Hosts: Nancy Hecht, CFP®, AIF® and Joe Bert, CFP®, AIF®
Yes, good morning. It’s Saturday morning on WDBO and this is On The Money, brought to you by Orlando’s oldest and largest independent firm of certified financial planning professionals. That being the Certified Financial Group in Altamonte Springs. With us this morning we have two of the 12 certified financial planning pros, say good morning to the lovely Nancy Hecht. Good morning, Nancy!
Good morning.
And the equally as lovely Joe Bert, Good morning Joe.
Good morning.
How are you guys?
We <Inaudible> thank you.
Nice to see you both.
Nice to be seen.
Nancy, in case anybody may be new to this program, what are you all taking calls about today?
Any of the pocketbook questions mostly focused towards retirement. Stocks, bonds, mutual funds, 401(k)s, 403bs, IRAs, Roths, long-term care, annuities. Any of the financial questions that are driving you crazy right now, that’s what we’ll take questions on.
And we have an open phone line for you, too. Here’s the number: 844-220-0965. You can also text us from your mobile device. That number is: 21232. Or if you’re so inclined and you want your voice to be on the program, if you see open mic and you’ll find that on the <Inaudible>. Some of the things we’re going to talk about today, a bucket list or withdrawing funds during retirement. My husband is 12 years older than I, should he wait to start taking Social Security? And speaking of Social Security, Nancy, again, are you the go-to person in your office for Social Security questions?
I would actually say Denise is first and I might be second. She’s taken a little bit more Social Security centric classes than I have. But you both are the best?
She’s the primary expert, yes.
When is your next deal or workshop?
Well our next Social Security boot camp is this coming Thursday, however it is full. So after that it’s January 19th, but speaking of workshops on 25th of October, Gary Abely is hosting, When You Retire Know Your Numbers.
That’s a Thursday?
That is a Tuesday, October 25th from 6:00pm-8:00pm, refreshments will be served. Countdown To Retirement is Tuesday, November 15th from 6:00pm-8:00pm hosted also Gary Abely. And with guest speaker estate planning attorney Jody Murphy. Again, light refreshments will be served. And then the last one we have on the books for this year is Thursday, December 1st from 6:00pm-8:00pm, Health Care Options In Retirement. Hosted by Gary Abely.
Gary is a busy — he enjoys doing — Gary. Yes, good morning. It’sSaturday morning on WDBO and this is On The Money, brought to you by Orlando’s oldest and largest independent firm of certified financial planning professionals. That being the Certified Financial Group in Altamont Springs. With us this morning we have two of the 12 certified financial planning pros, say good morning to the lovely Nancy Heck. Good morning Nancy!
Good morning.
And the equally as lovely Jovert. Good morning Joe.
Good morning.
How are you guys?
We <Inaudible> thank you.
Nice to see you both.
Nice to be seen.
Nancy, in case anybody may be new to this program, what are you all taking calls about today?
Any of the pocketbook questions mostly focused towards retirement. Stocks, bonds, mutual funds, 401(k)s, 403bs, IRAs, Roths, long-term care, annuities. Any of the financial questions that are driving you crazy right now, that’s what we’ll take questions on.
And we have an open phone line for you, too. Here’s the number: 844-220-0965. You can also text us from your mobile device. That number is: 21232. Or if you’re so inclined and you want your voice to be on the program, if you see open mic and you’ll find that on the <Inaudible>. Some of the things we’re going to talk about today, a bucket list or withdrawing funds during retirement. My husband is 12 years older than I, should he wait to start taking Social Security? And speaking of Social Security, Nancy, again, are you the go-to person in your office for Social Security questions?
I would actually say Denise is first and I might be second. She’s taken a little bit more Social Security centric classes than I have. But you both are the best?
She’s the primary expert, yes.
When is your next deal or workshop?
Well our next Social Security boot camp is this coming Thursday, however it is full. So after that it’s January 19th, but speaking of workshops on 25th of October, Gary Abely is hosting, When You Retire Know Your Numbers.
That’s a Thursday?
That is a Tuesday, October 25th from 6:00pm-8:00pm, refreshments will be served. Countdown To Retirement is Tuesday, November 15th from 6:00pm-8:00pm hosted also Gary Abely. And with guest speaker estate planning attorney Jody Murphy. Again, light refreshments will be served. And then the last one we have on the books for this year is Thursday, December 1st from 6:00pm-8:00pm, Health Care Options In Retirement. Hosted by Gary Abely.
Gary is a busy — he enjoys doing — Gary is a frustrated schoolteacher. He enjoys educating people, and once again these are absolutely free to our listeners and general public. And people ask why do you do this kind of stuff? We do it for basically two reasons: for over the course of many, many years we’ve seen people come into our office that had absolutely no idea the decisions they need to make revolving around these topics. So we do, to keep you out of trouble, and secondly to introduce you to our firm. What we do as fee planners. And this way whether you finish your planning advice now or sometime in the future, perhaps you’d give us an opportunity to earn your business. So you can get all the information that you want by going to our website. That’s fincancialgroup.com. Click on workshops, and you can make a reservation right there online. They’re absolutely free, leave your checkbook at home. And I’ll guarantee you’ll walk away with a couple of good ideas that can save you perhaps tens of thousands of dollars in the future.
Of course the Certified Financial Group rated by, what is it <Inaudible> Magazine?
By the way, we have great news.
What’s that?
We have just been certified by the Center for Fiduciary Excellence as one of only less than 100 firms in the country for our fiduciary excellence and how we work with our clients, all of our internal procedures, all of the safeguards that we have. How we select investments, how we monitor them, how we report to our clients. It’s pretty — it’s pretty prestigious, there’s less than 1/10th of 1% payroll 6/10th of 1% of the firms in the country have this designation and we’re delighted to have it. Interestingly enough as we’re staying in our newsletter which I just signed off on. We have been following these practices for years —
I was just going to say that yeah, since 1994 when most of us became CFPs, fiduciary responsibility has just been part of our practice. And now the world is in a panic because they have to catch up to how we have been practicing business, and maintaining and managing our client’s accounts.
Yeah, we’ve been doing this for a long time, and we wanted to subject ourselves to just the audit, to the exam. It’s 126 page questionnaire that we have to complete and you have to have an on site examination of our firm. And we were just granted this designation this past month.
Wow, that is impressive.
<Inaudible> certified, yep.
Wow. Well perhaps it’s a good opportunity now for anybody who may not know, what’s the difference between a certified financial planning professional and any old or Jane who can hang the shingle up there saying they’re a financial planner or whatever?
Well first of all the basic education to be able to sit for the certified financial planning exam is like a two year masters program. So it’s a lot of education. And then the exam process is rigorous. When we took it, it was a serial exam, now it’s a <Inaudible> exam
<Inaudible>
Now it’s one day big comprehensive exam, so I’m very happy we took it when we took it. There’s also an apprenticeship period. You have to work as I guess <Inaudible> paraplanner or work with a certified financial planner for a number of years before you can actually call yourself a certified financial planner. So aside from all the fiduciary and code of ethics and educational background that we’ve had to comply with for decades, it’s a ton of education and the education is continuing. Every single year we all have to go for continuing classes. For many of, whatever licenses you hold, most importantly your certified financial planning license. But the difference is just amends <?>. We have always had to and wanted to, I’m just going to say had to, we’re in this business because you want to be able to put your clients first and yourself second. And I think that that’s the big thing. We have an unbiased attitude towards trying to help people put together their retirement planning, family dynamic planning, whether it’s for their kids or for their parents or for their future hopes and dreams. And then fighting independent areas to help them fund and maintain and monitor their plans.
Anyone can virtually call themselves a financial planner today, an investment advisor, an investment consultant, whatever you want to do it. But the certified financial planning designation is in fact the gold standard and I’m proud to say we have 12 within our company. You can go to our website, financialgroup.com and there’s an FAQ section about what’s involved in becoming and maintaining your certified financial planner designation. So we’re proud of that.
It’s a lot of work and is a big deal.
So if you’d like to join us with a question or two for or for Nancy here’s the telephone number again: 844-220-0965. You could text us at: 21232. When you say you’ve been at it for a long time, you’re with like third or fourth generation clients aren’t you?
Yeah.
Yeah, we have grandchildren of some of our very first clients, and I think —
That says a lot.
Great grandchildren <Inaudible>
Yeah, well I’ve been doing this for 32 years so. Yeah, there’s been kids and then their kids. Very much as has.
Coming up on 9:15, Dave Wahl is in the news center keeping an eye on things. Of course he’ll have the very latest on the political campaigns coming up here in about five minutes from now. What’s on your website this morning for this week’s <Inaudible> three? It’s a nice picture of a cup of coffee.
Yeah.
But what you don’t know about that cup of coffee may hurt you.
It was about how the daily coffee may cost you your retirement. So it’s an interesting study on how much we spend on some of the discretionary spending that we have, like pulling into Starbucks every day, right?
Well, speaking of coffee, I did a whole current versus a regular coffee machine analysis. And, well you can get an average of 80 cups of coffee out of a pound. Which is going to cost you $10 versus 12 current things for I think $6 at the cost of — and I know everybody has them and I have one in my office because I inherited it.
Well it’s also convenient, too, for one cup of coffee.
Yeah, but still. To use an old term from my husband, caps <?> my hide. Because it is just such a waste of money, buying coffee in that manner. But now it’s coffee, it’s tea, it’s hot cocoa, soup you can now get for the little things. It’s amazing the different things that you can make.
Well it’s all about convenience, <Inaudible> pay for it.
Yeah, I know. But still it drives me crazy.
But those Wala <?> sandwiches are so good <?>.
Never had one.
Nancy Hecht and Joe Bert are in the studio for the certified financial group, let’s take a phone call from Randy in Seminole County, good morning Randy.
Good morning Randy.
Hi Randy, what’s your question?
Hello Randy?
Randy?
No this is —
Curt, can we hear him?
Who’s running this place here <Inaudible>?
I don’t know, he’s some <Inaudible>?
Is this Randy?
Yes it is.
Good morning Randy.
Hi Randy.
<Inaudible> we found you. What’s up?
Good morning, good morning. I’m a little behind the eight ball a little bit on retirement.
Okay.
Just turned 53 years old. I’ve had done pretty much no investing.
Okay.
A little bit I guess gun shy to the market with the fluctuations and some of the horror stories that you hear. I have managed to save about 100,000 in liquid. No credit card debt. Pretty much no debt except for a mortgage. What would be the best alternative if I plan to retire around 55 <?> years of age with the 100,000 I have without being too much risk or all of a sudden I find myself broke because of bad advice?
Well, my first question would be, what is your comfort level for liquid cash? Is it the 100,000 or is it less than that? That would determine how much of the 100,000 you could actually invest. Anything that you’re going to need or want to use in two years or less you have to keep in checking, savings, money market. That’s the emergency money, <Inaudible> the sock money, the comfort level cash. And beyond that you can afford to invest. So, I mean looking at the 100,000 that’s the way I would look at that. Beyond that, does your employer offer any type of payroll deducted retirement savings plan?
They do. They just started offering a — this is why I was calling — a 401(k).
Okay.
That they will contribute up to 3%.
You need to look at the matches gravy <?> and payroll deduct which is the best way to save, because you have whole dollars being invested for you as much as you comfortably can.
Randy, here’s what I want you to do. You say you’re 53?
Yeah, yeah, yes.
12 years to retirement. Your company just started a retirement plan and you don’t have anything in it. Okay. But you’ve got 100,000 in your funds here that you want to invest somewhere. What I would do is I would focus on putting $24,000 a year into your retirement plan. Have it come out of your paycheck. <Inaudible> oh my gosh, I won’t have any money to live on! Yes you do, you’ve got that $100,000 in your checking account, savings account, wherever it is. I want you to increase your 401(k) contributions, the maximum of $24,000 a year. Use the money that’s in your checking account there to make up for what you’re not bringing home. You’re going to get a $24,000 tax deduction. The money will grow for you without being taxed. When you go to your 401(k) choices, look for what’s called a target-date fund which is geared to your retirement date which is 12-15 years from now. Focus on that and put the money in there and don’t look at it for 12 years. That’s what you need to do. You’ve got to get that money working for you. If you don’t get it working for you, you’ll wake up at 65 years old and you’ll find your $100,000 is now worth $105,000 and you’ll be broke in six years. You’ve got to get that money working for you, and the best news for you when you’re putting your money in your retirement plan, is when the market goes down as your buying shares. The name of the game over your working lifetime is to get shares. And so it’s really actually good news for you. In fact the best news for you is if the market did nothing but go down for the next 12 years and you were continuing adding to your pile and then it just picked up just a little bit before your retire. You’d have far more money than what you’re doing today.
Alright.
And if I could suggest that maybe you push your retirement two years and a few months further out then you’ll be at full retirement age for Social Security.
Alright, we’ve got to get to Dave in the news center. Bob Diland, we’re going to put him up next. He wants to talk about an annuity and a withdrawal from a savings plan.
Let’s get back to it. This is On The Money brought to you by the Certified Financial Group in Altamont Springs. In the studio the Oracle of Orlando is back. Joe Bert is in the studio along with Nancy Hecht, author of the Hecht Effect, and A Man Is Not A Brand. You can join us. Joe, what kind of calls are you taking here.
I’m here to take your calls regarding your personal finances, things that they don’t teach you in school but the things we have to make decisions on day in and day out. Sometimes we stumble into them, sometimes we make great decisions, but more often than not we get sold something that really isn’t in our long-term best interest. So we’re here to kind of clear up that mind fog that you might have regarding your personal finances about stocks and bonds and real estate and long-term health care and IRAs and annuities, reverse mortgages, life insurance, all that and more. Nancy and I are here to take your calls and good news for you, there’s a couple of lines open. All you have to do is pick up a phone and dial the number 844-220-0965. Let’s go to Diland.
Wait, if we can wait one second.
Go back to Randy.
Randy, if you’re still listening, two points that I’d like to make. First of all, anything that you’re saving pre-tax is not going to dollar for dollar reduce your spendable. Because it’s money that’s going into your retirement purchase being paid to the Federal government and taxes. And you are exactly the type of person that is right for a financial plan. Looking at where you’re at now, where you want to be at retirement age, and then looking at maybe 25 or 30 years into retirement. So Randy, I’d like to invite you to take advantage of a complimentary consultation and let us put together a financial plan for you and help you build the road map to take you from the 53 to 65 or 67.
Because you have time. Time is a great asset, if you don’t use it you lose it. And the toughest cases that Nancy and I have worked on are people that have already retired, they haven’t done any planning, and they come into our office six to seven years in retirement and the wheels are coming off. So you’ve got time to make some adjustments, but the key is you need to know what you need to do now before you do it.
Bob go ahead, sir.
Good morning. How is everyone.
Great Bob, what’s up?
We’re good.
Good. Just wanted to know if a smart move, take some of my — I’m about two years from retirement — take some of my 401(k) and put it into an annuity that’s guaranteed at 6%. That’s my question.
6% sounds awful nice, but at what price? That’s what I would want to know. I’m not a fan of taking tax qualified money, which is your retirement money, and wrapping it in another tax qualified vehicle like an annuity, unless there’s a certain amount of money for succession purposes you want to guarantee are going to be there no matter what happens in the markets for a spouse or kids or something like that. A 6% guarantee, is that for accumulation, is it for withdrawals, does it have a 10-year, 15-year, 17-year surrender charge? Something like this is going to, from what I have seen, cost big.
There is no — I think what you’re seeing, what you’re believing, and what you’re actually going to get are actually two different things. People hear the 6% and they believe it’s like buying a CD. I’m going to get 6% of my money every year, which is a wonderful thing. Truth be known, is there are no annuities out there, what we would call fixed annuities, that will give you a 6% return. And if you said you get that 6% return, there is some hook in there. And that’s what you need to do, you need to find the hook. And the other thing is, if you’re going to take money out of your 401(k) your going to pay taxes on it. So you’re going to take a haircut right off the top. You’re going to lose depending on your tax bracket anywhere from 10% to 40% of what you take out to put into the annuity and you’re never going to catch up even with a 6% return. So that doesn’t make it any better <?>.
Even putting it in from one retirement fund into another retirement fund, I’d have to pay taxes on it?
I’m assuming you’re looking at an in-service withdrawal from your 401(k), and then rolling it over as a rollover IRA into this annuity?
Is that what you’re plan is?
Is that what you’re thinking about it, is that what you were told you could do?
Yes.
Okay. Well, you had asked, Bob, I would love to take a look at what has been presented to you and put into plain English all the factors of it. So if you’d like to take advantage of that I’d be happy to do it for you. But your first question is what do you think? And neither of us are a fan of this move.
Yes, indeed. It’s <Inaudible> Saturday morning with the Certified Financial Group, Orlando’s oldest and largest independent firm of certified financial planning professionals. Again, the Certified Financial Group is here and you could talk to Nancy Hecht or Joe Bert. The number is 844-220-0965. Let’s get right to work and this is Alex — wait a minute. Didn’t you have something you wanted to clear up with Bob?
Well, I mean one Well, one of the points from talking to <Inaudible> that I learned is that he may or may not have regularly re-balanced or re-allocated his 401(k), and we see that this happens a lot. People pick their initial investments and they never re-allocate or re-balance the mutual funds. And this is part of our practice. We do manage people’s 401(k), 403(b)s while they’re still working, but it’s important to look at re-balancing your portfolio.
Remind me to ask you about that. Managing my 401(k).
Okay.
Let’s talk to Alex on his cell phone. Good morning, sir.
Good morning. How are you?
We’re great, how about yourself?
Great, thank you.
Awesome, awesome. I’m very excited to listen to the information you’re providing. I have a quick question. I’m considering a Roth, and I have a 401(k) currently. I am 51. And I’m wondering, should I freeze my 401(k) and open up a Roth, or can I roll over my 401 into a new Roth? What is the smartest move?
The answer is no and no, in my opinion.
Okay, okay.
As we had discussed with the previous two callers, everything that you’re contributing to your 401(k) is full, un-taxed dollars that you’re saving. There have not been rule changes for 401(k)s for IRAs for a long time. There’s potentially going to be some rule changes for the Roth. If you had wanted to move money from your 401(k) to a Roth, you would have to rollover from the 401(k) to an IRA, and who knows if that’s allowed while you’re still working. And then you would have to do the move from the IRA to the Roth, and you have to be prepared to pay taxes on 100% of whatever you’re moving into the Roth. You’re looking at saving whole pre-tax dollars or converting them into taxable dollars for the hope that the rules associated with a Roth and the tax-free accumulation and not having to take required minimum distributions will remain through your lifetime.
Do yourself a favor. You have access to the Internet, I presume?
Absolutely, yes.
Google Roth: A Wolf in Sheep’s Clothing. That’s Roth: A Wolf in Sheep’s Clothing. That’s an article I wrote for Kiplinger.
And he’s saying wolf.
Woof, woof.
Wolf, Wolf in Sheep’s Clothing. And it’ll kind of give you some insight into what Nancy’s saying.
Sure. Thank you very much. I do appreciate that.
Thank you for the call.
And have a wonderful day, Alex.
Thanks Alex.
Alright, let’s talk to Jack in Osceola County. Jack, you’re on WDBO.
Good morning.
Good morning, Jack.
Good morning.
Hey, it’s very wonderful to hear you guys and I was very impressed with all of the qualifications that are necessary to do your job right.
Well thank you.
What can we do for you, Jack?
Well, I’m a 67-year-old man. I have two pensions and Social Security. My concern is that I live with a woman whom I call my wife. We were married in the past and we never bothered to get remarried but have been living together for years and I want to ensure her financial future. My concern is whether we should get married, if that’s the best method of passing along anything that I do have, or whether avoiding that is — there’s still a way to pass everything along. We are nine and a half years apart and I’m at 67 years old.
So, since you legally separated, has she gotten remarried?
No, she never remarried. We are —
Okay, that’s great. So she could pull off of your Social Security as a beneficiary. When you pass on, she will get 100% of what you’re receiving in Social Security right now. And as long as it was a long-term marriage, she is retired to a portion of your Social Security. Did she work herself? Is she entitled to Social Security?
Her Social Security would be very minimal. She hasn’t done an awful lot of work and she hasn’t been well.
Okay. So —
How about your pensions? How are those set up?
No, those are only for me. They would end. But my concern — and I know about the Social Security. My concern is that we do own a home. I own about 20% of it. It’s a $300,000 home. And I do have maybe 15,000 or 20,000 in a tax-deferred annuity. So I want to make sure that these things pass along to her without probate, for example, and I’m also worried about all the stories I heard about how one partner can be drained by the ill health of the other.
Well, that’s another concern. I was going to ask — I want to ask, Jack, what’s the state of your health?
I’m fairly healthy. No guarantees in life, of course, and —
One thing you might want to look at is maybe a 20, 25-year term policy to assure that there’d be some money for your wife, ex-wife, partner, when you pass on.
I have several life insurance policies. There’s a good amount of money that would come to her.
Let’s focus in on that.
You say a good amount. What kind of insurance and what’s the amount?
From my former employer, I believe the amount is 70,000 at this time. I believe it goes down when I get to 70 years of age, but it’s still considerable, and I have a separate policy that I have been paying for for quite a number of years. I don’t recall the amount. Together, they’re probably — when I get to be around 70, probably around $50,000 or $60,000.
Jack, I’m going to be blunt with you. Your spouse or girlfriend or whatever we want to call her is in financial trouble. You don’t have nearly enough assets to protect her, particularly because of the age difference. When you pass on, she is going to be in deep stuff. The amount that you described to us is woefully less than what she needs. And what I would suggest you do is that you meet with a certified financial planner, either us or somebody in town and have a detailed analysis of what needs to be done now, so she’s protected. If your concern is to have her protected, we’re in trouble.
And are there assets beyond the pensions and the Social Security? Did you accumulate money in a 401(k), an IRA, something along those lines while you were working?
The only thing left in the 401(k) at this point is about 20,000. And the home <Inaudible> 20%, which estimates maybe around 50,000 to 60,000.
Alright. So, yeah.
With the age different, and women live longer than men anyway. We have a financial situation here. That’s the bad news. The good news is you’re aware of it. The key is to get it fixed. We can’t do it on the phone.
And 67 is not old. You probably have close to 30 years.
Well, that part I’m happy to hear about.
Yeah, that’s the good news. Well, 115 is something I heard about life expectancy this week.
115?
115 years of age.
There we go.
<Inaudible>.
If we can stay on and you can take my information and call me since I’m in the vehicle right now and can’t really take your number, I’d appreciate it.
Alright, you stand by and we’ll get to that in just a second. 9:45, it’s a quarter until 10:00 on WDBO. From the text board, I will be retiring through the Florida Retirement System under disability. Should I go ahead and exercise my right to Social Security or wait? I’m 52. Old law enforcement officer. What’s the good? What’s the bad of going into Social Security immediately upon receiving my disability from the Florida Retirement System?
Well, it’s a 25% cut for pulling under full retirement age, and that’s a permanent cut. I don’t know what Social Security disability would be for the person, but again, the rules are changing on that. The availability for that is changing because that part of the system ran dry in March of this year and is now being funded by the retirement part. A little bit too complicated of a question to answer on the air. Be happy to meet with him face to face, or her, whoever it may be, and give them some good concrete answers.
You can check that out by going online to the website, financialgroup.com. Financialgroup.com. E-mail nancy@financialgroup.com. Is that right?
Sure.
Okay. You should try it Zack <?>. It might work. Alex in Orange County. Good morning, Alex.
Good morning.
I have a question about whole life insurance.
Okay.
I know that’s an interesting subject. I am 26, so I’m starting to think about retirement early, which I hope is a good thing.
Yay for you, yes. Pat yourself on the back.
Well, I’m invested in my company matched 401(k). I have a separate Roth IRA. And I actually do own whole life, but I’ve been hearing a lot more negative than positive lately, and I wanted to get your thoughts on whether I should keep going or if I should pull out.
Why did you buy it?
I bought it because I was actually advised to by my father. He pulled out a policy on me when I was one, and it’s accumulated a nice cash value for a really low annual premium.
Whole life is pretty plain vanilla, not jazzy, not sexy. Also not expensive. I’m a fan of whole life because more dollars are going for the protection than for any kinds of bells and whistles. And if what you’re looking for is permanent protection, I have absolutely no problems with whole life.
I’ll take the other side of it. You’re too young for that policy. I would freeze it, keep the cash there as a cash reserve, get — are you married?
No, I’m not. I think I was oversold.
You don’t even need life insurance. Why do you need to have life insurance if you’re going to leave it to your cat? That makes no sense.
Yeah, because the mentality was <Inaudible> early when I had a low premium.
Sure, I understand. Frankly, I was told this stuff when I was in college, too. We all make those early mistakes. I would, when it comes time for insurance, I would look at buying term insurance for a 30-year timeframe. You look in your premium, and then you have 30 years to build your liquid estate, max out your contribution to your 401(k)s, you’re IRAs, whatever you can do. And don’t mix investing with life insurance. In my estimation, you get the worst of both worlds.
And you probably have, through your employer, at least one-time your salary as an employee benefit.
We’re coming up on time to get to Dave Wahl in the News Center. I appreciate your call there Alex, and we’ll take your phone call as well. Its 844-220-0965. When we come back, your bucket list for withdrawing funds during retirement — does it include a Lamborghini like mine?
No.
No?
Maybe. Potentially.
Well, we’d better talk. Stick around. You can join us at — maybe that’s a Ferrari I’m thinking of. 844-220-0965. Or text us at 212-32.
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It’s an Ask the Expert Saturday morning on WDBO. Dave Wahl is in the News Center. We’ll get back to him in about five minutes with a more in-depth look at things going on, including a look at campaign news. Here’s a question. My husband is 12 years older than me. Should he wait until 70 to start taking Social Security?
I happen to know this couple and they’re self-employed, so they’re paying both halves of Social Security. They know how much is really being put into there. But because they’re both working and they have the health and the business to make it a choice, my answer to them was yes. By waiting to age 70, he will get — because full retirement age for him was 66. He’s going to get three years of 8% credits added onto his Social Security. And when he passes away, she will get that nicer, higher benefit.
Here’s a text. Receiving $1,300 a month in Social Security. Have about 19,000 in savings total. I do not own a home. What’s the best way to derive some extra income?
I wonder how old the person.
61. Disability, Social Security.
Oh okay. Social Security — I would get, maybe, a part-time job.
How about rental homes, he says. Rental houses.
If the person can get the money to buy the rental houses at a reasonable price and has the means to be able to manage it themselves so they can benefit fully from a tax standpoint, potentially that could be good.
Yeah, I think the best thing that this person could do is probably get in touch with you for a complementary consultation.
Yeah, what they’re doing is grasping at straws.
Yeah, okay.
My bucket list for withdrawing funds during retirement — I would like that to include a Lamborghini. But tell I’m wrong there Nancy.
Well, maybe, maybe not. It depends. We’ve talked a lot about cash and setting aside cash. And that’s the first thing you need to do. Many people look at one to three years worth of fixed expenses as a <Inaudible> kind of account. So that would be the first area that you need to set aside for withdrawing funds for retirement. Secondly, you need to bump yourself up the risk ladder a little bit and think intermediate terms. Five years or less, maybe some bond funds, dividend paying stock funds. And so you have the dividends that are paid monthly and then paid out to you to supplement your income. And then third, you have to think long-term. When people think retirement, they forget to think about the 20 or 30 years that they’re going to live in retirement. So you need a portion of your assets to be able to grow with the equity market.
Joe, we mentioned earlier that the Certified Financial Group manages 401(k)s. How does that work?
We do that — our clients are coming to us, that they’d like help with designing their 401(k) because there’s so many choices and the fund changes that have gone on over time, and coordinate with that other stuff. The funds stay at your 401(k) plan. What you do is you give us the authority to manage that for you on your behalf. And we pick out the design and portfolio for you, designed for your specific needs and risk tolerance. The minimum account size is $100,000 that we do it for. And we’d be glad to talk to you about that. All you have to do is go to our website, that’s financialgroup.com. Financialgroup.com and make an appointment with one of the twelve CFPs in our firm.
Congratulations on receiving — what was that thing called again?
CFEX.
What does that mean, CFEX?
It’s Center for Fiduciary Excellence.
Center for Fiduciary Excellence.
And you’ve been rated in the top 100 in the country?
Only 6/10 of 1% of the advisory firms in the country have this designation, yeah, so we’re very proud of it.
We all <Inaudible>.
Boy, I wish I had some champagne.
It was an arduous process.
It is a big deal.
Why didn’t you tell me? I’d have brought in some champagne.
Well, next week.
Well, congratulations Joe and Nancy and everybody at the Certified Financial Group. If you want to find out more, go online to the website. What’s the website address there Nancy?
It’s financialgroup.com.
Okay. Stay tuned for Dave Wahl in the News Center.
Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Certified Advisory Corp is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
This is News 96.5 WDBO, where Orlando turns first for breaking news, weather, and traffic 24 hours a day.
Live <Inaudible> coverage starts now.Yes, good morning. It’s an FDX <?> for Saturday morning on WDBO and this is On The Money, brought to you by Orlando’s oldest and largest independent firm of certified financial planning professionals. That being the Certified Financial Group in Altamont Springs. With us this morning we have two of the 12 certified financial planning pros, say good morning to the lovely Nancy Heck. Good morning Nancy!
Good morning.
And the equally as lovely Jovert. Good morning Joe.
Good morning.
How are you guys?
We <Inaudible> thank you.
Nice to see you both.
Nice to be seen.
Nancy, in case anybody may be new to this program, what are you all taking calls about today?
Any of the pocketbook questions mostly focused towards retirement. Stocks, bonds, mutual funds, 401(k)s, 403bs, IRAs, Roths, long-term care, annuities. Any of the financial questions that are driving you crazy right now, that’s what we’ll take questions on.
And we have an open phone line for you, too. Here’s the number: 844-220-0965. You can also text us from your mobile device. That number is: 21232. Or if you’re so inclined and you want your voice to be on the program, if you see open mic and you’ll find that on the <Inaudible>. Some of the things we’re going to talk about today, a bucket list or withdrawing funds during retirement. My husband is 12 years older than I, should he wait to start taking Social Security? And speaking of Social Security, Nancy, again, are you the go-to person in your office for Social Security questions?
I would actually say Denise is first and I might be second. She’s taken a little bit more Social Security centric classes than I have. But you both are the best?
She’s the primary expert, yes.
When is your next deal or workshop?
Well our next Social Security boot camp is this coming Thursday, however it is full. So after that it’s January 19th, but speaking of workshops on 25th of October, Gary Abely is hosting, When You Retire Know Your Numbers.
That’s a Thursday?
That is a Tuesday, October 25th from 6:00pm-8:00pm, refreshments will be served. Countdown To Retirement is Tuesday, November 15th from 6:00pm-8:00pm hosted also Gary Abely. And with guest speaker estate planning attorney Jody Murphy. Again, light refreshments will be served. And then the last one we have on the books for this year is Thursday, December 1st from 6:00pm-8:00pm, Health Care Options In Retirement. Hosted by Gary Abely.
Gary is a busy — he enjoys doing – Gary is a frustrated schoolteacher. He enjoys educating people, and once again these are absolutely free to our listeners and general public. And people ask why do you do this kind of stuff? We do it for basically two reasons: for over the course of many, many years we’ve seen people come into our office that had absolutely no idea the decisions they need to make revolving around these topics. So we do, to keep you out of trouble, and secondly to introduce you to our firm. What we do as fee planners. And this way whether you finish your planning advice now or sometime in the future, perhaps you’d give us an opportunity to earn your business. So you can get all the information that you want by going to our website. That’s fincancialgroup.com. Click on workshops, and you can make a reservation right there online. They’re absolutely free, leave your checkbook at home. And I’ll guarantee you’ll walk away with a couple of good ideas that can save you perhaps tens of thousands of dollars in the future.
Of course the Certified Financial Group rated by, what is it <Inaudible> Magazine?
By the way, we have great news.
What’s that?
We have just been certified by the Center for Fiduciary Excellence as one of only less than 100 firms in the country for our fiduciary excellence and how we work with our clients, all of our internal procedures, all of the safeguards that we have. How we select investments, how we monitor them, how we report to our clients. It’s pretty — it’s pretty prestigious, there’s less than 1/10th of 1% payroll 6/10th of 1% of the firms in the country have this designation and we’re delighted to have it. Interestingly enough as we’re staying in our newsletter which I just signed off on. We have been following these practices for years —
I was just going to say that yeah, since 1994 when most of us became CFPs, fiduciary responsibility has just been part of our practice. And now the world is in a panic because they have to catch up to how we have been practicing business, and maintaining and managing our client’s accounts.
Yeah, we’ve been doing this for a long time, and we wanted to subject ourselves to just the audit, to the exam. It’s 126 page questionnaire that we have to complete and you have to have an on site examination of our firm. And we were just granted this designation this past month.
Wow, that is impressive.
<Inaudible> certified, yep.
Wow. Well perhaps it’s a good opportunity now for anybody who may not know, what’s the difference between a certified financial planning professional and any old or Jane who can hang the shingle up there saying they’re a financial planner or whatever?
Well first of all the basic education to be able to sit for the certified financial planning exam is like a two year masters program. So it’s a lot of education. And then the exam process is rigorous. When we took it, it was a serial exam, now it’s a <Inaudible> exam
<Inaudible>
Now it’s one day big comprehensive exam, so I’m very happy we took it when we took it. There’s also an apprenticeship period. You have to work as I guess <Inaudible> paraplanner or work with a certified financial planner for a number of years before you can actually call yourself a certified financial planner. So aside from all the fiduciary and code of ethics and educational background that we’ve had to comply with for decades, it’s a ton of education and the education is continuing. Every single year we all have to go for continuing classes. For many of, whatever licenses you hold, most importantly your certified financial planning license. But the difference is just amends <?>. We have always had to and wanted to, I’m just going to say had to, we’re in this business because you want to be able to put your clients first and yourself second. And I think that that’s the big thing. We have an unbiased attitude towards trying to help people put together their retirement planning, family dynamic planning, whether it’s for their kids or for their parents or for their future hopes and dreams. And then fighting independent areas to help them fund and maintain and monitor their plans.
Anyone can virtually call themselves a financial planner today, an investment advisor, an investment consultant, whatever you want to do it. But the certified financial planning designation is in fact the gold standard and I’m proud to say we have 12 within our company. You can go to our website, financialgroup.com and there’s an FAQ section about what’s involved in becoming and maintaining your certified financial planner designation. So we’re proud of that.
It’s a lot of work and is a big deal.
So if you’d like to join us with a question or two for or for Nancy here’s the telephone number again: 844-220-0965. You could text us at: 21232. When you say you’ve been at it for a long time, you’re with like third or fourth generation clients aren’t you?
Yeah.
Yeah, we have grandchildren of some of our very first clients, and I think —
That says a lot.
Great grandchildren <Inaudible>
Yeah, well I’ve been doing this for 32 years so. Yeah, there’s been kids and then their kids. Very much as has.
Coming up on 9:15, Dave Wahl is in the news center keeping an eye on things. Of course he’ll have the very latest on the political campaigns coming up here in about five minutes from now. What’s on your website this morning for this week’s <Inaudible> three? It’s a nice picture of a cup of coffee.
Yeah.
But what you don’t know about that cup of coffee may hurt you.
It was about how the daily coffee may cost you your retirement. So it’s an interesting study on how much we spend on some of the discretionary spending that we have, like pulling into Starbucks every day, right?
Well, speaking of coffee, I did a whole current versus a regular coffee machine analysis. And, well you can get an average of 80 cups of coffee out of a pound. Which is going to cost you $10 versus 12 current things for I think $6 at the cost of — and I know everybody has them and I have one in my office because I inherited it.
Well it’s also convenient, too, for one cup of coffee.
Yeah, but still. To use an old term from my husband, caps <?> my hide. Because it is just such a waste of money, buying coffee in that manner. But now it’s coffee, it’s tea, it’s hot cocoa, soup you can now get for the little things. It’s amazing the different things that you can make.
Well it’s all about convenience, <Inaudible> pay for it.
Yeah, I know. But still it drives me crazy.
But those Wala <?> sandwiches are so good <?>.
Never had one.
Nancy Hecht and Joe Bert are in the studio for the certified financial group, let’s take a phone call from Randy in Seminole County, good morning Randy.
Good morning Randy.
Hi Randy, what’s your question?
Hello Randy?
Randy?
No this is —
Curt, can we hear him?
Who’s running this place here <Inaudible>?
I don’t know, he’s some <Inaudible>?
Is this Randy?
Yes it is.
Good morning Randy.
Hi Randy.
<Inaudible> we found you. What’s up?
Good morning, good morning. I’m a little behind the eight ball a little bit on retirement.
Okay.
Just turned 53 years old. I’ve had done pretty much no investing.
Okay.
A little bit I guess gun shy to the market with the fluctuations and some of the horror stories that you hear. I have managed to save about 100,000 in liquid. No credit card debt. Pretty much no debt except for a mortgage. What would be the best alternative if I plan to retire around 55 <?> years of age with the 100,000 I have without being too much risk or all of a sudden I find myself broke because of bad advice?
Well, my first question would be, what is your comfort level for liquid cash? Is it the 100,000 or is it less than that? That would determine how much of the 100,000 you could actually invest. Anything that you’re going to need or want to use in two years or less you have to keep in checking, savings, money market. That’s the emergency money, <Inaudible> the sock money, the comfort level cash. And beyond that you can afford to invest. So, I mean looking at the 100,000 that’s the way I would look at that. Beyond that, does your employer offer any type of payroll deducted retirement savings plan?
They do. They just started offering a — this is why I was calling — a 401(k).
Okay.
That they will contribute up to 3%.
You need to look at the matches gravy <?> and payroll deduct which is the best way to save, because you have whole dollars being invested for you as much as you comfortably can.
Randy, here’s what I want you to do. You say you’re 53?
Yeah, yeah, yes.
12 years to retirement. Your company just started a retirement plan and you don’t have anything in it. Okay. But you’ve got 100,000 in your funds here that you want to invest somewhere. What I would do is I would focus on putting $24,000 a year into your retirement plan. Have it come out of your paycheck. <Inaudible> oh my gosh, I won’t have any money to live on! Yes you do, you’ve got that $100,000 in your checking account, savings account, wherever it is. I want you to increase your 401(k) contributions, the maximum of $24,000 a year. Use the money that’s in your checking account there to make up for what you’re not bringing home. You’re going to get a $24,000 tax deduction. The money will grow for you without being taxed. When you go to your 401(k) choices, look for what’s called a target-date fund which is geared to your retirement date which is 12-15 years from now. Focus on that and put the money in there and don’t look at it for 12 years. That’s what you need to do. You’ve got to get that money working for you. If you don’t get it working for you, you’ll wake up at 65 years old and you’ll find your $100,000 is now worth $105,000 and you’ll be broke in six years. You’ve got to get that money working for you, and the best news for you when you’re putting your money in your retirement plan, is when the market goes down as your buying shares. The name of the game over your working lifetime is to get shares. And so it’s really actually good news for you. In fact the best news for you is if the market did nothing but go down for the next 12 years and you were continuing adding to your pile and then it just picked up just a little bit before your retire. You’d have far more money than what you’re doing today.
Alright.
And if I could suggest that maybe you push your retirement two years and a few months further out then you’ll be at full retirement age for Social Security.
Alright, we’ve got to get to Dave in the news center. Bob Diland, we’re going to put him up next. He wants to talk about an annuity and a withdrawal from a savings plan.
Let’s get back to it. This is On The Money brought to you by the Certified Financial Group in Altamont Springs. In the studio the Oracle of Orlando is back. Joe Berd is in the studio along with Nancy Hecht, author of the Hecht Effect, and A Man Is Not A Brand. You can join us. Joe, what kind of calls are you taking here.
I’m here to take your calls regarding your personal finances, things that they don’t teach you in school but the things we have to make decisions on day in and day out. Sometimes we stumble into them, sometimes we make great decisions, but more often than not we get sold something that really isn’t in our long-term best interest. So we’re here to kind of clear up that mind fog that you might have regarding your personal finances about stocks and bonds and real estate and long-term health care and IRAs and annuities, reverse mortgages, life insurance, all that and more. Nancy and I are here to take your calls and good news for you, there’s a couple of lines open. All you have to do is pick up a phone and dial the number 844-220-0965. Let’s go to Diland.
Wait, if we can wait one second.
Go back to Randy.
Randy, if you’re still listening, two points that I’d like to make. First of all, anything that you’re saving pre-tax is not going to dollar for dollar reduce your spendable. Because it’s money that’s going into your retirement purchase being paid to the Federal government and taxes. And you are exactly the type of person that is right for a financial plan. Looking at where you’re at now, where you want to be at retirement age, and then looking at maybe 25 or 30 years into retirement. So Randy, I’d like to invite you to take advantage of a complimentary consultation and let us put together a financial plan for you and help you build the road map to take you from the 53 to 65 or 67.
Because you have time. Time is a great asset, if you don’t use it you lose it. And the toughest cases that Nancy and I have worked on are people that have already retired, they haven’t done any planning, and they come into our office six to seven years in retirement and the wheels are coming off. So you’ve got time to make some adjustments, but the key is you need to know what you need to do now before you do it.
Bob go ahead, sir.
Good morning. How is everyone.
Great Bob, what’s up?
We’re good.
Good. Just wanted to know if a smart move, take some of my — I’m about two years from retirement — take some of my 401(k) and put it into an annuity that’s guaranteed at 6%. That’s my question.
6% sounds awful nice, but at what price? That’s what I would want to know. I’m not a fan of taking tax qualified money, which is your retirement money, and wrapping it in another tax qualified vehicle like an annuity, unless there’s a certain amount of money for succession purposes you want to guarantee are going to be there no matter what happens in the markets for a spouse or kids or something like that. A 6% guarantee, is that for accumulation, is it for withdrawals, does it have a 10-year, 15-year, 17-year surrender charge? Something like this is going to, from what I have seen, cost big.
There is no — I think what you’re seeing, what you’re believing, and what you’re actually going to get are actually two different things. People hear the 6% and they believe it’s like buying a CD. I’m going to get 6% of my money every year, which is a wonderful thing. Truth be known, is there are no annuities out there, what we would call fixed annuities, that will give you a 6% return. And if you said you get that 6% return, there is some hook in there. And that’s what you need to do, you need to find the hook. And the other thing is, if you’re going to take money out of your 401(k) your going to pay taxes on it. So you’re going to take a haircut right off the top. You’re going to lose depending on your tax bracket anywhere from 10% to 40% of what you take out to put into the annuity and you’re never going to catch up even with a 6% return. So that doesn’t make it any better <?>.
Even putting it in from one retirement fund into another retirement fund, I’d have to pay taxes on it?
I’m assuming you’re looking at an in-service withdrawal from your 401(k), and then rolling it over as a rollover IRA into this annuity?
Is that what you’re plan is?
Is that what you’re thinking about it, is that what you were told you could do?
Yes.
Okay. Well, you had asked, Bob, I would love to take a look at what has been presented to you and put into plain English all the factors of it. So if you’d like to take advantage of that I’d be happy to do it for you. But your first question is what do you think? And neither of us are a fan of this move.
Yes, indeed. It’s <Inaudible> Saturday morning with the Certified Financial Group, Orlando’s oldest and largest independent firm of certified financial planning professionals. Again, the Certified Financial Group is here and you could talk to Nancy Hecht or Joe Bert. The number is 844-220-0965. Let’s get right to work and this is Alex — wait a minute. Didn’t you have something you wanted to clear up with Bob?
Well, I mean one Well, one of the points from talking to <Inaudible> that I learned is that he may or may not have regularly re-balanced or re-allocated his 401(k), and we see that this happens a lot. People pick their initial investments and they never re-allocate or re-balance the mutual funds. And this is part of our practice. We do manage people’s 401(k), 403(b)s while they’re still working, but it’s important to look at re-balancing your portfolio.
Remind me to ask you about that. Managing my 401(k).
Okay.
Let’s talk to Alex on his cell phone. Good morning, sir.
Good morning. How are you?
We’re great, how about yourself?
Great, thank you.
Awesome, awesome. I’m very excited to listen to the information you’re providing. I have a quick question. I’m considering a Roth, and I have a 401(k) currently. I am 51. And I’m wondering, should I freeze my 401(k) and open up a Roth, or can I roll over my 401 into a new Roth? What is the smartest move?
The answer is no and no, in my opinion.
Okay, okay.
As we had discussed with the previous two callers, everything that you’re contributing to your 401(k) is full, un-taxed dollars that you’re saving. There have not been rule changes for 401(k)s for IRAs for a long time. There’s potentially going to be some rule changes for the Roth. If you had wanted to move money from your 401(k) to a Roth, you would have to rollover from the 401(k) to an IRA, and who knows if that’s allowed while you’re still working. And then you would have to do the move from the IRA to the Roth, and you have to be prepared to pay taxes on 100% of whatever you’re moving into the Roth. You’re looking at saving whole pre-tax dollars or converting them into taxable dollars for the hope that the rules associated with a Roth and the tax-free accumulation and not having to take required minimum distributions will remain through your lifetime.
Do yourself a favor. You have access to the Internet, I presume?
Absolutely, yes.
Google Roth: A Wolf in Sheep’s Clothing. That’s Roth: A Wolf in Sheep’s Clothing. That’s an article I wrote for Kiplinger.
And he’s saying wolf.
Woof, woof.
Wolf, Wolf in Sheep’s Clothing. And it’ll kind of give you some insight into what Nancy’s saying.
Sure. Thank you very much. I do appreciate that.
Thank you for the call.
And have a wonderful day, Alex.
Thanks Alex.
Alright, let’s talk to Jack in Osceola County. Jack, you’re on WDBO.
Good morning.
Good morning, Jack.
Good morning.
Hey, it’s very wonderful to hear you guys and I was very impressed with all of the qualifications that are necessary to do your job right.
Well thank you.
What can we do for you, Jack?
Well, I’m a 67-year-old man. I have two pensions and Social Security. My concern is that I live with a woman whom I call my wife. We were married in the past and we never bothered to get remarried but have been living together for years and I want to ensure her financial future. My concern is whether we should get married, if that’s the best method of passing along anything that I do have, or whether avoiding that is — there’s still a way to pass everything along. We are nine and a half years apart and I’m at 67 years old.
So, since you legally separated, has she gotten remarried?
No, she never remarried. We are —
Okay, that’s great. So she could pull off of your Social Security as a beneficiary. When you pass on, she will get 100% of what you’re receiving in Social Security right now. And as long as it was a long-term marriage, she is retired to a portion of your Social Security. Did she work herself? Is she entitled to Social Security?
Her Social Security would be very minimal. She hasn’t done an awful lot of work and she hasn’t been well.
Okay. So —
How about your pensions? How are those set up?
No, those are only for me. They would end. But my concern — and I know about the Social Security. My concern is that we do own a home. I own about 20% of it. It’s a $300,000 home. And I do have maybe 15,000 or 20,000 in a tax-deferred annuity. So I want to make sure that these things pass along to her without probate, for example, and I’m also worried about all the stories I heard about how one partner can be drained by the ill health of the other.
Well, that’s another concern. I was going to ask — I want to ask, Jack, what’s the state of your health?
I’m fairly healthy. No guarantees in life, of course, and —
One thing you might want to look at is maybe a 20, 25-year term policy to assure that there’d be some money for your wife, ex-wife, partner, when you pass on.
I have several life insurance policies. There’s a good amount of money that would come to her.
Let’s focus in on that.
You say a good amount. What kind of insurance and what’s the amount?
From my former employer, I believe the amount is 70,000 at this time. I believe it goes down when I get to 70 years of age, but it’s still considerable, and I have a separate policy that I have been paying for for quite a number of years. I don’t recall the amount. Together, they’re probably — when I get to be around 70, probably around $50,000 or $60,000.
Jack, I’m going to be blunt with you. Your spouse or girlfriend or whatever we want to call her is in financial trouble. You don’t have nearly enough assets to protect her, particularly because of the age difference. When you pass on, she is going to be in deep stuff. The amount that you described to us is woefully less than what she needs. And what I would suggest you do is that you meet with a certified financial planner, either us or somebody in town and have a detailed analysis of what needs to be done now, so she’s protected. If your concern is to have her protected, we’re in trouble.
And are there assets beyond the pensions and the Social Security? Did you accumulate money in a 401(k), an IRA, something along those lines while you were working?
The only thing left in the 401(k) at this point is about 20,000. And the home <Inaudible> 20%, which estimates maybe around 50,000 to 60,000.
Alright. So, yeah.
With the age different, and women live longer than men anyway. We have a financial situation here. That’s the bad news. The good news is you’re aware of it. The key is to get it fixed. We can’t do it on the phone.
And 67 is not old. You probably have close to 30 years.
Well, that part I’m happy to hear about.
Yeah, that’s the good news. Well, 115 is something I heard about life expectancy this week.
115?
115 years of age.
There we go.
<Inaudible>.
If we can stay on and you can take my information and call me since I’m in the vehicle right now and can’t really take your number, I’d appreciate it.
Alright, you stand by and we’ll get to that in just a second. 9:45, it’s a quarter until 10:00 on WDBO. From the text board, I will be retiring through the Florida Retirement System under disability. Should I go ahead and exercise my right to Social Security or wait? I’m 52. Old law enforcement officer. What’s the good? What’s the bad of going into Social Security immediately upon receiving my disability from the Florida Retirement System?
Well, it’s a 25% cut for pulling under full retirement age, and that’s a permanent cut. I don’t know what Social Security disability would be for the person, but again, the rules are changing on that. The availability for that is changing because that part of the system ran dry in March of this year and is now being funded by the retirement part. A little bit too complicated of a question to answer on the air. Be happy to meet with him face to face, or her, whoever it may be, and give them some good concrete answers.
You can check that out by going online to the website, financialgroup.com. Financialgroup.com. E-mail nancy@financialgroup.com. Is that right?
Sure.
Okay. You should try it Zack <?>. It might work. Alex in Orange County. Good morning, Alex.
Good morning.
I have a question about whole life insurance.
Okay.
I know that’s an interesting subject. I am 26, so I’m starting to think about retirement early, which I hope is a good thing.
Yay for you, yes. Pat yourself on the back.
Well, I’m invested in my company matched 401(k). I have a separate Roth IRA. And I actually do own whole life, but I’ve been hearing a lot more negative than positive lately, and I wanted to get your thoughts on whether I should keep going or if I should pull out.
Why did you buy it?
I bought it because I was actually advised to by my father. He pulled out a policy on me when I was one, and it’s accumulated a nice cash value for a really low annual premium.
Whole life is pretty plain vanilla, not jazzy, not sexy. Also not expensive. I’m a fan of whole life because more dollars are going for the protection than for any kinds of bells and whistles. And if what you’re looking for is permanent protection, I have absolutely no problems with whole life.
I’ll take the other side of it. You’re too young for that policy. I would freeze it, keep the cash there as a cash reserve, get — are you married?
No, I’m not. I think I was oversold.
You don’t even need life insurance. Why do you need to have life insurance if you’re going to leave it to your cat? That makes no sense.
Yeah, because the mentality was <Inaudible> early when I had a low premium.
Sure, I understand. Frankly, I was told this stuff when I was in college, too. We all make those early mistakes. I would, when it comes time for insurance, I would look at buying term insurance for a 30-year timeframe. You look in your premium, and then you have 30 years to build your liquid estate, max out your contribution to your 401(k)s, you’re IRAs, whatever you can do. And don’t mix investing with life insurance. In my estimation, you get the worst of both worlds.
And you probably have, through your employer, at least one-time your salary as an employee benefit.
We’re coming up on time to get to Dave Wahl in the News Center. I appreciate your call there Alex, and we’ll take your phone call as well. Its 844-220-0965. When we come back, your bucket list for withdrawing funds during retirement — does it include a Lamborghini like mine?
No.
No?
Maybe. Potentially.
Well, we’d better talk. Stick around. You can join us at — maybe that’s a Ferrari I’m thinking of. 844-220-0965. Or text us at 212-32.
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It’s an Ask the Expert Saturday morning on WDBO. Dave Wahl is in the News Center. We’ll get back to him in about five minutes with a more in-depth look at things going on, including a look at campaign news. Here’s a question. My husband is 12 years older than me. Should he wait until 70 to start taking Social Security?
I happen to know this couple and they’re self-employed, so they’re paying both halves of Social Security. They know how much is really being put into there. But because they’re both working and they have the health and the business to make it a choice, my answer to them was yes. By waiting to age 70, he will get — because full retirement age for him was 66. He’s going to get three years of 8% credits added onto his Social Security. And when he passes away, she will get that nicer, higher benefit.
Here’s a text. Receiving $1,300 a month in Social Security. Have about 19,000 in savings total. I do not own a home. What’s the best way to derive some extra income?
I wonder how old the person.
61. Disability, Social Security.
Oh okay. Social Security — I would get, maybe, a part-time job.
How about rental homes, he says. Rental houses.
If the person can get the money to buy the rental houses at a reasonable price and has the means to be able to manage it themselves so they can benefit fully from a tax standpoint, potentially that could be good.
Yeah, I think the best thing that this person could do is probably get in touch with you for a complementary consultation.
Yeah, what they’re doing is grasping at straws.
Yeah, okay.
My bucket list for withdrawing funds during retirement — I would like that to include a Lamborghini. But tell I’m wrong there Nancy.
Well, maybe, maybe not. It depends. We’ve talked a lot about cash and setting aside cash. And that’s the first thing you need to do. Many people look at one to three years worth of fixed expenses as a <Inaudible> kind of account. So that would be the first area that you need to set aside for withdrawing funds for retirement. Secondly, you need to bump yourself up the risk ladder a little bit and think intermediate terms. Five years or less, maybe some bond funds, dividend paying stock funds. And so you have the dividends that are paid monthly and then paid out to you to supplement your income. And then third, you have to think long-term. When people think retirement, they forget to think about the 20 or 30 years that they’re going to live in retirement. So you need a portion of your assets to be able to grow with the equity market.
Joe, we mentioned earlier that the Certified Financial Group manages 401(k)s. How does that work?
We do that — our clients are coming to us, that they’d like help with designing their 401(k) because there’s so many choices and the fund changes that have gone on over time, and coordinate with that other stuff. The funds stay at your 401(k) plan. What you do is you give us the authority to manage that for you on your behalf. And we pick out the design and portfolio for you, designed for your specific needs and risk tolerance. The minimum account size is $100,000 that we do it for. And we’d be glad to talk to you about that. All you have to do is go to our website, that’s financialgroup.com. Financialgroup.com and make an appointment with one of the twelve CFPs in our firm.
Congratulations on receiving — what was that thing called again?
CFEX.
What does that mean, CFEX?
It’s Center for Fiduciary Excellence.
Center for Fiduciary Excellence.
And you’ve been rated in the top 100 in the country?
Only 6/10 of 1% of the advisory firms in the country have this designation, yeah, so we’re very proud of it.
We all <Inaudible>.
Boy, I wish I had some champagne.
It was an arduous process.
It is a big deal.
Why didn’t you tell me? I’d have brought in some champagne.
Well, next week.
Well, congratulations Joe and Nancy and everybody at the Certified Financial Group. If you want to find out more, go online to the website. What’s the website address there Nancy?
It’s financialgroup.com.
Okay. Stay tuned for Dave Wahl in the News Center.
Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Certified Advisory Corp is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
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Live <Inaudible> coverage starts now.
is a frustrated schoolteacher. He enjoys educating people, and once again these are absolutely free to our listeners and general public. And people ask why do you do this kind of stuff? We do it for basically two reasons: for over the course of many, many years we’ve seen people come into our office that had absolutely no idea the decisions they need to make revolving around these topics. So we do, to keep you out of trouble, and secondly to introduce you to our firm. What we do as fee planners. And this way whether you finish your planning advice now or sometime in the future, perhaps you’d give us an opportunity to earn your business. So you can get all the information that you want by going to our website. That’s fincancialgroup.com. Click on workshops, and you can make a reservation right there online. They’re absolutely free, leave your checkbook at home. And I’ll guarantee you’ll walk away with a couple of good ideas that can save you perhaps tens of thousands of dollars in the future.
Of course the Certified Financial Group rated by, what is it <Inaudible> Magazine?
By the way, we have great news.
What’s that?
We have just been certified by the Center for Fiduciary Excellence as one of only less than 100 firms in the country for our fiduciary excellence and how we work with our clients, all of our internal procedures, all of the safeguards that we have. How we select investments, how we monitor them, how we report to our clients. It’s pretty — it’s pretty prestigious, there’s less than 1/10th of 1% payroll 6/10th of 1% of the firms in the country have this designation and we’re delighted to have it. Interestingly enough as we’re staying in our newsletter which I just signed off on. We have been following these practices for years —
I was just going to say that yeah, since 1994 when most of us became CFPs, fiduciary responsibility has just been part of our practice. And now the world is in a panic because they have to catch up to how we have been practicing business, and maintaining and managing our client’s accounts.
Yeah, we’ve been doing this for a long time, and we wanted to subject ourselves to just the audit, to the exam. It’s 126 page questionnaire that we have to complete and you have to have an on site examination of our firm. And we were just granted this designation this past month.
Wow, that is impressive.
<Inaudible> certified, yep.
Wow. Well perhaps it’s a good opportunity now for anybody who may not know, what’s the difference between a certified financial planning professional and any old or Jane who can hang the shingle up there saying they’re a financial planner or whatever?
Well first of all the basic education to be able to sit for the certified financial planning exam is like a two year masters program. So it’s a lot of education. And then the exam process is rigorous. When we took it, it was a serial exam, now it’s a <Inaudible> exam
<Inaudible>
Now it’s one day big comprehensive exam, so I’m very happy we took it when we took it. There’s also an apprenticeship period. You have to work as I guess <Inaudible> paraplanner or work with a certified financial planner for a number of years before you can actually call yourself a certified financial planner. So aside from all the fiduciary and code of ethics and educational background that we’ve had to comply with for decades, it’s a ton of education and the education is continuing. Every single year we all have to go for continuing classes. For many of, whatever licenses you hold, most importantly your certified financial planning license. But the difference is just amends <?>. We have always had to and wanted to, I’m just going to say had to, we’re in this business because you want to be able to put your clients first and yourself second. And I think that that’s the big thing. We have an unbiased attitude towards trying to help people put together their retirement planning, family dynamic planning, whether it’s for their kids or for their parents or for their future hopes and dreams. And then fighting independent areas to help them fund and maintain and monitor their plans.
Anyone can virtually call themselves a financial planner today, an investment advisor, an investment consultant, whatever you want to do it. But the certified financial planning designation is in fact the gold standard and I’m proud to say we have 12 within our company. You can go to our website, financialgroup.com and there’s an FAQ section about what’s involved in becoming and maintaining your certified financial planner designation. So we’re proud of that.
It’s a lot of work and is a big deal.
So if you’d like to join us with a question or two for or for Nancy here’s the telephone number again: 844-220-0965. You could text us at: 21232. When you say you’ve been at it for a long time, you’re with like third or fourth generation clients aren’t you?
Yeah.
Yeah, we have grandchildren of some of our very first clients, and I think —
That says a lot.
Great grandchildren <Inaudible>
Yeah, well I’ve been doing this for 32 years so. Yeah, there’s been kids and then their kids. Very much as has.
Coming up on 9:15, Dave Wahl is in the news center keeping an eye on things. Of course he’ll have the very latest on the political campaigns coming up here in about five minutes from now. What’s on your website this morning for this week’s <Inaudible> three? It’s a nice picture of a cup of coffee.
Yeah.
But what you don’t know about that cup of coffee may hurt you.
It was about how the daily coffee may cost you your retirement. So it’s an interesting study on how much we spend on some of the discretionary spending that we have, like pulling into Starbucks every day, right?
Well, speaking of coffee, I did a whole current versus a regular coffee machine analysis. And, well you can get an average of 80 cups of coffee out of a pound. Which is going to cost you $10 versus 12 current things for I think $6 at the cost of — and I know everybody has them and I have one in my office because I inherited it.
Well it’s also convenient, too, for one cup of coffee.
Yeah, but still. To use an old term from my husband, caps <?> my hide. Because it is just such a waste of money, buying coffee in that manner. But now it’s coffee, it’s tea, it’s hot cocoa, soup you can now get for the little things. It’s amazing the different things that you can make.
Well it’s all about convenience, <Inaudible> pay for it.
Yeah, I know. But still it drives me crazy.
But those Wala <?> sandwiches are so good <?>.
Never had one.
Nancy Hecht and Joe Bert are in the studio for the certified financial group, let’s take a phone call from Randy in Seminole County, good morning Randy.
Good morning Randy.
Hi Randy, what’s your question?
Hello Randy?
Randy?
No this is —
Curt, can we hear him?
Who’s running this place here <Inaudible>?
I don’t know, he’s some <Inaudible>?
Is this Randy?
Yes it is.
Good morning Randy.
Hi Randy.
<Inaudible> we found you. What’s up?
Good morning, good morning. I’m a little behind the eight ball a little bit on retirement.
Okay.
Just turned 53 years old. I’ve had done pretty much no investing.
Okay.
A little bit I guess gun shy to the market with the fluctuations and some of the horror stories that you hear. I have managed to save about 100,000 in liquid. No credit card debt. Pretty much no debt except for a mortgage. What would be the best alternative if I plan to retire around 55 <?> years of age with the 100,000 I have without being too much risk or all of a sudden I find myself broke because of bad advice?
Well, my first question would be, what is your comfort level for liquid cash? Is it the 100,000 or is it less than that? That would determine how much of the 100,000 you could actually invest. Anything that you’re going to need or want to use in two years or less you have to keep in checking, savings, money market. That’s the emergency money, <Inaudible> the sock money, the comfort level cash. And beyond that you can afford to invest. So, I mean looking at the 100,000 that’s the way I would look at that. Beyond that, does your employer offer any type of payroll deducted retirement savings plan?
They do. They just started offering a — this is why I was calling — a 401(k).
Okay.
That they will contribute up to 3%.
You need to look at the matches gravy <?> and payroll deduct which is the best way to save, because you have whole dollars being invested for you as much as you comfortably can.
Randy, here’s what I want you to do. You say you’re 53?
Yeah, yeah, yes.
12 years to retirement. Your company just started a retirement plan and you don’t have anything in it. Okay. But you’ve got 100,000 in your funds here that you want to invest somewhere. What I would do is I would focus on putting $24,000 a year into your retirement plan. Have it come out of your paycheck. <Inaudible> oh my gosh, I won’t have any money to live on! Yes you do, you’ve got that $100,000 in your checking account, savings account, wherever it is. I want you to increase your 401(k) contributions, the maximum of $24,000 a year. Use the money that’s in your checking account there to make up for what you’re not bringing home. You’re going to get a $24,000 tax deduction. The money will grow for you without being taxed. When you go to your 401(k) choices, look for what’s called a target-date fund which is geared to your retirement date which is 12-15 years from now. Focus on that and put the money in there and don’t look at it for 12 years. That’s what you need to do. You’ve got to get that money working for you. If you don’t get it working for you, you’ll wake up at 65 years old and you’ll find your $100,000 is now worth $105,000 and you’ll be broke in six years. You’ve got to get that money working for you, and the best news for you when you’re putting your money in your retirement plan, is when the market goes down as your buying shares. The name of the game over your working lifetime is to get shares. And so it’s really actually good news for you. In fact the best news for you is if the market did nothing but go down for the next 12 years and you were continuing adding to your pile and then it just picked up just a little bit before your retire. You’d have far more money than what you’re doing today.
Alright.
And if I could suggest that maybe you push your retirement two years and a few months further out then you’ll be at full retirement age for Social Security.
Alright, we’ve got to get to Dave in the news center. Bob Diland, we’re going to put him up next. He wants to talk about an annuity and a withdrawal from a savings plan.
Let’s get back to it. This is On The Money brought to you by the Certified Financial Group in Altamonte Springs. In the studio the Oracle of Orlando is back. Joe Bertis in the studio along with Nancy Hecht, author of the Hecht Effect, and A Man Is Not A Brand. You can join us. Joe, what kind of calls are you taking here.
I’m here to take your calls regarding your personal finances, things that they don’t teach you in school but the things we have to make decisions on day in and day out. Sometimes we stumble into them, sometimes we make great decisions, but more often than not we get sold something that really isn’t in our long-term best interest. So we’re here to kind of clear up that mind fog that you might have regarding your personal finances about stocks and bonds and real estate and long-term health care and IRAs and annuities, reverse mortgages, life insurance, all that and more. Nancy and I are here to take your calls and good news for you, there’s a couple of lines open. All you have to do is pick up a phone and dial the number 844-220-0965. Let’s go to Diland.
Wait, if we can wait one second.
Go back to Randy.
Randy, if you’re still listening, two points that I’d like to make. First of all, anything that you’re saving pre-tax is not going to dollar for dollar reduce your spendable. Because it’s money that’s going into your retirement purchase being paid to the Federal government and taxes. And you are exactly the type of person that is right for a financial plan. Looking at where you’re at now, where you want to be at retirement age, and then looking at maybe 25 or 30 years into retirement. So Randy, I’d like to invite you to take advantage of a complimentary consultation and let us put together a financial plan for you and help you build the road map to take you from the 53 to 65 or 67.
Because you have time. Time is a great asset, if you don’t use it you lose it. And the toughest cases that Nancy and I have worked on are people that have already retired, they haven’t done any planning, and they come into our office six to seven years in retirement and the wheels are coming off. So you’ve got time to make some adjustments, but the key is you need to know what you need to do now before you do it.
Bob go ahead, sir.
Good morning. How is everyone.
Great Bob, what’s up?
We’re good.
Good. Just wanted to know if a smart move, take some of my — I’m about two years from retirement — take some of my 401(k) and put it into an annuity that’s guaranteed at 6%. That’s my question.
6% sounds awful nice, but at what price? That’s what I would want to know. I’m not a fan of taking tax qualified money, which is your retirement money, and wrapping it in another tax qualified vehicle like an annuity, unless there’s a certain amount of money for succession purposes you want to guarantee are going to be there no matter what happens in the markets for a spouse or kids or something like that. A 6% guarantee, is that for accumulation, is it for withdrawals, does it have a 10-year, 15-year, 17-year surrender charge? Something like this is going to, from what I have seen, cost big.
There is no — I think what you’re seeing, what you’re believing, and what you’re actually going to get are actually two different things. People hear the 6% and they believe it’s like buying a CD. I’m going to get 6% of my money every year, which is a wonderful thing. Truth be known, is there are no annuities out there, what we would call fixed annuities, that will give you a 6% return. And if you said you get that 6% return, there is some hook in there. And that’s what you need to do, you need to find the hook. And the other thing is, if you’re going to take money out of your 401(k) your going to pay taxes on it. So you’re going to take a haircut right off the top. You’re going to lose depending on your tax bracket anywhere from 10% to 40% of what you take out to put into the annuity and you’re never going to catch up even with a 6% return. So that doesn’t make it any better <?>.
Even putting it in from one retirement fund into another retirement fund, I’d have to pay taxes on it?
I’m assuming you’re looking at an in-service withdrawal from your 401(k), and then rolling it over as a rollover IRA into this annuity?
Is that what you’re plan is?
Is that what you’re thinking about it, is that what you were told you could do?
Yes.
Okay. Well, you had asked, Bob, I would love to take a look at what has been presented to you and put into plain English all the factors of it. So if you’d like to take advantage of that I’d be happy to do it for you. But your first question is what do you think? And neither of us are a fan of this move.
Yes, indeed. It’s <Inaudible> Saturday morning with the Certified Financial Group, Orlando’s oldest and largest independent firm of certified financial planning professionals. Again, the Certified Financial Group is here and you could talk to Nancy Hecgt or Joe Bert. The number is 844-220-0965. Let’s get right to work and this is Alex — wait a minute. Didn’t you have something you wanted to clear up with Bob?
Well, I mean one Well, one of the points from talking to <Inaudible> that I learned is that he may or may not have regularly re-balanced or re-allocated his 401(k), and we see that this happens a lot. People pick their initial investments and they never re-allocate or re-balance the mutual funds. And this is part of our practice. We do manage people’s 401(k), 403(b)s while they’re still working, but it’s important to look at re-balancing your portfolio.
Remind me to ask you about that. Managing my 401(k).
Okay.
Let’s talk to Alex on his cell phone. Good morning, sir.
Good morning. How are you?
We’re great, how about yourself?
Great, thank you.
Awesome, awesome. I’m very excited to listen to the information you’re providing. I have a quick question. I’m considering a Roth, and I have a 401(k) currently. I am 51. And I’m wondering, should I freeze my 401(k) and open up a Roth, or can I roll over my 401 into a new Roth? What is the smartest move?
The answer is no and no, in my opinion.
Okay, okay.
As we had discussed with the previous two callers, everything that you’re contributing to your 401(k) is full, un-taxed dollars that you’re saving. There have not been rule changes for 401(k)s for IRAs for a long time. There’s potentially going to be some rule changes for the Roth. If you had wanted to move money from your 401(k) to a Roth, you would have to rollover from the 401(k) to an IRA, and who knows if that’s allowed while you’re still working. And then you would have to do the move from the IRA to the Roth, and you have to be prepared to pay taxes on 100% of whatever you’re moving into the Roth. You’re looking at saving whole pre-tax dollars or converting them into taxable dollars for the hope that the rules associated with a Roth and the tax-free accumulation and not having to take required minimum distributions will remain through your lifetime.
Do yourself a favor. You have access to the Internet, I presume?
Absolutely, yes.
Google Roth: A Wolf in Sheep’s Clothing. That’s Roth: A Wolf in Sheep’s Clothing. That’s an article I wrote for Kiplinger.
And he’s saying wolf.
Woof, woof.
Wolf, Wolf in Sheep’s Clothing. And it’ll kind of give you some insight into what Nancy’s saying.
Sure. Thank you very much. I do appreciate that.
Thank you for the call.
And have a wonderful day, Alex.
Thanks Alex.
Alright, let’s talk to Jack in Osceola County. Jack, you’re on WDBO.
Good morning.
Good morning, Jack.
Good morning.
Hey, it’s very wonderful to hear you guys and I was very impressed with all of the qualifications that are necessary to do your job right.
Well thank you.
What can we do for you, Jack?
Well, I’m a 67-year-old man. I have two pensions and Social Security. My concern is that I live with a woman whom I call my wife. We were married in the past and we never bothered to get remarried but have been living together for years and I want to ensure her financial future. My concern is whether we should get married, if that’s the best method of passing along anything that I do have, or whether avoiding that is — there’s still a way to pass everything along. We are nine and a half years apart and I’m at 67 years old.
So, since you legally separated, has she gotten remarried?
No, she never remarried. We are —
Okay, that’s great. So she could pull off of your Social Security as a beneficiary. When you pass on, she will get 100% of what you’re receiving in Social Security right now. And as long as it was a long-term marriage, she is retired to a portion of your Social Security. Did she work herself? Is she entitled to Social Security?
Her Social Security would be very minimal. She hasn’t done an awful lot of work and she hasn’t been well.
Okay. So —
How about your pensions? How are those set up?
No, those are only for me. They would end. But my concern — and I know about the Social Security. My concern is that we do own a home. I own about 20% of it. It’s a $300,000 home. And I do have maybe 15,000 or 20,000 in a tax-deferred annuity. So I want to make sure that these things pass along to her without probate, for example, and I’m also worried about all the stories I heard about how one partner can be drained by the ill health of the other.
Well, that’s another concern. I was going to ask — I want to ask, Jack, what’s the state of your health?
I’m fairly healthy. No guarantees in life, of course, and —
One thing you might want to look at is maybe a 20, 25-year term policy to assure that there’d be some money for your wife, ex-wife, partner, when you pass on.
I have several life insurance policies. There’s a good amount of money that would come to her.
Let’s focus in on that.
You say a good amount. What kind of insurance and what’s the amount?
From my former employer, I believe the amount is 70,000 at this time. I believe it goes down when I get to 70 years of age, but it’s still considerable, and I have a separate policy that I have been paying for for quite a number of years. I don’t recall the amount. Together, they’re probably — when I get to be around 70, probably around $50,000 or $60,000.
Jack, I’m going to be blunt with you. Your spouse or girlfriend or whatever we want to call her is in financial trouble. You don’t have nearly enough assets to protect her, particularly because of the age difference. When you pass on, she is going to be in deep stuff. The amount that you described to us is woefully less than what she needs. And what I would suggest you do is that you meet with a certified financial planner, either us or somebody in town and have a detailed analysis of what needs to be done now, so she’s protected. If your concern is to have her protected, we’re in trouble.
And are there assets beyond the pensions and the Social Security? Did you accumulate money in a 401(k), an IRA, something along those lines while you were working?
The only thing left in the 401(k) at this point is about 20,000. And the home <Inaudible> 20%, which estimates maybe around 50,000 to 60,000.
Alright. So, yeah.
With the age different, and women live longer than men anyway. We have a financial situation here. That’s the bad news. The good news is you’re aware of it. The key is to get it fixed. We can’t do it on the phone.
And 67 is not old. You probably have close to 30 years.
Well, that part I’m happy to hear about.
Yeah, that’s the good news. Well, 115 is something I heard about life expectancy this week.
115?
115 years of age.
There we go.
<Inaudible>.
If we can stay on and you can take my information and call me since I’m in the vehicle right now and can’t really take your number, I’d appreciate it.
Alright, you stand by and we’ll get to that in just a second. 9:45, it’s a quarter until 10:00 on WDBO. From the text board, I will be retiring through the Florida Retirement System under disability. Should I go ahead and exercise my right to Social Security or wait? I’m 52. Old law enforcement officer. What’s the good? What’s the bad of going into Social Security immediately upon receiving my disability from the Florida Retirement System?
Well, it’s a 25% cut for pulling under full retirement age, and that’s a permanent cut. I don’t know what Social Security disability would be for the person, but again, the rules are changing on that. The availability for that is changing because that part of the system ran dry in March of this year and is now being funded by the retirement part. A little bit too complicated of a question to answer on the air. Be happy to meet with him face to face, or her, whoever it may be, and give them some good concrete answers.
You can check that out by going online to the website, financialgroup.com. Financialgroup.com. E-mail nancy@financialgroup.com. Is that right?
Sure.
Okay. You should try it Zack <?>. It might work. Alex in Orange County. Good morning, Alex.
Good morning.
I have a question about whole life insurance.
Okay.
I know that’s an interesting subject. I am 26, so I’m starting to think about retirement early, which I hope is a good thing.
Yay for you, yes. Pat yourself on the back.
Well, I’m invested in my company matched 401(k). I have a separate Roth IRA. And I actually do own whole life, but I’ve been hearing a lot more negative than positive lately, and I wanted to get your thoughts on whether I should keep going or if I should pull out.
Why did you buy it?
I bought it because I was actually advised to by my father. He pulled out a policy on me when I was one, and it’s accumulated a nice cash value for a really low annual premium.
Whole life is pretty plain vanilla, not jazzy, not sexy. Also not expensive. I’m a fan of whole life because more dollars are going for the protection than for any kinds of bells and whistles. And if what you’re looking for is permanent protection, I have absolutely no problems with whole life.
I’ll take the other side of it. You’re too young for that policy. I would freeze it, keep the cash there as a cash reserve, get — are you married?
No, I’m not. I think I was oversold.
You don’t even need life insurance. Why do you need to have life insurance if you’re going to leave it to your cat? That makes no sense.
Yeah, because the mentality was <Inaudible> early when I had a low premium.
Sure, I understand. Frankly, I was told this stuff when I was in college, too. We all make those early mistakes. I would, when it comes time for insurance, I would look at buying term insurance for a 30-year timeframe. You look in your premium, and then you have 30 years to build your liquid estate, max out your contribution to your 401(k)s, you’re IRAs, whatever you can do. And don’t mix investing with life insurance. In my estimation, you get the worst of both worlds.
And you probably have, through your employer, at least one-time your salary as an employee benefit.
We’re coming up on time to get to Dave Wahl in the News Center. I appreciate your call there Alex, and we’ll take your phone call as well. Its 844-220-0965. When we come back, your bucket list for withdrawing funds during retirement — does it include a Lamborghini like mine?
No.
No?
Maybe. Potentially.
Well, we’d better talk. Stick around. You can join us at — maybe that’s a Ferrari I’m thinking of. 844-220-0965. Or text us at 212-32.
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It’s an Ask the Expert Saturday morning on WDBO. Dave Wahl is in the News Center. We’ll get back to him in about five minutes with a more in-depth look at things going on, including a look at campaign news. Here’s a question. My husband is 12 years older than me. Should he wait until 70 to start taking Social Security?
I happen to know this couple and they’re self-employed, so they’re paying both halves of Social Security. They know how much is really being put into there. But because they’re both working and they have the health and the business to make it a choice, my answer to them was yes. By waiting to age 70, he will get — because full retirement age for him was 66. He’s going to get three years of 8% credits added onto his Social Security. And when he passes away, she will get that nicer, higher benefit.
Here’s a text. Receiving $1,300 a month in Social Security. Have about 19,000 in savings total. I do not own a home. What’s the best way to derive some extra income?
I wonder how old the person.
61. Disability, Social Security.
Oh okay. Social Security — I would get, maybe, a part-time job.
How about rental homes, he says. Rental houses.
If the person can get the money to buy the rental houses at a reasonable price and has the means to be able to manage it themselves so they can benefit fully from a tax standpoint, potentially that could be good.
Yeah, I think the best thing that this person could do is probably get in touch with you for a complementary consultation.
Yeah, what they’re doing is grasping at straws.
Yeah, okay.
My bucket list for withdrawing funds during retirement — I would like that to include a Lamborghini. But tell I’m wrong there Nancy.
Well, maybe, maybe not. It depends. We’ve talked a lot about cash and setting aside cash. And that’s the first thing you need to do. Many people look at one to three years worth of fixed expenses as a <Inaudible> kind of account. So that would be the first area that you need to set aside for withdrawing funds for retirement. Secondly, you need to bump yourself up the risk ladder a little bit and think intermediate terms. Five years or less, maybe some bond funds, dividend paying stock funds. And so you have the dividends that are paid monthly and then paid out to you to supplement your income. And then third, you have to think long-term. When people think retirement, they forget to think about the 20 or 30 years that they’re going to live in retirement. So you need a portion of your assets to be able to grow with the equity market.
Joe, we mentioned earlier that the Certified Financial Group manages 401(k)s. How does that work?
We do that — our clients are coming to us, that they’d like help with designing their 401(k) because there’s so many choices and the fund changes that have gone on over time, and coordinate with that other stuff. The funds stay at your 401(k) plan. What you do is you give us the authority to manage that for you on your behalf. And we pick out the design and portfolio for you, designed for your specific needs and risk tolerance. The minimum account size is $100,000 that we do it for. And we’d be glad to talk to you about that. All you have to do is go to our website, that’s financialgroup.com. Financialgroup.com and make an appointment with one of the twelve CFPs in our firm.
Congratulations on receiving — what was that thing called again?
CFEX.
What does that mean, CFEX?
It’s Center for Fiduciary Excellence.
Center for Fiduciary Excellence.
And you’ve been rated in the top 100 in the country?
Only 6/10 of 1% of the advisory firms in the country have this designation, yeah, so we’re very proud of it.
We all <Inaudible>.
Boy, I wish I had some champagne.
It was an arduous process.
It is a big deal.
Why didn’t you tell me? I’d have brought in some champagne.
Well, next week.
Well, congratulations Joe and Nancy and everybody at the Certified Financial Group. If you want to find out more, go online to the website. What’s the website address there Nancy?
It’s financialgroup.com.
Okay. Stay tuned for Dave Wahl in the News Center.
Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Certified Advisory Corp is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
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