The Retirement Remedy: The Plan to Make Your Nest Egg Last | Dan Casey | TEDxWilmingtonLive

can anyone tell me what this is it may look like a dollar bill but it's not fast forward into your retirement and everything that you've saved up for your IRA or 401k jour for three B's your home your camp or whatever it is here it is folks something's happening to it watch the IRS wants their portion inflation it goes up and cuts your portfolio in half in 20 years medical cost they go up to three times that of inflation and your kids come home they want their section this is what you're left with for it may be 20 30 or even 40 years in retirement now I have a plan to put it all back together now Ivan I'm an investment advisor it had been for about 20 years I started out working for someone else but again something happened 33 years to the day I was born was the bottom of the stock market crash in the year 2000 and was on that day when I discovered I needed to go out in business for myself and do things the way I wanted to do to teach my clients how to retire for a retirement how to save for retirement and not lose it all to risks unknown and known so I went out and and started my own firm now it doesn't matter how you proceed with this for instance I came up over the 20 years with the phrase life is great now life is for your 20s and 30s is are all the steps needed for your 40s and 50s and great how perfect is 60s and beyond so every letter in that acronym takes you on a journey from when you're first starting out to your tire meant to let you know exactly what you need to do now it doesn't matter where you are in those steps usually you can always catch up there's the famous saying when's the best time to plant a tree 20 years ago when's the next best time now now we're going to start now we're going to discuss this and go on a plan is anybody anybody want to go on a journey with me we're gonna take a client named Ellen how she goes through and somebody the love of her life gets a career goes to retirement so let's do it together Ellen in this life is great its statement it's going to start with the letter L in her 20s and 30s now L stands for liquidity which just means get enough money in your local bank that you could access quickly in case of emergencies right because when she does start saving for like those company plans 401 K s four or three B's there's a penalty to get that early right so just get someone in an emergency fund if your job super secure three months worth of living expenses now so secure six months they just get that money in there first which takes us to the next one invest and insured I in life so when Ellen gets her maybe her first job usually at each company not always they offer some sort of company plan right public company 401 K nonprofit 403 B government maybe 457 and they all work basically the same way you put money in you deduct it it grows tax-deferred maybe or maybe they not they'll match some of your contributions right so you want to make sure that you start investing when you're at these these a company that you're working for I also works for ensure maybe Ella meets the the love of her life mark maybe they maybe they start decide to start having a family so we want to make sure that the breadwinner whoever it is is insured right for an untimely death usually term insurance is the best way to do that super inexpensive you get a decent sized death benefit and get this it's really a one-way contract as long as you keep paying those premiums they have to pay out that death benefit I don't care if you've got a terminal illness or some sort of disease they have to pay that out by law but you don't have to continue payments if you don't want you can stop at any time they just don't have to pay the death benefit right so it's a one-way contract super inexpensive probably the best way to go when you're young let's go on to the next letter F fund a Roth now if she's investing in the company plan that she's working with it she's got some excess money maybe it's time to put it into a Roth in 1997 the government gave us a choice to tax us on the seed the harvest now if you were a farmer would you rather be taxed on the little seed or the big harvest that it creates seed that's a Roth IRA the other way around if you don't get taxed all on the feed you get it plant it you have to be taxed on the entire harvest right that's a traditional IRA so usually the Roth makes sense so funder Roth okay we're moving on to the e in life estate plan maybe it's time to consult an attorney at this point in the state planning attorney and put together the necessary documents to protect everything that we've saved for right maybe Marc decided to stay home and quit his job to help raise the family so we need to get to make sure that the money's passed exactly the way they want it to now usually it's a will and a trust now a lot of people think if they just put together a will that's good enough to avoid probate now what's probate it's a very very very messy way to pass money that you saved up to people you love and that happens when there's no owner of the asset that you have whether it's a house money account if there's no owner meaning you pass away and there's no beneficiaries or anything that's got to go through probate and a judge and a court and lawyers are gonna decide where that money goes it's expensive and messy and a will does not avoid that people don't think that so a will and a trust a trust does avoid that messy P word so maybe put together a will and Trust at this time to do it okay every still with me we got Ellen and Marc through the 20s and 30s through the word life their children are growing older let's move on to the word is a kind of short word this is for your 40s and 50s a short word because we're really just keeping up with the status quo we're continuing to do what we what we said saving we're still protecting it and we've got the necessary documents to pass it on if something bad happens right alright so I in in is insurance oh my gosh she's talking about insurance again really this is why I'm doing it insurance companies people just don't understand that insurance companies offer products that nobody else can why because they're the only companies that can take longevity risk off the table what's longevity risk well everybody's not sure if you're aware but the fast growing demographic right now is what those aged hundred it over Centurions we're living longer right so longevity risk is not only that we're living longer but it's a risk multiplier the other risks out there that the stock market crashes interest rates rise you get sued divorce whatever it is right none of those risks matter if I walk out of here get hit by a bus but if I live to 110 or 120 odds are would probably be exposed to one or not all of those risks right so longevity is a risk multiplier this is why insurance companies can take it off the table because they're on both sides of the equation they sell life insurance on one side and annuities on the other now life insurance you pay small premiums your whole life and it pays out a large death benefit at the end right annuities you give them a large amount of money they pay out little payments for the rest of your life right otherwise known as a pension maybe your parents or grandparents are getting a pension all that is is the company they worked for gave an insurance company a large amount of money to pay out equal monthly payments for the rest of your life okay so we have life insurance we have annuities on one side life insurance the insurance company wins if you live a really long life right because you have to pay those premiums the whole time and they don't have to pay on a death benefit because obviously they lose if you just take out a policy make one payment get hit by a bus and they have to pay out a $1,000,000 right so they win if you live a very long life they also win over here if you live a very short life the company gave them all the money for your pension and they don't have to make payments very long that's how insurance companies take a longevity or risk off the table and why they can offer some amazing products like whole life insurance which I'm about to talk about now we talked about term in the beginning because it's a very basic easy to understand insurance now maybe it's time for a whole life policy or a permanent policy now the money you put into these policies act just like a Roth the money you put in grows tax-deferred it comes out tax-free you can use it for anything but wait there's more you also get that large death benefit right to pay out for an untimely death of L and maybe for Mark and the kids but guess what you can now use that death benefit while you're alive for long term care three is anybody here know that no most people don't if you can't do some of the daily things that most seniors can't do then you get access to this huge tax-free bucket to use for long-term care so if something does happen to Ellen god forbid a stroke and she needs some long-term care she doesn't have to attack her assets to pay for that while marks at home exposing him to the risk right of going through all those retirement assets she's got it okay maybe by now the kids are going to college take it out of that Roth like bucket I just told you about that you were depositing money in use it for college it's tax-free all right moving on to the letter S in is we want to sum up all these deferred accounts I was telling you to put it money into because we want to make sure they don't get too big now we've been told our whole life defer defer defer right put those put that money in but we don't want to get too big a lot of people so focused on they get deductions for putting money in there their company plans right the 401 K is whatever don't get so hung up on deductions retirement plans are not meant to give you deductions because when you're taking that money out in retirement that's when you need that's when you have no deductions left right usually your house is paid off usually your kids are moved out hopefully you have no deductions left so that's a thousand at the time when you're younger putting money in to get those deductions necessarily okay so we want to make sure they don't get too big and I'll explain that just how big in just a minute because we're now done with the letter the word is and that's your 40s and 50s let's move on to 60s and Beyond with the word great and the letter G so they're thinking about Ellen mark are thinking about retiring so they got to figure out well how much is our guaranteed money coming in right doesn't matter what the assets are at this time we're talking about income what's the guaranteed money coming in and that's usually Social Security and Pensions right although pensions are going away really quick back in the 80s about 60 to 70 peace percent of people coming into my office had pensions now just under 20% so figure out if you get Social Security your pensions because those basically are annuities they just pay you monthly payments for the rest of your life doesn't matter how you live they'll continue to pay right figure out what that is G can also stand for gap figure out what that guaranteed income is this is how much I want to travel see the grandkids and that's your gap that's what has to come out of your investments right so if you're not qualified consult a financial adviser figure out what the best strategy is to get that money out to make sure it lasts your lifetime okay so there's your income now let's move on to the letter R ingrate required withdrawals at some point the IRS woke up and said wait a minute people are putting money in their company plans and they're deducting it it's growing tax deferred and people are never taking that money out we need our tax money poor IRS right so they started something they started required minimum withdraws there are MDS you've got to get that money out starting at age 70 and a half right now the problem is people come to me on the customer retirement and I see this the balances of all these deferred accounts and I tell it well you know what 70 you would have to take out X amount half the time they don't even need it it sends them up into higher tax brackets and there all that money coming out third if it's going to the IRS instead of them or their family it's kind of hard to to outlive not outlive your money if you're giving it a third of it to the IRS right so don't let your retirement accounts get so big where that's going to cause a problem which leads me to the next letter e and great for exemptions and deductions now wherever you live in the world usually the government gives you some sort of standard deduction right if you're not itemizing meaning it will offset any income that you have okay now again remember in retirement you usually have no you can't write off anything anymore so you usually just end up taking the standard deduction and it's there to offset income now in retirement your income at this point is all that money coming out of those deferred accounts right so here's a big takeaway how do you get money out of all those deferred accounts without having to pay taxes on it keep keep it legal as long as you're required minimum distributions is not greater than that standard deduction it all comes out tax-free I'm gonna repeat that as long as you don't let all those deferred accounts get so big that the required minimum distribution is greater than that standard deduction it can all come out tax-free pretty cool right you put money in your whole life you deducted it it grew tax deferred now it's coming out tax-free because you're not taking out more than the standard deduction a asset preparation now may be the time to consult with an elder law attorney to maybe move some assets around legally so if something does bad happen to Ellen or Marc and they need long-term care or maybe bringing somebody into the home for respite care for mark or for Ellen whoever sick it can be very very costly right in the state that I live in Michigan it's $8,000 a month on average to be in a nursing home you can see how fast that can go through your assets so there's ways to move assets around so if someone does go into a nursing home you can easily qualify for Medicaid which is how the government pays for your costs so you're not exposing the spouse that's still at home till those risks of depleting your assets okay chief finally tax-free retirement now how did we get there all right let me build your retirement income portfolio right before your eyes so the first one Social Security right now the rule of thumb is if Social Security is your only income it's going to be tax-free it's because it's taxed differently than wages Ronald Reagan started at 1983 it's called provisional income look it up when you get home but if it's your only income rule of thumb it's gonna be tax-free so the next pot of income to go on top of that is all these money coming out of IRAs right even if you don't need it you're still gonna have to take it out and remember we didn't let our detects deferred accounts get too large so we're only taking out enough to where the standard deduction offsets it so that's tax rate all right say you want more income you guys are so greedy let's take it out of the Roth I told you to fund that's all tax-free it's completely off the IRS rate all right I call it the stealth bomber of income right under the radar oh you guys want more income really all right if you want more income take it from that whole life policy I told you to fund remember it acts just like a Roth the money you put in there take that out it's tax-free so your retirement portfolio is completely tax-free you're no longer in a relationship with the IRS Mark Twain a famous person in America famous lecturer humorist writer once famously said there are two important dates in everyone's life the date you are born and the date you figure out why I'm fortunate enough to know the layout or date it was again from the beginning of my talk 33 years to the day that I was born when the stock market crash at the bottom on my birthday and I figured out I needed to go out on my own that's my day so in the end life is great when you have a plan thank you you you

Channel: TEDx Talks

Views: 5,965

Rating: 4.4285712 out of 5

Keywords: TEDxTalks, English, Education, Achievement, Behavorial economics, Economics, Finance, Investment, Life Development, Money, Personal education

Id: GxFdZutJU7w

Length: 17min 7sec (1027 seconds)

Published: Thu Jun 14 2018