Safety and Growth for the LGBTQ+ Community

Episode 25: Audio automatically transcribed by Sonix

Episode 25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosure of any conflicts of interest, if any, exist. Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in, no matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello once again, welcome to Take Pride in Retirement. I'm Matt McClure, your host, advisor, pal. Buddy, your friend, your confidant. Uh, I am all of the above. At least, I hope. And someone who you enjoy listening to as cheesy, uh, and, uh, you know, sometimes kind of kind of dumb like that as I am. Um, thank you so much for being a part of the show. Really do appreciate you taking the time to listen to me. It means the absolute world, uh, that you would do that. And because I know that your time is important and I don't take it lightly, honestly, I do not take it lightly that you take time out to spend some time with me and hopefully learn a little bit about retirement, about some of the risks that you face, especially we as LGBTQ+ folks face in retirement. You know, a lot of and I'll say this quite a bit. A lot of what we talk about here on the show is relevant to the population in general. But I always, always, always focus in on those things that, from my perspective, are most relevant to LGBTQ+ folks and I speak from experience in this particular realm. I also, um, just, you know, having worked with people in the LGBTQ plus community as well as being part of the community myself, it is, um, you know, something that I see and do every day.

Speaker1:
So it's it's very important to me. Um, that's the whole reason that I started this show was to help people and to give back to the community that's given me so much. And that is, um, all I'm going to say about that part of the deal. All right. Uh, go online, by the way, take pride in retirement. Dot com is the website. It's take pride in retirement.com. There you can find previous episodes of the show. You can also find the link to schedule a consultation. It's easy breezy beautiful cover. Covergirl know it's easy breezy. To do that, just go up to the top of the page. You'll see a schedule consultation button and it takes you directly into my calendar where you can sign up for an appointment, whether it is one in person. If you're here in the metro Atlanta area, I would love to meet with you in person or if you are anywhere throughout the country, if you want to do a consultation remotely, we can set that up. Do it via zoom. Absolutely easy to do for you to book yourself directly into my calendar at Take Pride in Retirement Com if you want to send me an email, you can also do that it's Matt at Take Pride in retirement.com and the phone number here 855246 9211 (855) 246-9211. Again is that number to reach me and set up a consultation.

Speaker1:
And we'll go through a bit of, you know, what the consultation consists of and exactly, um, you know what you would get. Absolutely free of any charge in any obligation if you were to go that direction, if you were to decide you wanted to reach out. If something in today's show sparks your curiosity a bit, and I hope it does, then that is the place for you to go. Uh, again on the website take Pride in retirement.com or call the number. I'll share it, you know, as we go along here again and again. All right. Because I don't want you to forget it. Don't want you to forget little old me. Um, also wanted to say social media, um, we have, you know, pages upon pages upon pages on social media. We're on Instagram, we are on threads. We are on Facebook. We're on YouTube as well with the show highlights. A lot of shorts on there as well. Things always picking up there on the YouTube channel and all across the socials. So just go search for Take Pride in Retirement there. Um, really do appreciate it. And the whole point of this is to educate you about different strategies for retirement and different ways that I might be of service to you in planning for your retirement. And, you know, I mean, if you want to discuss how, you know you can reach your retirement goals no matter what those goals might be.

Speaker1:
I would love to help you with that because, you know, building plans for listeners is what I do. And, you know, I mean, it's all about helping people either retire if they want to do that or relaunch in the retirement, traditional retirement year time frame, you know, so you can do all of that. Once again take pride in retirement.com. All right. That is all my spiel at the top of the show here. And we got a lot to get to. Um, there was quite a bit, you know, I'm recording this show and it's being published here on August 9th of 2024 at the end of what has been a roller coaster week on Wall Street. And so what we are going to do here is take a look at a little bit about why, uh, things especially on Monday of this past week, really took kind of a nosedive. Um, and, you know, the Dow Jones Industrial Average fell more than 1000 points that day, started to climb back up on Tuesday, then fell again, then, you know, was up, you know, up and down and up and down kind of all week long. So I'm going to talk about that market volatility and why it's happening and why it did happen right now.

Speaker1:
Also going to talk to talk about how to protect yourself from it. So so important. And it's so important for the LGBTQ plus community especially. And I mentioned this, I think in the last episode where, um, you know, it's it's not just me. It's a lot of analysts, financial advisors, experts, etc. who, uh, say that, you know, financial, um, uh, aspects of LGBTQ+ life tend to be more complicated than the population overall. Right? And also, we tend to be more susceptible to, um, upheaval in society, uh, because, you know, it's an election year, there's some uncertainty there. There's uncertainty. Oh, you know, over what the Supreme Court might rule on marriage equality in the future and things like that, because there have been rumblings among some of the justices, at least 1 or 2 of them, that they need to revisit those hard fought and hard, hard won battles for marriage equality. And those decisions that were, you know, reached now almost a decade ago to, you know, make the marriage equality concept a reality across the country. And my husband and I are two people who really suffered when that was not the case. Marriage equality was not, you know, recognized state to state. We were in we got married in a state where obviously it was recognized, otherwise we wouldn't have been able to get legally married in said state.

Speaker1:
Then we moved to a state where we had no rights as a married couple at all. And so, you know, I mean, he had to go to the hospital one time with super, super bad kidney stone pain. And thank God it was a situation where it wasn't an emergency and he was like, it wasn't an emergency in the in the traditional sense. He did go to the emergency room, but it wasn't a situation where he was unconscious because had that been the case, my gosh, I would not have even had any right to go back and see him in the emergency room in recovery. And anything I would have had to wait in the emergency room waiting area. But luckily he was conscious when he went in and was able to sign paperwork to allow me to come back and to see him in in recovery and in treatment there at the emergency room. So yeah, know a lot about that. So there's uncertainty there surrounding that. And of course there are financial implications that go on with that. So all of that to say market volatility is a big deal. Of course, when it happens, especially emotionally, there's potential upheaval after the election this year that could affect all of our lives as well. So what I want to talk about and focus a good chunk of the show on today is protection from that uncertainty.

Speaker1:
It is so important to everybody. It's important especially to LGBTQ+ folks as I as I have just laid out there. And also you want to not try and time the market, right? Um, you know, sometimes people say, oh, timing. Timing is everything. You got to have great timing. Well, if you're trying to time the market, that's not such a good thing for you to do. Why? That is really never a good idea. Um, we'll kind of delve into some numbers here. I usually don't try and bring up too many numbers, like hard and fast numbers on the show, because people's eyes tend to glaze over when that happens. But, um, it's an important thing to to look at, and it's just just a few numbers, not many. And you're not going to have to do like hard math or anything. Okay. Also some financial landmines to avoid and how to kick the IRS out of your retirement plan, right. Just how to how to get rid of that partnership with the IRS that you're going to have in your retirement years? Okay. All right. So now that all of that is out of the way, you know what is coming up here on the show. Let's get right to it, shall we? And we shall with our financial wisdom. Quote of the week.

Speaker3:
And now for some financial wisdom. It's time for the quote of the week.

Speaker1:
This week's quote comes from the famed astrophysicist, author, and science communicator Neil deGrasse Tyson, who is just an absolutely brilliant man studied at Harvard University, University of Texas at Austin, and Columbia University as well. He was a postdoctoral research associate at Princeton also, Just really super, super smart, obviously, and so knows a thing or two about life and about, um, you know, how to how to be successful in life. And so he said this once, quote, knowing how to think empowers you far beyond those who know only what to think. So Neil deGrasse Tyson said, knowing how to think empowers you far beyond those who only know what to think. Boy, I absolutely love that because it really focuses in on you educating yourself, right? Knowledge is power. And so when you're not just being spoon fed, what to think and and being told what you have to think and you actually know how to think for yourself and the research that you need to do and the people, the experts that you need to talk to to find out what the you know, the knowledge is that you need to know that is so powerful and you are empowered, as Tyson says here, far beyond those who are only just told what to think. You know, I do like every now and then anyway to go through and watch, you know, people opinion hosts and that kind of a thing on TV or whatever who I don't agree with just to know sort of their mode of thinking.

Speaker1:
It doesn't, you know, change my personal opinion about anything, but it gives me perspective in life. And so I like to kind of get, you know, all sides of an argument and then make up my own mind. I also trust the experts when it comes to things like my finances, when it comes to things like, you know, like Neil deGrasse Tyson, for example, he's an astrophysicist, right? So if I, you know, were to say, um, you know, to try and, and, you know, sound smart about things that are going on in space and why Pluto is a dwarf planet, not an actual planet now. And and all of the, you know, like without doing a great bit of research, I'm going to kind of sound dumb. One of the first people that I'm going to go to is Neil deGrasse Tyson for that expert data, the opinions, all of the things. And then I'm going to take all of the information that I gather, and then I'll form, you know, my own sort of, you know, either, um, uh, opinion on things that doesn't change the facts of the matter, obviously, but I can, you know, form my own opinion on things. And then, uh, with that education, I can take and I can go forward and I can use it in whatever way. Not that I know exactly why I would use the whole Pluto being a dwarf planet thing for anything useful.

Speaker1:
But just as an example, because the quote comes from an astrophysicist, right. So hopefully you if you're having struggles or issues or whatever in your financial life, hopefully want to see about getting some advice from someone who is an expert in that arena as well, somebody who knows what they are talking about. I have taken the time to get my education and my certifications and all of that, to be a fiduciary for someone who has to look out for your best interests to be life and health insurance license as well, to do things like income planning for people for their retirement years. Um, to be to become a certified annuity specialist. I just got that designation here not long ago. So I'm constantly studying and learning and all of those things. And so knowing how to think and knowing where to get the information from and how to form the that informed opinion of whatever topic you're talking about is so important, rather than just being spoon fed what you need to to know. And then you're going to be, uh, not really knowing anything, right? Because you don't know how to think for yourself. So great quote there by Neil deGrasse Tyson. Um, all right, so a bit of a market update here on the show as we start things off for this particular part of the show.

Speaker1:
Um, stocks really kind of went wild at least. Well, not at least kind of went wild all week, but especially early in this past week as of this recording. Um, mainly due to concerns about the jobs data that came out that previous Friday. So it was jobs data from July, but also some revisions, some downward revisions of jobs data from a couple of months before. Right? So we were thinking like, oh gosh, you know, we've had three months in a row now where we've had weaker than expected, uh, employment numbers come out. And so that kind of freaked out the markets. Um, you had, uh, of course, you still have continuing high interest rates. Um, at least for now. Hopefully in the not too distant future, the fed will lower. Those investors also worried that those particular factors the slowing jobs market, the high interest rate environment there might slow down economic growth. And that led to a decrease in market confidence. So that's causing fluctuations in the market. And it makes investors nervous about the immediate future. Now I will say that a lot of people who are even more experts on on this and who look at the markets and market performance and analyze data about it and stuff every day, like that's just what they do with their lives or saying, look, this is not necessarily, you know, some market upheaval, say, in August, September time frame is not unexpected.

Speaker1:
Right. It is in keeping with what we were looking for. We're looking to happen this particular time of the year. Market was kind of overdue for some sort of correction. Um, and it's not like we're in correction territory. That would be down 10% from a recent high. But it's, you know, kind of a tumultuous time, let's say, in the markets, but not necessarily an unexpected one. And a lot of the analysts that I have seen analyzing, as they do as analysts are saying that, you know, longer term at least, you know, medium term to longer term, things still look strong for the financial markets at least. So if you have, you know, a lot of investments that are in the markets. What do you do in this particular time period that is seeing that upheaval, that seeing that uncertainty? Right. The seeing all of this volatility that we saw this past week. Well, especially as you get a little bit closer to retirement age, it's absolutely natural for your risk tolerance to go down. So you know, you're seeing kind of in real time a lot of the market risk that people could sort of fret about. Right. If you're if you've ever, um, invested emotionally, which is never a good thing, you, uh, a lot of times fret about, oh my gosh. Oh, the market's headed down. I need to sell, sell, sell. Well, no, that's not a good thing for you to do.

Speaker1:
You need to keep your wits about you and not invest with emotion. Right. So, um, that is sort of a thing. So you're seeing that in real time, kind of the market risk that we talk about quite a bit. Investment risk. Right. The fact that you could, yes, lose that investment in the market if things just absolutely tank or at least you know, a good chunk of it, but all of it technically is at risk in the market. So you're seeing that in real time here. But it's it's natural for your tolerance for that risk to get less and less as you age just sort of naturally happens, especially if you're in the retirement red zone. Right. This is kind of the few years before retirement and few years into retirement. Your main concern there is going to be sequence of returns risk. You don't want to suffer, right, as you're getting ready to retire or right as you have retired. You don't want to see big losses because then you are never going to be able to recover that if you're having to draw down on your investments and, and, you know, have a big loss, you don't have as much money to live on over the long term. So you want to move into a more of a protection mode. And this is, you know, what especially true, um, you know, if you've been in, say, a buy and hold type strategy for a long time, you've just been pouring your money into the same investments, you know, for years and years and years if you've been wanting to take some risk off the table, like a recent client of mine who who said, look, I know I'm taking too much risk, I'm getting closer to retirement.

Speaker1:
I want to retire in just a few years, but I don't know exactly what to do to reduce the risk. I was able to do that for him, to show him. Okay, here's how you reduce the risk. You still get a great rate of growth, but you also get protection from losses and an income in retirement. And so that is just, you know, music to his ears as a client of mine. And that's what I do for clients all the time is talk about not only growth but also protection from market risk. So if you've been wanting to take some of that risk off the table, yeah, now's the time to consider it. Especially if you, you know, started your investment life a while back and have just sort of set it and forget it kind of a little bit here. So one of the strategies that we use to do that is and this is kind of has become a little bit of a dirty word in finance in some places. Uh, it's a particular type though of annuity. Now don't freak out when I say the word annuity because likely if you've heard of annuities, you've probably heard some bad things and those bad things sometimes are are true within a particular context.

Speaker1:
A lot of times, though, they are not. And it's just kind of a little bit of fear mongering from people who may have other sorts of, um, you know, goals in, in mind as they're telling you or the, you know, public at large, these things about annuities. Um, but what we like to work with more often than than any other type of annuity is a fixed indexed annuity. So fixed in that you have protection from losses. You know, you can never do in the products that we use anyway. You can never do worse than 0% growth. You can never lose money in that annuity year over year. So that is the best possible news, especially in times when you have market sort of upheaval. Right. So there's that's the sort of fixed part. Right. So you can never do worse than zero. We say zero is your hero in these particular types of investments. Indexed means that it is tied to the performance of your annuity. The growth of the annuity is tied to a particular market index. It is not, however, invested directly in that index. There's a lot of stuff that happens under the hood, but kind of what you need to know as a consumer on this is that the performance of your annuity is tied to a market index up to a certain percent.

Speaker1:
Some annuities are tied to, say, the S&P 500. Some are tied to the Nasdaq, others are tied to proprietary indices, that kind of thing. But they're all tied to some sort of index, and they'll have what's called a participation rate a lot of the time. And some of those participation rates may be like 50% or 75%. Let's just say for ease of math, it's 50%. So if your investment or your the index, rather that your investment is tied to that your annuity is tied to. If that goes up 100%, for example, you get 50% growth on that investment. Great for you. Now the next year it tanks, you don't lose a penny. You still are at that 50% growth level that you experienced the year before. You know, sometimes instead of a participation rate, there'll be a cap rate. So let's say a cap is placed on your account at like 8%. So if the market gains 8%, great, you get to take part in 100% of that growth. But anything above that, you don't get to participate in that growth. It's still capped at 8%. So if the market goes up 20%, you're capped at eight. So sometimes you know there's there's a trade off there. But the trade off is the security of not losing any of that investment having that guaranteed by the annuity company.

Speaker1:
And these are long term investments, by the way. And by long term, I mean, generally speaking, at least 7 to 10 years before you necessarily turn on on income, right? Um, there are different products where you can turn on income immediately, and then you'll still see growth in your account, but you turn on income in this. It's like building your own personal pension. But what you do with a fixed indexed annuity is you make a lump sum deposit, or you can transfer funds from your retirement plans. That is not a taxable event. If you transfer from retirement plans, we can set it up where it's structured as an IRA or for tax purposes that that kind of thing inside the annuity. So if you take it from your 401 K or from an IRA, those are, you know, um, pre-tax dollars that have gone in there, same tax treatment. When you go to an annuity, we can structure it, you know, inside of a kind of an an IRA, sort of a wrapper as well. And so your tax treatment does not change. It also does not create a taxable event. So your taxes are unaffected for the current year. So you can also see that money then still grow tax deferred just like it did in that that other you know, retirement account. And so as I mentioned the investment performance is tied to a market index, but not necessarily invest.

Speaker1:
Not directly I should say it's not directly invested in the market. So it tracks the performance of that index. And it protects against the loss of principal. So you don't lose any of the money you put into a fixed indexed annuity. And you can establish a source of retirement income that you can never outlive. So some of the advantages there limiting your losses possibly that you can protect your gains that actually, you know, if you do have gains credited to your account, the only time you're ever going to see any kind of dip in the value of your account year over year would be, you know, any kind of fee for a rider like an income rider or something like that. Like, say it's a, um, 0.75% fee or 1% fee. Some somewhere in there you might see a little bit of a dip in a year where there's been 0% growth. Um, but that's it. That's not because you've lost money to the market, that's just paying the regular sort of fee that goes along with this particular type of account. Now, a lot of them have no fees, so you will not see any type of loss inside that account at all. And here is one part that is huge when it comes to talking about fixed indexed annuities, is that insurance companies that issue these types of annuities, these types of products, they have a 100% financial reserve requirement.

Speaker1:
A 100% financial reserve requirement. So that gives you even more peace of mind going forward because you know that not only does the insurance company, um, you know, guarantee against any loss of principle on paper, they really put money where the mouth is. Um, really, um, literally speaking here, because they are required by law to keep in reserves 100% of the money that you give them to do the, you know, investment and growth part of all of this. So that principle that you give them, they have to keep 100% of that to be able to pay you back. So if anything, any time goes south with the insurance company or for something, for some reason you need to go in and get that money. It is there. It's not just magically gone somewhere, like in a bank where they have a maybe a 10% reserve requirement maybe. Which is why we've seen bank failures a lot of times, because there'll be a run on the bank, and the banks won't have enough money to actually pay out all of the people that are coming in for deposits. So what happened? What was it last year when we had a couple of banks fail? And so that's what we saw then. But with an insurance company issuing annuities 100% financial reserve requirement, they've got to have that on hand to be able to, uh, pay out any claims like that that you might come back and, and make.

Speaker1:
So, I mean, a couple of disadvantages to talk about still with fixed indexed annuities as one of these sort of protection against market volatility type vehicles, um, you could see limits on your gains with some of the products because of low participation rates or cap rates that are kind of low, you know, really putting a ceiling on your potential gains. Again, the trade off there is you're not going to lose anything, right? Guaranteed by the insurance company and subject to the claims paying ability of the issuer, as we always say, um, and for good reason, because that is the case, that the insurer is the one guaranteeing that you're not going to lose that principal. But on the other side, you could see limits on your gains. There are products out there, though, that like Nationwide Peak ten, for example, is one that that I really like these days because it's got a north of 300% participation rate on some of the indices. And so that is huge. Never used to see participation rates that high. So you know if the market index went up 100% you would see 300% growth, right. So it really is um, something that is worth considering if you want to protect and still grow your wealth. Um, also, you know something else that is, uh, a potential thing to look into for protection purposes is called a structured note. Structured note, according to Investopedia, is a debt obligation that also contains an embedded derivative component that adjusts the security's risk return profile.

Speaker1:
So that's a very wonky way of saying this, but what you need to know is the return on a structured note is linked to the performance of an underlying asset. A group of assets or an index kind of sounds a little bit familiar, right? With a fixed indexed annuity being behaving in sort of the same way, at least on that, um, how the growth is, is credited. Right. The flexibility of structured notes allows them to offer a wide variety of potential payoffs that are difficult to find elsewhere. And you could do a structured note ladder, perhaps. Um, and you can align your structured note allocation across different terms, different maturities. And so that approach minimizes the risk of exposure to a single maturity date as well. So I mean here's the question that I have for you. Do you want to just wait and see what the market is like when you decide to retire? Or do you want to get to the guarantees in life? Do you want to start planning what you're going to do with the paychecks, and hopefully the paychecks that you are guaranteed to receive each month? So all you have to do is reach out for a consultation. I can explore those options and more with you. That's really just the tip of the iceberg. Go to take Pride in retirement.

Speaker1:
Calm. Take pride in retirement. Calm. I encourage you to do that and set up a free consultation. It's absolutely free of any cost, any obligation as well. Or if you like to do it, kind of the old fashioned way. Here you can call me toll free (855) 246-9211. It's 855246 9211. All right. Now this week really does highlight this past week why it's not a good thing for you to try and time the market. You really want to be in things for the long term. And I encourage people to do like dollar cost averaging, that being, you know, investing consistently over time. The market's up. You're still putting money in. The market's down. You're still putting money in. That's dollar cost averaging. You're putting in the same you know money each time you invest. And then you're going to end up doing better than if you tried to time the market. Because nobody can get it right both times and both the buy side and the sell side. So, you know, it's like the old saying is and it's true, buy low, sell high. But where is high and where is low? You know, it all sort of is a matter of perspective. And nobody has a crystal ball that can see the future. So you might get one of those. Right. But chances are you're not going to get both of those right. The high and the low right. So even let's look at this.

Speaker1:
These are those numbers I was talking about at the beginning of the show. If you look at the two decade period from 2001 to 2020 and you took $2,000 a year, not a whole lot. In today's dollars especially, it's not a whole heck of a lot of money we're talking about over a full year. Right? But a $2,000 annual investment for retirement. Let's look at that under different scenarios. This is from the Schwab Center for Financial Research here. And they send over that 20 year period. If you had perfect timing, which nobody does, by the way, you know, maybe some sort of supercomputer somewhere that can predict the future, I don't know with AI who knows what is possible. But if you had absolutely perfect timing, you bought low every time, you sold high every time you would end up at the end of that 20 year period. After putting that two grand in every year with $151,000 and just a little bit more 151 if you just invested that money immediately, when you know when you got it or if you invested it, that $2,000 a year, I guess if you took that $2,000 per year, took that entire lump sum and invested it all at once back then, uh, way back when at the 2001, at the beginning of this two decade period, you'd end up with $135,000 and change. Well, dollar cost averaging, which means putting money in at regular intervals, whether the market's high or low, whatever.

Speaker1:
That also gets you right at $135,000 at the end of that 20 year period. This is based on historical results. If you have bad timing, which means you don't get it right, you may get it right sometimes, but you don't get it right all the time at all because nobody does. Again, you end up with a bit of growth. Yeah, $121,000 and change. But you compare that that's $30,000 less than if you had perfect timing, which nobody has. So you're as you're much better off going with a dollar cost averaging type of investment strategy, investing at regular intervals all the time, no matter what the market is doing, because you end up with that 135,000, you're doing much better than you would if, say, you stayed in cash or you, you know, you put your money under the mattress or you put it in a low yield savings account that's only getting a fraction of a percent credited on an annual basis in interest. If that were the case over that 20 year period, you'd only have $44,000. So yeah, you see a little bit of growth there because, you know, if you added in an interest bearing account that, you know, that's what will happen, you get a little bit of growth, but it's just a tiny, tiny fraction of what you would get if you did dollar cost averaging.

Speaker1:
And nobody has that perfect timing. So don't even try to time the market, because then you're going to end up in a bad way as far as your money goes. And do not just stay in cash. Keep some money in cash. Sure. Or at least in a in an account that you can, uh, liquidate it, have access to it easily. A fixed indexed annuity might be one of those types of accounts. Right. Because you do have at least a certain amount of liquidity in a fixed indexed annuity that we were talking about earlier, at least like a like a 10% per year. That's kind of the standard there as far as the industry goes. And then after a certain period of time, you can make larger withdrawals without penalty, but up to 10% you can you can take without penalty. So anyway, all of that to say don't try and time the market and surely do not invest with emotions. Especially not the negative emotions that go along with a rollercoaster week or month or year on Wall Street. If you want to learn more, go to Take Pride in Retirement. Com set up that free consultation. I'll be glad to do it for you. No matter where you are, no matter who you are, no matter who you love, where you come from, how you identify any of those things I am here for you to help safeguard that money, but still get you growth and turn on an income stream in retirement that you can never outlive.

Speaker1:
That is really where the rubber meets the road. As far as what are you going to do in retirement? Are you going to try and live off that lump sum that you've saved up, and hope and pray that you don't draw down too much, and hope and pray that you don't lose a lot in the market in the process. Or are you going to have a guaranteed income stream for the rest of your life, and potentially for the rest of the life of a loved one as well? If you want to set it up that way, there are a lot of different ways that you can do it. There are also riders that can double your income, for example, on certain products. If you have to go into a long term care facility like a nursing home or assisted living, those living benefits are fantastic in a lot of cases and are perfect for a lot of people's scenarios. Now, I'm not saying that a fixed indexed annuity is perfect for everybody, and I'm not surely not saying that one particular fixed indexed annuity is perfect for everybody, like one particular company's product. Right? That is not at all what I'm saying. What I'm saying is whether or not it's good for you. You need an expert opinion. You need an educated opinion on what is good for you.

Speaker1:
And I will be straight up and honest with you if it is not good for you. And if there's another option that might be different and better based on a lot of different factors, including your age, your risk tolerance, all of the things when you plan to retire, your health, um, all of those scenarios, those factors and more all go into it. It's all based on that because as a fiduciary, I have to work in your best interests, not in my own. Again, Take Pride in Retirement is the website for you to go to. All right. So a couple more things to get to here in the show. This one is, I think, something that's very important as we look at now, you know, if you look at the national debt situation in the country, $35 trillion plus of national debt, it's something that we've never seen before. Um, it is something that is, uh, kind of, you know, the blame goes to a lot of people or politicians on both sides of the aisle. It also has to do with the fact that we went through a once in a hundred year pandemic over the last, you know, several years here. So a lot of that is kind of the, you know, reason behind why the the debt, the national debt has ballooned so much and all the stimulus and the and the payments that went into that and sending people money so they could survive.

Speaker1:
Right. It's not necessarily a bad a bad thing to make sure people have money in their pockets during a time of national crisis. So that is part of the reason why things have gotten so bad as far as the national debt picture goes. But now that means that taxes at some point are going to have to go up to be able to pay for all of that. And if you've done well for yourself, you might find yourself in a bit of a higher tax bracket, so it impacts you a bit more. Now, if you are in a middle or lower tax bracket, it won't affect you as much potentially. But chances are your rate's going to go up as well. And if you've got investments, if you've especially got an IRA or a 401 K sitting around, then that money is going to be taxed when you make withdrawals in retirement. The IRS, as a result, is your partner in retirement. So if that is a few years away for you, what you might want to do and what I have suggested to a lot of clients, what I've suggested that they do is look at a different way of investing, a different type of account. And this is because of something called required minimum distributions. Those are those mandatory withdrawals. We call them RMDs. Right. Required minimum distributions. They're mandatory withdrawals that individuals have to start taking from their tax deferred retirement accounts like an IRA, like a 401 K that I was just mentioning by April of the year after they turn 73.

Speaker1:
So 73 is the age now where you have to get those required minimum distributions going and the withdrawals are mandated by the IRS because basically, you know, you've put money in tax free, right? Those tax deferred accounts, uh, those IRAs, 401 s pre-tax money comes out of your paycheck or, you know, whatever, you haven't paid the taxes, the income taxes on that money just yet. Right? So you put it in pre-tax inside those accounts and it grows tax deferred. So then by the time you turn 73, Uncle Sam's like, okay, I've given you this big, nice tax break for all these years. So now I want my slice of the pie. Please give me what I have coming to me, says Uncle Sam. So that is the why behind this starting at age 73. Now, eventually that age will go up to 75. Used to be 70.5, then it was 72. Now 73, it will go up to 75 by law in the next few years, but not meeting the requirement to take out a required minimum distribution. So not taking an RMD when you are supposed to, when you are required to, that can lead to a penalty up to 25% of the amount that should have been withdrawn. That actually used to be a 50% penalty.

Speaker1:
It was, and still is actually the steepest penalty in the IRS's arsenal. They want you to take those RMDs so that Uncle Sam can get that tax paid. And so it is in your best interest to do that if you have those tax deferred accounts. Now a couple of things that you can do though, because now, you know, in this scenario you're partnering with the IRS and your retirement. You take withdrawals starting at age 73 or whenever in your retirement years, but definitely by age 73, a chunk of that of, you know, the biggest chunk of that goes to you. Well, then another big chunk of it goes to Uncle Sam to pay that tax bill that he's got coming to him. So what if I told you you can actually kick Uncle Sam out of your retirement, at least out of a good chunk of it. Well, there are some strategies here that I'm going to share with you to avoid or reduce RMDs. Number one is called a Roth conversion. You've probably heard that a Roth IRA. A Roth 401 K will convert the funds from a traditional retirement account to a Roth account. Roth accounts are non-taxable, so you put after tax dollars into a Roth. So you would take money out of your 401 K or IRA, whatever tax deferred account, you pay the taxes on it now and then move it into a Roth IRA.

Speaker1:
And the reason you want to pay taxes on it now is because of just what I was talking about as I started this particular segment of the show. Taxes are going to have to go up in the future, according to most economists out there, because of the national debt, because of other things, taxes will have to go up there historically at low levels right now. So now is the time to do that. Roth IRA conversion. So then, being a nontaxable account, Uncle Sam couldn't give two shakes of a lamb's tail. Couldn't care less what you do with that money. You can leave it in the account. You can withdraw it whatever you want, because there are no taxes going to be paid in your retirement years. So that 73 years old you have to take an RMD situation does not apply to you inside a Roth. Any of the money in a Roth that's not subject to RMDs because it's not subject to taxes, and therefore Uncle Sam kind of just doesn't care. So then you also get tax free withdrawals of that money in retirement. So a couple of advantages there. You don't have to take RMDs and you don't have to pay taxes as a result of that. Another option could be qualified charitable distributions. That's a distribution from an IRA directly transferred to a nonprofit organization. And if that bypasses the individual's bank account, that counts toward your required minimum distributions but does not count as taxable income.

Speaker1:
So if you've got a charity that you love, nonprofit that you want to give to, you can take a portion of that money that is required to be an RMD, give it to that charity, just going directly from your tax deferred account, directly to that charity, that that nonprofit. And that doesn't create a taxable event for you, but it does count toward your RMDs. So Sheriff qualified easy for me to say. Qualified charitable distributions or qcds. That's what those are called. Qcds. The limit for a QCD is set for this year 2024 at $105,000. A person married couple could potentially donate up to $210,000, reducing their RMDs by the same amount. Qcds are applicable only to IRAs, not to workplace retirement accounts. All right. So it goes directly from that tax deferred IRA into a workplace retirement account. Counts toward the RMD does not create a taxable event. One other thing here is that if you continue to work, your current employer's 401 K plan may be exempt from RMDs. A lot of them are. Some aren't. Check with, you know, HR or your benefits manager, whatever. But transferring assets from old retirement plans to the current employer's plan can also help avoid RMDs. And if you're healthy and you love to work and you want to keep working, that's potentially a good solution for you. Now, if you need to retire, then retire, and we'll come up with another solution for you.

Speaker1:
But it all comes down to, as I say again, your individual situation and what is best for you, that is my goal, is doing exactly what is best for you. Take pride in retirement.com is the website. Go there. Sign up for a free consultation. You can book yourself directly into the calendar with just a couple of clicks. Take pride in retirement.com. Or you can call me 855246 9211 (855) 246-9211. All right. As we close out here in the last couple of minutes that I want to share with you this week. And again, I appreciate you joining me because it's an absolute privilege to just have you along here. Um, some financial landmines to avoid either before or during retirement especially. And I'll run through these here. Number one is to allow your money to be mismanaged. I mean, are you are you neglecting to review and update your retirement plan as the years go by? Here's the thing. Your 401 K alone is not a retirement plan. It's an account, but it's just one account, and it's only one part of your overall financial picture. Do you know how much you're paying in fees? A lot of people don't. We can find out for you. Get that? What's called an expense ratio. It's exactly. You know, it's kind of a look at how much you're paying for what you're getting and for the amount of money that you have and the growth that you're getting, things like that.

Speaker1:
So if you don't know how much you're paying in fees, you know, you need to know that. And chances are you are being allowing your money rather to be mismanaged. And of course, if you don't know how much you're paying in fees, you don't realize how big of an impact that has. And so then you're probably not trying to delete the fees inside your portfolio when possible. So that's all part of, you know, mismanaging your money. And I'm not here to criticize and I'm not here to say, oh, you should have done better. And this is all shame on you and all that. No, I don't want you to feel bad. I want you to feel motivated. If that is you, if you don't know how much you're paying in fees, if you only have a 401 K, if you don't have insurance, like life insurance, if you don't have, you know, a full look at your financial picture and all of those things, I want to help you establish that right. I want you to improve your financial life. That is why I do what I do So we can find out how much you're paying in fees and all of the other things, and take a deep dive into your financial picture and put together a plan that's going to work for you so your money won't be mismanaged anymore, and you can avoid that first potential financial landmine in retirement or even before retirement.

Speaker1:
Number two, we talked about a little bit here thinking you can beat the market. You can't. Probably. So it's not about timing the market. As you said earlier, it's about time in the market. You've got to be in it for the long haul. Do things like dollar cost averaging and the things that we talked about before, if you missed that part of the show or if kind of glazed over it or something, go back and listen to it earlier on in the show if you're engaging in excessive or risky speculation when it comes to your investments, if you're overestimating your own ability to manage your retirement savings, kind of like I talked about a minute ago in the mismanagement landmine there, then you probably think, oh, I can beat the market, or I can time the market perfectly and I can make a gazillion dollars and all of that. Um, maybe you catch lightning in a bottle and, you know, you are just perfect with your timing, and you make a whole ton of money and all that stuff, and you're great. That is kind of like going to Vegas and sitting down at, you know, craps table and putting all of your chips on the line on a on a single bet, basically. Right. You don't want to do that. That's not a smart investment because you can lose everything.

Speaker1:
So if you are overestimating your own ability to manage your retirement savings, if you do think you can beat the market, please, please, please, I implore you, get to the guarantees in life number one, and do that by speaking with a financial advisor like myself, who can help guide you toward a plan that's going to work for you. Take pride in retirement. Calm the place to do that. If you don't have a plan for your Social Security benefits, that is another financial landmine here that you could potentially step on before or during retirement. Failing to understand the the best time for you based on your particular scenario. To start taking benefits for your situation. Not considering the impact of working in retirement on your social Security. Neglecting to account for potential changes to Social Security in the coming decade. Changes to the tax code are always happening in. The tax rates are likely to go up in the future, according to a lot of experts, as we were just talking about a few minutes ago. So you need to make sure that you have a plan for the changes that are likely going to happen there. Same thing with Social Security. Don't neglect to account for those potential changes in the coming decade, because Social Security Trust Fund, Old Age and Survivors Insurance Trust fund specifically I'm talking about here in just about a decade or so, time is slated to run out of money because there are a lot more people being paid Social Security benefits these days than are paying into it compared to how it used to be, especially when the system was first established back in the day.

Speaker1:
The fourth financial landmine here is depleting your savings too quickly because you didn't have a plan, right? So you're going to run out of money if that's the case for you in retirement, right? You are going to run out of the money that you've saved and you've worked so hard for and you've diligently put aside for your retirement years. If you don't have a plan, if you don't have a good solid withdrawal strategy, if you don't have a guaranteed stream of income for the rest of your life in addition to Social Security, if you don't have a personal pension, chances are you don't have a workplace pension because those have pretty much gone the way of the dinosaur these days, and workers are now bearing the burden of planning their own retirements. Instead of the workplace doing it for you and setting up you, setting you up rather with a pension. But the good thing about that, the silver lining around that really big cloud is that you can take advantage of different ways to set up a pension for yourself, and so that is something that you can do and get a guaranteed income stream, something that is going to last as long as you do.

Speaker1:
As long as you are here on this earth, you'll continue to get that income. If you underestimate the real cost of your monthly expenses in retirement, you can be in a bad situation, especially if all you have are those traditional plans or investment accounts. You know, those retirement accounts that are going to be taxed when you make those withdrawals, especially if you underestimate the cost of the taxes when you take those out. If you underestimate your monthly expenses in retirement, if you are paying a mortgage, if you're paying rent, if you're going and traveling a lot, if you're paying health care bills especially, that's huge. A huge expense in retirement. Underestimating the real cost of your monthly expenses is going to cause you to deplete your savings far too quickly, and it's because you don't have a plan for it and not having a big enough emergency fund to cover unexpected costs is another big part of that. And then the final thing here not aligning your investments with your risk tolerance. Are you taking too much risk? Are you getting closer to retirement? Because if you're getting closer to retirement in general, you want to be reducing the amount of risk that you're taking because you don't want to have, as I said earlier, a big loss right before you're going to retire or right as you are in retirement, right after you've called it quits from the workforce, because then you're going to be in a bad way, and you are not going to have money that's going to last you nearly as long as it would have otherwise.

Speaker1:
So you need to reduce the amount of risk in your portfolio. I can help you do it and it's time to get serious about it, folks, in 2020 for This big election year that we have, there's a lot of uncertainty. There's a lot of things affecting retirees, pre-retirees, especially in the LGBTQ plus community. And I've laid out a lot of those concerns that we all share. Um, just a little bit earlier in the show. So don't wait until you're ready to retire to then say, oh, well, maybe I need to start planning. That's not a plan. A plan is getting it done as soon as possible. And I want you to really, really take home. If you get nothing else from this particular episode of the show, that's what I want you to take home. I want you to take home the importance of actually having a plan, and a plan that's going to stand the test of time. That's going to be a positive for you, and it's going to be a solid plan that will survive and help you survive, no matter what happens in the markets, or with taxes or with Social Security, any of the things we want to get a solid plan in place for your retirement years.

Speaker1:
That is what I do and that is what I care about more than anything, is helping you get an individualized plan in place, something that is going to be good for you in your particular situation. Take pride in retirement. Com is the website take Pride in retirement.com. You can schedule a free no obligation consultation there. Also go to the website and email me. You can of course click around and see past episodes of the show and all of that. You can also give me a call if you prefer a hearing my dulcet tones over the phone. 855246 85524692 11 (855) 246-9211. Well, I thank you so much once again, folks, for joining me. I really do appreciate it each and every time we get together like this. Um, I thank you for spending time with me. It again means the world to me. I hope you've gotten something great out of this. Schedule, that consultation, and we'll get you on the road to a successful retirement, a retirement that you can take pride in Because you know what? That is what you deserve out of life. I truly, truly believe that for members of the LGBTQ plus community like myself and others and for everybody really, we all deserve that retirement we can take pride in. And I want to help you get there. All right. So reach out to me once again, the website Take Pride in retirement.com. And until next time, take pride in yourselves and take care of each other. We'll see you next time.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ+ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement. Com investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment Advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Matt McClure at Active Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Speaker1:
Structured notes involve risks not associated with an investment in ordinary debt securities. The securities are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of or guaranteed by a bank. The securities will not be listed on any securities exchange and the secondary trading may be limited. Therefore, there may be little or no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity. The securities are subject to the credit risk of the issuing bank, and any actual or anticipated changes to its credit rating or credit spreads may adversely affect the market value of the securities. Information provided is not intended as tax or legal advice, and should not be relied on. As such, you are encouraged to seek tax or legal advice from an independent professional. Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the FDIC.

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