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Smooth Sailing in Retirement: Avoiding Costly Mistakes · Money In Motion with Klaas Financial

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Speaker 1: And our telephone lines they are open for you right
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Speaker 1: now at six oh eight three two one thirteen ten.
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Speaker 1: That's six oh eight three two one thirteen ten. Got
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Speaker 1: questions for our retirement planning professionals from Class Financial CJ.
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Speaker 1: Closs and Malia Quavis. Of course they both come to
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Speaker 1: us from Class Financial and you can learn more on
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Speaker 1: their website Class financial dot com. That's class k l
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Speaker 1: a as financial dot com. Great website resource to learn
0:25
Speaker 1: more about Class Financial. You can of course listen back
0:27
Speaker 1: to this previous shows podcast there. You can also sign
0:30
Speaker 1: up to the weekly Market Pulse newsletter that available to
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Speaker 1: you at classfinancial dot com. Telephone up for the office
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Speaker 1: right here in Madison six oh eight four four two
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Speaker 1: five six three seven. No charge for that initial get
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Speaker 1: to know you appointment at colss Financial. It will be
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Speaker 1: complimentary to you again their number six oh eight four
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Speaker 1: four two five six three seven. And if you've got
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Speaker 1: a question, I'd love to have you join us this week,
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Speaker 1: just pick up phone gifts ring six oh eight three
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Speaker 1: two one thirteen ten. That's three two one thirteen ten.
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Speaker 1: As mentioned, joined this week by CJ. Closs and Malia Quavis. CJ.
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Speaker 1: How you doing this week.
1:00
Speaker 2: I'm doing great. It's been a beautiful week, Sean.
1:02
Speaker 1: It's absolutely fantastic, great weather. And Malie, are you just
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Speaker 1: loving this stuff or what we are?
1:07
Speaker 3: We're waiting for those little leaves to turn their little colors.
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Speaker 1: Yeah, it sounds like we may and fingers crossed, we
1:13
Speaker 1: may have a good year for fall colors, but we'll
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Speaker 1: have to keep an eye on that. We've got some
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Speaker 1: important conversations this week about ten mistakes that you need
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Speaker 1: to avoid when it comes to retirement planning. We're going
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Speaker 1: to walk through those with our friends from Class Financial, CJ.
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Speaker 1: Colss and Malia Waves in just a moment. But first,
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Speaker 1: before we get rolling on this week's topic, one of
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Speaker 1: the great things we do each and every week here
1:34
Speaker 1: on Money in Motion with Class Financial is the Closs
1:37
Speaker 1: Quiz question of the week and our friends from Class
1:39
Speaker 1: Financially have provided a twenty five dollars gift card to Amazon.
1:42
Speaker 1: We'll tell you a little bit later on in the
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Speaker 1: program how you can win that gift card. But a
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Speaker 1: little tip listen closely to the program because most of
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Speaker 1: the time, just about every time the question answer come
1:50
Speaker 1: up during the show gives you a little bit of
1:52
Speaker 1: a leg up on everybody else. Before we start talking
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Speaker 1: about those mistakes, let's actually look back at last week's show,
1:57
Speaker 1: Malia and get the question and answer there as well.
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Speaker 3: Yeah, so last week we had a great conversation regarding
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Speaker 3: gifting and what you can plan for with your own
2:07
Speaker 3: estate and potentially give away some money to your own
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Speaker 3: family or other people that could benefit from that potentially,
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Speaker 3: and understanding what those limits look like every year. So
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Speaker 3: the question of the week revolved around that in twenty
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Speaker 3: twenty four, how much are you able to gift to
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Speaker 3: another person with no federal gift tax consequences? Was it
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Speaker 3: five thousand dollars or eighteen thousand dollars per person? Was
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Speaker 3: the question? Donna of Madison correctly answered eighteen thousand dollars
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Speaker 3: per person. You could multiply that by ten people and
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Speaker 3: give out one hundred and eighty thousand dollars, So just
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Speaker 3: keep that in mind that total for twenty twenty four.
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Speaker 3: Congratulations to Donna and listen carefully to today's question and
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Speaker 3: it was.
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Speaker 1: A fantastic program as always, and you can listen back
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Speaker 1: at Colssfinancial dot com. That's COSS Financial dot com k
2:56
Speaker 1: LaaS Financial dot Com. Phone lines are open to three
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Speaker 1: two one thirteen ten. That's six oh eight three two
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Speaker 1: one thirteen ten. So this week we're going to be
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Speaker 1: talking about ten mistakes folks need to avoid when it
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Speaker 1: comes to retirement planning and CJ. What should be we
3:11
Speaker 1: be aware of when it comes to our own planning.
3:14
Speaker 2: Yeah, you know, having done this for darn near twenty
3:18
Speaker 2: years now, and I think Malia's well over that we
3:21
Speaker 2: we start to see some commonality in things that people
3:25
Speaker 2: do right and in things that people do wrong as
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Speaker 2: they both prepare for and then live in retirement. And
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Speaker 2: so that's what we're going to talk about today is basically, hey,
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Speaker 2: what are some of these major mistakes that we see
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Speaker 2: people make and how can you avoid them? So Number
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Speaker 2: one would be staying too aggressive in your portfolio as
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Speaker 2: you approach retirement. So, as you can imagine, everybody loves
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Speaker 2: great returns, but they often forget about the risks over
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Speaker 2: a period of time. Because our mind aren't actually as
4:01
Speaker 2: powerful as we think they are. They tend to have
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Speaker 2: what's called a recency bias to them. And this has
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Speaker 2: been studied and kind of proven over time that whatever
4:11
Speaker 2: has happened most recently to us, we remember really well,
4:15
Speaker 2: but things that have happened over longer periods of time
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Speaker 2: often we don't now. It depends on the severity of that.
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Speaker 2: And I mean that's both humbly and sincerely, and that
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Speaker 2: people have had some super long term, severe experiences that
4:27
Speaker 2: do stick with them. But where this comes into play is, Hey,
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Speaker 2: my portfolios done really well in the last three, four
4:33
Speaker 2: or five years. Golly, I don't think I need to
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Speaker 2: back off my risk as I get closer to retirement.
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Speaker 2: And so that would be the mistake is thinking that
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Speaker 2: you can just kind of ride the wave of extreme
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Speaker 2: volatility throughout retirement and forgetting that as you approach retirement
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Speaker 2: and live in retirement, most not all, but most people
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Speaker 2: need to back off that risk in anticipation of needing
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Speaker 2: to use that money for income. Now, Please, if you
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Speaker 2: are listening to me right now in the air and
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Speaker 2: you go, oh, good point, I'm gonna go change my
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Speaker 2: investment strategy, don't do that. Go talk to somebody, because
5:07
Speaker 2: your situation could be unique where you don't need to
5:10
Speaker 2: adjust it. I don't know if you have a major
5:12
Speaker 2: pension or if you have twenty million, I don't know
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Speaker 2: the particulars of you. But even even though I don't
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Speaker 2: know the particulars of you. One of the biggest mistakes
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Speaker 2: we see people making is staying too aggressive as they
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Speaker 2: approach retirement.
5:27
Speaker 1: Talking this morning with CJ. Cossim Lea Quavis. They are
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Speaker 1: our retirement planning professionals from Class Financial. Phone lines are
5:33
Speaker 1: open three two one thirteen ten. That's three two one
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Speaker 1: thirteen ten. The website for COSS Financial it is Cossfinancial
5:38
Speaker 1: dot com. That's Coss Klaas Financial dot com and they're
5:42
Speaker 1: telephone number six o eight four four two five six
5:45
Speaker 1: three seven. So Cjet's talk about kind of some more
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Speaker 1: of those mistakes and some of those areas that kind
5:50
Speaker 1: of rates those red flags people should be queuing in on.
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Speaker 2: Yeah, so mistake number two would be retiring without considering
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Speaker 2: all your health insurance costs or options. So often people
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Speaker 2: just say, oh, I'm just I'm done, or I'm frustrated
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Speaker 2: with my boss or whatever it might be, and they say,
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Speaker 2: I'm just going to retire. I'm sixty two or I'm
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Speaker 2: sixty years old, and I'm just going to do it.
6:10
Speaker 2: I'm going to jump in with both feet. And by
6:14
Speaker 2: the way, we respect that. We often tell people, hey,
6:16
Speaker 2: if your job is killing you. You're better off retiring
6:19
Speaker 2: than not living to retirement. But a big butt is
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Speaker 2: that health insurance is a large consideration if you're going
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Speaker 2: to be retiring before Medicare eligibility age. So Medicare, remember,
6:30
Speaker 2: is government subsidized health insurance for American seniors over the
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Speaker 2: age of sixty five. So some things you might want
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Speaker 2: to consider is, Hey, if I'm going to retire before
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Speaker 2: sixty five, what other options are available to me. One
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Speaker 2: would be COBRA. It's called the Consolidated Omnibus Budget Reconciliation Act,
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Speaker 2: and COBRA forces most large employers with over twenty employees
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Speaker 2: to offer group health insurance for eight up to eighteen
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Speaker 2: or thirty six months, depending upon the structure of the
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Speaker 2: company and the plan of continuation of the group health insurance.
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Speaker 2: They can't kick you off right away. Now, you'd want
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Speaker 2: to check with your employer to make sure that your
7:13
Speaker 2: plan meets that requirement. But here's the key. You have
7:18
Speaker 2: to pay for the whole premium, and often you have
7:21
Speaker 2: to add an administrative cost on top of that, which
7:23
Speaker 2: makes it about one hundred and two percent of the
7:25
Speaker 2: full premium. So the point being, COBRA is a great
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Speaker 2: option if you're retiring before sixty five, because you can
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Speaker 2: have it for eighteen to thirty six months after retiring,
7:35
Speaker 2: but don't think it's going to be at the same
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Speaker 2: cost it was when you were an employee. The next
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Speaker 2: would be like, Hey, if I'm going to retire before
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Speaker 2: sixty five, does my spouse have health insurance because that
7:47
Speaker 2: could be great. Right you retire, jump off your group plan,
7:50
Speaker 2: jump under your spouse's until you turn sixty five. Another
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Speaker 2: option might be veterans Health insurance for those who have
7:56
Speaker 2: served with honor in the military. Another would be a
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Speaker 2: four Care Act. So again, if you're retiring before sixty five,
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Speaker 2: maybe your COBRA insurance is too expensive or you don't
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Speaker 2: have an employer plan that you could jump onto. Then
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Speaker 2: there's something called the Affordable Care Act that was passed
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Speaker 2: during the Obama administration that does offer everybody insurance and
8:19
Speaker 2: it is kind of government run. It's through the Healthcare
8:22
Speaker 2: dot Gov. Now it's the insurance plans are provided by
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Speaker 2: private insurance companies, but the actual subsidy part of it
8:28
Speaker 2: you have to go through the Healthcare dot Gov website.
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Speaker 2: So you know, there's another thing, and then there are
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Speaker 2: these other options called medical sharing arrangements. But we're really
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Speaker 2: getting deep into the weeds when you get into medical
8:41
Speaker 2: sharing arrangements. So you would want to talk to a
8:42
Speaker 2: specialist about your health insurance options. But as you can see,
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Speaker 2: mistake number two retiring without considering health insurance costs. There's
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Speaker 2: a great example of why there's five six, seven different
8:55
Speaker 2: options that are available to you. And before you pull
8:58
Speaker 2: that plug on working, you just want to pause and
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Speaker 2: be aware of what you're going to do.
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Speaker 1: Talking this morning with CJ. Colossim Leia Quavis or Retirement
9:05
Speaker 1: Planning Professionals their website class financial dot com. That's class
9:08
Speaker 1: financial dot com telph number six to eight four four
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Speaker 1: two five six three seven. So we've got one too,
9:13
Speaker 1: And I'm not I'm not good with numbers, but I
9:16
Speaker 1: know up next CJ is number three.
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Speaker 2: That's right. Yeah, yeah. So so mistake number three is
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Speaker 2: not being tax wise. So here would be an example
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Speaker 2: of not being taxwise as you as your approach retirement
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Speaker 2: or live in retirement. I've mentioned this on the show before. Hey, CJ,
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Speaker 2: I heard that I should be debt free before I retire.
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Speaker 2: You guys talk about that on the radio show all
9:37
Speaker 2: the time, and I would say, that's right. Ideally you're
9:40
Speaker 2: tax free. So they go, well, what I did was
9:44
Speaker 2: I just decided to pull out three hundred grand from
9:47
Speaker 2: my four oh one K plan to pay off my
9:49
Speaker 2: mortgage right before I retired, and whoo, I'm debt free
9:54
Speaker 2: of course, really, And I go, excuse me, h, you
9:58
Speaker 2: may not have heard the subtlety in our advice there,
10:00
Speaker 2: So why would that be a problem. Well, the reason
10:03
Speaker 2: that would be a problem is because when you pull
10:05
Speaker 2: money out of your four oh one K or ira
10:07
Speaker 2: under most circumstances on this unless these are roth dollars,
10:11
Speaker 2: you're going to be subject to income tax. And remember
10:14
Speaker 2: our income tax consequences here in the United States are progressive,
10:17
Speaker 2: not regressive, and so as you earn more income, you
10:20
Speaker 2: pay more tax. Not to mention, you can pay other
10:24
Speaker 2: taxes and penalties and loss of benefits that you wouldn't
10:27
Speaker 2: have if you hadn't kind of jacked up your income
10:29
Speaker 2: in one particular year. So, if you are going to
10:33
Speaker 2: make significant moves in your financial plan that could impact
10:37
Speaker 2: your income in any given year, please please please talk
10:41
Speaker 2: to your financial advisor, talk to your account before making
10:44
Speaker 2: those huge moves. I mean, listen, everybody, we are all
10:47
Speaker 2: for you being debt free. If we have not been
10:49
Speaker 2: clear about that, I just want to be super clear. However,
10:52
Speaker 2: it has to be done in light of your entire
10:55
Speaker 2: financial picture and the tax environment that you live in.
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Speaker 2: So there you go. Mistake number three is not being
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Speaker 2: tax wise as you head into retirement.
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Speaker 1: Could be obviously a great benefit being debt free, but
11:06
Speaker 1: you want to make sure they as you point out CJ,
11:08
Speaker 1: that that you're following the following it and of course
11:11
Speaker 1: it's the ultimately the greatest benefit to you. As we
11:13
Speaker 1: talk with our retirement planning professionals from Class Financial, CJ.
11:16
Speaker 1: Coss and Malia Quavis, don't forget. You can learn more
11:19
Speaker 1: about Claus Financial on their website class financial dot com
11:22
Speaker 1: that's spelled k l a as Financial dot com. Great
11:26
Speaker 1: website to learn more about Costs Financial their separate divisions.
11:29
Speaker 1: You can also learn about the team there as well
11:31
Speaker 1: as sign up for the weekly Market Pulse newsletter. It's
11:33
Speaker 1: a weekly email you'll receive got a snapshot of what's
11:36
Speaker 1: been going on in the markets, as well as a
11:38
Speaker 1: link to the most recent podcast that available to you
11:40
Speaker 1: at cost Financial. Speaking of things available to you at
11:43
Speaker 1: Coss Financial pick up phone. Give a call six oh
11:45
Speaker 1: eight four four two five six three seven. No charge
11:48
Speaker 1: for that initial get to know you appointment at Coss Financial.
11:50
Speaker 1: It will be complementary to you again their number six
11:53
Speaker 1: oh eight four four two five six three seven. Maybe
11:56
Speaker 1: you have a pension and it can be a great blessing,
11:58
Speaker 1: but there are some things you want to consider before
12:01
Speaker 1: you make decisions around your pension. We'll get the details
12:03
Speaker 1: from Malia. We will do that next as Money in
12:06
Speaker 1: Motion with Coss Financial continues right here on thirteen ten.
12:09
Speaker 1: WIBA talking this morning with our retirement planning professionals Malia
12:16
Speaker 1: Quavis and CJ. Closs. Of course they come to us
12:18
Speaker 1: from Class Financial the website Coss Financial dot com. That's
12:22
Speaker 1: k Laasfinancial dot com. Great website to learn more about
12:26
Speaker 1: Class Financial. Also, don't forget to sign up for the
12:28
Speaker 1: weekly Market Pulse newsletter. While you're there. You can listen
12:31
Speaker 1: back to this in previous shows podcast as well, all
12:33
Speaker 1: available to you online at Cossfinancial dot com. Urtel phone
12:37
Speaker 1: number six oh eight four four two five six three seven.
12:40
Speaker 1: No charge for that initial you'll get to know your
12:41
Speaker 1: appointment at Coss Financial. It will be complimentary to you
12:45
Speaker 1: talking about some of the mistakes you want to avoid
12:47
Speaker 1: when it comes to retirement planning, and Malia, folks who
12:50
Speaker 1: have a pension, Oh, what a great option that is,
12:53
Speaker 1: and what a great opportunity and a blessing that is.
12:55
Speaker 1: But there are choices that need to be made. And
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Speaker 1: are there some potential mistake folks can make when when
13:02
Speaker 1: it comes to making the decision about some of those
13:04
Speaker 1: some of those options with their pension.
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Speaker 3: Yeah, absolutely, And you know this. We don't want to
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Speaker 3: be negative on this show and just talk about mistakes. Right,
13:12
Speaker 3: there's certainly more than ten mistakes people can make or summarizing,
13:17
Speaker 3: but really it's more about choices. We really have choices,
13:20
Speaker 3: and we want to make sure people are aware of
13:22
Speaker 3: choices when it comes to the retirement planning. So again
13:27
Speaker 3: we've coded this as a mistake. Mistake number four is
13:30
Speaker 3: not fully evaluating your pension options. Should you be so
13:34
Speaker 3: lucky to be offered a pension given your type of work,
13:39
Speaker 3: if you have any pensions coming to you. Many times
13:42
Speaker 3: people they honestly this they've been working for thirty years,
13:46
Speaker 3: They get a package in the mail, and we've seen
13:49
Speaker 3: this more times than i'd like to repeat. People just
13:53
Speaker 3: fill it out and return it without even taking a
13:56
Speaker 3: second look or having a trusted partner take a second look.
14:00
Speaker 3: These are critical, critical decisions because this is going to
14:03
Speaker 3: affect your retirement income. So the first thing we're going
14:07
Speaker 3: to say is slow down and really evaluate the options
14:11
Speaker 3: that your company is offering to you with regards to
14:16
Speaker 3: those payout choices, because those are critical because nine times
14:20
Speaker 3: out of ten, once you've made those choices, they are
14:24
Speaker 3: unchangeable or otherwise known as irrevocable once you've chosen them.
14:29
Speaker 3: So you really want to, you know, again, sit down
14:31
Speaker 3: with your financial advisor, look at your personal situation, the
14:35
Speaker 3: age of your spouse, the health that you currently have,
14:39
Speaker 3: longevity concerns, and then look at your other income that's
14:43
Speaker 3: going to be coming into the household, and that's going
14:46
Speaker 3: to help dictate which of the choices of pension options
14:50
Speaker 3: you may want to choose. Could be single, joint, or lump.
14:53
Speaker 3: Some and many times, and I'll be honest, we hear
14:57
Speaker 3: financial advisors absolutely say, oh, take the lump, roll it
15:00
Speaker 3: into an IRA and call it a day. That might
15:03
Speaker 3: be the right choice, but that might not be the
15:05
Speaker 3: right choice if in fact, the pension is actually paying
15:08
Speaker 3: out at a decent rate over time, right, And those
15:13
Speaker 3: are critical factors to really slow down. Look at the
15:16
Speaker 3: pension and conjunction with your future social security, other investments
15:23
Speaker 3: that you may have that may you may draw income from.
15:26
Speaker 3: So it's not just a singular like, oh, I'm just
15:28
Speaker 3: going to pick this box and that that's not going
15:30
Speaker 3: to affect everything else. You really really want to slow down.
15:33
Speaker 3: So that would be mistake number four. Sit down with
15:36
Speaker 3: someone when you have pension options in your mix of
15:39
Speaker 3: retirement income. Mistake number five is not maxing out a
15:44
Speaker 3: company match that your company offers in your retirement plan.
15:48
Speaker 3: And we've had previous shows on this how you should
15:50
Speaker 3: take advantage of these options. So if your company offers
15:54
Speaker 3: a four oh one K or other retirement plan, we
15:56
Speaker 3: of course want you to sign up and maximize the
15:59
Speaker 3: amount you contribute to take advantage of the entire employer
16:03
Speaker 3: match if available. So again that match is typically a
16:07
Speaker 3: percentage of your salary. So for example, if you contribute
16:11
Speaker 3: six percent of your salary, your employer might match three percent.
16:15
Speaker 3: So we would say we want you to shoot to
16:17
Speaker 3: max out the four oh one K contribution for the
16:20
Speaker 3: year if possible. Which in twenty twenty four is twenty
16:23
Speaker 3: three thousand dollars, So write that number down if you're
16:26
Speaker 3: under fifty years old, an additional seventy five hundred if
16:30
Speaker 3: you're over fifty, for a total thirty thousand, five hundred combined.
16:35
Speaker 3: So whatever you're contributing, and we again want to focus
16:40
Speaker 3: you know, our bogie is the max that you can
16:42
Speaker 3: afford to contribute. If in fact you can take advantage
16:46
Speaker 3: of that match from your employer, that's just extra cream
16:50
Speaker 3: that we're very excited that you could actually get. Now,
16:53
Speaker 3: we've seen situations where your employer pulls back, does not
16:57
Speaker 3: offer a match anymore, and we've seen people go, well,
16:59
Speaker 3: if they're not putting money in, then I'm going to
17:02
Speaker 3: just stop contributing. It's like, no, we want you to
17:05
Speaker 3: get the match, but really we want you to focus
17:08
Speaker 3: on this is your retirement, not their retirement, right, so
17:12
Speaker 3: steady as it goes, we want you to continue contributing
17:15
Speaker 3: and certainly don't dismiss free money.
17:18
Speaker 1: Talking this morning with Malia Quavis and CJ. Closs, our
17:20
Speaker 1: retirement planning professionals from Class Financial. Learn more online Coss
17:24
Speaker 1: Financial dot com. That's Coss k l A as financial
17:27
Speaker 1: dot com and they're telephone number six. So eight four
17:30
Speaker 1: four two five six three seven, no charge for the
17:33
Speaker 1: initial get to know you appoyment tech loss. Financially, it
17:35
Speaker 1: will be complimentary to you and Malia, you were talking
17:38
Speaker 1: there about putting money in what about taking money out
17:43
Speaker 1: of your retirement accounts?
17:45
Speaker 3: Yeah, this is mistake number six. We're not a fan
17:49
Speaker 3: of doing this, although we understand life sometimes throws some
17:53
Speaker 3: curve balls. You know, you're raising kids, et cetera, et cetera,
17:56
Speaker 3: but we are not fans of taking money out of
18:00
Speaker 3: your retirement accounts prior to retiring. Okay, and we see
18:05
Speaker 3: this a lot with clients who want to help their
18:07
Speaker 3: adult children, so it's not that it doesn't happen, but
18:11
Speaker 3: we're not big fans of it, and so we want
18:14
Speaker 3: to be clear on this. If you do take money
18:16
Speaker 3: out of your retirement accounts, either as a withdrawal or
18:19
Speaker 3: a loan, you need to understand that withdrawals are taxed
18:23
Speaker 3: as ordinary income ordinary income before the age of fifty
18:28
Speaker 3: nine and a half, and on top of that, they're
18:32
Speaker 3: going to come with a ten percent penalty unless you
18:35
Speaker 3: have an exception. Maybe you qualify for a hardship withdrawal,
18:38
Speaker 3: et cetera. But you have to understand if I take
18:41
Speaker 3: out twenty thousand from my FOURMU one k today, that
18:46
Speaker 3: is going to be added to my income for the year,
18:50
Speaker 3: so I might push me into another tax bracket one
18:53
Speaker 3: I don't want to hit. And then on top of that,
18:56
Speaker 3: I'm going to also have a ten percent penalty on
18:58
Speaker 3: that same money. Not a good feeling. You need to
19:02
Speaker 3: really watch that carefully, especially as you're within five years
19:05
Speaker 3: of retiring now. With loans, people also think, hm, I
19:09
Speaker 3: can just get by the loan on my plan, et cetera,
19:11
Speaker 3: et cetera. We have to understand that you are charged interest,
19:16
Speaker 3: and if you leave your job, the entire loan may
19:19
Speaker 3: need to be repaid immediately. Generally, it is depending on
19:23
Speaker 3: the plan, and if you can't repay your loan, you're
19:26
Speaker 3: going to be charged ordinary income tax and the loan
19:28
Speaker 3: amount plus a ten percent early withdrawal penalty. So again,
19:33
Speaker 3: sometimes these can't be avoided, but this is not one
19:36
Speaker 3: of our first choices that we would recommend when you're
19:39
Speaker 3: trying to maybe take take care of some situations.
19:43
Speaker 1: Talking this morning with CJ. Colssmile Equavius of Class Financial
19:46
Speaker 1: learn more online Class Financial dot Com. That's k l
19:48
Speaker 1: a A S Financial dot Com and they're telemphone number six.
19:52
Speaker 1: So eight four four two five six three seven, no
19:55
Speaker 1: charge for the initial get to know your appointment at
19:56
Speaker 1: Class Financially. It will be complimentary to you. What about
20:00
Speaker 1: social Security? What do we What are some of the
20:02
Speaker 1: pitfalls and some of the snakes folks may make around
20:05
Speaker 1: social security?
20:06
Speaker 3: Maliana, Well, there's a lot of buzz always about when
20:09
Speaker 3: I should take my Social Security and yes, it's very,
20:11
Speaker 3: very important. We do entire shows throughout the year on
20:15
Speaker 3: social security, the pros and cons of when to pull it,
20:19
Speaker 3: and generally speaking, you know, there's a lot of people
20:21
Speaker 3: out there who want to take it as soon as
20:23
Speaker 3: it's available, which is age sixty two, and they the
20:28
Speaker 3: understanding here is you could take it as early as
20:30
Speaker 3: sixty two. Preferably, we like people to probably wait till
20:35
Speaker 3: their Social Security deems it full retirement age, which is
20:39
Speaker 3: your FRA, which for most people's age sixty seven. So
20:44
Speaker 3: the earliest you can draw sixty two retirement age is
20:47
Speaker 3: probably sixty sixty sixty seven for most of our listeners.
20:51
Speaker 3: So why does this matter? Well, the earlier you take it,
20:56
Speaker 3: the less you're going to get per year, you're going
20:58
Speaker 3: to get discounted, basically a thirty three percent less benefit
21:03
Speaker 3: if you start it early. And if you happen to
21:06
Speaker 3: be working at age sixty two and you're earning too
21:09
Speaker 3: much between age sixty two or sixty three and your
21:13
Speaker 3: full retirement age, you will get benefit pulled back from
21:16
Speaker 3: Social Security if you're over a threshold of earning too much.
21:21
Speaker 3: So again, we want people to sit down and map
21:24
Speaker 3: out these numbers with a professional to make sure when
21:27
Speaker 3: it makes sense for you. Taking into consideration you may
21:31
Speaker 3: have a spouse. If something happens to one of you,
21:34
Speaker 3: the other one is only going to get one of
21:35
Speaker 3: the benefits, and typically we want to make sure that
21:37
Speaker 3: benefit is as high as possible, potentially asking one of
21:41
Speaker 3: the two of them to wait till age seventy to
21:43
Speaker 3: start pulling their benefit because there is reasons to allow
21:48
Speaker 3: your benefit to grow between full retirement age and age seventy. Again,
21:51
Speaker 3: we have full shows on this, but just slow down
21:54
Speaker 3: on Social Security, and those are a.
21:56
Speaker 1: Lot of fantastic shows. And when you mentioned so Security,
21:58
Speaker 1: Malia and you talk about the full shows that we've done,
22:01
Speaker 1: we've done. I know that. Get a lot of feedback
22:04
Speaker 1: on those, get a lot of calls, a lot of questions,
22:06
Speaker 1: really good podcasts folks can access at cost Financial dot com.
22:10
Speaker 1: That's coss k l a a s Financial dot com.
22:12
Speaker 1: Or simply give call six oh eight four four two
22:15
Speaker 1: five six three seven. Don't forget no charge for the
22:17
Speaker 1: initial get to know you appointment at Costs Financial. It
22:20
Speaker 1: will be complementary to you again. Their number six oh
22:22
Speaker 1: eight four four two five six three seven will wrap
22:25
Speaker 1: up our ten mistakes folks make can make when it
22:28
Speaker 1: comes to retirement planning and how to avoid them, and
22:31
Speaker 1: also to the COLSS quiz question week. We'll do that
22:33
Speaker 1: next as Money in Motion with cost Financial continues right
22:36
Speaker 1: here on thirteen ten wiv a retirement planning professional CJ.
22:43
Speaker 1: Coss and Malia Quavis of COSS Financial. The website coss
22:47
Speaker 1: financial dot com. That's Coss k l a a s
22:50
Speaker 1: Financial dot com. There telephone number six oh eight four
22:53
Speaker 1: four two five six three seven. No charge for the
22:56
Speaker 1: initial get to know you appoyment at Loss Financial. It
22:58
Speaker 1: will be complementary to you again. They're number six oh
23:01
Speaker 1: eight four four two five six three seven. Talking this
23:04
Speaker 1: week about ten mistakes that folk should avoid when it
23:06
Speaker 1: comes to retirement planning and kind of bringing it down
23:09
Speaker 1: the home stretch CJ. These last two just as important
23:12
Speaker 1: as the first two. In the first first eight. For
23:16
Speaker 1: that matter, let's talk about some of the other mistakes
23:18
Speaker 1: folks should be avoiding when it comes to that planning.
23:21
Speaker 2: Yeah, so financial planning mistake number eight is planning to
23:26
Speaker 2: work indefinitely. So again we often see this where people
23:30
Speaker 2: come in and say, ah, I haven't saved enough and
23:33
Speaker 2: it's too late now, you know, just keep my head
23:35
Speaker 2: in the sand, and I don't want to do the
23:38
Speaker 2: heavy lifting to try to figure out how much I
23:40
Speaker 2: would need to save, so I'll just plan to work forever.
23:43
Speaker 2: And as you can imagine, we all kind of intuitively
23:46
Speaker 2: know that's not a great financial plan. But here's some
23:49
Speaker 2: actual supporting information around that. So while many people plan
23:54
Speaker 2: to retire at age sixty five or later, because because
23:56
Speaker 2: we can survey this to find out when people plan
23:59
Speaker 2: to retire, the realities that actually most Americans retire closer
24:03
Speaker 2: to age sixty two than sixty five. So you go, well,
24:07
Speaker 2: what's what's the reason for the spread there? And often
24:10
Speaker 2: it can be things like health concerns or layoffs or
24:12
Speaker 2: uncontrollable items. So while more than half of today's workers
24:17
Speaker 2: plan to continue working in retirement, the realities that only
24:20
Speaker 2: one in five Americans age sixty five and over are
24:24
Speaker 2: actually employed were about twenty percent. And this is according
24:28
Speaker 2: to the US Department of Labor statistics. So you get
24:32
Speaker 2: it right if you just say to the financial planner
24:35
Speaker 2: to me, hey, I haven't planned appropriately, so I'm just
24:37
Speaker 2: going to work forever. We're going to go. Hold your horses.
24:41
Speaker 2: Statistically speaking, that might be very challenging to make happen,
24:45
Speaker 2: not to mention you know, layoffs and health, you know,
24:50
Speaker 2: events that occur. So again there can be a whole
24:53
Speaker 2: host of reasons why that may may not be possible.
24:57
Speaker 2: Mistake number nine would be putting your kid before your retirement.
25:02
Speaker 2: So again we see this quite often where people say,
25:05
Speaker 2: you know, I've saved in my retirement plan, but only
25:09
Speaker 2: the best for my children. And so you know, I
25:12
Speaker 2: want to make sure they go to the best schools
25:14
Speaker 2: and that money is not is not a barrier for them.
25:17
Speaker 2: And I want to make sure they have the best
25:19
Speaker 2: wedding and that money is not a barrier for them.
25:22
Speaker 2: So listen, you can. You've probably heard this phrase before.
25:25
Speaker 2: You can borrow for things like education and weddings, you
25:30
Speaker 2: cannot borrow for retirement. It is important not to mention
25:35
Speaker 2: that as your kid's age and they become more mature,
25:38
Speaker 2: they will actually say to you, mom, dad, why did
25:41
Speaker 2: you do that? Why did you not say for your
25:44
Speaker 2: own retirement so that you could give me all of this,
25:47
Speaker 2: Because now you're going to be dependent upon me as
25:49
Speaker 2: your child. So the idea here is you have to
25:54
Speaker 2: prioritize your retirement first to make sure you're reaching a
25:58
Speaker 2: minimum sustenance of retirement, that you take care of yourself,
26:01
Speaker 2: and then your children's education costs and and other things
26:05
Speaker 2: like that come onto that. Let me add to that,
26:08
Speaker 2: there is a huge misnomer in the United States that
26:11
Speaker 2: like all of us just pay for our kids education.
26:13
Speaker 2: That is simply not true. The reality is that a
26:18
Speaker 2: lot of kids either work through college come out of
26:21
Speaker 2: college with student loans. It should not be an expectation
26:27
Speaker 2: that just because you're a middle class or upper middle
26:29
Speaker 2: class you know American family, that you're going to pay
26:32
Speaker 2: for your kids college education. Please don't put that burden
26:35
Speaker 2: on yourself. It's just not a reality. You may even
26:39
Speaker 2: hear families around you saying, oh, yeah, our kids go
26:41
Speaker 2: to Princeton and Yale, and yeah, we just pay for
26:44
Speaker 2: the whole thing. Listen, half the time that's not true.
26:47
Speaker 2: The other half of the time, they may have gone
26:49
Speaker 2: to Princeton and Yale on a full ride scholarship and
26:51
Speaker 2: you don't know about it. Another third of the time,
26:54
Speaker 2: maybe they got an inheritance that you don't know about
26:57
Speaker 2: and that's why they're paying for their kids education. Don't
27:00
Speaker 2: put the pressure on yourself to think that you have
27:03
Speaker 2: to pay for all of this, including your own retirement.
27:06
Speaker 2: It's just a huge burden.
27:08
Speaker 1: And number ten cj bringing us down the home stretch.
27:11
Speaker 1: STOCKRACYT colssmally equative as high retirement planning for professionals from
27:15
Speaker 1: class financial. What is number ten?
27:17
Speaker 2: Yeah, so the final one for today, Number ten mistake
27:20
Speaker 2: to avoid is drawing too much out of your portfolio
27:25
Speaker 2: each year in retirement. So this really gets into the
27:30
Speaker 2: subtlety of having a relationship with a good financial planner.
27:34
Speaker 2: You have to make sure that your investments are allocated
27:37
Speaker 2: appropriately to meet your income needs, and then on top
27:41
Speaker 2: of that, you have to make sure that your withdrawal
27:43
Speaker 2: rate is sustainable. Now we use big terms like sustainable
27:47
Speaker 2: withdrawal rates and Monte Carlo simulations and all kinds of
27:50
Speaker 2: different things that confuse people. But let me just simplify
27:53
Speaker 2: this for you. While you're working, you accumulate money off
27:57
Speaker 2: to the side. Yes, this is known as four one contributions,
28:00
Speaker 2: irate contributions, taxable accounts, even paying off your debt on
28:04
Speaker 2: your home. That is a version of accumulating wealth. So
28:09
Speaker 2: while we're working, we accumulate dollars. When we retire, we
28:13
Speaker 2: decumulate dollars. Simple concept. You know, imagine just a hunk
28:17
Speaker 2: of money out in your backyard that you keep throwing
28:19
Speaker 2: money into the pit of the the hole you have
28:22
Speaker 2: in your yard. And then you get to retirement. There's
28:24
Speaker 2: no more working income coming in, so you go out
28:26
Speaker 2: to that pit and you start pulling money out of it.
28:28
Speaker 2: This is the idea of withdrawal rates. The question is
28:32
Speaker 2: how much are you pulling out of that hunk of
28:34
Speaker 2: money as a percentage, Right, If I lop off ten
28:38
Speaker 2: percent of my money that's in my backyard each year,
28:42
Speaker 2: I got ten years. If I lop off five percent,
28:46
Speaker 2: I've got twenty. But how do I run that calculation.
28:49
Speaker 2: If I have a volatile portfolio. You see the idea, right,
28:52
Speaker 2: It's it's art and science combined. And so what I'd
28:55
Speaker 2: say to you is this is where people like us
28:57
Speaker 2: really come into play. For us, we retire thousands of
29:01
Speaker 2: times with our clients. You're going to retire once, and
29:03
Speaker 2: so we know how to both build the investment allocation
29:06
Speaker 2: to beat your needs while also growing it enough to
29:09
Speaker 2: fend off from inflation. Because there's a lot of things
29:12
Speaker 2: you have to consider if you're going to be retired
29:14
Speaker 2: for twenty plus years. So final mistake drawing too much
29:19
Speaker 2: out of your portfolio every single year, as it relates
29:21
Speaker 2: to this one, just make sure you're talking to somebody
29:23
Speaker 2: who knows what they're doing.
29:24
Speaker 1: Really important data. Start that conversation. CJ. Colosseumleiaquavis. They are
29:28
Speaker 1: our retirement planning professionals from COSS Financial. You can learn
29:31
Speaker 1: more about Class Financial their website cossfinancial dot com. That's
29:35
Speaker 1: Coss Klaasfinancial dot com. Also a great feature there is
29:40
Speaker 1: the weekly Market Pulse newsletter get subscribed to that I've
29:43
Speaker 1: been subscribed for a number of years. It's a really
29:45
Speaker 1: nice weekly snapshot of what's been going on in the
29:47
Speaker 1: Market's also linked to the most recent podcast again that
29:49
Speaker 1: available to you at Cost Financial their telephone number six
29:52
Speaker 1: oh eight four four two five six three seven. Don't
29:56
Speaker 1: forget no charge for that initial get to know you
29:57
Speaker 1: Appoyment Tech Loss Financial. It will be complement three to
30:00
Speaker 1: you again their number six oh eight four four two
30:03
Speaker 1: five six three seven. Go on to hold on to
30:05
Speaker 1: that number as well, because it's time now for the
30:07
Speaker 1: coss Quiz question of the week. It works like this,
30:09
Speaker 1: In just a moment, I'll ask you the CLSs quiz
30:11
Speaker 1: question a week. We will then have thirty minutes from
30:12
Speaker 1: the end today's program to call the Class Financial Office
30:15
Speaker 1: right here in Madison at six oh eight four four
30:17
Speaker 1: two five six three seven. If you are the first
30:20
Speaker 1: call with the correct answer, win this week's prize, which
30:22
Speaker 1: is a twenty five dollars gift card two Amazon. This
30:25
Speaker 1: week's coss Quiz question the week is this, according to
30:28
Speaker 1: the Department of Labor, what percentage of Americans are currently
30:32
Speaker 1: employed at age sixty five and beyond? Is it five
30:36
Speaker 1: percent or twenty percent? Telephone number six oh eight four
30:40
Speaker 1: four two five six three seven. First call it correct answer,
30:43
Speaker 1: We'll win that twenty five dollars gift card to Amazon.
30:45
Speaker 1: Don't forget as well. That's Coss Financial office right here
30:47
Speaker 1: in Madison six oh eight four four two five six
30:51
Speaker 1: three seven CJ. Malia. It's always great hanging out with
30:53
Speaker 1: both of you guys. Enjoy this fantastic day.
30:56
Speaker 2: Thanks thanks Sean.
30:57
Speaker 1: Doctor Marty Greer joins us next year. On thirteen ten WIBI,
31:00
Speaker 1: This is Money in Motion with Coss Financial Asset Advisors, LLC,
31:04
Speaker 1: a registered investment advisor registered with the SEC. The contents
31:09
Speaker 1: of this show are for informational purposes only and should
31:11
Speaker 1: not be considered individual investment advice. Coloss Financial does not
31:15
Speaker 1: offer tax or legal advice. Any opinion offered during the
31:19
Speaker 1: course of this show is the opinion of that particular
31:22
Speaker 1: investment advisor representative and not necessarily the opinion of Coss Financial.
31:27
Speaker 1: News comes your way next right here on thirteen ten
31:30
Speaker 1: WIBA