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Speaker 1:
Now, on Talk Radio 1210 WPHT, WPHT [inaudible 00:00:14] Philadelphia. The Thrive Retirement Roadmap Show with your host, David Bezar, Karen Bezar and Bet Elam of Thrive Financial Services and Thrive Capital Management. They know that the road to a successful retirement is paved with consistent care and a commitment to guide the families they serve. David and Bret are co-authors of the book, Roadmap to Retirement.
Speaker 1:
Navigating your way to peace of mind. The Thrive team has been recognized by Suburban Life Magazine and Philadelphia Magazine as one of the area\’s top wealth management firms. They\’ve been featured in numerous publications such as The Wall Street Journal, CBS News, Fox, NBC, and ABC as well. But their greatest accomplishment yet is their ability to talk to people just like you about living out their dreams in retirement.
Speaker 1:
Their phone is always open at (800) 516-5861 or visit thrivefinancialservices.tyl16lnm-liquidwebsites.com. Now, here\’s David, Karen, and Bret along with Joe Krause.
Joe Krause:
Friends, steep losses on Wall Street is a painful reminder that the stock market is not immune to risk. Just when people thought that the bull market was unstoppable, they saw their investment portfolios plummet by as much as 30% in a blink of an eye. But when you retire, there will be other risks that will threaten your financial security. Other risks that the stock market and most people won\’t even see them coming.
Joe Krause:
Welcome to Roadmap to Retirement, the radio show. I\’m Joe Krause on this Saturday morning along with Karen Bezar, David Bezar and Bret Elam. Man, do we have a great show for you today. Sure, the steep market loss has always make great headlines, but where are the other risks that are often ignored? What if the $3 trillion stimulus package causes taxes to go through the roof in retirement? That\’s a very real risk. We\’ve said that on this radio program.
Joe Krause:
What if the skyrocketing cost of healthcare is no longer affordable? And what if you\’ve lived to be 90 or a 100 years old and your money runs out at 85? These are serious risks and you should prepare yourself just the same. Coming up on today\’s show, six overlooked risks that threaten your financial security and retirement, including what is sequence of returns risk and why could it decimate your nest egg.
Joe Krause:
Why Fortune Magazine says there could be monumental tax increases ahead plus why inflation is regarded as the silent killer of your retirement. And with that, Karen, I welcome into Roadmap to Retirement and welcome the audience in to the opening segment.
Karen Bezar:
Hi Joe. Thank you for that introduction. And man, we do have an action packed show for you today. So I\’m going to get right into it. And hello everybody out there. Hope everybody\’s doing well. So we have talked about this before but we\’re going to delve into it one more time. Sequence of returns could decimate your lifetime income. That sounds really scary and we\’re going to talk a little bit more about that.
Karen Bezar:
So recently with the Wall Street scariness that wall street sell off. And now of course unemployment\’s going through the roof. Sequence of return risk is bigger today than ever before. And if you aren\’t addressing the risk ahead, you\’re setting yourself up for a major financial fail. And again, sequence of return, it\’s the risk of retiring or starting to use money from your funds once you\’re retired during a downturn in the stock market. So this is what causes you to lose money.
Karen Bezar:
And the sequence of good and poor stock market returns can also impact your retirement savings amounts regardless of longterm rates of return. So with you coming to our office and we… I have asked people that we\’ve met for the first time, one of the questions I ask is, \”Are you concerned about market downturns?\” And they say, because they\’re not retired yet, it goes up, the market goes up, the market goes down, but they don\’t realize how dangerous it is. Once you\’re retired and you\’re taking money from those accounts, how it can affect your retirement?
Karen Bezar:
So the sequence of good and poor stock market returns can impact retirement savings amount. How can they do that? So here\’s an example, a retiree who experiences poor market returns in the first couple years of retirement, will have a different outcome than a retiree who experiences good market returns in the first couple of years of retirement, even though the longterm rates return, they might be similar.
Karen Bezar:
So two people both retiring at different times. One person retires and they have the luck of having some great years in the beginning with the market and another person retires, and those first few years, the market just keeps going down, down, down. That\’s where you take the risk of losing your nest egg. And watching your 401(k) and investments drop, especially now, it\’s gut wrenching for anyone, but those who are newly retired, you definitely face unique risks and added angst.
Karen Bezar:
And that\’s what we focus on here at Thrive. The biggest risk doesn\’t come from the losses experienced today. And investors need to keep in mind that once you start taking that income, especially when starting in market downturn, you\’re much more vulnerable to the market volatility due to sequence of return risk. So I\’m a very visual person and I just want to say if you\’re interested-
David Bezar:
That\’s why you married me.
Bret Elam:
That was good.
David Bezar:
Actually I have a radio face that [inaudible 00:06:14].
Karen Bezar:
He keeps saying that. That\’s not true. That\’s not true. Just real quick, if you want visual, go and Google do sequence of return risks and BlackRock has a great visual for that, a great chart to show you how it really affects you, how people with same interest rate average over time can, depending on when you start taking that money, your money it\’s going to not be there when you need it. If you start taking the money out and you have a downturn in the market, which causes a sequence of return risk. So just wanted-
Joe Krause:
Yeah. You know what? Karen, one of the things we talk about all the time with our clients, is some of the tips that we could do. And we\’ve got seven of those identified. So why don\’t you go through those real quick.
Karen Bezar:
Sure, sure. So first, one of something really important is you need to diversify your investments, right? So we need to re-establish your target allocations, need to consolidate accounts to simplify rebalancing. You need to reevaluate fund selections. Sometimes you need to ignore market returns. Overall, you have to really focus on your different buckets of investments. Rebalancing your 401(k) versus your IRAs. Adjust your contributions and tolerance for rebalancing.
Karen Bezar:
And that\’s something it\’s hard to do if you\’re doing it by yourself and you have any concerns. A financial advisor, somebody who\’s focused on retirement especially, is someone that\’s going to be able to help you out. And if you\’re not having regular meetings with your financial advisor and consistently rebalancing your portfolio, then you should be searching for one who does. So, listen, unfortunately, many people are going to lose a lot of money in the stock market right now. And it\’s not a scare tactic, it\’s just the truth.
Karen Bezar:
But there is a silver lining in all this chaos that nobody\’s talking about. So this downturn, the stock market, could be your best opportunity in over 40 years to save a small fortune and taxes in retirement. Learn how you can save tens of thousands if not hundreds of thousands of dollars with our free tax retirement analysis. I talked about this in our last show when we had actually shared some examples. This free analysis can be done over the phone or in a video conference in just 50 minutes.
Karen Bezar:
So it\’s just some basic information. We\’ll find the biggest opportunities and that can reduce your taxes with IRA, 401(k), social security benefits, income, and more. Some advisors charge thousands of dollars for a customized analysis, but if you\’re one of the 10 qualified callers, we\’ll underwrite 100% of the cost as a listener of this show. So if you\’ve saved more than $250,000 be one of the first 10 callers to get your free analysis now. Give us a call at (215) 987-2430. So don\’t miss this short window of opportunity right now. Again, give us a call at (215) 987-2430.
Joe Krause:
All right. Good stuff, Karen. Good way to begin to show. That term that we\’ve talked about going back to when we first started on Talk Radio 1210 WPHT, sequence of returns and what it could do or how it could potentially decimate your lifetime income. Good job. Nice start here on a Saturday on Roadmap to Retirement, the radio show.
Joe Krause:
Again, the phone number, (215) 987-2430 we\’ll get into our first commercial break. When we come back on the other side of the commercial break, why your IRA and 401(k) is really a joint account between you and the IRS. We\’ll deal with that question and answer the question after the break.
Joe Krause:
And back here on Roadmap to Retirement, the radio show as we come to you every Saturday on Talk Radio 1210 WPHT. Do you have an IRA or a 401(k)? You want to think of this as being your money, I get that. I tried a conversation with my wife about that this week. But really it really is a joint account and that joint account is between you and the IRS. So if you take advantage of some preventive tax planning strategies now, you can significantly reduce the taxes that you pay and keep more of your hard earned money. Keep it in your pocket where you can utilize those dollars.
Joe Krause:
Welcome back everyone to Roadmap to Retirement, the radio show. I\’m Joe Krause, along with Karen Bezar, David Bezar and Bret Elam. Today we\’re looking at and talking about six overlooked risks that could threaten your financial security in retirement in this segment, Bret, as I get ready to toss it over to you, how you could dramatically reduce your taxes? You\’re the tax expert. I always rely on you for great information. How can you reduce it with your IRA, your 401(k), social security, investment income and a lot more. So with that introduction, my friend, it\’s all yours.
Bret Elam:
Thank you Krause. As you know, we\’re going to continue that theme of the lines that I love, tax planner versus tax procrastinator. So again, we want to brace ourselves. Again, we are looking and facing straight at us in the eyes of higher taxes and retirement. So we\’ll share a couple of publications that we\’ve been seeing here recently. Couple here from Motley Fool talking about this, you\’ve spent decades grappling with your budget and learning the cost of your lifestyle and now what?
Bret Elam:
Now you get to toss much of that knowledge aside. And we learn a whole nother set of rules once we retire. And if one thing, Krause, that we always see people missing budgeting in retirement is taxes. It\’s that big old adage, are we looking at gross? Are we looking at net? We always need to factor in taxes. Because no matter how you try to avoid it, uncle Sam will always take a chunk out of your paychecks, whether it\’s a paycheck from working or pull money out of IRAs and 401(k)s.
Bret Elam:
And again, with everything that we\’re facing right now, [inaudible 00:12:37] things are going to go up and in the future. So the same is true again in retirement, although taxes in retirement can potentially have greater consequences than when you\’re working. And here\’s why, because you\’re likely more looking like that you\’re going to be on that fixed income Krause, spending more than you can anticipate, than you can throw off again, having that budget, but then we call it life. Life happens. So we got to be prepared for it.
Bret Elam:
And what happens if we\’re not prepared for them? Taxes can take a serious bite out of those overall numbers. Here\’s a great article from MarketWatch, the most surprising and complex set of retirement rules that boomers, baby boomers, must navigate is the maze of retirement taxes. And if anyone\’s ever seen that IRS book, the rule book is long, 300 plus pages. Here\’s a scary one Krause, we screw it up in retirement, the penalties are high, can be over 50% if we do not play things right, especially when we start talking about required minimum distributions.
Bret Elam:
And when you add it all up for an individual with a million dollars in retirement savings, these hidden, just the hidden taxes, not overall taxes, just the hidden taxes can equate to an additional $61,000. And again, remember this stimulus package that\’s hanging over us, those numbers can continually push higher and higher and higher. So what\’s it all about? We got to be a planner, tax planner, tax procrastinator. Here\’s a great article from Kiplingers, you have a silent partner in your 401(k) and I don\’t even like to call my uncle because I like my uncle. I want to call them the IRS at the end of the day. Okay.
Bret Elam:
The tax man is not my uncle. The tax man is the IRS. Every time Congress meets, there is a chance that government can decide to increase their share of your savings, these are profit sharing plans. Again, your IRAs. And who gets to change the percentage of the profits they keep? The government, the IRS. How? They change the tax code. So retirement accounts like these IRAs, 401(k)s 457s, 403s they\’re very popular. Most employers not only offer workers these types of accounts, they\’re actually willing to match it.
Bret Elam:
So it\’s a no brainer, right? Conventional wisdom. Put as much money away, we\’ll pay less taxes in retirement. Now, because do you know what the icing on the cake is? It all looks rosy Krause because the money you\’re contributing is tax free. But there\’s an asterisk next to that because what most people don\’t realize until it\’s too late as they\’re nearing retirement, is what they are creating is a ticking tax bomb. Why? Because the IRS wants their cut.
Bret Elam:
So when you withdraw that money, you have to pay taxes and that could be a major problem when you weren\’t expecting it. And again, with the climate we\’re at today, it\’s never more staring at us in the face that we need to be a tax planner.
Joe Krause:
Bret, just real quick, you and I were talking, you had shared that Forbes article with me and you\’re big thing that you talk about when we do our seminars and now our webinars is tax procrastination versus tax planning. And as well because we meet so many people, still some confusion related to Roth conversions.
Bret Elam:
Yeah. And we\’re going to go deep there. And that\’s one of the ways that we can be as proactive as possible. So when we talk about Roth conversions and required minimum distributions, again, contributing money to your retirement accounts, they\’re easy. You stash your money away into those tax deferred accounts, you get a nice break. But when you retire again, the government wants their cut. So that\’s where they force you to start pulling money out of those tax deferred accounts called required minimum distributions. They are now taxable.
Bret Elam:
And again, they want every dime. And again, we\’ve been talking a lot on this show talking about the Secure Act. The Secure Act, and that\’s where David was just talking about Roth conversions. They raised that required minimum distribution age to 72 from 70 and a half. And if you do not take that required minimum distribution, right, can be at 50% penalty. If you\’re scheduled to take 40,000 and you don\’t take any, you owe $20,000 not to uncle Sam, the IRS. Remember, we like our uncle Sam. Okay. So Forbes had a phenomenal article.
Joe Krause:
It\’s a big number, by the way. 50%
Bret Elam:
50%. A $2 trillion tax bill is coming for boomers. We call those required minimum distributions. Gang, this isn\’t David, Bret and Karen making this stuff up. This is stuff that\’s facing us right in front of us. But here\’s the good news, talking about required minimum distributions. March 27th, 2020 about a month ago as part of that stimulus package, required minimum distributions are suspended for this County year 2020.
Bret Elam:
Reason being, and we\’ve seen it, it gives you those accounts where we\’ve seen those dramatic stock market downturns of a [inaudible 00:17:48] 5% where retirees can now let them come back before they have to take that overall taxation at the end of the day of where we\’re going to pull that money from.
Bret Elam:
So talk about what we\’re facing, the higher tax rate in retirement, everything that we\’re talking about, the stimulus package. Now three again, we just went from $24 trillion in debt to $24.8 trillion. So we went up. We went up almost $800 billion from a national deficit in just three weeks. The numbers are going to continue to climb. And again, that conventional wisdom claims that you will pay a lower tax rate in retirement. Well, let me tell you something, David, Karen and I we sit with people all the time.
Bret Elam:
A lot of times it\’s like, whoa, now I know what you\’re talking about. We\’re going to be, even in today\’s same tax climate, you\’re going to pay higher taxes in retirement. Not everybody\’s the same, but many people are paying increased taxation. And Forbes set it again, taxes could double in the next 10 years to pay for the ballooning debt, social security, Medicare issues and for most people that enormous unfunded liability from our federal government, a lot of them linked to these ongoing retirements of enormous the baby boomer generation and how they can control that profit sharing of the taxes.
Bret Elam:
CNBC just came out Krause. They\’re predicting 46%, very shortly is what they believe the next marginal tax rate will be. Okay. When the Trump tax cuts expire here in 2015. This-
Joe Krause:
2025.
Bret Elam:
Oh yeah. Yeah. 2025. Yeah. We\’ve got to accelerate a little bit. 2025.
Karen Bezar:
Oh, yeah.
Bret Elam:
Yeah. That was our social security changes back then. 2025. One decade there. So this new $2 trillion stimulus package Krause, which helps a lot of us here in this country. That\’s a big deal. But we need to understand those unintended consequences that no one\’s talking about. There could be some collateral damage. Again, this $2 trillion, it\’s not free. Somebody has to pay for it and it\’s going to come from higher taxes in the very near future.
Bret Elam:
And again, unfortunately these taxes could hit millions of boomers at the same time that they\’re tapping their IRA and 401(k)s at the same time. So what would you do Krause? With the tax planning. With an extra $284,783 in retirement?
Joe Krause:
I don\’t have an answer right this second.
Bret Elam:
And that\’s how much a Philadelphia couple could save in taxes with their IRA and 401(k) using our defensive tax planning strategies. Do you have an IRA or 401(k)? Learn exactly how much money you could save with our free tax analysis. The free analysis can be done over the phone or video conference and takes no time at all. You\’ll discover the defensive tax planning strategies that could save you thousands of dollars and many people we meet too, even hundreds of thousands of dollars with your IRA, 401(k) pensions and other tax deferred vehicles.
Bret Elam:
Now, some advisors Krause, they charge tens of thousands of dollars for that customized analysis, but we\’re going to underwrite it for today to our first 10 listeners on the show today. Again, if you saved more than $250,000, call to schedule your free analysis now, (215) 987-2430. Hey, what would you do with an extra $284,783 in retirement? Learn exactly how much money you could be saving by calling (215) 987-2430. Call us now and leave that message right now. (215) 987-2430.
Joe Krause:
And of course in this day of social distancing, all of that conversation can be done on phone or on Zoom or anything like that or through video conference. So you can do all of that just like the comfort of the webinars.
Bret Elam:
And it\’s all complimentary Krause. Again, the first 10 callers, again, we\’re waiving those typical cost of a couple thousand dollars for that analysis.
Joe Krause:
Good stuff. (215) 987-2430 we\’ll get to a commercial break here on Talk Radio 1210 WPHT. As we go into the break, the number one fear for retirees. What is it? Is going broke in retirement. When we return, the strategies that can help you avoid outliving your money. Back at the moment.
Speaker 2:
So are you a member of the thrive army? If not, it\’s okay. You can still get a sample RMD tax report at no charge. All you have to do is go to thrivefinancialservices.tyl16lnm-liquidwebsites.com.
Joe Krause:
According to MarketWatch, more than six in 10 baby boomers feared running out of money before they die. They fear that more than death itself. Do you fear being 85 years old full of life and flat broke? Welcome back to the Roadmap to Retirement, the radio show. I\’m Joe Krause along with Karen Bezar, David Bezar and Bret Elam. Today we\’re talking about the six overlooked risks coming up in this segment with David. Why living longer is a blessing and a curse and later on how to protect yourself from the skyrocketing costs of healthcare and longterm care. Two concerns. David. All yours sir.
David Bezar:
Thanks Joe. So we covered risks number one and risk number two. So this is the third of the six. Hopefully we\’ll have enough time to get through them all. This is an interesting one Joe, because it\’s not something that most people kind of factor in as a financial type scenario, right? Living longer. It\’s something that we spend time on it for two reasons. One is, when we try to help people make the proper decision related to social security, longevity becomes an issue, right? Because here\’s basically a break even.
David Bezar:
So we ask questions and sometimes it\’s for the first time that people have ever consider it. It\’s like life expectancy for men is 82 and for women it\’s 85. So I\’ll say, \”Mr and Mrs, that\’s the standard. Tell me a little bit about the genes in your family. Mom and dad\’s still living? Did they pass early? What was the condition?\” So on and so forth. So for our listening audience, that might be something that kind of consider. And I\’ll give some statistical things in a second. So that\’s one reason.
David Bezar:
The second is, running out of money before people die is really one of the primary concerns that we hear from retirees. It\’s called longevity risk, right? So we want to delve into that as fiduciaries and as financial planners. And again, most people go, \”You know what? If I get sick just get a shotgun.\” People joke around about that type of stuff. But it\’s becoming more and more of a reality today is that, we quote this statistic out of the Census Bureau, that if you\’ve got a couple age 65, married couple, there\’s a 50% chance that one of that couple is getting to age 95.
David Bezar:
So if you don\’t build your financial, your written retirement income plan and stress test it into your 90s, there is a distinct possibility, maybe not a probability, but certainly a distinct possibility that you could run out of money. And Joe, we\’ve seen it, it doesn\’t matter if somebody\’s got $500,000 in retirement assets or $5 million. Because a person that\’s got $500,000 may only have expenses of $50,000 a year, right? So it\’s not stressing as much.
David Bezar:
But somebody that\’s got $5 million, might be spending $250,000 a year in expenses and with market corrections, healthcare crisis, all the things about longevity risk that could kind of create a problem. So when we talk with people about their financial futures, we hear this concern actually come up. Now, we kind of prompt it and then it becomes a realization like, yeah, what if I don\’t have enough money to make it through retirement?
David Bezar:
So living longer is leading to this basic charge of concern. Here\’s an interesting statistic, Joe. We don\’t hear the word a lot, but the word centenarian right now, there used to be a clothing store in Lansdale called Santarian. That was [crosstalk 00:26:51]. That\’s all the time ago.
Karen Bezar:
Yeah. Long time. Yeah.
David Bezar:
This is centenarian. That\’s someone who has reached their 100th birthday. Now, there are an estimated 450,000 centenarians living in the world today.
Joe Krause:
Wow.
David Bezar:
Right? Imagine what that number will look like 20 to 30 years from now. Right? As medical science improves, as the food quality gets better, as people take care of themselves, that number could dramatically start to increase. So for couples like I shared, we got people who reach at 65, 50% of one of the partners could last up to age 95. So we got to factor that in, not as a risk.
David Bezar:
That\’s number three, right? That\’s the risk. Does my written retirement income plan show me the details that if I live to age 90, 95 whatever that number is, I still have money and I\’m not… It used to be the old facetious joke, am I going to be eating cat food? Well, we want to make sure by doing the analysis that that isn\’t the case.
David Bezar:
Now, in addition with longevity is risk number four and that is, and man, do we see this, the skyrocketing costs of healthcare and longterm care insurance. So some of the unexpected medical bills that we discuss in our stress analysis, they\’re a major concern for many retirees. Prescription drugs are a major issue, especially for the chronically ill. Older people usually have a greater healthcare need and may require frequent treatment for a number of different health related issues.
David Bezar:
Healthcare costs alone are skyrocketing and the average person in their 40s, now, we\’re not even talking about retirees, but people in their 40s now is expected to spend roughly $335,000 on healthcare expenses throughout retirement. Now, I\’m going to tell you about inflation, Joe. When Bret and I started doing our workshops, we spent a lot of time talking about social security, Medicare, and all of that.
David Bezar:
One of the slides that we used was, did you budget $250,000 for healthcare costs in retirement? Now we\’re doing this in a live audience of 60, 70, 80 people, and there\’s not one person that would ever raise their hand because Medicare part B healthcare comes out of my social… People will think about it. Now, that was, Bret, what was that? Four years ago?
Bret Elam:
Almost five.
David Bezar:
Almost five years ago. And now the new estimate is not 250,000 it\’s 335,000. So when people were saying, \”I wasn\’t budgeting 250.\” Holy smokes, what percentage you think has got the inflation adjusted number of $335,000. So think about this for a second, Joe, right? Healthcare costs is part of the component. What if you\’re spent, and that\’s for just normal people. That\’s not extraneous healthcare costs, right? That\’s Medicare, your supplement, paying for prescriptions. That\’s not including, God forbid, you get cancer or you have Dementia, Alzheimer\’s or something chronic that\’s going to cost additional.
Joe Krause:
Mm-hmm (affirmative).
David Bezar:
Now, a lot of people today certainly know this concept about longterm healthcare insurance. I will tell you our position here because when we meet people, they\’re typically in their mid 60s now and when they explore the costs, we don\’t advocate for traditional healthcare insurance because of this, right? When they explore the cost, the premiums are really, really big, right? Then number two is, the premiums are increasing each year because the healthcare industry is being beaten down pretty darn good.
David Bezar:
So you may end up spending money for something that in the future you can\’t even afford to keep. And number one, you spend all that premium and may never get a claim out of it either because you drop the policy or you die in your sleep. So we really want to get people starting to understand, to factor in this health care. You add that with the longevity risk number three, and then the longevity risk of number four, It really becomes an issue related to overall retirement.
David Bezar:
So we really want to get people\’s retirement income pictured beyond just that one source of income. We want to get that three legged approach which is social security, maybe an employer pension. And then thirdly, those retirement assets and make sure that we factor in longevity and we factor in healthcare cost. And a typical financial advisor isn\’t really just, they\’re not thinking broadly enough, they\’re not looking holistically enough. They\’re looking at it kind of in one silo.
David Bezar:
Let\’s manage your investments. And they disregard what Bret talked about, taxation. They disregard what Karen talked about, sequence of returns. They certainly disregard longevity risk and healthcare risk. So when we do those types of things, it\’s taking all of those components and seeing can we make our retirement successful?
David Bezar:
So again, for the average 65 year old couple, there\’s nearly a 50% chance you or your spouse is going to live to be 92, 93, 94, 95. There\’s actually a 25% chance that one of you will live to be 97 according to the Census Bureau. So on one hand, congratulations. On the other hand, Holy smokes, right? Good luck.
Joe Krause:
Yeah.
David Bezar:
Good luck. Because if you live to be 90 years old, you could go without a paycheck for three decades. Think about that, Joe, right? I retire in my 60s, I could go 30 possible years without a \”job paycheck\”. So then I\’m relying on my social security, maybe a pension and my retirement assets. Now the good news is, today, there are some surprising options for creating retirement income that most people don\’t even know exists. And they could help your money last as long as you do.
David Bezar:
So what I would recommend is find out what they are with our retirement income analysis. This fits in with our tax analysis with our income analysis. And what you\’ll learn from this simple analysis is, could you accelerate your plans to retire by years? Or dramatically improve your lifestyle in retirement no matter how long it lasts. Now, some advisor charge hundreds of dollars for these customized analysis, but if you\’re one of our first 10 callers, qualified callers we\’ll underwrite 100% of the cost as a listener of our great show.
David Bezar:
Now, if you\’ve saved more than $250,000, be one of the first 10 callers to get your free analysis now, and you can call us at (215) 987-2430, (215) 987-2430. This free analysis can be done over the phone or via Zoom or Skype or these video conferencing tools. So call (215) 987-2430.
Joe Krause:
Well done. Great segment David. And as we go to the commercial break, I\’ll just take a quick moment to congratulate all of the-
Karen Bezar:
Centenarians.
Joe Krause:
… Centenarians, 450,000 of them.
David Bezar:
That\’s unbelievable.
Joe Krause:
That\’s such a big number. Good stuff. Good information. Again, (215) 987-2430 is the number to call. Coming up on the other side of the break here on Talk Radio 1210 WPHT, why the Wall Street Journal is saying, get ready for the return of inflation and how it could be a devastating impact on your retirement. Back in a moment.
Joe Krause:
According to Investopedia, even low rates of inflation can seriously erode the wellbeing of retirees. A period of unexpectedly high inflation can be devastating, and then years and years of low inflation could soon be over. Back here on Roadmap to Retirement, the radio show, I\’m Joe Krause on this Saturday morning with Karen Bezar, David Bezar and Bret Elam. We\’re talking today about the six overlooked risks in our final segment of the big show.
Joe Krause:
How you can safeguard your savings from retirements silent killer inflation plus how successful retirees are getting around record low interest rates on CDs and Savings Accounts. And that\’s where we\’ll begin our final segment on this Saturday.
Bret Elam:
And Krause, inflation, to me, [inaudible 00:35:49] retirees more than anybody. And why it\’s the silent killer, here\’s why, we\’re working all these years up to the age of 65 and we\’re getting pay raises to help us keep up with that standard living when we hit retirement, we talk about fixed income. So we talk about Investopedia. Inflation should be an ongoing concern for anyone living on a fixed income. Even low rates of inflation can seriously erode the wellbeing of retirees who live for many years. From the economist, COVID-19, the return of inflation eventually.
Joe Krause:
Mm-hmm (affirmative).
Bret Elam:
Okay. Getting ready for the return of inflation. Again, this silent killer. Again, what did a movie ticket cost a decade ago? What did a candy bar cost? What did a, the gallon of gas. The gas is at least low, but that\’s short term lift because none of us are driving but soon enough we\’re going to see prices go back again.
Bret Elam:
Here\’s another one Krause, get ready, from the Wall Street Journal, get ready for the return of inflation. The Fed\’s actions have increased the quantity of money in the U.S. economy at a blistering rate. History suggests that United States will soon see the inflation. Boom.
Bret Elam:
Again, another publication, gang, this isn\’t just us, this is everybody that\’s out there and again, we may be embarking on that short term here, again, in a deflationary spiral in the weeks to come, but longer term, once we get crossed that valley of the shutdown, there will be that significant spike.
Bret Elam:
And the longer term inflationary trend is the one that concerns me, Krause. It\’s driven by a continuation of the trend of the de globalization that started with the trade war. And again, we\’re back and forth with it every week. It seems like still.
Bret Elam:
Where supply chains now have another reason to return back home, which is the future wave of the virus trying to keep it away. And at the same time we expect the dollar to weaken on the back of the massive budget deficits and escalating debt to GDP ratios that are going to lead to a probable downgrade, unfortunately of our debt rating. A weaker dollar, and we got to be ready for it. We\’ll be inflationary.
Bret Elam:
And while it doesn\’t seem like, and Krause, when you talk about inflation, we\’re not talking about 20% typically we see it in ones and twos and threes, but again, that\’s how it\’s been. We go back to the 70s and the 80s, it can get significantly higher, but when you add that up, and again, David shared those stats of how long people are living over a long period of time, we have to be conscious of those inflation.
Bret Elam:
Inflation, the silent killer, just simply over the last decade, 21% of the purchasing power in this country has been gone just simply from inflation. Fixed incomes get crushed with inflation. We meet so many people in this area, Krause who have pensions and pensions do not go up. They stay flat. My mother being retired for 15 years ago has not gotten a pay raise from her pension. And now 15 years while we just heard 21% of purchasing of power went away.
David Bezar:
Yeah, Joe. Well, Brett, that last statement, that\’s the dollar.
Joe Krause:
Mm-hmm (affirmative).
David Bezar:
It\’s not just purchasing power. The dollar has lost 21% of its purchasing power. It\’s crazy.
Joe Krause:
Yeah. It is.
David Bezar:
And I watch that index every single day and these trade wars are definite, and that\’s a function of that de globalization Bret talked about, right? We want to be more competitive in the marketplace, but that has a major inflationary impact on us as U.S. citizens on what we got to pay for things. Now, the flip side of that, that was risk number five.
David Bezar:
This is now risk number six because the flip side of inflation and what we\’re experiencing at the same time is incredibly low interest rates at the bank. And if you think back to moms and dads, we used to hear the word fixed income. Well, fixed income back in the day was savings accounts and CDs when they were paying eight, nine, 10, 12%.
David Bezar:
I was on, for one of our clients, just looking at CD rates and the best, the absolute best in the nation. Because again, the Fed has driven down interest rates so low was 1.7% for a four year seat. So think about inflation. If it gets to be 2% we\’re behind the [inaudible 00:40:12].
Karen Bezar:
Yeah. So it\’s important to remember if interest rates are so low, they\’re almost zero. Preserving your retirement income gets really risky. So in the wake of the emergency rate cut by the Fed and to combat economic effects of this COVID-19 outbreak savings rates, CD rates, treasury yields, they\’re all down significant significantly. Like David said, I remember when I was really, really young, I was really young and CD rates were 6%, 7%. People were able to save money in a safe nature and do it on their own. Can\’t do it this way anymore.
Karen Bezar:
And for savers in a need of reliable retirement and calling through their golden years, it\’s probably going to get worse before it gets better. So what are you going to do? You can\’t stick your head in the sand. You have to do something about it. And interest rates are already low. After our great recession and they\’re likely just going to go lower in the months ahead. That\’s our opinion.
David Bezar:
Yeah. And here\’s the challenge. The challenge is that the low interest rates on those very, very secure types of investments is forcing. It\’s not an option. It\’s actually forcing people into the markets. When people should tend to be dialing back their risk, in your 60s and your 70s your risk allocation should be adjusted to be more on the fixed side, the guaranteed type side. It\’s actually forcing more people into the markets to take that risk on.
David Bezar:
And yeah, we\’ve rebounded pretty good. But the reality is there\’s probably a whole nother down leg to the market because the economy has been completely disconnected from the stock market. That\’s a big issue, right? So people are getting all hyped up again going, \”Oh, I recovered what I lost back in the March lows. Maybe I\’ll put some more money in because it looks like it\’s going back to the moon.\”
David Bezar:
And the reality is that\’s exactly, if you look at the charts, it\’s exactly what happened back in 08, 09 after the hype of the rally, bear-market rally, bunch of people jumped back in and then it went down another 42%. So you got to be really, really careful.
David Bezar:
So a couple of quick things I would say is, here\’s kind of a takeaway, if you don\’t have a comprehensive financial game plan that kind of covers all the bases that we talked about today, you\’re kind of setting yourself up for a fail. Saving for retirement is a great start, but it\’s what you do with the money at the end of the day that really matters. If you have a financial game plan, so great being proactive. But it\’s a good idea to make sure that that written financial plan that you have is comprehensive, that it\’s including all the things that we talked about, like social security, Medicare, taxes, the risk management, distress analysis, all of that.
David Bezar:
So what I would say is, due to some of the reports that we have seen, there\’s an actual one that we did, we generated an extra $284,783 in retirement for this Philadelphia couple. We did the analysis, we identified it, they implemented, that\’s what that savings for them is going to be over that period of time. So if you\’ve got an IRA or a 401(k) or any other type of a qualified retirement plan, I would say learn exactly how much money you could save with one of our retirement tax analysis.
David Bezar:
It\’s actually two separate reports that we combine into one. It\’s a free analysis, it can be done over the phone, it could be done in a video conference. It takes really no time at all. This free analysis can be done and it\’s going to cover all those tax strategies. It could literally save you tens of thousands of dollars. So if you\’ve saved more than $250,000, call to schedule a free analysis. You can call us at (215) 987-2430. Learn exactly how much money you could save. Just simple. It\’s very simple. Just call (215) 987-2430 to get that analysis. We\’ll get that done for you.
Joe Krause:
Well done. A lot of information today on Roadmap to Retirement, the radio show. Special thanks to everybody tuning in. I don\’t know how you can do it and I don\’t know how you can go at retirement without good people taking a look and giving you some guidance. That\’s my takeaway from today\’s show. Really, really good information. Well done by all. That\’s going to do it for this week\’s edition of Roadmap to Retirement, the radio show along with David Bezar, Karen Bezar and Bret Elam. I am Joe Krause on behalf of all members of the Thrive army. See you next week everybody.
