9.22.22: Audio automatically transcribed by Sonix

9.22.22: 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 Act of Wealth Show with your host, Ford Stokes. Ford is a fiduciary and licensed financial advisor who places your needs first. You’ll help you protect and grow your wealth. The act of 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.

Producer:
And welcome to the Act of Wealth Show Activators I’m Ford Stokes, your chief financial advisor. I’ve got Sam Davis, our executive producer, here with us. And we’re so glad you’re with us today. We’re going to kind of wrap up our seven part series with a bonus coming in a couple of weeks. Our seven part series is on how to build a smart retirement plan because we feel like we’ve got to do everything we can to educate you listeners. We care about you. We want to make sure that you build a successful retirement. Also, if you’ve been listening to our show for a really long time, but you haven’t called us or you haven’t booked an appointment with me, I would encourage you to consider doing that. All you got to do is visit active wealth dot com, that’s active wealth dot com. And there’s a schedule a consultation button, the upper right corner. Also, you can just pick up the phone and give us a call. Deborah and our team are standing by at 7706851777. Again, 7706851777 is the phone number to call directly into our king and queen building office on the perimeter. We’re right there in in Dunwoody, Sandy Springs, overlooking Perimeter Mall on the 29th floor of the King Queen Building. We’re in Building six and we look forward to talk to you. So on this week’s show, we’re going to wrap up really the last kind of four topics of a smart retirement plan. And let me just give those to you now. Number one is smart health. Number two is smart care. Number three is smart reinvest. And number four is smart review and smart health.

Producer:
Obviously, you need to do a good job at taking care of your health. You need to walk 100% of the people that lived to be over 100 years old, they walked considerably every day and they walked into their nineties. And so you need to walk. You need to move your body. And there’s a lot of other things with smart health out there. Be careful about how much you’re doing drugs, I mean, taking prescription drugs, things like that. Make sure that you’re inspecting you expect from your doctor, all those things. And I’m not a doctor. I’m not trying to play one on TV here or on the radio. Next is smart care. You want to make sure that you’ve got a really good care plan you’ve got to have. Medicare supplement or Medicare Advantage. You also need to have some sort of supplement to supplement so your co-pays and your deductibles are covered and taken care of. And believe it or not, we have a way for you to pay for those in perpetuity. Write one check and you’ve got all of your co-pays and your deductibles taken care of with a strong sound plan that can generate enough income each year to pay for your Medicare supplement. And and or, you know, obviously, your Medicare Advantage plans are usually free, but that’s more of an HMO type of situation. But a medicare or Medigap supplement plan would be more like a PPO situation where you’ve got a broader network and it’s easier to make sure your drugs are on formulary with your local pharmacy, etc.. But we’ve got great strategies on smart health and smart care.

Producer:
Kind of broke the two words up. And Bonnie Dobbs with Medicare and other red tape. She’s going to be talking about that in just a few weeks. And so we’re happy about that. The Smart Reinvest piece is to make sure that if you’ve got an IRA and you’re distributing money out of your IRA, do me a favor. Make sure you’re reinvesting it. And don’t just put it in your checking account and spend it. Because if you start taking out more than four or 5% as you get older, like although it’s like 8.18% is required for required minimum distributions, when you get, you know, you turn 90 years old. I would just encourage you to do everything you can to reinvest that money so you don’t run out of money. Remember the 4% rule. We try not to spend more than 4% of our principal each year. We don’t want to draw down more than 4% of our assets each year. Now, granted, we also have income from Social Security and things like that that give us a great way to live. I would just say, hey, be careful about overspending. But specifically, don’t spend what’s left over from your required minimum distributions after you’ve paid your ordinary income tax rate, let’s say at 14 15% plus your 5.75% Georgia tax. So let’s say you’re taking out 20% or 15 to 20%. You’ve got 80 something percent left over. Don’t go spend that money needlessly. Now, obviously, you’ve got Social Security. You’ve got 4% withdrawal rates from your assets as well. But when you take out requirement and distributions or maybe you’ve got a pension, be careful about overspending that money.

Producer:
You want to reinvest that money. So let’s let’s do everything we can there and then review. Smart review is just. Let’s do everything we can to review it each year. Understand where you are. Are you on pace with the original plan? Do you have as many assets in the original plan? What’s the growth or negative growth from the markets? Obviously, this year would be a negative growth situation. You may want to really evaluate what’s going on with the bonds in your portfolio. Again, this past week, Jerome Powell went up another 75 basis points and he said he’s ready to continue to do that. A lot of economists and a lot of market experts believe that they are going to do everything they can to stop in January because there’s fatigue. The market is fatigued from him doing this. Everyone’s fatigued from the increased rates. Obviously, mortgage rates are. Going sky high and it’s also slowing down the real estate economy as well. And I would say that Jerome Powell is not too popular. And inflation continues to to ramp because of our supply chain issues. And also, yes, oil and gas are costs are going down, but. We’re still seeing, you know, I mean, I still I’m still paying over $3.40 a gallon for premium gasoline at the pump. You know, we’re seeing grocery store costs are going through the roof. Still, chicken is a runaway freight train of almost over 20% this year, which is crazy. Sam, your thoughts on what you’re seeing with inflation and also with what our US Fed is doing?

Producer:
Yeah, Ford, I think I think I hear some people saying that they feel like it’s getting better. I think what’s happening is that a lot of people are just getting used to the, you know, the the increased prices both at the pump and at the grocery store. You know, we’re getting used to shelves being empty and we’re not able to always get everything that we need on our shopping list. You know, that’s to me, that’s not the way I want to see the American economy running. And I think we need to make steps towards getting things back. You know, I think we’re starting to see the long term effects of what happens when you bring an economy to a grinding halt like we did in 2020 and really for part of 2021 as well. So still tough out there feeling for for everybody, the hard working Americans know because we’re definitely feeling it at the pump and at the grocery store.

Producer:
There’s no question about it. It’s just something that I’ve just got a significant amount of concern about. And it just we continue, you know, he just continues to do this stuff and it drives me crazy that he just keeps going up and up and up and I just wish he wouldn’t do that. I think they’ve just got the wrong call there. So for the rest of the show, we’re going to talk about five important things to own during retirement. We’re also going to you know, in this segment, I think we’ve still got enough time to kind of talk about what all of our listeners get. Here’s what we give to all of our listeners when they call into our our office or they visit active. Number one is we provide comprehensive consultations at no cost to our listeners. There’s no obligation. You only work with us if it’s best for you. We want to make sure it’s the right decision for you. We also provide a free financial plan to your 95th birthday. We provide free portfolio analysis. We provide a retirement income gap analysis. We provide a retirement plan to your 95th birthday with your current portfolio that has nothing to do with us. We also provide a free financial plan your 95th birthday that has everything to do with us and our recommended portfolios. And then and then we also will provide a free financial plan. Your 95th birthday.

Producer:
With a Roth ladder conversion plan. And then we’ll also provide a Social Security maximization report. So you’ve got six things there. Let me go over those again. Number one is we’re going to give you a portfolio analysis. Lots of your current stuff so you understand the risks you’re taking, the fees you’re paying, and the correlation of your assets. When one goes down, how much do the others go down with it? Number two, we’re going to give you a retirement income gap analysis. So do you have a negative? Gap or do you have a surplus when you’re starting your retirement or you’re in the first five years of retirement? Number three, we’re going to give you a Social Security maximization report. We’re going to take your top 35 earning years as according to the Social Security Administration, according to saga of the report and statement they give you and you haven’t done that, I would encourage you to visit sec.gov to get an understanding of how much you’re going to make during Social Security. It’s a really good thing to understand. Number four, we’re going to give you a. A free financial plan to your 95th birthday. With your current portfolio that has nothing to do with us, with your current plan, your current allocation, with your current assets. You’re going to understand, again, the fees you’re you’re you’re paying, the risk you’re taking as measured by standard deviation, etc., the number.

Producer:
Number five is we’re going to give you a financial plan to your 95th birthday with our recommended portfolio, something we call results and advanced planning, which we think is really important to you to understand your retirement in advance. And then. Number six is we’re going to give you a full financial plan with our recommended portfolios. That also includes a Roth ladder conversion plan. Because guess what, folks? Right now, taxes are on sale. And if you want a free copy of my book, taxes are on sale. All you got to do is visit. Taxes are on sale. That’s taxes are on sale dot com. And you can get an understanding of how you can minimize the taxes you’re going to pay during your retirement years. There’s only two types of tax free investors out there. Number one is Roth IRAs. And number two is life insurance. And we can help you with either one of those. Feel free to reach out to us at active dot com or give us a call at 7706851777. We come back from the break. We’re going to talk about the five important things to own during retirement. And we’re so glad you’re with us here on the Active Wealth Show. You’re listening to the Active Wealth Show right here on AM 920 The Answer. Be right back to understand the five important things you should own during retirement.

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

Producer:
And welcome back to the Active All Show Activators. I’m George Stokes, your chief financial advisor. I’ve got Sam Davis, our executive producer, here with me. And Sam, we’re talking about the five important things to own during retirement. And we’re going to go one at a time here. So number one is a reliable vehicle. That’s the number one important thing to own during retirement. A reliable vehicle. You don’t want to rely on others to get rides. You want to get to and from medical appointments, church, seeing family, even traveling around to go see family and friends. And also most retirees don’t have access to adequate public transportation. They’re usually not living in town and and doing, you know, get jumping on the MARTA train or jumping on a martyr bus. And then also go where you want. When you want. Road trips. Just enjoy those road trips and then safety. You want to. You want to be able to get yourself or someone else somewhere in emergency situations, you want a reliable vehicle now. I didn’t say reliable vehicles. A lot of retirees go to one car and they’re able to significantly reduce their costs by doing that. Now, if the husband is got, you know, plays a lot of golf or whatever he might, you know, or tennis, you might want to get two vehicles. But. The other thing I want to share with the reliable vehicle. I’ve got a couple that lives in midtown and. Sam. They told me that their Tesla cost them about 40 bucks a month. To charge up. Drive around town. Which I thought was. Remarkable because I just filled up my Roush Ford F-150 truck and it costs me about 120 bucks to fill up. And that was one fill up. That’ll probably last me a week. And so that times four is 480. They’re spending less than a 10th of what I’m spending. Just your thoughts on getting a reliable vehicle, why that’s important for retirement in your mind. But also it seems fairly basic. But there’s also ways to save and to have the total cost of ownership be lower as well.

Producer:
Yeah, well, I think it’s fantastic. You know, for those people that live in kind of a pedestrian friendly neighborhood to run a couple errands, you know, on foot or on the bike. But, you know, that’s not always the most predictable and it’s not always the safest way to go, especially as as people age and get deeper into retirement. So having a reliable vehicle that’s going to have predictable maintenance costs and yeah, there’s a lot of awesome electric vehicles that are hitting the marketplace now, but you don’t have to go 100%. Ev You can get a really nice hybrid or even a very fuel efficient car that could get you 40 miles a gallon or better. And you can keep those gas costs down for sure. But yeah, you’ll want a reliable vehicle, you know, occasionally if you if you take a bus, that’s awesome. But as you get older, I think you’ll really enjoy having that reliable vehicle. And for folks that live here in the Atlanta area, you’ll need that to get around town. And it’s always great to be able to take a quick weekend trip over to the beach or up to the mountains.

Producer:
No doubt. Absolutely so. Reliable vehicle is the number one important thing to own during retirement. Number two is a home. I get this question a lot, Sam. Hey, Fortune. We pay our home off. We’ve got a 2.99% mortgage rate, even though now the mortgage rates are going well above 5%. And on the way to six right now. Because of what? Jay Powell is doing at the Fed, but with a home, you’ve got freedom. You likely don’t want to move in with your children, right? You don’t want to become a burden on your kids. A home is also a valuable asset. It will naturally increase in value. Plus you can write off any mortgage stuff, but you’d be better off to have your house paid off. So it doesn’t that mortgage payment doesn’t eat up one of the two Social Security checks that come into the household if there’s a married couple, also a safe, clean, comfortable place to lay your head, there’s just no place like home. And just your thoughts on that.

Producer:
Sam Yeah, and I think it’s absolutely essential, just like you do, to make sure you get that that mortgage paid off. You know, fortunately for for me and my wife, you know, we were able to get a really good interest rate during 2020. And now it’s one of our main priorities to to own our home free and clear as soon as possible. Because you’re right, you know, we spend so much money each month on just being able to pay our mortgage and stay in our home. And so if you can free up that percentage of your monthly income, it really changes what you’re able to do during retirement. And you can travel more, go see the family, go see kids more, you know, take those vacations all around the world. So definitely get that home paid off and make sure it’s something that’s safe, comfortable and one that you love.

Producer:
Yeah. And one of those strategies to pay off a home is downsizing it. Let’s say you’ve got three or 400,000 of equity in your home. Well, and you you sell for 600,000. You’ve got a 250,000 mortgage maybe, and you sold it for 650. Go ahead and downsize and try to downsize into a 250,000 home and and take a couple hundred grand extra or 150,000 that’s left over and invest that money and get it working for you. I watched the thing that Jack talked about, the difference between being rich and being wealthy. A lot of people are rich and they and they use and they spend 75 to 95% or even more of what they earn after tax. And they’re rich. And they were really enjoying a rich lifestyle and a luxurious lifestyle, but they’re not necessarily putting money away. And what the wealthy do is they will they will immediately take 50% of their aftertax income and invest it. But the absolute, absolute wealthy people, they only live on 25% of what they make. And they reinvest the rest. And if you can do that, even for a year or two, you’ll set yourself up for true success. I mean, you literally just have to suffer for a year and then all of a sudden you’ve got a nest egg, this building. And so that’s just something definitely to consider. But I would also tell you and Sam, you and I have talked about this before.

Producer:
The happiest people that come into my office are folks that own their own home. And it’s just kind of a big deal. I just like people that that are happy and it’s also something they can count on and they don’t have when there’s market volatility, like what we’ve seen in 2022 here and increasing mortgage rates and all this kind of stuff. It’s much better to just kind of avoid debt. And so that’s number two of the five most important things to own during retirement is at home. And I would encourage I’m a little bit different than most financial advisors. I try to make the recommendation like, look, pay your house off. Let’s stay with what Dave Ramsey teaches. Let’s pay the house off. The number three is emergency fund. You want to have an emergency fund that’s going to cover what I recommend is six months worth of expenses. And during retirement, you don’t want to have just three months. You want to have six months in case things come up. Let’s say kids or grandkids need help financially, but when unexpected problems arise, when you want to have enough liquidity and cash to cover emergency expenses, having six months in the bank is going to help you do that. And it should be enough to cover six months worth of expenses. But you ought to also ought to start figuring out what are your monthly expenses, what are your real monthly expenses? You ought to add up all the expenses you have over two months, then divide by two, and that’ll probably give you a good idea of what your average monthly expenses are and try to avoid using like November, December, when you’ve got Christmas numbers in there, which skew the number a little bit we like to use like August, September or September.

Producer:
October is really good months to double up. You want to have one month with 31 days and one month with 30 days. And that should give you a good idea on how to get to a full understanding of how much you’re spending. Also, one other trick here, too, on the emergency fund. If you feel like you’ve got a lot of subscriptions that are leaking money out of your accounts. Either go get tree bill, go to tree bill.com and work with them, or the easier way to do it is just to change your cheque card number and your credit card numbers. And that will all those repeat charges will stop because they won’t be able to charge into the old account number. And that way you get a handle on what you want to renew, what you don’t want to renew. It’s thoughts from you, Sam, on how to get control over subscriptions, but also that need for that emergency fund and how, you know, it just gives you peace of mind for you and Bailey out there. Just your thoughts?

Producer:
Yeah, absolutely. The emergency fund is is a super important component. I think Dave Ramsey, I think he even has that as his number one step towards reaching financial freedom. So everybody has that different number in their mind, what they’re comfortable with to have in their account at all times for an emergency fund. And I think it’s just important to keep that number there. Don’t have too much cash on hand, you know, you don’t want to have a liability just sitting there in the bank, but have that emergency fund number that keeps you comfortable and know before you receive each paycheck or before you receive an income source what you’re going to do with each dollar. Tell every dollar where to go, and then you’ll be living like the wealthy instead of living like the people that just appear to be wealthy.

Producer:
Yep, no doubt about it. And then number. Number four on here. So so far we’ve had we’ve talked about the first three most important things to own retirement. We’ve got five total here. So one is a reliable vehicle, two is a home, three is an emergency fund that’s going to cover up up to six months worth of expenses at least. And then number four is insurance. You want to be covered from health care costs that could drain your assets long term care insurance. Seven out of ten people are going to need long term care insurance at some point in their lifetimes. Males we lived about 18 months in long term care. Once we need long term care. Females, you ladies are living 36 months or longer in long term care and you’ve got upwards of 7 to 10000 a month that it’s costing a live in long term care. So you need to have a plan for that. And also annuities, you want to have insurance for living too long. You want to have some sort of having an annuity that can pay you a lifetime. Income is a really good idea and it’s also something that’s going to cover your cost. Plus, Social Security. A lot of people don’t realize you can literally generate your own personal pension. We’ll talk more about that and the final of the five important things to own during retirement. The final item, we’ll talk about that in the next segment. You’re listening active well show right here on AM 920 answer and come right back to understand that last and final fifth important thing to own during retirement. Thanks so much. Be right back.

Producer:
We have Ford Stokes, author of two important personal finance books. Annuity 360 and taxes are on sale here on AM 920. The answer as the host of the active wealth show Saturdays at 12 noon and Sundays at 11 a.m..

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

Producer:
And welcome back activators the active well Sheryl I’m fortunate your chief financial advisor and I’m joined by Sam Davis, our executive producer. So we’re talking about the five important things to own during retirement right now. And number one is a reliable vehicle. You don’t want to rely on others to get rides, right? You also want to have a vehicle, be able to go where you want, when you want, and you want to have a vehicle that can help you get somewhere in emergency situations as well. Number two is a home. You want to have the freedom. You likely don’t want to move in with your children. You want to become burdens on your kids. And a home is a valuable asset and it’s safe and clean and comfortable place to kind of lay your head. And and again, what Sam and I talked about is really there’s no place like home. Number three is you want to have an emergency fund that’s going to cover six months of expenses. And you need to understand what the six months of expenses are going to equal. So if you’ve got if you think it’s 5000 a month times six, it’s 30 grand. You need to have in the bank to be able to cover it. But it might be 36,000 because you might be off by 1000 a month and spend. And then number four is insurance. We want to have insurance to cover health care costs.

Producer:
So it’s good to have Medicare supplement or Medicare Advantage. So that way we can cover the 20% that we’re going to spend in co-pays and deductibles in addition to Medicare for Medicare Part A and Part B and Part D. And I would encourage you to get a medicare supplement plan so you can kind of cap your cost and it can operate like a like a PPO operates. So you’ve got expanded network coverage, things like that. And also hopefully you’ll have less hassle of your drugs being on formulary at your local pharmacy. Also, long term care insurance, really important to seven out of ten folks. They they’re going to need long term care insurance. And you can self-fund that if you want. But we like to work with folks. Either way, it’s their choice. But just realize that seven out of ten Americans are going to need some form of long term care insurance. And again, we reminded everybody that on average, the men live about 18 months in long term care and on average, the females live about 36 months or longer in long term care. So you want to have a plan for that, especially if it’s running about 10,000 a month right now. The next is annuities. Annuities are really life insurance for you living too long, and you want to make sure that you can never run out of money. And you also want to help that will help build for that retirement income plan and make sure you have a positive retirement income surplus, not a negative income gap.

Producer:
And it also can help you stay within that 4% rule. We’re going to play the top three rules that are really important to follow during retirement as well in segment four here. But here’s the last one. So we’ve already gone through the first four saying we got reliable vehicle, a home emergency fund and insurance are the top four. And then number five is your schedule. You really want to own your schedule. Retirement is about enjoying your life that you work so hard to build. You don’t want to go back to work. You don’t want to say, hey, welcome to Wal Mart. You don’t want to spend time watching the stock market and managing your own assets. You want to own your life. You want to own what you’re trying to do. Also, we spend a lot of time and my family, you want to spend the time with your family. You want to be able to travel, spend time with your with your loved one, spend that valuable time with your loved ones and see this great country and maybe even travel the world. But you want to own your schedule. Sam, your thoughts on owning your schedule. I know your schedule is important for you and your wife, Bailey, in the time you guys spend together. Just your thoughts on that?

Producer:
Yeah, I think this really gets to what everyone is trying to accomplish with their retirement forward. You know, you’ve built up all these assets. You’ve built up this nest egg that’s going to hopefully fuel you through your 30 plus year retirement. And from there, it’s it’s up to you once you choose to retire, you know, it’s it’s like everyday Saturday and you get to choose how to spend that time. So making sure that you continue to own your schedule and you get to really choose what you want to do with each day, day in and day out. I think that’s one of the most important things people should look to own.

Producer:
No question. I couldn’t agree more. So let’s recap real quick on the five important things to own. Number one is a reliable vehicle. You want to be able to get where you want to go. When you want to go. You also need to have a reliable vehicle for safety so you can get somewhere in emergency situations. And that way you can go see friends and family when you want to. Number two is a home. You want to have your home paid off if you can. The happiest people that sit in front of me that are retirees own their own home and they don’t eat up one of their mortgage payments. They don’t eat up one of their Social Security checks with a mortgage payment. Number two. Number three is emergency fund. When unexpected problems arise. You want to have enough money to cover six months worth of expenses. That’s a big, important part of the Dave Ramsey talks about about steps to financial freedom. Number four is insurance. You want to be covered from health care costs. You want to have a long term care insurance or at least be ready to and prepare to self-fund that. And then also annuities, having some sort of annuity to give you an income that you can never outlive. And so you can have income for life. So your your retirement income plan and budget is running at a surplus and not a negative income gap. And number five is your schedule. You want to have complete ownership of your schedule so that you can spend the time with loved ones and friends and family that you want to do. So, Sam, let’s go ahead and play right or wrong.

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

Producer:
All right, Ford, first one on right or wrong this week, the theme overall is going to be Medicare and having that smart health plan. So here’s the first statement. Every day until 2030, 10,000 baby boomers will turn 65 and seven out of ten will require long term care at some point.

Producer:
Yeah, as we kind of talked about in this segment in the segment earlier. That is right. That’s why it’s essential to have a smart health plan in place for your retirement. Health care costs are one of the biggest expenses for retirees, period. So you want to really have a really good idea about how to cap your cost and minimize your health care costs. Fidelity came out with their retirement survey earlier this year, I think it was right around April, and they said that it’s gone up 25 grand. So health care costs for a married couple in retirement starting at age 65 through their retirement years, it’s going to cost them $325,000 in total health care costs during their 30 plus year retirement. That is scary. And a large portion of that retirement plan and also that income that people are going to need. So you need to do a great job at planning with a medicare Advantage plan or a medigap Medicare supplement insurance plan to really plan for all of your health care costs, but also try to cap those.

Producer:
All right. Next item, you can have both a medicare supplement plan and a medicare Advantage plan at the same time.

Producer:
Unfortunately, as Donald Trump would say, that is wrong. So you cannot have both meds up and met advantage plans at the same time. You must choose which plan you want to go with our recommendation. Let’s say you’ve got like $1,000,000 plus for retirement. Our recommendation would be to do a med sup insurance plan. So therefore, you can kind of cap your costs, but also get kind of a PPO type environment and expand the network of doctors and pharmaceutical drugs and prescription prescription drugs that you might need and service providers. So that would be our recommendation. But that is wrong. You cannot have both a medicare supplement and a medicare Advantage plan at the same time.

Producer:
All right. Third and final statement for this week’s Right or wrong, you can use an annuity to fund your Medicare expenses throughout your entire lifetime.

Producer:
That is right. We believe this is a smart idea. You can ensure that you and your spouse will be able to fund expensive health care costs during retirement. You can use an annuity that will cover all of your costs. So let’s say let’s say between you and your wife, your Medicare supplement plan is going to cost you guys and also your Medicare Part D plan. It’s going to cost you guys all to end right around $500. You can buy an annuity that’s going to generate $500 a month or $6,000 a year after tax. You want to obviously plan for the tax side of it, too. And it will absolutely fund your Medicare supplement plan where you don’t have a worry or a problem. We think it’s a really good idea. It’s kind of a new fad and a new trend now. And we we are working with clients to do exactly that. So I would encourage you, if you want to just give us a call at 7706851777. Again, 7706851777. If you want to plan for your Medicare supplement all the way out and be ready to fund all of it, we think that’s a really good idea. So we got like a minute left or less than a minute left in the segment. What we’re going to talk about after the break, we’re going to talk about smart rule following as part of that smart financial plan. We’re going to kind of dust off those chapters from my book Annuity 360. And if you want a copy of my book, an 8360, all you’ve got to do is visit annuity 360 dot net. That’s annuity 360 net. And we’ll send you a free hard copy of the book and give you kind of an E copy as well if you want that. And it’s absolutely, absolutely for free for our activators for our listeners to the Active Wealth Show. We really appreciate you. And we come right back. We’re going to talk about the top three rules of smart rule following for a successful retirement. That’s the active wealth show right here on AM nine. Join the answer and go USA for the Presidents Cup. All the best.

Hey, little girl. Go. And you?

Producer:
The Federal Reserve keeps raising interest rates to combat inflation, but how could it affect your retirement? I’m Matt McClure with the Retirement Radio Network. Powered by Emera life supply chain issues, the pandemic, energy prices and Russia’s invasion of Ukraine have all been contributing factors to runaway inflation to fight rising prices. The Federal Reserve has been using one of its most powerful tools, raising interest rates.

Producer:
So they started increasing the interest rates about.

Producer:
I guess, two meetings ago. So about three months ago when.

Producer:
When they had the.

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First increase of three quarters of a point percentage points to 75 basis points, which at that point was the largest increase in about 30 years.

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Tibor Best is an economics professor at Georgia Tech. He says it’s surprising that the August reading for inflation did not see a decrease, especially given gas prices have been plummeting from recent astronomical highs.

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Inflation is not going to stop all of a sudden, but what one is hoping for is that these increases start to decrease so that we start getting to levels that are a bit more manageable and more pleasing to the eye.

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If nothing else, it was very surprising.

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That’s why, besides says many analysts now expect the Fed to be even more aggressive with interest rate hikes in coming months. So what does this mean for you? Potentially higher payments on mortgages, other loans and credit cards?

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Securing any sort of.

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Balance on.

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Any loan that doesn’t have a fixed interest rate? Is it going to become more expensive?

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Bassett ish says it’s important for consumers to cut back where they can to lessen the blow of inflation and interest rate hikes. And if you’re in the market for a new home, it could be good to delay the purchase until rates or home prices come back down. So how do the Fed’s actions on interest rates affect your wallet? That’s a key question to consider as higher costs eat away at your hard earned money with a retirement radio network powered by a married life.

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I’m Matt McClure and welcome back Activators, the Active Wealth Show. I’m Ford’s chief financial advisor. I’m joined by Sam Davis, our executive producer here of Segment four. We’re going to play three chapters from my book Annuity 360. And if you want my book Annuity 360, all you’ve got to do is is it annuity 360 net, that’s annuity 360 net. These three chapters are really important. The first one you’re going to hear is about the rule of 100. The next one you’re going to hear is the 4% rule. And the last one is going to be the rule of 72. All of them are really important rules, but the rule 100 in the 4% rule are extremely important for you to hear, especially during this time of market volatility, increasing interest rates, increasing mortgage rates, kind of runaway inflation. That’s kind of been slowed a little bit, but the monetary policy hasn’t been enough. It’s supply chain has been part of it. Cost of gas and oil and gas been part of it. Energy costs are part of it and labor costs are part of it. Let’s go ahead and play those three chapters back to back to back so you guys can really understand these important three financial rules to build a successful retirement that is based with a bedrock foundation. Chapter six The Rule of 100 Big idea. You want to risk less as you get older because you have less time to make up any big losses as you get closer to your golden years, many financial professionals advise gradually reducing your risk.

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Retirees and pre-retirees don’t have the luxury of waiting for the market to bounce back after a dip. The dilemma is figuring out how safe you should be in certain stages of your life. For years, a commonly cited rule of thumb has helped simplify asset allocation. This rule states that individuals should hold a percentage of their stocks that is equal to 100 minus your age. For example, a six year old would have 40% of their holdings in stocks and 60% in fixed income products like bonds or fixed indexed annuities. Why You Should Follow the Rule of 100. Take our current example of a 60 year old at age 40, your risk capacity is higher. You have more time to rebuild your wealth should you experience a dip in the market. However, at age 60, you can’t afford to risk as much of your portfolio in the market because the time horizon to rebuild your wealth is much shorter. Rule of 120. Many financial advisors now advocate the rule of 120 so they can get a significant rate of return for their clients and maintain management of the portfolio. I disagree with today’s market volatility. A retiree does not want to go back to work in a job making less than what they made before. They must consider following the rule of 100 or at least a 5050 smart financial plan that is built equally with smart risk and smart, safe investments.

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Chapter seven The 4% rule. Big Idea Withdrawing 4% or less annually from your portfolio will ensure that you will not drawdown your account too quickly and that your income lasts for your entire retirement. What is it? The 4% rule is a rule of thumb used by investors to determine how much retirees should withdraw from their retirement account each year. This rule should ideally help provide a steady income stream for the retiree while also maintaining. An account balance that keeps their income flowing throughout retirement by withdrawing only 4% from your account. Many financial professionals believe this will help your wealth last through your retirement and that you will be able to live comfortably with this withdrawal rate. This rule helps financial planners and retirees set the withdrawal rate for their portfolios. Life expectancy also plays an important role in this process. By determining if the selected rate will be sustainable, retirees that live longer will need portfolios to last longer, and medical costs and other expenses could increase as retirees age. Where did this rule come from? The 4% rule was created using historical data on stock and bond returns over a 50 year period from 1926 to 1976. Before the early 1990s, experts generally considered 5% to be the safe amount for retirees to withdraw from their portfolio each year.

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In 1994, William Bengtsson, a financial advisor, conducted a study of historical returns. He focused heavily on the severe market downturns in the 1930s and the 1970s. Bingen concluded that even during those markets there was no historical basis that a withdrawal rate based on the 4% rule would exhaust a retirement portfolio in less than 33 years. What about inflation? Some retirees will choose to stick to the 4% rule all the time and never adjust for inflation. However, the rule allows retirees to increase the withdrawal rate to keep up with inflation. There are two options to do this. The first option provides steady and predictable increase, while the second option will more effectively match your income to cost of living changes. Option one Setting a flat annual increase of 2%, which is the Federal Reserve’s target inflation rate. Option two Adjusting withdrawals based on actual inflation rates. The first option provides steady and predictable increase, while the second option will more effectively match your income to cost of living changes. Two scenarios where you should avoid using the 4% rule. Scenario one A severe or protracted market downturn can erode the value of a high risk investment vehicle much faster than it can in a typical retirement portfolio. Be cognizant of the health of the market and talk with a professional if you have any questions or want to make changes to your portfolio. Scenario two The 4% rule does not work unless you commit to it year in and year out.

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Violating the rule for one year to splurge on major purchases can have severe consequences down the road. It will reduce the principal, which directly impacts the compound interest that the retiree depends on for sustainability. Chapter eight Rule of 72 Big Idea. Knowing how long it will take your investments to double is a good planning tool. This will help you track your investments and calculate future earnings. What is it? The rule is a simple way for you to calculate how long your investments will take to double with a fixed annual rate of interest. If you divide 72 by the annual rate of return, you can get an estimate of how many years it will take for the initial investment to duplicate. The rule of 72 is relatively accurate when it comes to low rates of return, but becomes less accurate as rates of return increase. Example An investment of $1 annual fixed interest rate equals 10%. 72 divided by ten equals 7.2. An investment of $10 with an annual fixed interest rate of 10% would approximately take 7.2 years to grow to $20. Rule of 72 Adjustment. The most realistic simulation for the rule of 72 is an 8% interest rate. However, you can make a small adjustment to the rule in order to make the calculation even more accurate for every three points than an interest rate strays from 8%, you either add or subtract one from 72.

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The adjustment is not necessary, but some people prefer to make this adjustment because the time frame of this version of the rule is more accurate. Example one If your rate is 5%, you would just adjust the rule to be the rule of 71. This is because 5% is three points lower than 8%, which means you subtract one from 72 example. Two If your rate is 11%, you would adjust the rule to be the rule of 73. This is because 11% is three points higher than 8%, which means you would add 1 to 72. Other ways to use the rule of 72 things. With compounded rates, you don’t have to use the rule of 72 just for invested or loan money. It can be used for anything that grows at a compounded rate, such as population, macroeconomic numbers, charges or loans. Example The GROSS Domestic Product GDP grows at 4% annually. You could expect the economy to double in 18 years because 72 divided by four equals 18. Estimating the effects of investment fees, the rule of 72 can also be used to estimate the long term effects of fees that eat into your investment. Example one A mutual fund charges 6% in annual expense fees. It would. Use your investment principle by half in about 12 years because 72 divided by six equals 12. Example two A borrower pays 8% interest on a credit card.

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They will double the amount they owe in nine years because 72 divided by eight equals nine. Estimating the effects of inflation, the rule can also be used to find out how long it will take for your money’s value to have due to inflation. Example Inflation is at 4%. The purchasing power of your money will have in 18 years because 72 divided by four equals 18. So I hope you found those three chapters enlightening and educational, and we’ve talked about a lot of this stuff before, but especially with what’s going on out there in the marketplace with market volatility, I would encourage you to replace your bonds with a fixed indexed annuity to try to get safer and to try to start generating income. You can turn on income. And at the beginning of year two on most fixed indexed annuities, we’ve got a fixed indexed annuity that will give you a 10% immediate bonus. Also, we’ve got one that’s illustrating it over 9.94%, which we think is incredibly great considering the money is not invested in the market, it’s invested in the ten year Treasury and they take the interest off of that each year and invest into options. It’s great construction on the products. And so I would encourage you to give us a call at 7706851777 or visit active health.com and click that schedule a consultation button, the upper right corner. And now for the final countdown. It’s the five.

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Down. Down. So let’s recap what you may have missed. It’s the final countdown.

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On this week’s show, we talked about the five most important things to own during retirement, which included a reliable vehicle, a home, a six month emergency fund insurance, including annuities that actually can help protect about from you living too long. And number five was owning your own schedule so that you can really enjoy retirement. We also played right or wrong. We played the chapters of the Rule 100, the 4% rule in the Rule of 72 from my book Annuity 360. And we kind of covered the last four important items for building a smart retirement plan as part of our seven part series. But we’re going to talk in depth on smart health and smart care with Bonnie Dobbs here in a couple of weeks, because she’s not available, because she’s getting ready for the open enrollment period for Medicare. And I think you’re really going to like hearing her talk about that here in a couple of weeks. We’re so glad you’ve been with us. It’s really important for you to apply this stuff. And also, let’s try to follow the 4% rule and not spend more than 4% of our money each year. We’re happy to help in building a smart retirement plan when you’re seeking information about how to build a successful retirement. If you’re going to be a bear, be a grizzly, do everything you can to seek more information and knowledge because you don’t have to do it the way your your parents and grandparents did it. Let’s do everything we can to build a brand new 6040 type portfolio, do a better job at bond replacement generating income, have a plan for our health care costs during retirement, and build an overall safe and sound and smart retirement plan. And thanks so much for listening and have a great week, everybody. Come right back and listen to us next week on the Active Wealth Show.

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Thanks for listening to the Act of 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 Forward Stokes at 7706851777 or visit Active Wealth Investment Advisory Services offered through Brookstone Capital Management LLC. Become a registered investment advisor BCM An active wealth management or independent of each other. Insurance products and services are not offered through BC 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.

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