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9.8.22: 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 your retirement Unbroken with your host, Merrit Strunk. Merrit is a licensed fiduciary and financial advisor who always places your needs first. Merrit works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Merrit Strunk.

Merrit Strunk:
All right. Welcome again to the Retirement Unbroken show. I'm your host, Merrit Strunk, and I am the president of Momentum Financial Insurance Services. And today joining us is Matt McClure, our producer, Matt Say hi to our listeners will you.

Producer:
Hello listeners and hello, Merrit.

Merrit Strunk:
How's it going? Thanks for being here. Matt going great. Fantastic. It's a beautiful day here in San Diego. I want to thank you folks for tuning in and listening here. And hopefully, if you've been listening to the last couple of podcasts and radio shows, you've received knowledge and we've named this show Retirement and Broken Show, because for many people, their retirements may already be broken. They just don't know it yet. And Matt, when do they why don't they figure it out? What if it's going to be broken? When when do they feel the symptoms of that.

Producer:
When it's probably quite possibly too late for them to do much about it right in the middle. In the middle of retirement.

Merrit Strunk:
Unfortunately. Right. Wake up one day and go. You know what? Mr. and Mrs. Smith, we're in trouble. Right? We're in trouble. And listen, just like always, we're going to tell you what you're in store for here at the show. And just a sec. But first, allow me to share why we do what we do on the Retirement Unbroken show. We're here to transform our listeners into more educated, more equipped, and more financially savvy individuals so that they can make better financial decisions for their future. In each episode, we will awaken your mind and awaken your spirit and give you tools and information so that you can act with an intention and that you can unlock what is possible in your financial future. Now, having said that, I want you to hear something. If you get if you get nothing out of this show today, except for one thing, I want you to hear the next words out of my mouth. For most individuals, most individuals, you are one but one decision away from taking an action that's needed that will impact your financial future success. Did you hear that? Let me let me say it one more time. Very profound words for most individuals. You're about one decision away from taking the needed action that will impact your financial future success, maybe for you, maybe for you and your spouse, and maybe also for your family. It's important stuff. So you could be listening music, but you're here getting knowledge and wisdom and information that's going to help you do that. So your past, your financial past does not have to equal your future.

Merrit Strunk:
If you need to reach us, you can go to the Retirement Unbroken Dotcom website and you can also call us. You can call us at 858521 9700. That's 8558521 9700. And look, if you've got an adviser and you haven't actually heard from your advisor lately, maybe you don't even have one. But please talk to us and get a second opinion. This stuff, retirement, money, investing, planning your family's financial future. It's too important. It's too important to to to think that you can set it and forget it because you can't. It's important in the world's changing, especially in the financial area. We want to help you reach your financial goals and for folks to go to our website and they look up at the top at the retirement unbroken dot com, you can click a little button up there that says book a complimentary consultation to that. And if you do that, we provide comprehensive consultations at no cost to our listeners. Everything is confidential. I meet with every single person that responds and you know, there's no obligation if you want to work with us, only if it's best for you. That's how you know we will help you analyze your specific, unique financial situation. We'll closely examine your investment accounts you may currently have. We'll discover exactly how much you're paying. And fees help you cut unnecessary cost and or unnecessary risk in your IRA or 401. K and other retirement savings accounts. We can also help you with your Social Security planning and Medicare, and we'll compare your current situation to the what if the what's possible? Is there a better route? We could talk to you about that as well.

Merrit Strunk:
Look, if you're also listening to this on podcast, wherever you can listen to podcasts, be so kind as to subscribe and maybe leave a rating or a message we'd love to hear from. Our listeners. And in the last show you want to go back to a previous show and the last show we talked about an interesting conversation we had on your financial mental mindset and what might you name that personality that's in charge of your financial information and planning and so on. We talked about smart review and smart income streams, so if you want to go back there at the previous show, you can also listen to that. So what's coming up here on today's show? We're going to talk about common misconceptions about retirement planning and some common risks to your retirement and financial future. And when I say risk, these are things that could possibly derail your retirement. And like we say, this is called the Retirement and Broken Show. And it's because we also have a book. It's available on Amazon. And that book is called Your Retirement Unbroken. And the subhead on there, it's a little type below. The headline says, Your retirement may already be broken. You just don't know it yet. Right. And that's why we call this the Retirement and Broken Show. We're going to analyze these things, share with you information you need to know. But that brings us to the financial wisdom quote of the week. And Matt, bring it to us.

Producer:
And now for some financial wisdom, it's time for the Quote of the Week.

Producer:
We like to share some words of wisdom using, you know, using the words of others, because, you know, we talk enough on on the air here. But the words of wisdom coming from someone else this week are from Daniel Kahneman, an economist, a psychologist, winner of the 2002 Nobel Prize in Economic Sciences. And he said, quote, Money doesn't buy you happiness, but a lack of money certainly buys you misery. There you go.

Merrit Strunk:
Wow. Those are true words. And I think in the there's a country song, Matt, that that reminds me of, as you were mentioning it, which is money doesn't buy everything, but it can buy me a boat.

Producer:
That's true.

Merrit Strunk:
And this is what I tell my my children is that wealth financial wealth is not that important in itself in terms of being rich. I mean, that's not what it's about. But one of the things about having money in your future is that there comes with it a quality of life and you have options. What do you lose when you don't have enough money in retirement? You'll lose quality and you'll lose options. So quality could be quality experiences with your family. Great quality, quality travel, quality time, and you have options on what you want to do. So, you know, I like that. Know it cannot buy you happiness, but it can buy you options in quality as well. And hopefully that happiness is something that will come through other things besides having money. I tell you what, I'd rather have enough wealth and be able to explain why I am wealthy and what I did to get there, rather than the tougher discussion, which is try to explain why I am not. Why am I not? What didn't I do right? I didn't make that decision that we talked about earlier in the show here. So that I'd like to give you a little market update. It's been a good day on the market today. Actually, all the indexes were up today. The Dow Jones, if you've heard that phrase, the Dow Jones was up 1.44%. Now, sometimes financial advisors are guilty of throwing out terms, even the simplest terms that most of us already know. We've been hearing Dow Jones for most of our lives here.

Merrit Strunk:
That is a market index that's really made up of about 30 prominent companies on the stock exchange here in the US. They're not just the Nasdaq. People hear about the Nasdaq. It was up 2.21. And that is a lot of the high tech, high growth companies that you hear in the communications and information sectors. The S&P, which everybody knows and it's commonly referred to as the S&P 500, that was up 1.86 today. And that is simply a collection or an indices of 500 of the largest stock issuing companies in America. And then the Russell 2000, these are small cap companies, 2000 different companies put together. And that index and that was up 1.81% and oil was down 5.40% right now. Okay. So and I would say that those are accurate at the time that we record this show. So, yes, the major stock indices today passed a key test from late last week as they all held important support that we like to see. We either talk about support or we talk about resistance in the stock market indices. And for the S&P 500, a 61.8% retracement of the rally off of the June lows targeted at 3900 and last week's lows was 3904, as well as a measured, moved base on the small head and shoulders. Top came in at 3009 ten and a 61.8% give back for the Nasdaq. It was at 11,000 564. So last week's low was 11,547. So right in the same zip code.

Merrit Strunk:
And for the sharks, the same retracement targeted at two 93.84 with the intraday low of 293 and then all intraday lows on say, on last Thursday, September the first and the indices bounced into Friday. So unfortunately, the rally ran out of gas then and the indices sold off hard. So we're up today, which is great. So this set the stock market up for an important week here. If we if we in this key retracement gives way, the indices could be headed for a test of the June lows, like we said. And we've seen some very weak breadth, breadth that's d t h at the end, that breadth figures, which often shows that we are close to a bottom, which is everybody's wondering when's the bottom and both price and time. So lots of stuff going on there. Some good news was Apple was talking about its new release in that saying the. Bolster the market. So the meat of the show today is going to be talking about common misconceptions about retirement. Many of these will be you might react to, of course, but yet people do it over and over. And that's why they're called common misconceptions. Misconceptions. So the first one here is people think their effective tax rate will dramatically decrease once they stop working. Oh, right. They think I'm going to stop working. Therefore, my W-2 income is not going to be there. Therefore, one would assume that I'm going to have lower taxes. And remember, the key word there is effective tax rate, not nominal, not bracket.

Merrit Strunk:
It's the effective tax rate. You know, you've got to fill up each of those bracket tiers with money and then the very next dollar goes to the higher tax bracket. Then you average those out, you come up with your effective tax rate. You know, people go, Oh, I'm in the 24% tax bracket, and they think that everything gets charged at a 24%. So your effective rate may not dramatically decrease. And that's a common misconception in retirement. And you will need to have a tax plan if you do not consider taxes in your retirement, you may be in for a world of hurt and surprise. So you have to know that it may not stay the same if people think it is. Now, let's say this, you know, the tax rate can go up, don't you think everybody agrees our taxes are probably going to go up, right. That the the group there in Washington is going to go into pass new tax laws. And, of course, the percentage has to be higher. Look at Social Security, look at Medicare. Look what's going on. Look at our runaway spending and our deficit. Of course, it's got to go up. Okay. Well, if they raise that rate, what happens to the income that you do have? You have Social Security that's coming in. It's going to be taxed. You have pensions that are coming. It's going to be taxed. So that could go up, surprisingly. And you never plan for it.

Merrit Strunk:
Okay, here's another one, really sneaky one. When you have a need for extended care or it's also referred to as a long term care, because at some point in your life, you know, according to Genworth study, you may need long term care and 70% of us may actually end up needing that. So chances are you will at some point the question is how long? And by the way, it's super duper expensive. You wouldn't believe how much money it costs. Tens of thousands of dollars a month, tens of thousands of dollars a month if you're going to stay in a full skilled facility at some point. Now, some people think that this is covered by Medicare. Do you think that do you think if you needed long term care, it's going to be covered by Medicare? What is Medicare? Medicare is the the government insurance of people who no longer work. And above 65 years old, it doesn't cover long term care. So. I don't know. Look at your left pocket. Look at your right pocket. Look in the bank account. That's where that money is going to come from to pay for long term care. Medicare does not cover it. What what government program does well, Medicaid will they'll put you in a state facility and you will not like where you are and they'll pay for it. Guess how much money you can have? If Medicaid comes in, the state comes in. That would be 2000. That's not even to cover funeral expenses.

Merrit Strunk:
So you need to, in your planning, go through your checkboxes and say, if this happens, how do we have that accounted for? If you've never had that conversation? Education information is power. Yes, there is a medicare part A, which is your hospital cost. There is a medicare Part B, which is your physician cost and Medicare part. That's B and Medicare Part D, which is your drug cost. So guess what? If you have co-pays and co-insurance and deductibles with those Medicare costs, and most people choose to get either that or Medigap supplemental insurance plans or they get Medicare Advantage plans. Health care costs are something you need to consider. And that's why smart health is part of a smart financial plan. All right. You up with me now? So, number three. People think many times that the key to retirement is acquiring a pile of money or one big magic number of that pile of money assets. Right. So this is a huge misconception regarding your retirement portfolio. It'd be great to get $1,000,000, $2 million, $3 million. But honestly, retirement is more about income than it is about getting one big nest egg. Does that make sense? It's more about income. Like, I'll just I'll just go through this conversation with you. The two people show up tomorrow at the golf course. And let's say the market just took a dive down 4% or whatever. And one guy shows up and the other guy who's already there he goes. Wow, man, did you see that market today? Ooh, I don't want to go back and see how much money I lost today.

Merrit Strunk:
And the other guy is going, Yeah, okay. Yeah, yeah. I got to I got to check that out. And in the back of his mind, he's thinking, every month I get a pension check, it shows up in my checking account as if I was still working. And I know the bills are going to be paid. Yes, I have money that's invested, but it can take a hit according to my risk tolerance. I'd still be okay. I still have pension, I still have income. So the happiest people in retirement are those folks who have pensions. And if you don't have a pension, you never work for the military, the states, the municipal. You weren't a teacher or a fireman or a police officer. You don't have a pension or maybe one of those big old companies, you don't have a pension. So you would have to create your own private pension and there's a way you can do that. This is where smart tax portion of our smart financial plan comes in and matters. You need to have a dependable income stream during your retirement without the IRS holding you back too much. The IRS did we talk about 87,000 new employees? I think we did at previous shows. We did talk about that. The government is hiring an army of IRS agents, an army of IRS agents. They will have somewhere close to 163,000 employees all together. At some point.

Merrit Strunk:
I wonder what they'll be doing. You know what they'll be doing? They'll be taxing somehow. So one way to manage this is to generate tax free income from a Roth IRA. Another one would be to generate tax free income from maybe using one of the last sacred cows here in the United States, which is life insurance. You can use that in different strategies. And if you're in your forties, fifties or sixties, and you want to figure out how you can get tax free income or completely tax free income, well, we're happy to help you do that. So just give us a call. Go to our website and check it out. Okay. So something some people think that seniors receive all the same Social Security benefit. They do not. They're receiving different amounts. There are some averages in terms of checks, you know, by year, depending on when somebody's elected. So Social Security benefits are generated based on your top 35 earning years, top 35 earning years. So the more average income you have made during your top 35 earning years, the higher your Social Security income benefit will be. And it has a lot to do also at what age you elect to take your benefits. Quick quiz here, Matt. Do you do you think most people elect to take their Social Security at the very, very first time they can get it? Or do they wait to longer knowing that they can get exponentially higher income per month? Which one do you think, Matt?

Producer:
I think then this is just a hunch top of my head that most people would probably say give me my money as quickly as you can get it. To me.

Merrit Strunk:
That is the next financial wisdom quote. We're going to have our next show. We're going to have Matt, Matt come up and read that. Here's a quote by Matt McClure. Most people want that money. They say, give me the money. Yes, I think that's a great quote. You're right. Most people without counsel, without knowledge, elect to take the their benefits as early as they can at age 62 under current law. But they have no idea how that will affect them over their their lifetime. People think that they are stuck with the same Social Security benefit like it's flatlined. That's not true. It's absolutely not true. You know, the benefit can actually go up, especially after your full retirement age. For most people, that's 67 right now and it goes up 8% per year that you delay. So if you delay taking it, you've got 8% delayed retirement credits there. So the longer you wait, the more you're going to take in. And if you're married, there are some possible strategies there to increase the amount of money that comes into your household over your lifetime. If you don't know what those are, give us a call. We can chat about it. Okay. Here's another one. People think their taxes remain flat during their retirement years. Say what? Yep. It's true. This is one of the biggest misconceptions we hear.

Merrit Strunk:
Did you know that between 1960 and 1963, the current 24% tax bracket was actually 56%? Wait a minute, that was a big percentage number. And I just kind of threw it out there. Let me just repeat that. Did you know that between 1960 and 1963, the current what is currently in our reality, the 24% tax bracket federal was actually not 24. It was 56, 56%. That figure is 8% higher than two times of the same tax bracket. So imagine if this were the case for you today and you withdrew $10,000 to go on vacation with you and your family, the government would get 5600 and you would get the minority part of that $4,400. I'll repeat it, if that were happened again, and that taxation scenario where that 24% tax bracket is now 56, if you took out 10,000 to go to your vacation, the government would get 5600 and you would get 4400. Some people go, That's crazy. That can't happen. Well. The statement that's going around these days is that, you know, history may not repeat itself, but it rhymes. So if it's happened before, it gets something like it could happen again is what that means. So you need to do everything you can to tackle that misconception that taxes will remain flat and during retirement. And again, that's why smart tax is part of our smart financial plan.

Merrit Strunk:
You have to figure in the tax and how to do it wisely. Look, the less you pay is, the more you're going to keep, right? Less taxes, you pay, more you're going to keep. That's just the way it goes. Simple math. So another one here is, you know, and you may have noticed if you drive around town or in your town, you look around, do you see any senior living facilities popping up here and they're being built? People assume that they will just flat out die when they turn 90. Happy birthday. Oh, you're dead, right. 90. You reached it. Boom. Check out stamp. Stamp. You know, punch the clock. You're done. And whether they like to or not. So. So a lot of times we do our planning. We we look at average lifetime expectancy. We use 90 as our planning horizon here. But people are living longer whether they want to or not. So did you know that the human life expectancy over the last 200 years in the United States has more than doubled. Okay. We've got medical technology, health care, science. We're making huge leaps and bounds. Look at the COVID, you know, vaccination that we were able to kick out in a very fast time. Science at work, science in the past. And, you know, 100 years ago, they would just die.

Merrit Strunk:
Now you can get a double pneumonia, stay in the hospital for a week and you're good to go for another 40 or 50 years. Not so back then. So the CDC, the Center for Disease Control, also says that if you're married and both spouses live and they're in fairly good health at 65, then it's highly likely that at least one of you is going to live until over 90 years old. So we need to plan. For that longevity in our retirement. And guess what? If you live longer, you're probably going to need to have more money to to fund that life. So we're going to take a brief break here. If you haven't done so, just mentally write this down or a piece of paper. Retirement, unbroken dot com. Go there, check it out. You need to talk about some of these issues. You've never had that conversation you need to take a look at in your financial situation. Give us a call. I meet with every single person. I do not bite. We can talk about your Social Security or Medicare, your financial plan, your retirement accounts, any of those things. Remember, knowledge is power and you're one decision away. So we'll take a break here and we'll join you back here in a little bit.

Producer:
This part of today's show, your retirement and Broken is available wherever you listen to podcasts and online at retirement.

Unbroken to. But I do love that.

Producer:
You're listening to your retirement unbroken. To schedule your free no obligation consultation with merit visit retirement unbroken.

Merrit Strunk:
Hey, this is married, Shankar. Welcome back to the Retirement and Broken Show. So we were just going through the common misconceptions of retirement planning and you may be going to the list here and going, yeah, I thought that. I didn't know that. That's interesting. Now, here's another one. Back in history here on gosh, infomercials, the early infomercials, they showed all kinds of like little gadgets, little ovens and things like that. And one of them is I remember in my my my gray matter here was was it Ron Popeil, the Ron Popeil something or another? And he would say, all you do is set it. And the whole crowd would clap twice and everybody would say, forget it. Right? You just set it and and everybody would yell, forget it. I didn't forget it. All right. When it comes to your portfolio allocation, how are how are you invested and what are you invested in? At what risk exposure is that invested in? A lot of people think they can just set it and clap, clap, forget it. It's not. So please don't do this. We encourage everyone to do smart inspection, right, and inspect what you expect about your retirement future. So inspect what you expect in this case in look, procrastination or no attention to this. And hope is not a strategy. None of these work. It's your money. You worked very hard for this so we can help you make sure that your portfolio is managed properly. Folks, I cannot tell you the number of times I've met with people and they are so surprised at their real volatility, exposure to their assets when they're older and they have zero business having their investments live in that zip code.

Merrit Strunk:
You know, if you if you drove over there and that zip code, you're driving around in retirement, you're like, man, you know what? Our investments don't need to be here. There's too much risk going on. We need to get out of this. So we want your money working as hard for you as you worked for it because you did work hard for your money. And I bet you work even harder to save it. Right? So it is no. Set it and forget it. You need to pay attention. You need to be talking to your financial advisor. You need to revisit that. And that's why we shoot to talk to our clients. Quarterly When's the last time you talked to your financial advisor? We shoot to talk to them quarterly. Not everybody wants to do it, but for those who do, it's it's nice. We talk about the market, we talk about their portfolios, we talk about what's coming and things and improvements we might make if we see certain things. Okay, so no set and forget it. Please, please, please do not do that. Nine, we're going through. Nine we're on the ninth one here. Okay. So people assume that they can handle their retirement planning by themselves. And some of the the last episode we did, we talked about your personality related to your financial situation and what you would name Matt. I think you were on that one and you named yourself what was it, Matt? Your personality.

Producer:
It was manic Matt.

Merrit Strunk:
Manic Matt. Okay. So in this case, I don't think manic Matt is doing spreadsheets and sometimes and we had one like that was a spreadsheet maven mark you know. Right. And, and look at some point, you know, do you know there's artificial intelligence happening out there with institutional investors, large companies, the stock goes up a penny. There's a trade that's being made and billions are moving. How is the do it yourself or investor supposed to want know all the different financial vehicles that are available today. And being able to compete in that situation before they even know what's going on. And if I said the words tactical portfolio management, most of you would be going, I don't have a clue what that means. I mean, I could guess what it means. It's tactical. That means it's got military garb on or something, you know. I mean, it's daily managed, actively manage, actively changing depending on what's going in the market. And if you're older and you're in pre retiree or retiree and you don't know what that is, give us a call. We need to inform you of that because it might be in your best interest to be aware of these things. Another one is if you pass away and you've been personally handling all your retirement financial planning, all of a sudden your spouse has the responsibility of settling all the affairs and taking care of them themselves. So you need to do everything we can to set both spouses, not just one, but both spouses, up for success in retirement.

Merrit Strunk:
And they're in the right place with the right risk, with the right features and functions. We believe that the right way to do that is to start working with someone while you're both still with us. Right, so that we can establish a plan that will ensure that you are both taking care of in your air. Quotes. Golden years makes sense. I think it makes sense. All righty. So, you know, there's some other things. And we said those are the common misconceptions. We're going to talk about a little bit of the risks and why it's so important to have what we call a smart financial plan. Okay. So do you know what market or systematic or unsystematic risk is? Both the stock market and the real estate market go up and down through periods of volatility and uncertainty, and you can say market and systematic risk or something like the unsystematic risk would be this black swan situation with it. The systematic risk is what happens to the entire market no matter what you're doing. The tide has gone out and the boats are sinking. So systematic risk, what happens if that happens? We have a lot of geopolitical stuff that's going on here, folks. Do you have money that has no down measure of protection? If something happens, market risk markets go up and down. Are you exposed to just general market risk with your investments and is that unnecessary risk meaning you'll still make your goals if you had that risk removed? Is it unnecessary risk? We like to remove unnecessary risk, interest rate risk.

Merrit Strunk:
It just rates are subject to change and adjustments have shown that they have high significant effects on the American families and economy, economy as a whole. Now, we're going through that right now, interest rate risk. We're all feeling it right in general when bonds go up, which they are doing now on their yields, on short term yields and long term, then the stock market is down. We just left a period that was stocks were down and bonds were down. There was nowhere to hide if you did not have certain types of investments and certain types of strategies. Well, the other one is inflation. That's a risk. And by the way, when we do our analysis, inflationary risk is the most damaging and has most potential to derail a retirement. Why? Well, your retirement dollar, it just needs to have more of those retirement dollars to afford everything that it takes to afford your lifestyle, public policy so legislative risk to your investment taxes or most notably can affect American families. Here's one your timing you can't control when the markets will go up and down. So you must consider what you would do or you should do to retire, maybe in a bear market or a recessionary environment. This brings us to a really perfect storm situation. It's called the sequence of negative returns. The sequence of negative returns is most prevalent. When you do a twin type of study.

Merrit Strunk:
You ever hear the twin studies that people testing things in different different pharmaceuticals and they tested on twins to try to say, well, one had this and one had that, and we've kind of eliminated because they have the same biology. This sequence of returns can be twisted, tested in, say, brothers brother one, a brother to brother one retires earlier and withdraws the same amount of money that brother to this brother to retired much later, maybe ten years later. But when he retired, he's taking the same amount and it still has the same rate of return. But unfortunately, Brother two had a negative sequence of market returns. That means when he retired he had one year. That was a negative down market. The next year was a negative down market and the next year was a negative down market. And he's taking money out from a smaller bucket. It runs out of money much faster, could be a whole decade faster. That is where the negative sequence of returns is, is that it's a and you have no idea. Right? You get and you're like, I didn't know I was getting ready to have three or four sequential down markets. Yikes. If somebody just had the crystal ball or the genie in the lamp. No. Okay. So that's a that's a real tough one. There are strategies that can combat sequence of returns. If you don't know what those are and you're concerned about that, you want to make sure you have enough income for your retirement and maybe for both of your lives, not just you one, but both of your lives.

Merrit Strunk:
Then let's chat longevity. When we're doing our financial planning, we ask both of the of the couple. We asked both people, do you have longevity in your family? How old did grandma live? How old did mom live? And if they're talking about mom and grandma lived into their nineties or great grandma lived 100 and 203. Wow. Okay. So you may just be one of those people that have it in your genetics. So if you live a longer I daresay we're going to live longer than we expect. And that means we're going to need more money than we expect. It'll be more expensive than we think. Okay, so that's longevity. You live a long time. You're going to need money. And by the way, a lot of folks just go, you know, you know, the guy is especially you know, I love the I love the the macho thing. I'm guilty of it. At one point in my life was saying, oh, you know, I'll just off myself to be polite. I'll just off myself. I'm going to marry, you know, I'm like, Well, you ever go into one of those memory care facilities and walk through there? You'll meet a lot of guys in there that just plumb forgot or can't remember that they were going to do that. So you may be there and find yourself there, but you had no clue or no inclination that you wanted to live that long.

Merrit Strunk:
So longevity, excess withdrawal, excess withdrawal, you're taking out too much money from your assets. This brings up the rule of thumb, the rule of 4%. It used to be rule of four. Now it's like rule of two and or completely debunked. So if you're taking out too much money in retirement based on what your assets are, your rate of return or your risk exposure, you could be taken out too much money. Health care expenses. That's a gotcha. We call it the retirement smile. When you first retire, you've got high expenses because you're in the go go years. You're having a good time. You're traveling. You might be replacing a car, you might be remodeling the house, you might be having a really great time. Go travel to see the grandkids so your expense is a little higher. Then you get into the slow go years of retirement and then eventually the no go the Nova to take that name from an old bad car naming situation, the Nova, the no go. And you just don't go at that point. But your medical expenses may be quite higher at that point. So medical costs are typically one of the largest expenses for Americans in retirement. You want to be sure that you have a medicare plan in place that covers you and your spouse throughout your lives, maybe Medigap as well. But there are some expenses outside that you need to plan for. You need to make sure that you've got that covered in your planning.

Merrit Strunk:
Okay. This is one that that I see quite frequently. This is what not to be morbid, folks, but this is one of the things you have to talk about. We're human. We don't live forever. We are not not mortal. Right. We don't we're not going to do that. That means we're fragile in the city we live in. Some people don't come home and you may have a loss of spouse. Sometimes we get sick, we get a disease. Cancer is a big one. So when you have one of your one of the spouses predeceased, you lose one of the social securities and it's the lesser of the two. It's not quite how the Social Security Administration describes it, but you lose the lesser of the two affect. Late. And gosh, for some folks who don't have a pension and don't have any like a private pension or any other streams of income, guess what, half there or more than half or a good portion of it just walked out the door. There goes my income. Well, did your expenses decrease? Maybe a wee bit. You still got to pay the mortgage if you have one. You're still going to buy groceries. You're still got to pay for fuel expenses. Go on. And there goes part of your income through Social Security. You don't get to keep both. So those are some of the things that, you know, are risks to retirees and pre-retirees and why it's important to have what we call a smart plan.

Merrit Strunk:
Right. So you've got to have the smart financial plan. You've got to do a smart review. You've got to have smart tax approach, tax diversification, folks, if you don't go through these things and essentially when we do financial planning, what are you doing? When you're doing financial planning for retirement, you're trying to say, we have taken a moment and time and gotten the fiduciary help, knowledgeable help that says we're going to take a look at each of the situations that could potentially derail our retirement. And we're going to check the boxes and that we did the best we could and to have confidence that we have a great plan. We're not over risk. We're not under risk. We've got the gotchas in life accounted for and we've checked the boxes taxes, legacy, inheritance, sickness, illness, death, medical expenses, all those things. We check the boxes and we're building what's called a moat around your financial situation. All right. So your financial and retirement situation is the castle that's by the ocean. And we've got a moat built around it that when things come to attack or derail your retirement, we've got the boxes check. And much like Wonder Woman of the I don't know, seventies or eighties, she's got those gold cuffs on and people are shooting her and she's like, bing, bing, bing. You know, she's just blocking the bullets. Your financial plan, a retirement plan that is solid, is defending the viability of you having enough income for the rest of your life and financial success.

Producer:
There's no invisible plane, though, in in retirement.

Merrit Strunk:
I want that truth telling rope thing. You know, I really like that.

Producer:
Oh, yeah. There we go. We take that to Washington.

Merrit Strunk:
Right. That brings us up to a break here. We're going to go ahead and break in. If you haven't been to our website, please go to WW W retirement unbroken dot com look for the complimentary consultation button at the top or you can just simply fill it out and ask us a question we'd love to hear from our listeners here. So we'll join you back here in just a sec.

Producer:
This part of today's show, your retirement and Broken is available wherever you listen to podcasts and online at retirement. Unbroken dot com.

Producer:
Social Security will get a big cost of living adjustment next year, but there could be some consequences you might not have considered. I'm Matt McClure with the Retirement Radio Network, powered by AmeriLife. A new report by the Senior Citizens League says Social Security beneficiaries could see a cost of living adjustment or COLA as high as 10.1% next year. The reason, inflation running at a 40 year high.

Recording:
This is a very, very unusual and unprecedented pattern of inflation that we're experiencing.

Producer:
Mary Johnson with the non-profit group, told WPTF TV that surveys show inflation has caused about half of Americans to spend their emergency savings and people are carrying more debt on their credit cards. So the highest jump in Social Security payments since 1981 would be a good thing, right? Well, Johnson says it's better than no increase, but there are some things to be aware of.

Recording:
In fact, you can get penalized if you think your tax liability is going to be 10% more next year than you're paying now. You can be penalized if you don't send in estimated payments or have more money withheld.

Producer:
She told the TV station the increase would not be enough to cover a jump in Medicare Part B premiums, which are taken directly out of Social Security checks. And she says higher incomes mean some seniors could no longer be eligible for some other government benefits.

Recording:
And then a whole 15% were made ineligible because they were their incomes increased over the income limit for food stamps or rental subsidies or the programs in their area.

Producer:
So what should you do? Johnson says Prepare now. Talk to a financial adviser to help you get ready ahead of time and contact local nonprofits if you need help paying bills. So are you prepared for the unintended consequences of a larger Social Security check? That's a key question to consider as inflation impacts all our lives. With the Retirement Radio Network powered by AmeriLife, I'm Matt McClure.

Merrit Strunk:
All right. This is Merrit Strunk, host of the Retirement Unbroken Show, Radio Show and podcast. And we're going through some of these things that are critical for you to know in effective retirement planning. We went through common misconceptions. We went through common risks. In your retirement. We talked about like, you know, Medicare, cost inflation, interest changing public policy, timing, liquidity, loss of spouse, all those things you don't normally come up with until you sit down and do financial planning and start asking the tough questions and running some simulations or running some math on it. Now, here, for the time we have left here, we going to talk about important things. It's five important things to have or own during retirement. Now, when you enter in retirement, a lot of times you don't think about it. You may have had the same car that you've had for years. And if you if you have a car for quite some time or if you've ever hung on to a car long enough, you might notice there are some things that just aren't right with the car anymore that could be as easy as the the stuff on the outside, the paint, the clear coat or things like that. Other times it could be it just doesn't make sense to put any more money in this wagon. All right. So a reliable vehicle is one of those things that you would probably need to think about. You don't want to rely on others to get rides until you have to get to and from medical appointments to church, seeing family.

Merrit Strunk:
Most retirees don't have access to adequate public transportation. There might be some safety issues and you want to go where you want when you want, maybe road trips until you can no longer be a you don't want to be a threat to yourself and others on the on the road safety. So being able to get yourself or someone else somewhere if there are emergencies here in Southern California, we've got fires where you want to be able to hop in a car and get going. Okay. So a reliable vehicle is one of those. Look, later on when you're in the no go stage and you may be having some health concerns, Uber is great or transportation services to get to doctor's appointments and things can can actually do well. And at some point you need somebody else to help you schedule those things. I see this. I see this up. Close your home. Okay? Yes. Some place to live. Freedom. You maybe you likely don't want to move in with your children. If that is a choice. And maybe your children actually don't want you to move in, you know, as a choice either. But maybe not. Maybe your children just love. Hey, Mom, Dad, come on over. We love for you to be here. Okay. So your home is a valuable asset.

Merrit Strunk:
And for many folks who didn't do their plan and guess what? It is the asset that there is no investable asset, it's just the home. In a situation like this right now, too, is if you sell the house at a premium price because home prices are up historically. That's great. Now, where are you going to buy now? Where are you going to live? Because you also have to pay that premium to get the next place a safe and clean, comfortable place to lay your head. There's no place like home, right? So you want to make sure that you think about that. Where are you going to live? What state you're going to live? A lot of people in California are like not going to live here because of the state taxes and the way things are going here. That's the migration to the Sun Belt state. So that's happening right now. It costs a whole lot more to hire a U-Haul to come to California from Texas than or vice versa. It costs a whole lot more to rent a U-Haul here in California. If you want to go to Texas, they're more than happy to have you move to Texas. In California, bring that U-Haul right back. You know, so there's a lot of them that are over there. They need to hire people just to drive them back. An emergency fund. In most cases, we talk with our clients about making sure there's an emergency fund.

Merrit Strunk:
An emergency fund is exactly that for emergencies. And we like to say it's somewhere between six and eight months of of income that you'll need. So when unexpected problems arise, you want to have enough liquidity and cash to cover emergency expenses. A small one would be three of six, a sizeable one, 6 to 8 months, something like that. That's a lot of money for a lot of people. So I think it was a couple of years ago I read a research study that said in California, people over 65 years old that a super high percent of them could not put their hands on $3,000 immediately if they needed to. That's an emergency fund. If something happens to the car, the air conditioner, things like that, you have the money if you're still working and you don't have an emergency fund. Covid taught you a lesson. Folks who were in the service industry, all of a sudden they no longer have a job. Restaurants, bars, salons, gyms are no longer open. And guess what? If they didn't have that 3 to 6 month emergency fund, they were out there looking for a a job that may not have been a good fit or they were strapped or had to ask for some money. Insurance. You want to be covered with health insurance to cover the costs that you may be incurred for. So it could be a drain on your assets if you don't have that.

Merrit Strunk:
Specifically the long term care insurance we talked about that super expensive. If you've got an annuity, then you can be happy. You'll never run out of money for your lifetime if it's an income annuity for you and your spouse. So joint income, that's a nice way to make sure you've got your private pension. However, not all of them are great. And then lastly, your schedule. So retirement is about enjoying life. You work so hard to build, you don't want to go back to work, you don't want to spend. You don't want to spend time watching the stock market and managing your own assets because simplicity comes in later in life rather than complexity. And you want to be able to travel and spend time, time with loved ones and see this great country of ours and maybe even the world. So you want to make sure you have all these things. And these are what we try to do is do some thought provoking type of content here that can empower you. So I want to thank you for tuning in and listening to the Retirement and Broken Podcast and radio show. I hope these things have helped you. My name is Merrit Strunk and if you'd like to go to our Web site that is retirement unbroken dot com and just click at the complimentary consultation at the top and we want to talk. Have a.

Producer:
Blessed day. Thanks for listening to your retirement Unbroken. You deserve to work with an experienced and licensed expert who will strategically work to protect and grow your hard earned assets to schedule your complimentary no obligation consultation with merit. Visit retirement unbroken or pick up the phone and call 858521 9700. That's 858521 9700. Advisory services are offered through Momentum, Financial and Insurance Services LLC, an investment advisor in the State of California. Insurance products and services are offered through merit strong an independent agent. California license number 07510. Certified Financial Fiduciary is a FINRA recognized professional certification.

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