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May 8, 2021 8:30 am
Hans and Robby talk about income riders this week, and how they provide one of the only guarantees in making sure you don’t outlive your money.
Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on CardinalGuide.com for free!
You can contact Hans and Cardinal by emailing email@example.com or calling 919-535-8261. Learn more at CardinalGuide.com.
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Your chosen Truth Network podcast is starting in just seconds to enjoy it, share it, but most of all, thank you for listening and choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy.certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well for over 40 years on finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes.
Now let's get started with finishing well welcome to finishing well certified planner and on trial today show really pretty exciting topic income that never runs out and and so you know what now and working to get and all of what that means.
With my certified financial advisor Tom Shaw here in a second but I will not want to talk about the Jews teach this principle about income that never runs out like you may have heard that you can't out give God.
You know the story of when Abraham found out that his nephew had been kidnapped by Col. Omer and those kings that had come down and and capture the mob of Sodom and Moran taken them often and Abraham amazingly just took his men went and wiped out.
These kings got all this stuff and took it back into Sodom and Gomorrah and Melchizedek, the priest of God most high enough came in and they broke bread and wine, and Abraham gave him 10% of all the goodies that he gotten from defeating all these kings so that must've been quite a halt because you know they call that booty. In those days, a member the oak fascinatingly that 10% that you said that Abraham assaulted his wealth.
In other words they used salt to preserve things and so they were there, like the tie is a way to salt your wealth, because number one you cannot give God and if you are sending that money away God's gonna bless it back but the other really really cool thing about it that they teach us if any money that you give to God.
You know you made a good investment if it's because you you may have put money in this and that was a bad idea. You may have bought a car that went bad or you there's a lot of ways you can waste money.
But there's one that is a surefire way not to waste money and that's by salting your money and giving it to God, which you know that whole concept doesn't always mean necessarily there's some churches that that may not be giving money to us what takes discernment to know when you're actually giving the money to God and in how he's going to use that.
So I know most churches obviously would be along those lines, but there's something really harms that you say that didn't the number one thing that when people come to you for financial counseling.
What's their number one and this is not scientific research. It's just my own experience of seeing hundreds of people in their 60s that are coming to me they're getting ready to retire there already retired and one of the primary things we do is show them how they can distribute their money in their IRA or their other money if it's outside of an IRA to create an income in the number one worry that they have coming in is my gonna run out of money in my going to get old and start pulling money out of this and if you think about if you get $500,000 in an IRA, 401(k) or you get 400,000 and then you get a Social Security check.
And then you look at that and you say well yeah I can. I can just live off the earnings of that people are all confused that when we get our spreadsheets out when you start was drawn like I don't know 30 $40,000 out of that to live $50,000. At some point in given scenarios your money when you're 80 8182 so the real thing that we do in this financial planner. First find out if people really worried about that.
If they're not then we we gotta get into a point of light showing them how this could happen and then confirm that that's what they want us to do and so it's almost like the first five or 10 or 15 years of retirement is easy you just just spend the money and you try to grow was laughed and project things but it's the 80s and the 90s and and that maybe just one person of a couple so a lot of times a couple.
Somebody goes around 80 and the other person lives to 95 or 89 and so that's the number one worry is is like I am I gonna run out of money is you know if I start distributing these resources to myself. I start living off of this money I start spending this money that one point in my and zero like you for 300,000 and you took out 30 for 10 years you're done yeah and and and so but the cool thing is man I and I'll never forget when you introduce this concept to me.
I was like, really.
You can do that. How does that work at and you know that's just amazing this this concept of the annuity. What will it is and if you know where it were.
I find out a lot with clients as I've been offering these income riders and this would it really is. As soon annuity with a guaranteed minimum withdrawal benefit and it said just put that in English is the insurance company guaranteeing you at a point in the future you can start pulling out certain amount of money and then that certain amount of money you can pull that out for the rest your life and even if the account runs out of money were still going to send you check the insurance company guarantees and people here that when they're buying it. They know that I'm assuring them that this is safe and that kind of thing but they don't completely understand that to live had these things for a while and then we typically don't start withdrawing money in the first year. These things are best if you let them. If you live in what I call bake for like four 567-8910 years. In other words, were only going to take part in your money and put it aside with an insurance company and then were not going to touch it for like a minimum of four years, maybe five or six years and we can show you all the numbers but when we touch it were gonna turn on the income we can tell you right from the beginning. Your income will be this much when you're like 68 or 71 or just this point in the future.
And once you start the income if it's on two people has been a wife, and the income is. Joe comes to two people, but when the first one dies, it keeps going so it's it's going to come to you no matter what. As long as one of you is alive, so it's going to be at the second death. And stop. But then the beauty of that if there still money in the account after you die like some you know you both die in five years and your beneficiary gets the rest money. What will they do and the people understand that because of one of the first questions people have with this as well. Let's say we wait till 69 and then we start this income then both of us are killed in a car accident three years later and we've only received 36 months of $2000 checks. What happens to my original 300,000 with the dealers as they just been deducting those $2000 checks out of your account when you both died in this example, whatever is left in the account is getting earning interest all the time is going to go to your beneficiaries. But that's not the amazing part that's just mass some. Would people learn after they've had these for a while there, so amazed by his what happens when the second one of you dies when there's nothing left in the account. Let's say you lived a 93 second one he does in this thing ran out of money at age 83 or 84. Just because you withdrew so much for so many years and said zero what what people just can't believe it's like a miracle, is the checks still come from the insurance company on a zero account yet like ourselves critical. That is exactly the same thing and so your security starts when you retire you been bacon that money for a fact.
You can put it in there and then it ain't stop and an Intel Intel it's over, with the exception of no so security. Unfortunately, my beneficiaries don't get gifted with the remainder so I have these people down South Carolina lady Meadows because your neighbor has Medicare supplement insurance with those she sent her neighbor who is this new client, and the new client is 65 and she's bought a Medicare supplement based on her neighbor's recommendation, and when my new young agent finding them just found it here. You have some people in Chester, South Carolina that have motion be given where the town that I'm looking to wear their name and date. Do you know they got almost $1 million in a in a 401(k) and then they really don't have much else to their name. They got a little bit of savings.
They don't have a high income and they they think they own a farm that they inherited as a small farm but in this whole thing is the deal there and and so the first question I want to know is hot hot hot is how do you end up with you in almost $1 million in Iraq 401(k). Anyhow, I got through the whole story and this lady is just afraid she got a little bit lucky you know anything. God was looking after her were she invested this or they did together is his account, she did the stuff is as aggressively as you possibly could about four or five years ago with just the timing of that I'm in this thing was probably down around five or 600,000, like for four years ago and it's almost a million. Now, but they are scared because it's been going down to me that is below turbulent times in the market. Recently he had Dana what to do and so they found us and they found me and I said we sure don't do is take the whole 900,000 and throw it in. We could do that but that's not the right thing to do for for a number of recent coming is some reasons to do that a minute I guess number one is you would get a guarantee of principal. So once they put that money and then there is never going be less. Okay.
And then the interest is credited every year.
That's guaranteed to this thing isn't going go backwards it a point in the future so that makes it real attractive, but you've got no flexibility with this annuity you pop at all in their use create an income. That's all you got your really effectively don't have money to what we did is we took the 900-7000 we divided in three buckets of 300,000.
This is really Tom's idea and so we could 300,000 in the middle bucket sits there for five years and then in the sixth year and guarantees him in her both of them 24,000 a year 2000 a month for life. For both both off the welfare like this is going to stay running at $2000 a month as long as they one of them is to live then we projected their Social Security form which they had no idea. And so we came up with that and they had an income requirement of 5000 month so that he could retire now. 60 something or maybe next year, and 61 that's before Social Security so we now or in the bucket number one because we put 300,000 and bucket number one that we have total flexibility in working invested conservatively, but instead I get a little increase but forget the bucket number two and bucket number three guy got a blackjack banner. We got a break but we want to remind you to show structure by Cardinal guide.com where you can experience house is clean cardinal guys to plan for living in retirement. We got so much more limited treatment income for life on finishing well. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group.
Here's a chance for you to advance the kingdom through financial resources and leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance and IRA Social Security care and long-term care.
Just go to Cardinal guide.com and contact Tom to schedule a live recording of finishing well your church, civic group, contact Tom to Cardinal guide.com that's Cardinal guide.com welcome back to finishing well in today's very exciting topic income for life like it's never going to run out and when we left our heroine. They were had three buckets of money and we just finished with bucket number one manifest. We got these people live almost $1 million. He was 940 when we put all this together and I think it'd gotten down to 916 know like three or four or five days later so people just very worried just finding somebody like us from their rural setting, and then somebody they can trust you know it's almost like they do need to going to Charlotte or at least on in the Monroe or somebody and you know and they maybe need to meet in the middle where they're going to get somebody to indicate with them is that people like me they say have received like me are going to have a hard time communicating with these folks they were just scared to death a couple weeks ago and so we we got to this bucket principal. By the time we put everything together work and have him start Social Security at 62, which goes against my normal principles, but she 65 and by the time he 62 should be 67 so. And this is the big Social Security check room to make it smaller by starting at 62, but since she's foreign half years older. She's going to be able to collect more than half of his Social Security check.
It's it's kinda complicated, but anyhow we should all add to them and they were like see your ear to have 30 a grant year start in a year and 1/2 and that 30 a grant year comes without touching this 900 and some odd thousand dollars and then that's not enough for them that she told me they need about five grand a month after taxes so they may need to take home five grand a month and if you have your Social Security and just some more but not a lot more.
You could really get into almost a zero tax situation or soak. So get three buckets. The answer to that was in any one of these three buckets when you make withdrawals. It creates taxable income.
So the first bucket has 300 grand in it right from the beginning. It's a totally flexible account invested very conservatively and we can draw withdraw whatever we want. By the month and obviously we will build a get away with that very long, because if you start drawing out five grand months and then you pay some taxes but if you start doing that you run out of money percent. That's why we have this in bucket so this bucket number one is for the short term.
The next five years. Bucket number two is the annuity were we put is 340 grand that was sticking in there and that is going to produce starting in the sixth year of $24,000 guaranteed income 2000 a month as long as either one of them is alive and you know if one of them dies at 74 and the other one lives to 97 done matter that checks coming in all the way to 97. She love that. Then the third bucket is an annuity that doesn't have an income rider. It kinda has one but it doesn't have a charge for the income right so it's an accumulation annuity and it's really just design to protect your principal so as not to go backwards and then it has the potential for upside and it'll get some upside.
Most every year but is not as much you make in the stock market because the insurance company is guaranteeing you won't lose any of your principal so that's kind of an oversimplification, but that thing is just to sit out there and bucket number three and just grow and grow and grow and grow and then we can do all kinds of things without money down the road we may not have to because it so with the summary that I showed them is if he retires now that are actually in about six months that is bucket number one by the end of five years is going be down to about hundred and 60,000 so you still got effectively a slush fund that just sit there that he can make withdrawals from her. They can make withdrawals from when needed. If he waits till the start Social Security a year and 1/2 to retire then that original 300,000 is only going be down to like to $0.24 that since the bucket number one is just a managed account that has risk and it but it's over the short term, and you can afford to lose a little bit of that because you get these guarantees in bucket number two in bucket number three that was so simple. Once I explained a little complicated for Tom to put it together but this while Jen and I love him in on the bucket number three concept is like well we've done good now or 75. We want to go on to your untruths have to write or make they do something else for the they can turn on income and that bucket number three. They then use it for any number of things well hidden inflation might get a hold of them. Another thing that could happen is one of them could die in one of the Social Security checks can go away.
The 2000 a month isn't going to go away from bucket number two but they could have a need for income and we can create that out of bucket number three. The it has an income benefit in their it's not as sweet as risk is not charging for but the simplest way to do that is going to be richest for just making withdrawals from it. According to a schedule, but that's a good problem to have. So they got a cushion in bucket number one because there's been a be a balance in there forever and then you know bucket number three is just all about having a balance and they may have to start to make some minimum withdrawals at 72. They were worried about that for for nothing and they didn't need all the details because they knew that I'm on top of an allotment for long-term care that might be needed out of bucket number three dots will actually bucket number two that 2000 a month if they need long-term care doubles really just comes along with the package yeah so either one of them needs long-term care they can invoke the doubler in the 2000 and month become 4000 a month. Wow yeah I forget to mention some of us that anyone tell them that because there just once you start branching out at this point bold that by the time they're done they'll know they have it. But when we were into this plane and part of the sky was with hands in the air. We didn't have any screen when I'm on the phone. I've still not met these folks face-to-face.
I'm going to, you know, I'm just talking just like I'm talking to you all I got my hands drawn buckets up in the air. So when it might just go back to just a normal person. I have not the just usually normal, but it is a parody seven there with an IRA or whatever her 401(k) that's got $400,000 and they're looking at ways to have long-term income that like man that income doubler deal as I heard I've never really that's just what it is you actually restructure things like that when we have people with illnesses they can buy long-term care insurance. We can use these type of products and we gone from a bunch of companies because there's no health underwriting for that.
So if we have somebody that has a master ALS or they have cancer and his two recent EN you know but they want to get long-term care insurance, we might write regular long-term care insurance on the healthy spouse and then we might take the assets and put them in one of these annuities not take the income and then ran through the assets at the at the person who's ill and then they assess just grow and we can turn on income and we get all kinds of options, but if they do need long-term care we could wait to withdraw from that annuity until that person needs long-term care and that it's immediately double to Wainwright long-term care insurance on somebody who can qualify healthwise assets good news and it just makes me kind of. How neat is it for these folks at reset membrane. Right now I don't want $1 million and yet they were thinking like like so many of us that you know I Mike I have enough know what to know what's you know it and and God provided a way not only to secure what their needs were for the rest of the lies, but also you know even their long-term care and whenever and and is just it's got to do more with them and with the buckets because buckets can do all kinds of things. But what I needed to do was simplify the explanation and then build some trust because these people just kind of feel like the systems against the whole time I'm coming gently point now where you doing pretty good. You just wound up with almost a million bucks.
I get into the story how they got there.
But whatever there there and now I am the system okay and I want to try to simplify what they really realized as now they got an ally okay and what I was telling you, then, is it these are the people God will help me just he's doing backbreaking work, you can just tell is worn out. I talked to him like three times yesterday trying to call the institution on the phone just he's ready.
He's ready to just tender. A small farm she's ready form to be home relook they got all this money there, even if they had 1/2 this much I would've been able to do the same thing you know, or thirds, but with her going away with as they just don't have to worry about this anymore. They're going to get there $5000 a month after taxes they can retire when they want and they can just mix these things around and live happily around by the same token, unite, you have a CPA and with his doctorate in almost the same kind of thing different situation, but needed income for life. He's who I made the video about and that was only part of his money and, incidentally, was just the same amount of income. It seems like $2000 a month to a couple extra on top of their Social Security seems to be a popular number that people like to shoot for is also $24,000 a year of taxable income to go along with your Social Security psyche. It keeps you pretty close to that. No tax situation, but he was the same thing but you know you watch my video on that I have a whole video series on YouTube if you just look for cardinal advisors or haunts trial on YouTube.
You can find a whole lot of the stuff up there and I showed Robbie prepping for the show that video and it was more logical than the buckets and he got into a little more detail as shown little bit of a spreadsheet on the board but we were just talking about that is this this guy is a CPA is a PhD and he teaches managerial accounting and has for like 40 years at Florida State and he watch my YouTube and then I didn't make this video for him. I made this video about him than about his situation and were just taken part of his money and guaranteeing an income for life that starts in like four years so is a much more logical deal. So income for life. The course now it's one of the seven warriors which is that Hans's book the complete cardinal guide to planning for and living in retirement finishing well is is really I like much better because you know this is holy want to be able to to provide for our families and provide you know something to our grandchildren provide for God and all. It's a beautiful thing.
So thank you so much.
Great show, you think you don't forget cardinal guide.com. We hope you enjoyed finishing well brought you by cardinal guide.com visit cardinal guide.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs long-term care life insurance and investments and taxes as well as cons 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 get Hans book go to cardinal guide.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.
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