2021 EP0313 PLANNING MATTERS - COUNTDOWN RESOURCES

We want you to plan for success. Welcome to Planning Matters Radio. Hey, and welcome into another edition of Planning Matters Radio.

I am Peter Rochon. So glad that you are here with me today as we talk about your money, investments, your retirement, and your financial future. Hey folks, in life, we trade our time for money.

By making that trade, it would seem that money is the more important of the two, but it is not. We try to trade just enough of our time so that we can afford to live the life that we choose. And that's what it's all about, is figuring out how to use your time effectively, use your money effectively, to be able to support the values that are important to you. And that's what we're going to be talking about today on Planning Matters Radio. I am Peter Rochon. I'm the founder. I am an advisor for Rich on Planning, Rochon Planning, it is my last name.

You can find us online at richonplanning.com, and we've got a lot to talk about, so let's get right into it. First, I want to talk about the optimized retirement plan that we offer to put together for our clients and listeners to this program. If you have concerns, if you've got questions about your financial future, I think getting this document in your hands would be a big help to you. Now, the optimized retirement plan is custom. It's specific. It is your situation in writing, on paper, so that you can refer back to it.

It's a snapshot of where you are today, step-by-step instructions on how to achieve the goals that you define, and a timeline of action items in order to help you do that. It addresses income, investments, taxes, healthcare, and legacy planning, and it is just part of the service and the resources that we have available at Rochon Planning. If you would like to get your customized optimized retirement plan, pick up the phone and give us a call, 919-300-5886.

919-300-5886. You have friends that have told you about GameStop and how much they love GameStop. Let me tell you, they don't love GameStop. They love the fact that they are making money and can't explain why, and it's a recipe for disaster. A lot of people are dumping a lot of good money into something that they have no understanding of what it is, why it's going up. Now, I have nothing against GameStop as a company. I've got an 11-year-old son. He enjoys a video game from time to time.

We go to GameStop occasionally to purchase that game. However, that company lost nearly a billion dollars last year and the year before, and its price was significantly low, and hedge fund managers believed that it would be going even lower due to the poor financials of the company, and so they made bets against it. That's when a group of pretty savvy individuals got together in a public discussion forum and said, let's start buying this stock. Now, these are not amateur, average investors. These were people who had pretty large money and were pretty savvy and knew what they were doing. Well, the bandwagon grew and grew as they started purchasing that stock, and as news spread and as it was publicized, the popularity got increased, and the echo chamber was louder and louder, and then all of a sudden, good money started pouring in from average people who did not know why they were buying into it, claiming that they understood what was going on and that they loved the stock. They don't love the stock. They simply love the fact that they're making money and don't really know why. Nothing wrong with that, nothing wrong with making money, but it is a problem that you don't understand why it's going up, and that could turn the wrong way.

So, just a little discussion. Now, what should you be doing with your money in retirement? Those questions are answered in your optimized retirement plan.

It defines the process. The process is going through income planning, investment planning, tax planning, healthcare planning, and legacy planning. It overviews thoughts from your financial advisor, your concerns and goals, and potential problems with your plan for your financial future. The income plan covers needs that need to be addressed, what is in good order, actionable items, and additional notes.

The investment plan, again, what needs to be addressed and what's in good order. The tax plan tries to help you optimize your tax liability into the future, leverage your money, and keep as much of your money as possible. That's what we hope to do, but we also have concerns that taxes could be going up into the future. For the majority of Americans, we have saved our retirement nest egg in tax-deferred accounts.

This means that our tax bill has grown along with our account value, and that the amount of taxes that we owe on that account could be subject to change if the government, if the Congress, if the IRS chooses to change the rules. Could they? Absolutely. They've done it before, and they will do it again. Will those changes be in our favor?

Probably not. We know what tax laws are today. We know what opportunities we have today to control that tax liability. The name of the game in financial planning is to maximize what you have control over and minimize the elements where you can't control. Tax management, specifically, is looking forward and saying, how can I better control the unknown variable of taxes into the future?

How much I actually have to pay? There are opportunities to strategically optimize your portfolio to efficiently realize the tax liability, the bill that is there inside of your retirement nest egg, and to pay as little as possible. We can run a tax analysis and show you if you default to the IRS's plan under current laws versus if you are proactive and enact your own plan, what's the difference in that bill?

What's the difference in that liability? That's as tax laws stand today. If taxes change into the future, it could be even more significant. Trust me, it is a significant savings for most people who have seen that optimized tax report. It is something that is really mind-boggling, the fact that your future tax liability could potentially be as much as your account balance is today, with growth over 20, 30, 40 years on a tax deferred account and then paying the taxes that are required when you take income. That bill could be as much as your current account balance. A lot of times, we are able to buy the IRS out of that account for as much as, or as little as, 25 to 30% of that tax bill that could build into the future. If you'd like to see that optimized tax report, pick up the phone, give us a call. That is part of your retirement plan. We'd love to show you that in black and white and red.

The red is the tax bill that you would owe. We want to make that red number as small as possible, just like you. We can help you do that.

Pick up the phone, give us a call, 919-300-5886. Now, we've put together a series of great reports, the countdown to retirement. These are issues that you need to address in the 5 to 10 years as you get ready to retire and throughout your retirement. Once you launch, once you take off into retirement, the journey is not over. No, the challenge has just begun.

We need to make sure we're addressing specific issues. The first in the series of the countdown to retire is, are you ready to retire? It's 12 questions that you should know the answers to before you prepare to retire. How long would you be able to generate the income you need if your paycheck stopped today? There have been plenty of people who intended to retire at 67 or 65 and then suddenly got word that their company no longer required their services at 60 or had some unexpected event, stopped their ability to earn income, even sooner than that, younger than that.

If your paycheck stopped today, how would you be able to generate the income that you need to maintain your standard of living to support yourself and your family? Number one question, have you identified and calculated your retirement income gap? Now, this is a term that a lot of people haven't even ever heard, the retirement income gap.

This is a specific number, ladies and gentlemen. This is that retirement number that people talk about, that they think about, they say, well, how much do I need to retire? But people think about this in terms of a lump sum. Is it $800,000?

Is it $1.2 million? That's not the way to think about your retirement number. The retirement income gap is, the retirement income gap is your monthly expenses minus your sources of guaranteed income, the income that you do not need to generate from your personal investment portfolio. That is your monthly income gap. That is the amount that your portfolio will need to generate for you on an ongoing month to month, year over year, decade over decade basis into and throughout retirement. Have you identified that number?

Have you calculated that number? We can go through a process with you and help you understand what that retirement income gap looks like. Do you know how much you have available in discretionary assets over and above what it's going to take to fill that retirement income gap? This is the question of am I ready to retire? How much do I need to retire? How much do I have left over above and beyond what it will take to retire to do all of the things that I dream retirement will be about? Those are the discretionary assets over and above what it takes to fill the retirement income gap. Question number four, on the are you ready to retire, only the first in the series of our guides on the countdown to retirement. By the way, you can always get your copy by giving us a call, 919-300-5886, going online, richonplanning.com, or if you would like to click the link below the video.

You can click, you can like, subscribe, share, hit that bell so that you are notified when new editions of Planning Matters Radio are made available. Each week we come up with this podcast and with this video with different content to make sure that you are thinking about the subjects that you need to address in order to better prepare yourself for retirement, for your financial future. Look, we do a lot of things with our money. When you boil it down, there's really only four categories that those things fall into. We pay taxes, we pay bills, we spend, we can put that we buy groceries, we can put that we give to our charities, we tithe, that's in the spending category, and we save. And for those first three things, we have to realize that when we do those, that dollar is gone to us forever. When we pay taxes, pay bills, or spend that money, that dollar is gone.

All that we have left is number four, what we have saved. And we have to use number four, that savings, to reproduce our ability to do those first three things once we retire. Paying taxes, paying bills, and spending aren't going to go away on the day that you walk away from the paycheck.

You have to take what you have saved and reproduce your ability to do those first three things. If you want to continue to spend, of course we do, pay bills, we have to, and pay taxes, we'll have to do that as well. We have to have saved an appropriate amount for retirement.

Otherwise, we're going to be changing our standard of living significantly and dropping that standard of living. Social Security was never meant to give you the same standard of living that you had during your working career. Social Security was an insurance against poverty in old age or under the circumstance of disability. Look up Social Security and what it is. It's an old age and disability insurance program. I laughed when people started saying, hey, the government can't force me to buy insurance.

Yes, they can. They've been doing that since 1935, since the advent of Social Security. That is a government mandated insurance program to help stave off and prevent poverty among the senior community and if you have a disability. Social Security was meant to keep us just above the poverty line, not provide all of the lifestyle that we had when we were working. We need to save and we need to save aggressively.

Trust me, retirement is expensive. Here's a math problem for you and don't worry, I'll give you the answer. I'll do it real quick on my calculator. What is 2 times 3 times 7 times 10 times 52 times 20? That is 436,800.

Now what does that represent? Well, that's the cost of food potentially over 20 years in retirement. Two people eating three meals a day, seven days a week at $10 a meal, 52 weeks a year for 20 years is $436,800. Now that's not to scare anybody but that's one of the smaller costs in retirement. When you look at your taxes, when you look at the potential cost of healthcare, when you look at inflation, these are all things that we need to worry about, that we need to consider ahead of time, that we need to plan and prepare for and that's why you need to understand all of the issues that are addressed in the Countdown to Retirement. Just a few other items that are in that Countdown to Retirement report, series of reports. The 2021 Retirement Guide and again this covers some very important topics that you need to have addressed.

The Financial and Retirement Planning Guide and Checklist. It talks about have you evaluated your current effective tax rate? Have you increased your income need by the effective tax rate to calculate your gross income needed in retirement? Do you deduct your tax rate from your personal lump sum savings to calculate the approximate amount that you will need to keep in retirement, that you will need to have for your living expenses?

Again, this is calculated into that income gap that I was talking about before. Another report, the 50 401k mistakes. Lots of people participate in 401ks and they are a good thing to have. However, lots of mistakes are made with those 401ks. Anything from not participating, not capturing all the available match if you have one, not starting as soon as you are eligible, not maximizing the available match, not utilizing the Roth option if you have one available, not reviewing your statements, not rebalancing on an ongoing basis, not understanding your investment choices and options, not paying attention to the fees inside the 401k, not understanding internal costs, not prioritizing with other savings and investment options. 401k is a great tool but you may have better tools available over and above the match that you are receiving. Not understanding the internal cost, not reviewing the progress or addressing the risk exposure that you have, these are all things that are addressed in the 50 401k mistakes. There is also the 10 steps to prepare for retirement. Define your budget, define your guaranteed sources of income, define that income gap, strategize on social security to maximize that source so that you can minimize the income gap and the stress and strain and the reliance that you will have on your personal assets. Formulate a written income plan. This is one of the big steps that we help our clients with at Roshan Planning is that we sit down and we give a plan that many have never seen before. Instead of looking at the investment portfolio and projecting out a hypothetical rate of return into the future, oh you will make 10%, oh you will make 12% and you will have $10 million by the time you retire and pass that on to your children after your life.

No, that is not the right way to look at this and it is not realistic in today's world. What we need to look at is that income plan. When will you tap into the assets in your 401k? When do you tap into your IRA or your Roth IRA?

How do different investment tools such as bonds vs. stocks vs. dividends vs. social security, how are they taxed in retirement? How can we make sure that we are being as efficient as possible and keeping as much of our money as possible? We need to formulate that income plan. We need to address and understand risk exposure.

We need to calculate out for taxes. We need to consolidate like qualified accounts. Yes, diversity is important but that does not mean that you need to have five different IRAs scattered around. That becomes harder and harder to track and keep tabs on and if you leave that behind it can create quite a mess. Maybe your spouse or your children don't have all of the intimate details of where your money and your assets and your accounts are. I have seen that. I have seen people completely lost and not knowing where the assets were that were intended to support them and give them financial security.

One spouse had handled the finances and they did the family unit a favor by doing so but the other person was in the dark and that was no favor. So again, the 10 steps to prepare for retirement. It talks about these subjects. It's just part of the larger countdown to retirement series of reports. Absolutely something that you should get in your hands.

Pick up the phone, give us a call and we will get that out to you. You can also get a copy of my book Understanding Your Investment Options. The most important book you'll read this year and important is scratched through boring. It's not a page turner. I'll admit it.

I'll be the first to admit it. It's not something that you're going to be riveted to read the next chapter but it gives you a basic understanding. Any reader of this book should be able to have a pretty well informed conversation about all of the different investment options that are out there. Everything from ETFs to mutual funds. What types of different bonds are there? Government bonds, corporate bonds, municipal bonds, mortgage backed security bonds.

Why did they fail and cause the great recession? Gold, silver, crypto currencies. All of those are discussed in the book. The different types of annuities and life insurance.

If you are interested in those, there are a lot of different choices and options there. You should understand that some are more complicated. Some have risks. Some don't.

Some are very straight cut forward, plain and dry. Where you get a set interest rate for a set period of years and then you walk away with your money. That's actually pretty attractive to many savers and investors today because they pay a higher rate than most bank products. If you get a similar term for time length duration CD versus a fixed annuity, often times the fixed annuity is paying three, four, five times the interest rate as the CD of a similar time duration. A three year CD right now may be paying one percent. You may be able to find a three year fixed annuity right now paying two and a half to three percent.

It's worth exploring. It's worth understanding all of your investment options. There is not an evil option that is always wrong, always bad all the time.

Nor is there a best option that is always right in every situation. That's why you need to understand your investment options and why I lay out a quick explanation of what each one is, its benefits, its disadvantages, the type of risks you are exposing yourself to in each said choice so that you can have a better understanding. If you would like the book, Understanding Your Investment Options, if you would like the countdown to retirement, pick up the phone and give us a call at 919-300-5886.

Be happy to get that out to you. Back to the first of the reports in the countdown to retirement. Are you ready to retire? Have you formulated a plan to use Social Security to maximize income and protect your personal assets? Social Security is a tool, ladies and gentlemen. Should you take it at 62? Should you take it at 70?

Those are kind of the two schools of thought. Should you wait until full retirement age and then claim it? Well, based on your situation, maybe that is appropriate.

But here's the thing. Social Security should be used as a tool to protect your personal assets. None of those answers are universally always right for everybody's situation.

It is going to be different. Your situation is very different than your neighbor's situation and your brother's situation and your sister's situation and your parent's situation. The way that you use Social Security is unique and individual to you. And by the way, the folks down at the Social Security Administration office, they don't provide advice on that. Their job is to file the paperwork on the day that you show up, not tell you if that's the best day to show up because they are not advisors. They do not know the rest of your financial situation.

They don't want to take on the liability of providing advice. So if you'd like advice on how to properly utilize, how to maximize, how to be efficient with your Social Security, seek some competent, qualified professional advice. The Social Security report and analysis is something that we do for our clients every day at Rashan Planning.

And it has literally made a swing, a difference in several hundreds of thousands of dollars over lifetimes. That's money that you either are going to get from the Social Security Administration office, from the Social Security Administration system, or you're going to have to generate that from your personal portfolio, from your assets. I know which side I would rather get it from. I am entitled to that. They call it an entitlement. People say, oh, I don't like the terminology entitlement.

No, I am entitled to that because I paid into that system. And I want to get as much of my money back out as possible, plus some rate of return. Now, in order to do that, I've got to make well thought through and informed decisions. I've got to maximize the strategy on how I'm claiming and collecting Social Security. If you'd like to see that, the optimal strategies for your situation. Now, we can't tell anybody what the best strategy is unless you can tell us the day that you're going to take the limousine to heaven. Nobody has been able to tell us that yet, and I don't think anybody should be able to tell us that. But we can tell you the optimal strategies, the likely strategies that will produce the most income for you over your lifetime.

And here's the important part. How to use it to protect your personal nest egg as much as possible. Now, why would we want to do that? Well, because Social Security is not a liquid asset. You can't reach in and pull out more Social Security if you have an emergency come up. Social Security is not a legacy tool.

It does not pass on to next generation. Your personal assets do those things. And that's why we want to protect your personal assets as much as possible. Social Security is the tool to do that, but you've got to take the time to educate yourself to maximize Social Security. Do you know how you would cover the cost of medical and or long-term care expenses should you or your spouse require care?

That's a big one. Another one of our reports in the countdown to retirement is the three largest expenses in retirement and how to plan to control them. Number one, our largest known expense is taxes. Number two, the largest potential expense is healthcare.

Now, another statistic from the Department of Health and Human Services is the amount that seniors will likely pay for healthcare over the course of their retirement. In just Medicare premiums alone, this can be upwards of $200,000 for an individual, $400,000 for a married couple. When you add in the cost of routine care, medical, dental, vision, and then if you have any type of extended stay, hospital stay, true medical needs, or especially long-term care, nursing care needs, those expenses are extensive. They can be another $6,000, $8,000, $12,000 a month. And if you are a married couple, that is in addition to the regular expenses of the healthy spouse that is still living a life and providing that care. And so we need to carefully plan for this. This is the question, this is the issue, this is the expense that has bankrupted retirement many, many times and changed the quality of life for the person in need of care and maybe more importantly for the caretaker, the person that has provided that care.

The person that most often is, if you look at those statistics and numbers, is the daughter or the daughter-in-law, is the most frequent caregiver in a family unit, is the person who is most often providing care. Wouldn't you like to be able to provide them some compensation for taking time out of their busy lives to provide that care if needed? You can plan for that. You can set that in place.

You can make arrangements to be able to not only afford the care if you need it, but compensate your loved ones for providing the care if they are willing to step in and do that. This is all part of planning. And again, it's part of the optimized retirement plan.

It's a snapshot of where you are today. It is a discussion of, definition of, and put in writing of the goals that you have for your financial future. We put that in writing so we can make sure that we remember them and are working toward those. And then it is step-by-step instructions on how to work to achieve those goals. Now this is not a thousand pages of financial jargon and charts that you don't understand like what's going on with the game stock. This is simple, easy to understand language.

This is concise, consolidated. It addresses the issues that are important. It addresses your investments, your income, your taxes, your healthcare, and your legacy.

It's about six to seven pages and it goes over all of those. And then there are subsequent reports like the countdown to retirement, like the optimized tax report, like the social security report analysis. They are backup documents to the optimized retirement plan. And certainly we can look at those unique individual plans and discuss those as well. But if you would like that snapshot that you can refer back to, that's the one document that you need.

That optimized retirement plan, all of the other documents are supportive to that. If you would like to get that put together, something that we'd love to hear from you, we'd love to talk to you, we'd love to help you get that plan so that you feel more confident about your financial future, you have to take the first step. Pick up the phone, give us a call, 919-300-5886.

919-300-5886. You can visit online, richonplanning.com. Right on the front page of the website there's the opportunity for you to give us your information and receive a copy of my book.

You can get a physical copy in your hands or you can get the digital edition if you'd like understanding your investment options. Just go to richonplanning.com, richonplanning.com and request that. You'll have the chance to do that before you enter the site. Or you can click the links around the video.

Down in the description below the video, all of the resources that I've talked about today, there's links to them and you can go there and download those. Just click the link below in the description and of course as always be sure to like, subscribe, share if you have the opportunity, you felt this information was valuable. Hit that bell so you're notified when the next edition of Planning Matters Radio is released. We release these on a weekly basis and we'd love for you to stay in tune because we're talking about different important topics about your financial future each and every week.

Again, I am Peter Richon. I'm the founder of Richon Planning. I'm an investment financial retirement planner and looking forward to hearing from you, helping you out any way we can. Made a bunch of offers today about different reports, about different resources to get your plan together so that you can address the important topics that you need to have thought about, thought through and addressed to achieve your goals into your financial future and we'd love to get those in your hands. The optimized retirement plan, the optimized tax plan, the social security report and analysis, the countdown to retirement, the book, Understanding Your Investment Options. These are all resources that we have available to help you in your planning and we'd love to get them to you. Pick up the phone, give us a call at 919-300-5886. We'll talk to you next time on Planning Matters Radio.

This has been Planning Matters Radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, tax or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, including the possible loss principle. Advisory services offered through Brooks' Own Capital Management, a registered investment advisor. Produciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation.