Financial Moves to Make This Summer

6.3.24: Audio automatically transcribed by Sonix

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

Speaker1:
Welcome to Nationwide's Peak ten fixed indexed annuity, designed to help provide guaranteed income for life. Peak ten offers protection against market losses, plus protection for a spouse through a joint option and an immediate 10% penalty free withdrawal. Call us now at (704) 560-1573. That's (700) 456-0157 three. Guarantees and protections referenced within are subject to the claims paying ability of nationwide life and annuity insurance company nationwide. Peak ten is issued by Nationwide Life and Annuity Insurance Company, Columbus, Ohio.

Speaker2:
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.

Speaker1:
Welcome to Money Matters with Mike, with your host, Mike Zeno. 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 Zeno.

Speaker3:
What's up, what's up, what's up? It's Mike Zeno 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 as 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 show you how to improve your retirement outlook this summer with some sunny money. And we'll also answer more of our listeners questions. 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. Matthew, how are you today, sir?

Speaker2:
I am doing very, very well. Mike, I know you've been traveling the world a little bit here and, uh, finally, uh, you know, back on solid ground, uh, there in South Carolina.

Speaker3:
I am I had, uh, the opportunity to go to Lisbon, Portugal, for a work conference. Believe it or not, we had a couple hours of meetings each and every single morning, and then we got the entire day to explore the town of Lisbon, as well as some of the surrounding towns. And it was absolutely magnificent. If any of our listeners have not gone to Portugal, you need to add it to your bucket list, because I took more pictures than I have in a very, very long time. And I'm not really a picture guy, but I definitely documented everywhere that we went and all the things that we saw and, you know, it was just absolutely beautiful. Well, it always amazes me how Europe, uh, you know, we think our country is old. Uh, I think I ate at a place that had been around since the 1600s under the same family's ownership.

Speaker2:
Wow. That's. Yeah. You know, having traveled to Europe, um, a little bit myself, um, it's not been to Portugal myself, but I've traveled to different parts of Europe. Yeah, the the stuff over there is really, really old. Like, we think, you know, 100 years old is old. There's like, you know, a thousand years old is old over there.

Speaker3:
Not even a toddler in Europe.

Speaker2:
Right. Exactly. Like, oh, that's, oh, that's brand new. Uh uh, but yeah. No. Well, I'm glad the trip was good. It sounds like it was a success. So glad to have you back in the saddle again this week. And, uh, you know, of course, we'd like to thank our listeners for being back in the in the saddle or in the car or wherever you happen to be listening to us, uh, here on WRI or on the podcast version. And if you did not even know that there was a podcast version of the show available, which means literally every episode we've ever recorded over the past two years of this show, you can get it. Just go to Money Matters with mike.com. That's Money Matters with mike.com. Or you can go online to any of your favorite podcast apps. I'm talking any of them, uh, go there and search for Money Matters with Mike. You can also go to the YouTube channel. A lot of great content there from the show, highlights from different episodes and other special content as well. Also, Facebook. Mike's very involved in, uh, interacting with our listeners on Facebook as well. So basically, Mike, what I'm trying to say is we're just everywhere.

Speaker3:
Yeah, yeah. If people can't find me, they're not really looking. Right. And so, you know, please don't hesitate to contact us with your questions. We definitely want to help you. That's the the whole reason that we do the show. And you know, beyond just answering questions, I'd love to actually meet with you and discuss how we can help you actually reach your financial goals. And so we can help you with things from retirement planning, risk management, estate planning, and just a whole lot more. So building sound financial plans for our listeners is what we do best. And all you have to do to get started is call (700) 456-0157 three, which does ring my actual cell phone. Okay. I have refused to get an office number because my office hours are basically eyes open to eyes shut. Okay, yes, I have posted hours, but I just want people to be able to get a hold of me because, you know, if I have a question that's burning, I don't want to have to wait days or weeks for an answer. So (704) 560-1573 or just go on the web at Money Matters with Mike comm.

Speaker2:
Yeah, money matters with Mike comm again is the website as well. And both, you know, easy ways to get in touch with one Mr.. Mike Zeno. So we're going to take a look at some sunny money here and talk about how much has your nest egg grown. Well, if it's grown to 250 K or above, we have some to dos to add to your list there. We'll tackle that here momentarily. And inflation demonstration for you target is lowering prices. And we'll talk about that in how much inflation has really gone up over the past few years. We'll do some myth busters for you which is my favorite TV show of all time. Well, at least if not my absolute favorite, like one of my top three probably, um, myth busters. Great, great show. But we're not going to be blowing stuff up. We're going to actually dispel some common misconceptions about some retirement topics. We'll answer some questions from our listeners once again and tell you how retirees in America are feeling these days about how things are going. First, though, let's get some inspiration for our conversation with our quote of the week.

Speaker4:
And now wholesome financial wisdom. It's time for the quote of the week.

Speaker2:
And this week's quote comes from a great American President, John F Kennedy, who said this the time to repair the roof is when the sun is shining. I love that, yeah. You know, like if you've waited until it started raining, you're too late.

Speaker3:
Yeah. I mean, JFK was basically conveying the idea that you should take advantage of good times to prepare for potential future difficulties. And it's a a classic piece of wisdom that suggests that we should plan ahead and make preparations when things are going well, rather than waiting and trying to react when a crisis hits.

Speaker1:
Hungry for something to chew on. Here's some meat on the bone.

Speaker3:
Imagine you're sitting on your porch. You're sipping some lemonade. You're enjoying a beautiful sunny day. The birds are chirping and everything seems perfect. Guess what, folks? That's the best time to look at your house and say, hmm, maybe I should fix that leaky roof, because let's face it, trying to patch it up in the middle of a thunderstorm is about as fun as a surprise visit to the dentist, right? So I'll give you a couple of examples. Uh, the first one, I'll call the proactive planner. I want you to meet Bob. Bob loves his sunny days and knows that rain, just like retirement, is inevitable. So while he's enjoying his career, Bob decides to start contributing and maxing out his 401 K as well as his IRA. He looks at it this way if he can afford a new golf club now, he can also afford to invest in his future. Okay, by the time Bob is ready to retire, his nest egg is solid and he can spend his golden years playing golf instead of working at the local golf club. Okay. Example two well, that's just the opposite. That's the procrastinator. Uh, excuse me, procrastinator words are hard this morning, Larry. Larry's motto is why do today what you can put off until tomorrow? And on those sunny days, Larry prefers to lounge on the couch. He likes to binge watch reruns of The Sopranos, Breaking Bad and Game of Thrones, and he thinks about how future Larry will be able to handle everything. Well. Now, fast forward a few decades. Larry's going to find himself in the middle of a financial downpour, trying to patch up his retirement with a part time job and a whole lot of regrets.

Speaker3:
His roof is leaking both literally and financially. So what can you take away from those two examples? Well, I want you to think of an emergency fund as your umbrella. Sure, you won't always need it, but when you do, you'll be glad it's there. And plus, who wants to walk around with soggy socks, right? So, you know, that's the first thing. Make sure you have the emergency fund. Investing regularly is just like scheduling regular roof inspections. And while that might seem tedious now, you will be thankful when your roof or retirement fund is not collapsing into your lap. And then obviously you've heard to diversify and not put all your eggs in one basket or all your shingles on one corner of the roof, you got to spread them out. So whether that's stocks, ETFs, fixed indexed annuities, uh, real estate, just make sure that your investments cover all of the bases. And then obviously you have to review and adjust. And just like you would not ignore a growing crack in your ceiling, don't ignore one that's, you know, becoming larger and larger in your retirement plan. So review it regularly and make sure that it is still solid. Remember that preparing for retirement should be like enjoying the sun with a sense of responsible foresight, right? The sunny days of your career are the perfect time to lay down the groundwork. Otherwise, you might end up like Larry with a bucket that's catching the leaks in your living room and working at a fast food restaurant asking folks, would you like some fries with that instead of sipping pina coladas on the beach?

Speaker2:
Yeah, given the choice between the two, which one would you rather now, if you're if your dream in retirement is to be asking people if they want their, you know, to to supersize or if they want fries or a shake with that you know, fine. I guess that's great. To each his or her own, but, uh, I'd rather be sipping on some pina coladas or, you know, maybe a maybe a margarita or something like that on the beach daiquiri.

Speaker3:
You know, just a cold beer.

Speaker2:
Yeah, exactly. Exactly. That's. That kind of sounds. Sounds pretty good, too. Uh, but, yeah. No, that's absolutely great. You know, take care of those things that need to be taken care of. Even though, as you said, it may seem tedious to do these things today. You know, it's it's better to, to make the to make a little effort at different spots along the way while you can, rather than getting to a point where you know the roof has caved in, as you say.

Speaker3:
Yeah, kind of just goes back to my seven P's. Proper prior planning prevents pitifully poor performance, right? Just make sure that you're doing the little things along the way so that you don't have to react to the big thing when it happens.

Speaker2:
Yep. Do that proper prior planning. Absolutely. Right. Well, and speaking of planning and things to do on on the list here, one of the big topics that we're going to tackle today here, Mike, is some things, as a matter of fact, six things that people should do when their nest egg reaches $250,000. So if you know, if you're a listener to. The show out there and you say, well, I'm about in that area, maybe not quite there, or I just hit that mark in my retirement nest egg. If you're right around that 250 K mark, this is for you. And even if you're not there, you know you will be one of these days, hopefully, especially with Mike Zeno's help. Um, and if you're even above that, these are some things that you can do as well if you haven't done them already. So we've got several of them here. And number one is to actually use the proper accounts to save for your retirement. You don't want to be just, you know, stuffing bills under the mattress.

Speaker3:
That is absolutely correct. I love that we're kicking it off with this one. Right. Because I've never known anyone to become wealthy by saving money in a savings account at the bank. Okay, so you need to diversify beyond just your job related programs. So when I'm talking about 401 S or 403 B's, or if you're a, you know, a business owner and you've got a Sep, or if you're a federal employee and you've got a thrift savings plan, you know, consider building assets outside of those, whether you're investing in real estate or whether you're starting a home based business, just other things that will help you generate income down the road. And then obviously, it's obvious to me it may not be obvious to everybody. Consider getting an investing into a Roth IRA and other tax advantaged accounts, such as health savings accounts, for additional savings and benefits, or life insurance that can provide tax free income down the road. All of these Roth options, uh, the health savings account, they're allowing you to to utilize your money and not have to pay the tax on, on, you know, normal things like health care. Okay. And I it always blows my mind where especially people with high deductible plans, if they don't have a health savings account, why they enjoy paying taxes on that money just blows my mind.

Speaker2:
Yeah. I mean, if you can take advantage of that type of account and have that money already pre-tax in an account, especially and specifically for your health needs, that is not taxed. I mean, come on, it seems to me like it's, uh, it's pretty much a no brainer. I've been, you know, I've had a health savings account for for years since I've had high deductible plans. And, you know, there was one period of time in there where I had a more traditional, uh, insurance plan. But then I went right back to an HSA because I'm like, these tax benefits are actually pretty good. You know, they are good.

Speaker3:
I mean, the best kind of money in the world is free money. The second best kind of money in the world, folks, is tax free money. So if you have a high deductible plan, those HSAs really can save you a lot of dough over time.

Speaker2:
It really can. It really does add up there. And speaking of taxes, number two is uh, exactly that. Be mindful of taxes and how they're going to affect your future, not just for now, not just in the here and now and today, but look at how taxes could affect your future in your retirement years.

Speaker3:
Yeah. One of the questions that I ask, you know, folks, when we sit down in a meeting is I ask them, hey, you know, what is your biggest expense? And 99.99% of the people that I ask that question always lead with their mortgage. And I just start shaking my head and I'm like, no, it's not. And they're like, what do you mean? How do you know what my biggest expense is? Well, I can tell you, your biggest expense is taxes. So if you're not one that is planning for future tax brackets and understanding how withdrawals from your retirement accounts could actually place you into a higher tax bracket during retirement, then you are missing the boat. Okay, you absolutely need to balance each bucket that you have. And so we find that too many people are mostly invested in tax deferred retirement accounts like their 401 s, meaning that the IRS is a significant partner in your retirement. You're sharing your retirement with Uncle Sam. And so what we like to do is help people properly balance their investments across three different tax buckets, if you will. The first one is going to be tax deferred, okay. And those are made pre-tax contributions into like 401 S, 403 B's, 457 Sep or simple IRAs. Um, all of that money, you're getting a tax break when you put money into it. So you're deferring the taxes into a later point in time.

Speaker3:
Well, then obviously you have taxable accounts. That's the second bucket. And so outside of your traditional retirement accounts, those could be like your brokerage accounts that you have with your Merrill your Schwab, you know, whoever they are right there. And then of course, you have or should have. And not many people do or take advantage of this bucket, which is the tax free bucket. Okay. Investments in that bucket could include holdings in a Roth IRA or if your employer offers. A Roth 401 K or other type of Roth plan. Consider investing in that as well as an indexed universal life insurance policy. Because Roth IRAs and life insurance folks are the two truly tax free investments, the only two truly tax free investments. So, you know, I just want to remind folks that it is extremely important to get your 401 K or whatever employer sponsored plan you have working hard for you as you do to save in it. And so we definitely invite you to call us and receive a free 401 K review so that we can analyze all the fees that you're paying, the risks that you are taking, as well as the overall performance of your portfolio. And again, all you got to do is pick up a phone and call 704 5601573 or visit us on the web at Money Matters with Mike comm.

Speaker2:
Yeah, once again, easy ways to get in touch with Mike Zeno. How to get in touch with him is no secret. It's one of those two that he just mentioned right there. Well, number three on our list of the six things that you should do when your nest egg reaches $250,000 is to. And this is one of the things that that you brought up, Mike. And I love how that you described this, uh, in your meat on the bone segment today, uh, diversify whenever possible. And the way that you described it there is, you know, talking about the roof analogy, the roof repair analogy, you don't want to put all your shingles on one end of the roof, because then the rest of it's just exposed to the elements, right? You want to spread out the spread the love around, you know?

Speaker3:
Yeah. And a lot of people think that, you know, investing in different stocks is being diversified. And it's actually not because stocks are just one asset class. And so you want to include various asset classes when you're investing. So mixing in different types of investments such as stocks or um brokerage CDs or fixed indexed annuities or structured notes or multi year guaranteed annuities or real estate. Right. Doing all that will help you manage risks and enhance the overall growth potential. And so remember the saying don't put all your eggs in one basket. The same is true when you're investing for retirement. So by diversifying your investments you're reducing the overall risk of loss.

Speaker2:
Yeah that's absolutely right. You know that uh sage advice there of not putting all the eggs in one basket. It may very well be replaced by don't put all your shingles on one end of the roof. Um, that I think is probably going to catch on like, like wildfire here, courtesy of Money Matters with Mike. Um, number four is incorporate steady income sources. And this is something that, you know, when people used to think of steady income sources in retirement, they use think of, oh, well a pension. Right. Because that's I work for my employer 40 years I retire, I get the gold watch and I get that check coming in every month. As a big thank you for all of my many years of service to said employer. Um, but so few people have a pension these days. What do we do, Mike, to then generate a steady income stream for ourself?

Speaker3:
Yeah. So obviously the exploration of multiple streams of income for your retirement should be front of mind in the ten years at least, if not longer than that leading up to retirement. Building a solid income plan starts by planning for the descent. I like to think of an analogy like climbing Mount Everest. Okay, would you believe that most of the deaths that occur when people climb Mount Everest actually don't happen on the way up? They get to the summit. But where? And I was actually shocked by this, and so I wanted to relate it to retirement planning. Most of the deaths occur actually on the way down. So if you don't have an income and distribution plan for all of that money that you've been busting your hump to save all of your working years of your life, you could be, uh, very, very, um, I guess I would say on slippery rocks. Okay. On the way down, uh, during your distribution and preservation stages, so obvious income streams, like Social Security, like pension income, if you're fortunate to have one, um, maybe a personal pension from fixed indexed annuities or even some income from a part time job or rental income and so many other different types, uh, can be possible income streams in your retirement. And one of the things that I mentioned were annuities, okay. And a lot of people, you know, kind of just kind of buckle as soon as they hear the word annuity. Well, you know, some annuities like variable annuities, that's what has given this retirement planning tool a bad name. Um, contrast that with fixed indexed annuities, which are a sophisticated investment that can provide both stable income while at the same time reducing a percentage of your portfolio. Folio's exposure to market fluctuations might be just the ticket that you are looking for. So overall, just incorporate multiple streams of income and that will help you in retirement.

Speaker2:
Yeah absolutely will. And give you a lot of peace of mind because you know that that no matter what happens that is income, especially when you're talking about a product that comes with some, some guarantees, like a fixed indexed annuity or another type of account like that, then you know that you are going to have that income stream because you cannot outlive it.

Speaker3:
Yeah, you don't want to worry about slipping on a rock and dying during the descent, right? If you've just reached the summit, you've reached retirement. The last thing you want to do is have to worry about the way down, right? How long that money will last. We can guarantee that it lasts you for the rest of your life, and that gives you peace of mind, and that you cannot put a price tag on.

Speaker2:
Absolutely cannot put a price tag on it at all. Uh, number five here thing that you need to do if your nest egg has reached $250,000 or if you're, you know, even beyond that, or maybe not quite there just yet. Uh, number five is to protect yourself against inflation. Uh, that's something that we're all familiar with these days. That word.

Speaker3:
Yeah. I mean, especially over the last four years. Right? I mean, inflation kind of got out of control. The fed did its best to combat that by jacking up interest rates, which makes money very, very expensive to borrow. Um, and it's starting to come down. But the forecast is that they're not going to reduce them any time soon. So, you know, while some people fear market fluctuations and they result to, uh, ultra conservative strategy like converting to cash or putting their money in bank CDs, you really should stay invested in the market in order to protect your future buying power, and at the same time, regularly adjust your portfolio, because rebalancing the portfolio periodically will help you maintain alignment with your inflation protection strategy. And so to kind of give you a little bit of a tip right here, when you protect a portion of your hard earned retirement savings inside of a fixed indexed annuity, you can let the rest of your portfolio stay invested so that it has the potential to grow over time with the market, while you're still downside protected on the amount allocated toward that fire.

Speaker2:
Yeah, and that's very, very important to have that. Again, diversification, that sort of balance there because you don't want to be all in in the markets because then all of your hard earned money is subject to market risk. But you know, you want to have that upside potential of market growth. So get some downside protection. Make sure that you have both as part of your plan for retirement. Um, and number six, in our list of things to do when that retirement nest egg reaches 250 K is to meet with a financial professional who can help.

Speaker3:
Absolutely. If you're not hearing from your financial advisor or professional at a minimum of once a year, um, you might need to get a different person who's actually going to be invested in the success of your plan, because regularly reviewing your investment strategy as well as your retirement budget that I like to call a spending plan, doing that with a financial professional will help you ensure proper diversification as well as risk management, and so you need to be able to set clear goals with the person that is helping you out so that you know specific, measurable goals that will help you, uh, retire, you know, confidently save more, and give you the investment returns that you're actually looking for. Okay. It is up to you to take charge of your retirement as well as your financial future today. And as loyal listeners, we are absolutely offering you an opportunity to schedule a complimentary retirement and financial consultation with our expert team at no cost. So just again, give us a call (704) 560-1573 or contact us at Money Matters with Mike comm and get that complimentary consultation scheduled so that we can get you started on your plan for a successful retirement.

Speaker2:
Yeah, that's absolutely right. Once again, folks, the number is (704) 560-1573 or go online. Money matters with mike.com.

Speaker1:
Want to know where your hard earned money is going. It's time for an inflation demonstration.

Speaker2:
A couple of different updates in our inflation demonstration this time around. Mike, we've got number one, a story coming out here recently about how target is helping to fight inflation. They're doing it by lowering prices, hoping to to draw in more consumers and actually get those, you know, customers. What. Keep those customers wallets from from being lightened too much I guess I should say.

Speaker3:
Yeah I mean it, you know good. Good for them, right? I mean, they're reducing prices on approximately 5000 basic items that include food and beverages as well as household essentials. And those reductions will apply not only to their own target house brands, but as well as national brands. Um, you know as well.

Speaker2:
Yeah. That's right. And they say that about 1500 of them have already seen those price reductions. Um, and they'll do that total of 5000 products, as you say, over time here. But the cuts are in addition to the overall commitment that target says it has to offering people, you know, fair prices and lower prices on different brands. Um, but the price cuts are a response to inflation, they say, impacting household budgets. And that prompts, you know, consumers to really be tightening the belt.

Speaker3:
Yeah. I mean, I mean, think about each and every single one of you. You're probably a lot more cautious with your spending. And as a result, target reported a 1.7% decline in annual sales, which was the first decline that they've had in seven years. And they attribute that to inflation as well as higher credit card costs. So, um, I mean, I think that is is the big thing to, to just, you know, buyers are bewaring a little bit more these days when it comes to where they spend their.

Speaker2:
Money, that yeah, that's absolutely right. People. You know, they target of course, and all um, retailers want buyers to be buying and not be wearing. So that's one of the one of the goals here by lowering those prices is to new word. Yeah, exactly. But the buyers are bewaring I love it. Um, and you know, just to give a little bit of perspective here on how the, uh, inflation picture has changed over the last several years, story that we saw here out of out of Fox business. That said, inflation is up 20% since the beginning of 2021 and I mean 20% higher prices overall. That's that's kind of kind of insane.

Speaker3:
Yeah, folks. Uh, and if you don't know what happened in 2021, that's when the Biden administration first came into play. Right? High inflation is placing considerable financial strain on US households and increases the cost of essentials like food, like rent. And it has gone up nearly 20% since Biden first took office in 2021. And so, you know, when you look at grocery prices and they've surged over 21% and shelter costs have increased by almost 20%, energy prices have even seen a dramatic rise of close to 40%, folks. Um, and despite a recent decrease, inflation rates remain significantly above the reserve's target of 2%.

Speaker2:
Yeah, absolutely. And you know, I mean the average US household now spending an additional $227 a month compared to just last year because of inflation as well. And it's easy to put, you know, our ourselves in kind of a bubble everywhere across the globe has experienced inflation. We're actually, you know, not seeing it as high as a lot of places have. But still um, even that being said, I mean, a lot of the public polling shows that the confidence in the president's handling of the economy is pretty low. You know, in the in the 30s, I think 38%, according to a recent Gallup poll here. So definitely a lot a lot of work to be done both on the economy and on public confidence in how he's handling the economy there, because not a lot of people, um, you know, are are feeling good about the way that things are going, especially with that inflation. You know, if you go to the store and everything costs, you know, 20% more than it did on average a few years ago, that just doesn't instill confidence.

Speaker3:
Not at all. I mean, I know my money went a lot further five, six, seven and eight years ago than it does today. So folks, it is time to get serious in 2024. This is an election year, and there's already so much uncertainty in the world that affects both retirees as well as pre-retirees who are planning for their eventual retirement. So please do not wait until you're ready to retire to start your planning. So if you've got questions, give me a call, go to the website, let's get you in and get a plan together so that you can have confidence in your retirement. Yeah.

Speaker2:
Absolutely. Right. And take a deep dive into your retirement plan, not just something that skims the surface, but something that really does, uh, provide you with a comprehensive plan going forward to make your situation better than it possibly could be. Now, that is the goal. And once again, you can go to Money Matters with mike.com or call 704 5601573 to get that process started. All right Mike. So I kind of wish I had like um, the, the very famous voice, uh, of MythBusters, the MythBusters announcer now and like, the theme music playing in the background because it's time for us to bust some myths here and now. You know, we're not busting kind of the old, uh, urban myths about, you know, what's the causes? A dump truck to blow up in the middle of the desert or anything like that? Because I remember that's one of the experiments I remember is just. They blew up a dump truck in the middle of the desert. I forget exactly what that was testing. It was just really cool. So now we're going to be debunking financial misconceptions. We got five of them here, and we're going to really sort of talk about the importance of accurate financial knowledge for retirees and Pre-retirees, uh, this is a survey that we're going to be talking about here, uh, by the TIAA Institute and the Global Financial Literacy Excellence Center, which found a lot of these misconceptions that we are going to debunk here are really widespread. They're they're. Very much believed among a lot of people. So let's talk about myth number one here. Employer matching doesn't matter. Boy, that's a big misconception.

Speaker3:
Yeah I mean there's a problem. Okay. Many people don't fully utilize or even understand the power of the employer match inside of their retirement plans, which obviously to me again, can significantly increase retirement savings, for example. All right. If you contribute $1,000 a month to your 401 K and your employer will match you, uh, 50%, up to 6% of your salary, this could mean an additional $6,000 per year. And so, I mean, if you do that over a decade, that's $60,000 before any growth happens. That is significant. So you need to take action and maximize your contributions to take full advantage of your employer, match and review your plan details and adjust your contributions as necessary in order to meet at a minimum, the maximum match. But I'm just going to throw in that if you're only doing 5 or 6% because that's all they match and you're not going above and beyond, you are setting yourself up for a woeful retirement. You need to be saving and investing much more than 5 or 6%.

Speaker2:
Yeah, just make sure you max out as much as you possibly can. Great. Get that absolutely enough to get the employer match. You know what? If that's what you can do at this moment, great. Fine. But increase it as much as humanly possible, because you'll want to be saving as much as humanly possible for your future. Future. You will not at all be mad at you for that if you if you make that move. Well, misconception number two here. And we sort of referenced this one a little bit earlier, but it bears repeating because it's so prevalent. And as was, uh, found in this survey, misconception number two is that annuities are bad.

Speaker3:
I love this misconception. Right. It used to be back in the day that, you know, your dad, your grandpa, your his, your great grandfather. You know, their investment portfolio is basically a 60 over 40 mix of of stocks and bonds. Okay. Well, annuities started coming into prevalence probably 25, 30 years ago, even though they've been around since the Roman times. Okay. These are not new instruments. They've been around for a very, very long time. But the fact of the matter is, is that annuities are often misunderstood. Um, they can provide guaranteed income for life as well as tax free growth. And some annuities, though, like variable annuities, are not ideal and have given annuities a bad name. And so even the people who talk, um, ill about annuities most often do not understand how they work or they don't offer them. Truth of the matter is that you have to have a special set of licenses to be able to offer annuities to clients, and so most people are only on one side of the fence, and they don't operate on both sides of the fence. So I want to give you an example. Let's say that you invest in an annuity that guarantees income for life. And so you've essentially created your own personal pension. Right. Some of the best options currently available include benefits for your survivors. Where and not only that can give you an immediate bonus. They are 180 degrees different from the annuities of old. And so now we're starting to see a massive replacement of the bond portion of portfolios into these fixed indexed annuities. So, you know, take action folks. Consider if an annuity fits your retirement strategy for steady income, because in retirement it's not about the number. It's about how much cash flow you have that comes in on a guaranteed basis. So consulting with a financial professional who is fluent in this speak, right. And can show you different annuity options so that you can create your own personal pension to serve as an additional income stream in retirement. Doesn't sound like a bad idea to me.

Speaker2:
Absolutely not. I mean, and you can do that, folks. Reduce the risk in your portfolio. Establish that personal pension that creates a lifetime income stream. It's really one simple strategy. You just got to know about it and you got to do it correctly. Right. And the way to get started down that road is to call Mike Zeno 704 5601573. That's 704560 1573. You can also go to Money Matters with mike.com and reach out there. Well misconception number three or the myth number three that we're going to bust here is that Social Security benefits are going to just disappear. They're going to go away before Social Security beneficiaries go away.

Speaker3:
Yeah. There's a lot of confusion uh, around the longevity. Of Social Security benefit program. And that's an issue, right? That's a big problem because they are designed to last a lifetime. And even though the program is facing funding challenges, Social Security recipients, as well as those who have paid into the program should expect that monthly Social Security check to come in once they start it, as long as they live. So yes, benefits can be claimed as early as age 62, but delaying benefits increases the size of your benefit all the way up to age 70. So if you're not planning how you're going to and when you're going to claim and strategize and optimize your Social Security benefits, you might be missing the boat. And remember, if you're married when the first spouse passes away, so too does the smaller of the two Social Security checks, which means that, you know, if you're in a spousal situation, you have the potential of losing somewhere between 33 and 50% of your retirement income each and every single month. So you need to plan for that for sure.

Speaker2:
Absolutely. Yeah. That's the most important thing, is to have a plan because, you know, you if you fail to plan, you plan to fail after all. Um, misconception number four here is that people think they're not going to live into their 80s or 90s or even 100. Become a centenarian, right? They say, I'm not going to live that long. Why do I need to plan that long for forget about it.

Speaker3:
Right. I'm bringing a Sopranos reference in there. Yeah, so many people underestimate their life expectancy, which impacts their retirement savings planning. I mean, it would really suck, and I am I'm being blunt when I say that to say, hey, you know what? Nobody's lived past 85 in my family. And then happy birthday. You're 86 and broke. That does not seem like a good plan to me. The statistics don't lie, okay? The average life expectancy post age 65 is about 18.9 years. So almost 19 years, which means, you know, 84 with very, you know, variations between the genders. Women do live longer than men. So you need to take action and save more and invest in retirement plans that account for a longer life. People are living longer. Who's to say that you won't hit 120?

Speaker2:
That's right. I mean, we could see that here in the next generation, people living that long. Um, and, uh, that would definitely change, change a lot of things. But, you know, you want to have income. You don't. If you do live that long, you don't want to run out of it.

Speaker3:
So I just read an article where a woman broke the world record for a track and field event at 105 years old, okay, she's now actually 108. The story aired in in, uh, 2021, but she's still going strong. She's 108 years old and running track and field. So you know, yeah, that may be the exception to the rule. But the point of the matter is, is that life expectancy is increasing. And the fastest demographic as far as growth is the centenarian group. Those that are turning 100 or above.

Speaker2:
Wow, 108 and still running track I, I'm let me tell you, I that just makes me feel bad about my, uh, physical routines that I have going on. Anyway, let's quickly move on now to misconception number five here. And this is a big one, Mike, I feel like because there's a lot of confusion around Medicare, uh, the myth to bust here is that Medicare covers all my health care needs in retirement. Yeah.

Speaker3:
I mean, and that's a problem because the misunderstandings about Medicare coverage can and will lead to unexpected out-of-pocket health care costs. You know, for example, Medicare Part A that is generally free, but it doesn't cover all expenses. And those average out of pocket costs can be significant. So taking action and planning for additional health care expenses not covered by Medicare just seems like a pretty good idea. And so you should evaluate the need for what is known as a Medicare Advantage plan to cover that gap in what part A and part B do not, or consider or and consider a health savings account to cover future costs. So right now is a great time to meet with a financial professional and start putting a formal retirement plan into place. Because with time on your side, there is so much more you can do to improve your financial future.

Speaker2:
That is 100% correct. And I believe that, uh, the best place to go is to go to Mike Zeno, and that's available to you, a listener to the show, by going to Money Matters with mike.com. Yeah, that's Money Matters with mike.com. Or give Mike a call at (704) 560-1573. All right. So we did this on a recent show here. And uh, we're doing it again because it was great to hear your feedback and to get some questions from you the listener. Nerds out there. We love it when you send in the questions, you can do it via the website Money Matters with mike.com just on the contact page there. Feel free to send in any financial questions that you might have for Mr. Mike Zeno. Um, so here we go, Mike. Let's get started. I'll get a few of them to get through here in the last chunk of the show. And Linda from Waxhaw says, can you explain the difference between a Roth IRA and a traditional IRA? And which one is better for somebody who's currently in their 40s?

Speaker3:
Mm. That is a great question. So a Roth IRA and a traditional IRA are both very popular types of retirement savings accounts. But they do have key differences, especially in the terms of tax treatment eligibility and withdrawal rules. So I want to talk about some of the main differences. The first one we're going to talk about is tax treatment with a traditional IRA. All of the contributions okay are tax deductible in the year that they are made. And that means that you are going to get an immediate tax break. But then when you go to pull that money out and you withdraw it, it's then taxed as ordinary income. Uh, when you are going to be presumably in retirement, which can add to your overall tax burden and yield you less money. Okay. That's a traditional IRA. Contrast that with a Roth IRA. You are paying the tax on the seed with after tax dollars. So there is no tax deduction when you pay into the plan. But when you go to take your money out in retirement, it is tax free as long as certain conditions have been met. For example, the account's been open for at least five years and you are at least 59.5 years of old. Then let's talk about eligibility with a traditional IRA.

Speaker3:
You have some income limits in the fact that there are none. Okay. Uh, however, the ability to deduct contributions can be limited if you and your spouse are also participating in employer sponsored retirement plans and your income exceeds a certain threshold. Whereas with a Roth IRA, you are going to have income limits, higher income earners cannot contribute. Once you have a modified adjusted gross income between 138,000 and 153,000, you can't contribute. All right. And then after 153,000, and if you're married, it's between 218 and 228. So once you eclipse 228,000 you can't contribute anymore. So those are some pretty big, uh, differences there. And then there's these things called required minimum distributions. So with traditional IRAs um required distributions are going to start at age 73. As of this year it used to be age 72. And then before that it was 70.5. And what that means is that you must start taking distributions and paying taxes on them. Whereas with a Roth IRA, you've already paid the tax on the seed, which means there are no required minimum distribution during the original owner's lifetime, which makes it a very attractive option for estate planning. Okay. And so, you know, when we look at all these things and you want to decide between the two of them, the decision depends on your current situation.

Speaker3:
It depends on your tax bracket and it depends on expectations of the future. So, you know, if you're in a current high tax bracket and you expect to be in a lower tax bracket during retirement than a traditional IRA, might be beneficial for the immediate tax deduction. Okay. But if you're currently in a low tax bracket, um, and you expect to be in a higher tax bracket in retirement, or if you think that taxes will be higher in the future than a Roth IRA could be advantageous because you're withdrawals and retirement are going to be 100% tax free. So again, if leaving money to your heirs is a priority, a Roth IRA can be more favorable since it doesn't have the RMDs, and it allows the account to grow tax free for a much longer period of time, and then the flexibility and penalty free withdrawals. If you value the ability to withdraw contributions without penalties, then a Roth IRA is going to offer more flexibility. So, Linda, understanding these differences will help you make an informed decision based on your financial goals and retirement strategy. And I'd be happy to have a chat with you about your individual specifics. Just pick up a phone and give me a call.

Speaker2:
And that number is 704 56015737045601573. Linda, thank you so much for that question. Next one comes from David from Mint Hill who says this. What are the most common mistakes, Mike, that you see people make when planning for retirement and how can I avoid them? He says. I've worked for the past 30 years to build our nest egg, and I'm worried about potentially making a mistake.

Speaker3:
Yeah, well, Dave, uh, planning for retirement can be complex, and so many people make very common mistakes that can jeopardize their financial security, especially in those later years. And some of the more frequent mistakes is, you know, I guess the most common would be starting too late. Many people procrastinate. They delay starting their retirement savings until much later in life, uh, missing out on the benefits of compound interest. And so starting early, even small contributions made earlier on in your career can grow significantly over time just due to the power of compound interest. So begin saving as soon as you start earning. And then if you're able to automate your, you know, savings and investing automatic contributions to those retirement accounts, uh, will ensure the consistency. So, you know, not starting soon enough. It would be a big one. Um, not saving enough money would be a second one. And understanding how much money you're going to need in retirement, or I should say, underestimating how much money you're going to need in retirement can lead to inadequate savings. You just won't have saved enough. So you need to be able to calculate what your needs are. Use retirement calculators. Estimate how much you're going to need based on your desired lifestyle, uh, health care costs. And then don't forget to factor in the silent tax. Uh, of course we know that as inflation and then increase your contributions when you get pay raises. Right. Aim for a minimum of 15% of your total income and maximize contributions to those employer sponsored plans as well as IRAs, if possible. Okay, we already went over the third most common, which is ignoring the employer match and failing to contribute enough to take full advantage of your employer's matching contribution is like leaving free money on the table.

Speaker3:
You're telling me, nah, I don't like free money, which makes zero sense to my Zeno. Okay, so it makes sure that you're contributing at least up to the match, uh, inside of your 401 K or whatever you have, uh, just to be able to get that benefit. Then we have things like poor investment choices, uh, investing either too conservatively. I've seen people basically move to cash, and they're so afraid of losing $1 that they fail to make five that can limit the growth. And then on the flip side of that, I've seen people just let it ride. Right? And they are 100% all the way up through their, you know, 60s, 70s, 80s and 90s in the stock market. And that can just, quite frankly, expose you to unnecessary risk. So by diversifying your investments, by adjusting over time, that can help you, um, you know, take care of that as well. One of the other big ones. And I wanted to mention this, as I wrap your question up, is taking early withdrawals from your retirement accounts can incur unnecessary penalties, and it can reduce the amount that's available in the future. And then not counting on inflation, which can erode your purchasing power over time. That can really, really, really just absolutely decimate your retirement plan. So, you know, by being proactive and staying informed and regularly reviewing your retirement strategies, you can avoid these common mistakes, which will do nothing but lead to unpleasant surprises in retirement. And on the opposite side, set yourself up for a much more secure and complete retirement.

Speaker2:
Yeah. And which is, you know, definitely the goal. David, thank you for that question. Uh, once again, just absolutely great. And a lot of great info there from Mr. Mike Zeno. And that's just the tip of the iceberg. Uh, for for Mike, folks, if you, uh, schedule that free consultation, uh, going to Money Matters with mike.com or calling (704) 560-1573. Uh, you get much, much more. And it's all tailored for your specific financial situation as well. All right. So Michael from Belmont asks, I'm 50 years old, but here we go. I haven't started saving for retirement yet. Uh, I make a good living. Six figures in the last ten years. Is it too late for me to start? And what steps should I take to catch up?

Speaker3:
Well, Michael, first thing I want to do is commend you on your strong name. I happen to like that name. Okay. Starting to plan for retirement at age 50 is definitely not too late, especially since you have that six figure income. And while it would have been ideal to have started earlier, there are still many strategies that will help you catch up and secure the, you know, comfortable retirement. And the first thing you need to do is assess your current situation, calculate your net worth. You know, what are your current assets, which are things like your savings, your investments, any property that you own and then subtract. Your liabilities, which are your debts, your mortgages, and then estimate, uh, just like my last question, estimate your retirement needs. So consider how much you'll need in retirement by determining what you want to do and how you want to spend your time in retirement and calculate the expected annual expense in order to be able to do those things. And then don't forget to consider how many years you plan on being retirement or retired. I should say, uh, I'm not going to beat a dead horse, but maximizing your contributions, I think, is huge. And considering other retirement accounts like the Roth accounts like the health savings accounts, anything that allows you to not have to pay tax, uh, I think is going to be huge. Investing wisely, reducing debt. Okay. This is a huge one paying down, um, high interest debt, uh, credit cards, uh, you know, revolving things, personal loans, uh, cars, anything like that.

Speaker3:
And consider mortgage options, which means that you should evaluate whether paying down your mortgage or refinancing once rates come back down to earth makes sense for your retirement plan. Overall, things like trying to save more money whenever you get a raise instead of taking it home. Similar to my last question, right? Aiming to save minimum 15, I like to see 20 plus percent and then something you might want to do as well, since you're already 50 is consider working longer. I mean, if possible, just work a couple extra years because that not only increases your savings, but it also shortens the period that you'll need to draw down on your retirement money. So think of yourself as a financial ninja. At 50, you have the wisdom and experience as well as the energy to make strategic moves. So in your case, Mike, it's not about how early you started, but how smart you play the game from here on out. And remember, the best time to plant a tree was 20 years ago. But the second best time is now. So grab your shovel or in this case, your calculator and get planting those financial seeds. Your future self will thank you. While lounging on a beach, sipping a drink with a tiny umbrella in it, give me a call and I'll show you how easy it is.

Speaker2:
And you can do that by calling 7045601573704560 1573. Is that number once again? Um all right. So and Michael, thank you so much again for that question. Um, Mike, we got time for maybe one quick question. More here, Karen in Charlotte, who says I'm considering early retirement, says I work as a registered nurse at a big hospital and I can feel it taking a toll on my own health. What are the financial implications of retiring at 55 instead of 65?

Speaker3:
Well, there are some significant financial implications. It affects everything from your retirement savings and investment returns to your eligibility for certain benefits, as well as your overall financial security. So some things to consider is the duration and growth, right. So you have a reduced contribution period, which reduces the total amount that you can actually save. And you have less time for compound growth. Those additional ten years can significantly impact the growth of your savings. And to go along with that now, you have increased longevity risk because retiring at 55 means you'll need that savings to last potentially 30 to 40 years, depending on your lifespan, compared to 20 to 30 years if you retire at 65. And a longer retirement period is going to increase the total amount of money that you'll need to cover your living expenses, your health care, as well as other costs. And then when we're talking about Social Security, you can't even start to receive Social Security until you're 62, and claiming benefits before your full retirement age will permanently reduce your monthly payments. So, you know, all those things kind of will play into, you know, play come into account rather, especially when you talk about early access and early withdrawal penalties from your traditional IRAs and your 401 s before the age of 59.5. And so there are things you can do again, whether that's boosting savings now, delaying Social Security, uh, working part time so that it's not as much of a strain on your body, and then just reducing overall, uh, expenses. So retiring at 55 can be achieved with careful planning and disciplined savings, but it does require a comprehensive strategy to address the financial challenges associated with the earlier retirement. So I'm happy to take a look at your situation and offer some guidance. Karen.

Speaker2:
And goes for Karen. That goes for everybody else as well. Who is listening? All of you out there, uh, can give Mike a call at (704) 560-1573 to talk about your particular situation. 704 5601573 or go to Money Matters with Mike com. Well that is going to do it. For this week's edition of the show. Mr. Zeno, appreciate you as always, sir, and we'll do it again next time.

Speaker3:
Absolutely, Matt, thank you for everything you bring to the show. But most of all, from the bottom of our hearts. We want to thank our listeners. Without you guys, we don't have a show. So I appreciate you tuning in wherever you tune in each and every single week and whatever you're doing this weekend, I hope you enjoy it to its fullest extent and as always, make it a great day.

Speaker1:
Thanks for listening to Money Matters with Mike. You deserve to work with a licensed financial and insurance professional who can offer strategies for protecting and growing your hard earned money. To schedule your free, no obligation consultation, visit Money Matters with mike.com or pick up the phone and call 704 560 1573. That's 704 5601573 not affiliated with the United States government. Mike Zeno 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.

Speaker2:
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.

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