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Transcript
00;00;00;01 – 00;00;02;20
Mike
How do you get to be wealthy? Do what wealthy people do.
00;00;03;14 – 00;00;04;07
Jonathan
That’s what you do.
00;00;04;20 – 00;00;19;16
Mike
Do what wealthy people do. But you know, people who have money that, you know, big money, they’re really smart about money. They’re not idiots and they have the best advisors out there. So here are two things that they do that you should do that you want to copy.
00;00;25;11 – 00;00;40;00
Jonathan
Welcome to retirement today. I’m your co-host, Jonathan Berglund. And with me here in the studio, as always, Michael Reese, certified financial planning professional for over 25 years, helping those of you out there in radio land get to and through retirement successfully. How’s it going, Mike?
00;00;40;07 – 00;00;50;02
Mike
Going fantastic. And Jonathan, by the way, don’t forget, yes, you and I are in studio, but we do have a special guest tonight. Oh, indeed. Right beside you, we have Ben.
00;00;50;02 – 00;00;52;28
Jonathan
The ten most attractive creature ever setting the.
00;00;52;28 – 00;00;53;28
Mike
Tax monster.
00;00;54;15 – 00;00;57;10
Jonathan
He does haunt us throughout our sessions here.
00;00;57;16 – 00;00;59;04
Mike
As one goofy looking guy.
00;00;59;05 – 00;01;08;27
Jonathan
I know it’s it’s tough times out there in the market right now. And, you know, some some people may be a little anxious, perhaps, on what retirement might bring or can they retire now, right?
00;01;08;28 – 00;01;35;14
Mike
Yeah. Markets are certainly not cooperating right there. They’re having a little fun this year. And here’s the thing, right? We know that the markets don’t cooperate every year. We know that. We know when we invest money in the market, that some years we make money, some years we lose money. But the idea is that over time, right, if we have enough time, are the good years in the bad years kind of, you know, cross each other out and we should end up with some positive rate of return, right?
00;01;35;15 – 00;02;00;11
Mike
That’s the goal. The challenge with all of this, though, is that the timing of the good years and bad years, you know, while you’re younger, don’t it doesn’t really matter. But when you’re getting close to retirement, it can have an enormous impact on your lifestyle after you retire. Yeah. And in fact, if you retire and you’re not set up the right way, you may end up finding yourself having to go back to work.
00;02;00;12 – 00;02;01;03
Jonathan
Unretired.
00;02;01;03 – 00;02;19;04
Mike
Yeah, yeah. And or if you’re wanting to retire in the near future and you’re not set up the right way, maybe suddenly you don’t retire. So we talk about this a lot on this show and in the office about how you want to plan right for retirement. And Right is an acronym R is for risk. You got to manage risk.
00;02;19;13 – 00;02;44;22
Mike
IE is income, no income, no retirement. G is growth. You have to grow your money because inflation H is health care and of course, t is taxes. So I want to share a little story of, you know, we had a very nice family come in and back their list to the radio show and then they called in. They won their retire right report, which we provided for them, of course.
00;02;45;08 – 00;02;49;29
Mike
But let me share a little bit about their situation. I’m going to change your names. This column, John Emery.
00;02;50;03 – 00;02;50;18
Jonathan
Okay.
00;02;50;29 – 00;03;08;23
Mike
Classic, classic John Emery. And he entered, you know, he was 62 years old and she’s like 59, I think a few years younger. But anyway, he had entered the year January one, had about 800,000 in his 41k.
00;03;09;03 – 00;03;09;19
Jonathan
Doing well.
00;03;09;27 – 00;03;17;15
Mike
And his plan and now his wife Mary already retired. But John, I want with John and Mary, right?
00;03;17;15 – 00;03;18;15
Jonathan
You did? Yes.
00;03;18;27 – 00;03;19;07
Mike
Keep you.
00;03;19;07 – 00;03;19;21
Jonathan
On track.
00;03;20;28 – 00;03;44;03
Mike
John. His plan was this. He’s like, this is my last year. I’m going to work this year and I’m done. And the idea is I’ve got 800,000. That’s how he started the year I’ve 800,000 and I figure I’m going to add some more money, you know, add another 25,000 or whatever the max 26,000 is the company’s going to match, have another 30 going in, celebrate 30, get a little bit of growth.
00;03;44;03 – 00;03;58;20
Mike
I’ll be, you know, right around getting close to about 900,000. And he goes, when I’m retired and when I retire, I’ll need about 3000 a month, about 36,000 a year. You do the math, it’s about 4% on the button, pretty close to it. That should work out great.
00;03;59;04 – 00;03;59;29
Jonathan
Just make sense.
00;03;59;29 – 00;04;11;04
Mike
He’s on track. Everything is fabulous. As he entered the year. Well, he when he came to us, he’s like, okay, now here’s my problem. I’m halfway through the year.
00;04;11;12 – 00;04;11;24
Jonathan
Yeah.
00;04;13;01 – 00;04;21;25
Mike
I don’t have have I started the year with 800,000. I figured I should end the year close to nine with contributions. A little bit of growth.
00;04;22;00 – 00;04;22;06
Jonathan
Hmm.
00;04;22;22 – 00;04;24;13
Mike
What was problem, Jonathan?
00;04;24;13 – 00;04;27;03
Jonathan
It didn’t work out. Marcus did not cooperate. This?
00;04;27;03 – 00;04;32;17
Mike
Yeah, as a matter of fact, yeah. As a matter of fact, he says, my problem is I’m more like 650 at this point.
00;04;32;17 – 00;04;34;03
Jonathan
Yeah. Oof.
00;04;34;03 – 00;04;58;23
Mike
Because why he was all market based, he, you know, he thought he was diversified because he had like seven different mutual funds. Yeah, but the reality is a lot of those funds are doing the same thing. So now here he is. Imagine this now is it 650? He still got to add money, but by the end of the year, knock on wood, he’ll be closer to 700 than 900 hack.
00;04;58;23 – 00;05;01;16
Mike
He might be more like 600 if the markets keep going down.
00;05;01;16 – 00;05;01;28
Jonathan
Yeah.
00;05;02;14 – 00;05;04;11
Mike
Is he going to be able to retire at the end of the year?
00;05;04;23 – 00;05;05;20
Jonathan
It’s not looking like it.
00;05;06;02 – 00;05;22;03
Mike
So his options are this one. Work more? Yeah. Don’t retire. Keep working fine. Nobody likes that option to take less income, spend less money in retirement. Is that a good option?
00;05;22;03 – 00;05;22;27
Jonathan
That’s the rub, too.
00;05;23;02 – 00;05;51;18
Mike
Also no good, right? And so he’s kind of at his wits end. He comes it’s like, what do I do? What do I do now? Good news for him. We are able to put together a retirement rescue plan, we call it where we were able to say, hey, let’s take what you have, let’s rearrange how you have it invested and let’s set it up in such a way that you can still retire on time, but do it with comfort and peace of mind.
00;05;51;18 – 00;06;24;06
Mike
Have the same income he needs, right? He’s got where we can give him enough income. We can make it all work out right. We were able to make it all work out, but he had to make some changes. Right. But here’s the thing. How many people are out there, Jonathan? They’re just like that. Yeah. You know, my wife, she plays tennis and she was telling me the other day, she says, man, I’ve had like two or three of the ladies I play tennis with that have expressed a similar story as John and Mary.
00;06;24;20 – 00;06;51;26
Mike
You know, they were planning on retiring here in the next year or two. And the money that they’ve been counting on to retire, it’s like vanishing before their eyes. Yeah, yeah, it’s disappearing. So what I really want to talk about tonight is, you know, how do you go about securing your retirement plan? How do you if you’re in a bad spot, how do you rescue it?
00;06;52;16 – 00;07;26;13
Mike
Like, how do we do a retirement rescue? How do we how do we secure your retirement? Like my belief is, you know, you’ve been working, what, 30, 35, 40, 45, 50 years. You’re working a long time. You’ve been saving money for a long time. Don’t you deserve to enjoy a retirement free of financial concerns? Or don’t you deserve to enjoy a retirement where you can kind of do what you want to do when you want to do it?
00;07;26;24 – 00;07;30;17
Mike
And you never have to worry about your money.
00;07;30;29 – 00;07;31;08
Jonathan
Yeah.
00;07;31;26 – 00;07;49;01
Mike
Don’t you deserve that? See, I believe you do. I truly believe you do. But here is the problem. There’s a big problem that gets in the way. Couple problems. But the big problem is this. An investment plan is not a retirement plan.
00;07;49;01 – 00;07;49;17
Jonathan
Well said.
00;07;50;13 – 00;08;10;07
Mike
You know, you think, oh, I’ve got my money set up to invest. It’s diversified and odds are good that it’s set up for growth and accumulation as the kind of the goal. Yeah. Trying to grow your money. And by the way, when you’re working that makes perfect sense, except that is exactly what you should be doing. The problem is that retirement is different.
00;08;11;01 – 00;08;29;01
Mike
Retirement is radically and fundamentally different. When you are working, you are adding money to your savings and how you invest when you’re adding money to your savings is very different from when you retire. And now suddenly we’re not adding any more. What are we doing?
00;08;29;01 – 00;08;32;11
Jonathan
Jonathan Yeah, you’re hopefully conserving and then distributing, right?
00;08;32;12 – 00;08;59;27
Mike
Yeah. You’re taking money out. Yeah. You’re taking you’re not adding your distributing. Yeah. Keyword very different investment process involved. It’s night and day and the problem is so many people out there and maybe you’re one of them, you’re like, man, I’ve got this really wonderful advisor. They’re great person. They are. But the problem is they know how to do growth and accumulation, right?
00;08;59;29 – 00;09;01;20
Mike
They don’t know how to do retirement. Yeah.
00;09;01;20 – 00;09;03;11
Jonathan
You’ve come up the mountain now you have to go down.
00;09;03;20 – 00;09;07;15
Mike
Yeah. And quite frankly, I would say I want to stay on the top of the mountain.
00;09;07;15 – 00;09;11;28
Jonathan
There you go. Well said. Yeah. Yeah, exactly. I don’t want to go down. I don’t wanna keep tumbling down.
00;09;11;28 – 00;09;28;27
Mike
Yeah, I want to go but I don’t want to tumble down. I want to make sure my money last. See, here’s the thing. Investing for growth and accumulation has one focus. How do I make the pot bigger? Yeah. Investing for retirement has a different focus. How do I maintain my pot? How do I take money out of it?
00;09;28;27 – 00;09;29;13
Jonathan
Income?
00;09;29;19 – 00;09;47;03
Mike
How do I make sure it last as long as I do right? How do I still grow it? Because I’m worried about inflation. How do I deal with my taxes? What do I do about health care? Yeah, when should I take my Social Security? Right. Yeah. All kinds of questions that your typical advisor doesn’t know how to answer.
00;09;48;00 – 00;10;09;07
Mike
So these are the things you need to think about. You think about if you’re going to be retiring soon or if you’ve already retired, how do you secure your retirement? You have to retire, right? You have to have a plan to manage the R and right your risk. You need to have a plan to generate income that lasts as long as you do.
00;10;09;25 – 00;10;29;08
Mike
You know, part of that plan is making the right choices on your Social Security timing. Need to have a plan for g. How you’re going to grow your money. You need to have a plan for h health care. What are you gonna do about your health care expenses? Because they’re going to get higher over time. And then finally, the big I’m looking at Benny, our special guest.
00;10;29;08 – 00;10;50;19
Mike
When I say this, what do you do about t your tax situation. A lot of your money might be in a41k43b, guess what? All taxable, you’re going to pay a boatload of taxes. It comes out. How do you protect yourself from the IRS? We had this conversation the other day. There are two things that really wealthy people know.
00;10;51;00 – 00;10;52;16
Jonathan
Yeah, I remember this that.
00;10;52;16 – 00;10;55;24
Mike
The average person messes up like.
00;10;55;25 – 00;10;56;23
Jonathan
Yeah, get your pencil out.
00;10;56;24 – 00;11;18;10
Mike
Here we go. If if these are like, how do you get to be wealthy? Do what wealthy people do. That’s what you do. Do what wealthy people do. But you know, people who have money that, you know, big money, they’re really smart about money. They’re not idiots. And they have the best advisors out there. So here are two things that they do that you should do that you want to copy.
00;11;18;23 – 00;11;29;01
Mike
Number one, they never, ever, ever, ever let the tax tail wag the investment dog. So expand.
00;11;29;01 – 00;11;30;11
Jonathan
On that. What do you what do you mean? What do you.
00;11;30;11 – 00;11;49;01
Mike
Mean? So here’s the thing. Let’s say they invest in a company, A, B, C company, okay? And that company goes up in value. They’re like, wow, this is awesome. I invested $1,000,000. It’s now worth $5 million. Right.
00;11;49;02 – 00;11;49;14
Jonathan
All right.
00;11;49;29 – 00;12;12;18
Mike
Here’s what they and now, though, they’re saying, okay, I’ve made my money and it’s time to do something different. Time to sell that stock and cash it out, take my gains, go do something else. At no point do they think to themselves, Oh, golly, if I do this, I’m going to have to pay a capital gains tax, and I don’t want to pay capital gains tax.
00;12;12;18 – 00;12;14;25
Mike
So I think I’m going to freeze and do nothing.
00;12;14;26 – 00;12;16;16
Jonathan
Yeah, indefinitely. Right.
00;12;16;20 – 00;12;37;01
Mike
At no point does that ever cross their minds. They say, hey, I sell the stock because I made money and it’s time to move on. If I owe capital gains tax, who cares? It’s the cheapest tax out there. And by the way, if I don’t sell now, that stupid thing could go back down. I could lose all the money I made.
00;12;37;01 – 00;12;38;23
Mike
And then what good is it? Right.
00;12;39;02 – 00;12;39;13
Jonathan
Exactly.
00;12;39;13 – 00;12;41;16
Mike
The only way to avoid the capital gain is lose all your money.
00;12;42;00 – 00;12;43;04
Jonathan
Yeah, right.
00;12;43;05 – 00;12;53;29
Mike
They don’t do that yet. The average person all the time is frozen and you’re like, Oh, I can’t sell that stock at a gain. I might have to pay capital gains tax. So what?
00;12;54;02 – 00;12;54;19
Jonathan
Yeah, you.
00;12;54;19 – 00;12;56;09
Mike
Should be celebrating.
00;12;56;09 – 00;12;57;24
Jonathan
You have a capital gains party, right?
00;12;57;26 – 00;13;08;15
Mike
Yes. This is awesome. It means you did well. It means you won. Yeah, right. They don’t like it. Just so silly. Okay, that’s number one.
00;13;08;29 – 00;13;09;13
Jonathan
Number one.
00;13;09;27 – 00;13;36;04
Mike
Number two, the number two thing that wealthy people do that the average person doesn’t. The wealthy people, when they have their investment positions, is typically they have some kind of a stop loss where they say, hey, that I invested in ten different things. Right? Four of them went up. Four of them are around the same. And, oh, I got two losers.
00;13;36;14 – 00;13;36;22
Jonathan
Mm hmm.
00;13;38;01 – 00;13;47;02
Mike
Do they sit there and say, Oh, my goodness, I have two losers. I can’t sell those when they’re down? Yeah, I’ve got to wait for them to go.
00;13;47;02 – 00;13;48;02
Jonathan
Well, hang on. Right.
00;13;48;03 – 00;14;06;08
Mike
Better hang on for it to turn around. No, they say, look, someone’s going down. Oh, not they know. They understand everything they invest in does not make money. And the secret is limit your losses and ride your winners.
00;14;06;22 – 00;14;06;29
Jonathan
Yeah.
00;14;07;09 – 00;14;26;18
Mike
Limit your losers. Ride your winners. That’s what you want to do. And so, like the other day I’m talking to this couple and they’re saying, well, you know, we were at 1.3 million, now we’re down to a million. When we get back up to 1.3 million, then we’re going to do something.
00;14;26;29 – 00;14;27;07
Jonathan
Yeah.
00;14;27;16 – 00;14;41;05
Mike
Like, well, that tells me that you’re not thinking clearly. That’s not a good decision because a good decision is as a 1.3 million, it’s down to a million. And this is moving in a direction I don’t like.
00;14;41;15 – 00;14;41;23
Jonathan
Right.
00;14;42;14 – 00;14;52;21
Mike
You don’t sit there and take it. You do something about it. Well, people do not sit there and say, well, I guess I’ll scratch my head and wait for the markets to decide to help me. Right, because the markets don’t care about you.
00;14;53;01 – 00;14;53;21
Jonathan
They don’t care.
00;14;53;29 – 00;15;15;00
Mike
What wealthy people do. They say, you know what, this is going in the wrong direction. Let’s cut our losses. Let’s get out and let’s do something else that has a better chance of working. That’s what they do. Right. And here’s the reality. These same people, their cost basis was maybe 400,000.
00;15;15;07 – 00;15;15;14
Jonathan
Mm.
00;15;15;22 – 00;15;35;21
Mike
They went up from 400,000, 1.3. Now they’re down to 1 million. There’s still a lot of big gain. You never sell at the very top. You never buy at the very bottom. Don’t be making the mistake. One of the big issues with securing your retirement, rescuing your retirement, do not sit there and say up, my counts are going in the wrong direction.
00;15;35;21 – 00;16;00;22
Mike
I better do nothing until they turn around. That’s the worst decision you can make. The worst decision, because guess what? They may not be done going down. Stop the bleeding. If it’s not working, change. It’s that simple. Yet too many people are frozen because they feel oh, haven’t topped out, which is really not that’s not clear thinking.
00;16;00;29 – 00;16;03;11
Jonathan
Yeah. Or maybe you don’t know what to do differently. Right.
00;16;03;26 – 00;16;24;16
Mike
Right. That might be well that might be the other issue. Right. But the reality is if it’s not, I’m telling you right now, if your accounts aren’t done, if you are losing more money than you ever expected to lose or you’re losing more than you’re comfortable with, just move to cash and then give us a call. And let’s figure out how can we structure your assets a little more appropriately?
00;16;24;16 – 00;16;48;12
Mike
Right. Because guess what? You probably have you’re investing in growth in accumulation mode, which is fine if you’ve got more than ten years for a retirement. Like if you’re more than ten years out of retirement, you can handle the ups and downs. Who cares? But if you’re within ten years of retirement, what if you’ve already retired? You can’t take that same kind of risk right?
00;16;48;12 – 00;17;13;29
Mike
You got to be smarter. Now, real quickly, let’s go back to John and Mary. John started the year at 800,000. He was expecting to be closer to 900,000 by the end of the year with a little bit of growth and some contributions between him and his company is 41k, he is going to retire. So I start the year with a 100, I finish year around 900 K and I retire take my 3000 a month.
00;17;13;29 – 00;17;14;20
Jonathan
Right glorious.
00;17;14;29 – 00;17;36;12
Mike
And halfway through the year he’s at 650 right. Nothing close to what he was expecting. And I said, hey, we were able to help him rescue his retirement. We’re able to put together a retirement rescue plan for him. So what did we do? Well, the first thing we did is we said, hey, you got all these losers. We got to stop the bleeding.
00;17;36;20 – 00;17;41;24
Mike
Yeah, let’s move to cash first. Right. Let’s let’s re let’s refigure this.
00;17;41;24 – 00;17;42;21
Jonathan
Let’s reset.
00;17;42;22 – 00;18;08;26
Mike
Yeah, reset the whole thing. Right. And then we’d say, okay, how are we going to solve for income first? Because if you don’t have income, you don’t have retirement. He needed 3000 a month. 36,000, right. So 650, we said, hey, let’s take a chunk of that and let’s put it in something safe that gets a decent return and will generate that 36,000 a year that you want.
00;18;09;15 – 00;18;34;28
Mike
And the way we were able to do it, it would generate that income for probably. Yeah. 15 years, something like that. Sure. And then let’s take the rest of the money. That money we can put more towards growth than accumulation. But instead of a buy and hold approach, let’s use something that’s a little more tactical in nature, something that when the markets are going well, we can be a little more aggressive, but when the markets are bad, we could be more defensive, right?
00;18;34;28 – 00;18;44;29
Mike
So we’re adjusting to, you know, based on what the markets are doing, right. That’s a lower risk way to invest but gives you potentially better returns.
00;18;45;29 – 00;18;46;12
Jonathan
I like it.
00;18;46;25 – 00;19;04;05
Mike
We put that together for him and he was able to see, oh, like light bulb goes off. Oh yeah. You mean if I do this, yes, I can still retire when I want to, even though my accounts are down. Yeah, but you can’t keep doing what you’re doing. You got to do something different.
00;19;04;05 – 00;19;05;19
Jonathan
Yeah, make a change. Exactly.
00;19;05;25 – 00;19;16;27
Mike
And from his perspective, he’s like, well, I don’t it’s I’d be kind of stupid not to write. He, I don’t know that the markets are going to go back up between now and the end of the year. In fact, I don’t think they’re going I think they’re going to keep going down.
00;19;17;02 – 00;19;17;12
Jonathan
Mm hmm.
00;19;17;19 – 00;19;40;01
Mike
I got to do something if I want to retire to protect my income. So we helped him reformat things and he’s off and running. What about you? You know, what about you? Where are you with your retirement planning? A lot of you out there listening are within a couple of years of retirement. You’re looking at your accounts. Maybe you’re scared.
00;19;40;01 – 00;19;41;03
Mike
Opening statements.
00;19;41;03 – 00;19;41;13
Jonathan
Yeah.
00;19;42;06 – 00;20;12;15
Mike
But if you look at your accounts, you’re down pretty significantly. And let’s be honest, it’s very possible the markets keep going. South Sea planning, proper planning is all about how do you win when the markets cooperate, when times are good. But it’s also how do you win when markets do not cooperate, when times are bad? In other words, we want to hope for the best.
00;20;12;15 – 00;20;14;15
Mike
But what do we plan for the worst?
00;20;14;16 – 00;20;15;04
Jonathan
Exactly?
00;20;15;04 – 00;20;25;20
Mike
You plan for the worst. So many of you out there, you don’t have a plan because if things go well, you’re fine. But if things go poorly, you’re not.
00;20;25;24 – 00;20;26;22
Jonathan
You’re just hoping that’s.
00;20;26;22 – 00;20;28;00
Mike
Not a plan. That’s hope.
00;20;28;19 – 00;20;29;03
Jonathan
Right.
00;20;30;03 – 00;20;50;04
Mike
Now. Look, that’s great. If you’re you know, you’re a high school kid. You want to hope for stuff. But if you’re an adult and we’re talking about your retirement, I think your retirement deserves more attention then I hope it all works out. Yeah, I think it deserves a true plan. It is time for it may not be your favorite segment of the week, but it’s certainly mine.
00;20;50;05 – 00;20;51;14
Jonathan
It’s ours. I mean, I agree.
00;20;51;20 – 00;20;58;23
Mike
It’s often we this is our most fun. And the name of this segment is called What I Would Do If I Were.
00;20;59;06 – 00;21;05;25
Jonathan
King for a Day. Always fun.
00;21;06;00 – 00;21;26;15
Mike
I love this. So here’s what we do this week or what we do every week. If I’m king for a day, I make two rules, two laws? Yes, like one law is financially based and the other law is just in general, everyday life. Life. Yeah, right. General life. So this week I’ve got a couple of good ones here lined.
00;21;26;15 – 00;21;32;28
Jonathan
Up and I don’t, I don’t know these, by the way, these are these are secret this week. We haven’t talked about them. So we have now just as surprised as you are out there.
00;21;32;28 – 00;21;49;09
Mike
Yeah. So all of you listening, you’re going to hear my new laws, as are my thoughts. Yes. As Jonathan does as well. So here we go. The first one. Let’s do the financial 1/1. Okay. All right. It really annoys me. Here we go.
00;21;49;20 – 00;21;50;14
Jonathan
Here we go.
00;21;51;08 – 00;21;52;24
Mike
It really annoys.
00;21;52;24 – 00;21;53;08
Jonathan
Me.
00;21;53;27 – 00;22;26;09
Mike
How people take out loans and then they don’t want to pay them back. It’s like going to borrow money. They don’t want to give it back. Yeah, right. To me, this is a character issue and what I find most annoying is this idea in the media that we should pay off these loans, these college loans that these kids have taken out to pay for college.
00;22;26;17 – 00;22;26;26
Jonathan
Right.
00;22;27;07 – 00;22;32;24
Mike
And now they’re in a job and they can’t pay it back. Right. Or they don’t want to pay it back.
00;22;32;27 – 00;22;34;02
Jonathan
Or some combination thereof.
00;22;34;02 – 00;23;07;17
Mike
Or they’re just not financially adult enough to pay it back. Right. And here’s what happens all the time. It’s like, oh, I’m in. I’m probably if I’m I’m not intending to offend anybody out there. Right. And I’m not. So this is you. I’m not trying to offend you. All I’m saying is this if you go to a college and take out a 100,000 or more of student loans, and your idea is that you’re going to be I’m going to get a degree in art history or something like that.
00;23;07;24 – 00;23;34;04
Mike
Right. Then what are you doing? There’s not a chance you’re going to get a job out there that where you’re going to make enough money to pay off your loan. So why are you even doing that? You know, it drives me crazy that these kids are out there. They’re taken on loans to get degrees that are you know, they don’t make any money, like, okay, I’ll go here.
00;23;34;28 – 00;23;52;05
Mike
My niece my niece went out. She got a degree in zoology, like, you know, she wants to be she wants to work in a zoo. Yeah, which is great. Do you know what? You get paid working in a zoo with a four year college degree?
00;23;52;16 – 00;23;53;24
Jonathan
Not enough. I like that.
00;23;54;08 – 00;24;02;02
Mike
$14 an hour. Yeah. My 16 year old daughter makes more than that as a hostess at a restaurant.
00;24;02;23 – 00;24;02;29
Jonathan
Oh.
00;24;03;11 – 00;24;27;01
Mike
So quick. Now, by the way, my niece is lucky her dad paid for everything. What if she had to take out loans for all this? She’d never be able to pay this off. And then here’s what they do. All these college kids who have done this, they were, you know, first they make stupid decisions because they say, I’m going to take a bunch of loan money and then I’m going to do it to pursue this degree where I’m going to make no money.
00;24;27;23 – 00;24;50;19
Mike
Right. So already that’s a stupid decision. Let’s call it what it is. And Ben, they’re like whining about it because they were stupid. And now they want the taxpayer to bail them out. Now, who’s bail them and who is bailing them out? It’s not free. It’s not the government. It’s you and me paying for their stupid decisions. And you know what else it is?
00;24;50;19 – 00;24;54;01
Mike
It’s like, what about all those people that decided I’m not even going to go to college?
00;24;54;08 – 00;24;55;20
Jonathan
Yeah. Or have already paid them off?
00;24;55;27 – 00;25;16;12
Mike
Yeah, they paid off. They were actually adults. They paid off their loans or they don’t want to go to college. They instead they went out and they decided, I’m going to be a plumber, I’m going to work in the construction industry. I’m going to be you know, whatever they trade, they made a smart decision. They said, I don’t want to go to college.
00;25;16;12 – 00;25;35;00
Mike
I’m not going to take that. I’m going to make money now. And they’re all making money. And guess what? By paying off these student loans, those people are paying off the loans of these idiot kids who decided to take on more, you know, all these huge loans to pursue a degree that makes no money. Right. And that offends me.
00;25;35;21 – 00;25;54;27
Mike
I find that offensive. I find it completely offensive. So as King, I thought about how do I what law could I pass that would help fix this problem? And I think that I thought originally, like a great law, Jonathan would be, this is me ranting.
00;25;55;08 – 00;25;58;15
Jonathan
You got this glare in your eye. No, I’m just letting you go like crazy.
00;25;58;23 – 00;26;08;19
Mike
A great law would be this concept of anyone who brings up the idea of paying off student loans, you know, should be hit with paintballs by everyone that’s paid off their own student loan.
00;26;09;07 – 00;26;10;05
Jonathan
Everybody gets a turn.
00;26;10;09 – 00;26;30;15
Mike
Like, Yeah, if you paid off your own student loan, here’s paying for gun fire far away at this helpless person who’s thinks that you that you after doing what you’re supposed to do, need to help out, you know, basically need to cover the debts of someone that, you know, is just not being, you know, it’s like. Right. At first I thought about that.
00;26;30;15 – 00;26;52;24
Mike
I thought I’d be fine. But then I thought, you know what? We need to nip this problem in the bud. Well, here’s what I think. I think what you do is this. When you apply for a student loan, you have to on that loan say, this is the degree I’m working towards. And this is a job I’m working towards because there’s information on what those jobs pay.
00;26;53;06 – 00;26;53;15
Jonathan
Sure.
00;26;53;25 – 00;26;57;14
Mike
And then based on what those jobs pay, that determines how much of a student loan you can get.
00;26;57;14 – 00;27;02;01
Jonathan
Yeah, it’s like borrowing power. What is your borrowing power? Right. When they say, yeah, just like any other loan you go out to.
00;27;02;03 – 00;27;17;05
Mike
You go buy a house. You want to get a house? Yeah. You got to say, well, what’s, you know, what’s my income and all that kind of stuff. So here, what if we made a law where you said for the if you want to get a student loan, that loan has to be linked to your potential earnings power, right.
00;27;17;05 – 00;27;19;03
Mike
For the job you’re working toward.
00;27;19;03 – 00;27;21;13
Jonathan
So we actually have to do some loan underwriting, is what you’re saying.
00;27;21;13 – 00;27;21;29
Mike
Yeah, it doesn’t have.
00;27;21;29 – 00;27;22;19
Jonathan
Just a free loan.
00;27;22;19 – 00;27;27;25
Mike
It doesn’t have to be like intense, just something basic. Yeah. So I think I’m going to go with that one.
00;27;27;25 – 00;27;28;29
Jonathan
That’s fair. That makes sense.
00;27;29;00 – 00;27;41;08
Mike
That way everyone could still get these loans, but the amount of loan you get is linked to what you could potentially earn in the real world once you get your degree. That’s my idea. How do we feel about it?
00;27;41;08 – 00;27;48;04
Jonathan
I’m on board with that. I think that would be good. It’d be helpful for people, too, if you’re if you sit in that loan app and hey, you get rejected, it might make you rethink things. Right?
00;27;48;04 – 00;28;00;13
Mike
There you go. All right. All right. That’s my idea. Okay. I’m sticking to it. So with that, it is the law.
00;28;00;13 – 00;28;00;29
Jonathan
There you have it.
00;28;01;00 – 00;28;02;24
Mike
Okay. So I’ve just got done ranting.
00;28;03;02 – 00;28;03;15
Jonathan
Yeah.
00;28;03;16 – 00;28;07;05
Mike
Now there’s one more thing. It drives me crazy. So for tonight.
00;28;07;05 – 00;28;08;07
Jonathan
Just for today, you know.
00;28;09;09 – 00;28;10;08
Mike
I’m at H-E-B.
00;28;11;02 – 00;28;14;05
Jonathan
H-E-B is a is a common, a common place for you to go.
00;28;14;05 – 00;28;20;03
Mike
And H-E-B, I love H-E-B, actually, my wife loves me to stop at H-E-B to pick up stuff for her.
00;28;20;04 – 00;28;21;22
Jonathan
Is that what it is? Okay. All right.
00;28;22;05 – 00;28;34;14
Mike
I go to H-E-B and pull into my parking spot and I pull up parks parking and what’s in front of me. Somebody has left a shopping cart up in a parking spot.
00;28;34;15 – 00;28;36;13
Jonathan
Already knew it. Even said it. Yep.
00;28;36;13 – 00;28;41;04
Mike
They were too darn lazy to just walk the 20 steps to put the shopper.
00;28;41;17 – 00;28;44;10
Jonathan
Probably like two spots down right where they could have put it. Yeah.
00;28;44;18 – 00;29;08;25
Mike
While I’m parking, I saw another lady do exactly the same thing in the aisle right across from me. And I am a believer that nothing reveals your character more than what you do with your shopping cart. When you’re.
00;29;08;29 – 00;29;09;11
Jonathan
Done.
00;29;10;11 – 00;29;34;04
Mike
Do you return your shopping cart to the corrals that are provided in the you know, because they’re all over the place is corrals in the parking lot. None of them are far away? Or are you the loser who like the complete scumbag who doesn’t do that? Because, I mean, if you’re not returning your shopping cart, what? I like you.
00;29;34;20 – 00;29;42;19
Mike
I mean, I think our world would be better off without you all my. You. I mean, what is wrong with you that tells us everything I need to know about you.
00;29;42;20 – 00;29;53;22
Jonathan
It really does. I totally. It drives me crazy. And then they. They’re, like, loose in the parking lot. Maybe they roll downhill and it’s somebody’s car or what. It’s just like, c’mon, yeah.
00;29;53;29 – 00;30;22;08
Mike
This to me is like basic. This is just basic consideration for fellow human beings. Right, right. So here’s the deal. This is what I believe. I believe that shopping when you get a shopping cart, here’s what we should do because we have the technology for this. You have to like do your little thumbprint or something when you collect the shopping cart right in your link to that car, like a little RFID chip in that cart.
00;30;22;08 – 00;30;23;11
Jonathan
That’s your cart. Okay.
00;30;23;12 – 00;30;45;22
Mike
And when you are in the parking lot, if you don’t return that shopping cart to its little corral, alarm sirens go off and everybody sees it right? Yeah. And then also located around the shopping cart, we talk about people’s earlier. What if there’s, like long red paint, falls, people, guns, everyone out there has the right to grab paintball guns are firing at you.
00;30;46;05 – 00;31;03;15
Mike
Right. And just plaster you your vehicle and all of those around, you know. Well, not all those around you but yeah like that’s what they should do. Yeah. Because you know what? You deserve that if you can’t frickin return your shopping cart, then you know what? I pretty much hate you.
00;31;03;15 – 00;31;07;15
Jonathan
It is a frustrating thing for sure. I mean, here’s the reality.
00;31;07;15 – 00;31;13;22
Mike
If you’re the kind of person doesn’t return your shopping cart, I’m offending you right now. I probably don’t care.
00;31;13;22 – 00;31;16;04
Jonathan
Mike definitely doesn’t care about, you know.
00;31;16;15 – 00;31;24;22
Mike
Return your darn cart so people that hard. I know so anyway that’s get over that’s that’s me having a little fun with ranting on shopping carts so.
00;31;24;22 – 00;31;25;08
Jonathan
That’s a good one.
00;31;25;09 – 00;31;33;02
Mike
My law is return your turn. Shopping cart. Shopping carts must be returned. If not, you are pelted with paintballs. How about that? And they hurt.
00;31;33;14 – 00;31;35;10
Jonathan
You. They hurt you. Some welts. Yeah.
00;31;35;10 – 00;31;36;16
Mike
You get with me. Yes.
00;31;36;22 – 00;31;37;02
Jonathan
All right.
00;31;37;06 – 00;32;09;13
Mike
With that, it is law. If you’re retired, if you’re nearing retirement, you need to understand this is so vital. You need to understand that retired, it is different than when you’re working. It is fundamentally different. Yep. And because it’s fundamentally different, you need to fundamentally change how you manage your money. An investment plan is not a retirement plan.
00;32;09;18 – 00;32;34;22
Mike
In fact, it’s name calls. And so what we want to talk about here is what do you need to do to make some of those changes so that you can truly enjoy the retirement of your dreams? So I’m a big believer that retirement should be the best time of your life. Retirement should be the time of your life where you can basically do what you want to do when you want to do it.
00;32;35;03 – 00;32;54;25
Mike
And you have enough money flowing in month in, month out to support those activities, and you have full confidence that your money will last. That’s what it should be about. You shouldn’t be worrying about money. You should be focusing on how you’re going to make your mark in the world, right?
00;32;55;02 – 00;32;55;09
Jonathan
Yeah.
00;32;55;19 – 00;33;16;07
Mike
Hey. Or said another way, are you going to make, you know, do you want to travel? Do you want to go visit grandkid train? Do you want to contribute to a charity? Whatever it is, that’s where your time and attention should be. Yeah, right. It’s kind of like we have this these clients, they were sending me pictures. They were out visiting their family out in Oregon.
00;33;16;11 – 00;33;33;14
Mike
Yeah, right. And they said, hey, just send a picture. We’re, you know, there was they just retired. And so this was their first thing. Like, we really just want to go hang out with our family for like a month. And that’s what they did our call and they fired us a little picture, said, hey, check it out. That’s what retirement should be about.
00;33;33;14 – 00;33;35;24
Mike
It shouldn’t be about, oh, what’s market doing today?
00;33;35;24 – 00;33;36;14
Jonathan
Yeah, yeah.
00;33;36;14 – 00;34;05;05
Mike
It shouldn’t matter what the market’s doing today. If you need to worry about what the market is doing today, you don’t have a retirement plan. It’s that simple. You should be retired. Your retirement should be based on math and not markets. It is that simple. So how do you have how do you make sure you enjoy a secure retirement?
00;34;05;18 – 00;34;33;27
Mike
These are the areas you need to address and we talk about it in our retire right report. Right. Our IG T that is an acronym. Right, which means each letter stands for a word. The R stands for risk. Risk is there’s a lot of areas of risk in retirement. Yeah, it might be market risk, it might be inflation, maybe it’s health risk, a lot of different areas.
00;34;34;08 – 00;35;02;25
Mike
But you need to manage your risk first and foremost. There’s so many ways that, you know, one little thing goes wrong and it blows everything up. Yeah, yeah. So I’ll give you an example. My grandparents. Let’s talk about my grandparents. My grandparents, my grandfather was a big believer in investing and blue chip dividend paying stocks. Okay. When he retired, his entire income, you know, his portfolio income was based on the dividends from those blue chip stocks.
00;35;02;25 – 00;35;03;15
Jonathan
Sure, sure.
00;35;04;14 – 00;35;07;01
Mike
Problem. Our dividends guaranteed.
00;35;07;13 – 00;35;08;08
Jonathan
They are not.
00;35;08;08 – 00;35;09;00
Mike
Are they insured?
00;35;09;08 – 00;35;10;01
Jonathan
Who are.
00;35;10;01 – 00;35;10;22
Mike
They stable.
00;35;11;13 – 00;35;11;18
Jonathan
You.
00;35;11;18 – 00;35;12;06
Mike
Want them to be?
00;35;12;06 – 00;35;14;26
Jonathan
Hopefully they are. But I mean. No, no, not guaranteed, that’s for sure.
00;35;14;26 – 00;35;21;06
Mike
But the first time the market goes south, he retired at the end of the sixties. What happened in the early seventies?
00;35;21;06 – 00;35;22;28
Jonathan
Yeah, we had some turbulent times. Yeah.
00;35;22;29 – 00;35;47;10
Mike
Oh, pack lines. It was horrible. He saw his dividends get reduced, so his income was reduced. And to make up income, he’s like, Oh, that’s okay, I’ll just sell some stock positions. But the problem was those were also down. Yes. So he started creating this downward spiral. It didn’t take long. And guess what? My grandfather, who retired very comfortably, ended up basically running out of money.
00;35;47;29 – 00;36;10;08
Mike
He had to sell the family cottage right here to sell the family cottage because he couldn’t afford it anymore. And that just broke him. So mistake, little mistake and risk. The mistake was what? I think I’m good. I feel like I’m good. I have a lot of confidence. I’m good because all of these companies had track records of paying dividends for 20, 30 years.
00;36;10;11 – 00;36;24;23
Mike
Mm hmm. Risk market went south. It all blew up on him. Okay. We’re seeing a lot of people this year seeing that. Yeah, they thought their diversified market goes south. Suddenly they’re losing 20% plus, and they’re like, What the heck is going on?
00;36;24;25 – 00;36;26;25
Jonathan
Yep. Can’t retire any more this year, right? Yeah.
00;36;26;25 – 00;36;52;00
Mike
Here’s another risk. So my grandfather dies. Thank God he had life insurance. Good decision on his point, you know, on his part. And now. Now, Grandma, she’s back in shape. She’s in good shape now up. But she forgot about planning for her health care. She gets Alzheimer’s, right? And boom, next thing you know, spends all of her money on nursing home, spend down, dies with nothing that is broken, penniless.
00;36;52;12 – 00;37;13;00
Mike
Now, this is my grandparents who retired with over $1,000,000 in today’s dollars. They lose it all once because of bad investment decisions. Right. Investment decisions, by the way, that did well for him when he was working. Sure. They worked really well when he was working. Didn’t work in retirement. Then he died after a bunch of life insurance. Oh, boo.
00;37;13;00 – 00;37;39;08
Mike
Fixed it. Fixed the problem with life insurance, but life insurance fixes lot of things. But then another mistake didn’t plan for nursing home and now it’s gone again. Right? Grew their retirement savings to a million in today’s dollars lost it all made back lost it all again all because of small mistakes. So the are is risk. What are you doing to manage your risk and retirement.
00;37;40;03 – 00;37;54;29
Mike
Okay that’s really important. How are you de-risking your retirement are you having conversations your advisor about de-risking your retirement? And if not, maybe you should be talking to us. What’s I? I as income? No income. No retirement.
00;37;54;29 – 00;37;55;13
Jonathan
That’s right.
00;37;56;06 – 00;38;02;00
Mike
Bottom line, you must protect your income. Retirements like 20 to 30 years of unemployment.
00;38;02;10 – 00;38;04;02
Jonathan
Yes, permanent unemployment.
00;38;04;02 – 00;38;18;13
Mike
How are you protecting your income in retirement? How are you doing that? Guess what? If your answer is I’m just taking money from the portfolio, my advisor system. Good, you’re not good. Odds are really good that you’re not good.
00;38;19;15 – 00;38;20;13
Jonathan
Right? Well said.
00;38;20;22 – 00;38;38;25
Mike
You got to protect your income. G is growth. So our IHT g is growth. You still have to grow your money? Yes, I still have to grow it. Yep. Got to worry about inflation. H health care. How are you going to pay for health care when it happens? Do you have enough money? Can you pay out of pocket?
00;38;39;08 – 00;38;54;20
Mike
Right. Do you have insurance? You know, a lot of people are using life insurance these days. Are you looking at these options? Because you got it? This is one of those areas where you got to do something when you don’t need it. Right. So that you have it when you do need it.
00;38;54;27 – 00;38;56;18
Jonathan
Yes, yes. Right. Yep.
00;38;56;18 – 00;39;04;15
Mike
You gotta do something when you don’t need it. So you have it when you do need it, which stinks. But that’s how it is. It’s called being an adult. Yeah. You’re planning.
00;39;04;22 – 00;39;05;00
Jonathan
Yeah.
00;39;05;21 – 00;39;08;16
Mike
And then the last one t my favorite topic.
00;39;08;24 – 00;39;09;09
Jonathan
Yes.
00;39;09;10 – 00;39;12;12
Mike
And I’m looking at banning right now here tax the so.
00;39;13;00 – 00;39;13;05
Jonathan
He.
00;39;13;05 – 00;39;19;26
Mike
Is he’s got this like this chain and it’s it’s labeled like, you know, bling. Yeah. Now these people have blinged. It would.
00;39;19;26 – 00;39;20;10
Jonathan
Be bling.
00;39;20;10 – 00;39;34;15
Mike
Yeah. He’s got this chain bling. It says IRS on it. Benny, the tax monster. We hate this guy. I’m a big believer that you it is important that you pay the IRS what you owe them.
00;39;35;11 – 00;39;36;01
Jonathan
Definitely.
00;39;36;01 – 00;40;02;23
Mike
But I’m also a big believer that you don’t pay them a penny more. And all too often families, everyday families, because they don’t pay attention to tax planning, they end up giving the IRS tens of thousands, if not hundreds of thousands of dollars more than they have to. It’s just money wasted. Well, now, I don’t care if you waste money doing things you like to do.
00;40;03;00 – 00;40;21;24
Mike
Sure. Like, Hey, I’ve got a friend. They, like, go to the casino, they’ll take ten grand to the casino. If they lose it, they don’t care because that’s their plight. They have fun money, they enjoy it. Yeah, that’s burning through money. I wouldn’t do it, but they do it. But I don’t want it. I don’t want you burning it by giving to the IRS.
00;40;22;07 – 00;40;44;14
Mike
Right. I’d rather have you keep it in your family. Right. Keep it for you. What do you do now? Your tax plan every year. Do you sit down with your advisor every year and discuss your tax planning and look at strategies that you can use to reduce your taxes over time? Are you doing that? I bet of it is.
00;40;44;14 – 00;40;47;22
Mike
You’re listening. I bet you’re not, because I know most people down.
00;40;47;23 – 00;40;48;26
Jonathan
Probably shaking your head out there.
00;40;49;00 – 00;40;59;13
Mike
No. Now, if you’re running a business, you might be doing that because, hey, a tax person can charge business a lot of money to do that stuff. Right? But not an individual.
00;40;59;16 – 00;40;59;25
Jonathan
Mm hmm.
00;41;00;09 – 00;41;24;02
Mike
So whose job is it to help you with your tax planning? Probably your. Financial adviser. Are they doing their job or are they helping you with tax planning? And if they’re not, guess what? Again, you probably don’t have a retirement plan. You probably have an investment plan. They’re not the same thing. If you want to secure your retirement, you absolutely need to these areas, right?
00;41;24;07 – 00;41;39;29
Mike
You’ve got to manage risk. You’ve got to manage your income, protect that income. You’ve got to still grow your money. You’ve got to protect yourself against health care. And you’ve got to, got to, got to got to keep your taxes to a minimum. Yeah. Do all that stuff.
00;41;40;15 – 00;41;40;23
Jonathan
Yeah.
00;41;41;17 – 00;42;08;02
Mike
And if you’re not getting that right now, this is your opportunity. Here’s what we’re going to do. Provided you saved at least 200,000 for retirement, we will prepare for you. Absolutely free. No obligation. A personalized retire right report. It’s a report that helps you understand how you’re doing in each of these areas and give you good options, like good solutions to putting you in a better place.
00;42;08;20 – 00;42;16;05
Mike
So, Jonathan, this is a no brainer. I don’t know why our listeners wouldn’t want this. Yeah. What number do they call? How does it work?
00;42;16;05 – 00;42;26;20
Jonathan
That’s right. Connect with us. Set up a time. 5128865850. Again, the number is 512886 5850.
00;42;27;07 – 00;43;01;29
Mike
All right, folks, 5128865850. Give us a call now. It’s after hours, so set up a time where you can talk to Jonathan, my partner in crime, hear a threat and he will help get you situated. That’s our show this week. I hope you enjoy your week. We’ll talk to you next week.