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2021 EP0213 PLANNING MATTERS - PROTECTING YOUR SPOUSE

Planning Matters Radio / Peter Richon
The Truth Network Radio
March 30, 2021 3:29 pm

2021 EP0213 PLANNING MATTERS - PROTECTING YOUR SPOUSE

Planning Matters Radio / Peter Richon

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March 30, 2021 3:29 pm

For the love and protection of our family, we would likely give up money and income, but sometimes we can make pretty foolish financial mistakes or oversights that put those same loved ones in jeopardy. On this episode MRFC® Peter Richon discusses the financial protection of our spouse and family.

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We want you to plan planning matters with you knowing the information that will be the snowstorms visual will help plan and achieve success. We will discuss the topics strategies and secrets that you can use to improve your progress and get the results you want from life. How do you want your future look it's not always easy to get to your goal planning is empowerment. Let's learn what it takes from the best will give you the power to make it easier to plan the work and work the plan to achieve your success. This is planning matters radio hi everyone to the show today were here with Peter Shawna for Sean planning. He's a master registered financial consultant fiduciary advisor is also the author of a great informative book.

Understanding your investment options yet still say sometimes it might put you to sleep by does have a lot of useful information in it that if you try to understand some of the day terms and information risk sharing with you here on the show. It will help you and obviously understand and better be able to grasp what were trying to get across here and in and tell you that your for insomnia is although it's important information and if you're interested in understanding and advancing your financial progress. I think it's a great starting point a little biased. You should be biased. He wrote it right today will be discussing the big three biggest expenses in retirement and how you can plan to control them and also with it being Valentine's Day and with it being right around the corner.

What time to examine what we do for our loved ones. Critically for this show. From a financial perspective yeah yeah what what what a good gift for Valentine's Day. The gift of a financial plan and financial security maybe you could wrap it all up nicely and put it in a box of chocolates and give it to them and said look I need. This is what I did for you today.

Look at the end of the day. Valentine's Day is about showing your love ones that you care for them that you love them that you value them truthfully providing them some financial confidence regardless of conditions that is a gift of love and caring and while it might not be appreciated like that box of chocolates or a knife and a nice restaurant that's in the short term that's appreciated, but this could be appreciated in the long term.

Yup yup throw this on top. I also made an appointment for us to get a financial plan put together and take care of those nagging legal documents that we've we've been meaning to take care of those kind of so you're protecting your spouse mean Valentine's Day is. I guess as good a time as any to talk about this, but there are a lot of spousal soul issues when it comes to your money and a lot of times came in a household.

We up.

We don't actually sort of have are you and Yang where the spouse takes care of different things right and I love when somebody says that hey, I'm in charge of taking care of the finances for my household. But I also always think of the downside of that. Let's make sure that the other person knows what's going on so you're not so in charge that you leave them in the dark Knight heard many stories of that especially at the I guess people my parents age, maybe even older that the one person are usually the man in the house would handle the finances, he passes away and the wife doesn't know where anything is or where the accounts are how to get access to the money and it's kind of a sad situation. So yeah we both should know. I actually see the opposite just as much where really woman the nose where the bills are, knows how to pay them. Those were the accounts are and the guy would be completely in the dark CIC both exhibit but again, then it's best to work together and know all those accounts where they are and whose names are on them as well. In the end it's you know it's important, the partnership, it's also very valuable to have 1/3 party in in that partnership and that is who is the third party resource that we can go to and turn to for help and assistance and having that trusted advisor can provide a lot of reassurance there. So we we are that resource for a lot of couples when something happens to Joe when something happens to Jane.

I'm coming to you Peter right and you could be the mediator to when it when they come in together to say yeah maybe we should do it this way and here's why. Maybe we shouldn't do it that way.

Here's why.

So what are some of the things that you can do to help protect your spouse in the on in a fortunate time of possibly your death. Yeah, that. But you know death is not the worst of all possible outcomes just to have the most uplifting conversation unbound #day it it it's it's a very terrible time obviously to lose a spouse, but incapacitation long-term care. These risks are real.

The Department of Health and Human Services statistics show that seven in 10 of us at some point in our life are going to need assistance are going to need extended medical help and care and about one in 10 of us actually have addressed this risk. So that's one thing you know, just get your legal documents in order make sure you have your will to power of healthcare you power of attorney your medical directive so that when or if that time comes that you're gone.

Were that you cannot make decisions that you said and put in writing who is allowed to write checks on your behalf or make medical decisions on your behalf. Another one is in our decision-making.

So we tend to be very shortsighted and when we get to that age where Social Security is right in front of us. Oh boy oh boy.

We can't wait to go out and get it. However, by claiming collecting Social Security early, it can leave a surviving spouse with significantly less income because a lot of people don't realize this but one person only gets one benefit. So if you got a couple a married couple and there's two Social Security incomes in the household and then one person passes away, so does one of the Social Security benefit exactly. So what does this mean well.

This means anywhere from a one third reduction in income to a one half reduction in income and oh by the way that surviving spouse also simultaneously bumps up in tax brackets because they go for married filing jointly to single head of household is like a double whammy and guess when this affects us, like in our 80s. 85. We make the decision that determines it at 62 685 in our even younger. If you get ready for that. That just to retire and get that going. So yeah, you've got to be carefully unregulated.

Got age you choose to start and it and it's not the job of the folks down the Social Security ministration office to provide this guidance.

They do not provide advice. It's actually against their job description. They are there to help you file the paperwork on the day you show up not tell you it's the best day to show up because they are not advisors. They don't know the rest of your financial situation. Of course you am an advisor unifies a you help somebody out there that's wondering when should I start collecting Social Security as I do it at 6770. We run we were on the calculators I do earlier Social Security report and analysis.

I can't tell you the best time to claim unless you can tell me the day you're not going to be here anymore.

No one has done that yet and I don't think anybody should be able to to do that but I can talk with you about optimal strategy. If we believe this, then we should do that if were going to do this at the base of it all was Social Security. There's comes to schools of thought. One get it while the getting is good. Get as soon as you can. 62. The other is wait all the way until 70 because that's your maximum benefit. Neither one of those is always right now that's interesting. I got to know the right decision is to take Social Security when you need a an additional consistent income. Use it to protect your personal assets as much as possible. That's great to know and something similar to Social Security that you have to make that decision early is your if you qualify for a pension yet because there's several decisions you need. There is several options you can choose when you believe that retire from that company and again that that highest amount of income looks so attractive yes, but it only lasts for one lifetime and so by taking that highest income you might not be protecting your spouse.

Now we do help with strategies to maximize that income we call pension maximization. Sometimes it makes sense to take the higher strategy because sometimes we can make up for the difference with some life insurance and that only part of a comprehensive plan, not everybody says oh well, yeah, I definitely need life insurance. When I retire that most people say I don't because they got the biggest amount of of money that they've ever had. Personally a are leaving their paychecks are not trying to replace that the kids are grown colleges paid for the house might be paid for. We could probably pretty easily say I don't need life insurance anymore and justifiably so. But I tell you that retirement can be long and it can be expensive and over those many years.

We've got the tendency to spend down that asset. They gave us that confidence and so what I see is a lot of times people have a much more fulfilled happy, content, retirement, knowing that they've given their spouse the opportunity to refill the bucket so to speak.

They gave them the confidence on the day that they were tight at the still be taken care of even after and delivered. If you've taken the maximum pension.

If you've chosen to take Social Security in a way that doesn't leave your spouse the highest survivor benefit life insurance can be a very valuable part of your financial plan then and life insurance can also these days double for long term care protection. A lot of people don't realize that life insurance used to actually be about death these days. Life insurance is actually more about the protection that it can provide during your life as well as after your life. You can advance yourself, the death benefit for long-term care. In many cases, and this may not just be for your spouse either. There could be a child that you're still taking care of that need will need that money or it's going to want your parents right.

There's other other loved ones other than your so I let him another my mom she is. She is anything I hope that she never goes anywhere nothing but guess what something avenge the chances of her living forever are no so I actually talk to her about purchasing life insurance for her a she passed away around the time of my retirement and I know what the benefit is going to be with life insurance rather than investing all my money in a 401(k) where I don't necessarily know what the benefit is myopic, it could be good. It could go down.

I don't know. But also, and more importantly, it will provide me the ability to fund the long-term care for her should she needed right because she so you can use life insurance for a long term for long-term care harasses side and knows that should my mom need care that life insurance death benefit. I can actually pull it out during her lifetime and helped pay for long-term care cost because I'm not capable of doing that job and going to have to hire someone to do right and then there's some people to the light like the long-term care insurance as well because there are long-term care expenses so you could also look into long-term insurance, but that's something you need to side like the life insurance, long-term care combo okay because one way or another you get a benefit from the dollars that you spent on right that the thing that people didn't really love about long-term care insurance is that it was use it or lose it. Also the price was not guaranteed. It could go up in in it. I have a lot of clients that have long-term care insurance for 15 years and then suddenly got a letter hey Mr. and Mrs. Jones were raising your rates by double do you want to keep your coverage are not, and they couldn't afford it and unite so that the linked benefits with the life insurance/long-term care. You know what your prices, you know what your benefit is it actually helped the insurance industry as much as it did the client because the life insurance industry knew what their liability was going to be right care cost more than they originally thought more people needing it than they originally anticipated, and they're needing it for a longer time because people are living longer now lying slower. Hello, I'm Leah lying slower. I think about the question of long-term care. Yeah, a lot of times were dying slower. We've lived a long fulfilled lifetime is just taking us a lot longer to go wet and medical. I guess medical treatments have come a long way that they're able to help you live longer and the locks on the doors of the long-term care facility or to prevent people from leaving. You may want to keep you in there and paying for as long as not exactly a so yeah you know that again the most uplifting conversation ever here today on the thing you know this to show your loved ones how you care for them is not always buy a box of chocolate sits its address these agent address these issues and make sure that there cared for you and your no longer with us.

Yet here we talked a little bit about the investments in the retirement accounts in the market and a lot of times one person is handling that the other person isn't so just be sure that you're considering that that other person's feelings do they deal the same way they are they as comfortable as risk with it with the risk as you are. You know those are those are things to do sort of consider often between two people, even the same households. There's very different feelings about the amount of risk that they want to take so and disabilities happen throughout lifetime right if if my income was to suffer because I was in an accident or had some type of disability. I know my wife would change situations so I took out and disability insurance and insurance disability insurance when you get down to it. Marriage is a partnership right well and disability. Your chances of becoming disabled early in your life is probably hot, way higher than it is that you direly in your life. So yes having that disability insurance in place.

I always think to like. If you have it in place and maybe nothing will happen to you. That is there a higher authority. When you have when you prepare for things out. The times that they don't happen to have Murphy's Law the radio they do exactly exactly.

So you after you have all these things taken care of. Maybe we talk about leaving a legacy behind that's another thing that people for their loved ones and those they care about lots of different ways to do that. But there are better ways to do it then others, and so you want to leave that legacy in the most efficient manner possible.

You also want to have instructions of what to do if something happens to me that involves preplanning that involves talking about the Social Security and pensions like we have that involves beneficiary designations on your bank accounts and brokerage accounts that involves knowing how to pay the bills.

Knowing where the assets are in to pay those bills.

Your documents you where are the important legal documents children.

I don't want to divulge all of my personal business to you, but at least you know where the documents are rare to find them exactly those. Please have those conversations you have to prepare the money for the people, but you also have to people prepare people for the money right.

If you've got $1 million or $2 million net worth and you'd suddenly drop that on little Johnny at 21 years old is he really ready for that responsibility. Funny you say that to her even knowing your your kids in general like I know I have wanted to say everyone that the spender to make sure that he only gets his money and she gets her so that and they don't get it all at the same time because just like you said me. I'm afraid that he'll just blow it and it'll be gone. I've seen real creative ways to control back to win with if you care about that if you got one child, the spendthrift or maybe you don't fully trust their judgment. Or maybe they're married to the wrong person leading the in law could become the outlaw very quickly. You know there are ways to structure the legal protections around the money to to have control over those even after you're gone, and a will, a simple will or simple beneficiary designation tells the world who you want your money to go to after you're gone, but once it's in their hands. It's theirs to blow, and it is clearly laid out with yeah certain types of trusts and I'm not an attorney but I know where this is utilized certain types of trusts allow you to continue to have some element of control over what happens to the money, so those Isaac is no in between your advice and made meeting with an attorney that does no how to set up these avenues of giving leaving your legacy. That's great to know I know the other thing I don't know that we touched on it is making sure that all your accounts have the correct beneficiary depth them as well as a huge thing, especially in today's world where we got second and third marriages and mixed families. Make sure those things are up to date I have seen horror stories. Her even worse of about where you that just it has not been updated in the money did not go to the correct person. I've had a lawyer that came in and we did an interview for a podcast. I did call town and I was about our local community and and just highlighted local business owners, but he gave a story of a guy that passed away, and then his two different wives showed up and this this answer that made vagueness there. That was LA a study in law school and why it was necessary to update those legal docket.

So, anyway, and if you need help doing all this in a brick peers here which I'm planning that helps people like you and they help sabers, investors better determine their outcome and make their goals, their reality, you can reach out at 919, 305 86 or find them online@rochonplanning.com it's spelled like rich on planning and now working to get into the three biggest retirement expenses and had a plan to control them yeah W Timmy I know we don't have a lot of times let's with Jeanette room. Okay.

All right.

So basically adding up the cost retirements kind of expensive, yes. Right.

That's why we need to save and invest and grow our money aggressively. But guess what, if you don't identify the expenses that you're going to have in retirement. It can be even costlier because by identifying him. You can begin to control them. So number one on the list is our largest known expense and this may surprise you but even debt-free people have a pretty large debt that they've built up. Typically, right inside the retirement balance.

It's the debt to the IRS.

The unpaid taxes. Taxes are our largest expense in retirement.

Our largest known expense in retirement, probably to be taxes are largest potential expense, probably to be healthcare. We talked a little bit about healthcare but the health view services study in 2017. So this is actually even a few years old, said at a healthy 65-year-old couple entering retirement can expect to spend $321,000 on Medicare premiums alone Medicare premiums alone. That's not the.

The caterer over the course of retirement on and if you add in co-pays, deductible, hearing, vision, dental, that figure on average is about $404,000 and then long-term care can be an additional $67,000 per month starting in addition to the regular expenses that you already have. So the largest potential expenses healthcare. You gotta think through that one carefully and then inflation is the silent thief. That's the one that eats away at your purchasing power without you even realizing it, and all three of those things you need to plan for carefully and we do that in what we call the optimized retirement plan.

It is a specific written plan generating retirement income and it also helps you minimize the taxes that you pay addresses the cost of care, and then talks about how to keep up purchasing power and fight off inflation sounds great and I think this to be a great gift for any loved one that you have to make sure this is all in place and set up that you can leave a good legacy and they remember you finally when you're no longer here with us. But again, if you like what you hear and to need a plan and would like to have somebody in your corner helping you look at all these accounts and figuring out what to do going forward. Give Peter a call at 919, 305 86 and you can reach out and get that free is a pop up. I think he said Peter right that pops up that got on with Sean planning.com and fill that out to you in and you get the free book the free book understand our investment options again. Quick math problem for you.

Oh boy, I so to times 37105220 = 436,800. Now what is that 46 $436,800 + dollars.

In this case, that's my retirement.

That's cost to people a day. Okay eating three meals a day, seven days a week for an average cost of $10 a meal 52 weeks a year, 52 weeks a year for 20 years. Oh boy food costs alone could be $436,800 in retirement. It's a aegis you got a plan when you start adding it all up and then you want to go on vacation. Yeah it really everything at the weekly and having a plan in place will definitely help you get to use retirement years so you can enjoy them and be happy and's give my gift to your loved ones for Valentine's Day. The plan is confidence having the plan in place is confidence throughout retirement confidences is quality of life was just good plan in place.

I don't know you know if were all to be in the same place when when we get that plan, but at least you got more confidence with where you are and you have someone to go to if you just can't figure something out or you just want somebody on and your team on your side to say yeah you're doing the right thing here and you gonna leave a great legacy and be able to afford your retirements will Kim I appreciate you being on the program and and and doing a great job and thinking of these issues and encouraging people to do, question what they're doing with their money and then think about some important aspects in an issues but that's what we're here for you we we help people with that and if you'd like to give us call 9193005886919, 358 six jump online rich on planning.always a pleasure.

They say timing is everything but any broker or investment professional that wants to keep their license will flatly tell you that it's impossible to accurately time the market so doesn't this conflict make it virtually impossible to know when it's the right time to retire. That is, at least if your retirement plan is based on investments in the theory of asset allocation, asset allocation, was a theory that aimed to diversify your investments across different asset classes like stocks, bonds, or real estate. For example, based on the theory that different asset classes behaved differently depending on economic and market conditions. The theory goes that when stocks rise bonds will fall and vice versa. So, you should own a little bit of each sounds great in theory, the problem is, as we all found out too painfully, when virtually all asset classes lost. This theory is not always true. In fact, this financial model is also known as the modern portfolio theory and its 65 years old, not so modern anymore.

The world certainly has changed in 65 years, maybe it's time for this theory to retire to the real problem is that if your plan is like most peoples, and based on asset allocation alone. Your retirement is completely a blind attempt to hope to correctly time the market, so if virtually every financial advisor will tell you that it's impossible to time the market with a single investment. Why are they so willing to try to time the market when you're very retirement depends on it.

You see with asset allocation. If you are in retirement withdrawing from your savings to live and suffer large losses, especially early on in the first several years it can be devastating. But we can't time or tell when those bad years might be right around the corner.

Can you see how under the old way. Timing is everything and is good timing for sheer luck something you want to base your lifetime financial security on, you do have a choice, a plan based not on speculation but uncertainty, one that addresses retirements greatest risks provides an income that cannot be outlived and potentially can offset inflation. In short, it's a plan that removes doubt and worry, and replaces it with peace of mind and confidence. Income allocation is a retirement plan, income allocation creates a predictable measurable and sustainable income stream to replace your paycheck that will not fluctuate and is guaranteed to last through your retirement income allocation eliminates longevity risk the possibility of outliving your money because the income is guaranteed for your lifetime like a personal pension eliminates sequence of returns risk and the chance that timing doesn't work in your favor because you have sufficient income to cover your lifestyle needs without being forced to depend on a volatile market eliminates withdrawal rate risk because you have a plan that guarantees you will not run out of income. Income allocation protects you from a major stock market correction in a way that asset allocation simply cannot so ask yourself this simple question is trusting my retirement to a 65-year-old theory, one that has already proven to fail, and in fact predicts failure for up to 50% of the people following it because it is completely based on luck and timing really your best choice.

If you'd like to consider other options and let's discuss contact with Sean plan in today at 919-300-5886 or email us at info@rich on planning to request a free copy of the book retirement planning for geniuses or to schedule a personal meeting with one of our retirement advisors. You do have a choice on how you choose to retire instead of hoping to time the market shouldn't retirement be about enjoying the time of your life. Let Sean plan shows you a better way to assist in planning matters radio the content of this radio show is provided for informational is not a solicitation or recommendation of any investment strategy you are encouraged to think investment tax or legal advice from an independent professional advisor. Any investment and/or investment strategies mentioned involve risk and possible loss of principal luxury services offered through virtual capital management is a registered investment advisor.

Fiduciary duty extends only to investment advisory advice but does not extend to other activities such as insurance or broker-dealer services advisory clients are charged a quarterly fever as a product of a commission which may result in a conflict of interest regarding


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