Be Proactive, Not Reactive When it Comes to Retirement

5.5.23: Audio automatically transcribed by Sonix

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

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on. And today, we are absolutely bringing the heat again. On today's show, we're going to talk about being proactive and not reactive. And we'll have some steps that you can take to help reach the retirement of your dreams. As always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today?

Producer:
I'm doing great, Mike. I'm looking forward to this one, you know, because you talk about being proactive rather than reactive. Boy, if you're reactive, that just means you're behind and that's never a good thing to do.

Mike Zaino:
I like to think of it in terms of medication. You know, if you react to medication, that has a negative connotation. But if you respond, all right, then that's a positive connotation. So we're going to teach people how to proactively, you know, get in front of things to not have to react to them.

Producer:
Yeah, exactly. Which is so, so great. And we got a lot of we always like to to talk about meat on the bone here and we've got the meat on the bone segment coming up but got a lot of meat to chew on throughout the show as well. Wanted to also mention to everybody who is listening today that we thank you so, so much for tuning in, whether you are listening to us on the radio, on or if you are tuning in on the podcast, you know, if you're downloading, if you've subscribed, if you've commented on the podcast, if you have left us some feedback there. We love that and thank you. Thank you. Thank you. No matter where you are, you can also get all the episodes of the show wherever you subscribe to podcasts or by going to the website. MoneyMatterswithMike.com that is MoneyMatterswithMike.com and of course you can find us on Facebook you can find us on YouTube either one of those you just search for money matters with Mike I mean bottom line Mike is that people if they can't find us, there's no excuse. They're not.

Mike Zaino:
Looking right. In fact, this this past week we had a record week of engagement on Facebook. I really enjoyed going back and forth with with different folks who reached out and made comments on the different posts that we had. So that was fun. Keep them up. Keep them coming.

Producer:
That's right. We love, love, love it. So, yeah, keep those comments coming. And of course, Mike will get back to you. And here's the thing, too. You know, we'll talk about this as we go along. But Mike offers free consultations for anybody who's having any sort of financial questions that they're dealing with or, you know, some planning for the future and just have some things that they need sorted out. Mike will do a free consultation for you. We'll have more on that coming up later on in the show. And you can also reach him to do that via the phone number 704 5601573. That's 704 560 1573. But here's the thing. You call him if it goes to voicemail, which is a rare thing, unless you call him in the middle of the night. And that kind of will probably be what it is. But he will call you back. This is just the kind of guy he is. He's not going to leave you hanging. All right. So there's that. All right. Well, let's continue with the show and kind of get into the meat of it here. Mike, you know, we've got coming up a little bit later on, we're going to at the at the end of the show, I'm going to have one of kind of a little preview of this, our 23 retirement cost cutters for 2023. We've actually got that as a free resource that we can send to people. If you go to MoneyMatterswithMike.com and you're listening to the show today request this free report on 23 cost cutters for 2023 just filled with great ideas for hanging on to more of your hard earned money. And boy is that important these days. Mike with inflation running rampant.

Mike Zaino:
More important than ever, and given the fact that we're already in May, almost mid-May already and the year is flying by, they say it does that every year that we get older. And, you know, I can speak from experience in my only 52 years of life for sure.

Producer:
Yes, it does do that. It goes faster and faster. And boy, that's not fun when when you look at it and realize what the years just seem to be getting shorter and they're not. We're just getting older. That's that's kind of how life goes. But speaking of all that meat on the bone we have here on the show today, Mike. We've got our Quote of the week coming up in a moment. We're also going to talk kind of spend the bulk of the show talking about some bad money habits that could impact your retirement. We talk a lot about establishing good habits. Well, now we're going to talk today about things to avoid doing, some things to watch out for. We also have a little segment on how to be proactive, of course, rather than reactive in your planning for your retirement and even in retirement as well. So that's a great thing. But first, let's get things started off here with our Quote of the Week.

Producer:
And now wholesome financial wisdom. It's time for the quote of the week.

Producer:
And our words of wisdom this time around might come from Stephen Covey, who's an American author or was an American author. And you might remember this name if you say, Oh, that sounds a little bit familiar. He actually wrote The Seven Habits of Highly Effective People. So, yeah, the guy knew what he was talking about when he came when it came to, you know, doling out advice here. And these words of wisdom are, quote, I am not a product of my circumstances. I am a product of my decisions. Boy, love that one.

Mike Zaino:
That one's really, really good. Matt Choices, right? The choices we make have consequences and repercussions.

Producer:
Hungry for something to chew on. Here's some meat on the bone.

Mike Zaino:
Being a product of your financial decisions means that the financial outcomes that you experience in your life are a direct result of the choices that you've made with your money. Okay. In other words, the financial situation that you find yourself in today is largely a result of those decisions that you've made with regard to money in the past. For an example, okay, if you have a lot of debt, it is likely because you've made the choice in the past to spend more money than you earn, whether that's taking out loans or using credit cards that have high interest rates or just not prioritizing paying off any of your debts. Now, on the other hand, if you have a healthy savings account, it's likely because you've made the choices to live below your means to save a portion of your income and to make wise investment decisions. It is important, Matt and folks out there listening to understand that financial decisions have consequences and those consequences can impact your life in several different ways. All right. If you consistently spend more than you earn and you accumulate debt, you might find yourself struggling to make ends meet. And that is just going to cause you to experience stress and anxiety over your financial situation. And it's going to limit your ability to achieve your long term financial goals, whether that's buying a house or saving for retirement. Because we talk a lot about that, you know, on this show. Okay. On the other hand, if you make wise financial decisions and you live within your means, you're going to experience greater financial stability, greater peace of mind and the ability to actually achieve those financial goals and dreams. So ultimately, being a product of your financial decisions means that you have the power to shape your financial future through the choices that you make with money, and by making wise choices, prioritizing financial responsibility and actually planning for the future, you can achieve much greater financial success and security.

Producer:
Boy, and that goes hand in hand with the things that we're talking about on the show today being proactive rather than reactive. And yeah, I mean, you know, I'm somebody who I have I've been there in the past where I have had to pay the price for my literally for my financial decisions that that I had made. And and, you know, it all came down to just my priorities not being in line with with where they needed to be and being too focused on the here and now, like wanting wanting something here and now and not paying future self any attention and and planning for the future. Yeah.

Mike Zaino:
And let's face it, you know, when we're in our 20s, when we're in our 30s and we're just starting out in life and we're starting out in family life, if that's what you have chosen to do and you have children and you're just trying to make ends meet and life kind of gets in the way, you can still actually, even during that time, make wise financial decisions. And that's what we're going to talk about both sides of today.

Producer:
Yeah, absolutely right. And yeah, it's one of the, you know, big segments of the show today, as I said, as we started out, is these bad money habits that could ruin your retirement. We've got several of them here to go through because usually, as I said when I set it up here, Mike, you know, we usually highlight a lot of productive ways, healthy ways to use your money to, you know, different things to do to protect and grow your money. Well, now we're going to shine this spotlight on some habits to avoid, some things to watch out for because, you know, developing really any one of these could really put your future and. In your retirement at serious risk here. So so let's go through this list. Number one, in the bad money habits that could ruin your retirement. Living paycheck to paycheck. And yeah, that's not a good place to be in.

Mike Zaino:
It is not. And I'm surprised when I sit down with folks who actually have good paying jobs. Right. Why these people are living paycheck to paycheck. And did you know that as of January of this year, at least 60% of the United States adults are actually living paycheck to paycheck. And why is that? Well, they're spending every dollar they make and sometimes beyond every dollar that they make. And we recognize that times are tight, Right. Especially now. But you have to be very, very careful that you don't make a habit of living beyond your means and that the fact that you're always waiting for that next paycheck so that as soon as it hits, it's gone. All right. You want to be a little bit more proactive and instead, maybe if you are living paycheck to paycheck, look for ways that you can cut. Look for ways that you can earn more money. If you haven't asked for a raise. That would be my first suggestion.

Producer:
Yeah. Mean because that's one of those things that people kind of get afraid to do. And I know that like, you know, anytime I've ever either A done that or B gone in for like a job interview or whatever, I'm not the best at like talking up myself, right? And so it's like it can be an awkward kind of conversation. But, but what I've learned over the years is you don't know unless you ask and people are going to think any less of you If you ask, they're just, you know, it's going to be yes or no. And if they say no, then you're no worse off than you are now.

Mike Zaino:
Exactly. I mean, like the worst thing that can happen is they tell you, no, it's not like they're going to fire you for asking for a raise. At least I hope that you don't work for an employer that would fire you for, you know, just saying, hey, look at me, I'm doing pretty well. I've brought this, that and the other to the company. And I feel that that justifies, even if it's a modest raise. What do you think? You know, it's all in the way you frame things. Right. And your delivery of such. If you go in and demand a raise, then they may tell you to go jump in a lake.

Producer:
This is very true. Go walk into the nearest highway, you know, like that kind of thing. Yeah. No, it's it's true. And if you do work for an employer like that, who would fire you just for asking for a raise? Then you probably need to find a new employer anyway. Amen. Plenty out there with the help wanted sign hanging right now. Um, number two on this list of these bad money habits, Mike is carrying credit card debt month to month. We talked about it several times now on the show, but I think that Albert Einstein was the one who said this, that that, you know, compounding interest is the eighth wonder of the world. And really, it's true. It can work for you or against you. And if you carry credit card debt month to month, it is definitely working against you.

Mike Zaino:
So here here's the problem right? Americans love instant gratification. And the you know, when when credit cards were invented. Right. It gave them an ability to buy things that they could not afford. Okay. If you can't afford to pay cash, what do you do? You typically will put it on credit in hopes that your paychecks will come in and then you can satisfy the debt that you now own. But credit cards generally have very high interest rates, and those APR's are typically between 20% and 30%. And in addition to paying the high interest and the fees, if you carry a balance from month to month, more than, say, 30%, that can have a very negative impact on your credit score, which, believe it or not, could prevent you from borrowing money and receiving favorable rates when necessary. If you need to go out and purchase a vehicle if you need to or want to buy a house, or if you want to invest in your own business. And credit card debt is a major source of financial stress in the United States. And as we just mentioned, living paycheck to paycheck is no way to live. So if you carry credit card debt. Work on paying those off as soon as possible. Start with the highest interest debt. Okay. And then work your way down to being debt free. A lot of lot of folks have arguments over, well, should I pay the one off with my lowest balance? I'm always going to tell you to pay the one that has the highest interest rate off first, because if you don't, all you're doing is compounding your debt overall over time.

Producer:
Yeah, it's just interest on top of interest, on top of interest. And yeah, if you pay off the one with that highest interest rate, that's going to have the biggest impact. Most quickly on your finances. So absolutely great.

Mike Zaino:
And Matt, once you get that one paid off, take what you were paying that one towards that one and then apply it toward what you're already planning on paying to the card with the next highest interest rate so that you can multiply the money that you're putting toward paying off your debt and get it paid off that much faster. That, I believe, is called the snowball effect. And I don't know who started it. It might have been Dave Ramsey.

Producer:
Yeah. Or at least popularized it if he didn't start it, because I know I've have heard him talk about that in the past. And yeah, it's a great, a great way to do it because then before you know it, you know, you could pay off those high interest debts. Well, as we continue now with this list, Mike, of these bad habits, these bad money habits to avoid here, number three, having no emergency fund, I know this is one of those things. It's it's right at the top of the list of things that you should have is an emergency fund. So not having it that's on the list to avoid.

Mike Zaino:
Is definitely and we talk about this one Matt a lot on the show because it is that important and different experts are going to have different opinions on how much that you should have. You know, some will say you need a year to two years. Some are going to say 3 to 6 months. I like to go in the middle and say, hey, you know, between six months and a year of what your monthly, you know, expenses are. If you have that just sitting in an account that you don't use as operating capital, in other words, you're not paying bills out of this account. It is truly an emergency fund, especially with the interest rates that banks are offering right now coming up above 1%. It's actually not a bad place to stick your money for, you know, in case of an emergency. So what kind of emergencies? Right. Well, if you have a water heater that breaks, if if your Hvac, we're about to come into the dog days of summer here pretty soon in the southeastern United States where it's going to get hot. Okay. Well, if you're if your Hvac craps out on you, that's a pretty expensive thing to have to come up with. And so and a lack of emergency savings can lead to long term financial problems. And we were looking at a study that the conducted by the Federal Reserve, 40% of Americans said that they would have difficulty covering an unexpected expense of only $400, and 12% said that they would actually have to borrow money or sell something in order to cover that expense. So please do your best not to borrow from your retirement savings to pay for emergencies that is set aside for retirement. We recommend, again having at least six months of expenses in a liquid emergency fund that can be used to quickly cover any unexpected costs. And if you do end up using it, you need to replenish that emergency fund as soon as it's been depleted, as soon as you're able.

Producer:
Number four on the list of these bad money habits to avoid that really could wreck your retirement planning is not knowing where you spend your money. I mean, this is really it should be like, you know, finances 101 here. But it's important. And a lot of people don't don't know sometimes where every penny is going.

Mike Zaino:
Yeah. When I sit down again with folks and I'm like, all right, you make X, whatever that X is and you spend Y and x minus Y does not equal Z what you have left in your accounts. Like where did the money go? And they each look at each other and they're like, I don't know, where do you think it went? I don't know. Where do you think it went? Well, we find that way too many people don't have clear financial goals and they have no formal plan in place. And so at a minimum, we like people to have a budget of their monthly needs as well as their monthly wants so that they can effectively tell every dollar exactly where to go instead of wondering where their dollars went. Okay. So be on the lookout for those recurring charges that come up every single month, whether it's a monthly subscription, like a Spotify type account or a Netflix type account or a service, you know, like your electric bill or your water bill. Review your last few months of your both your bank statements as well as your credit card expenses and verify that you just aren't taking on any unnecessary costs. Okay. Because part of having a budget is having a plan for any extra money that you do happen to bring in. For an example, if you receive a bonus from work and a lot of you are laughing right now, even that thought of receiving a bonus, but let's just say you get one.

Mike Zaino:
It can be real easy to spend that money with. No. Consideration for your larger goals. We're just coming out of April, which is tax time for a lot of Americans. And so, you know, when you get that tax refund, you think, oh, look at all this money I got. Well, really, you just got your money back, right? You didn't plan effectively enough to not get a whole bunch back. So let's just say you got a bunch of money. A better idea might be to have a plan for that extra income. For an example, maybe you take 25% of whatever you get and you stick it right into retirement savings. I know that sounds awesome, especially if you're in your 20s or 30s, right? But trust me, once you hit your 40s, you'll start wishing you had started in your 20s or 30s. Okay, take 25% and do something fun like you put it toward a family vacation fund, something that rewards you for for, you know, getting and working as hard as as you've done and then maybe take the remaining 50% and throw it toward paying down your mortgage just as an example. Okay. So just having that plan for the extra money once again is paramount. If you're able to experience either a bonus or a tax refund as time goes on.

Producer:
Yeah. And getting those things, you know, it seems like, boy, with me, I know that if I have a lump sum of money in my pocket, I've just always human nature, I guess, sort of been, oh, it's burning a hole in my pocket. I got to spend it on something. I got to do something with it. But. But put it to work for you. And then that will be a much better situation for you going forward. Number five on the list of bad money habits is really people not wanting more from their careers. We sort of alluded to this a little bit earlier when talking about raises, asking for a raise and all of that. But yeah, I mean, there are people people kind of get complacent sometimes and don't want more from their careers.

Mike Zaino:
Yeah, sometimes, Matt I think people get lazy, all right? They enjoy comfort. The comfortable, the well-worn, well known, and they're afraid maybe to go outside of that comfort zone. Well, you know, improving your income is the best thing that you can do to increase your net worth and prepare for a successful retirement. So seek out those opportunities, whatever they may be, to help you advance in your profession. If you can't improve your income at work, maybe you can improve your schedule, which will free up time to maybe start something else. So for an example, if a company offers you the ability instead of working eight hour days, five days a week to maybe work a four hour workweek for the same pay, you might want to consider that because that's going to free up an extra day that you can either try to do a side hustle or generate some other type of income. As they say, time is money and having a flexible employment situation can be just as valuable as the raise. Okay. And it can give you that opportunity to earn money from a side gig or reward yourself with travel.

Producer:
Yeah, you got to. If every weekend is a three day weekend, boy, that's that does free up some time at the very least. And you know, a lot of studies that I've seen, at least in the past, have shown that with those four day work weeks, people can actually be even more productive than over the five day workweek. And it sort of stands to reason because, you know, you don't get the weeks, not as long you're not as tired by the end of the week. You know, you're not as worn out so long.

Mike Zaino:
Longer time to charge those batteries.

Producer:
Yeah, exactly. Which does need to happen. We got to, you know, have time for ourselves there. Number six on the list of bad money habits, not knowing how to minimize taxes. Boy, you know, people got to know how to do this and it's not. And disclaimer off the top, we're not trying to say get out of paying taxes because we want to pay what we owe. We just don't want to, you know, leave a tip for Uncle Sam. We want we want to pay him what we owe him.

Mike Zaino:
Right. We all know that your uncle is greedy, right? And he likes to collect the taxes in any form or fashion or shape that he can. And so, so many people just check the box, right? They do an E file and they do that year after year after year and they do it on their own. Okay. You might want to consider working with a tax professional who can consider any unique circumstances that you have and be able to answer questions to help save on those taxes. And a tax professional can also help you legally claim all those available tax deductions and credits that you might not even be aware of If you're just kind of doing your 1040 EZ every single year, trust the experts when it comes to something as important as your money. And then another tip. Would be to utilize one or both of the only two types of tax free investments. Number one being the Roth IRA. And then number two, believe it or not, being life insurance.

Producer:
Yeah. Zero taxes there on those two types of investments. And if you want more, of course, information about those or any other questions that you might have about your finances or planning for retirement, give Mike a call. 704 5601573704560 1573 Or you can go to the website MoneyMatterswithMike.com and request a free consultation. Yeah that's right I said free and you know they say nothing in life is free. Well this actually is so.

Mike Zaino:
There's no hook on this one folks.

Producer:
Right. The old adage does not ring true when we're talking about this particular scenario.

Mike Zaino:
Not only not only is it free, there is no sales pitch, Right? I'm not trying to sell you anything. If it makes sense for you to work with me, you're going to work with me. If it makes sense for me to work with you, we're going to work together. If either of us don't get a comfortable feeling, we're going to shake hands and part as friends.

Producer:
Yeah, and that's the way that it is. That's the way that it should be, right? So go to MoneyMatterswithMike.com and request that consultation today absolutely free as we say well number seven on this list Mike of those bad money habits is that you know people sometimes are unwilling to take normal risks with their money. Now what do we mean there by saying normal risks with money? Well, you.

Mike Zaino:
Know, a lot of people don't even know what kind of appetite for risk or risk tolerance that they have. You can actually go on to MoneyMatterswithMike.com and take a risk profile questionnaire and learn what type of risky you know that you are willing to accept. Okay so what I mean by normal risks. Well some people are just extremely untrusting of the stock market. Right. Or even some of the other safer kinds of investing. Well, taking risk is part of investing. But if you have a very low tolerance for risk, we can help put together a plan with you and for you that prioritizes protecting your assets while at the same time it gives you opportunities to grow your savings with market like returns. Believe it or not, those actually exist.

Producer:
They do and co-exists with that safety of the of the principal and the growth there on that principle. But also giving you market like returns. It does exist. And folks, I'm telling you, it's not like it's a unicorn that you're never going to see because they are out there. I didn't know about them going back, you know, before I started working here and on the show with Mike. But that's one of the things that you learn when you're when you're around Mike Zaino. He'll let you know what's going on in the real world of money. And that does does exist also. So number eight here on the list of bad money habits waiting too long to invest in your retirement. That was the thing that you said earlier, Mike. You know, if you're in your 20s and 30s, it doesn't seem like it's a priority. It's maybe not even on your mind. But then now I'm in my 40s and yes, it is something that I wish I had made a priority earlier on in life. Right.

Mike Zaino:
Well, Matt, I'm in my 50s and if I could go back to my 25 year old, 26 year old self right now, I'd slap me right across the head and tell me to wake up. Okay. Because I'm telling you, we talked about Einstein calling compound interest, the eighth wonder of the world. Well, you can take advantage of the benefits that compound interest have in working in your favor by developing great savings habits as early as possible. And the best thing is, is you don't need a lot of money to get started. Okay. I run an illustration before and ran this scenario where we have an investor who starts at 25 and invests $1,000 a year. All right. That's $83 a month. That's really not a lot of money. Does that for ten years and then never puts another penny in. And then the other investor, investor B, starts putting in $1,000 a year at 35 and does it all the way for 30 years until age 65. Guess what? Investor B, the guy who invests for three times the amount of time and puts in three times the amount of money does not catch investor A by the time they reach 65. And that is because of the power of compound interest. So the good news is, is that you can begin investing in your own IRA or Roth IRA today by setting up. Of automatic monthly contributions.

Producer:
Yeah. Set it and forget it. You know, let's we talk about that quite a lot. And just making it easy, making it, you know, automatic is a big thing. And that's the one of the, I might say the only, but one of the only reasons that I've ever had any money in any type of account is because I haven't had to go and make a point to do it. I just do it off the top and it's it's taken care of, you know, it's never even comes on my radar.

Mike Zaino:
Right back when we actually carried cash, it was very difficult to reach into your wallet and to pull money out and then go put it into the bank. Right. But if it just went to the bank straight from your paycheck and you never saw it, that made things much, much easier. And guess what? When you went to look at your account, there was money there. Okay. And so one of the things that I always like to kind of tell people is not to just set it and forget it. It's great to set it, but you want to eventually review this stuff because what happens in life, right, you may get raises over time. You may get cost of living adjustments over time, and you might find that inflation is getting to the point where what you used to be saving is not enough to counteract the effects of inflation and let you live at a at a level that you had expected. So you need to review it periodically and make the adjustments necessary to the amount that you save in order to get the desired result.

Producer:
It's set it. And remember, it is the, I guess, the thing. So there we go. Number nine on our list here, Mike, of these bad money habits that you want to avoid is the general belief that money is bad. You know, some people just don't even like talking about it. It can be an uncomfortable thing. Like like I was saying earlier when we were talking about, you know, going to your employer asking for a raise, it can be an uncomfortable conversation no matter the context, really, because money just tends to make people uncomfortable sometimes.

Mike Zaino:
Yeah. And I do think that that is a product of our country's serious lack of financial education and literacy. Right? If more people understood how money works, then more people would be able to talk about it a little bit more freely. But for many families and many people talking about money, it's almost a taboo subject not to be discussed. And, you know, when managed properly, money can provide stability and security for you and for your family. It can also allow you to achieve all of those wants in life, such as buying that vacation home or taking the family on a nice vacation and staying in your vacation home. Right. Money can also be a powerful tool for change, so you can consider donating to your church or any other charity or organization or foundation that you believe in and that you value and that you trust.

Producer:
Yeah, you know, it can. It's one of those things kind of like anything else that can be used or abused and or can can abuse you if you misuse it. So, you know, you want to make sure that you have a good relationship with money and avoiding it, avoiding all talk of it, and just maybe pretending like it's not even a thing is not a plan. And that's not a good way to go about it.

Mike Zaino:
It's not, in fact, your statement there about some of the people abusing or brought me back to a to a line from When Doves Cry by Prince.

Producer:
That's that's.

Producer:
True. I was just I was taking a sip of my water there and I almost spit it out. I'm glad that I didn't because there's a lot of electronic equipment around me right now that would not have been a good thing. All right. So the general belief that money is bad, number nine on the list surrounding it out here, number ten, bad money habit to avoid not saving enough money into an investment account. And this is. Yeah, I mean, you know, you want to maximize that so that you can especially if you've started late like you were just talking about. I mean, you know, time is is of the essence and with the, you know, compounding interest thing. I love that illustration that you talked about the earlier saver who only saves for a third of the time that the other person saves for they get the benefit of compounding interest. So the earlier that you start, the better. But, you know, you've got to make sure that not only are you starting early enough that you're maximizing the amount that you can contribute.

Mike Zaino:
And I like the way that we that we titled this last point, right? Not saving enough into an investment account. See, a lot of folks don't understand that there is a difference between saving and investing. Right. Saving. That's what you put in your emergency fund, something that is going to be used in case of emergency saving is something that you put in a savings account to help you reward yourself for short or mid term goals being reached, but investing. Sting is what you do for the long haul. Investing is what you do for your retirement. So yes, you want to put money into savings, but you also and more importantly, due to the effect of compound interest, want to put money into an investment account. So think about an IRA, an individual retirement agreement, technically. But a lot of folks call them individual retirement accounts, right? The contribution limits for 2023, if you are 49 or younger, you can put $6,500 into those accounts. And if you are 50 or older, you get an extra $1,000. You can do $7,500 into an IRA. So before you buy that next big want on your on your list of wants, you might consider paying yourself first and investing into your future into an IRA. So if your employer offers you a 401. K or a 403 B, or if you're a federal employee, a thrift savings plan or any other employer sponsored plan at least contribute the maximum that you possibly can to take advantage of their match, whether that's 2%, 5%, I've seen as high as 12% from certain employers. So make sure that you're saving in those employer sponsored plans to take advantage of the match. And then beyond that, consider opening up an IRA.

Producer:
Yeah, and who would say no to free money? I mean, that's just kind of a no brainer to to me that, you know, your company is going to throw in some extra money there and they're not going to, you know, charge you a penny for it. Yeah, throw it. Throw it my.

Producer:
Way. Matt You'd.

Mike Zaino:
Be surprised. I'm like, I look at people and I'm like, All right, so your employer offers a, you know, a 401. K, and I'm looking at their paperwork and I'm like, So do they match? And the person says, Yeah, they're doing 5%. And I look at their contribution, No, they're nowhere near the 5%. And I'm like, You don't like free money, do you? And they kind of look at me like I have a third eyeball. They're like, Yeah, like free money. I'm like, well, you're, you're, you're investing habits into your 401. K are telling me an entirely different story. And they're like, Well, what do you mean? And I'm like, They're willing to match you up to 5%. Let me calculate this out. You're only doing 3%. You're leaving 2% that you would put in plus their 2%, 4% on the table. And they're like, oh, and exactly, oh, let's make a plan to take advantage of what they're willing to give you for free. I say it all the time. Free is for me, especially Matt, when you're talking about money.

Producer:
Yeah, that's absolutely right. Free is right in my budget. And speaking of things that are free, that full retirement plan consultation is absolutely free. And we offer it here to listeners of the show. And by we, I mean Mike Zaino offers it to listeners of the show. Absolutely for free and talk about that Mike and what that sort of the process is like Because because, you know, I mean, when we say free, I mean there's no cost. There's also no obligation either to to continue here. It really is free.

Mike Zaino:
Yeah. Bottom line is, is you're only going to work with a with me if it's best for you. Okay. So so when I do the first phone call we're going to have is more of a discovery call. I'm going to ask you a little bit about you. I'm going to kind of figure out where you are in life and what you have in place, if anything, at that time. I'll tell you a little bit about me and my credentials and how I've helped literally thousands upon thousands upon thousands of folks retire successfully. And then we'll get together and I'll actually try to discover how much you're paying in unnecessary fees and help you cut costs out of your savings plans, whether it's an IRA or 401, K or any other type of employer sponsored plans, we can help you with Social Security maximization planning. We can help you if you're of age with Medicare planning. Remember, guys, it is your money. And if it matters to you, it matters to me. So I'm going to compare what you where you currently are to what's possible if we work together.

Producer:
And that is all yours by going to MoneyMatterswithMike.com absolutely free consultation there you just go to money matters with mic.com all one word or you can give a call to Mike Zaino at (704) 560-1573. That's 704560 1573. Well, you know, we talk a lot on we have talked a lot, I should say, on the show today about things to avoid, things not to do. Let's talk about some things to do for, you know, planning for retirement and and really being proactive rather than reactive about your retirement. The first one I know really hits home here as we start this segment. Mike, for a lot of people today, especially because just this past week we had another bank failure, First Republic Bank. And so yeah, talk about that. Why is it important now to not keep more than $250,000 in a single bank?

Mike Zaino:
Right. Well, I mean, you want to protect yourself and your family from all of that volatility inside the banking sector. We recommend keeping significantly less than the Federal Deposit Insurance Commission or FDIC, the limit that they have, which currently is $250,000. And as most banks offer very low interest rates on your deposit while inflation eats away at your spending power, if you've got money that you're not going to need for a little bit of time, we have way, way, way better options for that money itself.

Producer:
Oh yeah. And you may think, okay, well, my money's growing, but is it keeping pace with inflation? Well, chances are right now, no.

Mike Zaino:
The answer the answer is no. Matt, I had a lady that had $100,000 in a high yield savings account last year. And when we looked at our annual statement, she earned a whopping $0.23 on $100,000.

Producer:
A high yield.

Mike Zaino:
I giggled hard at that one.

Producer:
Oh, I love that. $0.23. I mean, that's just that is something it's not a lot, but it's something. And you can get a lot more. I know with a lot of these because I mean, there really are and we sort of alluded to this earlier on in the show, there are different vehicles out there that will allow you to do a lot of things. You can you can protect your principal. You can protect the growth on that principal. That growth can be market like you can get gains that are linked to a market index. But then when that market index goes down, you don't lose a penny. I mean, there's there are really a lot of different options for folks that I think many people don't know about these days because it products like, you know, annuities, for example, have gotten such a bad rap over the last couple of decades.

Mike Zaino:
Yeah, well, I mean, there are over 100 types of annuities, right? So when I hear people say I hate annuities, my first question is, you know, what do you know about them? Tell me more. Because when I hear I hate annuities, it's almost like me saying I hate food. Right? And I know that I need to eat in order to survive. So while I might not like mushrooms or while I might not like, you know, garbanzo beans, right. I love a good steak. I love potatoes. And that's why we talk a lot about the meat on the bone on our show.

Producer:
We need to have a segment with about the side dish, something with the potatoes. I don't know. We got to come up with a name for it. I guess it's a work in progress. We'll workshop it. We'll workshop it, definitely. Well, so this next one here to be more proactive rather than reactive is an important one, and it's the one that we talk about the most because it is important and that is establish a retirement income plan. Today, a lot of people have their sights set on some big number, which is always great to have a goal. We talk a lot about goal setting on the show, but it should be. I think that goal should be more about the income that you're going to have in retirement rather than some big lump sum.

Mike Zaino:
Yeah, so some people like that security blanket of knowing they have X in the bank or X in a retirement savings account and whatever that x is, if it makes you happy, guess what? It makes me happy as well. But the income that whatever your X is, is able to produce is ultimately the most important and critical aspect of your retirement plan. And so while, you know, the old school way of thinking was to take 40% of of your money and buy bonds for the future income, um, I think last year has just proven the fact that nobody should pay for an underperforming asset. And so you can consider replacing the bond portion of your portfolio with alternative income producing investments that do offer those market like gains without any of that market like risk. So those do exist. Give me a call and we'll discuss if they make sense for you.

Producer:
And 704 5601573 is that number 704 560 1573. Now, these next couple of items here, Mike, we sort of alluded to earlier, but I wanted to go a little bit more in depth here about taking advantage of the only two types of tax free investments. They are Roth IRAs and life insurance, as you said earlier. Delve into both of these for us, if you will.

Mike Zaino:
Right. So with a Roth IRA. Array. How it differs from a traditional IRA is that you're paying the tax on the contribution. So once that money goes in after tax, it grows tax free for the rest of its life. So you never have to pay any taxes as long as you've left that money in the account for five years. Once you pass that five year point, not only is the money that you put in tax free, but any of the money that it gains is also tax free. And so a lot of folks may say, well, I should have done that, and wouldn't it have been great had I done that? Well, the good news for you is that it is never too late, never too early and never too often to save for retirement. And so something that might make sense for you is what's doing what's called a Roth conversion, where you take some of that tax deferred money, go ahead and pay the taxes on it, and then convert it over to a Roth so that for the remainder of your life or until you need those funds, that money can grow in a tax free account. So that's the Roth IRA. And so you can also start the Roth IRA just, you know, if as long as your income is not too high, okay. That's why if your employer offers a Roth 401. K option, it is almost always best to pursue that first. But you can start up a Roth IRA and set up those automatic contributions. Kind of like, again, we alluded to earlier in the show so that you can forget it.

Mike Zaino:
Nope. So that you can remember it, set it and then remember it down the road. So that's number one. Number two is life insurance. And a lot of people don't understand that life insurance can offer not only a tax free death benefit in case you die too soon, but it's also a phenomenal tool to help build retirement savings and generate tax free income for your golden years. And so the way that works is that you have the ability to maximum fund a life insurance plan. And what that does is thanks to a Code 7702 that the IRS said is completely legal, You can take tax free loans against either the cash value or the death benefit later on. And many companies offer what is called a guaranteed lifetime income rider. So that means whatever you decide that you're going to take or whatever they calculate that you can take will be the same guaranteed for as long as you live. So not only do you get the tax free death benefit to protect you if you die too soon, but you also get the income to protect you if you outlive or have the potential to outlive your money. And then even beyond that, today's new school life insurance has living benefits that you can take advantage of. God forbid you're ever diagnosed with a chronic critical or terminal illness or even Alzheimer's, a cognitive impairment, right? Your income can either double or triple in those cases. So life insurance and Roth IRAs are phenomenal ways to be able to generate tax free income in retirement.

Producer:
Absolutely are. And with the life insurance part, it's not just the old death insurance anymore, which is what it used to be. And it was great and still serves its purpose. Having that death benefit that's paid off, you know, paid to your beneficiaries rather after you are gone. But there's so much more to it these days in different types of policies. I'm going to lump these next two together here, Mike, because they really do go hand in hand on the list one. And these are habits, folks, to help you be more proactive rather than reactive in your retirement. But it's to work with a legal expert and to have a plan in for when you or your spouse passes away. Both very important and both things that really do go hand in hand.

Mike Zaino:
Yeah, I think they they are super, super important, right? So having a will in place is just something that is smart business for your family. And you say, I don't have an estate, right? It's not like I need an estate plan. Well yeah, if you own anything that's in legal terms considered an estate. Okay. So having that will in place will keep your family from having to go to court for years, potentially while all of your final affairs are settled by the state. And oh, by the way, you have to pay the state if it goes to probate. And then I thought a staggering statistic was that 80% of widows actually changed their financial advisors once their spouse passes away because they never had the the built in relationships. So I think it's very, very important that by. Working with a financial professional, you can feel extremely confident that your retirement is not at risk should either you or your spouse pass away sooner than expected. And so oftentimes the spouse who was the do it yourself retirement planner, once that person passes away, that leaves the spouse with no clue.

Mike Zaino:
All right. And so many questions and then nobody to turn to. So be aware of that fact. If you're one of those, do it yourself retirement planners. Okay. And according to statistical data from the World Health Organization, globally, men have a lower life expectancy than women. And so this suggests that men are more likely to pass away before their female partners in marriage. Although it's important to note that life expectancy is just an estimate and it's influenced by many factors. The fact that men give up a little sooner may lead us to to want to set our spouses up for a little bit better and retirement a little bit less worry, stress and anxiety when it comes to the financial aspects. And so be prepared for what we have termed the widow's tax by meeting with us and reading our free report. And this information is free, totally free, if and only if you reach out to us today. Just for the folks that listen to this show, we're going to give you the report on the widow's tax.

Producer:
Yeah, it's got a lot of great information on exactly what we mean when we say the widow's tax. You know, it's all a lot of the stuff that you just talked about, Mike and more. You can go to Money matters with mic.com or call 704 5601573 to request a free copy of that report here as we continue on about ways to be proactive rather than reactive when it comes to your retirement, understand how your Social Security benefit is calculated and make a plan for when you're going to start receiving those benefits. Hugely important for folks to do it is.

Mike Zaino:
And a lot of folks out there don't understand how it's calculated, number one. So first off, they are going to take your 35 highest years of earnings, and that is what is used to determine your benefit once you've hit your quarter hour threshold to actually be able to qualify for Social Security in the first place. Right. So obviously, the more money that you're making, especially in theory, we're going to make more in our 30s than we did our 20s and our 40s than we did our 30s and so on and so forth. So that by the time you're pushing retirement you should have just ended those prime earning years. Make a plan for when you're going to start taking benefits. Yes, you can take them as soon as 62, but if you do that, you are giving the government a huge discount. Okay? You are saving them money and costing yourself money. Whereas if you just wait until your full retirement age, that is 100% of what you are due because you paid into Social Security for your entire life as a as a worker. Okay? And every year you delay, you're getting an 8% compound return, which adds up, folks. Okay. Here's another thing to understand. Also, make sure that you understand that as of 2021, the Social Security trustees, they projected that the programs trust fund reserves are going to be depleted by the year 2033. Well, we're in 2023. It was 2034. They've backed it up a year. We got another decade before Social Security is going to have some issues. So if Congress does not act to address the shortfall, Social Security beneficiaries could potentially face a reduction in their benefit. So we want again, we want our clients to have a solid income plan just in case Social Security cannot make payments as expected. And what I try to do is design plans where Social Security is just the the the frosting on top. Okay? You don't have to count on it or rely on it because you've got a plan that'll take care of itself. Whether or not Social Security is around in the form that it currently is.

Producer:
Yeah, a lot of people might say, Oh, well, why do I need to plan so much for my retirement? I'm going to have Social Security anyway and all this. Yeah, it's that's one of the reasons why is because of the trouble that the program potentially faces. And so you don't want to be relying only on that. And really, Mike, surprising to look down at the clock and see just a couple of minutes left. In the show. It's flying by here. But the last item on this list of things that will help you be proactive rather than reactive when it comes to your retirement. Determine your big budget items before you retire.

Mike Zaino:
Big budget items. What could those be? Well, some of them can be a second home. I see people that buy vacation homes all the time. I see people that go into buying a home, like as a primary residence in their 60s. And that kind of makes me scratch my head a little bit. But, you know, what about some other things? If you have plans to help pay for family weddings or maybe a grandchild's education, you want to plan for that well in advance. Okay. If you're somebody who is looking forward to traveling in retirement, we have a saying that your first ten years are your go go years, your next ten years are your slow go years, and then the final ten or however many you're going to have after that are pretty much your no go years. Well, you have to fund all of that travel, and most of that is most likely going to be done in your 60s. Right. And so you still want to be able to budget for those vacations that suit your needs and your desires and check off the boxes on your bucket list. So listen, if you're in the retirement red zone, meaning that you plan to retire in the next five years, or that you've just retired in the past five years, please give me a call so I can help strengthen your financial plan because you cannot afford to lose much during these years when you're in the retirement red zone, which means protection and growth is the key.

Producer:
Absolutely. And you can go once again to money matters with Mic.com or call 704 5601573 to find out more. Well, Mike, that's just going to just about do it for the show today. It has flown by. I appreciate all the insights. A lot of great stuff here on the show today. Plenty of meat on the bone for folks to chew on. Thank you. And we'll do it again next time.

Mike Zaino:
Awesome. Matt, I appreciate your contribution to the show. You do such an amazing job teeing me up for all the information so that we can educate the masses out there in listener land without our listeners, we don't have a show. So thank you guys for tuning in religiously each and every Saturday at 9:00. If you're listening in the local market to WRI or on podcast, wherever you listen to podcast. Thank you guys. Again, connect with us on the socials. Engage with us on on on Facebook. Give me a call, take advantage of the free reports and if you know anybody that can benefit from any of this information, please share my name. Please share my number. Please share the website. These things, folks are not secrets. Whatever you're doing for the rest of the weekend, do it to its fullest extent. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters with Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMatterswithMike.com or pick up the phone and call 704 560 1573 That's 704 5601573. Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. AmeriLife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis, with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

Producer:
When it comes to saving money this year, why not do it the old fashioned way? Clipping coupons? I'm Matt McClure with the Retirement.Radio Network Powered by AmeriLife. Coupons are still a great way to save money in the digital age with a lot less paper cuts. You can still find coupons and sales promotions in newspapers and magazines, but things have changed over the years. These days, there are a lot more opportunities to save money by searching online.

Jason Test:
The tools that are available now online make that really easy for shoppers to find the very best offer.

Producer:
That's Jason Test with the coupon website. Honey Speaking with NBC's Today show, the shift away from traditional paper coupons coupled with inflation does make it harder for some people to save. Take Kirsty Tureck, an extreme couponer, for example. She recently told the Today Show.

Kirsty Tureck:
I'm saving about 15% less than I was last year, but I'm also seeing probably 50% less sales and less moneymaker items.

Producer:
Still, she says, there are plenty of ways to save if you know where to look. Websites like RetailMeNot have been around for a while, but there are also newer apps dedicated to couponing, helping you keep the savings at your fingertips.

Kirsty Tureck:
Do not pay for toothpaste. Don't pay for shampoo and conditioner, laundry detergent, personal care items and household essentials. Always, always, always. Have a coupon.

Producer:
So do you know where to go to find coupons that could save you a pretty penny? It's a key question to consider, and it's one of the 23 retirement cost cutters for 2023 with the Retirement.Radio Network powered by AmeriLife. I'm Matt McClure.

Producer:
Call Mike today at (704) 560-1573 or visit MoneyMatterswithMike.com to get your free copy of 23 retirement cost cutters for 2023.

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