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Disclaimer: No statements made during the Thrive Retirement Roadmap Radio Show shall constitute tax, legal, or accounting advice. You should consult your own legal or tax professional on any such matters. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investment or investment strategies. Investments involve risk and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed. David Bezar, Bret Elam, and Karen Bezar of Thrive Financial Services and Thrive Capital Management are licensed to offer investment advisory services through Thrive Capital Management, LLC, a Pennsylvania state registered investment advisor. Office headquarters located in Fort Washington, and offices of convenience used exclusively for client meetings in Exton, Yardley, and Cherry Hill. Now on Talk Radio 1210 WPHT, WPHT-HD, WOGL-HD3 Philadelphia, the Thrive Retirement Roadmap Show, with your hosts David Bezar, Karen Bezar, and Bret Elam of Thrive Financial Services and Thrive Capital Management. They know that the road to a successful retirement is paved with consisting care and a commitment to guide the families they serve. David and Bret are co-authors of the book, Roadmap to Retirement: 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. 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 K.: A good Saturday morning, everyone, and welcome into Roadmap to Retirement, the radio show, as we come to you on Talk Radio 1210 WPHT. We begin this Saturday, if you\’re consuming the information here today, you\’re listening on what is the Leap Day on the calendar year here in 2020, and that means there are how many days in a Leap Year? David, do you know the answer to that?
David: Please don\’t go there with me on that one.
Joe K.: It\’s 366 days instead of-
Karen: 366 I\’m going to go with that one.
Joe K.: … 365. A good morning, everyone, and welcome in. Thank you so much for being here. Bret is here. Karen is here. David is here. This is a very important show, so I want to get right into the conversation. I almost feel as though, as the listeners tune in to us on this Saturday morning, David, I almost feel as though the coronavirus and the selloff this week in terms of what\’s happening in the market is one example of the uncertainty that we didn\’t know was going to be there as early as a week ago, and now questions are everywhere about the market and everything else. So, with that, I give you the introduction and welcome you in.
David: Yeah. Good morning to everybody. I know today will be a good show. I think what we\’ll probably help people with is get a good understanding of what separates somebody who just sells financial products from what a fiduciary is responsible for, what they need to do, and so on and so forth. We hope to bring a ton of value to our audience today, so I would say really kind of listen up. Get out the pen. Get out the paper. It\’ll be a good show for notes. It has been crazy. Now, you made a comment, Joe. I can\’t remember the exact words you just said, but along the lines of a little bit of surprise with the selloff and everything else, and kind of, quite frankly, we\’ve been preparing our clients for this for a long time, because we are what we would classify as the very conservative side of the financial planning arena.
David: I use this saying quite often, is what\’s popular isn\’t always right, and what\’s right isn\’t always popular. So, what\’s popular is financial advisors typically throw out the battle cry of, \”Hey, when the markets come down, just stay the course. It\’ll all be fine,\” and that is true. Markets, the one thing that as a financial planner I could say, and as a fiduciary, as I can say, the guarantee is that markets go up, they go down, they go back up, they go back down. The challenge for people, and the old cliché that we\’ve all heard, is you are supposed to buy low and sell high.
David: If we were to poll the audience, we had some type of a mechanism where we can get an instant poll, you would say most people bought into that philosophy, just like people bought into that philosophy of invest in tax-deferred plans, defer, defer, defer, defer, and sometime in the future, you\’re going to be in a much lower tax bracket. On those two things, if I ask people, \”Is that what you\’ve heard? Is that what you have complied with?\” we\’d probably get an overwhelming amount of yeses. When we talk about those things in our workshops, we say the same things, and people say, \”Yeah,\” but by the end of the workshop, and hopefully by the end of the show today, people will start rethinking all of that because this crazy swing in the market is really… It\’s not the coronavirus only. Right?
David: We\’ve been talking for weeks, and really even months about the declining earnings. We\’ve been talking about the fundamental cracks in the banking industry. We\’ve been talking about liquidity issues and quantitative ease in continuing. These are the things that we talk about intimately when people come in and visit with us. We speak less about it publicly on the radio because we don\’t want to confuse people. We want to make sure that… In one hour, we don\’t really have enough time to get into the weeds, to help you understand the true why. When people come in and visit with us for a first appointment and then a follow-up second appointment where we start to present what makes sense and why, that gives us some time to really get in it, and that\’s where you see the aha moments, that shift in mindset that people have, because Joe, I\’m telling you, this selloff in the market is really kind of the tip of the iceberg.
David: Smart money has really been knowing about this. Unfortunately, the typical retail consumer allowed that horrible emotion of greed to take over. Apple stock just going up, up, up and up, Microsoft stock going up, up, Amazon, you name the company, and people jumping on the bandwagon because of FOMO, fear of missing out. Most people, because of that, now are starting to see that they were buying more at the high points than the low points, and the philosophy of buy low, sell high really just went out the window. So, we\’re going to talk about a lot of things today. It\’s not going to be a fun show, so to say, not built for entertainment. It\’s really built for education and advocacy, so I hope we are able to deliver for that.
Joe K.: Yeah, and I\’m sure you\’re going to, and that means you\’re not going to hear me very much today on this radio program. I\’m going to let the experts deliver the information. I\’m going to take the advice that you gave to the listening audience, and I\’m going to take a lot of notes on my notepad, which I do on a daily basis, Bret. I\’ll tell people a little bit later about the one day next week where there are two workshops scheduled, but first, let me bring you back into the show, and on behalf of the listening audience, let me welcome you back into the chair.
Joe K.: We missed you last week, but thank you for being here, and we say good morning to you as well.
Bret: Yeah, good morning, sir. Today actually marks the 12-year anniversary in which David and I started working together, on Leap Day of 2008. So, how about that?
Karen: Oh, I did not know that.
Bret: I keep tabs on the number part of it.
David: That\’s that elephant memory that this guy has got.
Joe K.: It\’s unbelievable.
David: Because he didn\’t even tell me that, so I apologize.
Bret: It\’s all good. It\’s all good.
Joe K.: It is all good. Great stuff.
Bret: Yeah, it\’s all good, and we\’re going to have a cool, calm and collected show because you\’re probably going to hear on the radio later today a lot of doom and gloom, go do this, people trying to pry on emotion, and what we always talk about, and we talked about it earlier this year, Krausey, irrational exuberance, where now you\’re going to have people on both sides of the equation, and what I\’m going to go deep about today, and we\’ve been talking about since the beginning of the year, and we\’re going to stay true to it, is about Roth conversions. We\’ve been talking about the SECURE Act. We\’ve been talking about people with Roth conversions when they come in, and I\’m going to take people through a story about some of the fighting that I\’m hearing from people, because they\’re getting some of that conventional wisdom news related to Roth conversions. So, today, making rational decisions, not the coronavirus and all that, just looking forward to putting some of those pieces together, Krausey.
Joe K.: Really good stuff. Karen, I\’ll come to you quickly before we get to the commercial break. I say good morning to you.
Karen: Good morning.
Joe K.: We have about 60 seconds. That\’s certainly plenty of time for you to set the table for the listening audience. What\’s on your agenda? What\’s part of your conversation today?
Karen: So, I\’m going to go over a retirement readiness checklist. So, what should you be thinking of prior to retirement? One of the things you should do prior to retirement is come visit us, because that\’s what we do. We help you prepare.
Joe K.: I want to publicly commend you for a great job on the broadcast last week. I always listen to the podcast of the show the following week, and I do, like everybody else, I go to thrivefinancialservices.tyl16lnm-liquidwebsites.com, and I find the show, and I listen to the show, and in Bret\’s absence it was just the three of us making radio last week. Great job by you.
Karen: Oh, thank you, Joe.
Joe K.: So, Karen did a nice job.
Karen: Thank you so much.
Joe K.: Well done, and as we get to the commercial break, I want to thank the listening audience. This is Roadmap to Retirement, the radio show on Talk Radio 1210 WPHT.
Joe K.: Back here on a Saturday morning on Talk Radio 1210 WPHT, two workshops are scheduled on March 5th next week, March 5 of 2020, starting at 7:00 p.m., the West Whiteland Township Building in Exton and the Huntingdon Valley Library. Go to thrivefinancialservices.tyl16lnm-liquidwebsites.com. Scroll down to the middle of the page. You\’ll find the event details, and you\’ll find information to get yourself registered for the event or for the workshop, rather, Bret, on the 5th of March.
Bret: Yeah, Krausey. So, I want to take people through a story of what it\’s really like when they come in as part of that complimentary Thrive Retirement Roadmap Review, and everything\’s relevant, things that are going on with the coronavirus, things like Roth conversion, SECURE Act, irrational exuberance, all that kind of good stuff. So, I had a couple come in, Krausey, their income in retirement, married, filing jointly, they had $60,000 coming from Social Security, so two people, $5,000 a month. Normally, we see that all the time. Then between their IRA distributions, they had to pull out approximately about $50,000 a year. So, while married, their total tax burden was a little less than $7,000. Okay?
Bret: So, in addition to that too, we talked about this tax report that we\’ve been generating for people. We had an incredible response earlier in the year. It\’s a report that we generate saying how much money do we have within the family from an IRA standpoint. I call it the harvest and the seed report, where it shows us how much taxation you\’re going to end up paying, where if we just kick the can down the road as a tax procrastinator, pay our taxes as we normally do on required minimum distributions, then a lot of people we meet don\’t even need the money to live on, Krausey, so they\’re reinvesting that money, paying taxes on it all over again, and then as our listening audiences knows, this thing called the SECURE Act, now all that money needs to be pulled out within 10 years.
Bret: So, we went through that analysis on approximately a million-and-a-half dollars of assets by just simply kicking the can down the road. Between now and the time that they were the age of 90 years old, they will have paid almost $962,000 in taxes, assuming today\’s tax rates without any future increases, versus… That\’s on $1.5 million, $962,000 of taxation versus do you pay the tax on the seed. Now, it\’s a very extreme report where we\’re saying, \”If you simply just take a Roth conversion today on that same million-and-a-half dollars, you would pay $450,000 in taxes, but then you\’re done, and everything grows tax-free moving forward.\”
Bret: So, why Roth conversion? So, when we talk about things like Roth conversions, Krausey, what I shared with this couple was what does life looks like when the first one of you passes away. So, we went through that sample tax return. Again, they were paying about $6,700 in taxes. So, when either one of them passed away, they lost the lower of the two Social Security checks. So, instead of 60,000 coming into the household, now it was only 40,000 coming into the household. Okay? So, we still had the required minimum distributions, though, because they just continued to kick the can down the road.
Bret: So, what happened was they went from $110,000 of income joint, that when the first one of them passed away, it was now $90,000 of income. We lost that Social Security check. However, they went from paying $6,700 in taxation when they were both alive, that whoever the surviving spouse was, their federal income taxes were now greater than $11,000, almost a 67% increase by just simply when the first person passed away. In addition to that, they never paid a Medicare surcharge in their life, but now all of a sudden when the first person passed away, they were paying more for Medicare with just one person being alive than with two people being alive.
Bret: So, it was starting to sink in, the conversation. So, it was a do-it-yourselfer, so a self-studier, getting all his information from the internet, reading those articles that amazingly, some person can write an article that means everything to 300 million people in this country. It was a publication from Vanguard, and they\’ve got some great publications out there. Basically, what the article had said was, \”If you\’re not in a tax bracket of 30-plus percent, it doesn\’t make sense to do a Roth conversion.\” Conventional wisdom. I said, \”Do you mind if I see that article?\” He said, \”Yeah.\” He handed it over.
Bret: I said, \”For some reason, in this article, they don\’t talk about one of the certainties in life,\” and he goes, \”What\’s that?\” I go, \”Death.\” I go, \”I just shared with you what\’s going to happen to your tax return when the first one of you passes away. Do you just wait and just let this happen, or are you going to be proactive because you know your tax rate\’s going to go up?\” I go, \”Number two, you\’re in agreement that tax rates are going to go up. This article\’s stating tax rate\’s being static. If you believe they\’re going to go up, do we just continue to procrastinate, or do we come up with a plan?\”
Bret: So then, here\’s the best one, and this is the… The listening audience, I hope you\’re listening to me, if we\’re getting our information, a lot of it, on the internet. I then went into Vanguard\’s website to look at it. This is what it says under the article. \”Change is coming soon. We\’re working on updates that will reflect changes made by the SECURE Act. In the meantime, some of the details on this page may not be accurate. We also recommend that you consult a qualified tax advisor about your personal situation.\” Now, I wasn\’t there when he got that article the first time, but I\’m not sure if that blurb said it on there. But yet, people are listening to information like that every day to make a decision, where nothing is personalized.
David: Joe, what if that person didn\’t come into one of our workshops on tax efficiency in retirement, which this year we\’ll do over a hundred of those workshops? What if he didn\’t take us up on our complimentary consultation to review taxes and Social Security and Medicare? What if he didn\’t have an advisor who was a true fiduciary, not a falsely-claimed fiduciary, but a real fiduciary who understands all the elements of taxes and retirement, who had enough compassion, enough interest to dig in on behalf of that client, investigate that Vanguard website, and bring to the attention of that person, that retiree, what the reality is? Man, the difference between winning and losing is so small and infinitesimal that people tend to overlook it. That\’s the difference.
Joe K.: No doubt about it, and make the mistake of just assuming it\’s going to be one thing when the reality of it is it\’s not. It\’s a general convention for me to think that when my spouse passes away, or if I pass away, that the taxes are going to be less. That\’s generally what you would think.
David: That\’s it.
Bret: I always tell the horrendous joke during our workshops, Krause. \”Hey, how many people here from New York, Delaware, Pennsylvania knew that upon the passing of your first spouse, or pardon me, your spouse, that your property taxes get cut in half?\” Everybody\’s looking around. They\’re like, \”I didn\’t hear about it,\” and I say, \”Because it\’s not true.\” Just because somebody passes away doesn\’t mean all our expenses get cut in half. We need to be prepared for that. These people had an expense of $8,000 a month. Life was good while they were making that income, but now all of a sudden one person passed away, and their expenses only dropped to 7,000 a month. All of a sudden, we were now short on the cashflow when the first person passed away.
Bret: Again, we talk about Roth conversions, being as proactive as possible. We talk about the coronavirus, the incredible decline that we\’re seeing, that we just saw in the market this past week. That\’s an opportunity to be proactive. You\’ve got people like Ed Slott. We talk about it on the radio. When the market goes down, an incredible opportunity to do a Roth conversion. If you love Apple, if you love Microsoft, if you love Amazon, and let\’s say the market goes down, maybe not 10% like this week. Maybe it goes down 40%. So, if I had $100,000 and it turned into 60, and I think I\’m going to hold the stock, and it\’s in an IRA, why not convert it today, pay the tax?
Bret: Luckily, the market just reverses harvested the seed for you, brought it back down to 60,000. Now pay the tax on the 60,000. Keep the same Amazon stock, and now we just ride it back up, but here\’s the difference. We want to ride it back up, it\’s now tax-free because I want our listening audience to remember the rules related to a Roth conversion. You have a five-year lookback period on every single deposit, but a lot of people are scared. They\’re like, \”Bret, I can\’t wait five years. What if I need to touch that money? I\’m going to be penalized on that.\” No, no, no, no. Again, that\’s conventional wisdom. We need to understand the rules.
Bret: If you take $100,000, you move it from an IRA to a Roth IRA, you have a five-year wait to ensure that the earnings are tax-free. However, the order in which you pull money out of a Roth IRA on a Roth conversion is the following. The very first spot that you\’re taking money out of is your contributions if you are contributing money to a Roth. The second place that you pull money out of, this is the order from the IRS, are your conversions and your rollover contributions. The third is your earnings. What that means is you need to spend all your principle before you\’re even worried about a penalty on the earnings. That\’s the last bucket we got to have. That\’s the last bucket we\’re going to turn to, are those actual earnings.
Bret: So, if you\’re hearing this story on the radio today, saying, \”This sounds like me,\” 1-800-516-5861, you can reach us there. Feel free to email us at [email protected]. Not emotional decisions, just having a rational dialogue with people, saying, \”Again, there are only two certainties in life, death, and taxes.\” Do we want to be a tax planner? Do we want to be a tax procrastinator? Get rid of all the doom and gloom that you\’re going to hear on the radio throughout the weekend. \”Sell everything. Move it over here. Oh, my gosh, tax it.\” Stop. Let\’s take a breath, make some rational decisions, all things that we talk about during that complimentary Thrive Retirement Roadmap Review.
Joe K.: David, help me get into the commercial break. I mean, I am knocked back in my chair. It\’s just something I would\’ve never thought of.
David: The easiest thing, sit down with us, get a good understanding.
Joe K.: It\’s a must.
David: I\’ll talk a little bit about it in the next couple of segments, but that\’s just the easy thing. I mean, that\’s just it. It\’s an hour of time. Come get some certainty versus all this uncertainty.
Joe K.: My friends, it\’s complimentary. It is in your best interest to do it. I can\’t emphasize that enough, and I don\’t mean to try and put it out there in any other way, but it\’s just worth it that you do it. We\’ll get to a commercial break here on Talk Radio 1210 WPHT. Bret, nice job delivering some great information. Back on the other side.
Joe K.: Back here on Roadmap to Retirement, the radio show, as we come to you on Talk Radio 1210 WPHT. Shout out to all members of the Thrive Army, the growing Thrive Army, as people are coming to the workshop, leaving more educated, scheduling a complimentary review, complimentary, and then starting to understand, Karen, Bret, and David, what it means to personalize what your roadmap should look like based on you, based on your criteria.
Bret: Really quick story, Krausey. I had somebody come in this past week, a radio listener, loved us, 6:00 a.m., he probably knows who he is, and I\’m talking about him right now. You know what? I was telling David and Karen about this. Do you know the one thing that he talked about our show? We always talk about working with a fiduciary, and I talked about, hey, be careful of the doom and gloom today. He\’s like, \”You guys are never on here throwing everybody else under the bus. You\’re here to provide education and advocacy, and I believe it\’s genuine,\” and he said, \”You know what? When I came in today, you reaffirmed it.\” So, again, we\’re into testimonials and all that stuff, but again, if you\’re skeptical, let us prove you wrong. Get that second opinion.
Joe K.: Yeah. No doubt about it. Well done. Thank you, Bret.
Karen: All right. Well, I have a checklist here. I\’m going to read the bullet points, and then I\’ll go back over it, because I have a tendency to never get to all the items. So, I have a retirement readiness checklist, and here are the six bullet points you should start thinking about, especially now, if you\’re thinking of retiring, and what\’s happened this week is a little bit of a wake-up call to people. Number one, have you considered what annual income you will need in retirement? Sounds like a silly question, but guess what? People come in, and they don\’t always know what that number is, and it\’s a moving number, so it doesn\’t always stay the same. Have you considered how long you might live in retirement? Right? How long are you going to be retired, 20 years, 30 years? Number three, have you considered the cost of Medicare premiums, and along with that, have you considered the cost of health insurance outside of Medicare?
Karen: Then the last one is, have you thought about how to handle your savings once you retire? Oh, I\’m sorry. I\’m off by one number. Do you know how taxes will affect your retirement income? Where can people go to get all this information in one place? Come visit us at Thrive Financial Services, because guess what? We address all these issues when you come in by all the reports that we do. So, number one I\’m going to touch back on again, is, have you considered what annual income you will need in retirement? We had a whole show a couple of weeks ago, right, Joe, about what… Social Security is part of it, but there are so many moving pieces right there. But you need to sit down and really consider what is your income retirement need.
David: So, Joe, that\’s a process of working backward. People get very confused by that, when we ask them, \”What do you think your monthly expenses… What income will you need in retirement?\” I would tell you without fail, I would say 90% of the people get the answer wrong. Right? Because it\’s the first time… You never lived off of a… We\’re not telling you to live off of a budget. We\’re just trying to figure out, how do we make your retirement bulletproof? So, we start with, what does it cost to live? I\’ll give you a perfect example. So, I had a wonderful woman come in yesterday, and we\’re sitting and talking, and she had a number on her sheet of paper. It was $2,000 a month. I said, \”Okay. So, let\’s go through that, just to make sure.\” What it ultimately turned out was the $2,000 a month was her housing expenses. Right?
David: So, that was her mortgage cost, that was her taxes, that was her homeowner\’s cost, utilities. That was basically it. So, again, we know this is a… Bret used to use the terminology of dental pain. Right? Nobody wants to go to the dentist because of the potential dental pain, so we have to take you through it. Right? So, people don\’t want to deal with it, but that we help that number get evolved because we start asking, \”What about groceries? What about dining out? What about gifts to the grandkids? What about travel? What about this? What about that?\” When we were ultimately all said and done, that $2,000 number became $4,250. So, now we have something that everything, between Social Security, pension, retirement distributions, has to work, that for the rest of her life, $4,250, adjusted for inflation, will come in. That\’s what we\’re talking about in Karen\’s number one.
Karen: Right. I was just going to ask, were you sitting in my appointment the other morning? Because I sat down with a couple, and he did the budget, and I looked at it, and I said, \”Pretty good. Do you guys eat?\” He said, \”Yeah.\”
David: Karen\’s much more sarcastic than I am with clients.
Karen: I always find out… Right.
Bret: You know what\’s tough? You\’re hearing three different stories. We all go through the same thing every week questioning people. I get to the craziness too. You especially start asking the missus, \”Do you plan on getting your hair done in retirement?\” \”Absolutely.\” \”I don\’t see it on the budget. Is it free?\” \”No way.\” Nails, dog food, hey, those are all things we\’re going to continue. It\’s the number one thing that we see people wing it, which is the number one thing you got to be appropriate.
Joe K.: I remember my mother-in-law, after she sold her big house and moved in with us, and remember, she was going through that should I sell, should I sell for two or three years. When she moved in with us, she then calculated the taxes that she had to pay to the township over those three years that she was living there. The home was mortgage-free, but she\’s like, \”Oh, my god. I just spent $36,000 on taxes over the course…\” or whatever the number was, over the course of that three years.
Karen: Right. You still have to pay taxes, even if you don\’t-
Joe K.: Still have to pay taxes.
Karen: They always go up. They never go down. I haven\’t seen it yet. So, yeah. I mean, that\’s a funny thing, it\’s funny, a little bit of humor, but it\’s a serious piece of the puzzle. If you don\’t know that number, you really need to know it. I highly encourage you to sit down and really start looking at where you\’re spending if you\’re not already in retirement. Another part of that is you have an income coming in. I had a married couple, but they were recently married. She started her pension nine years ago. They\’ve been married five years. So, what do you think that meant, Bret?
Bret: It means he\’s not getting a thing when she dies.
Karen: No survivor benefit because she wasn\’t married at the time, so it wasn\’t even an option. So, it\’s something else to think about. They have so much coming in now, if she passes away first, I\’ll just say a large chunk of money will not be there, plus her Social Security income. So, that\’s what we plan for. So, number two was, have you considered how long you might live in retirement? So, we do a retirement stress analysis, we call it, and we look at the number you need to live off of on a monthly basis. If you\’re going to live in retirement for 30 years if you need $5,000 a month now, do you think 20 years from now you\’re still going to need 5,000 a month, or more than that?
Joe K.: The number\’s definitely going to be much more, for sure.
Karen: Right. So, we factor in inflation. We factor in what are you going to be paying in taxes, and we don\’t know what taxes are going to be in 30 years, so that\’s just what Bret was talking about, is that fantastic thing called a Roth conversion.
Bret: Here\’s an actuarial stat here for you, Krausey. A couple, age 65, there\’s now a 50% chance that at least one of them, not sure which one of them, makes it to the age 95. A lot of people think of retirement as being the fourth quarter. It\’s not. It\’s halftime. You may be spending as many years in retirement as you did during your working lives. You got to navigate up, just like we\’re navigating down.
Joe K.: Yeah.
Karen: Yep. So, back to my list, but anybody out there thinking about retiring or having questions, take a look at our website. There\’s great information on there, thrivefinancialservices.tyl16lnm-liquidwebsites.com. Our number is 800-516-5861. Give us a call if you want to set an appointment to come in. Again, complimentary consultations.
David: Can I just stop you for one second?
David: Again, in respect to your audience and the requests that they have made, the phone number is 800-516-5861. I\’m not correcting my wife on the numbers.
Karen: He would never correct me.
David: Just the speed of her voice.
Bret: Just remember Thrive is spelled T-H-R-I-V-E, thrivefinancialservices.tyl16lnm-liquidwebsites.com.
David: They both are adopting radio voices-
Bret: There we go.
David: … which really upsets me, that this is starting to happen, Joe.
Karen: You\’re losing your status.
David: No, I don\’t want a radio voice. I don\’t want to be… Although, I\’ve been told I have a face for radio.
Karen: I never said that.
Joe K.: I\’m in that category. Good stuff, the list.
Joe K.: Very important, as you referenced, and also, the understanding of it, being real with what it\’s supposed to be versus not-
Karen: Yeah, and I can\’t-
Joe K.: … and that\’s on us. That\’s on us to be candid with what we think we\’re going to need.
Karen: I would suggest not winging retirement.
Joe K.: No.
Karen: Let\’s just put it that way.
Joe K.: As we go to the break, I leave you with 50 today is the new 40, so when you say you\’re going to spend a lot of time in retirement, I think you\’re absolutely correct. We\’ll get to a commercial break. We\’ll be back here on Roadmap to Retirement, the radio show, with our final segment on this Leap Day of 2020. Back in a moment.
Joe K.: Welcome back, everyone, on a Saturday morning. Thank you so much for tuning in this Saturday morning on Talk Radio 1210 WPHT. David, you did a lot of listening in the first couple of segments with Bret and Karen, except for that one correction of the phone number, not the phone number, but the speed of-
Karen: Yeah, and it wasn\’t really a correction. It was a suggestion.
Joe K.: Yes, a suggestion.
Karen: We\’re always telling David… He\’s the father of two daughters, so he\’s surrounded by females. He always has to watch his tone.
David: I\’ve been told I have a tone.
Joe K.: I thought that was a good tone. I thought you handled that well. As a matter of fact-
David: I don\’t even know what she means, Joe.
Karen: What are you talking about? I don\’t have a problem with my tone.
Joe K.: But let me come to you and get you to weigh in a little bit about what we\’ve presented to the listening audience today and some of what we talked about.
David: Yeah, Joe. The road to retirement is not a difficult one for most people that are in our listening audience. You work, you make money, hopefully, you live below your income, you keep modest expense, you take the savings amount between income and expense, and you invest that into your qualified retirement plans, and you let the money sit there for 25, 30, 35, maybe 40 years, and now you\’ve built up this nest egg. Not a difficult plan. If you\’re a do-it-yourselfer, not a difficult plan. If you work with a financial advisor, not a difficult plan. Quite frequently, we get people who say, \”My financial advisor has done really well over the past five years.\” I hope so. Holy smokes. I mean, I really hope so.
David: But the worth of a financial planner or a financial advisor is really… You\’ve heard the old saying, right? The character of a man is determined not in good times, but in bad times. It\’s the same thing that goes across the plate for financial advisors or financial planners. The worth of that person that you are entrusting your future with is determined in the bad times, what they do. This week, our phones did not ring off the hook because we have a safe money strategy that we deploy. We have educated our clients to understand that emotion is not the way to make decisions. Logic is.
So, it\’s been very calm. It\’s been very peaceful. It\’s been easy to manage. I guarantee if I was a fly on the wall at most of these other firms, it\’s pretty chaotic, and I like peace. I like comfort. I like the calmness. It\’s something I strive for in life. So, again, if you\’re part of our listening audience, I ask this question often. I say, \”If you\’re going to make a mistake in life, do you want it to be a big mistake, or do you want it to be a little mistake?\” So, let me tell you what a little mistake would be if you\’re in our listening audience. A little mistake would be you come out to our workshop. If you go to our website at thrivefinancialservices.tyl16lnm-liquidwebsites.com, you\’ll see a list of all the workshops that we do. You\’ll find one in your general vicinity, and you\’ll spend about an hour and 15 minutes with us at a workshop. This is the small mistake, right? So, you spend about an hour and 15, and you will probably because I\’ve never seen it happen, where people walk out and say, \”I didn\’t learn a thing.\” You\’re going to get at least one pearl. Right? You\’re going to find one pearl of wisdom there, and then you decide to take us up on our Thrive Retirement Roadmap Review, that complimentary consultation in one of our local offices, and you spend an hour there, and you get your questions answered, and we collect up some data to be able to provide a report related to Social Security and Medicare, the risk associated with your investment portfolio, which is important, obviously, now, a stress analysis, and then most importantly, an overall tax analysis.
David: Then you come back for that second complimentary visit where we divulge all of the data and information that we came up with, and you spend about another hour-and-a-half. So, if we add that all up, what are we at? About three-and-a-half hours of time devoted, and at the end of that, you found out that everything that you\’ve put in place for retirement is spot-on, and you got complete and utter confirmation that you\’re doing a great job. That\’s a little mistake. Okay? You spent three-and-a-half hours of time to get that confirmation. Still some value, but let\’s call that the mistake, the smaller of the two.
David: The big mistake is that you\’re listening to the radio show, and you don\’t take any action, you don\’t call us, you don\’t come to one of our workshops, you don\’t find out about the reports, you don\’t have the reports done for you, and what ends up happening over the next couple of years, due to not making sure that Social Security, Medicare is appropriate, your tax planning are done correctly, your risk for your investment portfolio is appropriate for your situation, and you haven\’t analyzed all the stress, the different things that could potentially go wrong in retirement. You ignored all that. You didn\’t get that done for you, and something goes bust, whether you\’re not properly allocated in your investments, you didn\’t plan for your spouse to pass away, you didn\’t consider Roth conversion, and you end up passing on a big inheritance to a child that now caused a significant tax consequence for them, and the list goes on and on. So, out of those two mistakes, Joe, a little one versus a big one, which do you think most people should probably choose?
Joe K.: Well, that\’s an easy answer.
David: Yeah, right?
Joe K.: Make a small mistake.
David: Yeah, just make a small mistake.
Joe K.: I just have a feeling that more people are in the other category.
David: Yeah. Look, it\’s human nature, and we get it. You know us. I mean, there is just no pressure whatsoever, but we have such a high degree for passion in what we do, you hear it in our voices, you see it in our commitment level. Bret made a comment. He actually introduced me to the gentleman on the radio who said, \”I listen to Talk Radio on Saturday morning. I listen to all the financial shows,\” and he said, \”You guys are the only show that doesn\’t bash everything and everybody. You\’re not the typical radio host that says, \’My idea is the best.\’\” I mean, we actually pat people on the back who have done a wonderful job and say, \”Hey, there\’s nothing we can do for you. God bless. Good luck. You\’re done. Enjoy retirement.\” So, again, I would really encourage people to make a little mistake with us by going… Give us a call at 800-516-5-
David: Thank you, Karen.
Karen: Was that slow enough?
David: That was good.
David: I do the same thing. I\’m listening to the radio, and I hear an ad about something. I\’m like, God, I wish I could\’ve got that phone number. So, we\’re going to be very diligent in making sure people get our phone number, and then our website, thrivefinancialservices.tyl16lnm-liquidwebsites.com, is where you can register. I really encourage you to just go make a small mistake. Now, let me get to a little information. I want to read a couple of quick things here for you, Joe. This week has been hectic, no doubt, in the market, and I really do think it\’s the tip of the iceberg. That\’s my personal opinion. It\’s my personal analysis. I have been very, very, very conservative with my own money for the past year-and-a-half, so maybe I\’m early to the equation, but I\’d rather keep my powder dry. I\’d rather be safe than sorry. I\’ve accumulated enough money to retire exactly the way that I want, so why put it at additional risk?
David: I\’m not fancy. Hey, just keep it safe. Here\’s what\’s happening. I want to give people some insight. There have been 12 bear markets since World War II with an average decline of 32-and-a-half percent as measured on a close-to-close basis, meaning the start, the close, the start, the close of the bear markets. Now, we\’re in correction territory. We\’re not necessarily in a bear market yet. I think we\’re going into one. Earnings are drying up dramatically. Again, I think there are fundamental cracks within the economy. I think there are fundamental flaws in our system that were never fixed as a result of the financial crisis between \’07 and \’09.
David: I think things that were thought to be cured, absolutely, if you look at the undercurrent, have not been cured. So, we\’re kind of an economy that\’s built on quicksand. It\’s very consumer-driven. The consumers are getting very cautious. Here is the neat thing and the great advantage that we have. We do a couple of hundred appointments on a monthly basis. We get to hear from boots on the ground. What are you doing? You spending money? Are you taking bigger trips? Are you going out to dinner more? We\’re hearing people pulling back over the past 12 months, getting concerned that this market was at an all-time high, it\’s got to go a different direction. So, 32-and-a-half percent has been the average decline.
David: The most recent was October \’07 through March of \’09, when the market dropped 57%, and then took more than… Listen. This is the important part, Joe. That took more than four years to recover. The SMP closed in a bear market of December of \’18 using [inaudible 00:41:54] data. Bear markets have lasted 14-and-a-half months on average, and have taken two years on average to recover. So, this is the difference between the accumulation phase of life and the distribution phase of life. It\’s okay to stay the course when you\’re accumulating assets, but if you\’re needing to distribute assets, and we hit a decline of 32-and-a-half to 57%, and it\’s going to take somewhere between 14-and-a-half and five years to recover that money, it\’s really hard to get back to where you were at one particular time in retirement. We\’d love to talk to you about the details. Please give us a call at 800-516-5861.
Joe K.: Great way to end this show on a Saturday morning here on Talk Radio 1210 WPHT. Again, those two workshops next week are both on Thursday. One is at the West Whiteland Township Building, which is located in Exton, PA, and the other is at the Huntingdon Valley Library in Huntingdon Valley, both on Thursday the 5th of March. They start at 7:00. Taxes In Retirement. That\’s going to do it for this Saturday\’s edition of Roadmap to Retirement, the radio show. On behalf of Karen Bezar and our listening audience, we collectively say happy anniversary to Bret and David.
Karen: And David.
Joe K.: They\’re celebrating 12 years now together. See you next week, everybody.