Planning Today for a Better Tomorrow

4.7.23: Audio automatically transcribed by Sonix

4.7.23: 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 Atlanta, Georgia. Happy Easter weekend, people. What a phenomenal 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 how to build a winning retirement plan today, regardless of how much money you have saved. Okay. 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, brother?

Producer:
We're neighbors. I know, I know. I'm like, I'm so used to hearing you say Fort Mill and was like, Oh, yeah, you're in Atlanta this weekend. We're just in different parts of the city.

Mike Zaino:
That's right. I had to come down to Atlanta. My mother had back surgery last week. I have two younger brothers and we've kind of split the duty of, you know, my my middle brother was the one who took my mom, stayed with my mom, took my mom home. Then my youngest brother came over and spent a couple of days. And then I was able to drive down today after being in Raleigh the first part of of this week. And so I am going to spend Easter weekend here and the first few days of next week with her making sure she's taken care of.

Producer:
Well, you are, of course, a good son. And, you know, we we do for our parents, you know, you know that. I know how that goes, you know, with my with my dad having been sick a couple of years back and all that. So yeah, we we do for our it's like you get us to a certain age in life, your parents have always taken care of you. That's right. And then you start taking care of them. That's right.

Mike Zaino:
You know, my mom put up with me until I was 18 years of age. So bless her. I owe her for sure. There is no doubt in my mind, because I'm sure I put the woman through hell. Right.

Producer:
Well, there you go. Well, now is the time for that payback. It is, but yeah, so the bills come and do. But yeah, we do have a great show coming up here today over this next hour mean a lot to talk about what to mention first of all folks that if you are interested in anything that you hear over this next hour go to the website. Money matters with Mic.com because there you can find a lot of great info about the show. You can reach out for a free consultation as well. A lot of uncertainty out there right now. So you want to kind of, as we like to say around here, get to the guarantees in in life and in your finances. And there are guarantees still to be had out there regardless of what's going on in the market. That website, once again, money matters with Mic.com. Or you can call Mike Zaino at (704) 560-1573. If you're watching us on the video on the YouTubes or the Facebook's or the wherever, Mike has his phone holding it up right now because he will answer. He's got his phone on him at all times. Although if somebody calls during the show, probably will wait until after the show to call him back.

Mike Zaino:
That is that is true, Matt. And a point of note, especially if you want to learn about something and you have a problem that you would like us to solve and actually air on our shows, feel free to call in with those because I think that is great real world experience. I know we're going to get into one of those such situations a little bit later in the show, but if you have any questions that you want answered and you'd like us to answer them on your on the air, we'll leave your name out. We'll just discuss the situation. And because chances are you're not the only person in that situation and there might be others that can learn from what we would do given your set of circumstances.

Producer:
Yeah, absolutely right. I mean, it's, you know, you everybody's situation is always going to be at least a little bit different. But there are certain aspects of them that everybody's going to be able to relate to. So, yeah, don't be afraid to to reach out with situations like that. You can also go find us anywhere. You listen to podcasts as well. Really anywhere. Just go on to that. Whatever podcast service you use, Search for Money Matters with Mike same thing on YouTube. You can check us out there by searching Money Matters with Mike Facebook as well. Same thing. A lot of great content there. And the followers keep on growing on Facebook, so we'd love to have you along.

Mike Zaino:
You know, it was special. Matt actually got. Got a WhatsApp notification today from a gentleman that I had met in Nevis, the island of Nevis in the Caribbean at an alternative investment conference. He is actually from the UK and he said that he has several people that just want to learn about financial education topics in general. And so he asked me for the link and he's going to share it with those people. So if you know anybody, I don't care where in what corner of this world they live, just share money matters with Mike and let spread the word. Because again, I say it before I'll say it again. A rising tide lifts all boats. Yeah.

Producer:
And and that works on both sides of the Atlantic, too. And no matter where you are on the other side of the Pacific, wherever you are, a lot of this stuff is absolutely universal that we talk about here. Speaking of something that's universal and is going to affect everyone, the Secure Act 2.0 is something that we've discussed here on the show, Mike, And we want to let let our listeners know we have a new resource that's available to them. It's the Secure Act 2.0 and what it means for your retirement. It is a free publication, a free report that can be yours today. When you get in touch with us once again, you can go to MoneyMattersWithMike.com to get that free sent to you and it's an absolutely great resource that you'll be able to use and to sort of dispel all of the complicated craziness that goes on in these, you know, hundreds and hundreds of pages of legislation that that tend to come out of Washington.

Mike Zaino:
There's a lot of craziness that comes out of Washington. You can bet your bottom dollar on that.

Producer:
Absolutely right. Well, coming up here in the show, we've got nine ways to live comfortably during retirement. We'll have some tips that really anybody can follow there. Why you should meet with a financial pro. And hey, let's let's get you on Mike's calendar because I know that he can help you. Whatever your situation is, we'll play a little right or wrong. That's our sort of, you know, true or false kind of game show, sort of, you know, fun but still educational thing that we like to do here on the show. And as you said, Mike, we'll have a Problem Solver segment as well, where we'll solve a real life issue that someone has has called in. But first, let's get started 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 come from Warren Buffett. A very wise person when it comes to investing. And the oracle of Omaha, as he is known and getting on up there, born in 1930, it seems like, you know what's going to happen to Berkshire Hathaway after Warren Buffett decides one of these decades to call it quits?

Mike Zaino:
It'll be just fine.

Producer:
Yeah. Yeah, well, I'm sure it will. But Warren Buffett, as we know, brilliant mind and once said this, quote, Never test the depth of the river with both your feet.

Mike Zaino:
That actually harkens my memory back to a time when I was like 13 years old and I was an adrenaline junkie. I like to jump off of pretty much every thing. So we would jump off of houses that were being built into the big sand pits. We would jump off of bridges into the lakes, and one time we had the idea to ride a train that started not too far. So by the time we were able to hop on it, it was only going about 5 or 6 miles an hour because it was carrying just cargos of as far as crushed concrete. So we would climb to the top of this thing and ride the train and then jump off of the train over a bridge that crossed Nose's Creek. And I remember the first time we did it, we did not take into account centrifugal force, so we jumped, thinking we were going to fall straight down instead of being moved at an angle that the in the direction that the train was going. And we landed and stuck like darts in the thank Jesus very, very loose mud. Um, so nothing, nothing got broken. Although it was, although it was about a 30 foot drop, you know, we kind of, we kind of compressed our spinal column a little, but we didn't hurt ourselves. So we learned.

Producer:
A physics lesson there.

Mike Zaino:
Yeah, definitely taught. You know, myself and my buddy John, we taught ourselves to to make sure that that we took into account and jump a little earlier next time. But yeah, So, um, you know what else Warren Buffett says not to do? And this kind of leads into my Meat on the Bone segment for today. He says, Don't invest in anything that you don't understand.

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

Mike Zaino:
So you might be asking yourself, where does one begin if they're new? All right. And don't have any type of financial education or investment experience. Obviously, if your employer offers you the ability to contribute to either a 401. K, a 403, B, a 457, a thrift savings plan. If you're a federal employee or any other type of employer sponsored plan, you should definitely take full advantage of that, especially if they offer you a match. After all, if you think about it, their match is absolutely free money. And who doesn't like free money, right? I'm all about free. In fact, I say free is for me. So beyond employer sponsored plans, you could open up an IRA, which actually stands for Individual Retirement agreement. Technically, although a lot of people say individual retirement account, almost everyone should invest in and own stocks. And that's because stocks have proven consistently to be one of the best ways for the average person to build wealth over the long term. And US stocks in particular have delivered much better returns than bonds, savings accounts, precious metals and most other investment types over the past four decades. Another thing to consider would be to invest in real estate. I once heard an old man tell me that God's not making any more dirt, and that really sunk in with me because that means that land and real estate is a limited commodity, if you will.

Mike Zaino:
And as more people start moving into your area, then that real estate is going to increase in value. The same thing with Powder Springs. I grew up in powder Springs, Georgia, and I can remember as a child when cows what would get out of the farmer's field and walk through our backyard. And now it's nothing but, you know, multi-million dollar little McMansions and, you know, five, six, $700,000 townhomes and strip malls. And so real estate is always going to increase in value. But a good rule of thumb, Matt, is to never invest money that you can't afford to lose. According to The Motley Fool, if you break this rule and your investments don't pan out, then you can find yourself struggling to pay your bills at the end of the month. And the smartest investments involve companies that, you know have a long and bright future ahead of them. And while you may be able to make a little bit more money investing in a startup, there is absolutely no guarantee that they're going to make it. And then what happens? You risk losing all of your money if and when they go under another part of your portfolio, excuse me, of investing is to reevaluate your portfolio periodically, leave emotion out of any of your decision making.

Mike Zaino:
Even the best of companies have bad quarters and bad years, but that does not necessarily make them a bad investment. Avoid trying to time the market. People who do this often lose way more than they win, and the reason is because they have to be right twice, both on the buy side and on the sell side. And rarely do individuals get both, right? In fact, most money managers don't get this right and fail to outperform the markets. And that's why it's best to stay the long course when planning for retirement. It's the time in the market, not timing the market that yields the best results. But perhaps the most important thing to consider when investing is choosing the right financial professional. Their ability to walk you through elementary financial concepts and have you understand what they're talking about is paramount. If your advisor is using terminology that you don't understand and acts if he's the best thing since sliced bread and makes you feel like a little person and makes him look real big run, you want to work with somebody that can break things down in plain English and explain things in a manner that you're going to understand. And Matt, I happen to know a guy.

Producer:
Hey, I do too. His name is Mike Zaino and his website is MoneyMattersWithMike.com that's MoneyMattersWithMike.com all one word you can give him a call as well 704 5601573. Great perspective right now especially you mentioned it a couple of times as you sort of ran down that list staying invested for the long term because so many people do get caught up in the emotions of it all. They do. And they'll get freaked out, especially at a time like we've seen lately with a lot of volatility in the market. But folks, it happens. We were we were lulled into that false sense of security over the previous, you know, ten years like pre-pandemic, where we had this slow and steady growth. And now there's there's some turmoil out there. And so people are caught off guard by it.

Mike Zaino:
Yeah, they are. And if you out there listening, if you have concerns about the market, you have concerns about the current state of the economy and future tax increases that I encourage you to schedule a complimentary meeting with me so that we can get started on a plan that aligns your finances with your current risk tolerance.

Producer:
And once again, you can do that by going to money matters with Mic.com. All right, Mike, So we've got a list to rundown here as we continue on with the show. Nine Ways to Live Comfortably During Retirement. Doesn't that sound good? Living comfortably during retirement? It's music to my ears.

Mike Zaino:
I mean, they're known as the golden years, right? We don't want them to be the the cardboard years where you're living in a cardboard box under the bridge. We want you to be able to take advantage. And so the first thing that I want to point out has to do with Social Security. So if you don't mind, Matt, I'm just going to dive right in. Do you care?

Producer:
Dive away.

Mike Zaino:
Dive away. So so maximize your final earning years. And don't take Social Security until you're at least full retirement age. What do I mean by maximizing your final earning years? Well, most people are earning more money than they've ever made before in their 50s and 60s. So those are your final earning years unless you choose to work into your 70s. Right. But by waiting until you're full retirement age, say it's 67. It is for me. Okay. You actually receive at that point in time 100% of the Social Security benefit that you're owed. Don't settle for less by taking it too early. In fact, if you start receiving your Social Security benefits at age 62, you're only going to receive 75% of the benefit. But if you wait until your full retirement age, like I said, say, in my case 67, you get 100% of that monthly benefit because you delayed taking them for those five years. Now watch this. If you wait until the Social Security maximum age of 70, as it currently stands, you actually get 132% of the monthly benefit because you delayed taking it just another three years. So look at the difference between taking it at 62 where you only get 75% and then waiting just eight years. Okay. We all know that eight years goes by pretty quickly in the overall span of life, but from 75% to 32%, Matt, that is what, 57% more just by waiting those eight years? Yeah, it's kind.

Producer:
Of wild when you do the math like that. It's a big a big chunk there that you could be missing out on. You know, it's a great strategy.

Mike Zaino:
Especially if you are healthy and you have longevity on your side. You know your family's history. Right? So if all of your people live beyond their mid 80s into their 90s and beyond, then you are absolutely most definitely, unequivocally going to be better off long term if you delay taking Social Security. And remember, if you're in a married or spousal situation and one of the spouses passes away, so too does one of those Social Security payments, which means that the surviving spouse is going to keep whichever is greatest, the lesser amount goes away. So something to absolutely be concerned, literate of when you're looking at your retirement plan.

Producer:
Yeah, it absolutely is. You got to got to take that into account. Another thing that could be a way to live comfortably during retirement, that's number two on our list is to pay off your house or, you know, downsize and then pay cash for that new smaller house and then invest the difference. You know, we've said this before, and it's still true that the happiest retirees most of the time are those who have paid off their mortgage.

Mike Zaino:
It is. I mean, think about it. If you're if your mortgage is $1500 or $2000 or God forbid, you live in an area and you're listening to this where your mortgage is just because of of of the real estate prices are 3000, 4000, $5,000. Imagine not having to account for that in your expenses during retirement. So, you know, depending again on where you live, you might be able to sell your property and then move, I don't know, 20. It's a way kind of stay close and be able to buy something that's maybe on the edge of town that is significantly less, maybe 75%. And then you can bank that 25% difference. Now, here's something to also think about when it comes to paying off your house. If you didn't take advantage of the Uber low interest rate environment that was just a couple of years ago. Okay. And let's say your mortgage interest rate is above 5%. Anything less than 5% to me, I consider that free money. But if you're paying more than 5%, then you absolutely want to tackle that mortgage as quickly as you possibly can.

Producer:
Yeah, I mean, it's such a burden at the biggest financial burden that we have during our lives. Generally speaking, unless you have some some strange and unusual situation, most people, the biggest purchase that they make and the biggest payment that they're ever going to have is that house and that mortgage payment. So, yeah, absolutely. Getting rid of that boy, no doubt such a difference. And so So what's number three on this list?

Mike Zaino:
Yeah, another another thing. You know, reinvesting the money that you save from not having a mortgage and actually putting it to work for you in an investment account, I want you to think of your dollars as little soldiers, okay? And you want them to to capture as much ground as they possibly can. Okay. And if you have the ability to do so, meaning that you are over 50 years old, 50 or older, you should absolutely take advantage of and try to maximize the catch up contributions that the IRS lets you put away in savings. Okay. And so, you know, making those smart re investments in your future can pay off as you get older. So let's look at it now. You can save up to a total of $30,000 a year if you are 50 and older. The ordinary contribution limit for an employer sponsored plan like a 401. K or a 403 B or a TSP or any of those ones that I mentioned earlier in the show this year. That's $22,500. But if you are 50 or over, you can contribute an additional $7,500 a year for a total of $30,000. And I want you to think about this because I broke this down a little bit in math, too. Let's say that you are 50 years old and you start maxing out until you're full Social Security age, say 67. So that's 17 years times $30,000. Matt, That is $510,000 before any growth before any match over those 17 years. And if if you just receive a 6% rate of return each and every year, you're looking at over three quarters of $1 million.

Producer:
Wow. And that's that is great. That's one of those things that, you know, people might not even realize they could could do. And and, you know, you throw out a number like that and people are like, oh, that's just that's, you know, way out of my league. I would never be able to. But but you could you can do it. And as you say, that's before any of those matching contributions, before any growth, before any of that stuff, that's only going to add to it and compound on top of it. So you could, you know, be looking at well over $1 million just by doing that as as per your example there.

Mike Zaino:
And for those of you who are like, there's no way I can afford to max out my my 401. K, which, you know, at that 30,000, heck, if you do half right, if you do half, it's still, what, $375,000 at the time you retire. If you do 15,000 a year for those 17 years. So we're not talking about chump change. We're talking about life changing money that will allow you to actually live your golden years, not in a cardboard box under the bridge.

Producer:
Yes. And that is the goal, I think, for everybody. I think we can all agree on that. We we want to avoid the cardboard years and go for the golden years instead. Number four on our list of nine ways to live comfortably during retirement. We touched on this a little bit earlier. We can expand on it now, though, is to stay invested and avoid those emotions getting in the way.

Mike Zaino:
Yeah, so so especially if you are a younger investor, right? If you have 20, 30, 40, 50 years to go before you plan on retiring, then you need to stay in the market because why? Markets are cyclical. What goes up must go down and what down must go up. And typically in the history of our markets, we see the about every 12 to 14 years. Right. We see that that that big just, you know, drop or correction. As they like to call it. I like calling it losing 20 to 30% of my money. It's not fun. Nobody likes it. But if you know that markets are cyclical and you contribute, you know, buying even on the way down and back on the way up, that's called dollar cost averaging, which you're really doing is when prices are low, you're buying more of those soldiers on sale. You're adding those soldiers to your army so that when the markets do recover and come back up now they've already got more ground, you know, and that ground is just going to grow exponentially faster. So, you know, again, if you're a younger investor, definitely keep emotion out, understanding that there are ebbs and flows to the market. Now, if you are in that retirement red zone, you have to determine what amount of money you are willing to subject to the volatility of the market and then what amount of money, more importantly, that come hell or high water, you are not willing to risk due to market conditions. So obviously your time horizon for when you are going to retire makes a huge difference in how risky one should be when it comes to investing in the markets.

Producer:
Yeah, absolutely. And it all has to do with your your particular risk tolerance. And as you say, all of those different factors go into it, your, you know, your time horizon, how you know how much longer you are going to work, how much longer you are going to need to stay invested. And all of that really comes together in, you know, what we sort of refer to as a as a risk profile. And, you know, you could be someone, especially if you're younger, who is, like you say, willing to take a lot more risk and has the time to do it. But on the other hand, if you're a little older, might not be the case.

Mike Zaino:
That's right. And if you don't know what your risk profile is, you can head to money matters with Mic.com. And I actually have a risk profile questionnaire that you can fill out to determine how risky you should be.

Producer:
And that's a great tool and a great like it gets you, you know, gives yourself rather a lot of great insight into your own risk tolerance and sort of where you stand. Because if you you know, if you just ask the question, okay, how much risk are you willing to take, you could owe a lot of risk. That's great. I want to, you know, make me all the money, but I could lose it all, too. But I'm well, you know, I'm a rebel. I'm willing to take. But then you answer these questions and you. You sort of, you know, see and get it, get it analyzed there. It could be a totally different story on what actually makes sense for you.

Mike Zaino:
It is. And like I said, time horizon is everything. When are you going to need the money that you've worked so hard for? And the closer you get to needing it, the less risk you should take with those dollars simply because if you lose it, you don't have time to allow for it to come back, especially if you're retired and no longer contributing to your plan.

Producer:
Yeah, that's very true. And as we continue on here with our list of Nine Ways to Live comfortably during retirement, number five on the list is implement a Roth IRA conversion before age 73. Now used to be the the RMD age. The required minimum distribution age was 70.5 a few years ago. Then it went up to 72. Now it's 73 thanks to the Secure Act 2.0. But if you do a Roth IRA conversion before the age of 73, it's got some advantages there, Mike, and I'll let you do that. That rundown.

Mike Zaino:
Here. It does. So so number one, if you don't know what a Roth conversion is, let's say that you do have an employer sponsored plan or you have been saving in an IRA, right? Well, if you are comfortable enough and don't need the money, guess who's going to come knocking at your door looking for tax payment? But now the time that you turn 73, as Matt just alluded to, and eventually by the 2030, that's going to be pushed out to age 75, why? To allow you to grow that nest egg a little bit bigger so that they the government gets a little bit more of your tax money, Right. So by implementing a Roth conversion, what you're doing is you're looking at how much room you have in your tax bracket, your current tax bracket for whatever year you happen to be in before you jump into having to pay the next tax threshold, which means a higher tax payment. So if you've got room in there, it might make sense for you to go ahead and pay the taxes just on that portion of your money and then convert that into a Roth IRA, because what does that do? Well, number one, it helps you be protected from future tax increases.

Mike Zaino:
One of the things the questions I ask in every single one of my seminars and speaking engagements is how many people in this room think that taxes are going down in the future? And Matt never once has a hand been raised. Okay, so. If you think taxes are going up in the future, why in the world would you save in a tax deferred type plan? If you have the ability to go ahead and contribute to a Roth, either IRA or a Roth 401. K or other employer sponsored plans, that's eliminating those required minimum distributions no matter when they set the bar and push it out to. Like I said, it will eventually be phased out to age 75. So future tax increases, you don't have to worry about those. You don't have to worry about required minimum distributions. And the biggest advantage is that money grows tax free for the rest of its life. Tax free people wake up America and start contributing to the Roth.

Producer:
Yeah, there you go. Mean tax free that that you know, you said earlier that, you know free stuff is free is for me. Free is tax free is for me too.

Mike Zaino:
That's absolutely.

Producer:
Right. Up my alley. Well, number six on this list of nine ways to live comfortably in retirement. And boy, talking about something that that sounds sounds good to me too, is build your own personal pension that you can never outlive. And a lot of people might listen and say, well, how in the world is that possible? Thought that a pension was only something that maybe my employer might have or maybe used to have years ago They no longer offer because now it's just the 401. K and you take that or you leave it and whatever, but a personal pension that you have control over that you can never outlive that. That's something that sounds like it would be great for a lot of people.

Mike Zaino:
Well, and Matt, it's an education crisis right here because a lot of people have never heard of the fact that they can actually start their own pension plan and be 100% in control of how and when that pension starts kicking in and paying them income. They're you know, as over the past several years, I've heard commercials. I've I've seen TV ads against annuities. And it kind of makes my blood boil because there are over 100 different types of annuities and people that say, I hate annuities or I don't want an annuity. I honestly think it's just a simple education issue because if they knew that there were different types of annuities and this one I'm talking about in particular is called a fixed indexed annuity. All right. We can set them up for growth. We can set them up for income, we can set them up for a combination of growth and then income. And most of the ones that I'm dealing with are multibillion dollar, highly rated companies that don't go out of business and have been around since before most of our listeners were in diapers. So, you know, there are a lot of them, especially now because the market lost what it lost last year.

Mike Zaino:
The S&P was down 20%. In 2022, the Nasdaq was down 35% in 2022. And while they have seen some recovery this year, a lot of people out there are fearing that the worst is yet to come and there's still nowhere near where they where they were by the end of 2021. So there are a lot of these companies now that offer the fixed indexed annuities who are offering an upfront bonus so that you can, you know, make up for anything that you lost in 2022. And the bottom line is, is that you're investing in a market linked index, which means you get to participate in the gains of the market, but you are protected by a floor. You can never do worse than zero. And for you gamblers out there, let me put this into perspective. Let's say you go to Las Vegas and you want to play some blackjack. And when you sit down at the table, the dealer says, Hey, at my table, you can't lose. Okay? If you win, I'm going to pay you your earnings. And if I win, we'll just push. Matt How long are you going to stay at that table?

Producer:
I'm going to take up residence there myself.

Mike Zaino:
Exactly. You're going to have to kick me out. Well, these things exist, folks. And again, you still get to maintain liquidity. So if you need, you know, injections of cash periodically, they'll give you up to 10% a year. And, you know, I had this one person earlier this week that had $750,000 that she was protecting in a in a safe type environment, in a savings account. And then she had a little bit invested in the market. And so I said, well, what's your number that you don't want to lose? She said, the 750. That's why I have it, you know, in the bank. And even though they've increased their interest rates, I'm still earning peanuts. And I said, Yeah, more like more like pocket lint. And she she started laughing. And so we were able to take that. And because I asked her, I said, When's the last time you wrote a check for seven? $75,000. And she kind of looked at me puzzled, and I said, well, that's 10% of 750 grand. She goes, I've never written a check for $75,000. And I said, Well, what's the likelihood of you doing that every year for the next ten years? And she said, None. I was like, Perfect, you qualify. And she's like, Huh? So we took her money and we protected it. Gave her more upside potential by contributing to the fixed indexed annuity. Still maintain liquidity. And guess what? When she passes away, if she passes away sooner than later, there are named beneficiaries that can now take an inherited IRA. So when we're looking at those types of products, I love them for folks that are getting in and near retirement.

Producer:
Yeah. If you've got even as you say, if you've got money sitting in a savings account, even a quote unquote high yield savings account is, yeah, you might earn a little bit on that money, but it's not going to be, you know, the potential for any, you know, higher growth is not is not there. It's just it's just not it doesn't exist because of the way that that that works. I mean, even if especially if you've got your self parked in a in a savings account and one of the brick and mortar banks, the big the big boy banks, generally speaking, those interest rates on those savings accounts are just very low, just very minuscule. A lot, a lot less than 1% right now. Even with the interest rate environment we're in, you can do a lot better than that with a product like a fixed indexed annuity.

Mike Zaino:
Yeah, not only that, Matt, I mean, I saw a lot of people running to CDs as soon as CDs started, you know, coming up a little bit in their price as far as a percentage points offerings. And you know, the combat point to that is, is your money is still technically locked up. Right? You can't access the funds in a CD where we can give you better performance and better guarantees and still let you maintain liquidity. So I promise you folks that that love banks out there, I can blow them away with the product offerings I have at my disposal. And it's just a simple education issue. So let me educate you on that stuff. And I promise you that you can't go wrong when it comes to these types of products, as long as it fits, you know, your goals and objectives and what you're trying to accomplish.

Producer:
Yeah. And that's really what it's about, is what are you trying to accomplish? Let Mike Zaino help you get there through all of these different methods that we're talking about. And you can go to learn more and get a free consultation at Money Matters with Mic.com. That's Money Matters with Mike. All one word.com or call 704 5601573. All right. So number seven on our list of nine ways to live comfortably during retirement is replace your bonds completely. Now, we just talked about one of those strategies there, Mike, and that's a fixed indexed annuity. There's another way to do that as well, which is a little bit more complicated. It's a structured note ladder, but there are different ways that we can can accomplish that bond replacement and sort of, you know, because the because the bond market just really you talked about how awful the stock market was last year. Boy, the bond market was was had its worst year, I think, in history. Much in its.

Mike Zaino:
History. Yeah, in its history. The market the bond markets were down 15% in some cases last year alone. And so think about this for a second. This is supposed to be the safe portion of your portfolio, your traditional old school grandpa's 6040 mix, 60% in stocks, 40% in bonds. And, you know, grandpa used that 40% in bonds to create income in retirement. Right? So now we can replace those bonds completely by using that same strategy, that fixed indexed annuity. Why? Zero fees? You pay fees for bonds. Okay. Guaranteed performance and a floor of zero. The people last year would have loved to have a floor of zero because I asked this question all the time in my seminars as well. If you have $100, you lose 50%. How much do you have? Everybody goes, That's easy, Mike. $50. And then I say, All right, then you get your 50% right back. How much do you have? Almost everybody, without really thinking about it, screams out 100 bucks. And I'm like, Nope, you have a few smart ones in there that go 75. And I'm like, you, ma'am, You, sir, are correct. Because when you lose 50%, you got to gain 100% just to get back to even. So, the fact that bonds can lose money do not have a zero floor and are subjected to prepayment risk. Well, guess what? The fixed indexed annuity is not subjected to any of that participates in market linked gains and has a zero floor and can guarantee income for the rest of your life no matter how long you live.

Producer:
And that is really what it's all about is that income in retirement and and. Guaranteeing that for the rest of your life. Boy, that's just such a burden off and a weight off of your shoulders and, you know, just make you live a healthier life as well because you don't have the stress of what am I going to do to meet my obligations in retirement and all of that and all of that, all of those worries as well. Number eight on this list of nine ways to live comfortably in retirement is to diversify your accounts between three buckets. Right? You've got tax deferred, taxable and tax free. Yeah.

Mike Zaino:
So so when I talk about my smart money list, if I'm going to rank money, the best kind of money to me is free money. Well, where am I going to get free money? Matt? Well, if I'm participating in an employer sponsored plan and they're offering a match up to a certain percentage, if I'm not doing that complete percentage up until what they are offering, I'm basically saying, Nah, I don't want free money, which is ridiculous to me, right? Especially if you can afford to do so. So free money is the best kind. Notice that is not on our list right now, but it should be on our list. Because again, if you're participating in an employer sponsored plan and you're not at least contributing up into and maybe even beyond the match, you're missing the boat on that free money. The next number two in that smart money list would be tax free money. And Matt, there are only two ways to generate tax free money. We've spoken about one of them earlier in the show, and that's a Roth IRA. And the other one is a type, believe it or not, of life insurance called an indexed universal life insurance policy. So those two are the only two ways to get tax free money.

Mike Zaino:
Number three on the list would be the tax deferred bucket. If I have to save and I don't have a tax free option or a free money option, then I want to defer paying those taxes because I'll be able to take home more money and hopefully let those tax deferred dollars grow as big as they possibly can. And hopefully the IRS and the government is not going to raise my taxes so that hopefully I'll be able to enjoy most of that money. Now, obviously, of those three, whether free tax free or tax deferred, that is number three on the bucket for a reason because there's a lot of hoping, a lot of wishing, a lot of praying that goes along with that bucket. And then obviously the last bucket, it would be the taxable bucket. And so that's just straight, plain and simple. It's the money you have that you're going to have to pay taxes on. Okay. So if you had the ability to create free money, great tax free money, even better to me, right? Because you earn that money and now it's tax free and growing, tax free, and then tax deferred and tax.

Producer:
And you got to, you know, diversify. And, you know, when we talk about diversification, a lot of times people think, oh, well, I'm invested in this particular sector of the economy. That particular sector of the economy. But you've got to diversify as far as, you know, the way that you're set up as far as your tax structure goes as well. And that is number eight on this list. Number nine, as we round out the list of nine ways to live comfortably during retirement is to accurately calculate your monthly expenses and build a positive income gap at the start of your retirement. This is the thing, Mike. We always say that you want to have more money than month, not more month than money.

Mike Zaino:
Yeah. So the bottom line in retirement is if you don't know how much income you have coming in and how much expenses you have going out, you're probably going to either live so frugally that you're missing out on some of those things that you could be enjoying. Okay. Or you are going to spend more money than you can afford to spend. So one of the exercises, especially in that last year that I ask all of my clients to do if they last year of working. Let me let me clarify that is I ask them to live off of their retirement income while they still are working so that they can identify any shortfalls and anything, any leaks that need to be plugged or anything in general that just needs to be addressed. And I also ask them to chart every single penny that they spend for at least three months because you would be shocked at those, you know, brainless stops for gas. And then while you're getting gas, you run inside and get a coffee or you run inside and get a donut or, you know, just whatever it is, you pick up a magazine or you pick up the gum that you had absolutely no intention of buying. But because it was right there at the register, they got you, right. So by calculating your your your money and. Knowing where your expenses are going. Tracking your money, I should say, and figuring out whether or not you are positive or negative while you still have time and money to address those situations puts you well ahead of the curve as opposed to somebody who actually has to react when they find that there is more month than money because they did no proper prior planning to prevent that pitifully poor performance.

Producer:
Yeah, exactly. Exactly. You'd rather plan ahead, be in good shape in the beginning rather than have to do that, have to play that catch up and, you know, try to try to figure things out on the back end because that's never a good idea. But hopefully this list of nine ways to live comfortably in retirement really gives people some not only some ideas, but maybe, you know, spark some questions. And people might be saying, okay, so why should I meet with a financial professional? Why should I call Mike Zaino? Why should I go to MoneyMattersWithMike.com. There are several reasons and maybe having to do with things that people don't know either. They hear a term, they don't know what it means, or they just have never come across it, or they don't quite know how to fix a certain problem that they have going on.

Mike Zaino:
Yeah, sure, Matt. Bottom line, you just kind of hit the nail on the head, right? If you don't understand terminology, let's say an expense ratio, if you don't know what an expense ratio is, you need to meet with a financial professional. If you don't understand the complete picture as it pertains to the risk that you are exposing your investments to, you probably need to meet with a financial professional. If you don't understand how to manage that risk in your portfolio as you age, you should definitely meet with a financial professional. If you don't know whether or not you should pay your house off or if you don't have a plan for buying your next and potentially final vehicle, you should meet with a financial professional. If you don't have a health care plan, a plan that addresses the rising costs in health care as you age and as time progresses, you should probably meet with a financial professional. If you don't have a formal retirement plan. Matt, you should probably meet with a financial professional. And even if you do have a plan in place, if you have not gotten a second set of eyes on your plan, just to at least verify and validate your plan, and it's in its accuracy in delivering the objectives that you've set forth in it, then you should definitely meet with a financial professional.

Producer:
And I know a guy, Mike Zaino, you can go to Money Matters with Mic.com that's MoneyMattersWithMike.com or call Mike at 704 5601573704560 1573.

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

Producer:
It is that time once again where I present a statement and Mike Zaino tells us where whether that statement is right or it is wrong. And we want you to play along with us, whether you're at home, in the car, at the at the gym, on your way to the Home Depot, whatever in the world you're doing on your way to have Easter weekend meal with the family, whatever you're doing, we want you to play along. So guess along with me. And you know, hopefully you'll do better than I do when I give these statements to Mike and he tells us the right answer. So number one, in right or wrong is this If you choose to take a lump sum on your pension when you retire, you can receive up to a 20% bonus on your money. Is that when right or wrong, Mike?

Mike Zaino:
Matt That's actually right. And a lot of people don't know that they can take a lump sum, that there is a lump sum option when it comes to a pension. Okay, We can take that money and depending on your goals and objectives, if you need income, if you need immediate cash, like however you want to set it up, we can put that money into a fixed indexed annuities or annuity. And as I mentioned, the annuity companies right now are making things very, very attractive for those folks who lost a lot of money in 2022. And so by adding that immediate bonus to your pension nest egg, when you invest that lump sum into a fixed indexed annuity, it can also generate a much higher income payout during your 30 plus year retirement.

Producer:
Yeah, absolutely. So and once again, as we've said in the show before today and previously that that is, you know, a personal pension that you can never outlive that is guaranteed income for your lifespan, however long that might be. All right. So yeah, number one. Got it right. Number two, here we go. Here we go. There is no product safer than a bank CD when it comes to protecting your money. Is that one right or wrong, Mike?

Mike Zaino:
Matt, I think you know the answer to that one. Based on what we've been talking about today so far. Matt That is wrong. So we've talked about a fixed indexed annuity and I don't want to beat this to death, folks, but a fixed indexed annuity can protect your wealth while also providing that upside as your principal invested is tied to a market linked index. But zero is your hero. When the markets are tanking, you're guaranteed not to lose a dollar. And I want everybody to think about this, right? The FDIC, the Federal Deposit Insurance Commission, only protects your investments up to $250,000 in deposits. And the bigger issue is that there's only a 10% financial reserve requirement at banks. What does that mean? That means they're able to lend out 90% of all of the account holders money. And so if a run on banks occurs like it did last month and we saw not one, not two, three different banks go out of business because of the runs on their deposit, people were taking their money out in droves. They didn't have the liquidity to be able to give them their money. Now, money at a bank account that's called a demand deposit account. You should be able to walk in, demand your money, and they should be able to give it to you. But with only a 25 or excuse me, a 10% reserve requirement, then you run the risk of that not actually being able to happen. Now, fixed indexed annuity companies, they are required to keep 100% in reserves. So that means for every dollar that they have out there and guarantee they have at least that much in capital reserves. And most states require between a five and 10% surplus. There are also many great multiyear guaranteed annuity options. Those are called migas for short as well for your midrange money that you don't need for the next three, the next five, the next seven years that are way better than the CDs, mainly because they're going to outperform them in percentage and they are going to provide liquidity during those three, 5 or 7 year options.

Producer:
All right. So I've gotten I'm one for two now. I'm batting 500 as we go along here. And right or wrong, number three, you can structure your retirement accounts to deliver tax free income during retirement. You can do that. Is that right or wrong, Mike?

Mike Zaino:
Matt That is right. We just discussed that in our Smart money list. Okay. Both IRAs, the Roth IRA. Okay. And an IUL, an indexed universal life insurance policy, can provide tax free funds. Roth IRAs do this because you're depositing money after tax and you can take that money tax free when you go to withdraw it in retirement and there are no required minimum distributions. Okay. The IUL, thanks to the IRS Code 7702 allows you to build up cash value inside of your life insurance policies and then take tax free withdrawals from that accumulated cash value of the policy as a loan against the death benefit. Notice I said loan. It's a loan you never plan to repay. So if you start those especially young enough, those can amount to significant income streams. As far as both the Roth and the IUL over the course of your retirement.

Producer:
And I love that solution because I love a solution that people don't usually think of, because when they think life insurance, they don't necessarily think retirement. And so there you go. That's that's a great one. All right. So one more here. In right or wrong, it is a waste of time to have your financial accounts reviewed on an annual basis. Now, I already know this one, Mike. I confess I do know the answer to this one. But is that one right or is that one wrong?

Mike Zaino:
Yeah. I'm going to use our president's favorite catchphrase. Come on, man. You know that is wrong. You want to inspect what you expect regarding your financial future, why it's your financial future and an annual checkup at a minimum can prevent you from paying way too much in taxes, way too much in fees before those expenses cause a life style change, a lifestyle change. Think about that for a second. The taxes you pay and the fees you pay can actually cause a lifestyle change down the road. Why, Matt? Because they add up.

Producer:
Yeah, absolutely. Do. Absolutely do. All right. Well, not too bad Batting 500 this time around on right or wrong so you know still hall of fame numbers there but if you hear anything on the show, of course, that you would like to explore further, just go to MoneyMattersWithMike.com.

Producer:
It's time for this week's problem solver.

Producer:
And of course, as you can tell by our dramatic introduction to this segment of the show, it is the problem solver. And I will present the problem. Mike Zaino will solve the problem. Here we go. The problem is a man who just turned 70 still works. His wife does not work and is ready for him to retire. I bet she is. The wife wants to travel, though. The husband is concerned that they don't have enough saved to retire the way that they want. Here's the thing, though. The man has $900,000 actually put away in a 401. K. The couple would receive about $4,800 a month combined in Social Security. So you're looking at that particular situation. Mike, what is a potential solution for that couple?

Mike Zaino:
Yeah. Well, actually, Matt, we solve this problem, right by completely replacing their bonds. We redirected their bond portion, which was significant. We invested it into an income annuity and generated them an extra $2,000 each and every single month in income, which, by the way, was guaranteed for life and their annuity since it's tied to an index, meaning that they only gain and they never lose, gives them the potential for much higher returns on their money than sticking it, say, in a CD or in some of these bonds that have the potential to lose. So that plus the annual cost of living adjustments that their annuity has will help them outpace inflation. And here's an often overlooked but a really big factor affecting many people's retirement accounts. We also, Matt, found ways for them to cut their monthly expenses and we identified unnecessary portfolio and advisory fees that are now not there by working with me. So everybody out there that's listening right now, if you're listening to the show and you feel like you can relate to any of the scenarios that we describe on our program, please get in contact with me so that I can provide you with a complimentary consultation just for listening to the show today. I would love for you and your family to be a part of our next big retirement success story.

Producer:
Yeah, and that's absolutely right. There are a lot of those success stories from having worked with Mike Zaino on Problems just like yours, the things that you are going through, the concerns that you have, and you can explore solutions to your problem, just like that one couple did that we just talked about. Go to MoneyMattersWithMike.com MoneyMattersWithMike.com or call 704 560 1573. Well that is just about it for the show today Mike as I look at our time on the the old clock on the wall here but I thank you I've definitely had a great time. Once again, I have learned something, as I always do. I enjoy our time together so much. Thank you for all that you do for our listeners. And I will talk to you again next week.

Mike Zaino:
All right, Matt, again, thank you for everything you do. You put the shine on the show. Thank you to all of our listeners out there. Whatever you're doing on this Easter weekend, whether it's, you know, Easter egg hunts with the grands or doing whatever you're doing, remember the reason for the season 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.

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