12.9.22: Audio automatically transcribed by Sonix

12.9.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to the Active Wealth Show with your host Ford Stokes. Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax-efficient investing. And now your host, Ford Stokes.

Ford Stokes:
And Hello, Activators. We’re so glad you’re with us. I’m Ford Stokes Chief Financial Advisor. Welcome to the Active Wealth Show. And I’ve got Sam Davis, our executive producer here. We are going to talk about everything 401K and IRA today and specifically has your 401k, your IRA, your 43b or your Sep IRA, your simple IRA. Has that account disappointed you in performance this year? More than likely that’s the case. And we’re talking about today on how to take control of your retirement savings. Here’s the overview for this week’s show. I mean, number one is we’re going to give you our quote of the week here in just a second. We’re talking about 401K rollovers and in-service distributions. We’re also going to talk about IRAs as well. We will have a problem solver for all the listeners. Everybody usually loves to hear the problem solver. We have seven questions that we can help you answer for retirement this week. We’ve also got signs you could be ready to retire and how to save money and headaches for this holiday season. Sam and I are going to work through that with you. And then also we’re going to have another edition of Right or Wrong, which everybody loves to hear. So be sure to tune in throughout the show to make sure that you can get and listen to that right or wrong segment as well. But now first, the financial Wisdom quote of the week.

Producer:
And now for some financial wisdom. It’s time for the quote of the week.

Ford Stokes:
This comes from Jackie Joyner-Kersee. I. And here’s what she said. She said it’s better to look ahead and prepare than to look back and regret. And I completely agree with that statement. Jackie Joyner-Kersee was born March 3rd, 1962, as a retired track and field athlete, ranked among the all-time greatest athletes in the heptathlon as well as the long jump. She won three gold and one silver and two bronze Olympic medals in those two events at four different Olympic Games. She actually won the bronze here in Atlanta on the long jump. And we appreciate that quote of it’s better to look ahead and prepare than to look back and regret. And I completely agree with that. And that’s kind of what we’re talking about today. We want to talk about, look, you don’t want to just look back and regret the fact that you were you know, you left your money in a buy and hold, you know, high expense ratio 401K when you could have done an in-service distribution after 59 and one half years old and gotten control of your assets earlier. So we want to help you get control of your assets earlier. So also, this week’s show is for all of you out there who have been disappointed with the performance of your retirement accounts this year. We know it’s been difficult to look at your statements and see your numbers dropping, even though you’ve been continuing to work hard and save consistently. The S&P 500 is down 17% so far in 2022. The Nasdaq is down 29% in 2022.

Ford Stokes:
As an example, That’s remarkable. We also want to consider a traditional 41k rollover or an and or an in service distribution where you stay in service with the employer, but you take a distribution, you roll your money out of your 41k. Most foreign K plans will let you take at least the money that you’ve contributed, plus the growth. They may hold back the money that’s been contributed or matched by the company. But we want to help dispel the myth that you can’t touch the money you’ve saved in your 4k or other retirement accounts. Also, if you rolled an old 41k into your current existing 401K, that’s your money. You can go get access to that money, do a traditional rollover. We will not create a tax event for you. We’ll just roll it over into an IRA that you set up with us and we can manage the money for you and hopefully work really hard and do a great job at protecting and growing your wealth. It’s always our goal to help people take control of their assets so they can save more of their hard earned money and maximize their returns. Just is. Most people can remain with their company, stay in the plan like we talked about within service distribution, but just do our traditional rollover and continue to take advantage of the maximum match from their employer. So you can you can take money out and then just keep going and we can transfer money out every six months or every year. We want to be careful about not to over, you know, transfer out and incur additional admin fees.

Ford Stokes:
We don’t have to in trading fees, but every six months or to a year, it probably makes sense if you are in or nearing the retirement red zone. And by the way, we’ve talked about the retirement red zone before. It is the time when when you’re within five years of retirement or you’ve retired in the last five years and consider taking 40 to 50% of those dollars and protect that portion from the market loss. We have ways to help you do that with zero fees. And the solution can provide you with an additional income stream that you can never outlive. So it’s something you really should consider as you consider a traditional 401K rollover. If you if you’ve been working and you don’t know what to do with your money and you’re over 59 and one half years old, you can do a traditional 401K rollover and roll out with an in-service distribution and still stay employed. We want to make sure that you do talk to your folks, your HR folks, and your direct supervisor like, Hey, I’m just trying to get control of my assets. I’m not here to let you know I’m leaving or anything like that. I just want to make sure that I can help control our, you know, the assets that I have because I’ve worked hard to, you know, to save that money. I’ve worked hard to make it and I’ve worked hard to save it.

Producer:
It’s time for this week’s problem solver.

Ford Stokes:
Edward and Marie are a married couple who are both in their early sixties. Ed is an accountant and Marie is an office manager. They both have retirement plans through work and are consistently saving enough to maximize the free company match while reducing their current annual taxable income. They have been great savers, but both are disappointed in what has happened to their balances this year for sure, and each have seen 20% or more in losses year to date. They are in their typical 60 over 40 portfolio. They’ve got 60% stocks and 40% bonds. The solution for this problem solver and this problem that we’re talking about today in our Problem Solver segment. Edward and Marie will both do a traditional 401K rollover and in-service distribution to their new IRA accounts individually, because an IRA stands for individual retirement accounts. So those numbers, those those monies aren’t blended between Edward and Marie. It’s Edward will move his money out and Marie will move her money out. This will allow them to implement a more risk efficient, market efficient and fee-efficient strategy. They will draw the maximum amount of funds so that they can still remain in the company plan and continue to take advantage of free matches or currently unvested balances. Most people can do this once or twice a year to take control and better control of their assets.

Ford Stokes:
We think it’s a really good idea. You may have questions about all this, and if you do, I would encourage you to pick up the phone and give us a call at 770 685 1777 again 770 685 1777. Or you can visit ActiveWealth.com and click that schedule a consultation button the upper right corner and you’ll book an appointment directly with me. We’ll actually meet with you directly. You won’t meet with another advisor and I’m happy to help you protect and grow your wealth. And we’re also going to help you figure out, you know, portfolio analysis. We’re going to give you an understanding of the risks you’re taking, the fees you’re paying with your current plan. It has nothing to do with us. We’re also going to help you get a financial plan to your 95th birthday at no additional cost to you with our recommended portfolios. And then we’ll also give you a financial plan, your 95th birthday with our recommended portfolios. That also includes a Roth ladder conversion plan, because also remember, there’s only two types of tax free investments out there. Number one is a Roth IRA, and number two is life insurance. Some of you may be too seasoned maybe in your sixties or seventies or eighties, and you’re a little bit too longer in the tooth to take advantage of life insurance.

Ford Stokes:
But if you’re in your thirties, forties or fifties, it’s a good idea to go ahead and invest in life insurance with an index universal life policy to get market like gains without market like risk and the distributions from those policies. Will be tax free because it’s a loan against the policy. That’s a really good idea. But a Roth ladder conversion. Let’s say you’re sitting on a. $1,000,000 IRA. It would be a good idea to try to move about 150, 200,000 a year. Let’s say it’s 200 grand for five years plus the growth. Maybe it’s it’s six years total. And then all of a sudden, six years later, the IRS is no longer your partner in retirement. How beautiful could that be? Can you imagine saving six figures or more during retirement? We think that’s a big deal. And we come back from the break. We’re going to talk about exactly how much money you really could save by implementing a Roth conversion. But it is over six figures, I promise. And also, we come back from the break. We’re going to go through the seven questions we can help you answer for retirement.

Ford Stokes:
That’s a big a big part of today’s show. The seven questions we can help you answer for retirement. I think you’re really going to like these questions. I think you’re going to learn a lot. And we’re so glad you’re with us here on the Active Wall show. Also, shout out to Herschel Walker. Thank you for being on the show. Thanks for running for the four the Senate seat. Unfortunately, Herschel came up short this week, much to our chagrin. He came up by, I think, less than 100,000 votes. And, you know, I wish he’d won because I feel like we are better off with a Republican in the Senate. But Raphael Warnock is our senator. And unfortunately, that’s the case and we will have to support. At least our delegation that’s up there in in Washington. But we don’t necessarily have to support their politics and support their additional tax and spend liberal policies. I’m just can’t do that. But when we come back from the break, we’re talking about the seven questions we can help you answer for retirement. You’re listening Active Wealth Show right here on AM 920 the answer and we’re going to talk about the seven questions we can help you answer for retirement.

Producer:
Remember, all of Ford’s listeners receive a free financial consultation just for listening to the show. Visit ActiveWealth.com to learn more and schedule an appointment. Thanks for listening to The Active Wealth Show and subscribing wherever you listen to podcasts.

Ford Stokes:
And welcome back Activators the Active Wealth Show. Ford Stokes our Chief Financial Advisor and I’ve got Sam Davis, our executive producer here. Sam, why don’t you tell them how they how the activators Get in touch with us. And also let’s share with the audience who an activator is.

Producer:
Yeah, absolutely. So if you like listening to the Active Wealth Show and you’re interested in protecting and growing your hard-earned wealth, you know that makes you an activator. And you can find the show at ActiveWealthShow.com. We archive all of our old programs there. You can also find the show wherever you listen to podcasts. So whether that’s Spotify, Apple Podcasts, Google Play, wherever you like to listen to your shows, you can find us there. But don’t Ford to visit Active Wealth show dot com and you can actually conveniently schedule an appointment with us right there.

Ford Stokes:
Yeah, absolutely. You know what else too? I want to give a shout out to Charlie Kirk. I really appreciate all the nice things that he’s saying about us. He’s a friend of the show and and and I’m just really happy and proud to have him support us and support active wealth and just. Thanks, Charlie. Thanks for all your support of the Active Wealth Show and for me as an advisor and also Active Wealth Management and just the show in general. We really appreciate it. So now, Sam, we’re going to ask them seven questions. And if you don’t mind, I’m going to have you take these up. But we’ve got seven questions we can help you answer for retirement.

Producer:
Yeah. So when you meet with us, you may be asking yourself some of these questions already, but these are questions that we can help you answer for sure. So, number one, when should you and your spouse claim Social Security benefits if you haven’t already? And do you know the best way to maximize your benefits? Because Ford that’s a big concern for a lot of people. That’s one stream of guaranteed income they know they’re going to have, but they want to maximize it the best they can.

Ford Stokes:
Here’s when you really should take Social Security. Let me just answer this question a couple of ways. When you’re driving around out there and going to Home Depot or Lowes, you’re heading to lunch or you’re heading to you’re coming back from church or whatever you’re doing, whether it’s Saturday or Sunday, you’re listening to the show or you’re heading to a kid’s soccer game. Let me ask you this question. I want you to honestly ask yourself this question. Do you feel like you deserve more than $0.75 on the dollar of what you put in with Social Security? And I bet you your head nodding as you’re driving around Atlanta right now, or you listen to us on the Active Wealth Show podcast. And if that’s the case, then don’t take Social Security at 62 and one half. That means it’s not right for you. Now, obviously, if you’re if you’re having to put too much pressure on your portfolio by withdrawing money. Then. You probably do need to turn on Social Security, but if you can stay within a 4% withdrawal rate of your portfolio and still live without Social Security for a while, try to get to full retirement age. And after full retirement age, it’s 8% more a year. Every single year. It’s like an 8% simple interest roll up on your income each year. Almost like a pension, except for most pensions these days still are spear driven. So they’re they’re based with a spear product, which stands for single premium immediate annuity. And those pensions, they never grow.

Ford Stokes:
There’s just a flat amount. And so the amount of money you make off your pension and the buying power you have in your pension is pretty good early in your retirement. And then after inflation gets a hold of it, it’s not so great. And and so I would encourage everybody. To try to get to full retirement age. If you’re born after 1960, congratulations. Full retirement age for you is 67 years old. If you were born before 1960, it’s kind of a a stair step process. Say you’re born in like 1956. You’re going to be probably 66 and six months or somewhere around there is when you’re your full retirement age is. But try to if you can if you can avoid taking out more than 4% of your assets, and if you can still do that and not take Social Security, I would encourage you to keep going when you’re taking out more than 4% when you have to take out. Between six and ten plus percent, because if you take out 10%, you’re going to. You’re going to end up running out of money in 12 years. Really try to stay within that 4% rule, but it’s 8% more every year. You wait after your full retirement age. But I would encourage you to at least make it to full retirement age. Your FRA, which for most people is 67 and for others that were born before 1960, it’s 66 and a certain amount of months. So that’s my answer to question number one.

Producer:
Yeah. Another big question that we like to help people answer is what is your budget and what is that tax plan for your retirement? Do you expect it to change in the future and are you accounting for inflation and future tax increases?

Ford Stokes:
Yeah. When people do simple budgets on a spreadsheet at home almost every time, they never include accounting for inflation and future tax increases. We when we run plans, we run based on the current tax plan. I would encourage people to really have eyes wide open if they think taxes are going to go up in the future, especially after we just elected another Democrat senator from the great state of Georgia. You know, that’s something to have some concern with. But the inflation piece is a big thing and a lot of people need to include it. I would at least include a 3% inflation rate in your calculations. We do that when we run plans for you. So all you’ve got to do to get your own financial plan run to your 95th birthday is give us a call at 770 685 1777 or you could just visit ActiveWealth.com that’s ActiveWealth.com but what is your budget and what’s the tax plan for retirement. Here’s how to do the budget you want to take all your discretionary and nondiscretionary expenses. Discretionary would be like eating out or buying gifts for the grandkids things like that. Non discretionary are things like rent, power, water, cable, trash pickup, things like that. You’re going to add all of your expenses up because basically what you’re going to do is you’re going to take your the last two months, October, November, and you’re going to add up how much money you spend over those two months and you’re going to divide by two.

Ford Stokes:
You also should bucket which expenses are discretionary and which expenses are non discretionary. So you can see what you could work on with that fixed income bucket and see what you could do on the on the on the discretionary and say, hey, wait a second, I’ve got a chance to shave off another $4,500 a year. Another thing that a lot of people have is, hey, I’m going to downsize and I’m going to buy a house free and clear with the equity that I have or I’m going to pay my house off and stay in my house. All of those are are right there for you and a good idea. And so I would encourage you to budget. For. Understand your expenses. Understand what income do you require after taxes? A lot of people feel like, Oh, wait a second, all I need is I need 10,000 a month and I’m getting 10,000 in Social Security pensions and my 4% withdrawal. They don’t understand when they’re withdrawing out of their IRA, their their pension and also their Social Security. All of that is taxed. So if they need $10,000 in after tax money, they’re going to have to pull out another like 13,000 total every month to make make ends meet.

Ford Stokes:
That’s why retirement is more about income and expenses than it is about building one big nest egg. So one the answer to this question is yes, you should be accounting for inflation. Two, you need to be ready for tax increases. And I’ll give you a perfect example. In your lifetimes, if you were if you were born, let’s say 1955 or or before. Get this from 1960 to 1963 in your lifetime. You’re literally had it where the current 24% bracket was actually 56%. The income level from during the Kennedy years from 1960 to 1963 was 56% of where the current 24% bracket is. So if you don’t think taxes can go up in the future, I would beg you to reconsider also. I want to make sure you understand you are staring something in the face with your where it could be 8% higher than two X of where it is right now. So you need to have a plan for that. When we come back, we’ve got five more questions that we can help you answer for retirement. We spend a lot of time on the first two. I want to make sure that we’re thorough in our answers. I hope you come back. It was the Active Wealth Show right here on AM 920 The Answer to get the seven questions we can help you answer for retirement.

Producer:
As the song says. It’s the most wonderful time. But don’t let holiday spending wreck your retirement plan. I’m Matt McClure with the Retirement Dot Radio Network. Powered by Amerilife. Just over $832. That’s how much the National Retail Federation says the average American plans to spend on holiday gifts, food and decorations this year. Many of us will spend much more than that. So how do you keep from overdoing it? Financial website Investopedia has some tips on keeping holiday spending under control. Number one is perhaps the most important set spending limits for yourself. Tyler Ferguson with Jack’s Federal Credit Union agrees.

Tyler Ferguson:
Some can even go old school like myself and use a cash spending plan to ensure that you’re staying inside of your budget. You’re actually using cash to mitigate those swiping of the cards. It’s also an effective plan if you have kids wanting to shop as well.

Producer:
That from news for Jax. The number two tip from Investopedia is to make your own naughty or nice list. In other words, if you’re shopping list includes more than five people outside your immediate family, start cutting it, then bake cookies or other treats to give to those who didn’t make the cut. That way you spread holiday cheer without breaking the budget and you don’t seem like Scrooge Humbug. Other bits of advice from Investopedia include being realistic about your budget, collecting coupons or discount codes and organizing group volunteering instead of holiday parties, Ferguson says. One thing you should not overlook is getting the kids involved.

Tyler Ferguson:
For the younger kids, you want to give them a smaller dollar amount, maybe a $10 cash transaction to kind of help provide them a visual observation of what they’re using the funds for. And then for your older kids who have either been saving themselves already or they have a lump sum to kind of go shopping with, can open up an account for them, go over how to budget and how to spend.

Producer:
So how can you give this holiday season without busting your budget? That’s a key question to consider. As Santa starts warming up the sleigh with the Retirement Dot Radio Network powered by a merry Life, I’m Matt McClure.

Producer:
Thanks so much for listening to the Active Wealth show. Make sure to rate us everywhere you listen to podcasts, including Spotify.

Ford Stokes:
And welcome back. Activators, The Active Wealth Show on Ford Stokes or Chief Financial advisor got Sam Davis here, our executive producer. And Sam, we are talking about seven questions we can help answer for the activators out there for their retirement. So I think we’re on number three now.

Producer:
Yeah, that’s right. So the third question that we’re going to help you answer when you meet with us is how should you best manage your account balances and required minimum distributions forward? I know we find that a lot of people out there are just building up that big nest egg. And then once they get into the retirement, they’re trying to systematically withdraw from that each year. But we feel like there’s a much better way to do that.

Ford Stokes:
Yeah, there’s a couple of different things that you really need to have a strategy for. One is take a look at your portfolio makeup. Like what we encourage people to do is 60% aggressive stock portfolio and 40% fixed indexed annuities. That’s our number one recommended plan and that’s where our happiest people are. So and you can also start taking RMDs, but also you can start taking the withdrawals that you need to live on through the annuity. You can start taking the income also on best way to manage your account balances. For RMDs, you want to make sure that you’re taking your required minimum distribution from each account each year because it’s a 50% penalty. If you don’t take it out, you do not want to aggregate and then just take an amount out of one account because you’ll end up getting penalized. It is a 50% penalty. It’s the highest penalty in the tax code if you miss it. So you don’t want to miss taking your required minimum minimum distribution starting at age 72, because the US government, the IRS, they want their money, they want to be able to apply the effective tax rate, your effective tax rate, to the amount of money that you’re withdrawing from your foreign K each year. And it starts at 4.14% when you’re 72 and it goes up from there, it’s like it goes all the way up to like 8.77%. When you turn 890, they are trying to make sure that they get the money out of your tax deferred account. That’s growing. It may not have grown this year, but in general it’s grown over time. So make sure you can manage your your portfolio the right way. Also, another way to do it is to centralize all of your accounts, all of your IRAs, your 403 B’s, 457 Sep IRAs, all that stuff into a single IRA. When you retire just for you, it’s in your name and one for your spouse. That’s much easier way to manage your account balances and to manage the RMDs that you’re going to take.

Producer:
Yeah. Next question we’re going to help people answer Ford is should you consider converting some of your savings to a Roth IRA?

Ford Stokes:
Well, as we talked about earlier in the show and we talked about it in just about every show, there’s only two types of tax free investments out there available to Americans. It’s life insurance and Roth IRAs. And wouldn’t it be great if you could just kick the IRS out of being your partner in retirement, just literally delete them from your IRA? Well, you can do. That all you have to do is move money from your IRA to your Roth IRA and pay the taxes on the money that you convert each year. And I’ll give you another hint. The best way to do that is to have a taxable account, like an investment account or a savings account. Let’s say you’re moving 100 grand. You’re a 20% bracket. Go ahead, move 100,000, take 20, 20,000 out of your savings or your investment account. Pay the money to the IRS, pay the taxes from that taxable account, from that that investment account or savings account or your checking account. And move all of your money that you’re moving the full $100,000 for dollar from your IRA to your Roth IRA. Absolutely. 100%. So that as your IRA goes down, your Roth IRA will go up. Another really cool hint is try to move some of those dollars. If you’ve got losses and you’ve got some holdings that you think are going to come back and are going to rebound after this year.

Ford Stokes:
Specifically, let’s say you had some tech stocks after we just talked about Nasdaq losing 29%. Then what I would encourage you to do is. To move all of those assets over in kind so you don’t liquidate and then just put the cash in. You just take the actual asset and move it over in kind from your IRA to your Roth IRA. And then as those assets rebound, they will rebound within the tax free environment versus the tax deferred environment, and you’ll owe less taxes on it and you will gain the system a little bit. So I think that’s a really good thing to consider. But a Roth IRA, if you want to save six figures in retirement, if you’ve got over 400,000. Ira account. I promise you, you’re going to save six figures in retirement with an effective. Roth IRA ladder conversion. I’m happy to help you do that. We do it every single day. We help folks all the time. All you got to do is reach out to us at 770 685 1777. Again at number 770 685 1777. We’re happy to help you and just visit ActiveWealth.com and click that schedule a consultation button in the upper right corner and you’ll get booked directly into my calendar.

Producer:
All right the next question we can help people answer when they meet with us. Ford is what should you do with your real estate? Maybe you plan to downsize. Maybe now that the kids are out of the house, you’ve got a lot more square footage than you need, Right? So do you have any rental income to account for? So kind of answering those real estate questions?

Ford Stokes:
Well, this is probably more about the primary family home, right? That single family home. We always encourage folks, the happiest people that we just tell people. The happiest people we work with are folks that have their house paid off. Well, they don’t have a mortgage they’re paying. And, you know, if we’re talking about the, you know, the primary family residence here, I would encourage you to try to downsize or at least pay your real estate off. Also, be careful about paying your real estate off with your IRA, especially if you’re younger than 59 and one half years old because you don’t want to incur penalties. You want to incur additional taxes on the distribution, which you would do if you’re younger than 59 and a half. But if you’re over 59 and one half and you’re retired or you’re in that red zone of retirement, that’s five years before or five years after retirement, then I would encourage you to do everything you can to pay your house off. And so therefore, your mortgage payment is not eating up one of your two Social Security payment checks that comes in every single month. So that’s something that I would consider is to try to downsize, make sure you get your house paid off and avoid that mortgage payment if you can.

Ford Stokes:
As far as rental income, rental income is great. It can be a problem because things like during the pandemic, you had you had renters sitting there and you couldn’t evict them and meanwhile you had to keep paying on your mortgage. That’s a problem. I mean, that’s that’s not something that’s guaranteed. Right. And that’s why I like having a fixed index annuity. Using and buying a fixed indexed annuity with the amount of equity you’ve got in the rental income. So let’s say you go and you sell that rental house, then that’s a really good idea because you can take that money, put it into a fixed indexed annuity. And even if there’s a pandemic or not, they’re still going to pay you income. I prefer doing that and having a better plan than just hope, because hope is not a strategy. We can’t just hope there’s not going to be a pandemic. We can’t hope that we can’t evict people. We can’t hope that we’re hoping that somebody’s going to pay their rent. I like having a 100% financial reserve product and getting income from it as a portion of my portfolio. That’s what I recommend and what you should be doing with your primary residence in your primary real estate.

Producer:
All right. Two more questions. Sixth question is, what is your plan for Medicare and any potential long term care needs and making sure that we have those things tightened up. Right.

Ford Stokes:
Yeah. I mean, the plan for Medicare is big. You need to pick one or the other. You need to pick either a medigap Medicare supplement insurance plan. We just finished the AP and you know that enrollment period, the annual enrollment period, that’s what AP stands for. And they also Medicare Advantage and AP is really more about the folks that are in Medicare Advantage because they can. Reenroll into any plan they want. You know, Medicare Advantage is basically free and it’s run like an HMO, whereas Medicare or Medigap supplement insurance is more like a PPO. A lot of folks we work with, you know, our average clients, probably between $1,000,002 million net worth. They like capping their risks. They don’t want to have a big deductible. With Medicare Advantage, it’s $6,790 for you to pay that deductible or co pay if you have a hospital stay for 1 to 2 plus days. That’s something you really need to consider because a $6,790 hit on average could be a big deal in your budget if you get checked into a hospital. And so I, I like Medigap Medicare supplement insurance plans more than I like the Medicare Advantage. Medicare Advantage still is extremely popular. We work with Bonnie Dobbs and Medicare and other red tape. We can get you in touch with her. All you’ve got to do is visit ActiveWealth.com, click that, schedule a consultation button and we’ll we’ll try to get you set up with her. We don’t sell Medicare here but we are big fans of Bonnie Dobbs and the job that she does. And with that, I would also tell you you probably need to have a conversation about what are you doing about long term care because 6.9 folks out of ten are going to need long term care. And my question is, which one of you aren’t which one of you are in the 3.1 versus the 6.9? Because you don’t know and you really need to have a plan for long term care for sure.

Producer:
All right, Ford, last question before we send it to break. We’re going to help people answer the question, what legacy would you like to plan for your children or grandchildren?

Ford Stokes:
Well, my favorite thing that grandparents can give to their grandchildren. Is in order their children is. A Roth IRA. It’s my favorite thing that they can give. It’s more favored than than jewelry or silver or plates or dishes or whatever. I would just tell you that a Roth IRA, the iris, has already been deleted out of that account. There are no taxes with a Roth IRA and that will transfer on death. That’s a Todd account versus having to go through probate. That’s another really neat thing. And. I that’s the number one thing I would do. The other is you may want to have an idea on final expense, having final expense insurance, or at least have your funeral plot paid for in your funeral paid for so your kids don’t have to go out of pocket when you pass away and go to heaven. So those are the two big ones for me to help really build that that legacy. Also, the third one would be life insurance indexed, universal life insurance. There’s a death benefit attached to all life insurance. And so getting that tax free, that that allows it where, you know, the wife and the kids won’t become wards of the state and they won’t have to support themselves. And to get one large check as you pass away is a really good thing to be able to pass along to your family. Come right back. You’ll see the Active Wealth Show right here on AM 920.

Ford Stokes:
And welcome back, Activators the Active Wealth Show. I’m Ford Stokes, your chief financial advisor. I’ve got Sam Davis, our executive producer with us. And we talked about right before the break, I want to talk about the signs that you may be ready to retire. And it’s a good thing to kind of have a checklist. Also, if you want, you can just reach out to us at ActiveWealth.com, click that, and schedule a consultation button, and we’re happy to help you and give you a full $500 value consultation. We do that on the front end at no cost to you because we’re fiduciaries and I want to put your needs first and I want to help you any way I can. So here are the signs that you may be ready to retire. Number one is family home is paid off. There is no mortgage and there’s also no mortgage eating up one of your Social Security checks, Your Social Security income checks. Then number two is you’ve got no credit card debt. And. It’s just a good thing to just get rid of all credit card debt for sure, because there’s no reason to pay them 20%, 22% interest. Just pay off your credit cards. Just do just get there. Get to a disciplined lifestyle. And if you can’t if you feel like, you know, I’ve had credit card debt for a long time, just go ahead and try to live tighter and on a tighter budget for ten months, you likely will be able to pay off your credit cards. Also, you ought to follow what Dave Ramsey says and pay off the highest interest credit card first and then pay all the minimums and the rest of them.

Ford Stokes:
And I think he calls it his credit card waterfall. And so then what you can do is just pay off the next one, the next highest interest one. All right. So the first two signs that you’re ready to retire is, number one, the family home is paid off with no mortgage. Number two is no credit card debt. Number three is you have a fully funded emergency fund. And what we call an emergency fund is a six month fund. You have six month of expenses. So let’s say you’ve got 5000 in after tax expenses. You need 30,000 at least for a six month fund, and then your emergency fund will be fully funded. Number four is you’re no longer supporting your children or other family members. Is family members is kids out of college? Hopefully out of grad school not draining on you. And they’ve got real jobs and they’re ready to go. Number five is you have an income plan that makes sense and is multi sourced. One of the ways that we that we do things is will stagger annuities, stagger fixed index annuities where we can turn on income at different times, let’s say at like 65, 68, 70, 75 years old. As we need income, we’ll turn on annuities and then we’re good to go. But also this stuff is multi sourced, right? I mean, we’ve also got sources like taking out 4% withdrawal rates from our IRA or pensions or obviously Social Security income and that Social Security income, when we’re going to turn on Social Security income is a really big decision.

Ford Stokes:
And we can give you that Social Security maximization report at no cost to you. All you’ve got to do is pick up the phone and give us a call at 770 685 1777. Or you can schedule your free consultation at ActiveWealth.com. We would love to meet with you and discuss your future. We could help you make retirement feel like the next starting line and not a finish line in your life. Many retirees continue to work and volunteer some time on a weekly basis in order to stay active and involved. We are here to help you and we hope you take advantage of that assistance. I mean, you’re going to get a $500 value. I don’t know why you wouldn’t take advantage of that to get an understanding of with a portfolio analysis, you understand the risk you’re taking and the fees you’re paying and the correlation of your assets, especially after what’s likely been a bad poor performance year in your accounts. And also if you haven’t seen significant rebounds in October, November, I would encourage you to definitely pick up the phone and give us a call. If you feel like you’re just it’s underperformed, we’re happy to help you. Also, if you’ve got a41k and you just want to work on the allocations of your 401K, we’re happy to help you there. So just reach out to us as well. So now Sam, let’s go ahead and walk through the cost cutter for this week.

Producer:
Here’s the cost cutter of the week.

Ford Stokes:
So our cost cutter is saving you money and headaches this holiday season. And number one is we want to create a holiday budget. Number two is shop early to save on shipping. And number three is stay home for the holidays. Try not to travel. Number four is if you must travel, choose destination where they have off season deals going to the beach. Not a bad idea. Number five is give the gift of your time. If you’re going to help somebody out with painting furniture or moving things or whatever, give them the gift of your time, not your money. Number six is make it a potluck dinner for family and so that you’re not the one eating all the costs for the holiday dinner. Number seven is do it yourself. You can try to actually carve out some great wood carving stuff. There’s a leather working, pottery, making, baking, all kinds of different other forms of art. And you can learn a lot of that stuff at right there on YouTube. So I would encourage you to use your talents to create heartfelt and cost effective gifts.

Producer:
Come on down as we test your financial knowledge in right or wrong.

Producer:
All right. First item on this week’s right or wrong, when it comes to your IRA 401 K or other retirement plan, the best strategy is to set it, Fordt it, and just keep saving.

Ford Stokes:
Well, unfortunately, too many people think that’s the case. They think buy and hold is the only way to go. I would just say that’s wrong. You really should be evaluating your 41k plan on a quarterly basis, or at least every six months or at least every year. But you ought to analyze your 41k based on the expense ratio that you’re facing. And if you don’t know what an expense ratio expense ratio is or you don’t know what your expense ratio is within your 401K, I would encourage you to bring your statements in to us. We’ll happy to help you understand what your expense ratio is. Most foreign K plans have an expense ratio of 0.10.7 to over one point and from a percentage that comes out every year and it doesn’t show up in your statement, but it is in your prospectus and it also clearly reduces the value of your portfolio. Just have a really good idea and try to actively manage even your 41k, but specifically actively manage your IRA. And we like to rebalance every single month. We have about 50% of our portfolios are strategic and 50% are tactical. Tactical asset allocation just means that you’re rebalancing at least on a monthly basis. You’re not writing the market all the way down to the bottom of the valley, and you can have a much better situation if you’re rebalancing every single month. It’s kind of one of those things where you look just like shaving. You look kind of bad when you don’t do it consistently. I would encourage folks to go ahead and rebalance and reallocate and evaluate how they’re doing and what assets they hold with their 41k or their IRA.

Producer:
All right. Next item on right or wrong, the types of fixed income products or bonds you hold in your portfolio don’t matter as long as you have a portion dedicated to fixed income.

Ford Stokes:
Yeah, that’s just absolutely false. And there are so many people that think it’s just not that big a deal. The one thing I’ll tell you is 99% of the people that come in to speak with us, they have no idea the duration of their bonds. They have no idea the risk level or yield level of their bonds. And they don’t even know, you know, the quality of their bonds. Like, are they what’s the ratings of the bonds that they hold? What’s the ratings of the companies that they’ve got where they’ve got corporate bonds from? They have no idea. And I would encourage you to inspectors you expect about your fixed income. And also I would encourage you to transition away from bonds, since bonds have lost over 14% this year because of all the interest rate hikes from the Fed. I mean, you’ve got interest rate risk and reinvestment risk with bonds. I would encourage you to use fixed-indexed annuities to generate your fixed income.

Producer:
All right. And last item on this week’s right or wrong, you can delete fees on the bonds you currently hold by replacing them with an investment that offers market-like gains without market risk.

Ford Stokes:
Believe it or not. That’s right. It sounds too good to be true, but it’s not. You can really eliminate and avoid reinvestment risk and interest rate risk just by replacing the bonds you currently hold with fixed income with fixed indexed annuities. That’s something we can help you with. We specialize in that. You can feel free to give us a call at 770 685 1777 again 770 685 1777. Or you can visit ActiveWealth.com to click and schedule your free consultation with me. I’m happy to help you but yeah that’s that’s absolutely right Sam you can replace your bonds with fixed indexed annuities and also delete the advisory fees you’re paying because there are no advisory fees with the fixed indexed annuity. It’s the final.

Producer:
Countdown. So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes:
So on today’s show, we discussed the seven questions we can help you answer. Retirement. We also talked about the signs that you may be ready to retire. That included a family home that’s paid off, no credit card debt. You have fully funded emergency fund or a six month fund. You no longer are supporting children or other family members. You have an income plan that makes sense and is multi sourced. And you’re also you might be losing interest in your job as well. So that’s the seven. That’s the signs you may be ready to retire. We gave you the seven questions and also we gave you the holiday cost cutter, which is about creating a holiday budget shop early to save on shipping. Stay home over the holidays, you must travel, choose destinations with off season deals, give the gift of your time. Also, make it a potluck dinner for the holiday dinner. And also you can do it yourself by making some really great art on your own with wood carving leather works, things like that. And we also played right or wrong here in this segment. Everything we’re trying to do is we’re trying to help you protect and grow your wealth and better educate you about what to do during retirement, especially off the heels of a year where we saw values erode and market downturn with the Nasdaq and and the US markets with the S&P 500, the Wilshire 5000, and also the Russell 2000. We’ve seen major indexes all erode in value a little bit this year. And we want to help better educate you and show you that there’s different ways you can invest and also protect and grow your wealth. Thanks so much for listening to the Active Wealth Show. When we come back next week, we’re going to start talking about smart retirement plan going through all of that. And we’re so glad you’ve been with us. And happy holidays, everybody. Have a great week.

Producer:
Thanks for listening to the Active Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard-earned assets, To schedule your free consultation, call your Chief Financial Advisor Ford Stokes at 770 685 1777 or visit ActiveWealth.com.

Producer:
Investment Advisory Services offered through Brookstone Capital Management LLC BCM a Registered Investment Advisor, BCM and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
Fixed annuities, including multi-year guaranteed rate annuities, are not designed for short-term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
Ford Stokes and Active Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

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