Why You Need a Comprehensive Plan for Your Retirement

7.28.23: Audio automatically transcribed by Sonix

7.28.23: 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.

Greg Castle:
Hello again and welcome to Safe Money Masters, where our main goal is to help you, our listeners, become masters of your money and teach you how to keep it safe. And we hope you're having a terrific Tuesday. And my name is Greg Castle. I'll be your host, along with my co-host and producer, Matt McClure. Matt, once again, I think we have another great show lined up for our listeners today. So why don't you tell us a little bit about what to expect?

Producer:
Yeah. Again, you know, I'm pretty biased when it comes to this stuff, admittedly so. But yeah, I think we have put together another great show for the listeners today. Greg. We've of course will start off with our Quote of the week here in just a minute and you might be a little surprised at who the quote of the week comes from this week, folks. I was. I know, right? It's a well, I actually did read that quote and then I looked at the at the like byline as to who the quote who said it. And I was like, really? It's kind of cool. So we'll get there in just a minute. Demonstration. We've got Social Security talk along with inflation. And is it going to keep up with the rising cost of living? There are some doubts about that. We'll go through it. Is your level of risk age appropriate? That's a great question to ask yourself and we'll have some some tips there on how you can adjust your investments as you age. We'll play a little game called Right or Wrong that we like to do every now and then around here, as we'll put your financial knowledge to the test and share some great information with you, we'll talk about why you need a comprehensive plan for your retirement and how Greg can help you with yours. Speaking of of, you know, expert advice on retirement, one of the big experts in the entire business here, especially when it comes to safe money, is Tom Hegna.

Producer:
Don't worry, Retire Happy is one of his major books. He's got five of them out, I believe five different. Don't worry, Retire. Happy is one of them. And he runs through seven key considerations for a successful retirement. We'll take you through those as well, along with a little bit of this week in history. So a lot to get to. Greg and I wanted to mention here off the top, if people are listening today, if you're listening out there on the radio or on the podcast and you've been listening because you're interested in improving your financial situation and your ability to actually retire someday, which is the dream. You can let Castle Financial Solutions help you with some one on one attention and get you there. Just give them a call at (813) 722-0020. You can visit the website SafeMoneyMasters.com. And Greg and the folks there will be happy to meet with you personally. Provide some customized guidance and solutions based on your specific financial needs as well. That's what it's all about. Greg is specific financial needs individualized because? Because it's not one size fits all. We've got to, you know, keep in mind here, and you always do, I know that everybody's situation is different.

Greg Castle:
Yeah. There's no two plans that are exactly alike. There is no one size fits all retirement. But, you know, Matt, you mentioned a second ago about that quote of the week. So I think it's probably time that we shared our quote of the week.

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

Greg Castle:
In. This week's quote comes from former world boxing champ George Foreman, who once said this amazing quote. Quote, The question isn't at what age I want to retire. It's at what income.

Producer:
I love that.

Greg Castle:
You look at George Foreman and just kind of like, you know, he's gone from being a world boxing champ to being a philosopher. Um, but, you know, the quote is very, very appropriate because, I mean, whether no matter who says it, it's not at what age you want to retire. It's a matter of what income that you can afford to retire at. And and sometimes we got to work longer in order to get to that income. And sometimes it's there before we expect it to. And we can we can clock out early.

Producer:
Yeah, that's very true. And and, you know, I mean, somebody like George Foreman as well is someone who is obviously very successful in the boxing ring. I mean, Olympic gold medalist, professional boxer as well, has about 150 sons, both all named George.

Producer:
So, yeah, that is that is true. Remember, it.

Producer:
Might be a slight exaggeration, but, you know, they are all named George. But then, of course, the George Foreman Grill, he went and reinvented himself with that product. And boy, I'll tell you, it made a huge splash with it. More than 100 million units sold and counting out there. So, yeah, he's he's someone who knows about, you know, really what it takes to to be able to have and I'm sure he's got a good steady income stream from the George Foreman Grill these days and any you know maybe residual payments and that kind of thing from it. But you know, you can't necessarily go out there and market your own grill or something like that, folks. But you can have a retirement income. And of course, we'll get into a lot of that today, I'm sure.

Producer:
Yeah.

Greg Castle:
Actually, you know, I added to his net worth because I have one of those grills. It actually is great. I mean, it comes in handy when you're looking for something just to, you know, prepare a dinner real quick or even a lunch real quick. It's it's a very handy little gadget.

Producer:
Yeah.

Producer:
I've had I've had 1 or 2 of those, I think, throughout the years and I've always really liked them.

Producer:
Yeah.

Greg Castle:
So, Matt, before we get into today's topics, you know, I'd like to take a little time again to remind our listeners what our show is all about. The whole premise of this show is to to bring you topics and tools and information that will help you protect and grow your wealth and retirement income. And we hope you keep tuning in by tuning in. And you can catch us every Tuesday at 6 p.m. on Monday, talk 1010 and on your local FM stations, 92.1 and 103.1. And by the way, if you happen to miss an episode, you can catch the replay at SafeMoneyMasters.com. Just click on the podcast tab or you can also catch it on wherever you listen to your favorite podcast. So you can also check out our YouTube channel and subscribe to see weekly video highlights the special content. And if you have any questions or comments, we'd love to hear from our listeners. Feel free to email me personally at Greg@SafeMoneyMasters.com or you can call us at (813) 430-7100. Want to know where your hard earned money is going. It's time for an inflation demonstration.

Producer:
Will Social Security keep up with inflation? That sort of remains to be seen, obviously is, as you'll mention here, momentarily, I'm sure we had a big roar, a big raise, rather, for Social Security recipients this past year and probably not going to be so big this coming year.

Greg Castle:
No inflation correction. Social Security increases are tied to the CPI, tied to to inflation. And, you know, this past year was great, I think at 8.7% increase, if I remember correctly. Anyway, while it remains higher than the Federal Reserve would like for it to be, inflation has consistently been slowing down in recent months. It's an indicator that could lead to lower cost of living adjustments in 2024 for millions of Americans and retirees, which would be great. We're hoping that's going to happen. But with that said, you know, the Fed this past week did in their in their last meeting increased the federal spending rate from whatever it was up to by a quarter point. I think it's a five and a quarter now, five and a quarter, five and a half. And they're still projected to have a couple of more increases this year. And that could really determine what kind of inflation we're going to have by the end of the year going into 2024. You know, earlier this year, the Senior Citizen League estimated that based on the most recent consumer data, next year's Cola, which is basically the cost of living adjustment to Social Security and supplement Supplemental Security income or SSI could be as low as 3% because currently inflation rates running at 3%. And hopefully it will get down to the target that the Fed has for it, which is 2%. This would probably be a difficult situation to navigate for retirees relying on Social Security for their spending. For example, in Florida's Miami, Fort Lauderdale, West Palm Beach area, which is estimated to have the highest inflation rate of all metro areas in the country at up to 9%.

Producer:
Uh, the koala.

Greg Castle:
Will be officially announced in October at its annual meeting, meaning that the Senior Citizens League estimate could still change, but the estimate remains much lower than the adjustment for 2023, which I've already mentioned, was 8.7%, which included the highest boost in 40 years.

Producer:
Now, of course, it's the the question then, I believe you mentioned there of Miami, Fort Lauderdale, West Palm Beach with that 9% inflation. Boy, that's that's hefty. And that that goes back hearkens back to the national inflation rate, which peaked at right around 9% several months back. About a year. About a year back. As a matter of fact. But now so the question is, where else are we seeing big increase in inflation and rising costs for folks? And one of these, Greg, I know hits hits close to home for you.

Greg Castle:
Right in our pocketbook right here. Yep. Because. Next to your right below Miami-fort Lauderdale, West Palm Beach at 9% is Tampa, Saint Pete and Clearwater at 7.3%. And I feel that my pocketbook every time I go somewhere. Right below them, you got San Diego, Carlsbad, California, at 5.2%. Then you've got Denver and Aurora, Colorado, at 5.1%. Detroit, Michigan at 4.7%. Dallas, Arlington, Fort Worth, Texas, where my son lives, actually lives in the Dallas area. Over in Plano. 4.7%. And Atlanta, Georgia, which is home for you at 4.6%.

Producer:
At least I'm not up there in the 7.3% range.

Producer:
Judy, thanks a lot.

Producer:
I know, right? It's a it's not a competition, but if it were, I would win.

Greg Castle:
We've got the flu. We got the inflation. You got the traffic.

Producer:
So that's it's very true. It's very true. And I don't know which is worse, actually.

Producer:
Right now because time is money.

Producer:
And if you're spending all your time in traffic, then you might as well be spending money. So there you go. But, you know, I mean, inflation really does Greg, have expenses going up and retirement hopes going down for a lot of people. But if that is the case for you and your a listener to the show today, I want to encourage you to give Greg and his team of professionals at Castle Financial Solutions Group a call. That number is 813430 7100. (813) 430-7100. Let them help you develop your free inflation adjusted, safe money retirement roadmap. Because you know what? It's your money. And so if it's important to you, it's important to Greg and all of the folks at Castle Financial Solutions Group, and they are here to help you with your planning and just getting your house in order and plan for no matter what happens. All right. Well, and that is true, Greg, I want to say, no matter what your age might be, you know, a lot of people might have questions about, okay, what should my level of risk be that I am taking with my investments, with my retirement money? What level of risk should I take? And does my age have a big impact on that amount of risk? Yeah, it should. And I know that that you want to run down here kind of. I want to put it in air quotes, a rule that people have have followed for for quite a while. It's more of a guideline.

Producer:
Right?

Greg Castle:
Yeah, It's called the Rule of 100. Now the rule of 100 is a simple financial guideline, often used for retirement planning, and it helps individuals determine an appropriate asset allocation based on their risk tolerance and age. Some people just naturally are willing to take on more risk sometimes against their financial advisors advice, and some people, you know, take less risk and end up with less money again. A lot of times against their financial advisors advice. But the rule of 100 suggests that you should subtract your age from the number 100 to determine the percentage of your portfolio that should be allocated to more aggressive investments like stocks. The remaining percentage after subtracting your age from 100 represents the portion that should be allocated to less risky investments such as annuities, bonds, cash and so forth. And the idea behind this rule is that as you age, you should gradually reduce your exposure to riskier assets and shift towards more stable investments to protect your savings from potential market fluctuations. An example would be when you've got someone that's 20 years old, 20, I mean 100 -20 means mean. The leftover number is 80. So 80% of their portfolio is appropriate. Not necessarily. They should all have it there.

Greg Castle:
It's appropriate to have up to 80% of their portfolio in equities because they have lots of time to recover from market loss. That means 20% of their portfolio would be in something like annuities, bonds or other low risk assets. And take that. Let's go for example. You have one. That's because a lot of folks that listen to this show and a lot of folks that are clients of mine are 60 or older. So let's say let's take someone who's 65. If you've got someone that's 65, what that means basically 100 -65 is 35, which means no more than 35% of your portfolio should be in equities, and the other 65% should be in something safe and conservative, such as annuities, bonds or other low risk investments. And I run into a lot of folks who are getting close to retirement. Their portfolios are heavily stocked on equity mutual funds and stocks in particular. Most of them are mutual funds. Their 401. S43 B's, Tsp's or whatever, that are heavily weighted in equities. And you just it's time to transition. As you age, you need to transition, reduce your exposure to equities and stocks and increase safe investments such as annuities and bonds.

Producer:
Yeah, it.

Producer:
Is. You know not a set it and forget it kind of a situation. Speaking of George Foreman a little bit earlier, the George Foreman Grill and all that, sort of this reminds me of the old infomercials for some other kitchen appliance. The whole, you know, set it and forget it thing. It's not that way. It doesn't work that way with your retirement. Right. It's it's got to be something that you can adjust as you go along. And because your situation changes, just like everybody's situation is different. Everybody's situation doesn't stay the same either.

Producer:
So bearing does it to remember.

Greg Castle:
Yeah, you can't you can't just do a retirement plan without having some sort of like an annual review. Take a look at how market conditions have changed, how inflation has changed and other things to make sure that, you know, you're on the right track.

Producer:
Yeah, absolutely.

Producer:
Come on down as we test your financial knowledge. In right or wrong.

Producer:
You at home or in the car, wherever you might be, can play along with us. All right. Basically, this is how it works. I'm going to present a question or a scenario or a statement, rather. And Mr. Greg Castle, our resident expert on these things, is going to tell me whether that statement is right or whether it is wrong. So you give us your best guess as well, and we'll see how how right or wrong you are. All right. Here is number one, Greg, you should keep working and stop contributing to your retirement accounts to maximize your Social Security benefit. Is that right or is that wrong?

Producer:
Hmm, That would.

Greg Castle:
Be wrong in most cases. You know, you want your money working as hard as you do. So it's important to get a Social Security maximization plan. You know, you could be getting $0.15 on the dollar versus controlling 100% of the dollars that you're investing in your future.

Producer:
Remember that?

Producer:
Yeah, absolutely. Something to remember. Another thing that we want to check in to see if it's right or wrong, as I am now, zero for one in my right or wrong ness today. Number two is this. And I think I might know the answer just based on what happened here on the show just literally a couple of minutes ago. The rule of 100 is a simple calculation to help one determine how much risk they should be taking inside their portfolio of assets. Is that one right or is that one wrong?

Greg Castle:
As we mentioned earlier, that would be right. Now you can simply take 100, then subtract your age. The resulting number is the percentage of the assets you could have have have at risk in the market. So the idea is that the younger you are, the more time you have to make up for any significant losses. As you get older, you want to have more of your savings in safe investment products such as fixed indexed annuities or bonds or other safe investments such as CDs.

Producer:
Very good. All right. So one and one here as we go along now, we've got number three, which is there is no way to grow your money tax free in an IRA, right or wrong.

Producer:
That would be wrong.

Greg Castle:
You know, we've talked several times about Roth IRAs and Roth IRAs allow you to pay taxes up front and then take tax free distributions in retirement with no required minimum distributions. So by all means, you want to consider a Roth IRA. There's an approach. There are some situations where a Roth is not going to be an appropriate for a conversion, but if you're just looking to start an account, you know, by all means pay the taxes now and sign up for a Roth and contribute as much as you possibly can.

Producer:
Yeah, because.

Producer:
They're those taxes are going up in the future. That's that's for sure. Just about by anybody's estimation here. All right. So let's see how we round things out. One more in right or wrong to tackle. And it is a 60 over 40 portfolio. That's 60% stocks, 40% Bonds is a tried and true method and is still the best way to construct a portfolio for retirement. Is that one right or wrong, Greg?

Producer:
You know.

Greg Castle:
You would think it would be right, but it is actually wrong. You know, modern portfolio theory 60 over 40 portfolios is a strategy from 1952. You know, do you really want to rely on a 70 year old strategy for your retirement? There are again, there's no tried and true, as they say, no tried and true strategy or theory that's going to work for everyone. And so you need to update your update your portfolio, update your plan and make sure you're not living on a 70, 70 year old strategy to try and make it into your golden years. Now, you know, we believe in using new asset classes to properly balance smart risk and smart, safe or safe money investments.

Producer:
Yeah.

Producer:
It's so important to have that balance inside your, your portfolio because, you know, you, you want to make sure that you are protected against losses, but you still get that growth that you're going to need to have a great income in your retirement. And this really just highlights, Greg, exactly why people need a comprehensive retirement plan. You know, it's not just let's wing it. You know, the people need to have in mind the importance of having a real, you know, true comprehensive plan for your retirement. And one reason I'm just going to throw out in the beginning is I think you probably will end up with with fewer gray hairs because the stress level went way down. If you actually have a comprehensive plan going in.

Greg Castle:
Yeah, you're exactly right. You know, Castle Financial Solutions, we find that too many people think retirement plan is about rate of return. But they have no income plan that's guaranteed to fund their expenses. You know, we find that too many people have no clue about their bonds. And in many cases, bonds are 40% or more of their portfolio. This asset class has been underperforming lately because of inflation and other factors. We also find that too many people have no plan for health care expenses. And this is a major problem. As we know, health care is going to be one of the biggest costs they have in retirement, especially people have no long term care policies. And again, long term care is.

Producer:
You may not have.

Greg Castle:
A long term care policy, but you better have a long term care plan. So if they were to happen to you, you know, what is your plan for someone to come in and take care of you if you need home care? What's your plan If you have to go to an assisted living facility or a nursing home, you've got to have a plan. Anyway, it's also surprising this surprises us how many people have no legacy plan for the beneficiaries and no will or no trust to avoid costly and lengthy probate proceedings. In our experience, you know, many people haven't really thought about what they want to do when every day is Saturday. And how they're going to pay for it. And we'll talk about that a little bit later on. We'll get to that segment with Tom Heegner's book. Uh, you know, with life expectancy on the rise, it's more important than ever for pre-retirees and retirees to have a comprehensive plan that's going to get them to and through retirement. You know, by working with us, you know, during your planning process, you'll have a team by your side that can answer questions and properly align your plan with your retirement goals. And a lot of folks, you've got what we call an absentee advisor. You know, you have someone that sold you something at some point and you never hear from them again. You might get an occasional newsletter, but you don't get phone calls from them. They don't check on you. So if you haven't heard from your advisor lately, or you simply aren't receiving the attention you deserve through your work based retirement plan such as your 401.

Greg Castle:
K, 4 or 3 B or whatever, you know, and normally they can't give you advice because they're not licensed to give you advice so they can take out your paperwork for you. They can tell you how to fill out the paperwork, but they can't make any recommendations for you. It's against all compliance rules. So anyway, you know, let us Castle Financial Solutions provide you with great service and a complimentary consultation. You know, give my team a call at (813) 430-7100. Or you can email me personally at Greg@SafeMoneyMasters.com Provide comprehensive financial and retirement consultation that never at a cost to our listeners. You'll never pay us a penny. We are not a fee based advisory. There's absolutely no obligation to continue working with us after we build a plan for you. We hope that you will, but we'll be happy to build a plan for you because we want to make sure everybody has a plan to carry them in and through their retirement. But we only, only we only, you know, want you to work with us if it's best for you. Our only requirement is that you have to be nice. We do not want to work with nasty people. All right. We don't care how much money you got or how much money you don't have. We just want to make sure that you are nice and pleasant to work with. And we'll be nice and pleasant Back to you.

Producer:
And that is very, very important. Very important thing to to have in common there. It's two way street. So there you go. Well, you know, we talk a lot here on the show, and I know that you talk a lot in general with with clients and with potential clients as well about how to manage the accumulation phase of your of your life. That's basically your working life, right? When you're putting money away for the future, when you're investing, when you're, you know. Buying a product like a fixed indexed annuity, for example, which can give you those market like gains but without the risk that goes along with the market, right? So that is the accumulation phase. So let's kind of turn it around, turn it on its head and focus for a minute on the decumulation phase. First of all, Greg, what do we mean when we say the Decumulation phase?

Producer:
Oh dear.

Greg Castle:
Accumulation phase is also called the distribution phase, where you're basically taking money out of your.

Producer:
Okay.

Greg Castle:
So as you you know, you've acquired all this period of time your asset accounts. So the accumulation can be defined, I guess, as the process you go through during retirement, where you shift your focus from saving. That's the accumulation portion to using your assets to generate necessary income. No, typically I always advocate that there are three basic phases to retirement. You get the accumulation phase where you're growing your money as quickly as you possibly can. You got a transition phase where you begin to pay down debt, pay off debt, become more conservative in your investment approach, and then you finally reach the accumulation phase or distribution phase, in which case you start pulling money out. So we're talking about the accumulation phase. So some of the factors soaring, number of baby boomers entering and approaching retirements leading to a major shift in focus from accumulation and retirement savings to de accumulation and retirement income. The problem, as I see it, is that most people approaching retirement today are uncertain how they're going to manage their retirement assets and generate consistent income without outliving their money. And outliving their money is statistically and and is recorded time and time again in surveys. Outliving your money tends to be the number one fear of most retirees. If I remember right, a BlackRock survey, I think it was BlackRock found that only 36% of Americans are confident that they're going to have enough income.

Greg Castle:
They're going to have that they're going to need in retirement, while 55% are concerned about outliving their savings in retirement. So and without thoughtful, trusted guidance and planning, this could have dire consequences for the next generation seeking income to sustain a consistent standard of living. You know, retirees need retirement income. They need solutions that can provide spending confidence for both essential spending needs and also discretionary wants. There's always needs and there's wants, and we'll talk about that a little bit later on as well. But they need to make sure they've got money coming in or income coming in that can cover both the needs and the wants so they can enjoy the lifestyle they've worked so hard for all these years if we wanted to call it a D accumulation solution. You know, research from the Stanford Center on Longevity looked at ways that investors can potentially assess and combine a mixture of investments, insurance products against different retirement income goals. They evaluated systematic withdrawals and and plans for investment portfolios and annuities against the following criteria. Number one was the amount of income. Number two, access of savings. Number three, pre and post retirement protection. Number for inflation protection. Number five, Lifetime guarantee.

Producer:
Well, yeah, the interesting thing there is one of the key findings from that research at the Stanford Center on Longevity was that from a purely financial standpoint, annuities often really do provide higher yearly income as compared to systematically withdrawing from investment assets. So that's something that is I think may be surprising to a lot of people who might not have considered an annuity for their retirement plan. And a lot of people who are in that so-called retirement red zone that we talk about a lot, that's either before retirement or in the first five years of retirement. That is something to really have, you know, in mind and say, oh, wait, maybe I should have an annuity as part of my plan as well. And if you want to do that, at least explore it. Give Greg a call and he'll be able to test the strength of your plan. The number is 813430 7100. You can also email him. It's Greg at savemoney Masters.com. That's Greg at savemoney Masters.com.

Producer:
Yeah.

Greg Castle:
And you know, we.

Producer:
Talk.

Greg Castle:
So much about annuities in general. I just had a seminar at Carrollwood Country Club this week. This past week, I should say, and. During the during that particular exercise or that seminar.

Producer:
You know, I talked a little bit.

Greg Castle:
About annuities or guaranteed income, those type of things. And somebody this lady would had a Q&A session at the end. She said.

Producer:
Sound like you're talking.

Greg Castle:
Bad about annuities. I said nothing could be further from the truth. You know, I said, Actually, what I'm trying to say is that there are there is a type of annuity, the type that Ken Fisher talks about, the variable annuity that in most cases I wouldn't recommend for retirees. However, if you're looking for sustained income in retirement and you're looking for a way not to outlive your income in retirement, there is no better way to achieve that if you don't have a pension already than to have an annuity, a fixed indexed annuity. And even if we have a pension. This can still help you make cover that income gap between the amount of money you have coming in, guaranteed income you have coming in and the amount of expenses you have going out. And so anyway, annuities is not a dirty word in our book, especially here at Safe Money Masters. So, Matt, if if I were to ask you what day of the week do most people play golf work on their boat, get their hair done or enjoy their hobbies? What would be your answer?

Producer:
Any day but Monday? No.

Producer:
I would.

Producer:
Say.

Producer:
The more.

Greg Castle:
I play golf today, actually, so.

Producer:
Yeah, right.

Producer:
Well, there you go. I was going to say Monday, the least fun day of the week, but I would say, yeah, definitely on Saturday. You know it's that's that's the thing for all of the above, getting all the stuff done that you can't do during the week or you don't have time for during the week, all the fun stuff too.

Producer:
Well, you're exactly right.

Greg Castle:
You know the when you retire every day a Saturday, as opposed to when you are working and you have a job, sometimes you get to Friday and that's the fifth Monday of the week. So.

Producer:
Um.

Greg Castle:
I've had a few of those weeks where Friday was the fifth Monday of the week. It's pretty, pretty saturated. Anyway, it is important to secure both guaranteed paychecks and paychecks in retirement to cover both your basic expenses and also the fun activities. In other words, having the necessary income to cover the things that you need. Basically, your monthly expenses and your wants, hobbies, travels, gifts, things like that that make retirement enjoyable income to do. Those things are absolutely essential to to a happy and secure retirement.

Producer:
And in his bestselling book Don't Worry, Retire Happy. Tom Hegna outlines seven steps to retirement security. I was fortunate enough to meet Tom just this past week, as a matter of fact, as I was in Clearwater doing some some online webinar stuff and he was part of it and just a great guy, very passionate about what he he talks about sort of regarded as like one of the big retirement experts coast to coast, you know, So it was a great, great thing to be able to meet him. But he goes through these seven steps for retirement security. I'll just run down this list and then we'll go through them one by one. So he says, you know, have a plan for retirement, maximize Social Security benefits. Consider a hybrid retirement, protect savings from inflation, secure guaranteed retirement income, plan for long term medical costs, and use home equity wisely, something that might get overlooked there on that last one. So the first step that Tom outlines there, Greg, is to have a plan that's it seems kind of simple and kind of straightforward, which, you know, yeah, it kind of is, but it's essential.

Greg Castle:
Yeah, well, first of all, I'm kind of upset that I wasn't invited to Tom anything. You know, I'm right here in Tampa. I'm so close. You know, you guys were here. I got to talk to Sam Davis about that and see.

Producer:
Okay. Right.

Greg Castle:
Where was my invitation? Why was I not. Why was I not there?

Producer:
It must have got lost in the mail.

Producer:
Yeah.

Greg Castle:
Unfortunately. Let's go back to the first step here, that Tom and Tom's book. Unfortunately, you know, most people don't have a plan. And if they do, we find that it's often outdated or lacking key considerations because, you know, people, you know, regardless of how much money they have or don't currently have, need a retirement blueprint. So what is a retirement blueprint? A retirement blueprint is basically a let's go back here. A retirement plan is basically a blueprint that's going to get you from where you are now financially to where you want to be in the future. Too many people think that they can just wing it and be okay, and you really can't do that. However, there's too much uncertainty related to income and expenses and retirement uncertainty regarding longevity, uncertainty surrounding pension benefits and Social Security, and certainly uncertainty around inflation and other risk. As the old saying goes, you know, people don't plan to fail. They simply fail to plan. And a plan or that blueprint can help you protect your hard earned savings from these these and other risk.

Producer:
In the.

Greg Castle:
Footnote here, there's a survey that came out I just read recently that said that 56% of Americans have less than $10,000 saved for retirement. And that just kind of boggled my mind when I read that. But, you know, I sort of look around to, you know, some of the folks that do known in my past and even some of the folks that I know now, I can see where that probably is true. A recent survey by the Hartford Insurance Company, I think it was found that those who have planned for retirement are three times more likely to be confident that they're going to have sufficient income in retirement as compared to those who have not planned. And when you're developing your plan, you need to talk. You need to ask yourself two simple questions. First of all, what do I need my retirement income to do? And the second question is what do I want my retirement income to do? As surprising as it might seem, you know, we run across a lot of retirees that can't really confidently answer either one of these two questions.

Producer:
But, you know.

Greg Castle:
What we find is that clients must determine their own individual income needs in retirement. There is no one size fits all when it comes to a retirement plan, and retirees have an idea of what they want to do in retirement, what they what expenses they have to cover. And, you know, we want to be able to help them develop that plan. And and in Tom Edna's book, you know, he talks about, you know, more and more about the importance of the of having a a plan for retirement or having that blueprint. It's your retirement, you know. What are you going to do when you get there? Are you going to buy a boat? You're going to join the country club. You're going to see the world. You know, many people are going to reply no, because they they feel the need to keep the money just in case. In other words, they've grown this big pile of assets. It's a big mountain that they really don't want to touch unless they absolutely have to. And so they don't do the things that they they don't do the things that could help them have a comfortable and, quote unquote, enjoyable retirement. They just have a retirement. And the reason they they don't touch that money is just in case they need it down the road somewhere.

Greg Castle:
So I would advise you, as Tom Hegna does, avoid living the just in case retirement. You worked hard for your money and now it's your time to enjoy your golden years. So make sure you have a chance to do that. You know, retirees often don't spend the money, as I just mentioned. They they they don't spend it and then they die. So what happens to the money? It goes it goes to their kids who then in turn spend the money in most cases. So basically he goes on to say, it may be that in his book, but certainly in his presentations that, you know, hey, look, you know, when you retired, you wanted to buy a boat, join a country club, see the world, do other important things. You retired, leave all the money to your kids. Guess what they do. They take your money and they buy a boat, join the country club and see the world said, It's your money. Don't leave them anything. Spend it. So, you know, you've worked on these assets, and if you got money, especially if you got a guaranteed lifetime income coming in. So, you know, you have some discretionary money as well.

Producer:
Spend it.

Greg Castle:
It's yours. Enjoy it.

Producer:
Yeah.

Producer:
So he was saying that very thing the other day saying, you know, don't enjoy your money. You know, leave, leave your kids life insurance, life insurance. And then, you know, because not only is it tax free, he's as Tom says, you know, you can get it for pennies on the dollar as well.

Producer:
So exactly that.

Producer:
That is it The value is there. Okay. So the second step that Tom talks about is the importance of maximizing Social Security.

Greg Castle:
Yeah, this is a topic you know, we literally spend a week on is still not covered all it seems so simple. You know, it seems like, okay, I can take Social Security when I'm 62. I'm going to work, I'm going to retire. I want to take my Social Security. Just make sure it's there when I you know, while I still can, basically. But actually, Social Security planning is really, really, really.

Producer:
Complex.

Greg Castle:
And even today, we can't get into most of the complexity of it all. So. But when I ask clients what is their largest asset, their pension, their 401. K. Their home or their Social Security benefit, what do you think they usually reply with?

Producer:
I mean, I would say just because, you know, looking at that list that you just ran down, I'm like, okay, which one of these is probably their largest asset? For anybody, I would probably say that they would reply, That's my home. You know, if I own my home, especially if they own it outright, they would say, okay, it's the home.

Greg Castle:
And you're exactly right. That's typically what they would say. This could be on the right or wrong segment. But surprisingly for most people, their Social Security benefits, the largest asset they have, it's really it can it can boggle your mind because a single individual who has worked for 35 years, depending on how much he or she has paid into the system, could see their lifetime Social Security benefits reach in excess of half $1 million, $500,000 if you're a married couple, both of you drawing Social Security, your combined lifetime benefit could be worth more than $1 million and even more if you use certain benefit maximization strategies. So in most people it granted here in the Tampa area and some of the other areas we talked about with high inflation. Well, you know, granted a lot of houses now gone to that million dollar mark. And if you've got it paid off, it might well be your biggest asset. But in most cases, if you look at the average home value nationwide, we look at Social Security. Social Security is easily going to be your most likely your biggest benefit and your biggest asset in retirement. There are additional benefit options available for Social Security for a lot of different family situations. Let's take a look at a married couple first.

Greg Castle:
Married individuals can claim benefits based on either their own earnings record. Or the earnings record of their spouse. If an individual elects to receive a benefit based on their spouse's earnings record, the benefit can be as high as 50% of the spouse's earning record. Now, you have to note one thing, though. You, the spouse, can't claim the benefit until the spouse you're going to claim on has actually filed for his or her benefits. Additionally, you may also be eligible for benefits based on a former spouse's record in certain situations. You could have. You could have literally four exes depending on your age. You could have four exes. But as long as they you were married to that spouse for at least ten years and you're not and that person has not remarried again. And your retirement benefit is less than the benefit you'd be eligible for based on your ex spouse's record. And your spouse has enough credits to qualify for retirement benefits. Basically anybody can apply on your benefits provided they met those particular standards. And interestingly enough, if you have four people claiming on your record, it still does not impact your record. So you can still draw your full Social Security benefit now.

Producer:
But you can have all those X's. But the question is, do they all live in Texas?

Greg Castle:
All my exes live in Texas.

Producer:
That's right. Now, do I.

Greg Castle:
Have to pay a royalty for this plan?

Producer:
Maybe we'll let them send us the bill for that.

Producer:
But, George. Right.

Producer:
Right. There you go. A classic. An absolute classic. The question, though, then, though, Greg, is are there, you know, limitations on how much you can earn once you start taking Social Security?

Producer:
Yeah, there.

Greg Castle:
Are. You're referring to the Social Security earnings test. I believe the. Social Security earnings. Basically for if you take Social Security before your full retirement age. Which currently is somewhere between 66 and 67 now depending on your birth year. Oh. For every $2 you make over the limit, which currently is $21,240 a year for 2023. For every $2 you make above that amount, you got to give $1 back. Now, if you once you retire, if you make it up to the two full retirement age again, which is somewhere between 66 and 67, your limit increases on the year you actually file. If you file at your full retirement age, you have a limit there of I think it's now is like 50. It's around $50,000 or so now. And if once you reach full retirement age, if you take Social Security after full retirement age, for example, if you wait until age 70, 67, 68, whatever, afterward age, then basically there's no earnings test at all. So. So yeah, there is a there is that test. You could work yourself out of your benefit if you take Social Security too early and you're still working.

Producer:
Yeah. Then another question that might come up for a lot of people. Okay, we know how much maybe I can earn based on those limitations, but is my Social Security income going to be taxable?

Producer:
Yes.

Greg Castle:
Depending on your income. And this is basically ordinary income. Usually it does not include pensions. It's normally income from that you're actually get while you're working at a job and also additional income that comes from what they call provisional income like interest in and dividends and those type of things depending on if you exceed your your.

Producer:
It's basically the base.

Greg Castle:
Minimum they have. I don't have the scale in front of me right now. But you're. Social Security could be up to 85% taxable, which means for every $10,000 you would get in a year, 8500 of that could be taxable. The rest, the other 5000 bucks is not subject to tax.

Producer:
Okay.

Producer:
Very good. Good to know. Unfortunately, the tax man is going to have his his open palm pointed your direction for that. For that money, for that fair share. Step number three, then, in Tom Hagner's book is to consider a hybrid retirement. So what in the world do we mean when we say hybrid retirement? I've you know, I've heard of hybrid vehicles, but not necessarily hybrid retirement.

Greg Castle:
Well, you're right. The late George Burns once said and he probably put it best, is that, you know, retirement's retirement at 60, retirement at 65 is ridiculous. When I was 65, I still had pimples.

Producer:
Of course.

Greg Castle:
George Burns wanted to be close to live to close to 100 years old and never, never missed a beat. He worked until pretty much until right before he died. Betty White was the same way. I'm sure she has some quotes about that, too. And. Queen Elizabeth worked two tours late 90s as well. So. So what is a hybrid retirement? Hybrid retirement occurs when a retiree finds full or part time work after leaving a primary career. You know, besides being financially beneficial, brain scientist, not necessarily psychologist, but brain scientist are adamant about the benefits of continuing to stay engaged with work. A hybrid retirement can provide a quote unquote, middle ground between full time work and full time retirement.

Producer:
And so what are some of the benefits of doing that? Because obviously, obviously, it's important to point out because Tom puts it in his book at step number three here. So what are some of the benefits?

Greg Castle:
Very simply, there are things like an increased earnings mean the longer you work, obviously you're making more money. Second of all, you've got increased savings. If you don't need the money, you're just working because you want to stay engaged. They put aside the savings and have it to enjoy trips or vacations or provide gifts or provide charity or money to charity or whatever. And also increased Social Security benefits. Social Security benefits are based on 35 years of earnings history. The if you're making more money now than you made back when you were 18 or 19 and that's still on your list, basically the higher income will knock off one of the lower amounts so it can increase your Social Security benefit. You know, plus one of the biggest benefits as an advisor that I see for clients is that, you know, it keeps you from tapping into your portfolio for a few years.

Producer:
Now it gives you a little bit more time for that to to grow and to to accumulate as well. Well, just about running down to the wire here. We got about four minutes left in the show, Greg, But let's kind of run through, at least hit the high points of these next steps. Step number four from Tom Hegna. There were savings from inflation.

Greg Castle:
Yeah. Inflation we talked about is a is a killer. Now, you know, if high blood pressure is the is the silent killer for for individuals, then inflation is literally the high is the silent killer for retirement plans. You know, one risk that will almost certainly affect every retirement portfolio is inflation. It can decimate purchasing power over time. For example, you get $10,000 a month from your nest egg. The purchasing power at 4% inflation will be cut by more than half in 20 years. We've been basically $10,000 a day will be worth $4,000 in change 20 years from now. Uh, I could go into a ton of tons of examples in my own life. I'm sure all of you could as well. Um, inflation is extremely problematic for retirees who are on fixed incomes and also those who are dependent on their retirement savings to help make ends meet. A high inflation can erode both your income and your portfolio if you don't plan for it. Until last year, the US had experienced a period of relatively price stability, low inflation for the previous 2025 years or so. Even so, prices of food, gas stamps and other items significantly increased over that period. So you don't get anything else out of this. They learn the importance of paying yourself first. Savvy and savvy savers have been able to save even more than 15% of their income in other ways, too. So, you know, during the accumulation phase, make sure you pay yourself first, then pay your bills, put your money into appreciating assets, and also save 15 to 20% of your income.

Producer:
Yeah. So, Matt.

Greg Castle:
I think since we're running a little short on time, I think probably we ought to save the next segment or two, actually the next three segments of Thomas book and topics for another segment of our show. And those are basically secure, more guaranteed income plan for long term medical costs and use home equity wisely. But for now, I think it's time for this week in history.

Producer:
It's this week in history.

Producer:
Yeah, let's do that. You know, the we don't want to sell those segments short. So let's get to this week in History and August 1st. On this date in 1996, American author George R.R. Martin published Game of Thrones, the first installment in that hugely popular fantasy series, A Song of Ice and Fire. And then, of course, it became the TV series on HBO that lasted for several years. And I missed.

Producer:
It. I loved it.

Producer:
I will not talk about the final episode.

Producer:
I know it's pretty, pretty bad.

Greg Castle:
Um, also what we're talking about a history. 1936, the Summer Olympics opened in Berlin and the efforts by Adolf Hitler and the Nazi Party, the Nazi Party to demonstrate the superiority of the Aryan race were undermined by the success of African-American athletes, notably Jesse Owens. Birthdays The Day you got Jason Momoa, actor he played on Game of Thrones, also plays Aquaman and all the different movies. Jerry Garcia, the late Jerry Garcia from the Grateful Dead. He would have been 81. Today, he was rated by Rolling Stone magazine as the 13th greatest guitarist ever. Then you got designer French luxury designer Yves Saint Laurent, who also has passed away. So he would have been 87 today. Today is also.

Producer:
National Girlfriend's.

Greg Castle:
Day. National World Wide Web Day. National Alpaca Day.

Producer:
It's a National Spider-Man Day.

Greg Castle:
National Respect for Parents Day. I need to say that one to my kids. And the National Raspberry Cream or National Raspberry Cream Pie Day. I think I'll have some of that when we get finished today.

Producer:
Yeah, that sounds like a plan to me. I like that.

Producer:
Yep.

Greg Castle:
Well, Matt, once again, that brings us to the end of our show. I really appreciate the time we get to spend together every week. And with that said, I think we probably ought to wrap things up and say, We'll see you next week. Same bat time.

Producer:
Same bat channel.

Greg Castle:
Have a good week, folks.

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.

Producer:
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. Ameri 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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