If You Want the Best for Yourself, You Can’t Do It By Yourself

January 31, 2022 00:47:54
If You Want the Best for Yourself, You Can’t Do It By Yourself
Retirement Results
If You Want the Best for Yourself, You Can’t Do It By Yourself

Jan 31 2022 | 00:47:54

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Show Notes

This week on the Active Wealth Show, Ford discusses a new structured note offering for investors, answers more questions from listeners and highlights the importance of the 4% rule and the rule of 100. Activators, if you’d like to get more information you can call us at (770) 685-1777 or go to www.ActiveWealthShow.com and set an appointment. We will give you a free portfolio analysis and a free financial plan to your 95th birthday.

Book your free no-obligation consultation: www.ActiveWealth.com

Watch more episodes: www.ActiveWealthShow.com/podcast

Request your free copy of Annuity 360: www.Annuity360.net

If You Want the Best for Yourself, You Can’t Do It By Yourself : Audio automatically transcribed by Sonix

If You Want the Best for Yourself, You Can’t Do It By Yourself : this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer Sam Davis:
Registered investment advisors and investment adviser representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosure of any conflicts of interest, if any exist. Please refer to our firm brochure. The ADV to a Page four for additional information.

Producer:
Welcome to the Active Wealth show with your host! Ford Stokes Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax efficient, investing it and now your host Ford Stokes

Ford Stokes:
And welcome the Active Wealth Show activators on Ford Stokes Chief Financial Advisor, and I’m joined by our executive radio producer, Mr. Sam Davis. Sam, it’s time for you to welcome them.

Producer Sam Davis:
Welcome to the weekend activators. It’s almost February. There’s a chill in the air, but before long it’ll be spring. We’re glad to have you with us today on the Active Wealth show.

Ford Stokes:
Yeah, I’m really looking forward to being warmer. It feels like Jack Frost and lost his damn mind.

Producer Sam Davis:
Yeah, I’m not sure when the groundhog is going to come up, but I’m hoping that he lets us know that spring is coming.

Ford Stokes:
Yeah, we don’t need six more weeks of winter, but I think that’s what we’re going to get from old Punxsutawney Phil. I think that’s what we’re going to get pulling for the groundhog on February 2nd next week. All right, let’s go straight in what we’re going to talk about today. We’re going to talk about really the title of the show is if you want the best for yourself, you can’t do it by yourself again if you want the best for yourself. You can’t do it by yourself. And we’re going to we’re going to first take about five questions from our activators. We have five more questions that came in that we felt like a really important. Again, if you want to submit questions in to us, we’re happy to help you do that. All you got to do is send me an email at Ford at ActiveWealth.com. That’s Ford@Active Wealth. Or you can just submit your question via Twitter @ActiveWealthM is our Twitter handle Active Wealth M stands for management and you can also visit our Facebook page Active Wealth Management. So thanks so much. We love getting your questions, so we’re going to talk through those questions. We’ve also got a brand new flash note or structured note for February, and that’s really exciting stuff and you’re really going to like, we’re going to talk about it at the beginning of Segment two, so you don’t want to stick around for that because we’ve got quite the interest rate that we’re going to be able to provide.

Ford Stokes:
And it’s I’ve got a hint here for everybody, Sam. It’s higher and much higher than it was for our January flash notes. So that’s really good news. And we’re going to just kind of talk through how you can really reduce risk with your portfolio in some of these questions. And we’re going to talk about a couple of stories that we’ve got. And then we’re also going to share two big rules. They’re going to help kind of reduce your financial risk during retirement. Obviously, a lot of people have seen a lot of volatility seeing some market downturn. Some of the tech stuff is tech stocks have given back some some value and some volume. And we we’ve seen a lot of volatility in January and hopefully it’ll turn around. I think the market is also baking in what will likely be slightly higher interest rates. I don’t think the U.S. government is going to go crazy with interest rates, but we’re going to have slightly higher interest rates. And also they’re baking in a reduced amount of liquidity in the market where the U.S. government is not going to be buying as much on in the way of Treasury bonds and 10 year treasuries and things like that. So with that, Sam, I want to get your take on our the title for today’s show if you want the best for yourself. You can’t do it by yourself.

Producer Sam Davis:
Yeah, it’s so true. I mean, I’m just thinking back to so many times just in my life, and I’m sure almost all our listeners out there have experienced this at one point or another, where you’re just getting overwhelmed with whatever it is, it could be just things you’re handling around the house. It could be your personal finances. It could be whatever you’ve got going on at work. You’re feeling overwhelmed, but you’re still just trying to do everything by yourself. And in situations like that, what you really need is a team around you. So that’s kind of where our title came from today.

Ford Stokes:
Yeah, absolutely. And we also this past week, I got the chance to talk to Dr. Ken Dychtwald, who’s di Qualita, who is a Ph.D.. He’s the top thirty five most influential people in retirement planning, even though he’s not a financial advisor. He’s a Ph.D., and he’s an expert on aging and a couple of things that he shared with me. He shared that, you know, I was part of a of a panel and we had to ask him a lot of questions. And he mentioned. Get this, Sam, there are over 40 million unpaid caregivers in the United States right now caring for aged relatives or friends, and a lot. Most of those are wives taking care of their husbands and 40 million is over 10 percent. It’s almost gosh, it’s almost like 12 to 15 percent of the population. And if you don’t have a plan for what you’re going to do when you know one of the two of you and in a married in a marriage gets sick and needs help and needs care, I would beg you to reconsider and really get a plan. Also, Dr. Ken said that, you know, 70 percent of us are going to need some sort of long term care and I’m going to share his story. He shared the story that his dad lived for 10 years with round the clock coverage, and his mom lived 12 years with round the clock coverage.

Ford Stokes:
It was over $100000 a year for him to care for his parents three different shifts. His mom got Alzheimer’s, who was diagnosed with Alzheimer’s 12 years before she passed away, 12 years of him working with her where she had diminishing faculties. And she the he said like the last nine years, she doesn’t, didn’t know who he was. And he said it was great that he had the financial capability to care for her, but they had no plan for it. And and also, he talked about kind of a sandwich situation with a lot of 50 year olds. You’ve got a lot of 50 year olds who are providing for. Let’s say there are parents who are in their 70s and 80s and even 90s, and then you’ve got. Kids who are not, as he says, they’re not being all they can be. And they are living at home, and they are a financial drain on those 50 to 60 year olds. And you know, we’ve talked about it many times on this show. Listen, when we’re we’re on an airplane, they ask us to put the oxygen mask on yourself first before we’re helping others. I just want to make sure that each and every one of you know that you really got to take care of you and be careful about how much you say yes to. And most people don’t ever say no to their kids because they want what’s best for their kids and they.

Ford Stokes:
One thing that was really heartening, Sam, was that he said a lot of those 40 million caregivers, they don’t see it as a burden. They see it as an honor, as a way. And it’s honorable for them and they get much more out of it than you would think than you’d imagine by caring for their parents, which I thought was great. But at the same time, we should really have a plan for that, whether it’s investing in a fixed index annuity, that that also has some long term care income dabblers, or whether you want to get long term or long term care insurance or whatever you want to do. I mean, we do sell long term care insurance and it’s not something we push, but it is something we make sure that our all of our prospects are aware of and our clients are aware of, but. You know, it’s just something to consider, and I just thought it was almost like an epidemic the way he was talking me 40 million, folks. Plus there’s, you know, retirement looks way different. And then the next point I’ll share, but I want to get your take on that. Just kind of those folks that are having to care for their parents and also care for their kids.

Producer Sam Davis:
Well, first off, it’s just shocking that number 40 million and like you said, that’s between 10 and 15 percent of the population. But it is heartening to hear that most of them are seeing it as an honor. And you know, I can kind of relate know when you’re taking care of the ones you love. That’s not hard work that you feel obligated. You feel passionate about taking care of the ones you love. But we’re going to get into this a bit later in the show. Health care expenses, particularly in the last 10 or 20 years of your life, you know, that is so costly and it can be one of the biggest financial drains on people’s retirement. If you look at all the money that you’re going to spend on health care during your life, most of it is going to be stacked towards those later decades. So you need to have a plan for that.

Ford Stokes:
There’s no question absolutely you’ve got to have a plan for it. And and I would encourage folks to really, you know, if you want the best for yourself, you can’t do it by yourself and we’re here to help you. We’re here to be fiduciary advisors. We’re going to talk at the break. We’re going to talk about the new fiduciary rule that came out about rolling over funds and how that really shouldn’t be done just by, you know, the annuity only advisors, they should be, you know, series sixty five licensed fiduciary advisors, at least to give recommendations on rolling your money over from a four one K to an IRA and things like that. And so we’ll talk through that. All right. We come back to the break. But the big thing that we’re going to talk about right when we come back from the break is the new flash structured note that is offered through our registered investment advisory firm, Brookstone Capital Management. I think you going to be really surprised, pleasantly surprised by the interest rate and the rate of return that you can get over the next 12 months, especially when we’re looking at what we’re dealing with with all the volatility that we’ve seen and some of the market downturn in the month of January.

Ford Stokes:
And we’re so glad you’re with us here on the Active Wealth Show. We’re going to take your questions. We’ve got five questions Mickey in Roswell, Sarah in Alpharetta, Virginia in Marietta, Heidi and Tom in Brookhaven, and John and Ashland coming. We’re going to we’re going to take all of your questions. We’re going to share those. Thanks so much for submitting your questions. We’ll do that right. We come back to the break. And again, right now this show we’re talking about, hey, if you want the best for yourself, you can’t do it by yourself. That’s that’s the theme of today’s show. And what what are the things you can do to take control of your retirement so you can build a tax efficient fee, efficient and market efficient portfolio, and you just build for a successful retirement? Sam and I are so glad you’re with us here on the Active Wealth Show, and we’ll be right back with the Active Wealth Show right here on AM920 The Answer

Late December, back in 63. Very special time for me, as I remember.

Producer Sam Davis:
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. 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 project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Ford Stokes:
Looking.

You know, giving.

Ford Stokes:
And welcome back activators, the Active Wealth Show, and on today’s show, we are talking about, if you want the best for yourself, you can’t do it by yourself. So for all you do it yourselfers out there. If you listen to Active Wealth Show and you pick up the phone and give us a call or you visit ActiveWealth.com and you click that set an appointment button in the upper right corner. You’re going to get a special rate, like we’re going to give you a lower advisory fee and portfolio fee. Also, I wanted to kind of share like the expense ratios within our portfolios. We don’t make money on this and we try to keep the cost down way down for our clients. And one of the ways we do that is we invest and execute our portfolios with our allocations, using ETFs or exchange traded funds. I would just encourage you to consider working with us are our expense ratio in general ranges from zero point one five to point one seven. A lot of the expense ratios that I see that come in from four one KS when people are leaving their business, and again, if you want a four one K review will absolutely give you a four review. All you’ve got to do is visit Active Wealth and we’re happy to help you do that. But a lot of folks that come in with foreign one, they’ve got the expense ratios of zero point seven up to one plus percent, and that’s just a hole in the bucket that’s leaking water out.

Ford Stokes:
And so I would encourage you to make sure that you’re you’re building a portfolio that is fee efficient because that’s easy. I mean, some of these market returns and we’re seeing in with market downturns and volatility in January, that’s, you know, that depends on how the market behaves. If you’re reducing your fees, that’s something you can control. You can inspect your do you expect and reduce those fees and try to get those fees lower and we we can help you get your fees lower. We also can help reduce your expense ratio within your portfolio more than likely. Each portfolio is different, but we’ll add each prospect and client are different, but we’re happy to help you try to get more fee efficient with what we’re doing and what you’re doing. And so now let’s talk about structured notes. And also, this is kind of what private wealth management looks like. We’re able to offer structured notes or flash notes to our prospects and clients. And the one for February is offered by Bank of Montreal, and we’ve got a lot of other structured notes that are offered by JP Morgan, Credit Suisse, Citibank, BNP Paribas, Morgan Stanley and to name a few. But this one’s offered by Bank of Montreal, and I kind of want to go through the full details on this structured note. So the issuers Bank of Montreal, the pricing date on the date that it’s got to be invested in is February 11th.

Ford Stokes:
So you’re going to want to go ahead and reach out to us on Monday. Or you can reach out to us today at (770) 685-1777 again (770) 685-1777. This structured note is a 12 month note. It cannot be called for the first six months, and the maturity date, unless redeemed, will be Friday, February 16th. Twenty twenty three. It’s got a Q sip on it. It’s actually an identifier for the structured note. The coupon the minimum coupon rate is thirteen point three five percent annualized. And the reason we say minimum is that we kind of will say, Hey, we’ve got this much money. Usually, our firm Brookstone Capital Management, our registered investment advisory firm, they invest usually between 60 and 100 plus million dollars a month in new flash notes or new structured notes. And the minimum coupon that this note is going to pay is thirteen point thirty five percent. But it will go up more than likely once we tell Bank of Montreal how much money we have to invest in the note. And then therefore Bank of Montreal once that money and therefore they then will increase the interest rate to help improve it. Also, these are often called buffered notes as well because there’s a 30 percent buffer on these notes. So as long as the S&P five hundred, the Russell two thousand, the Nasdaq one hundred. Don’t lose 30 percent of their value.

Ford Stokes:
Any of those three, the three indices, as long as any of those don’t lose 30 percent of their value over the next 12 months, the principal is protected up to the downside barrier or level of the underlying index. This is also the observation on this is it is an American style note where it actually looks at how the index does on a daily basis. And if a breach of the level of protection occurs, principal value will then be linked to the performance of the lesser performing index at maturity. And also notice that the note is callable at full principal value after six months. It is not callable before the end of six months at the issuers discretion. If all three underlying indexes are. At or above their initial level, so in other words, we can’t get to month seven and all of a sudden these indices are below their initial level and then all of a sudden the note is called That doesn’t happen. It doesn’t get called with the principal could be at a negative. This is a security. It is a bond plus derivative product. But. It is a form of smart risk investing. And if thirteen point three, five percent sounds good to you and you don’t feel like the Nasdaq 100, the Russell 2000 or the S&P 500 are going to lose 30 percent of their value. If you feel like they’re going to at least stay higher than that, then your principal would be 100 percent protected.

Ford Stokes:
If that happens and you would get one twelfth of thirteen point three five percent on a monthly basis. That’s pretty remarkable. So you would receive one point one one two five percent on the principal you put into the structured note every month for the next 12 months or until the note is called. We think that’s a smart way to invest, we think that is what represents smart risk investing. And it’s all part of a smart financial plan. And again, this is what happens when you want the best for yourself, but you don’t want to necessarily be by yourself. You want to get help from a fiduciary, somebody that’s going to put you in to smart, safe and smart risk investments. Also, we another that is a bond replacement strategy, our our structured note for February as part of our bond replacement strategy. Also, we’ve got a really great strategy to give you diversified risk with structured notes. And let’s say you want to put $100000 into a structured notes you want to take. Let’s say you got a million dollars and you want to take 10 percent of it and put it into structured notes so you won’t put one hundred grand in. Well, what we do is we put $20000 in the February note, 20 thousand in the March Note, 20 thousand in April, twenty thousand in May and twenty thousand in June. And we would spread your risk across five different notes with five different issuing banks with five different starting points to the indices and five different interest rates.

Ford Stokes:
So it completely diversifies your risk and diversifies your payouts and diversifies when the notes are called. That’s a smart way to go because the premise is Hey, if no one loses 30 percent of its value, chances are Note three four five there are two three four or five wouldn’t lose another 30 percent and another 30 percent and another 30 percent. And so therefore your money is kind of mathematically protected when you’re spreading the risk across five different notes. And that’s how we really kind of protect your money with these structured notes and with what we’ve seen in the volatility and what’s going on in the markets, we think structured notes is a really great bond alternative, especially with slightly rising interest rate environments and U.S. bonds trading at one hundred and fifty times, you know, and you go forward price to earnings ratio, that’s a concern when only U.S. equities are trading at like between twenty two and twenty three times earnings. So if you don’t think there could be a bond bubble, if you don’t think bonds could actually be a boat anchor on your portfolio, to some extent, they absolutely can be, and they can also be a market value boat anchor, if you will. I would encourage you to try to consider bond replacements with structured notes like this. Bank of America structure note for February that you’ve got to get invested by the pricing date of February 11th, and we have time to get that done.

Ford Stokes:
And the other would be a fixed indexed annuity. We’ve got a fixed indexed annuity that is offering an illustrated rate at nine point sixty one percent and it has surrender charges. That’s a fourteen year product. But if you want to generate retirement income and you don’t want to have to invest in another another, fixed indexed any later and you just want, Hey, I just want to turn on income when I’m ready in five to six years. This is a great product for you. The other is we’ve got another product that’s a five year product on a fixed indexed annuity. Most five year products are minus their multiyear guaranteed annuities that are kind of a bank CD alternative, but we’ve got to fix the next annuity that’s giving you a great rate of return and illustrated rate of return that I think you’re really going to like, and it’s only a five year product. So if you’re interested in either structured notes, that’s a one year product that can’t be called for the first six months. Most of these. Full disclosure Most of these products are actually on the structured note. The Flash notes they are called within. I mean, in the seventh month, they’re called right after month six because the cost of capital got too great for the bank. You as the investor kind of one in that scenario, and you just move on and reinvest within your fixed income sleeve to another to the next structured note.

Ford Stokes:
That makes sense, but thirteen point thirty five percent is incredibly strong. Structured note interest rate that also helps protect against downside protection and protects against that principal buffer because you’re getting thirteen point three five percent. Let’s say the markets do go below the buffer, but then it comes back up a little bit. And let’s say you’re the indices are down 10 percent from their initial level. When you purchased, you still made three point three five percent because you’re getting paid thirteen point three five percent a year on a 12 month deal. Also, these notes cannot be called when the indices are below their initial level, so that’s a good protection for you as well. And we’re going to be talking, I promise you, we took a little bit longer on the structured notes because usually there’s a little bit more difficult products to understand. When we come back from the break, we’re going to talk about these five questions we’re going to we’re going to answer the five questions from our activators out there. And again, if you’re wondering who an activator is that somebody who listens to this show, it’s somebody who wants to activate their retirement. It’s somebody who wants to build a tax efficient fee. Efficient and. Market efficient portfolio. And it’s somebody that’s really trying to build for successful retirement. When we talk, when we talk about your questions and answering your questions, right, we come back from the break. You’re listening to Active Wealth Show right here on AM920 The Answer

Producer:
We have Ford Stokes, author of two important personal finance books Annuity 360 and Taxes are on sale here on AM920. The Answer as the host of the Active Wealth Show Saturdays at 12:00 noon and Sundays at 11 a.m..

Ford Stokes:
And welcome back to the Active Wealth Show activators, I’m Ford Stokes chief financial adviser, I’m joined by Sam Davis, our executive producer. And we’re talking about today is like, if you want the best for yourself, you can’t do it by yourself. You really should have a financial advisor to help you. Also, if you want the best for yourself when you’re gardening, don’t do it by yourself if you want the best for yourself when you’re cooking in the kitchen. You know don’t don’t do it by yourself. I mean, ladies out there, if you’re cooking for Thanksgiving dinner, yeah, it’s important, but you at least have somebody to help you carve the turkey and also help you do the dishes, right? So let’s go straight into these questions. But also, I wanted to be clear about the structure note for February. It is offering a thirteen point three five percent minimum rate of return. And it also carries a buffered note protection of your principal. As long as the Nasdaq 100, the S&P 500 and the Russell two thousand don’t lose 30 percent of their value. Your principal is then 100 percent protected and you get to enjoy one point one one to five percent in growth on your money that you invest in that note on a monthly basis, which is pretty great and it’s a great bond replacement strategy, especially. It’s an incredible beating bank CD strategy, too, because you want to compare thirteen point three five percent to the zero point zero five percent you can get from bricks and mortar banks on a bank C.D. These days, I mean, there’s no comparison there. All right, so let’s go straight into these questions and say, I’m going to let you fire him at me.

Producer Sam Davis:
Yeah, so we’ve got five more questions sent in by our activators. And once again, if you have a question that you’d like answered on the show, just send your question to Ford at Active Wealth. And if you’ve got a question that you don’t want answered on the show, just send your questions there and let us know like, Hey, this is more private. We don’t want it answered on the show, but all of these folks today wanted to be featured on the show, so we’re happy to do that. We had a bunch of questions answered last week, and if you missed that, don’t worry, you can find the Active Wealth Show wherever you listen to podcasts or whether it’s Spotify or Apple or Google or Stitcher or iHeart wherever. Just download the Active Wealth Show. Go to last week’s show and you can hear the rest of the answers to activator questions there. So the first one today, Ford is from Mickey in Roswell, and Mickey wants to know what percentage of my final working earnings will I need in retirement income.

Ford Stokes:
Well, I hate to answer the question with the answer of it, it depends, but it does depend. But I will tell you what is normal. Normally, most people want to get about 80 percent in income of what their working earnings were and let Social Security fill in. The rest is usually what happens. That’s what it used to happen with with pensions. In the seventies, you’d have a pension that would be 80 percent of what you made and then Social Security would fill in the rest. That’s a good guideline. Most people, though, you know your your Social Security. Let’s say you’re making three thousand a month in Social Security income, which is a very healthy Social Security income. It’s three thousand a month. That’s thirty six thousand a year, but generally that’s not going to end up being 80 percent of what somebody earned. Most folks are making, you know, over 70, 80, 90, even over 100 grand a year, in fact, and from within 10 miles of my office and the king and queen building where we’re recording right now. We’re on the 29th floor of the King building and building six. But within 10 miles of my office, there are a hundred and fifty thousand jobs that make over one hundred thousand a year. And that’s why we’ve located where we’ve located. We love Sandy Springs. We love Dunwoody. We appreciate them accepting us into their into their community. And we’ve we’ve given seminars, free seminars at the Sandy Springs Library before COVID, and we need to go back there and do that again.

Ford Stokes:
But we’re here to help folks in this area, for sure. But we we help all of Atlanta. It’s very accessible. Four hundred and twenty five. But I would just answer the question of this is like, you really need to get to at least 50 percent where you’ve got consistent income. And again, also be careful and make sure you’re not withdrawing more than four percent of your money out of your IRA because you don’t want to deplete your IRA, especially when you’re if you’re taking income and then you’re also losing value in your portfolio. As what’s happened to a lot of folks in January with all the market volatility, that could be a double whammy. You want to be careful about what’s going on. And but most folks are trying to get between that 50 and 80 percent range and and kind of fill in the rest with withdrawals from their IRA or Social Security, et cetera. There’s not a lot. There’s only 14 percent of the S&P five hundred firms out there who still have a pension. So pensions have kind of gone the way of the dodo bird. They’re no longer around. And so I would just encourage everybody to consider, you know, try to stay within that four percent rule. And we’ll play that chapter from my book Annuity 360 when we come back to the break. But let’s go to the next question, Sam.

Producer Sam Davis:
Yeah. Next comes from Sarah, and Sarah is in Alpharetta, and she’s asking, what are the biggest financial risks I should consider in retirement?

Ford Stokes:
Well, unfortunately, there’s more financial risks than there are financial benefits out there, and there’s more negative or tough headwinds than there are drafting back wins out there with retirement. So. We’ve got tax risk. Do you think taxes are going to go up in the future with twenty nine trillion dollars, according to U.S. debt clock and climbing? I would say yes, future increases in taxes or are likely because we’re at all time lows. An example in nineteen sixty to nineteen sixty three during the Kennedy years, the the current twenty four percent bracket tax bracket was actually fifty six percent, which is eight percent higher than two x. Then two times. The amount of what our current twenty four percent bracket is, so that’s one risk, the other would be market risk, and we’re all seeing market risk out there where there’s an adjustment on kind of a market downturn is being led by kind of a downturn in tech stocks on the technology sector. Market risk is real, and I can tell you one thing I’m not Nostradamus, but I can tell you one thing. Markets will go up and they will go down and they will go up and they will go down. They don’t just go up perpetually. And so you need to be prepared for that and also prepare for the long haul when you invest and at least be in tax deferred accounts like IRAs or even in tax free accounts with Roth IRAs to help deal with that tax risk and also the market volatility risk.

Ford Stokes:
There’s also health risk. You’ve got health risk. Getting one of the ways to do that is work with our friend Bonnie Dobbs at Medicare and Red and other red tape. Nj.com That’s Medicare and other red tape. Bonnie will help you. She’s fantastic at getting you into either a Medicare supplement or Medicare Advantage. Insurance plan so that when you walk into the doctor, you don’t have copays and you don’t have deductibles, you’ve got to pay and and therefore, you know, instead of Medicare paying only 80 percent when you pay for your Medicare supplement plan on a monthly basis that one hundred fifty plus dollars a month, you’re kind of capping your cost. If you deal with in a Medicare Advantage plan, you could have a very large deductible and co-pay if you get hospitalized and you also have to go through surgery and rehab and things like that. So that could be up over $6000. So be careful if you’re investing in a Medicare Advantage plan. Those are really popular now. But make sure you’re planning for the long haul. Also, you’ve got three risk. A lot of people don’t understand what they’re paying and expense ratio.

Ford Stokes:
They don’t understand. Understand what they’re paying in advisory fees and portfolio fees. I would just tell you to inspector you expect about the fee risk that you’re facing. And it’s also something you can fix. And we’re happy to help you fix that and we can at least give you a hey. Let me just give you an idea of what your portfolio fees are. Your internal portfolio fees. And then also what you can share, what your advisory and portfolio fees are with me. And we’re those management fees. We’re happy to help you. But if you want to understand what your expense risk is and your expense ratio is within your portfolio, we’ll help you do that. And then mismanagement risk if you’re trying to do it yourself or somebody else is being lazy in that rebalancing and reallocating your portfolio on a regular basis. We like to look at our portfolios on a monthly basis and change things up. That’s a big deal. And then the last one is withdrawal risk. Let’s make sure that we’re not over withdrawing money from our portfolio. We need be very careful about that and and we try to stay within that four percent rule. I think we’re going to play that chapter next in the next segment. All right. Go ahead with the next question there, Sam.

Producer Sam Davis:
Yeah, we got just a couple of minutes left here in Segment three, Virginia in Marietta, Georgia, is saying I’ve been saving my entire career, but when am I required to withdraw money from my 401k?

Ford Stokes:
Well, whether it’s a four one K or an IRA or a four point fifty seven or a four or three B or a simple IRA or a Sep IRA, those are all called qualified plans and you’re required to start taking money out of that out of those plans at age seventy two. Those are called required minimum distributions and the reason why you’re required to take money out and withdraw money from those accounts is because then that money that you withdraw is taxed at ordinary income tax rates. Because the government wants their money, they want their tax money, they want their tax dollars, and they’ve moved the with the Secure Act 1.0. They moved the RMD age from seven and a half up to seventy two. They tried to simplify it and not do this. The stupid mid-year thing, which I thought was a really positive move. But Virginia and Marietta, you are required to start withdrawing money from your four one K at age seventy two, and I would encourage you to roll over your money from your four one K into an IRA so that you can manage your own. Individual retirement account by working with a financial adviser like myself and take control and get more investment options out there, because with your current four one K, you likely only have about a dozen to two dozen investment options out there.

Ford Stokes:
And in today’s economy, that’s not good enough. On Segment four, we’re going to play. We’re going to play my chapter on the four percent rule and the rule of one hundred, so you can understand how much money you should be able to withdraw. And then also with the rule of one hundred is the kind of risk you should be taking or not taking with your portfolio. And we’re going to get to Heidi and Tom’s question in Brookhaven and John and Ashley’s question in Cumming, Georgia. So glad you’re with us here on the Active Wealth Show, Sam and I appreciate you being here. And when you come back on the break, we’ve got some really important things to talk about on how to plan for tax free and tax advantaged income planning, retirement income gap analysis and a lot of other things you’re going to want to hear in segment. For those Active Wealth Show right here on AM920, the answer Come right back,

Ford Stokes:
And welcome back to the Active Wealth Show activators on Ford Stokes and chief financial adviser and I’ve got Sam Davis with me here, our executive producer, and he is asking your questions you’ve sent in to forwarded Active Wealth or to the Active Wealth Twitter feed at Active Wealth M that’s m as in management. So Sam hit us with a fourth question from Heidi and Tom in Brookhaven.

Producer Sam Davis:
Yeah, Heidi and Tom want to know, how can we find out if my husband’s pension, my IRA and our Social Security is enough for us to retire on when we both turn sixty five in three years?

Ford Stokes:
Well, the number one way I would say to do that, Heidi, is for you to come in and talk to us. We’re here to give you a free portfolio analysis and retirement plan that includes, like I said, your portfolio analysis, also a plan with your current portfolio and then one with our recommended portfolios. But we have a retirement income plan with that as well. Also, Social Security maximization report. Make sure you’re making the right decisions. Social Security Also, what are we doing about Medicare surcharges? How are we reducing those? And also how are we reducing taxes in the future? The only way to do that is to get a comprehensive plan. We offer a free, comprehensive financial plan to your 90th birthday, but is a $1500 value and we offer it absolutely no cost to you. We take it very seriously and we, our fiduciary advisors, and we’re here to make sure we take care of you and your needs and we put your needs ahead of our own because after all, it’s your money, it’s your retirement. And Heidi and Tom, thanks for asking the question. But the best way to do that is to get a comprehensive plan because you need to understand all the factors because there are a lot of factors go into it your monthly spend, your monthly income that you have in retirement, different unforeseen events. Whether you’re trying to help pay for a grandkid to go to college or you’re trying to help for retirement, a rehearsal dinner or a or a or a wedding reception or things like that that are big, lumpy things that you have to take out of your portfolio. It’s something definitely you want to consider and be careful of, but you also don’t want to exceed that four percent withdrawal roll rule. You know, you don’t exceed four percent when you’re withdrawing money from your IRA. And that’s really important. So we’ll try to help you with all of that. All you’ve got to do is reach out to us at Active Wealth.

Producer Sam Davis:
All right. And last question, it comes from John and Ashley. They’re in Cumming, Georgia. We have put off estate planning for way too long. We have an old will that needs updated. What else do we need? We don’t want our children to fight after we’re gone like my brother’s family did.

Ford Stokes:
Well, I’m so sorry that your brother’s, your brother’s family had a tough time, but also it’s really tough to have a difficult situation after the death of a loved one is just the worst timing ever. The one thing you don’t want to do is you don’t have the U.S. courts or the Georgia courts to be the ones who are deciding who gets what. And by the way, gentlemen, when they do that, if you don’t have a will, they will just divide it up with all the kids equally. And also sometimes ex wives can get involved and or ex-spouses can get involved, and none of that’s fun for anybody. So I would encourage you to make sure you update that will get the will done for sure, because you want to not have the state or the courts. Municipal courts make a decision. You know, you don’t have the probate court make a decision for who gets what of your money. You want to make sure that you’ve got leave that that long lasting legacy. I think it’ll be more impressive to your kids and you leave that family legacy that you’re looking to leave. But we’ve got an estate attorney. We work with actually a couple of them, and they’re very reasonable. All you have to do is just visit us at ActiveWealth.com and we’ll recommend the right one for you. With that Sam, go ahead and play the four percent rule and the rule of one hundred play those chapters, and we’re so glad you’ve been with us here on the Active Wealth Show this week.

Ford Stokes:
I hope you learned a lot about how you if you want the best for yourself, you can’t do it by yourself. We’re here to help you. Thanks so much and I hope everybody has a great week. When we come back next week, we’re going to talk all the way through. As I promised last week, we’re going to talk all the way through how to build a smart financial plan with all of the elements involved with a smart financial plan and have a great week, everybody. Chapter six The Rule of one hundred As you get closer to your golden years, many financial professionals advise gradually reducing your risk. Retirees and pre-retirees don’t have the luxury of waiting for the market to bounce back after a dip. The dilemma is figuring out how safe you should be in certain stages of your life. For years, a commonly cited rule of thumb has helped simplify asset allocation. This rule states that individuals should hold a percentage of their stocks that is equal to one hundred minus your age. For example, a six year old would have 40 percent of their holdings in stocks and 60 percent in fixed income products like bonds or fixed indexed annuities. Why you should follow the rule of one hundred, take our current example of a 60 year old at age 40. Your risk capacity is higher. You have more time to rebuild your wealth should you experience a dip in the market. However, at age 60, you can’t afford to risk as much of your portfolio in the market because the time horizon to rebuild your wealth is much shorter.

Ford Stokes:
Rule of one 20. Many financial advisers now advocate the rule of one 20 so they can get a significant rate of return for their clients and maintain management of the portfolio. I disagree with today’s market volatility. A retiree does not want to go back to work in a job making less than what they made before. They must consider following the rule of 100 or at least a 50 50 smart financial plan that is built equally with smart risk and smart safe investments. Chapter seven The four percent rule The four percent rule is a rule of thumb used by investors to determine how much retirees should withdraw from their retirement account each year. This rule should ideally help provide a steady income stream for the retiree, while also maintaining an account balance that keeps their income flowing throughout retirement by withdrawing only four percent from your account. Many financial professionals believe this will help your wealth last through your retirement and that you will be able to live comfortably with this withdrawal rate. This rule helps financial planners and retirees set the withdrawal rate for their portfolios. Life expectancy also plays an important role in this process by determining if the selected rate will be sustainable. Retirees that live longer will need portfolios to last longer, and medical costs and other expenses could increase as retirees age. Where did this rule come from? The four percent rule was created using historical data on stock and bond returns over a 50 year period from nineteen twenty six to nineteen seventy six before the early nineteen nineties.

Ford Stokes:
Experts generally considered five percent to be the safe amount for retirees to withdraw from their portfolio each year. In nineteen ninety four, William Bingen, a financial advisor, conducted a study of historical returns. He focused heavily on the severe market downturns in the 1930s and the nineteen. Bingen concluded that even during those markets, there was no historical basis that a withdrawal rate based on the four percent rule would exhaust a retirement portfolio in less than thirty three years. Option one setting a flat annual increase of two percent, which is the Federal Reserve’s target inflation rate option two adjusting withdrawals based on actual inflation rates. The first option provides steady and predictable increase, while the second option will more effectively match your income to cost of living changes. Two scenarios where you should avoid using the four percent rule. Scenario one A severe or protracted market downturn can erode the value of a high risk investment vehicle much faster than it can in a typical retirement portfolio. Be cognizant of the health of the market and talk with a professional if you have any questions or want to make changes to your portfolio. Scenario two The four percent rule does not work unless you commit to it year in and year out. Violating the rule for one year to splurge on major purchases can have severe consequences down the road. It will reduce the principal, which directly impacts the compound interest that the retiree depends on for sustainability.

Producer:
Thanks for listening to the Active Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief Financial Advisor Ford Stokes at (770) 685-1777 or visit Active Wealth. Investment Advisory Services Offer through Brookstone Capital Management LLC. Become a registered investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCMA, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer Sam Davis:
A purchaser should evaluate and understand all of the risks and costs of an investment in structured notes Essenes prior to making any investment decision, a purchase of an SDN entails other risks not associated with an investment in conventional bank deposits. A purchaser may not have a right to withdraw his or her investment prior to maturity or could incur substantial penalties for an early withdrawal if permitted. A purchaser should carefully read the disclosure statement and any other disclosure statements for a S.N. before investing. An investment, in essence, is not FDIC insured and is subject to credit risk. The actual or perceived credit worthiness of the note issuer may affect the market value of SNS. Essence will not be listed on any securities exchange. Even if there is a secondary market, it may not provide enough liquidity to allow purchasers to trade or sell Essenes. As a holder of SNS, purchasers will not have voting rights or rights to receive cash, dividends or other distributions or other rights in the underlying assets or components of the underlying assets. Certain built in costs are likely to adversely affect the value of Essenes prior to maturity. The price, if any, at which the notes can be purchased in secondary market transactions, if at all, will likely be lower than the original issue. Price in any sale prior to the maturity date could result in a substantial loss. Essenes are not designed to be short term trading instruments. Purchasers should be willing to hold any notes to maturity. The tax consequences of Essenes may be uncertain. Purchasers should consult their tax advisor regarding the U.S. federal income tax consequences of an investment. In essence, if a S.N. is callable at the option of the issuer, in the essence is called, the holder will receive only the applicable redemption amount and will not receive any coupon.

Producer Sam Davis:
Payments that would have been payable for the remainder of the term of the MSN essence are not FDIC insured, may lose principal value and are not bank guaranteed. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. All data believed to be reliable but not guaranteed or responsible for reliance on this data. Past performance is not indicative of future results, which may vary the value of investments and the income derived from investments can go down as well as up. Future returns are not guaranteed and a loss of principal may occur. Brookstone does not provide accounting, tax or legal advice. Investors should be aware that a determination of the tax consequences to them should take into account their specific circumstances and that the tax law is subject to change in the future or retroactively. And investors are strongly urged to consult with their own tax advisor regarding any potential strategy, investment or transaction. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for market indices generally do not reflect the deduction of transaction and or custodial charges or the deduction of an investment management fee. The occurrence of which would have the effect of decreasing historical performance results, economic factors, market conditions and investment strategies will affect the performance of any portfolio, and there are no assurances that it will match or outperform any particular benchmark. The investment strategy and types of securities held by the comparison indices may be substantially different from the investment strategy and the types of securities held by the strategy, not FDIC. Insured may lose principal value. No bank guarantee.

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