On this week’s show, Dwight and Mitchell answer more questions from listeners and outline some essential strategies they utilize every day to help people retire better. Do you have a plan for your taxes in retirement?
Contact us today to get started.
Schedule a Free Consultation Here
Questions? Call Dwight Mejan today at (910) 235-0812
6.23.23: Audio automatically transcribed by Sonix
6.23.23: 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.
Dwight Mejan:
Well, welcome. We are back. Can't believe another week has already flown by. My name is Dwight Mejan. Alongside me is Mitchell Keiser. I am your host, and this is retirement radio, brought to you by 360 Capital Management. And we are the Retire 360 show. So it's good to have all of our regular listeners who tune in regularly. We appreciate that this show is about you helping you win with your money. And we are a independent, holistic fiduciary firm. No, that's a mouthful. We talk about that periodically, about the nature of each of those independent being holistic, coming at retirement and investment planning from a lot of different angles, not just investing your money. And we are fiduciaries as well, which we have your best interest at stake, not our own. We do better when our clients do better. Most importantly, we put our clients ahead of our own needs, don't we? Mitchell So, Mitchell, how's your week been going?
Mitchell Keiser:
It's good. A little rainy down here in low country, but it's been a pretty good week. How about you, Sam? You've been doing all right there in Atlanta.
Dwight Mejan:
Sam is our executive producer. Always good to have him with us.
Producer:
Yeah, things are things are going well. Probably had the warmest weekend so far of the summer this past weekend in Atlanta, Georgia. But things are going well. The kids are out of school. The parks and golf courses are busy and full. And I saw a lot of dads out there enjoying Father's Day weekend.
Dwight Mejan:
Awesome. I have one of my sons down in Texas with a heat index I saw today as we're recording this of 115. So while it's it's getting warmer we're not Texas warm. So thank goodness for that. But I'm sure the heat is coming so had a special week this week celebrated my 31st wedding anniversary with my lovely bride Dawn and just want to reach out and tell her I love her. And looking forward, Lord willing, to the next 31 years that I have together with her. But I know I couldn't do the things that I do if she wasn't there to support me. And it's been a great ride with her and I'm looking forward to the future. So good things, good things ahead. But hey, we are also, if you want to look us up, we are on Facebook, we are on Instagram. You find us there under the name of our company, 360 Capital Management. But you can also find out more about us. We have a YouTube channel. You can download previous podcasts from us on Spotify or wherever you get your podcasts from under Retire 360. So check us out there. You can find past episodes, but we're just glad that you're here with us today. We want to jump right in and do what we do try to do best here, which is help you win with your money. And for our listeners, I just want to remind everyone that get in touch with us.
Dwight Mejan:
We've had some great meetings again this past week. A couple listeners of our show had come in and really said it was a long overdue meeting, but it was good not only to meet them, but it was great to talk with them about their financial future. Some of their aspirations concerns, some of the goals that they have in mind. And we'll be getting together with them to lay out some ideas and recommendations and just proposals for them that cover things from tax strategies, building a tax efficient portfolio to constructing that portfolio to an income plan, which was a lot of areas of concern that they had, was the timing of when they could retire. And we helped clarify some of that with them in their first meeting. So they were excited about that. But if you are a listener here of this show, maybe it's your first time. We want to welcome our first time guests. We're broadcasting in the western part of the state in that Boone Banner Elk Blowing Rock area. And we are broadcasting this today from our Southern Pines office. And sometimes we're in the Boone area broadcasting this. But regardless, you're hearing it and we're glad that you're here today. But for our listeners, if you want to get in touch with us today, we put together a lot of great reports. We've got a free report on tax free investments for a better retirement. This report will help you make some legal strategic investments so that you can build tax free wealth.
Dwight Mejan:
We're going to talk a little bit about that on today's show. And the report is yours today. Just give us a call. You can reach out to us at (910) 235-0812. If you're in the western part of the state in the mountains there, reach out to us at (828) 278-7814. Or you can go to our website at Retire360Show.com and you can reach out to us there with questions. Comments or to request this report. Just a quick highlight of today's show. We're going to get into the quote of the week that Mitchell always does here in just a moment. We've got a little inflation demonstration or update today why interest rates might be here to stay. We got some questions from our listeners. We did that last week. That was very well received. So we got some more questions compiled that have come in over recent weeks and maybe the last month or so. We're going to get to some of those. So we're looking forward to that. We've got a 4th of July travel forecast that will update you on. And the question that we get is, can I retire early? So we're going to cover a little segment on if that is you and you are looking to retire early. We're going to give you basically some things to avoid buying these five things. And we're going to talk about that here later in the show.
Producer:
And now for some financial wisdom, it's time for the Quote of the Week.
Producer:
And that is brought to us by Sam Ewing, and that is inflation is when you pay $15 for the $10 haircut you used to get for $5 when you had hair. I'll read that again because it's a little confusing. Inflation is when you pay $15 for the $10 haircut you used to get for $5 back when you had hair. That's a good one.
Dwight Mejan:
I remember. I remember my kids telling me about the the $10 back, the $5 my kids used to tell me, Dad, can I have 20 bucks when they were growing up? And I'd ask them, I'd say $10, What do you need $5 for? So I'd try and work them down a little bit. There you.
Producer:
Go. Inflation is here and it's time to be prepared, folks. And we have a couple events where we're going to talk a little bit about that with inflation. And we're going to talk a lot about taxes, specifically taxes in retirement. If you guys haven't been able to make it out to one of our educational events here, we are going to be having one in downtown Boone. The location is coming to you guys shortly. But if you're interested and you'd like to come and check us out, give us a call and we'll get you on the schedule and our office number. If you do want to come to our event and save a seat is (828) 278-7814. Again, our office number is (828) 278-7814. And try to give us a call sooner than later. We do usually fill up and hit our max capacity there, but we look forward to meeting folks. As Dwight said, it's always cool to have listeners from our show come to our live events and kind of have kind of hash that out and just get to meet our listeners. So we look forward to meeting more of you.
Dwight Mejan:
Well, they we just get great questions from people. I know we've got a lot of people who, you know, have great educational background working in a wide range of careers that we have come to us with questions. And yeah, like Mitchell just said, we'd love to have you out and get on that early sign up list and reserve your seat. We look forward to meet. So we want to hop right in today. We want all of our listeners to understand really a fact. And we we talk about this at some of our live events, but we just want to touch on these two topics here or these two investment opportunities is there's only two types of tax free investments that are out there and you know how to take advantage of the only two types of tax free investments. We're going to just talk about those here for just a moment. And the first one is to open a Roth IRA account, start a Roth IRA account and set up automatic contributions. We love the Roth account. For those of you that are unclear or maybe not know exactly the difference between a Roth, a traditional IRA, the traditional IRA. It's been around forever, basically, where you're contributing money pre-tax, meaning you make the contribution you get to deduct that from your income at the end of the year. But there's no free lunch down the road. You wind up paying taxes on the withdrawals from those accounts and eventually there's an age where you must start taking money out of that traditional IRA.
Dwight Mejan:
For those who have not yet started, it's either going to be age 73 or 75, but if you set up a Roth account, you will pay the taxes in the year that you make that contribution. But later in life, when you pull money out of that account, you will not pay any income taxes. And one of the reasons we like that and many of our listeners who are funding those types of accounts right now, many of you listening, is because there's an unknown tax likely increase that's coming. So to have money building up and growing tax free and then have the ability to pull it out tax free is very attractive. So we like Roth. And the other way to do this, if you're not going to make contributions because some of you are saying, hey, it's too late for me, I've already completed my, you know, my working years, so I don't have any more earned income. You got to have earned some earned income to make contributions. But you can do what's called a Roth conversion. Those are for those of you listening who probably have funded the largest account, had somebody in the office here yesterday where 80% of their money. That they had saved for retirement, did a great job. Saving was all pre-tax, and this person's interest was how do I start moving more and more money into this tax free bucket so that later in life when I start taking more income out, I'm not going to get clobbered by taxes.
Dwight Mejan:
And that's where the Roth conversion comes into the picture. And that's simply a strategic move. Very simply done. You could do it yourself, but we do it here in our office as financial advisors. For a lot of our clients. We tend to do these kind of conversions around the fourth quarter of each year when we can kind of see what income has looked like for clients. We can kind of get an estimate of some of their capital gains just to make sure we're not going to bump people into a higher bracket. You have to be very careful when you do conversions, not just because of being pushed into higher bracket than you might already be in, but there's other things. If you're close to retirement, it could affect your Medicare premiums. So you want to be careful about that. We always say it's best to seek guidance if you're wanting to do conversions because most people that try to do these on their own, unless they're really good with understanding how the tax return works and where the the limits are for higher brackets and, you know, where your Medicare premiums could increase, Somebody that has the ability to do that like a financial advisor would be a good place to get some help with that.
Dwight Mejan:
And we would be more than happy to talk with you about that. Yeah, there's there's really three types of tax buckets that we talk about. There's basically money that's taxed now and that's after tax money with taxed growth. Those would be things like mutual fund accounts, stocks, CDs, savings accounts, those are tax now bucket there's tax deferred money. That's the second bucket. That would be your 401. K, your IRAs, your annuities. If you're perhaps like, say, for example, a teacher, your 403 B's, that's before tax money. You haven't been taxed on it. You actually got to claim a deduction in the year that you contributed to that account and it's taxed upon your withdrawal when you pull the money out. And that's the bucket you got to be careful about because most people wait to pull that money out. And that may not in many cases be the best strategy. Many times people are best suited, particularly if that's a very high bucket for you, that tax deferred bucket, you have a large 401. K when you retire or you're estimated to have that be your largest asset when you retire. As far as your savings account goes, that may be the bucket where a lot of your income comes from before you trigger Social Security. So and by doing that, you get an automatic raise in your Social Security of 8% every year past full retirement age. So it's really wise to seek counsel on this because there's no do overs.
Dwight Mejan:
When you start drawing Social Security and you elect that decision, it's a one and done decision and you can't go back for the most part and fix that. So that's the tax deferred buckets. The third tax bucket is the tax free retirement bucket, and that's the bucket that we're talking about here with the Roth account. Mitchell's going to give us an update here in a minute about the second one instrument that you could use for tax free money, but that is essentially money that you receive when you pull it out and it's not taxed and it's not subject to required minimum distributions. And that's a danger for a lot of people because if you want to build a tax efficient stream of income in retirement and really have a tax efficient portfolio, you know, we say this all the time. It's not always how much you make, it's how much at the end of the day, how much do you keep because you can make a decent amount of money, maybe outperform your peer, but you might be paying more in taxes and at the end of the day, you might end up making less in the long run because of the taxes that you pay. So when you're forced into this mandatory distribution, you're at the mercy at that point of two things the RMD rules of how much you have to take, which is a divisor that is that goes into your all of your tax deferred money to divide it by a number based on your year end balances and all those accounts.
Dwight Mejan:
So you don't want to be at the mercy of the government, you don't want to be at the mercy of the tax rates. You want to be in control of how much you're taking. And that's why it's a great pathway to start building. If you don't have this yet, a Roth bucket and start to build up money in that account. Because if we see tax rates, you know, go back to even what they were during the Kennedy era, this is a slide that we show. If you little plug for our taxes and retirement workshop, we show a slide during that tax seminar about what tax rates were in the 60s if that was to. Turned. Many of you who are currently in the 24% federal bracket, your tax rate in that same bracket could be double with with an additional percentage. On top of that, you could be up in the high 40s low 50% if the government raises rates to that level. So that's where when you want to start pulling income out and retirement, you don't want to just have it all come out of that tax deferred bucket. You want to have some of it come from that Roth account. It's really important you start building that Roth account up now.
Dwight Mejan:
So enough on the Roth. The Roth IRA. But if this if this piques your interest will give you some our contact information. We will run a complimentary analysis and show you what Roth conversions would look like under current tax rates. And what we do with that is we show you based on your current tax bracket, how much could you convert if if income taxes stay the same? And then what would that look like under a presumed growth rate? Six, seven, 8%. We'll run that and then we'll run it under a slightly higher tax rate and show you the differences of what your account would look like, you know, both with the pre-tax money and that post tax money under given years down the road, five, ten, 15, 20 years down the road. It's eye opening, folks. Very eye opening. So, Mitchell, you've got another instrument that our listeners need to be aware of that's tax free, and it's the only other one. And before you mention that, I know I get people sometimes saying, well, municipal bonds I don't pay taxes on, well, that's generally true for federal taxes, but it's not always true of the state income tax. Depending where you live and where you buy the bonds from. So we didn't include municipal bonds in here, but these are the only two true instruments that you use is the Roth and Mitchell. Share with our listeners about the other one.
Producer:
Yep. So a Roth is probably the most favorable way to grow your money tax free. Probably the most preferred status to have your funds sitting in. But the other way that you can grow your money tax free is through whole life or indexed universal life insurance. Life insurance does offer a death benefit just in case you do die too soon, usually more than the money that is put into the account. But it's a great tool to build your retirement savings and to generate tax free income during your golden years. So basically, you can you can be dumping money in usually life insurance policies have a certain limit as far as how much you can contribute in a given year, but that still could be up to 50 grand. I will say a pro using life insurance over a Roth is that there is an income limit like there are with Roth's. Now, if you're doing a Roth conversion, that's a little different. I would just caution our listeners that have heard this before and that are utilizing insurance to grow their money. I would say 1% of the time that we have people coming in here with whole life or index universal life insurance, I'd say 1% of the time did they understand what they have, how much they have and how much they're paying for it? You know, it kind of goes with the IRAs, with making sure that you understand so you're not, you know, missing out on gains. Well, insurance works kind of in tandem with that, that you want to make sure that you're not throwing out your money, becoming insurance poor.
Producer:
I'm sure you guys have heard the term insurance poor, but also just understanding if you do have one of those policies, when is it running out? Is there riders within those policies? How much are you paying for those riders? I'll tell you personally, I have one of those types of insurances and that has riders in it. That's going to guarantee me to a certain age. It's age 100. So I bought it that way knowing that, you know, it'll be there for me. My whole life I've had people come in say, Hey, Mitchell, this is going to last me my whole life, too. This is great. And then I look at it and there's no rider in there. It's going to run out in like four years. And they think that they're going to leave, you know, their wife money to, you know, sit back and kick their feet up and, you know, kind of relax and not worry about where tomorrow is going to come from. But, you know, I'll tell you, it's most of the time it's going to run out way sooner than what people think it is. So if you have a whole bunch of life insurance policies, if you're thinking, I don't even know what I have, is it that whole life? Is it universal life? Is it term life? I'd say get all of those things together and make sure I would advise people, the most prepared people that we have, they come in with all of their policies. They know how much they're paying for each of them. And we kind of dissect them policy by policy to make sure that it makes sense that they have them and that it makes sense that they keep paying on them moving forward.
Producer:
Because sometimes it works in the case where somebody comes into our office. Us and they need insurance because they need to either offset a debt for their spouse or they need to they want to leave money for their kids to offset the taxes that the tax burden that they're going to incur on their death. But I'd say probably an equal half of the time people are paying too much for insurance that they don't need. You do not want to be throwing your money out on insurance. Folks, we talk about inflation. We talk about the cost of things going up and how it's going at a rate unlike, you know, anything that we've seen yet during most of our lifetime. Don't be throwing your money out on insurance If you guys are tired of worrying about that, you're ready to start, you know, making sure that you're taking advantage of a tax efficient retirement. Pick up the phone. Give us a call. We'd be happy to talk to you guys, help you figure out what it is, the plan that you have with your taxes and converting your situation into a Roth. Or maybe you need to utilize life insurance. If that's the case, give us a call. (910) 235-0812. Again, our. Call us at (910) 235-0812. And if you're thinking how much are they going to charge us for that, we don't ever charge you for the initial consult if you guys are listening to us from our radio station.
Dwight Mejan:
Mitchell We had a listener of the show this just this past week here that came in thinking we were going to be discussing some of his portfolio. And the more pressing situation that we identified was exactly the area you've been talking about was the life insurance. And this individual, when we were asking some questions, was questioning him around some of his expenses and brought up life insurance. We always ask about it. We just want to know if people own it. And his portfolio he had he had a really good income, but his assets were a little on the light side. He didn't have as relative to income. His assets weren't very good, but he had pensions and Social Security, but wasn't really heavy on the asset side. But when I asked him about his life insurance, he was paying over $600 a month and he had a two policies. His wife had two policies. And when I asked him what the purpose of the insurance was, he couldn't really answer it. He didn't really have an example. So he proceeded to go home. He lived near our office here. He brought the life insurance policies back. And that was one of his questions. Well, how much are you going to charge me to review these and go over them with me? I said, we're not going to charge you anything.
Dwight Mejan:
It's just part of what we do. It's complimentary. And I said, when we review this, it's going to do, you know, one of a couple things. One, it's going to reinforce that you're on the right track and you should keep them. The second thing it could do is, you know, we could look at this and say, hey, you've got opportunities in these policies to consolidate them, possibly get cash value back. He didn't need the level of death benefit that he told me that he had. I haven't had a chance to go over the policies yet. We haven't looked at those, you and I. But he may have an opportunity to consolidate and or lower the cost that he's paying for the insurance. So there's a lot of factors that have to be analyzed and have to be looked at. But we do this as a complimentary service for people who listen to this show. So just reach out to us at the number Mitchell gave you and we'll be more than happy to go over that. Mitchell Is there anything else about that that you wanted to add or make sure our listeners were aware of? What that.
Producer:
No, I would just add to those that are listening, No, we're a financial services firm and this is a financial show, but insurance is probably equally as important to your retirement as is your financial situation as well. People often think that it's just a small little component. I just pay my little insurance premium. I mean, we've we've doubled people's monthly income based off of insurance. So, I mean, it's a big deal. So if you guys if you're not aware, make sure you make yourselves aware. If it's not with us, get help somewhere else.
Dwight Mejan:
Yeah, absolutely. All right. We're going to shift gears here and go to our next segment here of the show. We want to talk a little bit about inflation. Inflation is is still here. We've seen some relief from where inflation was at its peak. I believe the peak was last June of 2022, where we saw inflation hit about 9.1% is where it was. So we're seeing some relief in that area. But there is speculation. No one knows for sure that interest rates could be here to stay for a while. It just depends, you know, what reports you look at, even though we've seen it come down a little bit, there's been some relief. But there was an article in the Wall Street Journal and also one I read this week in Kiplinger's. We're just going to refer to a couple points from both of these articles, but across affluent countries in the world's banking powers. Central banks are sharply lifting inflation forecasts, penciling in some further interest rate increases, and warning investors that interest rates will stay high for some time. The Federal Reserve last week held interest rates steady, but they did signal two more increases this year, which would lift the US rates to a 22 year high. So price inflation in core services, excluding housing, which is a closely watched guide of underlying price measures, remains elevated and has not shown signs of easing.
Dwight Mejan:
That's what the Fed wrote in its semi-annual monetary policy report last week. So the Fed, just to kind of recap a few things here, the Fed's target rate for inflation is 2%. That's where they're trying to go. You know, the Fed's job right now is is pretty tough. And most recent data and inflation still holding strong consumer prices as of April of this year were 4.9% higher than they were a year ago. This is from the Kiplinger's article that I read this week. The Labor Department reported in May, which was only a bit improved from 5% inflation rate in March. However, the last time consumer price index inflation was under 5% was in June of 2021. So you just have to still jury's out on that. The current inflation remains a far cry from the Federal Reserve's target, which I just said was 2%, especially given it's coupled with a strong labor market. So we're at in April of 2023. Us inflation was at 4.9%, which is the consumer price Index for all urban consumers. So that's from the US Bureau of Labor Statistics. So, you know, there are some key takeaways from the Wall Street Journal article I was going to have. Mitchell just we won't dive real deep on these, but just some some takeaways from the Wall Street Journal article. Mitchell Why don't you share a few of those with our listeners?
Mitchell Keiser:
Yeah, for sure. Well, one thing that I saw was the underlying inflation in the US and Europe remains around 5% or higher with stable wage growth. I think that kind of does depend on where you live. I know inflation is pretty across the board, but I know it said something about the stable wage growth. I think that has a lot to do with where you are. We were in was a couple states away about a month ago. And I'll tell you, the minimum wage there is significantly higher than it was than it is here in North Carolina. What was the what were they paying somebody, Dwight, to work at a bagel shop? Was it like $25 an hour?
Dwight Mejan:
Yeah, it was mid 20s where we stopped. They had signs up front. That was just for not even a manager.
Producer:
Yeah. And you're hearing you're hearing me correctly, $25 an hour to work at a bagel shop. And that was. That was in upstate up in the Northeast. I was like, holy cow. That makes you think.
Dwight Mejan:
Makes you wonder how much the bagels were. Right?
Producer:
Right, right.
Mitchell Keiser:
So, yeah, that was one. Another takeaway I had was that central banks are revising their inflation forecasts upward and signaling further interest rate increases. I'd have to do a little bit more research on that to give a, I guess, a formal opinion. But I just find it hard to believe that so many people are still continuing to spend at the rate that they were back when interest rates were at the low 2%, because I know they're saying 5%, you know, even with like the interest rates on homes. But, you know, it's like tripled. So I find that hard to believe. It almost makes you think there's going to be a big pop. I'm not forecasting that. I'm not telling you it's going to happen, but I find it hard to believe that we can keep up with spending if inflation is going to continue at the rate that it is. So the last takeaway that I'd give you, Dwight, is just the impact of the previous interest rate increases seems to be waning with signs of the housing market stabilization and unemployment is declining with the normal business cycle. I just find it interesting how they're kind of working in tandem with each other, but kind of indicate that the market is on the uprise. However, I would tell you that due to what you were just telling me, Dwight, about the S&P 500 and how it is up year to date, and maybe you can just share with us what that is.
Mitchell Keiser:
But I think that statement would kind of be the large scope of what is going on with the economy right now. It's all an illusion is what I'm kind of seeing because there's a lot of things that are on the. It appears to be on the uprise like, oh, we're spending all this money. Some stocks seem to be doing so well. But that's that's not necessarily the case. There's a lot of, you know, companies that are going out. There's a lot of businesses that are being replaced. You know, the rise of AI, if you guys a lot of our listeners will always ask us, what's AI? What's this? What's I going to do to the world? Ai is probably going to change the world. It's probably going to replace a ton of jobs. So what that's going to mean, I mean, that's you know, it's all still a big question mark at this point. So but Dwight brought it up. Do you want to share with us that article that you read about the S&P five? Yeah, that.
Dwight Mejan:
Was probably one of the most startling stats I've read year to date. A couple of weeks ago that the S&P 500 is up over 15% year to date, but 85% of the growth from the S&P 500, remember, that's the 500 largest companies. S&p 500 is by most standards to be the benchmark indicator of where the US economy is at five companies make up made up 85% of the growth of 15. So we've got just a little over 2% of total growth coming from the other 495 companies that make up that index. And that could be what the author of the article was writing. I don't even remember who it was said this could be the last leg to fall and what's really propping it up. Mitchell You had mentioned it is artificial intelligence companies. Ai is here. I mean, it's it's and it's at lightning speed what's coming unless the government I'm not for government intervention. I don't want to go political here on this show. But something needs to happen because I read another article this past weekend that said as many as 300 million jobs within a relatively short period of time globally could be lost due to AI and the breakneck speed that it's going And that, you know, that's those are disturbing numbers when you hear that that amount. But that's where a lot of the growth we look at the Nasdaq, which is typically a tech heavy index, small cap companies doing a lot of research, technology that's you know, that index is leading the way this year up over 30% year to date. So AI is where people are placing their bets. I'm not saying it's a wrong place to place bets. I think AI is going to radically change, you know, how business is done. But again, there needs to be some caps, I think to some degree to slow it down a little bit so we can study it further just to say, hey, what you know, what is going to happen here to certain jobs, You know? So, you know.
Producer:
Something else I thought was interesting when you were telling me about that other article that you read was how the SNP is reporting that it's 15% in the north and it's indicating that we're on an economic incline. However, health care as a whole is down 4% this year. So health, if you're invested in health care, it's down 4%. I've been told ever since I got into the industry that health care is probably one of the safest bets. And, you know, an interest rates rise when, you know, the economy's going down. Health care is always going to be at a steady incline. That was kind of the rule of thumb. I mean, that's not the case, folks, which just kind of makes you raise your eyebrows at what's going on in the world.
Producer:
Yeah, yeah.
Dwight Mejan:
There's some there's there's some confusing data out there. And that's the trick. Mitchell and our listeners that, you know, the Fed is really caught between a rock and a hard place right now as it attempts to lower inflation without sparking a recession. And this kind of comes into one of the other points from the Wall Street Journal article Central banks face the challenge of deciding whether inflation is temporarily high or if it requires more drastic measures to address the issue. And, you know, I wouldn't want to be Jerome Powell and the Federal Reserve right now because, you know, they're having to quickly interpret a lot of lagging data. You know, one of the things that's uncertain right now, to give you an example, is lending. You know, we had three big banks in the spring that, you know, had major issues. And it's caused a lot a rippling effect in the banking industry where a lot of banks are tightening their lending standards just for fear that their balance sheet could get into the same issue. And many of our listeners have experienced that. If you've gone for maybe a small business loan or a mortgage, you know, mortgages are on the decline here as well with higher interest rates. But it's a precarious spot that they're in because it takes a little while for some of this data to come out. And if they're making decisions too quickly, you know, some of the lagging data, it takes time to catch up to their decisions and other stuff is more, you know, forward indicating.
Dwight Mejan:
So, yeah, I wouldn't want to be in that chair making those decisions. But the big thing I tell our listeners of the show, make sure that you have a well-diversified portfolio in a well, risk adjusted, you know, allocation strategy that fits your risk profile. It's very dangerous right now to be, you know, in more risk than what you can tolerate. And that's why if you're self-directing or you've got a bucket of money over here at this firm and a bucket of money over here, I'm meeting with a client up in the western part of the state here Friday. That's their situation. They have three major custodian accounts with well known. If I said the names, you'd know who they were. And they're one of them's managed and two of them, they're self-directing, but they own a ton of the same assets in each of those portfolios. That could be a good thing when markets are performing well. But if we hit a recession, as I stress tested this portfolio, they are going to get clobbered beyond their risk comfort and they don't even see it coming. But we're going to talk about that with them on Friday. So, folks, be very, very, very cautious of how you're invested that asset allocation and seek some professional guidance. You know, we'll we'll run stress tests for your portfolio, which is basically just putting your portfolio against a 2008 scenario and seeing what that would look like.
Dwight Mejan:
If you don't know what that would look like, you need to find out because especially if you're at the tail end of your career, many of our listeners don't have time to go back and just try to fix this, you know, go back to work if you want to enjoy the retirement that you've envisioned and that you've dreamed about, you've got to have a well balanced risk portfolio that's that's right for you and well diversified. So last two points that came from that Wall Street Journal article on this inflation segment, we'll move on. Lawmakers in the United Kingdom are calling for an independent review of inflation forecasts after the central bank's initial underestimation. So there's been, you know, some miscalculations on this by many countries. So they're calling for an independent review of that. And the last point was economies are still recovering from the pandemic and delayed reopening in China could provide a boost with stimulus measures. And a lot of people don't realize that China is still parts of it are still, you know, on lockdown. So that that's affecting some of the overall, you know, supply chain issues and some of the other things that we're dealing with. But. Hey, there's a lot we covered there. But we're going to take a break. And when we come back, we're going to take some questions from our listeners. So stay tuned and we'll be right back with that segment.
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 $1,500 value provided at no cost to you. Book yours now at Retire360Show.com.
Mitchell Keiser:
And we are back. This is Mitchell, and you guys are listening to the retired 360 show brought to you by 360 Capital Management. And now we are going to switch to a segment where we go over some questions that we had gotten from the folks listening to us. Now, this is going to be from all over the state of North Carolina. We get people that call in, send us mail, emails, inquiries on our website. We just picked the top couple here that we kind of got repetitive. Lee So I'm going to start here with a Larry in Charlotte. He wants to know or he says, I'm curious about how much money I should save before I retire. Do you have any tips or guidance that would be greatly appreciated?
Dwight Mejan:
How much should you save? Larry, great question. Thanks for taking the time to either type it in or call in with that. Larry, the simple answer as much as you can. But seriously, Larry, you know, it depends on fact. A lot of different factors. If you're an average wage earner, you know, you're not a doctor, you know, pulling in seven figures or really high six figures, you know, your average earner out there, we always recommend that you're going to need somewhere between 70 and 90% of your pre-retirement income. So you've got to start right there. Okay. With whatever that is. So if you're making 80 grand a year, you know, and you take that 80%, you need to get to somewhere in that mid 60 range on average, give or take a little bit, depending on your lifestyle. You need to start with that number. But the best way to do it to get more accurate is, you know, hopefully you're going to get to a point where we want the mortgage paid off by the time you retire. That's goal number one, is pay down that mortgage, get that done. Don't carry any debt with you in retirement. So remember, first thing is, it's not about just the amount of money that you save or the size of the nest egg. It's about your income. Your income is your lifestyle in retirement. So knowing that income is critical, you got to determine your retirement goals and your expectations around your lifestyle so that you have a baseline to estimate what your target income needs are. So, you know, work up a budget. We always say track your expenses for two months, divide it by two, add them both up.
Dwight Mejan:
You might have an odd expense one month and see what you're spending. Look at what you need. And then we always say work those numbers backwards because if you're let's just say you're a securities portfolio minded person, you don't have any, you know, fixed income. We don't recommend just going in with, you know, all securities in a portfolio. But if you were generally speaking, the 4% rule is what you have to look at. So let's just say to use a round number, $1 million is what you have saved or your target savings for retirement. Take that million dollars. Take it by 4%. That's $40,000. Then look at your full retirement age for Social Security. Let's just say you got 40,000 coming from that. There's 80 grand right there. If you live on a conservative 4% estimate of your portfolio, that's without any kind of pension. We know pensions are kind of a dying thing with most of our listeners, but that's one way to start looking at the numbers and then work those numbers backwards. So you might be saying, Larry, you might be going, hey, I've only got 300,000 saved right now and I'm going to want to retire in eight years and I need this much income. Well, then you've got to, you know, a really helpful website I'd direct direct you to. And there's other calculators out there, but website called Helpful calculators.com called helpful calculators.com on there you can go to a compound interest calculator. And what it allows you to do is plug in your current amount that you have for retirement, all your investable asset accounts put in how much you're currently saving for retirement.
Dwight Mejan:
It'll let you put in an amount there. You're contributing, let's say, every month to your 401. K, your IRA account. And then add to that the assumed interest rate that you're making on your money and figure it conservative figure 6 or 7%. And then it'll ask you how many years do you want to compound that out? And then you just hit calculate and it'll show you exactly how much money you'll have, let's say, in eight years, if that's when you're targeting retirement. So just go to that website. It'll kind of show you that then you can kind of just flow and work those numbers backwards to say, Hey, if I live off 4%, how much could I get off of that? So it starts with understanding what your your budget is in retirement. What are you going to need to enjoy that lifestyle that you envision? And then we kind of work those numbers backwards. So, um, you know, but the other thing I just want to mention, Larry, this wasn't part of your question. I mentioned it in the last before the commercial break. Make sure you're in the right risk profile for your investments, that you're not taking too much risk, especially if you're closer to retirement, but stay invested and stay the course. That's why it's important some people get, you know, freak out because they're maybe too risky. They pull money out of the market when it's going down and then they put it in when it's too late. So don't try to time the market. It's time in the market, not timing the market. So good question, Larry. Appreciate you asking that.
Producer:
Yep. Next we have Sharon and Blowing Rock. She writes in to say, I want to explore different retirement savings options. Can you provide insights on the best ones available for the baby boomers today?
Dwight Mejan:
Okay. So Sharon, you kind of give me a little idea of what your age is if you're a baby boomer, that's what you're asking. So I would tell you, number one, consider traditional IRAs. And I mentioned at the beginning of the show. Roth IRAs for tax advantages and flexibility. You may also want to invest. Mitchell covered this as one of the tax free instruments is consider using indexed universal life insurance policy to be your own bank and generate some tax free retirement income. I would tell you that, you know, the life insurance would would be after consideration after you've funded your employer sponsored plan. If you're still working, you want to take advantage of that employer match. That's we call it free money, but you've earned it by working for that employer. So definitely consider the Roth accounts. The other thing I would tell you to explore, Sharon, if you're in that baby boomer era, maybe you're a few years from retirement, explore indexed annuities as a way to secure some of that guaranteed income. Don't know if you have a pension, but if you don't, you want to get a little bit more guaranteed income beyond what Social Security is going to provide.
Dwight Mejan:
You don't want to have to just depend on money that you have invested in the stock market. And then the third thing I would tell you is maximize contributions to your workplace retirement plan. If you have a 401. K or a 403, B, 457, especially if that employer is offering matching contributions, make sure you're maxing that out. A financial advisor or professional can help you roll over these funds into an IRA that allows for possibly lower fees and better investment options. Because remember, in that 401. K. Sharon, you don't have as many investment options to choose from. If you roll it to an IRA, you're going to have a whole lot. You're going to have the whole investment universe at your disposal and you'll be able to, you know, invest in some instruments that likely are not in the 401. K plan. It might be a better fit to your risk tolerance. So thanks for writing in or typing in that question and calling in Sharon. We appreciate it.
Producer:
Yep. She sent us a letter and that is encourage if you guys have letters. We love hearing from you guys. This next one is on Social Security. And I'm just going to tell our listeners here before I read this question that we do teach classes on Social Security as well, the basics of Social Security, the basics of Medicare. If you guys have questions specifically centered around Social Security, if you're just completely lost, which it sounds like this next person might be kind of in that camp, give us a call. We'd be happy just to tell you when our next Social Security class is. And we provide a lot of really great information that's helped a lot of people just with their their planning. Again, our number, if you want to call us, is (910) 235-0812. And if you call us on the western part of the state, you could reach us at that number as well. We do receive calls and we could give you that information. (910) 235-0812. I'll jump back into the question here now. This is from Steve here in our local Pinehurst. And he says, I'm a bit confused about Social Security. Can you explain how it works and when I start receiving my benefits?
Dwight Mejan:
Yeah, great question, Steve. We do get lots of questions about Social Security. I think people in general just realize that, you know, Social Security is going to you're going to have a larger check if you delay. But many people, for whatever reason, want to retire early or they're just not sure the timing of when to take that benefit. So understand your Social Security benefit eligibility and how your benefits are calculated based on your earnings history. The first thing, Steve, I want you to do, if you haven't done it, is create an account on Ssa.gov. Again, it's Sam. Sam Apple dot gov Ssa.gov to view your top earning history and your potential benefits. So you want to log in there. The earliest age that you can start receiving benefits for retirement is 62, age 62, but waiting to your full retirement age. Typically, most of you listening here are somewhere between 66 and 67 can result in higher monthly benefits. Okay, Delaying benefits until age 70 can further increase. Your monthly payout goes up 8% a year from full retirement age. So consider your financial situation and goals before making a decision. And I would tell you, as Mitchell's just mentioned, you know, schedule a complimentary consultation with us. It costs you nothing. We can do a zoom call depending on where you're at, or you can come to one of our offices. We'd love to to go over that with you. We'll give you a free social. Security maximization report today free of charge. When you meet with us, you need to understand where that break even point is for Social Security. For example, if you elect to delay it until 70, a lot of people you you just need to know, hey, if I took it at my full retirement age, let's say it's 67 and delayed it three years, how long do I have to live? You know, if I wait till 70 to get the same amount of money that I would if I took it early and we'll run that for you in the report.
Dwight Mejan:
We'll ask you some questions about the rest of your retirement savings and give you some strategies that you could use, you know, for when to claim those benefits. So just reach out to us and we'll be glad to provide you with that report and tailor it to your situation. So we provide comprehensive consultations at no cost to our listeners. There's no obligation whatsoever. We will discover exactly how much you're paying in fees and your other accounts help you cut unnecessary costs to your IRA or 401. K will help you, as I just mentioned, with Social Security planning and your Medicare, we can handle the Medicare side of your insurance and we'll look at your current situation and we'll see what's possible. If you were to work with us, we're very transparent, transparent with you about, you know, our charge to to hire us. And we'll go over all that with you when we meet. So go to our website. You can go to Retire360Show.com you can book online with us there or you can go to that phone number Mitchell gave you earlier at (910) 235-0812 or reach out to us at the banner Elk location (828) 278-7814. We're going to take another break and we'll be back and finish up this week's show.
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 $1,500 value provided at no cost to you. Book yours now at Retire360Show.com.
Producer:
And we are back. This is Mitchell, and you guys are listening to the retired 360 show, brought to you by 360 Capital Management. We are going to finish off our show here with the five Things you Should Never Buy if you want to retire early. And the top of that list is luxury vehicles. A luxury vehicle includes automobiles, boats and RVs. Why is this? Some of this might be common sense, but vehicles are already a depreciating asset. Most people aren't using their car, truck or SUV to generate income. Again, that's most people. With few exceptions, a new car loses about 20 to 30% of their value after one year of ownership. I saw a quote one time don't don't quote me on who it was, but the average millionaire drives a car or gets a car that's three years old. So most millionaires out there today are not purchasing brand new vehicles, but actually purchasing vehicles that are about three years old. Luxury vehicles also come with a big price tag. They have more expensive ongoing costs such as insurance, insurance, maintenance, repairs. If you do have a boat, the dock fees, the park fees, all of that. We said it last week and we'll say it again. It's better to drive a Honda to the hills than a Lambo to the office. The goal here and the goal that we try to help our listeners achieve is financial freedom. You don't want to be strapped down by assets that you really didn't need and that probably aren't really making you happy and fulfilled anyhow.
Dwight Mejan:
Awesome. Hey, since I got two young guys here with me, our executive producer Sam and Mitchell here, who just gave an update on luxury cars. When asked these guys a question, I'm going to the helpful Calculator website. While Mitchell was doing his update here, average car payment thinks in the $800 a month range. This is more of an encouragement to you if you're young or on the younger side of starting your career. If you took that 800 bucks a month earned 8%, you just put it into an 8% mutual fund or investment somewhere in 20 years. Mitchell, what do you think? You have real quick see how good your numbers are. What do you think? You got $800 a month deferring that.
Producer:
For amateurs.
Dwight Mejan:
Yeah. 20 years.
Producer:
20 years. 300,000.
Dwight Mejan:
Sam, how about you? How much you think you got in there?
Producer:
Uh, I'm going to do the prices, right. I'm going to go with 301,000. Three.
Producer:
Oh, you did it, Sam.
Dwight Mejan:
You. You. Sam, come up on here on stage $471,000 later after 20 years, which is now, Listen to this. You're young. Give it ten more years. 30 years. I was just thinking of the term delayed gratification. We're not trying to deny people of a luxury car. We're saying delay that gratification and get it later because in 30 years, that $800 a month by not having that higher car payment turns into just under $1.2 million.
Producer:
So folks.
Dwight Mejan:
Young people especially don't drive, don't feel like you got to keep up with the neighbor or your buddy that just bought the BMW because that thing is going to rust out and he's going to be working or she's going to be working a lot longer, possibly in retirement. So delayed gratification is the word that I would have for you. A lot of extra money building up for you there without having that high car payment. Second thing here is holiday homes, timeshares. Unless you're vacation, vacation, I'm sorry, home is producing enough income to offset costs. It's likely sitting empty and unused most of the year. Timeshares offer limited flexibility in terms of travel plans. You may be limited to specific weeks or seasons if you want to access the property, you know? And not to mention, the other thing is you got the maintenance fees of those things, which is what creates a lot of problems where people want to try to get out of these things. So put that on the back burner. I tell you, put it off completely. That's not to say that you can't enjoy those. Some of you have them. It's a great fit. But for the average person, they're not a good fit. Instead, consider contributing some extra money towards paying off the mortgage. That way, when it's time to retire, you can sell the family home, relocate to the beach, the lake, the mountains where the kids and grandkids will be eager to visit. Well, Mitchell, what's the next one we got there?
Producer:
Yep. So next, I would say the latest and greatest technology. I think this is probably more of a habit for the younger people that are listening on that new iPhone comes out, the iPad, the new headphones, the they got the new Apple, the Apple headphones that go over the ears now. I mean, they're just constantly coming out with stuff. Resist that urge. Again, it's same thing with the car. If you just wait a couple years or a couple months past when things are brand new, the price is going to drop significantly. So if you can just hold off just a little bit, you'll save yourself a lot of money. Next, I'll just say excessive daily conveniences. The biggest one is coffee, getting coffee out. I know there's a lot of people that make these habits of getting coffee at Starbucks or they just swing through, you know, some kind of coffee shop on their way to work. Those types of habits right there, probably draining a ton of money out of your account. They say the average person that goes to Starbucks once a day drops about $2,000 a year. I mean, big part of that is because a lot of those specialty drinks are $5 or more. I'll tell you from personal experience, if I went to to Starbucks or if I went and got coffee out every day, I would probably be pushing about ten grand a year.
Producer:
At least drink a lot of coffee.
Dwight Mejan:
That's why I call it five bucks, because you can't get out of there for less than five bucks. Don't drink coffee, don't frequent Starbucks. No offense to those of you that do, I've never enjoyed coffee, but I've always called it five bucks for that reason.
Producer:
Yep. So.
Mitchell Keiser:
Absolutely. You got any more for us?
Dwight Mejan:
Yeah. The last one here is high fee financial products and investments. Many mutual funds come with excessive fees such as 12 B1 fees, we call them. And speculative investments tout potential gains but carry really high risk. There are safer, structured ways to take smart risks and grow your wealth in an efficient manner. Just get in touch with us to learn your options. So with that, I know it's time just kind of flies right by. So we'll pick up where we left off next week. But Mitchell, why don't you sign us off for our listeners? Sign off and but give them an update one more time on an upcoming event that we have. And I'll look forward to talking with all our listeners again next week.
Mitchell Keiser:
Yeah. So we hope to see you guys soon. Our next event that we are going to be teaching is on taxes and retirement and we'll probably touch a little bit on inflation just because it's such a relevant topic in our show and in our world right now. But our next event that we're going to do is in June, and that is going to be on July 20th. And on July 21st, July 20th, we are going to be at 6 p.m. And on July 21st, we are going to be at 11 a.m. The destination is still to be determined where we kind of go between two different locations or either at App State or the local library there. So we'll let you guys know about the date. But if you are interested, the best way to sign up is to give us a call. Our office number is (828) 278-7814. Again, if you are in Boone and you want to come to our class, our office number is (828) 278-7814. We look forward to seeing you guys there and we'll talk to you guys next 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.
Producer:
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.
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 automatic transcription software, generate automated summaries powered by AI, collaboration tools, powerful integrations and APIs, and easily transcribe your Zoom meetings. Try Sonix for free today.