Eleven Ugly Truths that Could Ruin Your Retirement

7.14.23: Audio automatically transcribed by Sonix

7.14.23: 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 each and every week. And today we are absolutely bringing the heat again. On today's show, we're going to talk about 11 ugly truths that could unravel your retirement and offer tips on how you can prepare in advance so that you can live the retirement you've always dreamed of. 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 hope you are as well, sir.

Mike Zaino:
I am. It's been a very, very busy summer so far.

Producer:
Yes, I know the the phone, I'm sure, has been ringing off the hook. The email's been blowing up and all of that. And for for a lot of reasons, I know with people looking for ways to plan their retirement these days amidst some economic uncertainty and all the things that have been going on. So I'm sure things have been busy for you. And we'll have a pretty busy hour here on the show. I mean, we've got these 11 ugly truths that could unravel your retirement to talk about a lot of stuff to cover there. We'll also play a little right or wrong later on in the show, which is something I know that I enjoy, even though, you know, a lot of the time you get to tell me that I'm wrong about something and I get to hear the buzzer sound, but other than that, it's okay.

Mike Zaino:
It's okay to be wrong every once in a while, Right? That's how we learn.

Producer:
That's right. Absolutely. Absolutely. But you know what, folks? You will not be wrong if you subscribe to the podcast version of the show. You know, we would love to have you as a subscriber. We're on Apple Podcasts, iHeart, Spotify, Amazon, Audible, all the biggies there. Pretty much anywhere you want to find us, If you can't find us, you're not looking. All right. So. So look for us. Search for Money Matters With Mike anywhere you get podcasts, same deal on YouTube. Find our YouTube channel by searching for Money Matters With Mike, either on the app or online at YouTube.com. Facebook as well. I know, Mike, you always interact with folks on Facebook and that's so great to really, you know, have some some real time discussions with listeners and all that. I know that's something that you really enjoy.

Mike Zaino:
I do enjoy Facebook just because, you know, when somebody comments and and I can respond and we have some back and forth going, a lot of times it's educational and a lot of folks who are reading the Post can actually learn from other people's experiences. So if you have anything that you want to communicate with me about on on Facebook, I'd love to have you at Money Matters With Mike.

Producer:
Yeah. And you can actually, you know what? Do it the old fashioned way, too. Mike Zaino is one of the few people left in the world these days, I feel like, who actually answers his phone because everybody else is just kind of like me.

Mike Zaino:
They're men.

Producer:
They're texting, they're doing all the things except talking on the phone. But Mike Zaino will answer when you call him. It's like a miracle, you know.

Mike Zaino:
I promise you will not have to press one for English when you call. (704) 560-1573 Over my dead body.

Producer:
Press two to speak to a representative. You know, it's like the robot voice is not going to answer. It'll be Mike Zaino. And if you can call him, you will get his voice at 7045601573704560 1573. Go online to MoneyMattersWithMike.com as well and you can reach out for a free consultation also you know you can get in touch with them using any of those contact methods to receive our free report on bond replacement alternative investments for bonds that you likely have in your portfolio as well. There's been so much volatility and negativity, really mostly negativity in the bond market here over the past year or so. Mike, that's going to be a really important report for people to get their hands on.

Mike Zaino:
It will be because, I mean, last year bonds were down anywhere between 12 to 15%. And then you couple that with the fees that are inside of of the bond portion of your portfolio, why would you ever, ever pay for an underperforming asset when that's supposed to be the guaranteed income source for your retirement? Years. And so we have alternative options to replace those bonds that are guaranteed to never lose any value and pay you income for as long as you live, no matter how long you live. So, yeah, I just don't I don't get why, you know, people are still adhering to, you know, the way great grandpa used to do things.

Mike Zaino:
Well, if it worked for great grandpa, it works for me.

Producer:
Well, you know, not maybe. Not necessarily. You know, great Grandpa also used the use the bathroom out back in the outhouse, So there's that. But anyway, if you're want to get out of the outhouse and into the 21st century, reach out to Mike Zaino. MoneyMattersWithMike.com or call (704) 560-1573. All right. So in addition to the 11 ugly truths that could unravel your retirement. We're going to play right or wrong, as I mentioned, we're going to talk about that initial consultation that I mentioned a moment ago. And really what Mike will do during a financial checkup with you. We'll kind of go into detail about that and let you know what you can expect. We'll also dig into a cost cutter of the week, one of our 23 retirement cost cutters for 2023. I've got a new piece on that that we will play and discuss later on in the show and then also this week in history to round things out. But first, let's get things rolling 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 Vince Lombardi. Yeah, more than just a trophy, guys. Lombardi, considered by many to be the greatest coach in football history, recognized one of the greatest coaches and leaders in the history of all American sports, not just football. Most known as the head coach of the Green Bay Packers, won the first 2 or 3 Super Bowls, I think, with the Packers there and also won five total NFL championships in seven years. So. So, yeah, he's a very successful guy. And speaking of success, this is what Vince Lombardi had to say once, quote, The measure of who we are is what we do with what we have. Those are great, great words there.

Mike Zaino:
Those are great words. And I mean, as somebody who played football and I'm sure I'm talking to a lot of folks out there that played any sport out there, you understand and recognize that, you know, the people who and the teams who win championships, they're not always the the, you know, the best athletes or the best, you know, individuals, but it's the one that tend to gel together the best as a team and doing what they do with what they have. Well, when we apply that to financial preparation for retirement, we can break that down into several factors.

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

Mike Zaino:
Number one is taking responsibility. Okay. Coach Lombardi's quote emphasizes personal accountability and highlights the importance of taking ownership of one's financial situation. And in terms of retirement planning, that means acknowledging that the resources available are going to vary from person to person, but it's up to each individual to make the most of what they have and making the most of your current situation. You know, it also suggests that it's not the quantity of resources that defines us, but rather how we utilize them. All right. When it comes to retirement planning, again, that means making the most of your current income, your assets and your savings in order to create a solid financial foundation for the future. And that could involve budgeting. It could involve paying down and reducing your debt load. It can involve maximizing both your savings and your investment opportunities. And how do we do all that? Well, we set goals and we take action. Okay. Coach's quote again encourage individuals to set those goals and take action in order to achieve them. And when it comes to your money and to your retirement, this means establishing clear financial goals such as when you want to retire, the lifestyle that you see yourself living, and what kind of income is going to be necessary in order to, you know, sustain that lifestyle.

Mike Zaino:
Then taking proactive steps to work toward those goals, like regularly contributing to retirement accounts and increasing those accounts every time or the amount that you save, every time that you get a raise, maybe you explore different investment options and you definitely adjust financial habits to align with those long term objectives. And it also implies that it's not just about the initial resources that you have, but also our ability to adapt and make the most of changing circumstances. So when it comes to retirement planning, it means being flexible and adaptable to unforeseen events, whether those are market fluctuations or economic changes. While we've seen a lot of that, you know, recently. Right, you know, or your personal circumstances. So adjusting your investment strategies, rebalancing your portfolio and regularly reviewing and updating your retirement plans can help ensure that you make the best use of your resources throughout your retirement journey.

Producer:
Yeah, and one of the things I think in there, Mike, that stood out to me was, you know, talking about really taking action and taking concrete action because, you know, and we talk a lot, you know, obviously about having a plan and, you know, putting a plan in place, setting, setting those goals first, putting the plan in place. But then, you know, all of the goal setting and all of the planning without action is just words on paper and numbers on paper. Right? It doesn't really mean anything unless you actually take action and put that plan into practice.

Mike Zaino:
Yeah, it's kind of like, you know, knowledge is power. No, it's not. Slide. Knowledge is power, so if you know the steps you should be taking but aren't taking them, then what are you doing right? I mean, look yourself in the mirror and ask yourself, Am I where I need or want to be? And if the answer is no, a resolute no, then you've got to make some changes in order to help get yourself where you want to eventually be. Because if you keep doing the same thing over and over and expecting different results, that's the very definition of insanity. It's not going to lead you ultimately where you want to get.

Producer:
Yeah. And unless you know where you want to get as a little padded room somewhere, you know the definition of insanity there. No, that would be taking it to the extreme. But yeah, you know, don't don't do that same thing over and over again expecting something different to happen because it's not just going to magically turn out differently. You've got to take action. You've got to. And if the action that you are taking isn't working, you've got to make adjustments. That was another thing that you mentioned there that really kind of stood out to me, Mike was be flexible and don't do as the old infomercial said, set it and forget it, you know, set it and and remember it and and act on it if you need to.

Mike Zaino:
Yeah, it's one of those things where, you know, minimally once a year, you know, preferably once a quarter, you should be reviewing your account balances, seeing how they're performing, seeing what kinds of fees that you're being charged for the performance, whether it's positive or negative. Right. And then ultimately deciding whether or not what you're being charged justifies the outcome and the result. Because if you're paying people to lose your money, nobody should ever do that. I can you know, there are lots of ways you can go out there and lose your money. Just go to Vegas, Right? That place wasn't built on on, on winners. So, you know, reviewing your portfolio and just your overall financial picture minimally of once a year will help keep you on track.

Mike Zaino:
Yeah.

Producer:
The winners in Vegas for the vast majority of of winners are the casino owners.

Mike Zaino:
You know that's that's.

Producer:
That's just the way that things work. But if you want to be a winner for your own, you know, financial life, you can do that. Reach out to Mike Zaino at Money Matters with Mic.com or go pick up your phone. Give him a call. 704 5601573. All right, Mike, as promised, we have now 11 ugly truths that could unravel your retirement. This is actually it's from the book called Creating a Worryfree Federal Retirement by Greg Cassell, a guy who I know and is a is a great guy and does some work I know, as you do with federal retirees and also the general public. So I think there are going to be some some great things in here. Obviously not. You know, it's 11 things. There are a lot of things that could unravel your retirement, probably, you know, maybe 1100 things that we could talk about. But this is boiling them down to 11 here. And number one on the list, Mike, is you'll probably live longer than you think.

Mike Zaino:
Yes.

Mike Zaino:
You probably will live longer than you think. In fact, every generation that has been born thus far in America is expected to live longer right than their past generations have. And so when when Roosevelt created Social Security back in 1935, you were supposed to have been dead already before you could even claim it at the earliest age of 62. And the reason being was the life expectancy of a male, according to Greg Cassell, was was less than 60. It was 59.9 years. Now, the average life expectancy for a male in the United States of America is 77 years old. And according to the Centers for Disease Control, the population of adults 85 and older is projected to grow 351% over the course of the next 17 years by the year 2050. So according to experts on aging and longevity, the first humans they, you know, are expected to live to age 150. And you heard me right, 150. Those folks are already alive today. And with Americans living longer than ever, it is no surprise that their biggest concern is outliving their income.

Producer:
Yeah, we talked about that last point on the show a few weeks back where, you know, this survey actually showed that people fear running out of money in retirement even more than death itself. And you're absolutely right. I mean, with life expectancy getting longer and longer, if you just have this big pot of money when you retire and you haven't really planned how you're going to draw that down without running out of it and you don't really have an income plan in place, you had an accumulation plan in place, which was great, and you've got all this money sitting around, but you don't have a plan for how you're going to draw it down in retirement to make it last. That's a problem.

Mike Zaino:
That is a huge problem. Right? Because, I mean, the last thing you want to do is have more month than money. You don't want to have a reasonable expectation that you're going to die at a certain point in time. Like just pick a number, say it's 85 and then you see your 86 birthday. Happy birthday. You're broke. That is not a good plan. That's more of a coping strategy. And we've always said that hope is not a strategy. When you can plan and have a strategy that takes you at least through age 95. And that's what all of our plans will do. Make sure that you are well equipped to live all the way to being a centenarian without the risk of running out of money.

Producer:
Yeah, and that really is where the key lies in retirement planning, making sure you're going to have that cash flow, because it really is it's about income. It's not really about that big nest egg pot of money here. Number two, on the list of the 11 ugly truths that could unravel your retirement, you might not have saved enough. I mean, that's that can be a problem as well.

Mike Zaino:
Yeah. And this is a sad reality of the state of affairs in America. I sit down with people all the time, right? All the time. Or they send me their statements and I'm looking to, you know, see what it is that they have. And if you were like me, you were taught at an early age that you should always save at least 10% of what you earn. You know, I'm pushing that now to like 15 to 20% just because of the rising cost of living. And according to a recent Gobankingrates survey, roughly 64% of Americans have less less than $10,000 saved for retirement. And that is a sobering and extremely sad statistic, Matt, because, you know, these folks aren't taking advantage of the opportunity to save and they're like, well, we're living paycheck to paycheck. We don't have that opportunity to save. My argument will be that if you're not paying yourself first, you're right. You will never have enough money left over to pay yourself. But if you do, I don't care if it's 25 bucks a pay period. If you put that money away first, you would be amazed at how your bills will find a way to get themselves paid. And if you have a company sponsored plan, whether it's a defined contribution plan like a 401 K or a 403 B, or for all my federal folks out there, a thrift savings plan, make sure that you're contributing enough to get the maximum match. So if they're going to match you up to 5 or 6% and you're only doing 3 or 4%, you're telling me that you don't like free money. And when I say that, people kind of look at me like, huh? And I'm like, Well, yeah, they're willing to give you free money. If you'll just put your own in there, then they'll give it to you free on a match. So make sure that you're maximizing the match at an absolute minimum.

Producer:
That's right. At a minimum, maximize the match. I love it because it's it really is free money. And that's right up my alley. I enjoy things that are free. And if it's free and it's also green and can pad my wallet, that's even better. So there we go. Number three on this list, Mike, is some of your investment success will be left to chance. I mean, you know, it's there are things that we can control and there are some things in life that we can't control. And that's the really just underscores the importance of actually having a plan.

Mike Zaino:
Right. And I always say control the controllables, right? The things that we can't control, I don't really worry about. But what happens in the five years before you retire and then the five years immediately after your retirement date can play a significant role in how well funded your retirement account actually is. And that's because of a thing called the sequence of returns. And what that means is the order in which your annual returns get delivered to your account. So I always refer back to the Lost decade, which was the first decade of this millennium From 2000 to 2009. The first three years of that decade had significant losses, followed by a few years of growth. And then 2008, the financial crisis and then a year of growth. Okay. Well, if you look at that whole decade as a conglomerate, what you're going to see is that that entire decade, that entire decade lost 9.1%. So if you're making money in the first several years of retirement. All right, great. You're in a much better position if you're losing money and you're drawing down on it because of those sequence of returns, you are never going to make the most of your dollars longevity because of the fact that you lost money in consecutive years during the retirement red zone. So it is very difficult to replace lost money during that period of time either because of time constraints. Right. You're just not going to live long enough or the loss of earned income. You're no longer contributing to those accounts. And so to protect your retirement savings during the retirement red zone, you might consider taking a conservative approach with your investments.

Producer:
Yeah, and we can talk more about exactly what that means as we go along here. Annuities would be a part of that, especially a specific type of annuity that that I know that we like around these parts. Mike A fixed indexed annuity might be right for a lot of people, might not be right for some others. It just depends on your individual situation. That's the beauty of actually reaching out going to MoneyMattersWithMike.com calling 704 5601573 and getting that consultation because it really does take you know looking at your individual situation assessing things and coming up with a plan that's tailored for you because it's not one size fits. All right?

Mike Zaino:
There's definitely not one size fits all. And I always joke in my in my speaking engagements and I tell people like, hey, if I was to take my shirt off and I'm like, Don't worry, I won't do it. You know, people that normally gets a chuckle and I say, hey, I was I picked three people out of the crowd and I say, I was going to ask you to wear it or you to wear it or you to wear it. It probably wouldn't fit you guys the same way it fits me. Some folks are still have children living with them. Some people are still, you know, taking care of their aging parents. Some folks have done a great job in preparing for retirement. Other folks need help in preparing for retirement. The reality is that there is no such thing as speaking in terms of absolutes. Always do this, never do that. Right. That is why it is so important during our one on one consultation that you bring in your documents. Because once I look at your numbers, I can determine what's right for you, not what's right for your neighbor, not what's right for your cousin, but what's right for you based on what you have going on in your life.

Producer:
And if you ever listen to somebody else who might be on the radio or TV or something, a infomercial late at night even, and they say, always do this, always do that. They talk in those absolutes. Like you said, Mike, that is not that is not good because that is not a situation that is going to be tailored for you. There are some things that are that are financial truths, like, you know, try and get out of debt, you know, as much as you can and that that type of thing. And two plus two is four. You know, like those are those are things that that are truths. But as far as actual financial advice and coming up with a plan for you, it needs to be tailored for you.

Mike Zaino:
Yeah, you have to be very, very careful from whom you get your information and make sure that they're actually looking out for you and your interests and not just for lining their pockets.

Producer:
Absolutely do. And once again, folks, that website money matters with. Com to reach out. Well, number four on the list of 11 ugly truths that could unravel your retirement is taking Social Security too early could cost you dearly.

Mike Zaino:
Yeah, especially if you have longevity that runs in your family. Okay. A lot of people can't wait to jump on Social Security when they turn 62. And a lot of folks don't understand that you can actually take Social Security at any point in time between age 62 and up to 70. And every year you delay that maximizes the amount that the government will pay you because you've paid into it. There's a natural tendency to want to start to receive those Social Security benefits as soon as you're able, you know, at age 60, to kind of do that. Steve Miller band, go on, take the money and run kind of thing. But if you take your Social Security payments before your full retirement age, which for most of our folks listening to this station is going to be either 66, 66 and some months. Okay. Or 67 as it currently stands, then you are actually permanently decreasing your monthly payment and the amount that you can earn, should you choose to work even on a part time basis, is also limited. And in 2023, you can earn $21,240, which is roughly $7,370 a month. And if you go over that threshold, guess what? They're going to start taking back some of your Social Security payments. So it's every $2 above. They take $1 back. And in the year that you do retire, it's every $3 above. They'll take $1 back. And then another thing is spousal benefits. Okay? There are a lot of married people out there that don't understand how to maximize their spousal benefits. Well, think about this. If you were a stay at home mom or dad and your significant other spent all of the time working and bringing home the bread to support the family, then there's a good chance that once you reach retirement, claiming age as far as Social Security. Half of their benefit may actually be more than what your benefit is. And so we can look at all of those different things. So starting Social Security too early could absolutely cost you dearly.

Producer:
Yeah, 100%. And you'll you know, the more you delay if you're able to again it's all based on your individual situation for each year that you do that you know you give yourself that 8% raise a year and that is that is a chunk of change that really, really does add up. Number five, Mike, on this list, you might regret skipping tax free growth options, tax free. Boy, that that sounds good. I'm sure pretty much everybody who's listening right now.

Mike Zaino:
Right. So you might regret skipping those growth options because, you know, if you're going to work for a company and you are fortunate enough where that company has what is known as a defined contribution plan. So that's a traditional retirement plan, like a 401 K, like a 403 B or a 457. A thrift savings plan. Again, if you are a federal employee or you're investing on your own outside inside of an IRA for an example, those types of plans are huge moneymakers for the federal government because what you're doing is deferring the taxes. They actually give you an option, pay me now or pay me later. And I often use an analogy of, you know, a farmer with a bag of seed. They give you the chance to pay the tax just on that bag of seed. But what they would rather you do is go across the street to all that, you know, acreage till up and prepare that soil, remove all the impediments out of it, then sow the seed and then over the course of your working career, they want you to irrigate it. They want you to, you know, keep the the bugs and the pests out. They want you to fertilize it and grow it as absolutely large as possible so that during harvest time, for an example retirement, they will tax you just on the amount of seed that you sowed.

Mike Zaino:
Right? Wrong. Okay. They're going to tax the entire farm. So when you retire and start taking money out of your plan, you're taxed not only on what you put in, but also your employer's contribution. If you have a match and all of the growth over the course of all of those years and you have no idea what the future tax rates are going to be, and guess what? You're going to be subjected to whatever the government decides that those rates are in. In the future, you have an option to pay the tax now. And how do you do that? Well, you do that through Roth accounts. So if your employer offers you a Roth 401. K, a Roth 403, B, a Roth Thrift savings plan and or you just want to invest in a Roth IRA. What you're doing is putting your money in after you've already paid the tax at a known rate and that money grows tax free for the rest of its life. In my opinion, a much smarter choice for your future income so that you don't ever have to worry about and are not subjected to the government deciding to change the rules.

Producer:
Yeah, that's right. I mean, and that farmer analogy always makes it really hit home for me because, you know what? What do you think is going to be taxed at a higher rate and what do you think you're going to owe more on the bag of seed or all of that harvest that you have worked so hard for, you know, and maintained and and, you know, now harvested in in the end, that is going to be the much larger bill. So yeah you know pay it now and don't have to pay it later because then you know when those Roth accounts the your contributions you've already paid the taxes on the growth is all tax free. So then when you make those withdrawals in retirement, those are tax free. You don't have to make any sort of tax payment on those. And boy, that that can mean a lot to your bottom line in retirement.

Mike Zaino:
It can. I mean, the best kind of money in the world is free money. Well, if you don't have any free money at your disposal, the second best kind of money in the world is tax free money. And that's how you accomplish that.

Producer:
That's absolutely right. Through a Roth and also through some life insurance. And I'm sure we'll touch on life insurance as we go along here as well. And people people always say life insurance in retirement. What? Yeah. Yeah. We'll we'll get there, I'm sure. Let's move on, though, now to number six on the list of 11 ugly truths that could unravel your retirement. And this is a big one that that a lot of people think they they don't necessarily consider it as much as they should. I think people kind of have it in mind. But your health care will cost more than you expect. It's going to be a bigger bill than you think.

Mike Zaino:
Well, I mean, yes, I remember my daughter went to the hospital and she was in the hospital for 4.5 hours. And when I got the itemized bill, I could not believe that those 4.5 hours were over $10,000. Right. And that was last year. So I'm thinking, well, what is going to be in another 20 years? The cost of everything has gone up over the past year to three years since the pandemic started, for sure. Well, guess what? As we age, health issues become more inevitable, our bodies start breaking down and we start to visit the doctor a little bit more often. We start to go to the dentist a little bit more often. And then another thing you have to consider is the cost of Medicare. So Medicare Part B, that premium currently is $164.90 per person without Part D, which is the drug plan, and that's the minimum that they are going to charge you. So if you make more money in retirement and remember your Medicare costs, they have a two year lookback on your taxes. So if you had a higher income right before you retire, like most folks do, you may be forced to pay an income related adjusted amount, which means much more money coming out of your pocket just for your Medicare costs. In addition to everything else that you have to factor health care wise in retirement.

Producer:
Right. And and that is just, you know, speaking about the premiums that you'll have to pay there and as you say, doesn't even include Part D, the prescription drug benefit and also not including number seven on our list, which is long term care. Most people will need long term care at some point.

Mike Zaino:
Yes. Why? Because people are living longer. Another reason why our health deteriorates and if you might not have family members that are going to be physically capable of taking care of you, you know, I weigh £215. There's no way that my wife or my daughters are going to be able to lift me if that is ever a necessity. Right. And according to the United States Department of Health and Human Services, around 70% of people over the age of 65 are going to need some form of long term care at some point throughout their lives and according to a 2020. Any report from Genworth in Florida, the average annual nursing home cost for a semi-private room, that means you're sharing the room with somebody else was $104,000 a year. Okay. And if you wanted a private room that jumped all the way up to 100 and almost $18,000, and that was from three years ago. So you basically have three choices when you're dealing with this issue. If you are healthy and you can afford it, you can apply for long term care insurance. But be aware there is no guarantee that you'll be accepted. You can purchase an annuity that comes with living benefits and those don't pay a daily rate. But your normal monthly income benefit is usually augmented, whether it's doubled two and a half times. Triple different companies have different ways of augmenting the income that you're going to take from that annuity and they'll do it for a period of up to five years because most people are not in nursing homes for that long. And then of course, your third choice and probably the least desirable, is to pay those costs out of pocket. And you better have some really deep pockets if you plan on doing that.

Producer:
Yeah. And those because those dollar amounts that you mentioned a minute ago, Mike, $104,000 for a semi-private room, that was the average. So you can pay a lot more than that at some places. You know, if you want to be at the really nice place that, you know, you might be, might be brand new and might have all the bells and whistles and services and stuff that you want to have that might be much more expensive. Or if you want to go where the you know, they'll they'll turn the light on for you and that's about it. Then it could be a little bit less. But that was the average was that 104,100 and almost 18,000 for a private room. That's a lot of money.

Mike Zaino:
It is a lot of money. And you don't want to end up in a state run facility. I can promise you that you do not want to end up in a state run facility. So do your diligence and make sure you're preparing for that if you prepare for nothing else as you age.

Producer:
Yeah, definitely so. Well, number eight, Mike, on the list of the 11 ugly truths that could unravel your retirement inflation, We've been talking about it here and it's been a subject that's been on our minds for the last couple of years, definitely, And since the beginning of the pandemic, really, when supply chain issues started rolling around and causing us all kinds of headaches. Oh, boy, hasn't it been fun? Well, inflation can eat away at your nest egg. And boy, that's true.

Mike Zaino:
It can. It's often referred to on this show as the silent tax because you don't realize what is going on. But we were extremely spoiled for 21 years from, you know, from 2000 all the way through 2021, inflation averaged between 1 and 3%. You know, and with a recent ten year average of only 3.27. And so the Fed's target is between that 2 to 3% range. Well, you know, June of 2022, it hit 9.1%. So if you think about the fact that you're in retirement and people are living longer and so your retirement could have to last between 30 and 40 years and you have a fixed income stream, then your purchasing power, believe it or not, can be cut by as much as 60 to 70%, all because of inflation and the rising cost of living.

Producer:
Wow. And people will think that they might look now at their say, projections for what they're going to have monthly in retirement. If they have that, you know, access to that information. And they might look at those numbers and say, that looks pretty good. I think that that's great, but that doesn't necessarily take into account inflation, especially if that is a number that is not going to grow every year. So like you said, if it's fixed, that means that, yeah, you're between the beginning of your retirement and the end of your retirement. That money is not going to go as far in those later years as it does up front. And, you know, I mean, you'll be feeling it, like you say, the silent tax. It's not a fun thing. Taxes are never a fun thing. And this one, you know, not like an actual tax, but it's it'll cost you.

Mike Zaino:
Definitely truer.

Mike Zaino:
Words never spoken taxes are not fun.

Mike Zaino:
There that's that's that.

Producer:
Should be a quote of the week one of these one of these days just you know credit me for that There you go. Well number nine on the list of 11 ugly truths that could unravel your retirement, you really don't know how much you're spending. A lot of people don't, Mike. I mean, a lot of people just just do not have a budget and don't realize where that money is going.

Mike Zaino:
One every month. Yeah. So.

Mike Zaino:
So this is not surprising to me. Most people don't know where their money goes at the end of the month. They're like, I know I made this. And where did it all go? Or during tax time. My tax says I made all of this. How is that even possible? I have nothing to show for it. So a recent survey by the Penny Hoarder found that more than half of Americans, 55% of Americans, do not use a budget. So if you don't know where every single dollar that you take in is ending up, then you might be in trouble. And retirees especially need to know this information. So they have to use their retirement savings to cover any income gap, which means that there is more month than money coming in. And so they're going to have to depend on that savings to kind of bridge that gap. And think about this for a second. If you're expecting to need $20,000 a year from your investments to cover the gap and you actually need $50,000, okay, that is a huge difference if you're expecting one thing and being delivered another. So the best way to do that is to get in front of it, be proactive, plan for it, make sure that you're investing in things that have increasing income options so that you are at least keeping up with inflation.

Mike Zaino:
But again, you have to know where your money is going. So a great I mean, phenomenal exercise for you is to go grab your last three months worth of both bank statements and credit card statements. And if you have more than one bank account, then you need to get more all of your bank account statements. If you have more than one credit card, get all of your credit card statements for the last three months and then go back in time and start categorizing where you spend all of your money. So go back and look at your food, your shelter and your clothing. Those are the things that you absolutely need to exist. But then look at how much are you actually paying in all those subscriptions to Netflix and Amazon Prime and Hulu and Yahoo and Hulu? What's the other one? Apple TV. I mean, there's just so many of them, right? Spotify, if you listen to music, SiriusXM, these things that are you don't even think about, but when they're anywhere between 5 and 20 bucks every single month or five and 80 bucks every single month, they add up. And a lot of folks have no idea where they're spending their money. And that's a problem.

Producer:
Especially if that you speaking of, set it and forget it like I was talking about earlier, that's one of those things people just do that, you know, it comes out of their credit card or out of their checking account or their debit card, whatever, every month, and it just automatically happens. They don't feel that charge happening on that card or into that account. And so if they don't feel it, it's not real to them. And they just forget about it. And I know because I've been there. So yeah, that's absolutely something that can derail your plan. Another thing that could unravel your retirement plan, Mike, is number ten on the list. And that is, you know, we all love our families, but adult children or aging parents, they could really derail your plan.

Mike Zaino:
Yeah, it is shocking to me how many times we have boomerang children. Right. And those are the kids that we kick out and like a boomerang, you throw that out and it just comes right back into the house, right? And then they start eating your food and they start, you know, just contributing to the use of electricity and contributing to the use of water and utilities. And again, we all love our kids, so we want the best for them. So, of course, they're always welcome at home. And then your parents, they gave birth to you. And so there may come a time where you're they're going to need to depend on you. But very few of us ever include having either our children or our parents back home with us. As far as a part of our actual retirement plan, there is a great deal of added expense, and that's especially true if your adult child now has a family of their own. And unfortunately, when a parent comes to live with us, it's often because they are no longer safely able to live on their own. So in many cases, you become the in-home caregiver for your parent. And if they no longer have the financial resources to contribute to their own care, it could require that you're having to pay and provide for that support for that in-home health care, whether it's from Aid or from an assisted living facility or having to go into a nursing home. So if you're not prepared for caring for either your kids or your aging parents, that could derail your retirement as well.

Producer:
Definitely. And you know, we already talked about the expense of long term care. If you are the one having to foot that bill for the parent or a good chunk of it, then that yeah, definitely going to derail your plan as well. And number 11, Mike, on this list of the 11 ugly truths that could unravel your retirement, you might overspend on housing or you might have to move.

Mike Zaino:
Yeah. So I mean, I'm amazed by how many people who are going into retirement decide to take out a 30 year mortgage. And a survey by the American financing. Found that 44%. Okay. So almost half of Americans aged 60 to 70 have a mortgage when they retire and having a hefty mortgage payment that can seriously crimp your cash flow, particularly for those who are on a fixed income. Now, on the other hand, paying down your mortgage might not be the best solution if it leaves you without enough of a retirement cushion. So one option might be to downsize and then use some of that equity to help fund your retirement. But, you know, the happiest retirees that I know of have no mortgage payment. And because for most of us, that's the largest single bill that we pay. So you might consider moving to a place where your retirement money goes a lot farther. And that's a move that can cut costs substantially.

Producer:
Yeah. And if you cut those monthly costs by just even just a bit, that really adds up over time. And you'll really feel that in in the long run. And folks, if you would like to speak with Mike Zaino about any of the things that we have been talking about here on the show so far, you can get in touch with him by going to MoneyMattersWithMike.com or call 7045601573704560 1573. And you know a lot of retirees and pre-retirees Mike as we said they're overly concerned about potential rates of return. It's kind of like that they're playing in the Wall Street casino. You know, they're they're, you know, getting into building that big nest egg maybe or having fun playing in the market or that, you know, whatever they're they're doing, they're at the roulette table, but they're not really they don't really have a plan that's balanced. Right with the right amount of safety and risk.

Mike Zaino:
Yeah.

Mike Zaino:
And so especially for the pre-retirees and the retirees, there's there's a television show out there called The Deadliest Catch. And the premise of the show, if you haven't seen it, is that these fishermen go off in arguably the most tumultuous and dangerous waters on the face of the planet in the Bering Sea off this, you know, straits in Alaska. And they go out there and they battle these 80 foot to 120 foot waves just so they can catch king crab. And the reason they call it the Deadliest Catch is that every season somebody typically dies, which is unbelievable. And that just goes to show how dangerous those waters are. Well, a lot of our pre-retirees and retirees, they may be playing the game of the Deadliest Catch because I'll tell you, when just from watching the show, when these people hit their quota and they have they fill all their they call them pots, they fill their pots with the king crab. They don't just hang out in party and drink beer and go, woohoo, Right. We're done. No. Why? Because it's dangerous, right? They recognize that one of those waves could capsize their boat. They recognize that one of those crab going bad at the bottom could just cause the entire haul to go bad.

Mike Zaino:
So they get their boat back to the pier. Well, again, a lot of our pre-retirees and retirees should look at the financial roller coaster that they've been on recently. And you may need to decide to get your boat closer to the pier. So during our one on one consultations, which again are no cost and no obligation, we are going to discover and take a deep dive into your financial picture and look to see how much you're paying in fees. Can we help you cut any unnecessary costs, whether they're in your IRAs, your 401. Ks or any other type of retirement savings vehicles. We'll look at maximizing Social Security and figure out different ways to help you bring home more money. Okay. And then we can also compare Medicare options, because Medicare can be very, very confusing. It's a very comprehensive consultation. And you'll walk out at least knowing that you have a plan put in place that you can have confidence in and you're only going to work with us if it makes sense for you because it's your money, right? It is your money. We don't take that lightly. And if it's in. Oughtn't to you? It's important to us.

Producer:
Absolutely is. Go to Money matters with My.com. Money matters with My.com. Or give Mike Zaino a call at (704) 560-1573.

Producer:
Come on down as we test your financial knowledge. In right or.

Producer:
Wrong? Yes. It's everyone's favorite game show where you don't win any prizes. But, you know, you get to get to pretend like you're on The Price is Right or, you know, one of those family feud even. Who knows? But it's right or wrong. Yeah. And you can play right along with us. Test your financial IQ here, folks. I'll present a statement to Mike Zaino, and he will tell me whether or not that statement is right or whether it is wrong. So you guess right along with us here. Okay, here we go, Mike. Number one, it's a waste of time to have your financial accounts reviewed on an annual basis. Is that right or is that wrong?

Mike Zaino:
Wow, Matt, that is wrong. In fact, I think you already knew the answer to that because we covered it a little bit earlier on our show. This is something that you do not want to just set and forget. You want to set and inspect what you expect regarding your financial future. And so at a minimum, an annual checkup can prevent you from paying too much in taxes, from paying too much in fees before those expenses absolutely cause a lifestyle change during the down the road, I should say. So that is something you want to do at a minimum once a year.

Producer:
Yeah, absolutely. That's right. You know, I was just playing with you, just pulling your leg there, Mike, because I was paying attention when you said that earlier. Promise. All right. Number two here on right or wrong, you should balance your investments across tax deferred taxable and tax free accounts. Is that right or wrong.

Mike Zaino:
Matt? I think that's absolutely right and smart planning. In fact, I would try to put it into those three buckets, but I would try to really heavily invest in those tax free accounts, especially if you think that taxes are going up in the future. And I've never had anybody when I ask that question, hey, do you think taxes are going up or down? Tell me that they thought they were actually going to go down. So you want to minimize the effects that taxes have on your retirement by taking advantage of the only two types of tax free investments? Okay. And those two are the Roth accounts. I explained those before, whether it's a Roth IRA, whether it's a Roth 401. K, a Roth TSP. So the Roth accounts and then life insurance and you alluded to this earlier, there are actual types of life insurance that you can maximum fund. You don't look at it like a bill. You actually pay more than what the premium calls for so that later on in life you can take tax free income that is also guaranteed to last you the rest of your life. And you can structure your retirement accounts to deliver tax free income during retirement. But at a minimum, you want to have some in the tax free. And then if you have to have them in in tax deferred and taxable accounts, that's obviously not the best picture for your future.

Producer:
Right. Tax free is always, you know, as you said earlier, Mike, the second best kind of money that is tax free. Free is the best. Tax free is the second best. All right. 500 is the is my batting average here on right or wrong this time around? And that is where it will stand.

Producer:
It's this week in history.

Producer:
Well, all right, Mike, I hope you've got your dancing shoes on for this week in history. This time around, we've got this great one from 1960, July 15th, 1960, Chubby Checker released his version of The Twist.

Mike Zaino:
Come on, baby.

Producer:
There you go.

Mike Zaino:
That's it.

Mike Zaino:
Let's do.

Mike Zaino:
The twist.

Mike Zaino:
Everybody's singing it right now.

Producer:
There you go. I mean, seriously, it's one of the one of the few dances I can do, really, and not completely embarrass myself. But of course, the twist was a big dance craze already. And then Chubby Checker came out with that song and then I think it was maybe the next year came out with Let's Twist Again, and it was another big hit for him. It was kind of crazy. It was the biggest hit of the 1960s, according to a Billboard magazine ranking back in 2014. Huge, huge song and a craze in and of itself.

Mike Zaino:
Mike It absolutely.

Mike Zaino:
Was. And every time it comes on the radio when I'm in the truck, I'll just turn that sucker up and I start doing the twist in my seat and people look at me like I'm crazy, but I don't care because that's just the way I am.

Producer:
Just twisting down the road that is.

Mike Zaino:
Now, if we change change genres from music to science. July 16th, on this date in 1969, Apollo 11 launched from Cape Kennedy carrying Commander Neil Armstrong. Michael. Michael Collins and Buzz Aldrin, and we went to the moon.

Producer:
Boy, talk about a historic moment in our history when Apollo 11 launched on its way mission to the moon there. And, you know, it took place eight years. You know, President Kennedy at the time, at the beginning of the decade had said, you know, set that goal before the end of the 1960s. We're going to put a man on the moon. And it happened by the end of the decade. And the Apollo 11 mission was the one that made it happen. And then a little business thing that happened, just a little tiny one on this day.

Mike Zaino:
In.

Producer:
1995. It was sort of tiny. Back then, it was Amazon.com selling its first book on July 16th, 1995. Wow.

Mike Zaino:
Jeff Bezos.

Mike Zaino:
Right. The guy the guy is is is absolutely brilliant. He started Amazon in his garage and it is now an e-commerce behemoth. Okay. But that first book was fluid concepts and creative analogies, computer models of the fundamental mechanisms of Thought by Douglas Hofstadter. So I wonder how much a copy of that book would go for today just as a piece of memorabilia and modern history.

Producer:
Yeah, I mean, it's sounds to me like a little bit of a snooze fest, but, you know, to have it on your shelf and say that this was the first book that was bought on Amazon, that would be something.

Mike Zaino:
Conversation would be something.

Producer:
All right, Mike. Well, that's going to bring us to the end here of the show. Didn't you know, we didn't even end up getting to everything in our, you know, sort of rundown of things today. But that just means we got more to talk about next time around.

Mike Zaino:
Time flies when you're having fun, right. And when you're educating people. So, I mean, that's the whole purpose of our of our show is just to put that financial education out there in hopes that that rising tide will lift your boat as well as your neighbors. So, you know, Matt, thank you so much for everything that you bring to this show and the production value. I definitely appreciate it. It would not be as cool and as good as sounding as it actually is without you. And it's all of our listeners out there in listener land. If you haven't taken advantage of any of those free reports that we're able to offer you. And again, that's free, no charge, we can email them to you. We can mail physical copies, but we have a lot of different reports, whether it's on the widow's tax and how to prepare and and plan in advance, or about the bank failures or about the Secure Act 2.0 and what it means for your retirement or how different tax free investments might help you prepare for a better retirement. Or we alluded to today's bond replacement, right? And the 23 cost cutters for 2023, please reach out. But this weekend, whatever you're doing, I hope you do it to the 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

Producer:
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. Amara Life 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:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
Are you concerned about market volatility, rising taxes, economic uncertainty and how it could all affect your future in retirement? Then tune in to Money Matters With Mike to learn how you can protect and grow your hard earned money. Money Matters With Mike every Saturday at 9 a.m. right here on FM 100.1 and AM 1340. Schedule a free no obligation consultation now at MoneyMattersWithMike.com.

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