Bad Money Habits that Could Sink Your Retirement

5.12.23: Audio automatically transcribed by Sonix

5.12.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Safe Money Masters with Greg Castle. Get ready for a full hour of financial information and economic news you can't afford to miss. Greg works hard each and every day to help hard working Americans like you navigate challenges and reach the financial freedom they desire and deserve. So now let's start the show. Here's Greg Castle. Now. Hello and welcome to the show. My name is Greg Castle and I'm your host, along with my co-host and producer, Matt McClure. Say hi, Matt.

Producer:
Hi, Matt. I mean, Hi, Greg.

Greg Castle:
Hey. Well, you know, Matt's got a sense of humor. You can catch us every Tuesday evening at 6 p.m. on Moneytalk 1010. And on your local FM stations, 92.1 and 103.1. Covering all the areas in and around Tampa, Saint Pete Clearwater and New Port Richey. Now, if you're interested in learning how to keep your retirement funds safe from market volatility or you want to create an income stream that you can outlive and you want to mitigate taxes and inflation, guess what? This is the show for you. Now, if you happen to miss an episode, you can catch the replay at SafeMoneyMasters.com or you can listen wherever podcasts are played. You can also check out your YouTube channel and subscribe to see weekly video highlights and special content. If you've got any questions or comments, feel free to email me at Greg at SafeMoneyMasters.com or call me at (813) 430-7100. Matt let's let's start out with a quote of the week.

Producer:
And now wholesome financial wisdom. It's time for the quote of the Week.

Producer:
That's going to be something. Yeah. That we do each and every week here. Greg on the show with a little financial wisdom. So, so the kind of the point of the entire show is for you to share your financial wisdom, you know, with all the listeners, right? But we like to get some, some third party wisdom in here as well as kind of a springboard for all this. And so, yeah, that's what we're going to do in the future anyway. But we're going to start with the financial wisdom quote of the week here. In episode one of the show, the premiere episode with a quote, I believe this is from you.

Greg Castle:
It is. It's one of my books, actually. So the quote very simply is, In my life, I've been both an air traffic controller and a stockbroker. The one thing I learned from both of those careers is simply that what goes up will come down. Now, hopefully the landing will be soft. However, you have to be prepared for a crash. So, Matt, I'd be interested in your thoughts of wisdom on that, on that on those words of wisdom.

Producer:
I love that. I mean, it's, you know, the parallels there between aviation and what happens on the stock in the stock market. You know, I used to be when I lived in New York, I worked for a while reporting from the floor of the New York Stock Exchange. And so it was, you know, being right there in the in the middle of of everything was very exciting. But it could be very nerve wracking, too, at the same time. So, yeah, you got to be not only emotionally prepared for the ups and downs, but you got to be prepared for especially those downs when it comes to protecting that money that you've you've worked so hard for.

Greg Castle:
Yeah. You know, I learned as an air traffic controller years ago, a couple of things. Number one is that you have to really focus on safety. As a matter of fact, our our our motto basically was, I still remember it was the safe and expeditious flow of air traffic. And so just like safe and expeditious flow of air traffic, as you get closer to retirement, it's very, very important to make sure that you have a safe and expeditious way to get your money and to keep your money safe from market volatility. Make sure that you find a way not to outlive your money, which is always a probability anyway. So after being an air traffic controller, I was an air traffic controller for 13 years while I was in the Air Force and. When I got out, you know, the stress of being an air traffic controller. Wasn't enough. So I became a stockbroker. And what I learned being a stockbroker was that. Every financial entity has a bias. When you're still like going to a doctor. If you go to a doctor, you know the doctor is going to if you have a back issue and I've had a number of back surgeries, had one in December, actually. So if you go to a chiropractor with a back problem, the chiropractor is going to, you know, tell you you needs to manipulate your your back and spine and get things done. If you go to a general practitioner, he's going to prescribe medication like a steroid pack or whatever, because, you know, surgery is the last option.

Greg Castle:
If you go to a surgeon, the surgeon's going to recommend surgery. So they all go with what they know. So financial. Financial advisors also have biases and the castle financial solutions are biased very simply is is to protect your money and keep it safe. We don't like volatility. We don't like to have you experiment with things that you need to keep safe. The question I always ask clients very simply, is how much of what you got do you not want to lose? And that's a portion of your money that you need to find a way to keep safe and put it in the stock market or mutual funds is not the best way to make that happen. So we should probably go on from there. So we got a show for you today. It's pretty well packed. And we're going to talk about things like ten bad money habits that could impact your retirement and also how to avoid them. We're going to talk about what it's like to work with us because we love turning listeners into happy clients and also how to be proactive about retirement. We're going to provide seven strategies for success how to avoid retirement tax bomb because strategies to help reduce taxes and then things of interest that happen this week in history. There's a few things that are pretty interesting this week, so let's just go ahead and jump right in.

Producer:
Now let's get into these ten bad money habits that could impact your retirement and and how to avoid them. I suspect we're going to be spending as you sort of set it up there a minute ago, Greg. We're going to be spending a lot of time here on this show talking about things that you should be doing. Things that, you know, the positive things that you should be doing, you know, positive changes that you can make as far as your retirement planning, your financial planning overall, go to help keep your money safe. Also get a good rate of growth there as well. But today, we're going to kind of start off with talking about the things that you should avoid, you know, so so here are ten things, ten bad money habits that could really kind of wreck your retirement and some some things about how to avoid them. Some advice there on how to avoid them. So number one on this list, Greg, is living paycheck to paycheck. Boy, that that is that's not a good situation.

Greg Castle:
Yeah. No, man. Hey, did you know that as of January 20th, 23, at least 60% of us adults are living paycheck to paycheck. Wow. That's pretty unbelievable. And you know, what we found in most people, most of our listeners probably would agree that, you know, they know people that spend every dollar they make soon after they're getting paid. Some people do that because they just can't control spending. Some people do that because they just, you know, don't make enough money to live on these days. Wages are very, very low. Um, also, you know, we know that at times things get tight, but you got to be careful not to make a habit of living beyond your means and always waiting on the next paycheck. I know a lot of folks that that, you know, smile as they're living in their big house and driving fancy cars or whatever. And at the same time, you know, they're up to debt to their ears and they're they're trying to keep up with the Joneses and really can't afford to do that.

Producer:
Yeah. Well, and that's the thing is like, you know, trying to keep up with the Joneses is you don't know what the Joneses are going through either. They may be in that same sort of scenario where everything on the outside looks great and happy and hunky dory and all those things. And then you take a peek inside their their financial picture and it might not be so pretty.

Greg Castle:
You know, we all love shiny objects.

Producer:
Yes, we.

Greg Castle:
Do. So shiny objects draw us in and we and, you know, and and if you're like my wife, you love sales. So it doesn't matter if you need it or what if it's on sale? You got to have it. That's right. And so you got to be careful about that. So what's number two, Matt?

Producer:
Well, number two here is kind of I guess it's one of those things that, number one, can lead to if you if you live paycheck to paycheck, you might find yourself in this scenario in our number two item, which is carrying credit card debt month to month.

Greg Castle:
You know, your credit card providers, you know, they make it easy to get the credit card. They make it hard to pay. Most people don't realize that generally credit cards have really high interest rates ranging between 20% and 30%. And that's just really hard to ever get paid down. If you get caught in that trap and you start charging more and more. You know, in addition to paying high interest fees, you know, carrying a balance will have a negative impact on your credit score because, you know, typically credit reporting bureaus want you to have, you know, credit card revolving balances at least 30% or lower of the available balance. So whenever you start charging too much, too much on a credit card, it can hurt your credit. It could also prevent you from borrowing money or prevent you from getting a favorable rate When you do borrow money, especially if they credit the way interest rates are going right now, they're high anyway. And whenever you have bad credit, of course you're going to end up paying more for that credit anyway. So it's not necessarily a good thing. Also, you know, I have a PhD and my PhD is actually in psychology organizational psychology. We had to go through a clinical a clinical rotation to get that as a psychologist and behavior, we dealt with a lot with stress. One of the biggest causes of stress is monetary issues, financial issues and credit card debt is one of those major issues. So just just make a habit of not living paycheck to paycheck. Make a habit of, you know, not living beyond your means. Do the best you can to control spending. All right. What's number three? Matt?

Producer:
Yeah. So as we continue on, this is the list of ten bad money habits that could impact your retirement. And number three is having no emergency fund. I know that's probably one of the first things that a lot of financial advisors, I'm sure yourself included there. Greg, you really stressed that because that's part of that, you know, being prepared for whatever comes type scenario.

Greg Castle:
Yeah. I mean, I do a lot of financial analysis with folks and we'll get into all their assets, we'll get into their expenses, get another stop. And when I do a sort of a risk analysis section and I get into, you know, how much you have an emergency fund and they say, well, you know, we just have these other assets. Well, it's really not an emergency fund because typically if you're under 59.5, you may have to have a penalty to pull from those assets if they're qualified or tax deferred. But anyway, the typically 40%, 40% of adults basically say that they have difficulty covering unexpected expenses of $400, and 12% said they'd have to borrow or sell something to cover that expense. So emergency fund is really important to set aside. How much do you need? You know, a lot of folks say you got to have six months worth. And that's a good benchmark, especially if you're if you're still working. And in a especially in an industry that might be volatile where you could be laid off. We want to make sure you got six months worth of expenses so you can, you know, find new employment. Uh, if you're retired or if you're retired and have a pension deal a lot with federal employees and federal employees typically have good benefits and good pensions. So once they retire, you know, the pension is not going to go away. The pensions, they're. And so six months may not be the benchmark they need for for that because they already have a pension money coming in. But for most people, if you're still working, there's a chance somewhere that especially with the economy, that your job may be lost. You need to set aside six months worth of income or six months worth of paying your bills. Let's put it that way, of outgo your expenses to make sure that you're covered. So what's number four, Matt?

Producer:
Number four on the list of bad money habits is not knowing where you spend your money. I think that this one's. This one's like, you know, financial education 101. You got to know what's coming in and what's going out.

Greg Castle:
That is so true. Most people really don't have clear financial goals and they have no formal plan in place. You know, at a minimum, we like to have people have a budget and have have them budget monthly needs and wants because there's a big difference between needing wants. You know, you go to a child and, you know, they ask for certain things and it's kind of like, well, do you need that? And of course, they're going to say yes, But you know, really they want that. They don't really need it. There are things that you do need and those things that, you know, that those are the things that you really should focus your budget on. If you've got discretionary money left over over in your budget, then it's okay to have an occasional want that you put in there. A lot of folks, and I'm guilty of this sometimes too. I hate to say this, but, you know, sometimes it's well, let's put it this way. My wife is hard to buy a present for, and she's going to hear this. She's going to shoot me.

Greg Castle:
But it's because whenever that she wants something or needs something, she she goes out and she orders it or she buys it. So when it comes time for birthdays, Valentine's Day. Christmas. I love you, honey. Gifts or whatever. I mean, there's nothing I can get her. You know, there's. She, she, she. She already has it, so. You need to have a budget and know where your money's going to be going. Separate needs from wants. Focus on the needs, not the wants. Um, be on the lookout for requiring subscription services. If you've got cable channels that you're paying for that you don't use, you know, can them. If you've got magazines you're taking that you're paying for, that you really don't ever read, you throw them in the trash when they come in to get rid of paper can them. So you just watch out for recurring monthly subscriptions and services. What's number? What's number five? That's enough on that. We could spend forever talking about needs and wants and spending money. So let's go to the next one.

Producer:
Yeah, we can. We can definitely spend a long time talking about that and going. Just quickly back to what you were saying about your wife. Really just kind of going out. She says she wants something. She'll basically go out and buy it. Yeah, it's almost goes back to that old question, what do you get for the person who has everything? You know, she's everything she wants. So.

Greg Castle:
Yeah, that would be my wife. I love her to death, but, you know, just she is really hard to buy stuff for because she, she, she has stuff it's hard to buy for. Keep going.

Producer:
Bottom line. Hard to buy for. All right. Number five on the list of ten bad money habits that could impact your retirement is not wanting more from your career. I think that, you know, maybe a lot of people do sort of overlook advancement in their career, maybe get a little complacent. You know.

Greg Castle:
They do spend a lot of time in the consulting world after, you know, being an air traffic controller or a stockbroker and being a newly minted PhD. The consulting world came calling and I was involved in. Mostly leadership. Leadership, development, organizational development. Those type things. And dealt with mainly executive executive team building. And we would always talk about succession planning. We would talk about, you know, people who are trying to advance their career on their own. They're trying to get additional education. They're trying to improve themselves someway, to make themselves available, to be hired, to be promoted to supervisor, to be promoted to manager or director. So the best way to do that is to increase your net worth, is to find a way to improve yourself and make yourself valuable to your employer. Uh, the another thing too is that you can improve your schedule in some ways. We always talk about work life balance and work life balance means basically. You know, not spending 80 hours at work and neglecting things at home. It means basically finding everything. So, for example, if you find a way to have a if your employer offers or suggesting in some cases a possible four day workweek, you know, find a way to take it, you may have to work longer hours, you know, for one day or four days of the week, But that's three days off. You get a chance to enjoy family and you get a chance to enjoy life. Um. As they say, you know, time is money. So having a flexible employment situation is kind of the way to go. I mean, after Covid, we became a virtual world. We're able to do things working from home in a lot of cases. So just make sure you make good use of your time. Yeah. Number six.

Producer:
Number six is not knowing how to minimize taxes. That's. That's a biggie.

Greg Castle:
Yeah. Um. I can spend the whole show talking about taxes because the you know, over the last couple of years, we spent a lot of money as a country, you know, for over $2 trillion during Covid just to make sure that, you know, we stabilize the economy. And that was a needed spending expenditure. But at some point, you know, somebody's got to pay for that stuff. Now we're running up against a debt ceiling, which if we have time, we'll talk about later. You know, the debt ceiling is is we really are running out of money to the point we can't pay our own bills starting around June 1st, according to Janet Yellen. So minimizing tax for individuals is also important. If I were to ask you, Matt, what you think the average tax rate for highest earners were over the last 100 years. What number would you give me? What percentage of your income would be taxed?

Producer:
For the highest earners. Average. Average. On average. I would say just throwing out a ballpark number. I would say 50%.

Greg Castle:
61%. Oh, wow. You know, back after the last World War, taxes actually rose to 94%. Wow. Actually, Roosevelt proposed that for every dollar over 25,000, you were taxed at 100%. Congress disapproved that and they made it 94% instead. So now, granted, everybody doesn't pay that. But, you know, at some point, you know, your tax rates will go up proportionately to what the average happen to be. So watch out for your tax. If you find a way to make to have or make taxable or tax free income, for example, instead of investing in traditional IRAs, you might take a look at Roth instead because. Roth basically. Grow tax free. So basically you pull your money out both growth and principal out tax free after the five year period. At any point after the five year period. Principal you can take out any time, but any time you have a tax. Advantaged option. Should always take a look at it. And most people don't don't know how to do that. And that's where we can come in and help. You know, we we do specialize in helping people do Roth conversions. We specialize in helping people find ways to minimize taxes. In some cases, it's not easy to do. Some cases it can't be done. But when you have the opportunity as you're approaching retirement, you know, find a way to get your money as tax free as possible, You'll you'll appreciate it in the future. Because if I ask you right now, do you think tax rates are going to go up, down or stay the same in the future? Matt, what would you tell me?

Producer:
I would say, given the fact that we're at historical lows as far as tax rates go, we.

Greg Castle:
Are pretty.

Producer:
Much got nowhere to go but up.

Greg Castle:
Exactly. So you're going to go up, you know, whenever that you put your money in at 401 K, you're basically saying, okay, I want that. I want that tax deduction. Now, as I get my paycheck, I get more money in my paycheck. However, what you're really telling the government is that, okay, I'm giving you this money, I'm taking my taking my tax deduction. Now, are you going to let my money grow? So at some point down the road, Uncle Sam is going to get his money because he's not only going to tax your contribution, he's going to tax your employer's contribution and he's going to tax all the growth. So you're going to pay a big tax chunk down the road somewhere in the form of required minimum distributions. Rmds or just taxes in general. So avoid taxes when you can. Number seven. Matt.

Producer:
So number seven on the list of ten bad money habits that could impact your retirement, taking too much risk with your money. You know, I think that's that's one of these things that people think that and you you alluded to this at the start of the show. You know, a lot of people think, oh, all of my money has to be in the stock market, for example, or I'm not going to see any growth. And so I've got to put it all at risk. But that's that's not the case.

Greg Castle:
What they want to grow, they want to grow. You know, they had we had like 14 years of the market, you know, doing nothing but going up with occasional dip, but not not bear market territory just went up. It went up. It went up. It went up. I had a former stockbroker buddy of mine that was talking to one day and basically the conversation lent itself to to. That period of time, the 14 years he said, I could do this. And over a 14 year period said I could have a pet monkey. Give him a dart. Have him throw it at the Wall Street Journal at one of the, you know, the financial pages over here, pick out a mutual fund or a company and whatever it hit was going to go up. All right. So we found out in 2019 or correction of 2021 that that didn't always happen. We didn't go into a bear market territory, but with the same time we we did. The markets were down last year. Indexes were down last year. This year. They've been a roller coaster up in January, down in February, up in March, up and down in April. So we'll see what the rest of the year is going to hold.

Greg Castle:
But anyway, I see a lot of retirees that have all their money in in equities. They got their money in mutual funds. They don't realize that mutual funds are basically invested in stocks. In most cases, you can have index funds, but still it's invested in those indexes. Indexes go down, you're going to go down. Um, if you're anywhere close to to retirement, that five year what we call the retirement red zone five years prior to retirement or five years after, you need to find a way to keep a portion of your money safe. Should you put everything into something that that you can't have exceptional growth on? No, I wouldn't. I would never let any of my clients do that. You want to protect a portion of it that you can't lose. You also want to have some money that you can take some risk with. Mitigate risk when you can. And we'll talk about how to do that if you have any. If you ever give me a call so you can give me a call at (813) 430-7100. That's again (813) 430-7100. And we'll find a way to help you mitigate your your risk with your money and find a way to keep it safe. Number eight.

Producer:
All right. Number eight on the list is waiting too long to invest in your retirement. I often tell people if we ever have a conversation about these kinds of things, I say, you know, you can it can never be too soon to invest in your retirement. You know, start early and as early as possible. But, boy, it can be too late or at least very close to it.

Greg Castle:
Yeah. Einstein once said that compound interest is the eighth wonder of the world. There's nothing better than seeing your money grow and your the growth in your money grow and the growth in your money grow even more. So take advantage of benefits of compound interest whenever you possibly can. Develop good savings habit. You know, most of us, at least my generation was taught you always need to put aside 10% of whatever you make. Of and 10% rule can actually make you pretty wealthy by the time you get old enough to retire. So that's a good rule to live by if you happen to be younger. Young folks should not avoid investing. They should not avoid talking to a financial advisor or financial planner to be able to put them on the path toward their financial goals for the future. Because, again, you know, we're young, we're stupid, we make a lot of mistakes and not only with money, but with other things too. But, you know, we we are young and foolish, but that's that's just part of growing up. But if you develop good habits and you have a good plan going forward and you happen to be in your late 20s or 30s early 40s and you really haven't started saving yet. You need to develop a good financial plan. Find a way to make a way to get started So you can do that by investing in an IRA or a Roth IRA. Just set up monthly monthly contributions and it should put you on your way. All right. What's number nine?

Producer:
Number nine, getting close to the end of this list of ten bad money habits here. Number nine is the general belief that money is bad. You know, it's one of those things not inherently evil. We got we got to have it, you know?

Greg Castle:
Yeah. You know, there we're taught that the Bible says that, you know, the love of money is the root of all evil. With that said, you know, what I've found is that it's the lack of money that is the cause of most devastation. You know, you take a look and people people make mistakes because they have no money. They don't do things because they have no money. They don't pay child support because they can't afford it. They have no money. They don't. Money is not a bad thing, you know. Money should be something that you aspire to do because the more that you get, the more you can give. And, you know, giving is one of those things that not only make us feel great. But it also, you know, helps out the entity or person that we're trying to help out as well. So money is not a bad thing. And when you have money, it needs to be properly managed. And so, you know, that's something that you need to take care of. Find a financial advisor would like to call ourselves at Castle Financial Solutions Financial Retirement strategist, because we really take a look at the strategies they're going to get you where you need to go. So money is not a bad thing. You just need the right strategy and the right plan to get where you need to go. All right. What's the number ten on our list of ten? All right.

Producer:
Rounding out the list here is not saving enough money into an investment account. You got to have you got to do it. You got to save enough.

Greg Castle:
You should always try and max out your IRAs. The IRA contribution limits for 2023 are 6500 if you're under 50. If you happen to be over 50, it's 7500. And before you buy that next big want, we talked about wants and needs. You know, needs are important. But before you buy that next big want, consider paying yourself first and making sure that you invest in your future. You know, if you're concerned about potentially losing a large portion of your nest egg due to market volatility or worry that you don't have enough save for retirement, then give the safe money. Experts at Castle Financial Solutions Group a call. Every financial advisor, as we talked before, has a bias. Ours is toward keeping your money safe from market loss, taxes and inflation. So give us a call. (813) 430-7100. Our service is never cost you anything. We're not fee based advisors. We're here to help you on your path, and you'll never pay us a penny. So I know that sounds strange, but we want to help you achieve what you need to achieve. And just give us a call. (813) 430-7100.

Producer:
It all has to do with your individual situation, because what's right for you might not be necessarily right for your your brother, your sister, your aunt, your uncle, your mom, your dad, whoever you might say, Well, this is the way that my my dad or my mom. This is the way that they planned their retirement. So if it worked for them, it's good enough for me. But you have a different financial situation than they do. So that's why it's important to to seek out the help of someone who can really. Go through your particular situation. And tell you, okay, this is what is going to work for you.

Greg Castle:
Yeah. On that note, regardless of what the financial gurus say that you listen to radio, TV or whatever, there's no such thing as a one size fits all retirement. You know, here time and time again. Do this and do this. This is bad. Don't do this. Everyone has a different set of circumstances. Those circumstances need to be taken into consideration. So to tell somebody to, you know, buy term, invest the difference, or some of the other things that gurus tell people sometimes not always the best option. A lot of it depends on your financial, your financial structure, your financial situation. But just remember, there is no one size fits all retirement plan or retirement in general. So everybody's situation is different. All right. So let's talk about how to be more proactive and less reactive about your retirement. What would be one thing you talk about there, Matt?

Producer:
Well, you know, I think the first thing here on on this list is super important these days, given everything that's happened in the banking sector with, you know, Silicon Valley Bank and Signature Bank and First Republic, all of that. You know, these these bank collapses for the first time. You know, we've seen these since right around 2008. So scary times there. So this first one is don't keep more than $250,000 in a single bank.

Greg Castle:
Yeah. So so right. You know, $250,000 is the limit that's covered by FDIC. So if you've got even a combination of assets, you could have a savings account, a checking account and a number of CDs in the bank. You know, that's all one $250,000 limit they're going to protect you on. It's not it's not per every account that you've got. So don't keep over $250,000 in any one bank. There are other ways to diversify. You know, there's other ways to to do things. You have if you've got a lot of assets, separate banks, separate accounts, brokerage accounts, those type of things. Each one's, you know, limited by their coverage, $250,000. So what else are we going to talk about?

Producer:
Well, the second one here is to establish a retirement income plan. Today, you know, I think a lot of a lot of times folks sort of focus on the one, the magic number, whatever this big number is that they have in their head about, oh, I need to have this much money by the time I retire this big lump sum, by the time I retire. But when you actually get there, you need to have a plan for income, right?

Greg Castle:
Right. You know, we spent our lives. Most people spend our lives or a lot of folks spend their lives, you know, developing this big pile of money, these assets they've got these assets can be stolen, lost, cheated some way. They can lose value because of the markets. So you've got to find a way to keep a portion of that money safe some way. A lot of folks, a lot of investors have done that with bonds. And ironically, you may not believe this, but. There are a number. Actually, most of the financial institutions and publications have all said that an FIA, a fixed indexed annuity, actually provides more safety, income and potential than bonds. So we might take a look at replacing part of the bonds you have. If you have a portfolio with bonds in them, replace those with alternative income producing investments that offer market like gains without the market risk and fixed indexed annuity is one way to do that. And we talk about that. If you give us a call.

Producer:
Well then that's a perfect segue here from that from, you know, looking at your your income in retirement is to talk about how you can have income in retirement but do it tax free. Right. You sort of you touched on this earlier, but this next item on this list about how to be proactive is to take advantage of the only two types of tax free investments.

Greg Castle:
You know, there's only really two types that you can use for tax free investments. One is a Roth IRA. The second is a life insurance products. Life insurance really is the only product that can offer a death benefit in case you die too soon. It's also great to build your retirement savings on because you can generate tax free income and grow it with market like gains. When it comes to the Roth IRA, if you've got one already, congratulations. You're way ahead of the power curve. If you don't, you need to go ahead and set one up so you can start making automatic contributions to it. Let's say, for example, you've got 401, four, three B's or Tsp's that you know, you're able to access. You might want to consider doing a Roth conversion with a portion of that that better to pay tax now because taxes are definitely going up at the end of 2025. So I mean, because that's whenever that the I forgot the tax act. But as 2017 was passed and it reduced taxes from 39 point something percent down to 36%, and so we know they're going up to at least 39% for the highest marginal tax rate at the end of 2025. So now's a good time to take a portion of your money that you that won't put you in a higher tax bracket and convert it over time between now and the time that this expires. So what's the next thing we're going to talk about, Matt?

Producer:
Oh, we've got so this is our list of how to be proactive and less reactive about your retirement. And a really important one here is to work with a legal expert. And the reason that that's important is to make sure that you have a will in place and that you have your final wishes, you know, set set in stone before you graduate off this planet. Right.

Greg Castle:
Right, right. You know, it's really, really important that you put a will in place and that you make sure all your final wishes are known prior to your prior to your death. When it comes to estate planning, you know, it's something that you need a legal expert for. As a matter of fact, I've lined up a legal expert for the show, not for this particular show today, but in the future. He has agreed to come on and talk about estate planning, particularly trust, trust or something that is very misunderstood. People think you've got to be rich to have one. But trust can do a great job of protecting a lot of your assets and making it transferable and avoiding probate down the road somewhere. So we'll let the expert talk about it when it comes on the show here in a couple of weeks. But we'll make arrangements, schedule a time. We'll let you know in advance when he's going to be here so you can watch that show.

Producer:
Very good. Well, and then sort of going hand in hand with that. Our next item on this list then is really more from a from a financial standpoint, specifically talking about having a plan for when either you, yourself or your spouse, your, you know, your spouse partner, your significant other, whomever it might be that when they pass away or when you pass away, you've got to you got to plan for that. It's not something that people like to think about or talk about, but it's coming.

Greg Castle:
Right? Right. My dad passed away years ago. You know, my my mom and dad both had eighth grade educations. They grew up in the farm areas of Tennessee. And, you know, when you they actually gave an eighth grade diploma away because that's the time when the boys were supposed to, you know, leave school. They got enough education to read, write and have some arithmetic learning. And so the way they go to work on the farm, that's that's the way they went. But so when dad passed away, dad had always handled all the bills and stuff and mom was left helpless. And so I learned a valuable lesson there. And I've learned it again time and time again for clients and advise them. The same thing is that, you know, you and your spouse both need to know what you got, who to call and how to access it. Yeah. Know the words. You make a list of these things because someday if you pass away unexpectedly your good health day. But there's a lot of young folks who pass away in their 30s 40s early 50s. So heaven forbid that you've got assets and things with passwords that nobody knows and and and your spouse don't know. You got this life insurance policy from work. They don't know that you've got. They don't know that you've got this IRA over here. They have no way to access it. Don't know you got it. And I guarantee you that the financial adviser institution's not going to call and tell you that, you know, this money is yours.

Greg Castle:
You can have it if you want it. Um, so you need to make sure that you know, again what you got, who to call and how to access it. You don't want to leave your spouse in a situation. You know him or her or her and her or him and him. You don't want to leave him in a situation where, you know, they have to guess what to do. And because it's already a period right after you pass away, whenever they're already in grief anyway, their their mind is not necessarily clear. Uh, having this set up in advance and having them know the place they can access this information is vital. Um. So, you know, men typically have a lower life expectancy than women. There's jokes out there that say, why do men die before women? It's because they want to. You know this. That's a joke. We didn't say that. So don't hold it against us. The, um. So a lot of times spouses have different age differences and the age difference can actually, we didn't really talk about this in another segment, but the age difference really does play a big part in your financial plan and planning everything from when to take Social Security to to. Well, it's just a lot of factors. We'll talk about them later. So I think we should probably move on from this section now for sake of time. Yeah, we.

Producer:
Can continue on here with, you know, I guess the this kind of goes hand in hand really with what we were just talking about, with understanding how your Social Security benefit is calculated. Because when you mentioned there, you know when to draw Social Security, if there's an age difference, that can be a factor in when to to draw that, but then understanding how the calculations are done and knowing what you would get when is is very important because that's all part of that same decision making process.

Greg Castle:
Correct. Every one of you listening should go to ssa.gov, and that's social security Administration ssa.gov and set up an account so you realize they will tell you what your projected benefit is going to be. Because when we do retirement plan, we ask all the folks that come in to to do that and bring in a Social Security statement. Give us an idea of what their benefits are going to be at starting at age 62. Max, age right now is age 70. And. So what people don't realize sometimes is that. The higher earning spouse, for example, with Social Security, should wait as long as possible to take Social Security, because if something were to happen that they predecease their spouse, the spouse would have the option of taking the higher benefit. The the the spouses or theirs. So, you know, for example, if you've got someone, both both of the clients would be in their 60s and maybe there's a four year age difference where the male is older, life expectancy is going to be shorter. It would be important, if possible, to wait as long as they could up to age 70, especially if he's the highest wage earner. That way his wife would be entitled to draw that higher benefit. For the rest, she would lose hers, but she would draw the higher benefit for the rest of her life.

Greg Castle:
So as part of planning that goes into the process of Social Security, when it comes to Social Security, you know, our our elected officials, I just wish we could all get along. But it's not happening lately. We never seem more divided than we are right now. And regardless of which side of the aisle you fall on, the fact is, unless you're senators and Congress people start taking some act, then the prediction is that the Social Security fund will be depleted by the trust fund would be defeated by 2023, at which point they're projecting that everyone, including those people already drawing it, their benefits could be reduced by as much as 25 to 30%. 33%. Uh, so a lot of folks that are that need Social Security to survive really won't be able to to survive on a on a on a 33% tax cut of their Social Security benefits. So try and get if you if you have any influence on your congressman or senator, try and try and convince them they need to stop bickering and take some action on Social Security. Uh, we'll talk about Social Security more in other segments, but that's probably enough for now. So anything else?

Producer:
Yeah. One more here on the list of things to do to be more proactive, less reactive for your retirement, and that's to determine big budget items before you retire. Now, a lot of times, you know, you don't obviously my crystal ball is in the shop. I don't know necessarily what exactly is going to happen, what big budget thing might, you know, the car might completely break down and or or, you know, a bus might hit it when it's parked on the side of the road somewhere and it's totaled. And so I have to go buy a new car, whatever. That could be a big budget item you can't plan for. But there are some that you can write.

Greg Castle:
You know, I've been trying to buy a crystal ball from people for years and I've never found one that works yet. But if you find one that works, I'll buy it from you.

Producer:
Yeah, mine. Mine's been in the shop for a long time. It just, you know, it's not working.

Greg Castle:
Yeah. Never. Never found one that worked yet. But, you know, big budget items mean sometimes we don't think about items like helping to pay for family weddings or even going to attend family weddings. You know, for example, you may be retired. You got a grandson, granddaughter that's going to get married and they live a long way away. You live in Florida. They live in California. You know, that's a that's a pricey trip. So whether it be weddings or helping to pay for education for kids or grandkids, make sure you take that into account in advance. You don't have to do any of those things. But if you want to do those things, you need to plan for those things. If you plan to travel when you retire, especially in your 60s and seconds, once you retire, you need to budget and have a vacation fund for that. You don't want to leave it just the chance that it's not going to be there when I send out an expense list for people to do before we put it into the financial software that we got the number, ask them before they do the worksheet. How much do you think your monthly expenses are? And they'll give me a figure when they get finished with the worksheet, they come back and say, Oh my God, I'm spending more than I than I thought.

Greg Castle:
You know, it's a lot more because you start taking a look at little things like cable, like like I had one person that was she said she was looking to get an annuity and she said, look, I just want to make sure when I retire that I got money to get my hair and nails done. And so, I mean, that's important to some people. But a lot of times they don't put it on their budget. So those little things that you spend money on, even we talk about big things here, but even the little things go into a financial plan and it's money that comes out of your pocket, money you got to prepare for the big things we can think of offhand. Vacations, uh, cars falling apart. You got to buy a new one before you retire. You want to be able to travel. So you decide you want to buy an RV, whatever it's going to be, you need to plan for those things prior to retirement and make sure you've got the assets to get them and still have enough to retire on.

Greg Castle:
So I think that's probably enough to cover that subject subject. So, um, you know, if you happen to be we talked about retirement red zone if you happen to be in the retirement red zone, that's five years prior to retirement, five years after retirement, you're going to be completely susceptible to something called sequence of returns, which is really hard to explain on the radio. But someday we'll show you a chart on here and give you a chance to look at it if you're watching the video. But if you plan to retire, if you're if you're in that retirement red zone, you know, give us a call. Help us. Let us help you strengthen your retirement plan during the years. Make sure that you've got a portion of your money that's protected from loss and market volatility and make sure that you're able to get that additional income stream for retirement. Again, give us a call at (813) 430-7100. Again, that's (813) 430-7100. Not only is the consultation free, but anything we do for you is free. We'll help you plan your future. Give us a call. All right. Moving right along. What's our next subject, Matt?

Producer:
Well, our next little section here of the show is something I know that is near and dear to your heart, Greg, And that is avoiding a retirement tax bomb. Boy, that, you know, you could have that ticking time bomb just waiting to go off and not even really realize it.

Greg Castle:
Yeah, those tax bonds are becoming more and more atomic as time goes on there. It's it's not not looking great. We, you and I both agreed just a few minutes ago that, you know, taxes have to increase. They can't they're not going to go down in order to pay for the spending we're putting into place right now in order to pay for government and in order to pay for for all these things, taxes are going to go up. So if you've got money in a 401. K, IRA, 403 B TSP, give us a call. Let us help you plan, you know, sort of how to protect some of that money from from loss and actually actually help you take a look at helping to mitigate In some cases, you really can't avoid taxes but help you mitigate the tax consequence you're going to have down the road somewhere. A couple of terms you need to know. One is tax deferred. Tax deferred is basically it means that you haven't paid taxes on that money yet. Tax deferred money is money you've not paid taxes on yet. You put money into that 401. K. That 403 B, that TSP 457 or whatever, that money has not been taxed. So you're going to be taxed on it down the road somewhere. You're going to be forced to do something called RMDs required minimum distributions.

Greg Castle:
So that's that's that's a tough one. Let me give you an example real quick. Let's say, for example, that you and your spouse are both in your 60s. You decide it's time to go in that bucket list vacation. Maybe it's a trip to Europe, It could be a cruise, whatever, great American road trip. But let's say you budget for three weeks and you plan, it's going to cost you $10,000. However, you go out and you decide to withdraw some money from your tax deferred retirement account, you're going to owe taxes. So for this example, let's say your federal tax rate is 24%. So a 24% going to Uncle Sam. You've only got $7,600 left for your trip. So you're going to need to take out more than the $10,000 for the vacation. In fact, you're going to need to take out over $13,000 if you want to cover both the trip and the taxes. So solution tax free investments. Take a look at Roth conversions. Take a look at any tax mitigation strategy you can possibly get. So time is running short. We need to move on here a little bit. So, again, if you want to take a look at how to mitigate taxes, give us a call. (813) 430-7100.

Producer:
It's this week in history.

Greg Castle:
On this date back in 1937, the American stand up comedian, actor and author George Carlin was born. He would have been 86 years old today. And most of you remember some of his skits. What was the most famous one, Matt? Do you remember?

Producer:
Oh, gosh.

Greg Castle:
It was all the dirty words. Yeah. And I can't remember how many there were, but that was it. So anyway, okay. On May 13th, on this date, 1950, singer songwriter Stevie Wonder was born. He turned 73. Today we're actually on the 13th. So if you got his Instagram or Twitter account, wish him happy birthday. Also on May 14th, American film director, producer, screenwriter, entrepreneur, entrepreneur George Lucas was born. He's 75 years old. On the 14th, May, the force be with him. He's best known for Star Wars, the Indiana Jones series. So we all know George Lucas and love his movies. Music. On this date in 1998, American song Sing, American singer, songwriter and and actor Frank Sinatra passed away at the age of 82. Sinatra is really considered one of the most influential entertainers of the 40s, 50s and 60s. He's among some of the best selling artists, having sold over 150 million records. So the weekly mailbag for this week. We got time maybe for one one of these out of the thing. So we'll answer the one for Tom in Tampa. Tom asks, he says, I'm 67 years old debating whether to take Social Security now or wait until age 70.

Greg Castle:
What do you recommend? And the answer that I give more often is probably just something I could put on autopilot. It depends. It depends on a lot of situations. We talked about some a little bit earlier. I would advise you to come, you know, give us a call. Let us let us try and take a look and see, you know, what your situation happens to be. If there's any age difference between you and your spouse, who's the highest earner, there's a lot of factors that go into answering that question. And I learned a long time ago that prescription without diagnosis is malpractice. So I prefer not to to exercise malpractice and give bad advice. Like I say, there's no one size fits all retirement. Everyone's situation is different. So if you've got questions that you want to have answered on air, by all means address them to me at Greg at SafeMoneyMasters.com or you can give me a call. (813) 430-7100. So, Matt, anything else you want to talk about before time expires?

Producer:
No, I think that's just about it. As I look at the clock, it looks like we're just about out of time. But boy, I've had fun here. Greg, on the on the very first episode of Safe Money Masters. I'm looking forward to many more.

Greg Castle:
Yeah. Matt, you know, I was kind of nervous going into this because, you know, it's been a long time since I had to be on TV or radio, and I am so thankful and so glad that, you know, you you are here to be my co-host and give me somebody to to bounce things off of and give your give your, you know, input and advice on things. So you're definitely going to be a very valued part of this show. Look forward to working with you again soon.

Producer:
Well, thank you. Likewise.

Greg Castle:
Matter of fact, looking forward to work with you next week, I guess, right?

Producer:
Yeah, that's right. That's right. We'll we'll do it again. Same same bat time, same bat channel.

Greg Castle:
And also stay tuned because when we finally get a date for our estate attorney, then we'll let you know in advance when we're going to have him on and we'll be able to answer questions that we're sure will be very important and informative to all of you. Well, with all that said, Matt, I think this is a good time to say goodbye. So to all you listeners out there, again, please join us every Tuesday night at 6 p.m. on Money Talk 1010 on FM 92.1 or 103.1 in Newport Richie And we look forward to working with you each and every week. Please join us.

Producer:
Thanks for listening to Safe Money Masters with Greg Castle. You deserve to work with a financial expert who has a track record of helping clients exceed their financial goals by implementing safe and proven strategies to schedule your free No obligation consultation with Greg. Visit SafeMoneyMasters.com.

Greg Castle:
Not affiliated with the United States government. Greg Castle does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. Amateur life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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