Episode Transcript
[00:00:00] Speaker A: Welcome to All Things Financial, the show that helps upgrade your financial literacy. Trey Peterson and Yelise Coutts are retirement planning specialists here to provide a unique and conservative approach to managing your money. Now, here are your hosts, Trey Peterson and Yelase Coutts.
Well, hello. Hello, everyone. Welcome to the All Things Financial podcast. My name is Ryan Moffat. With me is Yellow say Cuts episode. They just keep going on and on. Yellow say. We just keep.
[00:00:32] Speaker B: I think it's either 29 or 30. We just talked yesterday.
[00:00:36] Speaker A: It feels. It feels like, you know, there's a lot of information out there, but, you know, if you would have told me at the beginning, hey, we're going to fill up 30, 40 more than that podcast just on retirement planning, I would have said, is there that much to talk about? But as it turns out, yeah, there really, really is.
[00:00:55] Speaker B: Yeah. For the discerning listener who listens to all of our podcasts are probably hearing a few things more than once.
[00:01:01] Speaker A: Oh, that's probably true. But I think, you know, anytime. Well, it's. It's just like. It's just like any. Whether it's sports or business or otherwise, right? We're going to talk about the same things over and over again because we're talking about the fundamentals, right? Basketball greats, football greats. They spent hours and hours and hours and hours and hours doing the same thing, shooting the same free throw over and over and over again until it was just locked in and there was no chance that they were going to miss. Right?
[00:01:27] Speaker B: Are you. Are you preparing everyone to talk about inflation again?
[00:01:33] Speaker A: I might be very good. Well, welcome to the show, everyone. Got a lot of good information. We're going to talk about today.
We're going to talk about a number of things at. As it relates to people saying, hey, what could I be doing today? Or maybe even looking hindsight. What should I have done? There's a great YouTube video. We'll have the link on here as well at some point in time in the podcast. But it's a video actually. It's really enjoyable. That takes people from ages 5 through 75.
[00:02:07] Speaker B: Oh, you actually watched it. I told you about it.
[00:02:09] Speaker A: Yeah, exactly. But it takes people ages 5 through 75 and it says, hey, what's your one big regret? And, you know, it starts off and it's kind of cute little kids and, you know, I. I regret meeting that mean person or I regret meeting. Or I regret not being at the park today because I was at this park yesterday and I want to be there today. And obviously, as life changes as people become adults and get nearing retirement or other big phases of life, those regrets change. And yeah, it was really interesting. So we'll have that, we'll have that listed here somewhere as well. It's worth a, worth a watch. I think. It's always good to know, hey, let's learn from the pros in any area of life. And what can I look, look at somebody that's they've already accomplished and how can I then shape my decisions based off of, you know, successes or failures of other people? So I think it's always good to look at others people's hindsight as well, not just your own. But as we get in today, listener call out, we just want to welcome you again. And if you're in our area, we're in the south Minneapolis suburbs here. So we are in Burnsville. And if you are in the area, Burnsville or Savage, Bloomington, Lakeville, Prior Lake, Farmington, we'd love to meet you. We'd love to connect, we'd love to talk about your retirement if you are nearing that stage. We'd love to see how we can put value into your planning situation. So we'd love to, we'd love to connect. You can certainly reach out to us, call us, email us. Phone number is 612-286-0580. You can check us out on our website@g wealth.com or you can email us ryan g wealth.com yellow.com or trey wealth.com so y. Should we start with the quote of the week?
[00:03:58] Speaker B: Yeah, let's jump right in. So quote of the week opportunities are like sunrises. If you wait too long, you miss them. Right. I, I thought this was especially pertinent to you considering you're somebody who wakes up early to catch the sunrise every morning. Or is it only when you're on vacation?
[00:04:18] Speaker A: I sit there in meditation and splendor. No, I am up pretty early. I am up pretty early usually to try and get to the gym, but I see a lot of sunrises. It's true.
[00:04:28] Speaker B: Yeah.
Well, I mean, it's a great quote actually because, you know, I don't wake up early enough to catch the sunrise most days.
But, you know, opportunities are kind of that way too, where you have to pursue them. It has to be something that you intentionally seek out. And, you know, a lot of times, you know, discerning between good opportunities and bad opportunities, I mean, that's, that's the more challenging thing. Right?
[00:04:54] Speaker A: For sure. For sure. No, we, so we're in Minnesota and recently there, there was A really good. What do they call it was the Northern lights. What do you call that? Episode of the Northern lights? Event of the northern. I. I don't know what you call that. The Northern lights were really, really good. The Aurora borealis was really good in Minnesota a couple weeks ago, and my family missed it largely because it was supposed to be over a couple of days. And we're like, well, we're busy tonight. And then the next night, wow, we're kind of tired. The, you know, kids are getting a little grumpy. Let's put them to bed. And then we see all the pictures on social media of all our friends talking about it, how wonderful it was. So we say, okay, tonight we're committed. We're going, and we're going to check it out. And we drove out into the country away from all the city lights, and there was no northern lights. We missed it. We fully, fully missed it. So all this grand splendor, the conversation and the hype, and we completely missed it. And I think there is something to that. You know, when you think of missed opportunities and a lot of times people talk about the cost of things, whether it's monetary cost or, you know, cost of time or, you know, all these different things, but I think what is oftentimes missed. And Trey talks about this a lot, actually. He talks about the. The cost of missed opportunity, you know, and y say, I think the discernment. Is this a good opportunity or is it not a good opportunity? That's step one saying, hey, do I recognize it? Is it a good opportunity or is it not an opportunity that I need?
But if it is a good opportunity and you choose to miss it, I think that can have a high cost of things.
[00:06:29] Speaker B: Yeah. I think people just in general are more comfortable with opportunity cost. Right. Missing out on something like that versus like experiencing an actual loss or something that actually requires you to count the cost in that way. Whereas sometimes you never know. You never know where this opportunity could lead. And it's easier to miss out on that because taking opportunities also requires risk. And a lot of people are risk averse, especially as they get closer to retirement. We find that a lot of our clients, even people who don't become clients, but you know, just in general, they're looking to scale back their risk, whether it's in their portfolio or in their lifestyle, just in general, you know, it's.
You know, there's a reason why we call it transitioning from the accumulation stage in life to the preservation stage, because people are looking to preserve what they have. And in large part because you don't know what retirement holds, what, what it'll bring, what will happen in terms of just the unexpected things in life. And some of those things can be quite costly. So people want to make sure they have enough to get through. Right. Whether it's health care related expenses or otherwise.
[00:07:35] Speaker A: Yeah, yeah. And I think that's one of the big things that we always try and help people avoid is we don't want people to walk into retirement or get near it or even once you're into retirement. We don't want people to make a lot of those mistakes based on, you know, being afraid of the risk or not knowing if this is a good opportunity or not. I mean, we, everyone's heard some, some type of this story, you know, but we see it unfortunately, probably, well, definitely too often. But you know, there's a person with, you know, the great retirement savings, whether it's, you know, 500,000, whether it's a million bucks, whatever it is. And you know, we're, we're nearing an election currently and you know, a historic election. Well, four years ago or eight years ago or whatever it is, I got real nervous about the election or about whatever else was going on in the economy or politically or otherwise. So I put all of my retirement savings into cash. So my whole half a million, my whole million dollars, whatever that number is, and within their 401k or 403b or whatever retirement account it is, they move it all to cash, you know, in which of course you have total safety and there's great preservation there. But the problem with that, that we always see is when do you get back into the market?
[00:08:48] Speaker B: Right?
[00:08:48] Speaker A: When's the right time to get back into the market?
[00:08:50] Speaker B: And I actually go ahead, not to cut you off, but I met somebody and they did that in 2000, like 6 or 2007.
[00:09:01] Speaker A: Oh my goodness.
[00:09:02] Speaker B: Which was great. That, I mean, that was fantastic timing. And actually I kind of applauded them and I said, hey, you know, I mean, way to, you know, have the foresight to know that, you know, we're about to experience a correction, a significant one, you know, in 2008 and they put all their money in cash and they bought back in at the right time and that was a huge success story for them. The problem is four years ago they did the same thing, anticipating another correction. And in the last four years they've missed out on a lot of all time highs. And you know, it's, it's great that they got it right. The first time I didn't do like an analysis or a projection to see, you know, how much they saved overall or where their portfolio would be if they simply let it ride all the way through 2008, all the way until today. But I suspect that the loss is significant considering the all time highs that we've been experiencing over the last two years.
[00:09:53] Speaker A: Yeah, I had a conversation with somebody recently and they were nervous about the 2016 election. And depending on when you listen to this podcast, it is currently 2024. So says, you know, two elections ago and they moved everything to cash. And part of the conversation was great, okay, so what are you invested in now? You know, how are things going for you now? And they're like, well, no, it's still in cash. So eight years. And if you think 2016 till now, the same scenario, you know, where the last many years, yeah, we've had some bumps in the road for sure, but we've had many all time high years, so it's tough to have those conversations. And when you talk about missed opportunity, not knowing when to get back in, people get nervous. And I think, I don't know, I'm interested to hear your opinion on this yellow say. But I think if you're the type of person that would get nervous enough to the point where you take action to move everything to cash, it seems like there's a pretty strong correlation between I'm, I'm nervous so I'm going to move it to cash, and then I'm also nervous so I never get back in.
[00:11:03] Speaker B: Yeah. And it's kind of a weird time, right? Because not always. Yeah, yeah. I mean there's always unique things about, you know, whatever period of time we're talking about. But you know, it's, it's more of a sentiment that older people have, I think in general where maybe they don't have, they don't know what the right answer is to deal with that nervousness, to deal with just some of the concerns that they have. Right. They, they're concerned about the election, they're concerned about all the geopolitical stuff that's happening. And for them, safety. Moving their money to cash represents safety, but it's just this risk averse attitude or sentiment that they have. And really I think that a big part of it, you know, it's easy to calculate your losses in the market. Right. You just log in and you say, hey, today I lost 5% or 10%.
[00:11:55] Speaker A: Right.
[00:11:56] Speaker B: Look at your statements monthly. It's much more difficult and it takes a little bit more Legwork to realize, hey, how much have I lost to inflation by sitting in cash? Now, you know, some people maybe aren't necessarily moving to cash per se, but they're in a money market fund or something that is, you know, as a cash equivalent, but they're at least earning some type of interest rate. But if they're not, if they're just sitting in cash, I mean, you're losing to inflation. And I find that people are way more comfortable with that. I mean, right or wrong. I mean, I don't think it's the right answer, but they're way more comfortable with that because they don't actually experience the losses like they would on their statement if the market, you know, a little bit volatile.
[00:12:31] Speaker A: Yeah.
[00:12:32] Speaker B: So I don't know. I think it's more so just educating people on, you know, what it means to truly. And I hate the talking point, but to hang in there and be long term. Right. It's kind of. It's overused a little bit. And especially with retirees who often say, hey, I'm 70 years old. Like, what does it mean for me to hang in there, to be long term? I think I've already done that. But also just staying the course and having a plan in place and not, you know, I talked about this in the last podcast. Not panic selling. Right. Not making any decisions based on panic and fear.
And I think this kind of leads nicely into. Into really the first thing that I wanted to talk about.
There was a Business Insider article or article survey that they conducted where they were looking at Americans between the age of 48 and 90, and they were asking them, what is your biggest concern? I'm sorry, concern? Regret in life. And interestingly, there were really two answers that we found over and over, and they all had to do with retirement. And one of those was not saving enough for retirement. Now, you know, there's a lot of things that people tend to regret. That video that you Talked about on YouTube, like, it's interesting how, you know, some of those seemingly just silly things that, like, you know, the younger people would say that they regret that really just don't matter in the grand scheme of things. And then, like, as the people get older, it just like starts to be like a very sober video where you're like, oh, geez, like, this is kind of sick, you know, and it's like.
[00:13:59] Speaker A: Novels, not joining the Peace Corps. It's like, oh, my goodness. Yeah.
[00:14:04] Speaker B: I mean, I'm in my 30s. I'm just like, gosh, like, this is, like, this is coming for all of us. But, you know, my uncle, he had a recent health scare, and I can't remember a time where he wasn't mad at somebody in the family where he wasn't on, you know, on speaking terms with someone.
My dad has nine brothers and sisters, so we have a big family. And, you know, and I don't know if it's like that in your family, but, you know, word tends to travel pretty quickly when someone's upset or somebody does something. But he had a recent health scare and, you know, he brought everybody in, he apologized, he made things right, and like, thankfully he was fine. He didn't end up dying or anything like that.
And he's back to really just like, not talking to the same people he wasn't talking to.
But, like, stuff like that. Like, you don't. I mean, I don't know. I just. I can't imagine being 60 or 70 years old now. He's in his 50s, but being 60 or 70 years old or getting closer to the, to the, you know, to the retirement years and hanging on to those types of things and not having regret over that. And I mean, you know, if he thought he was on his deathbed, so he wanted to make things right. And I think if that's any indication of, like, what you should do today, whether or not you're on your deathbed or, you know, just avoiding or not having so many things to regret, like, that's one of those things. Now, of course, you know, we're talking about money here, and not saving enough for retirement is one of the biggest concerns. There's all types of things that really lead to a happy retirement, and it's not just related to finances.
[00:15:31] Speaker A: For sure. No, I totally agree. And I think that that's one of the things that, you know, I know I'm passionate about Trey is as well. And I know yellow say, these are conversations that we have all the time, but for us being the age that we are, 30s and 40s, and being able to look 20, 25, 30 plus years into the future to see, hey, what are the things that people have done to create a successful retirement, what are the things that people have done to create not a successful retirement, etc. And I think that's one of the big reasons that we do this show, is because we want to make sure that all of you listening have enough of the information that we see on a daily basis. You know, we'll meet with people and, you know, all over the board, we'll meet with people and some people are in a great position and have no idea. Some people are in a terrible position and have no idea. You know, ultimately, I think one of the big things is, especially as you're looking long term and as, as you're looking down the road, etc. Is just saying, hey, what am I doing and who am I relying on and how am I ensuring that I'm going to be in a good position? And a lot of people might tell you that, hey, as long as you're saving this percentage or that percentage, you'll end up in a good percentage or end up in a good situation, I should say. But I think one of the things that people oftentimes miss is that there are tools out there, there are professionals out there that can actually tell you yes or no, where you're going to be at and what your retirement is going to look like. This is not a, this is not an article or anything per se, but I meet with people. I don't yell, say what. I meet with probably 12 to 16 or 17 people per week, you know, as just kind of a first, hey, let's get to know you. People are reaching out and they say, hey, I heard your podcast or I checked you out on the website or was referred in or otherwise, and I want to get some information and say, and have you look at, you know, my retirement plan and have you go through and kind of give you or give us your opinion. And so we do this all the time and very interestingly is that people generally, and I say this as nice as I can, but generally people have no idea what, what situation they're actually in or not.
[00:17:43] Speaker B: Right?
[00:17:44] Speaker A: And I think there's so much value in simply looking, looking to the tools that are available out there and talking to the people that specialize in this type of stuff, planning wise, et cetera, whether it's finding some place safe to put your funds. If you are one of those persons or people that are nervous about things, hey, what is an area that I could put some money that could be totally safe, that I could have preserved, et cetera, but that isn't going to be subject to inflation risk, you know, what are the solutions for that? And there are absolutely solutions for that that people oftentimes miss. But, you know, I hear, I hear people's, you know, grand schemes and their big plans, they've mapped out all the time, whether it is, hey, this is what we're saving or hey, we're going to pull from this account or Social Security or otherwise. And oftentimes, and I genuinely mean Oftentimes people are making really, really silly, easy mistakes. Things that are easy to fix but just didn't have the right information and face value. Yeah, that makes sense. But not knowing all of the reasons to make a decision, whether it's Social Security, whether it is, hey, where do I put my money here? Am I saving the right amount, et cetera. And I think Social Security is one of the things that I deal with personally pretty frequently, I think, you know, oftentimes when I look at that, it's a matter of who has a larger benefit if you're married. You know, let's talk about some of those things. One of the very, very common things that I see is, you know, a married couple comes in and there are some general rules for Social Security, you know, and everybody's plan is different. And if you've listened to us at all, you've absolutely heard us say that, you know, retirement isn't a one size fits all type thing. You know, it's definitely something that is kind of per the individual, but there are definitely some general rules. And when it comes to Social Security, we oftentimes look and we would say, okay, who has a larger benefit, who has a smaller benefit? Is there a strategy within just the benefits that you will receive, when to take, et cetera? And I just had this recently where somebody, you know, said, well, his benefits larger, so we'll definitely take his first because that'll help give us more income once, once he retires, and then because mine's a little bit smaller, we'll delay that. And that way it can still get some of the growth. And so that way we'll have kind of similar benefits when we're both retired.
And, you know, again, face value, if we were just having dinner and I, you know, wasn't a Social Security expert, I would say, hey, that seems to make sense. You know, it seems like a good strategy, but it actually couldn't be more wrong. It's 100% the opposite of what, what they should have done, because why wouldn't you take the growth on the much larger benefit and take the much smaller benefit early? You know, so there are things like that that we see people make mistakes on all the time. I'll see people come in, they've already turned on their Social Security. We'll talk through things and I'll say, hey, what was your strategy in turning on Social Security or what? What led you to make this decision and starting your benefit at this age versus that age or otherwise? Just so I can have some context to, hey, what retirement planning did you go through, etc. How did you reach these decisions? And oftentimes it's, I don't know, I just retired. And that's when you turn on your benefit. Right. Question mark, a little bit of question mark in their voice. There's always that, like if the voice turns up, there's question in it. Like that's what you're supposed to do. Right.
A very unsure of of if they made the right decision or not. Well, you already turned on your benefit. You can't really go back at this point. A few exceptions, but we things like that pretty frequently where just a little bit of information goes a long way, depending whether it's Social Security, whether it's investments, whether it's just general planning or otherwise. So, yeah, I think that's one of the things that we like to focus on when people say, hey, let's at least go through this, this checklist and see, you know, what makes sense for you.
[00:21:31] Speaker B: So, yeah, and I think that Social Security and Medicare and there's a variety of other things, but that's an important one to try to get right. You know, there aren't a lot of sources of income that are guaranteed to last as long as you live. Like as long as you're alive, you're going to receive a Social Security benefit. And if you're married, you know, we talk about all of the different things that could contribute to your decision on when and how to file. I talk about taxes all the time, you know, provisional income and how Social Security calculates federal taxes on your benefit. We talk about spousal benefits. I think the one area, the most important area that we can discuss is talking about Social Security benefits in terms of survivor benefits. Right. If you're married, and that's kind of, Ryan, what you were alluding to. You know, we know the cost of living adjustment was announced for 2025. It's announced every October, but it's two and a half percent.
So it's the smallest cost of living adjustment that we've had in a couple of years based on inflation.
If you have $1,000 benefit, if that's your benefit for Social Security, you're probably not going to be too excited about the cost of living adjustment. Whether it's 2 and a half percent, 5% or higher, it's probably not going to change your life in any meaningful way, especially since the cost of living living has increased. So maybe for you it's just it doesn't really mean anything. But if you have a $3,000 benefit or maybe you've delayed on your Social Security and like you're taking it at the age of 70 and you have a $4,000 benefit, right? Which is definitely possible. We see it. Right. Two and a half percent means more for you, right? That's more dollars per cost of living adjustment. Same thing if you delay on your Social Security benefits and you earn those delayed retirement credits of 8% all the way until the age of 70 or I think, I mean, I guess you don't have to wait each year, right? It's every month that you delay, you get a portion of that growth for you that means more if you have a higher benefit versus a lower benefit. And I know that, you know, the average benefit right now in 2024, it's only like $2,000, a $2,000 benefit. And I would say that, you know, of course, you know, for some people, Social Security represents a large portion of the income that they have. It might, you know, I think for, I can't remember if it's like those over the age of 65. I think something like 30% of those over the age of 65 rely on Social Security benefits to, to meet half of their living expenses, half of their needs in retirement. 30%. So a huge portion. But some of those people rely on Social Security only. And that's, you know, maybe not the best spot to be in because, you know, clearly there's some planning that hasn't taken place or maybe just, you know, maybe you weren't able to. Everyone's situation is different. We hear all kinds of stories and, and people in different places and positions in life that maybe they could save for retirement. Maybe they just didn't have the opportunity to. So whatever you have is what you have, and you need to make the best decisions with what you have. And it's kind of like, I think sometimes kind of like getting a personal trainer. Like, I know what I should eat. I know what I shouldn't eat. I know, you know, I know, you know, what, what it looks like. You know, I had a professor. Professor. I had a. I can't remember what they. What it was some type of physical education class we had to take in college. And there was this guy from Africa who was. He was actually the cross country head coach at ORU, and his name was Dr. Alec Musakuma. And he'd always yell at us. He goes, it's very simple, guys. Intake versus expenditure, intake versus expenditure. And it's, you know, it's a simple concept, right? Like, you know, I mean, most of These, you know, it's not like this is a podcast on diet and exercise, but most diets that I found, I mean it's all about caloric intake and caloric deficit and how much, what are you expending, what are you doing? And most of us probably can, can figure that out, right? It's not rocket science obviously. You know, there's, you know, some technicalities to maybe specific types of diets and things, but really what it comes down to is intake versus expenditure. And I know some of these things, but for some reason I won't do them. I won't do them. But, but guess what? If I were to hire a personal trainer, and I know this from experience, like I tend to be the best version of myself, I'm spending money to have somebody tell me and basically hold me accountable for the things I already know to do. And some of it, like when we, when we meet with a client, like the information is pretty basic. Like sometimes it's not life changing, but it's enough good decisions that we stack up over time where the outcome is completely different. And you know, sometimes we're talking about simply a strategy on when and how to turn on Social Security, sometimes we're making projections on RMDs or we're giving investment advice and we're helping people navigate these things. And a lot of times it's like, hey, like they probably could have gotten to that solution on their own but they won't do it. Right? It's kind of like saving for retirement. A lot of times like we just like it's the very basic things that we're asking people to do. Hey, contribute regularly to your employer sponsored plan. Take advantage of the batch. Well, it's like, no kidding, like that's free money. Like why wouldn't you do that? Eventually retirement is, I mean that's, that's looming, right? That's going to happen for everybody. All of us are going to get there, God willing. And we're going to need to live off of something besides just Social Security and see it like a no brainer. But you know, oftentimes we're just encouraging people to make the most basic decisions like contributing to their employer sponsor plan, contributing to their IRAs, putting something away, making sure that they don't live off of everything that they bring in, in the earlier stages of life. Anything to add to that?
[00:26:52] Speaker A: No, I, no, I think it's really good and couldn't agree more actually. And I am laughing a little bit because I do feel like I don't know if it's every time, but definitely the majority of times we end up talking about the gym.
[00:27:06] Speaker B: But like you said, you're, you're the, you're the kickboxing specialist in our office. Waking up early in the morning to.
[00:27:13] Speaker A: If people have never met me, they're gonna be like, man, this Ryan guy is like really something. No, I'm very intense.
I'm just a 40 year old guy trying to like not, you know.
Although the, the funny thing is is, you know, we laugh a little bit and you know, it's all in your decision making and I know to do it, but am I doing it? Etc.
And gosh, at least once every 10 days, Yel say will come out of his office and say, hey Ryan. Hey Trey. Do you guys want to do Chinese buffet today for lunch?
[00:27:42] Speaker B: Yeah, we just told lobby. I actually was thinking today would be a great day for the Chinese.
[00:27:49] Speaker A: Right under the bus.
[00:27:50] Speaker B: Yeah, I don't know what it is. Like I spent I don't know, maybe 10, 15 years not going to a Chinese buffet. And then just recently in the last couple of months, I think I've like, I don't need at least a dozen times.
[00:28:01] Speaker A: So it is pretty good.
[00:28:03] Speaker B: Clearly I'm not paying for a personal trainer or any, any advice in that, that department.
[00:28:10] Speaker A: We know what we should do when it comes to the Chinese buffet, and yet sometimes it doesn't happen that way.
[00:28:15] Speaker B: But may that be a lesson to all of you do it yourselfers, right?
Actually, most of the do it yourselfers, what I found is a lot of times they're, you know, the engineers and really they're the most disciplined on those things. But they're also people who, who really have a difficult time spending their money in retirement.
[00:28:35] Speaker A: Right.
[00:28:35] Speaker B: They've been so careful to save every penny and now they, they need somebody to give them permission to begin spending that money. Not that you want to go crazy, but like, hey, you know what? If you don't spend it, I know who will? Your children, when they ultimately inherit it. You know, and I don't think that you would love some of their spending decisions that they would make with your hard earned money. So maybe enjoy some of it.
[00:28:57] Speaker A: That is something really interesting, and Trey and I talk about this pretty frequently, is that we see people and they've come up with a plan to get to the point of financial success where their retirement is secure. And in retirement we want security and we want options, but people will be so disciplined, whether they're a spreadsheet type person or a margin type person. Or whatever it is and they have a hard time retraining themselves after 20 or 30 or more years of being disciplined and nope, I can't spend that. Nope, I can't spend that. Nope, I can't spend that. I have my, my small budget where I allow myself to spend $50 on whatever I want every month or $100, whatever way I want per month. And by the way, that's not a bad strategy, especially when you're getting started, especially maybe if you have kids, other financial priorities, et cetera. But once you have reached the point that you have been disciplined for, it's really hard for people to make those changes and make that, make that adjustment to hey, now I can actually use this and I need to figure out what a good strategy is so that I keep as much of it as possible.
My kids keep as much of it as possible. Because even though you may not, may not like your kids spending habits, potentially I think we would all still agree that we would rather go to our kids than to the government. Right?
[00:30:16] Speaker B: Right. Yeah. And those don't necessarily have to be the two choices to make, but of course not.
[00:30:21] Speaker A: Of course those are your only choice either. Jo Bing Bing.
[00:30:27] Speaker B: I don't know, I think maybe it was a couple weeks ago I talked about how it's, it's very difficult for some people to be realistic in terms of their budget. They just can't get a grip on how much they actually spend and they don't want to make any compromises at all in retirement. And I think that that's, that, that's one, one side of the ditch that people have a tendency to get into, but another part of it, you know, isn't people who, who necessarily spend too much or can't spend their money, but they just live out of fear. And we talk about this a lot too and that, that dictates a lot of their decisions in retirement. And you know, longevity risk, it's a very real thing, longevity risk with certain health risks that are there that can really just, I mean we've seen, we've seen even large estates get really just decimated by long term care.
You know, and a lot of times people think, well, you know, the average life expectancy is 78 or something like that, rates right around 78, 79, you know, but that, that takes into account the entire population.
[00:31:29] Speaker A: Right.
[00:31:29] Speaker B: Our, our average client is 65 years old. You know, for a 65 year old, one in three are going to make it to the age of 90, like.
[00:31:38] Speaker A: Right.
[00:31:38] Speaker B: That's very different than Saying the average life expectancy for the entire population across the entire country is, you know, 78 years old. So the vast majority of our clients are going to exceed the age of 78 probably. You know, and I think that, you know, with the cost of long term care and all the unpredictable things that come with that, because, you know, it's one thing to say, hey, you know, I might need a home health aid at some point, it's another thing to say, hey, I'm going to be in a long term care facility and maybe the average doesn't apply to you there either. Where the average stays three years, it could be significantly longer than that, especially with folks who have cognitive impairment and memory care facilities and things like that. They could end up really just eating away at your retirement savings. And I've talked about this before, but still it's a huge concern, especially when we meet with couples, depending on what the age gap is between the couple, but especially if, you know, if one person ends up needing that care and all of the resources are depleted for that one person, what position does that leave the surviving spouse in? And unfortunately, typically the surviving spouse is women just live longer than men. Women are the ones who tend to outlive men or usually are the ones who end up having the short end of that stick.
[00:32:51] Speaker A: Right. It is interesting and not to spend too much time on Social Security, but I just met with a woman recently and her husband had passed away 12 or 14 years ago quite a while back. And she came in to meet with us because she had said, well, I had heard you talk about Social Security. I wanted to get a little bit more information.
And I know you talked about a surviving spouse for Social Security and I need more information on that. You know, my, my husband passed away 12 years ago or 14 years ago. And so we started going through things and looking at, at information together and you know, we found out that she was eligible to receive a $2,800 per month Social Security benefit as a surviving spouse. So that benefit amount is based off of her former husband's or deceased husbands full retirement age benefit.
[00:33:39] Speaker B: How old was she, Ryan?
[00:33:40] Speaker A: Do I mean, she was 67 and a half, so just over 67.
[00:33:44] Speaker B: Yeah. So. And, and of course, you know, I'm sure most of our listeners know this, you can, you can turn on a survivor benefit as early as age 60.
[00:33:51] Speaker A: Right.
[00:33:52] Speaker B: If you're disabled. So but if you do turn it on early, you actually, you receive the normal reduction that applies for anyone who's on that benefit early. So I was wondering how old she was because of how high that benefit was. It was like clearly correct, probably an un, unreduced benefit.
[00:34:08] Speaker A: Basically. That's exactly what ended up happening. So in conversation with her, she was a little over 67, you know, 67 and a half, something like that. So she had reached her full retirement age. And on the one hand, it, it was really funny. I mean, it was a very mixed emotion conversation because she's hearing for the first time that I can receive $2,800 a month. I had no idea that I would, I was even eligible for that or that a surviving spouse benefit was even a thing. And now all of a sudden, via one meeting, she found out she can receive $2,800 a month, which is just under 34,000 a year. It's like 33, 6. Right, that's, that's a huge change for somebody. I mean, $30,000 additional income is a big change for anybody, whether you've got a hundred thousand in your retirement account or a million in your retirement account.
[00:34:50] Speaker B: Did she have, did she have much of a benefit of her own?
[00:34:54] Speaker A: Well, so that's the interesting thing is, is that her full retirement age benefit was a little bit less, but by the time her benefit gets to 70, when it maxes out, it will be larger. So what we found out was she said, well, I'm a little frustrated because I didn't know about this, but at the same time, I'm, I'm overjoyed that I'm going to get these additional funds. I said, the, the good news is, is that you're getting the full amount. Had you taken it five years ago, seven years ago, had you known about it then, it would have been a smaller dollar figure and you were still working, so there could have been a penalty anyway. So it actually is working out very well for her, even though she had no idea it existed. So the nice thing is, is that now for the next two and a half to three years until she turns 70, she's going to collect her surviving spouse benefit of $2,800 per month. And then at age 70, she'll do a second Social Security application for her own benefit, or her own benefit will be maxed at 3,300. So, I mean, it's a huge, huge win for her because she can collect an extra 33,000 a year for the next couple of years until her benefit maxes out. It's, it's wonderful. I mean, it was a big, big, big win for her.
[00:36:05] Speaker B: Right. One thing to keep in mind, and unfortunately we bump into people all the time who end up learning this the hard way. There really aren't any automatics. Automatic things that happen are not Social Security.
And we found out recently someone who had been receiving a spousal benefit and who intended to take that spousal benefit right up until the age of 70, and then they planned to shift to their own benefit, they thought that that happened automatically. And eight months later, which I don't know why, it took eight months to realize the checks aren't going up at all from this Google administration. But eight months later, they ended up calling us to find out, hey, when is my benefit supposed to increase? I'm almost 71 years old at this this point. Why hasn't my benefit gone up?
[00:36:51] Speaker A: Right.
[00:36:51] Speaker B: Well, because you have to actively turn on your own benefit. Even though Social Security is aware that your benefit stops growing at the age of 70, there's no reason to delay beyond the age of 70. And thankfully they were able to backdate it a little bit, Ryan. They didn't build a full amount, 6,000.
[00:37:08] Speaker A: Months, but got six months backdated.
[00:37:10] Speaker B: Six months. Okay.
[00:37:11] Speaker A: Yeah.
[00:37:11] Speaker B: So you had to just keep that in mind. If you have a plan in place and you ultimately intend to turn your benefit on at whatever age, whether it's 69, 70, doesn't matter, you have to actively do that. Social Security for you.
[00:37:24] Speaker A: Right? Yeah. And I think back to your point earlier about having somebody on your side, a personal trainer, if you will, to say, hey, don't forget, this is coming up. We need to make sure we take action on this is important. You know, if, if any of these, if any of these things so far have stood out to you and you said, hey, I actually need to check on that for myself or I've not gone through a type of projection like that, etc, we'd be happy to do that with you. You can again give us a call. 612-286-0580. You can email us directly, Ryan, at G wealth, yellow, say gwealth.com or trey gwelf.com one of the things I wanted to shift to here, Yellow, say, is that this was a Yahoo. Finance article that recently came out, another study. And obviously there's tons of this information and you can kind of cut it a million different ways. But the article caught my eye for the title because it says US Retirement system is only getting a grade of a C plus. And you know, whatever, A, B, C, whatever. That's. It was kind of a little bit of a clickbait.
[00:38:28] Speaker B: Those letters Mean something.
[00:38:30] Speaker A: No, I know they do. I know they do. Caught my eye a little bit. So I'm jumping into it. And a big part of the rating, the reason that it's only at a C plus is related to pensions being funded. Lack of companies offering a pension, and then pensions that are existing, some of them are running into trouble. But one of the things I wanted to just spend a minute on is it's interesting because according to a Census Bureau, one in five Americans will be or expected to reach retirement age by the year 2030. So the next five to six years, 20% of the population will be of retirement age. The more interesting thing to that is that this age group is the first to face the milestone that doesn't have a cushion of having the full Social Security benefit or a defined benefit pension plan. So, meaning that we've talked about this a bunch, but Social Security is not fully funded right now. It's not guaranteed beyond another 10 years. So that is something that, you know, Congress obviously needs to figure out and fix. But more and more people are retiring without pensions. So the article went on to say that this really is the first generation, the first grouping of people that don't have that large fixed income guarantee as they shift into retirement. And it is a milestone when you think about that, you know, because, I mean, how many people have parents, grandparents or otherwise that, yeah, they had fixed income, and if they, you know, had extra, they had extra, and if they didn't, they didn't. And that was just the end of the story. You know, I remember that with my grandparents and, you know, like, this time grandpa's taking us out to dinner. Next time he's not. You know, it depended on the month because of fixed income. Right.
But it is a big milestone that fewer and fewer people are retiring with that pension and also having the total security on. On Social Security. So I thought that was really interesting.
[00:40:29] Speaker B: Yeah, I mean, there's obviously a lot of things that, for me, that come into play when I'm look assessing, like, you know, what it's like to live here in our country versus other countries that maybe have larger social safety nets and actually the health of whether it's, you know, the private sector or even the government and its ability to fund those obligations.
You know, it is kind of disheartening that we're a C plus according to the rating there. Right. You know, and a big part of that is just, you know, the onus is on you. You know, we don't necessarily.
We can't rely on things like that, anyways, you know, like, I would hate to be in a position where I rely on my Social Security benefit for a significant amount of my income. Now, obviously, I paid into the system. I want there to be something for me, you know, but if I could choose, you know, I, you know, maybe like many of you, actually, I think most people are probably better served paying into the system and having a Social Security benefit. But, you know, I know I can sympathize with folks who would rather just not pay their FICA taxes and instead make those investment decisions on their own and seek a better rate of return than what the Social Security Administration is able to achieve, which I think it's like we talked about this before. I think over the last, I don't know, 30 some years, they're, they're getting a rate of return of 1.4 or 5% on the Social Security trust fund, you know, which it's based on the number of people that are retiring and how much we're, how much we're. We're. We're drawing off of that to, to people that are collecting their Social Security benefit compared to how much people are paying in. Like, that doesn't seem like the math is going to work out very well. And obviously that's why there's a problem. That's why solvency is an issue. And so that we talk about often, you know, but it's one of those things that, you know, the onus is on you. You have to make sure that you're making good decisions for yourself, and you have to make sure that you're not relying on Social Security only, especially since probably, you know, they're probably going to bail out Social Security. You know, if I had to guess, they're probably going to find a way to fix it, but no one is going to love the solution. It's going to cost somebody something. Right. Whether it's the next generation or maybe they're going to push out full retirement age or something like that. And I'd rather be in a position where I've made good, sound financial decisions and I don't necessarily have to be impacted by whatever happens to the Social Security Administration.
[00:42:48] Speaker A: Yeah. And just, just to put a ball on that, that rating, the C plus rating, does come from the Mercer CFA Institute Global Pension Index, which has been around since 09. So obviously this is something that's been paid attention to and focused on for a number of years and, you know, coming up with, hey, what is my solid plan? What is my plan for income in retirement? So I Like your, I like your coach that you had referenced and you know, intake versus expenditures. And that's what one of the things I talk to people about a lot is that in retirement you're, you're, you're basing your plan the same way you do now. Meaning what are all my sources of income and then what are my expenditures? Right. What are my expenses?
The difference is some of the big differences are, you know, your income sources can change. Your retirement savings now becomes a source of income depending on how much you spend. So, you know, I think some of the, the quick tips as we, as we are nearing a close it, you know, the quick tips for the people that do have a successful plan. And you know, I think what the wealthy retirees have in common and what they did before they retired is they prioritize savings. We know that no one, no one can force you to do that. But I think having somebody on your side helping coach you and guide you, etc, is, is beneficial.
Anything you can do from an investment standpoint, saving standpoint, that's automated, right. We love that we can just have our 401k do it automatically. I don't have to have as much discipline to do it myself. You know, I think if there is a way for me to automatically just be gotten out of bed in the morning and just driven to the gym, yell, I would probably have a higher success rate of getting there. But I have to still do it. I have to hear my alarm. I have to, you know, not hit snoo Etc, you know, not subscribing with a lot of the, what do you call it, you know, the, the kind of keeping up with, with the Joneses mentality. There's nothing wrong with, you know, you need a new car or you want to have a boat for family time, things like that. Absolutely, go for it. But you got to make sure that some of these other things are happen.
And then, you know, I think one of the big things, and anybody will tell you this, that has been successful is that they got a lot of direction and they partnered with a professional in some capacity. Right. Depending on when that is. Maybe it wasn't until they were in their 50s or maybe even later 50s as they were nearing retirement, but partnering with a professional to make sure that they don't make the mistakes as they transition from their working and earning years and saving years into the preservation and spent down years. Right. So that partnership with professional is one of the things that resonates as one of the biggest components to a retirement plan and financial success. We see a lot of people that have saved well and then make costly mistakes, quite frankly, because they don't know all the detail what they should. So I don't know if you have any other thoughts on that, but I think those are the kind of things that I would want to encourage people on is, you know, saving is important. You have to have some of the discipline there. But talk to a professional that spends their time on this stuff every day, who knows what things to look for, et cetera.
[00:46:03] Speaker B: Yeah, I think that's. That's a great way to end things.
Yeah, I love it.
[00:46:08] Speaker A: Okay, perfect. Well, I like to end with something fun, so I'm just going to give you a quick this Week in History. I think these are actually really interesting. This was a big week over the course of history. I'll say, is that in 1825, the Erie Canal opened. This week in 1904, the first new York City subway line opened. That's kind of a cool, a cool deal. The Statue of Liberty was dedicated in New York Harbor. In 1886, this Week in History and then this one. I still think this is, this is just shocking, and it tells you what 100 years can do. But in 1938, October 30, 1938, many of you have either read this or heard this, but Orson Welles's radio broadcast of the War of the Worlds went out and caused absolute panic because people thought it was a real news broadcast. You know, and the whole thing is, you know, aliens come in and all this other stuff. I thought that was really kind of a. Kind of a crazy story. But it goes to show as time, time moves on, how things change, etc. Because I was 1938, you know, so not even a hundred years ago. And obviously now we have information at our fingertips and everything's available to us. But fun week in history for sure. So, Ryan, I. Yeah, I should have.
[00:47:29] Speaker B: Said this just as, as something that people need to be aware of.
[00:47:34] Speaker A: Yeah.
[00:47:34] Speaker B: A little earlier, but it is your annual enrollment period on Medicare. We're not going to spend any time on those things.
[00:47:40] Speaker A: That's a good point. I'm glad you said that.
[00:47:42] Speaker B: Every year, October 15th to December 7th, if you're already 65, if you're on Medicare, traditional Medicare, of course, and you're looking to shop out your advantage, plan your Part C benefits, this is the time of year to do it, you know, without going into a ton of detail. If you shop it out annually, you're probably going to save a lot of money over time. It doesn't mean you're going to make a change every single year.
A lot of that's based on your medications. Your part D. Right, Your prescription drug plan. Those change annually. There's companies that even though they have all of your medications in their formulary, they're required to have a medication for each therapeutic use category. It doesn't mean that they're all at the same cost, doesn't mean they offer all the same benefits. Shop that out, sit down with somebody who can help you with that to make sure that you're being as efficient as you can be in terms of your Medicare. Yeah, that's it. That's all I had to say on that.
[00:48:37] Speaker A: No, I'm glad you remember to bring that up. That is a good point. Again, the dates are October 15th through December 7th for Medicare Open enrollment.
Have a great day, everyone. Have a great week, everyone. If you want to reach out, if you want to talk to us about your retirement plan, whether it is about Social Security, whether it's about all of the pieces combined, hey, what does my retirement puzzle look like? How do I coordinate all my benefits together to maximize them? Or hey Ryan Yelsey, you guys mentioned some safe investment options, etc. I need to know more about those. Give us a call at 612-286-0580. You'll get a hold of us. You can email us, listen to our other podcast, atf podcast.com and we look forward to giving you more great information on our next episode. Have a great day everyone.
Thanks for listening to all things Financial. You deserve to work with retirement planning specialists who care about your money and take a unique approach to your financial and retirement needs. Visit AllThingsFinancial.com and set an appointment today.
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.
