Dwight and Mitchell share the news about Social Security’s new cost-of-living adjustment (COLA) and discuss strategies for saving money during times like these. Plus, how do structured notes offer downside protection along with significant upside potential? Dwight shares the details on this week’s episode!
Contact us today to get started.
Schedule a Free Consultation Here
Questions? Call Dwight Mejan today at (910) 235-0812
10.20.23: Audio automatically transcribed by Sonix
10.20.23: 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 Mejan. 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. Folks, we are back to the Retire 360 show.
Dwight Mejan:
We're glad to have you back. If you're a regular listener, if you are a first time listener to our show, we want to welcome you. We're glad that you're here. We've got a great show lined up for you. This is the show where we talk about you, your money, specifically how to win with your money, how to prepare and save for retirement, how to make sure you've got a good tax efficient strategy in your portfolio, how you've got an income and a tax plan. Put together an estate plan and a health care plan. Those are some of the pillars that we discuss on this show. My name is Dwight Mejan. I'm your host. Along with me is Mitchell Keiser. We can call you a host now as well. Mitchell, you're your official. I'm welcoming you as.
Mitchell Keiser:
All right, moving up in the world.
Dwight Mejan:
And we got Sam with us here as well. Sam is our executive producer. Always glad to have these guys with me side by side. They're not back up there right alongside me. So glad you guys are here. Part of the show. And hey, we want to remind our listeners, this is the show where you, the listeners, get to help shape the content and the subject matter. So thanks for those of you who do call in regularly, you want to learn some things about a specific topic. Just want to make sure that our listeners understand the door is always open for subject material. The door is always open for your questions, and of course the door here and the phone lines are always open for our listeners who want to get more specific information on anything that we discuss on the show, or anything that's relevant to them and their money, and helping them win with their money. So call us if you're in the mountains. We broadcast in that area in the western part of the state. That phone number there for our listeners is (828) 278-7814. If you're down in the more county area in the southern Pines Pinehurst area, you can reach us at (910) 235-0812. You can always reach out to us. Contact us on our website. That is Retire360Show.com. So reach out to us there. But yeah, we're glad you you're with us. You know, we have a saying here, Mitchell, you've heard me say it a lot is people support what they help create. Certainly a motto that I've learned in business 30 years doing this. I want to remind our listeners we are a fiduciary firm. We look out for you and your interests ahead of our own. So I just want to remind our listeners about that. And the show is brought to you by our company, 360 Capital Management. You can find us on that same website. And hey, we're glad that you're here. Mitchell. Sam, how are you guys doing today as we start the show?
Mitchell Keiser:
Hey, Dwight. Doing well over here. This is Mitchell. We are currently coming off the heels of our taxes and retirement event here in Pinehurst, and we're actually getting ready for our next class that we're going to have in Boone. So if you are in the Watauga County or Avery County area and you guys would like to come out to one of our classes, we are doing taxes and retirement again. We are going to do other classes here in the near future, but we are doing another taxes and retirement class there in Boone. If you guys are interested in that, we are going to be in downtown Boone and that is going to be the week of November 27th. So right after Thanksgiving, we're going to be having some classes if you're interested in that. The best number to call us at is at our Boone office, so we can save you a seat. And that office number is (828) 278-7814. And just real brief. What could you expect to hear at that class? We are going to talk about taxes once you've retired how to prepare for taxes pre retirement. And we'll briefly touch on Social Security. How to maximize your Social Security. Irma. If you guys don't know what Irma is you need to know what Irma is and how to prepare for Medicare. So we're going to talk about all of those in the scope of your taxes, because that is one component that if you mess up, you could be messing yourself up not just for a short time, but for a long time. So that's of interest to you. Give us a call. We'll be in downtown Boone the week of November 27th. Give us a call (828) 278-7814.
Dwight Mejan:
Want to ask Sam here in a minute how he's doing? But, Mitchell, when you were just updating our listeners on that and thank you for doing that for that information. We had a not too long ago, we had a listener of our show who attended one of our education one day workshops that we held. And when he checked in, he said, I know you guys, you're the guys on the radio. And he didn't come through that channel. As far as signing up through the radio, we love however you get to know us. But he found out about the. Workshop through social media, I think had had us advertise and he signed up that way. And then he said, hey, you're the guys on the show. I've been meaning to contact you guys as well. So he got a two for one special.
Mitchell Keiser:
Something we don't talk a whole lot about on this show is our social media, and I'm glad you brought that up because we have a awesome social media expert that creates not just tons of content, but she just displays it in such an easy to understand. And it's in a very informative way. So if you guys haven't already, I would encourage you to check out our Facebook page or our Instagram page. She just posts a lot of really great stuff and tips and tricks. I would just give that a follow. She posts probably a couple times a week and that is a 360 capital management. That's what you're going to want to look up. But we don't talk about that a whole lot on the show. But we do take show notes and that does get put onto our social media. So I know we give a lot of content. So if you guys are enjoying our content and you want to, you know, we're saying a lot for you to remember. And whether you're driving or just listening to us throughout the house, we got it in writing on our social media. So check it out.
Dwight Mejan:
And hey, the one behind the scenes that makes this happen and we bring them on. One thing I love about Sam, our executive producer, Sam Davis, who's coming on here in just a second, is Sam is behind the curtain, so to speak. He's pushing all the buttons that bring this show live and bring it to places. And we're glad to have Sam here. But the other thing I appreciate about Sam, he's not just on the technical side of the business. Sam is in our side of the business as well. He understands certainly the insurance component. Sam is doing some more continued study on the financial side of the business. He knows that as well. But Sam, you've got your you got your hands going in a lot of stuff. So I don't know how you keep it all together, but you do a great job for us, our listeners in this show. But all you've been doing on your trip back from Italy, are you back in the saddle and back in the groove again?
Producer:
Yeah, I think we're all caught up, Dwight. Appreciate it and happy listening. Happy weekend to all of the retired 360 listeners out there. Happy to have you tuning in. And thanks for the kind words, Dwight. You know, I do I do keep pretty busy. I've been kind of in this financial education retirement education space really since the beginning of 2020 and the start of Covid. I started to get really passionate about that and realized that so many people had so much to learn and understand about their personal finances and and retirement. And that was a time where we were all really thinking about our health and how important that was. And I think wealth is the other part of that conversation, just so important. We don't talk about it enough, we don't learn about it enough, or really take care of it and do the steps that we need to enough. And so I'm happy to do it. And so happy to be continuing my studies, like you said. But doing well down here in the South definitely caught up. I'm here in Atlanta and the colors are starting to change. I love the fall foliage. It's my favorite time of year, so good times. Yeah.
Dwight Mejan:
Well awesome. Well glad to have you guys both here on today's show along with our listeners. And if you are a first time listener and you want to check out some previous episodes, I know Mitchell just updated some of the social media. You can go to our Facebook page. You can also go to our website anywhere you download podcasts. You can find previous episodes. Just type in Retire 360 in the search bar and you can find us there. Retire 360 and you can check out more of our past episodes. We have a YouTube channel as well that you can go to. We're building more and more content for that, and we've got some things that we're working on. I'll save it for maybe a show in the future, but we're going to be doing some, some teaching on some shorter snippets that we're going to be putting on topics that you, the listeners, help to shape where you call in and you want to learn some things. We'll be taking some stuff to a whiteboard and keeping it, you know, high level, but giving you some specific financial advice, insurance advice that that you want to know more about.
Dwight Mejan:
So check out our YouTube channel. But it is growing. The viewers are growing as well, so we're glad to have our listeners not just listen to us here on the radio, but get to some of those other places where you can find out more about how we can help you win with your money. So we're going to jump in with today's show. Just want to start out it is annual enrollment period right now. And that is really an area for our office specifically where Mitchell his calendar I see it getting continually more and more busy. I looked at it this morning. Mitchell in fact, during our morning meeting, I said, Mitchell, your calendar is booking rather fast, I can tell. So I know a lot of our listeners who listen to this show have called in and have appointments with you and think you still have some times on the calendar coming up, but they're I think you're booking pretty much this week already. Think you're pretty full, aren't you?
Mitchell Keiser:
Yeah, it's it's funny actually. I have a couple days this upcoming week. I said I had to tell a couple people I don't even have time for a phone call. Yeah, but it is Medicare's annual enrollment period. And if you guys don't know, that is from October 15th to December 7th, and that is when you have the time to change either your drug plan or your Medicare. Care advantage plan. If you guys are on a Medicare supplement, you do not have to change. But if you have a drug plan or Medicare Advantage plan, or you're interested in obtaining an advantage plan, you have to make that initial decision. Now, from what I've heard from a client, actually, one of our listeners called in this week and had a great conversation with her, and she informed me that ship is not offering the same services this year as far as helping out seniors. And I just want to throw this out there because I do the Medicare for our office. But I do have a team that helps me as well. And we offer very similar services as ship. As far as advising people on their plans, I would say what makes us different and perhaps more valuable to to Medicare beneficiaries is that we not only can recommend a plan and educate you on a plan, but we can also enroll and can manage and can help help you with some of those transactions.
Mitchell Keiser:
Just real brief. If you guys have heard things about these advantage plans and you're like, well, what's all this free stuff about? We get a lot of calls where people are, you know, they're confused or they think they're missing out on something. And I'm just going to be completely honest with you. You might be missing out on something. You might be missing out on a lot of money. I'll tell you, I've helped a couple people just this past week where the question wasn't, are they going to save money? Switching to this type of plan, it's a matter of how much money are they going to switch to this type of plan? And if you've been listening, I shared this story a couple times. Last year was my biggest success story ever, where I actually helped somebody save $15,000 back into their pocket just from their health care expenses. He received no difference in how he received care. It was just a matter of him being in the wrong plan. And he had protection as far as his maximum out of pockets, his co-pays, his prescriptions. He was paying way too much for his prescriptions. This is all stuff, folks, that you have to have reviewed. If you can't review it on your own, you need to be with somebody that can help you review it on an annual basis.
Dwight Mejan:
You know, I can't emphasize enough to what you're saying is, when I started in the business on the insurance side 30 years ago, and I was doing what you're doing for our, our listeners and for, you know, all of our clients, you've called every one of them over the last four weeks prior to the enrollment season. Say, hey, it's getting ready. You've called them. I know a lot of our listeners haven't even heard from somebody. They might be 70. They've been in a Medicare plan for five years, and they don't. They wonder, am I in the right one or is there something better? And folks, this is your time to pick up the phone and call. And I'm going to give you those numbers here right now. If you're in the mountains, it's (828) 278-7814. If you're down in low country here in Moore County, it's (910) 235-0812. And I'm going to be as bold to say this. Your health care is as good in many cases as the advice that goes with it. I'm going to say that again, your health care is as good and in many situations as the advice that you're getting with it. And here's here's what I tell you, folks. You're going to pay the same amount. There's a lot of do it yourselfers out there these days. And they're going to go in. And we want you to do your own research, but you're not going to pay any less to purchase one of these plans, whether you're on the Medicare supplement side or whether you're on the Medicare Advantage plan form, you've got somebody who's knowledgeable, trained, skilled, totally equipped, and an independent fiduciary to help guide you in the process.
Dwight Mejan:
Folks, it doesn't get any better than that. If it does, call me and let me know what you think is better than that. Because and again, I'm not trying to make this about us, make it about Mitchell, but it is, you know, you have to have a health care plan. And what we do here is help you, you know, find out which is the best platform to be on. There's a lot of different decisions, particularly if you're coming into this for the first time. There's a lot of different decisions that you have to make. And we basically have a decision tree through the questions that Mitchell will ask you that will guide you into, first of all, the right type of Medicare plan, and then the plethora of choices that lie within that platform that you end up choosing. There's a whole bunch of different options between there, and you've got somebody who can bring it concise. You know, I love going back to college when I was in college and I had a couple of classes for two semesters, I just, I was, I remember studying, I just had the wrong mix of classes. So Cliff notes, I'm aging myself. I don't even know if those are still out there. Mitchell I'll ask you or Sam, is that are Cliff notes still in existence these days?
Mitchell Keiser:
Personally, have never heard of such a thing, and.
Dwight Mejan:
Sam hasn't heard of him either. You know what Cliff notes are, Sam?
Producer:
Yeah. So I used to use those in literature classes, like later in high school and definitely in college. And there were two competing brands. One was Cliff notes and one was SparkNotes. But I think what happened was they kind of got forced out of business or forced to adapt because of the internet. A lot of that information was available online, basically. Only a very abbreviated version of whatever it is you were trying to study, right?
Mitchell Keiser:
So have heard of. I have heard of SparkNotes and I've also heard of Quizlet. Quizlet was big when I was in college, so there you go.
Dwight Mejan:
Think the boys are still here over using Quizlet? So Cliff notes, since I'm the old guy here in the mid 50s, I use Cliff notes because I needed to get the information. I needed solid dated. And that's really something that that Mitchell does a really good job of is he'll he'll, you know, he'll ask the right questions, he'll guide you and you know, he'll he'll give you what you need to know. And Mitchell, I know you were continuing to say some things, but, you know, why would somebody want to reevaluate? You know, if the old saying, if it's not broke, I'm not going to try to fix it? I know there's some mentality out there of people listening right now who kind of take that approach. I'm happy with my health care. I don't need to make a change. Why should they still just maybe make a call and take a check here to see if if they're correct on that?
Mitchell Keiser:
So I'll say this time of year I probably meet with like 50 different people a week just to talk about their their health care plans. And I'll tell you, 80% of people, when I introduce something new, will tell me that it sounds too good to be true, or they'll give me some some way of saying that this all just sounds too good. Like Mitchell, how can you save me this much? How can my maximum only be this much? How am I going to get all these extra benefits? And more often than it should people, if they do not change, it's because of their fear and don't think it's their fear in me. I think it's the fear in themselves of making the wrong decision, because perhaps the the information that I'm giving them, they just don't know because they've just been so used to a familiar that they've never just adjusted. But folks, I'll tell you, there are certain plans if you're on a Medicare supplement. Just for example, I've heard people say, well, you know, I've been on plan N plan, plan F my whole life. If I switch it, I don't want to, you know, miss the same benefit. So why would I go from paying a couple hundred dollars down to $100? Folks, it doesn't matter legally if you have plan Ng or F with whatever company it is, they legally have to pay for the same benefits. And I've had people, they say, well, I'd rather just, you know, keep paying what I'm paying. And that that decision cost them thousands of dollars per year over $2,000. I've seen people that are just, you know, afraid to make that move.
Mitchell Keiser:
Um, same thing on the advantage side, people that they're paying these outrageous premiums or they're missing out on perhaps some of these benefits and they think that somehow they're going to get screwed, which I'll be honest with you, if you go into a plan that you don't fully understand or if somebody doesn't explain it to you, right, or if you work with somebody that you truly can't trust, it is possible out there. I've seen it happen, but I think a good fiduciary in this type of work is going to explain to you all worst case scenarios. I think that's a question that you should ask. What is the worst case scenario in this plan? What is the maximum would have to pay in this plan and tell me the most important things that you would want to know as an agent, as a representative in these plans, that perhaps I just don't know to even ask you. Those would just be some tips that I would give to people, but I would. My tip for the week would be one don't let fear keep you from missing out, because I see it every year. It cost people thousands and thousands of dollars that just because they're afraid, or to make sure that you are working with somebody you can trust just because something is good and you're ready for a change and you're ready to make it positive, I just am not a big fan of doing something over the phone, somebody you've never laid eyes on, so I would recommend that you guys work with somebody local. If that's not the case, just make sure you're doing really thorough research.
Dwight Mejan:
Yeah, well, and savvy retirees, what it boils down to. Mitchell, what I hear you saying is, you know, they they do a Medicare coverage check every year for an opportunity to save money. I know we have a a wealth advisory client. Think of two of them both. You know, north of a couple million in investment money that we help manage that are looking at their Medicare this year. They do it all the time. And I know both of them, you know, part of how they got there obviously they're diligent savers. Didn't have, you know, extraordinarily huge incomes to amass the wealth they have. But they check in and look at every pillar on the financial planning chart that we go over with our clients. And health care is one of those pillars. And they do that review every single year, and they will make a change for savings if they think it's better. And I just encourage all of our listeners to do that. So enough on that topic. But if you do want to get a hold of Mitchell (828) 278-7814. Were for western North Carolina if you're in Moore County. (910) 235-0812 or website Retire360Show.com and you can book a complimentary consultation with us there. Mitchell, why don't we hop into the quote and we're going to get into the rest of the meat here of today's show.
Producer:
And now wholesome financial wisdom, it's time for the quote of the week.
Mitchell Keiser:
And so this week's wisdom is brought to us by Jim Rohn. And that is, we must all suffer from one of two pains, either the pain of discipline or the pain of regret. The difference is discipline weighs ounces, while regret weighs tons.
Dwight Mejan:
It's an interesting topic on regret. We won't go there today, but you know the the fear of doing something that someone regrets. You know, we ask that question sometimes, you know, of people do you regret the things you didn't do or the things that you did? You know, a lot of people, you know, miss opportunities, the things that they didn't do. But regret certainly is something you want to avoid at all costs, if possible.
Mitchell Keiser:
Yeah. And I would just even add to that, if there are things that you wish that you did differently, I mean, you can't go back, you can't change it. You just got to plow forward and make the most with what you've got. Remember, Dwight, do you remember we had a client one time? She had $1 million portfolio. She was going to retire in ten years, and she put all of her money into a very volatile REIT, which is a real estate investment trust, and to something that she did thoroughly research. And she lost every dime of that IRA, and she was starting over from scratch and think she had 50 grand and she was motivated. I'll give her that. She said she was going to make it all back and then some in ten years, which I hope, I hope she did that. But, you know, there is a point that, you know, you can have a regret. There was a mistake, but you know how you decide to move on from it and set realistic expectations and absolutely.
Dwight Mejan:
Great, great point. Very good point. Well, hey, we got a special announcement. Maybe our listeners may have already come across this in the news, but Social Security, have they've announced their cost of living adjustment for 2024. So the news is in on that. We're going to address whether retirees are really keeping up or not. But Social Security recipients will receive an annual cost of living adjustment for 2024 of 3.2%. This is a much smaller increase than the inflation fueled boosts of the past two years, the Social Security announced this past Thursday, so the lower adjustment reflects the fact that inflation has moderated this year, and recipients had received increases of 20 and 2023 of 8.7% and 2022, it was 5.9% the year previous. So we look at the history then this year of 3.2%, again, this 2023 was 8.7, 2022, it was 5.9, 2021 was 5.9. And then in 2020, set prior to the Covid 19 pandemic, it was 1.3%. So, you know, many people, especially those at the Senior Citizens League, remain critical and skeptical that the cost of living adjustments accurately represent the real increases to the cost of living in the United States, especially for seniors who spend more on services like health care. And folks, if you look at, you know, where inflation is really at, when you look at like the essential goods, we've talked about it quite a bit on this show. Most people would agree that. Consumer price index is a lot higher. And that's what they keep doing with the government, is they want to manipulate the, you know, the data and that CPI, there's different KPIs out there now that are that are measuring certain things. So they're going to create a new CPI to fit the narrative that they want to, you know, put in play. But whether you think it's accurate or not, the fact is you're getting a 3.2% raise. And Mitchell, I think you've got something else you want to mention about the cost of part B Medicare. So why don't you share that with our listeners?
Mitchell Keiser:
Yeah. So the good news is you're getting a 3.2% increase. The bad news is you're getting a 6% increase in your Medicare Part B premium. This past year it was one 6490. In 2024 is going up to one 7470. So that's about a 6% increase. But we know that usually when they give us an increase it's usually going to be that's not going to totally offset you, but it's offsetting a little bit of those dollars.
Dwight Mejan:
So the government giveth and the government taketh away. That's exactly.
Mitchell Keiser:
Right.
Dwight Mejan:
So there was an independent economic research group called True Inflation. You can actually go there to true inflation.com. They determined that the real level of inflation since January of 2020 is actually 23.9% aggregate. So the question is are you keeping up with that inflation. And I think that's certainly feels more accurate to me. Some would probably argue it's higher than that. But 23.9 I think is a little more along the lines of what's more realistic. But obviously the government's not going to hand out a 23.9% Social Security raise, are they?
Mitchell Keiser:
So, Dwight, I've I have some things to add to that. So 23.9 that sounds more accurate to me. So there was a survey of 1000 people ages 18 to 65. And of those 1000 people, they said 64% of them said that they have spent less on non-essential goods. They pay more attention to bargains and deals. That's 64% of people. 39% say that they cut back on non-essential journeys on their vehicles. So less road trips, less people are traveling. 39% say they do not go out for dinner or lunch anymore. 32% of people say that they use less gas and electricity in their home, so they've been more mindful of just everyday usage. 27% of those people said they gave up on certain hobbies, and 11 only 11% of people that were surveyed said that they did not change any behaviors at all. So, you know, we're talking about a 3.2% increase, but you're saying, you know, what that really could be is, you know, in the above 20%, but then you have, you know, 64% of people that are, you know, professing that they're spending less money on their day to day living. So I just think that's it's pretty interesting when you look at the the full picture, not just what the government posts.
Dwight Mejan:
Well, and it Mitchell's a great statistics you shared. I'm glad you know our listeners got to hear that. But it exactly ties in with where the real inflation numbers are. Because if inflation was really 3.2%, which is what the cost of living is going to be, those high statistics that you gave on people making changes to their lifestyle that would they wouldn't be that high, you know, people wouldn't make those kinds of adjustments if it was really 3.2%. So I think it speaks more to the the real inflation numbers that we all feel and that we all believe to be more accurate and more true. And that's why there's a, you know, a huge quest for where can I get more yield to maintain my purchasing power, you know, with my retirement savings, with my income, you know, with savings, if people are able to continue to, you know, to save money in retirement. And, you know, we just want to just take a moment here before our break, just to remind our listeners and I'll ask you all a question. Is your retirement plan, is it working for you? You know, when you last over the last few weeks, many of you have received your third quarter statements from your retirement and investment accounts. And the question I have is, are you satisfied with how your portfolio has performed lately? Have you heard from your advisor or your financial professional lately? You know, if these are answers to questions that you're saying no or I'm not real sure, then I'm going to encourage you to pick up the phone and give us a call, and we'll tell you what it's like to to work with us.
Dwight Mejan:
You know, we're fiduciaries. We'll ask you some questions. We'll do a portfolio analysis for you. We'll set it up on a zoom call. I just want to share with our listeners. You know, one thing that I share when we do a portfolio analysis is. We look at average annual growth rates, and we'll take your current holdings in your portfolio, and we'll match them against a portfolio that we manage for some of our clients that fit your same risk tolerance. And we'll just measure that to see what is the return look like, particularly over a longer period of time, like over a 15 year period or a ten year period. And as an example, because this stood out to somebody just this past week who had done this with. And it really opened the eyes of a listener of this show who made that call. And one of the things that we looked at, they had a $700,000 current value in their portfolio, okay, 700,000. We looked at the average rate of return of the current portfolio that they held going back to 2008. So it was a little over 15 years ago, and we looked at that annual growth rate, and it was at 6% net of the fee and everything they had.
Dwight Mejan:
So we looked at a comparative portfolio that had the same level of risk, didn't impose any more risk on the client on on assets, and that we were recommending and ours had a 2% higher return. Now, we know that past performance does not indicate the future in terms of the same level of success. So just put that disclaimer out there. But if it held true in the next 15 years, they maintained another 6% return in our portfolio, which had had an 8% average return, held true. That difference in 2% was a difference of 15 years forecasted. At the 6% return, their portfolio would have a $1.7 million value, a little over 1.7 million. With the 8% return only 2% more, it would have a $2.3 million value. Now, we couldn't guarantee that that was going to be the case. We were simply using that as a discussion to say, if this plays out again for 15 years, what would that look like? And the difference was 2.3 versus 1.7. It was a $600,000 difference in 15 years on a $700,000 beginning balance. So folks, that makes a big difference when you start talking about 1% 2% values and it makes makes an even bigger difference on a larger sum of money, I put those same numbers to a $1.5 million portfolio.
Dwight Mejan:
And here was the difference. If you had a $1.5 million portfolio today and you averaged 6% over the last 15 years. Getting an extra 2%. Here's the difference at 6%, that 1.5 million in 15 years would be worth 3.68 million on an 8% return. It would be 4.96 million for a difference of almost $1.3 million over 15 years, on a beginning balance of 1.5 million, with just a 2% difference. So people sometimes don't really understand or realize the impact of what that 1 or 2% means. And I say that because I want people to understand this. Do you know what the fee is? That you're paying your advisor? Do you also know what the expense ratio is of the portfolio that is being managed where you currently have it? Because sometimes those expense ratios can run close to 1%. Okay. And we try to keep a lot of the portfolios that we manage with the type of asset allocation we use under 0.2%. So those those are things that we talk about in those sessions when we meet with a client. So, you know, pick up the phone and call us. Our number here is (828) 278-7814. Or if you're in the Moore County area it's (910) 235-0812. And of course our website is Retire360Show.com. So we'll be right back. We're going to take a quick break and we'll pick up some more on inflation.
Producer:
You're listening to Retire 360.
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 thousand hundred dollars value provided at no cost to you. Book yours now at Retire360Show.com. You're listening to Retire 360 with Dwight Midgen. Now back to the show.
Dwight Mejan:
All right, well, welcome back, folks. If you're just joining us, we've been talking about inflation. We've been talking about cost of living. For those of you who are taking Social Security right now, you are getting for 2024 a 3.2% adjustment increase in that Social Security. But if you're getting excited and you just joined us, it's going to be taken away by a 6% raise on Medicare Part B if you are on Medicare already. So we don't mean to be the Debbie Downers here, but we want to give you the facts. That's part of what we commit to doing on this show. I'm your host, Dwight Midgen, alongside our other host, Mitchell Keiser, and Sam Davis. Our executive producer is with us as well. But, you know, with that inflation, and we've been talking about the fact that the real inflation rate, I think all of our listeners would pretty much agree that is much, much higher than that 3.2% adjustment that people are receiving next year. In fact, Mitchell just shared some great statistics of people who are changing the way they live. They're cutting back and a lot of areas and think, you know, we might see some more of that depending which way. You know, we see interest rates going. There's talk of another increase that could be happening here before the end of the year. So we'll wait and see for sure where that goes. But you know, there should be this quest that many of our listeners have right now of, you know, how do I maintain the purchasing power of my portfolio, you know, where do I go? I mean, many of the listeners right now are, you know, looking at this market and going, hey, I don't really want to take more risk or I'm still sitting on the sidelines with some cash.
Dwight Mejan:
I just don't feel like I'm ready to put it into the market yet. Or I certainly want to, you know, if I do. So I want to know that there's some buffer built into what I invest in. So I've got some, you know, a hedge against, you know, some downward trend that could happen right away when I put the money in. And I can tell, you know, our listeners here, one of the things that we're using with a lot of success inside of client portfolios, and this was a great asset last year, and I would tell our listeners this would be the equivalent. If you own bonds in your portfolio, this would be a great alternative asset class that we'd love to talk with you about. If you're listening to the show right now, we use a product called Structured Notes and they are issued by large investment banks. For example, you don't have to be taking income in order to invest in them. Many people use structured notes and we use them in client portfolios who are just, you know, looking for a moderate growth portfolio. But a structured note is, is a debt obligation that's issued, and it has an underlying derivative that's attached to that.
Dwight Mejan:
Now that's a whole nother discussion on derivatives. But let me just say this about derivative derivatives. Since a lot of our listeners may not know what they are, it might seem scary. A derivative is basically something that draws its underlying value from from an index in this case. So one of the indexes for example is the S&P 500. And that is attached this derivative to this structured note. And there's a published interest rate on that structured note. So each and every month that interest is being kicked out into the portfolio. And if you don't need it it can reinvest. Or it can go into a cash account. If you want income later it can reinvest inside that structured note. So the structured note again it's a debt obligation. And it contains an embedded derivative component. And it has a buffer on it. And that buffer is 30%. All of the notes that we issue through our investment firm to our clients have a 30% buffer. And what that means is this as long as from the point in time that you purchase that note, there's not a drop on the S&P 500, a fall of 30% or greater. All of your principal at the end of that 12 months is returned to you. And all of that interest you would receive as well. So imagine you have a nine and a half or a 11.5%, which are current offerings by Bank of America this month. You hold that note.
Dwight Mejan:
If that market falls, let's say, for example, on that S&P 29.9% didn't hit 30. It got close. That's a long way down over 12 months. It could happen. But that's a long fall. As long as that index doesn't fall your principal is returned to you as well as that interest yield. So you would have, you know, the money you put in plus that interest. And that's a great opportunity if you're sitting on the sidelines and imagine this, folks, if you had that last year in your portfolio in place of bonds, you know, bonds were going. Going down rapidly with the rise in interest rates. You know, the feds had 11 rate increases in interest rates, which just plummeted bond portfolios. But if you had a structured note, a structured note is not impacted by interest rate movement. So great opportunity if you want to learn a little bit more about those, give us a call. If you're in the western part of the state (828) 278-7814 if you're in Moore County, (910) 235-0812, and one other instrument that we use right now in client portfolios with a lot of our customers, we're using buffered ETFs, buffered exchange traded funds, a similar concept. There's a buffer. I like to think of a buffer as a defense. You know think of a football team. You know it's got offense, defense, special teams. A buffer is a defensive position that the ETF, which is like a mutual fund. It's it's passively managed versus a mutual fund is more actively managed.
Dwight Mejan:
What that buffer ETF does is you can track I'm going to use that example for the S&P 500. You could track the S&P 500 point to point. So for example if the S&P is up over a 12 month period 15%, you can capture that full 15%. There are caps to the upside. But those caps right now are very generous. They're in the high double digits. And you can get buffers anywhere from 9%, 15% or 30% where you're protected. On the downside, either you know, 9%, 15%. So if if the market, let's say you have a 15% buffer ETF that's tied to the S&P, if the S&P is down 18% over the next 12 month period, you're only down 3% because the buffer inside that took the first 15% of that loss. So great other idea for you and we'd love to explain to you a little bit more if that's a fit, if it would be appropriate in your portfolio. But those might be two areas. I know our listeners kind of look for some specific ideas, and we'd be happy to talk to you about those. So we're going to jump in here and just real quick, I want to ask the guys here with me, Mitchell and Sam. Listeners are going to wonder where I'm going with this, but it's Girl Scout Cookie Time. This is our kind of fun trivia for the show. What is the favorite? What is you guys's favorite Girl Scout cookie? Mitchell, how about you? What's your favorite?
Mitchell Keiser:
Uh, so for me, I'm probably gonna have to go with Thin Mint. There was a day when I could easily down a sleeve in a city.
Dwight Mejan:
How many calories was in that one?
Mitchell Keiser:
Well, way back in that day they didn't count. So I'm old now. Now?
Dwight Mejan:
You guys still don't have to worry about it. You got that metabolism that like lightning.
Mitchell Keiser:
Yeah, I don't know.
Mitchell Keiser:
Once you once you hit your mid 20s, it's it slows down.
Dwight Mejan:
Yeah. How about you, Sam? What's the favorite. What's your favorite?
Producer:
I do love the Thin Mints, especially right out of the freezer. But my personal favorite would have to be the caramel Delites sometimes called Samoas. And I know I have a niece who sells Girl Scout cookies every year, and so I usually put in an order for a few boxes and get some Thin Mints, some caramel delites, and then like the lemonade ones as well.
Mitchell Keiser:
Yeah.
Dwight Mejan:
We, uh, I think my wife and I are at the point where we buy them from the first kid that comes to the door and, you know, being one of those competitive kids. I was one of those kids in grade school when we were selling chocolate, you know, sponsored by the school. And there was a prize. I would go to the door and I had to be the top kid in the class. So I felt like today when kids come to the door, I probably shouldn't give my address out because all the listeners are going to be coming to my door with their grandkids because I buy like, how many boxes do you have with you right now? You know, I'd be the one that buys them and then just give them away to people because I don't want them sitting in the house. You know, it doesn't do good for the calories, so I'm not going to give my address out for that reason. But I'm a Thin Mint guy. I like those as well. I agree with Mitchell. Could easily down them in one seating sitting I should say. The peanut butter patties one of you guys was talking about is that the ones that you can microwave or I know you could probably microwave any of them, but is that the ones where you say think.
Mitchell Keiser:
Think? Sam was saying that, but yeah, that that definitely sounds good.
Dwight Mejan:
And those are called Tagalongs. Is that the other nickname for those? That's what they call him. Tag along.
Mitchell Keiser:
I'll take your word for it.
Dwight Mejan:
But. Hey. What? The reason we're talking about Girl Scout cookies, folks, is the cost of Girl Scout cookies is going to be 20% more in the coming months. Many Girl Scout regional councils, they're raising the price of the popular cookies to help cover rising costs at the two commercial bakeries that make the treats. So you know your your favorite box of Girl Scout cookies. Mitchell, I'll ask you this. Maybe share with our listeners what are they going to sell for on average?
Mitchell Keiser:
Are you asking me to guess?
Mitchell Keiser:
Yeah.
Dwight Mejan:
What do you what do you think the sale is of them?
Mitchell Keiser:
So they were probably selling for around 3 to 4 or $5, something like that. I'm going to guess that they're going up to 7 or $8.
Mitchell Keiser:
Yeah, they were costing.
Dwight Mejan:
About five and they're soon going to cost about six bucks. So still less than what Mitchell thought. But the cost is definitely going up. And a lot of cookie lovers are surprised that the Thin Mint, the one we've been talking about here that a lot of us like the purchasing power, is thinner than it used to be, no pun intended. A $20, a $20 bill that you used to buy four boxes of cookies now covers only three with a couple dollars left over. So. And then nationwide, Girl Scouts sell about 200 million boxes of cookies a year. That's more than Oreos. Even though Girl Scout cookies are on sale for only a few months of the year, typically between January and April. So kind of fits in with what we've been talking about, guys, with the show, with inflation, where it's really at 20%, that kind of fit in with some of the stats that we were talking about here earlier.
Mitchell Keiser:
So you guys got.
Dwight Mejan:
Anything you want to add to the Girl Scout cookie trivia here that we're sharing with listeners?
Mitchell Keiser:
Well, I'm just kind of sad now that Sam informed me that it's 640 calories per sleeve, so I'll need to go for a run after this.
Mitchell Keiser:
That's for the whole sleeve.
Producer:
Yeah, I just I ran the math. I did the servings times the calories per serving, and I know that there's unless they've changed things. There's two sleeves per box of Thin Mints, so if you're eating them by the sleeve, that's 640 calories. That is a that is a heavy snack.
Mitchell Keiser:
That's about one third.
Dwight Mejan:
Of the recommended calorie intake. And I know that's not the calorie type that you'd want to take in anyway. But yeah, interesting trivia there. So thanks for the math on that one. Well, hey, let's, uh, let's shift gears here. We want to talk about something else that's happening this time of year that's really important for our listeners. We want to make sure this is up on the radar screen for everybody, and that is required minimum distribution reminder.
Mitchell Keiser:
So if you guys haven't already had your RMD set up, sometimes those are on a systematic withdrawal. Some people get those monthly, some people annually. If you haven't gotten that done yet, make sure you get that done by December 31st. That used to be one of the stiffest tax penalties that were out there. If you did not take your RMD, your required withdrawal. It's a little better now. But you know, folks, we still wouldn't advise that you play with that. It's definitely something you want to make sure that you're taking care of. So be sure to mark your calendars, prioritize that financial task before it's too late. And Dwight, I wanted to ask you this because some people are probably thinking, well, you know, I've been working with this financial advisor, you know, all my life. And now that I'm of age, I think it's just assumed that because they handle their finances that they're going to take care of that. So why is every financial adviser responsible for one guess, letting the beneficiary know that they have to take their RMD? And well, I'll start with that one. Are they required to let us know.
Dwight Mejan:
Yeah really good question Mitchell. Ultimately the responsibility for that RMD lies on the account holder. So if you have traditional IRA funds it's not your advisor's responsibility. Hopefully they are contacting you if it's the first time you need to take one. And that's, you know, on their radar screen. But if it got missed for whatever reason and you didn't take it, the responsibility lies on the account holder. And the other thing is, if you're, you know, 73 this year and you hadn't taken one yet, that's the age. If you haven't already begun to take required minimum distributions, as it's the year in which you turn 73, there's an exception to that. I think we'll get into that here in a minute. But and that's changing, folks. The the age is moving again to age 75. And if you'd like to know, you know, am I in that category or not? If you were born in the year 1960 or later, you're required minimum distribution. Age is going to be 75 if you haven't yet started to take it, and you were prior to 1960, your age is going to be age when you turn 73. And folks, I'm going to tell you this, the government is not your friend here. They're not saying, hey, we're just going to let you kick the can down the road. Because of our generosity, they are letting you kick the can down the road a little bit, but they're doing it because they realize the bigger that account gets, particularly as tax rates are likely to be going up, there's bigger sums of money they're going to be able to pull out of those accounts.
Dwight Mejan:
Remember this. With that traditional IRA. We talk about tax buckets and our tax planning class. You've got tax free buckets which is your Roth money. You got taxable accounts which is your you know after tax savings accounts. And then you've got those traditional IRA accounts, those pre tax buckets. That typically is the largest bucket for our listeners of everybody listening. Now most people the majority of their money is in that pre tax bucket. And that is the bucket that you have. You know if you're not yet there at required minimum distribution age, that is the bucket that you have the most control over. Now to begin doing some tax planning. And that is one of the areas in our wheelhouse that we work with clients on is, you know, showing them strategies on how they can get to a tax free retirement if they want to get there. Some of that's going to depend on if they have a pension that's taxable. But if you have no other income other than Social Security and you have a large bucket, if you want to get to a point in retirement where you get to a zero or a 10% current tax bracket, we'll show our listeners how to get there, and we'll show you the best tax efficient way to do that.
Mitchell Keiser:
So so Dwight, got a question for you before you lead into the next section. So there's somebody listening out there that's saying that they don't like RMDs. They don't want to pay their RMDs. It just frustrates them that they have to do that because they want to stay in their tax bracket, and they don't know where tax brackets are going. Their RMDs could potentially push them into something higher. And all of those unknowns are causing them stress for their financial future. So how could somebody avoid the RMDs if they do not want to take those distributions? So how could somebody do that in advance to prepare for that?
Mitchell Keiser:
Yep.
Dwight Mejan:
Good question. I think maybe somebody had put that question into our website before the show. And, you know, one of the things to avoid having to have, you know, RMDs that could thrust you into that higher tax bracket. And that's one of the things that we see quite often with people who come into our office is that's the that bucket, that tax deferred bucket. If they don't have a tax efficient plan to to move that money. People do a great job of saving in that bucket, getting to retirement. But then the bigger problem is looming. And, you know, we see it quite often where people are, you know, they're focusing on the wrong things inside the portfolio instead of looking at what, you know, what could be coming to hit them down the road, like you're saying, Mitchell, is this forced distribution, which is going to happen with that account if you don't have a strategy? One of the things that they could be doing is looking at conversions and doing Roth conversions. Now, hearing that a conversion is different from a contribution, a contribution is if you're still working and you have earned income, there's certain amounts that you can contribute to an IRA account or to a Roth account specifically, if you're under 50 at 6500 if you're 50 or over. There's a catch up contribution of 1000. You can do 7500.
Dwight Mejan:
There are some phase out limits where people can't do it at all. If you have certain income levels, we won't get into that on this segment of the show. But yeah, to that point, Mitchell, people can start to unload money out of that pre-tax bucket and want to make sure listeners understand there is no way to avoid paying the tax. Okay? There's no secret that you're missing out on, but there are strategies to help mitigate the lifetime tax liability that you'll have if you get with us and talk to us about a plan, we'll show you a strategy that you could use to systematically start taking money out. And there's there's things we have to be careful. There's little pitfalls along the way. There's this thing called Irma, which affects how much you pay for Medicare. Irma stands for income related monthly adjustment amount for your Medicare. And that people don't realize this. A lot of people don't, that you could pay up to $570 a month for part B of Medicare when most people are paying right now, currently $164 a month, roughly, for their Medicare. So you got to be careful when you start pulling money out of this account, that that pre-tax account, you got to be careful the age that you do that, because it's not necessarily right. When you get to Medicare, it starts at the age that you turn 63, because Medicare goes back two years to determine how much you're going to pay for Medicare.
Dwight Mejan:
So your age 63 tax return is going to determine the premium that you pay at 65 for your Medicare. And I know our software and the planning tools that we use with clients, it lets us know if we're going to bump them into a higher cost, and we're going to cover that with our clients to see if they're willing to do that, because sometimes they are willing to do a little bit higher amount, not 570 a month, but they're willing to pay a little bit more if they know what it is in order to accomplish another goal, which is a tax strategy inside the portfolio. So we got to kind of way what is the strategy that we're trying to really target right now? Is it a tax plan? And if it is, what's the best way of doing that. Because if you don't have a tax plan, folks, you're just going to the default method. And the default method is wait till RMD age and hope tax rates haven't doubled, for example, in your current bracket, which could likely happen. And then you're at the mercy and then you're partnering with the IRS and retirement. And we want to disinherit the IRS, not make them a partner with our clients.
Mitchell Keiser:
Yeah. That's crazy Dwight. Some people are also probably listening to this and they're thinking, is am I too late? I'm already above 73. Maybe they're 75, for example. Is there an age limit to the contribution age contribution for the converting to a Roth?
Mitchell Keiser:
Yeah.
Dwight Mejan:
From a conversion standpoint, no, there's no age requirement. There's no maximum amount that you have to do. The IRS has basically got the door wide open. They'll they'll receive your tax money however quickly you want to give it to them. And we don't recommend, you know, a large bucket that you just take everything you got and convert it over. Depending on how much you have in that account, that might be, you know, an opportunity for a few listeners. But for most people, there is a more strategic approach to doing that, and that is something that we lay out. But there is not a limit to how much you can convert into that. But that's another great question that we get quite often.
Mitchell Keiser:
Yes, absolutely. Well, we covered a lot of great stuff today, and we just wanted to thank our listeners for tuning in. I just wanted to remind everybody that we do have our next taxes and retirement class coming up in June. So if you guys are in the Boone area and you'd like to learn more about taxes and retirement, we'll touch on Medicare just a little bit. We will also go over Social Security, how to pension plan and how to win with your money. So if you're interested in that, that is going to be the week of November 7th or 27th and that is the week after Thanksgiving. We can confirm some dates with you. And if we have a spot, that event usually does fill up. So we do recommend that you call. So if you guys are interested, give us a shout at (828) 278-7814.
Mitchell Keiser:
Yeah.
Dwight Mejan:
Well, I want to thank our listeners. We didn't get through every bit of the material today that we had hoped to do, but we will pick up with that next week on the show. But I just want to thank everybody for tuning in. If you have questions, Mitchell just left those numbers. We're happy to take your calls. We're happy to see you on a zoom call. We're happy to meet you with one of our offices. We have an office in Banner Elk and here in Southern Pines. Always love to hear from our listeners, but we really love to meet with our listeners. And we've got some live events coming up that Mitchell shared. And also, feel free to get Ahold of us and book a complimentary session with us at our office. But until next week, keep those questions coming. That material is what helps shape the content of this show, and we're glad that you've taken some time out of your day and your weekend to tune in with us here at 360 Capital Management. Just want to wish everybody a great week ahead. And like Mitchell said, we're here to help you continue to win with your money. So we'll see you again next week. Thanks for listening.
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 offer 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:
Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest, if any exist. Refer to our firm brochure, the ADV to a page four for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWA. Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities.
Producer:
Buffered ETFs can be held indefinitely, resetting at the end of each outcome period. There is no guarantee the funds will achieve their investment objective. Investing involves risk, including possible loss of principal. The funds have characteristics unlike many other traditional investment products, and may not be suitable for all investors. For more information regarding whether an investment in the funds is right for you, please see Investor Suitability in the prospectus. The fund's investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus contains this and other important information. Read it carefully before investing.
Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.
Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.
Sonix has many features that you'd love including upload many different filetypes, collaboration tools, share transcripts, enterprise-grade admin tools, and easily transcribe your Zoom meetings. Try Sonix for free today.