David, Bret, and Karen are joined by Jim from Del-Val Insurance to discuss what is going on within the marketplace. Other topics include common situations that harm couples during their retirement.
We have a great lineup today, including some topics from Del-Val Insurance. before I get you to do your opening remarks for the audience, David, I do want to shout out to a close friend of mine, Jim Marino. For 40 plus years, he worked for the city of Philadelphia. He was the executive director of what we all know as The Broad Street Run, and he announced yesterday his retirement.
I thought it was fitting to shout out to Jim Marino. Who is now the former executive director of The Broad Street Run, and hopefully a new client of Thrive Financial Services.
That’s fantastic. Congratulations.
Well done by Jim Marino. Congrats to Jim.
Absolutely. Congratulations on that. We’re excited to be here today. We have a fantastic following. Getting up in the morning, Karen and I spent the evening down here in the city, which was a great. We had a blast. We met Jim down at the Wawa, at 19th and Market.
So, a big shout out to the team at Wawa for helping us out there, so that was good. Then took an Uber down here. We’re excited, and we’re so happy to have the audience that we do. We know the Thrive Army’s growing, and I’m not sure if it’s through sympathy or empathy, knowing that we have be here at 6:00 AM on Saturday mornings. But we talk about it all the time in our workshops, and when I ask people how many of you are early risers, we get a lot of hands up.
Now that we’ve introduced the show at the workshops, we were starting to get lots of phone calls, lot of emails on questions and topics that people want to discuss that come out of the workshop.
Yeah. You mentioned the Thrive Army in your opening thoughts there. I think it’s really important one, to thank everybody who’s part of the Thrive Army, as that army continues to grow.
A little bit later on in the program, multiple times, I’ll let everybody know where the workshops are going to be coming up next week. But that’s significant and that’s important as well.
Yeah, we just see it. It’s happening across the board. All we were trying to do is build a trusted network of financial professionals. That as people enter the Thrive Army, and gain the benefit of the education that we provide and the solutions that we offer, there’s other areas of business that we don’t necessarily do in our business. But again, it kind of circles what we do.
People like Jim from Del-Val and Fran, we’ve worked with them, we understand it, and we’re actually clients of theirs. We just have such an amount of trust for them, so we’re happy to introduce them to our Thrive Army family.
Jim, I’m going to ask you to weigh in and welcome you into the program. I know we had you on last week, and it’s nice to have you here as well. Sorry Fran can’t join us. But, I think it’s important for the audience to know. We have an audience of people from around the Delaware Valley, a very powerful network, and a very powerful audience that tunes in.
It’s very important for the audience to realize that, as you said, you’re a client of Del-Val insurance. We bring people into the workshops and into Thrive Financial with the genuine and an unconditional concern to educate them, and that’s what we’ve been doing. So with that tee up, Jim, I say hello to you and thanks for coming down, and thanks for stopping at the Wawa 19th and Market. Nice to have you.
It’s lovely to be here and a nice crisp Philadelphia morning. My wife and I, my younger daughter, we stayed in town, enjoyed our lovely city. David, Karen and Bret, I love coming here because I feel like I’m talking to a conscientious audience there. They’re listening because they want to better themselves, better their situation, and that’s the kind of people we’d like to talk to obviously, people that care.
Good stuff. So Jim will be with us for the full hour of the program. Bret, what’s on the conversation lineup for you today?
Yeah, it’s all about the details.
So important things.
Things on the surface sometimes can seem good, but it’s always uncovering and making sure. So we need to make sure that we have clarity in each and every one of our decisions.
Karen Bezar is also here.
Good morning. How are you?
Great, how are you?
I’m good. Nice to hear that energy Karen. What’s on the line up? What are you going to cover for us today?
Financial lies, omen need to stop telling themselves.
Yeah, good topic.
How many lies are there?
Well, for this purpose only five.
Important good topic. Financial lies with Karen Bezar. It sounds like a Netflix series. So, we’ll get into that later on.
There you go.Things on the surface sometimes can seem good, but it's always uncovering and making sure Click To Tweet
We’ll get into that segment as well. And then David, I know you’re going to talk about markets and fluctuation and I think that that is a topic that continues to be every minute of every hour of every day, right?
Oh, absolutely. Yeah. I mean it’s a big conversation point for people. Especially folks getting ready to enter retirement. It’s interesting, we kind of have a divided group of people. We have people who are in retirement that will say to us, “I’m not really concerned about the markets and they’re not really paying a whole lot of attention to it because, we’re creatures of habit and what we’ve done all along is what we tend to continue to do.” And our position on that is it, we’re big believers in passive investments, right? Passive index investing is definitely the philosophy, but as you enter retirement and you’re starting to enter into that de-cumulation, we’re going to start utilizing those assets to supplement retirement. There’s this concept called sequence of returns and it really does change.
So if you stay the course, it may end up not being what you want it to be. And then we have the other side are the people that are really and are just absolute panic. So, we try to calm down the folks that are in a panic and give them solid strategies, how to navigate the markets and how they do and we actually identify some opportunities. Maybe it sounds a little un-american, but when markets go down, it really does create some fantastic opportunities, buying opportunities as well as tax opportunities.
Bret as we look out, we’re not that far away from Tax Day, out in April. And I know that, it is a constant preparation for you with clients about tax sufficiency, about getting ready for not only your taxes, but paying less taxes when appropriate.
That’s our crossing, everyone’s going through that first go around with all those changes that happened in 2017 that they’re doing their taxes right now. Again, year one of the eight-year change happened this past year. So again, it’s that first. Okay. We see what the new norm is going to be. And again, as we continue to educate people of the concept of forward tax planning comes even that much more important, especially with the uncertainties of where tax rates will go. Again, fast forward out to 2026 and beyond. What can I do today, again from the tax efficiency standpoint, but for today’s conversation I want to dive deep a little bit into Krausey about again, understanding all the details that are within a plan. It reminds me justice past week had a friend of mine on Facebook and again, we have a lot of them using Facebook. We meet a lot of people who attend our workshops, who are big Facebook fans and so forth.
So I was reading on this online, the post was, I recently just saved $1,700 by changing my insurance policies. I forget what you want to post, The General or Geico or one of those outfits that we see on TV all the time. And I sat there and I just started shaking my head because what was in the details of that. It’s like Krausey, you and me this morning and you’re telling me about this doctor who saved some guy from having a heart attack. It was coming across like I don’t watch the news because it’s like, I hope I have the whole story on that one. It’s like, oh, I always hear half the story. You need to understand all the story. That kind of mix, to complete the whole thing. So have clarity on what everything looks like.
It must remind me, we met a client, pardon me, a prospect at a workshop not too long ago when he came up to me afterward and said, “Bret, can I just ask you real quick? We’re scheduling appointment, looking forward to seeing you in a couple of weeks. Can I ask you a question?” I said, “Sure.” He goes, “My wife and I got a pension. I retired, it’s $4,500 a month between my wife and I we have another $3,500 in social security coming into the house. We’ve got about $8,000 a month coming in no matter what, and we also have $1 million in our investments.“
And I go, “What? What are your expenses?” And then he said, $7,000 a month. He goes, are we going to make it? I go on the surface, everything sounds great. He laughed, and he said, “Excellent.” I said, “Do me a favor though, when you come in, we need details and everything that you have.
Wow, sounds like a great situation. But when you say details, the truth is in the details. It is so important for us, and I’ve been on this ride with you since we started the program. It’s so important for us to be willing to embrace the details because that’s going to determine decisions that we made.
And that’s it. We may have been born in the day, but not yesterday. Again, why I love what we do here at Thrive between myself and my partners is all the years of experience where we’ve seen almost every story come in. So, it’s important we sit down with people and especially during that first interaction, the very first thing we uncovered, well it says $4,500 pension was great. So long as he was living the day he passes away, his pension passes away as well. And it was like, wow, I got what I told you at the workshop. I’m changing my tune. And he goes, “what do you mean?” “I go, what happens if you pass away?”
And he goes, “well, my wife still has the million dollars”. I go, “Okay, okay, I hear you. so now let me paint a picture. let me tell you about a couple of my clients from the past. if you ever heard of this thing called Alzheimer’s” and he said, “Yup”. I go, “you know today, if you go to an Alzheimer’s unit at a facility, it costs anywhere from $12,000 to $15,000 a month. While you’re there, it’s a silent killer on all your assets because you don’t die quickly from an Alzheimer’s.”
Yeah, we’re told publicly we’re going to live longer. Well, inevitably we all know we’re going to pass. But the ability to be able to prepare yourself for an unforeseen scenario or situation, you just don’t know what it is. I think that’s really, really important for us to understand.
And that was it Krause. I go, “you can be in a facility three, six, eight years from Alzheimer’s situation.” I said, “someone passed away after being there for six years. Let’s think about that. That comes to about $600,000 to $750,000 if you were just there for four years. forget the market, we’re not even going to go there today. So, your million dollars over a four-year time period just got cut in half. And then all of a sudden, say you passed away, you’re $4,500 pension checks gone. Your wife’s social security check goes away, and she still has your social security check of $2,800. So now she has $2,800 check and she’s left with $300,000 worth of assets. That’s a game changer.”
True it is.
And understanding the details on the surface things sound great, but when you start peeling things back, they don’t always seem that way.
And Bret I would add this to you on the surface. Congrats for being able to have the conversation about that being on the surface. Now as you’re saying, prepare yourself for what’s next. Don’t get comfortable with what you’ve created.
And that’s it Krausey. And then going back to my friend that I saw his post on Facebook, I reached out to them and I started asking him questions. I was like, “How’d you save all that money?” He goes, “Ah, I just called game a little bit of information and it was simple.” I said, “Well, do you still have full tort?” He goes, “what do you mean?” I go, “Well, what happens if someone falls at your rental property? do you have an umbrella policy?” He goes, “What’s that?” And I started asking him all these questions and he said he wasn’t sure. I have to be honest with you, I can’t tell you I know everything about everything, but it’s why why we partner up with great people like Jim at Del-Val insurance. My wife and I went through an accident process before we were. I understood the difference between full tort, limited tort, but when we start promoting and talking about being an educator is being advocates out there in the community. People need to understand those details and I don’t want to throw it over to Jim. It’s all about the details and people always think about price, but it’s all about coverages as well.
I was Just going to say that, Bret. there’s so much advertising today, especially for auto insurance and it’s all centered on save 15%, save 20%. Give us a call, cut your rates. That’s all well and good. But when the stuff hits the fan, you want to make sure you have the right policies and it’s a mixture of saving money and getting the proper coverage. You can’t save money. It’s not all about saving money. If it was, everybody would have state minimum liability limits and no comp or collision. You need to have proper coverage, especially on the homeowner’s Krausey. I know you had a situation with a relative with a major fire. You really got to make sure you have prior coverage.
And I would immediately jump in Jim and say this to you, and I’ve said this to my family and I would say it to the audience. You don’t know what you don’t know until you’d need to know. And then you find yourself in a position where perhaps you can’t change the decision that you’ve made. And once you’re in that scenario, then you’re in a box and you’re forced to live with the details. And it’s one of the reasons as Bret mentioned and one of the reasons why the Del-Val insurance group to me represents, and I don’t want to sound like a commercial. I want to be able to represent the audience. The reason you’re sitting in the studio right now, it’s because of what you provide for the Thrive Army because of what you provide for the people I call the Del-Val insurance group, and at least explore the option of getting educated about it. And Bret, I think that’s what you meant with your introduction to Jim. It’s all about back to the details. It’s about understanding the details, getting educated on that detail.
Yeah, And that’s it. As Davis said, a lot of people who sit down with their nearing retirement or already there, they have something to protect. Right? And again, that’s what it’s about. It’s risk mitigation to order things that I need to fend off and again, when we have assets that we need to protect. Again, understanding the details, do I have all the right coverages and everything that I have in my life. Again, there necessary evils at the end of the day is understanding what all those details are.
Jim, automotive would be an obvious category where you can help or review. What are some of the other areas for the listeners that you can at least help or offer some sort of a complimentary consultation for.
Real quick, let me just tell a quick story from yesterday. I’m in the office yesterday I got a call, Mrs. Blah Blah Blah on line two. I picked up, she’s like, “Yeah, I think I want to drop my umbrella policy.” Now, this is a lady paying $300 a year for an umbrella policy. I said, why do you want to do that she was, “I don’t think I need it anymore I got rid of my swimming pool.” So I happen to know this lady has significant assets. I said, really
Somehow, she thought the umbrellas are relevant because she had a swimming pool. Now the swimming pool is gone. She doesn’t need the umbrella. So, I quickly said, do you really need to save $300 enough that you want to put the rest of your assets at risk because if you rear end somebody, they sue you and you put all your assets at risk because you don’t have that. So, she quickly said she’ll renew the umbrella.
Your example kind of hit what I was looking for. I just want you to be able to say, “Hey, here’s some of the areas we can look at it.” If you’re a small business, let me help you. If you’re looking for automotive, let me help you.
You did a great job there Krause on the things we can help you with. But I did remember what I wanted to say is I want to talk about the people that are paying the most, typically the people who have kids. And Dave, I know your kids are about the same age as mine. Bret, yours may be a little younger, but when you start getting in situations with four drivers, a couple of them are kids, four or five cars. Those are the people that are spending a lot of money. And those are the people that need, typically need the most work on their policies as far as making sure everything’s rated correctly. Maybe we’ll get into that in a little.
Thank you Jim, now we will turn to Karen Bezar. 100% of the time in a world, Karen, where there are no absolutes. Where there are no certainty to everything happening the way it’s supposed to. You will leave the workshop and you will know more about retirement than when you attend.
Agreed. And people do tell us that when they come, some people come from the workshop and actually take us up on the complimentary consultation and I say, “Did you learn at least one good nugget of information that you didn’t know before?” And they say, “Yes and it’s worth it.” And if you come in and meet with us, sometimes you even learn more things that you didn’t know.
I was very intrigued about in the pre-show prep for the topic.
Your topics. I want to get you right into it because I don’t want to set the tone.
No worries. And then really quick, I was going throw it back to Jim because I’m really glad that we work with Jim and Fran personally because we made a change to our insurance policy recently and I got the addendum and what did I do with it? I took it, didn’t open it and throw it in my file, and Jim said, “did you read it to make sure the changes we made are correct?” If I had a representative from one of those big companies, you call the 800 number, Jim knows us personally, he knows his clients personally. They don’t know me personally, so I’m going to throw it back over to him real quick and then we’ll get on my topic. If not, we’ll talk about it next week.
Yeah, Insurance as well as financial planning is still a relationship business and I hope it always stays that way because that’s the best way to get it.
I think it has to stay that way Jim.
As a matter of fact, the more things that all mean to cut you off, I’ll let you finish. The more things become digital in the more things become electronic and easy to go online. I think we need to get back to more of that personal connection.
Yeah. And after doing this for 30 years, I think at this point it’s amazing how many people, that you may not have talked to in a little while. But I still know their situation. It’s, amazing how your brain works and you can remember that kind of stuff. But, Karen getting real quick on the people are spending a lot of money it’s like does a college thing. We see this a lot where people or kids are to the point where they’re going away to school, they’re in high school, are starting to add their children to their policies. It’s amazing how many people do not have those children rated correctly, which is resulting in higher premiums. Did they let her carry or no, or their agent know that that child is now way at school? Do they have a car away at school? Is the car rated at that territory? Is that rated in a higher territory where they live?
Those are things that just unnecessarily high premiums. And with a simple phone call could be easily corrected. We’d be happy to help you correct those type problems. He can call us at 215-3540-122 and our website dvigi.com or you can just Google Del-Val Insurance group.
Good to have you here Jim Muelbronner. Thanks for joining us. Back to Karen Bezar on financial lies and thank you for being honest about throwing the document into the insurance file.
That’s what we do. We’re not supposed to do it, but that’s what we do.
Right. And I was like, “Thank you for telling me that.” So, I actually did read through it.
That’s the first time I’ve heard that.
No, it’s the truth. It’s the truth. So what Bret was talking about, plan for everything, but you also want to enjoy your life and live your life. And if Del-Val can save you some money on insurance, you can go towards retirement, right?
Absolutely. So, financial lies women need to stop telling themselves. I read a great article about how a woman is actually a psycho therapist who became a financial advisor. So how’s that from going for psychotherapy to financial advising? But sometimes it could actually be a good combination. So it’s actually six slides.
So, number one, my brain doesn’t work that way. It makes sense that you might think that your brain doesn’t work that way. Women, I’m talking about women. We were kind of told women aren’t good with numbers or math and things like that and they steer them away. And I think things are changing now, but number one, my brain doesn’t work that way. So you can learn something new and including finance, you can learn something about finances, just a decision that you need to make. It’s never too late to learn something new. Come to a workshop. Women have come to the workshop and they do learn something new and then they take the next step and they come in and meet with us and they’ve definitely learned a lot of things.
I met with a woman this week and she thought her social security for retirement age was 65. She thought she could retire at 65 with a good amount of money at social security. And then I informed her it wasn’t until she was close to 67 that she could do that. She didn’t know that. No, no idea.
Number two, the next financial lie, it’s boring. Women who say, I have no interest in numbers and charts, but it’s not all about that. Come to a workshop and you’ll see, come sit down with us and you’ll see retirement isn’t just about numbers, it’s about you, right? Is it at that trip that you want to take that you’ve been holding off and you’ve been saving for? Is it about spending time with your grandchildren or spoiling your grandchildren. Things like that.
And the other thing to remember is statistically 90% of all women will at one time be the sole household provider, the head of household. That’s because if you are married, chances are, unless you married somebody 10 years younger, they’re going to pre decease you so you should understand it. Number three, I don’t have time to learn. I mean, if you’re out there and you’re reading this and you’re a woman, I don’t have time. Because what is it that women tend to do is we tend to take care of everybody else and not ourselves. So take the time to learn a little bit about your specific financial situation. Number four, it makes me anxious. Here’s what women say, either makes me anxious or it will all work out.
Yeah. Get the anxious part. I certainly understand that it was about to say, I want my wife to be engaged in many ways take the lead on the details, on understanding the details.
The counterbalance to that is that when that anxiousness comes in, it creates another conversation. So good reference to it. Those two relate to me perfectly.
Right? And what we say is, or what I’m saying to you is avoidance. So just avoiding it. It’s not a viable strategy for life in general and in finance. So there’s no way over or around or under the problems. So the only way is through it. So it’s not that difficult. We make it very easy. I’d like to say we make it fun, but we definitely make it understandable for everybody in this situation. Money issues can cause big arguments in households. David and I never have any arguments at all.Insurance as well as financial planning is still a relationship business and I hope it always stays that way Click To Tweet
I was going to bring up that amendment that we got from the insurance company.
That changed and it also changed our checkbook as well, but anyway never have an argument.
We’ll push that in the next segment.
Yeah, we can push that to the next segment. So, but money issues can cause arguments in households. So it’s best not to talk about money at all. But I mean men and women just have different concerns about money and different thought processes. So just be on the same page and understand what’s going to happen for retirement. I can’t stress enough how important it is. If your husband passes away, do you know where everything is? Do you understand what’s happening? Like Bret said, the pension goes away. You just definitely need to know these things I’ve had experience with it when it’s too late.
Yeah. And I want to use that reference to speak to the audience and let them know that it is so true. And again, you often hear me say that I’ve had that experience. I watched my mother-in-law when my father in law passed away right after we got married. All of a sudden have all of the financial responsibility and the burden and everything falling on her lap to be able to manage and get a handle of. So certainly very, very important in terms of understanding the lies or not listening to them, I think is the better way to say it.
Right. Just move past it. Understand what’s going on out there. Don’t leave everything up if you’re married to, don’t leave everything up to your husband.
Good stuff from Karen Bezar, thank you for a great segment.
You heard Bret start off the program today talking about details. Karen transitioned into financial lies. And I think that is such a topic that deserves so much more time and so much more conversation because it’s a real reality. I think for all of us, and David Bezar is going to join us and get in markets. But before we do, I thought I’d give you just a quick 30 seconds or so to kind of tie it all together. I mean, there’s details, there’s lies, there’s opportunity to be able to save and figure out how to put more money into your retirement. So when you pull all these different things together, that’s all part of what the roadmap is. That’s what we’re talking about in terms of the education process.
Yeah. And I think that’s the aha moment that most people experience. Whether it’s listening to today’s a program like today or they’re coming out to our workshop or they’re coming in for that complimentary consultation, they start to realize that there’s a lot of puzzle pieces to navigating retirement successfully. That’s why we wrote the book that we wrote. It’s why we do the educational workshops so that we can get acting as advocates for this market, right? These pre-retiree folks, the retired folks, how do I make sure, number one, that I’ve got enough money to retire the way I want to retire. And then number two, is it going to last my lifetime? And whether it’s auto and homeowner’s insurance, whether it’s commercial liability insurance whether it’s taxes, whether it’s what investments you make. There are just so much, and these conversations that we generate kind of unfold all the things that have to be looked and then we tie it together with the Thrive Retirement Roadmap Review. So that’s a deliverable, right? That’s a document that has all the good, all the bad, and your action plan. And if you kind of follow this roadmap you end up exactly where you want to end up from a retirement perspective.
The first step in the Thrive process would probably be to give an overview of your complimentary workshops.
I would actually explain it as much more than just an overview Joe. Because I think like Karen had said a little earlier, we get the comment quite often that wow I’ve been to a lot of these types of financial seminars. This one was completely different than anyone. All the others just kind of seemed like infomercials. People go, whether it’s dinner or it’s kind of master’s education sometimes where there is no dinner it’s all about product for those presenters. We don’t mention a word about any type of product. We don’t even mention a word about any type of financial solutions.
We have nothing for sale.
Nothing. I mean it literally is like a class. It’s a class on how to navigate retirement successfully. So we bring up five main topics and then each topic may have three or four subtopics to it.
I mean, Bret and I are challenged that in an hour and 15 minutes we have to bring a ton of value. And what’s really interesting is that the number one, the amount of questions that occur, right? So, we actually have to deflect questions because we have to get done because the libraries limit the amount of time we have or they’re going to close their doors. And I think that’s why most people take us up on that complimentary consultation, which is nothing more than a continuing education of that class that we ran at that workshop.
Well, I certainly didn’t mean to minimize the details in terms of what occurs at the workshop. Out of the workshop comes the complimentary sit down and that’s where you can get into the details more. I think that’s the point I was trying to get across.
Yeah, and you’re spot on that. Again, you’re right, it’s an introductory and then at the workshop what we allow people is, we give them a sheet of paper and all of the topics that we discuss, we ask them if you would like to have a conversation related to any of these topics, just check those off. And when you come in for that one hour complimentary consultation, we make sure that we’ll address every area of concern that you marked off on that topic sheet. And then if they feel comfortable, interestingly enough, 99% of the people do, I think they get a kind of a peek inside when they come to the workshop. And then they’re pleasantly surprised that we didn’t try to sell them anything. We didn’t try to coerce them to become our clients. They start to realize this is just a team of people that are really authentic with wanting to be advocators for people that need to retire successfully.
So a lot of times 99% people are bringing all of their financial information and they say, I have this and I have that. How does this fit together? And that’s wonderful. I mean that’s what we get to do that. That’s what we love, that’s what we’re passionate about. And it’s awesome to take somebody through that evolution and either give them complete certainty that retirement is exactly the way that they’ve pictured it. And it’s going to be that way for the rest their lives or more important. And like Karen said about one of the lies some people think, it’ll take care of itself and it’s really what you don’t know that can actually hurt you. So uncovering those things and that session, gives us enough time to an offer and a solution and get it done so that they can enjoy retirement.
Good stuff. Well said. I want to get you into your topic of conversation. I didn’t mean eat into that, but I know you wanted to talk about markets and some of the fluctuation and stuff like that. I’ll let you do that at the very end. I’ll shave a minute just for me to give the audience the information about the workshops that are coming up next week. So let me let you jump in.
Yeah, absolutely Joe, and just right before I do, I want to make a quick comment because the radio show offers a glimpse inside, right before people don’t have to come to a workshop, they can come directly. They go to our website at thrivefinancialservices.com and schedule right online to come in and visit with us. But we’ve also created a download, which we mentioned last week on the show. It’s unbelievable how many people have downloaded. It’s an eBook on where re-free retirement, that’s both on our meetthrivefinancial.com website and our thrivefinancialservices.com website as well. So, make sure if you’re listening to the show, or you know somebody, there’s a referral button on it as well that you can send that eBook to other people. It really covers a lot of topics that we talk about here on the show. And then obviously our Amazon number one bestselling book people can go, that’s online as well. You can get a free download or electronic download or you go to Amazon and buy that. I think it’s $17.95. All proceeds go to a charity called beatcancer.org.
And the eBook is understandable, easy reading, it’s not a 125-page book. It’s an eBook.
It’s a book I could read Joe. Yeah.
Yeah, it is not all details by financial things. It is actually enjoyable.
I could get through that too.
Yeah, that’s true. Come on, so let me jump into this topic real quick Joe, and the head of this topic is really all about greed.
And I’ve said it many times, Bret has said it in our workshops as well, that the vast majority of people that come to visit with us have all the money they need to retire exactly the way they want. What happens is that these market conditions because things change, right? There’s a difference between getting to retirement and then staying in retirement. And because people sometimes don’t take action and they just stay the course. When markets do some crazy things out there it ends up disrupting retirement pretty down significantly. So what we try to convey a message is we are passive investors. We believe in passive style investing. But what makes us a hybrid is that we manage things a little bit differently when we see markets not necessarily going in the right direction.
The first thing I want to talk about is what’s happening in the markets. What indications are we seeing? And I want to talk about just really one thing and this really hopefully demonstrates to people that you have to be careful what you’re looking at, whether it’s macro, whether it’s micro, and if that’s not even in your vocabulary, so decide and you don’t want, then you’ve got to seek out the help of a financial professional who does this on a daily basis. I have here’s an article. The thing that the market’s watch is what the Federal Reserve Bank does. And up until very recently, the Fed was in this position that it was saying that they’re going to continue to increase interest rates because the economy is speeding up. And everybody was saying if you do that, then the markets will kind of roll back from that.
So there was just a Fed meeting. A great article about it, and I’ll just read you the headline to the article. It said, and this is from Business Insider, it says there’s ample evidence that the Feds worst fears about the economy are coming true, and the rate cuts are imminent. Not rate increases Joe, but rate cuts because they are starting to think the economy is not doing well and they’re looking to try to keep it kind of moving and instigated. They actually have revised the economics; the GDP growth was supposedly cruising around at 3%. The Fed has reduced it down to 1.1% on an annual basis. So, people have to start looking at what’s happening now when most people, when a market kind of contracts goes the opposite way of growth. Most people say, well, I’ll just stay in there.
I’ll stay the course and it’ll come back. And it does. We agree 100%. But think about this opportunity for retirees. Most people that we see Joe have 99% of their money sitting in IRAs are 401(k) accounts. So when you make a change in those accounts, it’s not a taxable event. All right? But it may open up a wonderful opportunity. To give you a quick example, let’s say you own a stock at $100 a share is what you paid for it. It’s currently worth $150 a share. You really believe it. You love it. You think it’s going to $200 but we get a blip in the market and that $150 a share stock comes down to $120 what most people do, Joe, is they just stay in it and then when it does go back to 150 all they really did was recover their money.
That’s it. No real other advantage has been created. Our philosophy may be if it’s right for the person we’re sitting across the table from that when it comes back down to that $120 Joe, we actually tell him to sell it because the capital gains is going to be a lot lower and the current tax rate and climate that we’re in is the lowest we’re probably going to see forever in our lifetime at least. Okay. So now it’s a lot lower of a tax consequence to do it. And then we tell them, if you love that stock, buy it right back and buy it in a Roth, make a Roth conversion. So when it goes from that $120 mark back to the $150 that you knew it was going to do, so all tax free at that particular point. Joe, that’s an example of nontraditional wisdom, unconventional wisdom.
Most financial advisors tell people just stay the course, what we just shared with somebody is how to minimize their tax obligation and then optimize their future growth where they’re not going to pay taxes on those gains. Does that make sense to you?
It makes sense what a great example. I mean what a great powerful example.
And that’s kind of things, Joe, that people just don’t know. When Bret, Karen, myself talk about those things initially, we get this look like I’ve never heard that before. And then when you put pen to paper and you show them the math and the logic behind it, they go, well that’s absolutely a no-brainer. Why hasn’t my financial advisor told me that and my response is probably should have been something he told you, don’t you think? And they say absolutely.
That will about do it for our discussion this week and we thank the Thrive Army for tuning in and educating themselves. We hope you got something out of the information this week. Thanks to Jim from Del-Val for joining us, as well as Karen, Bret, and David for their continued education of the audience.