YAR FULL SHOW 7-1-22.mp3: Audio automatically transcribed by Sonix
YAR FULL SHOW 7-1-22.mp3: 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 hosts. Randy Sams and Kale Simpson get set for a full hour of financial information and economic news affecting your bottom line. Randy and Cale work hard each day to educate Americans like you on how to reach the financial freedom they worked so hard for by protecting and growing their hard earned money. And they can help you, too. So now let's start the show. Here are your hosts, Randy Sams and Kale Simpson.
Kale Simpson:
All right. Hey, welcome back to another episode of your American Retirement on 101.1 FM. The answer. This is Kale Simpson, your host, alongside Randy Sams, my esteemed colleague. Coming to you guys a Saturday morning from central Arkansas. Happy 4th of July weekend. How you doing, Randy?
Randy Sams:
Doing fine, Kale. How about yourself, brothers? Going to be 4th of July here in a couple of days.
Kale Simpson:
I know it. Absolutely. Loving it. Loving a little bit of this cooler weather.
Randy Sams:
Happy 246 birthday to our home country. Right to America.
Kale Simpson:
Happy birthday, America. Well, hey, guys, appreciate I appreciate everybody listening again. We appreciate all the great feedback that we've received over the past couple of weeks regarding our Annuity 360 booklet. We've sent out to a number of you guys and the phone calls and requests for financial consultations. So guys, that is what we do all day, every day. We are here to help you guys navigate the retirement landscape, make recommendations where we can and offer our services if it makes sense to do so. So guys, please remember subscribe to the podcast where you listen to your podcasts. Hit that, hit that like button. Subscribe. Share it with your friends and family. We appreciate all the feedback. And again, happy 4th of July weekend. Randy, I'm going to bring us in real quick and kind of give a quick synopsis of what we've been talking about over the past couple of weeks. A couple of weeks ago, we talked about major challenges retirees are facing in the world today. We talked in great length about inflation. We've had many questions about inflation, many questions about why the market is behaving the way that it is. It's just a it's a fact of life why interest rates are going up, why the Federal Reserve is doing what it's doing. Last week we talked about different topics, specifically what we would do as financial planners and consultants, what we would do if we were you. And we've had a lot of questions from that episode.
Kale Simpson:
So guys, if you were unable to listen to that episode, you can always go to your American retirement dot com. Our podcasts and episodes are uploaded to the website. You can listen to past recordings. You can also like and subscribe to our channels and podcast right there from the website. So we appreciate we appreciate you guys doing that. But anyway, so that one was, was great. Had a lot of value and a lot of great information. Randy. But hey, real quick, we're coming up on 4th of July weekend and this podcast. We're going to go through a lot of things. Most importantly is investing with income in mind. Randy So a quick breakdown real fast before we jump into this and I hand this off to you. Gas prices are still high. We went we went out of town. I got gas at 437 a gallon at Kroger. Thank goodness we buy a lot of groceries at Kroger and we had fuel points. So we're able to save a little bit per gallon, but it's still a drop in the bucket. National average $4.88 from triple A. Gas prices and gas can go online. Check that out. Chevrolet gas prices for 88 national average. Everyone here in central Arkansas, we're seeing around 443 ish. Depending on where you decide to fill up, it's still hurting the checkbook. Middle America. That's that's where we are. Most of our clients are middle Americans. We're feeling the pinch. We're feeling it at the pump.
Kale Simpson:
We're feeling it at the grocery store. This this past week in the market, we had a we had a bounce off of some some critical levels, which is great. We got a little bit back. We're seeing some pressure again today. Got it. Got to keep an eye on consumer confidence. It was at a low. So consumers are starting. Had a client ask me about that earlier today, Randi, we're starting to see consumers, which the consumer was the strong part, the strong backbone of the economy. But we're starting to feel that pinch. Consumers are less confident right now, way, way lower than than what the consensus was. So what that means is we're not confident. We're not confident in what what the Fed's doing with rates. We're not confident in inflation. We talked about that a couple episodes ago. We're not confident with the war in Ukraine. We're not confident with with food. We're not confident with COVID. We're not confident with political issues. We're not confident with a lot of things. So so that consumer sentiment number really is weighing heavily on the market alongside interest rates, the Federal Reserve, gas prices, inflation, etc.. So, guys, we are here. Please call us 8669907664. Give us a call. Your retirement is what matters to us. We do this all day, every day. But the thing that I tell most clients, Randi, is, look, with with uncertainty you cannot afford. To have your 401. K turn into a 201. K right before you retire.
Randy Sams:
Or a 101 k. K You know, the values are going down. Yeah, values are going down every day.
Kale Simpson:
A quick quote of the week, Randi. This comes from a guy you may know or you've heard of him. Benjamin Franklin, Financial Wisdom, Quote of the Week. Here we go. Beware of little expenses. A small leak will sink a great ship. What an awesome quote. That makes perfect sense, because if you're not aware of what's going on with with your expenses and your income, that small leak will sink a great ship, Randi. So what we may want to do with our listeners is talk about if you if you do have a little leak, what are some things to do perhaps that might patch that small leak?
Randy Sams:
Well, Carol, here's what here's what I look at, just for clarification. I was not around when Benjamin Franklin said that. I didn't write it down. But I appreciate you inferring that that I knew him. But, folks, last week's episode was what what I would do if I was in your in your situation. So here's what I would do. First of all, I would recommend you go to your American retirement. Or call 8669907664. And schedule a free consultation with either Kale Simpson or myself. We'd love to sit down and go over what you currently have. Look at maybe some options, what your objectives might be. You know, it it costs more to live today than it did last year. It's going to cost more next year to live than it than it does this year. If you remember, some of the stats that we threw out last week show one of them, which was really kind of eye opening, that folks that are that are in retirement right now are fear running out of money more than death itself. So one of our objectives, folks, at your American Retirement with Kale Simpson and myself is that we want to make sure that your blood pressure goes to zero before your retirement account does. And you can read into that what you want to, but really go to your American retirement schedule of free consultation or call us at 8669907664. Kale Just kind of an example of what we're dealing with. You know, we looked at inflation. You mentioned some of the things and again, you know, we are celebrating the 4th of July, but.
Randy Sams:
The listeners may not be aware. They may be if they've gone shopping for their 4th of July supplies. But your 4th of July cookout is going to cost 21% more this year than it did last year. Inflation is at a 41 year high. Americans are reeling from these soaring prices. So brace yourself for the barbecue sticker. You may want to invite a few less family members or friends unless you want them to help pitch in for the cause. But just give an example. Kale. A half a gallon of vanilla ice cream will now cost you $7.44 compared to last year at $4.69. So maybe you're not getting a half gallon anymore. Maybe you just get an ice cream cone. Okay. So that's a 58 over a 58% increase. Hamburgers. How many of you all like to do hamburgers or hot dogs for 4th of July? And a package of eight hamburger buns are going to cost you 55% more. The price in 2022 this year is $2.58 compared to $1.66 last year. So, you know, that doesn't seem much when you look at it. You know, 258 from 166. I mean, what is that? Less than a dollar increase. But yet it's like, what? What it oh, my my good friend. As you said, Benjamin Franklin said, beware the little expenses. A small leak will sink a great ship. So even though that may be less than a dollar, it all adds up. How about chicken breast? It's gone up 40 over 40% to $9.48 from 674.
Randy Sams:
Potato salad. And these are some of the things that probably some of you guys do. You know, we could keep going on about the barbecue ribs and all the adult beverages that you may be drinking. But it's going to cost more this year for you to have your family barbecue or your neighborhood barbecue. And those are just some of the things that what Kale is is referring to that these little expenses add up. And if you haven't done the correct planning. And looked at it and looked and see. What are you going to retire on? And we've said it many times, and I'll continue to say it at your American retirement. We're focused on addressing the major financial issues facing retirees and pre-retirees in America today by helping people understand and prepare for a secure retirement, not a risky retirement. So what we want to do is we want to plug those little holes. Right. I mean, I've got a I've got a picture of what was in there, like a story about the guy where they had the hole in the dam and he stuck one finger and another hole popped up. So, you know, we want to be that guy that's putting the fingers in the dam. Stop those little leaks because we want you to have a happy retirement, safe and secure retirement. And that's what we do at your American retirement. So please go in a schedule of free consultation, your American retirement or call 8669907664. Kale, you want to add something awesome?
Kale Simpson:
Randy, thank you so much, guys. We're going to go to a quick break. During the break, we're going to play an audio clip as very informative. It's called Drug Price Inflation Talks about Medicare conversions and then how we as MKG Financial in your American retirement can assist in navigating the Medicare landscape. Randy Sam's is an expert when it comes to those things. So guys, take a listen to the audio clip. We'll be back here in just a few minutes. We'll talk to you soon, America. America.
Producer:
I'm Matt McClure with the Retirement Radio Network. Next time you head to the pharmacy, you could be in for some sticker shock. So do you need to plan now for higher drug prices in the future? First, let's spell out the problem, and it's not necessarily a new one. Prescription drug prices have been rising faster than inflation for decades, according to AARP. To put it in perspective, the group says if gas had risen as much as prescription drugs have over time, regular unleaded would cost more than 12 bucks a gallon by now. For seniors on a fixed income, being able to afford prescription drugs is essential. Ron Mastro, Giovanni of Health View Services recently told CNBC.
Kale Simpson:
Whether you're affluent or.
Randy Sams:
Whether you're the average person.
Producer:
I'll tell you what.
Randy Sams:
When you look at your Social.
Producer:
Security check, you're paying for health care. Prescription drug insurance plans provide some coverage, of course, but not all plans are created equally. And it's important that you know the details of your plan, especially what it will and won't cover.
Kale Simpson:
You really need to look at the coverage.
Randy Sams:
In those types of.
Kale Simpson:
Plans to.
Randy Sams:
Determine.
Kale Simpson:
What makes.
Randy Sams:
The most.
Kale Simpson:
Sense.
Randy Sams:
For.
Producer:
You. Lawmakers in Washington have been trying to come up with solutions on several fronts. They include things like allowing the government to negotiate drug prices, capping the cost of insulin and more. But those proposals have stalled. They were part of President Biden's build back better plan. It passed the House, but that massive piece of legislation hit a roadblock in the Senate, even though surveys show big majorities of U.S. adults approve of those measures. It seems like everyone agrees something needs to be done to control costs, but just can't agree on exactly what that might be. In the meantime, what should you do to prepare for higher drug prices in the future? Well, putting more money in savings surely couldn't hurt, according to the experts. But that can only go so far. And what can you do now to save money at the pharmacy? Well, that is a key question to consider as inflation continues its upward climb with the retirement radio network. I'm Matt McClure.
Speaker5:
When I get older, losing my hair many years from now.
Kale Simpson:
Will still be sending me Valentine.
Speaker5:
Birthday. Greetings, bottle of wine.
Kale Simpson:
Hey, guys, welcome back to your American retirement. I want a 1.1 FM. The answer. Again, this is Kale Simpson here with Randy Sands coming to you from central Arkansas on this sunny Saturday morning. Guys, we've been talking we've been talking this morning. About a number of different things concerning your retirement. Please go to the website, Your American Retirement. Please subscribe to our podcast. Please like our Facebook page. Please hit that like button. Please share it with your friends and family. Guys, we're here to help you. We offer free retirement consultations. No obligation, no cost. If we can help you aim in. If we can't, we apologize. We will do our very best to help you understand what you can and can't expect in retirement today. One of the things we've been talking about in great detail here recently is inflation. You guys just heard an excerpt from. From our guys talking about drug price inflation, how Medicare conversions can can potentially help, and how fixed indexed annuities can aid in coverage covering some different costs with respect to Medicaid or excuse me, Medicare. So Randy Sams is he's an expert in the field of Medicare supplement plans and Medicare Advantage plans, etc.. So he's going to take a few minutes and talk to you guys about Medicare, what that means to you if you're age 65 or older, and what we can potentially do to help you understand Medicare and potentially use different financial vehicles to aid in costs and different variables associated with Medicare. So, Randy, see the ball up right there for you. You can go ahead and take it and explain to our listeners what we can do with respect to Medicare.
Randy Sams:
Thank you. I appreciate that. Fantastic intro. Me and Ben Ben Franklin were just we just around the corner. So we're back on the air and I appreciate that. So, hey, listen, folks, remember schedule of free consultation of your American retirement? 8669907664. Again, what we do at SMG Financial, Your American retirement, we like to get together with you folks and put together a plan designed specifically for your objectives. And folks, while we're building a plan, one of the things that we most definitely have to take into account is health care. Health care planning, health care coverage. A lot of folks when I meet with clients, don't let this scare you. But I like to schedule about a two hour consultation when I'm meeting with my clients to speak about Medicare. First of all, most folks that are about to turn 65 do not even understand what Medicare is, what Medicare Part A, what Medicare Part B does and does not do. And we're not going to go into that in this show. But it's definitely something that we can begin to talk about, because as we get closer to the end of the year, the annual enrollment period, we can pretty much give a lot of information. But when you turn 65, you're going to be eligible. If you have enough quarters for a part A and then part B is going to be kind of optional. If you do decide to participate in Part B, there is a part B premium that you have to take into account.
Randy Sams:
But what we look at is the different types of Medicare coverages, Medicare Advantage, Medicare supplement. And the reason we want you to take a look at this and we like to sit down with you and discuss it. First of all, we want to make sure that you understand your basic Medicare coverage, part A and part B, and then from there, we're going to make sure you understand what your options are. Do you want to do a medicare supplement plan or do you want to do a medicare Advantage plan? Medicare supplement basically takes care of anything above what Medicare Parts A and B does not cover. Medicare Advantage is basically part A and B, but instead of being governed or administered by the government, it's now being administered by a private insurance company. But according to Fidelity, retiree health care cost estimate, an average retired couple at age 65 and 2022 may need approximately 315,000 saved after taxes to cover health care expenses in retirement. So you can see why health care planning is going to be very, very it's going to be high on our objective to make sure that we've got that coverage. So one of the things we wish we could tell you that it was free, but it's not. Some of your coverage is out there, have a zero premium.
Randy Sams:
But if you do a medicare supplement plan with a prescription plan, we're going to have to be able to plan for the coverage of the premium. So here's what we like to look at. You know, you'll never know how much you need depending on when you retire. You're going to look at how healthy you are and how long you're going to live. I like to look at it this way, folks. There's three stages in retirement. Number one stage is your go go years. Number two stage is your slow go years. And number three is your no go years. Your go go years is when you do everything you want to do. You want to go play golf. You want to go play go, go play tennis. You want to fish. You want to take cruises. You know you're going to do that. So what we look at for go go getters is we want to maximize your income. You can say anywhere from, say, 60 to 75, maybe 60 to 80, your slow go years. You still want to do everything. You just don't want to go out. Dad may not be able to see when it gets dark anymore any longer. So that's when your slow go gears. You need to make sure that you have a good health care plan, long term care planning. How are we going to how are we going to cover that long term care, you know, go years? It's just when you just don't leave the building until you actually leave the building, if you know what I mean.
Randy Sams:
So for your slow no go years, you can use life insurance leave to the kids. But that's what we've got to want to do. We want to look at the three phases of retirement. And when we look at medical expenses, Medicare supplement insurance once for all. You can cap your risk and know how much you will pay with a medicare supplement. So what Medicare supplement will do and folks, there are different plans. And again, we can't cover all of it today, but Medicare supplement, depending on which plan you're looking at, is basically going to cover the 20%. That part A and part B do not cover. Medicare helps cover 80%. The Mets up is going to fill in the last 20%. When you do a medicare supplement, you also are required to have a prescription drug plan, which you can have a standalone prescription drug plan. So now what we want to do is we want to play and we've got that in your in your objectives. We know we've got a plan for health care now. We've got to figure out how we're going to pay for it. So one thing that we look at. Is we can take some of your retirement funds and we can vest that into a fixed indexed annuity that pays enough income to cover your Mets up expenses.
Randy Sams:
So we want you to stop worrying about funding your medical expenses as you get older. And one of the ways we do that is, again, take some of your funds. I mean, the best. I'd enter the indexed annuity. So how much you're going to need? Again, that's something that we have to look at. But we want you to consider using an annuity to to fund these expenses. And indexed annuities are a great planning tool. Cale, any questions? You think we got it covered? Cal is going to be able to sit down with you. I'm going to be able to sit down with you. And we're going to be able to put a plan together for you. But look at your Medicare because your health care coverage, like we stated earlier, a couple age 65 and 2022, may need approximately 315,000 saved after taxes to cover health care expenses. And that's what we would want to be able to sit down with you and give you your options. So is it going to be best for you and your spouse? To be able to be covered with and take a medicare supplement plan, or is there a medicare Advantage going to fit your needs better? And that's what we're going to be able to do, is sit down with you and look at that. So what can you add?
Kale Simpson:
Yeah, you're exactly right, Randy. And I mean, that is if you think about it, I mean, I know everyone that's out there listening is probably thinking the same thing that I am. And it's staggering to know that a couple age 65 in 2022 may need over $300,000 after taxes just to cover health care expenses Randi. I mean, that is a staggering number. So I really enjoyed listening and actually taking notes on some things that you said, guys. I mean, but that's what we do. You know, it is a it is a holistic approach that we take when we're when we're talking with clients, we want to know. What expenses are out there. We talked about the quote from Benjamin Franklin at the top at the top of the podcast.
Randy Sams:
Randy, my.
Kale Simpson:
Friend. You know, that's exactly right. What what what do we need to do? What do we need to be aware of in your overall financial plan, your overall financial situation? Where are you now? Where are you going? And and how do we get there? What is the what is the path? What is the plan? And that's what we do, Randy, all day. Every day. I mean, that is what we do. We try to put a plan together to help clients understand what they can and can't expect out in the retirement marketplace. We say it over and over and over again. Not to clients are ever going to be exactly alike, right, Randy? Some clients are going to have humongous issues with Medicare and questions regarding Medicare or health care expenses or options or whatever the case may be with respect to health care. Other clients are just the young clients that I told you about the other day last week. His issue was he had a lot of life insurance at work. Well, guess what? When he retires, can he take his insurance with him? Probably not. Yeah, exactly. So he wanted to know what what we could do to help him with with something as simple as life insurance. But he wants to make sure that his wife, who is who works from home, she she is a homemaker. She takes care of the kids full time. But if something happened to him, he wants her to be taken care of. And he also wants his kids to be taken care of guys.
Kale Simpson:
So it doesn't matter if it's Medicare, if it's questions regarding health care expenses, if it's life insurance, or if it is the retirement conversation, which we've talked in great detail about, what does a fixed annuity do? How does a fixed annuity help clients in retirement today? What's the difference between a fixed annuity and an indexed annuity, which you refer to? Randy, what are the pros and cons of both? Guys, we answer these questions during our consultations. We can schedule a 15 minute phone call with you guys to discuss the differences between a fixed product, a variable product, and an index product. That in addition to covering health care expenses, looking at long term care options, which we talked about last episode, about what we would do if we were you, there are issues regarding long term care. These are all things that clients are going to need to get to get the list together, Randi. And we start putting checkmarks next to each individual item. So, guys, again, please go to your annuity or your American retirement dot com. If you have questions about annuities or you want our annuity 360 book, we'll be glad to mail one out to you. We're going to play a quick excerpt from our Annuity 360 chapter and we'll be right back to talk to you guys about Roth IRAs. If it is a good fit, how a Roth IRA or a traditional IRA might make sense to convert to an annuity. We'll be right back. When the night has come and the.
Producer:
Land is dark and the moon.
Kale Simpson:
Is the only light, we'll see.
Producer:
You're listening to your American retirement visit, your American retirement.
Producer:
Remember, all of Randy and Kale's listeners receive a free financial consultation just for listening to the show. Visit your American retirement to learn more and schedule an appointment. Thanks for listening to your American retirement and subscribing wherever you listen to podcasts.
Ford Stokes:
Chapter 17. You can buy an annuity with your Roth IRA account. Big idea. Many people don't know this, but there are at least five annuity carriers who allow you to invest your Roth IRA account into a fixed indexed annuity, and many others are beginning to follow suit. A Roth IRA is an individual retirement account. Ira, under United States law that is generally not taxed upon distribution provided certain conditions are met. The principal difference between Roth IRAs and most other tax advantaged retirement plans, like IRAs for one case, for three B's, for 57 Sep IRAs. Et cetera. Is that contributions into the Roth IRA are invested with after tax dollars and qualify withdrawals from the Roth IRA plan are tax free, and growth within the account is also tax free. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997 and is named for Senator William Roth, who introduced and sponsored the legislation. This may surprise you, but you can actually invest your Roth IRA account into a fixed indexed annuity. As of the printing of this book, there are five annuity carriers that will easily accept a full Roth IRA conversion from your IRA. There are only three annuity carriers that can handle partial conversions, but more carriers are adjusting their business operations and illustration software to accommodate Roth IRA investments into their annuity products.
Ford Stokes:
The largest annuity care in the United States allows for Roth IRA investment into their annuities. They allow Roth IRAs in all of their current fixed indexed annuities, full and partial with some parameters, including number one. Roth conversions will create new policy numbers, so they will show in separate accounts. But this does not change any product feature or the surrender schedule with the annuity product. Number two, conversions must be at least the product minimum premium between 10,020 thousand each. Therefore, you cannot implement a Roth conversion that is less than 10 to 20000, depending on the annuity product. The title of my next book is Taxes Are On Sale. I will cover all the aspects of Roth IRAs, Roth IRA conversions and why now may be the best time to kick the IRS out of your retirement account with a Roth IRA conversion? I believe that taxes will likely increase in the future, so a strategic Roth ladder conversion will help reduce your future tax risk and save you six figures in taxes paid during your 30 plus year retirement. Please do not let your current Roth IRA account or your desire to convert your IRA to a Roth IRA impede you from investing into a fixed indexed annuity.
Randy Sams:
All right. Hey, welcome back. Your American retirement with Randy Sams and Kale Simpson. Remember 101.1 FM. The answer 8669907664. Your American retirement dot com call us or go to the website schedule a free consultation, folks. We just heard a little segment about Roth IRAs and we want to be able to offer you once again, as Carl mentioned earlier on the show, we had a great response. We're going to offer it again, this show, if you'll give us a call or go to the website. We're going to give you give you for free the Annuity 360 book, which has some great information about why annuities, how they work and what they're all about. But right now, we're going to walk into Roth IRAs, I guess, then looking at a traditional IRA. So top reasons why Roth IRAs, if you remember last week, we spoke a little bit about Roth IRAs and why folks are interested in them. If you remember, what's one of the things that we do at SMG Financial, your American retirement, is we like to eliminate or reduce risk. So we've spoken about inflation risk. We've talked and we've spoken about medical risk. And now we want to talk about taxation, which is a risk that nobody knows what the taxes are going to be in a year or two years or five years or ten years.
Randy Sams:
So one of the things that we can look at is creating a Roth IRA. One of the reasons, some of the top reasons why Roth IRA, you divest the IRA from being a partner in your retirement accounts. There are no RMDs to take when you need to take it. So right now, if you have a a tax deferred or what we refer to as a qualified account for a1k, IRA, four, three B, whatever that might be, you do know right now at age 72 you are required to take RMDs, but with a Roth IRA, no RMDs are required so you can take the money when you need it. Taxes are already paid. You can leave a tax free benefit to your beneficiaries with no RMDs for them. That money that you have in your Roth IRA, it allows your money to grow tax free. So remember, Roth IRA is going to help us to utilize for a portion of your funds to be able to take care of the tax free benefits that we all want. We'd love to have all of our income be tax free, and a Roth IRA is going to be able to be a good a good step towards that.
Randy Sams:
So one of the things that we look at, folks, the biggest mistake people may make when planning for retirement. Retirement is actually more about income than building one big nest egg. And you've heard me say it kills her. Heard me say it. Kale said it himself. When you retire, everything switches. In the early years, you're all about growing that nest egg. It's about wealth, it's about assets. But when you retire, guess what? You're no longer accumulating, you're withdrawing, you're taking withdrawals. So when you hit the retirement age, whenever that age might be for you, it's all about income, not assets. So people make mistakes of thinking they've saved for retirement when they earn more than they actually do. Don't forget the four one K's and IRAs are tax deferred accounts. So you're going to owe the government taxes on those distributions and they can tell you when to take them. And remember, when you hit age 72, right now you are required to take RMDs. So what is a retirement income gap? Kell, you want to break us into this one?
Kale Simpson:
Sure. Randy. Absolutely. One thing that I want to go over with the listeners, Randy guys, when we're doing a consultation or when we are looking at income versus expenses and retirement, it's going to be completely different than income versus expenses while we're working. Right, Randy? I mean, typically when we're working, we're going to have a higher amount of income than we have in retirement. Not always, but a lot of the times that's something that that we see that's very commonplace. We're not going to have that that steady paycheck. But here's the deal. A lot of clients think they will spend a lot less money in retirement when actually we're spending as much, if not more in retirement than we are when we're working, when we're retired. You're not going to work 40 or 50 or 60 hours a week. You're at home. You want to go on vacations and you want to go on cruises or or maybe your wife does or your spouse or whoever they want to go enjoy retirement. And that is the keyword. Randy enjoying retirement. So we're going to spend as much, if not more money in retirement. Then we spend while we're working. So clients need to know the difference between retirement, living expenses and working. Expenses and incomes. So income gap, Randi. And it's in its most basic form is the difference between retirement living expenses and income from guaranteed sources like what we've talked about pensions, Social Security, lifetime income products like like an annuity may offer that we've talked to the listeners about.
Kale Simpson:
That's an income gap. The difference between those $2. You take your monthly expenses, subtract your monthly income. The resulting number is a gap. For a lot of people, it is a surplus. Obviously, if you're making more money than you're spending, that is a good thing. You're in the black. That is a surplus. We need to understand everyone's financial situation, not only while they're working. We've got a lot of clients, Randi. I've talked to a lot of clients here recently. They're still working. But guess what? They're getting close to retirement. And they're qualified plans. They're there. Defined contribution plans have taken a real hit this year. Write down over 20% north of 25, 26, 27% down on on the Nasdaq just since the beginning of January. So the market you really you've not been able to hide Randy cash with inflation has given us a negative return. Bonds and bonds are down in the year and so we're equities. So regardless of where you are, you have taken a hit in your retirement account. Clients still want to know if I have that dollar amount and what you just said.
Kale Simpson:
Randy makes perfect sense. People look at that statement, they say, well, I still have 150,000 or I still have 300,000. It's not one big nest egg, Randy. Retirement is more about income. It's how can that money. How can that money aid us in retirement to help us do the things that we've wanted to do in those different stages that you mentioned earlier in the broadcast? You know, your go go years, your go slow and your no go years. How can that sum of money convert to an income stream? And that's what a lot of people don't understand. What what is my income gap? What does that look like? What is an income gap actually mean? What is an income cliff? You can talk to that here in just a moment. And how how does working with someone like us help one understand the differences between income gaps, income cliffs and what income is an income stream, a guaranteed income stream, what that means from a a psychological and a planning standpoint in retirement. And we say it all the time, Randy, what we do is we help protect safe money, safe money, money you cannot afford to lose due to outside influences. Well, guess what everyone's 401. K has done since the beginning of the year. It has gone down unless you're in cash.
Kale Simpson:
Oc Great. But if you're in cash, you're still losing money due to inflation. We said at the top of the broadcast inflation's at a 41 year high. That's before I was born. Randy So at a at a 41 year high, interest rates are going higher, housing costs are going higher. We've got serious issues with respect to inflation. And as we talked about earlier, consumer confidence is really putting a damper on things out in the open market. So, you know, that's that's an income gap, Randy, that we talk to clients about. And remember, guys, we can talk to you about income gaps. We can talk to you about different things that we do from a financial planning standpoint. But that's what we do. We offer free financial consultations, comprehensive consultations at no cost to our listeners. We had a huge a huge outpouring of of clients asking for annuity 360 the book that's that's no cost to you guys we sent out a ton of those books. We've had calls. Clients want a 15 minute phone conversation. Randy They want to know, are they set up to accomplish all the goals and objectives they have in retirement? But when we talk about income gaps and income cliffs, God forbid, you know, that's when sometimes their eyes open really big. Right?
Randy Sams:
Okay. What, what? What you and I do again, we try to help people understand and prepare for a secure retirement, not a risky retirement. So what Cal has spoken about, when you look at an income gap, we're going to be able to pinpoint the income gaps, income cliff's when we meet with you for the free consultation again 8669907664. Give us a call American your American retirement schedule, a free consultation with Carl or myself. But here's what I like to look at it. Carl, when you and I sit down with folks and, you know, when we find folks that are that are in a in a great position, like they have a pension, they have Social Security, and we may be able to put them together with an annuity. And if you're have a surplus where that means your income is greater than your expenses, what we look at helping you do is we want to be able to create a paycheck versus a paycheck. That's a play y check, a paycheck where you can take the cruises, you can go play tennis, you can join the country club, you can buy the boat, you can go fishing. So that's what we want to be able to do with you. So we have the options when we meet with you and do the overall consultation. Put together an income statement for you, showing you what your income is now and what your income will be in years to come, and what can happen when an income gap or an income cliff shows up.
Randy Sams:
And we'll talk about the income cliff, but here's what we want to look at. The most important periods that we look at as far as I'm concerned and is concerned, we look at five year periods. That is five years before you retire, five years after you retire. And why is it important? Because right now, if you see the market in kale has phone calls and I have phone calls daily with clients that what happens is this they call their upset their 41k balance is gone. They're going to retire in three years. It's what happens, kale and three years. They're going to retire with what, less money than what they planned on, which means that they're going to have to retire on a less a lesser income or they're going to have to continue to work. So that's what we look at five years before, is we want to be able to put you in a in a in a program that is going to be able to give you that security five years before you retire and then also five years after what plays is that you're no longer adding to that amount that you're that you have accumulated, you're now withdrawing. And what comes into play there is the sequence of returns. And if your sequence of returns are down right when you retire, then that's going to be bad. So, folks, we're going to go to a break right now. We'll get back and we'll talk about the income cliff your American retirement dot com. Randy sams, kyle simpson.
Producer:
The heat is likely not the only thing making you sweat this summer. I'm Matt McClure with a retirement radio network powered by Emera life. With energy prices soaring and record breaking heat waves across the country, the cost of cooling your home could set you back a pretty penny this year. The Wall Street Journal reports the average American household will pay $540 in electricity bills during the summer months, up $90 from a year ago. An air conditioning can make up a big chunk of that total, especially in hotter and more humid areas of the country. Sarah Baldwin is with the think tank Energy Innovation.
Speaker5:
Because we have a confluence of factors, the increased price for both gas and oil, as well as natural gas in homes and buildings and a an extremely hot summer and likely to be record heat all over the country as well as the world, largely due to climate change. We're feeling the pressures on both sides.
Producer:
But if you think there's nothing you can do to ease the pain, you'd be wrong, Baldwin says. There are some things you can do that will cost you only a little, if anything at all.
Speaker5:
Paying attention to when you're turning on appliances, when you're turning on the AC, if you have a thermostat that you can program setting that thermostat to a modest temperature instead of going straight to really, really cold, looking at what kind of window coverings you.
Producer:
Have, other improvements may be a bit more costly.
Speaker5:
Update your air conditioner to the most efficient unit. A heat pump. Air conditioner is going to be your best bet. You can also look at replacing windows and doors. Those can be a bit more costly but can have huge benefits in the long term.
Producer:
And don't overlook your power company. It could have some programs or incentives to help you cut back on energy use and save yourself some money in the long term, Baldwin says renewable energy is the way to go since prices are much less volatile than things like oil and gas.
Speaker5:
The sun, the wind, geothermal, hydroelectric, other carbon free sources like nuclear are all generally very cost stable relative to their more volatile and spiking fossil fuel counterparts.
Producer:
So how will you survive the summer heat and its impact on your wallet as you plan for retirement? That's a key question to consider as the mercury and inflation keep going up with the retirement radio network powered by a marine life. I'm Matt McClure.
Kale Simpson:
Hey, welcome back to your American retirement on 101.1 FM. The answer. We've had we've had lengthy conversations piggybacking on what we talked about last week and what we would do if we were you. Today, it's been all about Randy. It's been about what? Investing with income in mind. So, guys, there are a couple of articles that we've read here recently. And Randy, you and I, we've discussed a couple of them together. But, you know, retirees are facing facing many threats. Things cost more inflation. It's all out there in the news. We get phone calls every single day about that. But the thing that I wanted to bring up to our listeners, Randy, is why does why is that pertinent in what we're talking about today? Well, the reason that that is very important is, guys, when you when you call us or when you go to the website, we're going to do our absolute best to help you understand what you can. And you can't expect giving different variables in the equation of retirement. Not not everyone will be alike. Everyone will be different. Randy, I've got a client that I'm working with actually two clients. One is 45 years old and the other client is 48 years old. So clients ask all the time, well, you know, how old do you have to be to to look at a financial plan with your company? Well, everyone's different.
Kale Simpson:
It doesn't matter. But then I also have clients that are in their late seventies and early eighties as well. And I know you do as well. But another big misconception, Randy, is a lot of clients think that if you're still working, you're stuck with your employer's retirement account, you're defined contribution plan or your qualified plan, your 401. K or your 403 B, I'm here to tell you that is that is not correct most of the time. Not all the time. But we can we can talk about that most of the time. If you're over 59 and one half years old, clients can qualify for an in-service distribution where they have access to move some of their retirement nest egg into a safe tax deferred qualified annuity, like a fixed annuity or an indexed annuity while they still work, Randi, and while they still contribute to their 401. K, but what that does is that puts in that safety net. You know, you talked about that retirement red zone, the five years before retirement and the five years after retirement. Well, if you're 62 and you lose 25 or 30% of your retirement nest egg, Randy, and you plan on retiring at 62, do you think that's going to change the landscape of your retirement if you lose 20 or 30% of your retirement nest egg?
Randy Sams:
Of course it's going to it's going to it's going to it's going to affect what you do if you lose that. And Cal, you know, as an example, just you gave a perfect the in-service distribution. So folks are going to understand I'm not going to name names, but I had a client that I've been working with for several months, the end of last year. And his big concern was that he had a pretty sizable 41k and he when the market in January started going down, he made a phone call to me. We got together and what we were able to do for him is we were able to do an in-service distribution. He is still working. As a matter of fact, he he's just about to turn 60 years of age here, I believe, next month. So when he heard 59 and one half, we were able to take a portion of his 401. K and move that over into an income annuity where he's going to let that money grow for the next seven, eight, nine, ten years. And at some point in time when he actually decides to retire, he's going to be able to start that income. Guess what? He called me the other day and he was happy. You know, I was happy.
Kale Simpson:
Gayle Why?
Randy Sams:
Because the market, the 401. Case had been down what c when we did his four on one K, it had just started to kind of drop. But by the time we got the funds transferred over, he was still he was still in good in good shape. But right now his 401. K could possibly be down, what, 20, 25, 26, 28% over over year to date. But because we moved it over to the annuity, it's protected. So so one of the things, folks that that we want to be able to do is during the planning is we want to be able to remove the risk. And as we've stated before, one of the risks that we look at is it's market risk. It's going to go up, it's going to go down. And one of the things that you have to look at is just because you're still going to work and gets calls. And I do also on a daily basis where folks that they're still going to be able to to to retire at a later age. We talked about Medicare at age 65, but what if I'm going to continue to work? That's good. We can talk about that. So if you're going to work to your 68 or you want to what, max out your Social Security benefit at age 70 and then retire, then we can talk about that also because one of. Things that Cal and I do for you when we meet. When we do the free consultation, we're going to provide you two statements. Number one statement is going to be an asset statement. So we're going to have to ask a few questions about what financial situation you might have, what accounts you might have. But we're doing that to be able to give you a one page overview of where you might stand, where someone wants to know what your financial conditions might be, what your net worth might be.
Randy Sams:
We're going to be able to put that together for you in an asset statement. And then number two is we're going to look and put together an income statement, which, you know, the income statement is really eye opening to a lot of folks because a lot of people, what they look at is they may still continue to work for the next few years. Correct. They're going to work for the next few years and then they retire. And then what happens? Well, they're going to go on Social Security. And if they have a pension. But if they don't have a pension, what are we going to be able to do? Well, there's going to be that income gap or as you like to say, there's an income cliff. So if you're going from making a fairly decent salary, then you retire and all you've got is Social Security with no pension. That's going to be a big gap and that's what we're able to put together for when we do the income statement. But then what's really surprising to folks, Carl, is when we put you down the road at age 75 or 78 or age 80, and you realize what the annuity has done for you at that particular point in time where you haven't had that big income gap or that big income cliff. So it's great that we'll be able to put things together for you. But folks, we need you to call Carl. What editions do you have that you want to let them know that what we do at SMG Financial?
Kale Simpson:
Randy The only thing that I can add, you've done a great job, guys. This is all no obligation, no cost. We do this for clients every day. It's more of an educational service that we offer more than anything else. If we're fortunate enough to earn your business. Amen. That's great. You'll be a client for life. If not, it is what it is. But we're still going to put in the work. We're still going to put in the homework, and we're still going to put you in a better position to understand what the next five years, like Randy said, what the next five years after retirement might look like, and how we can better prepare for that. And at the end of the day, it is not a cookie cutter type deal. It is more of a priority of finding out what we can do to properly plan for retirement, not selling somebody a plan. That's not what it's not what we do. It's not what we do. At SMG, your American retirement is focused on servicing the client, letting them know that they are they are unique. And we will do the homework. We will do the legwork to help them understand.
Kale Simpson:
And guys, look, we use multiple companies depending on what the client is trying to accomplish. Randy And again, everyone is different. But guys, let us do a comprehensive consultation. Pick up the phone, give us a call. 8669907664. Your American retirement, pick up the phone, go online. Let us put together a consultation. That way you have it. Let us analyze your financial situation. You might then understand that you're in a better position than you thought you were. Or you might understand that you need to put in a little bit more work or perhaps delay retirement. Had some clients that they thought they were ready to retire. Guess what, Randy? We're not. But that's what we do. We dissect and analyze current situations and make recommendations based on that data. So, Randy, I mean, you hit the nail on the head. We're here. We're here to help people. It's what we do all day, every day. But we don't know. We won't have the ability to do it unless you pick up the phone or go to the website and reach out to us, your American retirement.
Randy Sams:
So, Carol, I'd like to just add this very quickly before we close to those listeners today. If you haven't heard from your advisor lately, give us a call, talk to Cail, talk to myself, get a second opinion. Let us compare your current situation to what's possible if you work with us again. Smg Financial your American Retirement dot com. Give us a call 8669907664 or go to the website Your American Retirement Randy Sam's Kale Simpson. Hey, we just want to wish you guys a safe and happy 4th of July. Enjoy yourselves until we meet again next week.
Kale Simpson:
Take care, guys.
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 your American retirement today. That's your American retirement. Com Not affiliated with the United States government. Randy Sams and Carl Simpson do 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 specific result. All copyrights and trademarks are the property of their respective owners. A married 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.
Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.
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