Take Control on Your Retirement Transcript

Take Control on Your Retirement Transcript Producer: [00:00:00] 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 in 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.

Producer: [00:00:31] Welcome to the Active Wealth Show with your host Ford Stokes. Ford is a fiduciary and licensed financial adviser who places your needs first. He’ll help you protect and grow your wealth. The act of wealth show has grown because activators like you want to activate their retirement planning with sound tax efficient investing. And now your host, Ford Stokes.

Ford Stokes: [00:00:54] Welcome to the active wealth show activators I’m Ford Stokes your chief financial advisor. I’m joined by Sam Davis, our esteemed executive producer, but he loves his new job title of ambassador to the weekends. So go ahead, Sam, and welcome everybody to the weekend here. Welcome to the weekend, activators. It’s a good day. Good weekend to be in Atlanta, Georgia. Absolutely. You’re just back to from going up and seeing the Windy City and and going to Wrigley Field. Was that the first trip for you to Wrigley Field with your dad? It was my first trip to Wrigley Field when I left home for after college. We decided that we’d meet up every year and eventually try to see all the ballparks. So we went to the Windy City this week and it was a great time. It’s pretty awesome. It’s great stuff. Good family thing. So we want to go today on today’s show. We’re going to talk about. We’re going first to a market update here in a second. We’re going to also talk about how the jobless claims went down again this week, which is good, and what’s going on with inflation. And this news is crazy, so I can’t wait to share that. But then also we’re going to talk about. How do you determine your retirement income and expenses and do an actual retirement income gap analysis? And we’re also going to talk through some pretty neat stuff continuing on our series on smart financial plan, and that’ll be kind of in segments three and four. But first, let’s get straight into a market update

Producer: [00:02:35] Your ActiveWealth.com market update.

Ford Stokes: [00:02:38] Stocks slide as producer prices surge by the most on record. Walt Disney Company will report quarterly results this week. U.S. stock indexes were lower Thursday as investors weighed the biggest annual increase for producer prices on record against an improving labor market. The Dow Jones Industrial Average fell 66 points or zero point one eight percent, while the S&P 500 Index and the Nasdaq Composite Index slipped point one seven percent and point to nine percent, respectively. Both the Dow and the S&P 500 have over the past few sessions closed at all time highs. The producer price index for July increase. Get this, folks, at a seven point eight percent annual pace, the fastest since record keeping began in 2010. Prices were up one percent month over month, matching the increase in June. Elsewhere in the economy, initial jobless claims last week fell to three hundred seventy five thousand matching estimates. Continuing claims, meanwhile, slid to pandemic era, low of two point eight six six million. Also, job openings surged to over 10 million job openings for the first time ever in the history of the United States in stocks. Caterpillar and Nucor. We’re among the companies looking to build on recent momentum gained from the Senate, passing the one trillion dollar infrastructure bill that would provide funding for roads, bridges and other things. Drug makers Pfizer Inc, McDermitt, Johnson & Johnson and Biogen Tech, SC were in focus after The Wall Street Journal reported that U.S. Food and Drug Administration was considering authorization of a COVID 19 booster shot for people with weakened immune systems. eBay reported mixed quarterly results as a reopening of brick and mortar stores contributed to a two percent year over year decline in the number of active buyers on its platform.

Ford Stokes: [00:04:34] The e-commerce marketplace forecast current quarter revenue below analysts expectations bumble ink missed on earnings, but beat on revenue. The dating app maker forecast current quarter revenue above expectations. Big data provider Palantir Technologies, Inc. Top sales estimates as revenue surged. Forty nine percent year over year adjusted earnings matched Wall Street estimates. And Walt Disney Co. and Airbnb are among the companies set to report their quarterly results. In commodities, West Texas Intermediate crude oil slipped 16 cents to sixty eight and ninety nine cents a barrel and gold slumped three dollars and fifty cents to seventeen hundred and forty nine dollars and eighty cents an ounce. Voter concern over inflation remains sky high, as most voters blame higher prices on the pandemic rather than the government. At the same time, over half. Rate their family finances positively and far fewer are looking for more help from Uncle Sam last year and far fewer are looking for more help from Uncle Sam than last year. Approval of Joe Biden’s handling of the economy dipped four percent since June and now splits forty seven at forty nine percent. His approval is also down six points on immigration to thirty five to fifty seven percent and down 10 points on what is still his best issue coronavirus 54 to 42 percent. And now, Sam, go ahead and hit them with our inflation demonstration sounder because it’s a doozy.

Producer: [00:06:12] It’s time for an act of wealth inflation demonstration now.

Ford Stokes: [00:06:20] So this is really important, folks, I want you to kind of lean in on this one for all of you. Social Security beneficiaries are folks who are going to be receiving Social Security soon. You might be in for the highest cost of living adjustment in nearly four decades, according to new projections. The latest estimate from nonpartisan senior Abbassi Group, the Senior Citizens League. Puts the 2022 cola or cost of living adjustment, which will be announced in October around get this six point two percent in a single year. As previously reported by Fox Business, a spike in inflation has squeezed seniors who receive a modest cost of living increase in 2021. That situation, however, is expected to ease. And so I want to be clear here. You’ve got to stay invested. You just absolutely, positively must stay invested if you’re going. To keep pace with inflation and keep the same retirement lifestyle and keep your same buying power, you’ve got to do everything. You can’t come back from our break. What we’re going to do is we’re talk about expenses and income and how to calculate your retirement income gap and also what happens when. Inflation hits and how that gap can widen if you start out with a small retirement income gap between your total expenses and your total income. On a monthly basis and I’ve got a hint for you folks to. Lean in on this one. Retirement is actually more about income that you can generate than it is about growing your nest egg. Now, obviously, the larger nest egg, the larger you can, the larger amount of income you can generate on a monthly or an annual basis.

Ford Stokes: [00:08:12] But we’ve got to do everything we can to make sure that we’ve got the right amount of income and our assets are continuing to grow so that we don’t become burdens on our children. And that means, you know, a tax efficient, fee efficient and market efficient portfolio. That’s what activators like you were looking for. Also, if you got questions on who an activator is, an acrobat or somebody who listen to the show. So congratulations. You’re listening to the show. You are an activator. You’re someone who wants a successful retirement. You’re someone who believes if you’re going to be a bear, be a grizzly, you’re going to win, especially with your retirement. You’re going to do everything you can. You’re going to be focused on your retirement. You’re going to try to seek as much knowledge as you possibly can. And knowledge is power, especially with retirement. Don’t just be like all the drones out there and just leave your money. I mean, I had a call yesterday with a gentleman who worked for the federal government for 27 years and. He’s got a bunch of money in his TSP, and he just left it there. And I’ve talked to another gentleman who recently retired from 3M, and he just left his money in. His foreign cane was still having like a right out of one percent expense ratio. Coming out of his portfolio and he couldn’t figure out how he’s going to generate income from his 401k.

Ford Stokes: [00:09:37] He’d been in sales and he was like, what am I going to do? He gets a pension, too, which is great. But when he goes to start taking our business and how it’s going to work with the 401k, so what he should do is move money from his four one K to an IRA that he takes control of and hopefully that we can help manage. And manage the money within the portfolio. And we never have authority to take possession of anyone’s assets and we never have authority to withdraw any money from anyone’s account. We only have limited trading authority within our primary custodian, our high quality custodian, TD Ameritrade. And so, therefore, there’s no Madoff with your money situation. We’re here to make sure that your money is protected and you can inspect what you expect about your retirement and see your money growing on a daily basis or any time you want from a TD Ameritrade app. We also send Orion performance reports on a monthly basis. You can see how you’re doing each and every month. That’s what we do. So the rest of the show, we’re going to talk about figuring out a retirement income plan that includes calculating our nondiscretionary and discretionary expenses when I talk about what those are. And then we’re also going to talk about how to build a smart financial plan with smart, safe, smart risk and smart tax investment strategies. And if you want to book an appointment with us, all you got to do is visit ActiveWealth.com. That’s ActiveWealth.com. Chubby. Welcome back, Activators, the ActiveWealth.com show on Ford Stokes chief financial advisor I’ve got Sam Davis on the board is our executive producer.

Ford Stokes: [00:11:42] And you can also give us a call at (770) 685-1777. Deborah and her team are standing by to take your call, and we look forward to working with you. I want to be clear about some of what you expect when you meet with us. You can meet with us via zoom or in person or just on the phone, whatever’s convenient for you. But we’re going to seek to understand what’s going on with your current financial situation. We’ll ask you a lot of questions. We’ll also ask you to share your financial statements through our financial workbook, SEC section on our website at the bottom, navigation on ActiveWealth.com. We kind of hide it down there at the bottom to make sure that we don’t get a bunch of bots trying to crawl it. And it’s a 256 bit encrypted site. And so you can upload your all of your information, your statements. We don’t want you emailing us financial statements. You can always bring them by and we can scan them and give them right back to you, because we don’t keep paper on site at our office because we’re trying to protect your information. And that’s part of my job and part of the requirement for me is a fiduciary. And I want to at all times are always putting your needs ahead of our own. But if you go to ActiveWealth.com slash workbook, you can upload your information, your Social Security income, your current income, when you plan to retire, all that stuff, plus your fall and Kay and IRA statements or for three or four fifty seven statements and even your investment accounts and savings account statements and even bank CDs.

Ford Stokes: [00:13:17] And we will do a thorough analysis for you. You can also check out a new 360 dot net to get a free copy of my book, Annuity 360 to learn all you need to know about annuities, which ones to avoid and which one to buy for a successful retirement. And here’s a hint. I think you should consider an accumulation based annuity that we can present to you, because we work with one of the top annuity wholesalers in the country that wholesales over seven billion dollars of annuities every year. And we’re able to find the very best products out there. And also in next in the next segment, we’re going to talk about what to do about how to create your own personal pension and also what to do if you’re about to retire and you’ve actually got a pension, what you know, you don’t know what to do. If you take the lump sum, you take the income. And we’re going to give you actually a definitive answer and a recommendation in the next segment. But we promised in this segment that we would talk about retirement income or retirement expenses. But on the front end of this, let’s go ahead and play our retirement costs, cut our sounder. Because we want to get started on reducing our expenses.

Producer: [00:14:29] Ready to save some money. Here’s our retirement cost cutter of the week.

Ford Stokes: [00:14:35] So the retirement cost cutter for this week is going down to one car. And that’s a little bit more of an inconvenience, especially in Atlanta, especially if you got if the if you’re married filing jointly and the husband plays a lot of golf, chances are you really need two cars. But if you don’t do that, you feel like you can survive on one car, especially if you’re going to 80 plus years old. And maybe the wife is driving more than a husband, probably because usually wives last longer than we do on driving and in life. Right. Girls do live longer than us. Sam, also, did you know what the definition of a girl is? Oh, man, I’m not an expert in this. No, this is really good, because actually one of my clients who owns who owns a bridge club told me this. She said, For the definition of a girl is what women over 70 call each other when they get together. So I thought that was pretty good. So we want you to consider maybe going out of one car because you can save on any car payment, you can save on any gas maintenance on the car, changing your oil and also save on insurance with going to one car. But also, you might want to consider one of your two cars that might be your daily driver to go to the grocery store and stop trying to go get. You know, an electric car or go get a Prius.

Ford Stokes: [00:15:59] So it’s a hybrid so you can reduce the amount of money you’re spending at the pump, because if you haven’t noticed, gas these days is not getting any cheaper. And we’re up over three dollars a gallon now and. You can consider an electric vehicle only fits your lifestyle, but that’s our retirement costs that are either going to one car or one of your cheap cars becoming an electric vehicle or a hybrid vehicle to try to reduce the amount of money you’re paying in gas. So that’s our retirement cost cutter. So let’s talk about. How to calculate your retirement income gap. First of all, let’s define fund a retirement income gap is simply the difference between your budget and your guaranteed income sources. For example, if you have a budget that requires five thousand dollars a month of income in today’s dollars, you have guaranteed income for Social Security and pensions of three thousand dollars per month, then your income gap is two thousand dollars a month. So let’s walk through a scenario. So the annual nondiscretionary expenses of a couple were actually thirty one thousand five hundred dollars and their annual discretionary expenses we’re thirty thousand, so it’s sixty one thousand five hundred dollars in total expenses drained discretionary, nondiscretionary. So discretionary expenses are things like going out to eat entertainment, go to the movies, travel. Choosing to buy your grandkids gifts, things like that, nondiscretionary expenses or things like. Your Medicare supplement insurance payment every month, your power bill, your rent, your or your mortgage or your trash bill or any utility and things that absolutely are positively necessary for you to live your life, car insurance, things like that.

Ford Stokes: [00:17:58] Now you can fill this income gap back with Social Security income. And we’ve gone over this scenario before, but I want to make sure it’s clear. Let’s just take the scenario where. There’s a gentleman who’s making. Thirty thousand dollars a year in Social Security income and his wife, who never worked but worked harder than he did, stayed home with the kids. She gets fifteen thousand because she gets 50 percent of his. So that’s forty five thousand dollars for the family. So that’s a pretty good source, right? Well, if you’ve got that. And you take 61 five from 40, from 45. You’ve got to fill. Sixteen five back with withdrawals from your IRA. And that helps fill up the income gap. But where we run into problems is when that retirement income gap widens because of inflation and we have to start taking more out and tax rates increase and raise your hand and keep one hand on the wheel, please. But if you think taxes are going to go up in the future. While you’re driving around here in Atlanta or listen to us on the active wall show on Stitcher, Spotify or. Or iTunes. And also Salem Media and I Heart Radio and Google Play and the iTunes store there. But it’s likely that taxes are going to go up in the future.

Ford Stokes: [00:19:34] All they have to do is listen to the president’s currently in the White House. And take him at his word that we’re likely going to see tax increases, and when we come back from the break, we’re going to talk about what to do about closing your retirement income gap and how and there’s a lot of strategies and what you need to do to make sure you’re hitting things like on the expense side, on the cost side, and you’re also doing a great job on the income side. We’re also going to talk about what to do if you’re faced with the choice of taking a lump sum pension payment or turning on income. And also talk to you about what type of product. Actually enables pensions to be administered. What’s the product behind pensions, bottom line? And we’re going to also tell you how to create your own pension right after the break. You’re listening to well show. We’re so glad you’re with us. And make sure you come back to learn how you can close your retirement income gap and create your own pension. And welcome back, Activators, the ActiveWealth.com show Ford Stokes, your chief financial adviser, we got Sam Davis with us on the board, and we were talking about how to close your retirement income gap. And I want to go ahead and give you in detail how to plan for that. Number one is you want to determine your Social Security income that is available to you during retirement at various ages and also at various starting points, whether you’re going to turn on income at age 62 and a half or thrown on income at 65, or make it all the way to your full retirement age at either 66 and a few months or 67 years old.

Ford Stokes: [00:21:40] By the way, congratulations if you were born after 1960. That means that your full retirement age is sixty seven and it is likely pretty soon that they’re going to go up again. If you’re born after 1970 and they’re going to make it tougher and tougher, they’ll probably move folks retirement age up to 19 to 68, like 1970 and other things. But you really need to determine what works best for you. And we can give you a Social Security maximization report as part of this retirement income gap analysis. And let me ask you, do you feel like you deserve more than 75 cents on the dollar of the money you put in in Social Security? Well, guess what? If you start taking Social Security income at age 62 and a half, that’s exactly what you’re going to get, which is 75 cents on the dollar. If you make it a full retirement age, you get 100 percent of your Social Security income benefit. But if you make it all the way to age 70, you get one hundred and thirty two percent for every year.

Ford Stokes: [00:22:41] You wait after age 66 or 67, your full retirement age, you get eight percent more in your Social Security check. So the bottom line here is the longer you wait, the more you’re going to make than the number two thing you want to do is you want to estimate your monthly expenses. And the best way we help people do that is say take. July and August and add the two months together and divide by two, and that gives you an idea of how much you’re really spending. If you’ve got a lot of travel in July as an example, you might want to take August and September or September. October, we don’t recommend you include December, obviously, or November, because those are Christmas shopping months and usually your budget’s out of whack during those months. Number three is you want to research and estimate inflation as measured by CPI-e, not CPI-U. So CPI-U is the Urban Consumer Price Index, and that’s what’s called the I’m doing air quotes here, Sam. Save me to air quotes. Is basically the headline consumer price index that measures inflation. Did you know, though, that CPI-Eactually, which stands for elderly, is actually five percent higher because the cost of what? Retirees have to face specifically in health care. And so if if CPI, DASHO is three percent. CPI e would be. Three point one, five percent. And then. You want to reduce your future tax risk with Roth IRA conversion or life insurance? You do everything you can.

Ford Stokes: [00:24:27] To reduce your future tax risk by investing in one of the only two tax free investments out there, which is Roth IRA conversion or life insurance. You also want to plan for the eventual loss, and it is a guaranteed loss of 33 percent in some security income in the household with the death of a spouse. So in my example, where the husband was making thirty thousand dollars a year and the wife was getting 50 percent of his fifteen thousand, let’s face it, guys, women live longer. And so what that means is when he passes away on the day he passes away, she loses her Social Security income benefit and she gets his. So you want to plan for that. You need to have a plan to fill back. Thirty three percent of such great income. Now you’re going to be spending less money on food and things like that when you’re by yourself. But you might spend more money and travel to go see family to make up the difference. So you really need to somehow, someway figure out an income source to backfill that. Thirty three percent and lost Social Security income. Also, you want to follow the four percent rule and stay invested. In smart risk and smart, safe investment vehicles to outpace inflation. You don’t want to just go and bury it and put it under the mattress or buried in coffee cans in the backyard and go get a metal detector.

Ford Stokes: [00:25:50] You want to avoid that? Next, you want to consider the rule 100, the rule 100 states that if you subtract your age from 100, the remainder that’s left over is the percentage of your portfolio that should actually be invested in at risk equities. A lot of you probably almost just drove off the road, you’re like, oh, my gosh, I’m six years old, that means I should only have 40 percent invested in stocks, and I’ve got over 80 percent of my portfolio invested in the market right now. Well, then you should consider a bond replacement strategy. We’ve talked about that quite a bit here, and we’ll talk more about it in segment four. The next you want to generate a personal pension, and we will show you how we’re going to Sam is going to play Chapter nine for my new book, Annuity 360 to help you understand that. And also, you want to recalibrate your financial plan each year. So that’s a lot. There’s a lot of planning right there to backfill your retirement income gap and make sure it doesn’t widen over time with increases in taxes that therefore require you to take more money out of your IRA and also increases in inflation, where food cost more gas costs, more home appliances, costs more and all that kind of stuff. And now go ahead and play Sam Chapter nine for my new book. You can create your own personal pension.

Ford Stokes: [00:27:11] Chapter nine, you can create your own personal pension. Big idea, using an annuity to create a personal pension helps you create a lifetime income stream. But it also helps you leave a legacy for your beneficiaries. All annuities can create annuity income to supplement the income you need before or during retirement. Those who are approaching retirement are afraid that they will run out of money. But an annuity can help make sure you have an income you can never outlive. An annuity can be a great investment for your portfolio. But I encourage you to be careful that you don’t overpay for your annuity. When you put your money into an annuity, the annuity company will pay you your money back at a date you specify. You don’t want an annuity company to charge you too much to simply pay your money back to you. I’m confident that leaving a remarkable family legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiaries. The goal of a personal pension is to generate lifetime income with no risk that grows your money and allows penalty free withdrawals. An annuity can create a lifetime income with market like gains and no market risk while also allowing you to build enough wealth to leave your beneficiaries when you pass away. Don’t give the annuity company fees for doing nothing. We prefer fixed indexed annuities for our clients that do not have an income rider fee.

Ford Stokes: [00:28:36] But you can still create a personal pension without an income rider on your annuity. If you get an annuity with an income rider, but don’t utilize the features of that income rider. Then you are not getting what you paid for. You are literally just paying the annuity company one to two percent each year. You defer annuities and your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principle. Depending on how that index is performing, the growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments without an income rider. You should consider the features your income rider is providing you before deciding to purchase it as an add on. Make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you’ll receive an annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows. Believe it or not, you can generate your own personal pension by distributing no more than five percent a year with penalty free withdrawals from your accumulation based annuity policy. Many accumulation annuities are set up to be armed, friendly, so you won’t suffer a penalty when you have to take your arm.

Ford Stokes: [00:29:59] It would be silly for you to be penalized for something you are required to do. Annuity companies take this into account by creating products that make taking your Ahmadi’s easier. Inspect what you expect with any annuity. Don’t just go with what the annuity agent or advisor tells you. Read it for yourself specifically. You should read the annuity illustration guaranteed and non guaranteed tables included within the annuity illustration. Also, please remember that annuity policy is a contract between you and the annuity company. So caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you. They’ll will help you build a successful retirement and they’ll offer you peace of mind. Whether you choose to generate income through penalty free withdrawals or invest annually in an income rider. Know the consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you one to one and a half percent of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option you are considering. Making the right decision up front will save you a lot of frustration in the long run. Also, please remember that if you withdraw too much annually, say, 10 percent, you will run out of money in 10 to 12 years.

Ford Stokes: [00:31:19] Make sure that you’re working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend. No more than five percent be withdrawn each year from your account. We also said we would talk about what to do if you’re facing retirement and you’ve got to your face the choice of taking a lump sum in your pension or turning on income for your pension. And we’ll talk about that solution, right. We come back from the break. It was the act of welsher right here on Amdocs when the answer. We’ll also recap how to create your own personal pension. And welcome back, everyone, to the ActiveWealth.com Ford Stokes, the chief financial advisor. Sam’s on the board with us. Here is our executive producer. And I promise you, we would talk about for all of you people driving around, that you might be considering, you know, taking your pension. Only about 16 percent of all corporations still offer a pension. But that’s OK. If you if you’ve got a potential pension with Georgia-Pacific or Georgia Power or other corporations here in Atlanta and you’re faced with. Should I take the pension or not? Let me give you some advice. Did you know if you were to take the lump sum that we could get you a 10 percent immediate bonus on that money so we can take care of that and get that done for you? So would it be great if you had your pension was 10 percent higher? Now, obviously, there’s factors and payout factors and all kinds of things, but there’s a lot of annuity companies we work with that are very efficient.

Ford Stokes: [00:33:13] Some even offer accumulation based annuities that have zero income rider fees and no subaccount fees, because we’re not talking about variable annuity. You’re talking about a fixed indexed annuity. Also, if you’re considering a variable annuity, please don’t please consider avoiding what we call a scorable. Don’t do annuity. Make sure you consider a fixed indexed annuity and avoid variable annuities. But I just looked at a recent illustration from one of our annuity partners, and they’re offering a 10 percent bonus and they illustrate at seven point three, four percent. And they’ve got the 10 percent bonus on it, which is incredible. If you don’t want to take the bonus option. I ran one for a fifty three year old who left Goodyear and took a lump sum on his pension and he invested. The lump sum four hundred fifty thousand dollars from his pension into this fixed index annuity, and it’s illustrating at nine point eight four percent. And he’s turning on income at age 65. He’s 53. Analogy’s deferring for 12 years, and he’s looking at sixty four thousand one hundred and ten dollars a year in income. Now, granted, that’s an estimate. That’s a non guaranteed rate of nine point eighty four percent and the non guaranteed withdrawal rate.

Ford Stokes: [00:34:32] Of sixty four thousand two hundred ten dollars, but. It’s Index-linked, and that’s based on the last 10 years of historical performance of his index, which happens to be the Credit Suisse Raven Pack Index, and so. Yes, you really should consider taking the lump sum and taking control of your assets. Also, don’t leave the money with a company that could potentially fail or a government entity that could, you know, municipal or state government could have bankruptcy problems we’ve seen. Different municipalities and different states have financial trouble, and we want to take control and make sure that we put the boundaries around our hard earned and hard save money. And so if you got one of those, really be careful about turning on income from a pension. If you turn on income, a pension, the product that they use to do that is called a spear. It’s a single premium, immediate annuity. Again, a single premium, immediate annuity. And those annuities are really good at paying your money back. They’re not really good at growing your money. They’re not as linked to indices. A fixed indexed annuity is a better growth product. And wouldn’t you rather have money left over that your kids get inherit and also generate income with the same product? Also, your money grows tax deferred and you’re only paying ordinary income tax on the money you withdraw from the annuity each year. We can also implement a Roth ladder conversion before you do an annuity or even inside of an annuity product.

Ford Stokes: [00:36:07] There’s a few companies allow you to do some accounts where you can do a ladder conversion, where each conversion is classified each year. And so we can show you how to do that if you’re curious on how to do that. Go ahead and visit ActiveWealth.com and click that. Set an appointment button the upper right corner. Again, that’s ActiveWealth.com. Just visit ActiveWealth.com. We’re happy to help you with your pension decision. And also, if you’re like, you know, I never got an opportunity to get a pension, but I want one because I want mailbox money. I want to make sure that my retirement delivers peace of mind to me and I can generate real income. So why don’t we do that? Let’s go ahead and build your own personal pension. And I’ve got a secret for you also. There are no advisory fees with these personal pension type products. And we work with the absolute best products in the industry that are the most fee efficient possible. That also have done a great job of being market efficient or market linked, efficient and working with great indices. Also, if you’re offered an annuity with an S&P 500 index, but it’s only giving you thirty two percent participation rate and that index. I would strongly urge you to not invest in that annuity. I think it’s not good practice to only get thirty two percent of how the index performs.

Ford Stokes: [00:37:26] I think it’s very good practice to get 90 to one hundred and ten plus percent of how an index performs, and you will do better over time. Also, I’ve never seen an illustration or any estimate out there where corporate bonds are outperforming the growth over time of a fixed indexed annuity that gives you market gains without market risk. Obviously, we implement our portfolios and do a great job implementing tactical asset allocation. We’ve got a team of 45 folks that work on all of our portfolios. And so it’s great to have the smart risk part of our smart financial plan. But it’s even better to get that smart, safe path that also grows at market like rates. And if you’re following the rule of one hundred, it’s a great idea to kind of do a 50 50 plan, if you will, 50 percent in smart risk and 50 percent in smart, safe, smart risk would be tactical asset allocation and rebalancing every month within the market with securities and also minimizing your bond exposure. And smart savers doing a bond replacement invest in an income product like a fixed indexed annuity that can also generate market gains through. The market linking to these indices with a high participation rate in those indexes, like we talked about. And then the last piece is just smart tax and trying to do a really good job with Roth Ladder conversion or life insurance. And let’s talk about Roth conversion real quick. Sam hit them with a Roth converter sounder.

Producer: [00:39:02] It’s time for an act of wealth Roth converter.

Ford Stokes: [00:39:07] Hope you guys like that rock and verse sound or we love that. So it was a gentleman who called me this week and he called off of a webinar that he attended that I gave. We provide a retire well, reduce taxes and grow assets webinar on a monthly basis. And if you ever want to get scheduled for those, all you got to do is visit ActiveWealth.com and reach out to us or send me an email at Ford@ActiveWealth.com. That’s at FORD@ActiveWealth.com. And we’ll get you put into the next webinar. But he’s a former federal employee. He worked in the private sector for quite a while, but he is now 68 years old. And he just retired last year at the age of 67 for the federal government. His last job was in Homeland Security and worked at FEMA. He’s got nine hundred and six thousand dollars in total. He’s got one hundred eighty eight thousand dollars in a private sector, Roth IRA, because he was smart to invest in Roth money, not IRA or foreign money back in the day. And he’s got a TSP, which is a thrift savings plan. It’s the 401k version for federal employees. And by the way, Atlanta, Georgia is like the number seven market for federal employees because the CDC is here and department in tears got a lot of jobs here and there’s a lot of federal jobs here.

Ford Stokes: [00:40:26] And so we work with several federal employee families and it’s great stuff. But he’s got seven hundred and twenty thousand dollars in his TSP total. He’s got two hundred eighty eight thousand or Roth classified funds. And he’s got another four and fifty four thousand that are basically TSP or IRA type. Classified funds would be like a foreign CCAC. They’re qualified for tax deferral, but also qualified for ordinary income taxation, taxations, withdrawals. And he’s going to implement he’s trying to stay underneath one hundred and sixty four thousand four hundred twenty five dollars. Twenty four percent bracket. That’s the top end of the twenty four percent bracket for people that are, you know, single filing jointly. And he’s moving one hundred plus thousand dollars a year over a five year period, because he’s got growth on that money and he’s going to save hundreds of thousand dollars by implementing this Roth conversion. And so I would encourage you to consider saving six figures during retirement and implementing Roth ladder conversion. We can help you do that. And we give you a free 5400 dollar financial plan and portfolio analysis with a Roth ladder conversion plan. Absolutely. At no cost to you. And now the final countdown is the final countdown.

Producer: [00:41:41] So let’s recap what you may have missed. It’s the final countdown, the final.

Ford Stokes: [00:41:51] Today’s show, we gave you a market update with seven point eight percent inflation over the last 12 months. We talked about how to calculate a retirement income gap and how to deal with the eventual loss of a spouse and what happens when you lose thirty three percent of your Social Security income. And then we talked about what to do with your pension if you want to take a lump sum or not. And also how to create your own personal pension. We gave you our first official Roth convertor example with our Roth convert, our new segment. And we continue to talk about a smart financial plan. We talked about smart risk with tactical asset allocation, smart, safe with doing Bond Replacements with fixed indexed annuities and even life insurance to generate tax free income. And then also smart tax with a Roth ladder conversion so that you can get to one of the only two truly tax free investments out there, which is Roth, IRAs, and life insurance. So next week, we’re going to talk about how to calculate your Social Security income. Also, how to really make sure that you’re going to build a successful retirement that is market efficient, be efficient and tax efficient. Remember, regarding your retirement, if you’re going to be a bear, be a grizzly, be focused because knowledge is power. Do everything you can to inspect what you expect about your retirement future. It was the Active Wealth, show on AM 920 the answer. We’ll be right back next week.

Producer: [00:43:16] Thanks for listening to the ActiveWealth.com. 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 ActiveWealth.com. Investment Advisory Services offered through Brookstone Capital Management LLC by a registered investment advisor become an act of wealth management or independent of each other. Insurance products and services are not offered to be Covid or offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed past performance going to be used as an indicator to determine future results.