Speaker 1:
Welcome to Roadmap to Retirement, The Radio Show, with David Bezar, Karen Bezar, and Bret Elam from Thrive Financial Services, who have been featured on Fox, ABC, NBC, The Wall Street Journal, and more. Saving for retirement is a great start, but it’s what you do with this money that really matters. What’s your strategy to reduce taxes, generate income retirement, reduce your risk and get even more from social security? This is where you can count on straight forward and objective advice on how your can make your money go a lot further in retirement. Roadmap to Retirement, The Radio Show. Now, here are your hosts, David, Karen and Bret, along with Joe Krause.

Joe Krause:
How much has the world changed in the last 20, 30, or 40 years? To the say the changes have been dramatic would be an understatement. Yet, when it comes to planning for retirement, many people still rely on the conventional wisdom they learned from decades ago. Not only is this so called “wisdom” outdated, it doesn’t stand a chance against the challenges you’ll face in retirement in the coming years.

Joe Krause:
Hello, everyone, and welcome to Roadmap to Retirement, the Radio Show. Along with David Bezar, Karen Bezar, and Bret Elam, and David I want to come to you, but before I transition to you and you get into the show, I want to send a huge congrats to the entire Thrive Financial team. I’ll let you tell the story. What an incredible accomplishment. Congrats to everyone.

David Bezar:
Yeah, Joe, thanks so much. Our team is so excited. We feel so incredibly honored. Due to the hard work that we’ve done over the last couple of years trying to spread that message of education and advocacy, to the retirement community out there, help them navigate a successful retirement, taxes, social security, Medicare, investment management, legacy planning, all those things. being authentic, being really advocates for that community, we were honored this week as a new inductee into the Inc. 5000, which is a very storied group of American companies. The 5000 fastest growing private companies in the United States.

Joe Krause:
Wow.

David Bezar:
We were number 1663 on that list, and it’s on our website. You sort of get Inc. Magazine, and go to their website and see that, and I think, again, it’s just a testament to our team’s passion and commitment to the retirement community and really helping them get a pure understanding of what it’s going to take to navigate successfully through that.

Joe Krause:
Great things happen to good people. You don’t end up on that list without doing the great work that you do. So well done.

David Bezar:
Yeah, well, we appreciate that, Joe, and like I said yesterday, that you’re a part of that. We appreciate everything that you help us here with in getting the message out to our audience, and we certainly want to thank all the people who listen and have become clients or just kind of been contributors to that overall growth. So, that’s been great.

David Bezar:
How we are, talking about retirement, how we plan for retirement today has changed so dramatically even over the last five or ten years, and there’s really no shortage of challenges. I mean, we’ve got record low interest rates, the thread of another bear stock market, huge tax increases could be just right around the corner, and so much more. How you do your strategies, how you adjust these strategies and what does it really take to retire successfully is the big question. Coming up on today’s show, we’re going to talk about the five piece of conventional wisdom for retirement planning that basically have been turned upside-down on their head and the strategies that’ll stand up to the challenges today.

David Bezar:
We’re going to talk a little bit about why taxes could play a much bigger role in retirement than most people actually realize, how successful retirees are building a robust and diverse income plan, plus the key management of investment risk in this new crazy world that we live in. Brett’s going to talk about the first segment a little bit about conventional wisdom, your taxes being lower and your retirement has always been the idea, and Bret, tell us what the reality is.

Bret Elam:
Yeah, and that’s, again, I think, it was awesome hearing about the whole Inc. 5000, and I think a lot of why we are where we got to is going against the grain. Fight conventional wisdom straight in the face, and I love today’s show because we’re going to be attacking it about why you need to be your own advocate and get rid of the traditional way of thinking.

Bret Elam:
Conventional wisdom number one; your taxes will be lower in retirement. Conventional wisdom claims that you will have lower taxes when you retire, but what we have found is this is wishful thinking, at best, and we believe your taxes are going to be higher. We share with it a lot. Again, when we say what day of the week are you, number one, spending the most amount of money, and you always get your pre-retirees are always leading to the weekend, Friday night or Saturday, and we always make sure people remember, every day is Friday or Saturday in retirement. So you’re going to be spending as much money if not more money helping out the kids, the grandkids, all that. So we got to be conscious. Whoever threw that out there, you’re going to be spending less money in retirement, less taxes in retirement, we just do not see it.

Bret Elam:
Great article from Forbes. I’m going to do a quote from here before we kick things off. Talking about we’re dealing with a greater uncertainty than usually driven the questions by this. Here’s the uncertainty. How long will we be battling COVID? What will the economic impact be? What’s the stock market performance? Will be kids of grandkids ever go back to school? Another worry that’s not really on people’s radar, what’s the likelihood of taxes increasing in the very near future, but unlike whether we find that vaccine, or we know exactly what’s going to go on in the stock market, here’s what’s great is the issue related to taxes, we have some control over those, and again, with some planning, we can take those steps to mitigate the effects of those future tax increases.

Bret Elam:
Previous weeks, we’ve been talking about all the spending that’s going on with the government, the stimulus packages, and how the state’s and the federal’s revenues are dropping just because people aren’t working and everything that’s going on can only mean one thing, which has to lead to increased taxes in retirement. Again, recent weeks of the debt mounting, more unemployment, these are all things are going to lead to. Guys, we have to start putting the pieces together and realizing what’s facing us is future tax increases in the overall future. What’s our game plan? We’ve been talking about on recent weeks as to all the things that we shared, just going to continue on that topic.

Karen Bezar:
Right. One of the things we’ve brought up a few times is Roth Conversions, and right now it’s so important that your money work for you, and you don’t want to be sidelined by taxes. Right? Roth Conversions are something that can help you, and right now is an opportune time to start looking at that if you are heading into retirement or you’re in retirement, you can still do Roth Conversions because remember, required minimum distributions don’t start until you’re 72. I just want to bring up, I spoke to a very nice gentleman. If you’re listening, good morning, and I’m not going to bring up any names, but he was a listener and he called in. He had some questions, and we answered his questions.

Karen Bezar:
He is over the age of 80. That’s all I’m going to say, and he said if he knew now what…

Bret Elam:
The other way around.

Karen Bezar:
If he knew then what he knew now. Thank you. Thanks for helping me out. He said he would never had put his money in tax deferred accounts, which is a big deal, and he said he’s… Every year, he’s like, “I have to take more and more out for my required minimum distributions and it’s effecting me financially.” That’s such a story. Really a very important part of retirement, and remember, when you put your money and we do the Roth Conversions, the money in your Roth IRA gets to grow completely tax free, and withdrawals aren’t taxed in retirement. Traditional IRA withdrawals do get taxed, which leaves you to deal with that burden during your golden years. Furthermore, Roth IRAs are the only tax advantage retirement savings plan that don’t impose required minimum distributions. They give you more flexibility for your savings later in life. Anything else you want to add there, Brett?

Bret Elam:
Yeah, we actually did a webinar a couple weeks ago, and we’re going to talk about our upcoming one, as well, and David did a spectacular job on the webinar. We actually had a couple different callers call in. One was working with “a top accountant advisor” here in the Delaware Valley. Another one working with another radio personality on our show, and here were the two things. Both had significant assets, and he said the one who worked with another personality said, “You know what? They do the same thing as you,” and then all of a sudden we see their television commercial and they start talking about taxes. They’re talking about taxes within the mutual funds and how you can’t have low turnover of the funds…

Bret Elam:
That’s not what we’re talking about giving taxes. They are not doing the same thing that we’re talking about. When we had that conversation, it was like, my gosh! You’re right. So, needing the not a superficial conversation. The other one was, “My accountant said don’t do anything.” What do you mean don’t do anything? You’re getting ready… What happens if one of you passes away and tax rates double? What happens if tax rates go up? There’s an opportunity for us to do things, and most people, what they don’t realize, tax rates are lower now than they’ve been in 40 years. Here’s one thing you can’t get tax experts, CPAs, Economists, they can’t agree on a lot, but guess what they’re agreeing on. Taxes have to go up in the future.

Bret Elam:
This could happen just as millions of baby boomers are retiring. It could leave you a fraction of what you have in your 401ks, IRAs, tax deferred accounts, but there’s something you can do about it right now to dramatically reduce these taxes, and it’s taking advantage of some simple tax planning strategies that are available to nearly everyone. Now, we share with you exactly what those strategies are with our retirement tax analysis, and it’s a free analysis. We go through those defensive tax point of strategies. You may be hearing about Roth Conversion, insurance options. So many things are being advertised right now on TV and the radio. You might be thinking, “Is this for me? Do I do it now? Do I do it later? Do I wait until I retire?”

Bret Elam:
Again, you may have all these questions in your mind, and here’s my encouragement. Pick up the phone, call us right now, 215-987-2430. Paying fewer taxes in retirement could let you do more things with your kids and grandkids, can help you get that vacation home you’ve always dreamed about. One day we’ll be able to travel again. Again, learn how much money in taxes you could save. Call. Our staff is ready and waiting for you. If they don’t answer, leave a message. Again, call us right now. 215-987-2430.

Joe Krause:
And as we go to our first commercial break here on Roadmap to Retirement, the Radio Show, coming up next, why following the 4% rule could be the fastest way to go broke in retirement. Back in a moment.

Joe Krause:
The world has dramatically changed over the last 20 or 30 years, yet when it comes to planning for retirement, many people still rely on that same conventional wisdom from decades ago. Not only is this so called wisdom outdated, it doesn’t stand a chance when the challenges you’ll face in the coming years.

Joe Krause:
Welcome back, everyone, to Roadmap to Retirement, the Radio Show, as we come to you on Talk Radio 1210 WPHD.

Bret Elam:
We’re talking to day about the five pieces of conventional wisdom for retirement planning that have actually been flipped upside-down. Right? The point of today’s show is to make sure people recognize that there has to be shift in their thinking. What we’ve been taught, when we’ve been conditioned, what the media has spread about tax planning and retirement planning is very different today. Coming up on this segment, why the 4% rule could actually cause you to run through your entire life savings way too soon. Plus, how others are building a robust income plan that could really help insure that you’re savings lasts a really long time.

Bret Elam:
Again, the 4% rule has been the “safe withdrawal rate”. It relates to what we call sequence of returns and longevity. So, here’s a great quote from Forbes. “It’s the million dollar question for those nearing retirement. How much can you spend each year without running out of money?” That’s a question we ask all the time when we do our workshops, and the most common thing that you hear is the 4% rule. Here’s the 4% rule. It comes from 1994. It’s a study that was done by MorningStar and a gentleman by the name of Bill Bangen, and what they did is they came up with what is the optimum percentage rate that you can pull out of your account and have it last 30 years of retirement.

Bret Elam:
Sounds like a great rule. I got a million dollars. I should be able to pull $40,000 out a year. Here’s the problem. I said 1994. What a lot of people don’t realize and what a lot of publications are talking about today, is the 4% rule obsolete? Forget the 4% rule, and you see so many things that are out there that we’re getting links and so forth. Here’s a follow up. In 2013, MorningStar, the same company in 1994 that did the study, said the 4% rule doesn’t work. That was 2013, yet people are still talking about it today.

Bret Elam:
Why? You got things as David just shared. Longevity. You have volatility that’s out there in the markets. Low interest rate environments, and then you have that more conservative mix between stocks and bonds, and what the study came up with, here’s the flaw. They said it needs to be the 2.8% rule, not the 4% rule. What it means is almost 50% greater assets are needed to achieve the same darn things. Again, David just shared with us, the reasons that’s being attacked are those two things, and we’ll go a little bit deeper into talking about that concern of both sequence of return risk and longevity.

David Bezar:
One of the major flaws of the 4% rule is this concept called the sequence of return risk. This is where we don’t want to get overly complex in explaining it. I try to make it as simple as possible, and it’s something that’s not necessarily considered or looked at very often by retirees because, again, conventional wisdom says it’s pretty darn easy. If you got a million dollars, you can withdraw our $40,000 a year, 4% for the next 30 years and you’ll be fine. We’re finding, because of longevity, because of market conditions, because of lower interest rate environments, and again, who…

David Bezar:
I saw something the other day that said, “How many people do you think in the world were right when they thought back in 2015 where they would be in 2020?” How many people were accurate…

Joe Krause:
I’m not laughing at anybody.

David Bezar:
Yeah. No, no. I get it, but that’s my point. Who would’ve ever predicted that this is the conditions that we would be seeing in 2020. So disruptive. Right? So disruptive. So if we stick with that conventional wisdom and we ignore what’s called sequence of return risk, we don’t calculate that in. We really jeopardize our retirement. It’s actually running out. What it basically says is that in the early years, you’ve stopped working, you’re now relying upon social security, maybe a pension if you’re lucky, and then your retirement savings. If you’re now drawing off of your retirement savings, and you hit the unfortunate situation where the first couple of years that you’re withdrawing that money out happened to be down years in the stock market, it can end up to be devastating for the overall value of that portfolio long term.

David Bezar:
Here’s how it works, Joe. Here’s just the logic behind it. You know how people say stock market goes up, it goes down, it goes up, it goes down, all that? That’s completely true, and it’s a lot higher today than it was 30, 40, 50, 60 years ago. It always goes up, but it just really depends on where you’re at in the cycle because if you’re withdrawing money out during a declining value period, you’re taking shares out of the portfolio to cash in to live off of. So as the market returns, those shares are not in the market to help you recover. Those are losses that end up being permanent, and that conventional wisdom causes people to avoid thinking about that.

Bret Elam:
The other flaw with that 4% rule, people are living longer. Again, that plan was designed for 30 years of retirement. How many people do you know today that are over the age of 100? Here’s some scary stats for you, not scary, but this is reality of what we need to think about. For couples who are the age of 65, whether you’re healthy or not, whether you’re healthy or not, there’s a 50% chance that one of you lives past the age of 92. 50, and a 25% chance that one of you makes it past the age of 96. What that means is you may be spending as much time in retirement as you did during your working life, and as David just shared with you, the sequence of returns risk, especially what we’re facing right now, and people continuing to live longer and longer and longer, all of a sudden, you start finding major flaws within that 4% rule. What do we do? Karen’s going to talk to us about some of those solutions that are available. What do we have to do to take action with it?

Karen Bezar:
Right. A successful retirement, it depends not only on your own ability to save and invest wisely, but also on your ability to plan. How much income will you need in retirement? It’s hard to know and it’s a tricky plan, but that’s something that we work with our clients continually on an annual basis. It’s always ever-changing. We say that retirement’s dynamic. It never stays stagnant, and what you need to do is you know you have social security income, but where else is that stream of income going to come if you don’t have a pension?

Karen Bezar:
One of the things that we use sometimes in planning is annuities, and like we’ve said before, we don’t love annuities, but if you use the right kind of annuity, then you will be good. This is actually from Kiplinger. With interest rates near zero, annuities help pick up the slack. Strong retirement plans include a mix of products to produce the results you seek, and annuity payments can address many issues, but often, investors don’t consider certain products because of a lack of understanding or just misinformation. We’ve seen misinformation with annuities. Right, Bret?

Bret Elam:
Oh my gosh, and Karen, an article from Barrons, and old… We just addressed this. This is a conversation we just had yesterday. Annuities have gotten a bad rap over time, but again, with interest rates being so low and just the conditions we’re in, it’s worth a look, but here’s the one thing I want to share about annuities. Again, there’s so much that’s out there on the radio, on the TV. Don’t buy one unless you call me. Annuities are terrible. Annuities are the best thing in the world.

Bret Elam:
Here’s something that discourages me that I want… This is our advocacy and education is the word called churning. We had a client in yesterday, someone I met two years ago. They had a bunch of annuities. “Bret, we want to work with you.” That’s great. “What should we do?” Nothing. What you have is what you should have. I’m not just going to move you from an annuity into something else so that somebody can generate a commission. Can I tell you what happens in our industry? What I just described right there happens every single day. They came back in yesterday, and I said, “Let me see your statements.” I said, “What’s that?” They said, “An advisor that we saw in between the last time we saw you. We moved money from MetLife over to this new policy.”

Bret Elam:
I said, “We said it wasn’t in your best interest.” I go, “Who just won is the insurance company and the guy who just sold it to you.” So many people love sitting in front of people like us, and you want to trust every single word that’s coming out of their mouth. I’m here to share with you, you got to be a little bit of an advocate because if someone’s telling you get out of this annuity and go into this annuity, there better be a darn good reason to do it other than just putting money into that advisor or agent’s pocket. Do not be afraid to ask questions.

Karen Bezar:
I agree, and make sure you in advice from a fiduciary and a real advisor. Right now, the fed is anticipating interest rates to be near zero through 2022, and I wouldn’t be surprised to see this be the case for many years to come. I don’t have a crystal ball, but this could make it virtually impossible to generate income from traditional sources like CDs and savings accounts, and it’s forcing many families to take more risk in the stock market. That can be a dangerous game if you’re in it in retirement or you’re near retirement. The good news is there are some options to generate income that you may not even know exist, and we want to show you exactly what your options are with a retirement income analysis.

Karen Bezar:
Our analysis doesn’t cost you a dime, and there’s no obligation. If you’re the kind of person that needs to make your money work for you but can’t afford to lose a dime, this might be right up your alley. If you saved at least $250,000, give us a call. 215-987-2430. 215-987-2430.

Joe Krause:
Really good stuff. I couldn’t help but thinking, Bret, when you were talking about living longer and longevity, I couldn’t help flashing back to my mother always planning to live until she made it to 65.

Bret Elam:
Oh my gosh.

Joe Krause:
All the time.

Bret Elam:
And the stats just tell us differently.

Joe Krause:
Yeah. It’s so completely different. You are going to live longer, and one last thing before we get into the break. Find an advocate who works on your behalf. That’s how you get on the Inc. list. When we come back on the other side, conventional wisdom says you should delay filing social security until you’re 70 to get a bigger check. We’ll tell you why this could cost you a small fortune. Back in a moment.

Joe Krause:
There’s no shortage of challenges ahead for anyone wanting to retire in the next five years. Record low interest rates on traditional CDs and savings accounts forcing many families to take more risk in search of yield. The very real threat of a bear market and the damage it could do to your nest egg, Taxes could soon be going through the roof, and more. Why conventional wisdom around planning for retirement is dead.

Joe Krause:
Welcome back, everyone, the Roadmap to Retirement, the Radio Show. David, back to you.

David Bezar:
Yeah, so the question is, how do you adjust your strategies for retirement if all this conventional wisdom…

Joe Krause:
Hard to change conventional.

David Bezar:
Yeah. That’s the challenge. I mean, a body at rest tends to stay at rest. A body in motion tends… This is where you got to break those habits. Look around. Just look around. Ask. Look at people who have retired ahead of you. Are they in the position that they thought they were going to be in? Are you anticipating those big changes that may be coming down the pike? Does the 4% rule work? Well, I think we gave you enough indication that it’s probably a bit outdated. Are you planning your taxes for future hikes? How much of that is going to eat away at that nest egg?

David Bezar:
What we’re going to talk about in this segment is why delaying your social security benefits until age 70 could actually end up costing you money in ways you never really considered. A lot of people do these spreadsheets and they go, “Oh, this is what makes sense,” but they leave out a few of the elements in the equation trying to really figure out what makes sense. Again, conventional wisdom says, for most people, wait until you turn age 70 to claim social security benefits because you’re going to receive a larger check. Karen’s going to cover saying those little things that you got to think about. Is that actually right?

Karen Bezar:
Right. You might try to delay starting collecting your benefit until age 70, but in order to do that, if you’re not working, you’re going to have to plan to draw more from your IRAs and your 401k accounts for a few years. Do you have a strategy for that? Don’t just aim for 70 automatically, and many people, one of the things that we look at or ask questions about is longevity in your family. There are reasons sometimes to take social security early, and we understand that as well. Do you have health challenges? Is there something else going on in your life?

Karen Bezar:
Again, it’s something that you have to take a look at. I just want to read this quote from MSN. One of the things that sometimes people say to us is, “Well, I don’t know how long social security is going to be around so I’m going to start taking it right away.” This is a quote from MSN. It says, “The program is projected to be fully solvent until 2035, and you can bet politicians will step in and protect your retirement benefit in the years after 2035. So make the jokes but don’t sit idle. You can get the most from your federal retirement insurance by understanding how timing effects your monthly benefit, what rates your spouse has based on your earnings record, and how your income today can support a higher social security check later.”

Karen Bezar:
How you claim benefits can also, it triggers taxes, it can double Medicare premiums, all these things, all these choices, all these decisions you have to make heading into retirement as reminders. People say, “Well, I’m going to start social security early.” Okay. Have you thought about what’s going to happen? If you start social security early, and just a reminder out there, full retirement age is when the government says this is your full retirement age, this is when you can start social security without any penalties, but if you let it sit there, and you don’t take social security, you can have some growth on your social security income, which is a big deal when you’re planning for retirement. If you take it too early, they penalize you by taking a reduction in your amount, and if you take it too early and you have a spouse, how is that effecting your spouse?

Karen Bezar:
It effects your spouse two ways. There’s something we look at is if you’re a couple, one of you most likely will pass away before the other. It’s really important to plan for that surviving spouse. If you can delay your social security and it works out with all of the planning that we do, delay it as much as possible because you want at least good really high social security income check. Another thing that sometimes people are not aware of is if you have a spouse that maybe has not worked a lot in the outside world, they are actually allowed to have 50% of your full retirement benefit amount. So if your full retirement age is 66, and you wait until 66, they can get 50%. So, if it’s going to be 2,000 or $3,000, or let’s say $3,000 for easy math. It’s $1,500 a month is what your spouse actually gets. That’s a big deal if it’s $4,500 in retirement.

Karen Bezar:
So, something really important to remember, and the other thing that people are surprised about is social security benefits are taxed. Don’t we see that a lot sometimes, Bret or David, that people aren’t aware of that.

Bret Elam:
All the time.

David Bezar:
Again, it’s all those factors that you just said, and it’s understanding social security tax.

Joe Krause:
Social security benefits aren’t taxed in Florida are they?

David Bezar:
They’re taxed…

Karen Bezar:
It’s federal tax.

David Bezar:
That’s right. To the state, to the state. So the fed… Yes. The feds who’s taking most of that. [crosstalk 00:29:44]

Joe Krause:
That’s one of the reasons why I’m staring at Naples in my future.

Bret Elam:
In Pennsylvania, they’re not taxing you on social security either, but regardless, it’s all those things. What’s the age difference between me and my spouse? What’s my health? Do I get widow benefits? Here’s one for you. We just had somebody yesterday. The missus had worked part time, helped raising the kids, and she was no longer working, and mister was still working. They had both just turned 66 this calendar year. Conventional wisdom Karen said, “Oh, now I can start it, or no, I’m going to delay until 70.” So, he was now 66 and a half and she had turned 66 in June. I said, “Have you started benefits yet?” And they said, “No. We were waiting until I was going to retire and turn them both on.”

Bret Elam:
This is what we shared with them. Her benefit was $1,200 in June. Her husband’s benefit was $2,800. So, half of $2,800. She would have gotten $1,400, but she can’t get to that $1,400 payment until he starts collecting his payment. So what it meant was that there was no reason for her to not start her own benefit of $1,200. So we had them. She called social security right away to start her benefit because that $1,200 wasn’t going to be bigger than that 1,400 for years down the road, and he was going to retire between now and then. For them, it was an extra almost $20,000 a year that was going to be in their pockets because, just like the rest of the Americans, nine out of ten people are not aware of how do we maximize benefits within the household, and we got to be considerate of all those things that are out there.

Karen Bezar:
And relying on social security for advice in these matters can become more of a hindrance than a help. We recently had somebody who was our client. We did the social security analysis for them. We had it all planned out. They were going to file what’s called a restricted benefit, and so she called social security and they said, “Oh, you can’t do that.” This is a true story. She hung up and she called back again, and whoever she spoke to the second time said, “Oh, absolutely. You can file that restricted benefit.”

David Bezar:
And that happens so often.

Karen Bezar:
And she knew because talking to us, we said, “If you’re talking to the wrong person, hang up and try again.” If you made an average or above average income throughout your career and you’re thinking, “Hey, maybe I do need this.” Many of the traditional rules for filing for social security, like we said, they don’t apply to you. The traditional rules of thumb, like delaying your benefits as long as possible, could end up costing you a small fortune, and if you’re wondering why it’s because when you consider the impact of taxes, required minimum distributions, Medicare premiums, the net net could be a lot less money.

Karen Bezar:
We want to show you how you could get more income from social security with a customized social security analysis. This analysis will show you how you can get more income from social security while considering the impact it could have on your taxes, Medicare premiums, spousal benefits, all of that. Some advisors may charge hundreds of dollars for a customized analysis, but we’re going to cover 100% of the cost just for listeners who call today. If you’ve saved at least $250,000 for retirement and you have not filed for social security, give us a call. 215-987-2430. If you’re seriously interested on getting that social security analysis, don’t wait. 215-987-2430.

Joe Krause:
How many choices are there for social security?

David Bezar:
567.

Joe Krause:
There is absolutely zero chance that we could know what to do when it comes to that. That’s a fair statement.

David Bezar:
Yeah, again, like you said, conventional wisdom causes people to just adopt what the masses adopt. A lot of people who think they, generally, may be a lot smarter, but they run a spreadsheet to figure out that, but they forget to include their spouse in the equation. Again, it’s a number of different things.

Joe Krause:
Coming up in our final segment, the ugly truth about the 60/40 rule for diversification and why this conventional wisdom could lead you off a financial cliff. Back in a moment.

Joe Krause:
As we come back from our final commercial break, are you retiring in the next five years? Many people still rely on the conventional wisdom that’s been around for decades, the 4% withdrawal rule, delaying social security until age 70, or thinking the 60/40 rule is some magical diversification formula, but most of this so called wisdom doesn’t stand a chance against the challenges you’re going to face in the upcoming years.

Joe Krause:
Welcome back to Roadmap to Retirement, the Radio Show, where the advocates, David Bezar, Karen Bezar and Bret Elam are here on your behalf. David, all to you.

David Bezar:
This last segment is going to be related to investment management, and a lot of people hear this asset allocation model formula when we’re younger. Maybe we start out where 80% of our portfolio are stocks and equities, things that are in the stock market, 20% are in bonds. Some of those bonds may be short duration, some might be mid, some may be long term, and then as you get closer and closer to retirement, people start to shift that allocation where the idea is to get more conservative. Most people’s perception of more conservative is to have a much bigger position in bonds, ultimately, because bonds, conventional wisdom, are a safer investment tool than what stocks and equities are.

David Bezar:
We go from maybe an 80/20 to a 70/30 to a 60/40. Now, here’s what happens, Joe. Again, I just talked to somebody yesterday, and they said to me, this is a gentleman who’s 58 years old, worked for the postal service. Now he works for Department of Transportation in New Jersey. Great guy. I mean, a great guy. Did everything right, doing everything right, but one of the funny comments that he made to me was, “You know, Dave, as you’re looking at my investment portfolio,” I commented to him, I said to him, “Bob, I think you’re really over weighted in your stock holdings.” Which, for him as a 58 year old, were at 98.7% of his entire retirement. He goes, “I know. I’ve been thinking for the past 20 years that I should shift that up.” I was like, “Well, at least you’re honest, Bob.”

David Bezar:
Twenty years that I’ve been thinking that maybe that’s a little bit too much, but again, conventional wisdom, inertia, all those things combined get us to a point where we maybe don’t make the decisions or take action on the decisions that we know we should. This is where… A lot of you that are listening today are folks that probably have done a wonderful job doing your investment management on your own, and you probably say to yourself, why would I hire? I’ve done pretty darn well. Why would I hire anybody? Right?

David Bezar:
Let me just tell you a quick little story. I tell my clients this a lot of times. There was this man that was having trouble with his sink. It wasn’t draining properly. So, after many attempts to make repairs himself, in his frustration, what he ended up doing was calling a plumber to come in and make the repairs. The plumber listened carefully to the customer’s situation, pulls out a hammer, leans under the sink, and hits the pipe with the hammer. The drain immediately begins flowing again. The plumber then stated to the customer that the fee for that was going to be $500. The customer goes berserk at that cost and demanded that the plumber produce an itemized bill, and the plumber said, “You know what? I will.”

David Bezar:
So, he goes into his toolbox, writes up an invoice, and the following items were listed on the invoice. One, hitting pipe with hammer: $1. Two, knowing where to hit: $499. Right? I try to share that to illustrate that at some point, at some point, it may make sense to pay a fair price for an extraordinary value, and when it comes to investment management, that’s a lot of it. A lot of people say, “Oh, passive investment this and that.” It’s not only–and we agree with that. We’re big fans of passive index investing. But then, Dave, why would I pay you a fee? Because do you know what bucket you should be distributing your money from?

David Bezar:
You got investments. Are you properly diversified? We believe in four buckets. We believe in a cash bucket. Cash is good for emergency situations, but it’s also good to keep your powder dry in case the opportunity to buy things that you like on sale. Second is your stocks, your equities. Third is bonds, and then fourth are investments that may not be correlated directly to the stock market, much safer type investments. Number one, does that bring value? If somebody could look at that, do an X-ray, do a CAT Scan, do a blood test on your investment portfolio and show you why you may not be properly diversified, does that have some value to it?

David Bezar:
Number two is when it does come time to start distributing that money, could there be value in someone giving you guidance on the sequencing of where you take that money so that you can be most tax efficient. Number two that it’s not complying with the 4% rule, and that this money does last your entire lifetime, and if you happen to be a married person, last your spouse’s lifetime as well. You have to ask yourself, is it worth paying a dollar to have somebody hit the pipe, but making sure that you pay the 499 to get the advice of where to hit that pipe?

David Bezar:
If you’re listening, I hope that kind of makes sense to you. Here’s what I suggest. If you’re retiring in the next five years, many people are still relying on all the conventional wisdom that’s been around for decades, all the things that we talked about here on the show today. The 4% withdrawal rule, delaying social security, all of those kinds of things. Just give us a call. Let me give you our phone number. It’s 215-987-2430. 215-987-2430. It can start with just a phone call. We have so many people. They call in on a Saturday morning after the show. We get those scheduled sometime during the week at your convenience, spend 15 minutes on the telephone, get to know each other.

David Bezar:
I will tell you honestly, that’s not on our side. That tends to be on the folks that are calling in that that 15 minute dedicated call usually turns into 30 minutes, and we don’t squawk, we don’t complain about that. We’re happy to do it as advocates, and we get to know each other a little bit, and then you can make a determination if you think it makes sense to actually have a complimentary, customized analysis done for you where we look at social security, we look at taxes, we look at risk, we look at Medicare, we look at estate planning, and all the things related to your retirement.

David Bezar:
Once again, give us a call. 215-987-2430.

Joe Krause:
Loaded with information again here on Roadmap to Retirement, the Radio Show. What a great, great amount of information that you continue to provide on a weekly basis, and again, I want to use the last 12 seconds of the show today to say congrats to David Bezar, Karen Bezar, and to Bret Elam for being advocates. Number 1663. See you next week, everybody.

Speaker 1:
Thanks for listening to Roadmap to Retirement, the Radio Show from Thrive Financial Services. If you’re like most Americans, you have more questions than you do answers about what to do about your retirement savings. If you have a question about your IRA or your 401k, Pension or other tax deferred accounts, if you have a question about reducing taxes, generating income or filing for social security, whatever it is, David, Karen, and Bret are here to help, and often your questions can be answered in a simple phone call. Just call 215-987-2430. 215-987-2430.

Speaker 1:
And so you know, no statements made during Roadmap to Retirement, the Radio Show shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional on any such matters. The 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 here. 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, Yardly and Cherry Hill. Roadmap to Retirement, the Radio Show was a paid commercial announcement from Jacob Media Partners.

Speaker 1:
If you’d like to learn more about the power of the radio hour, contact Joe Krause at 267-261-3428. Today’s program has been prerecorded.

 

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