Hey, welcome everybody. We still have a couple of more minutes before the top of the hour here. So, we will uh wait until then to uh start this webinar. But in the meantime, let me tell you something kind of a little interesting here. So, uh um I have an uncle that passed away last weekend, unfortunately. And I don’t want to turn this into a oh, I’m so sorry, but what’s interesting here about him and my mom is they’re twins. Now, I’ve known twins. My I actually have two younger brothers that are twins as well. Uh so twins are not all that uncommon. They’re not super common. But anyway, what’s really more interesting about my mom and my uncle is they were actually born on leap year. So twins born on leap year. I I think that’s extremely rare. But uh anyway, that uh just kind of came to my mind here. my uh my tomorrow actually is the 10-year anniversary of my mom passing away. Uh and again, I don’t mean to turn this into something sad or anything like that. I celebrate both their lives. I had a great life uh for both of them, but yeah, twins born on Leapear I would think is extremely rare. Um so, but uh anyway, I’ve got uh that funeral going on uh this uh this Friday. um he died what he loved to do. He was uh he was uh at his vacation home with buddies that he’s been hanging out with for decades and decades. So anyway, so yeah, twins born on leap year top that I don’t know if anybody can top that in something rare, but uh anyway, with that being said, it is now the top of the hour. Let’s go ahead and get started here. Let me share my screen here with you. Uh click on this. There we go. Awesome. Okay. All right. So, again, welcome uh this evening. Uh my name is Bernell Baker. I’m a financial consultant with Alliant Credit Union. Uh I work for the Alliant Retirement and Investment Services. Uh I’ve been with Alliant now for almost 14 years. I think uh November it’ll be 14 years. I love what I do. I love working for the credit union. Uh I work out of my house. That’s a big benefit. I’ve been doing that for about 12 years now. Uh way before COVID hit and before we got all cool and everything like that. Uh I’ve been doing it for quite some time. So with that being said, uh let’s go ahead and get into this here. Uh just one thing is this is for educational uh purposes only. This is uh this is not being recorded and we ask that you don’t record it either. uh and it’s proprietary here for land. We we offer these services as a complimentary gift to all of our uh members of the credit union. So, we just ask that you uh respect that and uh don’t distribute or use any part of this presentation to uh anybody else. If you have any direct uh questions about uh anything in here at the end, I will have my uh phone listed and um and uh we can talk. So with that being said, let’s go ahead and get into this. So again, this is the different the website that we have here and uh the webinars we have are complimentary. It’s uh it’s there’s so many different topics that are available out there. Uh we also have the invests podcast. I’ll be honest with you, we haven’t uh put out a new podcast uh recently, at least not that I know of. Uh but the information is not time-specific. So the the podcasts that are out there uh are still good to listen to at any point in time. And then we have the uh the Aerys website and the blog uh that talks about us as a team and and everything. So with that being said, let’s go ahead and get started here and we’re talking about the home stretch, the seven things that you need to do uh in the decade before you retire. So if you kind of think about retire, you know, your your work life kind of like a marathon, you know, you’ve, you know, trained hard for it, you’ve you’ve ran most of the race and everything and then right towards the very end of it, that’s when you’re tired, your muscles ache in in a marathon, um you’ve got to really dig down deep and continue to going. You don’t want to stumble and fall just before the finish line. And that’s the same thing kind of with retiring is you’ve worked hard your whole life. Now it’s time to enjoy the rest of your life and hopefully you’ve done everything that you can do to have a great retirement and you don’t want to stumble and fall. So the seven things that we’re going to talk about here is to help uh eliminate you from that stumble and falling down. So here’s the different topics that we’re going to take a look at at different subjects here. And each one of these has their own, so I don’t need to go into each one, but let’s get into the first one here. So, determining when is the right time to retire. So, the grandfather of retirement was a gentleman back in in um in uh Germany in the 890s and by a name of Otto von Bismar. So, he was the first one that ever brought up the idea of retiring. So at that age or excuse me at that time he put the retirement age at 70. Well that’s all fine and great but the problem is is the life expectancy was about 42 43 years old. So you would have to almost double the life expectancy just to contemplate on retiring. Now, if we fast forward it to our time in 2026, our retirement ages are anywhere from 65 to 67, depending on when your birth date was. But our life expectancy is much longer than that. Anywhere from 82 to 85 typically for men and women. So, and there’s many people that live uh longer than that in retirement. And so the retirement now is completely different than what it was back in the 1890s when it was first mentioned and and first thought of. So there was many people that were asked on at what age do you think you’re going to retire? And there was a lot of people that said that they’re going to retire anywhere from 65 to 70 years old. And a few people said that they would retire prior to 65. Well, you know, the median age the people that said that they wanted to retire was about 62. Okay. Now, but the problem is is many people uh had to retire early. You know, for some reason people have to retire prior to the age that they want to based on personal health, a job loss or downsizing in in uh in a company or the company may offer early buyouts. So, I’ll give you examples on all of these. So, my mom, excuse me, my wife is retired. She had to retire because of health issues. We just deal with health issues with her. I was talking to a buddy of mine last night. Uh his wife at 45 was diagnosed with early dementia. Um he’s 60 now and she’s getting uh to be quite a handful. So, he had to quit working to help take care of his wife as well. Uh my dad lost his job and he was very very specialized in what he uh did and he could he uh lost a job at 55 and he just could not find um a a job in the same field that he did. And then I deal a lot with um uh airlines uh pilots and flight attendants and and ram people and they quite often have early buyouts uh for their employees. And so any one of these things can happen to any one of you. The problem with all of these is the majority of those that are retire is for reasons that are outside of their control. You know, you may have a loved one that is health issues. Like my buddy last night, my wife’s health issues are completely out of her control. She does everything she can, but they’re out of her control. my dad losing his job, you know, it just the whole company about 25% of the uh employees uh lost their jobs at that time. So the majority of people that retire retire anywhere from 61 to 65 years old. Now m you know bes besides that people are retiring prior to 61 years old. That’s where it makes up the other difference. And let me back up here. And then there’s a few people that are able to last beyond 65, you know, and and so you probably ought to plan on, you know, prepare to retire early, but if you can retire, well, retire whenever it’s convenient for or most convenient for you and beneficial for you. Now, couples should plan for age differences in their marriage. So on average uh there’s typically about a 2-year uh age difference being between spouses typically. Again I’m just talking typical there it’s you know my wife and I are three difference uh three years difference. Uh she’s three years younger than I am. But if you take a look at a at a couple here that are two years difference. The husband’s 25, the wife is 23 years old. Uh and that’s fine. And those those are good ages and and everything when you first get married. But down the road, if the husband wants to retire early, he can get on Medicare at 65 years old. If his wife isn’t working, then she’s got to come up with some sort of health insurance between 63 and 65. Now, typically men pass away at an earlier age than women do. And so if that happens, let’s say the husband passes away at 82. The wife then would be 80 years old. Women typically live longer than men. Not in every situation, but typically they do on average. So the wife could actually be alive in retirement on her own for 9 years or so. Okay? Those are just things you need to take into consideration when you’re looking at retirement and things that you don’t want to uh have a negative effect on you by doing something earlier on in retirement. So, let’s take a look at some ages that are very important to understand about retirement. So, at 50 years old, you can contribute more to a traditional IRA, a Roth IRA, or into a 401k. It’s called a catchup uh period. Okay, I have to say that really slow so we don’t confuse it with a condiment, but you can start contributing more to a traditional or a Roth IRA uh tradition or a 401k. At 55 years old, depending on certain qualifications, you may be eligible for early uh distribution from your qualified retirement plans. Now at 59 and a half, everybody can start taking money out of your your I your IRA plans or your 401k plans without any tax penalties. Pri unless you meet certain qualifications prior to 59 12 years old, anything that you take out of a traditional IRA, you’re going to have to pay additional 10% on your taxes. In a Roth IRA, you can take out your contributions only, but any conversions or gains prior to 59 and a half, you have to pay an additional 10% on taxes. Now, at 60 years old, people can uh qualify for widow or widower or social security. Now, at 62 years old, everybody can take out social security if you qualify for it. if you’ve if you worked or maybe you had a spouse work and everything. The problem with taking out it early at 62 years old means that you start the income sooner and you’re going to be a lesser you’re going to have a lesser amount for the rest of your life. So unless it’s absolutely needed, I do not recommend it. Also, if you take it out early and continue to work, there’s a limit on how much you can earn per year. And I want to say it’s somewhere around $23,000 give or take a little bit. I don’t I don’t remember that offh hand. I don’t I I haven’t come across that in a situation recently. But let’s say it’s $23,000. Uh if you’re taking if you’re if you earn more than $23,000 a year then um and you are taking social security then you’re going to you’re some of your social security is going to be withheld and given back to you at a later date. Now, at 65 years old, I recommend that everybody applies for Medicare Part A. That’s hospitalization. Doesn’t cost anything to have Medicare uh part A. So, everybody needs to apply for it. If you don’t, there could be some penalties down the road when you actually need do need to go apply for it. Even if you’re working in your covered under group insurance, I’ll be uh doing that in uh in not too uh longer uh distant future. I’ll be uh applying for it. Uh but at 67 years old, uh everybody then can apply for social security. That’s your full retirement age. Um if you haven’t um uh if you were if you weren’t born prior to 1960. So if you were born in 1960 or born after 1960, your your full retirement age is at 67. Anybody can do that. Now, if you apply for social security, then you can continue to work and get your full social security if you want to. Okay. At age 70, well, if you delay it and don’t take it out at 67, let’s say you’re still working and enjoy what you do. For every year that you don’t take out social security beyond your full retirement age up until age 70, you get an 8% increase in your social security. It’s called delayed credits. At age 70, you do not get any more delayed credits after that. So even if you’re still working, if you enjoy working and you’re still working, absolutely start your social security at age 70 at the very very latest. Now, at some point in time, if you have any traditional or pre-tax Roth IRAs, you’re going to have to start doing your RMD, required minimum distribution. If you are at the year 2033, if you are not 73, excuse me, if you do turn 73 prior to the year 2033, then you will have to do your RMDs, meaning every single year you have to start taking out money from your traditional or your pre-tax 401k. It starts out roughly about 4% is what you have to take out. But if you’re not 73 by the year 2033 the age jumps up to 75. It used to be at 70 and a half then they switched it to 72. Now it’s 73. And then again if you’re not 73 by the year 23 it’s 75. So you will have to then start doing your RMDs every single year thereafter. Okay. Hopefully this was uh helpful for you to see where you fall and what you need to do uh for that. So item number two, take aim at your retirement target. So I’ve got three rules of thumb here to share with you. The first rule of thumb is to save enough to generate anywhere from 70 to 90% of your pre-retirement income. If you can do that, you should feel very comfortable that you will have a very respectful and very uh uh financial worry-free retirement. Um anyway, that’s just it’s a rule of thumb. Now, there’s some cost that may go down when you retire. Hopefully, you’ve paid off your house. Okay? Hopefully, your mortgage is gone. You won’t have to pay that anymore. a transportation. Uh if you work outside of your house, you got to travel to work. I don’t have much of a commute, so I’m I’m good there. But transportation hopefully will go down for you. Clothing, you don’t have to buy these nice shirts and get them dry cleananed or anything like that, especially if you go into an office or whatever. So, that should go down. And food, you know, when you’re retired, you’ll have time to be able to cook at the house. you won’t be out with friends and family and maybe have some well, you may be out with friends and family, but you won’t be out with co-workers and uh so your your your food bill hopefully will will go down. Now, there’s some costs that may go up as well. Health care, especially if you’re covered under a group health plan. Okay, Alliant, I’ve got uh coverage under the group health plan at Alliant. I pay less per month than I would on Medicare. So, your Medicare costs may go up. Also, on top of that, you’re getting older, so you’re going to see doctors more often. Travel. I’ve got brothers and in-laws all over the country here. Actually, all over the Well, I got a brother-in-law over in Ireland. My wife is from Ireland, and her brother is still there, but the rest of her family is here. So, travel may increase to go and visit family or friends that aren’t real close to you. Utilities may go up. you’re at home more often, you got the lights on more often, you got the TV going, whatever. And then home maintenance. I fully expect that when I retire, my grandkids will come over to the house. Uh my two oldest grandsons or grandchildren, I got two grandsons and then uh granddaughter and I’ve got five grandkids, but my two oldest ones, we caught them earlier earlier this year, and they thought it would be really cool to uh throw dirt in the air conditioning fan when it was kicked on. So, uh, I hope maintenance I’m sure is going to go up because I’m sure my grandkids will be over more often and I will love it, but maintenance will go up just because they are destructive little boys and I love it. I guess it uh what goes around comes around. I was pretty destructive as a as a youth as well. Now, what can go away is a couple of different items. Social Security taxes are going to go away. Payroll taxes, I should say. It’s going to go away because you’re not working anymore. If you don’t have an income, then you don’t have to pay that social security payroll tax. And retirement contributions, you can only contribute to an a retirement plan as long as you have income coming in. And social security and pension is not considered income. So again, just to kind of recap, you do want to if you can uh save enough to generate 70 to 90% of your pre-retirement income. If you can do that, you should feel very confident that you’ll have a very very good retirement. So, rule of thumb number two, save a multiple of your salary based upon your age. So, let’s say your salary is $100,000 and let’s say you’re 55 years old. So, if you can, and I may sneeze here, I apologize. I’m going to look at the sun. See if I can bring it on. I apologize. If you are 55 years old and if you have anywhere from 60 600 to $800,000 in your retirement accounts, then you should feel very comfortable that you’ll have a good retirement because at 55 then at 60 it jumps up to eight uh to 10 times and then at 65 years old. If you have saved uh anywhere from 10 to 12 times, you should feel very comfortable. Now, that’s not to say that if you haven’t saved up to that that you won’t have a good retirement. It’s just that again, it’s a rule of thumb. If you have done this, you should feel very confident about it. If you haven’t done that just yet, I’ve got some slides coming up to show you that it is still possible to be able to do that. And the last rule of thumb that I have here is save enough to generate a 4% withdrawal withdrawal rate. So, if you want to have an additional $25,50 or $100,000 uh in uh in uh to be able to withdraw over the next 20 years, if you get a 1.5% return, you’ll need about a half a million in order to uh have in there to take out that 4% over the 20 years. If you want $25,000 extra, if you want $50,000 extra, you got to have a million and $100,000, you need two almost $2.2 million. Now, that is with a 1.5% return. Obviously, if you’re getting a higher return, the amount’s going to be get going to be less. And a shameless plug for Allian Credit Union, our savings account currently is 3.01. So if you’re getting a better return than 1 and a2 and let’s say it’s even up to 5%. Now 5% also is not being aggressive at all. It still is very being very conservative but you can see that the amount that you need then is much greater than if you’re only getting one and a half% return. So, if you need to save for 20 years of withdrawals, okay, and let’s say you’re getting a 3% return, you need to have uh for $25,000, you need to have 476, 50,000 is 972 and 100,000 is $1.9 million. Now, again, that’s a 3% return. If you double that, and again, 6% return is not being aggressive at all whatsoever. You can see that the amounts that you need is is a lot less. So item uh uh uh uh uh topic number three maximize your nest egg. As I mentioned earlier, um these are the slides here that if you’re not at that uh target range, the 6 to 8% at 55 or 8 to 10 at later on or 10 to 12%. This is how you can do it. So, let’s take a hypothetical uh situation here. We have a husband and wife. They’re both 50 years old. Let’s say the wife is a retired school teacher and now she volunteers her time at a historical society and the husband, let’s just say he’s an engineer and he earns $150,000 a year. Now, uh they have uh he has the ability to contribute to his 401k through work. there’s maximum amounts that you can contribute to a 401k and in in his 401k the maximum that anybody contribute is $24,500 now because he is 50 well let’s say his employer matches 3% as well so they’re matching $4500 now because he is 50 and and again 50 and older he can do additional money into his 401k it’s the catchup that I had kind of alluded to earlier. He can add an additional $8,000 because he’s 50 into his 401k. Now, he can also maximize contributions into a traditional or into a Roth IRA. Okay? So, the maximum contribution that anybody can do this year is $7,500. And as long as he he’s 50, so 50 and older, you can do an additional $1,100. So he does a total of $8,600 into his IRA account. Now, his wife can do an IRA account as well based upon his income. Even though she’s not working and she’s volunteering her time, they can still do it based upon his income. And because she’s 50 years old, she can do the additional catchup. So, they each can contribute $8,600 into IRA accounts above and beyond his contributions into his employer 401k. If you add all these up together, it comes out to be $54,200. So, let’s say they don’t do all of it and they just do it up to $51,000 even. So, they’ve got 15 more years until he’s planning on retiring. So, again, he’s 50. He wants to retire at 65. $51,000 per year times 15 years and let’s say he does a balanced investment. Uh this is actually even kind of a conservative investment. Say at 6% return over those 15 years those contributions and the returns would add up to $1.2 million. So again with a hypothetical 6% return. So again, it’s not too late to start. It’s better late than never. So even if you don’t have that 6 to 8, 8 to 10, 10 to 12% whatever um multiply of your salary, then don’t hesitate to start. Do it as soon as you possibly can. Now, you definitely want to get a portfolio checkup. That’s number four of our seven lists here. So, the average worker over their lifetime has 12 different jobs. I get my my oldest son has probably got half of those already. He’s been with his current company for quite a while now, which is really good. Okay. 63% of Americans have access to some sort of a defined contribution retirement plan, 401k or anything like that. If you start a new job, my sister-in-law is going to be starting a new job next week. 69% of employers now have an automatic enrollment. You have to opt out of it if you don’t want to contribute to it. So, this is kind of new kind of kind of nice to have uh those automatic enrollments. It kind of forces you to do it and you have to consciously not do it. Um which is I think is a you know, it’s a good thing that they automatically do it. Now, let’s look at perception versus reality. Okay? So, let’s say that you’re getting up there in age like myself. I’m 58 years old. And let’s say that I want to be kind of a balanced investor. 60% stocks, 40% bonds, not being very aggressive. So again, if I’ve had multiple jobs over my lifetime, and let’s just only put three here, not the 12, uh, that most people have on average, then my current investment could be 6040. But my previous two jobs may, you know, as I was younger, they were probably more aggressive. So, if I take all three of these and combine them all together, overall, I may be more aggressive than what I initially thought I would be or what where I should be at this point in time, let’s say. So, I might be 90% stocks, 40% bonds. So, you want to take a look at all of the different retirement plans you have out there and just kind of see where you fill in all with all of them combined together. So, let’s say what if you’re invested too heavily in the stock market. Let’s say you’ve got $900,000 and you want to retire in three years and you’re 100% invested in the stock market and let’s say you do an 8% return based on that. Well, in 3 years, if you’ve got $900,000 and you get an 8% return, you’ll have $1.1 million in three years to uh to retire. Now, let’s say that happens right before the tech bubble burst. And we know the stock market, the S&P 500 was was negative three years in a row, your $900,000 would have dropped down to $584. Okay? But if you had taken a look at it before that, and let’s say that you reallocated it before the tech bubble burst and you were at 50/50 stocks to bonds, your 900,000 wouldn’t have hardly fallen at all. Okay? But 3 years later, it still would have been negative. It wouldn’t have taken very long from the 50/50 to bounce back up. It would have taken 12 months and you would have been at over over your million dollars that you had initially wanted. If you had stayed uh 100% stocks, it took you almost four years to get back up or get up to that million dollars that you originally wanted. Now let’s say that you panic. You got three years towards retirement and we have 08 happened the great recession. So even if you were 50/50 stocks and bonds, your 900,000 would have dropped down to 700,000 if you’d have panicked at that time. Because unfortunately that’s what a lot a lot of people do. They see their stuff go down and they panic and they say they invest emotionally. They say, “Well, I can’t I I I I can’t take it. I don’t want to do this and they take all their money and they move it over into T bills.” Even after the first year and they kept it in T bills for the next two years, they would have had $713,000
if they didn’t panic. If they had left it alone 3 years afterwards, even after the start of the Great Recession, you would have been up to your million-doll mark. So realize in in retirement, get a good game plan going and let it go. By far the majority of the time the stock market is up. It’s up 75% of the time. If you look at the history of the S&P 500, it’s positive 75% of the time. negative 25% of the time. The majority of the time with the stock market is up, the S&P is up, it’s up over 18% per year. The majority of the negative the times that the stock market is negative, it’s it’s down less than 12%. So, get a good game plan and stick with it. If you had panicked, moved in into T bills, never got out of T bills, you’d barely be up to the million-doll mark at this point in time. Now, you always want to take a look at your accounts. You want to update your beneficiaries. I’ll give you an example of this. My uh my mom, as I mentioned earlier, passed away in 2016. Uh at at the uh at the end of 2017, my dad got remarried to a wonderful lady. So when and then he got sick. He passed away in 2024. And prior to him passing away, um he had a trust. Me and my brother were co-rustees on that account. We were taking a look at a lot of his accounts. And we noticed that he had an an old IRA account out there that still had my mom listed as the primary beneficiary and only one of my brothers listed as a contingent beneficiary. Uh this was done obviously many, many, many years ago. So thank goodness prior to him uh passing away we were able to tr change that uh from the beneficiaries around and put the trust as the beneficiary. You may have young children or grandchildren. As I mentioned we got five grandkids. Um I’ve had two born in December and February February of this year December of last year. And so take a look and see whenever you have a new addition to the family. Uh whether it’s grandkids, a son or daughter-in-law, brother or sister, anyway, any any change to family members, you want to take a look and see do you want to update the beneficiaries to include that person or not. And I always recommend that you do a trust. Um a trust is just written in stone. It’s more solidified. If your assets are not in a trust, they could they will go through probate. And in probate, anybody can contest uh the the will of the or the estate. So, I highly recommend that you do a trust uh whenever possible. Uh item number five, create a social security strategy. Now, when I talk about social security, I always get it. Well, social security is going to go bankrupt. There’s not going to be anything left. But that is not true. Social Security as a is a pay as you go program. Those of us that are working now are paying into it through our paychecks and then those that are retired are taking that payment out. What could go away is prior to 192, excuse me, 2021, prior to 2021, there was more money going into the social security trust fund than what than what was coming out. After 21, the baby boomer started to retire and they should, okay, if they want to, but they they have the full right to retire. And what’s happening now is that there is more coming out of social security than what’s going in. So it’s the excess that is expected to run out in 2033. If the government doesn’t do anything then some people I mean then social security may be 22% less than what it currently is. Now, I’ll be honest with you. I cannot imagine that whatever parties in charge would ever allow that to happen. I’d think there would be a lot more riots going on than we’ve ever seen before. Um, but in true government fashion, nobody’s doing anything about it right now. They’re all just kicking it down the road. Now, the possibility of what can happen to save that so that people still get a full amount of their social security that they’re currently currently getting now plus all the cola raises and increases and everything is a potential solution is that they could raise payroll taxes up to 3.65%. Nobody ever wants to talk about raising taxes, but I just can’t see any other way of of solidifying social security for for everybody anyway. But social security will always be around. It’s not going to go under. It’s not going to go bankrupt. It’s the surplus that’s going uh that’s going down. So, I’m sure there will be something that will happen. uh we just don’t know what it’s going to be yet because we’re nowhere close to 2033 and so the government’s not going to do anything until the very last moment in my opinion. As I mentioned earlier, there’s a full retirement age. So again, if you were born at 1960 or after, your full retirement age is at 67 years old. If you were born prior at 1956 or prior, your full retirement age is at 67. And then you’ve got excuse me 65 your full retirement age is 65 and then you’ve got 66 and so many months this is your full retirement ages. Now I often get the question also what is the maximum amount that anybody can receive in social security. So if you paid into social security, you worked hard your whole life and you paid the maximum amount, these are the amounts, the maximum amounts that you can get uh from social security. If you had an average income, worked an average job, got an average income, this is the averages that you would get then. So at 67, my full retirement age, my average would be $2,600. Okay, take a look at, you know, think of yourself. Do you think you’ve earned more or less than the average? And this is what it is. I mean, you can look on the social security website, the social security.gov website, and you can know exactly what dollar amount that you will be getting. Now, if you had a a less than or the lower amount of income that you had, Social Security is going to replace a higher percentage of that income. So, let’s say you had an average income of $50,000 a year when you retired and were on Social Security. That would cover about half of what your income was going to be, about $25,000 of that. If you earned $200,000 a year and you contributed to the social security, that would only cover about 25% of your pre-retirement income. So again, think of that 70 to 90 rule and figure out, okay, where’s the rest of your money going to come from? And that’s what this uh next subject is. Build a retirement income stream. So, if we have an average money market savings account paying.22% and you have a half a million dollars in there, you’re going to earn a whopping $93 a month. Okay? Now, if you’re a little bit more aggressive and you do a CD, even though they’re not aggressive at all, that’s going to give you about an extra $214 a month. Again, if you do it into some bonds and just get a little bit better of return. Again, bonds are not risky. They can go up and they can go down in value as well, but they’re not risky at all uh compared to the stock market. You know, if you are into the high yield bonds and are getting a 6 12% return, then you could get a substantial monthly amount, $2,700. Okay. So, if we take a look at systematic withdrawals from your retirement account. So, let’s say you’ve got a a stock price, an individual stock that’s paying you, excuse me, that costs $5 and you have a 100,000 shares on that. And let’s say that you want to withdraw $1,500 a month from that uh from that stock. Okay? If the stock price goes up from $5 up to $6, you have to sell fewer shares. If that price goes down from $5 down to $4, you have to sell more shares to cover that same $1,500 a month. Okay? So, think of it that way. If you know, obviously we all want the stock market to grow, but it doesn’t grow all the time. 75% of the time it does, 25% of the time it’s down. Now if we can take that uh retirement savings and turn it into an income stream if we have some income producing products okay and we do distributions from original savings or income may fluctuate from the income producing products. So for example you have stocks or ETFs that are paying out dividends. Dividends are different so your income would fluctuate. You may get a little bit more one month, you may get a little bit less, but there’ll be no distributions of the original amount. And we’re talking on the amount of shares that you own. The share price can always fluctuate, but the number of shares would remain the same versus if you set it up for a systematic withdrawal plan, you want the $1,500 a month. Again, that’s going to fluctuate and it could uh dip into the original share the number of shares that you had. Okay, so couple of different things to look at. Do you want a incomeroucing product uh product or a systematic withdrawal? Item number seven here, look beyond the money. So many years ago they did a a happiness curve. Um and they they they asked people at different ages, how happy are you? Well, from 45 to 55 is when people are at least happy. I don’t want to say that they’re miserable at all because you can still be happy, but they’re the least happy. You know, they’re getting closer towards retirement. They’re maybe stressed out that maybe they haven’t saved enough. They’ve got kids that are thinking about going off to college then and you’ve got the expense of college. You’ve got aging parents maybe that you’ve got to take into consideration. That’s why I moved out where I’m at is my parents were getting older and between me and all my brothers, I’m the only one, excuse me, I’m the only one that could live near them because I can work out of my house and um uh so I was able to move closer to my parents and help help them out. Here’s the great thing about this though is at 55 happiness starts to improve for many people. And the reason for happiness can improve is if you’ve got some good health. As I mentioned earlier, my wife’s got pretty poor health, but I’ll be honest with you, she’s a pretty positive person, which is good, but it would be much more amazing if she was healthier. Um, but she still does the very best that she possibly can. You have friendships. I’ve got lifelong friends, 58 years worth of friends. Well, maybe not quite 58 years, but I got friends that I’ve had for decades and they are a big support to us uh and everything. And then we got families. I mentioned I’m a grandfather. I’ve got five grandkids. I love hanging out with my grandkids. I actually had my two oldest grandsons. uh they spent the night uh Friday night a couple weeks ago when we roasted hot dogs in the backyard and did s’mores and and uh anyway they’re they’re looking forward to doing that again. So made me happy to hang out with my grandkids and my children as well. I’ve got three kids. Now the island of Okinawa is notoriously known for being having a very long life and they have something that they refer to there is called icky guy. Basically icky guy translates into something to live for. So we all need to find out what our icky guy is. Find out what you love to do and in retirement hopefully you can do that or find out what you’re good at and contribute back. Find out what the world’s needs and create it or build it or do something for that and then find out what you can be paid for of the things that you enjoy doing. Uh my uncle that just passed away, he loved to do woodworking and there was a a little shop in his community where they built little toy little toy cars kind of like uh Pinewood Derby cars but on a much smaller scale. Um, and he volunteered a lot of his time, uh, just cutting it out and sanding it and doing stuff. And that’s just what he did in retirement to just kind of stay busy. But find out what your icky guy is and what it it does. I’ve got a buddy of mine from Australia and he is he’s said in the past where he has either had all the time in the world uh but no money to go back and visit family and friends in Australia, that’s when he’s been unemployed. Or he’s got all the money in the world but no time to do that. That’s when he’s been employed. And so hopefully in retirement, you have prepared well enough that you’ll have all the time in the world because you won’t be working anymore and you’ll have all the money to be able to do it uh based on your retirement savings to be able to go and travel and and basically do the things that you enjoy and the things that you love to do. So to create your own retirement living plan, you know, things in retirement and just because you’re retired doesn’t mean uh that life is going to end. Contribute to a cause. Find a good cause. Like my uncle, he found a good cause that he could he can contribute to and and and feel good about what he was doing. Visit family and friends. As I mentioned, I’ve got family all over the country and brothers all over the place and a brother-in-law in in Ireland and stuff. pursue different hobbies. Again, you’re going to have the time to be able to do things and so do a hobby. Uh do some traveling. So many people want to travel when they’re retired. Start a business if you want to or go back to school. Here’s a few examples of people that didn’t let retirement stop them. Peter Roier, he invented the the thesaurus when he was 73 years old. Didn’t let retirement stop him. Colonel Sanders started her first KFC at age 65. Madonna Bter, she’s known as the the uh iron nun. She was a nun and she started doing her uh her marathons at 40 and completed one at uh at 82. I don’t think I could do a marathon or excuse me, triathlon, sorry, triathlon. Much harder than a marathon. I don’t think I could do one now. Uh even a marathon. Uh, Grandma Mosa started painting at 76 and Yichiro Murai he he set the world record by climbing Mount Everest at age 70 and then he crushed it when he was 80 years old. So these are people that didn’t let retirement stop them and they continue to thrive and do and do very well. There’s an unknown author that came up with this and said, “Retirement is wonderful if you have two essentials, much to live on and much to live for.” So hopefully you’ve been able to save enough money that you’ll be able to um be able to do the things that you want to live and be able to enjoy the people that you want to live it with. So, just to kind of recap, here’s the seven things that you need to do in the decade before retirement. You need to make sure that you have each one of these. Um, at least you’re taking a look at each one of these. Uh, you may not have them all exactly where you want to, but at least start with a plan and move forward from this part from this point going forward. I highly recommend that everybody works with a financial professional. We have so many different products that people just are not aware of. Things that people say, “Oh, I wish I’d have known about that earlier.” Uh work with a financial professional and and um and and get a plan going. You want a plan going into retirement because if you don’t have a plan, all you have then is a wish. And you don’t want to go into retirement with a wish. There’s a there’s a commercial on TV where this guy’s hoping hoping for retirement. I can’t remember. It’s one of the uh insurance companies credential maybe. Anyway, I can’t remember but he’s he’s hoping. You don’t want to go into retirement with a hope or a wish. So, one of the things that we can do here to help you out which is complimentary is a report that we can run here. And this report is called wealth vision. That’s what the name of the report is. It covers so many different things and I’ll just go over some of the the slides here that it can cover. Again, this is complimentary. I recommend that everybody um uh has it done based on your situation. And so we put in a bunch of different information from you. And so we’ve got Bob and Mary here. And this report re uh printed this out. So this is their income and expenses. The red line there is their expenses. The dark blue is their social security. That light blue is the a pension plan and then the orange is the RMDs. So they’ve got enough from their social security to cover their monthly expenses. Their pension is paying it putting them well over the top and then their RMDs kick in and they got way way too much money uh than what they need to. And the reason why the red line jumped up uh into the orange there is because when you have to start taking the money out of your traditional IRA for your RMDs, your income tax is going to increase and that’s going to increase your your expenses there then. And the one thing that we can do is is uh with this plan here is see how much in total taxes that you’re going to pay over your lifetime and then what will your portfolio be at the end of your life to be able to pass on to loved ones. Now, one of the things that we do quite often in this, at least I do a lot, is is run a Roth conversion scenario for you. Does it make sense for you to do a Roth conversion? And in this situation here, it’s a Roth conversion for a set $60,000 for 5 years to see what does that do. And the big thing to look at this is in that uh that red is an increase in taxes because when you do a Roth conversion, you got to claim it as income and pay taxes on it. So it increases their taxes for those uh years that they were doing it. But what it benefited uh Bob and Mary here is it decreased their overall taxes for their life by $140,000. But it then it also increased the amount to pass on to beneficiaries by over $800,000 just by doing a simple Roth conversion in the beginning. Another example here is Dave and Sarah. Uh and again, they’ve got different income. In this particular situation here, Dave and Sarah’s uh expenses are exceeding their income. That’s what the yellow is, is they have to start doing withdrawals. And if they were able to do a well, here’s here’s their assets value growing over over their lifetime. And if they were able to do a Roth conversion in this particular situation, this is usually what I run instead of a set dollar amount is at what tax bracket then is the optimal uh benefit for you to do a Roth conversion. And just for example here, if they fill it up to the 22% tax bracket, you could see here that they do it for five years and then they’re all done with their Roth conversions. This scenario here for Dave and Sarah would save them $116,000 over their lifetime in withdrawals, uh, excuse me, over their lifetime in in paying taxes, and it would increase their portfolio by $250,000. Okay. Now, if you look towards the very end, the the fourth column from the right, that’s when one of them passed away. I’m assuming it would be Dave. This doesn’t tell us here on this which one it is, but Dave, let’s say it’s Dave that passes away. And if they’re basically about the same age, then Sarah can assume Dave’s traditional IRA into her name. She’ll still have her RMDs that she’ll have to take out if if they have any RMDs left over. But the problem is, and most people are not uh aware of this, and we call it the widow or widowers tax. So when they’re both alive, they’re filing as joint uh as a joint uh file, a joint as married, filing jointly. Unfortunately, when one person passes away, even if your income remains the exact same, it may bump you up into a higher tax bracket because now you will have to file as a single person. So, that’s something that we can take a look at and this report will run for us. So, if we can reduce taxes over your lifetime, I am all about paying your fair share. be legal about it because um in jail it doesn’t matter how much time or money that you might have. If you’re in jail, you’re not going anywhere or doing the things that you want to do. Um but there’s no reason to give the government extra money if you can legally avoid it um by doing Roth conversions up front. And that’s something that I never know how this is going to end up until after I run these reports. So that’s basically it. Um, now let me um, as some people I don’t know if I mentioned this earlier and I apologize. If you have any questions, there’s a Q&A or a chat feature. Go ahead and type your questions in there and I’ll get to all these questions and everything. But why Arys? What’s so special about us? You know, the Alliant Retirement Investment Services. Well, first of all, we are a full-fledged financial uh, firm. We have access to so many different products that are out there. We have many many of our accounts are are no fee accounts or if there’s a basically my philosophy is one thing that we don’t do here. We don’t charge you a set fee on everything you have with us. It’s all based upon the different account that you have and there’s many accounts that don’t have any fees. So my philosophy is is that I look for the one that that costs the least but makes sense for you so that if there’s less cost then that’s more money in your pocket. Obviously if the account does have a fee on it then we have to pass it on to you. Um but um and I go over all those all those uh fees and and costs and everything uh in in advance. We have different products that give you a guaranteed income stream for the rest of your life. If you’re married, it would be for both of you. We have different type of strategies. I have some really cool products that when I do share with people, they’re like, “Wow, I’ve never heard of that before. That sounds cool.” Um, but anyway, just things that you can’t do on your own. And unfortunately, that’s why many people have not heard of those. So, how can we help you with that? Number one, we can help you by running that that wealth vision report for you. That would be the first step. I highly recommend that everybody get that ran from them. And and then as I mentioned, we have different uh investment strategies. We have estate planning here and we can tailor a plan specifically for what you’re looking to do. So basically what we want to do here at ARIS, we want to get to know you and design a plan specifically for your situation. Then we use a team approach to make sure that we’re looking at all the different things, all the different types of products we have out there uh for you and and tailor something for what you’re looking for. And then we want to build a lasting relationship for the rest of your life. The cool thing with Alliant is if you’re a member and you’re one of my clients or any of the other financial consultants here, you have our direct phone numbers. You call us directly. It’s not a toll-free number and hoping that the person you picked up has more than a couple of weeks worth of experience and you get the right information. As I mentioned, I’ve been with the line almost 14 years here. I’m too old to start anywhere else. I plan on retiring here. So, I’d be with Alliance for over 20 years. Uh, I love the credit union. I love working for the credit union here. So, I plan on being here for as long as I possibly can. Here is my direct contact information. If you have any questions, you can call me directly. My phone number here is 773 4628612.
Uh, that’s for people that may are may be on the phone and aren’t seeing this or that’s my direct email there, bbaker.lplantcreditun.com.
So, let me get into the questions that people had here. And before I do that, let me launch this. If you would like to have especially that wealth vision report if you’d like to or just talk to me one on- one, I will be glad to uh to talk to you. Answer yes to this and I will reach out to you. I’ll try to do it as soon as I possibly can, but like I said, I got the funeral on Friday that popped up. Uh I may not be able to reach out until uh next week, but I will try and reach out as soon as I can to you. I will call you first and if I get my I get your voicemail, I’ll leave a message with my phone number, but then I will also shoot you an email and in that email, you’ll have access to my calendar and you can schedule a Zoom uh meeting so we’re not playing phone tag back and forth. So, let me get to some of these questions here. Uh first one here, my grandfather from my mother’s side and my grandmother from my father’s side both died on Christmas Day, 10 years apart. Wow, that is uh yeah, Christmas Day is probably not the the best holiday then. That’s uh that’s interesting. It’s interesting piece of information there. Uh number one, if you pay another question here, I should say if you pay off the mortgage, there will be no write off for taxes. Yeah, that is true. Uh will this be beneficial? Uh could we write off any repairs, home insurance, taxes of HOA fees? Um, I’ll be honest with you. I am not a CPA. Um, but I do know that if you ride it, if you pay off your mortgage, you won’t have those deductions. I I agree with that. Um, but can you write off any repair for home insurance and taxes and HOA fees? That’s a good question. That would be a question for a CPA, an accountant. Um, I know the basics of taxes, but more towards investments, not uh considering real estate. So, I apologize. I do not know that answer there for you. Uh, I got three C’s in well, well, I got three C’s in college. Two were accounting. Um, but I know accounting is different than actually doing taxes. And my last C was my last semester. I was just done. The rest were A’s and B’s but I was just done at this point in time. Uh number uh another question here. Can I do a Roth conversion even in retirement? Uh yes you can because there’s a difference between a conversion a Roth conversion and a contribution. So with the contributions that’s your limit uh $7,500 or $8600 if you’re 50 or older. Those are contributions. That’s new money going into retirement accounts. Um, a conversion is already in a retirement account, a traditional IRA retirement account, just moving that over into a Roth. You’re not adding anything more to your retirement. You’re just moving it from one account to the other. So there’s no income limits on a conversion and there is no contribution limits on a conversion either. You can do whatever you want in a conversion. Uh either a little bit every year or anyway. Yeah. So you can do any you can do a Roth conversion in retirement. Yes, you can. Um another question here. What are your thoughts uh thoughts on fixed annuities? Great question. I love them. But let me explain it to maybe some other people here. There’s when I say annuities, there’s all different types of annuities. There’s variable annuities, index annuities, equity annuities, fixed annuities. Some are horrific. I absolutely am not a fan of variable variable annuities. If you’ve heard anything negative about a v about an annuity, it’s typically talking about a variable or an equity annuity. I don’t disagree with the negativity. I don’t like them. I have them. I’ve not offered one and I can tell can’t can’t tell you that when the last one is. But a fixed annuity is a fixed interest rate for a fixed period of time. Basically like a CD. The difference is CDs through a line credit union or we call them certificates but CDs certificates of deposit. They are federally insured through NCUA. Uh at a bank, they’re FDIC insured. Same insurance, same federal insurance. It’s just credit unions are non-public uh excuse me, nonprofit organizations. Banks are for aprofit. Same thing. Uh annuities are all insured through your local state. Every state has a life and health guarantee association. Uh the amount of insurance on on any annuity I have not seen anything under $250,000 same as FDIC or NCUA. I’ve seen even some states even go up to $500,000 on annuities. The insurance, excuse me. So fixed annuities are a fixed interest rate for a fixed period of time. Right now, I want to say I’ve got a fixed annuity for 3 years, and that’s the least amount of time you got to commit to it. I want to say I’ve got one for about 5.75%. Uh I looked it up earlier this week, which is quite a bit higher than even the Alliant uh certificates. Um so I think fixed annuities are great. Also, if you are if you’re using non-retirement money, so not an IRA, traditional or Roth, annuities grow tax deferred, you will pay taxes on the interest, but only when you take it out of the annuity. So, versus a CD, you’re paying taxes every single year on the interest that you earn in the CD. So, if you put the same amount of money in a a CD and the same amount of money in an annuity and got the exact same amount of return, the annuity would be higher after the 3 years because you’re not taking money out to pay taxes on that. So, I think fixed annuities are a a great alternative to a CD. And um if you’re wanting something with little to no risk like a CD, that is all the questions that I have here. Uh and we’re at the top of the hour. We’re actually a little bit beyond the hour and I try to cut cut it off in an hour, but I get talk about investments and that’s it. So, I am grateful for everybody. uh spending some time with me today. Hopefully, it was helpful for you. Uh and again, for those that answered yes to the questionnaire, I’ll try and reach out tomorrow, but I can’t guarantee I will. If not, it’ll be early next week. And um and then we’ll touch bases and and we’ll get going. The rest of you, I hope everybody has a great weekend. Uh it’s getting fall weather out, nice and cool outside, so I hope everybody can get out inside and enjoy it before it gets too cold for everybody. Have a wonderful evening and take care everybody.