Costs to Consider When Planning for Retirement

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3.31.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Retire 360 with your host, Dwight began. Dwight is a licensed fiduciary and financial advisor who always places your needs first. Dwight works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Dwight Mejan.

Dwight Mejan:
Well, good afternoon. You made it back and we made it back. And that's presuming you've been here before. If this is first time for you. Welcome to Retire 360 show. We're honored that you took some time out of your day to catch up with us. Maybe you're just flipping channels there, but we're glad that you joined us for the next hour of power with your finances. Our goal here at 360 Capital Management is to help you win with your money. We are broadcasting from Southern Pines, North Carolina. So wherever this finds you, we're glad that you are here. I am here with my name is Dwight Mejan. I'm your host. Alongside me is Mitchell Kaiser. And we also have our executive producer, of course, faithfully in the background. His name is Sam Davis. So want to welcome you guys back. Mitchell, how's your week been since we last been on the radio here?

Mitchell Keiser:
Hey, Dwight, and hello to our listeners. My week is going pretty well. We've had a couple recent events here in North Carolina that have been pretty good, so the week's been busy, which is a good thing.

Dwight Mejan:
Yeah. So just a quick update for the listeners. I know we've gotten some calls from some of our own clients, but also some other folks have called in and just had questions about this whole banking sector and what's happening there. We're not out of the woods yet, but there's been a little sigh of relief on Wall Street with regard to that. There's been some some interesting parties here in North Carolina. First Citizens Bank has just acquired some of the assets of Silicon Valley Bank. That's interesting here for us in North Carolina, they didn't buy all the assets, but what I read was about 70 billion worth of assets were purchased for about 17 billion. So interesting news here for North Carolina, but we'll see where all that goes. But certainly not out of the woods yet. Wall Street Journal had indicated this past week 186 banks that are on a little watch list. These are some of the regional banks. Again, our job here is not to breed any kind of fear. That's not what we're doing. But we're certainly not out of the woods yet with the banking sector. They think some of what was going on with Signature Bank and Silicon Valley and some of the others you've been hearing about in the news was just a precursor to some other situations in certain spots within the banking banking sector.

Dwight Mejan:
So time is certainly going to tell. But interesting news here for us in North Carolina, having a local bank acquiring some of those assets. But hey, we want to jump into today's show. Again, this is brought to you by our firm, 360 Capital Management and the title of our show Today, we're going to talk about how to fund the retirement of your dreams. We all have a vision of what our retirement is going to look like or what we'd like it to look like. We're going to discuss on today's show cost to consider and solutions that are common to certain retirement obstacles. Certainly, we all face obstacles in retirement. Risk is a big one, but there's certainly a whole lot of other risks and obstacles that we have to get past. We're going to talk about some of those today. But again, welcome to the show. We're basically here on this next our journey with you to help you win with your money. Just a shout out to our local listeners here in the Moore County area. I know some of you here are outside of Moore County, but we just want to encourage you, if you hear some topics today that you want to discuss further or you want to go deeper on some of these, we encourage you to schedule a complimentary consultation.

Dwight Mejan:
That is always the case for you, our listeners, and we just want to share that website information. You can go to Retire360Show.com or you can call us at our office here at (910) 235-0812. We'd love to hear from you if you want to catch up on some of our past episodes or maybe you've missed some or you're a new listener and want to go back to see some of our topics. Anywhere you can download podcasts, you will find us at Retire 360 and you can find us there and you can download or listen to some previous episodes. We also have a YouTube channel, so you can check out the YouTube channel, subscribe to see weekly video highlights and special content over there. So just please reach out to us. We'd love to hear from you, our listeners. Much of some of our topics that we discuss come from you, the listeners that want to hear a little bit on topics that are near and dear to you. Perhaps you're rounding third base, to use that baseball analogy, and coming into retirement. We'd love to hear what's on your mind and bring it to the show as well. So communicate with us on that website. We'd love to hear from you. Also want to let our listeners know that we have always have information we want to get out to you.

Dwight Mejan:
We can email it, we can mail it to you. There is Secure Act 2.0. I've mentioned this before on the radio. That Secure Act, the original one, had about a dozen or so things that impacted retirees and pre-retirees as far as your money goes. But Secure 2.0 has about somewhere in the mid 90s still carving through those areas, our team and us to try to get the relevant information and opportunities to you. But if you'd like to get a free copy of what the secure 2.0 means for your retirement, this report is free and it's yours today. If you reach out to us, you can call us and ask for that. Just call that number (910) 235-0812 or go to Retire360Show.com and you can request it there. So just a brief overview of today's show and we'll hop right in it. We're going to get to the quote of the week. You always hear from Mitchell on that. We're going to talk about ten costs to consider when planning for your retirement. We're going to break down the list for you. We have a problem Solver, which is a new story about we helped a family retire successfully. And also, if you are concerned about retirement, who isn't right? We discuss what worries pre-retirees and retirees and what you can do about it.

Producer:
And now wholesome financial wisdom. It's time for the Quote of the Week.

Mitchell Keiser:
Yeah. So our quote of the week is brought to us by Richard Bock. He was an American writer back in the he was born back in the 30s. I think he became popular in the 70s. And that quote is the worst lies are the lies we tell ourselves. So the worst lies are the lies we tell ourselves. I think that kind of applies to finance. Well, it applies to life in the sense that I think one of the worst lies is that we know everything. We as in ourselves, we as in what we're told in the news, what we're told, you know, in the classroom, you know, all those things. You know, we just, you know, we we believe the lie that we know. And I think that's kind of relevant to this whole banking crisis that we had. And you touched on it a little bit about how there's like 186 banks right now that are being propped up by aid or, you know, just all the uncertainty in the market. I know we chime in to a lot of things and read a lot of articles. I know there's something published in Time news about just some of the volatility and how people respond to this fear.

Mitchell Keiser:
So when people see all these banks failing, there has been an increase in people pulling their money out of the market. And, you know, just different people respond to fear in different ways. I know personally and this I don't mind sharing my personal opinion on some of these things personally. It kind of made me a little startled. So I started to look. Now again, I'm probably in the riskier part of my career as far as the amount of risk that I'm willing to take with my retirement. But I started to push this past weekend a lot of that into more conservative investing and into a lot of safer stuff just because, um, I mean, we don't know what's going to happen. And I know that, you know, I'm in my mid seconds, but and I have a long time to go. But I mean, heck, I feel like I don't want to see that money go down any farther. I'm sure I'm not alone. I've got a lot of questions.

Dwight Mejan:
Didn't you, Mitchell? Yeah, I was getting a lot of questions from Mitchell over the last week, week and a half, as he was even looking at the banking sector, and that's what I was telling him. Mitchell, you're young, but you did have concerns, that's for sure.

Mitchell Keiser:
Yeah. I mean, if you guys just even Google stuff that's going on with like local banks and how many banks are people are just ripping their money out of places and people are not banks, but people are freaking out and how they're responding to that and how that's going to respond to the economy. And a lot of analysts are pretty concerned. But anyhow, if that's something that and I just wanted to throw this out here, too, because this is a service that we do here at our office that we don't talk about a whole lot, but we can do what's called a shock test. And what does that mean? A shock test to somebody's portfolio would be what? How would your portfolio respond if we had another recession or if we had like another 2008, you know, what would happen to your portfolio or what would it have done back then? And we can kind of just show you how those positions would have adjusted back in that time and what it would look like if we did have another crisis now. And that's important to me. And if that's important to you to give us a call. (910) 235-0812. Or if you wanted to check us out, learn. A little bit more before you did that, you could check us out at our radio website. Retire360Show.com.

Dwight Mejan:
Yeah, well, that's great. And I also encourage listeners that go to our website Mitchell to go to the mission, vision and values. We hosted another workshop yesterday that we had done and had a lot of folks at that event a higher than normal, and a lot of folks had had questions and a lot of folks want to take advantage of that complimentary meeting that we offered them on the subject matter that we were discussing. A lot of it was taxes. But one of the other areas that we discussed specifically was how losses matter more in retirement than they did. When you're, say, Mitchell's age at 26, and I always take this back to a recent study that was done, this article, you can look at it in Kiplinger's, and there was a financial researcher, I think I might have mentioned this a couple of months back on the show, but it's worth mentioning again, just because of the volatility that we're experiencing right now, the researcher's name was Jack Marion, and he set out to study a 50 year period and it went from 1960 to 2010. And what he sought to study was the S&P 500. And he looked at three different scenarios over that 50 year period, and he took $1,000 and invested in under three different scenarios. The first scenario was $1,000, with the S&P returns with no dividends.

Dwight Mejan:
Okay? The dollar amount of that 1000 in 50 years with no dividends resulted in an ending balance of $18,600 with no dividends. The second scenario, same time period, 50 years. He included dividends with the S&P and instead of 18,600 without dividends, with dividends, it was $84,600 significantly higher with dividends. What I found most interesting was the third study was taking the S&P. No dividends, just like example one, but also no losses. You want to take a guess in your head? Think about those numbers a minute. S&p 500 with no losses, but no dividends either. Instead of 18,600 with no dividends, but with no losses. On the third one, it was almost $180,000. That's 100 almost 100 grand more than the S&P with dividends. So the point is, obviously losses make a big difference. And one of the things to be careful about, if you're listening to this program right now and you are close to retirement. What matters huge is if you're going to take money out of that portfolio, even if you're not and you suffer losses early and you're allocated too heavy to exposure in the stock market, that could make a huge difference. It could take you years, if not decades potentially, to make that up. When the last big financial crisis came in 2008, the average investor in a 60 over 40 portfolio took them about 7 to 8 years just to get back what they had.

Dwight Mejan:
They call that time period, the lost decade, because what you had invested, it didn't do anything. All you were doing, if you had it professionally managed, was you were paying an advisor fees, waiting for the market to recover. So there are ways in retirement where you could secure and protect more of that money. You hear us talk about it. We're not opposed to the market. We manage money in the market for our clients. But you have to grow that money responsibly. It's responsible growth that helps you win the race. It's not taking reckless growth. And like Mitchell just alluded to, that shock test or another way we call it is a stress test. We'd be happy to stress test that portfolio for you as a listener. It doesn't cost you anything. Call us up, email us and say, I'd like you to do that complimentary stress test. We'll email it to you if you want, and we can cover it with you on a Zoom call if you prefer to do a Zoom meeting. And that may be enough information where you decide you do want to come in and talk a little bit more specific. So we encourage you to do that. But with that, we're going to kind of jump back in here to today's topic.

Dwight Mejan:
We just want to give you some updates there on what's happening in the overall economy and with risk, just be cautious as the name of the game right now. But we want to talk about ten costs to consider when planning for retirement. Some costs can be reduced or eliminated in retirement. Other expenses might remain the same or even increase. As you get older, you're going to likely face new costs as you use more health care services. Or if you take up hobbies to fill in your time in retirement. But don't forget about inflation and the inevitable effect of what will have on your expenses in retirement. So first expense, of course, is housing. Housing could be your biggest cost in retirement. Don't forget to account for property taxes. We call it salt tax. The salt state and local government taxes home repairs. If you pay off your mortgage, the house payment goes away. But the property taxes, insurance and the escrow fees never go away. So consider home repairs become more difficult to do it yourself as you get older. So we know there's you know, there's different ways. Some of our clients, by the way, they have mortgages, some of them don't have mortgages. Obviously, the goal is to try to get to retirement and pay off that mortgage if you can. And there are a variety of ways to significantly reduce your monthly household bills.

Dwight Mejan:
But we always encourage listeners, you know, to put that money away into what we call a sinking fund, which is just to allow a fund off to the side. Perhaps it's another banking account savings or money market where you can just put that money into every month to allow for some of those home repairs that are going to be coming down the road. New roof, you know, heating air unit. There's a multitude of things. If you own a home that, you know, can go wrong. So another option is to downsize the home. It'll cost significantly less and it's going to free up some of your home equity and it will pad your nest egg. It's very important, though, if you decide to do that, is to take that equity and to put it into something that you can protect your principal. Very important to consider an investment like that. But, you know, it's going to it's going to free up some of that that money that you can put to work. Maybe you need income, more income. There's places where we can show you to put it for for more income moving to a new place, you know, can improve your retirement and your finances. So that's the first one. Mitchell You've got another one our listeners need to be aware of there.

Mitchell Keiser:
Yeah. So another tip to consider for you guys Is the Medicare premiums something that you don't necessarily think of? You see a lot of commercials on TV about This is free. That's free. So you think, oh, my health care is free once I'm retired, which is partially true. I will say Medicare, I still believe, is one of the best. It is the best insurance that you can have on your life, but you still do have some costs associated with that. Unless you're on Medicaid, then that's totally different. But most people do not pay a premium for Medicare Part A, which is the hospital insurance. Now, Medicare Part B medical charges a premium of in 2022, it was 170. I think it went down to 165. In 2023, that could be it's somewhere around there. Think I'm close. But then another premium that you have is Medicare Part D, So that's your prescription drug plan. So those are those are the must haves for most. I'd say 95% of people listening. That is something that you will have to face. Now, I know prescription drug plan premiums are probably somewhere between $10 and $30 is probably the average drug plan. But right there, just in those two premiums alone for Part B and Part D, that's about $200 a month. When you turn 65 and you're on Medicare, you have the option to do a Medicare supplement, which is going to be an additional premium.

Mitchell Keiser:
That is what's going to cover the remaining 20%. Now, you could probably expect to start to pay somewhere between 90 and $120 a month so that you've got an additional 90 to $120 a month on top of that. Some people choose to go the other route, which is to get off of original Medicare and go to an advantage plan. That is a good fit for somebody. Now that would eliminate your Part D premium. And those don't have those don't have a premium on their own at all. But what they do is when you go to the doctor, they're not going to cover, you know, the remaining 20%, you know, in full like a supplement would, But you're just going to have a small just a small copay when you go to the doctor. So you could think of a Medicare Advantage plan, like a really good version of what you used to have when you were working. So it's it's not going to cost you anything. And it's probably going to give you, you know, extremely maximized benefits from anything that you had during your working years. I am a fan of both types of plans. I think that depending on who you are, depending on your situation, your health, your finances, it really just depends.

Mitchell Keiser:
I'll tell you just an example. There was this past week, I think it was two weeks ago, there was a gentleman that came into our office. They just said, you know, my supplement premiums are just getting so expensive and I think I'm on the wrong drug plan. Can you just take a look at this and tell me if you can help? I'm not making this number up and I'm not exaggerate when I say that from what we were able to do with just a quick analysis of his Medicare planning, we were able to save him. Next year, he's projected to save over $9,000 and he's going to get an additional cost card where he can use $50 a month at a grocery store. And that hands down was, you know, 100% improvement to his situation. And he's on a better plan. Just that simple analysis, you know, saved him $9,000. Now, I'll tell you, some people might look at $9,000 and say like, I could care less about $9,000. I make, you know, over half $1 million. And if that's your situation, you know, that's awesome. Congratulations and good for you. But I would say most people don't fall into that category. And $9,000 a year is a it's a lifestyle change.

Dwight Mejan:
You know, you're talking about the side of the balance sheet where people can save money, but there's also a side to Medicare. I want our listeners to be aware of where they can cost them more money for Medicare. And that's due to something called Erma, which Medicare is not the same price as we've shared before on this program. Not everybody pays the same premium for Medicare and not to go deep dive on this particular topic, but people just want our listeners to be reminded that if you're not careful with how you move money in retirement or where you withdraw money from in your accounts, for example, you take a large tax deferred account withdrawal that could cost you not just income tax, it could cost you more in Medicare, your Medicare benefits getting taxed, and also your Medicare premiums, including your drug coverage. Medicare could charge in 2023 as much. And you correct me if I'm wrong, I think it's up to $578 a month. You could wind up paying and people don't feel the brunt of that until two years later from the tax return that they file. In other words, people today are paying in 2023 according to what their tax return did in 2021.

Mitchell Keiser:
Yep. So in an ideal world, just to add to that, in an ideal world, if you guys are doing Roth conversions or if you're, you know, if you're younger and you're looking to retire and you want to start doing Roth conversions, ideally you'll have that done at 63 because once you become your 63, 64, 65, then that's when Irma could affect your Medicare premiums. Also, I know my grandparents, they sold a rental property there. My grandparents are 80 years old and they didn't want to deal with it anymore after their tenants left. But they sold a rental property and they didn't realize that they were going to pay triple the Medicare premiums the following year. Just something that nobody ever even, you know, mentioned to them. And I didn't know they even sold it until afterwards. So all important stuff to think about. But leading into health care costs, that's tip number three. So if you don't have any kind of supplement, Medicare Part A has 150. It's $1,556 of a deductible that you have to pay for hospitalized. And there are additional coinsurance charges if your hospital stay exceeds 60 days. I would just encourage somebody, if you are 65 and you don't have any form of a supplement, um, it's not that I think you should call us. I think you need to call us or somebody. You need to be put into something and I'll say Dwight's or I guess it's your father in law. Um, he didn't have anything. And he came in here one time and he was fully responsible for the remaining 20% of whatever he would have paid at the doctor, you know, if he had to go in and have these huge surgeries done, which fortunately he hasn't really been to the doctor, but he would have been responsible for 20% of whatever that cost was because he only had original Medicare.

Mitchell Keiser:
He came in here and I found him a plan that got him $100 added back to his Social Security check, got him $50 a month in a grocery card, and it capped his benefits so he doesn't pay anything for primary care. Hardly anything at a specialist. And his out of pocket costs got like dropped down to I mean, there's a maximum that he's very unlikely to ever hit. But it's I mean, it's just a couple thousand dollars. I mean, and it didn't even cost them anything. But the difference between, you know, where he was and where he is now, I mean, he saved, you know, we added some money back to him. So he's, you know, profiting off this really. But it just was his lack of knowledge. He didn't know. He had no clue. And I obviously didn't know either. But he was just talking to me about it and just wanted to stress to you guys, if you I mean, if you don't know what you have, if you're confused about Medicare or your insurance, be happy just to talk to you about it. You know, it could be 30s 30 minutes, whatever you need, we won't charge you for our time if you call us. (910) 235-0812.

Dwight Mejan:
Yeah, sometimes, Mitchell, we don't know what we don't know, Right? It's oftentimes the case. But hey, moving along here to taxes another cost in retirement, obviously a big one that we have to we have to manage. But most of us have saved significantly in our retirement with pre-tax accounts. The Roth account has been around for for years. And more people are funding Roth, which is the right way to go, particularly if you're a younger listener to this show. We're huge fans of the Roth savings plan, especially when, you know, we ask people all the time this, especially our live events, if they think taxes are going up versus down. And overwhelmingly, I don't think I've had a person in the last ten events that we've done. Mitchell I could be wrong on this, but I don't think anybody's betting taxes will go down there at the lowest rates in history. In fact, if you go back to the early 1900s, the average high marginal tax rate, which is the highest tax rate you pay if your income is, you know, well over a half $1 million, that top federal marginal rate is 37%. Well, if you go back to the early 1900s and you just take segments of years where the tax rate bounces all around, the average top marginal rate since the early 1900s is 58.4% and we're currently 21.4% less than that.

Dwight Mejan:
So there's a lot of a lot of room for taxes to go up. And then when you factor in baby boomers coming into retirement in droves, 11,000 people a day turning 65, and then you take a higher dependency of people on social programs like Medicare. It's a combination really, of disaster for the tax base because the the Social Security fund has been borrowed against. And it's those monies have been used for different. Things, which again, we don't want to go political here on this show, but that should have never happened. But the bottom line is this, that the trust fund with Social Security is in some serious jeopardy in 2034. So the only thing that could potentially happen, the thing that's likely to happen is two things. One, we're talking about taxes is taxes will likely go up. And number two, there would indicate or seem to indicate that there will be some level of means testing for the cost of your Medicare, which there is now. We could we don't know. We don't know what's coming, but we could see thresholds get lower based on how much you're going to pay for Part B of Medicare.

Dwight Mejan:
Uh, lots of things could happen. Taxes obviously likely to go up. We don't know what those are, but it's all the more of a reason why you have to be sensitive to a tax efficient plan. And I will tell you, at 360 Capital Management, one of the things that we incorporate into every client plan, it's one of the pillars, one of the five pillars that we use in building out a retirement plan is building a tax efficient portfolio. And within that tax efficient portfolio, one of the other things that we're looking at in that portfolio is we're looking at how do we take your portfolio and over your lifetime strategically move money without affecting your Medicare premium to a huge degree. If you're past age 65 and you didn't get a chance to really do a Roth conversion strategy is come up with a strategy for you and show it show you what that would look like under different tax scenarios, under current tax rates, and then with the likelihood that tax rates could go up, we could do that. Okay. So that's just one of the other things that we will take you through as part of that exercise. So if your taxes. Yeah, go ahead, Mitchell You.

Mitchell Keiser:
Know, well, I was just going to add to what you were saying, and not that we're here to talk about politics at all. That's not the point of our show. But if you guys have been listening to politics, different bills that are being proposed, I mean, the Democrats especially have proposed a lot of things and raising taxes to make up for basically a lot of debts. I mean, we are giving a lot of money to and I don't I'm not going off I'm not rehearsing an article here when I say this, but, I mean, we're giving all this money to Ukraine. You know, we had how many billions and trillions of dollars in stimulus money and now they're going to raise taxes to pay for what they had given away. Another example is I just saw or this is, I guess that new. But Biden proposed to double the capital gains tax. Now, that's not law yet. But I mean, they are they are looking for ways to make up for money that was spent in previous years. And I do think it is a good point that you're mentioning in the financial plan, especially if you are retired, to take advantage of some of these low tax rates, because, you know, if you do have if you did a conversion, you'd be subject to income tax or capital gains. I mean, it could potentially be again, we don't hold a crystal ball, but it could potentially be as low as it might be for a while. Again, we don't know that. But again, you've heard me a little bit by now to know I waver on the side of caution and I'd, you know, venture out to believe a lot of our listeners probably would be the same.

Dwight Mejan:
Well, you actually hit the nail on the head. I just read an article this morning that the war in Ukraine, from what we financed for that from the US is $150 billion. There's no end in sight for this war and we need to hold both sides of the aisle again, like we just said. Mitchell you said it. We're not political on this show. We need to hold these jokers in Congress accountable. We do that at the voting booth. Okay? There's just there's no way about it. But there are some of these trust funds have been, you know, been used and abused. And that's why we're having some of the problems that we're having. But, you know, going back to the listeners, you know, the RMD age haven't talked about this, I don't think in recent shows, but we certainly talked about it in our live event. And by the way, we'll get to a live event here a little bit in the show that we have coming up in April. So you want to stay tuned for that. We'll give you some more details here shortly on that. But the R&D age has been pushed back again to currently it's 73 and in 2032 or 3, it's going to be pushed to 75. It's already part of the secure 2.0. And there's more information if you want to contact us to get more secure 2.0 facts and some things that will help you understand some things better with your portfolio and your retirement, reach out to us.

Dwight Mejan:
Like I said earlier in the show, we'll get you a free copy of that report. But when you think about your buckets of money, we all have one of three or a combination. Probably if all three of these buckets hopefully is you've got taxable money, which is just money you have sitting in ordinary checking money market accounts, money you've saved, you've already paid taxes on it. That's a taxable account. You have your pre tax account, which for most of our listeners to this show, most of our clients that come into our office, the biggest bucket of money is pre tax. That's the money that they saved and they got to take a tax deduction while they were working. That was your that's your biggest bucket for most people. And then you have your tax free account. There's only two buckets of money. You can have money sitting in that are tax free. That's your Roth account and life insurance. Those are the only two places you can put money tax free. Some people think about municipal bonds, and I'm just not putting those in there because some municipal bonds you could pay state taxes on. So it's not totally a true statement on munis, but those are the two buckets. Here's what the IRS I think this is Dwight speaking personally. This is my opinion. Why is the IRS giving people the opportunity to wait later to take money out of those pre tax accounts, which are the largest accounts for most households? Do you think the IRS knows that? I think they know it full well if given the chance.

Dwight Mejan:
What bucket as you get into retirement, you're not as active. You don't want to pay taxes. What bucket will you kick the can down the road and not pull money from when you retire? If they give you the chance, you got it. It's your IRA bucket. And I believe they know what's coming is when they have to raise the tax and you're hopefully growing that money responsibly and it gets bigger, it's going to be that much more in tax revenue. They're going to be able to collect as a whole. And we ask this question When we did the event yesterday, I asked people how many people think taxes are going up? I think 99% of the people raised their hands, maybe 1% didn't know. Next question I asked is how many people if you work with an advisor or you're sharp enough to do this on your own, have a strategic, systematic plan in place to lower the taxes by putting money strategically into Roth funds. If you believe taxes are going up, how many hands went up in that room? Zero. I find it interesting, folks, that people believe taxes are going up, but they have no plan to optimize the tax bill in their lifetime. Well, you said it earlier.

Mitchell Keiser:
You kind of said it earlier, Dwight. You don't know what you don't know.

Dwight Mejan:
You don't know what you don't know. But we want to help you understand it. And we can show you forecasting models of your portfolio to make some best educated guesses under current tax treatment today. Because if it goes up, it's going to look worse on your tax bill. But we can take the current tax rates, show you a Roth conversion strategy on your portfolio and see what that looks like. And I'm just telling all of our listeners, if you have an advisor you work with and they're not showing that to you or getting you in to talk to you about that, then I think you need to question Are you getting the right advice from that advisor? Okay. Because we're going to do that with you. If you're a client of ours, we're going to discuss Roth conversions with you. We're going to show you a Roth conversion plan. So enough on taxes. It's a big thing to consider the last thing I'm going to say about taxes is this Social Security, another tragedy here? Up to 85% of Social Security and many of our listeners are being taxed on 85% of their Social Security. They're paying taxes on that.

Dwight Mejan:
Money was already taxed once so that you could get the Social Security. Now it's being taxed again. So if you want to try to have a retirement where you're not taxed as much on Social Security and what causes that, quite frankly, are the distributions from many of our listeners who have RMDs coming out. So you might be a candidate to eliminate taxes on your Social Security and have a better strategy over your lifetime to not pay taxes. So if this is a topic that kind of strikes home and you've been tuning in closely, give us a call. (910) 235-0812 or go to our website Retire360Show.com you can connect with us there. Schedule a free complimentary session. We'll have some more information if you want to talk to us live or see us live and hear what we have to say for about an hour about how to minimize taxes in retirement. We'll show you some more specific strategies for that. I do want to let you know that that those live events fill up quickly, so we'll get you information here. But Mitchell, take us to the next one for our listeners here. What's next?

Mitchell Keiser:
Yeah, so our next cost to consider would be food. I mean, everybody knows that it's more cost effective to eat at home versus going to a restaurant. However, when you become retired and you're sitting at home all day, there is a tendency for people to want to go out to eat with their friends, which is we're not saying that's a bad thing. You just have to be conscious of the cost. You don't want to get yourself into a habit that's going to you don't want to be spending more than what makes sense for your budget and what makes sense for how much money you have to pull out. You want to make sure your money is going to last you a lifetime. That being said, there are things at most restaurants and grocery stores called a senior discount. I'm sure most people either have those, have used those, or at least you've heard of it. We would just recommend that you guys, if you're going out to eat or if you are at a grocery store or you're just doing those things, just ask. Ask if people have a senior discount, if they don't just give it to you. I mean, there's no harm in asking. The worst they could do is say no. But I know a lot of times it's at least, you know, ten, sometimes 20%, which could be a pretty big cost cutter if you are one of those people that just likes to go out to eat with their friends just to socialize, hey, there's no shame in meeting with friends at home and there's no shame in packing food and meeting in a park somewhere. I know I live by a pickleball court and I see there's senior programs that are there 24 over seven. And, you know, people bring coolers and stuff and, you know, you just got to think of the cost effective things, especially now with the way inflation has gone at the grocery store. I'm sure most people's grocery bill has gone through the roof, as I know mine has. But just just things to consider there when on the topic of food.

Dwight Mejan:
Or we can have a barbecue at Mitchell's house. I hear you're pretty good on the grill. At least that's what my daughter tells me. So we can have all the listeners over to Whistling Pines. Kind of give your address out over the air.

Mitchell Keiser:
There you go.

Dwight Mejan:
Yeah. Hey, hey. With that, let's let's go to a quick break. We'll come back and we'll finish the last five here on on cost cutters here for retirement. We'll be right back.

Producer:
Like what you're hearing, you can watch the show to visit YouTube.com and search Retire 360 to watch clips from this program.

Producer:
When trying to cut costs in 2023. Take a look at your cell phone plan. I'm Matt McClure with the Retirement.Radio Network Powered by a marine life. Cell phone plans with all the bells and whistles like unlimited talk, text and data can cost a pretty penny, especially if you sign up with one of the major carriers. But there are cheaper plans out there. Among the cheapest are prepaid plans from mobile virtual network operators or MVNOs. You'll recognize them operating under names like Consumer Cellular, Boost, Mobile, Mint, Mobile, or US Mobile, just to name a few. These companies don't own their own towers. They operate by entering into agreements with the big companies like AT&T, Verizon and T-Mobile, which do own the infrastructure.

Stetson Doggett:
The major carriers sell access to their networks, to prepaid carriers at wholesale rates. These prepaid carriers then sell plans to consumers at significantly more affordable prices.

Producer:
That's Stetson Doggett cell phone plan expert, YouTuber and publisher of Best Cell Phone Plans. Net. That website is a good resource to compare plans determine the features you need, like deciding if you really do need unlimited minutes and seeing if you qualify for any discounts. So are you paying too much for your cell phone plan? That's a key question to consider, and it's one of the 23 retirement cost cutters for 2023. With the Retirement.Radio Network powered by a mirror life. I'm Matt McClure.

Producer:
To get your free copy of 23 cost cutters for 2023 call Dwight today at (910) 235-0812 Or visit retired 360. Show.com.

Producer:
You're listening to Retire 360 with Dwight. Now back to the show.

Dwight Mejan:
Okay well we're back here on the Retire 360 show. We want to thank you for again for tuning in and we're we're picking right back up where we left off. We've been covering ten costs to consider when planning for retirement. There's certainly more than these ten, but these seem to be the ten big ones. And we left off on food. Mitchell was just talking about that. But want to pick up the Old Faithful emergency fund. Most of you know what that is, but emergency fund doesn't end when you retire, for sure. You'll continue to need money for home repairs, appliances, car issues or. Mitchell, you're going through one of those situations right now, aren't you, on a on a car situation. So you know what that's all about. But.

Mitchell Keiser:
Oh, yeah, you don't you don't know real stress until you're dealing with car issues.

Dwight Mejan:
Mitchell's had a car in the shop. I think now you got to be pushing a month, right?

Mitchell Keiser:
Uh, yeah, it's been at least a month.

Dwight Mejan:
Mitchell had a certified pre-owned vehicle that he'd only had for maybe two months. I'm thinking somewhere around there and kind of got. Seemed like something got missed on the certified pre-owned, but nonetheless. Yeah, good thing for it. Good thing he's got the warranty on it. But still, if you didn't have the warranty, you'd have a pretty big bill. So the emergency fund, you know, we like the emergency fund to be, you know, at least three months. If you can get it up to six months of your household expenses, that's a better spot to be. It's essential to avoid spending retirement savings, you know, on something like this, particularly if you're kind of an aggressive investor, you don't want to have to liquidate money when markets are down. You want to sell stuff when it's high. So just make sure you're planning includes funds set aside to cope with emergency expenses.

Mitchell Keiser:
Yep. And then the seventh thing we'll go over here today is the entertainment. Again, we kind of touched a little bit with food, talking about, you know, once you're retired, you tend to have more free time and you look for things to do. And so what are you doing for entertainment? Because we all know it's not that difficult to spend money to keep ourselves occupied. But there are plenty of free activities that you can do. I don't know if our listeners are living in a retirement community or near one. I know in Pinehurst there's plenty of things to do that don't cost anything or they don't cost much. There's leagues, there's games, there's, you know, there's a lot of stuff going on here that I would recommend if you are looking to get involved. You know, the your county senior center is a good place to start. If you guys go to church, your church would be a good place to start. And again, a lot of those, they don't cost anything. So, I mean, you could get involved, you can get a community and just be conscious of watching that budget. And I don't mean to put on my preacher hat, but if you're not, you don't you don't need a lot of money to make you happy. You don't need to be spending money to make you happy. If spending money is what makes you happy, then you're not getting happy in the right stuff. So yeah, good stuff. And a sermon.

Dwight Mejan:
Good. Well, that's. That's a good one. Maybe if you're in a hurry. That's. I love that, Mitch. That's good. So travel would be number eight. You know, retirees finally have time to travel as much as they want. I know that's something that I'm not near retirement anytime soon, but love to travel. The only limiting factor is your budget. You know, retirees have the advantage of being able to travel during weekdays and off peak times, which could save you money and and help you avoid the crowds. So, you know, shop around. There's there's some good deals, I think. Mitchell you might have been the one telling me that if you're traveling to Europe right now, there's some places that are, you know, well over 2000 a ticket and then there's other places in similar destinations that are like $600. I think you saw a round trip you were telling me. So, yeah.

Mitchell Keiser:
It's a Switzerland.

Dwight Mejan:
Was it? Switzerland had good prices, so I don't know how that they may have gone back up. But yeah, great to, to shop around and certainly travel is a fun thing to do if you're into that.

Mitchell Keiser:
But also check out current news to make sure there's not a war going on in any of those places.

Dwight Mejan:
Yeah, that would actually be a good thing as well. Well, so Mitchell, what's the number nine?

Mitchell Keiser:
Yeah, so number nine grandchildren. So if we have some generous and philanthropic listeners that like to give, we say number nine is the the grandchildren is a cost to consider depending on how much you like to give. We see a lot of people giving more than they should or if somebody we had a we had a client come in this past week that he gave houses to a couple of his kids which if you can do that, that is awesome. Good for you. But we just like people to be aware of what they do have and what makes sense to give during their lifetime, because there is nothing wrong with setting up a legacy plan for once you are gone. So make sure you have something set aside for you that's going to last you your lifetime. And then, you know, you can kind of direct that to go different places after you get your wings and fly out of here. I do think it's a great idea if you do have if you do have that all set aside and you still have extra money, if you want to see where that money goes, you know, while you're still living. I think that's incredible. And I think you should do it. But just make sure that you are planning for what you need. Because if it's kind of like getting on a plane and they say to put your oxygen on before helping out somebody else because, you know, if you run out of oxygen, then you're no use to anybody. But you know, if you run out of money, then, you know, you can't help anybody anymore. So just be cautious on how much you're giving to people, because if you do leave a legacy for them after you're gone, that's that's something that they can't take from you while you're living so well.

Dwight Mejan:
Mitchell You kind of tied in with number ten is leaving the Legacy. The piece about legacy that I just want to mention from an investment standpoint from your portfolio is, you know, if your biggest bucket of money in your in your say, 70s, you could still be in your 60s, too. But if that pre-tax bucket of money, your traditional IRA accounts, maybe you still got those old 403 B's or 457 seconds. And if you're a long time listener to this show, you've heard me say, Why are you doing that? I will say it again. Why are you doing that? There's better places that you could roll that to an IRA and not be forced to take a distribution out of those accounts separately. Remember, any retirement account you have if you've left an employer and it's in a four category, 401, 403, B, 457 if you're of. The age that distribution must be pulled proportionate from that account. You can't just pull it all out of one account like you could if it was in 4 or 5 different IRAs or just one IRA. So keep that part in mind. But the point is I was going to make, if your legacy, if you have a legacy mindset, one of the mistakes that we see quite often is people who leave their children the inheritance and the biggest asset they're leaving them is that pre-tax account, the IRA, the traditional IRA. Many of their children, because they're, you know, maybe between second and third base, to use that baseball analogy, again, in their own retirement years, they're in some of their best earning years being employed.

Dwight Mejan:
And the danger there is you're leaving them a ten year period of time that they have to make decisions about when is best to pay the taxes because the time clock is ticking. It's not like it was a few years ago where your kids could stretch your IRA over their lifetime. Now they have ten years to do it. So if you have a legacy mindset, here's one suggestion that we make to a lot of listeners of the show and people who come in for a complimentary consult. If you're one of the people who say, Hey, I don't really need this RMD and you wind up just putting it in your bank account and you don't use it on anything, we might suggest looking at a second to die. If you're married, filing jointly or even as a widow or widower, parking that money into a high cash value life insurance policy where the cash value is high from the get go and that money is used to pay tax free, a benefit if you die prematurely or you live to your life expectancy, the kids will have tax free money from that life insurance to pay the cost of the taxes. And they could take all that money from the IRA out and just use that. Life insurance proceeds as the instrument to pay the taxes on. It's a great plan, especially if you don't need or depend on that R&D distribution.

Dwight Mejan:
So if you'd like to know a little bit more about that, you want to know more about budgeting, planning, any of those things we've just been talking about, we'd love to help you with a with some analysis today, see where we could help you in that area. Just go to Retire360Show.com you can book a complimentary meeting with us there or you can reach out to us. You can call us at (910) 235-0812. So now we want to just change gears here a minute and we want to talk about a problem solver that we did to help a family recently retire successfully. And we'll tell you a little bit about that. There was a emergency room doctor who worked at an area medical center. The doctor was 65 years of age and his wife was 61. They planned on retiring after he turned 65. However, with the state of inflation and the current state of the economy, they were very concerned about the future and didn't want to draw down savings too quickly. And the rest of the portfolio had been impacted negatively just due to losses in the market. So because of some of their concerns, the doctor was considering working another two to maybe three years to save more money. But he was growing, as you can imagine, tired from a very demanding job with long hours in a stressful work environment at the hospital. So after he and his wife met with us, we determined that they would receive approximately $5,000 a month in Social Security income, but they were expecting total monthly expenses to be around 14,000 a month.

Dwight Mejan:
And it was leaving them an income gap, as we call it. You've heard us, if you've been a listener of this show, talk about that before. They had an income gap of about $9,000 a month. So this couple didn't want to sacrifice their goals or lifestyle and retirement. And the husband didn't want to delay retirement any longer. They have two daughters who would be getting married soon, and they wanted to be involved in the planning and funding of those weddings. So they were they were also receive they were going to receive great fulfillment from an annual mission trip to South America. So this couple simply put, needed paychecks for their expenses and they needed paychecks to enjoy traveling while they were still in their 60s and 70s. So the solution is we help them fill the gap in their income plan through two key strategies we implemented and we talked about this a little bit earlier in the show. We implemented a Roth ladder conversion plan, which was systematically taking money each year to reduce their future tax risk. We put that out on a spreadsheet and showed them the benefit of even converting that money and how it was going to save them. Number one, in taxes, most of their savings were in tax deferred accounts, pre-tax accounts, meaning they owed taxes on future distributions in retirement. So we protected. 40%, the bond portion.

Dwight Mejan:
You know, you've heard about the 60 over 40 portfolio, 60% equities, 40% bonds. We took that 40% bond allocation and we placed it instead in a fixed indexed annuity. Okay. You hear us talk about that a lot, but with a fixed indexed annuity, you've got principal protection on that money, unlike in a bond portfolio, because the two big risks in bonds are interest rate risk. Interest rates go up, the value of the bond portfolio goes down. And then obviously in the climate that we're in today with banks, many people are concerned about default risk of the company issuing the bonds. So you have default risk at stake as well inside of bonds. The fixed indexed annuity eliminates both of those concerns. So we get equity exposure linking those gains. And that also had here's the other benefit 100% reserve requirement. So where banks have fractional reserve requirements, for example, they had every dollar of deposit in a bank that you put in the bank only has to keep 10% of that in the vault in cash and the other 90% can go out for investments and and doing loans. So with the fixed indexed annuity, it's 100% reserve requirement. So this gave this couple safety and reassurance that they would have the income they needed to live, the retirement that they had in mind because annuities provide an income that you could never outlive. And for this couple, they were going to get the same payment and they knew when they were going to trigger it, what year that was going to happen, and they could count on that payment every year, no matter what, while both of them were living.

Dwight Mejan:
So why am I sharing this story? We want you to think about your own retirement and how you're going to fund it. That's why I'm sharing the story. How are you going to fund retirement? Is your retirement plan number one? Is it tax efficient? Number two, do you have a retirement tax bomb like this couple had where all their money was sitting in pre-tax accounts? And number three, are you tired of delaying your own retirement? We had somebody come into our office a few months back. I'll never forget this. And she was a widow, still working, thought she had to work another four years. And when we started asking her the basic questions that we asked, our basic assessment after about 30, 40 minutes is why are you still working? And we basically showed her that she had more than ample enough money to live on without even taking Social Security. Then we showed her what her Social Security would look like and we recommended in her case, not everybody is the same to take it at age 70. And she decided that she was going to go home and likely put in for retirement, which is what she wound up doing. So a lot of people just don't know that they can retire because they've never met with a financial counselor or with an advisor to see if that was possible.

Dwight Mejan:
So retirement, as you hear us say on this show a lot, it's not about the size of your nest egg. Many people have done a great job saving for retirement, but the real grunt work starts when you have to start distributing that money out. That's when it gets more complex. And you may know what I'm talking about. If you have filed a tax return and you've had capital gains and you're drawing Social Security and you're wondering why you're paying out more in taxes, that's exactly why taxes do get more complicated in retirement. So if you're trying to systematically withdraw money from accounts as you need it, you could be at risk of living what we call that just in case retirement. So get two guarantees and enjoy paychecks and enjoy play checks that come from investing a portion of that money in fixed indexed annuity. We can run you illustrations on that as well, regardless of what tax bracket you're in. It's it's important to have a plan and we can help you. So we just as a reminder, we provide these consultations at no cost to you and we'll be happy to to run that for you. But with that, we have run out of time for this week's show. I promised you we'd get a date to you. We have a plan, a workshop coming up in April. It's going to be on April 20th. Mitchell, Is that a Monday or a Tuesday? I don't think it's a Monday, isn't it?

Mitchell Keiser:
So that is actually a Thursday.

Dwight Mejan:
It's a Thursday. Oh, there you go. So it's a Thursday. And what time is that Mitchell going to be?

Mitchell Keiser:
So that is going to be at 11 a.m..

Dwight Mejan:
11 a.m. It's at in Pinehurst. It's at the Cannon Park Community Center. We're going to focus a lot on taxes and what taxes look like in retirement. We're going to give you practical advice of steps that you can take immediately when you leave that workshop of how you can implement tax savings for your portfolio. But it's at 210 rattlesnake Trail in Pinehurst and it will be at 11 a.m. I will tell you, we're saying this to you now as a listener, we want to give our listeners priority and signing up for this. We do. Have limited availability. We're only doing one event that day. It will fill up quickly. So contact us at the at our office here at 360 Capital Management. Our number is (910) 235-0812. But with that, we appreciate you tuning in to this week's show. And we're going to pick up where we left off next week. And we'll have some other great new information. But if this was your first time tuning in with us, we appreciate you tuning in and we'll look forward to being back with you next week. Take care and have a great week.

Producer:
Thanks for listening. To Retire 360, you deserve to work with an experienced and licensed expert who will strategically work to protect and grow your hard earned assets. To schedule your free no obligation consultation with Dwight, visit Retire360Show.com or pick up the phone and call (910) 235-0812. That's (910) 235-0812. Investment Advisory Services offered through Brookstone Capital Management, LLC, BCM A Registered investment Advisor. Bcm and 360 Capital Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
Fixed annuities, including multi year guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity. Contract guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
At 360 Capital Management, we know you've worked hard to earn your money and you've worked even harder to save it. When it comes to wealth management and planning for retirement, Dwight Mejan is passionate about helping people protect and grow their wealth. Visit Retire360Show.com to schedule your free consultation today. It's a 1000 hundred dollars value provided at no cost to you. Book yours now at Retire360Show.com. Are you interested in protecting your assets from market volatility, rising taxes and economic uncertainty? Then tune in to Retire 360 with Dwight Mejan to learn how you can protect and grow your hard earned money. Retire 360 Sundays at 3 p.m. right here on Talk 97.3 FM 104.1 FM and 990 a m. Protect your hard earned money today at Retire360Show.com.

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