Having a retirement savings plan may not seem as enticing for a number of people. That’s only because they don’t know what to do with it, or they’re still at that mindset where future things should be for the future. They still need to get the proper financial education that will help them see the importance of planning ahead. Doing so could even get you that $1 million mark if you know how to how to use it with the right amount of patience and strategy. Learn about savings and 401(k), and find out more about assisted living which could give comfort to those people who are worried about becoming a burden to their love ones.
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What is a 401(k) And Do I Need It?
David, I come to you off of the launch of the book, Roadmap to Retirement.
Joe, we had an amazing launch of the book. We talked about it for a couple of weeks leading up to this book launch on Amazon. What we had offered our audience, our clients and anybody out there in the public, they were going to be able to download a free copy of the book. The book is normally $17.95 if you ordered paperback. We decided we wanted to get that information out to as many people as possible because we had nothing but wonderful reviews on it. We wanted to try to create some type of a mechanism that people could get their hands on this book and share. We did a one-day and the launch was phenomenal. We had great reviews, a lot of five stars in the book.
We\’re looking to share a lot of that information. Try to get some of that out. We\’re looking forward to writing our next book and making sure that we get that out. I wanted to let you know that all of the proceeds from the sale of the book are going to a charity called BeatCancer.org. You can look them up to see if that\’s a good charity that you\’d like to donate to. If you do purchase our books, you get two things with it. A lot of good information and know that you\’re also helping people out.
David, I commend you for being candid and forthright with our audience. Certainly understanding why that is the designation for the charity or for the proceeds of the book. The name of the book, Roadmap to Retirement: Navigating Your Way to Peace of Mind, by Bret Elam and David Bezar. Bret, I want to give you an opportunity in the C-block. We\’re going to start to deal with the conversation or a topic assisted living. We\’re going to only begin to scratch the surface of that topic.
Krause, we\’ve always been talking about having a plan for taxes, investment and income. We talked about legacy. Now, we\’re going to focus a little bit and I’m talking about what\’s that plan for healthcare. We\’ve touched on it in bits and pieces previously, but we\’re going to dedicate that whole C-block to talking about assisted living. It\’s a touchy topic but nevertheless, it\’s a topic that can\’t be ignored.
A topic we must have. I always constantly refer back to your subtle description of dental pain, to be part of that process. Karen Bezar is with us. Karen, you\’re going in a different direction from assisted living. You\’re going into a savings area. You\’re going to start to unhelp all of our listeners start to understand that. We\’ve heard the word before but might not know what it means.
The word is 401(k). All I knew when I was a younger child or started getting into the workforce is invest in my 401(k). I had no idea what that meant.
We\’ll deal with all of that in the B-block as Karen Bezar is with us. We’ll continue to dive into Riskalyze with David. Here at Thrive Financial Services, the mantra is to educate and advocate, not sell. David, I want to jump to you and get into a question or two. I also want to congratulate you, Bret, Karen and everybody here at Thrive Financial Services for a great week of workshops. The audience is starting to react and respond. The workshops are starting to fill up at a capacity level. The information is the reason why.
We\’re continuing with those workshops. We have people that show up at the workshops that didn\’t come through our normal channels of marketing. We ask, “How have you heard about us?” It was either via the radio or via somebody who attended a workshop and invited them. We certainly welcome walk-ins to our workshops. I thought about what I would do is talk about our next two workshops. Share what\’s going to be the topics on those workshops. Why they\’re important to get to and a little bit about the experience of the workshop.
One of the things that prevent people from doing things is that thing called fear. We\’ve broken the word fear down into an acronym that stands for False Emotions Appearing Real. Not knowing what you don\’t know. Sometimes it\’s easier to let inertia take over and not take that step forward to go get the information. You do a wonderful job, Joe, making sure our audience knows about it. We\’re all about education. We\’re all about that advocacy approach. We want to get people empowered or making the right decisions for retirement. Our two workshops are we have one at Wissahickon Public Library in Blue Bell PA on Route 73. The topic for that workshop, which is present, in real-time, is Tax Efficiency in Retirement. The people who are typically attending this are people in that real close to retirement age or have already entered retirement age.
We have two types of people that are showing up. One group focused on, “How do I do my retirement income planning in the most tax-efficient way? If I have a sizable estate, how do I make sure that I pass this onto my beneficiaries in the most tax-efficient way?” That\’s one group of people. The second group of people are people doing it for the first time. Taxes have been so much in the news that is trying to focus on, “What do I do? What are taxes going to look like in retirement? Is going to be different than what I saw while I was in my working year?” You could certainly go to our website to register or you can call us and get registered at 1-800-516-5861.
The other workshop is at the West Whiteland Township Building in Exton, Pennsylvania. The topic for that workshop is Social Security Maximization. It’s a relevant topic for people who are entering retirement. People who still have questions, “When do I take Social Security? I heard something that I might be able to take a benefit off of my spouse\’s, defer my benefit? What\’s the optimum way to do it tax-efficiently? What\’s the way to get the most benefit out of Social Security over my lifetime?” These are types of questions that get answered at that workshop. It\’s education. Seminars, people going to come and feel that they\’re going to have to buy something or they\’re going to get pitched something. We don\’t talk about the product. We don\’t talk about our company. We talk about the points that are relevant. We try to give the answers to questions that people have.
[bctt tweet=\”Educate and advocate, not sell.\” username=\”\”]
Karen, our topic of conversation strategies about seven-figure 401(k)s or remove seven-figure, just 401(k). That is such a big topic.
I remember getting my first job and being excited that I had a 401(k). I had no clue what it was, but now I do. I’m going to offer some suggestions on how to build up your 401(k) and to understand it a little bit better. As far as 401(k)s go, we try to offer advice to many different kinds of readers that we have out there. Some people understand what a 401(k) is, but we\’re trying to help you make the most out of your 401(k). It is one of the most common retirement savings accounts and for good reason. It will get you where you need to go if you know how to use it. Some smart investors who plan ahead can easily hit the $1 million mark.
I know it sounds like a lot of money when you first start out. You can hit the $1 million mark in your 401(k)s. The truth is most of us don\’t have the time or patience to learn all the strategies that you need to get there. To give you a fighting chance at getting to the seven figures, which you would like to get to by the time you retire and your 401(k), here\’s a quick primer. Number one, this goes for anybody and this goes for any investment tool, is to start saving early. I know when you\’re young and you get your first job, you want to start spending your money on buying that new car, buying new clothes or buying a new house. We can\’t stress enough to save early. You don\’t want to be 55, realize that you\’re going to retire soon and then you have to play catch up. That means you\’re going to have to start saving a lot more money in a little bit of a time. If you start saving early, you can start chipping away at that million-dollar mark or whatever your mark is going to be as you start going along in your career in life and your savings career.
I’m thankful, Karen, for my wife who not only started early in her life but has made sure that all of our children understand that process. We were doing it with my son, Joseph, who is graduating from college. He\’s in the military now. He\’s setting up his IRA and his 401(k) and everything through USAA. He was getting everything figured out. The number one point was your point and that\’s exactly what my wife said to him.
We had that conversation. Our daughter\’s graduating, starting in the workforce. We can\’t stress enough because we were lucky and we got into this field when we were younger. We understood the importance of it. Younger kids, meaning twenty to 25-year-olds, didn\’t understand the importance of it. Save early. No matter how old you are, no matter what your economic condition is, if you have access to a 401(k), you should get it and start saving in it immediately even if you haven\’t done it yet. It\’s a nice way to start saving money. It comes out of your paycheck and you won\’t even miss it. If you\’re starting early or saving early, don\’t try to max it out if you can\’t afford to do that. Don\’t try to do anything fancy with your investment where you\’re placing it if you\’re too vulnerable at that time. At that point, you\’re getting in the habit of making regular contributions. It\’s the most important thing you can do with the 401(k). You let your compound interest work and it starts compounding and your money starts growing. It\’s almost like magic. It makes your money grow faster.
You should try to save about 15% of your salary. Research shows that most people need to save about 10% to 20% of their annual salaries to be ready for retirement. Sounds like a lot. If you start young, have a vehicle like a 401(k) that starts taking money out of your paycheck. You won\’t even miss it. That means for simplicity\’s sake, it\’s a good idea to aim for 15% each year. At a minimum, you want to save enough to earn a company\’s match. What\’s that mean? Some companies will match. If you invest a certain dollar amount, they\’re going to match your amount. Sometimes it will only be a percentage and they will only stop at that percentage, but it\’s free money. Why would you not do that? That makes all the sense in the world.
It\’s one of those arteries that we talk about on this show and fall under the title of the book, Roadmap to Retirement, and the 401(k) as a feeder, as one of those elements. It’s certainly vital when you sit down with a client or a potential client or you have a conversation, it always comes up.
When you\’re happy when you start thinking about retirement, “I’m happy I started saving my money at age 25. Now that I’m 55, I’ve been saving for 30 years,” and you haven\’t even touched that money, which is an excellent thing. That\’s all it\’s for. It\’s earmarked only for retirement. Another thing that employers sometimes offer is auto-escalation. It increases your savings. It’s almost like an inflation fighter. Every year by percentage, usually 1%, but that can add up to every year. It can add up and you won\’t even miss the money.
Auto-escalation simply is an increase by a percent with each passing calendar year.
That’s correct, of what\’s coming out of your paycheck and going into your 401(k) investment. No matter what, saving does mean foregoing some nice things. You might have to skip that cup of Starbucks coffee. You might have to make the decision to do things in the future. Do I need that Sirius Radio when I can listen to AM radio on my car and it\’s free?
Stay the course. If your investments are diversified and you know why each one of them is there, you don\’t necessarily need to get worried. When there\’s a major fall in the markets, especially when you\’re a younger year, stay the course. It\’s tempting to trade-in that Valdo market. Even the best investors don\’t always win at that. You can\’t play the game if you\’re not in it and looking at your investments every day. If you\’re young, the market will come back. If you move cash but don\’t reinvest before the market stabilizes, then you\’ll have to scrimp and save even more to make up for your mistakes. Just stay the course.
Don\’t tap your 401(k) early. That\’s so important. Your 401(k) is for retirement only. It\’s not there in your new house. It’s not there in your new car. Please, don\’t touch that. Plus, you\’re going to get a penalty from the government. We do meet with people who have 401(k)s and we tell you to be sure that you\’re financially savvy about your savings. Understand your fees, overcoming investment biases. Let us act as your coach to help you get you through the retirement goals. Our goal here is to work with you, to help your 40-year career in savings and finance your next 30 years in retirement. Call today for your no-obligation financial review. Call us at Thrive. We\’d love to look over and help you review your retirement plan.
[bctt tweet=\”FEAR. False Emotions Appearing Real.\” username=\”\”]
Karen Bezar is a Managing Partner here at Thrive Financial Services. You can call and if you\’re comfortable sitting with Karen, you can schedule an appointment with her. Good information today on strategies, not only about what the 401(k) means, what it is and how to preserve.
Bret Elam now joining us. This is a touchy subject, assisted living. I always seem to end at your doorstep when it comes to that phrase that I love, a little bit of dental pain. Bret, this is another one. That is a conversation we need to have because there\’s so much to understand. In our age group, in our time, we don\’t quite know how to envelop the conversation.
Krause, sitting around the water cooler at the family table, we\’re always talking about, “I earned this on my investments or I have this much saved,” but no one ever wants to talk about that assisted living conversation. What are the things that worry you about aging? If forcing your family to take care of you is even part of that answer, you\’re not alone. We don\’t go too in depth in that topic, Krause, during our workshops. We touch it on a high level. When we sit down with people here in the office, it\’s always a topic that comes up. We\’ve heard them all, “I’m just going to go out in the backyard and take a bullet or I’m going to turn on the car in the garage.” You hear everything that\’s out there. Truly, it\’s something that we need to need to plan for.
No one plans to fail but rather they fail to plan. That\’s what this is all about. A new study from the Nationwide Retirement Institute found that half of those polled were worried about becoming burdens to their loved ones. We hear that time and time again when David, Karen and I sit down with people. “I don\’t want to be a burden to my loved ones.” It\’s always one of their primary financial concerns. More than half of the study’s participants said that pain for long-term care would wipe out savings that otherwise would be passed onto their children. Everyone always wants to pass money on from a legacy standpoint but necessarily doesn\’t have anything to fill that hole where if I get sick, that\’s out there. No matter what, it\’s not easy to think about those assisted care, end-of-life arrangements.
The big thing here is to make sure you have the conversations while you\’re healthy. Don\’t wait for that crisis to happen before you start planning for that because it\’s almost too late. They\’re not easy conversations. We get that. The idea is to start thinking about them now, whether it\’s you or your parents. A lot of us and a lot of our clients we’re sitting down, our typical clients are typically in the late 50s to early 70s, and still have parents that are still aging, still living. It\’s obviously prominent because anything could happen when parents are in their 80s, 90s, etc. at any given time. The big thing is having those conversations while you\’re healthy.
There are two choices at the end of the day when it comes to assisted living. The first one is I want to be taken care of at my house. Realize being taken care of at home is a mixed bag at the end of the day. It makes sense why you want to stay at home. It\’s what we\’re comfortable with. It\’s more affordable than going into a facility. It\’s easier for your family and friends to sit down and come to see you more often. There are always pros and cons. It\’s difficult to move once you\’ve reached that point in time where you now need that assistant care. It\’s trying to create all those preparations and going into that.
Everyone\’s situation\’s a little bit different but they\’re necessary conversations to have. If your parents want their assisted living at home, remember it\’s that mixed bag again. It could be you, meaning it\’s our clients we see at time and time again going to help out and taking care of mom and dad. Sometimes it may be after retirement. Sometimes it\’s before retirement. A lot of times if it\’s before retirement, what it inevitably becomes is retirement because you end up where you\’re going to go help out with mom and dad, it means it\’s probably almost a 40-hour job that\’s happening over there.
I was in the bank and I was talking to the teller. She was taking care of her mother who was 89 years old. Her mother was having an issue when she was stuck at the bank. She was trying to get her daughter there and everything else. It is real life stuff on a daily basis.
It\’s those two things. It\’s taking care of our parents and then paying a lot of money in college debt for our children. It\’s those two things that we need to be wary of that happen day in and day out. The biggest thing is making sure. Especially if you\’re going to be a primary caregiver for mom or dad, is making sure you\’re not sacrificing your financial future. A lot of times it\’s these years in your 60s while you\’re healthy, you don\’t have to work anymore, that you want to go out, live and enjoy retirement. We do start slowing down as we continue to age. The big thing is to plan for it because there are options that are out there. The other side to be taken care of at home, Krause, is going to a facility.
We talk about a client of mine who passed away. They\’re paying $15,000 a month for a semi-private room and an Alzheimer\’s unit here in the Philadelphia area. Nursing homes aren\’t cheap, but most people can\’t even estimate how expensive it can be. The median price that\’s out there today is $97,000 a year. Let\’s say you\’ve done a good job for retirement. Let\’s say we may have saved $8,000, $9,000, $100,000, $1 million, $100,000 a year. The most critical thing that happens is that if one of us gets sick and our spouse is still healthy and enjoying life, those become budget busters. No ifs, ands or buts. You want to talk about your finances falling off the cliff. We\’ve talked about what happens with that critical pension and Social Security monthly benefits that we get and make sure that we have those right decisions. What if does happen that we call life? It’s life at the end of the day. We don\’t know what tomorrow is going to end up happening.
That’s a big number, Bret. $97,000, that\’s a haymaker in the ninth round. That\’s tough.
When you say, “I’m going to go get a shared room,” right behind that is $90,000 a year for a semi-private room at the end of the day. Those amounts are staggering. It\’s certainly enough that it\’s worth bringing up to your financial advisor. If you\’re working with a financial advisor and you’ve never had that conversation. There\’s something wrong with that. We hear that time and time again. All my advisor does is talk about investment management. We talk about you need to have that plan for healthcare, for legacy, for tax, for investment management and taxes.
Everything needs to work together. When we’re talking about assisted living is that you don\’t have to take it on a loan. If you have siblings and/or mom and dad themselves, maybe everyone\’s pitching in, if we will. Those conversations sometimes go a little bit awkward. Especially if there\’s a big gap between what you make and/or your siblings and/or your children. Be patient. We see a lot of tension that can be built from those conversations. Listen to everyone\’s concern. Everyone should be feeling like they\’ve been heard at the end of the day. The biggest thing on this one is because it\’s that no one wants to have the conversation. You can\’t be there on the New Year\’s Eve party and looking at the family and saying, “What\’s the plan for mom and dad\’s assisted living plan?” It doesn\’t work that way.
You’ve got to give everyone a little bit of fair warning to gather their thoughts because they\’re not thoughts we\’re not necessarily thinking about every single day. It\’s good to put it all on the table and put those pieces together so that when you do sit down, you can have a good conversation there. It\’s critical for you to plan for what can go wrong before being able to afford the luxury of what can go right. Your savings could be drainers. We talked about $90,000, $97,000 a year in an instant, without a solid plan in place that addresses some of those potential risks you might face in the future. Here at Thrive, we’ll explain how long-term care policies work and discuss if it\’s right for you. Our goal is to help you be best prepared for that outcome. It all starts with that fully personalized and comprehensive plan.
Call us today 800-516-5861 or you can always reach us at ThriveFinancialServices.com. We always say, don\’t leave your retirement income to chance. Healthcare costs are just one factor that can seriously drain your purchasing power if it\’s not accounted for. Let us navigate all of your retirement income planning decisions, taking all those necessary risks under the account. We’ll learn your life goals and combine them with your financial situation. Create a customized retirement plan that aims to carry you to and most importantly through retirement. Call us to schedule that comprehensive, no obligation review to get started.
The topic or the subject of conversation assisted living, have you had it yet? That\’s what Thrive Financial Services is all about. It\’s all about being an advocate. It\’s all about providing education. It\’s all about what the title of the book says, Roadmap to Retirement: Navigating Your Way to Peace of Mind. Under the subject line peace of mind, there are a lot of layers. That is an example of a layer that you must be self-aware and you must have the conversation. Well done from partner, Bret Elam. David, when you started our opening segment Roadmap to Retirement, we celebrated the book and the launch of the book. This book is a successful, useful book with great information in it.
Joe, thanks. When we wrote the book, our goal was to get something out into the public that was going to be useful. Here\’s what\’s unique about this book, Joe is it\’s not just Bret and me telling our story and our philosophy related to financial planning. What we did is we went out to all of the financial professionals that deal with retirees. Estate planning attorneys, CPAs and accountants, Medicare specialists, reverse mortgage people, anybody that a retiree may end up engaging in the process during retirement.
Bret said something in the last segment that we talk about every day. It\’s the fact that most financial advisors out there are investment managers. They\’re focused on the design of a portfolio, the management of a portfolio. That\’s what they spend time. We hear it often from people that we serve that when they talked and brought up these topics like Social Security maximization or tax efficiency. What about if I need long-term care facility? They basically got referred out. They would say, “I handle the investment side and I’ve got somebody I know that can help you on that side.” We see that as a little bit of a flaw. We want to act as the complete and total steward for somebody’s retirement plan because the retirement plan isn\’t just the investments. It\’s all those other topics we mentioned.
Instead of having one hand do one thing and one hand doing another, that CPA may never talk to the financial advisor, the banker or the insurance agent. No one is acting as that true empathetic overseer of the plan. When we work with our clients, we have total comprehension of what\’s going on. If we make a decision on one topic, it\’s going to have an impact on another area. We make sure we know what\’s going on, and that\’s a big deal. That\’s why we wrote the book the way we wrote it. We went out and we interviewed all of these other financial professionals. Had them go through what the process is and what mistakes they\’ve seen their clientele make in the planning process. Joe, the book, we think is going to be a great resource tool. Our intention is to follow up with a number of books in a series so that it\’s the succession of what\’s next, how to do more and get a little bit deeper on each and every topic.
It does fall under the topic or the headline of being an advocate for your clients. That is what stimulates me to do this show every time. I’m one of the 375,000 people that listen to this radio station on a weekly basis. I’m one of the individuals that need an advocate to be able to create a roadmap.
I’d like to talk about why we titled the book, Roadmap to Retirement. We\’ve also standardized our retirement planning process to where we call it a Roadmap to Retirement Review. That review is this process. People are afraid sometimes to pursue something because they don\’t know what to expect. I thought I’d described that a little bit. When Bret, Karen, and I sat down and we wanted to make something that stood out to people. We came up with the idea of Roadmap to Retirement Review. The process is where we sit down with people. This is all complimentary that we do initially. I’ll share with our audience that we do it to a degree that would be complimentary, meaning we\’re not going to do a significantly deep dive. If somebody ultimately wants to go down that path where we\’re looking at all the granular aspects of their financial plan, they can talk to us about a possible engagement. No pressure.
[bctt tweet=\”No one plans to fail, but rather they fail to plan.\” username=\”\”]
We\’d still go through a pretty comprehensive review through this Roadmap to Retirement Review with people. One of the first things that we look at is Social Security. If they have not yet taken Social Security or if one of the spouses in a married couple has not yet taken it, we do a Social Security maximization analysis. That gives us the best math. It\’s an X-ray where we can see what\’s going on in the inside and then make a recommendation that gives that couple of the most maximum benefit over their lifetime through Social Security. Incredibly valuable. Few people do it. Our firm is certified to do it through the National Social Security Advisors Association where we\’ve gotten accreditation. We\’ve gone through a curriculum and a training course to be experts at how to do Social Security. That\’s usually the first step.
The second step is we do a Tax Clarity review where we dive deep into taxation. It\’s more forward tax planning than it is reporting taxes. We\’re looking for opportunities that we can make a recommendation to improve and optimize taxes. We also do what\’s called a Money Tree review, and that is where we stress test the overall retirement. It’s about a 60-page report. We typically only go through one page in our complimentary session. It talks about the probability of a successful retirement. Lastly is Riskalyze, and it\’s beneficial for the people who receive Riskalyze stress analysis on their portfolio. We call all four of those steps in the process The Roadmap to Retirement Review Process. Our audience can call us at 1-800-516-5861 to schedule that review. It\’s about an hour long. We collect up some information. We get back together for another hour and go through that information. They can go onto our website at ThriveFinancialServices.com and schedule that complimentary review anytime they\’d like.
Good stuff from Managing Partner, David Bezar. Can I have the workshops again?
At the Wissahickon Public Library in Blue Bell, Taxes In Retirement. At West Whiteland Township Building in Exton and that\’s a Social Security Maximization workshop.