This is the Truth Network. Um Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAID, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well. Welcome to Finishing Well, a certified financial planner Hans Scheil. And today's show is a financial plan series episode 6 of 8, where we're building a reliable retirement income plan. How fun!
So, when you think about a reliable income plan, right, Elijah was staying with this widow. You may know the story in the Bible, it's in 1 Kings chapter 17. And She was, he told her to go make her my cake, and she said, No, you don't understand, my lord. I was fixing to cook my last cake. Cake.
I'm run out of flour, I've run out of oil. And Elijah gives her from what I consider a major piece of wisdom when it comes to building a reliable retirement income plan that we're going to talk about. This wisdom is: do not fear, go and do what I ask. In other words, he's telling her to trust God, and essentially at some level we do, but fear leads to all sorts of mistakes when it comes to planning. In fact, Jesus said it many times, it says throughout the Bible, I think 365 times.
And so, fear is just not part of the plan, is it, Hans? It's not. Yeah. We So, when we're building an income plan, I mean, first, what I'm going to tell you is when people come to us, Many of them think this is all we do.
Okay, I mean that's if this is what we do. and this is all we do, and this is just part of it. I mean, yeah, yeah. But in any case, here we are, Tom and Susan. We're in episode six of eight.
We're we're Flip the three away from the end. and we're building an income plan. that's going to last the rest of both of their lives.
Okay, because we've got a lot of things. to think about and where we start. is we build our plans income plans from the bottom up. versus the top down. Yeah, what I'm going to tell you about that is when somebody comes into me, they're a new client, their incoming client.
And we're just shooting around, having a conversation. How much do you need in retirement? How much do you folks need to live? You know, people a lot of times will just throw out a very simple number. They'll say $100,000 a year.
I mean, when they throw it out too quickly, I can tell real quickly, they haven't thought about this. They're just trying to get past this. Hear what I got to say. Um But they'll throw it out. And then one of my questions that I don't maybe ask immediately, but I'm going to say now is that $100,000?
Is that before tax? or after tax. And then, you know, people get all different kinds of reactions. People are gonna say, oh Funny, you should ask, you know. I just, yeah, okay.
Or that some people say, oh, that's. After text.
Okay.
Well then, how much money do you Do you need To make to net after you pay taxes $100,000 a year. And they said, well, I don't know. For then. you know, it's a good thing you're in here because we're we're We're not going to play the game that way. What I want to talk about is I want to create two levels.
I want to find out what you need. And I used you as an example in my what does the Dilmore household need? Every month. For every year to buy necessities. And then we can get into some definition of what's a necessity, but You know, it's Having a home.
Heaven lights. electricity uh food clothing A car. You know, blah, blah, blah, blah, blah. What do you need to function as a family?
Okay.
That doesn't take most people that much. People that do it quickly Uh I like to go into their checking account. which they send to us, and I like to look. That's where I can find the spending. and where they're paying the credit card bill and All that I can find out what they need.
To Lou. every month. And so we want to have that number. And then we want to create a number on top of that. Are there wants?
Do we want to go on a vacation? Do we want to do things with our kids and grandkids? Do we want to give money to them? Do we want to Uh you know, we're gonna give to the church. I mean, and that's back in the need department.
Um But so we're going to build this number and we're going to come up with needs put on top of them once, and then we're going to come up with a number. And for Tom and Susan, I think this number got up to like 11 grand a month or 10 grand a month, something like that. Um And diff a lot of people, that's six grand a month, seven grand a month, eight grand a month.
Some people Single people, it's three grand a month, two grand a month. I mean, whatever it is, we're going to come up with a number. That you need to live up and it doesn't include taxes. Because you can't spend tax money on electricity and groceries. I mean you just You got to pay your taxes and then the net.
So we're going to start from the bottom up. Build this income and for Tom and Susan We're going to just say 10 grand a month. 11 grand a month. was that number And then we gotta plug that in at the base of the plan. And then we got to inflation adjust it.
We got to increase it every year going into the future that it's going to cost more to live. as time goes on. Um And that's That's what we're working toward. Am I making sense, Robbie? No, absolutely, and obviously.
You know, if you're coming from that position, it gives you a sense of security. Like, wow, you know. That might really take into consideration the things that are important to you.
Well sure, and in their case these people have large Social Security checks. They got $6,300 a month. Coming in between the two of them. We're starting it up right now because he's retiring. It'll be sixty eight and she's Going to be 67.
And uh they go sixty three hundred a month. And so Once they saw that, what's... That's a lot of money and and managed properly, we're not going to pay that much tax on it. And so there's three thousand seven hundred bucks, excuse me, that's three thousand seven hundred short of 10 grand a month.
Now we're going to have to pay some tax, but I just I'm building it out. And then we've got to figure out where are we going to get the money. On top of that, To Um pay their Um so that we net 10 grand a month. And so if I Well just looking at these numbers. is we set up two annuities for them one that starts immediately, paying them six grand a month.
Yeah, yeah. 72,000 a year.
So that gets added on to the 6294. and you got like twelve thousand three hundred a month. And if I remember right, their taxes are about $2,300 a month. And I'm just simplifying this.
So it's going to leave them with 10 grand a month. you know, like six grand. was need And four grand was wants. And there you go, and it's not spending all their money. And then that gets inflation adjusted.
taxes get paid on top of that, and then we plug all that into the software. And we kind of see how they're going to make out thirty years from now. Yeah, yeah. Uh if both of them lived in ninety five. And then we're going to look at a whole bunch of different scenarios, but I mean, when I sit here and explain it to you, it doesn't sound all that complicated.
Um And I guess we're going to get into the next video, or later in the second half, we're going to talk about how we came up with. that money. Um But We don't have to get into the increases because you've got to remember these people have two million bucks. Um to almost two million in their IRA.
So it isn't that hard to create a six thousand dollar a month income. How do that?
Okay, am I making sense? Yeah, and again, for those people who know what an annuity is, which we're going to get into that in great detail, but that's just part of the tools that are in the toolbox. Of creating, you know, like the widow had, right? The oil in the flour never ran out once, you know, she had the right allocation, so to speak. And so it's kind of a fascinating thing that these blessings are available to us, but sometimes we just don't know the tools.
And that's part of what an annuity is. Yeah. We just took part of their and put it in two different annuities. And what these annuities guarantee is that this six thousand a month is going to come to them As long as just one of them is alive. If both of them are alive, it comes If only one of them is alive.
So if Tom dies at 80. Yeah. Uh Susan lives to 98. She's still getting a check for six grand a month. Guarantee.
And so I'm just oversimplifying it. But and that only takes part of their IRA. And then it doesn't account for inflation. And so We we we've got to Uh take the rest of the money. and grow it.
so that later on down the road, when they need more than six grand a month, they've got the money there to do it.
Okay.
Yeah, it's beautiful.
Now I've just simplified this or oversimplified it. Um is we've got to look at the income plan and put that first, we've got to create the money, but we're really looking at four things. or we're creating four plans within the income planning. We're creating the income plan, which I just talked about. we're creating the investment plan.
This is so what are we going to invest this money in So that make sure we don't lose it. and we make sure we grow it. And we're going to put it in a lot of different things. Um We got to look at the estate plan.
So, what happens when either Tom or Susan dies early. and one of the other one lives on as a single So we've got to make this income plan and investment plan all work for the first benefactor of the estate which is a surviving spouse. And then we got to intertwine it with the tax plan. because we can't spend. Tax money.
on necessities or wants We got to just pay our taxes.
So there's a way to plan taxes So that we keep them as low as possible.
So it leaves us more of our money to spend. Yeah, that's absolutely beautiful. And this would be a great place to point out that this show is being brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to see the seven worries tabs, which the idea of that is we don't want you to worry. And those tabs are very similar to these actual episode numbers in that today's show is the IRA and the 401k, but you can see that all of those have now are.
An episode of this whole financial plan series. And so, if you go to the IRA 401k tab, you're going to see a beautiful video along all these lines. It gives you a lot of details. Actually, shows Tom Griffith going into the software that shows how it comes to these beautiful numbers that he's talking about that takes this plan and really takes all the worry out of it. And of course, there's also at the cardinalguide.com, Hans's book, The Complete Cardinal Guide to Planning Foreign Living in Retirement, and of course, the ever-famous Cardinal.
Contact Hans and Tom Page. It's all there right there at CardinalGuide.com. We'll be right back in a moment with more of Financial Plan Series episode 6: Building a Reliable Retirement Income. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM. a registered investment advisor.
BCM and Cardinal Advisors 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. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
Well, welcome back to Finishing Well with Certified Financial Planner Hans Scheil. And today's episode is Financial Plan Series. Episode six of eight, which is build a reliable retirement income plan and how fun it is. I just love this particular episode. Is it so neat to hear how you took their assets and created this?
Like they will never, obviously, no matter what happens, when either one of them goes first or last, or they live on to 140, it's ain't running out. That's the whole idea. And some folks, we have to adjust their spending. we have to push them back a little bit. There's other folks that we push them up a little bit.
So you you either need to spend some more money or start giving it away. You helped. Because you're way under. You're holding yourself to this. very low income.
when you could do much more. And if you don't want to spend it on yourselves, I'm sure your kids and grandkids would love the gifts you can bestow upon them. And I know that the church very much needs it. Um other charities so Um I mean, so sometimes when we're in this income planning, Department We got to push them around a little bit before we create the plan. Other folks, we don't have to do that.
Other folks is that, you know, it's kind of like our job. This is what you want. This is what you need. This is what you want on top of that.
Sounds reasonable to me. We're going to go back and do the work, and we're going to come up with a way. that we can make sure you're not going to run out of money. And you can spend this amount.
Okay.
Yeah. What I got into in the end of the first episode, or just before the break there. Yes. There's really more than just the income plan. I just jumped into that and spent the whole time on that, but you've got the investment plan.
So we've got to. figure out what are we going to invest this money and how are we going to invest it. Again, as you heard before, is that some of their money is going to be shifted into annuities. to just get the guarantees And the cash flow. in the guarantee for life thing.
But a good bit of their money is going to be invested. And we got to get all that right. Um And we got to get the risk factors right, the tilting, and that's what you had mentioned. Tom went into. Oh old What he does.
for people that choose us as their investment adviser, And even if they didn't choose us or the love people, They're going to stay with their existing investment advisor, but they're going to take this written plan and they're going to bring it back to their investment adviser and say, This is what my financial planner tells me how I need to be invested. What do you think? Can you implement all of this for me or at least get their reaction to it?
So in um So that all comes with the financial plan. It's an investment plan, an income plan. And then we got to take into consideration the estate plan. And for most married couples, The estate plan that we first got to prioritize is one of you outlives the other one. We got a plan for the income.
and investments Have that survival. I just It's kind of that simple. In the income planning area, that's all we're really going to do because we're going to get to estate planning in the next episode. Um So we're planning for the survivor while we're doing this income. We're planning that one of the two of them may live on for several years, And we need to make sure they're all right.
Um And then the last area is the tax planning, the tax aspect of this. We we need to say, okay, here's the plan. This is what we come up with. This is how much we're going to spend. This is how we're going to guarantee the spending through annuities.
And then this is Social Security. The pen. The rest of this money is invested. But where does this leave us tax wise? is our tax is going to kill us.
At this level, or do we have things invested appropriately in the right type of account, the right type of character? And can we shift things around a bit? to to make taxes low. Am I making sense? Absolutely.
Yeah. And so We create this income plan. It tells us To a degree, what we need to do with investments of the money that's going to be invested in stocks and things that are going to grow. Um then we need to bounce it against the estate plan Or in other words, we've done all this income. Planning.
We're looking at the survivors Of the estate, or the survivor of the marriage.
Now with a single person We don't really need to do that because a single person, we can get to a state planning when we get to it. Most of them. Is there money's for them? and they want to take care of themselves and their income and guarantee it, and then what's left is going to go to their kids. Um But that's not all singles.
Some people are willing to do without because they have a specific direction they want to give a certain thing to their kids.
Well then if that's what we're going to have to do, that's going to come backwards and affect the income plan. or the investment plan. Um And so Then the tax plan is we're kind of building that as we go. But sometimes the income plan, if we got to pull out a bunch of taxable money. It's going to kick against the tax plan.
And then maybe we need to go redo that a bit. You know, this whole section of the plan, it seems like it's the center of it, and it's what most people come to us for. Mm-hmm. But we're not only thinking income plan. I mean, we're thinking about.
you know, making good Social Security decisions in your sixties because So that's going to have a big effect on the income plan. Um we're thinking about in the Medicare department We want to make sure that our income plan doesn't drive us into a bunch of Irma. and the Medicare tax. We got to think about you talk about something that'll blow up an income plan. is a long-term care need.
If all of a sudden Tom and Susan If they all of a sudden you know, one of them's 84 and they had a stroke. And now they're going to need care. for the rest of their life. that's going to take their ten thousand dollar spending Uh budget. and blow it through the roof.
And that's why we need long-term care insurance, and we need to plan for that. Oh. You know, we hit the IRA and the 401k, where most of their money is, that's going to create taxes as we're. turning it into income. Um And then the estate plan, we already talked about that and taxes.
So When we're designing this income plan, we're touching these other six areas. And then we're having to go back. and make adjustments. And then that affects the income plan. And so this whole thing is one gigantic adjustment.
But there's adjustments are all made in order to reduce those seven worries, right? And get it back to, okay, we know going into retirement, these are the the major considerations or things that could worry us, but we're covering all the bases to arrive at an overall number, not just necessarily your needs and wants, et cetera.
Well, it is. And to be frank, I think uniquely. we cover all these other areas while we're creating this income plan. I mean, most people, when they're walking in the door here, they're asking questions like: can I retire? Can I afford to retire in two years?
Can I retire now? Yeah. Then They're wanting us to answer that. And when this plan is about building building the plan To can you, of course, you can retire, you just may have to live on half of what you thought you could do. Or Another side of it is You've never really taken a look at this.
Some of those people are real surprised. You got more than enough to retire.
So This whole financial planning process Is designed to answer those questions and then give you a plan so you know what to take from when. how much you can spend. And then you can go into that with confidence, knowing you're not going to get into your eighties. He had run out of money. Which is frightful.
Yeah, or nineties or hundreds. That is the idea, right? And and the beauty of the of the reliable retirement income plan. I mean, that's what that's what the description is. Yeah.
And so We, you know, we're in all 50 states in the District of Columbia. We do a lot of this work by Zoom. We meet a lot of our people. face to face with Zoom. We also have offices in In Charlotte.
We've got an office in Greensboro. We've got an office in Durham, North Carolina. If you want to meet us in person. We can certainly arrange that. Um If you don't want to do a zoom and you want to work over the phone.
We have clients that work with us like that. In the modern day, we can provide these services to people All over the country. I mean, we're licensed everywhere we need to be. We have products there and. Um It's actually really cool.
You know what I love about the plan is the idea of the three buckets of money. Um which I can never hear about that enough. Essentially. Go ahead.
Well, sure. I mean, the three buckets of money, so you're talking about another show and another video where you've got. you know your Um money you're living off of, which is the uh the annuity. And then you've got the money. that's sitting there that you're deferring the taxes and your your accumulating the interest For the future, am I going down the right road there?
Am I anticipating that? Absolutely, yeah, exactly. And um that's what A lot of people don't understand. They look at their whole bucket of money. Here's one bucket.
And so we're going to. you know, that's what we're going to do with just about everybody, is we're going to Take some of your money and put it here. And it has a job. And we're going to take some of your money and put it here, and it has a job like paying you an income like an annuity. That'll never run out.
As long as you're alive. And then Um another bucket. that is there, which is the deferred money. And it's the inheritance money. It's the emergency fund money, and there's people that go beyond three.
And so, again, you can find out all kinds of things about this at cardinalguide.com. And if you go to cardinalguide.com, there you're going to see, again, as we talked about, the seven worries tabs, we've talked about all show, and one of those is going to be income. And so, if you go to that in investments, and if you go to that tab, you're going to see a video along these lines with great show notes as I talked about. Tom takes you right through on how the software works and how it comes up with these numbers and all about the annuities and those kind of things. And then, of course, You know, we have The Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement.
And there's an amazing workbook that goes with that. And, of course, the contact Hans and Tom pages. Tom is Hans at. Said at the beginning of the show, no matter what your situation may be, yes, they charge $1,000 for this plan, which seemed like the deal of a lifetime when you see all the detail that goes into it and you see what they're talking about. But anybody that has a deep concern, that's what they're there for.
They want to talk to you. It's all there at cardinalguide.com. Great show, Hans. Thank you, and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station.
All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone.
Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult. With a qualified tax or investment advisor to determine if it's suitable for your specific situation. Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM, a registered investment advisor.
BCM and Cardinal Advisors 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. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com.
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