Hello everybody and welcome to tonight’s webinar. We’ll get started here in another minute or so. I wanted to uh uh open this up. I hope everybody’s having a fantastic day and fantastic week as well. Uh I don’t know if if we have many people out there that are big football fans. Football recently started. Uh I can’t wait till hockey starts. that is uh coming up in I think this well I think pregames or so this weekend anyway um but we’re getting into the fall season and uh things are getting a little bit cooler where I’m at here. Hopefully things are not too hot where everybody else is at. Um so we’ll go ahead again. We got about another minute left. We’ll go ahead and get started in about a minute here and just let everybody join the webinar that uh that had signed up for it and is able to do so.
I hope everybody has some good plans for this weekend. I don’t have anything exciting which I’m okay with. uh a weekend without well I guess it depends on the type of excitement but a weekend without too much uh major excitement is perfectly fine with me. I am I am okay with that. So all right well we’ll go ahead and get started here. It is the top of the hour here. Again thank you everybody for uh joining uh me here today. My name is Bernell Baker. I’m a financial consultant with Alliant Credit Union here. Let me pop this up here. Uh before we get started and get into the meat and potatoes of this, uh let’s just do some house uh housekeeping stuff here. Excuse me. Um as we go along here, if you have any uh questions, um please type them in the uh uh the Q&A or the chat uh tab there. I will get to every one of those questions by the end of the or at the end of the webinar here. I uh encourage everybody to stay here uh until those questions are answered because maybe somebody has a question that um they thought of that might pertain to you that maybe you hadn’t thought of or anything. But let’s um yeah, I I recommend staying to the end. Uh this will be about an hour long. I try and keep it uh uh within an hour. I also hopefully it’ll not be too dry and too stuffy for you. I’ve been on many webinars myself where the presenter is just so stuffy and you pretty much fall asleep. So hopefully that won’t happen here. And uh with that being said, let’s go ahead and get into this. Now this presentation is purely for educational purposes only and it’s proprietary here at the line credit union. We don’t record any of these um and but we and we ask that you don’t record any of these either. This is purely for educational. We offer these as a complimentary service for being a member of the credit union here. So, we just ask that you not uh do any of that. Uh here are the different uh websites that we have here. The different uh places where you can find information about AIS Alliant Retirement and Investment Services. Uh obviously, as you know, these webinars here are complimentary, don’t cost anything at all. We have a bunch of different topics and subjects that you can pick on and and learn. Just continuing to learn. That’s the good thing about it. Uh we also have the Investsavvy podcast. I’ll be honest with you, we have not done a a new podcast in quite some time, but the information there is not uh time-sp specific or anything. So, it may be some good information there for you. And then the AIS website and blog, find out about uh me and my team and and everybody here at the credit union as part of the Alliant Retirement and Investment Services here. So, let’s go ahead and get started here. So, how can we help you? The one thing at the very end of this webinar here, I’ll talk about a a complimentary report that I really encourage everybody to to take advantage of. It’s really detailed. There’s many other places that charge quite a bit of money uh to do this report. We don’t do it because of your membership with Allian Credit Union. And so, I um encourage you to uh you know, when I get to those slides, I’ll tell you what slides they are. They’re they’re pretty um obvious which slides they are. Um but we also do all sorts of estate planning, uh investment management. We have so many really cool and unique uh products here that are just really cool that we can uh we can uh take a look at for you if you’re interested in those. So with that being said, let’s go ahead and let’s get started here. So, this is the subject that we’re talking about, the home stretch. Seven things that you need to do before you get to retirement. You know, if you’ve ever watched a uh a race, especially a long distance race or maybe even participated in in one like a marathon or anything like that, you come around the uh the last little bit here, your legs are exhaust, you’re totally tired, you’re exhausted, you can see the finish line, and that’s where you don’t want to stumble and fall. uh you want to go ahead and continue on into the finish line and and finish uh the race. Same thing in retirement. You may be getting closer toward retirement, kind of like myself. I got the gray hair to prove it. Uh but you may be getting closer towards retirement. And right now is not the time to stumble and fall. And um you know right now you really really need to um take a look at your your retirement plan and make sure that you are in the um on the right track to go ahead and retire and have a very comfortable time in retirement. My apologies. I have asthma. It kicks in every once in a while. So I apologize for not uh uh for coughing and hopefully I’ll be able to stop those. Okay. So, here’s the different uh subjects that we’re we’re going to be taking a look at. Each one of these has their own slides. So, we’ll just get right into that here. So, the biggest thing is determining when to retire. You know, Ottovon Bismar, he was the kind of the the godfather of retirement. He brought up the idea of retirement in the late late 1800s over in Germany. He came up with a retirement age of age 70. The problem with that is that life expectancy at that particular time was about 42 and a2 years old. So if your life expectancy is 42 and he comes up with a retirement age of 70, not many people actually retired. Um and the problem is with today our retirement age is 65 to 67 and we’ve got a slide coming up here that will uh show that. But the life expectancy is much uh much older than that. You know, 80 mid80s uh for the majority of people, some even well beyond that. My dad’s side of the family typically lives until their mid9s or, you know, pushing 100. Um and uh so it’s a very different time frame right now than than it was back in 1890 when the term retirement came into uh into play. Now there was a a study a research uh that was done recently that asked many people at what age do you think that you’re going to retire. Most people said that they wanted to retire between 60 and 65. And obviously that is a big goal for many for many people out there. But the problem is is there was a lot of people that didn’t retire until after 65. Some of those that retired early retired for different reasons. So the average age of retirement was 62. And so why do you think that some people retired early? Well, there’s there’s three different reasons that uh that uh people retired early. Um reason number one, personal health uh issues. I’ll be honest with you, that’s what happened to my wife. My wife was got a lot of health issues. She had to retire early. Or it may not be just health issues for you. It may be health issues for somebody else. A loss a job, downsizing or stress or burnout. Uh my dad falls into that uh category. He lost his job early on. Well, I shouldn’t say early on. He lost a job before retirement. He was very very specialized in what he did and he just couldn’t find another job. So, he uh he retired early uh because the company uh had layoffs and everything. And then there’s some other people that uh get the the benefit of having a buyout offer and they can retire early because the company gives them a lump sum here. Now if we take a look at this, so for about 70% of retirees, the reason that many people retired early was it’s something that was completely out of their control. You can’t really control any of those things that uh that happen up there, especially in the top two. You really can’t control those things. If there’s a health issue or if a company has layoffs, it’s completely out of your control. By far, the majority of people retired between uh 61 and 65. The majority, even more than that, retired prior to 65 for whatever reason. And we just covered three different reasons. There’s only a few uh a handful of people percentage-wise that retire at at uh 65 or or beyond technically 66 or beyond. So let’s take a look at why people couples should plan for retirement based upon different ages. Uh often times there’s a couple of years difference between a husband and wife uh or spouses if you want to say. In my situation, my wife is uh three years younger than me. And that’s okay. So, when you first get married, a couple of age difference is really not that big of a deal. It is going to be down the road though when you go to thinking about retiring. So, it used to be retirement age was at 65. So, when the uh if this is your scenario here, when the husband went to decide to retire, he could get on Medicare at 65 years old. but his wife couldn’t go on Medicare. She couldn’t get it for another couple of more years. Now, fast forward that even further. Statistically speaking, uh men pass away at a younger age than women do. So, if the husband is a couple years older and he passes away early and if we look at statistics, the wife could live quite a few years in retirement on her own. And that is something that people need to need to take in into consideration. So there are some very important ages when you’re talking about retirement. Um so if we take a look at these, so prior to 59 or younger than that, you can add money to a uh a retirement plan. But once you turn 50, then you’re allowed to add more to a retirement plan. It’s called a ketchup. I’ve got to say that really slow or people get it confused with a condiment. So, at age 50, you can start adding more to a 401k or to an IRA uh than you could uh prior to 50 years old. At 55, some people depending on the situation, but some people are eligible eligible for early distributions from their current plan. Okay? uh your current employer plan at age 59 and a half. That is so if anybody wanted to take any money out of IRA accounts prior to 59 12 there’s an additional 10% on paid on taxes. Um but at 59 a half that additional 10% goes away. At 60 you can either have a widow or widowers uh social security eligibility. And at 62, anybody can apply for social security if you qualify. Now, the problem with uh uh applying early at 62 years old, you’re going to get a much lower amount than if you waited until your full retirement age, and it’s going to stay at a lot lower amount for the rest of your life. It’s going to be even more difference the the older you live because COLA, the cost of living adjustment, uh the increase that Social Security, uh gives is going to either be based on a lesser amount if you took it out early or a greater amount if you waited till your full retirement age or even until age 70. It’s the same percentage for everybody. It’s all based upon uh primarily I should say it’s based upon u inflation. Uh but if everybody’s getting the same amount if you took it out early you’re just getting a lesser of an increase uh that year. At 65 in a number of different months uh people or give or take three months people can enroll for Medicare. I absolutely encourage that you enroll for Medicare part A at 65. Uh part A is hospitalization doesn’t cost anything to have Medicare part A and if you don’t do it then you may uh come into some issues down the road when you do go to qualify for it. Again you don’t need part B if you’re covered by say a group health insurance or whatever. But part A is really important to be able to um to get. Now at 67 everybody is at their full retirement age. So, it’s again, I’ve got a slide coming up. It’ll show you 66 in so many months or 67. Uh, then everybody is will be in their full retirement age amount. Now, uh you don’t have to take out social security at 67 or your full retirement age. You can if you want to and you can continue to in uh to earn an income at your full retirement age and there’s no deduction in benefits. Uh if you take out social security prior to your full retirement age, there is a limit on how much you can earn each year without acrewing a penalty. And I want to say it’s somewhere around $22,000 give or take a little bit. Um, so but if you’re if you’re working full-time, don’t don’t take out social security prior to uh your full retirement age. At age 70, that’s the last age that social social security will increase. So from 67 to 70 if you don’t take out uh social security uh they they give you what’s called delayed credits and it’s an 8% bump in your social security. Um and again down the road that might benefit you because of COLA. The cost of living adjustment is going to be based upon either a higher amount at age 70 a little bit lesser of amount at your full retirement age or even lesser than that at 62. Now, at 73, if if you are at the age of 73 prior to 2033, you’re going to have to start taking out your RMD, required minimum distribution. This is money, excuse me, that you have to take out every single year from your pre-tax 401k or your traditional IRA. And that’s if you’re not working for that company in your 401k. So, if you’re not of the age of 73, by the year 2033, it bumps up to 75. It used to be 70 and a half, then they changed it to 72. Now, it’s either 73 or 75, uh, depending on when you were born and everything. So, uh, again, at those ages, you have to start taking money out of your traditional IAS. Your Roth IRA, you don’t have to, but your traditional IRA you have to take out. It’s roughly it starts out roughly about 4% per year that you have to take out and then every year thereafter the percentage uh slowly increases
uh topic number two take a mature retirement target. So I’ve got three rules of thumb to take a look at here when we’re talking about that. Now rule of thumb number one save enough to generate anywhere from 70 to 90% of your pre-retirement income. Again, most people don’t do that, but it’s a good rule of thumb. If you can do that, then you should feel very confident that your retirement is going to be very, very good. Now, there’s some costs that may go down. Hopefully, your mortgage is paid off. You don’t have to do that anymore. Transportation. I work from home. My transportation’s probably going to go up because I don’t uh I don’t have to tra to drive anywhere and I will have time to to go see my grandkids or whatever. Uh clothing will probably go down. You don’t have to buy such nice suits um dress clothes or anything like that uh as for a work environment. Uh and then food. you’ll have time to be able to cook at home and uh you won’t be going out to dinner or lunches and everything with all the co-workers. Now, there’s some costs that may go up. Healthc care may go up. I work for the credit union. Credit union uh as part of my benefits, they pay a good chunk of the health care. I do pay some, but uh Medicare is will cost more than what I have to pay currently. Travel could very well go up. I’ve got uh in-laws that live all over the country. I’ve got brothers that live all over the country. Uh so we can travel and visit them and and do different things. Uh utilities will probably go up. You know, if if you work in an office, you’re going to be home now more often. You’re going to have lights on more often. The TV’s going on more often, whatever. And then home maintenance probably will go up. For me, that’s almost a guarantee because I’ve got grandkids that come love to come over and just wreck havoc on my house. It’s pretty funny. Um, I just fully expect that when I retire, the grandkids will probably be over more often and I will love it. Uh, because then I can spoil them and then send them home after I’ve doped them up on sugar and everything. Uh, so my home maintenance will probably go up. My grand I’ve got two grandsons, four and six. I’ve got three, five total, but four and six spent the night with me last Friday night and uh something broke. And then my four-year-old grandson, he thought it would be really cool to stick it down in my air vent into the floor. Where he comes up with some of these ideas is just mindboggling. I just have to laugh at him. He’s such a funny kid. Now, costs may go away. Obviously, if you don’t have an income coming in, then you’re not paying social security payroll taxes. And again, without an income, you can’t do any contributions into a retirement plan. So again, just to kind of recap, if you can generate anywhere from 70 to 90% of your pre-retirement income, you should be feel very comfortable um with retirements. So rule of thumb number two, save a multiple of your salary based upon your age. So, a good rule of thumb in here is if you take a look at these, let’s say you salaries $100,000 and you’re 50 to uh 55. So, then you you know, again, if you have saved anywhere from 600 to $800,000 in retirement accounts, you should be able to feel very comfortable. Now, if you don’t have that saved, it’s not the end of the world. I’ve got some slides coming up here that can help you understand that it’s not out of uh not all hope is not loss. Okay, we’ll take a look at some slides coming up here. And then the third rule here is save enough to generate a 4% withdrawal rate. So, if we take a look at that and let’s say you want to add an additional 25,50 or $100,000 to your your income for the year in order to generate that amount and do a 4% withdrawal withdrawal withdrawal rate for the next 20 years. If you’re getting a 1 and a.5% return, this is the amount of money that you need to have in uh in um in your assets to be able to do that. Now, a shameless plug here for Alliant Credit Union. We’re paying double that one and a half percent return, but obviously we don’t do that all the time. Interest rates fall. Uh savings accounts are going to go down, CDs are going to go down, things like that. But let’s say you want to have an additional $25,000 for the next 40 20 years uh to get a 4% return. You need a little over half a million dollars in in an in your assets. If you want 50,000, you need a little over a million. And if you want 100,000, a little over 2 million to be able to do that. Now, if you get a higher return than uh 1 and a.5% and let’s say you get a 5% return, and 5% return is not being aggressive. It really isn’t. Uh, but you you as you can see here, you need a lot less money to be able to take out 4% per year over the next 20 years and get the 25,50 or $100,000 that uh that you want. Now, what if you need to save for 20 years of withdrawals? Okay. So again, if you have a 3% return here, if you want to have a 20 uh 20 years worth of withdrawals, getting a 3% return. And then if at $25,000, you need $476. At 50,000 for a year, you need 952. And if you um want $100,000 a year for the next 20 years, then you need just shy of $2 million to be able to do so. Again, that’s a 3% return. Now again, if you’re if you want to take on a little bit more um return and get a little bit better return, you can see obviously the more of a return that you get, the less that you need overall. And again, a 6% return is not being aggressive. There’s some very very good uh conservative things out there that can give you a 6% return. So item number three is to maximize your nest egg. So as I just mentioned, if you’re not at that uh uh you know 6 to eight times your salary, here is the plan that hopefully that you can get there. Let’s take a hypothetical uh situation here. Uh and let’s say that uh we got a husband and wife here. The wife is a retired school teacher and now she volunteers time at a historical society. And let’s say the husband is a is an engineer and he earns 50 $150,000 a year. Let’s say they’re both 50. And then let’s take a look and see what we can do here. So again, your contribution into a 401k, there’s an annual maximum that you can contribute. And into a 401k is 24,500. A simple uh 401k or a simple IRA 17,000. and a set IRA is a maximum of 72,000. So since he’s employed, he can only do into his 401k. So he puts in 24,500 and the employer matches 3% which is standard. So they’re going to put in $4,500. Now, um he can also contribute more since he’s 50 years old. He has that catchup uh that he can do. so he can add an additional $8,000 into his 401k through his work. Okay. Now, um you can do it into you can also contribute into a traditional IRA as well. Okay. So, since he’s 50 years old, he can put $8,600. So, it’s a 75 for everybody. But since he is 50 and older, for those that are older, you can do an additional $1,100. So that’s a total of uh $8,600 that he can contribute for into his uh IRAs for the year. Now even though his not wife is volunteering her time and not earning any income coming in, she can still contribute money into her IRA account based upon his income. Again, since she’s 50, she can do $8,600 total for the year. And if you add all these things up, you can contribute 45, excuse me, $54,200 into uh uh IRA accounts. So, let’s say you don’t do the maximum amount. Let’s say you just do $51,000. And let’s you say that over the next 15 years, because again, if they’re both 50, he wants to retire at 65. And if you get a 6% return, again, which is not ultraaggressive, it can add up substantially. So over those 15 years, you can have $1.2 million or add $1.2 million to your retirement. And then again, you and that’s just until 65. And then you’re going to hopefully be living quite a long time after that. you wouldn’t be able to add money to that if he decided to retire at 65, but that money can still continue to grow uh for him. Topic number two, you want to get a portfolio checkup. So, the average worker has about 12 different jobs throughout their lifetime. My oldest son has probably done that already in his lifetime. He has jumped from job to job. He’s been in one spot now for quite a while and he really likes it. But that means you could have potentially four or 12 different 401ks out there. And 63% of American workers, they have access to to a defined contribution plan at work. Now, for many people that just uh start a new job, 69% of plans have automatic enrollment into 401k. So, let’s say that in a previous job, well, excuse me, in your current job, you are, you know, getting closer to retirement. So, you want to be kind of balanced kind of down the road. You have a 60% stocks, 40% bonds. That’s what you have in your current one. But let’s say you had three other uh previous 401ks out there. Obviously, they were when you were younger, and let’s say that you were ultraaggressive in that time. If you combine all three of them to take a look to see what you’re uh where you’re at, you may find out that you are a lot more aggressive than what you expected that you would be. Now, it’s not necessarily a bad thing, but again, you want to take a look at all the different retirement plans that you have out there. Um combine them all at least on paper just to see where you’re currently are at. Now, let’s uh let’s take a look at to see what would happen if you were overinvested in stocks. Okay? So, let’s say you’re you’re at u at $900,000 and your goal is to retire in three years. And let’s say that you are 100% stocks. Uh now your goal in order to retire at um uh at uh at a million dollars, if you get an 8% return over those three years, you would have $1.1 million in your portfolio. But what would happen if that was at the tech bubble burst and beginning of 20 beginning of 2000, 2001, and 2002, the tech bubble burst happened and the stock market was down for three years in a row. If you were overly invested in stock market, say 100% into stocks, your 900,000 could have fallen down to $584,000. But if you were 5050, not overaggressive, not uh ultraconservative, but right down the middle, your 900,000 would have then only fallen to $871,000. Now, if you decided to go ahead and leave everything as is, your 50/50 plan would have earned you that million dollars within 12 months. And your 100% stock plan, it would take it would have taken you almost four years to get back up to that hundred million or that million dollars that you were ultimately that was what your goal was. Let’s take a look at another scenario here. Let’s say that you’re at $900,000 and your goal is to retire in three more years. You want a million dollar. And let’s say that you’re not overaggressive. Let’s say you’re 50/50 and the stock market crashes and burns during the Great Recession. Okay? If you panicked at that point and took all the money out of the stock market and put it into T bills, by the time you were going to retire, you would have had $713,000. Okay, if you didn’t panic and if you left things as is knowing when the market goes down, it has always rebounded again. Sometimes it rebounds faster than others, but it has always rebounded. If you didn’t panic, it didn’t take anything out. You still would have been able to retire in those three years with a million dollars with your T bills. it would have taken you almost until now to be able to get up to that million-doll marker. So again, get a good plan game plan going. Know that the stock market is going to go up and know that it’s going to go down. Historically, whenever it go has gone down, it’s it has always rebounded and come back up. As I said, sometimes it comes up faster than other times, but if you’re not ultraaggressive and you just leave things as is, it’s going to be well for you. You know, the um Warren Buffett always says that he buys when people are selling and he sells when people are buying because people buy into the stock market emotionally. the stock market falls and they go down and down and down and then people finally panic because they’ve seen their market go down and then they panic and sell out of it at the wrong time and then the market rebounds, come back up and then people wait and wait and wait to build up their confidence back up again into the stock market and then they buy in after it has already risen. If you don’t panic and you don’t get out of it, it’ll rebound. It’ll be fine for you. Now, you want to update your beneficiaries. You may have a new spouse. My mom passed away in 2016. And my dad got remarried at the end of 2017. Uh they were old enough. They were in their 80s, so they uh kept things separate. My my stepmom and stuff, but you know, it might be younger. But you want to take a look at beneficiaries. I’ll tell you when then my dad passed away a few years ago when he was um getting closer towards towards his time that we knew he was going to pass away. We, you know, he had a trust set up, a highly recommended trust over a will, but he had a trust set up and me and another brother were uh co-rustees on that. We noticed that he had this uh little IRA account out there that he still had my mom on as the primary beneficiary and he had only one brother, one of my brothers as a as a contingent beneficiary. So we were able to put the trust as the beneficiary. So you want to take a look at that. Uh you may have young children or grandchildren in my case, see if you want to add anything and and u you know leave them anything. Uh and as I mentioned earlier, I highly recommend recommend a trust over a will. Um it’s just more more uh solid uh more concrete when it comes to the uh uh dividing up the assets and everything. So item number five, you want to create a social security strategy. So when I talk about social security, I always hear, “Oh, social security is going to go under. It’s going to go bankrupt. we’re not going to ever have social security for uh this older people and stuff. That is not true. Here’s what it is. Up until a up until 2020 or 2021 actually, there was more money going into social security than what was coming out to pay benefits. Uh in 2021, that started to flip uh because the baby boomers are retiring and they should retire. Uh but because of that there is now less money going into social security than what’s coming out. So it’s the surplus that’s expected to run out if the government doesn’t do anything. It’s the surplus that’s that’s expected to run out somewhere around the year 2033. Okay. Now, I highly highly doubt that the um uh the the different political parties don’t come up with something to save Medicare or Social Security, I should say, Social Security. If they don’t do something, I think there’ll be bigger riots than we’ve ever seen, even in the recent history. Now, if they don’t do anything, Social Security benefits may drop by about 22%. But one of the things that they can do, and there’s a number of different things, but one of the things that they can do is raise uh Social Security payroll tax. Okay? It’s a ugly uh don’t kill the messenger. It’s an ugly thing to say, but in order to uh have enough social security paid out to those that have put into it, uh then there’s probably going to raise uh income tax, some sort of a tax, increase some sort of a tax uh to uh benefit Medicare or Social Security and keep that going. As I mentioned earlier, here’s this slide that is uh for the full retirement age. So take a look at this. This is uh whatever year you were born, this is the year that your full retirement age kicks in. Now I often get questions, what is the maximum that you can earn in social security? So these are the maximums here. If you paid into social security, the maximum amount, this is the uh the max the average maximum benefit that you would you would get back. If you had an average job and received an average income, this is what you’re going to be receiving. So again, my social security uh full retirement age, I should say. My full retirement age is 67. If I had an average job paid in the average earning an average wage and everything, uh my benefits would be $2,600 a month uh in social security. Now, the more money that you had made in your lifetime, the less social security is going to contribute to that 70 to 90% of your income. If you made less in your line lifetime, then Social Security is going to contribute more as a percentage to that. So, if you earn an average of $50,000 a year, once um once you uh turn on Social Security, it would cover about half of that 50,000. Okay? If you earned $100,000 and you turned on Social Security, it would be about 40% and you can see 32 and 25% if you made over uh $200,000 in a year. So, so if you earn that income, you definitely want to make sure that you are contributing into a a retirement plan as much as you can to offset the uh the difference there. So, item number six on on the agenda here is to build a retirement income plan. So let’s take a look at different uh uh returns for different amounts or for different uh percentages here. So let’s say you have a half a million dollars and you put it into a money market account earning 2 point.22% return. You’re going to get $93 extra a month off of the interest from that. If you’re able to get a half percent, basically a half percent, then you’ll earn four $214 a month extra on that. Now, by not being hardly any more aggressive at all whatsoever, if you put those into different kind types of bonds, and if you’re getting a 2.79% return, you can see that an average monthly income would be $1,100, a little bit more than that. if you want to do mut bonds getting 3.94% you can get a little over $1,600 a month and so you can see here the higher return that you get obviously then the more of an income that you’re going to be able to uh obtain. Now, let’s say if you want to have systematic withdrawals and let’s say you want to take out $1,500 a month and you have an individual stock that has a share part a share price of $5. So, if it’s at $5 and you want to be able to take out uh money, then you would have to take out 300 shares. right here is if the if the share price increases 20% up to $6, then you only have to take out 250 shares. But if it drops down to the 4%, then you only have to then you have to increase the number of shares up to 375. Okay? Okay. So, it it’s going to depend on when uh you know what the price of the um of the investment is to see a how much you’re going to have to take out to get that systematic withdrawal. So if you put it into some income producing products and there’s no distribution from original savings. Okay. But if you if you want to have uh some dividend paying stocks then the income is going to fluctuate because not all dividends pay the exact same. Even a savings account is going to change a different uh over time here. Um but your income could fluctuate if you do the income producing products. But again, if you have a systematic withdrawal plan, then you know what your budget needs to be because you’re going to have consistent income, but you may dip into your original uh savings. Just the two different things that you have to take a look at. So, the last item that we’re going to talk about here is to look beyond the money. Now, there was something uh done a study done some time ago about the happiness curve. Okay? As you can see, typically ages 45 to 50 is usually the least happy. Um, you know, you’ve got children that may be going into college or or going into the workforce. You want to make uh you know, you’re kind of stressed out to make sure that your children are are doing the right thing for their future. You may have ailing parents that you may need to be concerned with or whatever. But the the good news about that if you’re within that age, and I’m I’m 58, so I’m a little bit on the upswing there. But the good news is happiness usually gets better later on in life. And there’s a number of different things that factors into somebody’s happiness. Health, health is a big factor into happiness. As I mentioned earlier, my wife had to retire early because of health. I’ve seen the benefit. I’ve I’ve seen the what health can do on somebody’s happiness or even state of mind. Friendships, you know, often times you have lifelong friendships that you have in retirement and you have the time to hang out with them and do a little bit more. And then family, as I mentioned, I’ve got five grandkids currently right now. I love hanging out with them uh with my grandkids. uh and uh that that bring me brings me joy and especially it brings me joy knowing that I can send them home again which is awesome. Now the island of Okinawa has they’re known for being very very happy people and they’re also known for their longevity and they have something that they call there is called icky guy and basically icky guy is something to live for. So what you need to find out in retirement is what is your icky guy? Find out what you love and go ahead and do that. find out things that you are good at and find out what the world needs and then if you can get paid to do those things even better. You know, at that point in time, as I say, it’s it’s not a job if you enjoy what you’re doing. If you’re in retirement and decide to do something different, it’s not a job. It’s something that you enjoy doing. So, I’m sure that that will improve uh your happiness and and possibly even your longevity. So in retirement, you know, you may decide to uh contribute to a cause. Okay. Visit family or friends. I mentioned that I’ve got family all over the country here. May pursue different hobbies. you know, a buddy of mine uh is from Australia and he has said that up until well, he’s still working a little bit, but uh he says up until about now, either he’s had all the time in the in the world to go back and visit his family and friends in Australia, but he’s had no money, that’s when he’s been unemployed, or he’s had all the money to be able to go and do that, and that’s when he’s been um but he doesn’t have the time to do that. That’s when he’s been employed. So, in retirement, you want to hopefully be able to have the money and the time to be able to go and do what you want to do. Here’s a few examples of people that in retirement didn’t slow down and they did some amazing things. Peter Roier developed the first theorist when he was 73 years old. Uh, Colonel Sanders started his first KFC at 65 years old. Madonna Buddhis known as the uh the Iron Nun. She started her, excuse me, she started training for triathletes when she was in her 40s and she finished the last one when she was 82 years old. That’s amazing. Grandma Moses started painting when she was 73. And Yichiro Murray, he set a record of cl of being the oldest to climb Mount Everest at age 70 and then he crushed it when he was 80 years old. So these are people that in retirement didn’t slow down, didn’t stop. They continued to do what they wanted to do. They found their eeky guy and was able to have a very good and long uh life in retirement. So an unknown author once said, “Retirement is wonderful if you have two things to have two essentials, much to live on and much to live for.” So find out what your icky guy is and and uh and live for that. So just to kind of recap, uh here’s the seven different things that you need to do in the decade before you retire. Um I obviously I highly highly encourage you to work with a financial professional. Again, that’s what we do. Oops. That’s what we do here at Allian Credit Union. We are uh financial professionals, financial consultants here and we can help tailor a plan specifically for what you’re looking to do and to be able to live in retirement. As I mentioned very early on, we do have this report that I do recommend that everybody take advantage of. Here’s a few slides of what this report can do. So, it’s, you know, it covers a lot of different things. this report here, you know, we’ll take a look at how much social security you’ll be able to I get in here in this particular slide here. The dark blue is the social security that you have in here. The light blue is the pension plan if you have it. You can throw in rent. You can throw in anything in there as as extra. The red line there is the uh this particular situation is their expenses. And then the orange there is the RMDs that have to take out. Unfortunately, well, these people unfortunately do not need the RMDs to survive and to uh pay bills. They’ve got enough income to be able to do that. But unfortunately, they have to start doing it uh at 73 or or 75 depending on uh what their ages are. You know, if we take a look at that report here, it will give us our cumulative taxes that you will pay over your lifetime. uh and then again how much portfolios will be left uh on to beneficiaries when you pass away. A big thing that uh I am hearing quite a bit out there and I have many people ask me about is what about Roth conversions? Does a Roth conversion make sense for you? Uh and you know every time I talk to somebody about that I never know the outcome until I run this report here. And we can do a Roth conversion in a number of different ways. For example, this one here is if we just do a set amount, say $60,000 for the next 8 years, what will that change in taxes and or accumulation? So, in this particular situation, it would reduce this couple’s taxes, overall tax uh consequences by $140,000, and it would greatly increase their portfolio by $828,000 when they go ahead and go ahead when they pass away. But not only is it just increasing it by 8 $800,000, it’s also increasing it quite a bit in the Roth account that then their beneficiaries will also be able to cash in tax-free when they re when they need to. Another example here, Dave and Sarah. Uh, if we plug in some numbers here for them, we can see that they’re going to have their assets continue to grow in retirement. And if we do it into a tax bracket, this is typically what I recommend is we fill it up to a set tax bracket. maybe keep it in within the tax bracket that you are currently in and just whatever the income is figuring out what the maximum tax bracket is and then reduce that. In this particular situation, if they do that for the next 5 years, then they will um it would save them $116,000 overall in their lifetime of uh of paying taxes. and it would increase their their a assets when they passed on by $250,000. So, is a Roth conversion good for you? Maybe, maybe not. I never know until I until I um I run the numbers here. Now, let me share something with you here. If you look at the last four lines here, that little triangle there, that’s when somebody passes away. Now, when if you’re married and you have a spouse that passes away, um or anyway, let’s say you’re the surviving spouse here, you know, if you have traditional IAS, if you’re still within the same or very close to the same age, you’re still going to have all the RMDs that you’re going to need to do. But the problem is is that you’re going to be filing now as a single person, not as a married filing jointly. So even if the income reduces down, your tax percentage might increase. Okay? Call it the widow or widowers tax. So, one thing that a lot of people don’t take that into consideration is that there, you know, when one person passes away, you’re filing as a single person, your tax bracket might uh increase and you might be paying uh more in taxes. Even if it’s the same amount or maybe slightly less, you still could end up paying more in taxes. Okay. Now again with this uh with this particular situation here obviously in the beginning years when you’re doing the Roth conversion it will increase your taxes for those years because any of the money coming out of a traditional IRA you have to pay taxes on it but it would then uh um eliminate that amount there uh would go into a Roth IRA so that you wouldn’t have to do any RMDs down the road on that and it can stay in there and continue to grow and you’re not required to take any money out of the Roth IRA. So, just to kind of end this thing and I’ll get into questions here. So, again, if anybody has any questions, please type it in the chat or the uh Q&A uh question and answer and I’ll get to those questions here in just a little bit. But why Aerys? Why why us versus uh somebody else or whatever? You know, the the cool thing with ARIS is number one, we want to get to know you and we want to design a plan specifically for your situation. And then we use a team approach to come up with that plan and make sure that we’ve got all of your bases covered and then you can have a very good comfortable retirement uh and life for the rest of your life and living for the rest of your life. And then lastly, we want to build a lasting relationship for life. The cool thing with with Aerys, excuse me, is that for example, all my clients know that they call me directly. Uh my phone number rings directly on my desk and they can call me. Now, a pays me to talk on the phone and I would like to say I do a pretty good job of that. So, oftentimes they will get my voicemail, my voicemail, but I will pick up every time that I can. If they leave a message, I will call back within 24 hours. Usually by the end of the day, but sometimes it’s the uh by the next day, but I I always call back. Now, here is my contact information. My direct phone number here at Allian Credit Union is 773 4628612.
As I mentioned, that rings directly on my desk here. Uh if you have any questions, absolutely feel free to uh give me a call here. That’s my email address, bbaker.lpliancreditun.com.
Um now with that being said, let me get into some of these questions here. I’ve seen some pop up. Um while I’m doing that, let me let me do this. If you would like to have a one-on-one question, uh a one-on-one conversation with me, I would be glad to to have that with you. If you’d like this report ran, I’ll be glad to run this report uh for you for your situation here. Go ahead and hit yes to this uh question and I will reach out within the next couple of days. I will give you a call first and uh if I don’t get you on the the phone, I will then shoot you an email. And in my emails, you all have access to my calendar. you could schedule a Zoom call uh with me and that way um we’re not playing a phone tag back and forth. Um so let me get into this questions here. Uh will there be a recording of this webinar shared un as I mentioned in the very beginning? No, there’s not a recording. This is purely for educational purposes. There is no recording on this one here. Um you can always call me anytime that you would like to if you have a question. Uh another question here. I’m 61 years old. Can I do a Roth conversion now? Yes, you can. I am not currently working. Does not matter. I had to quit to care for my husband full-time. I’m so sorry to hear that. So, a Roth conversion is not adding to your retirement plans. It’s just moving from one tradition from a traditional IRA over into a Roth IRA. You can do that at any point in time. There’s no and you can do it for any dollar amount. Um, you know, more it’s not considered a contribution, which is brand new money, not in a retirement account going into a retirement account. That’s a that’s a contribution, but anybody at any age, regardless of income, can do a Roth conversion. Uh, another question here. Does contributing to an employer’s Roth 401k plan or personal IRA impact the cost of one’s Medicare premium? Uh, not contributions, but I’ll get into that. I thought I once heard that it’s not good to contribute a year or two before starting Medicare. Is that true? No. It’s not the contribution that impacts the cost of Medicare. It’s the income that you have. It’s called Irma. I R M A. If you have in in I want to say it’s $109,000. If your income is less than $109,000, you don’t have any additional costs for Medicare Part B or Medicare Part D. Again, Medicare Part A is free. But if your income is 109,000, I want to say it’s 124,000, then you’re going to pay an additional 80 or 90,000 a $90 a month for part B and D. And if it’s above 124, it can get quite uh quite expensive for Medicare. If you are uh are lucky enough to be able to save for retirement and have a really good nest egg, by the time you have to start doing your RMDs, you may be paying a couple hundred extra a month for Medicare Part B. That’s why a Roth conversion might really benefit you. So again, it’s not the contributions, but it’s your income during retirement to see if uh Medicare Part B and Part D is going to cost you extra. Uh how can I find a worksheet to see if I can convert to a Roth IRA? Um Lisa, contact me. Um hopefully if you answered yes to the questionnaire, I’ll reach out to you. Um but if uh it it’s a program that I run here. So I have a spreadsheet that I have created and I uh I I fill that spreadsheet out or have my clients fill that spreadsheet out and then based upon that uh the answers that will determine whether a Roth uh Roth conversion is the right thing for you to do or not. Okay. Um, and I I think that is all the questions that I have on that. So, again, we’re right about the hour or 55 minutes into this. So, just just a little bit before the uh the hour mark. So, thank you everybody for uh spending the this hour with me here. Uh for those of you who answered yes to the questionnaire, I will go ahead I will reach out to you over the next couple of days. again. If I get your voicemail, I’ll shoot you an email and you can schedule a time to do a Zoom or give me a call back. Uh, whichever is uh most convenient for you. Uh, a few people have said thank you. You’re sure welcome and thank you for joining me. I hope you all have a great um uh rest of the day and rest of the week and hopefully we’ll catch you on another podcast, another uh webinar soon. Take care everybody.