Halloween is right around the corner, but there are a few things that scare investors even more than Halloween. Let's talk about it. Welcome in. Glad to see you again here with Jake Dozer, one of the members of the team at Rosewood Wealth Management. I am Ben George, and we are in the season of Halloween.
I'm sure you are getting prepared, Jake, with a couple of kids, right? You probably have already started talking candy and costumes and decorations and all that. Oh yeah, I mean, Adam, our eight-year-old, has a slew of closet space dedicated to Halloween. Not necessarily Halloween, but just dressing up in general. He's he's all into that, and my wife, I'm sure, has an an army of things that our four-month-old can dress as that he will look adorable with.
So he won't be scared, but he'll certainly enjoy a little Halloween. We even have lights out that can be Halloween. Halloween, you know, lit up so nice for the colors and stuff.
So I don't know what we'll do, but you know, we're looking forward to it. There will be too much candy. There will be a stomach ache. There will be a dad tithe of said candy. We'll have a good time.
So no doubt about it.
Well, we're going to talk about kind of another aspect of Halloween, which is the scary season, right? And and really apply that to kind of what you what you do every day and some of the fears that you talk about with many retirees, right?
So what scares people in retirees and in Investors more than Halloween. I want to go through some of the biggest fears that are out there with you, Jake, and talk about kind of how you address these with people. Because I know the first one out there is this fear running out of money. I mean, I don't know who doesn't really matter who you are. Maybe if you're in that one percent we always talk about, you don't have this fear of running out of money.
But for most people, this is a legitimate fear they have when they go into retirement. Yeah, it's. I think it's probably one of the biggest ones, and Some folks would not say I'm afraid of running out of money, but a lot of times their behaviors exhibit that fear. Here's what I mean. Here's a good example: like you know, instead of Jeff Foxworthy's, you might be a redneck if let's say let's call this Jake Dozer of Rosewood Wealth Management's.
You might be afraid of running out of money if if you've ever chronically Under spent the amount of money that you can actually afford to, you might be afraid of running out of money.
Now there are some stipulations there, which is you need to know actually how much you can afford to spend. And if you haven't figured that out yet, you're missing at least a component of your retirement plan, named an income plan. But this is probably the one I see most often is when folks just chronically spend a lot less than they actually can afford to. And I feel like the reason this ties so well into like being afraid of running out of money is because it's indicative that while intellectually you might know that you're not going to run out. Behaviorally, you're not putting your money where your mouth is.
Now, don't get me wrong; if you're spending less than you can afford to spend, what a wonderful problem!
However, it's a problem nevertheless because it means that you are going to be building up extra money that one day. Is going to need to be taxed.
So, how are you going to unwind that ball of wax? Is one day one day going to need to go somewhere, either to a person or a cause you care about, right?
So, there's all these things that can stem from not spending enough money. And a lot of times, the biggest challenge is taxes because then you're down the road you're going to have RMDs and you're going to be forced to withdraw money. And maybe it's you're afraid to run out of money because you haven't. Prepared as well as you feel like you should, but I always encourage anyone is whether you're in the space of like I don't think I'm going to run out of money, but I might not be spending as much as I actually could, or I just don't even know how much I can spend, or you might be the person who says you know I I. I have a sense I may have not prepared as well as I could, and so maybe I'm afraid of even assessing whether I'm going to run out of money.
Wherever you come out on that spectrum, my encouragement is get some clarity on that because the biggest. You know, sort of addresser of of the fear of running out or the fear of anything is knowledge. Knowledge is power, and so start having that plan so that you can clarify whether or not that fear is founded, or if it's unfounded, and we just need to create some discipline around your plan. Yeah, nobody wants to work longer than they have to if they have the ability to step away from work now, right? Right.
So make sure you do get that clarity from the team at Rosewood Wealth Management to figure out exactly how much you have and if it's going to last you as long. All right. Second big scare here too, and I know kind of where we are with this investing environment currently. Jake is, you know, one day, you know, where markets up, next is down, is up and down, swings a lot on the news, the headlines, and there are a lot of people right now that are getting close to retirement that are just fearful of, hey, I'm going to get in, I'm going to step away, and all of a sudden there's going to be a big market crash, and it's going to really cause some huge problems for me.
So, how do you prepare for that? Yeah, I mean that's a great valid concern. In that, I think every person out there, especially right now, has a little bit of trepidation about the market. You know, we've got the conflict with Iran, we've got the conflict conflict in Ukraine, we have midterm elections coming up, we have gas prices that won't come down, we have unemployment that won't come down, we have inflation, we have all these things. And don't get me wrong, I believe in the market long term, but I also recognize that there are.
There's this tipping point of so many things that are working against us that catch the headlines in the news right now, and my encouragement to folks is: you need to be able to understand how much risk you're actually taking right now. The biggest thing I see when we're evaluating portfolios is that folks are taking a lot more risk than they may realize, because the past ten years or so, outside of anomalies, the market's been really kind and it's grow, grow, grow. But a lot of times, something people need to be faced with is what got You here doesn't necessarily get you there. What I mean by that is, you know, the skills and tactics to grow your money aren't the same skills and tactics to preserve your money. It doesn't mean that you should stop pursuing growth.
It just means maybe you don't need as aggressive growth, but that requires some analysis of. How much risk do I need in order to make my plan work? And for some folks, it's can I take the least amount of risk as possible to get there? Or in other people, it's hey, I've got so much extra that I can take more risk than I need to. But until you kind of anchor your plan in like not just what seems exciting over the past ten years, but rather what are the tools that will fuel my money to work.
Based on the way I intend to use it, there's going to be a disconnect between the level of risk you're taking and the level of risk you need, and that's appropriate. And so, don't put yourself in a place where if the your 401k gets cut into a 201k because the market has a crash that you're trying to get out of a hole that you have to keep withdrawing from because you took too much risk than and more risk maybe than you needed to.
So, get an assessment on that. To really hone in on how much risk should you take, not much. How much risk I want to take, if if you will. We're talking about some of the biggest financial fears that are out there. We got number three here.
With everything else that's going up in in costs, Jake, healthcare is still. Top of the list, right? It seems to really show no signs of slowing down until really things get fixed across the board.
So, when you're working with someone that's really worried about is how can I afford healthcare down the road? What am I going to do to pay for healthcare down the road? How do you build that into a plan? It's huge. You know, there's a couple things.
It's when do you want to retire? If it's after sixty-five, then we need to figure out what's the right Medicare. Combination for you is it, you know, Part A is the part that's free for most folks, but Part A really just covers going into the hospital. It doesn't cover the doctor, it doesn't cover the specialist, it doesn't cover your prescription. Part B is the part Part B premium that you can actually have higher surcharges on based on your income, called ERMA.
All these things that covers the doctors and things of that nature, but then it still doesn't cover you know the sort of the gaps in your plan, such as creating a deductible. Deductible and out-of-pocket max. It doesn't cover prescriptions, things of that nature. And then you're typically faced with, all right, do I go Medicare Advantage, where it's free or really close to free on a monthly basis, but can have huge unexpected costs, or do I go with supplement plan out there, you know, letters C through Z, if you will, where I I really try to combine Part A and B with a supplement plan so it looks a lot like my health insurance when I was The workplace, and then Part D, which is Medicare prescription coverage.
Sometimes that's built into a supplement plan.
Sometimes it's not.
So you need to figure out if you're 65, which plan's right for you, and you need to evaluate that annually.
Furthermore, you need to figure out which one you can afford, which is part of that income planning and where income and medical come together. If you're retiring before 65, now you got to figure out: Do you use COBRA insurance? Can you afford to pay for Affordable Care Act? You know, Obamacare.
Sometimes people call it healthcare.gov. What's that going to look like? And then long term, you got to think about well, what about the unexpected expenses that may go up as I get older, such as long term care, assisted home healthcare, assisted living, things of that nature, or just you know the unexpected medical that that arises. And then you got to find the balance between how do I plan for the unexpected and emergencies, but still enjoy my retirement. You know, so there's these tensions that have to.
Managed. It's not an either or; it's a both and. But having a plan that unites health at the forefront, you know, the data tells us that. The average sixty-five-year-old will spend well over three hundred thousand dollars in their retirement on their medical costs, and so you need to figure out how that's going to impact you, and how do you balance fun with preparing for those unexpected expenses? Yeah, that's a big that's a big number that a lot of people try to wrap their heads around, but with planning again, you can kind of account for that piece of the puzzle.
And it kind of takes us to our next one here, kind of piggybacking off of that, is that need for long-term care. A lot of people are, you know, fearful that hey, I'm going Need it, but then beyond that, what should I be doing to prepare for that right now? Because it's not a conversation a lot of people want to have. Absolutely, you know, when you have a long-term care event, if you have a significant other that passes away, these unexpected expenses that pop up at the end of retirement they can catch folks off guard. And you shouldn't spend all of your planning on retirement on the unexpected.
In the in the you know in the idea of like, well, I have to plan for the worst case. Because yes, it's true some worst case planning has to be considered. But also, if you only Plan for the worst case. You'll never do any enjoying of your money, but you. But similarly, on the other side of the spectrum, you can't plan for you know puppy dogs and rainbows at all times.
You know there has to be some worst case area too.
So there's a there's a tension, there's a balance to be reached. Too many extremes on either side. Where oh, I'm going to work forever because I love what I do.
Well, what about when you can't? Or oh, well, my significant other takes care of that, so I don't have to think about any of the planning. But what about when they're gone? You know, or oh well, you know, I don't want to go into a nursing home. I just want, you know, to go up, just walking in the mountains, and and nobody's ever going to see me again.
I've had many people tell me that.
Well, what about when you're not in the position make those decisions? You know, some of these truths are uncomfortable to face, but nevertheless, you have to have the discussion so that you aren't ill prepared, and more importantly, maybe that your family isn't left in the lurch making some of these huge decisions because. You didn't want to deal with it, so have these conversations as uncomfortable as they are, so that you don't have to live in the fear of the Halloween season that comes around. Yeah, no doubt. And you kind of touched on the last one a little bit there—that that loss of a spouse—and again, part of that overall planning process that the people have to go through, right?
And I know that it's a little bit of a different conversation than some of these expenses, right?
Some of these costs that you're dealing with, but and it's one that I think weighs on a lot of people. And sure. Not only is it an emotional issue and and you know the grief that comes along with it, but there's a lot of financial consequences too that just put you in a tough position to even deal with. That's right, a hundred percent. It's one of these things that you know nobody wants to talk about, but there are eventualities, and and so again, should you spend every moment of your waking days talking about it?
No, but is that something where we oftentimes over a cup of coffee or tea or facilitating that conversation with a loved one and their significant other or their kids? Yes, not because we're planning for it in a Exploitative way, but rather we need to face the eventuality, and we need to know at minimum what are we looking at, so we can, you know, I want to have a full deck of cards, so I know how to play my hand. That's the key, right? And you can have that by sitting down and going through the planning process with the team at Rosewood Wealth Management. Whatever your fear is, right?
That's a great place to begin the conversation. I'm sure, Jake, for a lot of people that you talk to, that's probably some of the things you address right away. Hey, what worries you the most right now? Absolutely. You know, we're always looking at what are the concerns that you have on your mind.
What's the number one thing that's keeping you up at night, so to speak, about your finances? What do you feel like is standing in between you and being able to retire confidently right now? Those are the types of questions we want to dig in. The facts and figures will work themselves out. They almost manifest themselves out of how we address these concerns.
You know, and sometimes those concerns are unfounded.
Well, let's put them to bed. But oftentimes those concerns are either there because there's been a lack of planning, so let's do the planning to give you the peace of mind, or they're born out of they are very real concerns, and your gut instinct is correct.
Well, what are we going to do to address them? Right? It's either way, the best time. To have those conversations as well before you have to, you're forced to.
So have that conversation now. We'd be honored to help you. All right, you can get touch RosewoodWealthManagement dot com. Also, all that contact information down in the show description. Whether you're watching us on YouTube or listening on your favorite podcasting app, but remember, most most of the things that are going to scare people about retirement really isn't the event itself, right?
It's it's not knowing what happens, right? That lack of knowing, and a plan is not going to make those unknowns disappear at all, but it can make them a lot less frightening moving forward.
So we hope you enjoyed this. Hope you have a great Halloween wherever you're watching from, and we'll talk to you again. Carolina Wealth Stewards, doing business as Rosewood Wealth Management, is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.
