This week is all on Permanent Predictable Income! Join us as we break down 3 of the most common sources Social Security, Pensions, and Insurance Products. We are going to be talking about what Permanent Predictable Income looks like and the timing of when you turn those resources on. NEW episodes every Saturday at 10:30 am!
Speaker 1 [00:00:20] And welcome to the money puzzle. My name is Cynthia DeFazio, and I’m joined today by Brian Ramsey and Eric McAndrew of Family Wealth Planning Partners. Aaron, how are you today? Well, thank you. It’s great to see you.
Speaker 2 [00:00:32] I’m happy to be here.
Speaker 1 [00:00:33] Thank you. Happy to have you here, Brian. How are you? I’m doing
Speaker 2 [00:00:36] really well. We were just talking. I’m a little chilly, but I’m good.
Speaker 1 [00:00:40] I know you do. It is a little chilly today. Well, I’m so excited about being with you both today. Obviously in the studio, because I know that you’ve been so incredibly busy. You’re so passionate about helping others retire comfortably, retire with confidence and most importantly, putting their money puzzle together piece by piece. Brian, let’s talk a little bit about what’s behind us right now.
Speaker 2 [00:01:02] Yeah, so the money puzzle was a creation we came up with because it does involve your overall financial plan or your financial picture is made up of little pieces and they all need to kind of fit together. A lot of times, you know, folks don’t put that together where they say, Oh, I know if I make this selection or make that decision, it could affect something else. And so what our role is and in putting your money puzzle together is to make sure that all the pieces of puzzles fit together. And today, specifically, we’re talking about retirement income, and that is made up of lots of different pieces of the puzzle. So we’re going to be talking about just what that looks like, and we’re going to talk about timing of when you turn those resources on. So it should be a really good show. But but just know that the topic for today is just one piece of this overall puzzle. It all has to fit together.
Speaker 1 [00:01:53] Absolutely. Brian, thank you so much. And obviously, Aaron, I love our topic today. It is permanent, predictable income sources in retirement. That is wonderful. Everyone loves that. They love the guarantee. So let’s talk about that a little bit. What are some of the guaranteed sources?
Speaker 3 [00:02:08] First, I’m on. I’m just going to talk about the definition of that. So it’s just exactly like what it says, so permanent. It’s going to be with you for as long as your your life long as you’re living. It’s they’re predictable. We know the amount, we know that that is coming every single month. It’s it’s happening and you know, you’re going to get it. And it’s obviously income and retirement. So. So that’s why we like to refer to it as permanent predictable income, because it’s exactly what it is. One of the sources is the most common source that most people have is Social Security.
Speaker 1 [00:02:39] Oh, OK. Big one, big one.
Speaker 3 [00:02:41] So Social Security is the most common source of permanent, predictable income. It’s the difference in Social Security is it’s not. Everybody turns it on at the same time. Not everybody. Not everyone’s going to need to turn out at the same time doesn’t make sense. There’s not one golden rule as to when you turn Social Security on. So, you know, that’s that’s that’s a big question when it comes to when we’re planning for somebody to encompass. Sometimes we get clients that come in that have already turned Social Security on. You know, sometimes we get clients that don’t know when it comes to turns Social Security on. And that’s the reason why they’re coming to us is is to help them decide what makes the most sense in their plan. So Social Security is one of them. Another big source of permanent, predictable income is pensions, so a lot of times, especially around our area and in Louisville and in the southern Indiana area, we have a lot of teachers. So and teachers, they do have pensions and the pensions in Kentucky are not made different. They’re not made the same as the pensions in Indiana. So there are some people that might receive pensions from the government. They also could receive the Social Security on top of the pensions if they’ve been paying in. And then there are some companies that are left, believe it or not, that do have pension plans. So, so you may have a private organization that that offers you a pension when you retire, so that could be another source of permanent, predictable income. And then the third one is there are investment products, insurance products that allow people to create their own permanent and predictable income. So we’re going to talk a little bit about all three of those, OK today, but those are the main sources.
Speaker 1 [00:04:22] Perfect. Brian, I’d like to talk a little bit about Social Security because obviously Erin mentioned that there’s different strategies and ways to file. And of course, Aaron mentioned some people coming in. They’ve already turned it on. Are they doing that because they have a little bit of apprehension or fear that perhaps it’s going away in the future? Or do they not know exactly when to turn it on when someone is claiming early?
Speaker 2 [00:04:44] Yes. So I would say that what we find often is people just don’t know how to select Social Security. They don’t know how it actually fits into their puzzle. Yeah, because turning Social Security on is a piece of the puzzle. But it’s all about timing. Sure. And so that’s what we found is people are like, Oh, it’s sixty two or sixty five, I’m just going to turn it on, and they really don’t know how that ultimately affects them. Yeah. And so another sort of misconception is, well, if I turn it on at sixty two, the break, even we always hear that term, you know, what’s the break, even the break, even as well? If I live to 70, I’m better off turned on at sixty two and you know. And so that’s. Just not that’s not how you should view it. It really is turning security on should be all about timing of when you’re turning on all your sources for income, not just Social Security, because Social Security is affected. I think we’re going to want to do the show on Social Security as a matter of fact. Or at least, yeah, yeah. Some pieces of it’s all going to go to a little bit more detail, but you know, there are consequences if you turn it on and you’re still working and Social Security is taxed depending on how much earned income you have or income you have for that particular year. And in some cases, I’ll give you an example. So we had a client, they came in with a client now. It wasn’t a client the time, but he came in and we were doing specifically at retirement income analysis, which is what we’re doing right now. That’s why he came in. And so we were talking about the the resources for permanent, predictable income, and we were talking about Social Security. And we showed him that turning Social Security on because he was going to turn it on. Sixty five, sixty six, which is about a year before as when he was retiring, which is about a year before his full retirement age for Social Security benefits. But we showed him. Let’s take a look at you turning it on when you want to versus turning it on its 70. And so we said, OK, let’s just look at the difference because he had very long longevity on his the family. So we showed him that it might make sense for you to turn on your Social Security at age 70 and turn on the non predictable, nonpermanent income sources from 67 to 70. And so we just ran the scenario and said, let’s look at what the ultimate outcome is. And that’s our job and everything that we do, our job is to provide the information to clients so they can make an educated decision. So he he was just like, Oh, well, I retired. I should turn Social Security on. Not, not necessarily. And so when we walked him through that information and we gave him the information to make a decision, then he said, Oh yeah, hey, this makes a lot of sense. Now see how delaying my Social Security benefits and taking the, you know, turning on the non permit and predictable income sources makes a lot of sense.
Speaker 1 [00:07:24] OK. All right, Brian, thank you so much. Aaron, is that often the topic of conversation when people come into the office for the very first time? Let’s say they heard from a friend at the water cooler that they were going to turn on a certain age and that they should do the same.
Speaker 3 [00:07:37] Absolutely. Yeah, actually, we’re we’re going to be doing another show on some of the common misconceptions and some DIY mistakes that people do, and that is typically the biggest one that I hear is I have to turn it on at 62 because in order the amount of money that I’m going to make from 62 paying Social Security up until 60 or up until 75 or 76, when I’m going to break, even I have to. I have to live that much longer in order to make that money back. So. And again, just kind of piggyback on what Brian just said is not necessarily so. So when we look at when we’re looking at retirement and we’re looking at a retirement income plan, we are backing into how much money they’re going to need to live off of. And we account for things like inflation. We account for health expenses going up as we get older. So we account for those those items and we want to try to get as much of that money that they’re trying live off of that they need for immediate living expenses to be permanent and predictable. So. So those are some some items that we we discussed in these meetings with them to back into these numbers for them.
Speaker 1 [00:08:50] Thank you so much, Aaron. Brian, I know that you and Aaron have a very special offer to present to the viewers at home today, and let’s talk about what that is before we open the phone lines.
Speaker 2 [00:08:59] Yeah, sure. Yeah. So today is pretty simple. We’re talking about retirement income plan planning, and so that’s what our offers is. We are offering anyone that calls in today an opportunity to come in and schedule a meeting with us and we’re going to develop a retirement income plan. That radical plan has three specific things that we look at number one. We’re going to look at what are your sources of income in retirement? There’s two different types that we’re talking about, which is permanent, predictable income and nonpermanent non predictable income. So we’re going evaluate what those are. Number two, we’re going to talk about timing. It’s very important to to turn those income sources on and understand what the timing is of when to turn those on. And then third, we want to look at what is the probability that those income sources that you have, what is the probability of those income sources providing you the income that you need from the day you retire until the day you’re no longer here? And so that’s what the that’s what our offer is. But keep in mind that the retirement income plan is just one piece of your overall puzzle. Yes, we’re going to evaluate everything else. We’re going to look at your risk management. We’re going to look at your investment strategy and your estate plan. We’re going to do all that. We just happened today to be talking about retirement income sources. So. So if you find yourself in a position where you know you’re five years or a couple of years away from retirement and you’ve not. Going through the process of determining, you know, what your income sources are and what the timing is going to be to win and turn them on and what’s the probability of those income sources supporting you from the day you retire until the day you pass away? Come in and see us. That’s what the offer is and allow us the opportunity to help you start down that path of financial freedom. And we just believe that, you know, the the path to financial freedom starts with completing your money puzzle. And that’s what we’re offering is an opportunity for you to come in and allow us to complete your money puzzle.
Speaker 1 [00:10:51] Brian, thank you so much. Aaron, thank you so much to the viewers at home. The phone number to call is on your screen. That number is eight four four nine zero zero five two one zero. We know that you have a lot of questions for Brian and Aaron about how to plan your perfect retirement, how those pieces of the puzzle are going to fit for you. All you have to do is pick up the phone and call in today at eight four four nine zero zero five two one zero. We’re going to take a very short commercial break, but when we come back, I’m going to talk to Aaron and Brian a little bit more in depth about pensions and how those will help going forward. Stay tuned.
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Speaker 1 [00:13:02] And welcome back to the money puzzle. My name is Cynthia DeFazio, and I’m joined today by Brian Ramsey and Aaron McAndrew of Family Wealth Planning Partners. Gentlemen, a great show that we’re having today talking about permanent, predictable income sources. Brian, I want to talk to you a little bit about how that planning process first works. How do you help people get their pieces of the puzzle aligned, right?
Speaker 2 [00:13:26] Yeah. So the very first step is a lot of people think the first step is going to be, well, I need to, you know, determine what my Social Security is going to be. And that’s not necessarily the case. The first step when we walk through this is determine what your income need is unfortunate. People have to do a budget. I know that’s sort of a scary word for a lot of people.
Speaker 1 [00:13:44] I like spending plan better.
Speaker 2 [00:13:46] I get. What would you call it, that we should call the budget, but we have to understand exactly what it is that your lifestyle need is going to be. Yeah. So this is as as an example, just for easy math because, you know, like I like easy math. Let’s say that, you know, somebody comes in and says, Hey, you know, my monthly income need or my lifestyle is five thousand dollars a month. That’s really the first number we need to identify. What’s our goal? What’s our target? What are we trying to shoot for? Our next step is to identify what our sources of permanent, predictable income, Social Security, pensions, insurance products can all be. The sources we’ve already talked about that can provide that source of permanent, predictable income. OK, so in this scenario, let’s say that we’ve we’ve asked the client to go out and get their Social Security numbers and again, for easy math because I like easy math. Let’s say that their Social Security benefit is £20 a month. OK, so now we’ve got a $5000 budget that we’ve got to, we’ve got to meet. We know that one part of their permanent predictable income source is $2000 a month. So no, we will have to cover three thousand dollars a month. So we know we’ve got sources of nonpermanent non predictable income, meaning 401Ks, IRAs, Roth IRAs. So we’ve got that pool of money and what we try to do is determine is out of that pool of money. Is there any need for us to go back and establish another source of permanent, predictable income because we can do that? And so that’s what we just have a conversation clients say, Well, let’s let’s see what it takes to then establish this again. Easy math a thousand dollars a month of permanent, predictable income. So what pool of money do we have to pull from in order to satisfy that that need? So let’s just say that, you know, now we’ve established that, so we’ve got the three thousand of it taken care of. Now we have everything left over that is what we call nonpermanent and unpredictable income. And what is the probability of that pool of money providing the $2000 you need? Adjusted for inflation for the day you retire into the day you pass away, that’s sort of that’s the steps.
Speaker 1 [00:15:52] OK. I love that when you explain it, it sounds so easy and wonderful to understand. So thank you so much for shedding some light on that, Brian. Aaron, I want to jump back in a little bit into the pension that we were talking about, obviously in the different types of pensions that people would have. Do you ever have people coming in to talk about taking a lump sum option?
Speaker 3 [00:16:12] Yes, absolutely. We do. A lot of especially these are more common in in the private pensions. A lot they’ll do the buyout options. And then obviously there are other pensions that have buyout options, but there are multiple options for pension income. So one is a lump sum option where it allows the participant or the pension person receiving the pension to take a lump sum of money. And then at that point in time, they can kind of do whatever they would like to do with that. In some situations, that does make sense for for a couple of reasons. One is when they take a lump sum of money out, they have the they take control over that money. If for some reason something happens to them, let’s say they take the lump sum option and they pass away two months later, they now can pass that money on to their heirs, their beneficiaries. OK, right? If they were to take a single life payout on the pension, which is another pension income option that they’d have if in the same scenario, if they were to pass away two months later, it’s gone. There’s there’s typically no death benefit on that.
Speaker 1 [00:17:21] Wow. OK.
Speaker 3 [00:17:22] So and again, not all pensions are the same. Just like we’re talking about Social Security earlier. Not nothing. You know, Social Security is not always the same, but there are multiple options on the pay off or pension. So so there’s ways to do joint life now. Joint payment joint life payout would be if it was, for me example, I turn my pension on and I have a spouse, my my wife. If something happens to me, my wife would continue to receive some sort of a payment. And usually there’s variations of those pension payment options. There’s 100 percent which is going to be your lowest level pension payout. There’s usually a 50 percent survivor benefit where they can continue to receive monthly payment, but it’s. Half of what the cost is or half of the income payment that you would receive while I was living. And then there’s usually like a two thirds option or 75 percent, some somewhere in in the the middle there an option which again provides a little bit higher payout than what the 50 than what the full 100 percent would be. So. So pensions are not easily understandable, typically. I usually when when a client comes in, they’ll they’ll bring a pack of big their options down here, big, just stack of papers and they’ll say, Hey, help me understand this. Yeah.
Speaker 2 [00:18:36] So Brian, yeah. So I’ll just add one quick piece of that. So exactly what air was talking about is why we do a financial plan for every club. Yes. And while we put this puzzle together to say, how does this pension fit into your world, your specific situation? I’ll give you two examples. We had a now client, a prospective client that came in that has had has a pension. She’s about a year, year and a half or so away or at the time, away from retiring, she said. Hey, I’ve got this opportunity to either get this really high payoff or a pension, or I’ve got this lump sum, which was a significant amount. She’s like, What should I do? And I go, I don’t know, but we’re going to run the numbers and show you. So we ran the numbers to say, here’s what it looks like if you take the lifetime income. And it was a for joint for joint life. But here’s the option if you took a lump sum in her plan was successful either way. Wow. It made no difference and we sold her makes no difference which which option you take the odds of you running out of money are very slim. Meaning your money’s going to survive you either way. And we just started talking and we said, Well, here’s the good and the, you know, the pros and cons, if you will have taken the lifetime income. Here’s the pros and cons of walking through what a lump sum looks like, and she made the right decision. But the only reason why she made the decision is because we literally did a financial plan and showed her both scenarios to say it, doesn’t it? It’s not going to make a financial difference which way you go. It’s just what you prefer. The also another example is this is about a year ago we had a client came in that was ready to retire again with a pension. I had a lump sum option and we sat down and we said, OK, here’s let’s look at the scenario. This particular client, they needed the lifetime income. They they just needed it. So what we did was we ran through a scenario after scenario after scenario to show them to give them the information they needed. And what he decided to do was pretty unique. We see this occasionally, but it’s it’s not. It’s not that common, OK, but he actually took it. He was married. He took a single life payout, but he took the difference, and it wasn’t quite the entire difference between single life and joint life. We took that difference and we bought a whole life policy so that if something were to happen to him, his wife would get the proceeds of the life insurance policy. Wow. So the numbers just worked out and we said we walked into the scenario and we said, Hey, here’s the difference. If you get a lump sum, here’s the difference if you keep it. And his decision was, I want to take the lifetime income and get the life insurance policy. So that’s just another scenario that his puzzle was a little bit different than the first client we talked about. Yeah. And the only reason why, while we know that is because we literally walk through a financial plan, that’s fantastic.
Speaker 1 [00:21:22] I know you have a lot of stories like that and I love hearing this. I know the viewers do too, because it shows how you’re helping people every single day create their retirement plan of their dreams. That’s invaluable,
Speaker 3 [00:21:33] and it goes just to show that not everybody is the same. So the back to the watercooler conversation is what works for this person that you saw at the water cooler may not be what works for you. That’s our plan in place is what’s going to be the best that?
Speaker 1 [00:21:48] Well, on that note, Aaron, I know that you have a very special offer that you and Brian would like to present to the viewers at home. Let’s talk about what that is and then open the phone lines for the second time.
Speaker 2 [00:21:57] Yeah, yeah.
Speaker 3 [00:21:58] Our offer is if if you are sitting here thinking that you’re concerned about income and retirement, so you know, what is it? Do I have? When should I turn Social Security on? Maybe. Have I already turn Social Security on your thinking? You know, potentially that was a mistake or whatnot. If you’re concerned at all about how you’re receiving your income in retirement from retirement accounts, what accounts you’re going to take it from, how much do I need? What do I need to to live off of any of those concerns resonate with you the things that we’ve been talking about today. Give us a call numbers right there on the bottom of your screen. Eight four four nine zero zero five two one zero. Give us a call. We’ll give you a complimentary retirement income plan. We’ll sit down and have this conversation with you and make it more personal for you.
Speaker 1 [00:22:42] Aaron, thank you so much, Brian. Thank you so much to the viewers at home. The phone number to call is on your screen. That number is eight four four nine zero zero five two one zero. We’re going to take a very short commercial break, but don’t go anywhere. I have so much more with Aaron and Brian. When we return
Speaker 5 [00:22:58] has a good saver. You’ve been putting away money during your work. In years, studies find that the biggest fear of retirees is running out of money, market volatility isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put savers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead, we have a retirement account such as 401Ks or 403 B’s. These accounts typically exposure money to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market? The last thing you want is to lose a portion of the money you need for income due to market loss by working with a financial professional. You can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse if you’re married. We all have moments in our lives when we wish we had taken action sooner. Don’t let procrastination reign on your retirement parade. Act now before it’s too late. Please call our office to set up your no cost, no obligation. Retirement Income review today.
Speaker 1 [00:24:25] And welcome back to the money puzzle. My name is Cynthia DeFazio, and I’m joined today by Brian Ramsey and Aaron McAndrew of Family Wealth Planning Partners. Gentlemen, a wonderful show we’re having today talking about, of course, the permanent, predictable income sources. Brian, how do you start turning those on? How do you help people decide what to do and when to do it?
Speaker 2 [00:24:45] Yeah. So we talked a little bit about Social Security that it is very specific to your situation. What I want to focus on right now is that if you remember back early in the show I talked about, you know, we had the Social Security and then we worked on it turned on an insurance product that would give you permanent, predictable income. And what I want to do is to give you a sort of how how we set that up. So we had a client that’s been a number of years ago and a lot of these insurance policies, you got to give it time to grow. You can’t just flip a switch and say, OK, now I want this turned on. So it’s better if you have five to 10 years available to you to allow this thing to develop. OK. So what we did was we identified that she had a life insurance policy that she wanted. It was a whole life policy, meaning it was there until she passed away, so is going to pay out. But she had to pay premium payments her entire life to keep that policy in place. And so what we what we did was we created an insurance product and we designed it to specifically account for that particular premium payment for the rest of her life when she retired. So I think it was again easy Maliki’s math. So let’s say that was right around $1000 a month. It was a little bit less than that, but let’s just keep it a thousand dollars a month. So this was about eight years prior to her retiring, and she’s a couple of years away. So we did this about four or five years ago. But what we did was we designed it and said, OK, we know we want that particular permanent, predictable income to make that payment for that life insurance policy. That’s not going to change because it’s a level premium of her entire life. So we went back and designed the product to say, OK, how much do we have to put in that product today in order for this particular year to give us $1000 a month for the rest of her life? So that’s how we designed it. We went through the process, walked through it, showed it to her and said, You know, hey, here’s how much we have to put into this particular product to then, you know, when you retire, we’ll flip a switch and that product will make that premium payment for her for the rest of her life. So it’s sort of she set it and forget it, if you will. I know it’s sort of an infomercial statement, but that’s kind of what we did, right? Put it in place. We said it, and now she can just forget about it. It doesn’t ever have to worry about it again. So. So that’s a good thing. The thing I want to talk about. We’re talking about permanent, predictable income. As I mentioned this earlier and I didn’t get a chance to explain I somewhat. And we’ll take a quick second.
Speaker 1 [00:27:09] Yes, we have about 45 seconds.
Speaker 2 [00:27:11] Take a quick look over the clock down here. No, it’s it’s the decision between Social Security and affordable. OK? OK, that’s should I take Social Security? Should I take money out of my phone? OK, and again, that is a piece of the puzzle that you really have to to get engaged with and complete your money puzzle to know when to turn those on.
Speaker 1 [00:27:32] Brian, thank you so much. Aaron, thank you so much to the viewers at home. The phone number to call is on your screen. That number is eight four four nine zero zero five two one zero. Let’s put your money puzzle together again. Thank you for watching eight four four nine zero zero five two one zero. Be safe, be happy and be blessed.