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Max, where do we start this evening?

Hi, Jean.

Our first question tonight, I think, is one we get quite often.

It says I am 72 with 1.5 million in retirement savings and no debt, but I'm still terrified of running out of money one day.

How do you know when you've got enough?

Thanks.

You're absolutely right.

It is a frequent question.

Some form or another.

There are there are two pieces to this question.

The running out of money fear.

A pretty reasonable fear.

One shared by the vast majority of folks that we talked to that are either retiring or soon to retire.

They have that.

What anxiety, that angst in the back of their mind.

Gosh, I don't want to be 95 and and be broke.

No one does.

So that's a pretty reasonable fear.

The word enough is a very interesting, word for two reasons, but I'm going to circle back to that here in and in just a few moments, because I want to talk about that fear of, running out of money, that fear of not having enough of of being 95 and broke.

There are a number of ways to address that.

If the concern is a financial one and and it may or may not be, but let's let's start with, a reasonable concern about having enough about having enough, assets so that at some point in the future, you are you're not only not broke, but you're able to pay your bills, be happy and healthy.

At 65, things are fairly clear.

If you're trying to project out, by the time you get to 70, 75 of those projections, they're they get a little fuzzy by 95.

It's simply a guess.

It's simply a guess.

Unless.

Unless you create a, in essence, a contractual guarantee that you will never run out of money.

In essence, Social Security is just such a contractual guarantee.

Social security does not say we're going to send you a certain amount per month, and until you run out, there is no run out.

I mean, some in the audience right now are going, you're right.

Unless Social Security runs out a different issue for another time.

But absolutely a concern.

But something that if is if we start fundamentally Social Security says, we're going to send you a certain amount of money and, and you, you can have that for as long as you live.

Pension says something very similar.

It is not a government program is a private program, but it is a guarantee, a contractual guarantee that you will receive a certain sum of money for as long as you should live ten years, 30 years, 40 years.

So, putting those two things together, you could rightfully have the confidence that you will never run out of money, because at the end of this month, there will be a direct deposit to your to your checkbook, of social Security.

And if you have a pension, a pension.

So you will never run out of money.

Well, how about folks who are, not fortunate enough to have a pension and not, terribly confident that the Social Security system will be there?

How about those folks?

Well, there are items often referred to as private pensions.

The underlying asset is referred to as an annuity.

And they can be constructed in such a way that you will, again, never run out of money, because next month you'll get another deposit.

And another deposit as long as you should live.

So for those of you who are saying I wish I had a pension, you can have a pension, you can exchange some or all of your money that you have saved for retirement.

In this case, 1.5 million to create a pension like payment.

In the ultimate using an extreme example, one I would not recommend.

But just to give you a sense of what this individual might be able to do to allay his fears.

A a fixed pension, meaning once you set it up, the annuity will pay you per month for the rest of your life.

Without fail, guaranteed by the full faith and credit of the annuity company on 1.5 million, you're looking at approximately 105, $110,000 a year.

Now, for some of you, you're hearing that guy, what he's done.

That's fantastic.

For others of you, you're going.

Ooh, that wouldn't quite do it.

So let's go back to the word enough.

And what is enough?

It is a very personal assessment.

You determine what enough is, but not in the sense of how much of it piled up, but in the sense of how much income must I have so that I'm, My bills are paid.

I'm happy.

I'm healthy.

So if, for example, two extreme examples, this gentleman says I need $3,000 a month.

Goodness, you have enough.

More than enough.

Because likely your Social Security payment.

If you've saved 1,000,005, you're likely you've earned well, your Social Security per month is likely 3000 bucks.

You're done.

You're 1.5 now is icing on the cake.

It's a lot of icing, admittedly, but it's icing on the cake.

What if you said to me, 15,000 a month?

Well, that changes things dramatically.

15,000 minus the three from Social Security is 12.

We need $144,000 a year off of, million five.

It's almost a 10% cash flow.

That's very, very challenging.

Do you have enough?

Not likely.

If the number is somewhere in between, we can assess.

So, enough is not measured by how much you've piled up.

Enough is measured by how much you need, how much you need.

And by the way, if you're saying I need 15, it doesn't seem like it's going to work.

You might want to look more carefully at your budget.

Some folks budget loosely.

Others are very precise.

So, enough, often in our conversations with, folks just like you, in our more than money world headquarters, it's around those kinds of discussions.

What do we need?

Not really sure.

Let's work on it.

Let's get some numbers.

Let's polish those up, and if they're well within range, we're done.

And if it looks like it's going to be tight, we've got some more work to do.

But fear natural.

Can it be addressed?

Of course.

Can we create guaranteed lifetime income?

Without a doubt.

And how much is enough?

You get to measure that by how much you need.

Excellent question.

Very brief question.

Very long answer.

My apologies for the long winded.

This, but I think you get a lot of flavor of how that, retirement discussion goes for basically everyone.

So where do we turn to next to help the folks in our audience?

Well, our next email is looking for some clarity on something that they actually heard you say.

This one says, I enjoy your show.

I'm 80 years old and I would like to protect my 401 retirement fund.

You indicated on your show that I could not use this fund in a 401 K. I thought I heard you say if I transfer the 401 balance into one of my IRAs, that this would be allowed.

So is this correct?

Thank you.

Gosh, as long winded and we start out with Gene says too much of that's, an unintended, ironic, however, segue, from one question to the other.

Totally appropriate.

First of all, thank you.

80 years old, still, paying attention and still, grabbing good ideas and seeing where they take us.

You're very, very kind.

Second of all.

Yes.

Even though the question is kind of a little vague about what exactly it is, I said, I'm going to circle back to that here in a moment.

You did hear me say exactly what you thought you heard me say.

So let's set the stage for one case.

Gentleman had A41K still has a 400.

One K has decided at age 80, up to his age 80, whatever investments were in that 41K, he was happy with whatever fee structure was in that 41K he was happy with whatever advice or not that he was getting from that 4k he was happy.

So no reason to change.

And then and then, something arose, some concern, some anxiety, some, fear perhaps of, gosh, what happens if what happens to me at age 80 if, if my investments take that big drop, and big drops, depending on the type of investments that you're in, they not only happen, they happened on a regular basis.

This is not a this is not seeing a unicorn, stock market in any given ten year period, will go up either modestly or a lot.

Seven of ten years, two years out of ten, it will drop not dramatically, but drop 3 or 4%, perhaps in one year, eight, nine, 10% in one year.

Annoying for sure.

Devastating?

Not particularly, but typically in a ten year period.

There's one year where you go, wow, that was nasty.

Not long ago, 2022 I believe market was off over 20% in that year.

Could that really rock a retirement savings of 41K plan?

The answer is yes.

The typical for one K is almost like a snapshot of investments from 15 years ago, and we work with a lot of for one case, we work with, gosh, all the major sponsors, all the major, investment groups that you're familiar with.

And we see what they have to offer.

And quite often, to be blunt, disappointing.

A handful of, of, mutual funds, if they're, if they think they're cutting edge, perhaps a few ETFs, exchange traded funds, very popular these days.

And for one case, our target date funds, these are funds that are, kind of an umbrella fund where they invest in lots of individual mutual funds underneath that umbrella, in an effort to, create an allocation that will fit a certain age group if you plan to retire in ten years.

Here's your, target date for ten years.

Here's your target day for 15, 20, 30 days.

Even go out 50 years.

Target date 20.

What?

75.

So bottom line is, for one K plans can have solid investments.

Some 401 K plans have very good investments.

And some, are very, very disappointing.

What makes it ultimately disappointing?

Just as an aside for all of you who are currently in for one K plans and and particularly those of you who are in for one K plans, where you go, they're not that good.

I've never been happy.

It is ironic to me, having done this for so very long, that A41K plan provider, the the the provider, your employer may be the provider.

Generally speaking, they delegate that out to a, to an outside firm who will create an offer up the, the menu of investments to you.

What's, ironic, embarrassing, disappointing to me is that the cost to provide employees with a tremendous world class lineup, not six, eight, ten different options, but 20, 30, 40, 50, 60 different options.

Not just a few target date funds, but lots of opportunities to do exactly what the client wishes to do.

The employee wishes to do, at a very high level, the cost to have world class versus an no difference whatsoever.

There's no incremental cost.

There's a little extra work.

Yeah, I get that.

And there are lots of employers that are very willing to do the extra work, but in some cases, many cases they aren't.

So this gentleman comes to us and says, hey, I understand there are investment options, investment platforms that will provide protection, in the event of the stock market takes a dip.

And it will protect my investments from, from the kind of following in that dip.

And the answer is yes.

There are.

They come in three, roughly three, types of, platforms, buffered ETFs, exchange traded funds that are, they use options to protect against downturns that can protect against, minus ten, -15, even down to -100.

You could be invested in the stock market and have no principal risk whatsoever.

There are issues, pros and cons, but you can do that.

Then there are structured notes.

Structured notes are issued by major banks.

They provide they can provide basically anything you can imagine.

But if you would like to create an investment portfolio again, investing in the stock market, where you are protected against downturns, structured notes can work very well.

Even just just to have a little bit of fun for a moment, even if you, were interested in investing in the stock market and were interested in creating a situation where you could turn a profit, whether the market went up or down.

Structured notes can do that.

Pretty interesting stuff.

And third big block, are called Riley's registered index linked annuities.

These are annuities that tax deferred annuities, that provide you again with the options to have tremendous protection against downturns in your investments.

At age 80, I'm guessing I'm just guessing.

I'm assuming I'm right.

I could be wrong, but I'm right.

This gentleman is far more interested in knowing that his investments that he saved so hard, held on to so tightly over many, many years are not lost.

That's his number one priority versus how much he makes now, depending on his approach, depending on which platform or platforms, he might use.

All three.

That he selects, he can still get very, very good rates of return.

His call on what that definition really is and have tremendous protection.

So are these typically available inside of for one case?

So he heard me.

Exactly right.

Correct.

He is allowed to access.

He is permitted.

He is given the opportunity to access these kind of investments inside IRAs.

So if he wishes to take advantage, he will do what's known as a rollover goes directly from his 41K into his IRA.

There's no taxable event in this case.

So he's not harmed.

He's not paying any extra taxes at age 80.

He's taking his RMDs.

We understand that part.

But rolling it into an IRA now opens the universe from this much that the 41K was very, very generous in allowing him to access to the entire universe, virtually the entire universe of investment options, including all the ones we just talked about that would provide him with downside protection.

Fascinating stuff.

Well done.

You.

Thank you so much for listening so carefully and so, so accurately.

Absolutely perfect.

Speaking of absolutely perfect makes you look absolutely perfect this evening.

Thank you sir.

Yeah.

And where do we go?

Our next question.

Let's just see how we can help them out.

This one says my husband passed away three years ago, and now I'm under contract to sell our home and move into an in-law apartment with my son and his family.

I expect our house will sell for about $650,000.

We paid $145,000 many years ago.

I was told by my tax person that I will only owe taxes on $5,000.

My son did some research and doesn't think that.

That's right.

So I'm wondering who is right and what are the taxes that I should expect to pay.

Thanks.

Well, first of all, as we are crafting this show, we have about a month to go in this year's tax season.

Our, more than money tax department.

You want to talk about, 24 over seven?

So it seems, they are hard at work.

Crafting answers to questions very similar to this and lots of others, of course, preparing tax returns.

But.

Our tip of the hat, goes to both you and your son and his family.

What a lovely thing you're doing.

I, I grew up in an era that was just just beyond.

Just beyond, the old style American, tradition of if, mom and dad raised a family and then, the their their children were of age.

They got married and and started having their own children.

Mom and dad would move literally aside.

They would add a small addition to the main house.

If you go through the country roads of America, you'll see lots of older homes, two front doors, because that's the main house that mom and dad raised their family.

And when they were done raising their family, they would move next door, an in-law apartment, so to speak.

Obviously much more than that.

But then in-law apartment, and then son or daughter would raise their family in the, in the family homestead, a beautiful thing, a beautiful thing.

And the opportunity to be there with your family.

Outstanding, outstanding.

So let's talk about how, capital gains treatment, affects the sale of a home of a home.

And as some of you have already decided, how this is going to unfold, and I can almost assure you, I mean, some of you are very, very sharp at these kinds of things, but I can almost assure you that you haven't actually thought through all of the various necessary pieces here.

The home is sold for 650,000.

They paid 145 on its surface as a $505,000 capital gain.

That's a lot of tax.

$100,000 plus.

That's not going to happen.

And most of you out there, especially if you're of age, you're saying, wait a second, I know that's not going to happen because she gets a, a a a deduction.

There's a there's an exclusion.

And that part is true.

$250,000.

So if we're at 505 and we take 250 away, we're at 3 or 5.

We're at roughly, what, 275?

We're still paying a ton of real estate taxes and a ton of capital gains tax.

Not happy.

And also not true.

And also not true.

When her husband passed away owning a house jointly, she received a stepped up basis on half of the value of the home.

So assuming three years ago the home was worth roughly the same, make it easier on Jean, it was worth 600.

Half of that is a stepped up basis.

So she gets $300,000 as a basis from her husband.

She gets half of the 145 because half of it was hers already.

So that's about 75,000.

So she's at 375.

She gets 250 exclusion.

That's 575.

That's six and a quarter.

Not only will.

Yeah, maybe maybe she'll end up paying $5,000 in tax.

So in this case, not shockingly, the tax professional was quite right.

And her son in his, I'm sure, well intentioned, well intentioned wasn't thank God, thank God.

And and so good for you.

Well done.

You.

You'll get to keep almost everything.

Almost everything.

All but five.

Not a bad thing.

You'll pay more in closing costs and transfer taxes, but you'll do very, very well.

Thank you for the question.

Next, we have a quick one to wrap up.

We do?

Yes.

Our last question tonight, says looking to connect with a long term financial advisor, a one stop shop.

I have two small children, and I would like to be more intentional about saving for the future.

Can you help me, Jean?

Oh, I would love to help.

I would love to help.

I love this question.

I love this question.

The email does not say so.

But but in my heart of hearts, I think this is a young woman, single mom, two small children, and she wants to be intentional.

I love that word.

I just love that word.

I love her attitude.

I love what she intends to do.

I and by the way, that her her approach, her, her mental approach, her philosophical brunch, her thought approach to this is exactly right.

The vast majority of people kind of sputter along, hey, I'm saving some money.

Oh, look, there's an RV.

We should maybe buy the, There's no intention involved.

There's no planning involved.

They spend more time planning their vacations than they do their entire future.

And when you have two small children, you can't do that.

It's irresponsible not to be a great parent.

Of course you do.

Of course you do.

You love your kids.

And part of loving your kids is setting a good example financially.

Being intentional, having a good plan, and looking to build a relationship with a financial advisor.

That is a long term.

And she mentions one stop.

Absolutely.

Get tax advice.

Get estate planning advice.

Get life insurance advice.

Get home buying advice.

Get investment advice.

Get all that under one roof with one advisor.

And if you're very, very lucky, you're very, very lucky.

And there are a lot of great advisors throughout this country.

If you're very, very lucky, you get one that's pretty close in your age and you grow and maybe just maybe 50 years from now, you'll be sitting across a table with your financial advisor.

Your kids are grown and they're saying, Thanks to mom, you've got grandkids.

Thanks, grandma, because you intentionally crafted not just the finances of your life, but your life.

You intentionally crafted your life to produce this result.

I'm over the moon.

I get lots of financial advisors out there.

Idiots.

Million dollar minimums, half million dollar minimums, $2 million minimums.

Wouldn't give you the time of day.

But there are a lot of great financial advisors out there that not only would, but would serve you proudly and with great excitement and great excitement for your future.

Thank you.

Speaking of thank you.

Thank you for spending part of your evening with us.

You could be anywhere.

And yet here you are.

That's very, very kind of you.

You allow us to be the most, relevant financial show on television today.

Continue to do that.

Please send us your emails.

Jean.

And ask mtm.com.

Give us your questions, your observations, your concerns, your criticisms.

I like those two.

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Let me.