Latest / TaylorMade Retirement with Taylor Demars, CFP® / Financial Moves That Aren't as Simple as They Seem

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Financial Moves That Aren't as Simple as They Seem · TaylorMade Retirement with Taylor Demars, CFP®

• 0:00
  SPEAKER_01: Some financial decisions look pretty complicated, but they actually turn out to be rather simple.
• 0:05
  SPEAKER_01: At the same time, others look simple and are anything but.
• 0:08
  SPEAKER_01: So today we're looking at a list of common money moves and sorting them into either pile.
• 0:12
  SPEAKER_01: Harder or easier.
• 0:17
  SPEAKER_00: Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life.
• 0:24
  SPEAKER_00: With third generation certified financial planner Taylor DeMars.
• 0:32
  SPEAKER_02: Welcome into another edition of the podcast.
• 0:34
  SPEAKER_02: This is Taylor Made Retirement with Taylor DeMars, and we are talking about this week is it easy or not?
• 0:41
  SPEAKER_02: Basically, when it comes down to some of these financial things.
• 0:44
  SPEAKER_02: So gonna have Taylor give us a little bit of a breakdown on a couple of topics here that we work our way through to see if there's any pitfalls or things we need to be aware of when it comes to dealing with these.
• 0:53
  SPEAKER_02: So, Taylor, my friend, welcome in.
• 0:55
  SPEAKER_02: How are you, buddy?
• 0:56
  SPEAKER_01: I'm fantastic.
• 0:57
  SPEAKER_01: Happy Monday to you.
• 0:58
  SPEAKER_02: Yeah, yeah, we're taping on a Monday, getting these things taken care of for folks.
• 1:02
  SPEAKER_02: And you know, so like to your point to the tease there, there's some things that just, you know, they just seem awfully simple, but there's probably some nuances or some caveats you want to be careful.
• 1:11
  SPEAKER_02: So let's dive in and talk about a couple of them.
• 1:13
  SPEAKER_02: Uh, and we'll start with Social Security, right?
• 1:15
  SPEAKER_02: I mean, when to take it.
• 1:16
  SPEAKER_02: I mean, yeah, it's not easy.
• 1:18
  SPEAKER_02: Like there's a lot of factors, but some people kind of just say, well, you know, in 62, it's easy.
• 1:23
  SPEAKER_02: I'm that's when I'm doing it.
• 1:24
  SPEAKER_02: But what are you doing to yourself?
• 1:26
  SPEAKER_02: What are you costing yourself?
• 1:27
  SPEAKER_02: You know, there's just a lot of different little things to think about there.
• 1:30
  SPEAKER_02: So address that one.
• 1:32
  SPEAKER_01: Yeah, for sure.
• 1:33
  SPEAKER_01: And of course, it probably goes without saying, but my my two cents on each of these topics is uh it's from my perspective, right?
• 1:39
  SPEAKER_01: And and and and taken with a grain of salt as far as how clients come to us with their perspective, because I agree with you.
• 1:45
  SPEAKER_01: Many of them see Social Security as just just so complicated, right?
• 1:50
  SPEAKER_01: And I think part of the financial services industry does that to them because you can watch you know videos on my channel including that say why you should claim at Social Security at uh 62, or videos on my channel that say why you should delay, and because both can be true, uh just depending on you know person's situation.
• 2:06
  SPEAKER_01: And that's just it's just such a uh a common topic.
• 2:09
  SPEAKER_01: Nearly all retirees are claiming social security at some point, and so you get too many opinions.
• 2:15
  SPEAKER_01: But I in my opinion, I think it's actually easier than it is.
• 2:18
  SPEAKER_01: You know, from the other side it may be harder, but for me, it's much easier when we have a certain framework.
• 2:22
  SPEAKER_01: And and for us, we have a uh a three-prong approach that helps us evaluate each client's situation through those lenses to say, hey, what makes the most sense?
• 2:30
  SPEAKER_01: And and that's with what what we just determined today, but you know, on an ongoing basis, or continue evaluating does that timing still make sense because life happens.
• 2:38
  SPEAKER_02: Well, that it definitely does, right?
• 2:40
  SPEAKER_02: And so you want to make sure you're kind of dealing with things as best you can in that regard.
• 2:44
  SPEAKER_02: Okay, all right, so that was the first one.
• 2:46
  SPEAKER_02: Uh, what about the 401k, the rollover, right?
• 2:49
  SPEAKER_02: So again, you can do a lot of this stuff yourself, but there's a couple caveats that you want to be careful here because you don't want this to bite you.
• 2:55
  SPEAKER_01: Yeah, I I I my my initial take is that a 401k rollover is easier than not.
• 3:00
  SPEAKER_01: I would say it is very intimidating for people because you know, when they've been working and saving, depending on how long you've been with the employer, it could be a seven-figure account.
• 3:09
  SPEAKER_01: And it blows my mind, but many of these uh custodians will uh send you a check.
• 3:15
  SPEAKER_01: They'll send you a million-dollar check to your mailbox, and you have to take that check and you have to forward it on to uh Fidelity in our case, where we custody our clients' assets and then it gets deposited there.
• 3:24
  SPEAKER_01: Have you know, knock on wood yet to have a bad experience with that, but it's still it feels nerve-wracking to do a rollover 401k rollover for that reason.
• 3:32
  SPEAKER_01: I feel it's pretty simple because, well, it's what we do every day.
• 3:35
  SPEAKER_01: There's no taxes, no fees, no penalties or or or whatnot to make that transfer.
• 3:40
  SPEAKER_01: But you do want to be certain that you're doing a rollover and not a withdrawal, which sounds so simple to say, but it can't be understated because if if you're accidentally selecting the withdrawal option, you'd now congrats, I had a million-dollar paycheck and half of it's going to the IRS.
• 3:55
  SPEAKER_01: Well that nobody wants that.
• 3:57
  SPEAKER_02: I mean, look, we always we all gotta pay, we gotta pay our fair share, right?
• 4:00
  SPEAKER_02: But you gotta be efficient here as well.
• 4:02
  SPEAKER_02: So you don't want to just you know be overshooting because they're you know, they're not gonna get a nice letter from them saying thanks for the loan that you gave us all year long.
• 4:09
  SPEAKER_02: Exactly.
• 4:10
  SPEAKER_01: It doesn't work that way.
• 4:11
  SPEAKER_01: That could be bad.
• 4:12
  SPEAKER_02: Uh all right.
• 4:12
  SPEAKER_02: Next one on the list addressing the cost of a nursing home stay.
• 4:16
  SPEAKER_02: Uh, there's this can't be easy.
• 4:18
  SPEAKER_02: This has got to be complicated.
• 4:20
  SPEAKER_02: I'm I've never done it, but I was just going to assume that they don't make this easy.
• 4:23
  SPEAKER_01: No, and I agree.
• 4:24
  SPEAKER_01: I I sat on the side of this being more difficult than not.
• 4:27
  SPEAKER_01: In large part because there's A, it's it's far in the future, right?
• 4:32
  SPEAKER_01: We're talking for most of our clients who are around age 60.
• 4:34
  SPEAKER_01: It's something that could be 25, 30 years away.
• 4:37
  SPEAKER_01: So no one has a crystal ball that good.
• 4:39
  SPEAKER_01: And it's also hard because you're weighing multiple factors.
• 4:42
  SPEAKER_01: And for us, though, the kind of the recipe that we're trying to uh balance here is okay, first of all, where where are they potentially aging out, you know, and maybe it's where they live now, maybe they want to live somewhere else.
• 4:52
  SPEAKER_01: So what zip code you're in can really determine what that cost might look like.
• 4:55
  SPEAKER_01: Then also where their preference is as to how and where they want to age.
• 4:59
  SPEAKER_01: Is it in home, is it in a in a nursing facility, right?
• 5:02
  SPEAKER_01: Um, so that that incorporates the cost.
• 5:04
  SPEAKER_01: And then we also have to look at things that are kind of mainly out of our control at this point, which are things uh such as our genetic background, right?
• 5:12
  SPEAKER_01: Yeah, how did your parents or or other blood relatives age out?
• 5:16
  SPEAKER_01: Um then you look at your own health history, how well have you been taking care of yourself, or how good has your body been to you.
• 5:21
  SPEAKER_01: That can give us an indicator of you know what those costs might look like.
• 5:24
  SPEAKER_01: I I try and simplify all of that and not try to pretend that I know the future, but we use a um we use a platform I pay for for clients that uh that actually is a HIPAA compliant questionnaire that walks them through all these questions.
• 5:37
  SPEAKER_01: So I don't have to, you know, try and weigh it all.
• 5:39
  SPEAKER_01: And then once we get that, then it the program weighs it against millions of other data points and families to be able to say, hey, try and extrapolate what that cost might look like for you.
• 5:48
  SPEAKER_01: Now, what I know for certain is that it's not perfectly right, but it does simplify what is a hard, hard thing to answer because you get this wrong, and you know, it could be the torpedo that sinks the whole plan, right?
• 6:01
  SPEAKER_01: And we don't know it until the end of the plan here.
• 6:03
  SPEAKER_01: So for us, at the end of the day, we're trying to hope for the best, plan for the worst, reasonably estimate what that cost might look like.
• 6:09
  SPEAKER_01: And part of the decision is hey, what are those financial assets or resources you have to draw from at that point?
• 6:15
  SPEAKER_01: And making sure even though it's decades away, do we do we have a plan of how to afford that down the road?
• 6:19
  SPEAKER_02: Yeah, you definitely you gotta have a strategy for all these things, and certainly with that one, um, because if you don't have a plan, you're going one on the state's plan, right?
• 6:27
  SPEAKER_02: And nobody really wants to do that.
• 6:28
  SPEAKER_01: So nobody wants that.
• 6:29
  SPEAKER_01: Yeah, they think they do, but they don't.
• 6:31
  SPEAKER_02: Well, anybody talk to anybody, you find that you quickly do not want to do that, right?
• 6:34
  SPEAKER_02: So learn that ahead of time.
• 6:35
  SPEAKER_02: All right, this one is pretty simple, Taylor.
• 6:37
  SPEAKER_02: So updating your beneficiaries.
• 6:39
  SPEAKER_02: This is pretty easy.
• 6:40
  SPEAKER_02: You can do this uh relatively uh quickly along a lot of the different platforms.
• 6:44
  SPEAKER_02: A lot of them have things where you can just go sign and change some things, but the consequences of not doing it are certainly are not simple.
• 6:49
  SPEAKER_01: Not yeah, the consequences are not always easy.
• 6:52
  SPEAKER_01: No, I would agree with you.
• 6:53
  SPEAKER_01: It's almost too easy as I was thinking about this to go in and change a beneficiary when you're looking at a you know a seven-figure portfolio and you can change people's lives with a you know uh you know, your decedents' lives uh with a few clicks of a button.
• 7:06
  SPEAKER_01: And uh so that's that's a good thing, is if you wanted to make a change, it's there's no barriers or friction to do.
• 7:11
  SPEAKER_01: So I almost uh zoom out a bit on this question because it's not just about beneficiaries, but your overall estate plan.
• 7:17
  SPEAKER_01: Um many times when you set up your 401k right account right, they require you to set up your beneficiary, which is good, forcing you to make a decision.
• 7:23
  SPEAKER_01: But there's no one out there forcing you to get your will done or your your your financial power of attorney done, your healthcare directive.
• 7:30
  SPEAKER_01: So we do.
• 7:31
  SPEAKER_01: That's one thing we hold our clients accountable to is you gotta get an estate plan done.
• 7:35
  SPEAKER_01: And and I'm not not an attorney, I can't offer legal advice, but we also try and make it uh an easy button if you with an in-house solution that's low friction, low cost, and and and gets what I feel 80% of our clients need, which is uh a simple estate plan.
• 7:50
  SPEAKER_01: If they need a trust, we've got uh you know people that we can refer them to for that.
• 7:54
  SPEAKER_01: But getting your estate plan done is actually a lot easier than most people think, even though it's not the most fun topic.
• 8:00
  SPEAKER_02: Okay.
• 8:00
  SPEAKER_02: And don't forget, like, not just the major things.
• 8:02
  SPEAKER_02: I think sometimes we think about like our will, you know, or something like that, Taylor.
• 8:06
  SPEAKER_02: But you can do this for many accounts too.
• 8:08
  SPEAKER_02: Your your 401ks, I mean, even you know, the bank account, do a TOD, POD, whatever.
• 8:13
  SPEAKER_02: But just have some of that stuff taken care of.
• 8:15
  SPEAKER_01: Agreed.
• 8:16
  SPEAKER_02: Okay.
• 8:16
  SPEAKER_02: Agreed.
• 8:17
  SPEAKER_02: All right.
• 8:17
  SPEAKER_02: Um the last one that I wanted to bring up here, Taylor, was turning your savings into a retirement paycheck.
• 8:23
  SPEAKER_02: Now, this one's the one that most people would say, well, this is what I we should have done this one first because that's what I want to know, right?
• 8:28
  SPEAKER_02: How to make that happen.
• 8:30
  SPEAKER_02: Is it as easy as they claim it is now, or is it is it even more complicated?
• 8:34
  SPEAKER_02: Because you can go on your website and you could go to your portfolio thing and you can look and it can tell you what, you know, that little amount that it says you're, you know, you should be able to get this much and so on and so forth.
• 8:43
  SPEAKER_02: But how do you actually do it?
• 8:45
  SPEAKER_01: Right.
• 8:45
  SPEAKER_01: Right.
• 8:46
  SPEAKER_01: It's the it's the how that really matters the most because there's different levels of quality, I would say, to creating a retirement paycheck.
• 8:53
  SPEAKER_01: I agree.
• 8:53
  SPEAKER_01: There are there are free or low-cost uh tools and calculators out there that uh that can come up with a solution relatively fast.
• 9:00
  SPEAKER_01: I mean, heck, think about AI.
• 9:02
  SPEAKER_01: Uh if you're comfortable with you trust the platform, you could dump all your information and nitty-gritty in there, and it will give you an answer and it will be very confident about that answer.
• 9:11
  SPEAKER_01: But I I I I find when clients are making a once-in-a-lifetime seven-figure decision such as retirement, they are they are wary and rightfully so of a quick and easy answer.
• 9:22
  SPEAKER_01: And so if I had one, I would certainly, I think I'd I I would be living on a private island if I could find a perfect answer as easily as people would like.
• 9:32
  SPEAKER_01: But our next best thing is is is frankly a proven process to determine that retirement paycheck, right?
• 9:38
  SPEAKER_01: Which is the our our our answer is the retirement readiness roadmap, that that three-month seven session process to understand from the foundation what is it we're trying to fulfill.
• 9:46
  SPEAKER_01: And then we can try and translate that into a plan and what are the what are the strategies we'll employ.
• 9:51
  SPEAKER_01: And then you translate that into the portfolio, which will then create the portfolio paycheck system.
• 9:55
  SPEAKER_01: So hopefully that question doesn't that that response doesn't make it sound harder than it is, but from my lens, it's easy, right?
• 10:01
  SPEAKER_01: Because this isn't our first rodeo.
• 10:03
  SPEAKER_01: Uh and I'm just wary uh of of any option out there that tries to make it um as easy as an easy button when it's something as consequential as funding your ideal retirement lifestyle.
• 10:14
  SPEAKER_02: Yeah, that's a great point, right?
• 10:15
  SPEAKER_02: So, you know, it can sort of be, but also really not.
• 10:20
  SPEAKER_02: And it's one of those things where you don't really want an easy button, I think.
• 10:23
  SPEAKER_02: I think we want to make sure this is where we've got it uh, you know, down pat and as as sound as we can for our specific situation.
• 10:30
  SPEAKER_02: And that's where financial professionals, you know, really come in and help as well.
• 10:33
  SPEAKER_02: And some of the other areas too, but certainly this is a big one.
• 10:36
  SPEAKER_02: So if you need help with that, to his point, the retirement readiness roadmap is there for you to uh get involved with and get started with.
• 10:42
  SPEAKER_02: So go to the website at demarsfinancial.com.
• 10:45
  SPEAKER_02: That's demarsfinancial.com and get started today by clicking on the could we be a fit button there on the website, or you can always reach out to them.
• 10:53
  SPEAKER_02: Uh, there's a lot of good tools, tips, and resources.
• 10:55
  SPEAKER_02: You can check out the uh YouTube channel that Taylor has as well.
• 10:58
  SPEAKER_02: Subscribe to that, find uh uh watch more episodes of that, check out more episodes of the audio podcast, whatever you like to do, lots of stuff there at demarsfinancial.com.
• 11:07
  SPEAKER_02: All right, my friend, thanks for breaking it down as always.
• 11:10
  SPEAKER_02: My pleasure, thank you.
• 11:11
  SPEAKER_02: We appreciate it, and we will catch you next time here on Taylor Made Retirement with Taylor Demars.