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The End of Your Financial Rope: Retirement Income

Finishing Well / Hans Scheil
The Truth Network Radio
March 9, 2019 8:30 am

The End of Your Financial Rope: Retirement Income

Finishing Well / Hans Scheil

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March 9, 2019 8:30 am

Eclesiastes 4:12 says “And though a man might prevail against one who is alone, two will withstand him–a threefold cord is not quickly broken.” Robby points out that it is fascinating how many things in our life come in threes and that would really be inspiring if we truly understood the threes.


Hans goes over the traditional three legged stool of retirement income that was originally created in the 1940’s. Now, the leg that represented pensions is being replaced by “defined contributions”, such as IRAs and 401(k)s. What happens when this leg is weak?


Retirees now have a balance in these defined contributions accounts that starts reducing when they pull out money to live on. Hans talks about a client who believed he did not need a plan because he has over $500,000 in an IRA. 5 years later, it was down to $70,000 and he needed this income to last for the rest of his life. A lot of this money was drawn to pay taxes, he was only living off $50,000/ year. This is where a plan would have really helped him.


There is a solution to this problem. Insurance companies offers a plan that will guarantee you a monthly check as long as you are alive, even if your account runs out of money: an Annuity. Make sure you and your family have enough money to live off of in retirement.


Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!


You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at


Welcome to finishing well brought to you by Cardinal certified financial planner Schild best-selling author and financial planner helping families finish well over 40 years of 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 today show on finishing well with certified financial planner on trial is reaching the end of your financial rope and you know this comes from this idea. This in Ecclesiastes 412 and what it says is that one may be overpowered to can defend themselves through the cord of three strands is not easily broken.

And so when you think about this rope of three strands not being easy to break if it was just one, two and three reminds you of what you have the of the three-legged stool of retirement income would have been taught since coming to the businesses is real actually from the 1940s. So you got laryngitis. John today's however delimiting some of my words that you got on the three-legged stool of retirement. It compares with that is is that it's not easily broken. And if you get the three legs are Social Security and then what was pensions, which is now IRAs and 401(k)s are defined contribution and then personal saving so those are the three legs of the stool and you know what happens when one of the legs becomes weakened or broken stool falls over. So like it taught in Ecclesiastes 4 right that if you got one strand of your financial income in the retirement I it's it's it's a tough situation, one can be overpowered to can defend themselves or if you got say Social Security because everybody's got Social Security will not everybody but most everybody and then if you add to that an IRA. Then you're in a little bit better shape but if you have three strands right now savings part right that it's not easily broken or it's not to collapse and in so that you know what you're getting at here today is old.

There's a lot of folks out there in retirement that are just collecting their Social Security check. And by the way, they tend to know exactly what that thing is okay and they know the amount and they know what husband is in the wife's is and then they just drawn money out of their IRAs.

They needed and just cannot roll along with that that that's the typical person out there any ideas that we don't want them to reach the end of their financial rope afterwards outlive your money but it is an interesting thing that we got seven worries tab at the website. If you go to Cardinal you'll see the seven worries tab that you you made a remarkable observance at lunch really. We could have the seven Faith tabs up there, but people have a tendency to worry. Rather than have faith in, and that comes from right understanding what you deal let's correct in his Cardinal site just anybody that's right and that down and we do have the seven worries tab up there and we go through in the seven worries are roll talking about her Social Security, Medicare, long-term care IRAs investments and income life insurance and estate planning and income taxes for 62+ and and what I was saying at lunch as we really could call them the seven face for the seven areas of faith, but what people need to get some faith about this in the you know need to stop worrying about it.

The way to stop worrying about is to get a plan as the rest of what I was saying there's a lot of folks get into retirement. They make some decisions about each one of these areas and they just cannot happen there waiting to return and so you know what I'm gonna recommend. And what's really at the core of this the show today is talking about having a well thought out plan for your retirement income and specifically doing it so you don't run on money right in the I did not outliving your money or you know not coming in in the rope and as I teach special needs ministry in all its interesting thing that the word faith. If you were to see it in sign language as we teach our students and special ministries is your pointer head and then you take to having a hold of Mike you're holding the end of a rope while you know faith is like that you're holding on to something and and what this is really referring to in Ecclesiastes is of the cord of three strands is the father the son and the Holy Spirit, they they work together to become you know that which we can hang onto in any set of circumstances. But it's fascinating how many things come in threes in life that really would give us faith if we understood. Wow there were three different strands of income coming in and and you got stories. Dr. half of people were now they didn't they didn't see that they could had a different plan if if they do you know worked on these three strengths and unfortunately these stories happen with people. What a lot of folks would say have a lot of money, and in the particular guy that I'm thinking about just in his IRA or 401(k) turned into an IRA. When he retired at 73 had 550 great and he's living in a $700,000 house that he only has a $60,000 home equity loan on and then he owns two other residences in their worth about 200 grand.

Each one is mortgaged to the hilt as much family and it so it's really a net collector of money and then he's got this other house that that is paid for, so that we could raise some cash, but he has no intention of selling it and then he's also got an income coming in from Social Security and his wife does from Social Security and then as well. He's got this annuity that's paying them almost $2000 a month and you just look at this it is What lull them to sleep as I don't need a plan. I got lots of money to Seattle part-time income, he still gets from doing his old job as a scientist, so you know what he lacked all along is really a plant coming because the 550 grand is down under 100 grand.

It's found about 75 grant. You see, how can that happen in five years because he 78 years old and one thing that yet.

He pointed this out to me which I Artie knew his you know if you can get 50 grand out of an IRA and retirement. You gotta withdraw about 80 or 90. Just so you can pay 30 to 40 in taxes to net the 50 so to get 50 grand out you gotta withdraw 90 in unity do that for five years and that means I'm going to write you yeah yeah that's that's the situation, and so anything is is that is as you begin to realize that it and really I love when you look at the you know it Cardinal and you go to the seven worries tab one of those worries is income but when it when you look at your book, the complete cargo guide for planning for living in retirement.

You don't call it that, in and part of the reason not calling it there at the website as you had your answer to the change in thinking within your own company of what that really it yet within the company meet it in the first book it's investing and living off of your money for the rest your life okay because I try to write the book in plain English so it was right there in my head, but what editors do and the people around me as they get the stuff in the proper form will then by the time we got to the second book, which is the workbook changed a little bit toward income, but it also just titled investments and then by the time we got to the website and it was all laid out the worry he actually says income sentences so it means that within the organization. I Artie made the sale we just discovered this this morning. It's not so much an inconsistency, it's just all of you questions and all of you, but many of you in our listeners. You're probably thinking when you first get on the show that all we do is sell investments and make investments in just tell you where to put your money in how you can make money and not certainly part of what we do but is very little of what we do and is well a lot of people out there hanging the shingle out the financial business that is all they do.

I'm financial planner and where it Cardinal were financial planners and so that involves a lot more than just investing your money. Such things as okay. We got a have a reliable income for the rest of our life. We can be run out of money at 83 and still alive or you know if I'm dead at 77 and then my wife was surviving on last she's run out of money at 83 that it is just is just not good or having to sit here in a crisis like the gentleman that I was just speaking of these all of a sudden he's under 100 grand in this account. He's been living off of it. He still got a lot of life ahead of them and he's coming to me wondering what to do and the good news is working to build a do some things to these custom assets, but these can be forced to make some decisions that he doesn't really want to make okay and were you lack this thing down and working to get all three legs of the stool set up so that he can have retirement and not reach the end of his money or the end of his rope, so to speak at in the fascinating thing to me is that when I look at my own father situation. He was married in his last marriage to a lady who was 25 and be closer to 30 years younger than him and so he never dreamed when he was sitting at his financial plan, you know to set up a plan in case she happened to pathway first.

But God has other debts and this is where it comes in really handy to have somebody sit with you as you begin to make this plan because again it's not about what's in your balance at the end of the day, it's whether or not you have a steady income to meet your obligations as you continue to live by the worry and the fear around that income, which is incurred by your children.

By the way, because your father this point is lying in a bed and he's worried about things like oxygen and get in and out of bed and it's it's the family that you that is really sit near stress and over and fortunately for him, he's not on money so that's all good but there there's plenty of people that do end up in these precarious positions and it really all connects back to the planning that was missed in the decisions back 20 years ago right so can you imagine your own situation where you had three streams of money when you knew was coming in over. Of as long as you may live. When we come back will be talking about that very subject today reaching the end of your financial rope, certified financial planner Hongqiao brought to buy Cardinal guided solid Cardinal this chapter today which is in the book deferred to common and we 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 harms expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care.

Just go to Cardinal and contact Tom to schedule a live recording of finishing well at your church Christian or civic contact Tom to Cardinal that's Cardinal welcome back to finishing well and certified planner on child today were talking about. Hopefully not reaching the end of our financial rope or for reaching the end of our faith in, and we been talking about that out of Ecclesiastes 412, the court is not three strands were income of three strands would not be easily broken and Hansel were to get into these three strands in and how can we plan for those in a meeting.

I guess one of them Social Security, we can well and let's talk about Social Security from the positive. For a minute here. We spent so much negative time and we read so much negative stuff about it coming so the way I see it the biggest benefit of Social Security is you can outlive your Social Security you are getting get sent the Social Security check until you die you may need to send that last one back. They can be pretty snazzy but it's good to go on if you lived 100 tenants could go on. If you die at 73 it's going to stop at 73 admit it's for the rest your life.

The next benefit to it is its inflation-adjusted now is Lotta griping going on where people have only gotten one and 2% over the last few years, but inflation is extremely low for the last several years, but if it's inflation ramps up which it may well do if you inure retirement if you're in your 60s. Now Social Security will keep up with the can outlive it is can keep up with inflation.

But the downside of it. It is not enough.

I mean it's it it has to be enough for the people don't have any savings or retirement savings and they make enough but it's really not enough to have and wasn't designed to be all was that right. This is one leg is still right. So in a 11 strand is easily broken, but to can defend themselves was sure and so the second one is was pensions in your pension is gonna look a lot like Social Security you can outlive and if you set upright your spouse can outlive it, but the fact remains, most people don't have those with a been replaced by his 401(k) is 403 B's 457 plans, IRAs, just anything where you got a pot of money for retirement that you haven't paid tax on the money yet and so that presents a problem for the average consumer.

Even though it's nice that I got a guy up in Indiana that we talked about in some previous shows he's got a million bucks, and that that this guy doesn't view himself as a millionaire in his IRA, but now he's got the problem at 61 years old retired.

He's gonna make that thing last for the whole rest of his life, and I experienced him a little overconfident because you know he's just he's looking at that proverbial boy the least, to make his 5% a year as I'm a good investor and you know I maybe could even lean on seven and he's almost thinking that these can get that 5% linear in To come in every year, 5% and that's not how the stock market works and a lot of troubles with this. He needs to live off and both he and his wife need to live off of this million bucks for the rest of their lives in. That presents a problem and in effect we need to turn it into a pension and one of the ways we do that is by putting part of it into an annuity that provides a guaranteed income for the very much like Social Security that you can outlive gamma knife first are doing this over a year ago someone asked me Robbie lesson annuity Avenue at this clear on that one is you know how the pancreas works but you know the basic of an annuity, the more I know about it that similar dissent Social Security. What a wonderful thing for so many people in maritime rhyme is way to turn on him, never stop.

It's wonderful thing very misunderstood product. There's many people out there that don't understand him in the Leah blanket. They're not very happy about these things and they can advise people don't get him and a lot of times people give that back to me and they they don't know why they're not good. They just know that they're not good and and and you know they're asking me is that true as a for some people in the wrong situation or whatever church, sure they could be bad, but that it's it's it's a miracle product it's backed up by an insurance company which is wonderful and you have 1 billions and billions of dollars in calculations and so you can get your money back out of the thing and throw writer an insurance company can guarantee depending upon how long you wait to turn it on that you and your spouse can get an income every month. That's can keep coming until the second one of you dies is guaranteed even if the annuity runs out of money, but one or both of you still alive.

The checks keep coming in. Just like a Social Security check that I'm not suggesting that people take all of their money in this you know strand number two were leg number two, they throw it all in an annuity to create a guaranteed income. I'm simply saying that if we got assertion Social Security check.

We know what that is and we know how much that is short of what we need and want to live on.

Then when it be nice to just take heart minimums are the sky with a million bucks.

We've gotten around to $300,000 of that million bucks that were going to put in an annuity that he's not gonna pull any income from it. He's gonna wait several years and then he's got a guaranteed all these condos flipped the switch and now the check start coming in and he can outlive at and there's another huge benefit of this particular strand of the rope that I see that a lot of people's plan leaves out long-term care and and they think that Medicare is going to pick that up or whatever they may think may happen that their family might not end up into pretty a situation where they they don't know how to take care of this individual anymore at home or what the situation is and they don't have insurance himself that one strand can snap right off.

If there is no plan inside that in those annuities can get them with long-term care enhancements or we can separately take care that I really and prepared for the show dog and Robbie. I was just explaining the number one thing that can disrupt the splint. Once you get the plan done yet. The guarantees in word and invest some of this money for growth, especially the guy with a million bucks. Were you were working to get a balance of this. These can take some risks with an implant that do well and create extra money that we can do all kinds things with. But wicked disrupt his whole plan and someone else that maybe don't have the luxury that extra money is long-term care. So let's just say you plan the legs of the stool to kick out for grand a month for the rest your life or five grand a month and then you're just going along these inanimate have an easy time living on that do things for my grandchildren and outlaws and want to pay a lot of taxes. I'm happy with that.

All of a sudden you're facing assisted living costs, home healthcare costs.

You know whether it's one spouse or both of the survivor and all of a sudden you have a need for 678 grand a month for months and years.

It just takes the whole plan in just it just cuts all the legs office tools were essentially what cuts the strength of the rope. Again, everything rope and then it comes Medicaid and some things are kind of scary. I'm sure in you when you see what actually happens in an and you know the situation I observed with my own father situation. He didn't have that particular leg of the stool and that made left us with some hard decisions to that had to be made, because we realize it is all estate wasn't risk over that one part of the decision that we complain for Jan soap doing with this gentleman up in Indiana. We are gonna compare taking the same amount of money putting it in an investment account and still drawing out the income the same as the annuity and the Morgan project and guess what, in our projections, you end up with more in the invested account then you do with the annuity imitate why that is because you've assumed you can get the same return every year and you've assumed a higher return that you may or may not get settlement if the net second plan projections look great but you know projections are at me, things don't generally work out just like with the annuity. There's a floor on that mean it just it is guaranteed to be this amount. If you start this income at this age is guaranteed to send you checks that amount until the second one you dies were just talking about options here.

I'm not giving any financial planning for you on the radio. I would suggest that you get in touch with me if you really want to look at your situation. All of this comes out of the Cardinal guide my books get two of them. The chapters of the book. Cardinal can buy the books on Amazon go to our website and see that get him on Amazon. If you send me a message I'll be glad to send them to the tell me your listener the show you'd like one and so we want to get to that third leg because the third leg you've Artie paid the third strand of the rope you are to pay taxes on that that money. So this guy also has $200,000 of just savings that he's got sitting here and I'm encouraging him to really squirrel that money because all of a sudden he might have an unplanned expense you may need to do something for one of his children get them out of some kind of mass or pie new roof for buy new car or something with a big, bulky expense and that can destroy your tax situation crazy if you draw that money out of the IRA and he could throw the income plan crazy week so work at work and I want to have a bucket of money that we can draw from that. We don't have to show his income and that's can keep our overall tax bill low practice.

If your taken money out of savings. You can still not pay any tax on yourselves pretty that income leg because absolute right. You Artie pay the tax on the savings that was drawn that out monthly. It's not increasing your income. As far as the IRS is concerned and is not Anderson's current up weep with some people that have sizable nonqualified savings and then some IRA which is number two strand and they'll do like in every other year thing so one year they'll pull it out of the IRA in the gonna pay taxes on that amount and some of the Social Security the next year they'll draw it mostly out of the nonqualified savings and just a little bit out of the IRA and then they pay no taxes for that year. We got all kinds of strategies for folks really just designed on getting the most we can after taxes out of all three strands of the rope, but the basic principle again to me and I love when I saw the evolution of the concept from the work started out the booklet went to the workbook where it where it ended up that at the seven worst habit Cardinal is the idea of what this really is turns out to be an income strand. Hopefully a cord of three strands that that does not run out as long as he did, no matter how long my experience most folks at retirement and after retirement and spent too much time worrying about their balance in their And then secondly the investment performances or investment losses in we can help you deal with both of those risk by putting party your money into guaranteed annuity right okay so you can see there's all sorts of different ways to look at this, but there's no doubt that having a certified financial planner summary sit down and look at your situation with your particular set of circumstances, and they're all different and we want to thank you for listening today. We hope that none of us reach the end of our faith rope that we realize that we have a court of extremely three heavy-duty strands of God the father not the son of the Holy Spirit comes. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant 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 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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