Randy outlines the most expensive budget items for retirees today. Plus, does the 4% rule still work during times of high inflation? Randy shares his thoughts on this week’s show.
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8.11.23: Audio automatically transcribed by Sonix
8.11.23: 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 Your American Retirement with your host, Randy Sams. Get set for a full hour of financial information and economic news affecting your bottom line. Randy works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here is your host, Randy Sams.
Randy Sams:
Hey, good morning, central Arkansas. I want to welcome you to today's show, Your American Retirement on 101.1 FM. The Answer where Little Rock comes to talk. My name is Randy Sams, president CEO, SMMG Financial, and I'll be your host today. And going forward, I'm glad you took the opportunity to join us this morning. I don't know if you've had your first cup of coffee or you're against got your first cup of coffee or your own cup, 2 or 3. I can't do 2 or 3 cups of coffee. People always say I kind of talk fast anyway. I try to slow down when I do this show, but if I do more than one cup of coffee in the morning, the hair on the back of my neck stands straight out and I talk really fast. So anyway. Uh, hope you're doing well. It's been a beautiful week. We've had some good rain, which I'm glad to see. Of course, you know, when it rains, your grass moles grows and you have to mow it. But that's just part of living in Arkansas. The the heat has gone down a little bit because of the rain.
Randy Sams:
But now the humidity is going to be coming up because of the sunshine. So it is what it is. Welcome to Arkansas. But again, thank you for joining us on today's show. We've got a great show for you. We're going to be talking about cut cost and retire with confidence. Taxes and more big expenses that impact your retirement, that impact your retirement, cut costs and retire with confidence. That's what we're all about. So. I want to give a shout out to all our listeners in Benton, Arkansas, Bryant, Arkansas. All you Saline County listeners, thank you so much. We appreciate all the comments that we get from our local listeners because you guys know I am from Benton, moved to Benton in the 70s, so I've been here for 45 years. I've been in Benton longer than I was in Little Rock. But I am an Arkansas boy born and raised in Little Rock, Arkansas. Went to school at University of Arkansas. Go Hog. If you go to the podcast or you go to the YouTube channel, you'll see me. I have my Razorback t shirt on this this morning. So we're getting ready for some football, aren't we? Who's all ready for football? No, I am. But what do we talk about on this show? Well, we talk about retirement income. So folks ask me what you do, Randy and I say, well, financial we are focused on addressing the major financial issues facing retirees and pre-retirees in America today.
Randy Sams:
We want to help our people understand and prepare for a secure retirement, not a risky retirement. So that's what we do. So again, folks, you heard me mention this earlier. We have a podcast. You can listen to any of the previous episodes on our website YourAmericanRetirement.com or on your favorite podcast app, Spotify, whatever that might be. Also a YouTube channel. So check out our videos and subscribe to our weekly highlights. So in other words, when you see me on the YouTube channel again, you'll be looking for Your American Retirement. You'll see my smiling face. And if you see the Razorback shirt, you'll know, Hey, I've got the right guy. Today, we don't have the complete show on YouTube. We just take little segments where we feel like are the highlights of the program kind of get you interested in listening to the full program and hopefully you'll go to the website or you'll listen to the podcast. But that's what we do. We want you to give us a thumbs up. We want to thank you for all the people that have gone to YouTube giving us a thumbs up. Tells your friends and family about us again. We love all the folks that we get the chance to talk to and all you have left. Very encouraging comments and suggestions. Again, what does concern you about your retirement? Whether you're close to retirement, you're ten years away from retirement or you're into retirement.
Randy Sams:
What is it that concerns you? That's what we deal with on this show. I just don't talk about formulas. I don't talk about calculations. I don't talk about, you know, I don't talk a lot of times about what sales we have. Right. I do give examples and I'm going to give one in just a little bit of an example of why it's important to know what you're being offered when it comes to an annuity. Very important. But again, please don't hesitate to call me with your financial questions, your concerns. Leave me a suggestion. Say, Hey, Randy, this is what kind of concerns me. And it may be something that I've never thought about. Maybe something I've never run across. Just leave me that suggestion. Call me. 86699076648669907664. Leave me your information. Leave me your message, and I promise you we'll put it on the schedule to talk about it. Because if it concerns you, it concerns us because we are concerned again about setting you up for a secure retirement, not a risky retirement. So today's offer for our listeners, if you call me or you visit our website, you can receive our free report on tax free investments for a better retirement. So in this report, we share our strategies to help you keep more of your hard earned money. So we believe in paying Uncle Sam what he is owed. But you don't need to leave the IRS a tip, you understand? So call us at (866) 990-7664 or visit us at the website YourAmericanRetirement.com and say hey Randy, I'd like to have that free report tax free investments for a better retirement and we'll get that to you ASAP.
Randy Sams:
So, hey, let me let me kind of give you an example of of what we do. And this is what I run across, folks. Okay. I met with a gentleman, spoke to him on the telephone and he had already met with a couple of other advisors, retirement planners. And, you know, we went over a couple of some of some of his information and what he was looking at. And he was in a in a in a pretty good financial situation and getting ready to retire, you know, But he wanted to be able to set up an income annuity. Not immediate, but he wanted it to be able to grow. And at a certain age, he wanted to turn that on because of the fact he was looking at right now, when he retires, he's going to be turning on Social Security. And he's one of the lucky few out there that he has a pension. But he also understands that ten years from now, the money that he's going to get when he retires, when he turns on his Social Security and his pension is not going to have the same purchasing power that it does today. And he understands that, you know, hey, if I take this a certain amount of money and we put it into an income annuity and we let it grow for ten years, then at age ten, you know, in ten years, whatever age that might be, I can turn on the additional income and that will act like a ladder, that will act like a to protect him from the inflation that has occurred over ten year period.
Randy Sams:
Okay. Now, he doesn't have to wait for ten years, but that was his plan. So this gentleman had 200,000 and this is an example of an income annuity and what you should know and what you should look for. That's why you need to get a hold of me at (866) 990-7664 or go to YourAmericanRetirement.com. And let me educate you on what's out there but this is an example of what really happened. So this gentleman had 200,000 and he wanted income in ten years. So he had been shown a product from a company that was giving him a guaranteed 14% simple interest growth, 14%. Folks, that's pretty mean. I don't know of a bank that's offering 14%. But here's the. Remember that was simple interest. So 14% simple interest on $200,000 is guaranteed to grow at 28,000 each year. Okay. It's not compound 14%. Simple interest is if you got $100,000 and you get 10% simple interest, that's $10,000. If you've got a guaranteed 10% simple interest for the next ten years, it's going to grow at $10,000 each year for the next ten years. Okay. So this gentleman was looking at a product that gave him a 14% simple interest guaranteed for ten years, which is 28,000 per year.
Randy Sams:
So his 200,000 was guaranteed to grow to, what, $480,000. So that sounds good, right? So after ten years of growth, they showed a guaranteed income of $26,400 per year, $26,400 per year on that 480,000 that he would have in ten years. Okay. Remember, 200,000 growing at 14%. Simple interest, 28,000 a year times ten years equals 480,000. But his payout was 26,400. So the product that I presented to this gentleman had a 7% compound interest for ten years. All right. Now, remember, we're using compound interest. Basically what happened is over that ten year period, his 200,000 doubled to 400,000. And the income that I was able to offer him was 30,000 versus 26,004. Now, why did my 400,000 pay out higher than his 480,000? Because your income is based on your age and the time of income that you turn out on that income and the payout factor the company offers you at that time, you have to focus on the guarantee. So my payout factor ten years from now was 7.5 is was 5.5. So folks, that's why you need to get in contact with me. We have to focus on the guarantees. What does your contract guarantee you? At what age? So, folks, you come right back. We're going to get in to the quote of the week and the meat of the subject. We'll be right back. Miss, part of today's.
Producer:
Show, Your American Retirement is available wherever you listen to podcasts and online at YourAmericanRetirement.com.
Producer:
Are you concerned about market volatility, rising taxes, economic uncertainty and how it all could affect your future in retirement? Then tune in to Your American Retirement to learn how you can protect and grow your hard earned money. Your American Retirement. Every Saturday at 10 a.m. right here on 101.1 FM. The Answer protect your retirement and schedule a free no obligation consultation now at YourAmericanRetirement.com.
Producer:
Any bonuses mentioned may be subject to additional restrictions and regulations based on the offering annuity company. You may not receive the bonus if the contract is fully surrendered or if traditional annuitization payments are taken and if the policy is partially surrendered, it could result in a partial loss of bonuses because these are bonus annuities. They may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads, and other restrictions that are not included in similar annuities that don't offer a bonus feature.
Producer:
Visit YourAmericanRetirement.com to schedule a free consultation with Randy today. And now back to the show.
Randy Sams:
Hey, welcome back, folks. Again, my name is Randy Sams. You're listening to Your American Retirement on 101.1 FM. The Answer. Again, I want to thank all of you for joining me this beautiful Saturday morning. And again, thank you for joining us. And hopefully you're taking some good notes. So remember what we just spoke about. When you're looking at an income annuity, don't let all the bells and whistles, all the shiny stuff impress you. Basically, the bottom line is this. You got to look at the company that you're doing business with. What are their financial ratings You have to look at, sure, I'm all for bonuses, but the bottom line is, at what age are you going to turn on that income If it's not immediate, at what age do you want to turn on that income and what is the payout factor at that age? So if I'm 60 and I want to turn on an income at age 65, what's the payout factor at age 65, folks? That's how you determine whether or not how much money you're going to make. So you've heard some people, they have the 4% rule. And, you know, in order for your money to last, you can take out 4% and that should last for 30 years or whatever that might be.
Randy Sams:
All right. I'm not a big believer in the 4% rule because you see the 4% rule just base is just based on your money just staying level. What happens if it drops? If you're taking out 4% and your money goes down 20%, that's not a good formula. That's why I'm a big believer in income annuities. Okay? I'm a believer of guarantees. I'm going to be taking a sure thing versus a what if we can all show what ifs, all the hypotheticals we want to. But when you're retiring or getting ready to retire, you better base your retirement on guarantees. And that's what we do at SMG Financial. We focus on the guarantees. So please give me a call. (866) 990-7664. Or go to YourAmericanRetirement.com and leave me your information. So Randy I've got some questions on that guaranteed income that you were talking about. Oh the payout factors. I'll be glad to get back in contact with you. So financial wisdom quote of the week.
Producer:
And now wholesome financial wisdom. It's time for the quote of the week. Quote of the week.
Randy Sams:
In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing. Does that make sense in any moment of decision, the best thing you can do is the right thing. The worst thing you can do is to do nothing that is given to us by Mr. Theodore Teddy Roosevelt. And Mr. Roosevelt was the 26th President of the United States, serving from 1901 to 1909. Mr. Roosevelt's achievements include the establishment of national parks and monuments, consumer protection measures and the construction of the Panama Canal. Mr. Teddy Roosevelt. So thank you for that financial wisdom today. All right, folks, let's talk about Mr. Warren Buffett. You all know who Mr. Warren Buffett is, one of the wealthiest men in the world. Mr. Buffett has a list, and we're going to go over some of that. So hopefully you have some those of you who are getting ready to be retired thinking about retirement, you're in that retirement red zone. You know, the retirement red zone, as I call it, five years before you retire and five years into retirement, that's that ten year period that you need to be really focused on not losing. Okay? You got to be focused on not losing any money during that ten year period. I call that the retirement red zone. But Warren Buffett made a list of things. Poor people spend their money on. All right. Warren Buffett's list of things. Poor people spend their money on.
Randy Sams:
So get ready. So Warren Buffett, one of the most successful investors in the world, has a reputation of his simple yet profound financial wisdom. By addressing these common financial pitfalls, we can all make more informed decisions to ensure our money serves us well. So, folks, we have to be aware of when we're getting into retirement, close to retirement, you need to be aware of some of the things that need to be looking out for some of the things that I might need to change in my lifestyle before I get into retirement or while I'm in retirement. Okay. So this is a list by Mr. Warren Buffett, which is a very smart man. Okay. So take a listen. Number one, neglecting personal development. According to Buffett, the best investment one can make is oneself. And I agree with that 1,000%. So enhancing skills and education can boost earning potential significantly. Knowledge and the abilities are assets that no one can take away from you. So, folks, if you look at my business card or you see you get an email from me, you'll see that I have a couple of designations behind my name. I'm not doing those days. I'm not putting those designations to try to impress anyone. Folks, those designations were earned with blood, sweat and tears. All right. I'm a big believer in education. That's why, you know, what we do is educating our clients or potential clients, helping them understand the financial risks that you will in your retirement.
Randy Sams:
Remember, what do we say? We want you to retire. With a secure retirement, not a risky retirement. So what I do to help you is to educate myself. Okay, folks, annuities today are not the same that they used to be five years ago, two years ago. There they have annuities coming out every day. They've all got really nice features. But again, don't let all the bells and whistles get you excited because the bottom line is, if you're looking for an income annuity, then it's about income, right? If you're looking at more growth annuity, it's going to be about growth. Two different things, but that's why we need to look at that. So neglecting personal development, always try to keep yourself educated, try to read. Okay. I've always heard leaders or readers or readers or leaders, so try to read some books. Try to educate yourself. Stay active. Number two, relying on credit cards. And folks, we've had a big we've had some sections before, some segments of our shows before talking about credit cards. So credit cards can be convenient, but a high interest rates can quickly overshadow any benefits if you don't pay the full balance monthly. Buffett advises against needless spending that could lead to credit card debt. Now, folks. Here's my philosophy on credit and credit cards. All right. I have a credit card. I have a business credit card. I put all my business expenses on that credit card. All right. Now, the good thing is that my credit card gives me these, I guess, reward points.
Randy Sams:
Okay? That you can use them for different things. But you see, I don't build up a balance. So what I do at the end of the month is that I pay off all my expenses that I've put on that business card. Okay. But there are several people that I've spoken to that that's what they also do. They have funds coming in, Social Security, pension, annuity income. But they put all their bills, all their grocery bills, electrical bills, utility bills, whatever it might be. They put those bills on a credit card. But they're smart. It's like Buffett says, pay the full balance at the end of the month. But what they're doing is they're accumulating those reward points also. Okay. So sometimes you can take those reward points back in cash. They'll send you a money card or you can take a Walmart gift certificate or you can take a Home Depot gift card or whatever. So many ways to do it. But relying on credit cards is not something that you should do if you don't want to fall into that poor category. Number three, frequenting bars and pubs. Aha. Spending on activities like drinking at bars can add up. Opting for more affordable social gatherings like home get togethers can help cut cost. Reducing alcohol consumption will also lead to a healthier lifestyle. Y'all get that. Had I had to laugh at that. So reducing your alcohol consumption will also lead to a healthier lifestyle.
Randy Sams:
Okay, so stay out of those bars and pubs, folks. It's more expensive to go out to eat than it is to do it at the house. All right. I still plug a bunch of restaurants. I love restaurants. I've got a few favorites myself, but I don't eat out there. Eat out every day. So frequenting bars and pubs is something that Warren Buffett says. That's a no no. Chasing the latest technology is number four. New gadgets may be tempting, but often last year's model serves just as well. Buffett himself has a history of sticking to functional rather than flashy tech. So, folks, how many of you all have the newest iPod? Iphone? I think What are we up to right now? Iphone 14, 15, 16, whatever it is. Okay. There are some people out there that win. The new iPhone comes out. They have to have the new iPhone. Well, I think they come out with a new one. What, every eight months or nine months? Okay. I've had my iPhone now. I think my iPhone is an iPhone ten. Okay. So I'm like, Buffett, I'm going to stick with it as long as I can until it tells me that it's time to get a new one. All right. Overspending on clothes. Wow. And Buffett, along with other billionaires, lean toward simplicity in his wardrobe. Choosing classic durable clothes over flashy, expensive brands can result in significant savings. Shopping from for for vintage clothing that fits your style can be an affordable cost cutter and a fun activity during retirement.
Randy Sams:
Make sense, folks. You don't have to have the Gucci shoes or the Louis Vuitton purses or whatever. Hey, I'm not knocking them. If you got them, fantastic. More power to you. He's just saying overspending on clothes. I go into some people's closets, families, and I see clothes that are hanging up there that still have the tags hanging on them. Okay. They bought them. They haven't ever worn them. All right. So don't overspend. Don't close buying new cars. Cars are notorious for their rapid depreciation. You buy a new car today and you drive it off the lot. Change your mind tonight. Take it back tomorrow. It's dropped in value. So Buffett recommends buying pre-owned cars and holding on to them for as long as they're reliable instead of falling for the allure of the new models. Buffett drove a 2001 Lincoln Town car for over a decade. So, guys, cars are a necessity. They're not a they're not an appreciation product unless you got an antique car that you've taken very good care of, then obviously they're worth more today than they were 25, 30, 40, 50 years ago. That's fine. Number six, Unused gym memberships. Buffett promotes an active lifestyle but cautions against unused gym membership ships. Free or low cost fitness routines can be just as effective if regularly practiced. Okay. I know a lot of Medicare Advantage plans out there have a gym membership included in it, like silver.
Randy Sams:
What is it? Silver sneakers. There's a couple of more out there. But, you know, hey, we want you to stay active. But why join the gym just to be trendy if you're not going to use it, if you're not going to go lift weights or work out or jog or use the bicycle machine, why spend that money? Let's look at a last couple of ones. Oh, gambling. While gambling might seem like a shortcut to wealth, Buffett emphasizes the importance of understanding the odds, the urges people to make financial decisions that favor their long term wealth accumulation, not momentary thrills that come from casinos and gas stations, scratches, guys, Casinos are in business because the majority of people that go in do not walk out winners. If everybody was a winner at the casinos, they wouldn't be in business. If you want to go gamble, set you a limit, Go in with a hundred bucks. If I lose a hundred bucks, I'm leaving. Okay. If you get up 100 bucks, take their $100 and leave. On top of that. So, folks, those are Warren Buffett's tips to avoid being poor. Remember those when you're getting ready to retire or you're getting close to retirement, you might want to change some of your lifestyles. Hey, listen, come right back. We're going to jump right back into these are the business business, biggest expenses for retirees today. Listening to 101.1 FM, the Answer we're Little Rock comes to call.
Producer:
Sound familiar? I'm Jim Tabaka with the retirement radio Network. Powered by AmeriLife, millions upon millions of credit card transactions are processed across the US every day. Creditcards.com senior analyst Ted Rossman told CBS News recently. More than a third of US adults are carrying credit card debt right now.
Ted Rossman:
Credit card balances are at records. We're seeing more people carrying debt and we're seeing interest rates at record highs. So I think this just calls to importance the need to pay it off.
Producer:
Furthermore, a recent report from Lendingtree.com says that Americans have put themselves in a $986 billion hole of credit card debt. And while Americans don't shy away from trying to score reward based incentives and take advantage of the perceived positives in a credit card based system, it does beg the question is cash still king? Paying for items in cash presents opportunities to reap specific benefits. Instead of paying credit cash payments. Take away the worry of having to pay credit card fees or interest and may be the most significant reason you own what you purchase rather than owe While paying in cash offers a different and safer way to manage your money. There's a growing trend in society of various businesses going cashless, however, paying in cash at various restaurants and coffee shops or even the doctor's office could prove financially beneficial for your household balance sheet using cash instead of credit. Part of our 23 cost cutters for 2023 for the retirement radio network Powered by AmeriLife.
Producer:
Are you interested in ways to protect and grow your hard earned money? Your American Retirement is here to help. Here's Randy Sams.
Randy Sams:
Hey, welcome back, folks. Again, I want to thank you for joining us today, this Saturday morning. This is Your American Retirement on 101.1 FM. The Answer we're going to get right into this segment. These are the biggest expenses for retirees today, but it's the combination of your current budget items and these new expenses that people find difficult to balance in retirement. So, folks, this is why I spend so much time and effort focusing on the strength of your income plan. You need the paychecks to cover your everyday expenses and the paychecks play checks to enjoy your lifestyle for free time in retirement. So if you'd like some help planning your retirement income needs, please visit the website YourAmericanRetirement.com or give me a call. (866) 990-7664. And let us sit down and help you understand why we believe you retire on income, not assets. But let's get into these big biggest expenses for retirees today. Number one, health care of all the spending categories in your retirement. This one over time will likely be the biggest, especially when you consider long term cares. So if you're in reasonably good health today, health care spending should be relatively low when you retire, then jump as you age in your 80s and beyond. So these expenses are often less for men because they often die first. Well, guess that would take care of any sickness, wouldn't it? Is he sick? No, he did. Or rely on their spouse to take care on caregiving duties.
Randy Sams:
That means the surviving spouse will often have to pay for their own caregiving costs, which tend to vary in different areas of the country. So, folks, something that we have to pay a lot of attention to when we put together a retirement plan for you and your spouse. We have to look at health care. We have to look at what you have currently. If you're going to stay employed for the next few years and you're able to keep your employer group coverage, that's great. But at some point in time when you actually step away from that job and you have to go on Medicare, you need to be aware of what the options are and the cost and then what your out of pocket expenses might be. So that's something that we have to look at and remember. Something that you also have to look at is long term care. What do you have in place today as far as long term care? See, a lot of folks you have automobile insurance less than what, 3% of people ever utilize that automobile insurance. But yet everyone has it because it's mandated. You folks that own homes, you have homeowner's insurance already got to have that in case the house burns down. But you know that 8% of folks who ever have who have homeowner's insurance ever have to utilize the homeowner's plan. Okay. Now we have hail storms that come through. You may get a new roof.
Randy Sams:
Thank God for the health or for the you know, for your homeowner's insurance. Long term care, 72%, 72 out of 100 when you're in retirement at 65 or above, will have to utilize some type of long term care. But yet I speak to people all the time. They don't have long term care insurance. So it's something we have to address, folks. And when your caregiver is your spouse, that puts a lot of stress on the spouse. I know because my dad, my mom told my dad that she would never put him in a nursing home or long term care facility. So she took care of him and saw what, you know, that it didn't become a burden because she loved him. They were married for over 60 years, but still it still stressful. So luckily, she had me and my younger brother that was able to give her some time off. But a long term care is something that you have to look for folks. So health care costs will continue to rise and it's something that you're going to see. They're not going to go away. So it's probably the largest of any spending category. So their projected health care costs are projected to climb about 5% annually over the next 30 years, about twice the rate of any other expenses. So, folks, we talk about long term care. And what I want to tell you about right now is some of you may be aware of this, some of you may not.
Randy Sams:
We are in Arkansas. It hasn't come to Arkansas yet. It may not come to Arkansas, but I want you to be aware of it. But there are several states right now that are looking into or have implemented state mandated long term care. So state mandated long term care is a publicly funded, long term care insurance program that it was in Washington State. It was the first one that was passed. Okay. It just went into effect July 1st of this year. But now there are other states looking into whether they should follow with their own long term care plan. Long term care expenditures are the number one use of Medicaid budgets today, stretching these budgets beyond limit. So it's hope that state mandated long term care benefits funded by the public could help ease Medicaid budgets by being the first dollar paid before Medicaid would kick in. These states generally have goals to provide the middle class with an affordable, long term care coverage that could help pay for care, often with the focus on home care. And it would delay slash, avoid the use of Medicaid benefits for those who would qualify with first dollars coming from the state long term care program. So approximately 30% of states today are showing some level of interest in pursuing solutions to their own state's long term care challenges. We've got a lot of states California, New York, Pennsylvania. Connecticut. Illinois. Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New Mexico, North Dakota, Oregon, Utah and Vermont right now are actively looking at or at various stages of interest, including preparing legislation bills written that will likely see changes.
Randy Sams:
What what happens, folks, is when you see one of these state mandated long term care plans, I'll tell you a little bit about the Washington plan. I'm not an expert, but what I do know enough about it that what it is, is that there's no limit to the income level. So you're going to pay a tax. Everybody in the state is going to pay a tax no matter what your income is. Okay. So it doesn't have a cut off point. Okay. It's not up to, say, 100,000 or 100 and 50,000 or 200,000. Everybody's going to pay that tax. The thing I don't like about the plan is that it's not portable. So if you leave the state of Washington, if you were in the state of Washington and you're starting to pay that tax, you can't leave. So it's not portable. You have to be in the state of Washington to be able to utilize it. Plus, there's a five year waiting period, folks, So I'm going to pay that tax for three years and then I have to go into a facility. I can't utilize it because there's a five year waiting period. All right. Plus, folks, is not like a traditional long term care plan. It only pays up to a certain dollar amount.
Randy Sams:
The plan in Washington State is 35,000. So, folks, if you knew what the average cost here in Arkansas is, that 35,000 is not going to go very far. It's probably more expensive than Washington State. So I'm not a big fan of the state mandated long term care plans. All right. Because first of all, it's another tax. We're taxed to death as it is already. Number two, it's not portable. You can't move and take it with you. Number three, it has a limitation. It's only going to last for so long. It's only going to pay out a certain dollar amount and then guess Medicaid is going to kick in. So so basically what it is, is just to stop from Medicaid being your first dollar that's going to be paid. Okay. So why is it important to have private long term care coverage? Because in the state of Washington, what they've allowed to happen is anybody who has a private long term care plan. Traditional long term care plan or a long term care annuity that focuses on long term care, you're going to be grandfathered and you're going to be exempt from all of that legislation. You don't have to pay the tax. All of that's going to be exempt. So I believe in having your own individual long term care plan you need because you can buy the policy that you want. It gives you guaranteed premiums and benefits and you have more leverage for those benefits.
Randy Sams:
You have more chair, you have more choice for the care options. And it's portable between the states. All right? And it has guaranteed annual inflation built into that plan. So premium protection with long term care products attached to a life insurance plan or with annuities. And folks, that's what I utilize. I use an annuity plan. You put in a certain dollar amount and they give you 2 to 3 times whatever that dollar amount to be used for your long term care benefits. All right. Why do I like the annuity? Because if you have a traditional long term care plan and I'm not knocking those who sell them or those of you who have it, but it's one of those if you don't use it, you lose it deals. Okay? It's better to have it and not need it than it is to need it and not have it. But I look at if I can put your funds into an annuity that's basically utilized for long term care and you don't ever have to utilize the long term care feature, it's an annuity. So if you pass away, the funds are going to be there for your spouse or for your kids. That's why I like the long term care annuities. And if you want to find out more about that, you can call me at (866) 990-7664 or go to the website YourAmericanRetirement.com and say Randy I'd like to have more information about that long term care annuity because I know that me and my spouse need to address long term care issues or the need for that long term care.
Randy Sams:
All right. So let's get you set up with the long term care plan. And we don't have to worry about if Arkansas ever joins these other states that are looking to do a mandated state mandated long term care plan. All right. Let's look at number two, fitness and wellness. People who invest in health and wellness typically have lower medical costs. Makes sense, doesn't it? You're healthier. So this can be anything from gym memberships to yoga classes to stationary bikes and quality shoes to taking walks every day. If you get out and play golf, you know, do you ride that cart and just get out to hit the ball or do you actually walk 18 or say nine holes or 18 holes? I know it's hot in Arkansas, but it's still called exercise. So the more retirees spend on fitness and wellness, the less they could end up spending on medical costs and long term care. So don't be afraid to spend a little bit of time and money to improve your health and fitness. It pays to be healthy. All right. Number three, taxes. Even though it seems like taxes might decline when you're retired, that's not always the case. So you got to ask yourself, are taxes higher or lower today than they were ten years ago? So have a plan for taxes before you retire.
Randy Sams:
So as the federal government looks for ways to reduce the federal deficit, that will likely result in higher taxes. Exactly. So the government's best option to increase revenue or to increase taxes or cut spending, which one of those two you think is going to happen first? What do you suspect? Which which of those strategies do you think they would actually utilize? I think they're going to increase taxes before they cut spending. All right. So, you know, folks, we have we have ways to help address the tax issue. We can put you into a Roth type product. We can take any money you have in a 401. K right now and start putting that into a Roth conversion plan where we take out 10% over the next ten years and let it grow. And then that growth, when you start taking money out is not taxable. All right. Plus, you don't have to take RMDs out of it, but that's concerning Roth conversions. Roth IRAs, many ways that we can address your tax issues. Again, you can call me (866) 990-7664. Or go to the website Your America Retirement. Leave me your information. We'd love to sit down with you and address some of the tax issues you may be concerned about. Number four, home maintenance. So if you plan to stay in your home, the one you're in today through at least a good chunk of your retirement, you're likely to see your home maintenance cost jump up considerably.
Randy Sams:
That's because you probably have to hire services and take over some of the tasks you've been doing for years. This includes hiring pros to do everything from lawn mowing and gutter cleaning to window washing and home cleaning. Something as simple as using a ladder as you age often isn't a good idea. So folks, you guys have seen the commercials for the I'm not going to use the name of the the gutter company, but one of the things that they utilize is they show a not a young person, but an older person, and they're up on that ladder and they're trying to take those leaves and the pine needles and all the other stuff out of the gutters. And they talk about how dangerous it is. All right. And it is. So one of the things you have to take into consideration is home maintenance. All right. I love mowing the grass right now. Well, I say that I mow the grass. Now, that's part of my exercise routine. But I know as I get older, I may not be able to do that grass or mow that grass as often as I do now. All right. Not because I don't want to, only because I may not be able to. So, folks, you come right back. We're going to pick it right back up. We're going to talk about number five, six and number seven and number eight. Again, you're listening to Your American Retirement on 101.1 FM. The Answer.
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Randy Sams:
Hey, welcome back, folks. Again, my name is Randy Sams. I want to thank you for joining me today on 101.1 FM. The Answer, You're listening to Your American Retirement. Let's jump right back into it, folks. We're talking about the biggest expenses for retirees today. We've gone over the first three, the first four excuse me. And we're going to jump right into number five utilities. Utility costs could be one of the few expenses that decreases during retirement. For one thing, you typically no longer have to pay for children taking long showers or cooking all the hours of the day and night, leaving the refrigerator door open or leaving the lights on all over the house. So also folks tend to downsize their homes, which would require less heat and air conditioning. So nevertheless retirees that you that you the rates that utilities charge all consumers or customers will continue to increase annually due to inflation. So. If you look at utilities. You hear about people because of their electrical bill. You know, you have your air conditioning and some people like to crank that air conditioning down to, you know, in the 60s, which is fine if that's what you want to do, That's great. Have to put on a sweater when I come into your house. Okay. When we do a when we're going to do a consultation. But that's okay. I have sweaters. I have jackets. But that's also going to cost you more. All right. So how much of your retirement are you going to be spending on utility bills for heating during the winter time, for air conditioning during the summer time, Electricity? Keep the lights on.
Randy Sams:
All right. Now you go to my mama's house and I love her. Um, you're going to be walking around in the dark because she doesn't leave a lot of lights on and she doesn't believe in crank that air conditioner down. So when you go to her house. It's going to be a little bit cooler inside than it is outside, but at least it's cooler, but it's not that much cooler. All right. If you get my drift. So you got to look at utilities and that's her concern, is because the money that it would cost her on a monthly basis for those utilities. So she's trying to cut costs where she can. God bless her. She has me as her son and she understands what I talk about. And that's one of the things she does now. I tell her, the momma, you can keep it a little bit cooler in the house if you want to. You got plenty of money coming in to cover, you know that utility bill, if it goes up $50 a month because you cranked it down a couple more degrees, but you got to focus on those utility bills. Be smart on how long you leave those lights on, how long you watch that television and how long you do all you know, you leave those refrigerator doors open. Number six, transportation. This is one of the most important areas of retirement spending, but one of the least considered.
Randy Sams:
So as you age, retired people often rely upon others to help them get from place to place. So that is true. How many times have you had someone from your family call you and ask you to take them to the doctor's office or take you to an appointment, whatever it might be, because they don't drive any longer. All right. So transportation or they may want to go with you to a on a trip. I would like to go see their grandkids or they like to go see their brothers and sisters who live out of state. And you're going to put them in a car with you and you're going to take them with you. All right. So remember, as folks age, they often rely upon others to help them get from place to place. So this might be an Uber to a doctor's appointment or a cab ride to the grocery store and back. All right. Now, my mom had a young lady that that that what she would do every week is she would go pick her up and they would go buy groceries because the lady didn't drive. But my mom would go pick her up and take her to buy groceries and take her back home. That's great. Okay. Now, folks, there are some plans out there, Medicare, Medicaid, Medicare Advantage plans that they have a transportation benefit in there. Okay. So sometimes if you go to the doctor's office or you go to the hospitals and you see these vans that pull up and people are getting out, those are paid for by some of your health plans out there.
Randy Sams:
Medicare, Medicaid Advantage. So but you got to think about transportation. So, again, many retirees downsize to one car to cut cost. So if you purchase a new car before or during retirement, you will face a multiple transportation costs ranging from payments on the car to maintenance to gasoline. Higher electric bills for EVs. And that's scary. Electrical vehicles, that's going to jack up your electrical bill. Plus, you know what I've been seeing here lately, and I'm not knocking EVs. If you have one, that's fine. But I'm seeing the the danger of when those batteries catch on fire, you know? Those batteries can't be put out a car fire for an EV because of the battery, the type of battery it is. You can't put water on it or you got to drown it with water. Okay. So that's scary as far as I'm concerned. But hey, if you've got an electrical vehicle and you can drive it around town, that's fine. Okay. And you got to look for insurance. So when you have those automobiles, you got to look for the insurance cost also. And a lot of people are going from two cars down to one car when they get into retirement. Number seven. Travel. So travel costs in retirement will vary based on where you go and where you stay. Folks, this is when I talk to folks about a paycheck. All right. One of the things that you need to consider in retirement because people say, man, we want to travel.
Randy Sams:
All right. Well, where do you want to travel? Because we got to take that into account. Do you want to take a worldwide cruise? Do you want to travel overseas? Or do you want to stay in the States? Do you want to just want to travel Arkansas? Do you want to travel to Arizona? Do you want to go to the Grand Canyon? Do you want to go to Yellowstone Park? Do you want to go to Florida? Whatever it might be, folks, you need to plan for that because where you plan on traveling to. Needs to be considered because the cost is going to go up. If you want to do a world cruise, that's great, but it's going to cost you more than going to Hot Springs. Okay. Go on the lake, Ouachita. It's going to cost you more. That's something that you have to consider. So I call those paychecks. When we put together a retirement plan. Let's look at your needs. Those are your basic basic expenses. And then let's also look at your wants. Those are what do you want to do? You want to travel? Where do you want to travel? Let's put that under the paycheck position. Okay. The paycheck category, because we're going to use those paychecks to take those trips to do that travel. But but it is determined based on where you want to go and also whom you want to bring along with you. So if you're treating children and grandchildren to a vacation as well, cost will rise considerably.
Randy Sams:
I see those all the time. You can go to YouTube or wherever you, you know, whatever it might be, Facebook or whatever, and you see all these family trips down the Florida or whatever, and they got all the family together. Well, you know, I'm not saying that the grandparents paid for it, but a lot of times I've heard of people that, you know, they're about to take their family on a cruise and they're going to pay for it all. Well, that's not cheap, but hopefully they plan for it. So you should plan to travel much more in early retirement. Those are your go go years and much less to not at all in the latter years, which are your slow go and your no go. All right. Again, your go go years are when every day is Saturday. Every hour is happy hour. You're going to go you're going to go play pickleball. You're going, going, going, going. And then you hit your slow go years. Basically your slow go years is you still can do everything you wanted to do before in your go go years. You just don't want to go as much. All right. And then your no go years. You remember what I say. Your no go years is basically when you don't leave the building until you leave the building, if you know what I mean. So get out there and travel. To any of your bucket list destinations while you are still young. All right, folks, you know my philosophy.
Randy Sams:
I deal with too many people that what they've done all their younger years, that they've dreamed about retirement. Like I said, they want to join the country club. They want to travel. They want to go here. They want to go there. They want to do all kinds of things. And I want you to we have to set up a plan to allow that. Without a plan, you get into retirement and the first thing you're concerned about is spending too much money and then you're concerned about, well, I want to leave my children some money. So all these plans that you've made, joining the country club, taking cruises, doing all of these exciting things during retirement, you don't do them and you pass away and you leave the money to your kids. Guess what your kids do? They join the country club. They take the cruises. They have a good time. All right. So what I say is that's where my philosophy is. Let's utilize a life insurance plan. Leave the life insurance death benefit to your children as your legacy. And then you and your spouse go out and spend all your retirement funds. Okay. Call me. (866) 990-7664. And I'll show you how we can implement that type of plan. All right. Number eight. Kids and grandkids. Spending on kids and grandkids can be as simple as a gift card or as lavish as a trip to Disney World. So many retirees also choose to pitch in and help pay for a grandchild's college education.
Randy Sams:
So many folks tend to overspend on their first grandchild. Then when the next grandchild comes along and perhaps several more, they are likely to try to match the same generosity, even if they can no longer afford it. So be mindful of those expenses and opt to spend more time, not money, with your loved ones. Folks, we're in this situation. Not that we're retired, but we have two beautiful grandkids. All right. So I know all about this one. So when they come and visit Pops and and Lala. Or Lala and pops, you know, man, we're taking them out to all the exciting places. They want to play video games. They want to go bowling. They want to go to the zoo wherever they want to go. They want an ice cream cone. They want a snow cone, whatever it happens to be. Yeah. Pops is here at your service. You know what I'm talking about. If you have grandkids. All right, So love my grandkids, and so do you. But we have to plan. We have to make a plan. So, folks, big expenses for retirees today. We've talked about it and we've looked at them. And hopefully you have been taking some good notes and you're going to be retired. You're going to be planning for a secure retirement, not a risky retirement. So, folks, again, my name is Randy Sams. I want to thank you for joining me today. You've been listening to Your American Retirement on 101.1 FM. The Answer, go out and have a fantastic Saturday. God bless you.
Producer:
Thanks for listening to Your American Retirement. You deserve to work with licensed financial insurance experts who can offer sound strategies for protecting and growing your hard earned money to schedule your free no obligation consultation. Visit YourAmericanRetirement.com today that's YourAmericanRetirement.com. Not affiliated with the United States government. Randy Sams 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. America Life 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.
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