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Retirement Income: Buckets of Money

Finishing Well / Hans Scheil
The Truth Network Radio
June 26, 2021 8:30 am

Retirement Income: Buckets of Money

Finishing Well / Hans Scheil

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June 26, 2021 8:30 am

Hans and Robby discuss the Buckets of Income Strategy.


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Finishing Well
Hans Scheil
Finishing Well
Hans Scheil
Finishing Well
Hans Scheil
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Talk podcast connecting current events, pop culture, and theology, and were so grateful for you that you've chosen The Truth Podcast Network it's about to start just a few seconds. Enjoy it and please share around all your friends. Thanks for listening and thanks for choosing the truth podcast network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner Lonza Schild, best-selling author and financial planners 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.

Finishing well, finishing well is a general discussion and education of the issues facing retirees are no advisors on Schild CFP some insurance this show does not offer investment products or investment advice is welcome to finishing well today's show. I think you like this title is retirement income. Buckets of money I'm renewing. Once buckets of money and I think you're really get enjoy Hans's wisdom today. Here is is I couldn't help but think as I was listening to the buckets of money strategy. I was thinking about you know, Joseph, and this is Pharaoh told in his dream about the you of the sick cows and the fat cows and in all these things get swallowed you know God gave Joseph the wisdom to store grain which really when you think about these go to 10,000 feet above the situation here is a phenomenal Sabbath famine that's coming over the land and God is not only going to meet the needs of his people, you know, Joseph and his families can meet the needs of the Egyptians through the wisdom that he gives Joseph in what is an upcoming crisis and interestingly also gives Pharaoh the wisdom to understand that Joseph had that information so as we look at our retirement and you think wow I'm I'm not can I have the source of income that I've had my whole life.

And so it looks like there could be a famine headed your way. But the good news is Hans is here with buckets of money or at least strategies for buckets of money right yeah and just the buckets of money comes into play when you were using annuities and frequently we just have two buckets of money really have one bucket of money which is just some cash that's invested both summer IRAs and 401(k)s are money sitting somewhere that we have the ultimate flexibility to make withdrawals and that's going to be our short-term money. So if we need 5000 a month like these people might need for about a year we we discussed the flexibility to just make a withdrawal from this account a dealer, surrender penalties, or the company come back and say they've already invested. First, such as such term so so the first bucket is going to be something which has complete liquidity and withdrawal flexibility fees, difficulty times we got none of that deal, then the second bucket is going to be an annuity and the annuity. As you know was annuities you need to leave that money there for a while when annuities are not a good place to buy and then turn around six months at Salomon linebacker. I want some of my money back when they have ways to do that but the reality is if you're buying an annuity, especially if you're buying it for me it's for a long term purpose and so by the time we just have these two buckets. What will you do is to take income from the first bucket since we needed with complete flexibility and then that bucket is eventually going to run out, but we want that to be several years from now and then when the second bucket get some growth on banks for a while and now it has an income that you can start that second bucket is going to come with a guarantee. Once you start income that that income will never stop until you die. In this case. The case I'm using as an example for the show. That's two people husband-and-wife screeners continues to income to continue once I started as long as one of the lot, so the income stops at the second death. So interestingly I guess it was that Pres. Roosevelt was the originator for for many of us in the idea having buckets of money that Social Security itself is an annuity and so actually you've been putting money into a bucket of money your whole life ever since you went to work. Thanks to Pres. Roosevelt Lagos in support of security ever sense. You're absolutely right at end and so is that money has been banking in their I've always like that term that you use in an and drawing interest in all that it it is in fact you know if it is annuity because it comes with a guarantee that once you started that income will not stop until you're gone. I have a spouse in your check was larger even after you die there and keeping that income to your spouse that you want some like fun playing with your buckets of money, but just print your go to wasn't Social The printer statement okay and you'll see they have it every last penny. That, of that you put into your bucket of money. Okay, you and your employer now just take your Social Security benefit. That would save 868 or whatever year you choose and multiply that over about 10 years and year to find out that you get more money a lot more money. Chances are if you live 10 years after Social Security then you put into an MSA was a heck of a strategy at in that same idea is kind of what you're talking about here with this with this fellow is absolute because so your IRA or 401(k) money is intended to be a supplement to Social Security so in the example I just brought out a lot of times the simple plans exist to buckets of money. It's the it's the money you can get at Morgan use short-term for income that wouldn't take a lot out of that and we got flexibility because we know we got bucket number two which is an annuity it's allowed to bake for a while. This can grow, but in my example then there's the third bucket because these people have more than they need. So we put that in the third annuity which doesn't have a guarantee of income, but it's got like maximum M maximum accumulation as were much better than bucket number two, so register apportioning the money for a purpose of an overall strategy and when you really think about it. There's 1/4 bucket at play here which is Social Security and in the so security is coming.

A lot of folks they look at Social Security when I start talking to somebody's $50 again to be there when I'm there is this is that nobody really says I got this awesome program that is going to be there and it's gonna pay me a lot of money lists were you brought up the statement is if you look at your statement and just really say well it's this is pretend ferment that I'm actually going to get that which I feel like you are okay and just look awesome is because once it starts it's not can stop by when you read about these people that pass away at 100 Nader hundred and six. Just imagine they started to Social Security at 65 how much they got paid over the lifetime. It is huge and how to let us know how long work in all that we we think we do. So security is just can't keep sending you checks so they really what Social Security does is it alleviates the longevity risk or the fact that you might live a lot longer than you think you're going to live in and make sure that you still check collecting a check at that point, the annuity does exactly the same thing by knowing bucket number two.

In our story by leaving the money there you in our example for five years and then we can already tell the guy that this generation of the Mandalay, the $24,000 a year for the rest your life will if one of them lives 203, there still going to send in that $2000 a month if they take it monthly in the hundred and third year and that we collect in their Social Security check.

So now if they died 84 well I guess they're not going to get anything past 84 so so that the other downside of having something that covers longevity risk is you know you're not can I get anything after your heirs are going to get anything after you die out, but the beautiful thing about the annuity is if I'm understanding of this law is my opportunity if I that is that if you had not used the original money, money that you put into an annuity right. Let's but say you you would put $200,000 into this annuity and you died two years later you have you have is in the mice can be paid to the beneficiary, but even in this example, but if you start the $24,000 a year in this fifth year six-year the end of the fifth year and then you collect data from this guy's case from 65 to 84 then die and you means that use up your money.

The only difference is, is she still alive. Then she keeps getting because he has to have them both, but the whole point here is as if you passed away early. The annuity wasn't as good as sweet as it was. If you live a long time but that's all risk assumed by the insurance company and so are our concept they were doing here is his people look at their IRA or their 401(k) as a whole. They look at this and get this much.

Then there watching it go up and down there all nervousness with these people were about going down can I retire and I this come up with crazy numbers like 70% of the slaves talking like earning 7%. She just be a slamdunk chart means I can earn 7% deduct 7% every year, and we can go on forever, so principal machine really articulated that way but that's kind of the underlying principle and is so far off its knots kind of people look at that. So I had to get that out of her hand and that's not strategy will grant you.

So then all were simply did with them as we took their bucket of money one big big bucket and we divided into three smaller buckets approximately the same size and then were using them for different things and get different problems rights in your listing to finishing well, a certified financial planner homicidal today show is retirement income. Buckets of money like you know the whole concept of open a lot of people's concern in retirement that famine that's coming on.

Joseph faced is that there can outlive their money while that's a beautiful thing. If you list in the finishing well today because we have no intention of crafting, but unfortunately God is is giving us wisdom through a lot of people over the years to show us how we can do that since all in Hans's book the complete cargo guide to planning for and living in retirement, which is there an cargo as well as all website goes into all these different things. You know there specifically is Hans's email address and he would love to hear from you if you wanted the whole book we had a specific question, by all means it, it's there, but there's also some other stuff on Pharaoh quickly. That's at that website that they have this phenomenal YouTube channel would just give actually there in the hundred thousands of hits of all these people that are getting Hans's information. So if you want to see the whiteboard experience that Hans does where he goes through some of these things and shows you mathematically how these things work out in all those videos there on we meet retirement income all the things we talked about on finishing well as well as podcasts of previous shows and charts and also some wonderful things cargo so we come back on. 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 Hans expertise and qualified charitable contributions veterans aid and attendance IRA so security care and long-term care. Just go to cargo and contact Tom to schedule a live recording of finishing well, your church, Sunday school or civic group contact Tom Cardinal that's Cardinal welcome back to finishing well a certified planner Hans Schild today show is on retirement income.

Specifically, buckets of money and started a strategy not unlike Joseph taught on how to live through famine and the idea is lot of folks think that that retirement could be famine is on and the income that they used to. But the good news is we got strategies and and and really this is some beautiful stuff. This whole concept and but we want to you not gonna take it in, put some flesh on the story a little bit of these people and kind of their situation. Yeah, I mean sit so for starters with when the case was brought to me before I met the lady in then met her husband's looking at a 401(k) statement with $880,000 and then these guys are standard down small town just as they used to be in New York and then the guys in the tree business or something in terms of cutting down here. They didn't do it real clear my people on everything distally was already a customer and so I have a lot of questions that I want. I just want to find out who people are and why you have 880 grant which is a lot of money for the people we just describe.

I don't want asking that that bluntly. So what I learned is he is to do his landscaping business for a very rich man for a number of years and both in Florida and New York, and he's through doing that, but this guy set up a 401(k) for all you call the help and these people contributed to it properly and a few years ago they had about four 500 grand in there, which had to be doing something right and then she started getting involved in his thinking about retirement and then when she did. Is she made it as aggressive as she possibly could I not sure I would recommend that at the time, but it turned out to be a lucky bet in the 4500 became 800 S. and just between the time when I finally met him on the phone. The 880 had become 940 and what I experienced her is even more nervous about the 940s and she was there because she was just convinced this is all going to crash and it's all gonna whatever and I'm just listed mankind doing any talking. She is very worried about big losses in the market, and even told me what happened in 2007 knowing what happened in 1987.

What happened in 2000. They don't want to happen to them and think it will wire you so invested so aggressively. If you if you're worried about that and then is more or less what were talking to you okay real good. But what's all this money for so it's he can retire. Then she launches into taken 900 grand a little bit more than that and just applying percentages to the whole thing which allowed people to actually start saying well when I retire you know if I can earn this amount and there's an answer, but if I can earn this amount and then I can just live off of that and that the end of every year they'll be just as much for start of the year after we spend the earnings doesn't sound from planning your my answer that is not very good. Okay what about Social Security and I didn't anymore get that out, which is salary will he's only 60 and so you know you can get it for a while. Okay, but a while is just 18 months and then she had Artie started her Social Security back when she bought her Medicare supplement 65 and hers is like 388 a month and then when I was explaining what he might want to start his Social Security at 62 because you will be 66 in so many months you'll be up for retirement. The other line.

The short of it is I figured out that they can get 3800 a month. That's when I started listening. Research did you be able to start drawn 3800 a month and a year and 1/2.

She is 38,000 a year is a lot of money to somebody that only needs 5000 a month to live, which I think she overstated that and so what were talking about on the show here is we just expanded their scheduler of plan by using the bucket so we took the 900 grand 900+ which by the way. By the time we got to selling them. What we're going to sell him Artie gone down about 915 so that are lost 25 grand.

Just in the couple weeks and we got all that worked out and we divided their money into three buckets, so one bucket is short-term so he could retire tomorrow and we can just make withdrawals out of that till he's 61 and 62, and then will make much smaller withdrawals out of that until he's tip to tip at 62 until his annuity and bucket number two is five years old and then start regarding started that now and then five years from now. We got a guaranteed $24,000 a year for life and we won't have near drawn down bucket number one and then bucket number three is just their excess money so we put that in an annuity that was, that is designed for maximum accumulation. The just as a withdrawal feature so they can use that to protect against inflation and if they have some expenditures if they have expenditures later in life. It's us a three bucket strategy. I think what you talked about is Juliet is really their fourth bucket is that Social Security check which is 3800 a month they going away and that's can adjust for inflation itself. So once we went through all of that just the three bucket strategy is nothing different than taking a big large 50 gallon drum and just breaking it into some smaller drums or maybe some 15 gallon drums and just telling on the scanner when you look at Joseph and Pharaoh and he was saying. We have seven good years and during the seven years we might take some of this and put it back aside so that will have them. It was just a strategy. And so you know this is part of what we do to set up our original annuities, which is her Social Security and and here we go, but not all of us don't have $960,000 over what will you know you are good done the same strategy form.

If they had 320, they wouldn't have that third bucket of the whatever we want to be bucket and then they don't really need the 24,000 starting in the sixth year that would be fine for them if it was a thousand or 20 of 12,000 in additional thousand a month guaranteed so this can be done.

This bucket strategy with much smaller amounts of money supplementing Social Security. Most people that are implementing these are not 60 and 65. A lot of them are a little closer to retirement or their Artie drawn Social Security so there I just use this quiz is sticking out of my mind and these people were just shocked because were preserving the principal. These people are gonna die with a lot of money and there and have the security of knowing that monies there.

They get to be 70 1/2 they can start doing two CDs and given some of this money away to God to the church if somebody is sitting there and they've got an IRA. I even it 220 or whatever the situation is. It is a good idea to sit down and go cable. How is my money gonna provide for my needs clear through so that it is as essentially we don't outlive our money, we might take 120 and put it in the same kind of annuity they bought bucket number 220 Green for two people might be one person that is one we can guarantee a number starting income in the six year get on any amount but it's can be pretty good for 120 and then we can look at it and say what you can be and if we wait eight years, you know, is even more so. So I'm just making simple math and then we could leave 100 a bucket that has maximum flexibility for withdrawals so that if we needed to start drawing out that amount by the month. Now say it was a thousand a month when I can get real good earnings on this hundred thousand got a keep account liquid that we get some earnings and never start drawn out a thousand months would thousand mother get 100 months before we got attempting annuity to get a thousand right in and plus you have the other bucket of money saved roof and all is that most current or in my case the septic tank pump decides it's too long first flight whatever and it it it needed to go right now in Maryland. Now I need $2000 that you that's part of that strategy is built and that that that there's gonna be money in the case for crisis Dante will redo that hundred thousand dollars saved monies were gonna probably move 10,000 year over indoor raw and the tax effect to that of people that don't have a high income.

Anyhow, it's almost nothing to do these conversions that's 10,000 is a slamdunk. And then when they do have this roof they won't even have to pay taxes still make the withdrawals out of the raw data. It's that it's now that I'm 65, and for those of us are still working right.

I mean, it's a great bucket to begin to to fill because it if you're if you're still working right and and and you can go now with the Roth IRA with your after-tax money, make deposits up to $6000 a year right in your creating a bucket that you got total access to. But at the same time mean Ellis is is still you know it you're able invested in. So this strategy is is is multiple things. It's also with annuities and annuities are gonna get you a guarantee of principal they're going to get you a guarantee that your income is never going to stop until you die. But there also. You can leave the money there for while they're not liquid very liquid so the whole concept is as soon as I write somebody annuity I'm looking to diversify away from it to just given this other bucket which has very easy liquidity front running get their hands on the money. So now I can at the strategy is is it's beautiful from a standpoint of an element with Dave Ramsey or whoever you listen to that you got an emergency fund, yet you got up and income strategy throughout your lack outlive your money and and essentially not be able to take care your family so it you know, one of the seven worries that we talked about so many times is a retirement income in so many folks are concerned that fellow outlive their money to discard strategies. If absolute strategies and taxes are involved in all of this and really talk about it much, but the whole idea is these people are going pay very much in taxes. Yeah and and this it's it's that's definitely part of all that which is again another one of the tabs that Cardinal so again the book is the complete cardinal guide to planning for and living retirement. All you have to do is gargle and you can contact Tom's bearer, as well as again, what we talked about the videos in the podcasts all sorts of resources thanks again, thank you finishing well is a general discussion and education of the issues facing retirees Cardinal Cardinal advisors and Hans Schild, CFP some insurance this show does not offer investment products and more investment advice. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal and 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 to get Hans will go to Cardinal 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 Cardinal Cardinal

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