Wealth from Wisdom is a weekly radio show from Carson Wealth.
Paul West: Hey, do you have an IRA, 401(k), a SEP or any really other type of retirement plan, and if so, what you’re about to learn could have dire consequences for these accounts and worse yet your retirement.
They’re called required minimum distributions, or since we all love acronyms RMDs and most people don’t understand what they are or they ignore it, or of the very least, I would say they underestimate this devastating impact they could have on your nest egg, you and even your family and you’re listening to Wealth from Wisdom. I’m Paul West and thank you so much for joining us today.
I’d like to introduce my co-host Jim Caldwell. Jim, welcome to the show. So Jim, a lot of people, I know our listeners love to watch TV, CNBC, one of the most common networks people watch for financial advice. I think you know my opinion on that, there can be good information there, but be careful the end of the day. How did they make money? Do you know? Selling tickets, selling, sell a ticket. Actually fear fears. How they make their money. They scare everybody to death or buy watches. Well that’s, that’s a tactic I would agree.
But it’s by commercials. Commercials pay them money and what then happens? Advertising, marketing. And so I thought this is interesting. So I do think they do provide some good content. They used a phrase the other day on CNBC, they called requirement minimum distributions.
The tax torpedo, the tax torpedo. Jim, have you used that phrase before? Yeah, there’s an IPA called a torpedo. It’s one of my favorites. The Sierra Nevada. Yeah. Excellent. Good.
Yeah. All right. But there’s a good reason why I would tell you that CNBC called RMDs attacks torpedo, and we’re going to talk with you a little bit about that on today’s show because when you are 70 and a half years old, the government forces you to start withdrawing money from your tax deferred accounts and you have no choice.
You have to do this. And guess what? The government doesn’t care if the stock market is up or the stock market is down. But if you’re not prepared, this may decimate or could decimate your retirement account and it can trigger, you know, all my gosh, I’m thinking of all the taxes, all those problems and all those things that go with it.
So we’re going to share with you five critical RMD mistakes that you could make that could cost you a small fortune during your retirement. And Really Jim, I mean I think what I want our listeners to understand is avoidance isn’t an option and that’s going to tell you mistake number one is waiting too long to put together your strategy. So as I think about this is, I mean a, Jimmy, you encountered this all day long, don’t you, where people have to talk about this, whether they want to or not, they have to talk about it. Sure.
I think what you talked about is when you start planning, I, I feel like it’s in your early fifties early to mid fifties but waiting until you’re in your sixties sometimes it’s not too late, but it’s, it’s kind of pushing the envelope there because there’s a lot of strategies you can use to take some of those qualified dollars out of there and use those to live on or take distributions in your sixties so that when you get in your seventies and you have to take the RMDS and of course at that point for sure you’re taking social security, that combination is going to bump up your, your taxes.
And that’s always not a very happy ending. No. And we don’t want that to happen. And Jim, speaking of happy ending, which are like spring to get here, that’s for sure. Everyone is tired. I just, the whole thing, the shoveling, the not just the snow scoop, Ej, but I feel really bad. Um, for parents. I feel bad for school administrators. They’re, they’re getting tired and fatigued. Yeah. You know, that’s going to happen now.
There have to put together a strategy. What are you going to do later this year? Are they going to have to go two more days of school? And I can feel people cringing. Yeah. That’s going to fly like the Hindenburg. Yeah.
Not going to go over well, but it’s not an area where they have ex, you know, I want to say not expertise, but it’s not an area where many people have gone down nor do they want to, but they may have to, it may be just inevitable at some standpoint and just like, it’s inevitable you’re going to need an RMD.
So what I want people to think about is Jim, you and I talk about this. I mean, it’s 2019. When is this market going to stop going up? Do you know?
Jim Caldwell: I don’t have that crystal ball, but for right now it feels good except that we can’t become complacent. I mean we could have a pull back anytime. It’s kind of like all hands on deck and you know, who knows nobody, nobody has that vision.
Paul: Yeah. Well I shared last week on the show and I’ll just repeat it again. You said spring training, so you just, you triggered that thought process far a gym is, I shared, the analogy is I think we’re in the eighth inning of a baseball game of where we are in this up of an economic cycle.
But I just don’t know how long the game is going to go. Is it going to be a 90 and end game and are we about done here at the end of 2019 or are we going to go extra innings? Is it going to 10 innings or 15 innings? I don’t know. But I certainly hope that you’re protected from it. And this leads to what I call sequence of return risks.
So since we are up, if the since 2009 a significant dollar amount, imagine if you retire next year, but the market was down 20% and you needed to take money out of your account, but yet your $1 million account is now only worth 800,000 how’s that going to make you feel?
Not Good. Not Good. It’s going to make you feel like fill in your favorite four letter word. But I don’t want our producer Jamie to do that. So I mean if I think about this, you have a choice. Either do it now or you wait and I would tell you, we get pushed back all the time for people. It is not uncommon.
Are you truly open minded about it to sit down and think about it this moment, you’re going to feel so much better when you get it done. Jim, do you have, do you have a task like where you live now where you just keep putting it off at home?
Jim: I think for the most part it’s, it’s washing the car, you know, cause you know you’re gonna wash it. And then you’re going to go outside in the weather and it’s going to have snowy and slushy and you just see, just don’t do it.
Paul: Yeah, you don’t. And I think about at my house, you know we have you know what’s next on the list. I call it. What’s next on the list is something I got to get done in the house or other. It’s scraped wallpaper things, but that can just gets kicked down the road.
But it’s inevitable. At some point I have to do it. It’s either I have to do it cause I want it to look better. Or for some reason if we were to sell our home, I’m going to do it to increase the value. Well, all of these things eventually catch up to us. I’m going to share a secret with all of our listeners.
This is really big secret gem. I’m on the edge of my seat lifts. You look like it there and be almost looking like you’re standing up. So you’re that excited here.
Paul:Simply this, the people that plan for RMDs the most save the most money in taxes. It’s ans down as one of the simplest things that we see all the time because they get ready for it. It’s like the same thing. How many of you know, and I have one of these by the way to Jim, I have a ticking time bomb in my backyard. That sounds dangerous, right? You’re, you’re wondering what this is the air conditioning unit.
You got it. Bingo. It’s got dents and the fins, it’s been there since we moved in over 15 years ago. It’s been in the house longer and I just like, I can hear it are talking about, you know, just keeps ticking and ticking and ticking. But I let it sit there now. I guess I could be proactive and just bite the bullet now or am I maximizing my returns?
Paul: I get by letting us said I don’t want it. I don’t know what the right answer is, but when I look at my tax situation, if I can proactively plan for when that is to happen. So say like my air conditioner.
So if you don’t think, I haven’t been putting money off to the side for the last five years, so my air conditioner funds ready to go because what I did not want to happen July of this year, my air conditioner goes out and there’s a run on air conditioners for one reason or the other and then I got a problem I can’t get access and it’s going to cost me more than I ever thought before.
But if I was smart, I would have planned for that air conditioner sure as heck a long time ago. Yeah. So when I think about these RMDS is you have to be forward looking. You got to think about tax ramifications and ultimately you got to worry about short term volatility. And Jim, we were talking with this earlier, I mean the volatility in the markets is come screeching to a halt again, December it was up gigantic, but now it’s flat lining almost this kitten pretty boring again in the market.
Jim: So take that another step further, and I think we’re going to hit this in another segment, but I’ve had two conversations today from people who need to take RMDs this year and it’s, do we take them now when your account values are up? Because last normally rule of thumb is you wait till closer to the end of the year for all the right reasons.
But if we have another December this year like we did last year, you’re taking that RMD at the wrong time. So something we’re kicking around is Margaret’s are up, count values up. Let’s take that RMD now.
Yeah, but I’m going to pay more taxes. Why should I do that? Well, you’re going to pay the same amount. I mean it’s still this, this year. So put and then we can reinvest that into something else. But at least we’ve gotten a bigger chunk of that out of it.
Paul: That way you’ve locked in your gains. So yeah, I’d rather pay taxes on for say the 4% rule. So is year one for them, Jim. And so $1 million 40,000 but all sudden if they wait til the end of the year and their market value is 800,000 what if the market goes down 20% for hair?
And by the way, we heard from our market’s team earlier this week, but that’s certainly a possibility. So now instead of getting 40,000 you get 32 now granted you have to pay taxes on that 40 but sure if I, you just went from 1,000,040 thousand to 800,000 to 32 I mean I’m doing the math here and that’s, yeah, that saves me a lot.
So I love your idea there. And I think most people, if they actually just look at their personal situation and it, by the way, if you want a free customized tax reduction analysis, (888) 419-8513 that’s (888) 419-8513 like you said, Jim, I mean it’s like taxes could be one of the most overlooked opportunities we see the pro proactive, not reactive on that.
Do you want to help? (888) 419-8513 you’re listening to Wealth from Wisdom and Jim Caldwell and I or continue giving you ideas to help you be more successful in your retire.
Paul: How and when you take your required minimum distributions can actually cause far more problems than you ever realize. You know, it’s possible you could lose up to 50% of the money that you’ve saved for your retirement account and just taxes, penalties, and fees. And once this happens, poof, it’s gone.
There’s no getting this money back. Jim, Hey, I’m joined by Jim Caldwell. I’m Paul. Last, you’re listening to wealth for wisdom and today we’re talking about those five critical mistakes people make in their retirement and specifically related to RMDs are what stands for required minimum distributions.
And by the way, if you’re not in retirement yet, you better be listening to this because this is one of the most important decisions you can plan for and coming up in this segment, we’re going to keep talking about taking RMDs at the wrong time or were shit from the wrong account.
You Think, oh, how in the world is people do it. It happens if we see it frequently, right? So I’m just, for me, I’m looking out of the market and boy we’ve had a good start to 2019 a lot of you know what I would call interesting things going on. The question is always interesting versus important.
I love when people say, Oh man, did you read this article? Well that’s interesting, but is it important, you know, for example, earlier this week, the top performing sectors, industrials, the bottom is consumer staples. Interesting, but does that that important?
The vix is now below 15 interesting and important home sales. Now, Jim, this one for me, I think it’s pretty fascinating. Everybody loves to talk about your own home. And then I would say people who buy homes or flip homes, they really love to tell you how great of a deal they got.
But home sales are starting to miss expectations. So is this a warning sign? I don’t know. What do you think? Well, I mean the average mortgage rate has dropped. I think it was over 5% and it’s like 3.75 now. So it’s dropped from conforming 30 year loan earlier this week was went from 5.2 to 4.67.
Ueah, it is, you know, but US manufacturing is pretty strong right now. So there’s a lot of positive indicators out there. I don’t know, Jim, I just trusted my gut on these types of things. I take my 20 plus years of experience.
There’s part of us being a firm with Forbes and with Barron’s and being ranked as one of the top places to work in the country. And I think there really is the realization is this, because we want to look at a situation, this is why we call it wealth or wisdom by the way, is we want to be truth givers and truth receivers.
And at the end of the day is we can take as much information as possible to make a decision and help make the right decision for you. By the way, we’re a fiduciary, so we have a legal obligation to do that. Not very many advisers do. So if we’re with a wire house or another firm, ask them the following question, are you a fiduciary? Better yet? Send them an email, make them give it back to you in writing cause you know, or maybe you don’t know. Actually, I shouldn’t assume that we know what assume means.
Right, Jim? All right, good. You don’t need to repeat it. So, I wish you could, but not this radio. So with that being said, most people don’t realize that when you make a decision as a fiduciary, you have a legal obligation. And by the way, when you asked for this question in writing from your financial advisor, their emails are tracked and archive to make sure that they are providing your advice that is compliant meaning fits within all the rules and regulations are out there so they cannot give you made up or false or stretched where they call that white lies about the information if you ask them for that type of information in writing.
Jim: So one of the smartest things you can do is get that type of information in writing. I like that. And another thing you can get in writing, and I think this is important, not just for RMD planning, but how many people out there have a true wealth plan? How many have really sat down with a professional and put together a roadmap from where you are today and where you want to be. Five, 10, 1520 years down the road.
And I think properly put together, you can answer a lot of questions with taxes, tax planning, RMD planning, and some of the things here that we’ve talked about today to give you a clearer picture as to where you are and where you’re going. And I, I would say that there’s no reason to forego that into your sixties. I think here again in your forties, 50s start to kind of put that together. Yeah.
Paul: Jim, I was actually reading on Linkedin and by the way, you want to follow me on Linkedin. Paul asked Jim Caldwell. He could follow said Carson wealth or Carson group. You can also, we’re all on Twitter. PaulWestcoach is my handle. CaldwellWealth. I was reading an interesting article and I love to do this. It’s just they’re great news feeds both Linkedin and Twitter for me. But somebody wrote a story about, they had been interviewing people about a life full of regrets and I just thought that was just Jim.
Fascinating about what a people regret most like later in life they’ve had a chance to self reflect on life and what’s out there. And certainly one of the biggest ones is time. Time that they gave up, just doing stuff that wasn’t driven by them. Another regret, and I w I wish we could interview people from upstairs that being heaven, but imagine that people no longer on this earth who didn’t actually put together the right family plan or pass on their legacy or share a story or whatever it might be and it disappeared and they have immense regret that they didn’t take advantage of that during their lifetime.
Jim: We see that all the time. I mean, how would you know, I know for me, and I know for you also, what if something happened to one of us and we left our family hanging. I mean in my situation, three sons are all grown and they’re on their own. Your situation, your children are still at home, different ball game. But we both need the similar plan.
Paul: Yeah, well I, I ultimately think like all of us, we just want comfort that we create. I’m going to use this phrase with you. I want to make sure I create simplicity for my heirs. I want to make it simple for them so that way if something ever happened, they have grief and everything else that, you know, you’ll never imagine. But it also, you don’t want them to have to worry about all the numbers and all the things.
And I think another one is I think people have regret related to, they wish they would’ve stayed in better touch with their life, their friends, their family. Um, they wished it would’ve gone up more time. And I think they ultimately was interesting about the article is people have regrets is they spend so much time worrying about getting to the next stage of monetary value that they forgo what’s most important.
And if they, if you think back in life, Jim and I, if I, if I asked you to rank like your top five happiest times in your life with those would be top five. Um, none of them can be. Go ahead. Selfishly what I graduated from the Ohio State University for some reason I knew that was going to get it, I mean I was close to is my dad called it taking the train home.
I got down around a two point and you get below a two point you’re in trouble. And I fought back and got it up to a two, seven and I got my degree and I mean to me that was huge for me. Getting married and having three great kids be there in the delivery room. That that’s pretty cool stuff. Yeah. I’d have to say those are top five right there.
Yeah, but they’re not spending money. Wow. If you’re spending whoever paid for her college. Well I’ve had foot that one. Yeah. So that would ask our listeners today, if you think about your top favorite moments in life and your happiness moments, how much of them are like you spending money now it may be partially like, oh we had a trip, but it was, it would make you happy. How much money you spent or how you felt during that experience.
I think about Jim, I was a naysayer on, this is my family since we’re based here in Omaha, Nebraska. Of course neighboring state of South Dakota and pretty famous, you know, national landmark there, Mount Rushmore wide, pushed off for many years. Not wanting to go there cause I just thought it sounded, man, that’s a long ways to drive and that’s going to be boring. Just being fair.
So we went several years ago and I remarked to my wife Courtney, I was like, this is the best vacation we’ve ever taken. We had more fun in the car conversing with each other once we got there hiking, getting just to talk to each other, learning about life. I had more fun, you know, packing the cooler and sandwiches and all those types of things. It has nothing to do with dollars and cents.
It had everything about the fact that it’s almost like you let time stand still, but I also think about, I had no worries and I’ll give you from a financial element of, and no worries that I didn’t have something to place in case something ever happened to me. Of course I have financial worries. Like are my kids okay? Are they going to be okay for college, are we okay currently for college, are we okay with housing?
All those things and like many of our listeners have, but we’re a moment could stop stand still when you’re enjoying. I think all of us have been to a dinner, I’m sure our producer Jim, he’s been to a dinner with friends and like you’re sitting there and you’re having such a good time laughing and telling stories and having drinks or whatever you’re doing, where you’re like, I had just had the best time.
What was it about the camaraderie and how people made you feel? So that’s why I always say, if you can take advantage of something financially now of getting something done like initiative – we’re talking about being ready for your retirement and figuring out your RMDs – you’re actually going to enjoy life more because you have those things knocked off and completed rather than pushing it down the priority list.
And you know what I said earlier, Jim, creating simplicity for your heirs or your family. You want to do that where if you don’t, then it’s too late. And I don’t want to deal a hand of cards. You ever play cards, Jim?
Jim: A little bit, used to play a lot of Euchre at lunch in high school, you know, nickels and dimes. That was a lot of fun.
Paul: Yeah, Euchre’s a great game. Gosh, we, we’ve played pitch, grown up hearts, bridge. We play a new game Hand in Foot – I don’t think it’s new, but it’s newer to my family. Those things are fun because of just the conversation that goes on. But I think about, well you’re ultimately how you play your cards influences it, but doesn’t it really almost more just what were you dealt, like doesn’t that influence it the most in terms of what hand you were dealt? Like in life while we’re living we have the chance to control that hand and make changes and adjustments, but if we’re not here anymore and we pass our hand of cards our family cannot essentially make any further decisions from there.
If the cards are the cards and they have to play, I’m like they lie. So if you want your situation looked at to make sure that cards are being handed to your family correctly and creating simplicity for years, give us a call. You won’t be disappointed. (888) 419-8513. If you’re the type of person that wants to make sure you maximize every dollar you transferred to your family. (888) 419-8513 that’s (888) 419-8513
Paul: Hey, welcome back to Wealth from Wisdom. I’m Paul West. My cohost today is Jim Caldwell and we’re having fun talking about different strategies and tactics related here. We’re trying to avoid using the term the Ohio state here on the show. Jimmy, got to take a drink every time you say that. Actually, whenever.
I better not tell you that they just won the big 10 and hockey over the weekend. That was really cool and that’s good. I don’t think I was paying attention to that. Should I have been? No, no, no. Well my least favorite word guy. Everyone. Right. But we’ll, we’ll get back to that because everybody’s at the dreaded B word.
Gosh, speaking of dreaded, I’m getting tired of the weather around here, that’s for sure. So what do we do here on welfare wisdom? You’ve been listening to our show and we’ll keep trying to, with our listeners. And by the way, thank you all. Everybody in the community says hello.
Paul: You know, tell us you’re listening to the show. We appreciate it. If you want to send us an email and you got a personal question email@example.com, that’s firstname.lastname@example.org. We’re happy to read it on the show if you’d like us to.
You know, let’s talk about something that’s been out there in the public this year and certainly since the tax and jobs act came out and that is Roth conversions and Roth conversions are a personal, by the way, I think it’d be super interesting. Maybe I’ll do it here while we’re speaking gym.
But if you, if you read online or heard something about should you do a Roth conversion, here’s what most people do. And we learned this last week, we had a speaker in here last week, Jim, that you and I listened to and I thought one of the most fascinating stance I wrote down is that 73% of people will look at and look up about people online before ever contemplating calling them or requesting more information.
73%. Again, I’m not really surprised by that. I do it. If I hear something that’s interesting, what do I do? I Google it. But think about how you Google your pieces of information. So for example, if I’m worried about a Roth conversion, not worried, but I’m interested so I could type in Roth conversion.
I could type in “what is a Roth conversion.” I could type in “IRA Roth conversions good.” I could type in “IRA Roth conversions bad.” So think about it, how you search me. Completely change the output you see on the screen. And that’s why, and by the way, Jim, I think this is fascinating too.
So you’re going to go believe something potentially in an article or somewhere else posted by someone you’ve never met before who may or worse yet may not be a professional. At least when I ask you Jim, what do you want to, where do you want to go to eat? Or what do you like to eat or do you like to go to eat?
That’s based on what experience? Your personal experience. You got it. You ask a waiter or waitress. And most people love to ask what’s good here. So I think it’s nice. They tell you what’s good here, you know? Or it can really tell you how good of a waiter or waitress you are by the following statement.
So Jim asks me what’s good here. Jim, what are you in the mood for today? Italian? Okay, so have you had pasta remotely? Do you have any allergies? Do you like red sauce or do you like white sauce?
Jim: I’ll go red sauce and a, no, I’m not allergic to anything.
Paul: Okay. So you know, we’ve got this bolognese that’s really good, that a lot of people like that, like red sauce, that like pasta and you see instead of me saying, oh you should have had the tuna tar tar, which might be their most popular dish, what did I do? I personalized the menu to you.
So I’m going to you. I’m going to know you’re a great server if you’re personalizing your recommendation to me. Now I know not a lot of people have time when their server doing that, but I think that tells me a lot about who they are. And I bring this up because Roth conversions are, you can’t get more personal than that.
And here’s why, because it’s dependent upon two things. One, I would actually say it’s impersonal based on your numbers from the past that your numbers are what the numbers are, where it is personal is based on your life, your dreams, your goals, and where you’re going from an income and a tax perspective.
Well, you have a job three years from now or not. Where’s your tax bracket? You’re gonna be there three years from now or not. So that is personal cause that is reliant on you looking out in the future and predicting where you may be.
So now you got to take an educated guess on the quad, which is your numbers versus the qualitative where you might go. And I think that’s why Roth conversion is one of the most personal decisions out there. And there’s no right or wrong answer. So what did I say earlier about Google search? Is a Roth conversion good? Or is a Roth conversion bad?
Jim: I think you can, you can go either way there. I mean, I don’t know if it’s good or bad, if it’s the word appropriate, let’s say for the given situation. So like we’ve, we had one the other day, I was working with the household, 95% of their assets were in retirement accounts. So I’m looking at that saying, well why would you want to convert that to a Roth? Because they had heard this or seen this somewhere where basically all you’re doing is accelerating the tax liability.
So that was a no-no. Whereas I had another household where what we did was she had a lot of traditional IRA but she had a lot of non qualified outside assets. So what we decided to do is have her file a tax extension this year because you can wait until whenever you file your taxes to make that decision. And so that will allow us to figure out where her income’s going to be so we don’t bump into another bracket.
Paul: You don’t want those things to happen. Um, so Jim, I, you know, I mentioned Roth conversions bad, Roth conversions good. You do a Google search, I mean I think all of us know, or at least I’ll educate you hear part of Wealth from Wisdom isn’t just financial wealth is wealth of knowledge and a lot of areas. So when you start typing in your Google search, what happens?
A dropdown appears and it automatically starts giving you recommended options based on what other people do. So I just started typing in “should” and then just the letter R. So the dropdown menu, you can see it on my screen here. The first one says “should red wine be chilled.” What do you think? Yes or no?
Jim: Red Wine? No.
Paul: Okay. Should rosé be chilled?
Jim: That’s the second one? Yes.
Paul: Should resumes be one page?
Paul: And, I’m not sure I know how to pronounce this correctly. Should Rami Malek win an Oscar? I think that’s the Bohemian Rhapsody star. Right? So that’s funny. It’s like those are the things that pop up. They’re completely uncorrelated and not related at all, but that’s based on what other people have done and done in a search request through there.
So if you’re going to Google online, which I just gave you all the statistic earlier, that 73% of people when they hear something, Google it to learn more. How do you know it’s right for you? You don’t. You can go to Wikipedia.
By the way, I love that wealth MD is out there, but I can get, I can assure you that, you can find a pro and con for about every health situation on web MD, right?
Paul: I tore my ACL, I didn’t tear my ACL. I’ve got foot fungus, I don’t have foot fungus, whatever it is. Sorry for making that too personal there. But I mean it was just the, it’s like the people can rationalize any different thing there. The reality is is the numbers are what the numbers are. You take your projections and then you figure it out.
And here’s an important note. A last-minute Roth conversion doesn’t completely save you because when you convert, you have to pay that appropriate tax at that time of conversion. The growth is tax free, not the amount converted. So you have to be really careful about that. And Jim, I think a lot of people did forget about it.
Jim: Yes, and that’s kind of a hurdle. The other hurdle I see a lot is people that are in 401k’s, they’re participating. The questions are, can I still do a Roth? And, and there are strategies there, but it’s all based on your adjusted gross income. And if you’re sitting out there trying to just figure it out yourself, you’re not going to have a happy ending.
But we’ve talked about backdoor Roth Iras before and how those work. And I think that’s something that, that people need to look at and consider
Paul: They, they definitely do. Um, and help people make the right decisions related to that. Jim, you know, as I think about, you know, where are we are, um, what’s going on, Trump, Kim, you know, big headline news and headline story.
I read it earlier this week, why we are Wealth from Wisdom is what I like to call, um, 1% moves in the market. So there’s been eight days this year where the market’s moved up more than 1% are down more than 1%. So that’s four a month, you know, maybe a little bit more.
That’s really it for historical averages. And the reality is, is like last week there were zero. So one of the things we’re watching here at the Carson group is what’s happening is people’s propensity for risk unfortunately is continuing to go up again, which is amazing to me because in December, people were running to be protected.
People that were in downside protection, capital type strategies were super thrilled because they didn’t have any risk, and by the way, we had a lot of people that are like that.
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Required minimum distributions are one thing, but did you know that RMDs could trigger more prompts with your social security benefits, your medicare premiums and more? Welcome back to Wealth from Wisdom. I’m Paul West and today we’ve been talking about five critical mistakes that cost you a small fortune and your retirement. My co-host today is Jim Caldwell.
Jim, you know there’s a lot of these things we’re talking about. Gosh, I’m thinking about like what are critical mistakes people made in the blizzard we had here in Omaha last weekend. That was something else.
Jim: You mean like getting out and driving in it?
Paul: Yeah, that’s one of them. Or if they did not packing like a shovel for their car, extra warm food, water, not vodka, water, Jim, not vodka. So being smart and sometimes just making smart decisions and you have to, you have to realize you can’t always outsmart or out-tough the situation is sometimes you just got to make a conservative decision.
I know it flies in risk, but you sometimes gotta make the decision that’s going to cause the least amount of pain versus one that’s going to help create the greatest amount of gain. And I think about Social Security as one of these. So everybody wants to either do one of two things, either a, maximize it, or b, start as soon as possible.
But you can’t have both. It is impossible. You can’t just like, you can’t have account, not go down, but an account also go up as much as the market. It’s just not possible. You can’t vote both as a Democrat and a Republican, you can’t have both things filled out for a party. You can go on and vote on the ballot for different candidates in each, but you still have to choose one or the other.
So that’s what life is. You have to make a series of independent choices. And Jim we saw earlier this week, and I want to share this with you. So Scott Kubie’s been on the show several times with me, senior investment strategist here at the Carson Group.
He shared a story that you’ve seen online, by the way, a lot of these online brokerage firms, TD, Fidelity, E-trade, Charles Schwab, you know on what I call their do it yourself platforms, they’ve promote a heck of a lot for 95 trades, $2 trades, free trades, low cost ETFs, free ETFs.
What I thought was super interesting was Fidelity’s come out with a zero fee fund, but yet they’re not raising assets that the amount they want. So what does this tell me? I, I’ve always known this in life, but this again backs up this theorem, free in terms of advice does not always mean better. Free or lowest cost and money management, guess what? Doesn’t always mean better
Value is always there unless it’s not evident to the person who is experiencing that situation. So just be careful when people buy things for costs. I’ll give you an example. Jim, you know you’ve spent some time in Florida. If you go to a fresh seafood market, is there any difference in the type of fish?
Jim: Oh yeah
Paul: Yeah, so, but if you have different types of tuna, you can have the one that’s what? $5.99 a pound, $12.99 a pound, $30.99 a pound. What’s the difference?
Jim: There’s a difference.
Paul: Quality, the value you perceive. So even though it’s more per pound, the value you get from the consumption of enjoying it and the taste and the flavor and all of those things you’re willing to spend at whatever your price point is that you feel you want to spend. And I look at it is, as you know, when you work with financial professionals, what value are they providing you and how are they helping you?
If they’re only doing investments for you, that’s pure table-stakes. Most of that can be done online. You can fill out risk tolerance questionnaires, but if they start giving you advice on your financial plan, they give you advice on your taxes. They give you advice on your insurance, they actually make sure your trust is funded, they make sure you have a power of attorney.
If you’re a listener and you’re going to have a college-age child or grandchild soon or you know when they turn the legal age of majority and they go off to college, what if something happened to them? They got in a car accident, they drank too much and went to the hospital and you go to the hospital and you have to make an important decision – give them more medicine or not, or whatever it may be. And the health care professional looks at you and says, I’m sorry I can’t take that advice from you. How are you going to feel?
And Jim, you’re looking at me like, well that’s not going to happen. You’re a parent. I’m a parent. That’s my kid in there. That’s my kid. Of course I can make a decision. How old are they? 19. Huh? They can make decisions on their own. Who has a power of attorney for them? I don’t have a power of attorney. I’m the parent.
Jim, I couldn’t even fathom being in that type of scenario or situation. So actually we at the Carson Group would recommend that when you have a child go off to college, you get a limited healthcare power of attorney to help them out just in case they got put in that situation.
And I can tell you personally, Jim, I’ve had clients of mine go through this and sure they don’t want to spend a couple of hundred bucks to get that updated and you know what they don’t want worse – to be in that scenario or situation. So if you’ve got kids or grandkids, go off to college and if few years talk to your son or daughter or talk to your grandson or granddaughter, whoever overseeing them is whoever the Guardian is.
That’s something simple that you can execute on that is truly wealth from wisdom because the wealth you’re going to get from feeling better or if you’re ever put in that scenario. Is it scenario scenario. So I just want people to be careful on what they do and then ultimately help yourself make that right decision. Jim, and I mean I know you work with people, those healthcare power of attorneys are something so impactful of your life, but yet people don’t do. Why? Because it takes time and energy
Jim: And it all falls into that estate planning basket so to speak. You know you talked about earlier about creating simplicity for your heirs. It just so happens we’re having a workshop next Wednesday, March 6th here at Carson Wealth from five to seven and it’s talking about the 10 most often mistakes made in estate planning. And I would invite any of our listeners to contact us and come out and listen. I feel there’ll be a lot of valuable information that night.
Paul: So I know you didn’t have a lot left. If you want to Rsvp they can just call the normal number here. I’ll give it to them again. (888) 419-8513 Again, chance for you to learn smart things like that. Healthcare power of attorney I shared with you or Jim, are you okay if they email us to Rsvp? email@example.com or (888) 419-8513.
I’m glad you’re doing that, Jim. I know you and several other advisors are just trying to educate people. So besides healthcare, power of attorneys, assume you’re going to talk about, you know, keeping your wheels up today. Trust what other else will help people out.
Jim: Just getting your house in order. I mean just wills, trusts, estate planning, power of attorneys, where those documents need to be kept, how they need to be. We’re able to talk a little bit about, you know, if you’re on social media and you have all those passwords and everything that if you pass away that your heirs have access to those, you can shut those accounts down. Those are things that are highly overlooked.
Paul: Yeah. Or what if you have your credit card and you have your credit card to pay automatically. And like many of our listeners, um, and I would even say like my family included, you usually have one person who controls all of the access there. Now they share their user id and passwords, but then they probably forgot.
They probably know you do. But making sure you transfer that in a way and be smart of it. So we actually have a way to help store this info to help our families. If you want advice or what that looks like. (888) 419-8513.
Most people have an open mind to this. They have an open mind of taking action now to inspire themselves to feel better about how they protect their family. (888) 419-8513 call us now. Don’t wait. That advice you’ll feel better about for the rest of your life. (888) 419-8513
Thanks for listening to Wealth from Wisdom.
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