10.28.22: Audio automatically transcribed by Sonix

10.28.22: 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 welcome to the Active Wealth Show, activators. I’m Ford Stokes or chief Financial advisor. I’ve got Sam Davis, our radio producer here with us and we’ve got a really great show for you today. We’re going to talk about how to make a head start, how to get a head start on your New Year’s resolutions. Just on the financial side, you don’t have to go crazy and start trying to lose weight during Halloween, Thanksgiving and Christmas. But. We ought to try to do everything we can to get more market-efficient, fee-efficient and tax efficient. With our portfolios, but also try to figure out how we’re going to generate consistent income at a surplus and not exceed. Our 4% rule and not exceed withdrawing more than 4% of our assets. And then. We’re just going to talk to you. How to eliminate your income gap. If you have one or two. How to build. An increased income surplus. In 2023. Hope that sounds good to you guys and gals as you’re driving around here in Atlanta. And we just want to say welcome to the show. We want to really welcome our activators and all the people who listen to the show. And if you’re wondering who in Activator is, it’s somebody who listened to this show, somebody who wants to build a tax efficient fee efficient and market efficient portfolio so they can build a successful retirement. We just really appreciate you guys and gals and thanksS so much for everybody who’s visited us at Active Wealth dot com and Active Wealth how dot com.

Ford Stokes:
If you want to take advantage of our exclusive offer to our AM 920 the Answer listeners, all you got to do is call 770 685 1777 to take advantage of our free offer of a free financial consultation at no cost to you. That is a $4,500 value. We’re going to help you understand and better understand the risks you’re taking with your assets, the fees you’re paying with your assets that may not show up in your statements, your monthly statements, and what we can all do about it and how we can help you diversify your portfolio. Also help you better understand the correlation of your assets and how much all of your assets are going to move together. And we’ll do that in a metric way and we’ll also give you a results in advance. Retirement plan. Absolutely. At no cost to you. So you get your retirement in advance. You get to understand what each year looks like between now and when you turn 95, 95 years old. So that’s pretty good. And all you’ve got to do is visit active wealth dot com and click that schedule a consultation. But in the upper right corner and you’ll meet directly with me. Ford Stokes, your chief financial advisor. And I’m happy to help you. We’re going to walk through.

Ford Stokes:
We’ll take your current statements. Your current monthly expenses, what you think your retirement expenses are going to be. And then we’ll also. Go through your Social Security statement that you get from Sars-cov. And if you haven’t done that, I would encourage you to visit SSA gov, which is the Social Security Administration’s website, and get your report, get your statement that shows how much money you’re going to make if you reach full retirement age. But also it gives you the top 35 earning years that they have down, which is basically your adjusted gross income for those top 35 earning years. And then we can plug those into our maximize my Social Security system and we’ll spit out. There are some really great whatever reports for you and you can make a determination on when you really should take such security. Also, one of the hints I would give you try to make it to your full retirement age if you can. The longer you wait, the more you’re going to make, especially if you feel like you’re going to live past 73, 74 years old, which most people are living past that. So we like our clients to get to full retirement age, then turn on income and then not negatively impact their retirement nest egg with larger and larger withdrawals. And also, Sam, you want to kind of let them know how they can get our podcast too.

Producer:
Yeah. So we understand that, you know, people aren’t always available when the Active Wealth Show is on the air, but we are available on AM 920 The Answer two times over the weekend, Saturdays at noon and Sundays at 11 a.m. But if you miss both of those shows, you can find the Active Wealth Show wherever you listen to podcasts. And we’re actually working hard right now to make sure that the Active Wealth Show is available in more places than ever. So just check out the Active Wealth Show wherever you listen to podcasts, and you can also just visit ActiveWealthShow.com And there’s a lot of great information and resources there as well.

Ford Stokes:
Yeah, absolutely. So I hope everybody reaches out to us at ActiveWealthShow.com Or ActiveWealth.com . On both of those sites you can click that schedule a consultation button in the upper right corner and we’re happy to help you. And also, here’s a couple of important reminders. The current annual enrollment period, or AEP, as all the Medicare folks talk about, is now underway. It is in session. You’ve got all the way until December 7th. And if you want us to let if you want to, just let us know how we can help you. All we’re going to do is we’re going to introduce you to Bonnie Dobbs with Medicare and Other Red Tape. She has sat on the Council for Aging for the Atlanta Journal Constitution and continues. To provide articles to the AJC on Medicare. She’s got thousands of Medicare clients. We like working with an expert like that. And so that’s pretty good stuff there. Also, Election Day is coming up Tuesday, November 8th. If you are going to vote conservative, make sure you show up to the polls on November eight. And if you are a liberal and support our current president, Joe Biden, then I would encourage you to show up to the polls on Wednesday, November 9th. So that’d be great there. Again, we’re supporting all of the Republican and conservative candidates out there. Please vote with your wallets and your retirement in mind, if you would, for us. And yes, I’m not very shy. But again, reminder, all you liberals and all the Democrats who are going to vote and support Stacey Abrams or you’re going to support Raphael Warnock and all those people, I would encourage you to visit the polls on November 9th.

Ford Stokes:
That’s Wednesday, November 9th. All the conservatives make sure you get out there and vote. They’ve got early voting period now and make sure you vote on or before Tuesday, November 8th for those of you conservatives out there. Those are jokes. Folks are just trying to keep it kind of light and fun here today. Here’s an overview on this week’s show. We’re going to give you a quote of the week here next. We’ve also got an inflation demonstration. We’re going to talk about how to eliminate your. Retirement income gap and how to get started on that in 2023 as part of a kind of an early New Year’s resolution even before Halloween. We’re going to play the fun segment everybody keeps requesting, which is right or wrong. We’ve got that that segment ready to go and Sam’s ready to go to ask and start things going in segment two or three. I think for right or wrong, we’ve got this week in history and a whole lot more, and we’re so glad you’re with us here on the Active Wealth show. And we want to do everything we can to help you build for a successful retirement. And we’re trying to help you take the tax man out of the deal, but also how to do a proper retirement income planning as well. So here’s the financial Wisdom quote of the week.

Producer:
Now of wholesome financial wisdom. It’s time for the quote of the Week.

Ford Stokes:
Sir Arthur Godfrey had to say Arthur Godfrey was an American radio, television broadcaster and entertainer who was sometimes introduced by his nickname, the Old Redhead. Arthur Godfrey said, I’m proud to pay taxes in the United States. The only thing is I could be just as proud for half the money. Which I think is great. You know, he’s kind of a famous radio and television broadcaster and thank you for that wisdom. They’re back in the day, Mr. Godfrey, For sure. Just a reminder, we talked about on last week’s show, the Social Security increase, the cost of living increase for 2023 was is 8.7%. That’s up from last year’s 5.9%, bringing the two-year increase regarding inflation to 14.6%. The good news is your social your income benefit has a built-in adjustment to help protect your buying power. The bad news is inflation is wreaking havoc on American families, particularly in the areas of food costs, energy costs, new and used vehicle costs and travel costs. Is part of why we want our listeners to have a solid and tested plan for protecting and growing their hard-earned money. You need to outpace inflation in order to protect your buying power. And we can help you do just that. All you’ve got to do is visit active wealth dot com and click that, schedule a consultation button and take advantage of your free $1,500 value.

Ford Stokes:
We give you a free, complete financial consultation. We do that because we’re fiduciaries and I want to do everything I can. To put your needs ahead of my own. And we feel like that’s the best way to start our relationship and our partnership. It’s for you to reach out to us, book that, schedule a consultation appointment with us, and then we will give you a financial consult at no cost to you. And that way you can make an informed financial decision about what you’re going to do with your money, because your money is hard-earned and hard-saved. And we’re ready to go. We’re ready to help you today. All you’ve got to do is visit ActiveWealth.com Or call us at 770 685 1777 , 770 685 1777. Deborah and her team are standing by, ready to take your call and get you booked into my calendar. We come back to the break. We’re going to talk about how you can plan and better build. For a retirement income surplus and avoid a retirement income gap starting in 2023. Active Wealth Show right here on AM 920. The Answer.

Charlie Kirk:
Charlie Kirk here. If you’re concerned about your investments, then I encourage you to listen To the Active Wealth Show. Hosted by my good friend Ford Stokes. Saturdays at noon and Sundays at 11.

Producer:
Investment Advisory Services offered through Brookstone Capital Management, LLC. Bcm a registered investment adviser, not an actual client of Active Wealth Management. 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. I’ve got Sam Davis here with me and we’re going to do our inflation demonstration right now.

Producer:
Want to know where your hard-earned money is going. It’s time for an inflation demonstration.

Ford Stokes:
So, Sam, why don’t you just share what’s going on in the world of rising prices?

Producer:
Yeah, You know, it’s no surprise to anyone listening that things are a lot more expensive. I mean, we highlighted those areas in segment one. Food costs, energy costs. New and used vehicle costs and travel costs. Kind of the primary ones there. I mean, I know every time I’m at the grocery store, I’m always a little surprised when I get to the register. Energy costs. We had two or three of our largest energy bills over at the Davis household this year. So definitely costs hitting us, you know, and those aren’t flexible things. You know, you have to put food on the table. You’ve got to heat and cool the house, especially if you live here in Georgia. You’re kidding. So inflation demonstration for this episode, the Consumer Price Index, which measures the average change in prices for consumer goods and services, rose more than expected again in September. We’re still hovering near the highest levels of inflation since the early 1980s, so that’s 40 years. And we’re living pretty much in the worst stretch of inflation this country has ever seen. You’d have to go back for decades. The rising cost of living is bad news for workers who whose average hourly earnings are down 3% from a year ago, leaving more Americans living paycheck to paycheck. That’s not what we like to see. 32% of adults say they regularly run out of money between pay periods, according to a study from salary finance. That is not good either. More than half of working US adults feel as though they are behind on retirement savings, underscoring the hardships of the inflated economy, according to a recent report from Bankrate. And of those adults that feel that they’re behind on their retirement savings, over a third feel that they are significantly behind, according to the Consumer Financial Services Company’s recent report. So Ford, still no good news on the inflation front. The Fed continues to raise interest rates. They’ll be meeting again in the first week of November and we expect rates to go up. How much we will see.

Ford Stokes:
Hopefully it’s hopefully it’s only 50 basis points. I just hope he doesn’t do it at all. I hope they they wise up and don’t do it. Also, I don’t know if you want to really come out with that on what I think will be like the week before Election Day. So because they’ll meet on Monday and then they’ll probably announce on Tuesday. Oh, goodness. Hopefully Jerome Powell realizes that monetary policy is not the only way to reduce inflation. We could have governmental policy and not just start writing blank checks. We could start there. That would be helpful. I mean, the according to the US debt clock, it’s well over $33 trillion of US national debt, which is just ridiculous. And we’ve just got to get both sides of the aisle on the page of fiscal stewardship, just like we all have to with our own checkbooks. And, you know, I applaud everybody That’s a pre retiree retiree. Congratulations on doing a great job at earning a great living and working hard and providing for your families, but also saving because it’s harder to save because a lot of times you’ll take your lifestyle up to the level what you’re earning. And I just I really applaud. Everybody’s been able to you know, the squirrels have been able to squirrel away some nuts for the winter. You guys shouldn’t be hurt by inflation. I mean, inflation really hurts your buying power if you don’t stay invested and you can stay invested with tactical asset allocation where you’re got a portfolio that’s rebalancing, it’s got a mix between stocks and bonds, hopefully more stocks and bonds these days.

Ford Stokes:
And then you’ve got your replacing also your bonds with fixed indexed annuities or structured notes or a combination of the two to give you more principal protection structure nodes is a security and it does involve risk in the market, but it does have a principal buffer up to 30% as long as the markets don’t lose value of over 30% for the time you buy it. Like the S&P 500, the NASDAQ 100 and the Russell 2000, as long as those three indices with a lot of notes that we work with, don’t lose 30% of their value. They don’t hit their trigger level, your principal is protected and you’ve got significant growth that you can generate from those now fixed. The next annuity is not a security. It’s not at risk in the market. It is safer. And they also have to, you know, reserve 100% that you give them and they invest it into the ten-year US Treasury in that ten year US Treasury right now is higher than it’s been since I started working this industry a long time ago. And. You know, it’s 3.6 plus percent right now. And that’s a lot that that can give. If you invest $100,000 in a fixed indexed annuity, they’re going to generate $3,600 or more in interest that they at the end of year one. And they can then take that interest and invest into options for you. And those options are in things like the Credit Suisse Raven PAC or the JPMorgan Cycle Index or the BNP Paribas growth Index, all these different kind of indices, but also the S&P 500 and NASDAQ 100 and other indices that you know of.

Ford Stokes:
It’s interesting to see. How much does can grow and give you market-like gains without market? Risk because your money is not invested in the stock market. Your money is invested in the ten year US Treasury. And so. At the end of the day, let’s say if the market goes down as it has this year, if those indices lose value over this year. Or the year that you’re invested in a fixed indexed annuity where your money goes, your options may go to zero, they may be worthless, but your money is invested in the ten-year US Treasury, and it just goes back to earning interest the next year again. So your money’s not invested in the stock market with a fixed index annuity. And that is a really big deal, especially for a lot of people. Today we are writing more annuities than we ever have because people are coming to us going, Hey, Ford, heard you on the radio. Hey Ford, I got your book Annuity 360. Hey, Ford, I’ve seen some of your YouTube channel videos. Hey, Ford. I’m watching some of your older podcasts on ActiveWealthShow.com We have to do something. And I am risk averse. I’m getting older. I don’t want to have to go back to work. And I need an income plan.

Ford Stokes:
And part of that income plan is. Building your own income, whether you’re using your portfolio and you’re generate and you’re withdrawing, say, 4% because we don’t want to withdraw more than 4% of our nest egg because we don’t want to run out of money. And for those of you who are withdrawing 10% of your nest egg each year in the first early years of your retirement, you’re going to run out of money in 12 years. Maybe if you’re with us, you’re or another private wealth management firm that’s got other strategies you might run out of money in 14 to 16 years. Please don’t withdraw more than four or 5% from your portfolio. Please do not do that. We want to make sure you’re not one of those statistics that. Sam talked about in this segment on inflation demonstration. We want to make sure you feel like you have enough money to retire successfully. Now let’s talk about how to eliminate your retirement income gap. And starting in 2023, I mean, retiring during a down market is challenging, but it’s also not an impossible task. We’re going to help you make sure you don’t have a negative income gap. You want to have a retirement income surplus during this important time. Number one is you need to determine your expenses during retirement. You want to subtract your expected income from your expenses. And it’ll give you your retirement income gap. Do you have a surplus if your expenses are less than your income sources, or do you have a negative income gap because your expenses are more than your income? We want everyone to have an income surplus.

Ford Stokes:
We just do. We want to make sure you can enjoy life with your family. You know, like we’ve always say on this show, you know, we spell love, Timmy and this on this show. I do that with my own family. We want to make sure you have the time to spend with your family. And you can afford that. You can finance and fund that. And that’s a big deal. You’ve worked so hard to build your nest egg. You deserve to be able to generate the income that you need to enjoy your lifestyle. And if you’ve got a smart reinvestment plan to once you start taking RMDs or you’re reinvesting the money you’re not using from your required minimum distributions after you pay your taxes and after you’ve, you know, satisfied your monthly income in your monthly expenses, then I would encourage you to have a really good smart reinvestment plan invested in a tactical asset allocation managed portfolio like what we do. Use ETFs to implement your portfolios so you can minimize the expense ratio within the portfolios. Then number two here is you want to build a plan that can pay you income even during a bad market. You want to consider replacing the bonds in your portfolio with fixed-indexed annuities to eliminate fees? Because again, with a fixed indexed annuity, you do not have fees. You don’t have advisory and portfolio fees.

Ford Stokes:
We also want to invest in fixed-indexed annuities that are fee efficient. We want to try to avoid the income rider fees. Especially for those of us that are going to defer our money for a long time. And we’re not going to start taking income. Should we do everything we can to avoid an income rider fee? Yes, we should. Let me ask you, why are you going to pay a company 1% income rider fee every year when you’re going to defer for five years, you’re going to wait to turn on income for five years When you retire, there’s no reason to pay an annuity company fees for services they’re not going to render and they’re not going to deliver to you for at least five years. And they’re taking out an income rider fee of one point every single year. So if you work with active wealth, we can put you in fee-efficient products. We’re happy to help you there. When we come back for the break, we’re going to talk about the number three element in how to eliminate your income gap starting in 2023, right when we come back from the break. What we’ve been talking about is, listen, we’ve got to figure out how to generate efficient income during retirement and how you can even do it during a down market. And we come back from the break. We’re going to help you understand how you can get the money you need to last 30-plus years right here on the Active Wealth Show on AM 920.

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

Ford Stokes:
And welcome back to the Active Wealth Show. I’m Ford Stokes, your chief financial advisor. I’ve got Sam Davis here with me on the board. He’s been our great executive producer. Sam, let’s play right or wrong for the folks.

Producer:
All right, Ford, here we go. First item on right or wrong this week. Here it is. There will be no changes in the tax brackets from 2022 to 2023.

Ford Stokes:
Well, it’s interesting. You’ve got the same seven tax brackets, but this is wrong because while we have the same seven tax brackets with the same percentages, 10%, 12%, 22%, 24%, 32%, 35% and 37% plus you make over 10,000 in the state of Georgia, just add 5.75% on top of that number. By the way, the income thresholds within the brackets have changed due to inflation. It’s important to have a tax plan during your retirement years, which is why we encourage all of our listeners and existing clients to have an annual financial checkup to ensure they are on the right track to meet their goals and save as much of their hard earned money as humanly possible.

Producer:
Second item on right or wrong this week, the only ways to reduce your taxable income and get into a lower tax bracket are deducting your mortgage interest and taking advantage of tax credits.

Ford Stokes:
So that is wrong as well. Anyone can reduce their taxable income during retirement by taking tax-free withdrawals from the only two types of tax-free investments out there with a Roth, which are Roth IRAs and life insurance with life insurance. Also, we like indexed universal life insurance policies so you can get market-like gains without market risk because you’re the money and the additional cash value that you’re paying into that indexed universal life policy collects and grows, and it grows according to how an index performs that you select. So that’s a pretty good stuff. If you’re interested in generating tax-free income during retirement, then I would encourage you to schedule a free consultation with us. All you’ve got to do is visit active wealth and click that schedule a console button in the upper right corner, and it will cost you nothing to find out how much you could be saving on future taxes. One other quick point here. We definitely want to make sure that you’re you’re reducing your modified adjusted gross income by including the money you’re paying in your the interest you’re paying on mortgage interest, and then also all the other tax credits, like child tax credits and tax credits for folks who are over 65 and for the blind. You get 1300 dollars of a tax credit this year. And if you’re over 65 or you’re blind and it keeps going up year every year. And so I would make sure that you’re including that whether you’re using TurboTax next year or working with your accountant, make sure you’re getting your 65-plus-year-old annual tax credit. That’d be great, because that kind of helps offset a little bit some of your health insurance costs and things like that. That’s why they do it. And I’m glad that they give us that tax credit for sure.

Producer:
Okay. Ford, Third and final item on this week’s right or wrong, we know that we are in the middle of Medicare’s annual enrollment period. So let’s see how well all the listeners have been paying attention. Here it is. Medicare pays for long-term care needs.

Ford Stokes:
Unfortunately, that is wrong because Medicare does not cover long-term care needs for people who cannot perform everyday activities on their own. Things like being able to transport yourself or be able to feed yourself or things like that. This is why we want everyone to have a smart health plan for successful retirement. Healthcare expenses are very costly and on the rise. Now is a great time to review your Medicare and any long term care insurance needs, and we’re happy to help you with that. If you are one of these risk averse and security minded folks and you’re really concerned about health care costs during retirement, so realize you’ve got to have a good Medicare plan, a good health care plan, but also, please, please, please understand the long term care costs are not covered by Medicare. And if you’re security minded and you want to be taken care of during retirement, you want your assisted living facility, stay covered and not be a burden on your kids, then don’t encourage you to go ahead and visit active Health.com. Reach out to us and we’re happy to help you with any of your long term care needs. A lot of people are self-insuring against long-term care, but they’re going to draw down their assets significantly. Be very careful with long term care costs. Here’s another thing. It basically the CDC came out and basically said that males lived to be about 818 months, one month to 18 months in long term care once they move into an assisted living facility.

Ford Stokes:
And females lived to be over between 18 and over 36 months or longer because women do live longer than us for sure. So just realize you need to have a plan, especially if long term care costs are going to be between seven and 9000 a month in an assisted living facility. That’s a whole lot of money, and it’s usually outstrips the money that you’re spending in a lot. What we’ve seen is a lot of people will sell the family home and they use the proceeds from the family home to pay for the long term care costs and then they live off the rest of the money. I don’t think that’s the kind of family legacy you want to send where you’re drawing down and cannibalizing your assets. I’d encourage you to get some insurance against that and just reach out to us because we’ve got some really good products from Mutual Omaha and others to do just that. And all you’ve got to do is call us at 770 685 1777 again 770 685 1777. Or visit active wealth dot com. So Sam thanks for reading us all that the right or wrong I know everybody really loves the right or wrong segment just any thoughts that you have on the tax brackets and long-term care and also ways to kind of reduce the taxable income during retirement from those three right or wrongs we had only wrongs this week.

Producer:
Yeah, well, we’ve gotten a lot of good information this month. We know that the cost of living adjustment for Social Security is going to go up giving Social Security recipients a bit of relief there. We also got a little sneak peek at what the tax brackets are going to look like for 2023. And at the beginning of the show, we talked a lot about getting your New Year’s resolution off to a head start, because if you’re listening to the. Active Wealth show this weekend. Halloween is on Monday. Before you know it, it’s going to be election Day and then a turkey will be on the table. It’s Thanksgiving right after that, the Christmas tree is up and you’re wrapping presents and and 2023 is on the calendar. So build some good momentum into 2023, especially with something as important as your finances. I know it’s hard to eat right over the holidays, but this is something you can definitely get a start on before the calendar flips over.

Ford Stokes:
Absolutely. And if we have time, listen to This Week in History.

Producer:
It’s this Week in History.

Ford Stokes:
One historical moment, which I thought was interesting. On This Week in 1965, the historical Saint Louis Gateway Arch was completed. The 630 foot high Gateway Arch was lifted to commemorate President Thomas Jefferson’s Louisiana Purchase of 1803. And the structure costs less than $15 Million to build and is designed to withstand both earthquakes and high winds. And I thought that was just really interesting.

Producer:
Yeah. You know, I grew up in Kansas. Ford and Saint Louis is not too far away. You can take a nice little day trip from either Wichita or Kansas City and make it to Saint Louis. And so I had the opportunity, man, it was probably in the early 2000s. It may have been shortly after 911, we had the opportunity to go up into the arch. And if anyone listening has ever visited the Saint Louis Arch, you can go up inside it and you ride inside of an elevator that’s a little bit larger than a washing machine that kind of rocks back and forth and takes you all the way up to the top. Really cool experience. And it’s such a visually striking monument. You can see it from where the Cardinals play baseball and so many places throughout that city of Saint Louis.

Ford Stokes:
I’m so glad you shared that. I had no idea that what the size of the elevator was to go up in there. So that’s good stuff. When we come back from the break, what we’re going to talk about is the new tax brackets and. We also are going to try to put a bow on how to really calculate again and how to eliminate any negative retirement income gap you could have and how to get on the road to success with that, if we can. And also, we’re going to talk about what do you get when you come in for a full retirement plan consultation, when you come into a private wealth management firm like ours and or specifically ours, and we’re so glad you listen to us on the Active Wealth Show, come right back. We’ve got a lot of great stuff for you.

Producer:
A new payroll tax could be coming to your state. I’m Matt McClure with a retirement dot radio network powered by Amerilife.

Alison Hoffman:
We have seen a failure as a country to provide comprehensive insurance for long-term care.

Producer:
America has a long-term care problem, NPR reports. 70% of people who turn 65 will need some type of long-term care, ranging from in-home care to a full-time nursing home facility. And the costs can be astronomical. A Genworth study in 2021 found the median cost for home health was more than $61,000 a year. If you want a private room in a nursing home, the median cost there more than $108,000 annually. And Medicare won’t cover the costs.

Alison Hoffman:
Medicare pays for short-term post-acute care if somebody’s been hospitalized or has other kind of short-term medical needs, it doesn’t pay for the kinds of things that we think about as long-term care.

Producer:
Alison Hoffman is a professor of law and Deputy Dean at the University of Pennsylvania Kerry School of Law. She tells me relatively few people in this country have long-term care insurance. Washington State was the first in the nation to try to bridge that gap.

Alison Hoffman:
What Washington state has done is it’s done a payroll tax point, 58%, that is for all W-2 workers or full time workers that comes out of their payroll. And then so long as they pay in for a certain number of years, when they have a benefit that they can use for long term care up to a certain amount.

Producer:
But it’s not a cure all for the problem.

Alison Hoffman:
It is a little patch. I think the total benefits in Washington state are 36,000 and they increase with inflation over time. But the cost of a nursing home in most states is three times that over the course of a year. What it is, is the states trying to come up with a tool to fill in some of some of the gaps.

Producer:
Now, states like Pennsylvania, New York and California are looking to Washington’s plan to implement their own solutions. Professor Hoffman says taxpayers can opt out of the payroll tax in some cases, such as those who have their own private long term care insurance.

Alison Hoffman:
So why would somebody want to opt out? Well, somebody might want to opt out because they’re already contributing dollars towards towards long term care. And they think that that’s sufficient. That’s enough. But people also might opt out because they don’t value it as a form of insurance.

Producer:
So could a program like this be coming to your state? If so, how could it affect your wallet? And what about your own long term care plans for your later years? Those are all important questions to consider as time continues to tick on by with the retirement dot radio network powered by Amerilife. I’m Matt McClure.

Ford Stokes:
And welcome back activators to the active wealth show. Ford Stokes chief financial adviser got Sam Davis here our executive producer with me. And listen the 6040 portfolio which is 60% stocks and 40% bonds that a majority of people have that their advisor puts them in has done very poorly this year in the S&P 500 lost 25 plus percent. Bonds have lost over 13 and a half percent this year because the Fed keeps going up on rate. So we’ve really seen how bonds are affected by interest rate risk. When rates go up, the bonds you currently hold are worth less because people want the higher paying bond. And so then you have to discount. And so therefore you’ve lost some value on the bonds that you used to hold. Even if you’ve got an ETF that’s got a bunch of bonds in it as well, and or a mutual fund that’s got a bunch of bonds on it. One of the things we like to do is talk about bond replacement strategy and try to replace your bonds. If you’re going to generate income, you want to eliminate the and delete the advisory and portfolio fees because the insurance company will pay us the advisors and we’re not going to double dip and we can’t double dip. So we’re not going to take a commission from the insurance company and then also charge a management fee or a portfolio fee on top of it, because that just wouldn’t be right.

Ford Stokes:
And again, we’re fiduciaries. You’ve got to put your needs ahead of our own and you want to make sure you don’t ever work with an advisor who would double dip and take both and generally hopefully wouldn’t keep their license very long. So that would be good. But we’re trying to do everything we can to take care of you. And so what I would do is try to delete and eliminate. So let’s say you’ve got $1,000,000 and you put 400,000 into bonds, but you want to replace them and buy a fixed indexed annuity for 400 grand. Well, the typical advisory fee around Atlanta in hours is lower than this and is like right around one and a half percent. So you’re paying 6000 a year in advisory fees on bonds are just going to pay you income and aren’t really going to get you a lot of market growth. Why are you doing that? Why would you pay money every year for bonds? It doesn’t make any sense. And so what I would do is replace the 400,000 and invest in a fixed indexed annuity and start generating income from that a year later. Hold back the income you need for the first year. That deferred period allows them to kind of generate interest off the ten year US treasuries they’re going to invest in for you.

Ford Stokes:
And then they’re going to take that that money, let’s say a $3,600 for every 100,000 you have, and they’re going to invest into annuities. I mean, they’re going to invest into options. And those options are going to give you market like gains and they’re going to keep a portion of it and you’re going to get a majority of it. A lot of the ones we’re working with are giving you an extreme rates because the ten year US Treasury interest rate has never been this high. It hasn’t been this high in over 20 years. I wouldn’t say never, but it’s it’s been a long time since since it’s been this high. And so I would encourage you to consider a bond replacement strategy. And because of that, we’re going to play the bond replacement chapter, which I think is chapter 15 for my book, Annuity 360. And all you’ve got to do is, is it Annuity 360 dot net that’s annuity 360 dot net to get a free hard copy of my book. Annuity360.net . We’ll also give you kind of an immediate download that gives you some an overview of it as well. But we’re going to send you a signed copy of my book. So if you want a free copy of my book, we’ll just send it out to you. No, no questions asked. All you’ve got to do is go to Annuity360.net

Ford Stokes:
There’s no obligation. But again, we’re trying to educate folks about how to replace your bonds. So go ahead and play chapter 15 about bond replacement and how to generate a sound bond replacement strategy with your portfolio. From my book Annuity 360 Chapter 15 Bond Replacement with fixed indexed Annuities Big idea. Historically, bonds have seen volatility When the market is volatile, fixed indexed annuities are not subject to the same volatility, which makes them a much safer investment. You might have heard a financial advisor talk about replacing your bonds with annuities to protect your wealth and grow your retirement funds. And my firm, Active Wealth Management, we believe this is a smart way to protect your future. Many people have learned that bonds are a safe way to invest your money, but there are some downsides to bonds that should make you think twice. We’ll talk about some reasons why you should consider replacing your bonds with annuities. First, here’s some information on the history of bonds in the United States. Historical bond volatility. The 1900s saw two secular bear and bull markets in US. Fixed income inflation peaked at the end of World War One and World War Two due to increased government spending. The first bull market started after World War One and lasted through World War Two. The US government kept bond yields artificially low until 1951. The long term bond yields were at 1.9% in 1951.

Ford Stokes:
They climbed to nearly 15% in 1981. In the 1970s, globalization had a huge impact on bond markets. New asset classes such as inflation protected securities, asset backed securities, mortgage backed securities, high yield securities and catastrophe bonds were created. Early investors in these new asset classes were compensated for taking on the challenge. The bond market was coming off its greatest bull market coming into. 21st century, long term bond yields declined from a high of 15% to 7% by the end of the century. The bull market in bonds showed continued strength in the early 21st century, but there is no guarantee with our current market volatility that this will hold. See Chart 15.1 To see the incredible difference of investing in a fixed index annuity versus investing in bonds. Why you should consider replacing your bonds with annuities. The first question you should ask yourself is this Why would you take market risk with your bonds when your bonds can lose their value? If you just look at the history of loan, you can see how uncertain the future of bonds is. Inflation and fluctuating interest rates play a big role in bond yield. Interest rate, risk of bonds, bonds and interest rates have an inverse relationship. When interest rates fall, bond prices rise. Due to the COVID 19 pandemic, investors have moved their money to bonds because they believe it is a safer investment option. However, this has caused bond yields to fall to all-time lows.

Ford Stokes:
As of May 24, 2020, the ten-year Treasury note was yielding 0.64%, and the 30-year Treasury bond was at 1.27% reinvestment risk of bonds. This is the likelihood that an investment’s cash flows will earn less in a new security. For example, an investor buys a ten year, $100,000 Treasury note with an interest rate of 6%. They expect it to earn 6000 a year At the end of the term, interest rates are 4%. If the investor buys another ten year note, they will earn 4000 instead of 6000 annually. Consider the possibility that interest rates change over time when deciding to invest in bonds. Systematic market risk. This refers to the risk that is inherent to the market as a whole. It will affect the overall market, not just a particular stock or industry. This can be unpredictable and it is impossible to avoid. Diversification cannot fix this issue. But the correct asset allocation strategy can make a big difference. Unsystematic Market risk. This type of risk is unique to a specific company or industry similar to systematic market risk. It is impossible to know when unsystematic risk will occur. For example, if someone is investing in health care stocks, they may be aware of some major changes coming to the industry. However, there is no way they can know how those changes will affect the market.

Ford Stokes:
There are two factors that contribute to company specific risk business risk. There are two types of risk internal and external. Internal refers to operational efficiency. An external would be similar to the FDA banning a specific drug that the company sells financial risk. This relates to the capital structure of a company. A weak capital structure can lead to inconsistent earnings and cash flow that can prevent a company from trading reduced advisory fees. Investors who trade individual stocks may know how much commission they are paying their broker, but individuals who buy bonds often have no idea what type of commission they are paying. Bond dealers collect commission on bonds they sell called markups, but they bundle them into the price that is quoted to the investors. This means you are unaware of how much commission you are actually paying. Standard and Poor’s estimates of bond markups is 0.85% of the value for corporate bonds and 1.21% for municipal bond. However, markups can be as high as 5%, up to $50 per bond. Bonds have finite durations. Bonds only provide income for a finite amount of time. Unlike an annuity which provides income for life, you must reinvest your money if you want to continue generating interest with bonds. However, reinvesting with a bond can sometimes come at a loss. As we discussed above, annuities will provide you with an income you can never outlive. And now for the final Countdown. It’s the final countdown.

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

Ford Stokes:
So on this week’s show, we really try to talk about how to eliminate your retirement income gap starting in 2023. It’s kind of about getting a head start on a New Year’s resolution. We want on number one, determine your expenses during retirement. Number two is we want to build a plan that will pay you income even during a bad market, which we’ve seen and experience a bad macro market with market downturn this year. And number three is we want to understand you will need money to last for 30 plus years. We’re all living longer. That’s why we provide all of our listeners with a complimentary financial plan from now to their 95th birthday. Regardless of when you’ve got your starting point, all you’ve got to do is reach out to us active wealth dot com and click that schedule a consultation button in the upper right corner that’s active wealth dot com. We also played my chapter on bond replacement here in this segment we’ve we’ve imparted a lot of great wisdom we played our right or wrong game and talk specifically about some of the Medicare and what’s going on with the US tax brackets this year. And then also we have done everything we can to help you better plan for retirement through a real consultation and what you can get with a financial consultation.

Ford Stokes:
It’s a $500 value with a free portfolio analysis. You can understand the risk you’re taking, the fees you’re paying, and also the correlation of your assets, and then also trying to get you to a full results in advance. Retirement plans, your 95th birthday at no cost to you. I did want to share right before you leave here, I want to share one thing that the current married filing jointly tax bracket for 24% has gone up the top end of that bracket before the 32% bracket starts has gone up from $340100 to $364200. So you do have more room to convert your IRAs to Roth IRAs at the 24 and lower level. Listen, everybody, have a great week. Make sure you vote with your wallets and your retirement in mind next week. And we appreciate you all. We’re praying for you. We’re here for you. Go ahead and reach out to us at Active Wealth dot com. Remember, if you’re going to be a bear, be a grizzly, really be aggressive about trying to get as much information for retirement as you can. But listen the Active Wealth Show and work with us. We really appreciate you all. Have a great week, everybody.

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 Active Wealth dot com. Investment Advisory Services offered through Brookstone Capital Management LLC become 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 multiyear 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 not affiliated with the United States government. The agent does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners.

Producer:
Amerilife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as-is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or of the results obtained from the use of this information. Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Nor are the obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange, and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities.

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