Retirement is like a 30-year vacation, but the route to that 30-year vacation can be a very bumpy one. Most people get very stressed when they’re in transit, even when they’re going on a trip that they’ve looked forward to for a lot of years. The stresses of a long layover are a bit like the stresses of retirement planning. It’s the way to get where you want to go, but it comes with its own complications. That’s a whole new language that you need to understand and it can seem so easy to stumble over all of that.
Like when somebody puts a big a trip together, you basically need a good planner to make all that happen, somebody who understands the potential pitfalls, how to navigate them, how to avoid them if possible, and all of those things. Bob Hansen from Rever Mortgage says one of the biggest things he finds in the industry is that people wait too long to find out how much they’ve got available, and sometimes if they need it, it’s too late and they can’t get it. Read up and learn what Bob has to teach so that you’ll know how much you got available and you can start to accordingly plan your 30-year trip to retirement.
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Plan Your 30-Year Vacation Today with Bob Hansen
Bob Hansen will be joining us as one of our partners being profiled on the show. Bob, we take a moment just to welcome you in. You’ve got an interesting conversation that we’re going to get to. There is an incredible amount, a large surplus of money locked up in equity. Tell us about it.
Joe, people over the age of 65 that are homeowners have control over $7 trillion of money that’s available that they can tap into. We’re going to talk a little bit more about that, but that was just one of those numbers that over the holidays, I was looking at some details about things and $7 trillion just blew my mind. I couldn’t imagine that there’s that much money that is locked up in the homes of people.
We’ll get to all of that with Bob Hansen, our expert. We’ll deal with all of that. Bret Elam is also with us. We send a shout-out to Karen Bezar who’s not joining us. Bret, every time I bring you into the conversation, it’s something new about the Tax Law. We’re going to stay on that as we move through the start of this year. It’s on people’s minds right up front.
We introduced those changes that were in the new tax law here. I don’t think we could take a full day to go through everything that was in there. We went through some of those highlights and we’re just going to continue that conversation of what matters to most of the people, our clients, things that we’re finding out as well, things that we need to be aware of, especially the earlier you find out about it in the year, we could make the adaptable of what makes sense for our particular situation. I’m looking forward to diving deep into that conversation again.
We will give the updates on the workshops that are occurring. David, with that I used this transition to transition right over to you for some opening remarks in your opening monologue. The workshops to date have been phenomenal.
We’ve been so excited about the receptance, the attendance, everything that’s going on with our workshops. We had a workshop at the library in Bryn Mawr. That was awesome. We had one in South Hampton, attendance, packed houses. What’s completely rewarding is that we do these workshops typically from about 7:00 to about 8:15, but we tend not to get out of the workshop until after 9:00 because we get bombarded with questions.
People are coming up, “That was awesome, I haven’t heard that before, I didn’t understand that, you gave me clarity there,” and book an appointment for complimentary consultations at our local offices. That’s been absolutely amazing and one of the things that we carried through from the radio show was for people who did schedule complimentary consultations with us, we were giving away our book and the book has been received incredibly well.
As a matter of fact, we had our digital launch on Amazon and we were the number two most downloaded book under retirement planning in the nation. We’re not the number one but we get close, so it was exciting to see that. The book has been incredible, the reviews were phenomenal, all five star, tons of written reviews on it. We’re excited and we’re going to continue with that. We’re going to give away ten free books. The book is just incredible. It’s interviewing different financial professionals, people who are reading it or given us that feedback that, “I never even thought about talking to my accountant about that. I never considered reverse mortgage. I didn’t know there was issues with long-term healthcare like you addressed in the book,” so some good stuff.Some people are fearful that they're not going to have enough money to retire with. Click To Tweet
Congratulations, David, on the digital launch. That is just phenomenal, that’s exciting news.
What I want to do is to talk about a concept about booking your trip to retirement. I’m going to go back and forth with Bret a little bit on this because Bret and I get a chance to travel a lot, both family travels as well as business travels. I don’t know how you are, Joe, about with your travels but Bret is one of those guys who anticipates all the problems that can go wrong with travel. If the flight’s at 10 AM, you could guarantee Bret’s going to be at the airport by 5 AM, at least a four-hour window, two hours for security and two hours just to get calmed down from all the potential hassle.
That’s why we’re great partners because I’m a little bit more free that way and show up just as they’re shutting the door and Bret’s holding the door so it’s a good situation and it works out. My monologue is talking about that stress in booking trips and how it relates to making sure you’re planning for your retirement. We, here at Thrive, always say that retirement is like a 30-year vacation, but the route to that 30-year vacation can be a very bumpy one. Most people get very stressed when they’re in transit, even when they’re going on a trip. They’ve looked forward for a lot of years.
What I want you to imagine for a second is that you’re about to set off on a vacation to travel to the spot of your dreams. Before you get there, you have a layover for a few days in a far-off country. It’s somewhere that you’ve never been before where you don’t have a clue about the culture. Where is it? It could be Portugal or Egypt or Nepal or something like that. If people will, just for a moment, put themselves in that type of frame of mind, you can see potentially the type of stress that would occur.
Once you’ve got that place in mind, I want you to think about all the challenges that you would face once you got there. You may not speak a word of the language or how to get from place to place. Perhaps you’re worried about the local food upsetting you. Most of all you’ve had this checklist and you got to keep making sure that you’re knocking those things off.
In that way the stresses of a long layover are a bit like the stresses of retirement planning. It’s the way to get where you want to go, but it comes with its own complications. That’s a whole new language that you need to understand. You know you got to understand how bonds are working, and derivatives and ETF funds. There are customs to learn and decisions to make, like how to balance your investments and adjust your portfolios at the right time.
It can seem so easy to stumble over all of that. Like when somebody puts a big a trip together, you basically need a good planner to make all that happen. We think the same thing, you need a good travel planner, someone who knows how to get around, what recommendations to give you, and what the experience is going to be like.
We use that as the analogy for that 30-year retirement. You need a good planner, somebody who understands the potential pitfalls, how to navigate them, how to avoid them if possible, all of those things. For people who are interested in setting up that 30 year trip to retirement, they can give us a call at the office, come to one of our complimentary workshops, call us at (800) 516-5861, go to our website, ThriveFinancialServices.com and they can book a place to come out and see us at one of our workshops and get that planning started.
Let’s bring Bob Hansen into the conversation. $7 trillion is such a big number and when you hear that number or you listened to that number, it stops you right in your tracks.
Before I get into the $7 trillion number, I wanted to talk a little bit more about what David was talking about the trip to retirement. The $7 trillion, I came upon that as I was looking on the internet for interesting facts that most people don’t know and I just wanted to share one with the audience and everybody here and get your thoughts. If you go away to an exotic place, you’re thinking about your plans and what you’re going to do, and then you think, “It’s an ocean. I’m going to go swimming.” What’s one of the things that people are most fearful of that will happen to them when they jump into the water at that exotic location?
Sharks, everybody’s fearful of sharks, and why is that? They’re fierce, they’re evil, they eat everything. They’re the garbage cans of the sea. When you put your kid to bed at night, this is a little on another topic, what is it that you usually give your kid in his crib to cuddle and snuggle with? His teddy bear, his little stuffed animal. Joe, let me ask you a question. What’s killed more people over the past years? Vicious sharks or those cute little cuddly teddy bears?
The natural thought would be sharks because of how vicious they are.
You would think that and that’s what most people think of because they have that fear of going into the water and being eaten by a shark. Actually, the numbers show that last year there were 22 fatalities due to teddy bears and stuffed animals. Guess how many people died from sharks last year? One. That just lets you realize that sometimes what we see as something to be feared might actually not be scary at all, where something that you think might be safe might not be as safe as you thought. As I was looking at these numbers, it just threw me for a loop that sharks are a lot safer to be around than teddy bears because less people have died from them.
The other number that I came upon was the $7 trillion, which was more related to what we’re talking about here. $7 trillion is the amount of money that the Americans that are 65 or older have locked up in their house in equity. You say, “What exactly is equity?” Equity is the amount of money that you’ve got between how much you owe on your house and how much the house is worth. If you owe $100,000 and your house is worth $200,000 the equity is $100,000. If you owe nothing, then you’ve got $200,000 of equity.
The question is, of that $7 trillion, how much of that is yours that you can tap into? In order to do that you need to know how much equity you’ve got and how can you tap into that equity? What you need to do is you can go to the website, www.HowMuchIsMine.com, and on that site it’ll give you a little calculator that you can tap into and it’ll tell you exactly how much of that $7 trillion is yours to tap into. Now, if you’re not tech savvy, you can always call (484) 905-1800 and we have people online that will talk to you and explain how much of that equity is yours based on the house value, how much you owe and where you live.Money can't buy you happiness but being broke can’t buy your happiness either. Click To Tweet
The point in it, Bob, is that so much money being locked up in equity is there to be utilized.
That’s part of why you want to find out how much is yours because as you’re planning your trip to retirement, you want to know how much money is available. Some people are fearful that they’re not going to have enough money to retire with and if they’re in retirement, they might become a little stingy and fearful that if they did want to go on a trip other than booking their trip to retirement, if they wanted to book a trip to Cancun, they might hold off on that because they don’t think that they’ve got enough money to be able to do that because they don’t want to touch their very tight retirement plan.
That’s something that David and Bret work with everybody on is explaining how to be set financially so that you don’t have to worry about it, but for the people that might be a little bit anxious about it, that’s where you need to find out how much of that money that’s tied up and locked up in your equity can you take along on that vacation with you so that you can enjoy that money instead of it sitting in your house as bricks and mortar and windows and shingles. You can’t take that to the store with you and you can’t take that on vacation with you. You need to find out exactly how much you can get and how much of that is yours.
It sounds like an easy process. HowMuchIsMine.com is the destination where you would go punch in some numbers. From that you’ll determine, under this surplus of locked up equity, you’ll at least answer the question and get a starting point. Bob, when people realize that they have equity, is it unusual for people to know that they don’t have equity or they don’t know how much equity? When they realize they have that, what happens? Does it create opportunity? Does it create options for them?
It creates options. Somebody said that money can’t buy you happiness but being broke can’t buy your happiness either. Not realizing that you’ve got a big pile of cash sitting in your house that you can tap into is something that can inhibit people from having options. Money doesn’t buy you happiness, but it does buy you options and it gives you the ability to be able to do things that you might enjoy doing. If you’re on a tight budget and you didn’t realize that you had a big nest egg of money sitting in your house that you can tap into, you might not go on that vacation to see your grandkids.
We were talking about Cancun or something exotic, but something as simple as if your family lives out of state, you might not go because you might not think that you can afford it because you don’t know where that money’s going to come from. I highly recommend whoever is interested in doing anything and finding out how much of that money is theirs and that they can tap into so that they can go see family, so they can go on a vacation, so that they can support their retirement that they go to the website and go to HowMuchIsMine.com or you can call (484) 905-1800. I suggest you call now and find out. One of the biggest things that I find in the industry is that people wait too long to find out how much they’ve got available and sometimes if they need it, it’s too late and they can’t get it.
All good stuff from Bob Hansen from Rever Mortgage. $7trillion is a big number. HowMuchIsMine.com, it’s a simple process, do it at your leisure and figure out how much money you have or figure out the surplus of what that locked up equity is and how that applies to you. Bob Hansen, thank you so much. We’ll transition out of equity in your home and deal with taxes.
Bret Elam has the fortunate or unfortunate task of answering the questions about the ever-changing tax laws and how they apply. We’ll deal with all of that. We’ll give you updates on the workshops again, and don’t forget the free book is out there, 1 (800) 516-5861. David, we’re giving away ten complimentary copies off of the great success from the Amazon digital release.
Bret Elam is here to talk about changes or what’s new in the new tax law. I’m not quite sure, Bret, if we’ll ever get to the point where we’ve covered the entire subject of the new tax law, but it is part of the conversation on a daily basis.
These are the most drastic changes to the tax law in decades. I know over the past couple weeks we’ve been talking about some of these changes and even in the tail end of 2017, some of the proposed things that are out there. As things are continuing to be “released” and I think the government still trying to figure out, the IRS is trying to figure out some of the things they throw out there is exactly how that all comes into play.
First thing we’re going to dive into, and this is some good news, some of the things that we’ve been chatting about, where we talked about when we sell stocks, when we start going through some of these changes, is that things were changing where you had to choose or where you didn’t have that choice of first in last out when selling stocks. That was put in the initial provisions of the new tax code, but we can still go in and now sell any lot of stock that we want to. We talked about it, where we talked about maybe some last-minute changes. Just things that they threw out there about first in, first out, is that role did not stick. That’s a big deal.
The second thing is there have been no cuts to any of the maximum contributions into the 401(k). There were some rambling about that as well, so that stayed the same. We talked about some of these tax bracket changes. Another big one that we’re hearing a lot about out there right now is about how in-home equity loans, we’re not going to be able to deduct that interest anymore. Now it’s starting to roll out as well. When we got a home equity loan or home equity line of credit, it’s figuring out how much of that home equity loan or home equity line of credit was actually pumped back into the house and how much was it to refinance debt.
I don’t know who’s going to come up with that formula and figure that out because we can’t deduct it, however, if it was used to put home improvements back into the house, we can deduct that portion. That’s a mess that they’ll have to figure out by the end of the year. It’s to be continued as we find that information out, but here are some things that we do know and these are some of the big changes, especially when we talk about the standard deductions that have increased up to $24,000 for a couple or $12,000 for an individual, were things that we are still able to itemize.
Let’s talk about some of the things that we are not. We get down to the bottom of when we file a schedule is that we can no longer deduct investment expenses. Previously, investors could claim a tax deduction on those investment expenses along with tax preparation fees, safety deposit fees and all those were grouped together on the itemization of the taxes. That line item is now gone, which was a big deal. It’s important to understand how those ramifications will all come into play because estimates are 94% of people will no longer be itemizing anymore. Does it make sense to pay off my mortgage? Does it make sense to refinance? Does it make sense to go get a reverse mortgage? Does it make sense to change some strategies with all these changes? We’re talking about a lot of these changes that are being locked out.You need to be smart enough to know what you don't know so you can learn. Click To Tweet
Another big change, Roth conversions. When you do a Roth conversion now, they are now final. We used to have the ability to do a Roth conversion and we wanted to change our mind, we always had the ability to go back and do that. That is done. That is a big deal. We need to think about it for those of us, and we have this conversation all the time with our clients of what makes sense from a Roth conversion standpoint. One of the things we talk about during our workshops is how great would it be to pull money out of an IRA converted to a Roth IRA and pay no taxes. If you’re interested in that, I’d be more than happy to sit down with you here at the office or come out to the workshop. We do the demonstration during the workshops as well, but feel free to come in and we can go through that with you.
We talked about in generalities during the workshop. We have fun, we have people come in, they share their information with us. We use the dynamic software, that tax clarity report that we’ve been talking about over the past months. Particular to your situation, we’re telling you let’s go take $18,000, let’s go take $8,000. A young lady, down on the main line, we did $28,000 where she was able to convert $28,000 from her IRA into a Roth IRA and paid zero taxes. That’s still happening this year. None of that’s changing, but when we do those conversions, they are now final. Some of the changes and we touched on it a couple of weeks ago. I was talking about 529 plans is that now we can utilize those to pay for schooling between kindergarten and twelfth grade, so it does not necessarily just need to be used for college.
We can use up to $10,000 in that 529 plan to pay for “elementary, middle, or high schools.” The belief is there something that was called a Coverdell Savings Account which was used for those younger years in school where the thought is that they’re going to start being phased out because of the lower contribution limits that we were going to have as well. Another big deal, and we talk about this a lot during our workshops, capital gains. They’re defined a bit differently now. Before, depending upon the tax bracket that you’re in, that determined what you are going to pay from a long-term capital gain standpoint. As if that topic wasn’t confusing enough, they’re now tied to different economic indicators. Previously, it was at 0%, 15% or 20%, depending upon what tax bracket you’re in.
For example, if you were in the 25% tax bracket, it meant that we were in a 15% long-term capital gain bracket, but with the new law and with these income tax changes, lawmakers still wanted to hold those thresholds pretty much intact so they changed things quite a bit. For example, if you don’t file your taxes jointly, meaning if we file a single taxpayer and we earn up to $38,600, you don’t owe anything from a capital gains standpoint.
General rule of thumb, if we approximately double that number for a married couple or filing taxes jointly, it’s that same thing. We don’t pay any long-term capital gains, we see that all the time, especially people in their 60s. David just popped in there and spoke about how great it is when we sit down with people and show them how much money they can do from a Roth conversion standpoint. Just as we see the same gratitude that we see, the same excitement when we’re sitting down with our clients and sharing with them how much they can actually take in long-term capital gains and pay no taxes on it.
Here’s the one thing that I’ve learned. There is so much that we don’t know. There is so much to your point of educating the listener and in educating us as consumers and individuals. You need to be self-aware. You need to be smart enough to know what you don’t know so you can learn.
I think you’re spot on, Joe. It’s the biggest challenge because unfortunately the industry has a black eye. Historically there’s a lot of issues within our industry and sometimes causes people to be a little bit hesitant in having those conversations, but if you don’t have those conversations, it doesn’t allow us to actually identify for you those things. Like having Bob talking about $7 trillion in untapped equity, if you learned what to do about that, that could change your retirement picture. Bob talked about a lot of the good stuff. We get to unfortunate situation sometimes to see the bad stuff. God forbid a health care crisis or something like that and you didn’t have the right amount of assets available. You didn’t have a long-term healthcare, $7 trillion sitting in untapped resource. Your portion of that could be a big deal.
I’ll give you an opportunity to finish up on this segment on the new tax law. I don’t know when you sleep, there is so much to learn and so much to know.
I revisit what I said before, Bret, it can be overwhelming to the point that you almost tune out or you almost turn off or you almost don’t want to have that conversation. I just would encourage our listeners to have the conversation, to go to the workshop. It is so worth it. Everybody here: Bob Hansen, David Bezar, Bret Elam, Karen Bezar who’s not here, are all about advocating for you. They’re all about providing education to you. That’s what it’s all about. That’s why this show exists.
What makes us feel great in what we do, we met people that have no advisor, we meet people who have financial advisors, we meet people that are self-managed, we don’t throw a book at somebody and say, “Here you go, here’s your tax code.” We take it and break it down into layman’s terms and the gratitude that people leave the office with, it’s what gives us enjoyment in what we do every single day. It just continues our theme of education and advocacy. I don’t sleep at night reading all these changes and it’s our job to deploy and communicate to people about the things that apply to them because there’s so many things in the tax code that don’t mean anything.
Bob Hansen, it’s so nice to have you. It’s fitting that the conversation referenced a large amount of equity sitting in homes. You use the number $7 trillion. We talked about it and referenced it a few times, but whether it’s for a positive in your life, a trip, a medical situation that perhaps would come up unexpectedly like they normally do, that opportunity is there for the individual once they understand what it means and what that equity means in their home.
It is good to know that it’s there and one of the things that Bret referenced a little while ago is something that I’m familiar with. I’ve been in the actual real estate financing and mortgage business for over 30 years. There’s an interesting occurrence back in the mid ‘90s to the mid-2000s and that was in this area in particular. There was a period of time when the growth of house values went up almost exponentially.
Houses were gaining value at 25% a year so if you had a house that was worth $300,000 or $400,000, it was worth $600,000 or $700,000 just a few years after that. There was a period of time when a lot of people started refinancing and taking money out of their houses and that presented a little bit of an issue with the tax situation because the interest on your house is tax deductible and it has been, but when you take an amount out above the sales price of the house, there are some limitations as to how much of that money is tax deductible.
What Bret was talking about earlier is that this year the interest deductions on home equity lines of credit is going to be taken away except for the amount that was applied towards home repairs. Back in the mid ‘90s, what they ended up doing with the tax rules was they came up with a flat amount, a flat percentage of the sales price of your house. Above and beyond the sales price is what you are allowed to write off as far as the interest was concerned.
I think what’s probably going to happen, if I was to speculate ahead a little bit here, is that the deduction for home equity lines of credit is probably going to end up being a percentage of that loan amount or it might just be a flat amount. Back in the late ‘90s, they said $100,000 over the sales price of your house would be tax deductible and anything above that would not. Don’t hold me to that number, it was around that. That’s the same thing that’s going to happen with the home equity lines of credit also. I just wanted to touch on that because Bret did hit on that earlier and I wanted to expand on it.There are so many things in the tax code that don't mean anything. Click To Tweet
Thank you so much for being a huge contributor to the program. A good information and again, HowMuchIsMine.com, that’s the answer to the question. That’s where you find the information on how much money you have locked up in equity. All things come full circle, it leads me back to David Bezar who kicked off the show and David, I’ll give you the last few moments of the program. I don’t know how you follow up on being number two on Amazon, on the release and all the five-star reviews. I don’t know how you follow up on that, but to me it represents who you are and who Thrive Financial Service is. What your meaning is, why you’re here, I think the book is a good example of that.
It did put us in similarity as the Philadelphia Eagles, being the underdogs. I was listening to one of the radio stations and they had a newscaster and they had a travel planner. They were giving warnings because they put packages together for the Minnesotans to come down to watch the game and they were giving warnings about when they enter Lincoln Financial, if they should have their shirt on, if they shouldn’t, if they should be inebriated, not inebriated and then what it ended up happening on the Eagles if they won or they didn’t. I found that interesting. I like the underdog position and our next book will be number one and we’re going to go work on that over the next couple of weeks.
One of the things that I wanted to spend a little time are the three things that financial advisors may not be telling the people that they’re trying to serve. According to the Department of Labor and Statistics, there are actually 200,000 financial advisors out there. We’ll probably cover this in our next show, but I’ll give you the headlines on it. One is this is a financial advisor talking, I’m giving you beneficial advice, but I may not be giving you the best advice and that relates a little bit to where financial advisors work.
Whether they’re independent or whether they work for a firm because a lot of times financial advisors are guided, I’d say that loosely, but maybe more encouraged to build books a business versus giving the best financial advice. Maybe we’ll cover that in our next show, Joe, because I think we’re going to run out of time to get through that whole talk.
Congratulations on the release on Amazon, on the digital release number two with a lot of good five-star reviews. Special thanks to Bob Hansen from Rever Mortgage for joining us on the program. We thank everybody on behalf of David and Karen Bezar, Bret Elam, and of course Bob Hansen, I’m Joe Krause. See you next time.
About Bob Hansen
My Name is Bob Hansen. For over 30 years I have been working in the world of Real Estate Finance. I have always worked to promote and educate current and prospective Homeowners about the lesser known yet extremely powerful Programs available to them.
About 5 years ago, I decided to devote my time exclusively to educating homeowners and prospective homeowners about the many advantages of the very misunderstood Reverse Mortgage. I truly feel it is one of the Best programs available today to any homeowner age 62 or older.
My business and purpose are clear and simple. I am on a mission to provide anyone interested in learning about Reverse mortgages the opportunity to learn in a comfortable and stress-free manner from a person that puts learning and Education First.
I do not SELL mortgages, I am not a Salesperson. I will not tell you what to do.
Instead, I will help guide and assist you in your pursuit of knowledge and information. I am an Educator First!
I will personally meet with you. Together, we will work to obtain a clear understanding about the many benefits of the Reverse Mortgage program. I will help you understand the Pros and Cons of the program.
Once you have obtained a clear understanding about the program. I will then ask you to make the decision as to whether you feel a Reverse Mortgage is the right choice for you.