This is the Truth Network. Welcome to Finishing Well brought to you by CardinalGuide.com with certified financial planner Hans Scheil, bestselling 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, IRAs, long-term care, life insurance, investments and taxes.
Now, let's get started with Finishing Well. Well, welcome to Finishing Well with certified financial planner Hans Scheil, and today's show is Guaranteed Retirement Income Increases Retirement Satisfaction. Now, I know you all want more increased retirement satisfaction, and so here's a great strategy we got for you today, and interestingly, I couldn't help but think, but in Psalms 90, you may be familiar with that verse, verse 12, where it says, So teach us to number our days, that we may apply our hearts to wisdom. And wisdom to finish well, obviously, as that's the name of the show, and interestingly, when we number our days, we can get an idea of what we've got left to invest, or what we may have left to withdraw, and those kind of things. I was thinking that what you're going to find out through this show today is most of us underestimate the length of our days, because you're going to find the average lifespan is longer than I thought it was, and I'll bet you'll be surprised, too. But what that tells me is we have only so long to create an income for ourselves, or in some cases, to pray for our children and that kind of thing, and you may know I do a show with James Banks called Encouraging Prayer, and lately we were talking about this idea of we have a chance, while we're live, to continue to pray for our children, our grandchildren, people we know well, the people in our church, et cetera, and every time we do, we're giving them an inheritance or prayer, because as those prayers go before God, according to the book of Revelations, he keeps them in bowls like incense, and those things are going to continue to be right in front of God for eternity. Those prayers for your children, your grandchildren, you're making an investment every single time you pray one, and so as we number our days, here's our opportunity to invest in all sorts of things that will continue to pay us an income, and certainly our families, for eternity, Hans, but obviously, when it comes to our retirement satisfaction, it's nice to know you got a check coming in.
Well, it is. You know, I read a lot of these studies. I don't reference them too often in the shows that we do and the teaching that we do on YouTube and on the radio, because if all I did was reference studies, I'd probably be pretty boring to listen to, but I read a lot of these things, and there's three of them mentioned in this show, and we'll start with the first one. It comes from a society of actuaries, and I, too, found this interesting. I didn't realize people live this long, and this is how I make my living, but if I'm looking at it, it says, you know, if you're healthy at 65, and that's a big if, so if you're not healthy at 65, these statistics don't apply to you, and by healthy, they're not really talking about, you know, you're running marathons or something.
They're just, you don't have cancer that's active, that's not in remission, or, you know, you don't have a very serious heart condition, that type of thing. As healthy, they're talking about reasonably healthy, is on average a man that makes it to 65, and he's healthy, he can expect to live to 89 on average and a woman to 91, and that's higher than I thought it was, and what I heard from you is you thought the same thing. Exactly, I never would have guessed it was that, but that does lead us to the question, you know, we don't want to outlive our money.
Well yeah, and then I'm going to add one more little piece to that, is couples. So now if you have two people that are reasonably healthy at 65, and we look at how long the surviving spouse lives, so now, on average, the surviving spouse lives to 95, so it's even further. So when both of us are doing our planning in such a way that we're thinking about when one of us dies, which for us guys, we a lot of times think that's going to be us first, and then we're going to leave behind our wife, and then how long is she going to live and how much money is she going to have an income to live on. So reading this stuff is important, and then, you know, we're reading it because we, you know, it's what I do as I'm a financial planner and a retirement planner, and I sit down with people generally in their 60s, and we plan out these things, and a big part of what we're planning out is what's their income going to be now, what's their income going to be in five years, and what's their income going to be in 25 years.
And so, and that's some pretty difficult job, and then there's a certain amount, the accuracy is only going to be so close, especially when we get way out there in the years. So, and the topic on this video, in another study that I was reading by the University of Michigan, and this PhD, Wade Fow and Mike Finca, I've talked about them before, is they studied these whole groups of retirees through the University of Michigan and studied them over, and people with protected lifetime income, where they've got something that is going to pay them for the rest of their life, they tend to spend more in retirement, and they have a higher retirement satisfaction. Now, that's kind of a mouthful, but let's talk about that a little bit. Yeah, you know, when you have more satisfaction, it means you worry less, which probably means you're going to live even longer.
Right? And part of your study, you even pointed that out that people that are in the top percent earners, they live something like three and a half years longer, was it, than somebody? Oh yeah, and that's another little piece of it is, is yeah, the highest earning people, the highest 10%, I believe it was in the study that, so then they start looking at how long they live, and it's actually 5.9 years for men and 3.1 years for women. So, and so why do you live longer if you're a higher earner? It's probably because you take care of yourself, you access more medical care, you might well be more educated, which is going to cause you to utilize medical care, you're going to, maybe it's going to cause you to read about things your doctor tells you.
I don't really know what's behind it, but it's people that have savings and have been successful in being a higher earner, the statistics just say they live longer. And you know, one of the things that comes to my mind, Hans, when I think about that, and I think it's wisdom, is that I can't tell you how many people I knew that when they got sick, they didn't go to the doctor because they couldn't afford either the co-payment or they couldn't, or they thought they were going to have to go to the emergency room and that was going to cost them. In other words, those worries about money keep people from going to the doctor actually when they're, when they're bad sick. And some of those folks died because they didn't get to the doctor in time.
And that's terribly sad. And some people don't go to the doctor just because they're stubborn. My mother-in-law, like having knocked down drag outs with, and you know, just think about that at the urgency of going to the doctor when you're sick. Sure. So we read these things and you know, what I'm trying to do with people is just sit down with people individually and I'll do this with you if you come in and see me. If you don't come in and see me and you're just listening on the radio or you're watching these videos on YouTube, then I'm going to try to give you the advice that I work with. So you know, just because people are going to live longer, you know, that's a good thing for them. But as a financial planner, that means I need to provide for more years.
Okay. And a lot of people are pessimistic when they come in to see me when we start talking about, you know, their family history and you know, their current health situation with their desire to live a long time. A lot of people say, oh, I don't want to live a long time because I look at these, whatever. And then people say, oh, I'm going to go early because all the men in my family that have heart disease or whatever. And so people tend to be fairly pessimistic about the length, the possible length of their life. And so I generally try to get them to look at, look at it from the safe side because you might, one of you might live a long time.
And so we better plan for it. And so the topic of the video and you know, the topic of the show today is when you study these people who set up a protected lifetime income stream, which your social security check is a lifetime income stream. And it's even adjusted by inflation. But social security check is generally not enough to live on all by itself. So the people who set up their investments or part of their investments to kick them out of check every month for the rest of their life, they tend to spend more and they tend to spend that money and be happier in retirement. So, I mean, that's just, that's a fact backed up by the study. Right. Well, the idea of the increased satisfaction means that, because we talked about the beginning of the show, that if your plan was essentially to hope that your investments were going to do well or hang onto your money really, really tight because you're afraid you're going to spend all of it, you're not going to be very happy because you're going to be terribly worried all the time that either your investments aren't going to do well or you're going to run out of money. And if you've got a guaranteed income stream, that ain't going to happen.
Well, yeah. And we see so many people that come into us very worried. That's why they're hiring us is they're very worried that to spend any of their money because they are just concerned about spending principal and that it won't be there one day when they need it. And a lot of them haven't gotten real specific with the numbers. That's what they hire us to do. And we really pin them down and it's like, you know, we get with a number of people, you folks need to spend some more money or give it to the church or give it to your kids now or do something or tell me that you're saving up for your kids and that's the real reason you're not spending money or you're saving up to give it to the church. We've got to find a purpose behind this.
Darrell Bock Well, I'll tell you one thing. I just recently came back from Spain with my wife, Tammy. And one thing I was thinking is that, wow, watching these people try to get around on these tours and we were seeing some beautiful things in Spain, but the younger people were able to go to the cooler places where some of the older people, their health wasn't what it was.
They couldn't go. And so by giving yourself the freedom to spend the money, you know, when you're young enough to enjoy it, really is going to allow you to travel and do other things that really, you know, time is marching on. And again, on the idea of counting the number of days, those are things you want to do with your wife.
You don't need to wait till you're 80 or something because you won't be able to do it. It's a good time to mention, because we've got to go to a break, that the show is brought to you by Cardinal Guide, cardinalguide.com. And there you're going to find the Seven Worries tab, which is what we're talking about today.
We don't want you to worry. And this one is on income. And so if you go to the income tab at cardinalguide.com, you're going to see a video with all kinds of show notes that gives you details about what we're talking about today, as well as Hans' book, The Complete Cardinal Guide to Planning and Living for Retirement. And also, of course, the Contact Hans page. It's all there at cardinalguide.com. When we come back, we're going to give you some details on how to create that retirement income stream that will increase your satisfaction.
We'll be right back. Investment Advisory Services offered through Brookstone 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. Welcome back to Finishing Well with certified financial planner, Hans Scheil, brought to you by Cardinal Guide, cardinalguide.com. And of course, today's show is Guaranteed Retirement Income that Increases Retirement Satisfaction.
So Hans, how do we do that? Well, I mean, it's a process and I don't just want to immediately go to the annuities as a solution. So let's talk about what we're talking about today. So one study that I was looking at, which was kind of shocking to both of us, is people that are 65 and reasonably healthy are expected on average to live men to 89, women to 91. Yeah, and that's longer than I thought it was. And then when we're talking couples, where they're both 65 and reasonably healthy, one of them is going to live to 95 on average. Another thing we found in the study is the highest 10% of our different study, but highest 10% of earners have gained longevity after the age 55. And people, men, almost six years of increased longevity, and women three years, and I think that that has a lot to do with, they must be taking better care of themselves. And they're, you know, accessing medical care and actually doing the stuff that the doctors tell them to do, maybe because they have more resources and they're looking forward to a long, it doesn't matter what the numbers are, is that people that have accumulated some wealth have a tendency to live longer. And the third study that we looked at that we're bringing into this video is that people that have a predictable lifetime income stream tend to be more satisfied in retirement than people that have growing investments and they're just pulling money out of the growth of their investments to live, but it's an uncertain thing throughout their retirement. When they compare these two groups of people, the people with a predictable check are more satisfied, even if that check is less. Does that make sense? Oh yeah, absolutely. I mean, I know that, and I'm certainly not in retirement, but you know, when you're getting that check and it's coming in and you know, okay, well I got that 2,000, you know, if that's what the check was from Social Security, the check comes in at 3,500, well you got all month long to spend that 3,500, then comes another 3,500.
But if it's saved, you're always pulling down on it and it's just, you know, it's not quite as satisfying when you don't have the same thing coming in next month. Now I've read this and this thing, this report from Wade Fowle that I was reading, and I found this to be very true of the people at the highest levels of net worth, people that have way more money than they're going to spend in their lifetime, okay? And there's plenty of them out there, there's plenty of them that you're not even aware of who they are because they live very modestly. But anyhow, they come into me and I found this to be true is, they got their Social Security checks, so that's a check coming in. But for many of them, that's the only regular check they have coming in because their investments are so vast and they've got an IRA over there and they're waiting to take out of that till they're 73 and then they got a Roth IRA where they've converted it and they don't want to take anything out of that because they know it's forever tax free and then they've got their other investments and they don't want to cash those in because they've got to pay capital gains, so there's all kinds of don't spend the money and they don't really know where their next month's paycheck is coming from. And they've certainly got a lot of options and they almost feel sheepish about it because they know I'm staring at all their money, like what in the world are you talking about? But it's a concern where people have done all this investing properly but they've got no regular paycheck and a lot of them purchase annuities from me, maybe not with a sizeable piece of their money, but you know, some of their money, they really like that check coming in every month that we start an income form and then they don't have to wonder. They get their Social Security check, they get their annuity check and then maybe we spread it around amongst a few annuities so they get like two or three annuity checks and they also know that that annuity check, after they pass away if they're married, their spouse is going to keep getting that check in the same amount as long as he or she is alive. So there's a certain amount of satisfaction where we get away from the numbers of just knowing there's a repeatable check coming in and the studies prove it out and I've just witnessed that with people. They like getting that check every month. It's like a paycheck in retirement. Darrell Bock Absolutely. So could you spend a little time explaining how those kind of investments work?
David Morgan Well, sure. See, the insurance company can't be paying everybody to 100, you know. I mean, so the insurance company is guaranteeing that they're going to pay you if you buy this annuity in your spouse, your wife, your husband, if either one of you lives to 100, they're going to send you a check every single month, well beyond the money that you had in annuity. Well then, so what people do is they put a hunk of money. I mean, many times we sit down and first we're targeting an income.
We want an income of $5,000 a month. So then we go into the computer and we say we're going to start this income of $5,000 a month when these people are 70 and then we're going to guarantee that the $5,000 a month is going to come in every month until both of them are deceased. Well then we can plug that into a computer and it'll come back and tell us, yeah, we need to put in $300,000 now into this annuity and then we need to let it sit there for five years and we start the income in the sixth year and then they're going to have that guarantee right from the beginning that they're going to get that much amount of money per month and then the insurance company sells a thousand of these things and then people are going to be all over the board when both of them are deceased. I mean, there's going to be some people, both of them are gone at 80 and they're going to be some people, both of them are gone at 75 and then there's going to be people where one of them lives to 100, one of them lives to 96 and the insurance company just works on the average. Make sense? Oh absolutely.
Absolutely. And then those people who passed away at 75 or 80, their heirs are going to get a pretty significant payment because there's going to be quite a bit of principle left in that annuity and the people where both of them passed away in their mid 80s or the second one does or their early 80s, there's probably not going to be anything for those people because they would have collected all their benefits while they were alive or anything for their heirs and certainly the people that live up into their 90s, there's going to be nothing for the heirs but there doesn't really supposed to be. We're not putting all people's money in this. This is just, it's a supplement to the social security check. It's the money they live on that they can count on and they generally, people end up feeling that that is spendable money.
So we're going to withhold the taxes and then we're going to, whatever's left, we're going to spend it every month because next month there's going to be another check. Now that's a cool thing and so in the video you guys did some case studies essentially where people were doing just that and really in one case it was a significant one and on the other one it was a smaller, however it just got him to where he needed to be and the cool thing is he knew he was going to be there for life and he still had $200,000 left to have in case he needed to put his hands on some money and that kind of thing. Well and he's robbed that money. That second case study, that was a couple of years ago, we put that together. You know I remember the numbers from those in the video.
We didn't put them on the board and we showed two examples. One guy we were setting up $20,000 a month for life and he has substantial resources and he's kind of the guy I was referring to earlier. He didn't really need to buy an annuity to collect $20,000 a month. He's got enough resources that he could just take it out of here and take it out of there and he'd be fine indefinitely but he decided that he put $3 million into this study and $1 million went in to pay him the $20,000 a month for the next five years and the other $2 million went in to pay him the $20,000 a month for life to he and his wife and he has security in knowing that that check is going to come in every month from two different companies, one in the beginning, one in the end and it's going to continue no matter how long both of them live or one of them lives and he knows his wife has the survivor end of the deal.
The other guy, he was pretty slim. I mean we had a big amount we needed to cover in addition to his social security check and I believe we had $700,000 to work with and so we needed to take $500,000 and cover his monthly check for the rest of he and his wife's life, okay? Yeah, that gave him a lot of comfort and he still was left with 200 grand that we could invest with some risk but as I said earlier, he's come in and robbed that 200,000 already and it's just within the first couple of years. I don't think he's robbed all of it but he's taken about 50,000 of it because he wanted to buy something and you know I cautioned him but he also feels comfortable that he knows he's got those paychecks for the rest of his life so even if he blows through that 200,000, he knows he's got significant money coming in for the two of them to live. Yeah because he's got the 5,000 plus his social security and his wife's social security so that's amazing. Well again, we're at the point where we've run out of time before we ran out of show. We want to remind you this show is brought to you by Cardinal Guide and so if this looks attractive to you, I know it sure is to me to have a guaranteed income for life and that would certainly raise my satisfaction go to cardinalguide.com and there you're going to see the income tab under the seven worries tabs and you can see a video right along these lines with these details as far as these case studies etc.
It's all there on this income tab at the seven worries and then you've got the of course Hans' book The Complete Cardinal Guide to Planning for and Living in Retirement that gives all these kind of details and you know the most important contact Hans and Tom to put your numbers in you know exactly what you're doing and what kind of income you need right it's all there at cardinalguide.com. Great show Hans. Thank you and God bless you.
Thank you. The opinions expressed by Hans Schile 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 Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment Advisory Services offered through Brookstone 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 Whale 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 Hans 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 Hans book go to cardinalguide.com. If you have a question, comment or suggestion for future shows click on the Finishing Whale radio show on the website and send us a word. Once again that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.
