. You don't need

06:25 to to manage portfolios for its volatility. You manage it for its risk. And the fact is when you start taking income from a portfolio that's where volatility becomes risk because risk is defined as loss of principle. Volatility is a temporary situation where share prices go down over a 10 15 20 30 year period. Stocks go up in general and they're not risky. They're actually safer than bonds. And a friend of mine and yours Dr. Wade Fowle has talked about this when he wrote that article. I don't know when it was a few years back. But he said why bonds don't belong in your portfolio. And what he's alluding to is the fact that if you can hold on to your stocks long term enough

07:16 and you have other assets from which to draw your income then stocks are less risky than bonds. By the way Peter Lynch also said something similar to that in his book beating the street. I remember reading that back in 1994. That tells you how old I am. Yeah Peter Lynch. Great guy. He's found a fidelity. Yeah very very smart man. Thomas let's make sure people have a way to contact us. If you're wondering about the volatility in your portfolio. If you want to make sure you have a total plan put together for retirement. This is your chance to get Coach Pete's power plan right now which is 22 step total retirement plan all mapped out for you in writing to help you diagram where you are right now. But more importantly where you could be by making the right choices. Analyze what you have right now. Make sure you don't have too many what we call financial termites. Too much risk fees and commission in

08:04 that portfolio. And you really need that financial fill-up strategy. That check delivered every single year for the rest of your life. Thomas tell people how they can do that. All right folks that number 800-661-7383. 800-661-7383. You can also text keyword plan to 600-700. Plan to 600-700. There's just a lot of confusion out there in the money world Ray. A lot of people don't know if they're doing the right thing and they don't know if they're getting the right information from the right person to do the right thing. Yeah unfortunately there's a lot of misinformation and you know fortunately there are shows like this as well where you can get the right scoop and hopefully help people retire in comfort and safety. Thomas I gave Ray an advanced copy of my new book The Book on Retirement. Ah very nice. And about 300 pages. Ray read it. Ray what do you think about it? I read it

08:52 page for page. Page for page. And I thought it was excellent. I think everybody should get a copy of it whether he gives it to you for free or you buy it. I'm sure he wants you to buy it. I'm getting mine for free. I thought it was excellent. Not only did you entertain me but it's really good solid information that's spoken in a language that most of us can understand. Yeah well that's what I try and we don't want to talk down to folks we want to make sure everyone understands and remember being in class and if you didn't understand what the teacher was talking about right away you never caught up during that that period that the class period because you were still trying to figure out what the teacher was talking about to begin with. So we never wanted to leave people behind. Maybe very important to make sure that people are totally educated. Educated the right way for the

09:39 right reasons isn't it? Absolutely. Yeah. When we talk about the mortgage world you and I were talking about the mortgage world before. What's your opinion on what's going on in the mortgage world these days? Well you know a couple years ago I was telling everyone that rates were going to go up to eight percent and I think a couple weeks ago we saw the 10-year treasury break the mark of five and interest rates did get to eight percent. Right. And there is a lot of misinformation from real estate agents and mortgage brokers or mortgage banks because all they want you to do is buy a property and at an eight percent interest rate it might not be the best time to buy a property. Yeah. And so you know right now mortgage rates are high. Yeah well I mean it's and they could go higher right? I mean nobody really knows. Now your crystal ball did you bring it with you because you predicted

10:24 eight percent? What did you say a couple years ago you said that? We believe that you know the you know the 10-year treasury is going to go above five percent again and rates will get to about eight and a half. We see it slowing down I would say in the third quarter of 2024. Is that a reason why somebody should not buy a property right now? It depends on what type of property you're going to buy and where are you going to buy that property? Let's say it's a primary residence. Primary residence at you know rates over eight percent. If you look across the United States of America and look at the median income it doesn't support eight percent interest rates. Okay okay. And I would say that you know the majority of the people in America today have a five percent interest rate or better so you're not going to see them selling their home to go buy at the peak of the market at a higher rate. It's going to make

11:10 people a little less portable. Correct. When you don't want to leave that interest rate that you got like I'm at 299. I'd be crazy to sell my house now and try to go get an eight percent rate. Well you're going to see the government agencies you know do what's called an assumable loan. So I do see us launching that pretty soon where you're going to take over someone's loan. That's the only way it's going to work. Then you wish you could get a time machine and go get a lot of loans at 2.9 or two and a half and it'd make your property very easy to sell if you could sell that interest rate along with it. That's why you want the best education. You know I was telling a lot of folks when rates were at four percent I was able to get 10 million dollars on a 20 million dollar house for them and they said well 4.90 is a high rate and those individuals in Palo Alto. Hello you should have done it because now

11:57 you could invest that money and buy more properties. Yeah I mean it's it's just a confusing world. I think the main thing is to be informed make sure the education you're getting is from the right place and you're not getting led down a rabbit hole of wrong information. So verify like Ronald Reagan would always say trust but verify. So folks here's what I recommend. Let's let's clear our desks off. Let's make sure that you get that clear understanding of where you are right now but more importantly where you could be with the proper financial and income plan put the put in place as we call it the financial fill-up strategy which has that growth protection income component. Grow your money protect that growth and get income for life when you need it and for the next 10 of you who have at least 200,000 dedicated to retirement this offer is for you and our strategies do work best for those of you with over a million dollar safe retirement. Thomas tell people how they can qualify for Coach Pete's power

12:45 plan. It is very easy all you have to do is call 800-661-7383 800-661-7383 you can also text keyword plan to 600-700 that is plan to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Thomas Lipscomb, Each and every week I talk to very interesting people. And the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Welcome back in to the Financial Safari. Consumer advocate Thomas Lipscomb here in studio alongside America's wealth, financial, and income coach. That is bestselling author, Coach Pete D’Arruda, sitting with us in studio today. We have two special guests, Ray Lucia and Matty Amini. Coach, having a great conversation with them, aren't we? Yeah. We were talking here at the break, and I mentioned one word to Ray, and Ray got fired up. It was taxes. Ray, how happy do taxes make you? I love taxes. You know, I work for a CPA firm now,

00:49 and I help them do a lot of different strategic things. I mean, most CPAs are really good at doing tax returns and some consulting, but many of them don't have the resources to do some of the more creative, but seriously beneficial tax saving strategies. Okay. So let's talk about one that you have identified that's a pretty good one. Well, you and I had lunch today, and we were just in a casual conversation, and the casual conversation went from the pulled pork that I was having to, I can save you a couple hundred thousand dollars. Yeah. Well, that's, so how, this is for business owners, I guess, right? Well, for real estate. Let's just stay with real estate. Your other guest

01:36 was talking about investing in trust deeds. Well, this is investing in real property, and you said that you are a partner in a building this year, and the building was worth X amount of dollars, and I talked about bonus depreciation and cost segregation. So let me break those down real quick. Sure. First off, when you own a commercial building, you acquire a commercial building, you get to depreciate it over 39 years. If it's a residential building, you depreciate it over 27 and a half years. And most people know that. But you can do what is called a cost segregation study. Now, these used to be super expensive, thousands and thousands of dollars. Well, now with technology, they're down in the, you know, maybe a thousand or two thousand, depending on the value of the property.

02:25 Very affordable now. Yeah. Very affordable. So you do a cost segregation study. And what cost segregation does is it segregates the property values where the depreciation schedules were less than 20 years. You can actually accelerate those. And with bonus depreciation, any property acquired since, say, October 1 of 2017 and January 1 of 2023 gets 100% bonus depreciation. Let me give you an example. Let's say you bought an apartment building for a million bucks and 300,000 of it is land. There's 700,000 of it left. Maybe 25 or let's say 30% or so, 200,000 of it is less than 20 year

03:13 depreciable property. They give you a tax deduction of that $200,000 now. Now, if you bought that property in 2018, 2019, you can do a look back cost seg study and actually get that full deduction on your tax return, either by amending or there's a form you fill out, you can get it on this year's. If I understand that part of it, I don't do tax returns. I'm just, you know, the 30,000 foot guy. Correct. But the other thing is there are still opportunities to do that right now. And I'll explain what real estate professionals are in a second, because that's key to this. But the depreciation schedules are phasing out. So the 100% bonus depreciation stopped in 2023. In 2024, it's 80%, and then 60,

04:04 then 40, then 20, and then it's gone. Okay. So right now on that $200,000 write-off, if you bought the property this year, you get 80% of that or $160,000 deduction. If you or your spouse is a real estate professional, and I'll explain what that is in a sec, then you can take all of that this year. So if you're in a 30%, 40% tax bracket, saves you $40,000, $50,000, $60,000 in taxes. So let's look at a scenario. Somebody buys a townhouse, let's say, in 2023, like this year. And they buy it for, let's just say, $450,000. And it's going to be rental property. All right. So let's take me the rest of the way now. How can I qualify for this? Let's say that the land cost X and the property structure was worth $275,000 left over. Okay.

04:56 That's easy math. So $275,000 divided by 27 and a half years means you get a depreciation of $10,000 per year on that property. All right. That's straight line depreciation. That's what everybody gets. Right. Now, if you make more than $150,000, you can't even take that depreciation because you phase out. Okay. Now, if you're a real estate professional, you can take that depreciation without regard for your income. But in addition to that, you can also get the bonus depreciation. So bonus depreciation would take all less than 20 year property. So of the $275,000, let's just say for the sake of discussion, $100,000 represented carpet and drapes and lighting and landscaping and so forth. That can all be

05:46 bunched into this year. And you take $100,000 income tax right off as a real estate professional. What it takes to be a real estate professional, you don't have to be real estate licensed, but you do have to spend at least 750 hours and 50% of your work time doing real estate. It could be property management, could be fix and flip. It could be all kinds of different real estate. It doesn't have to be just sales. Okay. So if you do, then you get to take those great depreciation numbers. Otherwise, you get the 27 and a half years anyway. But if you make as much money as you, you wealthy sucker, you can't get it because you're not a real estate professional. So what'll happen is

06:32 when you sell that condo or townhome or whatever you bought, you'll be able to take all that right off against the capital gain sales price. Okay. So you can still benefit a little bit down the road. You still get it. It's just deferred. Down the road. Oh, well, so how does one become a real estate professional then? You said they have to be a real estate professional. They don't have to get a real estate license. They don't have to get a real estate license, but they have to spend more than 50% of their work time. So you have a full-time gig. Your wife has a full-time gig. It's not going to work for you. But let's say your daughter decided she wanted to spend some time managing your townhome, managing your other, you have other real estate too. Correct. So in your particular case, your daughter could set up her own property management company. And as long as she spends more than 50% of her work time working on those properties, collecting rents,

07:19 you know, charging her dad extra fees for being a late payer, et cetera, et cetera, replacing tenants, you know, the stuff that property management folks do, as long as she spends 750 hours of which 500, and there's some other exceptions to all this, but 500 material hours of actually doing that stuff. Then the other 250 can be, you know, thinking, making phone calls and so forth. Then she's a real estate professional. All right. Well, so it makes sense. So the cost segregation study is the most important thing, I guess, to get started with if you think you could qualify for being a real estate professional. Yeah. So through my CPA firm, I've been able to negotiate with a few cost segregation companies that have the data. See, back in the day, you needed to hire an engineering company to go in and take a

08:08 look at, you know, elevators and what it costs to change the lights and all that stuff. Well, you know, these cost studies have been around for years. So if you data banked all of that information, they know what every light bulb costs. They know what every railing costs. They know all that stuff, flooring, et cetera, et cetera. And so they plug it into their computer. And for less than a couple of grand, maybe 1500, maybe even a thousand. And in your case, it's probably thousand or 1200 bucks. You spend that and you get a $50,000 write off. That's well worth it. It makes a lot of sense. So folks, if you are curious about getting your own cost segregation study done, all you have to do is text the word study to 600-700. Just put in the body of the text, the word study, and then send it to 600-700. We'll make sure you get connected with the right

08:57 people to see if you qualify for that. Some people could save a whole lot of money if they took advantage of this. For sure. And now it's not too late. If you bought a property this year, you want to take advantage of that 80% because it goes to 60 in about a month and a half. Okay. So definitely if you, well, what if you bought it in 2020, let's say, and you wait until 2024 to file? Oh, you're still fine. Okay. Because you can go back and collect it on the 2020 at 100%. Okay. Good, good. So you don't get penalized for not applying right away, as long as you buy the property in a certain year period. We already own the property since September 27th of 2017. Right. Up to January 1 of this year. So 600-700 is the number. And then in the body of the text, you type the word study, S-T-U-D-Y,

09:43 and you'll get that cost segregation study information to see if you qualify and see how much you could save on taxes. Right. People love to save on taxes. I do too, just like you do. Who doesn't like to? Thomas, do you like to save on taxes? Every day if I can. Weekly. If you save the wrong way, you end up in jail, and you'll save on rent and mortgage payments too, because you won't have one anymore. You'll be in jail. There you go. You'll lose everything. So it's important to do the right thing at the right time. Do we have a broker's behaving badly, speaking of the right thing? Oh, we do. It's the wrong thing. Don't get mad at this one. And now, brokers behaving badly. Just when you think they can't get any worse, they do. This guy needs to be in jail now. Meet Kaz Crafty of Colts Neck, New Jersey.

10:31 He's accused of pocketing $1.6 million and now is facing multiple charges. Now, since November of 2017, Crafty was authorized to provide financial counselor services to families of deceased U.S. service members, known as Gold Star families, who, as surviving beneficiaries, are entitled to thousands of dollars in death benefits. According to the U.S. Attorney's Office, Mr. Crafty was responsible for providing general financial education to the surviving beneficiaries, but prohibited from offering his personal opinion regarding the use or investment of the benefits. That's exactly what he did. Without telling the Army, he had two side hustles with two separate financial firms and uses his position as an Army financial counselor to identify and target military families to invest

11:21 their survivor benefits. The U.S. Attorney's Office says based upon Crafty's false representations and omissions, the vast majority of the Gold Star families mistakenly believe that Crafty's management of their money was done on behalf of and with the Army's authorization. He's looking at 20 years in prison for each of the wire fraud and securities fraud charges. It's also punishable by a maximum $5 million fine. The SEC weighed in and says that Crafty pocketed more than $1.6 million in fees and commissions alone. The director of the SEC's Division of Enforcement said in a statement, rather than help Gold Star families best use their survivor benefits, we allege that Mr. Crafty manipulated them to profit from their grief.

12:07 This, in my opinion, is one of the lowest of the low, taking advantage of Gold Star families. Crafty expected to be tried and sentenced later this year. Insist on transparency with any advisor and be sure and follow up on BrokerCheck. Always good to check and see what the person who's recommending is doing there, folks. And just be very careful. Get the right plan in place. That's what we talk about, our total retirement plan. Thomas, I've got 10 of those golden tickets right now we're going to give away. Make sure you get that real plan for your family that will give you that peace of mind to approach retirement on your terms. And you also get three of the books I've written when you come in this time, too, as well. And that number, 800-661-7383, 800-661-7383, or text keyword plan to 600-700, plan to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Welcome back in to the Financial Safari. Consumer Advocate Thomas Lipscomb in studio alongside best-selling author Coach Pete D’Arruda. We also have special guests in studio Ray Lucia as well as Mehdi Amini. Having a great conversation here folks. Welcome back in. How are we all doing? Ready for round two? Oh yeah. Now here's one thing. We talked about Tom Hegna's new book last week, Who Wants to Be a Millionaire? Really good book. It's about 107 pages of techniques and strategies to make

00:48 sure you're doing the right thing in the money world and make sure that you're on the right path. It doesn't mean everyone's going to make a million dollars but you can have a lifestyle of millionaire if you use some of the strategies and techniques Tom outlines in his book. Thomas Lipscomb, do you realize that Tom Hegna sent us about 20 copies to give away this week so I'm going to give 20 of these copies of the book away for anyone who calls and you come in and get it. You get your own golden ticket for your own Coach Pete's power plant as well when you come in. Tell people how they can start that process. I love that. We make it very easy folks. Just call 800-661-7383. 800-661-7383. You can also take advantage by reaching out via text. Text that keyword plan to 600-700. Plan to 600-700.

01:35 And I'm going to be visiting with Tom this Monday after Sunday. You are, aren't you? I'm going to apply to New York on Monday. I'm going to be on Wall Street. I'm going to be masterminding and I'm going to be on a couple of TV networks here. And Tom even wants to be on his show Who Wants to Be a Millionaire. It's a Fox business show. But I won't be on this time. I'll probably be on in December. Wow. How fun is that? So let's, do we have a Through the Years segment? We do. These are always fun. Thank you, Gary. Check this one out. Through the Years. Let's take a trip back in time. The year is 1951. During January, the United States began nuclear bomb testing at a site in Nevada. And said to be four times as big as the atom bombs of World War II. The explosion takes place at 1,500 feet.

02:22 The first commercial computer was created in the U.S. It was called Univac. The data processing machine had 5,000 vacuum tubes and weighed about 16,000 pounds. This Univac, it can add 2,000 separate additions in one second. It can make 500 multiplications, 250 divisions, and do all sorts of other complicated things. The classic television show, I Love Lucy, debuted on CBS in October. The show starred comedian Lucille Ball and Cuban entertainer Desi Arnaz as Lucy's husband Ricky. Of course, that was her real-life husband as well. Here's a clip from the original pilot. Ricky? Yes, Lucy, what is it? If you'd known how I look in the morning, would you still have married me?

03:07 Well, would you? I'm trying to decide. The classic film, An American in Paris, premiered in London during August. The musical film featured music from George and Ira Gershwin and the dance numbers were choreographed by the film star Gene Kelly. The film won a total of six Academy Awards, including Best Picture. Then I want a melody. Then I want a melody. I strive. Walt Disney's 13th animated feature film, Alice in Wonderland, is released in July. It was considered a flop and received negative reviews from the film critics. Alice in Wonderland soon became a cult favorite. The film was re-released in the 70s.

03:56 Come, come, my dear. Don't you care for tea? Why, yes, I'm very fond of tea, but... If you don't care for tea, you could at least make polite conversation. Well, I've been trying to ask you. I have an excellent idea. Let's change the subject. Inflation in 1951 was 7.88%. Your new house cost you $9,000 and you made about $3,500 a year. New car cost you $1,500 and to put gas in it, just 19 cents a gallon. We've now arrived back in the present. Hope you enjoyed the trip. Here's to a smooth ride into retirement. It's always fun to see what happened back in the past. Ray, you were born right around that time, you said. I was a one-year-old. One-year-old then, 1950. Do you remember I Love Lucy? Of course.

04:44 Thomas, you want to go back for those prices back to 1951? Wouldn't I love to. 19 cents a gallon. I do remember paying 27 cents, but I don't remember 19. Wow. That's crazy. What about the Univac computer? It did a bunch of different equations. Yes. It added, wouldn't it say, 16,000? 16,000. It weighed 16,000 pounds. That's what caught me, too. And they say that a smartphone today could run circles around any of the older computers they had. 16,000 pounds. Well, the little phone you have in your pocket probably does 20 times more things than that computer did. Do you remember the first financial planning computer that people used to take on the road with them back in the day? What was it called?

05:29 The Computone. Oh, the Computone. Where you took the handset of your telephone and plugged it into these two rubber holes and dialed the number. He got disconnected, and it would spit out a little printer. And that weird paper. Oh, I know what kind of paper you're talking about. Yeah. I used to travel with that, like to Las Vegas, all over the place. And I was, like, super enthralled with it. I thought it was the coolest thing ever. Well, you remember the thermal paper back in the day? Yeah, so that's exactly what it was. So if you didn't get the information off it right away, it would disappear. It's like disappearing ink on that stuff back in the day. I was talking to my grandkids about that the other day. The disappearing ink? Actually. Well, no, I was just saying, you know, now you guys are walking around with your noses in your phones every single day. Oh, yeah. And, you know, we used to have to stop at the 7-Eleven, put a quarter in, and call our client to see if the appointment was still on.

06:21 Yeah. Now you press in navigation, it takes you right to the door. Oh, I know. Or you have a self-driving car to get you there. It was different. Did you have a Thomas Guide? A Thomas Guide, yeah. Instead of GPS, yeah. I used the Thomas Guide instead of a GPS. Thomas Guide. Thomas, you remember your guide? Popular name today. I don't know a popular name. Is that before your time? That was before my time. Yeah. His name is Thomas, though, so he had the guide. There you go. That's where the parents came up with the name. Did you ever use the Thomas Guide? No. I don't remember. Do you? I remember the maps. We had, like, the map you had to unfold. I remember, like, certain cities had a book. You could get the map book. Yeah, they still sell those, actually. Really? Which is crazy. We bought one for our grandson, who's away at college in Colorado Springs. And my wife brought him a map. I said, honey, he's not going to ever open. You don't even know what it is. He won't know how to read it.

07:07 I was just going to say, Siri, or whatever, take me to this place. It's so much easier these days. The worst thing was being lost at night and then having to try to find a phone book somewhere so you could call the person you're going to see and find out if they could give you decent directions. Yeah, and this time of year in California, it gets really foggy sometimes. You can get lost really easy. At the seventh horse, make a lift. Hey, Maydee, let's talk about something that a lot of folks might not be familiar with, the term trust deed. What is a trust deed? It's essentially a mortgage. And what we do at United Legacy is we're giving an opportunity to investors to invest into a trust deed, get onto the first lien position, make anywhere from 9% to 12% returns

07:54 secured with the home. Wow. So, yeah, that's important being the first in line, the first lien, right? Absolutely. You don't want to be the fifth lien. No, first lien, and we're underwriting at our bank, at La Jolla Capital Bank and American Mortgage Bank, properties that have plenty of equity, preferably 50% equity into the property. We're giving short-term loans at 12 or 24 months with double-digit returns. A lot of retirees across the country are looking for fixed income with inflation, gas prices. In San Diego, we got gas prices hit $7. Went back down, but $7 is a lot. Yes, that's a lot. You know, when we live in San Diego is the most expensive city in the United States.

08:40 We have an office in Honolulu, third expensive city in the United States. So, you know, you got to have income. And so, double-digit returns, short-term, and a climate where inflation is hurting the American people in their retirement years. Right. We're able to, you know, take a $200,000 investment and get them that fixed income and sometimes pay up the interest up front. Oh, so like you said what the interest was, 9%, 10%, 11%? Do you think up front? Absolutely. Wow. That's pretty neat. Secured. Secured. So, here's a question I know anyone would ask is, how safe is it? Like, it sounds too good to be true to me. That's a pretty good interest rate. And it's only, you're looking at a one to two-year kind of investment timeframe. And the money's pretty liquid then, isn't it?

09:26 It is. It's the climate of the market today. Interest rates are higher. Right. So, we're able to give higher yields. There's a lot of, the consumers are real estate investors, fix and flippers, people that are still doing transactions. And we have a fund right now, and the fund is more for accredited investors. It's a three-year hold. But as far as the security, it's very protected because of the equity into the property. Right. And now we have some partnerships that we're going to release and go live on where we almost guarantee the principal coming back to the consumer because of the equity position. That's pretty neat. So, I think before the show, we came up with a text code. So, if you're interested in finding out more about this, folks, all you have to do is text

10:13 the word TRUST, that's T-R-U-S-T, to 600-700. That's TRUST to 600-700. We'll get you information on it. I think that's the first step of any plan is to get the information, get informed, be familiar with it, and get confident and see if it's a fit for you or not. Absolutely. And, you know, you asked about the risk and, you know, what we look at is geographic areas where, you know, I ask all the listeners, do you believe if a property is worth a million dollars that the real estate market in your particular area is going to lose 50% value? Right. Well, if it does, then your $500,000 investment is pretty secure. But we back that at United Legacy and we have partnerships where they back your principal. So if a client is in default, you're $500,000, we're going to write you a check for that.

11:01 Yeah. So if you're talking about a million dollar property and it has to fall to $500,000 for you to even worry about anything, then that's a pretty good investment in my book there because that'd have to fall 50% and the property would, what I've seen with properties, it goes up and down, right? It'd come back eventually. Absolutely. And the key thing is 12 months is the term of the loan. So we got to also ask ourselves, do we think that the property values in North Carolina are going to drop by 50% in the next 12 months? I hope not. A lot of people would be very mad at a lot of different things if that happened. And where can you get a secure investment, secure being an alternative investment, not a regular investment, and get double digit returns plus your principal back in a 12 month period? Now we hear that term secured investment, we hear like people were, it's secure because

11:52 it's backed by the mortgage or by the property the mortgage has. A lot of people when they invest like a stock, there's no security there at all. There's no backing to it. If the stock goes down, you don't have anything to fall back on. But with a mortgage-backed place like this, alternative investment here, you've got the mortgage, the property that the mortgage is securing to secure your investment. Absolutely. But there's a lot of examples of alternative investments and investments in real estate are alternative investments. I believe right now the climate in America, it's the best time for us to invest into debt funds and secure debt, not highly leveraged. So we can say a trust deed, but if you're lending 100% of something, whatever it's worth, that's not so secure. So again, having leveraged 50% or more equity, 12 month period of time, your name being on

12:44 the title of the property and giving you double digit returns up front. Definitely worth pursuing. Folks, if you're interested in that, all you have to do is again, text the word trust, trust, T-R-U-S-T to 600-700. That's trust to 600-700. That's trust to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week, I talk to very interesting people. And the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So, stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Alright, welcome back into the Financial Safari. Consumer Advocate Thomas Lipscomb in studio alongside best-selling author Coach Pete D’Arruda, as well as Ray Lucia and Maddie Amini. Welcome back in, guys. Hey, Mr. Amini. A lot of people are curious about how to make money, how to make the money they see on TV instead of getting trapped in a CD at a bank at maybe 5% or whatever. How do you get ahead in this game, this money game? The way to get ahead is to make big returns or find really good investments

00:49 or developing things. Well, you want to talk about developments, I guess, don't you? Yes, we believe in real estate development, especially right now. And, you know, you can build in California, for example, since I live in California and San Diego, we're seeing a lot of bonus density loss changing in California. So, we're able to, in one area in California, take a 4,000 square foot lot and build 26 units. In fact, we looked at another development deal in California, right by the water, you know, coastal, less than one acre, we're able to build 198 units. So, when you talk about real estate- It's amazing when you think about it. It is. One acre, 100, because you're going up instead of out. You're going up. The laws are changing. They're allowing us to be able to build. The rules are

01:40 changing. And when you're able to take such a small piece of land and build up and build lots of units, that's where you're going to get the biggest returns on investment in real estate. So, a lot of people are looking for the right investment in real estate. It's not going and buying a single family residence at the highest peak of per square foot. It's about building square footage in areas where they're allowing you to build up and stack on each other. Is this zoning? They've changed the zoning requirements? Is that why people are able to do that now? Or people never thought about building up? It is. It's, you know, the housing crisis that we have in California alone. And if you go to White House's website, they're talking about in the future- Whitehouse.gov, I guess is it?

02:26 Yes. And what you're going to see is they're going to be funding billions and billions of dollars for a lot of these office buildings to be actually converted into multifamily. Well, that's interesting. So, taking some of these vacant office buildings and now they're going to be big apartment complexes, I guess, right? Absolutely. Wow, that's an interesting concept. And prior to that, what we're seeing in certain geographic areas is being able to bring these developments to investors out there that are looking for a great return and being able to, you know, point out where those properties are is what we do at United Legacy. Now, when somebody wants to invest in something like this, what do they do? What's the steps of that? They can try to do it themselves, but it'd be almost impossible, correct? It would. You know, you need to know how to develop. You need to pick out the geographic areas where this is possible all across the United States and team up with a good organization

03:17 that can help you through that. And with United Legacy, that's what we do is we're bringing in the average American that wants to invest and put them in front of these types of deals. And so, that's why you're one of the specialists at Retirement Master. Yes. Because your specialty is this area right here, the real estate area, the way to maximize the gains on real estate and also invest the right way into real estate. We can't generalize real estate anymore. Is it a good time, you know, water cooler talk, right? Is it a good time to buy? Is it not? Is it in residential? Is it in commercial? You know, we have to ask a lot of questions and we have to be informed. We need a strategy. The world is changing. You can't be a dinosaur and you have to change with it. It's a turning point in the Great

04:07 Reset. When capital is getting more expensive, prices are still at the peak. How are you going to make money in real estate? And so, we believe, you know, there's two ways. One, invest into short-term debt and trust deeds. Two, pick out geographic areas and investments where you could build a lot of square footage with these bonus density. This law is changing. All right. Let's go back to number one, short-term debt and trust deeds. We talked about that earlier in the show, but here's what happens in radio. People come and go, they get in their car, they get out of the car. People might not have heard you on segment two talk about trust deeds. So, explain that just briefly, what a trust deed is and how people can participate in that. The average person could participate, let's say they have $250,000. We secure a $500,000

04:55 property. You're able to get, let's just say, a 10% return on that up front for a 12-month period. Your name is on the trust deed. You are secure with that million-dollar asset. And so, you got to ask yourself a question. Do you believe in a 12-month period, wherever that property is located, that you'll be able to pick and choose, will the values of that property go down by 50%? And so, you're pretty much protected with your principal. You're able to get double-digit returns. And what I like to compare it to, Coach, is to buying an investment property. If I were to go in this market today and buy an investment property, I would have to at least put 30% down. You have a rate now with investment properties with prime borrowers that are buying an investment. It would be about a 9% interest rate

05:44 in today's market. I have to pay my taxes, my insurance, the HOA, and we have to cash flow. And most of the time, it's pretty hard to do that. So, a lot of retirees do not want to even be the property owner. And if you're in California, you couldn't even collect rent during the pandemic. So, who wants those headaches? And a trust deed, we have a great saying, sometimes it's great to be the owner, sometimes it's great to be the loaner. You become the bank. Don't let the word trust deed scare you away. You become the bank. You're not just investing in the real property. You're lending the money. And so, we, as a mortgage bank, underwrite the client. We get an appraisal on the property. You get to pick and choose the property. And we have plenty of room in the

06:34 equity of the property to ensure that we're going to get paid back. And on the other end, why would someone not pay the principal back when they got so much equity in the property? They're going to find whatever way to get that loan back to you. And so, we secure that. We protect the principal. And investors are able to make a 10% return on a monthly basis, in some cases, up front. Now, if you want to find out more about how to, just some information on what a trust deed is and how you could qualify for it, if it makes sense, all you have to do is text the word trust to 600-700. Again, the word trust in the body, the number you text to is 600-700. It just makes sense to find out some information and get that true diversification in the real estate world. You brought up a good point. If someone tried to buy their own property as an investment property, they'd pay about a 9%

07:23 interest rate, which there go the profits. I mean, it's sort of like working at a restaurant and seeing somebody eating all your food before they weren't selling it to anybody. You got the interest rate eating your profits up at 9% interest you have to pay. And could you even get a return of 10% to 12%? Probably not. Murphy's Law would go against you because if you had to make it, you'd probably lose money. Absolutely. It happens a lot of times. So just find out about how to have real estate work for you, not against you. I think that makes a lot of sense. Now, point number two was on that. Besides trustee, what was the next point you made? The real estate development. Development, yeah. Being able to build a lot of units with what we're going to see a lot of micro cities in America, in the downtown metro areas. We're building all around. I'm here in North Carolina visiting you and I see you guys are building everywhere. And so it's all compact. And you

08:11 know, you got the retail, the mixed use. So development deals where you could build square footage, get into these investments, they're going to make you money. You know, when you said micro cities, I picture that with that show about those little tiny houses that people live in. The small ones. You've seen them, right? They look like little work sheds, people living there. I love those. Do you? I'd love to move into one of those. Oh yeah? My wife wouldn't. There you go. You might be forced to move in one if you get in trouble. They've been in the backyard where he has to go to the backyard. I have no comment. You know, we just celebrated our 50th wedding anniversary. Well, congratulations. So I'm very used to sleeping on the couch and sleeping in other places, but I think we're okay for the time being. Yeah. Well, I mean, it's just about making sure that you understand what your spouse wants.

08:57 To stay out of trouble. I wouldn't want to, I mean, I've seen way too many people get downsize from a big house to little house around retirement. And then all of a sudden they're calling us, telling us that they're getting divorced. So I don't know if there's no, I can't, there's no scientific correlation that I can verify yet, but I think so. I mean, I like my space. I don't know, Thomas, I know we've agreed you like space too. I am most certainly introvert. What about you? I love my space. We have a big house, but for some reason my nine-year-old and 11-year-old love to come sleep with mommy and daddy. Oh yeah. Well, that always happens. The big bed. Maybe we should downsize, but my wife wants a bigger home, double and square footage. Wow. And everyone sleep in our room. Oh, that's how that happens. Well, when you have a party at your house, where do most people end up? In the kitchen. Right. So the kitchen is a very important part of the house. To me it is. That's where I go get

09:45 my late night snacks. There you go. So we've got a couple minutes left in the show. Ray, we're in the year 2023. I mean, I never thought we'd ever get to the year 2020 or 2020, but here we are. And a lot of people are wondering what's going to happen in the next 10 years. I know you don't have a crystal ball, but what do you see happening in the money world the next 10 years? Well, I think technology is going to play an ever increasing role in virtually everything that we do. So there, you're going to see trading strategies coming out of the woodwork. You're going to see people like my firm, the CPA firm going through transitions because AI is going to start doing pretty much all of their jobs as far as the technical side. It's one of the reasons why

10:32 I'm in the consulting business with firms such as that to get them more on the advisory side and less on the mundane filling out returns and all that, because a lot of that's going to be done by AI. Listen, I am an optimist. This is the United States. We are in troubling, troubling times right now. And I think as it relates to your financial plan, your retirement plan, whatever the case may be, it does pay to have a very long-term perspective on things such as the stock market and such as real estate, which, you know, and I'm listening to the presentation here and it clearly makes a heck of a lot of sense to me when you can go short-term, get decent rates of

11:19 return and wait out the potential storm that may be ahead of us. So once again, if you can run your financial life a little bit more conservatively than perhaps we ran it up to and including COVID, I think most people will benefit by that. How important is it to have income built into your retirement portfolio? Well, it's critically important. I mean, I'm at retirement age and I'm semi-retired right now. You're never going to retire, Ray. You're like me. You're too happy around the money world. I love doing what I do. And I, you know, with the CPAs and all that, it's really been a lot of fun. And then hanging out with guys like you where we get to mastermind like we did all day today is really a lot of fun. But I think we just have to be a little bit more careful with the riskier

12:10 investments and focus more on income than on growth. Maybe brought that up in the real estate market. He doesn't see, from what I can hear and understand, he doesn't see where there's an upside upside in a lot of traditional real estate. Go out and buy a condo, rent it out to somebody. Buy a small apartment building, a duplex, a fourplex. He doesn't see an upside because the interest rates are too high. I would settle on something that gave me some kind of either guaranteed income or very safe and secure income. Well, let's get that total retirement plan done, folks. And Thomas, we have 10 more spots open, I think, here. Let's give that opportunity to folks. Folks, if you want your very own Coach Pete's Power Plan, it's 22 steps behind the scenes giving you that retirement and retirement income

12:56 plan that you deserve. Thomas will tell you how to do that. It's no cost or obligation, by the way. Folks, we make it very easy. Just call 800-661-7383. 800-661-7383. You can also text keyword plan to 600-700. That's plan to 600-700. You can also change the amount of business. You can also change the amount of business.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Hi, this is Coach Pete, and if you've got questions on how to properly structure your assets and build retirement income, you're in the right place. Welcome to the Financial Safari. Broadcasting from coast to coast, it's the Financial Safari with your host, Coach Pete DeRuta. Coach Pete and his guests are some of the nation's top financial professionals. They make it their mission to guide investors through the treacherous jungle of the financial world, showing them how to grow, keep, and leave their money for their loved ones. Coach Pete is a frequent contributor to Fox Business Network, CNBC, The Wall Street Journal, and many other news outlets. They come to Coach Pete for their answers, and now so can you. So stick around and find out how to make it through the jungle of the financial world on

00:48 the Financial Safari. Welcome back into the Financial Safari. consumer advocate Thomas Lipscomb here in studio alongside Coach Pete D’Arruda having a great conversation. Coach, you have a special guest on the line for us. Who do we have? Oh, one of my best buddies ever. It's Mr. Tom Hegna. He's joining us from Scottsdale, Arizona. And Tom, it's been a little while since we've been on together. And in the meantime, you've written a new book. I mean, of course, my favorite book you've written is called Don't Worry, Retire Happy, Seven Steps to Retirement Security. Let's talk about that just for a minute. How have people across the world accepted this book? Well, Don't Worry, Retire Happy. You know, that was the TV special that played on PBS and 80 Million Homes in the U.S. and

01:34 Canada. That book is really the math and science behind a successful retirement. So it's been received very well. It's got all the research of the top PhDs in the world. And so instead of using people's opinions, what I did was I used the facts and the research and the math and the science to show people how to retire the optimal way. And I told you, it was when I was talking to you about that book years ago, I remember telling Thomas in my studio, I said, you know, what Tom Hegna does is he puts math over markets and science over speculation. And that's what a lot of people are forgetting, Tom. When we're talking about getting to retirement, that's only half the battle. That's right. Because, you know, it's like when you climb a mountain, there are more deaths on the way down from the mountain than on the way up from the mountain. It's the same in retirement.

02:19 There's more tragedies once people get to retirement and run out of money or have an unplanned long term care event or something than the problems that they have saving and investing. Yeah, I remember watching your special on PBS and I mean, millions of people saw that. And I think a lot of people took some of the concepts you were mentioning and applied them. And and now they're going to have a happier retirement because some of the money they have now is isolated from market events. Yeah. And I mean, you know, everybody thinks retirement's about having this big pile of money. It's not really true. It's about having increasing income. And I would add increasing tax free income if you can. And then managing risk. You know, what happens if the market crashes? What happens if you live a long time? What happens if inflation continues? What happens when they raise your taxes? And notice I didn't say if what's going to happen when they raise your taxes.

03:07 And and so that's what a good retirement plan. It anticipates all those negative possible events and then protects the wealth from those events. It's a whole lot better to withstand a negative event in the market when all your money isn't exposed to the market. Correct or not? Incorrect. That is correct. Yeah. I mean, and when I know it sounds simplistic, but Tom, over my 31 years in the financial arena, I've seen way too many people with all their money exposed to some kind of risk, whether it be interest rate risk or market risk or we talk about, well, interest rate risk is owning real estate. I mean, if interest rates keep going up, the market of the pool of people for you to sell your house to is shrinking because rates are high and it costs thousands of dollars more a year to own the same house you could have owned two or three years ago.

03:53 Plus, look at all the banks that failed earlier this year. And it wasn't because they held bad investments. They held the safest investment in the world, U.S. government bonds. The problem is they bought the bonds when they were 1% and then when interest rates went to 5%, those bonds had gone down 80% in value and they're the world's safest investment, but they were down 80% and those banks failed. You know, we all know, and in the financial world we know this, when interest rates go up, bond prices go down. So let me ask you this, Tom, what were the people in the banks thinking when they were piling money into bonds at 1%? Well, they shouldn't have been, you know, because the risk was, and I mean, the Federal Reserve said we're raising interest rates, so I'm going to raise them a lot. So it's not like, oh, surprise, surprise. I don't understand why they subjected themselves to that interest rate risk.

04:40 Now, let's be clear. If they hold those bonds through maturity, they get all the money back. But the problem is in between now and maturity, those bonds can go down like they did, you know, 70%, 80%, and then if people walk in the bank and say, hey, I want my money, they didn't have the money to give them their money back. Yeah. Let's say you needed the money now. You don't have 10, 20 years to wait for maturity. No. You know, that's the problem. And we talk about that kind of risk. That's a big risk that people forget a lot of times. But then the market risk, but I mean, the real estate risk, inflation, what about inflation? I mean, we keep hearing it's pretty funny when they come out with the monthly numbers and they say, hey, it's a, we're only, inflation's only at 3% this month. Well, that's 3% higher than it was last month. We need negative inflation to get back to where we used to be. Right. And look at gas prices up 40, 50%, you know, food prices up 20, 30%.

05:27 At least. I mean, everything has got up. It's, it's, I just laughed the other day. I went to Starbucks. I got a large iced tea, black iced tea, $4.49. And I just laughed. All it is, is water in the teabag. Wow. There's two cents worth of stuff in there and $4.49. It's crazy. You could go to Walmart, get a hundred pack of Tetley or Lipton tea for about $4. And you could have made, uh, how many gallons of tea? Yeah. It's crazy. We're paying for convenience these days, but we're overpaying for things we shouldn't be overpaying for. And inflation is a silent killer, just like high blood pressure. That's right. I factor that in because I had a little high blood pressure, but I'm back under control with a little medication. I'm happy about that. There you go. Yeah. Everybody hears about my health issues here. We could tie it into the market and the heartbeat is a good thing to keep low too. So that's why we, we want a proper balance in the financial world.

06:15 But my heartbeat would increase Thomas, it would, Tom and Thomas, both of you guys, my heartbeat would increase if I became a millionaire and you wrote a book, Tom, since we've talked to asked it's Tom Hageness, who wants to be a millionaire. And that's what we have you on today. Want to talk a little bit about this book. What inspired you to write it? Well, here's the deal. I've spent my whole time writing books for baby boomers. I've written five books on retirement. This was the first time I did one for generation XYZ and millennials. You know, I have four kids ranging from age 21 to age 39. And these are the things that I've taught my kids on how to build wealth. And all four of my kids are, are very successful so far, you know, and doing great things. So I said, I want to build, I want to write a book for younger people because I believe

07:01 almost all Americans can become millionaires if they want to be. And that's what I put in this book. I'm generation X. So I appreciate you calling me a young person. 1966. So I'm almost a baby boomer. And there you go. Here's what they say about Jen. It's fun to look at what they say about our groups, right? So they say generation X are skeptical, but big believers when they find something that is, that is backed up by science and math. And so I think that's why I like you so much, Tom, because, because you back everything you say up with science and math, no guesses, no gimmicks, no theosaurus words that no one understands, no re-imagining. It's just the facts. Sort of like they used to say on Dragnet. That's why I like Dragnet back in the day. Yeah. Let's talk about good. I like to keep things simple because I think simple, you know, is effective. And when it's complicated, it gets confusing and people just lose interest.

07:49 Yeah. Lose interest or trust. I mean, if you don't, if you can't understand something, the trust level is not there too. So understanding things very important. Let's talk about the first chapter, help people become millionaires. What, what, what's this chapter about? Well, what's, what's interesting, um, coaches, you know, when I was an advisor 30 years ago, the ETFs didn't even exist. I couldn't illustrate mutual funds. I couldn't illustrate stocks and bonds. There was one product at the time I could illustrate and that was life insurance. And so what, what, what I would do is if I went to one of my kids' ball games or I went to a, you know, a party and somebody said, so what do you do? I didn't say, well, I'm a life insurance agent or I'm a financial advisor. What I said is I help people become millionaires. You tell me how many million you want and I'll show you what you need to do to get there. And people would be interested in that. They say, well, all right, well, show me what I'd have to do to be a millionaire.

08:36 And then I would run a life insurance illustration and solve for a million dollars cash value at their age 65. Now, I don't think everybody should put all their money in life insurance, but it was the only product I got to illustrate. And I use an example in the book, a 25 year old female, if she puts away $7,700 a year at age 65, she's going to have a million dollars in her life insurance policy. So that was step one. But then I'd take them over to a time value of money calculator. And I'd say, look, if you could get 6% a year, you'd only have to put away about 500 bucks a month away and you'll be a millionaire at 65. If you could get 9%, you'd have to put away about $250 a month. If you could get 12%, you only have to put away a hundred bucks a month. Well, all of a sudden people can see that it's possible for them to have a million dollars.

09:23 See, most people think, oh, that's pie in the sky. I could never do it. And they'll never do it because they don't think it's possible. But when they can see it, then they can believe it. And that's when they can achieve it. Zig Ziglar said all that kind of stuff. So you got to see it and believe it to achieve it. It's the same with financial stuff. And then I was no longer considered a salesperson. I was on their wealth building team. I was part of their team and I was going to help them become wealthy. And that's how I started. Well, you know, when you look at a million dollars, it's still a good deal. If you win a million dollars, like in the lottery or Survivor, Survivor gives a million dollars away to the winner. But they've been giving a million dollars away for the last 20 years to the winner. Don't you think the people who won right at the beginning, that prize was more valuable. That million dollars was worth a whole lot more 20 years ago than it is today, isn't

10:10 it? Yeah. And I get a lot of people say, Tom, a million dollars isn't enough for a millennial. And I say, OK, I understand that. I might even agree with that. But I will tell you this. The first million is the hardest. And you know that as well, Pete. The first million is the hardest. And after the first million, the second, third and fourth can come easier and quicker. Anyone who says a million isn't much, I mean, I'd rather have a million than not have a million, right? It's a building block. It's building. And a million can last a long time if it's used properly. Yes. I mean, we've built plans with a million dollars for lifetime income that people have increasing income. They never worry again. And the problem is a lot of times we've met these same people. They were working and they were still working and they didn't think they would be able to retire with the income they wanted in the Wall Street model. But taking it and putting it in the safe money model with a lifetime income, the growth protection income type accounts, now the riddle is solved.

10:57 And so it's not just about what kind of money you have. It's where you have it. That's right. And so you're talking about that too. And it's also not trying to get intimidated because when we have no money or not much money, when you have somebody saying, well, all you have to do is start saving this amount of money. And by you're 25 now, and at 65, you're going to be a millionaire. It's still hard to, number one, it's hard to trust anybody. Number two, it's hard to believe you really can be a millionaire, but it's all about time, value, money, isn't it? Yeah. Yeah. Yeah. And you talked about it hard. Things are hard. It's hard to say. In my conclusion, here's what I say. I say marriage is hard. Divorce is hard. Choose your hard. Obesity is hard. Being physically fit is hard. Choose your hard. Being in debt is hard. Being financially disciplined is hard.

11:44 Choose your hard. And so we all have to choose our hard. Yeah. I mean, that's a good way to look at it, too, because nothing's easy. And actually, if it is easy, you're not going to appreciate it anyway. I mean, you look at some people that inherited a lot of money and they blow it within the first couple of years. Lottery winner is a good example of that. Some people win the lottery and then years later, they're poorer than they are. Then at that time, they're poorer in the future than they were before they won the lottery. And I also put in the book that there was a study on Canadian lottery winners. The neighbors of Canadian lottery winners went bankrupt at a much higher rate than normal people. And so what happened is the lottery winner moves in and they start buying new cars and going on trips. And then, you know, you have to buy that new car and go on that trip. And people go bankrupt when they live next door to a lottery winner. We call that keeping up with the Joneses.

12:31 That's right. The funny thing is I had a neighbor say their name was Joneses. They were the Jones family. They've moved now, so I've stopped spending money. Just joking. So, folks, we're talking to Tom Hegna. And he's the author of several books. He also had a PBS special, Don't Worry, Retire Happy. My favorite book that he's ever written is Don't Worry, Retire Happy. Available anywhere fine books are sold. But also, he's got a brand new book called Who Wants to Be a Millionaire? And when we come back after the break, we're going to delve into this and find out the simple tools and techniques that get you where you want to be. And speaking of getting you where you want to be, if you'd like Coach Pete's Power Plan, which is a 22-step total retirement plan, the next 10 of you who call, we'll give it to you at no cost or obligation if you call right now. 800-661-7383. 800-661-7383. You can also connect with the team here at Capital Financial by texting keyword PLAN to

13:19 600-700. PLAN to 600-700. Coach Pete Radio. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Peter J. Deruta or his guests are liable for the usage of information discussed. Always consult with a qualified investment, legal, or tax professional before taking any action. Annuity guarantees are based solely on the financial strength and claims paying ability of the issuing company. Individuals should thoroughly review the contract for specific details of the product features and costs. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income in the year they are taken. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Hi, this is Coach Pete, and if you've got questions on how to properly structure your assets and build retirement income, you're in the right place. Welcome to the Financial Safari. Broadcasting from coast to coast, it's the Financial Safari with your host, Coach Pete DeRuta. Coach Pete and his guests are some of the nation's top financial professionals. They make it their mission to guide investors through the treacherous jungle of the financial world, showing them how to grow, keep, and leave their money for their loved ones. Coach Pete is a frequent contributor to Fox Business Network, CNBC, The Wall Street Journal, and many other news outlets. They come to Coach Pete for their answers, and now so can you. So stick around and find out how to make it through the jungle of the financial world on

00:48 the Financial Safari. Welcome back into the Financial Safari. consumer advocate Thomas Lipscomb in studio here alongside bestselling author Coach Pete DeRuta. We also have on the line Tom Hegna. We are discussing his new book, Who Wants to Be a Millionaire? Coach, in the last segment you mentioned, Survivor has been on over 20 years, and it originally started with a million-dollar prize. Yep. I threw the numbers into the inflation calculator. There you go. You want to hear what it would be in today's dollars. Well, it's not the financial calculator anymore, is it? No, it is a visionary engine. All right, you put in the visionary engine, and what'd you get? All right, 1.775. So that's what you almost have to be a $2 million prize winner now in Survivor to equal what it was when it first started. Just since it started. Yeah. Incredible. Yeah. Well, Richard Hatch, we all know him. He was one of the original winners of Survivor, and he did it naked, and then he didn't pay

01:36 his taxes, so then he ended up in prison. So you never want to take that route. And then Discovery stole that idea, and now we have Naked and Afraid. All sorts of Naked and Afraid. Well, we don't have a Survivor veteran, but we do have a veteran, a U.S. military veteran, Tom Hegner. He's also the author of a bunch of books, Don't Worry, Retire Happy, my favorite one, PBS special, Don't Worry, Retire Happy, and his brand new book, Who Wants to Be a Millionaire by Tom Hegner. Tom, we just started talking about this on the last segment, but there's three phases of wealth. Let's go over those. Yeah. Yeah. So the first phase is building wealth. That's who wants to be a millionaire. Then if you have wealth, you better protect it. That's who wants to stay a millionaire. And then in retirement, you want to distribute it to either you or your family. That's how to live and give like a millionaire. And like I said in the last section, Pete, is that I spent my whole career on number two

02:25 and number three, protecting and distributing wealth. This is my first foray into the building wealth, and I'm doing it for young people so that they can build wealth, and then they can retire too, you know? Yeah. Now, we say young people. How young or old can someone be to still apply these concepts? Well, I mean, anybody can apply these concepts, but the younger you are, the more effective it's going to be because you have time. And time is the one thing that older people don't have, that young people haven't. And the problem is many young people waste their time. They don't start investing young. I always say it's the money you save in your 20s that will allow you to retire in your 60s. If you don't save any money in your 20s, you're not going to be able to retire in your 60s. You're going to have to wait until you're 70. And I just want people to retire young and have a great retirement.

03:13 Yeah. Very, very important. Because, well, Albert Einstein identified compound interest as one of the eighth wonders of the world. And there you're hitting right on that. Because the sooner you can put money away in your favor, the sooner you're going to be able to have that growth and that retirement you deserve. Conversely, or inversely, if you, I always get that mixed up. But on the other side, if you owe a lot of money, the compound interest will go against you on credit card debt. One of the things, I see people come in many times with 29% interest on credit cards. Yeah, I mean, that's crazy. And so there's really three keys to building wealth. Number one, you want to make more money. And we'll talk about that. Number two, you want to spend wiser. And I would say spend less, but at least spend wiser. And number three, you want to put your money into appreciating assets. See, think about it, coach. Most people put their money into depreciating assets.

04:00 The car, boats, jet skis, RVs, clothes, computers, iPhones, handbags, shoes. Those are all depreciating assets. They go down in value every single day. Now, we all need some depreciating assets, but that's not where I put the majority of my wealth. So I'm not going to spend a lot of money on things that go down in value. I'm going to put my wealth in places that go up in value. And I think if people just realize that, you know, the dirty little secret, coach, is that every one of your listeners is going to earn millions of dollars. Even somebody earning $50,000 a year over their career is going to earn somewhere between three and six million dollars. But if we can get them to 100,000 a year, they're going to earn between seven and 11 million. If I can get them up to 250,000 a year, they're going to earn 18 to 28 million dollars

04:47 over their career. And it's a lot easier to save a couple million when you got 28 million coming in than if you got three million coming in. Yeah, I agree. And so I always tell people, it's not how much you make, it's how much of your money do you keep. And a lot of people don't keep enough. And I'm on record saying that most Americans could be millionaires except for two simple things. Number one, they spend way too much money on their cars. And number two, they get divorced. So the moral of the story is drive a used car and stick with your first spouse. Now, I say that tongue in cheek, and I'm not telling people who are in abusive relationship that they shouldn't get divorced. But what I'm saying is divorce can wipe people out. And many people are getting divorced in their 40s, 50s and 60s. And half their retirement fund is gone. Boom. And so, you know, teaching your children that picking their spouse is the most important

05:33 decision of life, I think is very important. And the other thing, coach, the reason I pick on cars is because it is the one thing that most people spend way too much on putting money into depreciating assets. I use me as an example. I had a chance to buy a brand new Ford F-150 pickup for $65,000. Or I could buy a two-year-old one with 13,000 miles for 30,000. Well, guess what I did? I bought the two-year-old one for 30,000. Now, if I invest that 35,000 and I get 6% interest, that's going to gross to somewhere between $383,000 and $697,000 in retirement. If I can get 8%, it's going to be somewhere between $401.8 million in retirement. Now, coach, that's one vehicle.

06:20 I'm married. I got four kids. I think we probably had 15 or 20 vehicles over our life. You know, I'm just telling you, we were just celebrating our 40th anniversary. Multiply those numbers times 10 or 15 or 20, and all of a sudden, you got millions of dollars, and coach, you see it all the time. People come in your office, and the husband and wife, they each have $1,000 a month car payments. Yeah. They'll never get wealthy. Too many people are trying to look wealthy instead of become wealthy. See, I never cared if people thought what I looked like. I didn't care about that. What I was doing was building wealth, and I want people to really think, do you really care in 30 years, do you think you'll remember what car you drove 30 years ago? Will you care? Was it brand new or was it two years old? Nope. I mean, you know, I just think cars are the one thing that if people made different buying

07:09 decisions, that alone could help them have millions of dollars in retirement. One word I penned it years ago, I don't know if people have picked it up, but gratisfaction, and that's what gets people to buy cars. You want that immediate gratitude and satisfaction together, so you go buy a new car, and then we talk about it, maybe you finance it for five years, which is 60 months. About 30 months in, you might not even have that car anymore, but you still have what, Tom? You still got that payment. Got those payments. That gratisfaction gets people in trouble. So it's about having a plan first, and the plan is not to blow your money. And did you ever watch Fantasy Island back in the day? Oh, yeah. The plane, the plane. You remember? We had the little guy. That's right. And we always thought he was saying the plane, but really they were trying to subliminally tell you to plan. Here's what he said. The plan, the plan. It said the plan, the plan. And people now are picking up on the fact that you really need a plan, and the plan doesn't

07:57 just involve about having a budget and spending plan. It's knowing why you're spending or not spending what you're spending. And you just gave a great example of that. Taking the money you would have blown on a car and instead putting it into your account, where now you can buy five cars in the future and pay cash if you let that money build up. Yeah. And, and, and coach, the thing that people forget, they said, oh, I don't want to save retirement. That's boring. It's not boring. It's paying for my country club membership. It's paying for my, I told you we're going on a Mediterranean cruise. Retirement is awesome if you have the right funding for it. And my kids are jealous of us because now we're like kids in a candy store. We're like on summer camp every day. I play golf four to five days a week. I play pickleball two days a week. We're going on cruises. We're having the time of our lives. That's what retirement's about.

08:43 And that's why it shouldn't be a pain to save for retirement. You should want to save for retirement. You should want to have as great a retirement as you can have. But a lot of people think it's boring or it's, it's, you know, oh, that's a waste of my time and money. No, it's not. That's your future life. And I always say the only person that will take care of your older self is your younger self. Let me say that again. The only person that will take care of your older self is your younger self. And I'm so proud of how my younger self took care of little old me. Well, I talked to a lot of military veterans who were in your same boat, Thomas. They learned how to save and budget like other people didn't because you didn't have much money, but you knew how to appreciate money and put it away because you had long-term goals. And by the way, folks, we're talking to Tom Hegna. He's the author of Who Wants to Be a Millionaire?

09:28 What an awesome book. But after the, after we get done with the segment, I'm going to talk to Tom. I'm going to order some books from him. So we have some books to give away when you come in folks to, to get your own plan put together. Also, we have these visionary engines on our website where you can, you can map out what, what if I didn't spend this $500 on a car? What would it be worth 30 years from now at a certain interest rate? You put in whatever interest rate and see what it is. That's why they call it a visionary engine. Thomas, tell people how they can get the visionary engines. Absolutely. Just head over to visionaryengine.com. That's visionaryengine.com. And we have a host of them there, depending on what your focus is. But one I think that pertains to this conversation is what does it take to be a millionaire? Yeah, that's good. Feeds right into what we're talking about. It does. We call it the millionaire milestone timer, but it paths out your, your path to your first

10:14 million. Well, Tom, we, Tom, we talked about earlier. We talked about how you, you mentioned how financial planning and retirement planning is all about like climbing a mountain, but a lot of people, more people die on the way down after climbing a mountain than the way up. So in your book on chapter seven, you say, where are you on the mountain? I think that's good for people to identify. Let's talk about that. Yeah. Yeah. So, you know, part of being, when you're young, you're at the bottom of the mountain, you're starting to climb. And then when you, when you retire, when you're right at retirement age, you're at the top of the mountain, but then that, that money has to last you, who knows how long to, to 80, 90, a hundred, 110. We don't know. It's got to get you all the way back down to the mountain. And that's, that's why for young people, you know, one of the things I help young people with is teaching them how to make more money. And, and I say they should follow the Japanese concept of Ikigai.

11:00 Now, Ikigai is an intersection of four circles. So circle number one, you want to write down, what is everything you're good at doing? Circle number two, what do you love to do? Because you might be good at some, but you ain't doing it. That's not a good combination. So you want to know what you're good at. You want to know what you love to do. What does the world need? And what can you get paid to do? And I'll use me as an example. I found my Ikigai. People say I'm good at doing this. I like doing it. The world certainly needs what I'm doing and I get paid to do it. So I found my Ikigai. You know, even Abraham Lincoln said, whatever you, whatever you are, be a good one. So like, if you're a plumber, you should want to be the best plumber in the County. If you're a truck driver, you want to have the best safety record because the best people are the ones to get paid more and promoted well.

11:46 And I think we've forgotten that, you know, you want to be good at things that those are the people that get paid. I say there are riches in niches. Find your niche. It will make you rich. So you want to become an expert in something. You want to be able to do something better than anybody else that if they have a problem, they're calling you because you are the person. Those people make more money. So you want to develop those skills, get some expertise. So let me share with you my secret to success. And I've shared this with all my kids. When you get a job, I want you to go to work early, stay late and always do more than you're paid to do. Now people say, well, that's crazy. Why would you do that? Because you will soon become the most valuable worker in that company. You're going to get paid more and promoted faster than your peers who come to work late,

12:34 leave early and try to do as little as possible for a paycheck. Now, when I was growing up, all the kids were taught this. I don't think kids today are taught this. In fact, I spoke at a meeting and one of the people who put this slide up, my secret to success, and they got attacked on Facebook. Oh, that's stupid. I would never do that. I'm not going to give more time to the man. They got to pay me. They want me to work. They got to pay me. And I just told them, I said, see, that's the dime a dozen people. Those are the people that come to work late. They leave early. They do as little as possible for a paycheck. They're the ones not going to get promoted. They're not going to get paid more. You know, this worked for me. It's worked for my kids. And I know it will work for your listeners. Be the MVE, the most valuable employee. Yeah. Folks, you can have the most valuable plan, the MVP. If you call right now, we'll put together for you what we call Coach Pete's Power Plan.

13:22 It's a 22-step total retirement plan. And yes, it does have the financial fill-up strategy, a monthly check all the way through retirement that you can never outlive. If it's in that GPI plan, growth, protection, lifetime income. I want to thank you, Tom Hegna, for visiting today. Folks, if you'd like to get your own plan, though, all you have to do is give us a call. Thomas will tell you how to do that. Absolutely. The number 800-661-7383. 800-661-7383. You can also begin your journey by texting keyword plan to 600-700. That's plan to 600-700. Coach Pete Radio. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice.

14:08 Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Peter J. Deruta or his guests are liable for the usage of information discussed. Always consult with a qualified investment, legal, or tax professional before taking any action. Annuity guarantees are based solely on the financial strength and claims-paying ability of the issuing company. Individuals should thoroughly review the contract for specific details of the product features and costs. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income in the year they are taken.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week, I talk to very interesting people. And the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Listen. And welcome back into the Financial Safari. Consumer Advocate Thomas Lipscomb here once again, alongside America's Wealth, Financial, and Income Coach, bestselling author, Coach Pete D’Arruda, as well on the line, I was going to say in studio with us, as well on the line is Mr. Phil Graham. Phil, you're so inspiring. It feels like you're sitting right here with us. And I've been to the studio multiple times. Yes, you have. Yes. Where are you joining us from? I'm visually picturing myself there right now.

00:46 Where are you at right now? I am sitting at my desk in Lake Norman. Let's talk to somebody if they're asking themselves this question, maybe they've asked some friends, how much risk can I afford? So, Phil, let's say somebody's 55 years old right now, and they're asking themselves, how much risk can they afford? What kind of answer would you give them? Coach, I remember one time I asked a lady, she was in her 80s, she was retired, and she had a bunch of money in the market. And I was like, Mrs. Jones, if you doubled your money tomorrow, would you change your lifestyle? She was like, well, no, Phil, I've lived within my means, and I'm happy. Maybe I'd take an extra cruise or do something special with the grandkids, but no, I wouldn't change my life. And I remember going, well, Mrs. Jones, if you lost half your money tomorrow,

01:33 would you change your lifestyle? Oh, by all means, Phil, I would definitely change because I'd be scared to death. That's thought-provoking when you think about it. Then why is your money set up like you're trying and hoping and praying to double it, but putting it completely at risk? When you're telling me you already have enough, we need to be more concerned about not losing it, but still getting a competitive rate of return. Correct. Well, then the next question is, what types of risk are there? When we talk about risk, it's not just stock market risk, is it? There's inflation risk, which was kind of off everybody's radar for the last 10 years, and it came back with a vengeance, thanks, Biden.

02:20 And there's tax risk. I can guarantee you, well, we already know taxes are going to go up next year. Looking forward to that. They're going to have to continue to go up, because who's going to pay for this billions and billions of spending that we're doing? Every time you give money away, when you hear the government doing it, there's no such thing as government. It's us, the people. Without us, the government has zero. Zero dollars. And I love asking people, who's going to pay it? And people a lot of times will go, oh, the Americans. I'm like, ah, no, wrong answer. We're the Americans. The right answer is taxpayers. Yeah, well, that's right. Only 50% of Americans approximately actually pay income tax. Yeah. But yet everyone can vote, and they can vote for politicians who say they'll raise taxes. Yeah, because they don't care.

03:06 They want the free stuff. Well, they love it, because if I'm not paying taxes, I'm going to vote for the guy who says he's going to give me more stuff, because it doesn't matter to me. You're going to take the money from the guys paying taxes. So we got- Doesn't make any sense. We got market volatility. We got inflation. We have taxes. Those are- We have healthcare expenses are going up and up and up, partly because we're living longer, which is a good thing, but it causes a lot in healthcare. Luckily, down here in the South, we pay much less. Coach, you and I have some friends up in the Northeast. They're paying over $200,000 a year today for nursing home care. Wow. Well, that'll burn through a million dollars really quick at $200,000 a year. Well, nursing home, big thing too. Now, the traditional long-term care policies is not the only way to make sure you're covered for nursing homes, correct?

03:53 You know, there's a lot of new options, like the traditional monthly or annual payment where you buy long-term care. Yep. Those have kind of gone away. The insurance companies had to keep raising rates, and it just became unattractive. Didn't make any sense to have a policy like that if you really didn't know what you had. If they could keep raising the fees or the cost for it, and also lowering your benefits as a trade-off for lowering your premiums, that wasn't a real policy in my opinion. I've never offered one because I didn't like the fine print. You know, I've done a lot of work in the last few years with what we call asset-based long-term care where- Me too. You know, for example, if you had $200,000 that we allocated to this account, it's still going to earn interest. But if you needed that money for long-term care, they might give you a 5X or a 2X, depending on your age when you bought it.

04:42 You get a multiplier where you're leveraging that, and all the benefits are tax-free because it's for long-term care. So it's a way that you're kind of self-insuring, but you're getting a multiple on your dollars, specifically for long-term care. It's something we look at and need to address because I can tell you, you don't want Medicaid to be the answer. If you have money, becoming a ward of the state and being stuck in a Medicaid bed when you have money is not what you want to try to figure out. You want to kind of plan ahead for this potential expense in the future. Yeah, you don't want to become a ward of the state, they call that there. Also, life insurance, some of the new life insurance policies will enable you to use the death benefit while you're still living to pay for your long-term care.

05:31 That makes a whole lot of sense. Tax-free too, by the way. You know, life insurance is such a really unique tool that sometimes people turn their nose up because they're, you know, maybe from the, you know, the old policies from the 80s or variable life or something, they just have a bad taste. But what's very interesting is a lot of the banks, I'm not talking about bank employees, I'm talking about the banks themselves, heavily put money into life insurance policies. It's called a BOLI, a bank-owned life insurance. For that leverage, the wealthiest families in America use life insurance, not necessarily for the death benefit, which is just an added benefit, but for the ability to take withdrawals potentially tax-free.

06:20 We all think about Roth IRAs, but there's limitations and all these different things, but some cash value life insurance policies can come out tax-free. And then you add what, Coach, what you're talking about on there, the ability to access the death benefit while you're still alive. Beautiful. For either, you know, critical illness or long-term care, home health care, it's an amazing tool that for some people could be a possible solution to solve multiple problems. Well, it's spectacular because if you pass away, there's a big death benefit. If you don't pass away, you can use the death benefit to pay for what you want. But even after the, like, let's say you're only a couple years in, you have probably paid any money in there, and now you're taking hundreds of thousands of dollars out a year of money you never put in to begin with out of the death benefit to pay for your long-term care, and you do it all tax-free.

07:12 I mean, it's a bonus plan. If one of the plans, Coach, has return of premium, meaning you can get your money back, so it's like the only three things that could possibly happen, you're covered. If you change your mind, you get your money back. If you die, your family gets the tax-free death benefit. If you go, if you need home health care, assistance living in a nursing home, you get access to the death benefit for that. So literally, like the three things that can happen to you in your lifetime, there's a 100% chance one of those three things could happen. The tool works for that. We don't want the death to happen ever, but it happens. So we want to make sure we're compensated and our family doesn't have to change zip codes because a lot of people who don't have life insurance or don't have money put aside, and they're the breadwinner of the family. When they pass away, the bank doesn't care. I mean, they need that payment or they're kicking you out of the house. The tax man doesn't care either, by the way.

07:57 They need the payment or they're auctioning your house. And by the way, you never – and we're talking about risks, the types of risks to begin this segment, and that's where we still are in this conversation. One of the risks that people never talk about is real estate. Is real estate guaranteed to go up? Man, I just watched a video the other day, Coach, on these Airbnbs and VRBOs that so many people bought the last couple years because they wanted passive income. Right. And literally this summer, they've gone from 80% occupancy to zero. Wow. And they're sitting on these half million, million dollar mortgages that they bought at the top of the market. I think there's going to be a flood of houses coming back on the market that's going to drop prices, even with interest rates being high. And if we see interest rates tick back down, I think we're going to see prices drop again.

08:45 Yeah. Well, the taxes are – It's not permanent. That's true. You owe tax on the real estate every single year. So even if you pay your house down to zero and you say, I'm fine, you still are not what we call tax-free. So you can't get on the TV or the radio and scream, I'm tax-free because you're never tax-free if you own real estate because they're going to tax you. And then we talked about it. The commissioners, county commissioners, and the city commissioners get together every year and decide how much is going to increase or keep the same your real estate taxes. We've had three tax increases on our property here in the last five years for a total of over 30%. See, they only tell you 10% of the time. And guess what? We don't have that many new people moving to town. So it's not like the cost of the city is going up. Well, you see what they spend to build a new school these days. I think my school probably cost $100,000 total.

09:31 It was a cinder block building back then. And now they're building – they built one down the road here in Wake County for $98 million the other day. And they probably already have trailers outside because it's not big enough. You know, back in the day, we had like one or two of those carts they would wheel through to school. It had the projector on there. Yeah, the AV cart. When that came into the classroom, you knew you were going to have a good day. Or substitute teacher. Either one was good. But nowadays, every single room has built-in everything, built-in TV, not even VCRs anymore, built-in streaming, all this kind of stuff. So that's fine. I'm glad the kids are getting that. But who's giving it to them is anyone who owns any property. If you own a car or a house or a boat or anything like that. Even if you don't have kids or grandkids in the area. They don't care about that. I mean, you're going to get taxed. So you need to make sure your money is in the most tax-efficient manner, the places it can be, and try to reduce taxes.

10:17 But what I'm just saying, when people think that real estate has no risk, it can go down in value. And also, you owe tax on that real estate every single year. And what we're seeing, unfortunately, is that tax increases with a double whammy. Because the value is going up with the real estate, and the tax rate goes up at the same time. So not only is it – it's fun to look at your value go up until you realize you've got to pay taxes on that new value. And also, they realize the county commissioners just met, and they increased the tax rate. So that's a double whammy, and no one's happy with that. But again, nothing wrong with real estate. It doesn't go away. But not all your money should be there. And real estate's not going to give you a lifetime income. Well, and Coach, I think the key point takeaway is it's not risk-free. Right. There is risk involved. And you may love it, and it may be a tangible asset, and those are all great things. But it's not risk-free. Just know the risk of what you're in, and also know the risk of not having a true plan.

11:05 And that's why we talk over and over again about the power of having a Coach Pete's power plan, which is what we call the total retirement plan. 22 steps behind the scenes, encompassing everything from Social Security, long-term care, taxes, taxation, real estate, all the things you have, and we categorize things for you to make it easy to understand where you are right now. Then we figure out with you and your family, or you, if you don't like your family to know, if you're going in the right direction or not. Some guys don't want their family to know anything. Right. So that's okay. One guy said, Coach, the reason I fly first class all the time is because if I don't, my daughters and sons will when I pass away. So you need to make sure that the number one person or persons you and your spouse are taken care of. But then you also need to make sure that if something goes wrong with your lives, or if you're not here anymore, your next of kin is also taken care of. So we do all that in the Coach Pete's power plan. And we've also got a goodie bag of all the things we've talked about today,

11:53 a grab bag of three books, a box set, and the fee and risk worksheet, and also the fee worksheet. We're going to give all that and a plan, a golden ticket for your very own total retirement plan for the next 10 of you who call right now with at least $200,000 dedicated to retirement. We've seen others charge over $1,000 for this, but as long as you have at least $200,000 dedicated to retirement, this offers for you. And our strategies work very, very well for those of you with over a million dollars dedicated to retirement. Thomas, tell them how to do that. Sure. Just call 800-661-7383. 800-661-7383. Or text keyword PLAN to 600-700. PLAN to 600-700. 200-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800-800

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week, I talk to very interesting people. And the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Listen. Welcome back into the Financial Safari. Consumer advocate Thomas Lipscomb in studio once again, alongside bestselling author America's Wealth, Financial, and Income Coach, Coach Pete D’Arruda. We also have Phil Graham on the line. Welcome back into the conversation, guys. Good conversation, Thomas. I want to talk quickly. I want to ruin the conversation here. Talk about taxes. Taxes is no fun for anybody, but tax planning can make it a little more fun,

00:45 a little less non-fun, by planning ahead so you know exactly what's going to happen so the tax man can't kick you in your behind unexpectedly. So we've got our tax planning guide out, don't we? I love it. Every good video game has to have its arch nemesis, and so let's see what we can do to the IRS. And we'll show you just different tools and techniques people have used. Tax planning guide, your roadmap to reduce taxes this year and in the future. Hot off the presses. We've got a pretty good number of copies of this. We'll give out what people call in. Come in and get it as well. We have a PDF form of it. Is it going to be on one of our websites? It is. It's available actually right now at yourmoneydesk.com. So if you head over to yourmoneydesk.com, scroll down there on the page, and you will see that 2023 tax guide. Your Money Desk. Very good to do. Now, do we have a Through the Years this week?

01:31 We do. Listen to this. Through the Years. Let's take a trip back in time. Back in time. 1975, the year of Jaws, the introduction of Betamax. Patty Hearst was released, and Jimmy Hoffa disappeared. Inflation stood at 9.2%. The Dow ended the year just under $4,000. That's up 34% on the year. A new car costs you about $4,200. You get $300 back if you bought a Chrysler. Only Chrysler gives you a $300 check. Not GM, not Ford. Gas, $0.44 per gallon. Buy a house for about $40,000. Average wage, $8,600. Television viewing was changed forever with the introduction of the Sony Betamax. This totally new concept in home entertainment will expand your enjoyment of television viewing

02:17 to a level that was, a short time ago. Nothing more than an ambitious dream. Well, speaking of TV, we marveled at the $6 million man. Gentlemen, we can rebuild him. We have the technology. We got laughs from Saturday Night Live. Jane, you ignorant slut. And we headed on up with the Jeffersons. Well, we're moving on up. We're moving on up. To the east side. President Gerald Ford survived two assassination attempts. Jimmy Hoffa, the ex-Teamsters boss, disappeared, never to be heard from again. Fitzsimmons denied renewed speculation that organized crime was moving into the Teamsters' union and that there might be a possible connection between organized crime and Hoffa's disappearance. Speaking of the mob, The Godfather Part II was released and we never looked at sharks the same way again after watching Jaws.

03:08 You're going to need a bigger boat. The biggest sports story of the year had to be the Thrilla in Manila. That was the biggest round of the fight for anybody. Muhammad Ali beat Joe Frazier in 14 rounds in the Philippines to retain the WBC-WBA heavyweight title. If you retired in 1975, you needed about $86,000 to be comfortable. Musically, we grooved with David Bowie. We took it to the limit with the Eagles. We walked this way with Aerosmith. And on that note, we'll rock out of 1975 and back to reality. We've now arrived safely back in the present. We hope you enjoyed your trip. Here's to a smooth ride into retirement. Used to love the Jeffersons back in the day. George. Phil, do you like the Jeffersons?

03:55 I love the Jeffersons. George Jefferson. I like the J-M. We were going out on there. Samira Smith. That was very nice. I like good times, too. They didn't say nothing about good times. Oh, that was JJ. Yeah. JJ. Dynamite. Dynamite. Hey, Thomas, let's give out. Now, if people want to email in questions or if they want to listen to shows of the past, they can always do that at FinancialSafari.com, can't they? They can. Just head over to FinancialSafari.com. We have a great way there as well where you can ask your question in your own voice. There's this big red button. You can actually record in your own voice. This could be featured here on the program. A question for Coach and the team. FinancialSafari.com. So, Phil, income strategies in retirement, a little different than income strategies when we're working, aren't they? I mean, they're completely different. Because when you're working, you're getting that wage or that paycheck from your employer

04:40 coming in. Wage rate. And when you're retired, you're responsible for your own paycheck. Yeah. So, that's the reason. And there's no more money going in the bucket. Right. Well, the bucket has holes in it. That's because of taxes and money you need. So, you need to make sure you're constantly pouring new income water into it so it never, well, I would like mine to almost overflow, but you never need it empty, do you? Well, when we're doing income planning, we always say, we don't want your retirement income to take a hit. Right. H-I-T. The acronym stands for healthcare inflation and taxes. Now, I like to add market volatility as a fourth letter to that. They hit them. Yeah. Yeah. But healthcare, massive potential expense.

05:27 And by the way, Medicare part B is means tested based on your taxable income. Since we're talking about taxes, we want to lower your taxable income. Not the amount of money in your pocket, but the amount of that money that's actually taxable is what we want to decrease. Inflation is like the silent killer. It's like carbon monoxide. Like, inflation risk early in retirement can be devastating to your money lasting forever. And then taxes. You know, I know that's what we're talking about now, but what I've learned is that I can put more spendable money in someone's pocket by reducing or eliminated taxes than I can by chasing a higher rate of return. Yeah. Well, many times- All day long. When people chase a higher rate of return, what happens in many times?

06:13 Well, now they're putting their money at more risk. They get less and less of return. As a matter of fact, they might have a negative number or two. So we can keep their income safe and guaranteed, but if we can lower their taxes, the net spendable dollars goes up dramatically. There's a bunch of steps in Coach Pete's power plan, and all three of the things we just mentioned, as well as market risk, are mentioned in Coach Pete's power plan. We address that. Where you are right now, where you should be, where you can be, changes to make, additions to make, fine-tuning. And we're going to offer that, Thomas, for the next 10 people to call. They'll get their very own Coach Pete power plan. It gives the insight. It has a financial fill-up strategy. Also has retirement autopilot, where you don't have to worry anymore about where the income is going to come from. And when I hear that sound on a plane, I go to sleep.

06:59 I'm one of the only people that I know that can sleep sitting up because I've traveled so much. But we need to make sure that we can do whatever we want to do in retirement. And one of the main things, having retirement autopilot in place, but getting a true plan where you know exactly what's happening, not guessing anymore and hoping. Those are not strategies, yet if you're in the market, it is guesses and hopes because no one really knows what's going to happen tomorrow. Heck, we barely know what happens intraday in the market. The market starts up and it ends down. It starts down, ends up. Who knows what's happening day to day? And then the Dow goes to sleep for the night, wakes up the next day, and it forgot everything that happened the day before. So let's make sure we get the right plan for the right time of our life, get that confidence we need to approach retirement on our terms. And we'll do that for the next 10 of you who call right now at no cost, no obligation. In other words, free. That's a four-letter word that I like, F-R-E-E. Thomas, tell them how to call that.

07:45 All right. That number 800-661-7383. 800-661-7383. You can always text the keyword plan to 600-700 as well. That's plan to 600-700. Phil, we talked about the, earlier on the show, we talked about the difference in what a difference a fee can make in your balance at the end. And a lot of people, I think they might be shocked about it. We talked about the same accounts, like the same starting amount, 200,000 and four different accounts. And each account had different annual fees. One had zero annual fees. And then one had 1%, one had 2%, one had 3%. The difference is astounding between the 0% and the 3% fee. But let's say somebody's trucking along at, let's say, 2% fees, which a lot of people still accept a 2% fee. 20 years later, after starting with $200,000, getting 6% a year compounded.

08:32 Now, of course, there aren't many accounts that guarantee you to get the same amount of money every single year. That's risk. That's at risk. But we're pretending here. 20 years later, you'd have $437,000. So you started with $200,000. 20 years later, you have $437,000. That's not too bad. But that's a 2% fee's been coming out every year. Contrast that to if you didn't have a fee, you'd have $641,000. So that's almost the difference of $200,000 in 20 years. And the accounts are basically, there's nothing else different except for the fees in there. Which account would you rather have? Well, Coach, you talked about one of your favorite four-letter words is free. Absolutely. Well, everybody's least favorite four-letter word is math. Math. M-A-T-H. Math. Everybody hates math because it doesn't lie. And what's interesting, psychologically, you hear 2% fee.

09:20 And it doesn't sound that bad, right? Like, oh, that's not that high. Well, if you have 6% gains and you subtract a 2% fee and you net 4%, that's like a 33% reduction in your gain. Yep. So to me, that's actually a 30% fee. And that compound interest is on your side, usually. So again, you were at 20 years. You were in the 0% fee account. You had 641,000 after starting with 200,000. But 30 years, that's only 10 years more. Now you have 1.148 million. Money's almost doubled in that 10 years going forward. That's the beauty of compounding. The account that you had the 2% fee in went from 437 to 647. So now contrast that 647,000 to $1.148 million.

10:11 Again, both accounts the same as far as interest rate. The only thing different was the fee charging. That's a gigantic difference. And that's why compounding, as we get older in our life, means a whole lot more to us than we start. But starting, the soonest you can start, the better. And a lot of people haven't started at all. A lot of people haven't educated themselves on the differences in different accounts out there. Just putting your money in the 401k is a great place to start, but in my opinion, not the place to finish. If you're over 55, you need to start exploring different ways you can move some of your money from your 401k into your very own tax-qualified IRA. We call it a super IRA. Especially if you've had three or four different jobs, three or four different 401ks. Why not consolidate them in one place and now get a lifetime income from there you never have to worry about? And maybe we've seen people that are able to retire a couple years ahead of time because they put the money in a different place than having it at risk.

10:57 How much sense does that make? I mean, it makes a lot of sense. Plus, now you have control as the consumer. Yes. You're controlling what that money is, how it's working for you, not only being able to access the options included in a 401k. You control it now, which to me would be much more comfortable. Yeah, very, very important. Thomas, we see it all the time. People are confused. I understand. I mean, gosh, I don't know a thing about cars except I know how to press the button to start it. But if I went into a dealership and he said, well, you've got this kind of differential over here, you need this kind of oil. My eyes gloss over. Now, I used to change my own oil growing up. But nowadays, if you change it, what are you going to do with it? You can't dump it anywhere. Sure. So I'd rather have somebody else do it. Same thing in a financial world. Let the professionals handle what the professionals do.

11:43 And again, we have both hats. We have the risk hat. We have the safe hat. We're a fiduciary planning organization. First thing we do is look at where you are now, educate you on what you have. And then we find out what you want to do in the future. Then we put a plan together that makes sense for what you've told us you want to do. And many people tell us what they want to do. And then we look at the plan they currently have with their current broker. And it has nothing to do with what they want to do. So let's put a plan together that answers all the questions you want to do. And that's what a true fiduciary team does. We call it the Coach Pete's Power Plan. The next 10 of you who call will do one for you at no cost or obligation. Also, a three-book set and that 401k survival box set that has that fee worksheet we talked about in the workbook. It's very eye-opening. Make a step in the right direction. Call 800-661-7383. Again, that's 800-661-7383.

12:29 You can also text keyword plan to 600-700. That's plan to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week, I talk to very interesting people. And the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Listen. Welcome back into the Financial Safari. Consumer advocate Thomas Lipscomb here in studio alongside bestselling author, Coach Pete D’Arruda. Also on the line, we have Phil Graham, special guest. For 25 years, he's been working with folks around the country, helping them develop proper retirement plans for today's retirees. Phil, earlier you mentioned the acronym HIT, things that can affect our retirement planning. And you mentioned healthcare, income, and taxes.

00:46 And I started thinking a little bit about vehicles, about how you can have these little things like a spoiler that can help the vehicle's efficiency, even though it may not be necessarily the engine or a big piece of the vehicle that one would typically think about. You look at the electric cars today, they're covering all of their wheels up with the slick wheel covers to reduce that air resistance. Something though that I wanted to kind of twist this around and just say, what else do we need to be looking at? What are some other smaller pieces to the puzzle that people may be ignoring, but shouldn't be? I mean, I feel like so many people are looking for the big fix, like the one thing that's just going to change retirement. That's right. And for me, again, 25 years, we've helped protect over $22 billion over that time. It's looking for a lot of little adjustments we can make that add up to big success

01:36 in retirement. And so, you know, taxes is a big thing. Now, on the surface, taxes is like, well, I hate paying taxes. I mean, your justice learned hand said, it's not your patriotic duty to pay the maximum amount of taxes. You should only pay the minimum required by law. But not having a plan means you're paying the maximum. So you're paying the maximum. Well, here's where taxes really get important. We talk about IRA money and 401k money, which is fully taxable. Well, that can affect your Medicare Part B premiums. Because guess what? Uncle Sam goes, oh, you got more taxable income. We're going to charge you more. Your taxable income can affect the tax rate on your social security.

02:28 What? You mean, because I take more money out to live, you're going to whack my social security with more tax? Hey, wasn't social security a tax to begin with? So you're taxing a tax. Exactly. And so when we're doing our planning, we talk about having a tax strategy. And tax strategy is called planning ahead. It's not just filing your taxes April 15th and paying the bill and going, oh man, I wish I had some more deductions. It's having a true strategy on where we're strategically going to pull income from and win in order to pay the least amount of taxes. Because not only will that put more money net spendable dollars in your pocket, it can reduce your Medicare Part B premiums.

03:17 It can increase the amount of social security you get because it's being taxed less. And it never reduced your spendable income. We just strategically took it from the right accounts in the right years from the right places as part of our strategy, which is different for every person. Yeah. It's a lot different. Those little reductions or eliminations of taxes can make mean big dollars in your pocket. Well, it's a lot different than just picking out a financial product. That's not what financial planning is. I mean, a lot of people are under the misconception that it's all we do here. We just get a little grab bag out and pull a financial product out. This is a good fit. No, we need to see what's going on, what you need to do, what you want to do all the way through retirement. Then go find the strategies, not products, strategies that fit you and your family.

04:05 Then after the strategies have been double checked and they work for what we're trying to do for you and your family, then and only then do we go out and find the products that match the strategies. And that's very important. It's not find a person who meets as a product. That's what Wall Street is. Find a person, sell them stocks, bonds, mutual funds. No, this is find the strategies for the right person and then make sure they agree with that strategy. Then you find the products that exist because there's a lot of financial products. Most of them aren't the right fit. Well, Coach, what I've always been impressed about your team is that they really make sure that the clients understand the strategy and the plan. They're not talking over people's heads speaking in Latin. They're really making sure that, hey, are we all on the same page? Do you understand what the strategy is, why this works? And that's why it has so much success because

04:56 everybody's bought in. Everybody understands this is what we're doing. This is where we're going and why. And that gets me excited. Well, you know, Phil, I have the opportunity of being able to work here at Capital Financial, and I love seeing couples who walk in the building. You know, they may look a little nervous that, you know, you've got, especially for the first meeting, you might have your file folder with things inside of it. And I love watching oftentimes those same couples walking out with a big smile on their face, walking with confidence, their shoulders a little bit further back in the air. And Coach, I know this is something you want to provide for folks. So folks out there listening, if you have questions about what we're talking about and you want to take advantage of one of those complimentary consultations, 800-661-7383 is the number to call. 800-661-7383. You can also text keyword plan to 600-700. Once again, we're here with bestselling author, Coach Pete D’Arruda,

05:45 as well as Phil Graham. I'm going to bring us back into the conversation with a quote from Will Rogers. Be thankful we're not getting all the government that we're paying for. We're paying way too much. I like it when they don't get, when they're not in DC, they're all on vacation. That's better for us. We have a vacation too. Didn't Will Rogers have one of my other favorite quotes? I'm more concerned about the return of my money than the return on my money. There you go. Which is similar to what Warren Buffett says. He says, the number two rules of investing is number one, don't lose money. Number two, see number one. So here's one thing. Thomas, you mentioned that too. A lot of people have their information, their financial information scattered all over the living room or it's in the dining room, or maybe it's in an office in a file cabinet. In a shoebox. A shoebox. Maybe you haven't opened the envelopes. We have people come in with all sorts of different ways they've kept track or not kept track of their money. What we recommend is they

06:31 dump it all out in our eight foot conference table. Then we help you divide it in different sections. Then we'll use one of our financial organizers that we let you leave with. It's got 25 different sections in it where we can help you categorize where your money is right now. And it makes it a whole lot easier than when you get the new statements to open up the organizer at that right place and put the new statement in. A whole lot easier than having it scattered, all scattered, smothered and covered. Sort of like Waffle House to tell you. Let's unscatter your brain. Let's unscatter your financial situation. Let's get you a clear plan, concise plan, and let's make sure it has retirement autopilot so you'll never have confusion when it comes time to getting income in retirement you can't outlive. Thomas, tell people how they can do that. Yeah. Again, 800-661-7383. 800-661-7383. Or text keyword plan to 600-700.

07:18 Phil, a question for you. Let's say I'm a retiree. I'm getting ready to retire. I'm about one or two years away from that. And I ask my question to myself and my family, how do I live for 30 years on the money I've put aside? What does somebody do next? I mean, right now you're sitting there looking at your 401k statement. Maybe you put some money in the Exxon stock, let's say, or maybe you've got a Schwab account that you self-managed some money, but totally you've got about a million dollars. What do you do next to make sure you can live 30 years on that or longer on that million dollars? I mean, I think you need to start putting together a plan. I mean, I don't think this is a DIY type scenario. You don't want to bet your livelihood on doing it yourself. And my grandmother used to say, you know, they'd say spit in one hand and wish in the

08:03 other and see which one fills up first. You don't want to be wishing on your retirement. You want to have a plan. And I would want to know that at least some, if not all of my income is guaranteed in retirement, even if I live to be 120. To me, that would be my number one thing I would want to get figured out. And I beg people, don't retire and then show up at the office and go, hey guys, I just retired at 60 and they didn't have enough money. Because again, it comes back to math. We can do a lot of really amazing things, but it's still math. And that becomes part of the plan. So they need to have a plan, coach. Math over markets, man. You got to have math on your side. Markets are up and down, but math is always on your side. And math doesn't lie. You can't argue with math. Math

08:51 works. Despite what you see on social media, when somebody posts a math problem there and half the people get it wrong, and then they swear they got it right because they forgot PEMDAS. That's right. Right there. Hey, all right. So what if you live too long? I mean, that's a question people have on their mind. Now, if you have an income plan that's guaranteed to pay you for the rest of your life, that means the rest of your life, doesn't it? We're so used to these asterisks in contracts these days. Oh, well, that meant the rest of the life for your money, not your life or that kind of thing. It is really the rest of your life and your spouse's life. There are special vehicles out there that will continue to give a paycheck until there's nobody left to give the paycheck to. Is that correct? It's a hundred percent correct. And again, every plan we do is different for each family, for each person, each couple. So we may not have all the income coming from that one spot, but

09:39 I want a foundation to know that I have that paycheck coming in even when I'm not working. Yeah. Well, that's important. I mean, because we have no idea what's going to happen in the market tomorrow, much less a week or a month or a year from now or 10 years from now. I mean, it might be something new that we don't know about and it might destroy what you have. So nobody wants to have all their money at risk because if risk happens, we're in a whole lot of trouble. Yeah. My job has always been, if you get to retirement, retirement and you're not already rich and I know that's subjective, but my job has always been to make sure people don't become poor in retirement. That you don't have to be the greeter at Walmart unless you want to be the greeter at Walmart. And it all goes back to the age old problem or battle between risk and safety. And so when people hear safety, they think the money's going to not do

10:29 anything, but there are some safe accounts that actually have decent returns. The main thing about a decent return is you never have to give it back if it's in a safe place. You could be in the market and have a crappy return one year. Matter of fact, you could be down 5%. You say, don't worry, next year we'll recover. And then the next year you lose 20%. Well, now you're down a lot. And then the year after that, you lose another 20%. So in total, you're almost down 50%. It would take a hundred percent gain in the market to get back ahead of the market. And that's something people forget. Math. Everybody's least favorite four-letter word. Math over markets. And so, you know, we're really passionate about making sure everyone gets the plan they can be confident in. And we can give them a true independent analysis of their financial institutions and their financial products and strategies. And it's good to have it from someone who's totally independent. We're not beholden to any company or strategy. So we'll look at what you

11:16 have, what you want to have happen. Most of the people, I'll tell you, Phil, most of the people we talk to, they want some safety. They want to know with certainty what their income's going to be. So they get growth, protection, and lifetime income, GPI account. GPI stands for growth, protection, and lifetime income. And it really puts them in control of their own retirement. I'm just amazed how many times when people see that they actually can get a retirement they'd be happy with without putting excess money at risk, it really, you can see the light bulbs go off in people's heads saying, well, gosh, why haven't I been told about this before? And we all, we don't know why, because many times whoever's been giving them advice is motivated and compensated by keeping them at risk. So let's get the safe plan. Matter of fact, you're more at risk with a risk plan than you ever would be of not getting income than you would be in a safe plan, because we have surety and

12:02 simplicity with the safe plan. So Thomas, tell folks how they can get their very own Coach Pete's power plan today. It'll put you in control. It'll take the worry out of living in retirement. You can actually take that deep breath, that sigh, and go on vacation and not worry about what's happening in the market. I agree. Easy first step, 800-661-7383, 800-661-7383. You can also text keyword plan to 600-700. Find out how much risk you're taking. If there are any red flags or potential problems for you, get that second opinion. The number again, 800-661-7383, 800-661-7383.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week, I talk to very interesting people, and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Welcome in to the Financial Safari. Consumer advocate Thomas Lipscomb here with you in studio alongside bestselling author Coach Pete D’Arruda. Coach, you have a special guest for us. Yeah, for about two decades, a little bit more than two decades, I've known this fellow right here. He's helped tremendous with our ability to communicate the message of safe money savings to consumers. His name is Mr. Phil Graham. I call him Dr. Phil. Phil, welcome in. Thanks, Coach. Thanks, Thomas.

00:46 Phil's been an advocate for safe money to make sure people, when they get to retirement, Thomas, they have the money they thought they were going to get. More importantly, have a structured income plan you can never outlive. Phil, how important is that? You know, Coach, I like to say, I like to, you know, I don't make people rich. I make sure retirees don't become poor. That's what I'm passionate about is making sure that people enjoy their retirement. And that mailbox money, that paycheck every month coming in during retirement, I think is the key to a happy and enjoyable retirement. Well, there's so much information out there and many of it doesn't apply to people and other other pieces of information. If you do apply it the wrong way, it'll hurt you a lot. And people, you know, a lot of times we we hear something our neighbors do or we look on the Internet and we assume that is 100 percent accurate and it will apply to us.

01:37 Phil, many times it doesn't. And many times people get in trouble by taking advice from people they shouldn't be taking advice from. Yeah, I call that, you know, the brother in law effect where, you know, where your brother in law, who's not a financial advisor, is trying to give their opinion or you're playing golf with your buddies and somebody's got the stock pick of the week. And it just makes me cringe because that never works out. Yeah. You know, it's like the what they call the Monday morning quarterback. Monday morning quarterback. And we always come back, coach, to where you got to have a plan. Ed Slott, you know, one of the IRA experts in the country, talks about not having a plan is you choosing the government's plan or you choosing the worst plan. You need to have a plan. And it's not coming from your neighbor or your brother in law. That's for sure. Well, back in the 80s, he was way ahead of his time and we should have been paying more attention to him, even though he's a small guy.

02:26 But on Fantasy Island, the little guy would always point up and say this. And we thought he's saying the plan. He was saying the plan. And people now realize a plan is very valuable for retirement. Matter of fact, if you can know with certainty what your lifetime income can be guaranteed to be sent to you in the form of a financial fill up, that means every single year you're going to get that income and every single year it's going to replace itself, replenish itself, and hopefully can grow to combat inflation. In other words, the check you get the first time is never going to be smaller than the check you get in the future. You always get more checks or more value checks or the same amount. So you'll never go down. And it's a lot easier to build a retirement plan when we know with certainty what the income is going to be. Isn't it, Phil? I mean, how scary would it be to not know that your income isn't guaranteed, that you could actually run out of money?

03:17 So you're not working anymore. And the older you get, the less likely it is that you're ever going to go back to work. And my own father told me one of his biggest fears was, you know, he'd worked for 50 years plus. He was scared to retire because he was so used to money coming in every month. When he retired, it was the first time in his life that money was coming out and wasn't going back in. And the whole, the guaranteed retirement income, that paycheck coming in his, from his retirement accounts guaranteed, that was what kind of helped him take a deep breath and not watching the stock ticker on the news every day and just actually enjoy retirement. Yeah. So the feature is getting lifetime income.

04:04 What do you say the benefit of a lifetime income is? Well, that even if you live to be 120, that that that's still your lifetime, that income still comes in. And in some of the research we've done, Coach and Thomas, we've found that people live longer in retirement. Think about this. They live longer in retirement when they have a guaranteed income. Well, because if we deep, deep down or dig down even deeper, it's not just the fact that you get an income you cannot live. That's a good, that's a good feature again. But the benefit is you're not going to have ulcers. You're not going to worry about having to get up at 930 to see if the market's up or down, to see if you still have retirement or not, because your retirement income is not tied to the market whatsoever. It could be more income, but it'll never be less than you start with.

04:49 And I think that's where a lot of people get confused is because broker always says, hey, we'll have more income for you if you put all your money at risk. The problem is that's in the ultimate environment, the market environment. If the market doesn't go up, you're going to have less money than you need. And then we're in trouble. So when you're in that financial red zone, which is five or 10 years out from retirement or all the way through retirement, you need to make sure that you know exactly where your income's coming from. And you also need to know with surety that the income is never going to stop. Phil, agree or disagree? I agree completely. That income guaranteed is such an integral part. What I specialized in for so much of my career was how do I guarantee as much income for someone using as little percentage of their assets as possible?

05:40 Yep. So what I mean by that is if someone had hypothetically a million dollars and they needed, you know, $40,000 of your income to fill the gap between their social security, their pensions, and any other income they have. What's the smallest dollar amount that I can use to guarantee that $40,000 for the rest of their life, no matter how long they live, allowing the rest of those assets to continue to grow? That's such a big factor because then you help with inflation, healthcare costs, and all these things. It's not that Wall Street Journal number, Coach, what do they say, 3%? I think it used to be 4%. They had to drop it to 3% is all you can take? Well, but Phil, that did not guarantee with 100% certainty that you wouldn't run out of money. They say with a 92% certainty if your money's at risk in the market and you take 3% of whatever the balance is each year, you have about a 92% success rate.

06:35 But you know what? You have an 8% failure rate, and I don't accept any failure rate over zero. So that doesn't get my stamp of approval. I'm getting on an airplane tomorrow morning. I'm not getting on that airplane if there's an 8% chance of failure. I can guarantee you that. I'm not getting on it. I know there's a very, very smidgen there, but that's in anything in life on the airplane. But we have 100% certainty in the plans that we put together. Thomas, tell people how they can get their own. It's very true. 800-661-7383 is the number to call and connect and get your own total retirement plan in place. Maybe you have a plan, just want a second set of eyes on it. It's very important to do that as well. 800-661-7383. 800-661-7383. And they can text? And they can text as well. Believe it or not, all you have to do is text the keyword plan to 600-700.

07:21 That is plan to 600-700. Very important just to get a plan in place no matter where you get it. But make sure the plan has a core aspect to it. In other words, the market is an explorer. Explore means you can go up, down, all around. If you've ever watched some of the Jacques Cousteau shows, they were exploring. They had no idea that we, well, watching on TV, we thought he had no idea what he's going to find around the corner. But they probably knew ahead of time if they were filming and they're editing. But in real life, you never know what's around the corner. But if you have your money in a core account, that is a safe money, the green accounts, you never have to worry about any dirty tricks. You never have to worry about the market taking the money away. And no financial termites, non-necessary risk, fees, and commission. Phil, how many people out there you think have way too many financial termites and don't even know it in their portfolio? Most people don't know. The investment companies do a really good job of blending those in and massaging those

08:13 into the paperwork where you have to know what you're looking for. And when I'm talking about fees, even if you say a 2% fee, which I think is really low on a lot of investment accounts, but a 2% fee, when is a 2% fee not a 2% fee? Well, in my mind, anytime that you don't earn 100%, your fee is greater than 2%. So if you earn 10 and you take that 2% fee off, to me, that's a 20% fee, Coach. Well, yeah, because you're missing, and also you're going to miss growth of that money that's disappeared from your portfolio. Because once it's not there, I don't care how it comes out, risk, loss, or fee, the money's not there next year to compound on interest because the money's not even in the account anymore. There you go. And I missed the career day, Coach, when they said you could actually lose people's money

09:00 and still get paid. Gives me a sour taste. We actually have in our workbook series, the 401k survival box set, we have a workbook in there, and it shows the difference in four different accounts. One account with 0% fee, and then one account with 3% fee, which we've seen 3% fees out there. We've also seen, which I think is horrible and crazy, we've seen planners charge up to $10,000 or more every single year for a, quote, planning fee, and then they put people at risk. And they're probably compensated on the risk side as well. You don't need to be paying a planning fee. That's money you don't have in your pocket anymore, so you lose that money, and you lose the chance of ever gaining on that money because it's not in your pocket anymore. But if someone started with, let's say, $200,000, which a lot of people have $200,000, and they had an account with 0% fee, and they earned 6% interest, at the end of 30 years, they would

09:46 have $1,148,000. Again, compounding, they only started with $200,000. 30 years later, they've got over a million dollars. Tax deferred? Yeah, and it's been growing tax deferred. But if some, or tax, yeah, this was tax deferred in this account. But if somebody had 3% fees, guess how much they would have after 30 years? Again, the same kind of interest rate, 6%. 800,000, I don't know. 484,000. Oh, jeez, that was way worse than what I'd got. Over $700,000 disappears because not only did you lose it in fees, but the fees you lost are not earning interest for you anymore. If you're at a 1% fee, it's $863,000. And if you're at a 2% fee, it's $647,000. So my question to anybody listening is, why are you paying any fees whatsoever in your account? Your account should be building for you. There should be nobody reaching in and taking money out of your account, for the safe money

10:33 especially. Risk money, you're going to have to pay the managers and all that. You have to know that ahead of time. But why are you paying people to put your money at risk? And Coach, a lot of that to me just comes down to transparency. And one of the things your team is amazing at is helping someone truly understand what they have now. You know, yeah, we want to ultimately create a custom plan for everybody we work with. Right. But you need to know where you are now. Like if you're at a shopping mall or somewhere, they have those big maps and it says, you are here. Well, we need to figure out where you are now in order for us to build that plan and that roadmap for your retirement. Well, financial planning is all about looking at the road you're on right now and making sure it's going to get you to the destination you've been told you're going to.

11:21 Phil, how many times have you run in your 25 plus years in the financial arena? How many times have you heard stories about folks who thought they were going one way in the financial world and their advisor had them in the wrong place? Yeah, I see it quite frequently. And that's one of the reasons we talk about you need to be getting regular checkups to make sure you're still on the right path because maybe what you want changed. Maybe the plan that you did with someone five, six, 10 years ago was right at the time. But now that you're getting closer to retirement, it's different because, you know, Coach, you know this, but for the listeners, there is a big difference between financial advisors that help you when your money's growing, like during the accumulation phase where you're not as worried about the ups and downs potentially. It takes a specific specialist to help on the decumulation to guarantee that income.

12:12 It's kind of like, you know, hiking Mount Everest. You have a greater chance of dying going down the mountain than you do going up. And the same thing is in retirement. It's true. Got a hard break coming up right now. I want to make sure people get their information. Folks, if you want your very own Coach Pete power plan that encompasses the core part, the part we've been talking about, the zero fee type accounts, no money coming out of your money, no commissions coming out of your money on the safe side to make sure you have a lifetime income you deserve. Thomas is going to give you the number and a text number to get in touch with us. The next 10 of you, there'd be no cost or obligation for Coach Pete's power plan. That number, 800-661-7383, 800-661-7383. You can also text keyword plan to 600-700. That's plan to 600-700. That's just a big question.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Hi, this is Coach Pete, and if you've got questions on how to properly structure your assets and build retirement income, you're in the right place. Welcome to the Financial Safari. Broadcasting from coast to coast, it's the Financial Safari with your host, Coach Pete DeRuta. Coach Pete and his guests are some of the nation's top financial professionals. They make it their mission to guide investors through the treacherous jungle of the financial world, showing them how to grow, keep, and leave their money for their loved ones. Coach Pete is a frequent contributor to Fox Business Network, CNBC, The Wall Street Journal, and many other news outlets. They come to Coach Pete for their answers, and now so can you. So stick around and find out how to make it through the jungle of the financial world on

00:47 the Financial Safari. Well, folks, like we mentioned on the first section of the show, we have a very special guest today. He's been on the show before. He's helped a lot of folks throughout his life. I've known him for about 15 years now. His name is Michael Wall, and he's joining us from Palm Beach, Florida. He's at Wall Private Wealth, by the way. Mike, welcome in. Thank you, guys. Good to see you. Now, let's talk about some tax-saving strategies. Now, any time of the year, in my opinion, is a good time to talk about saving on taxes. Now, when we talk about this, there's all sorts of ways to minimize your taxes. Number one, just don't pay your tax bill. But we know how that works. That's not a good thing. But let's do it legally and ethically and morally. There are ways where we can reduce our taxes.

01:35 In other words, do tax planning to look ahead to protect our behind from the tax man. Now, let's go through a couple of the strategies that you found very successful here the last five or ten years. Yeah. You know, Coach, one of the things that we see is tax savings and tax planning falls into a couple of different buckets, I guess. The first bucket is on your assets, right? So if you have qualified monies, IRA money, 401k money, and you want to try and get that to a place where you minimize taxes along the way, that's kind of one classification. There's a certain strategy that can be wrapped around that. Then you have another bucket that focuses primarily on your ordinary income. So there's a lot of folks out there, a lot of folks listening to this show, that might be high-income earners.

02:23 They're making $700,000, $1 million, $2 million, $5 million, $10 million, potentially a year or more. And so one of the challenges that they run into is saving money in taxes. So that's the other bucket. Now, there might be a third bucket where you have folks that literally have need for tax strategy in both of those buckets. Not only are they high-income earners, but they also are in a situation where they also have wealth. They have maybe several million dollars, and they want to mitigate taxes along the way. Now, when you look at tax planning and tax strategy, Coach, as you know, and we've talked about this in different planning meetings over the years and doing events, and you and I have been on different shows, not only your own show but others as well, talking about strategy. And one of the things that we know, right, is we've talked about this in many, many ways.

03:12 It's the idea of it's not how much you make, it's how much you keep. And so when we take a look at taxes, we not only have those buckets we discussed, but we also have current tax savings, future tax savings, and then estate transfer tax savings. So when you think about this, it's not just like, hey, you know, a lot of people, when they look at people, they say, what have you done for me lately? I want to know what I can do right now, which we can talk about those strategies, and we will. But we also have to make sure that we think about the fact that there's real strategy around this. And most people that, Coach, as you know, we've had lots of conversations around this. They say, but I got a CPA. That's wonderful. But most CPAs are wonderful people. But oftentimes, they're historians. They're taking a look at what you paid last year, what you made last year, what charitable donations you gave last year.

04:03 And they're not really coming to the table with advanced strategy. Yeah, very, very important to have that advanced strategy, isn't it? Because, like, the IRS thrives on people not doing tax planning. They're not going to tell you if you qualify for certain things. They're not going to point out certain avenues you could have gone down that could have tremendously reduced your active income, the income that you report to the Uncle Sam. There are ways to reduce your taxable income right now. And so let's talk about that right now. What are some of the ways that you've seen in your practice? I know you deal with a lot of high net worth individuals. We do as well. But you're in Florida. You basically drive down the street. Everywhere you look, there are probably high worth individuals there. What are some? And, of course, with that situation, you have high tax bills. You have no state income tax in Florida.

04:50 But federal income tax is the one that gets people the most, isn't it? So what are some federal income tax strategies to reduce what we have to report to Uncle Sam legally? Yeah, it's a great question. So most all the families that we are working with income-wise, they're already in the 37% bracket, which is right now the top bracket. And federally, obviously, you guys, depending on where your clients would live in the Carolinas or wherever, are going to have state taxes or Vegas or wherever they end up being. But at the end of the day, yeah. So one of the things we want to look at right now, and here's the good news. The good news, Coach, as you know, is right now, literally, even though we're close to the end of the year, there's still strategy that you can use to reduce your taxes for 2022. So let's jump right into that. Yes. Let's say your income's high, right?

05:35 Your income's $1 million, $2 million, whatever the number is. And you're in a place where you're saying, OK, gosh, I don't want to buy more trucks. I don't want to buy more vehicles. I don't want to buy more commercial property. You know, what can I do? There's a rolling, actually, in Section 170H of the IRS Code that is a law which has been enacted by Congress. Yes. A lot of people don't know about this, but a lot of people don't do a lot of research, which is why they don't know. Remember, a lot of people don't know what they want because they don't know what's available because they don't do the research. And that's why, Coach, you and I have been so successful over the years in helping families. But one of the things that we know is Section 170H has been a law that was enacted by Congress basically all the way back to 1980. And it allows for what's called a conservation easement.

06:22 Now, there have been several people that have said, I've heard about these, or most people, quite honestly, are not familiar with these. And they've changed along the ways, along the years. They've been codified and ratified in Congress, by Congress. But it is a law that is passed by Congress. And what it allows people to do is essentially participate in the ability to preserve ground. And by doing that, they get a tax deduction. Now, many of these deals, Coach, as you know, will bring a three, four, five. There's some current deals right now that are open that actually provides a five-to-one deduction. Now, here's what that means. So for every dollar that you put in, you get a $5 ordinary income deduction. And that's using what's called a best-use value that the IRS allows.

07:12 And so, Coach, really what it is is in simple format, if somebody has an income of, let's say, $2 million, we can literally reduce that income by half. Unfortunately, the bad news is the IRS won't allow us to cut your income more than half. But we can reduce the income by half, cut it down to a million. And in that scenario, it would technically save $370,000 in ordinary income taxes just on the federal side. Now, if they have state taxes, then obviously that would be an additional tax savings as well. So let's just say their all-in bracket was 37 federal. And let's say there was – what's your tax rate there where you sit in North Carolina? Let's just say 7 percent. That's a little higher, but that's – a lot of people are in that 7 percent bracket. Simple math.

07:57 So let's say you're at 37 federal plus 7, which is 43 – or 44. Right. So now you know you're going to save on that million dollars. Your real tax savings is $440,000 saved. By reducing your taxable income by a million, you're saying. So if somebody reduces their taxable income from $2 million to $1 million, and they're going to save about $440,000 in taxes that way. Okay. Yeah. Is there a cap on it, Mike, that you can take advantage of this with? What do you mean by a cap? He says there's no limit to how much you can do, right? Right. You can only do half of what your income is going to be. Wow. That's exactly right. Now, what happens is a lot of CPAs when they look at these deals – so a couple things you have to understand when you look at the easement space. The first thing you've got to know is what is the deal itself.

08:45 I've been involved personally with these deals for years and years and years. I've done a lot of research in this space. We've consulted on this space in many, many ways. The gentleman that we're actually collaborated with and we consult for his company was a 23-year career veteran at the FBI, the head of the counterterrorism division – not head of, but lead in the counterterrorism division. Knows the deputy commissioners of the IRS. And he's the one that put the current deal that many folks are involved in currently, and it's invested in land in California where there's a potential to build a solar farm. But by utilizing some strategy, we're able to say, you know what, what would it look like to actually have this as a deduction? So it allows for the ability for a five-to-one deduction, simply put. And how it flows through to the investor, Coach, and this is the best part about it, you don't have all of these things that – like if you buy a building for a deduction, now you own property, you've got property taxes, you've got insurance, you've got maybe all of these other moving parts.

09:45 You know you've got a beautiful office there in North Carolina. Right. Lots of space, but you've got a lot of moving parts there. And so with this deal, it really just flows through. It's Form 8283, which is a non-cash charitable deduction. So it flows through as a Form 8283 non-cash charitable deduction. It must be done in the current year. Again, it's part of the IRS code, Section 170H. A lot of CPAs are in a place where they may not be aware of it, or they might be aware of some of these deals, Coach, that have been done years ago, which a lot of them were, quite honestly, subpar. As we all know, hopefully things get better along the way, and this is one space that has. And so some of those subpar deals, you may find them in print or whatever.

10:32 This was good or bad or whatever. But a lot of the deals that have been around for a couple years now are really, really strong. They've been heavily underwritten. In fact, most of them have Lloyd's of London's insurance backing up your monies as it goes in. There's a lot of factors that are there. And there's some cost, obviously, to get into the deal. But the general rule of thumb, if you think about it, if you have a million dollars of income that we're reducing, you're in a place where, as general rule of thumb, let's just say you save $400,000 in taxes on that million. All in 40% is your tax number, right? So you save $400,000 in taxes. Well, your number, your investment number, because it's a five-to-one multiple, to get that would be $200,000. So it's going to cost you $200,000 to put in the deal, the investment.

11:20 And ultimately, what that's going to get you is a $400,000 tax saving. Basically, here's your bottom line. If you don't do any strategy, you're going to give $400,000 to the government, and they're going to like you for it. No, they're not. Exactly. If you do strategy, you put $200,000 in the deal, and you save $400,000 in taxes. So you basically double your money year one. And so there's no limit to how much you can put in, except you can only put in, when you use a multiplier, it can only reduce your taxes by half of what it would have been. So if you have a $2 million gross income, you can reduce that gross income to a million. In other words, if you have a $4 million, you can reduce that to $2 million. If you're $6 million, you can reduce it to $3 million. These are big numbers, Greg.

12:06 Now, the money you invest, what happens to that money, and do you ever see that money back, or is that just one of the pawns in the chess game, the tax game of chess? Yeah, yeah, it is a tax game of chess. And it's, again, on the quick note of that, you know, if you wonder why a lot of high net worth people, you've got to remember, the average annual income on Palm Beach Island is almost $28 million a year. And that's assuming that people live there on average two months a year. Wow. Well, Mike, we're coming against the clock, but we have so much more to talk about. Can you hang around for another segment? I'd be happy to. Absolutely. And that number is 800-661-7383. You can also text the word PLAN to 600-700. This is a great opportunity to reach out, get your own questions answered. Again, that number, 800-661-7383.

12:54 800-661-7383. Or text that keyword PLAN to 600-700. That's PLAN to 600-700. Coach P Radio. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Peter J. Deruta or his guests are liable for the usage of information discussed. Always consult with a qualified investment, legal, or tax professional before taking any action. Annuity guarantees are based solely on the financial strength and claims-paying ability of the issuing company. Individuals should thoroughly review the contract for specific details of the product features and costs. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income in the year they are taken.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Hi, this is Coach Pete, and if you've got questions on how to properly structure your assets and build retirement income, you're in the right place. Welcome to the Financial Safari. Broadcasting from coast to coast, it's the Financial Safari with your host, Coach Pete D’Arruda. Coach Pete and his guests are some of the nation's top financial professionals. They make it their mission to guide investors through the treacherous jungle of the financial world, showing them how to grow, keep, and leave their money for their loved ones. Coach Pete is a frequent contributor to Fox Business Network, CNBC, The Wall Street Journal, and many other news outlets. They come to Coach Pete for their answers, and now so can you. So stick around and find out

00:45 how to make it through the jungle of the financial world on the Financial Safari. Well, folks, welcome back into the Financial Safari. Fascinating conversation already here with Mr. Michael Wall from Wall Private Wealth. Michael, this is a tremendous strategy on how to save on taxes, but I think it's important that everybody realizes that this has to be done in 2022. So get on it right away. Again, the number is 800-661-7383, 800-661-7383, or text the word plan, P-O-A-N, to 600-700. That's plan to 600-700. Now, Mike, last week we talked about reducing taxes. We talked about a very special strategy. Now, before we get into this, I want to, there's somebody else on the

01:32 radio who's teasing people with this strategy, but never gives details. We're giving details because you are the one who developed this strategy, so the guy on the radio locally is basically copying you. But he doesn't do it the right way, I don't think. So we'll get it right from the horse's mouth. Okay, there we go. So how you doing, Michael? You good? I'm wonderful. Now, let's summarize what we talked about last time about how to reduce taxation, do it legally, ethically, morally. There's nothing wrong in the tax code. There's nothing wrong with reducing taxes that are allowed to reduce. If it's in the tax code, it's been used by others, and we're specifically going to talk about 170-H in the IRS code. That's what we talked about when we last visited here on the last segment of when we tied you on. But let's talk about, let's summarize what the 170-H is. Let's summarize who might qualify for this, how to go through it, and how to reduce

02:21 those taxes, because that's on everyone's mind these days. It is, Coach. And so, first off, thanks for having me on. Love connecting with you. And we've been working together on different things for, gosh, 15-plus years. Been great friendship along the way in the business and evaluating, teaching other people in the industry. We both had an opportunity to do that. It's a blessing. But yeah, when you talk about the idea of reducing taxes, it's on everybody's mind, especially the high-income earners. So when you talk about who qualifies, this is really where we kind of compartmentalize our tax-saving strategy, whether we need to save taxes on future money, which is our retirement investments, there's strategy around that, whether we need to save money in taxes on our estate planning as we transition. There's some federal rules changing in the code for 2025, so we need to prepare well for that. That's legacy in estate planning. And now, really,

03:09 what we're talking about, Coach, is the idea of reducing taxes in 2022. Yes, there's still time this year to save money in taxes in 2022. And so who this is going to qualify or connect really with is people that are high-income earners. It doesn't matter if you're a W-2 income or a 1099 income. You have your own company. You get K-1s. It doesn't really matter how it flows through. Really, we're going to see the most benefit. If you're in a place where you're making $700, $1 million, $2 million, $3 million or more, we have a lot of families that we serve that are making $3, $5, $10 million a year down here in Palm Beach or more. We just had a conversation last week with somebody making about $100 million a year. They paid $40 million last year in taxes. Wow. Their CPA, they're in Orlando, actually, that was referred to us. Whether we'll help them or not

03:55 is still that to be seen. We're having this conversation. But the bottom line is, a lot of people don't know what they want because they don't know what's available. So Section 170H is part of the IRS code that specifically gets into the conservation easement savings. Now, this is a congressional law that was passed and it's been around since 1980. It's been codified and ratified, but it's been on the system and on the books since the 80s. I got to tell you, Coach, I got a lot of connections, not only in this space, but also we have a great friend that's, I won't mention his name. He's a Trump-appointed federal tax court judge that lives in D.C. that we've been having some conversations with as well about this space. The key when you look at these structures and deals, they're conservation easements, but when you look at them, you must understand that there's good and bad of everything. So just because somebody's offering a deal

04:44 doesn't mean you should be involved. Just because it's a tax savings play doesn't mean you should get involved. You need to make sure that you look at the underwriting. The CEO of the deal that we have done consulting on is actually a 23-year veteran of the FBI. He was part of the counterterrorism division. He got into this space and it's been very, very well vetted and researched. So let me give you the 30,000-foot view, Coach, if I may, on this deal. Essentially, you've heard of the whole story, save the birds and the bees, right? Save the ground, save the ground. And that's really where this came from. The federal government realized that they did not do a good job of preserving ground. They were about $28 billion behind in taking care of the underbrush and all of the things that's necessary to preserve ground well, right, for sustainability. And so they offshooted this to

05:33 the private sector, essentially saying that if you want to preserve property, we will reward you, Section 170H of the IRS Code, by giving you a tax benefit to do it. Now, obviously, the deals that are created, there's all kinds of different deals where you might have a deal where it's involved in minerals. You might have a deal where it's involved in solar. There's a variety of different ways that these deals are structured, and that's where the research really has to come in. But that's the genesis of all of this. Now, the other thing that I will say when you look at these deals, Coach, is you got to know it's very simple actually to file because it just flows through as a Form 8283 non-cash charitable deduction, which basically means it's similar to just like if you give money

06:20 to your church or give money to an organization or a nonprofit or a charity. It just flows through as a Form 8283 non-cash charitable deduction. The only limitation really that's been set with a lot of these, this happened in the Bush administration in the early 2000s. And basically, the limitations that were set coaches, you can only reduce your income, unfortunately, you can only reduce your income by half. Now, what that means is if your income is $2 million, you can use this strategy to reduce your income by half. And that's it. Now, if you're in a place where you end up investing and it reduces your income by more than half, well, you can't use that additional monies this year. It just carries forward for 15 years as an ordinary income loss. So it's not like it's a lost entity.

07:10 And the general roll of thumb on the deal that we've seen that's worked really, really well, it's got Lloyd's of London Insurance backing up the investor capital, et cetera, et cetera, is it's about a five to one multiple, Coach. And, you know, we've talked about this for a long time off air. What that five to one multiple means is for every dollar that you put in, you're going to get $5 of ordinary income deduction. So simple math. If you reduce your income by a million dollars and your total tax on that income is 40 percent, let's just say, that's a $400,000 tax bill that you're going to give to the government if you do nothing. If you're involved in this deal, which are obviously for accredited investors only, meaning they have to make a certain amount of money or have a certain amount of money. Right. If you're involved in this deal, for every

07:56 $100,000 you put in, you're going to get $500,000 of ordinary income deduction. So you put in $100,000, you're going to get a $500,000 deduction. You put in $200,000, you're going to get a million dollar deduction. So the simple math on that million is if you do nothing, if you're at 40 percent bracket all in, you're paying 40 percent, $400,000 of the government. Instead of doing that, we say, time out, keep more of what you made, your proponents, Coach, of you and your team helping families make lots of money. Well, let's make sure we keep it, too. So put $200,000 in a deal, you're going to literally, real savings is going to be $400,000, which means you basically doubled your money because you didn't give all that $400,000 to the government. You only put $200,000 in a deal and that's it. It's a beautiful thing. Okay. So you do that, you get a great tax write-off,

08:44 a great tax deduction. And then what happens to the money that you put in? What eventually happens to that money? So it's a great question. So really, you're investing initially in the strategy for the purposes of the tax benefits. That's your main reward. And that's your benefit that you're getting from the IRS. Well, you already, in effect, doubled your, well, you have five times your money as far as what you could write off. So you doubled your money as far as what you don't have to pay. So that's exactly. You still, the money's still there somewhere. It's invested in that, but it's probably being used to do what the government wanted to be done with that money, correct? Yeah. So the land is actually now in conservation that's been purchased. We're using what's called best use value, which is where we get the valuation. There's two approved valuations from the government, which is comps. You know, you see a comparables. If somebody buys a house

09:31 and the house down the street is worth X, Y, Z, you get comparables or you get best use, which is why we look at say, what if we invested in build a solar farm? And that's what some of the deals out there are that we've seen that are quality. But at the end of the day, the better deals, the better conservation easement deals, Coach, they're going to put some of the monies, which checks a box to be a separate business activity for the IRS conservation structure. They're going to put some of the monies into an investment structure, which is going to yield some revenue back to the investor. It's not going to be a lot. You're not going to be like, oh, this is amazing. But about 15%, let's just say somebody put $200,000 into the deal to get a million dollar deduction and roughly $400,000 of actual tax savings. Well, that $200,000, about 10 to 15%

10:19 of the monies, Coach, is going to go into a separate structure that's going to kick anywhere between 5% to 7% a year on that $200,000 back. And then once the ground is sold, after it's satisfied all the conservatory mechanisms and requirements, in about four, five, six years-ish, they're roughly going to get some more monies back as well. So you're going to get over the course of a five or six year period, Coach, as you know, anywhere between 30, 20 to 30, roughly all in back percent of what you put in. So if you put in $200,000, you should expect to see somewhere in the ballpark of $60,000 come back to you over the course collectively of about six years. So if you did $200,000, that would give you a million dollars you could write off on your taxes.

11:05 And it effectively really cost you about $130,000 to do that. Over a six-year period. Over a six-year period. That's not a bad deal for taxes. That's like putting a dollar over there and getting $3 back or $4, $5 back reduced on your taxes. It makes a lot of sense. Yeah, because essentially what you're doing, Coach, like you said, is you're putting $130,000 in and your real savings are roughly $400,000 or more than $400,000 if your tax bracket's over 40% all in. Yeah. So really, it's a win-win-win to me. It makes a lot of sense. This won't appeal to folks who don't have a tax problem. Folks, if you're tired of writing gigantic checks to the IRS, why not write a smaller check to the IRS by utilizing some of the tax saving strategies out

11:50 here? Tax reduction legally. Again, it's in the IRS code. I'm sure you have private letter rulings on this. You have all sorts of ammo to go against the government if the government ever came back and said this wasn't allowed. By the way, we're not tax attorneys. Mike's not a tax attorney, but we work with folks who understand the tax code. Absolutely. Yeah. And so the big thing with this, Coach, is really here's the key. The key, like anything else in life, due diligence, due diligence, due diligence. And so one of the reasons we've consulted on these over the years is because we have not only we're working with high-profile, high-income, high-income people, but we're also in a situation where we've done a lot of research on this. And I'm a big believer that unfortunately people, professionals have worked too hard for their wealth. Yeah. And

12:36 there's just a lot of CPAs or financial people that are just too scared to learn about anything because their fear of audits or whatever it may be. And at the end of the day, when you look at a lot of these things, if you do them correctly, you do your diligence right, you're in a place where you've covered a lot of your bases and you don't really need to worry the way a lot of folks worry about things. Use strategy that exists because you've done the research around it. Well, and then, folks, a number to call right now if you want to find out more, see how this applies for you. Find the information out. It can't hurt. 800-661-7383. That's 800-661-7383. Or text the word PLAN, P-L-A-N, to 600-700. That's PLAN to 600-700. Michael, I want to thank you for your time. We'll have you back on maybe in 2023 to go over some of the new tax savings items

13:22 that may exist. And to summarize, say, you know, what kind of year you had as far as people wanting to reduce taxes here in 2022. Yeah, love to. Happy to. Yeah. Great. Yeah. Thanks for having me, Coach. Oh, this is really great. Yeah, it's always good to have you. Michael Wall from Wall Private Wealth. And Michael, we'll visit you with you soon. Coach P Radio. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Peter J. Deruta or his guests are liable for the usage of information discussed. Always consult with a qualified investment, legal, or tax professional before taking any action. Annuity guarantees are based solely on the

14:08 financial strength and claims paying ability of the issuing company. Individuals should thoroughly review the contract for specific details of the product features and costs. Income payments and withdrawals from deferred annuities are generally taxable as ordinary income in the year they are taken.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people, and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Folks, welcome in to the Financial Safari. This is the show every single week we go out across the world and we talk to people who make a difference in the financial world, and we want to make sure that you get educated, you get all the information you need to make the proper financial decisions. In my over 30 years in the financial arena, if I had to put my finger on one thing that has caused more trouble for folks is they don't understand what they're doing, they don't understand what their advisor has been telling them,

00:46 and they don't understand the money world completely. And we've got a great expert. He's been on the show several times over the last decade and a half. His name is Tom Hegna, and he's joining us from Phoenix, Arizona, or maybe Scottsdale, Arizona, somewhere out there in that Phoenix area. And he's the author of two great books, Paychecks and Playchecks. And my favorite book is Don't Worry, Retire Happy, which Tom also turned into a PBS, public broadcasting special. You may have seen him on TV. Tom, welcome in. Hey, thanks, Coach. Great to be with you again. It's always fun to have you on. It's always fun to be on. And your color is orange. Every time I see you, you get the orange. Every time. Yeah, it's a branding thing, you know. Yeah, I love it. I love it. Well, the cover of your first book was orange, by the way. Yep. Paychecks and Playchecks, that's correct.

01:32 Now, we're here in 2022, believe it or not. I mean, I remember the year Y2K, like the year 2000, and we were all going to be in trouble. The computers were all going to take a break and leave us, and it didn't happen. And now we're in 2022. And this has been a very interesting, let's say, last couple years with everything from COVID to inflation to recession talk to maybe even depression talk. Let's just take a step back, though. Let's talk to people in a logical way. And I don't like scaring people. I mean, when I tell people to be worried, I really do mean be worried. And I'm a positive person. I try to stay positive. But I think we need to educate folks that are watching and listening just on what money really is and how it can work in your favor instead of working in the broker's favor a lot of times.

02:21 Yeah. Well, you know, when it comes to wealth, there are really three phases. The first phase is building wealth. That's when you're younger and you're saving, you're investing. You know, you need to kind of be in the market so that you can get returns and grow. But then it comes to protecting wealth. See, once you have money, yes, you want to grow it. But just as important, you want to protect it. Like, I always tell people I want to make as much as I can make, but I don't want to lose what I've already got. And see, mutual funds can't do that. Stocks can't do that. There are products that can do that. And then the last phase is distributing wealth. Actually, either taking it as income for yourself or giving it to charities or relatives or whoever you want when you die. And so that's what I spent my career, you know, helping people build their wealth, protect their wealth, and then distribute their wealth in the right way based in math and science.

03:06 And there are some principles that are based in math and science, not based in some broker's opinion. And that's what I go around and speak about. I don't sell any financial products whatsoever. So I just take the research of the leading PhDs around the world and try to share that with clients all around the world. Yeah, we call it math over money. I mean, really, if you understand math, money will work in your favor. Yeah, and, you know, like people don't understand inflation. But, you know, Milton Friedman said inflation is always and everywhere a monetary event. Now, what does that mean? That means every time you print a dollar, what happens to the value of all the other dollars? Well, they go down a little bit. If you print another dollar, the value of the dollars goes down. Now, we've been printing trillions and trillions and trillions of dollars. And our dollar has actually gone up. Why? Well, because the Fed has been raising interest rates.

03:52 But eventually, once this interest rate thing is going to happen, I mean, the problem is we printed all this money. And now the Fed is going to try to shred $5 trillion of it. They printed $9 trillion over the past decade and a half or whatever. They're going to try to shred. That's called QT, quantitative tightening. They're basically putting money in the shredder. Well, we saw what happened when they pumped $5 trillion in. The market went just like this. What do you think is going to happen when they put the $5 trillion in the shredder? Well, it's going to have to go down at least a little bit. You know, so I think people should be worried, not scared, but just concerned and then prudent because there are prudent places you can put your money that won't go down. Yeah, well, my dad's a physics professor for 43 years. And basically what goes up must come down a lot of times.

04:38 And for every action, there is an opposite or equal reaction. And so just what you said, gosh, everyone was a stock picker here the last 20 years because everything was going up, it seemed like. Because the Fed was pumping so much money into the market or making the rates go down so low, there was no other choice for Sally May down there who just retired as a teacher for 40 years. She had to take her money out of her safe bank accounts or safe places and put it into the stock market to try to keep up with the growing market that was going there. And so many people are in the market right now who should never have been in the market to begin with, with the money that they have in there. Yeah. And you know what? Somehow we got into this thing where it was either you have your money in stocks or you have it in protected products. That should never be the case. You should have some amount of money always in protected products and probably some amount of money always in the market.

05:25 Because you want to participate when the market's going up, but you've got to have protection when the market goes down. And the markets do go down and they can stay down for a long time. In Europe, the market's been down for over 20 years. In Japan, the market's been down for over 30 years. I mean, think about it. What would happen to your retirement, and I'm talking to your listeners, if this market went down and stayed down for 5, 10, 15 years? I think that would decimate a lot of people's retirements. It won't decimate mine, though, by the way, because I've got enough money in protected products that I'm guaranteed to at least pay my basic living expenses without having that subject to market risk. Well, and that's important because I think a lot of folks, if the market tanks and when it does tank, everyone just assumes it's going to come right back the next day. And, matter of fact, it almost has the last 15 years. But, Tom, like you said, there may be a time where the market goes down and then you jump in, you throw a lot more money in, and the market keeps going down.

06:17 So, buying at a low today may be buying at a high tomorrow because there's no guarantees. And I think a lot of people just got it in their head that the market always goes up. Where did that fallacy approach our mental aspects? Because there's no such thing as guarantees in the stock market. Right. What they're saying is over time, the market has always gone up. So, it goes up, it goes down. But over time, it's always gone up. And I agree with that. But the problem is if you're at a time in your life like retirement, in or near retirement, and the market's going down and you're pulling money out of your account, that's a dangerous recipe for running out of money. It's called the sequence of returns risk, order of returns risk. David Macchia calls it timing risk. You know, he lists 10 financially identical retirees that have the same portfolio, the same investment, the same risk profile.

07:05 The only thing different is they retired 90 days apart, 10 people. And you know what happened? Two of those people went completely dead broke. Two of those people became wildly wealthy, even though they were taking it out. And the other six people, they made it. But we never know who are those two people that just based on timing, based on bad luck, they end up running out of money. You should never subject your retirement to bad luck. We talk about two of 10. And Wall Street uses that almost as a sales tool saying, hey, you got an 80% chance of success. But I always, Tom, and you do too. We've talked about this for years. I'm a skeptic. So I say, well, if eight out of 10 are succeeding, what happened to the other two of 10? And what could they have done differently to make sure that they weren't two of 10 in that bad place where they're not going to survive through retirement?

07:52 Yeah. Imagine going to the airport and the pilot saying, ladies and gentlemen, welcome to retirement airlines. There's an 80% chance we're going to land safely. Nobody would get on that flight. Now, that's flying and that's your life. But you know what? You shouldn't subject your retirement to those levels of risk either. And you don't need to. You know, BlackRock, Barclays, Ibbotson, and even the Wall Street Journal have said if you would simply move your bond portfolio to some type of guaranteed annuity, either an income annuity or just one that's guaranteed to go up, your portfolio returns are going to go up and your risk is going to go down. This is math and science. This isn't an opinion. I don't sell annuities. I don't care if people buy them. But look at what bonds have done. I mean, coach, it's not just stocks that have gone down.

08:39 Stocks have gone down. Gold's gone down. Oil is going down. Bonds, people have gotten crushed in bonds. This is the worst year ever for a bond investor. So if somebody's 60% stock, 40% bonds, they're losing on both sides. That's not supposed to happen. And I wrote an article, I don't know, years ago that said the 60-40 portfolio is dead. Long live life insurance and annuities. And all I said in that article is if you're going to be 60% stock, then you should be 40% in annuities or life insurance, something that is not going to go down when the markets go down. And that was great advice three, four years ago. It's even better advice today. So I'm just telling people the simplest way to get involved with annuities is move your bonds. I'm not talking your stocks. Move your bonds because people have been getting crushed in bonds. Yeah, a lot of people fall in love with their stocks.

09:24 So it's almost like you're telling them to get rid of a family member when you tell them to pare down some of the risks they have in the market. Tom, another thing I've noticed, and this is very alarming to me, people will come in and say, well, my broker ran this Monte Carlo simulation. And I've got a great chance of success in retirement. And I saw you made a good point about this a few weeks back. You said the Monte Carlo simulation basically is at the mercy of whoever is entering the data. In other words, if your planner is anticipating you and your spouse both passing away at age 80 or 85, even 90, of course you're going to have a pretty high success rate. But what if you live longer? The success rate almost goes away. Right. You know, most broker, and I say, you know why they call them brokers, because you're broker than you were six months ago. That's why they call them brokers. But I say, you know, I'm not a big fan of Monte Carlo simulations because of Monte Carlo simulations.

10:10 They'll plug in this down and they'll say, you have a 90 percent chance of success living to age 90. Well, 63 percent of all married couples have somebody live beyond age 90. Fifty percent of 65 year old couples have somebody live to be 93. Twenty five percent of those couples have somebody live to be 97. So what I tell people is if you want to do a Monte Carlo simulation, have your broker put in age 100 and just see what happens. Yeah. His plans are going to fail. They're going to get wiped out. So don't use age 90 in a Monte Carlo. Use 100 or 105. That's my position. You know, isn't that financial malpractice when they're using those numbers that they know life expectancy is longer than that just to make a sale? Yeah. You know, I think the guy who posted it, he was a very respected guy. He said, I'd rather be vaguely right than totally wrong or something like that. And I go, well, I want to be totally right when it comes to my retirement.

10:58 I don't want to be vaguely right. I want to be right. And that's what I write about. That's what I speak about. So I show people how to never, ever, ever run out of money and to live their life. Look, I'm mostly retired. I'm 75% retired. This is the life I'm living. I own 11 annuities. I've got a guaranteed income coming in so I can go play golf. I can play pickleball. I can do all the things I want. My wife and I are going to Hawaii in a couple of days. So I'm not just talking the talk. I'm walking the walk. And, you know, I've got a long-term care plan. I follow all the steps that I write about and talk about when I'm out trying to help people retire the optimal way. I need 100% success rate for my clients, and I won't settle for anything less than that. We age 121 when we do our plans. 121. There you go. Because we don't know. I mean, maybe there'll be some new modern technology, and we'll all live to age 120.

11:44 Well, if you have a plan that's going to expire at age 90, you've got 30 years. That's a whole working life now. 30 years of retirement where you can't go back to work where you're going to be in a lot of trouble. You know, and people who say, well, life expectancy has come down because of COVID. Moshe Malevsky studied this. He studied the Spanish flu back in 1918. And what happens is some deaths are pulled forward. But what's going to happen from now on is life expectancy is going to jump because all the people that were close to dying, they've died, okay? And so now we're going to have a resurgent where people aren't going to die for a while. And now they're coming up with cures for cancer, diabetes, heart disease. They got these little nanobots that go in your body and fix things. And, I mean, it's crazy. And so it's not unthinkable that people could live to be 130, 140. Time Magazine said the first person lived to 150 is alive today. Wow.

12:30 So, I mean, we've got to take that into account. We have to make sure our money lives as long as we do. And, folks, if you're curious about getting your own plan, if you're curious, if you have the right plan right now, give a call. We'll give you a no-cost second opinion. And we'll also put together for you your very own fiduciary plan, total retirement plan. Call right now. All right. So that phone number to call, 800-661-7383. 800-661-7383. Or just text the word plan to 600-700. That's plan to 600-700. That's plan to 600-700.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people, and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Well, folks, welcome back into the Financial Safari. This is a show every single week we go out across the world and we talk to people who make a difference in the financial world. And we've got a great expert. He's been on the show several times over the last decade and a half. His name is Tom Hegna, and he's joining us from Phoenix, Arizona. Tom, welcome in. Hey, thanks, Coach. Great to be with you again. We've got an article here from Kiplinger, and it says, Why I love annuities and so should you.

00:47 It's an article that came out. The date is January 16, 2000. Pretty good foreshadowing there. If you would have read this article and taken advantage of some of the advice here, you would have got your retirement plan a lot safer and a lot better positioning before all this inflation and market crash stuff started happening here. So let's talk about it. Yeah. So, you know, guaranteed lifetime income should be a foundational element of any retirement plan. That's what the research of the leading PhDs. Now, there are three sources of guaranteed lifetime income. The first source is Social Security. Well, Social Security is the largest retirement asset most people have. But what is Social Security? Social Security. It's a lifetime income annuity. It's a guaranteed paycheck for life. The second source is a pension.

01:32 But what is a pension? A pension is a guaranteed paycheck for life. It's a lifetime income annuity. So what the researchers say is you should figure out how much money do you need to cover your basic living expenses. You subtract out your Social Security, subtract out your pension. Whatever you're short, you're supposed to go find an insurance company and buy some form of income annuity. Again, I don't sell annuities. I don't care if people buy them or not. I'm telling you what the research says. And what that article said was basically that, you know, you should have about 20% to 40% of your portfolio in guaranteed lifetime income. I'm going to have more than that because I don't just want to have guaranteed paychecks. I want to have some guaranteed playchecks too. But 20% to 40%, that's about normal. The Wall Street Journal had an article earlier this year that said you should move some of your bonds to annuities. Roger Ibbotson did a study where he found out annuities have outperformed bonds for the last 40 years and are likely to do so for the next 40 years.

02:23 Barclays came out with a paper, you should move your bonds to annuities. BlackRock, who didn't even ever think is pro-annuity, they came out with a thing and said you should move your bonds to annuities. So this is established out there, but you know what? People don't listen or they have brokers that are conflicted with their compensation because they want to get fees on everything. And they say, oh, don't buy those annuities. They have high commissions. The commission on annuity, most annuities, is very small. It gets paid by the insurance company. It doesn't come out of the client's money. Now, of course, the product is priced to pay a commission. But if you put $100,000 in annuity, the whole $100,000 goes in. You could do $100,000 with that broker every year, every year for the rest of your life. They're going to take fees out of there. Market's down, tough luck. They're taking out their fees. And it comes out of your account. And I don't know how forever fees are somehow better than a one-time commission paid by an insurance company.

03:13 It's a ridiculous argument. And yet that's what they talk about. It's the best way, I think, to – well, it's sort of like buying a car. I mean, the commissions are worked into the car. You're not paying another commission when you buy the car. Like, let's say you buy a $40,000 car, you don't have to come in with $45,000. $40,000 for the car and $5,000 in commissions. The commissions are already built in. Now, let's talk about, though, for a minute the whys of life insurance. So just insurance. The insurance industry in general. Why did the insurance industry come up? Well, because it's a way to shift risk, to shift your burden if something goes wrong. Like home insurance. If your house burns down, well, you have home insurance for a reason. So the insurance company will help you rebuild. Car insurance. You get in a wreck, the insurance company will help you get it back in the car and make sure it's driving like it did before you got into rent. Income insurance, if we have a market crash, if you had money in a place where you wouldn't lose it,

04:01 the annuity. Annuity is insurance for your money, isn't it? I mean, when it comes down to it, it's a way – it's not as exciting as bragging to your friends that you got into Facebook at $10 and now it's at $300, but it's not anymore, by the way, because it goes up and down. But insurance basically is a way for you to know with certainty what your outcome is going to be ahead of time. Right. You know, we talked about building wealth and then protecting wealth and then distributing wealth. The annuity can be great for protecting and then distributing wealth. It's going to give you the highest pay – guaranteed paycheck of any product out there. You can't find anything that will give you a higher guaranteed payout rate. If you're 90, the annuity will guarantee you 20% every year for the rest of your life. You know, it goes based on age. And the older you are, the higher the guaranteed paycheck. So people in their 70s, their 80s, their 90s, they should for sure be looking at income annuities.

04:48 People in their 40s, 50s, and 60s should be looking at protecting their wealth by using an annuity that they can then turn into income in the future. And so, again, you know, this is what the research of the leading PhDs, Dr. Moshe Malevsky, Dr. David Babel, Dr. Menachem Yari of Israel, Dr. Michael Finke, Dr. Wade Fowle, Nobel Prize recipients, William Sharp, Dr. Robert C. Merton, you can research all of them. The message is clear. You need to have at least enough guaranteed income to cover your basic living expenses. Why? Because you're assuring against longevity risk. What if you live to be 100, 100, 510? The annuity will protect you. What about market risk? There's no market risk in an annuity. What about order of return, sequence of returns risk, or withdrawal rate risk that you can take out too much money?

05:35 You see, the annuity protects you from overspending, and it protects you from underspending. The truth is, Coach, most people underspend because they're scared to touch their money. Oh, what if the market goes on? What if this happens? So they never live the retirement they're entitled to because they underspend. The annuity allows you to spend everything. Well, when you look at the five-star financial plan with five different topics here, we insure our life insurance. We insure our life, so we get life insurance. We insure our health, health insurance. We insure our house, home insurance. We insure our cars, car insurance. Well, that's four. The fifth is insuring our income. I'd argue that's the most important part of the insurance that's ignored. So if you have all those other insurances, you definitely should have the wealth insurance or the income insurance I call an annuity. Yep, and that's why I say I want to make as much as I can make, but I don't want to lose what I've already got.

06:24 Vanguard can't do that for me. Ken Fisher can't do that for me. You know, a broker can't do that for me. That's what you can do for me. So I want to make as much as I can make, but I don't want to lose what I've already got. And I think most of your listeners would say, you know what? That's what I want, too. So you win the race. You win the marathon. You win the marathon, and yet instead of celebrating, you decide to walk back into the marathon path and try to run the race again. That's what happens. Many of you watching or listening, you've already won the race in the retirement world. You've got enough money to have that safe, secure retirement income that'll be worry-free forever for you, but yet you decide to keep yourself and your money in the race. In other words, in the market. We can go up and down and all around. We did talk to a client years ago, a radio listener. She did not become a client. She almost had a million dollars. She said, I'm going to put some of that money in annuity as soon as I get to a million dollars.

07:11 I want to have a million dollars in my stock portfolio. I've always wanted to have that. Marty Hensley, one of my planners, met with her. She said that she had about $990,000. She still wanted to wait. She never reached a million, Tom. Not that next five years because the market went down and she spent the next five years trying to recover back to where she was when we talked to her to begin with. Recovery is not gain and making sure that you are in the right place is paramount to having that successful retirement where you don't have worries. Yeah, you know, here's what happened to me. I'm not an old guy. I'm 61, okay? But at 60, I decided to mostly retire. I'm about 75% retired. You know why? I lost my best golfing buddy at age 56. We talked that we lost another good buddy who's 41. I lost my mom, lost my dad, all my aunts and uncles. And I'm sitting there saying, okay, well, how many years do I have left?

07:57 And am I trying to be the richest guy in the cemetery or do I want to live the richest life? And so I chose I want to live the richest life. Now, listen to this. I never joined a country club. I've always been a golfer. I've never joined a country club because I was working too hard. I was working, you know, 60, 70 hours a week. I could maybe play two or three rounds a month. I could never make the numbers work. Well, guess what? Now I'm a member of two clubs because the numbers work great. When you're playing golf five days a week and pickleball two days a week, I'm telling you, the numbers are outstanding, especially here in Phoenix, Arizona. And so I'm in Flagstaff for the summer. I'm down here in the winter. I play golf. I'm having the time of my life. But I could still be out there working, you know, 70, 80 hours. People will hire me all day. But I've chosen not to. I've chosen to live my life. And I would hope that some people would listen to this and decide, you know what?

08:44 Why do I keep doing this? I've won the game. Now let's just turn it into income and live off of it and have a great retirement. That's what I'm trying to do. You know, we both practice what we preach. I've got a lot of my money in safe money solutions like annuities and life insurance, a very specialized life insurance policy that will give me almost $200,000 of tax-free retirement income guaranteed in like nine years from now. That's pretty good. I mean, so in nine years from now, that might not buy a candy bar, though, the way inflation is. But it's better to have it than not have it, isn't it? Exactly. And I move more of my personal wealth to cash value life insurance as well, because I believe you should be working on getting as much increasing tax-free income as possible. Because, you know, we've talked about the economy. We're $30 trillion in debt, climbing at $4 billion every single morning.

09:32 We have $200 trillion of unfunded obligations for Social Security, Medicare, Medicaid, government pensions, military pensions. I mean, I just ask people, where do you think taxes are going from here? They're going up a lot. People say, oh, I got a million dollars in my 401k. I say, really? How much of that is yours? They say, what do you mean? It's all mine. I said, no, it's not. You got a partner. The partner's the federal government. And you're the limited partner. They're the general partner. They get to take their cut first. And here's the deal. You have no idea. What if they decide they're going to take out 60%? What if they decide they're going to take out 70 or 75 or 80? You know, back during World War II, the marginal tax rate was over 90%. What if that happens? Then your 401k isn't even a 201k. It isn't even a 101k, you know? And so you don't want to have all your money in pre-tax dollars. You want to have some places where you can get money out tax-free.

10:17 You know, I told you I own 11 annuities. Most of them are in Roth IRA income annuities. So I'm going to have tax-free income for the rest of my life for my annuities. I get tax-free income for the rest of my life on my life insurance. I mean, this stuff really works. But, and I own dividend-paying stocks. I'm not against dividend-paying stocks. I own real estate. I have a diversified portfolio. But I have the majority of my wealth in protected assets because I'm not at a point where I want to lose it and worry about it. Two key phrases there, safe money solutions and tax-free income. I mean, when you put those together, I'd be willing to argue my plan versus any Wall Street plan would be more successful when we have safe solutions and tax-free income. And the tax-free aspect is something that a lot of people are overlooking. We're so caught up in returns these days. We forget about the return to you, not the return on your portfolio.

11:02 And I want to return all my money and all my gains. And if we have money in the Roth, that's what you get to do until or unless the government decides to play dirty tricks with that. But I'd rather be in a Roth than not be in a Roth. Correct? Right, right. And, I mean, I just had to send the government another big check because I had to file an extension and I did a big Roth conversion last year. I thought I withheld enough. I didn't. I didn't like writing the check. But you want to know what? That check will be a lot smaller than, you know, it's like when I work with agricultural people. I say, would you rather pay tax on the seed or the harvest? They say, well, I'd rather pay tax on the seed. Okay, that's a Roth IRA because you don't get a tax deduction. But the harvest comes tax-free. With a 401k, you get a deduction on the seed, but you've got to pay tax on the harvest. Not really a smart thing. So, I would lean towards Roth 401ks, Roth IRAs.

11:48 If you put in 4%, they match with 4%, do that. That's 100% rate of return. But above that, I would never put another penny in my 401k. I'd put it in Roth or I'd put it in cash value life insurance. That's the way I would do it. Well, because it makes sense. I mean, when you're looking at the main goal is to have more income for you and your family, then the Roth makes a lot of sense. Tax-free makes a lot of sense. Annuities make a whole lot of sense because you're going to get back what you put in. No one has any guarantees when they put money to market if they're going to get any of that money back. Hopefully, you get a whole lot more. But that word hopefully is in there. And that's not a good word when we're making a guaranteed financial plan for retirement. Yeah. And I mean, the stock market is fine for the paycheck, but the paycheck needs to be guaranteed. And that's the difference. It should never be stocks or annuities. It should always be stocks and annuities.

12:33 That's the solution. Just replace your bonds with annuities. Buy some dividend-paying stocks. Have some real estate. Go knock yourself out. But do not put all of your money at risk, especially not right before or right after retirement. That is the danger zone. We have a free special report on guaranteed lifetime income, folks, and tax-free aspects of it as well. If you call right now, you'll get that. And Tom, really appreciate your time today. Again, Tom Hegna, the author of Paychecks and Playchecks. And also, don't worry, retire happy. Tom, hope to have you on again and enjoy your trip to Hawaii. Thanks, Coach. Talk to you soon. Take care. All right, let's open up these phone lines. That number, 800-661-7383. 800-661-7383. And we've got a great way to text us as well. Just text the word PLAN to 600-700.

13:19 PLAN to 600-700.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where we go out across the world and find someone who's making a difference and like always this week is no exception. We've got a return visitor now it's been about over a decade since he's been on last. His name is David Webb and David has been entertaining and informing the public for decades from music to talk in Boston, Houston, Dallas, New York City and in syndication now satellite radio and television. He's hosted the David Webb show on Sirius XM Patriot 125 and he's also on Fox Nation. He's a Fox News contributor.

00:51 He's all over the place on the Hill and Breitbart News also. His name is David Webb and David where you joined us from today? Miami, Florida. Oh that's a nice place to be. Miami. You know after the bourbon festival in Kentucky this weekend it's nice to come home and decompress. Tell me about the bourbon festival. Did you go to blends? When you get to the distillers the distillers came to us. I got to tell you I was surprised and happily so. There were 31 year festival in Bardstown just outside of Louisville and man have they got it dialed in. I tried actually my one of my favorites was the 1792 barrel proof by Blanton's among others but a real tasting real experience real food great people and

01:38 you know one of the reasons I love this country there's so much to see and do. You're right about that and you never run like a lot of people get on they run to the airport and they go like overseas where they could be having a lot of fun and seeing a lot of cool things right in their own state believe it or not especially here in North Carolina. Yeah and so if you think about our country if I could for a second you look across America and include the islands and territories we contain every climate on the planet from rainforest to high desert to low desert and everything in between. I mean look I love traveling love seeing the world there's a lot to see out there none of us will ever get to see all of it it just isn't possible but you could do a lot in America and still never get through it.

02:23 Now where were you born David? I was born in the Caribbean I was born in Jamaica West Indies nice and but I have a family and then just a couple weeks ago on Labor Day my mother and I went up to visit the family gravestones plural that date back pre-revolution in Gilbertsville New York on the Donaldson side so we have a family history that goes back for this country for Jamaica for others and like a lot of people you know you start digging into your background you find out there's a lot more in common that brings us together. I stayed in Jamaica like three or four years ago right before COVID came and in our resort there was a jerk chicken shack there and the cool thing about that it was all inclusive so you could go by the shack anytime you wanted they give you half a jerk chicken

03:11 so I think I probably had about 20 chickens a day there it seemed like and I love jerk chicken. Well you know it's okay to make them an endangered species once in a while. Speaking of endangered species what do you think about the inflation reduction act and the dollar seems to be in danger right now doesn't it? Yeah I mean we've got the however someone looks at it and I can't tell you for sure we've got a committed group of ideologues that go way beyond Kenzie and economics we've got a committed group of people that want government to have more intrusion in our lives we want government they want government to be in control of our wants and needs and in order for that to work you've got to have a dependent class well in any society how do you get a dependent class you undercut the economy of all the things

04:02 that we need in society to work right culture safety community all the things legislative bodies and everything if the economy doesn't work then people are more easily controlled people are more easily influenced and it's not unique to America they've they've done this across the board in other nations I'll give you a stark but quick example in Chile in 1975 give or take some months a group known as the Chicago Boys went to Chile Milton Friedman among others the economist one of the leaders of that group they restructured Chile's economy they grew it and from 1975 forward it became the nation with a

04:49 stronger economy highest per capita income and an education system that was flourishing raising the next generation of workforce etc the Marxists went into Chile they took on critical class theory as the attack here critical race theory in America and just a couple of weeks ago thankfully and we don't know where it goes they voted down by about 62 to 68 percent a Marxist constitution in Chile societies can change if you destroy the economy we don't know the future of Chile but right now Chile is socialist run and if they get their way further on to a to a Marxist a Marxist constitution which would further destroy that country this is the belief of some of the hard left and the outcome of what they do no matter what they tell you in the form of oh it's just a little form of socialism or not really what you say it is well the outcomes not just in Chile but in other countries in Colombia with the election of Pietro with others this is a very real strategy and it's been a

06:04 employed here in America yeah folks we're talking to David Webb he's hosted the David Webb show on Sirius XM Patriot 125 David you know it's it's always fun to to have other people's money free stuff is great until you run out of other people's money isn't it yeah it really is I mean Margaret Thatcher gets the credit but the reality there was that's what happened in the United Kingdom socialism socialism health care failed all these other things failed and when they were out of other people's money they then became the wards of the state and the state couldn't afford it yeah it's it's it's very concerning to a lot of folks who study the economy to see this happening because if we don't have enough workers we're not going to have enough products and therefore it doesn't matter what the cost is if it's not available and we're seeing this firsthand what about all the you know and I just casually watch the internet every now and then and supposedly a lot of food processing companies are either burning down exploding or going out of business that's worrisome to me because one thing I know is we need food to live

07:05 yeah I mean everybody eats every day let's just keep it simple right that's how it works I looked into that and I you know wasn't able to go as deep as I wanted to just you know call it just I wasn't able to there are a number of issues for some of those plants it was actually a maintenance problem that you know they spun them up after being shut down for COVID again lack of workforce proper protocols right uh and that's not new in the industry but it should not what shouldn't be left off the table is a proper investigation into some form of attack it's not new that there are enemies of the United States and documented cases where they will go after electric power plants up even you know have been whether eco-terrorists or Islamist terrorists have literally been arrested outside of

07:58 electric plants you look at electric plants you look at water treatment plants these are the core of our society imagine if you change the formula in a water treatment plant in agriculture it's not as if you spin up the next day and you make a new car because you got the lineup and running at the plant you have to plant grow and those gaps can cause real food deserts for Americans not to mention from an economic standpoint exports to other nations which fuels the economy fuels those companies and feeds those families that work there yeah it's it's it's it's just it's crazy right now just so many I guess we're we're in a 24 7 news cycle so you hear these things but then you start trying to you start trying to connect the dots and many times the dots won't connect one of the things that I really want to talk about here is inflation

08:47 and issues like market volatility impacting the country today as well as the media's inability it seems to want to use the word recession maybe they'll start using recession when we go into a depression but why why is the media so skeptical and why are they so it seems like when I grew up the media was was the watchdog and now it seems like the media is a lapdog for certain parties yeah look the short form of that explanation is over the years those who entered the media field started out as reporters the the dishonest crowd who didn't follow the w's right who what where when why and then of course the how in their reporting they became the editors in these newsrooms and I've worked in newspaper television and radio currently and those editors make editorial decisions about what gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it gets published and how it works and how it ways it can't how it did so it can't because it's how it was what it was what it was what it can't

09:40 angled and we see that in papers like the new york times that have gone from paper of record to the paper you wouldn't wrap fishing and when you look at them they have an enormous influence but it's because people have built themselves into these institutions and in the bureaucracy similarly in government where the left has uh really entrenched themselves and this is a big part of the need to fix this country it's not just about elections and voting but once officials are elected good ones will look to fix these bureaucracies and help root them out because it's not about being left or right it's do you function correctly as an institution we need good institutions we need good establishments we need a good functioning government yes we really do

10:29 hey we also need good functioning restaurants and and places we go to buy things and and one of the things that's been very concerning to me which i it's baffling as well is the i want to get your thoughts about this probably the last thought of the day today hope to have you on again in the future but your thoughts on the national employee shortage that we see these see almost every single state has the same problem where you go to a restaurant and there's a sign in the window saying we're closed today because we can't find employees what's going on because the the employment numbers are pretty low i mean we have an unemployment number that's pretty comfortable but yet we can't find people to work well the employment numbers are low because it's been a farce for decades used by both sides they use what's called the u3 numbers i would encourage anyone to look up the u6 numbers at bls.gov and get an understanding a better understanding of the employment situation also

11:19 once people have left the workforce and no longer report no longer file for unemployment they drop off the role so as a result the number looks low but the reality is we have still over 11 million jobs unfilled we do have a problem with the workforce that largely due to covet was paid to stay home and they've made decisions we have another issue which is i think more cultural which is the value of work and a generation by the way which most americans i believe and it's somewhat anecdotal get it hard work getting ahead being an achiever uh but we also have too many people working or not working and then of course mediocrity again affecting the economy if you don't start young and build your way up in life

12:05 how do you become a better earner and therefore a better economy yeah it's just uh it's baffling to me i mean i've always wanted to work and i want to i want to earn what i make it's no fun sitting at home i don't think it would be fun you'd probably feel worthless just getting a check every now and then but a lot of people seem to like to do that so david it's it's been a pleasure having you on uh hopefully we won't wait 10 years to have you on again but again folks his name is david webb and you can see him on patriot 125 the david webb show dave thanks for your time today thanks and uh yeah let's not make it 10 years coach p you take care my brother 888-623-8858 888-623-8858 or just text 401k to 600 700 we will see you there

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where we go out across the world and find someone who's made a difference in my life and someone I've looked up to for a long time because I used to see him on TV. I followed him on LinkedIn. Him and I have had a couple of conversations about where we went to college before on LinkedIn because I'm a Carolina guy and he's an NC State guy but he's also a former congressman. He was on the Ways and Means Committee and his name is J.D. Hayworth. You may have seen him on TV on Hannity on Geraldo all over Fox Business

00:49 and Fox News. Really good guy. J.D. is joining us from somewhere in Arizona. J.D. welcome in. Well thanks Coach Pete. Yes greetings from Scottsdale Arizona. It likes to think of itself as the west most western town and critics call it the west most midwestern town but here I am representing the southeast and the great southwest and it's so good to be with you today. Thanks for the invitation. Yes sir. Well you've got a Super Bowl coming in this year to your area don't you? Yes that means a whole lot of Eddie money a whole lot of Johnny paycheck Johnny cash and but you know what's interesting when you do the comparative studies and we're don't get me wrong always happy to have the Super Bowl in but you take a look at the sport that is so closely identified with where you and I

01:36 grew up in the southeast when we have our big NASCAR races out here the the multiplying effect on our economy. I the big secret is it comes pretty close to the Super Bowl. Wow. So it's been remarkable and please don't let the guys in Rockingham know I'm the guy who stole the race to bring it out here to PIR. There's a story behind that but I don't want guys throwing rocks at you or me so we'll stick to the issues today. Well one of my best memories I was 10 years old I grew up in Scotland County which is only about 20 minutes from the rock this the speedway there and dad used to take us here they had two races a year he'd take us to the first one we'd sit in the infield and eat chicken I used to love to eat Kentucky Fried Chicken as a 10 year old and every now and then you see some cars go by that was my enjoyment. Oh you bet what a great place and I remember going down to Rockingham on the JLC

02:28 Webb Fur Affair that took you there into Richmond County so yeah lots of great memories of that area and of well NC State and of back home in High Point so it's just great to be with you today. You know High Point back in the day when you were there I mean it was the furniture capital of the world still doing it. Yeah and High Point remains so you know when you stop and think and I don't know if we've really given High Point the credit think about when this happened maybe about a half century to 60 years after after the Civil War and the city fathers of High Point said there needs to be a place for furniture exposition and thus the Southern Furniture Exposition was born. Now the sad fact is that a lot of the manufacturing has left High Point but when the furniture shows come to town you have everybody from all

03:20 over the world continuing to come to High Point North Carolina and I don't know if we really reflected on what that has meant both to that area and to the entire state and now as we take a look at our economy sadly so much of the manufacturing pulling out of the United States and heading for places like China and that would include the furniture industry. Well you know when I think of High Point I think of furniture and also think of High Point University and Nito Cubane who's done a great job of turning that the school around and they're they're on the front of any kids recommendations. You went to Carolina you went to Carolina I went to state but we can say great things about HPU and I can remember Nito this shows you how life changes coach Pete I were first member I first remember Nito as one of my

04:08 counselors up at Camp Cheerio which back then was run by the High Point YMCA and up in I guess the Roaring Gap area in the western part of the state yeah but Nito and the folks at HPU have done a remarkable job. He had me come up to speak about 12 years ago there on campus to one of his business schools and we also incorporated media in there because we do we do a lot of media here for our for our company and and he was just an outstanding guy and right then I said gosh if this would if I would have known about him when I was looking for colleges I would have tried to go to High Point because he teaches all his students how to make money after they get out of college which is a novel concept these days especially after this student loan forgiveness act that was just passed. Oh wow that's exactly the case and they do prepare young people for a business environment for a career

04:58 and that's so important and as you mentioned this this really is a nice segue into political policy and economic policy. Only two things we really need to know the late great Milton Friedman pointed this out if you want less of something tax it and conversely if you want more of something subsidize it and so this this uh move by uh by uh Mr. Biden to uh forgive student debt loan uh in addition to being kind of a crass political move before the midterms it is going to create problems I just and this is not partisan this comes from somebody at Harvard who advised the Obama White House Jason Furman on uh Twitter

05:44 pouring roughly half trillion dollars of gasoline on the inflationary fire that's already burning is reckless. Yeah it makes no sense. No it's just it's bad news but the good news is there are people like Coach Pete and those of us who listen closely to try to avoid uh the shoals I guess the outer banks of economic policy in these troubling times. Well a lot of people don't realize when you hear about uh you know and one other thing a tangent off of that is the president and this is on all the talk shows anyways we're not going to waste a lot of time here but does he really have authority to do what the house is supposed to do to begin with? That's quite true and that'll end up in court uh it depends on the Supreme Court's on recess until the first Monday in October it is conceivable they could convene

06:32 an emergency session to take this up but don't bet on it. So it's it's funny the money doesn't just come from a money tree so if I'm going to give you if I'm going to forgive ten thousand dollars of debt for you I'm going to reach over to Thomas my producer I'm going to take ten thousand out of his back pocket and give it to you because there's no money for coming from I mean there's no magic money it comes from one person to go to another. That's exactly right this is a classic transfer of wealth from people who aren't wealthy. That single mom who's working hard whose kids it's going to be tough for them to go to college she's paying now for the loans of others who have gotten an education and who may or may not have put that put that education to work. Hey we have a couple more minutes here and I wanted to touch on some fun things now let's talk about your what got you to

07:20 Well two two words Lou Holtz. Lou Holtz recruited me and uh the joke is he said oh no we're going to sign that kid from high point I got to take that job with the New York Jets but uh no it was it was a great experience at state uh had some health problems that sidelined me in football so the joke is I was recruited as right tackle but ended up left out however I got to be student body president my senior year I started in radio back at high point at age 14 so I would also do work with sports information and what was then called the Wolfpack Sports Network and no less a Carolina grad than Woody Durham gave me my break in television back when channel 28 was the NBC affiliate back circa 1979

08:05 80 so I started in television back there and had the good help of uh the voice of the Tar Heels Woody Durham in doing so and then from uh Raleigh Durham to Greenville Spartanburg Asheville to Cincinnati and then in 1987 to Phoenix where uh after seven years on the air I answered the call to run and was elected to the Congress of the United States and it's been incredible the only downside is I don't get back to North Carolina as often as I would like well next time you do you make sure to let us know ahead of time we'll have you right in the studio and that'd be good it's good to see you in person well coach Pete I look forward to that and since you're a tax expert we'll figure out a way that I can expense that so I can I can we'll say this is an official interview with my business

08:52 your business and figure out a way to get me back in studio sometime soon well I can sure benefit from a guy who used to be on the house ways and means committee myself I can probably learn a lot from you I know I could and you also one final thing I want to make sure people know this you were uh you had something to do with HR 743 that's a social security protection act of 2004 yeah we we just wanted to make sure because demographically and truth be told you and I are heading in this direction pretty quickly it's kind of a shock but back when we were working that 20 years ago it almost seemed like something far away well we understand it I'm sure you tell those who hear words retirement ain't that far away social security is an important uh important resource but woe to anyone who tries

09:39 to depend solely on social security primarily because of of what we're seeing now the demographic bulge uh the baby boom is going kaboom demographically in terms of those of us moving into our 60s and eventually into our so-called retirement years the good news is a lot of us don't want to retire the realistic news is that it is tough for uh today's workforce to support social security recipients of tomorrow so we tried to find rational reasonable ways to augment social security to make sure it's there for Americans but uh you know our kids instinctively coach Pete take a look at this the polling question was

10:25 asked gosh 20 years ago what is more likely they asked this of kids uh uh from I guess uh 16 to 24 what's more likely uh finding extraterrestrial life or you getting social security benefits when you reach your 60s and I don't need to joke about it the truth was the kids said oh we're going to come in contact with extraterrestrial life social security won't be there for us well I hope that's not the case but we need to make it to help people understand they need to supplement things they need to plan for the future because relying on government ain't the way to go well speaking of ufos you watch the news lately they're trying to make contact there we go anyway are you kidding me as a graduate of

11:11 you i'm seeing what tucker is talking about with all the with all the cattle uh uh carvings up uh cattle mutilations you know that's kind of scary stuff so uh and even my old uh a couple of my old constituents in snowflake arizona those were the guys who back in the 80s claimed to have been abducted now i didn't exactly ask for their endorsement but hey i would have been happy to have a vote for me they were entitled to secret ballots but we have some of my friends out here in arizona who say they have taken a trip from arizona to uh those ethereal realms aboard those ships but that's a whole nother topic coach pete for another visit well really appreciate your time today jd

11:57 hey coach look forward to getting back together with you and uh you know it's just wise to think about the future because it gets here quicker than we know absolutely folks his name is jd hayworth and the name of the book whatever it takes i would recommend uh it's still in print uh out there jd you can get it on amazon i'm sure it sure is yep available wherever fine books are sold and that's why bezos is making a ton with amazon.com hey will you take care of my friend you too coach pete let's talk again soon yes sir 800-661-7383 you can also text the word plan to 600-700 this is a great opportunity to reach out get your own questions answered again that number 800-661-7383 800-661-7383 or

12:44 text that keyword plan to 600-700 that's plan to 600-700 you

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where I go out across the world and I find someone who's making a difference in the financial world or the world in general. By the way we did have Sully Sullenberger on. He had nothing to do with the financial world but he was everyone knew who he was in the world and it was all about having that retirement autopilot and making sure that you can control what's going on in your financial life. And the guest this week is someone who is going to help you take control of your financial life. Her name is Shirley Liu. She's joining us from McLean, Virginia and I call it right around the sausage factory about 20 minutes

00:50 from DC. She's got a book out folks. It's a tremendous selling book. The name of it is IULASAP How to Win the Financial Game of Life, Invest Like the Wealthy and Generate Tax-Free Income with One Three-Letter Word. Shirley welcome in. Well first of all thank you so much for having me Coach P. Oh big fan of you bud. Well thank you. You know your book got my attention. I mean I didn't know you before I got this book and I said gosh this girl knows what she's talking about. I know you're older than a girl right you're not an 18 year old but you're an experienced financial planner so maybe I shouldn't call you a girl. This gal that's better. This gal knows what she's talking about and you really do. Talk about what inspired you to write a book like this and let's talk about the

01:35 the accolades you've got from the book. Well thank you so much. Well first of all you know I came out the book May of last year and believe it or not on November that just passed out of 10,000 women got nominated by Forbes magazine. I Shirley Lu was a selected top 50 over 50 by Forbes as top leader in the country. Tremendous. That's a big that's a big echo by the way. Incredible journey on that and then of course in the Washington DC area Washington Business Journal just kind of ranked Shirley Lu and Associates as one of the fastest growing company for 75 top 75. We were getting make a tremendous stride but I came out with the book and you know to be honest with you before even the book I got into financial services it's because you know you read my book a little bit about my situation to be honest you know

02:25 my husband had committed suicide and left me with a one-year-old baby in a 15 and 16 with no life insurance. Wow. So that was my story it was very tough you know as a single mom trying to survive and then I got into finance because I just felt that women need to know about money need to understand absolutely yeah and then I found out a lot of men it's so funny when I'm talking to men they're like yeah my wife does it all but what does she have I don't know right so it's one of those conversations that I think both needs to know and understand so that was where my passion began and then you know of course during that time you know coach Pete it was one of those situations where people didn't believe index well how can you not lose money well how can you gain money without loss well how can you do this you know I stood my ground to be honest with you for the longest time for the past you know

03:15 almost 18 years or so biting you know fighting and everything else against everybody out there the no-sayer you know and of course you know I also see people always make comment right on the internet oh wealth management don't believe the stuff that we do anyway right well guess what but um I stood my ground and I felt very strongly that the index universal life was a way to go and I know there's a lot of author out there that talks about life insurance right right right right and and you know you know that uh okay for example the power of zero you know and uh and then you've got you know um the the retirement miracle right and you've got all these books and everyone talks about life insurance but they're kind of high behind the biggest product which is the IUL so I decided well why not go head

04:04 on why not call it is what it is right so that's what I did I I created the book IUL and really explained the mechanics of it how an index you know the rising tide where it lifts all both versus they're picking a particular stock those kind of things and sure enough the book on the IUL the day that it hit it hit number one in seven categories um you're investing retirement planning life insurance all that uh and today that book IUL remain number one selling right now um so that's I got into it because I'm passionate I believe in in saving and retirement using life insurance and there are things such as five-year retirement plan that no one knows about yeah it's it's it's refreshing your book is because you you like you said you're not hiding behind any any fancy terms or trying to

04:51 skirt the issue I mean it is what it is it's a life insurance product but it's a good life insurance product that is designed for the favor of the client which is very refreshing because a lot of the old life insurance products were designed for the insurance company right right and and I think you and I know that and you know one way to do is being being a client so I have clients I myself as a client being able to say you know what I saw the performance I saw the things that it did and I wanted to create get rid of the daggone myth the one of the first method talks about that well you can't make money in an IUL are you kidding me you know last year now of course you know March you know the stock market lost money correct so the floor is zero right right but the year before that oh my god I had IUL policy

05:37 for my clients that was making 27 return on the money now 27 percent yeah okay you're right but I'm like you know really guys you don't make money in IUL oh come on you don't have it so you don't know what it does that you know well and the making money part is really good but the but it's got some other advantages that a lot of people don't realize right because it's not just the making money part and again zero is your hero is very important you can never have less than you started with as far as the gains and a lot of people don't realize that we're so used to being in the market or the crypto world where one day you're up and the next day you're down big and that's that's this eliminates the down factor correct absolutely but you know what I love about I love about what you said about helping people I'll give you an example there was this little young nail technician you know she does nails that's all

06:22 she does correct so she comes in I open an IUL for 200 bucks not a whole lot right but she got to start somewhere yeah well you know after four months having the policy guess what happened she wanted to put more money in breast cancer oh she died no no no no she was at an early stage but because of going through chemo and stuff like that she couldn't eat couldn't feed herself you know I mean you got through that crisis and do you know that 200 bucks a month was a we were able to advance 126,000 in her bank account that you can use now to pay for her mortgages food everything else while she's in the process of getting treated for chemo that's the beauty of this because 200 bucks oh I know you can fund in stocks in any other policy that can give you a

07:09 living benefit you probably have 100 bucks left if you put it in the stock market so yeah the living benefit very important I talk about the living benefit all the time Shirley the living benefit rider on the on these policies for long-term care or for terminal illness you get to take your death benefit out while you're still here even if you've only paid 200 dollars in like you said this person was able to take over a hundred thousand dollars out tax-free to pay for health costs and everything I know and you know what happened even after she did all that she had like after her treatment thank god because she was at early stage now she's no more cancer and then guess what she had eighty thousand dollar leftover and she turned around and took that put a down payment on the house nice I'm flabbergasted you know with the kind of things and and I've witnessed oh my god I've witnessed the kind of things that you and I are changing lives it's about changing lives you know

07:59 I mean when someone passed away you know COVID I had so many people passed away and you know you can't help solve the pain that the family have but what we're able to do is able to deliver 200,000 200,000 a million dollars to these people and said look here's what can help your family to continue on with life you know what I mean yes and if you and I know this one of the most rewarding things and I appreciate you by the way to get on the platform and sharing this information with the world out there because we need people like you and I to be able to spread this message well because we don't have the budgets that the Wall Street companies do and a lot of the money is spent trying to tell the average consumer to put money in a place they really never should put it and that's at risk in the market many times I mean if you don't have a if you don't have a plan first you should never be piling money into a

08:47 risky investment like the stock market you need to have a plan with the core and explore and and also that protection and you call it the American dream let's talk about the American dream in your in your book that's chapter two talk about the American dream and the importance of making sure you have the right policy in your procession well you know the American dream was here's the old dream versus the new dream okay yeah the old dream was okay you know what let's get a good job raise a family buy a house with the white picket fence right and at the same time if you got a job you got a pension plan you know a voila with a house with them there it is that's your American dream yeah and you have a pension well the problem is that that American dream has changed yes people changing job all time nowadays not just about having a house and all that right you know you've got a new way of looking at things now okay the dynamic of it you've got a lot more build now old and day

09:37 you know you don't have a lot of bills now look think about it you got kids education right you've got parents that may be elderly right you've got long-term care you've got all these crises and pension plan went away right yes what does that new American dream looks like great does it look like okay you know it's about now having financial security we have to do what's called financial security redefined it's no longer about me having that house it's about me okay how do I outlive my income I'm medicine right nowadays getting better and better and I'm outliving my money and I've seen so many people running out of money right now you've got that crisis and then taxes oh my god are you kidding me you know you've got the economic crisis that's going on right now you know with the covid hitting right yes that's a war in russia and you know and all this stuff that's going on that's impacting our world yes it is so now where social security possibly could be running out okay somebody said

10:28 well it'll never run out well I hope it doesn't run out yes there's certain things congress has to do right but the reality sets in that if you don't plan for your retirement who will so I believe the new american dream is you got to be proactively planned and if you notice in my book I talk about you know the game of life right yes are you a queen or a pawn simple as that a queen or a pawn uh or a king I'd like to be king yeah right right Thomas you're a queen or a pawn I would prefer the king status if I can take it you don't want to be a rook no you better be a king if you get a chance well the rook's not too bad well the rook's not bad well my book did say that I want to help you become a king and queen so there you go there you go of your own domain you know when you talk about it this is about taking control of your money and not depending on others when you get a policy such as this because now

11:17 you're in control I mean like you said this this lady that you just signed up for that life insurance policy and then she has breast cancer if she didn't have that policy what would have happened to her I know she would have lost her job as a nail technician she would have no money coming in and her family would be still struggling out there now she's you know I don't know you know I just know that we can change the word by one life at a time you know that if people just listen in to us you know the old life insurance you know I I know that people say term you know I call that donation honestly yep um I'm not a big fan of it uh just because you know there's a place for it but majority term insurance only pays out two percent it's really sad you know um and people still going for it I mean so many people go to work and have term you know and they believe that oh it's so cheap but then guess

12:07 what you don't leave any legacy so to me you know if you want legacy you know you want some advantage you want a situation where it's going tax deferred and and if you properly structure this thing are you kidding me you're going to get tax free tax advantages in retirement yeah well term insurance gets more expensive as you get older and it's unaffordable and uh the average uh term policy doesn't pay what you know you usually don't die during your term unfortunately hey we're running against the clock surely but I want to tell folks if you're interested in finding out more information about how to make sure you have the proper life insurance policy or just want to make sure you some of the the strategies we talked to talked about today with surely you can text the word life that's l-i-f-e to 600 700 that's life to 600 700 surely I want to have you back for a whole show sometime is that okay oh I would love to do that and again thank you so much for I love everything

12:57 you guys do and please continue to help the word out there yes yes ma'am again the name of the book is i-u-l-a-s-a-p how to win the financial game of life invest like the wealthy and generate tax-free income with one three-letter word again her name was Shirley Liu Shirley thanks for your time today thank you very much all right take care guys all right let's open up these phone lines that number 800-661-7383 800-661-7383 and we got a great way to text us as well just text the word plan to 600 700 plan to 600 700

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where we go out across the world and find someone who I think is making a difference in the world and especially in the financial world and this week is a fantastic guest. I've had both of his most recent movies in my collection and we're going to be airing the most recent movie at a few movie cinemas and we've also got some DVDs that we can give out as well after this interview as well as some special codes you can use on the internet

00:45 to watch the movie at no cost. But his name is Doug Orchard and he's joining us from Florida and the two movies I'm talking about one is 2018 and we if you've been listening to the show at all in the past you heard us talk about it the power of zero the tax train is coming. We'll talk about that at a different interview and I'm more than happy to touch on it today too but we want to talk about the most important one the most recent movie called the Baby Boomer Dilemma an expose of America's retirement experiment. Now Doug welcome in. Hey thank you so much for having me. Now your movies are awesome and I want to ask you first what inspired you to start doing these movies? Well actually it was David Walker back in 2004 I happened to be driving across the Mojave Desert

01:32 and the only radio station I can get in was Las Vegas University at the time on AM radio and he was being interviewed there and it appears nobody was listening to him and he was complaining that the president wasn't listening to him and how dire our future was because the national debt the projections of where we were heading and this was four years off of when the projections were showing that we were never going to have a national debt that we were moving to a point we're going to have no debt well and in four years it just got I mean just went out of control so fast and so and I I just I became super interested and I began doing documentaries in 2009 and you know that's all I do since and and so I had some some individuals come up to me saying you know you need to make a film about retirement income income income income

02:22 and they explained the problem with it in relation to that debt and I and the consequence of what we're facing and and so this is really overall it's been a half a decade in the making it takes a long time to make a movie like this yeah it does but because you have an all-star cast in this movie about and people in the financial industry will probably know a lot of these folks but even people outside of the financial arena have probably heard some of the some of the names there like of course if you're listening at all and you follow politics you'd probably know David Walker because he was the comptroller general of the U.S. he resigned during the Bush administration because he said he got tired of signing checks that were going to bounce because he was in charge of signing all the government's checks in a in theory I know there's a rubber stamp there he got tired of having his name associated with us getting ourselves in trouble as far as spending wise

03:07 wasn't he right he was and he became frustrated because you know he served under both political you know parties presidents yeah no dog and and he he at that moment was an independent type and he just felt like no one was listening and so that's when he he resigned and started this national tour he created a great movie about the national debt it it um was actually nominated for an academy award you thought that everything would be changing and uh and of course nothing happened and um it's been interesting talking to him through the years and listening to the tone of his voice and we got him in rare form in this film I think we got him in a frustrated moment it's quite interesting to listen to and he just opens up

03:53 and tells things how they really are which and and again this film isn't really it doesn't really make any points about political party the government anything like that everyone should know that this film is about okay given what's going on what do we do about it as baby boomers what do we do about how do we protect ourselves um given this and it's a dilemma I mean the film is aptly named it's a dilemma you know there's no easy road but there are better choices than others yeah so when we talk about the dilemma and a lot of folks are listening say well my retirement's fine I've got my money in a 401k and and my company says as long as I put money in I'll have a retirement income but they don't really understand what the 401k really is 401k is more of a lump sum vehicle correct right it is and at first we had the founder the person who created the 401k in the film um Ted Benna yeah and we had we had really the

04:44 world's experts on every single line that you can come up with and the world's experts for social security for pensions for the people who do um the biggest exposés on those the the people who created these all all who administer over them every every aspect of it and study them um in the movie but 401ks it's about aggregating money for you know for growing it but when it comes to and what do you even mean because 401k is really not even a good word um but usually what people think of is they're thinking it's growing in some type of mutual fund right right um and so if we're going to use that vernacular for a moment then that's there's one everything we understand is it's about growing it

05:30 but not distributing it and all the rules change the moment you start taking money out every law you think you understand it no longer applies and that film that's what that's one of the messages of the movie it shows it very clearly well back in 2008 we had dr david babble from the wharton school on on our show because he had been writing a lot of articles about the the dilemma about income and retirement and uh and looking at the vehicles that existed that were known to man that would give you a lifetime income and he was doing all sorts of research papers on it from the wharton school and i said doc what why are you spending so much time on this he said coach i'm going to retire soon i want to make sure i get the right vehicles myself unfortunately dr david babble has passed away but you have him uh you have him in the movie as well yeah i got him the last recording of him um and this film

06:17 meant an awful lot for him he he lined up some of the key people of this of this movie he was a great guy we got a lot of great responsible we had him on the show i think we had him on for a return visit too after he retired and he was happy because he didn't have all his money exposed to risk well the other thing about dr david babble that's interesting is he was the world's authority on inflation so he did his dissertation on inflation when he got his phd in economics from university of california berkeley um and then he was the person who brazil when they were in trouble tapped and went down and helped them uh get that thing under control and and so when he looked at his own personal question what do i do personally what do i do he had written incredible articles and strategies about you know here's how you

07:04 optimize money in retirement and all that but when he got down to it he was like you know this is too complex to actually do in retirement he wanted something simpler and he wanted something that was effective hedge against inflation and and so that's what he reveals in the film it's super interesting what he does it's simple folks we're talking to doug orchard he's director filmmaker researcher for the baby boomer dilemma also the power of zero the tax train is coming when we talk about inflation uh gosh if dr babble was alive today he'd be all over the place on the news wouldn't he he would be um and the thing the thing that's interesting is a year ago when i was filming him was it just a year ago no it was a year year and a half quarter quarter ago in march 2001 he saw the inflation coming 2021 2021 to that what i will there we go thank you a good time machine

07:55 yeah yeah so he knew he knew it was happening well i mean he he was showing me all these charts like he saw this was coming um and he would be all over the news um but the issue is it isn't you know what do we do now and all that we have inflation it's here it is here yeah and um i i think that when we get to just looking at our personal bank accounts it's frustrating right and when you look at nine percent per month you know this is this is insane it is how do you guard against that and it's so when i look at what did he do and then he was telling me what here's what i do and here's why and here's what will work i i thought this has to be he changed my mind on an approach and that this that approach gets

08:41 a lot of time in this movie okay yeah and also in the movie you discuss the mismanagement of state and local pensions that's something that's very worrisome because a lot of folks listening probably have state or local pensions this is probably the biggest expose in an actual movie this is a pg mpa rated film and 99 of documentaries are not rated because they're really infomercials so this the mpa they have a group that that gives the rating and they have a part of it that screens is this art is this objective or is this you know a corp or an infomercial for something and and it can't get through that if it's really an infomercial so so they take it and look at it that way when we look at what's going on right now um it's important that we truly get the right

09:32 picture as as consumers and um who's really telling us the story and and that's what we try to do we try to tell an objective an objective story it's going to look a little different from any narrative you get from anyone else um but this is what happens when you have a crowdfunded film and i don't sell anything i just make movies yeah well i mean it's a great movie and i've watched it three or four times we have we have my whole staff is watching i make them watch it too because this is relevant this is a movie that is addressing every single person that's listening is going to be affected good or bad by the decisions they make financially and speaking that another area you touch in is the role of low cost fixed annuities in retirement can you touch on that yeah well that's what dr david babble is

10:19 using and this is of course is something people don't understand and something i was very very against going into the film and it was amazing what happened i mean i got a 180 experience because it it comes down to it all comes down to income and if you have all your money at risk what happens when you have a 30 correction in the market and you're within that five five years of retirement or in that first 10 years of retirement you cannot recover from it it's impossible mathematically and and i had that experience you know i actually lost 90 of my portfolio in um in the year 2000 um back when i was just turning 30 years old and um in my 401k and it never in there i never made up for it i mean i never made

11:08 up for what was there it's really a i really wish that we'd stop saying you have time to make up for it when you're younger because that's also not true um what we can do is have things at risk and know that that's at risk and we have things that are guaranteed and know that that part's guaranteed and we have to make a decision do we want to have a certain percentage of our retirement in a guaranteed fashion and what's that lifestyle look like and the rest could be you know up for risk or you know are we okay with making guaranteed the poverty line and we at least have that and then the rest could be at risk there's a decision to make but to have all of it at risk nobody nobody i haven't found anyone who suggested that that makes sense nobody says that in this film yeah well dr craig israel

11:54 from stanford university came up with the core and explore as far as retirement income the some of the money or the money you want to have for income you want to be guaranteed to have for income needs to be in the core that is not exposed to risk but also grows locks a gain in and it gives you a monthly or yearly income for the rest of your life and then once you establish that income which you know ahead of time then you can take the leftover money the money you don't need as much now i don't want to lose any money but but you don't if you lost that money in the explorer account not the core account you'd be okay but as long as the core is protected then you can take more risk with the leftover money what do you think about that well i think that when you talk about core we're including social security and pensions both public and state and this film absolutely exposes that those publicly stated numbers of what your benefit is it's mathematically impossible right now for them to

12:44 deliver those numbers to you so that's why we talk about not depending on the group accounts and having individual accounts so yes and so that's where you're saying okay well i need to supplement my core what i thought was core but if we're gonna get a 30 haircut for example in social security then then how how are you gonna make up for that what's your new core that's where the annuity fits in to supplement that same with a pension you know my dad has calpers so i wanted to inform my 86 year old father that his calpers number is seriously at risk because they've been they've been planning on growing at eight percent a year seven and a half percent a year right that's impossible that's an impossible they've never done that before they've only done what the treasury rates ever done since 1980 in any 10 year trance that's all they've ever done look what the treasury rate is right now it's not seven and a half percent has been a long

13:32 time by the way yeah so and and with that they're still underfunded at a seven percent which they never will hit you know nobody's hitting that number so so we have we have some real ethical problems and by those who are ministering our core social security public and private pensions serious particularly the public ones that's where the problem is is the publicly ones i don't know how they're getting away with it but this film demonstrates where we where we really are at and this is the the glasses you need to wear to see things clearly yeah and then you can go meet with your your advisor and and you can dictate hey here is what i need now you know you can have that intelligent discussion um after this film it's it's meant to just open your eyes it's not financial

14:21 advice by itself but it does open your eyes on what the conditions are well being informed is the most important thing then you can approach retirement with confidence knowing you've made the best decision because you had all the different places like explained to you instead of just whatever your broker's pushing and so very important to see this movie folks if you'd like a special code to watch the movie doug's been generous enough to share some with us their individual codes you can watch the movie one time and we're also going to show the movie next month in three movie cinemas around so give a call right now or text us movie m-o-v-i-e to 600-700 to get on that list again movie to 600-700 doug we really appreciate your time and and let's schedule another time to have you come and talk about the power of zero sometime that sounds great that sounds great thank you so much folks again his name is doug orchard and the name of the movie is the baby boomer dilemma an expose of america's retirement

15:11 experiment 888-623-8858 or text 401k to 600-700 you're going to get that comprehensive retirement review plus all the extras that coach just talked about you'll see where you are today but more importantly you'll walk out the door with a roadmap that can help get you to where you need to be when it comes to retirement 888-623-8858 888-623-8858 or just text 401k to 600-700 you

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00:00 You're listening to the Triangle's Afternoon News with Steve O'Brien on FM 98.5 and AM 680 WPTF. The problems with our economy are affecting everyone when it comes to their investments, when it comes to their financial future, and I'm always happy to have Pete DeRuta on with us. Some people calling Coach Pete. I think I will, too. Coach, nice to have you here. How are you doing, Steve? I'm doing just great. Thanks for being here with us. So are people changing the way they are financially planning with what we're going through right now? Well, let me tell you, this week I started in Vegas. I went to Chicago. I went back to Raleigh, and now I'm in Austin, Texas, and every single place I've been to, that's all people are talking about.

00:51 So, yes, people are changing. They're paying more attention, Steve, to what's really going on in the economy. And I am, too. I mean, I'm not the guy who does the main shopping of the family, but every now and then I go to the store, and what I usually buy is I want to cook out. So I buy the ground beef and potato chips and soft drinks, all the good stuff, as far as I'm concerned. And I've invented something I call the Coach Pete Ground Beef Index. The ground beef index? Yeah. It affects men. I know it's affecting everybody else, too, when you start seeing these prices. But right now I'm sitting on a golf course here in Austin, Texas, and the golf course is crowded. So it's not affecting people, everything they do, but people are paying attention to it. I guarantee you that. And, of course, when they go to fill up the car with gas, gas prices are better.

01:38 But even with our gas prices going down a little bit, it's still making things awfully tough. Do you see an end in sight to all this? Well, I would love to be able to tell you yes. I'm a positive person, Steve. I try to be positive all the time. But there's two numbers I look at. We all hear about the CPI. That's the Consumer Price Index. And then there's something else. We get lost in this alphabet soup a lot of times when we're watching the financial shows. We really don't know what it means. But there's another index called the PPI. That's the Producer Price Index. And that's about two points higher than the CPI. And that's a forward indicator. And the CPI is a lagging indicator, which means you hear all these terms. Again, when Kramer starts talking about it, a lot of people don't know what he means.

02:24 It means that we've got a lot more inflation on the way because it's costing the producers a lot more to produce the things we're going to have to buy. So if someone's got investments for their retirement and the stock market's been going down, understandably, because people are concerned about recession and what's going to happen with the Fed, who's probably going to raise the rate probably at least three quarters, if not a whole point. The people are concerned about that. What should people be doing? Should they be keeping their money where it's at, or should they be looking at something a little bit more safe for now? Well, I've been in the financial arena 30 years now on July 2nd, so it's hard to believe. I feel old now. My beard is getting a little gray. But over the 30 years, I've seen certain circumstances sort of like this, but I've never seen anything this bad as far as there's no real end in sight.

03:18 And what they're telling us isn't coming true. Remember they said that inflation was transitory, which meant a lot of people had to figure out what that meant. They said it was only going to be here for a little while, and they were right. That bad inflation number was only here for a little while. It's gotten larger, unfortunately, than costing more. Here's what I recommend, Steve. And again, I've got 30 years behind me here, and I've never had a complaint for a reason because I've always told people the truth. We're a fiduciary planning firm, but I recommend everyone listening get their very own retirement income security evaluation. And it covers risk and safety, inflation, what kind of income you're going to need. And it factors in where you are now, but then it gives you instructions on how to get to where you really want to be. And that's the most important part. Anyone can sit here and criticize, but if you're criticizing without action, what good is it for anyone else?

04:04 So you can get your own. Anyone listening right now has opened up. I've had my tech department open it up free for everyone. If you text R-I-S-E, that's RISE. So the word RISE, R-I-S-E, if you text that to the 600-700 number, so instead of a phone number, go up there and put 600-700 and text the word RISE, you'll get a link to be able to do your very own RISE score. That's, again, retirement income security evaluation. And after all, why are we saving? We're saving so we can have a comfortable retirement so we can not worry about work and not worry about money. And so many people I talk to now are very worried about money, and they're worried about work. They're going to have to work longer now because the market has taken away their retirement years, and that's not fair. So if you have the right plan in place, you can retire sometimes even earlier than you thought.

04:51 You've got to have income. You've got to have safety and risk together. We call it Core and Explore. We have a 22-step total retirement plan. We cover that, Social Security planning, Medicare planning, everything, and then also getting into more advanced tax planning and then looking at your income. Because the most important thing for everyone listening is having enough income to do what they want to do all the way through retirement, not just 10 years or 15, but all the way through retirement, not only for you, but for your spouse. So get that RISE score done. Get your own retirement income security evaluation. Text RISE to 600-700. Now, Steve, I think everyone should be doing this right now because there's really no end in sight despite what you hear on TV. And unfortunately, what we hear on TV many times is not the truth. And what the truth is is when they come out with the CPI, but more importantly, the PPI numbers.

05:38 I think everyone listening needs to pay more attention to those numbers because politicians can lie all day long. But when you look at your bank account balance, that's when the truth comes out. Well, I agree with everything you said about that, except that old part. I'm older than you, so what are you doing? Jeez. It happens overnight, Steve. Yeah, boy, it sure did. Well, it didn't happen overnight. It took about 71 years for it to hit me. Please like it. Coach Pete D’Arruda is a guy that knows a lot about what's going on in the financial market. Talk to your analysts and make sure you're in the right place. Pete, as always, thank you for joining us on the show. Take care, Steve. Everybody else, I'll see you on the weekend. Thank you.

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00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where we go out across the world and find someone who's made a difference to me or I think that's made a big difference in the financial world and it's really no exception this week. We have a return visitor. He hasn't been on the show for a while. We've had him on in the past talking about lifetime income and importance of making sure you have proper balance in your portfolio. He's from Boston. His name is David Macchia. David welcome in. Coach Pete thanks for having me. Now you've written some books too. I

00:48 mean you've been all over the place in the financial world. What's your most recent book? So it's called constrained investor. It's a timely topic and if you're not familiar with that term let me explain it. So in financial services we segment people. We base it on their amount of money they have invested. AUM it's called right and we have these neat categories of people. Mass market, high net worth, ultra high net worth. It's great when you're accumulating money but when it comes time for retirement it doesn't really work. So what constrained investor does, it introduces three client segments and any person can fit into one of these segments. There are underfunded investors, overfunded investors and constrained investors. My work involves constrained investors. Those are people who get to retirement

01:35 with money which is great but the amount of money they have isn't necessarily high compared to the level of income that they need to support their lifestyle. And when you're in that position it means you have to be very very careful on the investing strategy that you use to create income. Yeah very very important because if not you can end up on the wrong side of the curve so to speak. Wrong side of the curve and going broke with your income being reduced or eliminated. So what are some of the main obstacles that you see these days as far as getting in the way of people getting the proper plan they deserve for the rest of their life in retirement? So there's so many financial advisors in the United States but so few of them I would say are expert in retirement income planning. It's a different world than accumulating money. It's a different

02:21 set of disciplines financially. It's a different set of insights and skills and so you really have to look for an advisor who's schooled in that area. About five years ago there was a designation that I received called the Retirement Income Certified Professional, RICP. And that deals strictly with making sure people have the retirement income they need throughout retirement. Not just the first 10 years or 12 years or whatever some broker's Monte Carlo simulation told you is going to be but this is lifetime income that is structurally guaranteed. You can't lose it and it's always going to be there. How important is that for most anyone listening? It's the most important thing in the world for a retiree. There's no financial issue more important to a retiree than income. And the reason is this. In retirement it's your income that creates your standard of living not your wealth. People don't focus on that but it's all

03:10 about income. We had in North Carolina the other day we had the first five million dollar scratch off winner. You know they buy these little lottery tickets they scratch off. My relative one of my grandmothers my wife's grandmothers used to give us those scratch off tickets on Christmas every year. They were in our stockings we'd all scratch them off and no one won five million dollars. But he won five million. After taxes he got three million back and I read that he's got an income plan already established where he's never going to have to worry about income for the rest of his life. And his comment was he had no income before this. He basically had found some money and bought a lottery ticket. Sort of sounds like a Willy Wonka story. Not the way you want to go about it as a rule. But he walked into income and now he has income forever. But most people cannot depend on those

03:55 lottery tickets as picking the right stock or putting all the money on red on the roulette wheel. There are ways that are safer and more secure to make sure you have that guaranteed lifetime income aren't there? Well that's true and an annuity would be the ideal way. But I'll tell you one thing you should keep in mind right now. Everyone listening should. If you don't have the right kind of income strategy at a time when stock prices are falling that means you're exposed to what we call timing risk. That is the biggest scariest monster of a financial risk you can experience and it can eat up your income very quickly. So it's very very important to have a portfolio that's structured in such a way that you're protected against that kind of risk. You know there's so many risks out there affecting or potentially affecting our money yet when the average consumer hears some of these risks it glazes right

04:42 over it doesn't affect them in their mind they don't think. But when something like a tidal wave comes in and wipes out a bunch of things in the market we learn real quick how important these risks are to to basically identify ahead of time and make sure to have some preventive maintenance done so you don't have to fall for these. Well you know there's this thing called recency bias. Your memory is prejudice. It remembers the recent stuff right? Sure does. And we've had we've had a 14-year engineered fake bull market that the Federal Reserve has created that has juiced the price of stocks. Well it's seduced a lot of people into think that just keeps going including financial advisors. But you know we're coming to a reckoning point right pretty soon I believe. Well all right now let's talk about this. We have a bad let's say we do have a really bad market environment and let's say we have

05:28 a real bear market that lasts five or ten years. We're so used to seeing what we call a bear market is five or ten minutes these days or five or ten days. The market goes back goes down then it zips right back up. But what you're saying a lot of times is that the Fed has engineered this because they keep pumping more money into the supply and the money has to go somewhere so it goes to the market and supply and demand says we have more buying than selling the market goes up. But we have a lot of people on margin these days too so we can see accelerated downdrafts and then shorters get involved and we could see a real bad bear market for five or ten years and that's when the word annuity will come into a lot of people's minds and many people will try to get annuity after they've lost money. Many times I would argue it's better to get it when you're up in the market you're not up until you're out of course so liquidate some of those gains and get that money to place you can't lose

06:13 it again. Well that's right and I think you need to think about at least protecting a part of your essential expenses in retirement with income that's guaranteed. Again no retiree stops needing income. Yeah. That's something to never ever forget. Well and in the traditional retirement income people depended many times on CDs at the bank when CDs were paying a really high interest rate you could live on the interest rate but lately well I say lately maybe the last 10 or 14 years bonds have taken way too much of a of that workload and and you you wrote a post to the other day I saw it was the worst month in bond history a month ago. That's right and that's a very long history bonds are crashing and where else what else could you expect we got near zero interest rates so there was no place for bonds to

06:59 go except down. Well folks we're talking to David Machia he's the author of the constrained investor he's also a I consider him one of the one of the leading experts in income in retirement making sure you preserve protect and guarantee the money you're going to need to to uh to live a comfortable retirement not just get by in retirement. David you've done a lot of work lately uh educating women on the importance of income planning you want to talk about that for a minute? Yeah and really there's nothing more important because um because of demographics coach Pete women are going to inherit most of the available wealth assets well think about women you know they tend to be a little bit more risk averse than men and what we do know is they live longer than men and guess what again I go back to the same same idea

07:45 you never stop needing income if a woman is going to live to 95 97 100 102 right now there's a million people over the age of 100 in the United States wow in the next 20 years is going to be 5 million so if you live for a really long time which is quite possible that income must continue what are some of the key issues affecting women who were preparing for retirement now you know we say women behind every good man there's a good woman that's what you always say but we've been trying to behind a successful man as a woman who's been helping him all the way and many times though the women have have done a lot of work at the home and raising the children and don't get a lot of credit for that but here's a stat that women benefit on and you and I are in trouble women outlive men by about seven

08:30 years and a lot of men marry women a little younger than they are my wife is about six years younger than I am so she's got a 13 year gap of me not being around that she needs to have someone she trusts and she needs to have a plan she believes in to make sure that no games or gimmicks are played with her retirement money that's so true coach pete women need an income plan that's understandable that builds confidence that they can you know buy into and keep for a long period of time but I'll tell you something else it's not a not a good thing for the financial advisory business when the husband dies a boomer husband in seven out of ten instances the spouse the female spouse fires the male advisor within one year well and that tells us that the most men male advisors haven't been doing a good job and relating to the women and they have to do a lot better yeah and and so yeah if you don't feel

09:20 that connection is so of course when husband passes away uh the wife will move the money to someone they trust and respect that's what that's exactly right and there's no hesitancy women will definitely find an advisor that they can have an authentic relationship with they look for different things men men are all about roi you know they look at the the quick hit the quick profit women women are really focused on goals and values they want to be listened to they want to have an authentic relationship and if you are a financial advisor and you can relate to a woman on that basis and truly listen and truly care about her needs and her goals and aspirations you have a client for life when we talk about women and income i mean having an income plan gives that peace of mind i mean and many people especially as we get older we're searching for that peace of mind knowing that we're going to have certainty we call it a

10:09 financial fill-up strategy every single year a check will arrive to your mailbox regardless of what happens in the market didn't seem like a big deal when the market was going up like crazy but now that the market's teetering around how important is it for most everyone listening to make sure they have some money that can't be stolen from financial termites and market volatility it's 100 essential important again there's nothing more important because expenses never stop and and today we're inflation surging everything is becoming more expensive so the necessity for income is is never been greater will rogers always said it's uh he's more worried about the return of his investment than the return on his investment do you think a lot of people because we're in this 24 7 investainment generation where you can go to the internet uh you can get text all the time or you can go watch tv

10:58 24 7 tv networks all pumping the market have people forgot what the most important thing is they certainly have another will rogers anecdote i remember is i don't remember personally but i've read about it he said at one point invest in inflation it's the only thing going up it's so true these days now inflation a whole different story we've got about a minute or so left i mean uh let's talk about the inflation how important it is people to have an inflation adjusted and protected plan and then uh any kind of comments you'd like to make at the end well i think you need an investing strategy that blends safety and risk it's important to be invested in the market long term but at the same time you have to have a portion of your assets that are covered by safe investments especially in the early part of retirement because that's what protects you against

11:44 that awful timing risk right you need that you need a lifetime income component that's fully guaranteed for as long as you live and then you need exposure to stocks and if you have those safety parts of the strategy right you can you can durably stay invested in stocks because whether the market is going up or down or teetering or volatile it don't matter to you your income need has been secured you know doesn't that give someone a peace of mind i mean when we talk about peace of mind it's one thing to say it and talk about it but when you're actually in that situation when you really do have that offensive line around you and you're the quarterback and you're not going to get touched you're not going down your income's not going down and you even have a chance for it to go up but it's never going away what kind of feeling does that give people when they know they're they're totally protected and really nothing bad's going to happen i think it's the feeling of being

12:32 able to sleep comfortably every single night which is about everything for a retiree well we put a website together that's tying into what you've helped us with uh to to explain the importance of protecting uh what you have protecting wealth but also getting income from wealth and especially if you're a woman we've got woman wealth and income and it can be women or woman so we got both of the sites women wealth and income dot com go there and get uh get educated folks and uh and more importantly if you'd like to your very own plan put together right now we could do it for you the team can is ready for you right now 800-661-7383 is the number to call or text plan plan to 600 700 david's book again is called the constrained investor i recommend uh everyone pick a copy

13:17 up because david this can really be uh it's almost like paying 20 to get a million dollars worth of income in retirement when you think about it when you go to that read that book no i'd like to think that's exactly true it's a it's it's written in language that anyone can understand and it really gets to the heart of mitigating risks and making sure that your income lasts my uh grandmother used to hide 20 bills in certain books that was sort of her idea of making sure money was safe and uh that encouraged me to read you never know what i'd find a 20 bill in a book but again folks his name is david makia david we hope to have you on and again the future especially as we go forward working more to educate the women on the importance of having that wealth and income i'd enjoy it's my pleasure and uh folks we'll be right back after this

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where I go out around the world and find people who are making a difference who are have made a difference who I've known in the past and we've got a return visitor. It was back in 2000 I think the first time we had him on the show maybe 2011 and then 2012 we had he had a bus tour talking about the talking about the economy and talking about spending and his name is Dave Walker. You may have heard David Walker. He was the former U.S. Comptroller General put in under Bill Clinton and he also went through George or he

00:49 went through some of George Bush or maybe all of George Bush we'll get him to say that. Dave is joining us from I think D.C. today. Dave welcome in. Well thanks. I'm Alexandria, Virginia which for the record is outside the beltway in the real world. Right outside the sausage factory we call it. That's right. You don't want to be there if you don't have to be. So this again tell folks how you were appointed your feelings when you were appointed back then and then and then why you resigned. Well I held several presidential appointments. My first one was Reagan. My second one was Bush 41 and my third one was Clinton and that was as Comptroller General United States which in English is Auditor General Chief Accountability Officer and head of something called the Government Accountability Office and the GAO is responsible for trying to help the Congress improve the performance

01:41 and assure the accountability of the executive branch for the benefit of the American people. And you know I had three goals when I went to the GAO and I had accomplished two out of the three and Pete Peterson may God rest his soul who's now no longer with us convinced me that I wasn't going to be able to accomplish the third one in that job because when you Comptroller General you can talk about the problems but you're not allowed to talk about policy solutions and my view is is that you need to wake people up show them a way forward and talk about solutions and that was what the tour was about 2012 and I'm happy to come back to that because it was incredibly successful and we need to do it again. And what was the title of that tour again? The 10 million a minute tour and the reason it was

02:30 called that was because the total liabilities and unfunded promises things for like unfunded social security and Medicare benefits were going up 10 million dollars a minute. And last year they were going up more than 10 million dollars a minute. You know that's it's it's all when we talk about that kind of money the average American me included can't comprehend that we're talking about 10 million a minute. I've never seen 10 million in my lifetime in one place 10 million a minute and and it's in his past that you said huh? Well yes it was as of last year it was worse than that and you know the problem is is that you know people talk about deficits and the president talks about that the deficit is down significantly from this this year as compared to last year. Well there's two reasons

03:19 for that. One reason is is we're not spending trillions of extra money on COVID and secondly the Congress didn't pass his you know his trillion dollar plus build back better bill and so that's the only reason it's down but but the the structural deficit you know that doesn't have to do with one time items that deals with recurring items it's actually up and and and a lot of people talk about deficits and debt the debt right now is about 30 and a half trillion dollars but that doesn't count unfunded civilian and military pensions, retiree health care, it doesn't count unfunded social security, Medicare obligations. The real number as of the end of last year was not around 30 trillion it was over 112 trillion. Well I mean it's growing faster than the economy. When you look at people can

04:10 see just a microcosm of how the federal government works just look at the U.S. Post Office because or Amtrak. Yeah it's had its share of challenges it has and and you know part of the problem is is that you know the the the Congress needs to get the the the post office a little bit more flexibility about how to operate yeah well than they have but yeah well here we're talking about federal deficit and all this on unfunded unfunded liabilities and and then at the same time I hear Biden talking about wanting to forgive student debt how's that going to work well here's what's interesting coach Pete the the number one asset or stated differently the largest asset on the financial statements or balance sheet of the U.S. government is student loans as of the end of last year is 1.6 trillion and going up rapidly so a he

05:06 doesn't have the legal authority to do that number two it would be irresponsible number three would be inequitable what about people who've already paid back their loans or never took loans to begin with correct like me yep yeah right and me okay and um you know and and what's he going to give away next I mean presidents don't have the authority to give away federal property and the irony is this is the largest asset on the balance sheet yeah well it's like walking into your house and just giving stuff away that's because we're taxpayers it's our money that's being given away and the people that are screaming for giveaways usually don't pay and then people say well you won't increase the debt that's true it won't increase the debt but it'll increase it'll decrease the net worth of the country because

05:52 you're giving up an asset you're not taking on an additional liability in this case student loans are an asset to the federal government not a liability well the spending is I mean it's putting ourselves it isn't it's a national security issue when we go into debt like this there's absolutely no question that it is I have a number of good friends in current and former military I'm on the defense business board I taught at the naval academy to two of many good friends of mine that were former joint chairman or vice chairman of the joint chiefs of staff Admiral Mullen and Admiral Owens have both said publicly that the largest national security threat that we face is our mounting debt burdens and in fact

06:37 my latest book American 2040 still a superpower question mark you know talks about you know the economic and national security challenges that we face and and what do we need to do to try to address them well well earlier before we got you on the air you're talking about a constitutional amendment you're working on that's right because I'm convinced that the only way that the congress is going to put our federal finances in order and create a better future for our children grandchildren future generations is to be forced to do it and statutory limits have not worked the debt ceiling is a bad joke it's done nothing to really constrain spending and other provisions that have been in from time to time

07:22 that the post bank caps have been suspended or repealed and so what we need to do is we need a limit on credit card limit we need a limit as to how much debt as a percentage of the economy we can take on absent a formal declaration of war certain narrow unexpected emergencies and we need to set a lower limit than where we are that we want to try to get to over over time to give us more fiscal flexibility and promote more growth and opportunity and we've actually made a lot of progress on that in fact there's no joint concurrent resolution it's going to be introduced to congress within the next several weeks that I've been involved with that shows that more than the required number of states

08:09 it asked for a convention to propose such an amendment in 1979 and congress never did anything well you know Dave amendments are an interesting thing matter of fact here in North Carolina the people like me included the people voted that we should have to have voter ID we had an amendment to the constitution of North Carolina and we said that we should have to have voter ID and it passed and yet one one judge in North Carolina overruled that and so we still can vote without voter ID which really in the in this day and age that chunks my chicken doesn't make any sense well but did you do that in the constitution here's part of the issue you know part part of the issue is you know it's a

08:55 whole different level when it's in the constitution and unfortunately unlike some countries like Switzerland that is in the best financial condition of any country in the world okay you know they have initiative and referendum at the national level we don't have initiative and referendum at the national level but one of the points that you make is okay we need to get and we need to have an amendment proposed but the way that we want to get it ratified we want it to be ratified by conventions of citizens in each of the states because the people are way ahead of the politicians on this and we proved that in the 2012 10 million a minute to tour where we got 77 to 97 percent agreement on specific reforms

09:43 that would get our debt to GDP down to reasonable and sustainable levels over a period of time so the people are ahead yeah of the politicians well when you mentioned the debt ceiling earlier and and the average american doesn't understand that either though you know you can you can explain it a lot better than what the media does many times and then another confusing aspect comes up in the financial world how do you know if you're getting what you pay for when you have a money manager and i know that you've got some feelings about some of the ones that advertise a lot that really don't do what they say well you know i recently fired uh one of my money managers and i said publicly who it was it was future investments and you know if you i like the fact that they're a fiduciary i like the fact that uh that they're trying to create customized portfolios but uh but clearly their ad is misleading and they

10:32 say they do better when their clients do better well that infers that they have some type of a performance-based fee they really don't they just have a standard fee and you know if your account goes up then you know you'll pay more and if your account goes down you'll pay less but it's just a standard fee yeah you're still paying right and and the problem that i had is i'd expressed concerns a number of times over what they were doing one of the biggest concerns that i had is they had a number of stocks in their portfolio that had gone down 40 50 percent you know over several months and they never did anything about it they just wrote them down wrote them down wrote them down i can do that and to me that well to me that makes no sense at all you know so but but in any event you pay your money you take your chances well there's a lot of i call it

11:22 financial confusion and there is there's a lot of financial confusion out there unfortunately and and i think that benefits uh the people in charge and also the people making a lot of money i mean if you're confused you keep doing what you're doing well that's right and and in my case i'm fortunate because the market's gone down significantly since i went to cash and obviously i'm going to end up redeploying that now because i'm not saying i'm not staying in cash forever but uh uh you know i was lucky in i i got into the market a fair amount back on march 23rd i think it was 2001 which i think was actually the low of the market now i had no idea to know that was the low of the market if i had known it then i would have put a heck of a lot more in when i did then i did yeah they always say a broken

12:07 clock is uh right twice a day so i mean you that was good timing on your point that's right that's right that's right hey we got about a minute left tell us what uh what we can look forward to i know you're i'd love to are you going to do another bus tour coming up or are they how can the average american get involved we clearly need another bus tour uh you know people may want to go to uh let us vote for bba.org and find out more about this uh constitutional amendment effort that's underway uh and and and stay tuned to some you know developments that are likely to happen i think we need another tour i'm going to advocate for another tour we need two things in addition to that to prepare the way we need the constitutional amendment and then we need a statutory fiscal sustainability

12:53 commission that will engage the american people with facts the truth the tough choices solicit their input and then make recommendations to the congress that will be guaranteed a vote in the congress to put our finances in order that's what we need hopefully we'll get it well that's eventually yeah that's a great plan let us know when you do that we'll make sure to have you on when you're when you do the next tour and uh and i'd like love to see you again too dave that'd be great you take care folks his name is dave walker former u.s comptroller general and uh dave thanks for your time today we'll be forward to talking to you again my pleasure take care you

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Transcript

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00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Well folks this is the time of the show where we go out across the world and find someone who's making a difference and is interesting to me and if you've ever looked at the financial world if you've looked at these things called mutual funds for years people didn't know which ones to get and if they were getting ripped off quite frankly and then a guy named John Bogle came along and founded Vanguard and it's been an interesting study and people getting educated in

00:46 the money world and not overpaying and making sure they do get educated more than they used to and we've got a great guest today. His name is Eric Balchunas and he's joining us from right outside of Philadelphia. He's a senior ETF analyst at Bloomberg Intelligence where he leads ETF and passive fund research. He and his team write several notes a week for Bloomberg Terminal which total over a million reads per year. Eric's also co-host of the weekly Bloomberg TV show called ETF IQ. He's got a new book out called The Bogle Effect. I'm going to talk about John Bogle a little bit and I want to welcome you in. Eric welcome in. Hey it's great to be here. Thank you for that nice introduction. Well you've got a long bio so I have to pick and choose what to talk about but The Bogle Effect here the book takes readers through the financial areas such as active management ETFs and advisory

01:33 world quantitative investing something called ESG which a lot of people are going to hear more and more about that coming up behavioral finance and even trading platforms to show how they and the investors they serve are being reshaped and reformed in that book. Now what what inspired you to to write the book I know you've talked to when John was alive I know you spent a lot of time talking to him. Yeah I had sat down with him for three different interviews for over an hour in the five years before he passed away and then we exchanged emails he was on my ETF show a couple times and I had all this audio on a dictaphone and I a couple years before he passed away and the pandemic hit and I'm sort of had a little more time and I thought you know let me get this out out there because I think what he did is really interesting it's almost a business story that it's not just like a Jeff Bezos

02:23 or Steve Jobs it's actually I think another level given that he really didn't get rich himself I think those other stories are usually that somebody becoming a billionaire this guy made everyone else rich and I find that story really interesting when it completely has is now dictating the whole industry basically they alone taken about a billion a day which is really an absurd amount of money they take in a billion a day for 10 years and then other people have now copied their sort of low cost index funds whether it's BlackRock or Fidelity and that's the funds they get assets in now so in a way Vanguard and Bogle the man have had I in my opinion the biggest effect in asset management if not all of Wall Street as you know compared to anybody else and really I think all of what Bogle did really comes

03:11 down to one phrase I think his life's work could really be defined by addition by subtraction he removed management fees trading biases all the friction that just gets in the way of you and your money which once it starts compounding is glorious yeah that's a good point you know the investment world is very confusing for a lot of folks too and then it's more of the investainment when you watch some of these shows that are on like 24 7 is you can get financial information I think people get more enticed to do more things they shouldn't do because they get impatient and you know the word the phrase dollar cost averaging means a lot instead of trying to buy and sell a lot of times always buy and add to something if you believe in it I think that's one of the main things that the John was featuring is is the consistency and persistent and saving like that and and not trying to like find the

04:00 horse that's going to win the race but bet on all the horses so and and and put the money in every single month the system systematic investing is something that every American should be doing yeah I think most people who have invested I think you know when you're talking about this entertainment aspect of it I think young people drive that a lot I think when you look at Robin Hood yeah I remember I'm a Gen Xer in the 90s we were all thought we were geniuses because we bought Microsoft and Cisco and it went up a lot but then you know a correction hits and you realize this is harder than it looks and so most people who are young I think go through that process I think it's generational but there's a line in in war games uh that movie from the 80s where the the computer deduces that the only winning move is to not play and I think that's what most people uh subscribe to

04:49 after they try this on their own it doesn't work out and then also maybe they get older they have more responsibilities they have a family a mortgage they can't mess around with money as much yeah and that's where I think Vanguard is really really fits that time in your life when you're finally done with the gambling aspect and you want to just save and grow your wealth and so I think you're right that Vanguard is sort of at odds with that sort of culture but I will say um and I funny Bogle wrote a piece for the New York Times in 1999 right before the internet bubble burst and because that's when day trading was crazy then too right um and he basically said that people who day trade only get about 60 percent of the actual market returns and and you know he didn't like active mutual funds but he

05:39 said at least they get 75 percent of market returns but an index fund gets you 99 percent of the market returns and so as much as he would slam active managers he thought doing it yourself was was even worse if your goal is to grow wealth that that's also part of the book because I was like listen this guy came out with an idea called the index fund and he wouldn't pay brokers so a he he had an idea that sounded average it's like I don't why don't it be average and he was doing it outside of the entire system of incentives but he was able to break through and I look at all the creative ways he was to do it one of those ways is showing the growth of ten thousand dollars and I think this is what is interesting in the story of Vanguard is it took a long time because of this this guy operated outside of a system and so the company didn't even get to 10 percent market share in the fund business

06:27 um not until 25 years after it started so this was a long process of him trying to explain to people that buying and holding an index fund is an average if you wait long enough you end up at the top of the heap you have to change the way you're viewing investing and that's hard he had to change hearts and minds in and do it without uh being inside the system and it's a good business story in there too it's interesting and I think a lot of uh the crypto and defy world I I'm trying to explain to them that actually if you're in that world and you like crypto and all this and the defy thing um this book should appeal to you because this guy was like og defy um just in a different way but there's a lot of the same spirit and ethos here between bogel and what young people are seeking out with crypto and decentralized finance folks we're talking to eric baltunas a senior etf analyst at bloomberg

07:16 intelligence and author of the new book the bogel effect uh you brought crypto up I wanted to mention that when you said your generation x most of the folks I know who are generation x are dabbling or heard about the crypto what do you feel about crypto yeah so um crypto is interesting I still don't quite get it um but it's resilient its resiliency has made me respect it and there's really smart people in the industry and I wouldn't bet against some of them so that's where I sort of give it my respect that said I still don't totally think it's going to overtake currency I I uh is it the new gold I mean you could debate all this I do think though that crypto is being helped by the bogel effect and I'll explain why you talk about gen x or even boomers who are dabbling in crypto I think what you have now is that in the 90s you'd have these active mutual funds and you'd you'd have one that was

08:02 five stars and then it wouldn't perform well so you'd sell it and buy the next five star one and you would just churn these active funds and it just made investing hard finally people find something to hold on to an index fund so they have that in their core the problem with an index fund for many people is it is boring yeah it's really efficient and it's really it can create uh it's the best way to create wealth but it's boring as hell so I think we have a chapter in the book called the fall and rise of active that legacy active that's just sort of you know close to the benchmark and picking a couple stocks here and there that's probably getting replaced by vanguard in the core of the portfolio but where active is now finding a home is in things like crypto or high active share active like cathy wood and arc or thematic investing um nfts those are not only um you know fun and ways to

08:52 distract yourself so you don't touch the other part which has to grow it takes you know 30 40 years but those things have nothing to do with the index so they complement so we have this sort of visual of you've got this boring vanilla core which is great and good for you but then you go and you search for some hot sauce uh to put on dabble I think is the right word so I actually think crypto is being helped by the fact that vanguard has taken over the core portfolios because it's allowed people to have a little more patience with those volatile areas of their portfolio which are in smaller slices uh you're not as bummed when crypto goes down 30 40 percent because hey it's three percent of my portfolio and I really have 80 percent of it in this uh you know s p 500 index fund uh it calms you down a lot

09:38 where anyone gets in trouble when they put too much money on the risk side and they don't have their safe side established and you see that then they get then they make irrational decisions and they get trapped in the wrong places because all their money's in the wrong place and unfortunately i've seen people who take way too much risk with money they're going to need for retirement and nothing wrong with risk but making sure you know what the what the risk is and and they have an exit strategy to that risk too so one final we got about a minute here left i wanted to ask you a question here and i think it's a good one what's your biggest concern of the markets right now yeah i think my biggest concern you know short term is just that the 60 and the 40 you know the 60 40 portfolio they've both been going up for like 15 years usually stocks go up bonds don't but they've both been going up because it's low rates so i would say you know that's my biggest worry should people look to something

10:24 that's like alternative um but i don't know i also think that in the end uh stocks are a really good place to be because people get up every day and create value at these corporations that's something bogel preached and tried to sell people on was that you get a cash flow and you get um uh dividends and you get earnings growth when you buy stocks so i think it's a good long-run investment it's just you know what should you do you know to maybe uh protect yourself a little if the 60 and the 40 goes down for a while but the 40 part the bonds probably where i'm worried the most because obviously if the fed rates rate raises rates and they go up in a long cycle a lot of the bonds that are out there right now are just work less yeah and so that's going to be an interesting thing to watch and that's probably something that concerns me a little bit thoughts on inflation yeah i mean i look um i was a baby in the 70s but uh it was a big deal back in the day and um it's scary where it hits home is like

11:15 oh i i went to my review and i got a four percent raise yay well inflation seven then that's where it hits home people like yeah you're right man um i'm actually starting to slide backwards so even if i'm even if i'm ahead i gotta subtract seven percent from everything now and that's scary yeah and i think that's this is something that's going to be probably a big issue for a while i hope it's just supply chain i hope it's just pandemic supply chain and that's sort of what we're seeing and it's not as bad as we think but um yeah it's it's scary uh i would say that's up on my worries too that's part of why the fed is really committed this time to raising rates you know in the past they've always folded like a lawn chair yeah but now i think they're going to see it through because inflation is worse than say the market's uh you know having a spasm well yeah good points and uh and i think uh

12:02 how many pages is your new book how many pages of the boga effect uh about 340. wow that's down for 500 so edited it down and also interviewed 50 people including warren buffett and michael lewis and and i have their quotes in there it's sort of written like a semi-documentary and so i think i think it i try to make look mutual funds are as interesting as c-span to most people so i tried to really really bring it and include a lot of voices and make it as entertaining as possible well folks his name is eric baltunas and the name of the book is the bogle effect eric we hope to have you on again in the future i would love that thanks for uh having me on today yes sir and folks we'll be right back

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Folks this is the time of the show where we go out across the world and find someone who is making a difference in the world specifically the financial world and got a really good guest today. Her book came across my desk the other day. She's in our radio network as well. Her name is Kelly Slott and she's in Southern Cal and the name of the book it's The Great Retirement Mystery. Kelly welcome in. Thank you for having me. It's going to be fun to talk about this today. Well this is an interesting book and in the book I mean I mean what first of all I want

00:48 to ask you what inspired you to write the book? Well you know my job is to help people. That's how I look at it. So I thought you know I'd like to get a book out there that really kind of covers the strategy that I use and to help people come understand financial markets because a lot of people really frankly that come to me don't understand the markets much. So I wanted to take my years of knowledge in the financial field and put it in a book form that's easy to read and really can help people with their financial portfolios and creating exactly what they're looking for. That's what inspired me. Yeah. Bill you're right this book is very easy to read and I'm sure everyone listening has run across some of those financial books in the past where it looks good when you're buying it ordering it when you get it home. It's hundreds of pages of unexplainable or

01:33 understandable print where you really after you get done reading you don't even know what you read. But your book takes people from point A to Z and walks people right through that planning for retirement process. Matter of fact what I really love about your book is you have the six biggest retirement blunders and I always say that smart people learn from their mistakes but geniuses can learn from other people's mistakes and that's what you're doing here in this book is you're educating folks on how to avoid some of those pitfalls and nobody wants to be the dummy in the room. So you can help everyone not be that person and let's go through I want to go through all six of these retirement blunders. We'll start in any order you want. What's the biggest retirement blunder you see Kelly? Well one of the biggest ones is listening to the wrong sources. So when people hear from their

02:19 neighbor the person that works across the desk from them at work a friend and they say oh well my friend says this that and the other and that's what I should invest in and I always say well do they know your full financial picture? Do they know what your risk tolerance is? This is really important and most time friends, family they don't know that. So that's why I say one of the biggest blunders is really listening to the wrong source and but really know what your risk tolerance is, know what your time frame is. Those are all important things that I ask people when I would they come and sit with me for the first time. So I think that's really one of the biggest blunders I see. You know where I hear a lot of folks where they ask what their neighbor's doing or the person next to next office over is when they're trying to get their allocations right for the 401k. Do you hear about that too?

03:07 Well absolutely. 401k allocations is interesting because there's usually 10-15 different mutual funds to choose from and they all have different aspects to them. So yeah it's important to know what your time frame is, your risk tolerance is based on those kind of choices. Yeah because I mean if your neighbor's doing one thing doesn't mean it's the best thing for you and I see that's way too much and people use hearsay a lot of times well so and so said this and so therefore I'm going to take what so and so said and apply it to my plan and not listen to you Mr. Fiduciary or Mrs. Fiduciary. Right. Yeah exactly. Actually I just had a call yesterday from a radio show caller and she said well you know I had an advisor that my brother's using and I told the advisor just do whatever my brother's doing. So she gave me a list of all the recommendations and I said based on what you

03:54 told me your risk tolerance this this is not what you should be doing. So anyway it was interesting. I hear that a lot you know we have a family advisor and he's worked my with my parents or my grandparents for years therefore we're going to use that same person. Well how do you even know if it's good or not? I mean just because your parents maybe your parents or grandparents don't know that they haven't been getting the best service or the best plan put together but they don't know any better because that's all they see. Right exactly you've really got to consider your source and your time frame your risk tolerance really personal to you that's why I create specific plans for people absolutely. Good all right well that was that's a big one you trusted the wrong people but looking at the book here here here's another blunder not having a plan and sticking to it so this it's basically a double blunder number one not having a plan and number two if you did have a plan not sticking to it. Yeah so again it kind of goes into the first one there as listening to the

04:44 wrong sources because a lot of times people do things off the cuff oh I have a plan and then they hear something oh let's go do this so that changes the plan well stick with your plan I mean and that's that's true in that case but it's also true with markets because markets change and so people go oh I want to I want to go buy xyz because now that's the next biggest thing it's like well no that's not your plan you've got to stick with your plan certainly adjustments could be made but it's important to stick with the plan that we create for you unless something changes you inherit money you win the lottery and a lot of different things can change but sticking with the plan is important. Yeah very very much is and then here's another one of your blunders here making decisions emotionally how many people have ruined a plan by making emotional decisions and having to affect

05:29 their investments in the wrong way or their retirement plan the wrong way. Yeah it's so true I mean look at the cryptocurrency phase that people are into some people have made money with that certainly but that's an emotional decision oh it's the next biggest thing but is that really right for you and is that right for your risk tolerance so yeah emotional decisions are not wise and I really try and talk people through what might be going on that way something that's fancy that might come their way so yeah be careful of that. Well two big emotions that people use at the wrong time fear and greed so when the market's going down people get afraid and they sell at a low or on the other side the market's going up like crazy doesn't matter if it's real estate stocks bonds crypto you name it the market's going up like crazy you get what my daughter calls FOMO fear of missing out and so you jump in and greed

06:19 is the name of that emotion and so you buy at a high and then you have that other emotion when it's at a low and you sell and it's the exact opposite of what Warren Buffett says the success in investment world he says buy low and sell high and number two is repeat that. Repeat repeat absolutely. Used to laugh about the back of a bottle of shampoo it said wash rinse repeat. Good marketing. Repeat until you run out of shampoo and you're done for the day. All right so trying to time the market's another blunder what do you feel about that that emotional aspect? Yeah so it kind of goes with emotion too you've got to make sure that your plan is in place right so trying to time the market you're never going to get out at the exact right time you're never going to get in at the exact right time if I always

07:07 tell my clients if it's a good time to sell sell if it's a good time to buy buy we don't try and time that because I really my many years in the business I'm sure you've seen this too coaches I don't see people get that exactly right you just can't so that's why we have plans that's why we create plans for people is so we don't have to try and figure all of that stuff out because it's you know I we're not trading the market all day all you know and all the risks inherent in that so let's make sure we're doing it right for you. And folks we're talking to Kelly Slott she's from Southern California and the name of her book is The Great Retirement Mystery we're talking about some of the six blunders that exist in your plan and you know emotions really take charge and a lot of people subject themselves to undo emotions by listening to folks on TV screaming about buy buy buy sell sell sell don't buy don't buy

07:56 so don't don't let that be the final deciding factor is what you see or read or whatever on TV especially because TV is there for a reason to sell advertisements that's why soap opera is a good example now how about taking advice from the wrong sources is that a big blunder it's a big blunder because again every source that you listen to and it could be the Wall Street Journal it could be the TV station or radio station they're touting whatever they're touting right and it may not be appropriate for you so you've got to make sure that you're listening to someone that's on your side that's got your best interest at heart and going to do the right thing for you so that's one of the biggest blunders I see with people is listening to those sources that maybe not maybe they don't have their

08:42 best interest at heart. Yeah you also talk about lack of understanding of social security and medicare we see this all the time as well and it's not just the fact that anyone go down and claim social security or buy a medicare supplement but are they doing the right one for themselves and many people have cost themselves hundreds of thousands of dollars in the past by selecting the wrong social security claiming option or strategy and many don't realize that there are some good options for you out there that could make you a whole lot more money. Yeah that's right you can take social security at 62 it's the earliest you can take it but really do you need it then because that's the lowest dollar amount you'll ever get so if you wait every year that you wait you're going to get eight percent more per year so full retirement age for most folks is around 66 you can take it at

09:29 70 that's the most dollar amount you'll get so I always tell people go to ssa.gov socialsecurity.gov and look at the amounts you would get at each of those ages and I usually have people print those out for me and bring them in because then we can decide when do you need the money how much do you need it's important to look at that because like you say coach you can lose thousands of dollars hundreds of thousands of dollars if you don't take it at the right time so important to look at that right time or the right option many time and many people who have been married before for at least 10 years can be entitled to their spouse's benefit without the spouse knowing and without it affecting the spouse in a negative way despite what some people would like to have happen so yeah that's very true I always tell people too um the higher earning spouse if you can take it at age 70 that's much

10:17 better right because if then they pass away then the remaining spouse gets their benefit which is really nice yep yeah it's good when you say and and we've heard this over and over again a lot of people have said well I can't believe it's true almost but when you look at eight percent per year you're costing yourself if you take this social security at 62 as opposed to waiting to 70 and the difference between 62 and 70 is eight years so if you use the rule of 72 you take that eight the the basically the interest will look at it or whatever you're not getting eight into 72 goes nine times so you almost would have doubled your money because if you didn't the interest into the number 72 tells you how many years it'll take for the money to double it'd be nine years for a double but you're going to hold it for eight years you almost get double the income in social security by waiting wow from 62 to 70 makes a whole lot of sense doesn't it kelly yeah sure does yeah that's why

11:06 i tell people really let's look at that let's let's not let that get away from you so bring go to social security.gov print out that print sheet for yourself so you can see it they used to send you in the mail i don't know how long it's been it seems like just yesterday but it's been years and years since they sent that one to you remember the one used to get in the mail and surprisingly i got one a couple of months ago dave got one huh all right now one final thing in the book we had about a one minute here we have to show uh this segment here with you but uh it is bonus blunder set it and forget it explain that ah yes well see this is why i do portfolio reviews periodically with my clients because i want to make sure that what we have set up for you is still appropriate for you so you don't just set it and then walk away and never look at it again i have a lot of people unfortunately come to

11:54 me and their advisors don't ever call them and look at okay this is what we have maybe we're overweighted in something i mean look at the last 12 year bull market run a lot of people have high amounts in the stock market these days and maybe they're not so comfortable with that anymore so we take some profits off the table do some alternative types of investments for them so don't set it and forget it you've got to look at it that's my job to make sure we're looking at it making sure that it's still what you want it to be year over year over year so by all means uh do portfolio reviews with your advisor if you're not because you've got to make sure your allocations are where they need to be it is funny anytime i hear set it and forget it i get hungry and it's because of that rotisserie chicken ad that used to be on tv all the time folks the name of the book the great retirement mystery

12:44 and how to avoid the six biggest blunders we just went over some of them but the book is a lot more advanced and really it's a lot more advanced to meet with a planner but this is a good introductory level to some of the mistakes people are making the books available anywhere books are sold and her name is kelly slot kelly thanks for your time today coach p i really appreciate it and we'll be right back after this you

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00:00 Each and every week I talk to very interesting people, and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me, that everyone out there needs to hear it. So stay tuned, folks, and I hope you enjoy this newest weekly segment on Coach Business. Folks, this is the time of the show where we go out across the world and find someone who is interesting to me, or that I've known in the past, and this week is no exception. This week we're going to go to Grand Haven, Michigan. And those of you who have listened to the show for a while know that I was, for four years, I had two two-year terms with the International Association of Registered Financial Consultants, the IARFC. And as I was president,

00:45 one of my favorite board members was a guy named Michael Markey. And he's in, again, Grand Haven, Michigan, and he's got a very special announcement to share with us on the show, I think. But Michael, welcome in. Hey, nice to see you again. Now, you've always been outspoken, which I love, in the financial world. Let's talk about, I want to talk a little bit about the financial world, and then let's make a little announcement with you, and then weave it into a different world. So the financial world is pretty confusing, isn't it? Spend a few minutes on the internet, and you get lost in like a typhoon of financial information. One of the things I've seen in my almost 30 years in the financial arena is that there's the truth, there's lies, and then there's the middle ground. And I don't like middle ground, because middle ground is where confusion happens. I mean, really, financial planning is almost, there is a science that can be absolute as far as when we're trying to plan income for folks,

01:32 or make sure they get the right life insurance, and make sure they have the right retirement plan. I mean, in your career in the financial world, what have you seen misconception-wise, and what do you think has been your best achievement ever as far as talking somebody away from the confusion and getting them into the right plan? I think the biggest misconception is when somebody unilaterally says an entire product class is bad. And so you can see like a Ken Fisher says this, Dave Ramsey's done it. And when you say that, you're saying, you know, for the last, if that product's been around for 100 years, for the last 100 years, every commissioner in every department of insurance in every state, they've either been too stupid to see what you see, or they're all too corrupt. You could even make the argument most, but all in every state and for every year,

02:19 it's irrational. So, you know, I wrote a column for quite a while for advisors about Dave Ramsey. I wish I would have maybe tried to, it probably wouldn't have gone anywhere if I tried to make it nicer. But I do feel bad of going maybe as harsh as I was, but yeah. Well, but again, it's important that people get the truth. And the truth is what really makes, forms happiness in people's minds when you know, and this happens, you know, if you ever bought a car before, if you do some research ahead of time and you really know what you're looking for, then after you buy the car, if friends of yours who know the car world say, hey, you got a good deal, or that's a great car. Whereas on the other side, they'll say, gosh, you paid what for that? It's the same thing in the financial world. There's good, bad, and ugly. Yeah, you buy a car. It's never a good sign when your family goes, why?

03:05 Why did you buy that? I liked it, I thought. Then buyer's remorse sets in even faster when everybody doesn't like that. All right. So you've always been outspoken. That's what I love about you. And you've got a special announcement today. Yeah. So a few weeks ago, we announced that I'm running for governor in the great state of Michigan. So we'll be traversing the state. We've actually got a team right now canvassing the state. One of the things you have to do is you got to get 15,000 validated signatures, which is a process in itself. So as of early in the week, our team's been out for about two weeks, and we're halfway there. That's good. So I think that says something about the momentum and what people want to see. Yeah. Well, I mean, I think, well, what have you seen when you've been out there talking to folks

03:50 in Michigan? What's the overall consensus about the direction we're going? Inflation. People are just, it's killing them, especially retirees. Just inflation is just hitting them hard. Well, you and your wife do a radio show, and we've done a show here in North Carolina across the nation for the most part for about 17 years. And anytime we, in the past, when we talked about inflation and even social security, people didn't really want to hear that conversation because, oh, we don't have inflations here, but we don't really, we don't feel it. People are feeling it now, aren't they? I've been warning people about inflation for over a decade, almost laughed out of the room for a while, but it's simple because it's a math term. It's called reversion to the mean. And it's like, the moment you say math, everyone goes, oh, it's high school again. They just shut down. But reversion to the mean basically means that if you have a, if your average is right here in the

04:38 middle, if you have a period of time where it's way below the average, you're going to have a period of time where it's way above the average. That's how you get an average. And so we had almost no inflation for a decade, which meant at some point we're going to get hammered. And that's where we're at right now. It's a swing into the pendulum, but it's really swung fast and hard the other way, hasn't it? Right. Folks, we're talking to Michael Markey. He's visiting with us from Grand Haven, Michigan, and he's just announced to us he's the announcement's been out a couple of weeks, but he's running for governor in Michigan. What inspired you to want to run for office? Because, I mean, I've known you, you've been a pretty comfortable guy in the financial world, you know, being a politician, put a pretty big target on your back. Yeah. You know, I've had that target on my back for a while. It actually happened two years ago. Oddly enough, I was getting a coffee just like you probably have sitting at the Starbucks and I'm

05:25 waiting in this long line. And it was right during President Trump's last year when we were pushing through Supreme Court justice. And Republicans were shocked that Democrats were mad we were doing it. Yet four years earlier, we were telling them, no way are you going to do this? And I just sat there and I thought, what if I in my marriage, I did the same thing? Like, what if I did whatever I wanted to do just anytime I had the power, meaning I had the checkbook. And my wife and I had some of this friction because there's been times where I wanted to buy something for the business where, let's be honest, there was a little bit of personal use that could, you know, in a legal way. But, you know, I just wanted it. Yeah. And you'd be like, no. And I'm like, who are you saying? No, this is a business expenditure. But, you know, I realized that in a marriage that I had to work together and I had to admit fault sometimes when I didn't think I was

06:12 wrong. But you had to care about the other person's feelings in order to accomplish more. And I mean, we've been so lucky and blessed. We've done far more than we ever thought we'd do because we've done it together. And I thought, wait a minute, look at politics. Oh, yeah. When was the, especially here in Michigan, we don't work together at all. I kind of joke, like right now you've got partisan voting and it's like the moment one party has the power, why don't we just send the other party home? It's about what it's come to. We don't need, you know, we can save some money. You can mow the yard and we'll go ahead and vote. Well, every now and then they find out some legislatures have gone home and still get paid too. We've heard about that every now. That's a different story. So being a governor is basically being the president of a state. And, but the big difference to me is the governors cannot overextend

07:00 their budget. Sort of like if the U.S. government overspends, they just print more money. You don't have a printing press in Michigan. So what's your plan for keeping the budget balanced and making everybody happy? Well, you know, the first thing that I want to do is I think that we need to, and I made this mistake myself too. I said, let's improve our education. And then I kind of, I got mad at myself because I sat there and I go, you know, as an, I used to play college baseball. I go, we never said, let's improve our record. Let's improve our hitting. No, it was, we're going to be number one in the league in X, Y, or Z. So I think Michigan needs to focus on being number one in education. We've got a lot of race tensions here, which I think are also class tensions. But if we, if we give everyone not just access, but to educational opportunities, but we create world-class, lead the nation, we're going to minimize and blast through a lot of these class tensions.

07:49 We're going to lift that up. We're going to create revenue from that, but that's also going to create jobs. So it all comes down to, it's this multiplication. So yeah, I agree. We can't just print money. But quite frankly, who better than an advisor to understand that? Yeah. Yeah. I had to say, I wouldn't have thought of this way, but you know, as a, as an advisor, helping retirees, what do we do? You've done it for years. We help people dream. First of all, you've met somebody at some point goes, Hey coach, I don't think I can retire. Right. Oh yeah. All the time. And so what do we do? We're like, well, no, let's, let's define what retirement is. Right. Let's make a plan to get there. And then we help them accomplish that dream. So, you know, that's what we need to do in Michigan. We need to dream. Like people come in with a plan. They go, we're going to make education better. No, we need to dream. A dream is let's make it

08:37 number one. Yep. And then we put a plan together to do it. Well, Tom Brady's famous for saying, let's go before he runs out on the field or during the game, let's go. Well, why a good slogan be, let's win. Because that's what you're aiming for. Let's win. I mean, winning all the time. That's, that's the best strategy ever. I know Donald Trump had a book that had the title. I think winning is in the title of that book too, because like I said, if you're not winning, you're losing. Right. So, I mean, winning is better. Winning with the financial life too is important. Winning in the political life is important too. I just think that, you know, it is amazing to talk to people on the state level when they manage a state government compared to the federal government. Federal government seems to have no worries. Again, they just send the tax collector out again and print more money. State government's a little tougher. You start raising the taxes in the state and the industry moves away. We see, we saw that happen in a county in North Carolina I grew up in. The county raised

09:23 taxes to the point where all the industry left. And now the county is the hundredth. We have a hundred counties here in North Carolina. It is a hundredth poorest county in the state. That's where I went to high school and grade school and all that. Nothing to brag about, but it's not fun to watch that. But, but we could see it, it almost developing in slow motion. You raise taxes on industry, industry leaves, nobody to tax anymore. And then everybody else leaves too, or the people that stay can't support the government they have. So it's just, I'm proud of you for what you're doing. What's your, we've got a couple more minutes now. What are two of your main campaign planks? So campaign point, I obviously number one in education. Um, but we want to bring people back together. I think that, you know, a lot of my clients are split. They're not all Republican. They're not all Democrat. I think we're more alike than we are different. I had somebody a couple

10:10 of years ago and he goes, well, Mike, you know, the problem with you Republicans, I said, all right, what's that? And he goes, you guys don't believe in a living wage. I said, what does that mean? He goes, well, minimum wage should be a living wage. I said, I think you're defining the problem incorrectly. He goes, what do you mean? I go, um, do you want minimum wage to be a living wage? Or do you just want more people to at least have access if they're willing to work hard that they should be able to make a living wage? They should be able to, you know, retire and have vacation and have some things. He goes, well, yeah, that's what I want. I go, great. See, the moment we say it's a minimum wage, now you separate people. Instead, let's identify what the actual problem is, which is how do we get everyone who wants it, who's willing to work hard to have a living wage. Then we work together to come up with ideas because, you know, here's the thing you talk about Tom Brady. I'm yet to remember any

10:58 national champion of sports team that did it with just offense or just defense. They, you know, they might have a great defense and a mediocre offense, but they always have both to make it work. And so we need both. We got to get Republicans to start talking to Democrats and Democrats start talking about with Republicans. If we want to, if we really want to make Michigan great, if we really want to win in education and economy, we have to get all our best minds working in the same direction. Yeah. And then the momentum there would be a lot better than fighting, constantly playing the tug of war game. I mean, tug of war, nobody wins a tug of war. And I think it was a squid games I watched. Everybody lost a tug of war on one side too. So, yeah, I mean, I'm glad I never played tug of war like that. So, well, you know, one minute wrap up here. What, if you do get in the governor,

11:44 as a governor, what, what are, what would be the first two, I know you want to fix education or get it going good and, and make sure that, you know, we can talk that, have that wage talk or have the work talk. But what are some of the things you think you can accomplish in the first year realistically? I think right away, very fast, people say, how, Mike, how could you actually bring people together? I had one person challenge me. He goes, can you make your kids not fight? I go, yeah, I just put them in different rooms, done. But one of the ways to do it is my dad always said, locks, keep honest people honest. I do believe most people in politics that you got your outliers, but most are trying to do good, but we need some locks to keep honest people honest. And so what we need to do is when we have these negotiations, put it on TV. I hope it would be the most boring TV you'd watch because it's just a bunch of people being polite and talking. But you want to, you know,

12:33 the issue is we need to be accountable and transparent with that so that when people aren't working in Michigan's best interest, we can be like, hey, you don't have to take it from me. We don't have to sling mud. You saw it. We sat here, tried to have a conversation and all we got was, you know, irrational rhetoric. So that would be right away. Well, here's one final thought. I should have asked this earlier, but we still have like about 30 seconds here. Your ideas on Congress being able to insider trade like they've been doing for years and get away with it. Yeah, get rid of it, right? It's not fair, man. I mean, look at some of the people that became multimillionaires because they're trading on inside information. They're sharing that information with their friends. Don't think they're not sharing it with their friends and family, too. And so you're against that, too, right? It's crazy. Absolutely. It's crazy. Yes. Okay, folks, Michael Markey running for

13:19 governor of Michigan. Michael, good to see you. I hope we have you on again in the future. Thanks. Folks, we'll be right back after this.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. Hey welcome back into Financial Safari. Consumer advocate Dave Perkins here of course with America's Wealth Coach and best-selling author Coach Pete D’Arruda and we're going to talk about another book here. Christina Pien Kepperling is the CEO of Powerful Legacy Insurance and Financial Services. She is over 15 years in Central Kentucky with two offices in Lexington and Louisville and the author of the book The Retirement Train and Coach I know you've

00:48 got that book there but I love the whole concept of the book because it starts the train starts in Kidville and goes into Grown-Up Town and then Destination Retirement. Offices in Louisville and Lexington. That's sort of like having an office at Carolina and one at Duke. Right. Good point. Yeah I have to make sure what color I'm wearing that day. Yes you do. There's a gang colors I want to start. So The Retirement Train what a great title Christina. What inspired you to write a book first of all? Back in 2016 I was on an Alaskan cruise and went on one of those little excursions in Juneau Alaska and took a train ride and I was just sitting there they were kind of like these old church pews you know really uncomfortable under the bum and just sitting there on this train ride and I had been told when I bought my ticket buy this type of seat. Well when I was on the train there

01:36 was a couple that was beside me on the opposite side and all they were seeing was a just a rock wall they weren't seeing the beautiful view that I was seeing and the lady was kind of you know snickering at her husband a little bit. I wish we could have done things different and there's a lot that we could have done different in our life and it kind of got me thinking about what mistakes have I made and what can I do to make that better? What mistakes are my retirees making and what can I do to make that better? Hence the retirement train. So from chapter one just Kidville what can you be doing to save for college and how should you teach your children about money? How much does it cost? And then chapter two of course is going to be your 20s. So it kind of instead of a chapter it's actually a stop and each stop has a quote. I really love that. And then at the end of each chapter we kind of give you some just snapshots

02:22 or some talking points to make sure and give you these statistics that I know you are just dying to hear. So she was letting her husband have it. We call that North Carolina blessing him out. Yeah that's right and bless his heart. Yes bless his heart. He was getting it. I know he was red-faced. He was pretty mad. Well the retirement world's really complicated. It really is and but it really comes down to it's not that complicated. I think I think with all the millions of dollars spent every single day in advertising to try to get for like financial institutions try to bring your money to them they try to make it seem like they have a better light bulb but there's only one light bulb here and it really comes down to one thing making sure that you are comfortable in your retirement and your retirement is what you want to do in retirement not what somebody else is doing and unfortunately Christina you've probably seen this

03:07 when I say retirement's about what you want to do when the husband and wife get to retirement many times they don't want to do the same thing do they? They do not. I have actually seen people argue across my conference room table on multiple occasions because while you're working and while you're you know just getting your regular paycheck and a lot of times I see couples that have separate bank accounts well then when it comes time to talk about all of the savings it's combined what kind of a lifestyle do we have they don't agree on their spending habits or their savings habits and for that matter they don't agree on the income and holy cow it makes for an interesting meeting but you're right it's your retirement when we're talking to people we're talking about them individually I've never seen a couple or an individual alike that has come through the doors of one of my firms and their situation has been the same as another. Yeah and that's right and so

03:55 why why why do some financial firms treat everyone the same then? I have no idea I don't think that there there is any type of a cookie cutter retirement strategy except when you're cutting cookies I mean that's about it it just doesn't even exist and you know as much as I would really love to say that every retirement is going to be sweet it's not going to and sometimes you've not done the right things sometimes you've not made the right decisions and we have to make some alternative decisions and some alternative changes and maybe a little bit of an alternative route to get to your retirement and that's okay too when you're coming in and seeing us we're going to make sure that you're on track which is part of the retirement train and the on-track retirement system so it is exciting. You know you say there's there's a couple national firms when when when folks walk in after hearing us on the radio or seeing us or

04:40 someone tell them to come see us that kind of thing when they tell us before we even pull out statements when they tell us who they're with currently if it's certain brokerage places or national firms you see advertised we tell them before they show us what they have what they're going to have if we feel like a magician almost you know here's what here's what you have in your hand and and and most of the times unfortunately it's right because that's the cookie cutter method and that doesn't really apply or shouldn't apply to you listening I mean everyone out there has their own situation so I've I've often argued and the people that have listened to the show over the years know it that there's a saying called that there's no two snowflakes look the same and I say well how does everyone how do you really know that though because no one's actually looked at every snowflake they melt too fast so of course they don't look the same there's nobody to verify trust the science trust us on it right so you've got a chapter in your

05:30 book called exploring the pinnacles what is that about yes so first off I used to live in Berea Kentucky so obviously it's stop three so we're talking about when you're at the pinnacles and this is a beautiful landmark by the way if you ever have the opportunity to visit there if you're one of those people that likes to hike I don't really like hiking but I did enjoy the view once I got up there and I've not done it again since but what does this really look like and in the middle of your life this is when if you've not talked to somebody about retirement or you've made a couple of mistakes in your 30s and 40s if you've not made any mistakes financially you're probably not living I know all of us have kind of shook our head we bought too much car on a payment or maybe we rented an apartment we couldn't afford or maybe we bought a house and we really couldn't afford it or we bought in the wrong place and couldn't get out of it we're paying too much interest all of these

06:18 mistakes that we've made and then what does it look like on your everyday habitual behavior you know for example if you have an employer plan and you are not participating in 401k contributions and receiving that match you're making a huge mistake so in those pinnacles of your career which is normally going to be your 30s 40s and even on into your 50s you want to make sure that you have all of those tax advantages contributing to your retirement saving for retirement making good sound financial decisions having excellent credit saving money every which way that you can that's what it's really about christina i love the fact that you also give them because i know that your main thrust and goal is to get people to retirement properly especially in the financial red zone to make sure that they get on track and stay on track but you do also offer advice to younger people we both have young adult

07:05 children who could start saving now in just even little ways could make a big difference in their retirement you address that in the book it can't and when we're talking about in your savings remember folks when you hit the age of 50 you have what's called catch-up contributions and in stop five which is called the oasis around the bend it says the small quote which is sharon stone one of my favorites it's not like 50 is the new 30 it's like 50 is the new chapter well let's break that down for just a second and why did i pick that and how does that look well because maybe you've made some mistakes you didn't save enough in your 30s and 40s and so there's a possibility that you're not going to be able to retire when and how you're not discussing how you want to retire then you're missing part of that retirement puzzle as well so there are just so many things to discuss and in the overall retirement

07:54 train one of my favorite pieces about it and the reason why it was written this way is because it's so easy to understand there are a lot of really silly stories in there i'm getting so many people that are happy with the information because they'll say i actually learned this in your book and i'm applying it to my life if that's not the ultimate compliment when you've authored something i don't know what is we're talking with christina peen kepperling who is the author of the book the retirement train and also ceo of kentucky-based powerful legacy insurance and financial services who is all about well her book is aptly named the retirement train it does go through stages of life but the important thing is that christina you get people on track for retirement we do get people on track for retirement and you know it's funny when we're talking about being on track every person's

08:40 track is different every destination every stop is going to be completely different and one of the things about destination retirement which is the sixth stop this is when we're talking about getting there and how it works i do want to read just a smidge right at the very beginning of it one of my really good friends and i'm on her board for a non-profit organization she said that life seems to be broken down in three stages one falls between zero and 30 during this stage you have the energy and the time but just not the money stage two is between 30 and 60 and when you're starting to just have the money you just don't have the time and it's so silly because then in the third stage this is the 60s to the end of your life this is the period when you've got the money you've got the time but you just don't have the energy anymore oh life is so unfair it really happens like that and

09:29 folks this is like this is i love this book by the way it's called the retirement train i call it the financial whistle stop tour hey i love it and step number or stop number five is the oasis around the bend what is that for the folks listening well if you're getting close to retirement you know in your 50s you're getting close to that oasis you're going to be start taking some moves around here and the marshmallow theory i'm not going to tell you what that is i'm just going to give you the name of it the marshmallow theory is at the beginning of that chapter i want you to read about this it's so fun now we do have three financial phases and i do share out in the community in our seminars about these three phases and you can have so many different professionals that state this different ways but let's talk about growing protecting and spending i do love talking about spending money i am a really excellent consumer so i'm just going to say right there my husband will agree all day long but

10:18 i'm also excellent at saving so in that beginning of the financial phases that contribution folks this will be your 20s all the way up through possibly your 60s even 70s because people are living longer you're contributing into your retirement savings there it is then we start to get in that financial red zone that everybody talks about what is that it sounds really exciting it is this is when we should start dialing down risk a little bit jumping into some conservation maybe start making a few changes in the way that we're thinking about that distribution phase so this will be your 60s 70s 80s the rest of your life the number one fear that i hear from retirees and pre-retirees is running out of money in retirement so if you're worried about running out of money in retirement if you're worried about taxes volatility in the market all of these important things i want you to come and get a copy of this book

11:08 so first off it is available on amazon it's 1995 which is so fun and exciting just jump on there and grab a copy of the book i know you're going to enjoy it second you can also drop us a note on yourpowerfullegacy.com and just enter in your name your email address and let us know would like the retirement train and we'll give you a call let you know lexington or louisville office whichever one you'd like to come and get that from we do have the payments available and for some of you our current clients you know that it was actually given to you so you've received a great value and we know how much you've loved it and enjoyed it and passed it on to several other people so let's get this book out there and get that information out there well you know it's very very important that people get the the right plan for the right time of their life and and and what got you there is not going to keep

11:55 you there a lot of times so again there's when when the train stops a lot of people get on a lot of people get off and some people switch trains and many of you listening right now may be on the wrong train and might not realize it and so if your advisor if your advisor specializes in risk all the time and has never talked about retirement income matter of fact guaranteed lifetime income we call it a financial fill-up you might not be with the right advisor for the next train ride of your life which is all the way into the sunset so to find out if you are on the right train give us a call right now dave tell them how they can do that 800-661-7383 you can call or you can text plan to 600-700 so call 800-661-7383 or text keyword plan to 600-700 and again the book was the retirement

12:44 train christina we really appreciate you having having you on today thank you so much for having me it's always a pleasure my sweet friend and i look forward to seeing you soon yes ma'am and folks we'll be right back after this

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Well, folks, this is the time of the show where we go out across the world and find someone who's making a difference. And you guys know that I love to talk to authors since I'm one myself. And this week we have a very special author joining us from Panama. Yeah, the country of Panama. And his name is Andrew Hollum. And he's written the book, Millionaire Teacher, The Nine Rules of Wealth You Should Have Learned in School. And we talked about this a month or so ago on our show when I found this book. And I liked it so much and my staff loved it so much that I wanted to have the real author of the book on to talk from his own words what each chapter means or some of the chapters. And matter of fact, I like the book so much I bought a copy for everyone in my company's organization. So I bought 20 copies and handed them out. And Thomas is nodding his head in there.

00:46 Thomas, have you started to look at the – I mean, you guys like the book. I have started going through it. It's great. There's so little information out there that's practical that anything that you can get your hands on is very valuable. This is like an owner's manual for the financial world, I think. So I've written some books too. I like this book along with my seven baby steps. I think these books are both really good. But without further ado, let's welcome Andrew in. Andrew, welcome in. Hey, thanks very much, guys. It's a pleasure to be here. I'm glad you guys at least aren't turned off by a middle schooler's sense of humor because that's basically all I've got. And that's about all I put into Millionaire Teacher. Well, if people listen to this show, they appreciate a middle school sense of humor because that's about what we do all the time. You even have the drum to go along with it. All right. So explain first why you're logging into the show from Panama today.

01:33 What's going on in Panama? Hey, it's warm for starters. So my wife and I have been globally nomadic for about eight years. And so I grew up in Canada and I was a public school teacher there. And I took a year off in 2002. And just to travel, I decided I'm going to travel the world. I was super naive, thinking I could see the world in a year. And the principal at the school that I was at in Canada ended up getting a job at a private international school based on a U.S. curriculum, mostly American students, servicing mostly American families in Singapore. And he said, you should apply for this job. So I took that job. It was fantastic. I taught high school English and then eventually I taught high school personal finance.

02:20 And we thought we'd take a year off in 2014. We figured let's take a year off, take a break, travel a little bit. And one year led to two, which has led to eight so far. And we're enjoying it. We're floating around all over the place. So Panama is where we currently are, but we don't tend to be in any one spot longer than typically a handful of months. So when you do that, do you find what, and I'm just using a term that I hear, Airbnb, do you find little houses to rent? Or how do you go about that when you're nomadic in retirement? Yeah, sometimes we do. Sometimes like right now we're staying at an Airbnb. Yep. And other times like we'll actually rent a place. Renting is far cheaper, of course. No middleman. Sometimes.

03:06 Yeah, exactly. And Panama's got, I mean, great value for your money. So right now we're on this. We've got this place on the 35th floor with this spectacular ocean view. And it's about a thousand. It would be, if we were not doing the Airbnb thing, it'd be about a thousand dollars a month. And it has, you know, like a swimming pool on the top floor and it has a gym. And it's got this great gazillion dollar view. Like it's the most spectacular view I think I've ever seen from a building. It's incredible. You're talking about a thousand dollars a month. I know a guy who rented a place in Malibu, Airbnb, it was a thousand dollars a night. It didn't have a pool. So what a deal. You know, one of the things that a lot of people have been trying to say, well, gosh, when I retire, I want my dollar to stretch further.

03:51 So let me go to different countries. We heard a lot of people running to Mexico years ago and Mexico still running to Mexico. The one complaint I hear is security. It's not the same safety feeling as we get in most neighborhoods here in America in Mexico. I don't know what Panama is like. And you have to know it's not going to be the same, but the food's going to be different too. But I guess you guys like that. You know, what's interesting is it's when you're looking at safety, it's generally regional. So, you know, the United States is based on homicide rates per 100,000. It's actually pretty low. And ironically, despite what we hear from the media, it's safer to live in the United States now than it was in the 1990s. Wow. And the 1970s. But we don't get that sense. Doesn't seem like that, does it? You know, with the media, with the number one rule of media, and I know a lot of people in media, is if it bleeds, it leads.

04:40 It leads. So they get you to listen and watch and they keep you there and they keep it filled with negative news and get you all depressed in a half hour. And they've sold you a whole bunch of stuff like soap. Yeah. I mean, if you walk up and down the streets, you walk up and down the American streets and you ask people like, tell me about like homicide rate, gun violence, gun violence compared to how it was in the 90s and say the 1970s, they'll tell you it's way worse. Yeah. But if you look at FBI crime statistics on homicides per 100,000, it's safer. It's basically safer than it's ever been. And so obviously there's still issues. We still need to sort things out. But likewise, you know, when you get a place like Mexico, homicide rates pretty high. But again, it's really regional. So you've got the port cities that are dangerous, the cities up by the U.S. border that are dangerous. Right. Anything where you've got, you know, drug movements back and forth.

05:27 Right, right. But there are pockets that are relatively safe. Having said that, Panama is another level. So Panama is far safer than Mexico. And with Panama, you can drink water out of the tap. It costs a little bit more to live in Panama or to be in Panama than it does to be in Mexico. But, you know, we're, you know, the more I travel, guys, the more I realize I don't know. And the more I realize, like, I have to keep learning. I'd never been here before. And I'm liking it. We're having a really good winter here in Panama. Well, what I say in the financial world, it's not the information that's out there. It's where you're getting the information. So if you're getting it from a biased source, guess what? It's going to be biased. So that's why we talk about in the financial world how important it is to deal with a fiduciary planning firm that has access to risk and safety.

06:12 So you put that proper plan together. Now, let's look at your rule number one in your book is spend like you want to grow rich. Now, what does that mean? Yeah, you know, many people think that wealthy people spend gobs of money. And that's, you know, that's what you'll see on television. And you might read that in a flashy magazine and such. But the truth is that wealthy people spend far less than we often think they do, especially when we're looking at depreciating assets like vehicles. It's really interesting looking at, I mean, Thomas Stanley wrote about this in The Millionaire Next Door when he first published that book in 1996. And he continued his research. And then in 2019, a few years after his death, he was unfortunately killed in an automobile accident.

07:02 He, his daughter, who he had been working on a new book with, ended up continuing the research and publishing a book called The Next Millionaire Next Door. And what that book showed was that the median price paid for a median price that a typical American millionaire paid for their latest car was $35,000. Now, what's so interesting is this. So my wife and I have a condominium and there are 40 units in this place. And of my neighbors, you know, 39 neighbors there. It's in Victoria, British Columbia. And if I go down into the parking area and I look around at the vehicles, I would say that probably the majority of those vehicles are worth more than $35,000.

07:50 But I'd be surprised if any of the people driving them are actually millionaires. Yeah. So that means they're spending all their money on depreciation, depreciating assets, which is not the proper recipe, is it? You know, it's not. And, you know, it becomes the norm because when you see other people doing it, like your neighbors are doing it, this just becomes what people do. And so you start thinking, because everyone else is doing it, it's got to be at least normal. If not healthy, it's normal. You don't even think of it as unhealthy. But, you know, we do. We have this, I think, an unhealthy, most of us culturally have an unhealthy relationship with, I think, our desire to acquire stuff, depreciating assets. And often we borrow money to get them. Well, I don't know if they have this bias yet. There's like familiarity biases, all the biases.

08:37 But what about the wealth bias? So you're biased because you want to look wealthy. That's what people buy. You know, when you, and I don't know if your parents ever told you this. My dad never told me anything to spank. But mom would say, well, like if I came home and I did something wrong in school. And I said, well, mom, everyone else was doing it. And she would say, if everyone else was jumping off a cliff, would you do it too? And I would say no. And so that's what happens here. You see everyone else blowing money and you decide, well, if they're doing it, I could do it too. But the smart people, the rich people, they're hiding in plain sight. And in your book, I learned a term. I'm honest. I didn't know this term. The Deca Millionaire. And Thomas knew that. When I asked the guys when we were doing the show and that no one had seen the book yet, I said, what's a Deca Millionaire? And Thomas knew it. And then one final point of that, and I want you to talk about this.

09:25 But in that Deca Millionaire chapter in the book, and again, it's chapter one, you talked about Warren Buffett in 2006 spent $55,000 on a Cadillac. The funny thing is, in 2005, I spent about that on the same Cadillac. I got a Cadillac SRX, which was the Hearst kind of one. It was a station wagon. I really loved that car. So I feel like Warren Buffett today. But Warren Buffett could buy million-dollar cars, and he's sitting there buying, and it's still a lot of money, but $55,000 Cadillac. Now explain the Deca Millionaire kind of philosophy and what gets people there and keeps them there. Well, it's really spending less on depreciating assets like cars and thinking more about spending like a millionaire. And millionaires actually don't typically dine out at really exclusive restaurants on a daily basis, for example.

10:18 Most millionaires don't own Rolex watches. Most millionaires don't go around buying extravagant jewelry or fancy brand-name purses. And that's a total irony. If we were to grab the people that end up buying really expensive jewelry, really expensive purses, and really expensive cars, and we would like to corral them all into a room. Like we took, I don't know, we found like a thousand of them. We went into an upscale parking lot. You found all these people that had these really high-end vehicles, and you jammed them all into a room, and you gave them truth serum. And you're actually to ask them, like, how much money do you actually have? You'd find that most of them had really high salaries. So, you know, they might be doctors and lawyers and people that end up earning a lot of income. But they're typically people that have low levels of wealth.

11:05 That doesn't mean that there aren't rich people who end up driving really expensive cars. There are. But most rich people don't. So it's a great way of reframing things. Because, you know, what you're not spending on an expensive vehicle, if you choose not to, you can put towards investing for your future. Yeah. You can put towards donating money to charitable causes. You can put towards potentially taking time off, a form of sabbatical to spend time with people you love and enjoy some really cool experiences. And generally speaking, you know, we don't get a lot of satisfaction. We think we do beforehand, but we don't get a lot of satisfaction from material acquisitions. Buyer's remorse. Remember that term? Exactly. That's what happens, too. You say, gosh, the little voice inside you said, I shouldn't have done that.

11:53 Even though it felt good for the first couple minutes or first couple days, Buyer's remorse kicks in and you realize you made a mistake. Hey, Andrew, this has been a fascinating interview. Do you have time? Can we hold you over one more segment to talk more about this same book here? I'd be thrilled to. Okay, folks. We'll be right back after this. You're right.

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Bessence. Folks we're back here on the Financial Safari. Fascinating guest. We've had a mod before and every time we have mod people demand that we have mod again. His name is Mr. Tom Hegna. He's written a couple books. The book we're talking about today is Don't Worry, Retire Happy. Tom that means a lot doesn't it? Yeah and you know and I try to walk the walk. I said what good would it be if the guy who wrote the book Don't Worry, Retire Happy doesn't retire and he's not happy. So

00:46 that's why I've kind of entered into my retirement. I'm kind of doing the hybrid retirement but I'd say I'm 70% retired now. You're a pretty good golfer too. Well yeah I mean I won the club championship in 2020 at Flagstaff Ranch. I was the oldest club champion in course history and I would tell you this. That in my life is as big a moment as when I spoke main platform at MDRT or top of the table. I mean it was a big deal for me and you know but I'm being happy and I'm doing the things that I want to do in retirement and that's what I want for your listeners. So happiness is defined differently by everyone but I think that no one complains and no one is unhappy when they have streams of income coming in retirement that will never go away until they do. How important is that? It's very important. I mean you know the portfolio will do better if you add little guaranteed lifetime income because the

01:33 way that the income annuity functions inside of a portfolio it functions like a triple a rated bond because it's guaranteed every single month as long as you're breathing that check is coming. With a triple c rated yield the payout rate is much higher than what you're going to get from a cd or a 10-year treasury with zero standard deviation it never fluctuates and so even the people who say they hate annuities I say okay well let's throw the word annuity out what if I could get you a triple a rated bond with a triple c rated deal with zero standard deviation oh man I'd love that well yeah that's how it functions inside of a portfolio so the portfolio will do better the research shows you're going to be happier and now the latest research shows you're likely to live longer as well because you have less stress you worry less because you're being paid to live many people choose to live differently they watch what they eat they they exercise they see the doctor when they're not

02:19 feeling well and all these things tend to cause people to live longer yeah all good points and when you have the money that's coming in it gives you the availability to to live life on your terms instead of having to wait around to the next check comes because you build up streams of income and you can do what you want when you want to do it because every day is a saturday when you retire except for you you're still having you still have a couple mondays in there because you're semi-retired because you because you want to not because you have to though right right right and I I was just in san antonio yesterday and I I just realized why I don't like traveling you know I mean I love speaking in front of people I don't like the 35 hours I spend to get there and come back for a one hour presentation I think this is so much more efficient yeah well I mean being online is great I mean we've got so many more technology improvements coming down the pike and it's going to make life simpler for those who can afford it and that's why it's important to have streams of

03:04 income I know a lot of people listening and watching right now probably have big balances in IRAs or 401ks but they don't have any idea what kind of income they get from that balance I mean how hard is it for someone to to come to the realization that they need to have that second opinion to show them income based on their lump sums yeah well you know Dr. Moshe Malevsky who's in all my books but he's in this movie the baby boomer dilemma he says you know we're all getting wealthier we have more money and more money but that wealth buys us less and less income because interest rates are so down and so that's why I think it's so important to lock in these streams of guaranteed lifetime income and these annuities because they pay mortality credits that's extra money from the risk pool the payout rates are much higher than what you're going to get from other you know market

03:50 based income products that don't have any mortality credits and people just really don't understand that but I you know all the research shows like I said these PhDs are just lined up one after another an economist who who's who stress the importance of using annuities in retirement let's talk about the movie what's it called again yeah it's called the baby boomer dilemma that the the director is Doug Orchard he's he's he was also the director of power of zero he's a he's a world acclaimed uh uh director he's had you know numerous uh shows on you know netflix and and and apple tv and all these places and so I mean he's he's a very well regarded director and he put this movie together that that features some of the top names we're talking Nobel Prize winners Robert C. Merton Bill Sharp um you know

04:39 Olivia Mitchell one of the smartest ladies in the world on retirement income Dr. David Babel Dr. Moshe Malevsky so I mean this is loaded but then throughout the movie there's a real world family that's dealing with a choice should they keep their pension should they switch it to a 401k and what happens if the market goes down so there's so there's all these experts but then there's a there's a narrative throughout the entire movie and it's not any type of sales presentation whatsoever it is a true documentary it got a rating from the motion picture association they will not give a rating if they're if if somebody comes in with an agenda this is a non-agenda movie it's looking at retirement uh through the eyes of some of the smartest retirement research they have the father of the 401k in this movie tom henna all right so it's yeah well i had well i i'm i'm in there too but yeah the father of 401k is

05:28 in there and it's pretty interesting well it's amazing but that was when the burden got shifted from the companies to yourself when we were talking about funding your retirement and a lot of people haven't haven't had that wake-up call yet but as more of our friends retire or try to retire and don't have the income streams they thought they're going to have we're going to have more and more people paying attention to guaranteed lifetime income and you're dealing with that bubble wealth these people see their 401k balances they think they're rich you know i've got a you know i got a million bucks for my 401k if people say that to me and i say well i say how much of that is yours yeah and they say what do you mean it's all mine i said it's not yours you have a partner and you're only the limited partner the government is the general partner and you have no idea how much they're going to take from your 401k i mean right now it's 36 37 38 39 percent but what happens if it goes to 70

06:15 or 80 or 60 you have no idea how much of that 401k is actually going to be yours and and that's why i'm trying to get rid of all of my 401k and ira dollars and put it into things where i know what i've got and it's coming to me tax-free that's what i think is going to be so important a lot of people watching listening and they know they've got these big gains and they know it can't go up forever it's no jam there's no jack in the beanstalk here my daughter carrie 16 years old taught me a term and i think it it applies to a lot of folks who have these big gains but are afraid to liquidate or don't want to it's called fomo fear of missing out they they fear that if they liquidate tomorrow the market will continue to go up and they'll be behind they'll think they could have made that money but we don't i mean when we sit down with folks we don't say liquidate all your money just portions of your money to reallocate so that if the market tanks you don't go to the nice house to the poor house that you

07:04 have a a situation where you have core money that you're never going to lose and you're going to have an income stream and then gamble money which is explore money nothing wrong with having some gamble money but only after we have a retirement fund to take care of yeah i'm not against the stock market i have money in the market but most most of my money is has some protection on it so like if the market goes up 20 or 30 i get to participate in that but if the market crashes i'm not going to lose all my money and i think that's what's so important is that you put some safety nets under your bubble wealth otherwise if it all goes away people are going to be very very unhappy that they didn't lock in some of their gains folks just to make sure you're on the right track if you want your review of your situation you can always text plan plan to 600 700 that's plan to 600 700 tom life

07:51 insurance they've got a bad name too for a while because i think it has a connotation if you have to die to benefit from it but over the last five or so years the life insurance industry has stepped up and now you don't have to die to benefit from a life insurance policy yeah you know people are shocked when they know that my my life insurance premium is 226 000 a year i put 226 000 a year into my life insurance because i want to have millions and millions of dollars available to me tax-free and and and i do now and and so you know people think oh that's crazy it's not crazy you find some of the wealthiest people in this country you know walt disney started walt disney from his life insurance policy jc penny started jc penny from life insurance policy ray crock started mcdonald's from their life insurance policy i can tell you there are farmers and ranchers all over the country who've been saved

08:38 by the cash value in their life insurance policy and when times got tough they were able to take money out of there and continue their farming operation so that they could continue to become wealthy so i think the people who figured it out are the wealthy people the smart people have figured it out everybody else thinks oh it's an expense it's not an expense i want to put as much as i can into there that and if you start looking at it as an asset instead of an expense it's going to change your whole thinking on life insurance it's done right it's streams of income that are now tax-free as well absolutely tax-free is going to be bigger and bigger as we go it's going to be it's going to be bigger and bigger and you know it's not a republican or democrat issue it's a math problem we need a math party because these parties can't add and subtract and the math says taxes are going to have to go we need to teach math to congress that's right that would be a good tutorial session right there but

09:25 there's an added benefit because of long-term care the problem with traditional long-term care it was always hard to find a company that was going to keep the policy the same way that you bought was going to be there when you needed it and there's been dirty tricks played in the long-term care world but now life insurance companies have said you can take some of your death benefit out tax-free if you have a special policy set up with the life insurance company and that will go towards paying any kind of long-term care situation you have yeah you know long-term care is the one thing most people forget about they can wipe out their entire life savings and and the way i used to explain this life insurance type policy is let's say somebody had a hundred thousand dollars down at the bank or something i'd say okay you move that over here i draw a circle i put the hundred thousand in there this is your money and most of these policies have a money-back guarantee so if you have an emergency you

10:11 can get it out it's going to earn an interest rate probably better than the bank it's going to grow tax-deferred but it's there as an emergency fund and then i draw a bigger circle and say but here's the death benefit if you don't use that and you die your family gets this tax-free and i'd write the amount of that death benefit and i said but what if you don't die what if you need long-term care there's a bigger circle and i'd write what the long-term care benefit is so this one this one policy can do three things it can be an emergency fund it can be a death benefit tax-free to your family or it can be a tax-free benefit for you if you need long-term care and i think this three things in one is going to resonate with a lot of people well it really makes a lot of sense i mean and many people are watching right now they may have or listening they may have a life insurance policy but they're saying gosh do i have what is that the right policy or and life insurance rates have come down the last

11:00 10 years maybe you're overpaying for policy that doesn't have what you need in it so we encourage anyone who's listening or watching that has a life insurance policy or wants to find out how to get the right one to text us and all you have to do is to text to 600 700 you text the word life l-i-f-e to 600 700 and we can get a review for you we can also give you some prices and some forward-looking illustrations of what you could do if you do the right thing in the life insurance policy but getting that audit and review of your current policy is valuable and tom like we always say never cancel your current policy until you have a new policy in your hand absolutely and you know a lot of people just have money sitting around doing not much it's sitting in a money market fund or sitting in a cd or a bank account earning less than one percent that's perfect money where you can have because there's really there's really not a cost i mean there's internal fees but i mean if you move

11:49 a hundred thousand in the whole hundred thousand goes in you get the emergency fund based on a hundred thousand plus whatever grows you get the death benefit that's bigger than the hundred thousand you get the long-term care benefit and so you know i don't know why somebody would keep a hundred grand sitting in a bank account or in less than one percent when it can be doing three things at the same time sounds like one of those infomercials but wait there's more in a good way yeah well i don't and and your listeners need no i don't sell any financial products i don't sell annuities i don't sell life insurance i don't sell long-term care insurance i just take the research of the top phds in the world and try to share that with advisors and with consumers so that they can that they can be knowledgeable when they make their decisions but see that's why it's so important to work with an advisor like you coach because i don't believe retirement is a do-it-yourself project you know you don't do your own dental work in your garage with your drill set and i don't think you got to be doing your

12:38 retirement planning either and i stick to that i agree and folks uh if you want a copy i've got 20 copies of this book it's don't worry retire happy and we've got 20 copies for the next 20 of you call we'll get that you also get a golden ticket for your very own total retirement plan thomas will tell you how you do that

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Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Vessence. Well folks we've got a really good guest today. He's a return visitor. He's been on the show numerous times over the last 10 or 15 years. He's one of my great buddies in the financial world. His name is Mr. Tom Hegna. If you've seen public TV you've probably seen his special Don't Worry Retire Happy. He even has a book called Don't Worry Retire Happy which is really neat as well and a DVD. And we've got a copy of this. We've got some copies of this.

00:46 We're going to talk about how you can get your hands on these in the future. But more importantly we have Mr. Tom Hegna right on the line. Tom welcome in. Hey coach. Great to be with you again. It's beautiful these days the technology. So a lot of folks are listening on the radio but a lot of folks are also watching our TV show at the same time. The beauty of the technology these days is we're able you're sitting in your office and I'm sitting in North Carolina. You're in Arizona I think. Are you in Arizona this week? Yeah Arizona this week. And I'm in North Carolina and it's spontaneous and instantaneous what we can talk to each other and see each other. It's beautiful. So let's talk about something. I heard you say a term the other day and I wanted to talk to this talk to the audience about it. It's called bubble wealth. What is bubble wealth? Well you know I listened to a podcast with Dr. Michael Finca and Dr. David Blanchett.

01:34 Now these are two of the smartest PhDs around the subject of retirement. And they were talking about this concept of bubble wealth. And all it means is that right now the market's up. You know crypto's been up. Real estate is up. And everybody feels very wealthy. And they're making plans. They're quitting their jobs. They're retiring. They're doing all this stuff based on this bubble wealth. But when this market goes on. And the reason it's a bubble is because all this money that's been printed. The trillions of dollars of this bond buying by the Fed. And the trillions of dollars being spent by our government for COVID. And all this other stuff. And all this money's going into the market. And it's driving prices of everything. And we're seeing inflation. But we're seeing asset inflation too. And much of it is really a bubble. And when everybody heads for the exit at the same time.

02:22 Because at some point the market's going to go down. Crypto's going to go down. It's going to get really ugly. And then people are going to be stuck with whatever they have left. And what I'm trying to encourage people to do. Is turn their bubble wealth into real wealth. And that's what I've been talking about a lot lately. Okay so step number one. And identifying if we have too much bubble wealth. We also call this paper profits. Many times if you have a lot of wealth. Maybe it's time to realize some of that wealth. But what's step two. If you realize you're in way too much risk. But you have a lot of gain. What's the step two to re-diversify I guess. Well I mean I'll use me as an example. I'm not just talking the talk. I'm walking the walk. You know I kind of announced my retirement last year. I'm about 70% retired. But I have been converting my IRAs and 401ks to Roth. Okay. And many of those Roth are in income annuities.

03:09 So they guarantee me now tax-free income for the rest of my life. I've been moving more of my personal wealth. Out of my brokerage account into cash value life insurance. Which may sound boring to some people. But it's a way to secure your wealth. Because it's not going to go down when the market crashes. And yet it can still you know have some upside potential as well. Plus it gives me tax-free income in retirement. And I think having tax-free income in retirement. Is going to be so important. Because with all this spending. You know it's not free. And when they get up and say oh this is free. It's not free. Somebody's got to pay for it. And it's going to be taxes. And we're 28 going on 29 trillion dollars in debt. The debt's climbing at 4 billion dollars every single morning. We have 200 trillion dollars of unfunded obligations. For social security, medicare, medicaid, government pensions, military pensions.

03:56 Taxes are going to go up. So I believe these are the lowest tax rates I'm going to see for the rest of my life. So I'm trying to lock in my bubble wealth into real wealth. In ways that I can get tax-free income in the future. You identified two financial termites here. Taxation and too much risk. Those can eat people alive when they're not really paying attention. And so what do you tell the person that says well Tom I love the idea of realizing some of this gain. This big gain. But I don't want to pay capital gains tax. Well okay so there's ways you can tax harvest. You know I know the market. The indexes are near all-time highs. But I've never seen so many stocks. Individual stocks that are down 40, 50, 60, 70, 80%. And these are companies that were boomers. Like you know Peloton and Roku and Square and PayPal. And you know I mean these are real stocks.

04:43 And they're way down. And so I know in almost every one of your listeners portfolios. They have some winners. And they have some losers. This would be a great time to sell some of your losers. And then you can sell your winners. And if you sell the equal amount you don't have to pay any taxes. So you can harvest some of your gains by taking it against some of your losses. And I would recommend looking at doing that. That's the ultimate strategy right there. But if we don't. After all. If we still have a bunch more of gain we haven't realized. Because we've gone through all the tax harvesting. My next point is I'd rather pay tax on a gain than have a write-off on a loss. And if we wait too long. Like you're talking about. You mentioned all those great companies were skyrocketing a couple years ago. And now they've hit the ground. We don't want to watch our wealth disappear like that either. And pop in that bubble wealth.

05:29 Right. I always tell people you don't want to let the tax tail wag the dog. You know I've had so many people who said well I don't want to sell because I have to pay a lot of taxes. So they don't sell. The market crashes. And then they don't have any gains anyway. So you know it's better to pay tax on a gain than to you know have more losses. Well when we talk about that that seems to be a very important ingredient to a happy retirement. When you're not worrying if you have number one less taxation. But number two income streams. Let's talk about income streams. Yeah well the you know the Wall Street Journal had the headline. The secret to a happier retirement. And friends neighbors and a fixed annuity. And they were talking about an income annuity. That the happiest people in retirement are the people surrounded by their friends. Surrounded by their families. Who have guaranteed paychecks every single month. At Time Magazine found the same thing in Great Britain.

06:16 Lifetime income stream key to retirement happiness. Towers Watson. They're not even in the insurance industry. They did a whole white paper on annuities and retirement happiness. The American College wrote a whole article on how annuities help with happiness and retirement. So we found that people who incorporate annuities in their portfolio. Number one their portfolio does better. It lowers the risk and increases the returns. Number two we found they're happier. And now the new research shows they're likely to live longer as well. So you know for those reasons I own 11 annuities. And there's this movie that came out. This baby boomer dilemma. Dr. David Babel in that movie disclosed that he owns 14 annuities. And so he's one of the smartest people ever to study retirement.

07:01 And he had 14 annuities. I've got 11 of them. And you know all those PhDs and researchers. They're the ones that own the annuities. Because the math and science says you should have one. Great story about Dr. David Babel. I think it was 2009 I had him on my show. And he was getting ready to retire. And he was very adamant about researching annuities. And so he was I mean he was researching for himself. But he's also turned into a research project. And he's been very successful in his retirement strategy. Yeah I mean unfortunately he died in May. But yeah but he explained his entire strategy in that movie. The baby boomer dilemma. And there's even some extra footage that the director made available. That even once you watch the movie there's some extra footage. If you want to watch it on his full interview.

07:47 But yeah he's in all my books. You know he's in paychecks and playchecks. He's in don't worry retire happy. And he's one of the smartest people in the subject of retirement. Well I'm sad to hear that he passed away. He's a really good guy. I mean it's amazing when you start hearing about people that. I guess we're getting older Thomas. We start hearing about people dying that we used to know. And that's not fun. But we don't want our income to ever die. And so let's talk about this. Why is there a negative connotation or negative words. And negative articles about annuities from other planners many times. Well I you know I just did a post today about these fake fiduciaries. These are financial advisors who say they're fiduciaries. But they don't use annuities life insurance or long-term care. They can't be fiduciaries. I mean that's ridiculous. They may be investment fiduciary.

08:33 But they're not retirement fiduciaries. Well I mean I think the insurance industry did a little bit of it to themselves. Because as you know 15 years ago there were some bad annuities out there. There were annuities with you know long surrender charges. High surrender charges. Paying high commissions to advisors. I don't see those anymore. I think they've been pretty much weeded out. But there's still some bad aftertaste from some of those. But then there's you know these people on TV who have agendas. That they want you to invest with them. Because they have high fees. And they don't want to you know they can't compete against Vanguard or Fidelity. So they pick against annuities. But the difference is if your broker has high fees. And you lose money. I mean you lose money. But in a variable. And it's really only the variable annuities that have the high fees. The other annuities are not even fee products.

09:19 So the variable annuities do have fees. And they are higher than a mutual fund. But it's because they guarantee that you're not going to lose money if the market crashes. I mean what's that worth? You got to look at the value. Not at the fee. And then you know the fact that most annuities are not fee products. A single premium median annuity is not a fee product. A deferred income annuity is not a fee product. A fixed annuity is not a fee product. A base fixed indexed annuity is not a fee product. They're called spread products. And so really it's only the variable annuities and some optional riders that have fees. And I think that's a big misconception among a lot of people. It's funny when somebody writes about annuity. They're digging up the old ones that don't exist anymore when they want to be negative many times. And so yeah it's very important to know that a planner who's a true fiduciary has everything from risk to safety. And if you're not offering safety then you're not really a fiduciary.

10:05 There's a planner I saw on a website. He has a $10,000 annual fee. He charges his clients and then he manages their money for another fee. But his fee is $10,000 based on your assets. And he is totally negative about annuities but he claims to be a fiduciary. How is he a fiduciary? Yeah I think the fiduciary. See there's not a good fiduciary standard. That's the problem. And until they start you know convicting some of these people claiming to be fiduciaries who are not using annuities or life insurance or long term care insurance. They've really got to do enforcement actions on those people because they're not doing what's in the best interest of their clients. The research is clear. You know Dr. Moshe Malevsky in the movie says economists argue about everything. They argue about inflation, interest rates, you know unemployment, what level is good. But they don't argue about annuities. The only thing they discuss about annuities is what type and when and how much should go into an annuity.

10:56 You're not going to find economists and PhDs who are against annuities. You're just not going to find it because the research is clear. Well it just means when I saw that when someone has a $10,000 minimum annual fee, it could be more, every single year. Are you really doing the best thing for the client when you're starting them negative $10,000 every single year? I don't think so. Right. Let's talk, we've got about one more minute here in this segment then we're going to have you on for another one to talk about the movie you're talking about there and everything. And I want to talk about Paychecks and Playchecks, the first book you wrote and how important it is to have that retirement paycheck for life. We call it a financial fill-up strategy. But what inspired you to write the Don't Worry, Retire, Happy book? Well I had given the Paychecks and Playchecks presentation down in San Diego about eight or nine years ago at a big industry meeting. And there was somebody there from PBS and they said, Tom, we want to do a PBS TV special.

11:42 People need to hear this. But we're not sure they'd really understand this paycheck and playcheck thing. We would need a simpler title. So I wrote the book, Don't Worry, Retire, Happy. And the difference is, Don't Worry, Retire, Happy is broader. It talks about having a plan, working with a financial professional, maximizing social security benefits, considering a hybrid strategy, having a plan to protect yourself against inflation, the importance of guaranteed income and retirement, having a plan for long-term care, using home equity wisely, and then using life insurance as the most efficient way to pass wealth to children, grandchildren, and charities. You're supposed to spend your money, not leave any money. Don't leave any money to kids. Spend your money. Leave them life insurance because you can do that for pennies on the dollar. I had a client one time. I said, well, you know, why are you flying first class all the time? He said, if I don't, my daughter will. So basically someone's going to spend the money.

12:29 You need to enjoy your money, that's your life, your retirement, make sure that you're set, and then if and when you pass away, your spouse is taken care of, and then when both of you are gone, everyone's taken care of. And so, folks, if you're interested in finding out more about the true strategies of a total fiduciary plan, Thomas is going to tell you how you can do that right now.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Listen. Well welcome back into the Financial Safari. Coach Pete here, very special guest Mr. Phil Graham over there. Phil we were talking before the show there's an acronym out there I want you to explain to people and we say it in a sentence. The sentence is don't let your retirement take a hit. H-I-T. What does that stand for? Well to me the three biggest risks to retirement and I'm probably going to add a fourth. Okay. But the H stands for health care.

00:46 Health care big one. Long-term care, home care, assisted living or. Is that getting more expensive cheaper? Or I just renewed my health insurance at the glorious healthcare.gov with a $17,000 deductible. But so that's a whole other conversation. And it costs you a lot more than it used to cost. It's ridiculous. So that's the H, health care. The I is for inflation. Inflation big one. That's a big one these days isn't it? We could talk for hours about that effect today. You know what we need to talk about sometime and that's that we don't have enough time on this show is the funny business the way the government can come up with the cost of inflation and make it seem not as bad as it is. Yeah let's go pull some things that don't matter into the equation there. If you're shopping at all for anything you've seen inflation and you're going to see more and more of it and it's not just getting

01:35 gas. Now gas has a that's a huge inflation there but it's food it's everything. Talk about that. So inflation's big. H-I-T. What's the T? And then the third taxes. Another fun one. And no I've lived by the rule for years that I can put more money in somebody's pocket by reducing or eliminating their taxes than by chasing a higher rate of return. Tax planning. Tax navigation strategy we call it. Helping you navigate the tax code to protect your behind from the tax man. Well the key word you just said coach is strategy. Strategy. Not tax planning. Not tax preparation. Strategy is the word that makes the difference. And then the fourth that I've added is market volatility. Okay. Sequence of returns. The timing of the market. When you put your money in versus when you take it out. Warren Buffett always

02:23 said buy when others sell and sell when others buy. But the main thing is buy low. Sell win. High. And during the journey up the mountain. The accumulation years. The rates of return in the order that they happen are irrelevant. And I think you're gonna have Tom Hegnaugh on. I know he talks a lot about sequence of returns. We've had Tom on a bunch of times. He has sequence of return. Very important. But when you're coming down the mountain and you're withdrawing money. Right. Negative returns early in retirement can be catastrophic and just completely implode. Which is why you hear me talk about guaranteed income. Very important. Paychecks during retirement. And it's a fill up we call it. Making sure you have streams of income that are never going to go away that can increase to combat inflation and are tax efficient.

03:09 So it covers all your hit strategy there. Right. Yeah. So the great news is there are tools that can help with health care costs. You know whether it's traditional long-term care or just other vehicles that have key components built in to assist with that. Inflation is how do we get a decent rate of return without the market volatility. You know I believe in that. Yep. And then taxes is working with someone that understands tax strategy and can help implement that plan. It's more than just waiting until April 14th and trying to manipulate the numbers on the tax return. It's a full-time job for a good planning team to make sure that they're keeping you on the right tax strategy every single year. Folks if you're interested in tax strategy all you have to do is text the word plan P-L-A-N to 600-700 by the way. 600-700 and the word plan and you'll be taken care of.

04:00 Now let's talk about this a little bit. Let's narrow. Let's isolate some of these and let's go through what the big problems are. Like when we're talking about inflation, what can someone do to combat inflation? I know we all sit around and complain about it, but what can we do to make sure that we can control inflation going forward or make sure it doesn't affect our family as bad as it affects others? I think obviously starting with living within your means to where you have more money than what you're spending, which that's difficult for a lot of people. But no one wants to be told to be on a budget. I know, but yeah. Here's what it is. And it's not as easy as it seems, but it's not impossible either. Make sure that you're getting a return that is equal to or greater than what the inflation rate is. Right. And then eliminating the volatility as well. So like how do we get a better than average chance

04:50 to get a better than average return without the downside risk? And I think that's going to be our best bet to outpace inflation is to get good market returns, index returns, but minimize or eliminate losing money in the down years. Unnecessary expenses, commissions and taxations. How's that? So we can eliminate those. And there are tools, coach, that there are tools that as planners we use that during the income phase have the ability to increase income based on inflation. So when we're putting together a plan, we're taking those into consideration and literally, that's why you and I love being independent is we can literally go research and find any financial tool available to man

05:35 and utilize it for the client. Being independent and being a fiduciary, they're two of the best words you can hear if you're working with an advisor. Make sure they're independent, which means folks, they have access to most anything out there based on what you need, not what they're being told to sell you, big thing. And just making sure you're on the right track. And then being, of course, independent, being a fiduciary, we have to put our clients' needs above ours at all times. Very important. It's funny you say that, coach. I'm not going to mention any names, but there are certain very large firms out there. If a client says they're with that firm, I don't even need to look at their statement. I can tell them the exact percentage that their assets are allocated. I know exactly what you're talking about. And there's other ones the same like that. And so here's a phrase I don't like, and I hear it on some commercials that says, when you do good,

06:23 we do good. But they forget when you do bad, they also do good. I want that job. It's like the weatherman. Yeah, but the most important ingredients, Ted, are very successful, I think. A successful long-term plan are the three main words. Growth, got to have your money grow. Right. But then you've got to protect that growth. Don't give it back the next year. What good is it to have great growth if you have a bigger loss next year? So lock the growth in so you can never lose that growth. And then when you decide, you can activate a lifetime income you never outlive. Now, how much peace of mind does that give somebody? Well, we've seen a lot of statistics that retirees with guaranteed income payments, whether it's a pension or what I call personal pension using a guaranteed income stream. Very important these days because companies have taken pensions away for the most part. So having your own personal pension or two or three will give you the satisfaction of enjoying retirement.

07:13 Well, not only do you enjoy retirement, it's proven that they live longer. Because they're not worried all the time. There's no scientific fact other than the statistic is they live longer if they have guaranteed income. Happy people always look happier. You can tell the person that's not happy, by the way, and you wonder why they're not happy. Many times it's probably because they didn't have the right plan put together and they don't know where the money's going to come from tomorrow. Most people don't want their retirement to be staring at the money channel, ticker symbol, wanting to know whether it's going up or down. They want to be enjoying themselves knowing that, hey, I got this paycheck coming in. It's been called the market. It's been called a roller coaster and it makes a lot of sense. Very highs and very lows. And then everything in between is the anticipation of what's going to happen next. And that's not good. Then you get post-traumatic stress syndrome sometimes by watching the market too much.

08:00 That's not a good retirement. Well, and think about today where the market is and the unknown of, I think everybody agrees that it's going to have to go back down sooner rather than later. But when? When? Nobody knows. And no one knows. We know the day after. By the way, I have a new crystal ball in my office. It still doesn't work. And then I just got the magic eight ball in. Yep. It actually has answers. How's it working? Neither one of them have been dead on. You ought to do a study, a comparison one year and every day. Just ask the magic eight ball and do your investments based on what it says. I like that. What does the eight ball say this week? Not good. So it's just, it's important though. And one of the most overlooked strategies though is having that lifetime income that's guaranteed. Right. That's that personal pension.

08:46 We all have 401ks or we have money put in IRAs that have a big lump sum, which is fun to look at until you start figuring out, well, gosh, I'm going to have to attack that lump sum and start taking money out of there to live on in retirement. And what if that money is still tied to the market and the market goes down when I'm taking money out? I'll never get that money back. And I might not be in a position where I'm going to get money for the rest of my life because I might outlive my money as opposed to the growth protection income kind of system where your money grows, it protects the growth. And then you have a guaranteed lifetime income based on that growth for life for you and your spouse if set up correctly. And then when you pass away, whenever that is, if there's still money there, Phil, it goes on to the next again. Back in the day, that money many times was lost. Right. And you didn't get it. Now you do if you set it up right. So many of you watching or listening may have a plan that isn't right for you today.

09:32 And if you haven't had your plan, your retirement plan analyzed, if you haven't even thought about retirement income, it's never too late. So what I'd say, again, all you have to do to get your very own plan that with no cost or obligation, text the word plan, P-L-A-N, to 600-700. That's plan, P-L-A-N, to 600-700. Make it easy. It's got to be easy. And then we analyze you and give your own strategy session based on where you are and where you want to be and your whole family situation. We could design a customized plan. Customized plans, Phil, I know you've talked to a lot of advisors over the years. Many of them don't customize plans. That's important. Well, Coach, I think you guys, your whole team is amazing at the customized plan. But what I take away every time I spend time in the office is that your team is one of the best or the best at taking what a lot of people look at as complex situations.

10:21 Try to make it simple. And simplify it because the most successful plans are ones that the people following the plan actually understand and agree with it. Yep. Because if they don't understand it, it's like looking at a map in a different language. Like it's like, I don't know where I'm going, but your team is amazing at making sure they understand it. And everyone watching, listening, needs to decide what they really want to do in retirement. Right. Because if you don't want to do much in retirement, then you really don't need much of a plan, but you still need that lifetime income. But if you want to travel the world or play golf or have the grandkids flown in, wouldn't it be great to know with certainty you have a plan that will guarantee that money coming in so you can do what you thought you're going to do? Well, you know, like you said earlier, pensions were the way everybody retired. Big companies in the government got together and said, let's put this back on.

11:08 Let's shift the burden back to the consumer. Back to the consumer. Yeah. And they gave you the 401k, but they didn't give you the income. That's why I say you don't really have a retirement plan until you have lifetime income. Correct. Is that a fair statement? It worked when it was a pension. Now that it's a personal pension. It's up to you. It can't be a personal pension without guaranteed income. Yeah. You have to have, well, yeah, you don't have a retirement plan unless you have lifetime income. Right. You can look at a lump sum all day long, but if the lump sum disappears when you needed the most, how safe was it? How good was it? And was it customized? Probably not. So here's what it is, folks. I mean, if you are one of the next 10 people call right now, we'll put together for you our 22-step total retirement plan. We'll also give you a three-book set, and I've got a couple box sets. You can pick which one you want. I have the 401k survival box set, and I have the seven financial blind spots box set. If you're nice, we'll give you both of them.

11:53 But I mean, it's DVDs, workbooks, guidebooks, everything you need to help you figure out what it really is that you desire in retirement. Then we'll put together, we'll search the world, basically, as being financial independent fiduciaries. We'll search the world, see if what you need is out there, and we'll design a plan that fits you the most. Thomas, tell them how they can do that.

See omnystudio.com/listener for privacy information.

Call 800-661-7383 or text PLAN to 600-700.

Transcript

Automatically transcribed from this episode; timestamps are approximate.

00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Listens. Well folks this is the time of the show where I like to go out across the world and find someone who's making a difference. Someone who I like to talk to and hopefully you like to listen to. We have a return visitor he's been on the show plenty of times in the past. I love having him on. He's even written the foreword in my book The Seven Baby Steps to Mr. Tom Hegna. Now Tom is a best-selling author. He's written two best-selling books. My favorite one is Don't Worry Retire Happy. He's also he has a public broadcasting special that's been on before

00:48 videos all over the internet Don't Worry Retire Happy Seven Steps to Retirement Security. Tom welcome in. Hey coach good to be with you. Now you're joining us from Arizona I think right? That's correct. I'm in the Phoenix area right now. Phoenix is a great place. Yeah. I love going to Phoenix and Scottsdale the area right there and let's talk about the money world. Now I saw you're all over the internet a lot of times. I see you on LinkedIn and you talked about I saw a post you made on LinkedIn about Monte Carlo simulations. Do you want to talk about that for a minute? Yeah actually it wasn't my post it was Michael Kitsis who you know he works with CFPs and he works with the RIA world you know the investing world. Right. And he's kind of an advocate for Monte Carlo simulations and I just commented that I'm not an advocate for Monte Carlo simulations

01:37 and so we got we just kind of went back and forth on that a little bit. I joined the argument already in progress. Yeah well I mean here's my problem like Monte Carlo simulations are for people who don't necessarily believe in using annuities or other products and they think they can do better with an investment portfolio like a diversified portfolio. The problem is they don't use the right age in many of these Monte Carlo simulations. I'd say 99% of the advisors use age 90. Well age 90 is going to fail 63% of the time because 33% of men, 43% of women and 63% of married couples will have somebody live beyond age 90. And so all I'm saying is if you're going to run a Monte Carlo simulation you need to use age 100 or age 105 and if they do that almost every one of those portfolios will fail. Yeah.

02:28 And that's just that's just the way it is. Now let's explain what the what the idea behind a Monte Carlo simulation is for the listener. Yeah so what they do is they would take a portfolio let's say it's 60% stock 40% bonds and let's say you're going to withdraw 4% or something in retirement and then they'd run 10,000 simulations if the market's up if the market's down if interest rates are up if interest rates are down if you got low inflation high inflation and all these combinations be like 10 or 20,000 combinations and then at the end it'll say there's a 83% chance your money will last you to age 90. Well there'd be almost a 0% chance that it would last to age 100 or 105 and that's kind of my point that when people and and all I told Michael is I said Michael if if if there was a 10% failure

03:16 rate you would not get on an airline if it had a 10% failure rate if if 10% of all their flights crashed you're not going to get on that airline you know and and I don't think somebody should put their retirement that has a 10% chance of totally running out of money by an age that they're almost certainly going to live past so I I just don't believe in Monte Carlo simulations why do that when you can have guaranteed income to at least cover your basic living expenses and then you can invest however you want to be on that yeah it's about the perfect combination and you're right man I tell you I would get on any plane if it had a 2% failure rate because that's a two out of two out of 100 crashing and so we don't want two out of 100 plans crashing either right and and and I also got a kick out of it he said uh Tom they're not failure rates they're adjustment rates he said like an

04:04 a pilot when he takes off he doesn't just set in one destination and it goes straight there he has to make adjustments as he flies well that's kind of funny because every one of these Monte Carlo simulations says failure rate I've never seen one that says adjustment rate maybe you have I've never seen one that says adjustment rate so if you're running out of money yeah you're going to have to adjust and lower your spending and live a crappy lifestyle uh I guess that's the adjustment that he wants I would rather make adjustments to the upside say oh I got too much money I can go spend out more now and I I just I just found the whole post to be very uh you know interesting and I'm not afraid to chime in don't you love when people redefine the definition that's not redefinable yeah I mean the Monte Carlos say failure every one of them says that your chance of failure and he says no that's

04:51 your chance of adjustment oh good grief adjusting to life with no money right that's what you should come back and tell him right that's right but I mean let's just be be careful and and no one should ever have all their eggs in one basket and that's what this Monte Carlo simulations that I've seen people do a lot of brokers do it it's when they're trying to get more of your money to put in there hey look you'll be fine as long as this this and that happen and then they forget to tell you like you pointed out that the simulation runs to age 90 and I don't know about you Tom but I want to live past the age 90 and I want my plans to live to age 121 and to retire beyond we call it well and we saw during COVID how fast they got these vaccines done well guess what they're going to come up with a cure for Alzheimer's they're going to come up with a cure for diabetes for cancer for lung disease heart disease they're going to cure these things over the next 10 or 15 years

05:36 and people are going to live longer whether they want to or not they are going to live longer and and also markets at all-time record highs we pumped in all this funny money and people who are thinking the next 10 years are going to have the same returns as the last 10 years are going to be very disappointed yeah there are many many very smart people out there say over the next 10 years the market could very well be zero or negative because we could have some really big downturns and the Monte Carlo simulations don't always plan for that type of thing so I just think it's it's a fool's errand to try to use a Monte Carlo simulation to retire when you don't have to just cover your basic living expense to a guaranteed lifetime income and then invest after that we call that the core so get your core plan established where your your lifetime income is taken care of then you can gamble

06:22 if you'd like in the Monte Carlo's type world you gamble with money you don't need to survive with right and you know I even posted something positive about bitcoin a couple months ago and somebody thought my facebook site got hacked they said oh heck no would never talk about bitcoin he's always about guarantees and I said no because I have most of my money guaranteed it allows me to take a little bit of risk if I want to and I all I ever said was put one percent I put one percent of my portfolio into bitcoin and turned out to be a great great call and I've even posted I think one percent is less risky than zero percent so you know I'm not against investments I'm just saying do it wisely and this Monte Carlo stuff I think is for the birds well it's a whole lot easier to take risk when you have your guarantees in place on the other side I mean that makes it so much easier and that's what we always talk about when we talk about the core and explore get your core plan established first not second

07:11 and then take risk with leftover money because then when the market starts bouncing around like it does you won't be enticed to sell at the low and buy at the high you buy when you want and you sell when you want you don't sell because you have to and that's the most important thing in the money world now let's talk about lifetime income though and because even to this day with so many success stories out there of people having lifetime income and guaranteed lifetime income with annuities people still have that bad connotation of annuities in their mind and sometimes when I ask people I say where are you getting this from well Susie Orman once said she didn't like annuities well then when she's been pressed she said she didn't like variable annuities and she was fine with fixed annuities so when they hear these things maybe Dave Ramsey said he doesn't like annuities well Dave Dave doesn't know all the annuities that are out there neither do I I mean there's so many different annuities out there but when you find ones that fit it is a perfect fit for some people yeah and to anybody who says they

07:59 don't like annuities I say put your money where your mouth is cancel your social security checks then because social security is a lifetime income annuity cancel your pension because a pension is a lifetime income annuity so it's ridiculous when people say they don't like annuities they love their social security they love their pension and the people who have annuities love their income from their annuities as well and so anybody who talks bad about annuities doesn't understand them you know I do I've read all these white papers hundreds of white papers from PhDs all over the world I can't find a single PhD who studied retirement that says annuities are bad they in fact Dr. Michael Finkes says there's no like zero debate among economists and PhDs about if you should have an annuity the debate is what type of annuity and when so there's no question you you should have an annuity in your

08:46 portfolio the real question is what type and when should you start and that's you know that's that's a better discussion than saying annuities are bad that's ridiculous well starting and that's like starting a game of basketball with one hand tied behind your back if you can't utilize annuities for what the purpose they are supposed to be used for and that's to take a lot of the worry out of planning for retirement folks we're talking to Tom Hegner he's the author of the book Don't Worry Retire Happy he's also been on PBS with a video special called Don't Worry Retire Happy Seven Steps to Retirement Security Tom we we talked about in that little battle you had on LinkedIn with Mike Mike Kitsis and he was talking about you're an annuity salesman and Tom you don't sell annuities I don't sell annuities I don't sell any financial products I own 11 annuities okay if they were dumb products if they were stupid products I would own zero of them I don't sell them but I but I own them

09:33 I believe in them and and I'm entering retirement now myself and I'm gonna I'm gonna live what I've talked about I'm gonna not worry and I'm gonna retire happy don't worry retire happy practice what you preach well it's just fun I mean really when you look at it the money world is fun when you're not tying all your net worth to one particular asset class and that's what I see way too many times when people say well I lost all my money in cyber currency or cryptocurrency they had all their money there I lost all my money in the stock market I lost all my money in CDs at the bank because I can't get a hold of them and I'm not getting any interest or I'm losing buying power Tom it's a it's about a combination of the financial products and strategies that are out there not all your eggs in one basket I mean how many times we have to say this it's exactly it's not stocks or annuities it's annuities and stocks and manage money and you know real estate I own real estate I own dividend

10:22 paying stocks I own a little bit of Bitcoin but I've made sure that my base my foundation is covered with guaranteed lifetime income and then I got life insurance to go to the kids so that my wife and I can spend all of our money see if people realize if they just would spend all their money they they have plenty of money for retirement but they're trying to save this money I guess to leave to kids don't do that buy a policy for pennies on the dollar to go to your kids and then spend your money we call that a spend and leave plan so once you get that take care of then like you got your kids and your whatever you wanted to have taken care of when you die then you can take care of yourself and live a life instead of waiting to die and that's what a lot of people are doing like you're saying they're they're more waiting to to not be here than enjoying while they are here yeah and you know I I play golf almost every day now and I won my club championship last year I'm the oldest club champion in course history and it was because I got to practice my chipping my putting

11:11 I worked on my game I worked on my driver I worked on everything and it all gelled in that one magical weekend and and for me that's a big lifetime event in my whole life and but I'm able to do it now because I've got this income coming in I don't have to worry if the market's down or what interest rates are doing or who's in the White House doesn't matter I'm gonna I'm gonna have a fun retirement well congratulations on your championship by the way yeah and let me ask you this one final question about your golf bag did you have one club in there did you have a selection of clubs I had a whole bunch of clubs I can 14 clubs in my bag and I used every one of them you know I don't use my driver out of the sand wedge or out of the sand trap and I don't use my sand wedge to tee off and and too many people are just think oh the stock portfolio will do everything no it won't it won't and annuities won't do everything and life insurance won't do everything but it's a combination and that's why I think it's so important coach that they work with people like you and financial professionals

11:59 because I don't think it's a do-it-yourself project I don't do it myself I have a financial advisor and and because I it when it comes time to buy a product how do I search 2,000 different products and find the best one for me I need a financial professional to help me so to put it in your terms a financial caddy can help you pick the right club for retirement how's that absolutely so folks his name is Tom Hegna the book is don't worry retire happy I've got about five of them here so if you call during the show today we'll draw five names out of all the callers and and we'll get some lucky winners to get this book but you can see Tom Hegna online you can buy his book right now he's got you have paychecks and playchecks retirement was it retirement security for life right retirement solutions for life yeah that's my first one yeah really good book as well and so these are all books that these are all information sources that you can use to make sure to put together that perfect

12:47 retirement for yourself Tom we thank you again for your attendance and we look forward to talking to you again soon hey thanks coach it's always fun my brother

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Transcript

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00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Business. I've got a friend I've had her she's been a friend for like 10 years now or so and she maybe you've seen her Orange County Housewives it's uh well yeah about 10 years right her name is Vicki Gunvalson and if you've ever watched Orange County Housewives you've seen her on there but you won't see her anymore she has retired from that show and she's written a book and the book's title is Life After Work Gaining Financial Peace of Mind in Retirement.

00:47 Vicki you are too young to retire but I'm happy for you. Welcome in by the way. I'm not I'm not retired yet you can't kick me out of this uh crazy life that we're in with uh financial services but I did this because there are so many clients of mine that are trying to figure out what is their life going to be like after they stop working and I just felt it was a good time to get this launched thanks for having me on. Well you have a quote at the beginning of your book and it's a fascinating one because this this individual I thought about when we were building our studios about nine years ago I wanted to have Mr. Rogers neighborhood and we still are going to do that by the way but Fred Rogers and he wrote or you you quoted him often when you think you're at the end of something you're at the beginning of something else and that makes a lot of sense for this book. Yep as well as COVID right?

01:36 Oh yeah. I still love Mr. Rogers. We had to reinvent our businesses a little bit but I um first of all Pete I wanted to thank you for having me on I know you've got the successful radio show and for the listeners I just appreciate you taking the time to listen to us um but really um just excited about the new book and thought we'd talk about it. Well let's talk about I love to I'm the kind of guy and Thomas and everybody around here laughs at me because when I write books I usually come up with a title first and a book cover and then I write the book so. Oh that's good. How do you come up with the title Life After Work? You know what I was had all these crazy names in front of that I was going to put my name as part of it uh but I really just said what do my clients come to me for and when they sit down with me they say what is my life going to be like when I stop working and it just kind of fit it was in

02:27 a authentic moment I was writing down I was journaling and I just thought you know what life after work and that's what this book is about is what our life will be like after we stop working and for many of those of you that are having to retire or get forced out of work right now because of you know COVID um that's what they're facing is is what is life going to be like after work? Well yeah because life never well we don't want life to stop we want to enjoy life and actually we're working to make sure that in the future we can have fun where we don't have to worry about going to work. I love to have fun you know that yeah well look I have fun at work by the way but I mean a lot of people don't. I know now we're fortunate enough that we can meet some incredible people incredible clients and you and I did meet about 10 years or more um and we just had a great

03:15 relationship I've done a lot of videos at your incredible office there so you got an incredible staff um and so I just I just feel like we're really fortunate to be connected. Yeah well you're right and and what I like about the book it's it's not just for females but it's going to help a lot of females because a lot of females are looking for information and many times when I talk to couples it looks like the male has been the one who's been in charge of the finances but females are starting to wake up and Thomas my producer Thomas tell Vicki what the shirt that I'm wearing says right now. Yes you're wearing the women and money shirt. Yeah so because women it's important that women run about money as well. Absolutely absolutely. So you wrote about in chapter 10 of the book Female Forward Finances. What is that about? The female forward finances we have got to know as

04:01 females both of you are males I'm a female we've got to know what's going on in our finances or we're going to get caught off guard. There's an 85 to 90 percent chance we're going to die single. If you're married now that's the statistics that you're going to be alone sometime in your life. You came in this world alone you're possibly going to leave alone. Those of you that aren't married or divorced or widowed you've got to understand that this is a complicated time and maybe you've been safe and you've been saving and you've been working and now all of a sudden you're not in a good place right now because all of a sudden you've lost you've lost your job and that's what I think for women it's super important to know what we're doing. Very important and it's not as hard as I you know a lot of people just like me trying to learn a foreign language let's say French for instance I start trying to learn it or

04:48 well let's look at Chinese where they have their own symbols and I say I'm not going to learn that I'll just read what the fortune cookie says. But we lock up and we don't do things but this this book is is simple because it takes you step by step on how to learn the financial world and I love that. Yep and you know school didn't teach us sometimes it's the hard knocks of life that teaches us but you don't want to be taught by mistakes and I think that's where you and I both come from when we're doing our business is we want to avoid the pitfalls that could happen if people get a little bit too aggressive on their portfolios and then we see what happened earlier in 2020, 2008, 2000, 2002. I mean we can see that if you're too heavily you know invested in the market you could have some downturn which we

05:38 don't want to have to happen right? Yeah a long time ago someone said that smart people learn from their mistakes but geniuses well geniuses learn from other people's mistakes and that's that's the that's the the meat of the whole argument right there and folks by the way we are talking to Vicki Gunvalson and she has written a book called Life After Work Gaining Financial Peace of Mind in Retirement available everywhere books are sold. Vicki this is a tremendous book and I want to talk about a chapter here where you talk about federal fees friend or foe. Let's talk about the federal fees. Yes so those of you that may or may not know but in in 2026 we are looking at a tax increase and those people that have a 401k or haven't converted some or all of it over to a Roth we are going to be imposed much higher taxes so those federal taxes are not going to go away. Now you may be fortunate

06:29 enough to be in a non-state tax environment those of you in Florida I don't know North Carolina if you folks have state tax I believe you do. State tax yeah. Yeah so here in California where I live I mean we're taxed the minute we wake up it just doesn't go away so you know federal taxes federal fees all of those a lot of my clients are not prepared for they don't understand that that they've been kicking the can down the road for 20-30 years in their 401k that account has grown and now they expect to receive that money you know is not a high tax and it's going to be taxed it's going to get larger and larger and larger the longer the time goes on so we love doing Roth conversions we love looking alternatives through life insurance I mean you know what you and I have been trained I think we're the

07:16 best in the industry and so from that we just try to help our clients getting out of that tax environment got to get up got to get them in a in a better tax place. When you look at California's state income taxes that's higher than many people pay federal taxes in some states and that's crazy and I also have heard well there's been some rumors well yes rumors Vicki where they're going to get a even if you leave California they want to tax you for the next 10 years they've been proposing those bills that's coming so I know that's a lovely thing Pete isn't it so that's why I just bought a place in North Carolina I've got a place in Puerto Vallarta if that happens I'm out of here I'm literally out of here and so yeah it's really really disheartening our property taxes are lower here than a lot of states but we still have that huge huge you know state tax federal is the same no matter where you

08:06 go but these 401ks and IRAs you know that you're going to be taxed heavily. If they pass that'll be now I'll look at it as call I'll call it the Hotel California tax you can check in anytime you want but taxes will never leave check out anytime you want tax gonna come yeah leave your light on I might be knocking on your door someday so leave your light on as they say well no but you know these unpredictable taxes we we just have no control what you do have control is how you invest your money how you prepare for retirement and and the great thing about both of our firms in your firm especially as you create an opportunity for these people to see another side other than just you know put it in the market and walk away and hope it works. Well I'm a retirement income certified professional that's a designation by the American College very intense three courses about income and

08:54 retirement you write about income is the outcome in your book and that is vitally important explain that. Yep so the withdrawal rate a lot of advisors aren't talking about that withdrawal rate so let's say for instance you've got a hundred thousand dollars in your IRA account and your advisor you go to your advisor and say what can I withdraw from that account and never have that money be gone like it'll last for a lifetime so let's assume you live to age a hundred and he may or she may come back to you with a four percent withdrawal rate which is what was happening back in the day right Pete so we heard this four percent so that means you can withdraw four thousand dollars out of your car out of your account and you have a very probable opportunity for success right so when all this started coming about the

09:41 sequence rate of returns and the markets being so unstable we now are down to about a two and a half percent withdrawal rate so that same hundred thousand dollars safely saying you can take out twenty five hundred dollars a year and you have a probability of success now twenty five hundred dollars and a hundred thousand dollars may or may not be enough for you to live off of so we like looking at that withdrawal rate and we have vehicles that will give you a five or six percent withdrawal rate guaranteed for the rest of your life and even if you run out of money you will still get a paycheck so that's incredible and so we do that through insurance vehicles and we love those type of accounts it's like a pension you create a pension with your own account well it's important because you go from paychecks that you get when you're working and

10:30 tom hegda the famous author talks about going from paychecks to playchecks and playchecks is when your money that you put aside starts generating revenue so you can play in retirement you have to have those playchecks every single month for the rest of your life they can never go away and you are right some of the contracts out there are written a contract 100 guaranteed to give you that income for life even if your balance goes to zero how important is that well i love that i mean it's like social security one of the things when my mother was alive she always felt social security was going to be gone and i said mother you're 83 years old it's going to be okay but when i really gave her that reassurance that god forbid if social security stops and you lose your twenty five hundred dollars a month um we as five children will help you but now we've got another opportunity other than just social security to give

11:18 you that guaranteed paycheck every single month dropped into your checking account and you never have to worry about it going away it partners well with social security uh so those of you that are getting pensions don't you love your pension you pretty much can guess every single month that's going to drop in your account and pete you and i love to create pensions with people's money so i think that's the specialty that we have and a lot of advisors don't really understand it so we do vicky you know what i call those monthly or yearly checks that arrive to your house no matter what happens in the economy what's that financial fill-ups because every single year you're getting refilled and folks that's the beauty of having an author like vicky her book in your collection and folks again the name of the book was life after work gaining financial peace of mind in retirement again her name was vicky

12:06 gunvalson and vicky i write about similar things in my book the seven baby steps and folks uh for listening to this interview for the next 20 people call you're going to get that seven baby steps book at no cost or obligation if you call right now thomas give them that number out all right folks that number 800-661-7383 800-661-7383 or you can just text the word coach to 21000 coach to 21000 and special thanks to vicky and folks we'll be right back after this

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Transcript

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00:00 Well, folks, this is the time of the show where I talk to knowledgeable people across the world as far as the financial world is concerned. And today is no exception at all. We have a return visitor, one of my favorite guests. I originally talked to him years ago when he's a visiting professor in Japan, of all places. And through the beauty of technology, we were able to get him on the show. But his name is Dr. Wade Pfau. That's P-F-A-U. And he's a multi-award winning retirement authority. He's a professor of retirement income and co-director of the New York Life Center for Retirement Income at the American College of Financial Services. And, gosh, he's a really good guy. He's an author of a great book, folks. And if you haven't read it yet, Safety First, Retirement Planning. Doc, when this first came out last year or earlier this year, we had you on and we were talking about the importance of safety for retirement planning.

00:47 Has the COVID virus changed any of this? Well, it's good to talk to you again, Coach. Yes, sir. Right. I mean, in the past, sometimes that seems more theoretical because when the stock market's going up, people don't always appreciate the value of safety. And we've got the reminder now that there's a reason why you might want to approach your basic expenses in retirement differently. Like a wake-up call a little bit, isn't it? What's a trap that people have been – well, before we had this wake-up call for some, and some people still haven't woken up, but what is one of the main – you know, anytime there's a bad thing in life, not just financial, but we need to learn from our mistakes or learn from what happened, learn from bad things. What was the typical trap that people were falling into before the coronavirus as far as retirement planning? Well, just when it came to the basic way to approach funding a spending goal, there's a popular idea.

01:36 Just use a diversified investment portfolio. And usually it calls for pretty aggressive asset allocations of, say, 50% to 75% stocks. And then you can comfortably rely on the stock market to provide outperformance. And that's the way to approach building a retirement income strategy. That's a very popular approach in practice that contrasts with the safety-first approach. Now, when we hear safety, a lot of people are listening to safety. I don't want to go down to the bank and put my money there and maybe get 1% and fall behind because inflation is like on average about 3%. Where are some of the alternatives that people can get that retirement income? They don't have to worry about the market taking away right when they need it the most. Right. And that's a great point because it's very important. There's really three basic ways you can fund retirement. And when people first hear the word safety, they might be thinking of like bonds or even cash or savings accounts or CDs and so forth.

02:25 And that's not necessarily safe. That's a starting point. And there's two ways to be able to spend more than bonds. One is that idea of relying on the stock market. There's no protection or guarantee that will happen. But the belief is stocks will outperform bonds and that will let you spend more. But then the safety first approach is more about using the power of risk pooling and insurance. That you can have an insurance company that's basically investing in a bond-like approach, but it allows retirees to spend more because retirees don't have to worry about the possibility of stretching their money out to 95 or 100 or however old they may be worried they may live to. Through the power of risk pooling, you have this group of individuals and the insurance company can pay them like they're going to live to their average life expectancy.

03:11 Because those who don't live as long help to support those who do live longer. And it raises a standard of living for everyone. So it's a way to just to make sure that when you get to retirement, there's no worries about if the money is going to be there or not. I mean, basically, you're taking the risk of retirement planning and pulling it onto the insurance companies many times. Yeah, yeah, that's the basic idea. It's instead of taking on all that risk on your own and being worried, well, what if I do live a very long time? And what if I do get bad market returns? And therefore, I just feel like I have to spend less to make sure I don't run out of money. You transfer that risk to the insurance company. Yeah, I went over this with someone a few weeks ago and they said, you know what it sounds like, Coach? It sounds like the traditional pension that we used to have. Well, that's what an annuity is. It's a pension. With a traditional company pension, the employer pooled that risk.

03:57 And workers got a pension based on some formula linked to their work history, like how many years you worked and your salary and so forth. However, that works. But that's how your pension was paid. It wasn't based on the idea of the 401k where you're now investing in an account on your own. And whatever you're going to be able to spend, it depends on the performance of that account. But pensions can pull that risk across all the workers. And it makes a lot of sense. And there are two different reasons why people don't want to get annuities. One person said, I'm too young for an annuity. And then another person says, it's too late for an annuity. What would you tell people? I know we have some youngsters listening and it's always great to get started and annuities may be a good fit. But the most important part, I want to talk to folks that are going to retire in the next year or two. Is it too late for them to buy an annuity now?

04:43 No, it's certainly not too late. I sometimes the argument is made is that as you get older, you're kind of becoming more exposed to longevity risk. And so the case for using an annuity actually strengthens as you get older. And so I'm usually arguing, no, it's OK to go ahead and use them closer to your retirement date rather than waiting until you're 75 or 80 or 85. But certainly it's not really going to be the case that it's too late to add some sort of lifetime income protection to the plan. Right. Now, in terms of it being too early, I think five or 10 years before retirement's a nice sweet spot where you start to think about annuities. You could do it even sooner. But at some point you might just want to ride out the market until you get a little bit closer to, again, five or 10 years before retirement.

05:28 If you can get a lifetime, what I've seen, I've seen people get lifetime income annuities and they were able to retire sooner. So then the argument is, what is too soon to retire? Well, yeah. Hey, folks, we're talking to Dr. Wade Pfau, and he is a Ph.D.'s professor of retirement income in the Financial and Retirement Planning Program and co-director of New York Life's Center for Retirement Income and the Retirement Income Certified Professional Program Director at the American College of Financial Services. And it's always a great time having you on. And you also wrote the book just recently, Safety First Retirement Planning. And in that book, you talked about the 4% rule. What is that for our listeners? And does that still apply? Well, that's the basic investment approach. That's where if you're going to fund retirement with investments, it's going to be some variation on the 4% rule.

06:15 And it was Bill Bengen in 1994 published an article where he just looked at U.S. historical data and found that if you plan for a 30-year retirement and you use an asset allocation of 50% to 75% stocks, you could have taken out 4% of your retirement data count. So if you had a million dollars, say, you could take out $40,000 and then increase that spending with inflation. And in historical data, you wouldn't have to worry about ever running out of money for at least 30 years. Now, whether that applies today is another matter. And there's a number of issues to think about. The first is just interest rates are lower now than they ever were in the historical data. And that has a big impact. Lower interest rates means lower bond returns and lower sustainable spending.

07:01 And it could have impacts on stock returns as well. There's all these just other issues, too, like the 4% rule. It assumes 30 years, but people are living longer now. It doesn't consider taxes. It doesn't consider any sort of investment fees. It's assuming that investors really stick to this aggressive asset allocation throughout retirement and so forth. And so I really I do have concerns that 4% isn't as safe as the historical data just suggests when you do that simple type of calculation. People that are listening that are 5 or 10 years away from retirement, what's a proper retirement parachute they can use to take the market, some of the market risk off the table and make sure they have that successful retirement they've worked so hard for? Well, it starts about thinking about potential expenses in retirement. And for expenses that you really want to keep protected and not have exposed to stock market volatility, you look at what you already have.

07:52 So like Social Security and delaying Social Security can be part of that. If you do have a traditional company pension and so forth. And then if there's still a gap between the reliable income you have and what you really would like to have to feel comfortable in retirement, that's where an annuity can fill that gap. And also potentially fill that gap with less assets than if you're applying that safe withdrawal rate concept, like something like the 4% rule in terms of, well, what would I feel comfortable spending from an investment portfolio? The annuity could let you fill that gap with less assets than you might have to earmark with investments. So what type of annuities would you picture someone using to make sure to fill that gap and take some of the worry out of living in retirement? Well, the starting point is always the simple income annuity. And that requires annuitizing the contract.

08:38 So you don't get the upside exposure and you don't get any liquidity for the contract. Right. But it's a simple starting point. You could also then look at different types of deferred annuities that, and by deferred, I mean, you're not annuitizing the contract. You might start your income right away still. You know what? It's a little bit of a subtle distinction, but a living benefit. Yeah. Living benefit. Yeah. Very important because that means your whole life. And, you know, we used to call annuitizing annuicide because you're giving up all control of your money to the insurance company. I try to stay away. If we can make a plan without annuitizing, it's a good plan in my opinion. But sometimes annuitizing does make sense, but many times it doesn't. Yeah. These days you don't have to annuitize the contract. So you can have that deferred annuity with a guaranteed living withdrawal benefit that supports that lifetime income and still gives you access to the underlying account.

09:28 If we haven't confused the listeners thoroughly yet, we'll try harder next time. It is funny these days. It's a lot simpler than people realize, but if you're dealing with, and unfortunately you've seen it too in your life and I have too, there's a lot of people that have one product in mind no matter what appointment they're seeing and what client they're seeing or what person they're seeing, and everyone gets the same thing. That's not the right fit these days, is it? No. You really have to consider people have different styles and approaches and preferences. And for some people, investments can work, but it's not for everyone. And there's an important role for annuities as well. And a lot of people are going to feel more comfortable having that protection in place. Well, folks, I mean, it's that time of our life where we need to approach retirement planning seriously. And if you want to do some home study, you can always get the book Safety First in Retirement Planning.

10:14 That's from Dr. Wade Pfau. It's P-F-A-U. Doc, it's always a pleasure and hope to have you on again soon. Oh, thanks. Yeah. Likewise. It's been a pleasure. Take care. And folks, we'll be right back after this.

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00:00 Folks, this is the time of the show where we go out around the world and find someone who I really watch or listen to and I think makes a big difference in the financial world, and today is no exception by far. This is one of my favorite, if not my all-time favorite guests. He's a return visitor on the show. I don't know, we've had him on six, seven, eight times in the past. His name is Mr. Tom Hegna, and he's author of two books, Paychecks and Playchecks. But my favorite one is Don't Worry, Retire Happy, Seven Steps to Retirement Security. Tom, welcome in. Hey, thanks, Coach. Great to be with you again. Yeah, it's been a turmoil and turbulence and all these other adjectives and adverbs we could use to describe what's happening in this year, but if we could put it in a sentence, what's your feelings on what's happened here in 2020? Well, I mean, everybody's using the word

00:47 unprecedented, and I think that is true. We haven't ever seen the economy shut down. The stock market doesn't seem to make sense to a lot of people because the stock market is actually going up, but the economy is still in tough shape. And so it's just strange times. These are not normal times. Yeah. I've heard this phrase, and I hate some of these new phrases that are marketed, the new normal. What does that mean? I don't like it. Well, we'll see. I mean, I think people are going to maybe do less in-person meetings. I think this virtual world is going to stay for quite a while. But I think eventually we'll get back to normal. But what people don't understand is this is likely not the last pandemic. I mean, now that we've had this, any little virus, the media is going to go crazy over. And so I tell people, you've got to be

01:39 cautious, especially if you're near or in retirement. Now is not the time, I don't believe, to be naked in the stock market. You've got to put some protection on your portfolios. I've had so many people, and I've read a lot of articles about how because there's no sporting events anymore and no casino's really open, the gamblers who need that fix every day, that emotional fix are throwing their money into the market and trying to get that gambling mentality into the stock market, which isn't the right recipe for folks that are 10 years away from retirement or in retirement. Right. And I saw that same article. I mean, I think even Barron's talked about it and that there's a lot more day trading going on by people who used to gamble in sports or casinos. But I think a lot of that's just noise. I just think you have to position your portfolio

02:25 that no matter what happens, you're going to be OK. I mean, the reason this market's up is because the Fed is pouring trillions of dollars in there. You know, they say don't fight the Fed. But but, you know, as you know, Pete, there's going to be consequences at some point, like taxes are going to have to go up, you know, and I've been shifting a lot of my own personal money into cash value life insurance and Roth IRAs because I can see these are the lowest tax rate I'm ever going to see for the rest of my life. So I'll pay my taxes now and then I'll get tax free income in retirement. Well, the best time to basically to transfer your money from a regular IRA or regular 401k to a Roth is when your value is down. Correct. Right. I say you get a double discount because the market's down. So so so you transfer less and pay tax on less than you would have, you know, before.

03:14 And then these are the lowest tax rates we're likely to see for the rest of our lives. So it's kind of like a double discount. And if you don't take advantage of it now, you know, I don't know when somebody would take advantage of it. Yeah, it makes a lot of sense. Now, when we talk about retirement and you wrote about this in your book again, and it's a great book, folks, and it's available everywhere books are sold. Don't worry, retire happy. And you had seven steps to basically financial freedom in retirement. And step number five, and you wrote this book before the virus, obviously, this is this was in 2016, the copyright. But you say secure more guaranteed lifetime income. Now, people hear that phrase. What should they think? Well, you know, coach, there's only three sources of guaranteed lifetime income, social security, which is a lifetime income annuity. It's a guaranteed paycheck for life, a pension,

04:00 which is a lifetime income annuity. It's a guaranteed paycheck for life. But if people don't have enough social security and pension, they're supposed to go out and find an insurance company and buy some form of lifetime income annuity from an insurance company. And you need to have enough guaranteed income to at least cover your basic living expenses in retirement. So you got to figure out how much money do I need, you know, every month to live my normal retirement life. And that should be covered with guaranteed income. That's the paycheck. And then for the play check. Yeah, you can invest in the market, you can invest in real estate, you can invest in all these things. But coach, all the people who said, I don't want annuities, I got rental properties. Yeah, how's that working out? You know, renters don't have to pay rent and landlords can't evict them. Or they said, Oh, I don't need annuity. I'm going to do ladder bonds. Yeah, how's that working when the 10 year treasury is at 70 basis points? That's not going to work. Then they say to me,

04:47 Oh, dividend paying stocks. That's what I do. Well, have you seen all the dividends have been cut, slashed, eliminated? It's a record. And more to come, you know, or they say, I believe in municipal bonds. I'm buying tax free bonds instead of annuities. Yeah. If you read Barron's just two weeks ago, they said about how many towns and cities are defaulting on their municipal bonds. So, you know, those products just cannot, they cannot replace guaranteed lifetime income from an annuity. All right. So then let's talk about, and by the way, folks, we're talking to Mr. Tom Hegna. He's a tremendous author. He's a great guest, a great friend of the show. The book that we're talking about right now is Don't Worry, Retire Happy. And he also has a great book, Paychecks and Playchecks, Retirement Income for Life. Tom, it's just a fact where when that annuity word comes up, we've had several people over the years come in and say, I want to have lifetime income and I want

05:35 to never worry about it. And I want checks coming forever, but you cannot use an annuity. And I said to one guy, it's almost like you're telling us that we're a travel agent here in New York City. And you're telling us you want to go to France, but we can't use a plane or a boat. Yeah. Yeah. I mean, look, people, there's so many misunderstandings about annuities. They think the fees are too high. Most annuities are not even feed products. They're spread products. It's only really variable annuities that have fees and some income riders on some of these other products have fees, but base indexed annuities, single premium, median annuities, deferred income annuities. None of those are fee products. So they don't know, they don't understand that. And they don't understand that social security is a lifetime income annuity. So when people say they don't like annuities, I say, really? So you're telling me you're going to call up the social security administration. They stopped those checks. No more nasty social security checks in this house.

06:21 We don't like annuities. Are you seriously going to do that? You know, they worked for that company for 42 years. Are they really going to call the HR department and say, stop those pension checks. I don't want to find any of those nasty things in my mailbox. We don't like annuities in this house. And, you know, they don't realize that those are lifetime income annuities and people love their social security. They love their pensions. And by the way, they love their income annuities when they buy them. Yeah. Very, very important. I own 11 of them, Pete. I own 11 and I don't sell them and I don't care if anybody buys them, but the math and science is clear. If you try to retire without an annuity in that portfolio, you will live a suboptimal retirement. It will be less than what it otherwise could or what it should be. And that is a mathematical, scientific and economic fact. Well, it should be the core of your portfolio, your retirement portfolio and the core and explore philosophy. Like core is the money you can't lose and it has to be there for the rest

07:09 of your life. And then once you have that established, hey, if you want to take some risk and we are humans, humans, and we came out of the cave one day and that was a risk. And now we didn't go back in the cave. So the cave is the core. That's where you can't lose. But if you want to explore, you got to know you could take some risk if some of those cavemen left the cave, never came back because they weren't alive anymore. So we have to be very careful. Matter of fact, we had Dr. Wade Pfau on last week, a professor of retirement income and the PhD program there of the New York Life Center for Retirement Income. And he's also the co-director of the RICP, Retirement Income Certified Professional. He said everyone needs annuities for that lifetime income. Yeah. And I mean, I'm a big fan of Dr. Pfau. I quote him a lot. In fact, you know, what his research, here'd be a great white paper that your audience could look up. It's called

07:56 It's More Than Money. It's More Than Money. And it was written by Dr. Michael Finca and Dr. Wade Pfau. And what they say is if you at least cover your basic living expenses with guaranteed income, then you can actually be more aggressive with your other money. You can actually take more risk because you're not worried about paying your bills if the market goes down. And one other thing, there was a great book by another friend of mine, PhD, Moshe Malevsky. He wrote a book, Are You a Stock or a Bond? And I think that's perfect for this environment. And so I would just ask your listeners, are you a stock or a bond? And if your pay's coming in and everything's fine and you're financially fine, you're more like a bond. Well, then you can invest a little more risky. But if you're one of those people out there, your paycheck has stopped, you're worried about paying the rent or the bills, you're more like a stock and you need to invest

08:42 more conservatively in your investment portfolio. Because if the market goes down, you don't have your portfolio down and your income gone. And I just think it's a great talking point, at least with people today, that they need some guarantees. Guarantees only matter in bad times like this. But this isn't going to be the last bad time. Well, that's the problem. We can't predict when the next bad time is going to come. Call it a black swan. And remember 2001, remember 2007, 8, 9. And here we are with the coronavirus and who knows what's going to happen next, right? We don't know. And so the secret is having a portfolio set up where it doesn't matter what happens, you're still going to be fine. And you know, the Japanese stock market has been down for over 30 years. The European stock market has been down for over 20 years. Emerging markets have been down for over 10 years. I'm just saying Americans have no idea how far the

09:30 market can fall and how long it can stay down. You know, coach, I spent 22 years U.S. Army military intelligence. I could give you a hundred reasons why the stock market could go down and stay down for 20 years. I mean, you know, just think about a terrorist attack. No, I mean, I'm talking these suitcase nuke bombs or some something. There could be another pandemic. There's all kinds of black swans out there. And I don't want that to ruin my retirement because coach, remember, I'm going to retire next year, too. So I'm not just talking the talk. I'm walking the walk. I hope you'll keep visiting with us every now and then and tell us about retirement. By the way, thanks for your service. And you'll be thrilled to know that Dr. Fowl knows you. And he was very excited when he when he heard that you've been on the show a lot. Yeah, well, Dr. Fowl and I are good friends. And, you know, I just totally respect him and Dr. Finka and Dr. Moschmolevski. I mean, these are these are some of the brilliant minds behind retirement and how to retire the optimal way,

10:19 how to get the most for the least in retirement. That's what I write about how to get the most for the least because you only get one shot at retirement. Yep. So we have a listener right now. Let's just pretend someone's listening. They're 60 years old. There are a couple and they've got $500,000 between them and they want to retire at 65. Like everyone has that imaginary number in their head. What should they do with some of their money right now? Well, first of all, they should come sit down with you and then you can ask them all the questions you need to like how much how much income do they want? How much risk do they want to take? But but even even if they just moved like the average person out there, coach, is invested 60 percent stock, 40 percent bonds. And I wrote an article saying the 40 percent bond side is dead and that that younger people should replace their bonds with with cash value life insurance to give them a bond like return, but don't have the interest rate risk.

11:05 But older people, let's say 60 and above, should replace their bonds with with guaranteed lifetime income from an insurance company. It will immediately lower the risk and increase the returns of their portfolio because inside of a portfolio, the way that that income annuity functions, it functions like a triple A rated bond with a triple C rated yield with zero standard deviation. So we'll immediately lower the risk and increase returns of a portfolio if you just move your bonds out. You don't even have to touch your stocks. Just move your bonds into guaranteed lifetime income. You know what I love, Tom? This is a final point here before we go. And I really appreciate your time today. But I love it when you tell someone about the annuity story about that lifetime income and they're 100 percent in risky investments, real estate and stock. And instead of do what we recommend, they come back with 50 reasons why they don't think annuities are safe, yet they're in unsafe investments to begin with. It always kills me.

11:54 It's hilarious almost. Well, I say this, SWSWSWN, some will, some won't, so what next? And sometimes we've got to hit the next button and move on. I hate to see people destroy their retirement chances by not taking the right steps right now. And so the right step for us is having you on the show every now and then. I really appreciate your time. Thanks, Coach. Great being with you. Before I let Tom go, let me tell you one more time, the name of the book, Don't Worry, Retire Happy, Seven Steps to Retirement Security, available everywhere books are sold. Thanks, Tom. Thanks, Coach.

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00:00 Well, folks, this week we have a very special guest he's been on. He's a friend of the show. He's been on probably about eight or nine times over the last ten years. His name is Dr. Dan Geller. He's an author. He's an all-around great guy. He's a professor. Doc, welcome in. Thank you, Coach. It's a pleasure to be on your great show again. Now, let's talk, you know, times have changed since we talked last, haven't they? Boy, they sure have. They sure have. But there is light at the end of the tunnel. And we are actually pretty much entering now the stage of recovery. Yes, and that's good. But a lot of times, and we've talked before, how the worst enemy of an investor many times is the investor themselves. That is true. That is always true.

00:46 So rather than cry about spilled milk, because if you watch TV or listen to the radio, everyone's complaining about what happened and all that, let's look forward, let's try to be positive, and let's give our listeners some positive advice on what they can do financially, emotionally, with their financially, to make sure they're on the right direction as we go forward. Sure. So as far as the overall picture, we are pretty much entering now. These are kind of the early stages of the recovery. It looks like we are going to have some type of tilted, I call it tilted V-shape recession, meaning we went down very fast. The recovery is going to be much longer and much slower because we are dependent on a vaccine to go back to kind of some type of normalization.

01:44 So we are looking at, let's say, 12 to 18 months until we are totally out of the woods, pending a vaccine. That's kind of the caveat. But things are looking better and businesses are opening up with restrictions. Nevertheless, it's getting better than what we had, you know, just at the bottom of this economy. We lost 25 percent of our workforce. Nearly 40 million people were out of jobs. And we lost about also a quarter, 25 percent of our retail sales.

02:30 So that's substantial. This is kind of the bottom. And we'll pretty much go upwards from here. As far as financial, on the personal finance, you know, this is a lesson to all of us, I think, that you never know. Meaning it's always prudent and wise to have reserves. Because, you know, this came kind of as a surprise and it affected pretty much all of us. And as far as, you know, money management and investments, to be more on the cautious side.

03:22 Yes, it looks like we are on the path for recovery. But things can happen along the way. And it's always good to keep this in mind. You know, your book and how we met a long time ago, Money Anxiety, it means a lot today. Your book has been called one of the best books on behavioral finance ever written. I mean, you have to be proud of that. I am. I am. And, you know, I must say, as bad as this recession is, it actually validated and vindicated the central point, the theory of money anxiety, that basically says that when money anxiety increases, and, you know, by the way, the money anxiety index jumped tremendously.

04:14 It's now at 81.5. And before the coronavirus kind of hit us, it was in the low 40s. So it doubled in a matter of a couple months. And so the central point in the theory of money anxiety is that when money anxiety goes up, consumption goes down, and people shift the money, the deposits in the bank to liquid account. And both happen right on the money. Well, people get scared, and then they don't, you know, they think the world's going to end tomorrow kind of thing. And we need to talk about, and by the way, folks, we're talking to Dr. Dan Geller.

04:59 He's author of the book Money Anxiety. He's joining us from San Francisco today. Doc, is there an inoculation or vaccine for risk or for bad behavior in the market? I wish there was. The only, you know, the only way to deal with it is to listen to those who have been around the block a few times. And, you know, just learn from the experience of those who know a little more about how things work. You know, we do learn from experience. I just turned 50-40 the other day, and more knowledge builds up. And in my lifetime, there have been a number of crashes and a number of recoveries,

05:47 but a number of people never recovered because they've done the wrong thing, or they were in the wrong place to begin with. That is true. That is absolutely true. But the good news is, again, Coach, things are getting better, and that's the most important message that, you know, I can deliver today is that this has been a very, this has been a terrible experience for most people financially and otherwise. But things are looking better economy-wise, and we'll get out of it. You know, this is the time where a lot of people make a lot of money, but a lot of people lose. And I had somebody ask me the other day, I try not to give individual stock advice, Doc, because you never know.

06:35 And they said, Coach, what do you feel about the airline stocks? And I said, they're going to go up, they're going to go down. Yes. You know, because you never know, right? I mean, so we shouldn't do, that's not a true plan. That's gambling. That's like going to Vegas. People need a real plan these days, don't they? They sure do. And, you know, I'll tell you kind of my philosophy based on my research. And in an ideal world, if everyone had time, probably the safest bet is just to buy an index of the whole market and stay with it for, you know, 40, 50 years. But that's kind of the ideal. Not everyone has 40, 50 years.

07:24 So the other alternative that people are, as you said, kind of experimenting with, they buy individual stocks, hoping that, you know, next week they'll hit the jackpot. Yep. Rarely happens. Very rarely happens. And it's almost like a casino. Yes, you might hit the jackpot once, but you'll stay there and lose it back again to the house. You know, it's funny you said that, Doc, because with the casinos being closed, I've seen article after article about trying to explain the volume increase in the market. Because casinos are closed and there's no sports to bet on either. The gamblers, the people that have to have that fix every day, have taken that gambling money and gone into the market with it.

08:10 Yes. Oh, I can see that. Absolutely. Absolutely. And they, you know, they bought the same, you know, the same fallacy with them from the casino. Yep. You know, I always tell people who gamble, and I'm not talking about the amateur gambler who goes to Vegas and puts $50. I'm talking about people who are habitually gambler. So, how do you think all these fancy hotels were built in Vegas? Where do you think the money came from? Yeah. For everybody that lost, right? That's right. Yeah. That's right. So, the house always wins. The same thing happens with the stock market if you go on individual stocks.

08:55 If you know what you're doing and you stay the course or, you know, you're somewhere in the middle, you're diversified and longer term, not in and out. Every time you hear something on the news, then you're much, your odds are much better. Well, we've got about a minute here. I want to look forward in your crystal ball of emotional, financial, behavioral, economics. What do you think the most surprising thing will be in the next five years? I think that we are going to see a shift in investment philosophy and practice. So, right now we have two extremes.

09:44 So, we have one extreme where people have the 40, 50 years and, you know, in their 20s they put money in an index, let's say an index of the S&P 500, and they stay with it for 40, 50 years. Yes, they'll come out ahead nicely. The problem, as I said, not everybody has the time. On the other extreme are the people who are just in and out a few times a day, and it never works. And somewhere in the middle we found a way that if one knows how to use behavioral economics as a predictor, like we do, that's our expertise,

10:31 there is a way to find ways to invest and stay with the wave of the behavioral economics. And this looks like kind of an in-between solution that is proving to be beneficial. Well, it's fascinating, and I absolutely love every time we talk to you. I get enlightened with the behavioral economics aspect. Folks, his name is Dr. Dan Geller. The book available on Amazon. I'd recommend you run out and get a copy of it, folks, because we're going to have up and down markets forever, and doing the right things is the most important aspect of all financial planning. Money Anxiety is the book on Amazon.

11:18 Dr. Dan Geller. Doc, thanks for your time today. Coach, always a pleasure, and stay well. You too. And, folks, we'll be right back after this. Thank you.

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00:00 Each and every week I talk to very interesting people and the most important part is that I shouldn't be the only one hearing it. I really feel that if these people make sense to me that everyone out there needs to hear it. So stay tuned folks and I hope you enjoy this newest weekly segment on Coach Listens. I'm Coach Pete and I'm joined with Mr. Mike Wall. Now Mike Wall works with higher net worth families, he's been doing that for about 20 years. And Mike tell us a little bit about your experience working with high net worth folks. Well you know Coach I tell you it's definitely something you and I connected years back in the industry and as we've continued to grow kind of together in different ways as well. You know the needs of those with wealth are different, they just are. You know it's like at the end of the day if you have a Ferrari and you need to get the oil changed or you need to get it serviced you're probably not going to take it to the Ford dealership right.

00:52 There's nothing wrong with Ford but at the end of the day it's just the needs are different. And so my experience has been like you I was on national media for about six years. I still write for Forbes as a commentator there, one of the Forbes financial contributors if you will. And been in a place where really we have exclusive focus now with the firms that we have from a consulting firm to a motivational company to a private wealth firm to advanced tax planning. And our niche coach really is kind of helping families throughout the country that at minimum have a million. Our true private wealth division starts at 25 million and then we have a pro athlete division. And again the needs for these folks are very very different because even like this with this whole coronavirus thing going on they might be in a place where we got a call the other day from a gentleman that's currently with Goldman Sachs.

01:37 He's looking for a second opinion. He's got about 15 million. Well he's lost a couple million dollars from what's going on here with coronavirus. He's still going to be able to live his life but his needs are different. And a lot of times a lot of these firms that exist out there, these financial firms, their philosophy is just kind of ebb and flow at the market. And there's more strategy that we need to be looking at. Well in my over 27 years in the financial arena what I have seen way too many times Mike is a one size fits all strategy from most of most even the big private wealth divisions of banks. It's a one size fits all I see it over and over again Mike and people that are listening here they want their own customized strategies don't they? Well they do. I mean when you think about a coach like even if you go into Chase as an example everybody's familiar with Chase right and you walk into the bank and their private wealth division in a lot of ways starts at $250,000.

02:23 And they try and make it unique and they try and make it special but the reality of it is it's not. And you're right it is it is important to have a tailored plan. It's like listen everybody if they had to pick whether they're going to go and get a dress or a suit off the rack even if it's like it's Saks Fifth Avenue. Nice shop right nice store. Yes. You would still rather have something that's completely tailored made for you. You're pitching all picking all the stitching all the buttons everything made just for you and it feels different it fits different it is different because it's made for you not made for your neighbor. And that's exactly what people need to be looking at when it comes to their investments in general because that's just not happening out there. And by the way you and I both know as we've talked about this in many times in the past that a lot of these big firms whether it's Wells or Merrill or whoever it is there they might be providing value and service but they don't have the capacity because they are so large which sounds kind of counterintuitive but they actually don't have the ability to really get granular and tailor the way that an independent or boutique firm can.

03:22 That's a great point and you know Mike I've known you over 10 years and about eight years ago you and I were together researching some real estate in New York City. And we spent a few days there and that was my first experience with a true tailored suit and sport coat. You took me by a place there and I got measured up and I almost had a heart attack when I saw the bill. But it's still to this day the sports jacket that I got there is still my favorite sports jacket ever. I only wear it on special TV appearances when I go on CNBC or Fox or something like that or I bring it out every now and then for my office colleagues because I don't want them to feel left out. But it's such a great fit and it really does make a difference doesn't it. Yeah it does it does. And so so the purpose of this show is we're interacting and as you're listening and you're dialing in and tuning in each and every week as these shows come out. You know one of the things that we know is a lot of people don't know what they want because they don't know what's available.

04:13 So our goal and intention here with this podcast is really to kind of come above the clouds if you will. You know a lot of times people are in a place where they're they're flying in the clouds. They're high they're doing okay they think financially maybe they're doing all right but they're not high enough to really have the kind of clarity that they want. So if you can imagine when you're flying in a plane whether it's a private jet or commercial and you pop through the clouds and when you pop up there you have the availability to have a view that is not only well rounded but it is far reaching. And that's one of the things that we want to be doing is sharing thoughts and ideas here that we have seen implemented to clients and families that we're working with that have not only helped them save hundreds of thousands to millions of dollars in taxes in their portfolios and on their wealth. But also giving them the ability to really have what we call an efficient portfolio.

05:00 And that's so important as you're right as you mentioned it coach earlier this is way different than just stocks bonds mutual funds moving more to fixed income and less to equities when the markets are rocky. We all know that that solution has not fared well. In fact it's it's been tested and proven the fact that you know even in 2008 when markets were rocky a lot of people with safe quote unquote safe investments in the market because as you and I both know nothing is safe in the market lost money. So we want to be bringing things to the table that might be a little bit different. Some of you out there as you're listening to this you might say I've heard of private equity before. I've heard of venture capital before. I've heard of easements before I've heard of a variety of other things. Let's say you're getting ready to sell a business for 25 30 40 50 million dollars. Did you know that there is a treaty that's been signed and instituted with the country of Malta that actually gives you the ability to have some serious tax advantageous structure and potentially eliminate and for sure help drastically reduce the taxes on the sale of your business.

05:58 So all of these things we're going to dive in coach and I think this is something that people in that lane it's tough because people in that lane it's like I don't know exactly where to go. To get that kind of information the general information for general investments are out there. But where do you go if you got 2 3 5 10 15 20 30 plus million or more to get the kind of knowledge that you really want. Yeah these are essential strategies to help you de-confuse yourself as it relates to private wealth and tax planning tax strategies. And folks if you'd like some information or want to get your own plan based on these strategies it's very simple. All you have to do is text the word coach that's c-o-a-c-h because I'm coach Pete coach to 21000 that's 21000 or give us a call right now 800-661-7383.

06:43 Mike you brought a good point up there talking about when you pop through the clouds in the airplane you have that 360 degree panoramic view. It's been otherwise called a eagle eye view and it's amazing what you can see from above that you don't see when you're down in the situation. And like you're saying if someone is getting ready to sell a business they're getting bombarded with all sorts of stuff they forget about the most important part themselves. Yeah well that's exactly right. And the reason is think about it anytime that there's new things that enter into our lives right new things that occur. Even right now you know we're going through situations it's pandemic in the world and all of these other things. What happens is is you have all of these additional pressures that are weighing on you that are more than your normal day-to-day pressures. So it causes you to be in a place where you could panic or you could do things or make decisions that are unfortunately irreversible.

07:30 You know I had a conversation with a tax preparer at one time and you and I both know that there's nothing wrong with CPAs. There's some quality quality CPAs out there and there's some that you know are not so good. Just like anything else there's good and bad of everything. But CPAs historically when you think about it you know a lot of people say well I have a CPA helping me with my taxes or they're going to help me evaluate the cost evaluation of my business. As I look to transition and sell and all of these other things. But the CPA typically is someone who is helping you with basic day-to-day things. They're historians right. Tell me what you've spent. Tell me what you made. I'll tell you what you're getting back or what you're going to pay in taxes. And so one of the things that we know and all of these additional pressures come on because you have new things happen in life. Sometimes you need new strategy. And I love the thought that says what got you to where you are is not going to get you to where you need to go.

08:20 So what got you to where you are now is not what's going to get you to where you need to go. And for a lot of times for a lot of folks when they sell a company coach they're in a place where they may have been making four or five six seven hundred a million maybe two million a year in income or maybe more while they're CEO and running their company. But now they get ready to sell their company. They're used to running the business and all that all that goes with that. Now they get ready to sell their company and they're in a place where they get maybe a 20 30 40 50 million or more payday. And now all of a sudden it's like this is the first time in their life even though they've made a nice income. It's the first time in their life they've gotten a check if you will for 50 million dollars. And what do you do with that? And that's some of the strategy that we want to be bringing and sharing because this is just something that we've seen. We've been able to add a ton of value to families throughout the country over the years.

09:06 Yeah and I think it's important for anyone listening to know there is a positive relationship and correlation between tax and wealth if you have the right team on your side. And folks if you're looking for a team or if you want a second opinion or just want to get started on the new avenues here and the ways to really structure your money to take advantage of the tax code instead of being punished by it. All you have to do is give us a call 800-975-6717 800-975-6717 we offer a no cost initial consultation just to make sure to get you on that right track. And Mike any final words? I'm excited to kind of come back and collaborate together and use some of the wealth of knowledge that you've accumulated and I've accumulated and we've implemented it in helping families in different capacities. And so I'm excited for our listeners out there as we continue to grow the show throughout the country and quite honestly the world to add value to those that need it most because I believe that it's a big part of stewardship when it comes to our money.

10:01 And those that really have amassed some wealth typically they want to be in a place they want to be a good steward and they want to use that wealth for ways that can impact places and people for generations to come. Dennis Waitley once said that it was his goal in life to plant shade trees under which he will never sit. That's forward thinking and that only happens with the correct planning. So I'm excited for our listeners and I'm excited for this show. I do want you to know if you've got a question specifically that anytime you reach out it's going to be a very individualized situation. All of the information is held privately so no one's going to know your information obviously other than us when you talk specifically to us if you qualify. And we look forward to connecting with many of you and helping you protect grow and reduce taxes on your wealth for years to come. We have a national team folks and again you can always go to financialsafari.com or you can give me a call 800-661-7383 and folks we'll be right back after this.

10:56 Thank you.

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