Plan With The Tax Man

Certainly, none of our podcast listeners would be guilty of making unreasonable requests, but let’s talk about some of the unreasonable requests we hear from others in the financial world. We’ll explore what makes them unreasonable and what proper expectations look like instead.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey, everybody. Welcome in to Plan With the Tax Man with Tony Mauro from Tax Doctor, Inc. hanging out with me once again to talk investing, finance, and retirement here on the podcast. Of course, don't forget to subscribe to us if you enjoy the content or would like to get some more episodes as they come out. You can do that at Apple, Google, Spotify, iHeart, Stitcher, all that fun stuff. Any of those platforms that you like to use. Most of those are already pre-installed on your phone. So feel free, excuse me, to subscribe to the podcast, Plan With the Tax Man.

Speaker 1: And we're going to talk about handling some unreasonable requests. Tony, certainly none of our podcast listeners would ever be guilty of making unreasonable requests. But that's what we're going to talk about this week.

Tony Mauro: Yes.

Speaker 1: How're you doing, buddy?

Tony Mauro: That sounds good. I'm doing good.

Speaker 1: Yeah?

Tony Mauro: I'm getting ready for the holidays.

Speaker 1: Yeah. We're into November now, yeah.

Tony Mauro: Into of November.

Speaker 1: Yeah. This is our early November episode. I kind of like this time of the year quite a bit. Except for the massive weather swings because then you get a little, I don't know, a little early cold or something. That's no fun. But other than that.

Tony Mauro: Right, exactly.

Speaker 1: The 40 degree weather swings are a little bit frustrating, right? You start the morning, and it's like, 37. And then by the afternoon it's like, 70, and you're like, okay, wait. How am I dressing today? [Crosstalk 00:01:17].

Tony Mauro: Yeah, I know.

Speaker 1: But it is what it is. That's okay. And it might be Mother Nature being a bit unreasonable, but rather than the white stuff, which we're not ready for yet, we'll take it.

Speaker 1: So let's do some of these unreasonable requests. I've got a couple here. Basically, these are statements and comments that we've heard people make through the years. I talk with advisors all over the country. And basically, just kind of give me a breakdown on understanding it, but at the same time, what kind of makes it unreasonable, okay?

Tony Mauro: Mm-hmm (affirmative).

Speaker 1: All right. So the first one, and we're all guilty of this. I want bigger returns with no risk. Well, that sounds great, right? I mean, everybody would like to get... We want to get as much as we can without sacrificing very much.

Tony Mauro: Exactly.

Speaker 1: But it's not really reasonable.

Tony Mauro: It's really not reasonable. And yes, everybody talks about it, especially when the market itself is doing fairly well, has been for a while now.

Speaker 1: Right. It doesn't help the argument, does it?

Tony Mauro: No, it doesn't help the argument. And we've talked about it before with news coming out so fast and you see people on TV, and we'll use Bitcoin and some of that virtual currency stuff.

Speaker 1: Oh, yeah. Mm-hmm (affirmative).

Tony Mauro: GameStop, things. And everybody wants a piece of that. And so everybody's looking for that larger return, but then they say, "Well, I don't really want any more risk." Well, there has to be something that gives there, if you want bigger returns. Obviously, we try to educate them that you're probably going to have to take more risks. There's probably going to be a lot more fluctuations. And we try to go into, with them, about the bigger picture, because it's inevitable that ... they're chasing something and they just heard.

Tony Mauro: In fact, I just had an email from one of my biggest accounting clients last night. And he's asking me, "What do you think of this stock?"

Speaker 1: Okay, right.

Tony Mauro: And it's like, well, my first response always is, "Where did you get this? I mean, did you just hear it on TV? Did you hear it from your barber? I mean, what brings this up?" And it's kind of out of left field for him, but probably just thinking like everybody does, "Hey, I want big returns."

Tony Mauro: And so a lot of people, when you do that ... well, when they ask me questions like that. I mean, they look at us advisors like we are the accountant on the inside. And they want us to sometimes go out and research this and that. And sometimes you can find companies that are undervalued, as far as that goes, but they don't really have any interest in that. They just want to know, "Hey, should I buy this?"

Speaker 1: Right.

Tony Mauro: So it gets back to that, "Hey, I just want a big return." So we try to slow them down a little bit. I think it's unreasonable to assume a bigger return for little risk. I mean, at the end of the day, that's not possible.

Speaker 1: Well, and again, this market doesn't help, because we're going on 12 years here of this basic bull run. There's been no prolonged downturn in 12 years, which I'm not sure if that's a record, but it might be.

Tony Mauro: Yeah.

Speaker 1: So typically it doesn't go this long. And you could get into the argument, we could go down into the weeds, Tony, of this whole thing. Is it propped up on toothpicks? Because it seems to be the case.

Tony Mauro: Yeah. Talk a lot about it. Yeah.

Speaker 1: There's a lot of conversation out there back and forth about, well, one of the reasons that they're keeping the interest rate so low is because, obviously, the debt ceiling is so high. If we raise interest rates, the money we pay on the 30 trillion we owe, is higher. Right?

Tony Mauro: Mm-hmm (affirmative).

Speaker 1: So there's all these kind of factors in this weird spot we're in working against and for and against each other. So it's understandable. We all want to get as much as we can get, but you got to realize that if you keep risking as much as you want thinking that this market's going to go on and, hey, you know what, we could be totally wrong and it might continue on for 10 more years.

Tony Mauro: Yeah. Love it.

Speaker 1: The second that it doesn't and you risk too much, then you're going to be upset that you've lost everything. So you got to take the good with the bad, so.

Tony Mauro: Yeah.

Speaker 1: It's like a Facts of Life episode, take the good, take the bad.

Tony Mauro: Got to do it.

Speaker 1: All right. So let's go to another unreasonable request. Can you reduce your fees for me? I got a lot of advisors. We talk about this, we'll hear somebody comes in and says, "Well, what are you charging?" Because we see these big commercials from these big box places.

Tony Mauro: Sure.

Speaker 1: And they're like, we're not charging anything or whatever. Is it reasonable to ask someone to reduce their fees?

Tony Mauro: I'd say, off the cuff, I jack around with people and say no, because I kind of put it back to them. And I say, well, let me ask you this. I ask them where they work. They tell me, I ask them, roughly what you make. I said, well, let me ask you if I were your employer, I came to you and said, well, will you take less and do the same thing? What do you think you're going to tell them?

Speaker 1: Right.

Tony Mauro: To shut up.

Speaker 1: I'm not happy with that, sure.

Tony Mauro: Yeah. You're not happy with that. Right? So, at the same time though, I guess it's not totally unreasonable because I think you need to know as a client, as an investor, what fees you're paying and are they worthwhile and are they reasonable, type of thing. And if they're a little high, it doesn't hurt to ask. But at the same time-

Speaker 1: Sure. And I think maybe what we're talking about is value, right? Because-

Tony Mauro: That is the value that you're bringing.

Speaker 1: Yeah. I mean, because yes. If there's always going to be the market's always going to be out there, and I mean by the market, I mean the business marketplace, to say, "Oh, I can do this for less," right?

Tony Mauro: Yes.

Speaker 1: That's kind of the nature of the beast in just about any industry, but at some point, are you scraping the bottom of the barrel because you're trying to get the lowest fee?

Tony Mauro: Yeah.

Speaker 1: And sacrificing service.

Tony Mauro: And it really comes down to the service. Do you feel like you're getting value for what you're paying for and it's taking you to your goal and you have regular updates and really our relationships, I don't want to say performance is not important because it is, but at the same time we try to keep our clients grounded enough to say, "Look, we're still on plan. We're going to hit our goals. And for the risk you want to take, that's what we're shooting for."

Speaker 1: Yeah.

Tony Mauro: And as long as they get there you kind of get their mind off that, which we're just talking about. I want the greatest return with no risk.

Speaker 1: Right.

Tony Mauro: Then they find a lot of value in that. But I do think too, that it's like anything else, most of the time you get what you pay for. And so if you're generally down there at the low end, you're really not getting a lot of service. If you are, you've got a great deal, but generally that's not possible.

Speaker 1: Very true. I mean, right now, obviously we know prices are getting out of control on a lot of things, but you can easily use just the McDonald's analogy. You can pop into a McDonald's and get a fairly cheap cheeseburger, but that's what it is, right? It's fairly cheap.

Tony Mauro: It is.

Speaker 1: So if you go to a nicer hamburger place or a fancier type of place and you're going to pay more for a bigger, juicy house burger type thing. So value. Value for what you're paying. You got to bear that in mind.

Tony Mauro: It really is.

Speaker 1: Yeah. Okay.

Tony Mauro: Yeah.

Speaker 1: Unreasonable request number three, Tony, how can I get out of paying taxes on that money in my IRA or my 401k? I want to get out of it. That's probably unreasonable. You can't get out of.

Tony Mauro: That is unreasonable. Yeah. I say sure. I always, again, I like to joke around a lot. So, you know, yeah, you can get out of it. Here's what you got to do. You got to break some laws cheat on your taxes.

Speaker 1: Right.

Tony Mauro: And hope you don't get caught. I said, illegally, no, you can't get out of that. And you could do some Roth conversions and you could do some things to plan around it, defer taxes and things. And I think that's where you need to plan it, but to avoid it?

Speaker 1: Yeah. We could get more efficient, right?

Tony Mauro: Yeah, get more efficient, yeah.

Speaker 1: We just can't avoid.

Tony Mauro: Yeah. But to totally avoid it, no. It's very, very difficult unless you have, again, the Roths, but there are some rules there that kind of limit that a bit. We do get that a lot. Especially during tax season, they want to get out of it. In fact, I, again, take an example, I had a discovery call the other day with some young businessmen and they just started business. And about the second thing out of their mouth was, "Well, we really don't want to pay any taxes, but we're starting to make money." Well, guys, that's impossible. I said, "There's some things you can do to be more efficient to keep your taxes low," but-

Speaker 1: Right, right.

Tony Mauro: You're asking for the impossible there, so.

Speaker 1: To your point, I mean, I guess you can do it, but A, I'm not the person to do it for you, right?

Tony Mauro: No. Nope.

Speaker 1: And B, do you really want the headache that comes with it?

Tony Mauro: Yes.

Speaker 1: Because that is, yeah. And that's always going to be an argument. Look, we want to stay as low as we can stay. We want to pay as little as possible. That's a given, but just realize that you're going to have to do it. And so when it comes to this money and we talk about it often that's sitting there in this IRA or 401k growing over the years, that's what they're waiting on. They're waiting on that big money that you owe them. So let's talk about ways we can be more efficient and reduce the taxes. Now, maybe that's paying some of that. Maybe that's doing some conversions that you mentioned, Tony, paying some of the tax now. At this rate, let's say it's 22% just for hypothetical, versus later on when maybe it's 32, right? Whatever the case might be.

Tony Mauro: Right, yeah. It's difficult to say to do. The main thing is just try to keep them as low as you can. That again comes back to the old takes some planning, and a little bit work.

Speaker 1: Takes some planning, yeah. Got to have a little bit of a strategy other than just, "I don't want to."

Tony Mauro: Yeah. Right.

Speaker 1: That's not a good strategy. Okay. Now, how about the kind of along that line, a little bit of that, "I don't want to deal with it." Look, we do podcasts. You do marketing, you do advertising because you're a business, you're trying to get clients in business. And sometimes you come across people who are just like, "Look, I'm finally talking to an advisor. I'm terrified of this stuff. I don't know what I'm doing. Just do it for me." And so, on one hand you kind of go, well how is that unreasonable? But Tony, there are some people who think, "Hey, let me just hand you all my stuff. And then you just fix it all for me. And I don't have to have any further kind of input from there." And I think that's the unreasonable part. You've got to still be involved.

Tony Mauro: You definitely have to be involved because, for one thing, what I kid them about too is I said, "You know, we do it for you. It's going to be my plan." And my plan's going to involve this, this and this. And do you want that? And they all say, no, gosh, I don't want to do all that. I said, well then, my point is, it's got to be your plan. You got to participate. Yes, it's a little bit of work, but it should be fun work. I mean, we're not going to give you anything that you can't handle. But part of the [crosstalk 00:11:42].

Speaker 1: Yeah. You're doing the heavy lifting, of course, but you-

Tony Mauro: Yeah. We're doing the lifting.

Speaker 1: Yeah.

Tony Mauro: But I think part of the value though, is... and we will not do it. When we get done kidding around, we say, "No, we will not do it for you." Part of the value we bring is we do a full financial plan with everybody here or at least a minimal one. We're not just going to come in and throw and pick some things off of a piece of paper because I want to know, and I want to have it down as to what your goals are, what you have now, what you're trying to do.

Speaker 1: Right, yeah.

Tony Mauro: So that we can work towards something. So, it doesn't take a ton of work for them. Most advisors these days have most of this automated and online where they can go in and start filling some of this out rather than having it. Used to be on paper, you get this big packet from your advisor and that petrifies them and now they can just kind of go in and pick it off and save it as they go. But they do have to, with us anyway, have to go through that step. Yes, so important.

Speaker 1: Yeah. And to your point a minute ago about, it'd be your plan. Even if it's not your thing, right? The math or the figuring out the best optimal time for this and alpha that and beta this. Sure, we understand it. That's not your thing, but you've got to be able to talk about what it is that you want out of retirement. What kind of lifestyle you're hoping to maintain? Is it heavy travel? Is it a lot of charitable giving.

Tony Mauro: Right?

Speaker 1: Whatever the case might be, that's where you come in, right? So that's where a lot of the... Hopefully those are fun conversations to your point.

Tony Mauro: Yeah. They're fun. Yeah. If you get it down to that level and where we're not talking about all that technical stuff, people start to open up about that kind of thing.

Speaker 1: Yeah.

Tony Mauro: And you know, some of that stuff they've been wanting to do all their lives and if they can have a chance to do that, then all of a sudden they're sitting up in their chair a little bit saying, "Well, yeah, maybe I can do this."

Speaker 1: Exactly. I mean, that's when at that point you've decided you wanted to fulfill your lifelong dream of making tiny marshmallow Elvises in your garage and selling them at Halloween or something, I don't know.

Tony Mauro: Right?

Speaker 1: Whatever crazy idea that you've got, the retirement could be the fun time to do that. And then you got to fund it with, the plan, the strategy to get it all done. And I don't know where that crazy little Elvis thing came from, but that's the point, right? You're like, "Yeah, I like that too." So that's kind of the crazy point of retirement is that it's hopefully this opportunity that we get to do some things we've always wanted to do, but also maintain that safety and security and that structure that we're all looking for as we're aging, which kind of comes back to the big returns with little risk, we want to chase the big money, but we don't want to risk anything.

Speaker 1: Well, you got to have a good strategy so that you can protect what you need to protect. But then also maybe take a few chances here and there, but that all comes back to having a plan and a good strategy. And hopefully that helps you out along the way. As we talk about this stuff on the podcast with Tony. So if you've got some questions, reach out to him, get on his calendar and chit chat about these things at 8 4 4 7 0 7 7 3 8 1. If you've got some questions before you take any action, always check with a qualified professional, like Tony. He is EA and a CFP, a certified financial planner of 20 plus years here to help you in the area. So give him a jingle 8 4 4 7 0 7 7 3 8 1.

Speaker 1: And as I mentioned earlier, don't forget, you can subscribe to the podcast on whatever platform you like using for your podcasting needs, and you can find it all at yourplanningpros.com. That's yourplanningpros.com. Tony, thanks for hanging out with me and my friend. I hope you have a great week. I'll talk to you in a couple of weeks just before Thanksgiving.

Tony Mauro: All right. Sounds good.

Speaker 1: All right. Well, have a good have a good week folks. We'll see you next time here on Plan with the Tax Man with Tony Mauro.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.

Different types of accounts have different tax consequences. Let’s talk about those advantages and disadvantages in different types of accounts and how you can use them (or not) in retirement planning.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey, everybody. Welcome back for another edition of Plan With the Tax Man, with Tony Mauro from Tax Doctor, Inc. We're going to talk tax consequences because, hey, it's right there in the title. So we might as well spend a little time ... pros and cons of the various account types is what we're going to get into this week here on the podcast.

Speaker 1: And Tony, before we do, I got to ask you a question. I saw Costco's and stuff like that are starting to say, hey, we're going to limit the purchase of TP and cleaning supplies. I was like, are we really doing this again?

Tony Mauro: I just saw that myself, and I couldn't believe the headline when I first saw it.

Speaker 1: And I get it. Right now, it's logistics more than it is panic buying. Because we're still having trucking situations and clearing shipping containers and docks, and all that stuff. But it's the point of like, people just ... we overreact. They will see these news headlines and then you know they're going to run out and do it.

Tony Mauro: Yeah. They run out. Yeah. It could be a sales ploy too. [crosstalk 00:00:56].

Speaker 1: That's a good point. Yeah.

Tony Mauro: Just to get people in. But I do think the more as this year as has drug on, and through my travels, and even here locally, that the supply chains are suffering.

Speaker 1: They're definitely suffering. Yeah.

Tony Mauro: We've got labor issues. Everybody all up and down, whether it's restaurants, accounting firms, I mean, hospitality, especially is struggling to find employees. And it's crazy. I just had my car serviced. And they said that they can't ... they don't have enough ... I don't know. They're missing some chip that comes from overseas. And they can't finish the cars to get them on the lot, so they don't have a whole lot of inventory of brand new cars to sell. [crosstalk 00:01:38].

Speaker 1: That's why used car sale is up so much. Yeah. Mm-hmm (affirmative).

Tony Mauro: Yeah. It's just incredible. Well, good for the remodeling and construction industry. But lumber's way up, so that's costing a lot. But it seems like a lot of my business clients, especially that we do accounting for, are having good years. Which is good.

Speaker 1: Yeah. That's fantastic. Yeah. I saw that ... and here's the thing. We talk often about, just having a strategy, right? Have a plan. And you can apply that lesson to so much stuff in life, Tony. Like even buying toilet paper. When we went through what we went through last year, I would have hoped that more people ... and probably a number of them did get wise.

Speaker 1: But like I told my wife, I was like, look, we never know what's going to happen when it starts to get cold again or whatever. So maybe every other trip to the store, maybe pick up an extra four-pack. Then you're not panic buying and you're not hoarding. We're just getting a little extra. Just a little, small stockpile going of whatever, just in case something does get silly again. Versus that, everybody flocking in and just cleaning the stuff out.

Tony Mauro: Yeah. No, I know. It is crazy.

Speaker 1: And that's a strategy. Even that is a strategy. And that's planning as well. So that's going to do it this week for the show. No, I'm kidding. So let's talk about tax consequences then, because this is planning, as well, too. So as I mentioned, let's do pros and cons of some of these account types. And you just give us some advantages, disadvantages that kind of.thing, okay?

Tony Mauro: Sure.

Speaker 1: Tax deferred accounts. Let's start with the traditional, the 401k, the IRA, most of the places where we are conditioned to sink our money.

Tony Mauro: Yes. And these are all great accounts, by the way. I'm not going to come out and say that one is better or worse in any case than any other, but...

Speaker 1: Yeah. Just pros and cons.

Tony Mauro: Yeah. Just pros and cons. And so you do need to know these because they all have their place. So in the traditional tax deferred accounts, our IRAs and 401ks, of course, the big advantage is when you put money in, it's going to be a tax deduction. It means it's going to look like to the government, when you filed that tax return, that you didn't earn it. Even though it's still your money and you still own it, you just parked it somewhere for retirement.

Tony Mauro: Big, big deal. Because theoretically, A, you're not paying taxes on it. You will later, which is kind of a disadvantage. But the big advantage is you're not paying taxes and it's going to grow tax deferred. So it's going to grow faster because the little tax man is not going to be there with his hand out every year, taking their cut. So that's been the traditional way to save for retirement.

Tony Mauro: A couple of disadvantages. And this is kind of a hotter topic lately is ... and this is true. When you have big sums in these accounts, you know that you've got an IOU to Uncle Sam and to your state government. Meaning that they're going to want their tax at some point. And even though we've kicked the can down the road a while, the old thinking was, well, I'm going to be in a lower tax bracket when I retire. And a lot of times nowadays, sometimes that's the exact opposite. We're actually now in a higher bracket, so when we go to pull this money out, now we owe taxes then.

Tony Mauro: And again, depending on how you look at it, could be a disadvantage there as far as that goes. I think with this, like all retirement accounts, another small disadvantage is money set aside. That's what the government wants you to do is keep it set aside until you're 59 and a half. And there's penalties if you pull it out early and things like that. So you got to know the ins and outs of these. And just have a conversation with your advisor. They're going to explain the same thing and go through it and then help you decide which one is better.

Speaker 1: Well, it's the education, and like I said, the conditioning that we've been getting for years that this is where we go, right? We just put the stuff in a traditional 401k, we tax defer it. And I like how you said, it's ours, but they don't view it as ours yet. The government does. And it's someplace we parked it until they want their cut later on when we take it. That's like the RMDs, so on and so forth. And that's the traditional way of thinking. But there are a lot of alternatives that maybe are better way to go.

Speaker 1: And at the time we're taping this, Tony ... we don't have any official word yet to what's going to happen with the tax proposals. But there's all the talk about, well, they're going after the wealthy. But if you really look at some of the other things in there, it's not just the ultra wealthy. It's not even really just the wealthy, right? There are some things in there that's going to pinch all of us a little bit if they make these changes.

Speaker 1: And over the last couple of years, tax-free accounts, like a Roth IRA, and even a newer thing, like a Roth 401k, have been very, very appealing to people because I know what my tax rate is today. I don't know what it's going to be in the future. And whether they make a change or not, they're sunsetting. So they're going back up in a couple of years, regardless.

Tony Mauro: Exactly. And if you really, if you think about it, take all the politics out and whatnot ... pretty much everybody knows that the government spends more than they take in. We've got a lot of debt. At some point...

Speaker 1: And they're not very efficient. Right.

Tony Mauro: Yeah, they're not very efficient. And at some point, we have to start paying for some of this somehow. And some of the things that they like to do is mess around with some of this stuff and create taxes to do that. But the tax-free accounts really have gained a lot of steam, like the Roth. Because the thing with them is, is you don't get a tax deduction when you put the money in. It's all after tax dollars. So the government isn't out anything because they collect the tax on that.

Tony Mauro: But the deal with them and these accounts is, well, okay, I didn't get a tax deduction, but they're saying all the earnings on these accounts is tax-free. Not tax deferred, free forever. So [crosstalk 00:07:25] the pot of money that grows ... Yeah. There's no taxes being paid on the earnings. And then when you take it out, you don't have to worry about that. Now, some of the things the government has found and tried to close ... because obviously, if there were no limits on these things, all the wealthy would stash all their money there. I mean, they're not dummies when it comes to this.

Tony Mauro: But the feds say, you can only put so much in a year. Which is 6,000, then there's a catch-up. I think it's still 6,000. It might be 6,500.

Speaker 1: I think it's 65 or under now. Yeah.

Tony Mauro: So you can't stash too much in there. But what a lot of people are doing now though, which is a legal loophole, is really taking money they're putting in the 401ks or whatnot ... or had some money in IRAs. And they're taking it out and doing Roth conversions up to their tax limit. And saying, okay, like you said earlier, we're going to pay some tax now, we know what it is. And I'm going to keep converting until I get all my money out of the tax deferred stuff.

Tony Mauro: Or they're using the newest thing, the Roth 401k, which is just like the regular IRA and 401k, it's just you don't get a tax deduction now. But you can stash a lot of money in those. So it's a very good account. I think it deserves some looks, especially if you're younger. And it's a heck of a deal. So I think you should take a look at it.

Speaker 1: Yeah. No, I agree with you. And I think that's where people were trying to be more efficient. Because every time we get more efficient, then the IRS is like, well, we got to get more efficient, and it's this chess game. And it's always funny these conversations about, I found a loophole, or I want to find ... and it's like, well, the code is the code is the code, right, Tony? As a tax professional, there's not technically really loopholes, right? There's just the code and the people who are willing to find the ways to manipulate it to their best advantage.

Tony Mauro: To their best advantage, yeah. It really is. And then sometimes the IRS says, well, too many people are doing this, and then they change the code. So you can't do that legally anymore.

Speaker 1: And that's closing the loop, right? Yeah.

Tony Mauro: That's closing the loop.

Speaker 1: Yeah. Exactly.

Speaker 1: All right. Well, talk to me about number three, after tax brokerage accounts. What are those? First of all, just kind of explain them a little bit just for people ... taxable accounts, though?

Tony Mauro: Yeah. So a taxable account really is no different ... I mean, you could call anything a taxable account. Your savings account, CDs, money markets. But brokerage account would fall under that. Meaning that you just decided that you were going to start investing in some securities. And it might be equities might be mutual funds, whatever. [crosstalk 00:09:51]

Speaker 1: So it's just to tax your E-Trade account, for example?

Tony Mauro: Yeah. Like E-Trade or whatnot. And that's called a taxable account. Meaning that even though you own securities, when you buy and sell, if you have gains, you're going to be taxed on the gains, only when you sell them though. And if your securities generate dividends and interest income and things inside of that account, you're going to be taxed on it. So at the end of the year, you're going to get a statement called 1099-B, and it's going to summarize all this. And you have to give that to your tax person because you have to claim that on your taxes.

Tony Mauro: So what's the advantages and disadvantages? Well, the advantages really are, again, you're paying your taxes now. And you're not into all the rules. You don't have to take money out at any certain time. You know exactly where you're at. I think another advantage ... but this is in any type of account. Long-term capital gains are taxed at a lower rate than your potential income is. And you could do some tax loss harvesting, which is a tax planning move, where if you've got a lot of gains and you've got a few losses, you can offset the tax on those gains by selling and deducting your losses.

Tony Mauro: So they have a spot, especially if you've maxed out the other two things we've just talked about. People say, well, I still want to save more. And we say, well, I mean, there's a couple other things, but just a regular account sometimes make some sense. Or if it's just a trading account, a lot of people use E-Trade and Schwab and things, and they do a lot of trading. And that's where you do that at.

Speaker 1: I forgot to ask you, whenever I asked you to give us some pros and cons, to ask you whether or not you use some of these tools in your retirement planning process. And I'd imagine for these first three, you use all of these, right?

Tony Mauro: We use all of them, yeah. We do. I mean, we start at the top and try to get the most tax savings or deferral that we can. And if people want to keep going ... we try to set high savings rates, and then we break it out between the different accounts. But if somebody has got the wherewithal to say, I want to save 10, 15% of my income. A lot of times we can't get it all in one type of account, because of the rules. The IRS says it's too advantageous.

Speaker 1: As a CFP, a certified financial planner and professional, I imagine ... and obviously a tax person. So you get to kind of look at this through both lenses, right? So when you're thinking about these things, where a lot of times, if you're working with someone who's just a financial planner, they will say things like, well, let's ... they have tax knowledge, of course. But they'll say let's consult a tax person. You get that nice advantage, unless I'm wrong, of looking through it with both lenses at the same time.

Tony Mauro: We do. And we get some calls from clients that work with financial planners. And they're tax clients, and of course, they want ... I think some financial planners, it's probably something they don't want to get into if they get too far into some of the tax stuff. But it is good, especially with tax clients, because we already have their tax returns and just...

Speaker 1: Yeah. You're right there looking at it. Yeah.

Tony Mauro: ...plug some numbers into the tax software, into the financial planning software. And try to find the best route based on what they want to do. Using all of these different kinds of accounts. It's almost a must these days to be able to do that.

Speaker 1: That's for sure. Well, I got two more. Let's see if we can knock them out. You mentioned CDs, so let's bring that one up. I know we're trying to be pros and cons, I'm finding a hard time finding any pros to CDs right this minute. I mean, other than the fact that, I guess they're safe. But I mean, talk to me a little bit about CDs.

Tony Mauro: Well, yeah. I mean, CDs, they're always the whipping boys of the investment world, especially now. The CDs, the advantages of them ... back in the day when you could earn a reasonable rate of interest, that's mostly what retirees put their money in. If you could get five ... I remember the days when it was 8%. And the big advantage is, that's FDIC insured, so there's no risk to your principal. It's a contract between you and the bank and they're going to give you X amount of dollars or interest rate. And at the end, they're going to return your money and you could do it again. And all different kinds of time horizons and whatnot.

Tony Mauro: The problem has been, over the years, rates have shrunk. These rates now are what I would call very, very low. I mean, you can't even keep up with inflation on these things.

Speaker 1: No, no. Not at all.

Tony Mauro: And if you take inflation into account, your tax rate into account ... because these things, unless you put them in an IRA, are taxable. Sometimes there's actually, if you show it to people, a negative return in real dollars. But a lot of retirees still like to cling to them. They complain a lot, they're just not earning. And we tell them...

Speaker 1: To your point, the whipping post, right?

Tony Mauro: Yeah. You're not going to get that. And you're going to have to come up with something else and venture out a little bit. But they still have their place. I mean, you could say, for children. You could do some things. You could use them for college. It depends on your risk appetite, but these are ultra, ultra conservative. And if rates ever come back to something respectable, I'm sure you'll see them not being talked about like they are today.

Speaker 1: Gotcha. Okay. And then my final one, the fifth one here, Tony, is life insurance. Now we're talking about tax consequences and that might strike people as strange sounding. So are there tax consequences to life insurance?

Tony Mauro: There are tax consequences. And everybody loves to hate the life insurance sales guy these days. But life insurance still has a great, I think, value in planning, and not only for your estate and retirement. But everybody always wants to ... you know the old saying. What is it? Buy term and invest the difference. I still think that a cash value life insurance, in certain situations, makes some sense. Because it's going to build up cash value, it's growing tax deferred. You can borrow against it because it's your money. No questions asked.

Tony Mauro: Life insurance, of course, for the death benefit is tax free to the beneficiaries. It doesn't matter how much it is. And you can use it in some really sophisticated planning techniques, depending on what you want to do and how you want to leave your money for children. And I think it still makes some sense. People ask me, well, hey, I've got X amount of dollars in my nest egg. I want to leave my kids something, but I want to spend my money. And we tell them, well, you can do that. Just go out and you can buy a life insurance policy. Make sure you're paying on it or it's a paid up policy.

Tony Mauro: And then you can go out and spend every dime and at least you know your kids are going to have what you want them to have, should you pass away. So there's a lot of uses for it. It does get complex. Sometimes it's not sold properly, and for all the wrong reasons, but I think you should at least take a look at it as a planning tool.

Speaker 1: Yeah. And I think a lot of people don't realize ... we think of life insurance as just life insurance. And not thinking about necessarily the tax consequences. So I wanted to bring that up and have you address that a little bit this week on the show.

Speaker 1: All right. So thanks for hanging out with us this week as we talked about tax consequences with the tax man. So that's why we do the show, Plan With the Tax Man. So if you've got questions, as always, get on the calendar. Talk with a qualified professional before you take any action, if you're not already working with Tony. Make sure you check with a professional before you take any action on something here on our show or any others.

Speaker 1: And don't forget to subscribe to us on Apple, Google, Spotify, iHeart, Stitcher, all that fun stuff. Find it all at yourplanningpros.com. That is yourplanningpros.com. Tony, thanks for hanging out and explaining some of the tax ramifications and some of these things. I appreciate you.

Tony Mauro: Yeah, you bet. Talk to you soon.

Speaker 1: Yeah, we'll see you next time. We'll be in November the next time we get together. So that'll be nice, and maybe the chilliness will really be rolling in. And we'll be talking about Christmas in November, when it should wait until December, but whatever. I'll get on my pumpkin spice high horse again so I won't do that.

Tony Mauro: I like that.

Speaker 1: We'll see you next time, folks. Have a great week. Don't forget to subscribe to us here on the podcast Plan With the Tax Man, with Tony Mauro. We'll talk to you next time.

Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through an Avantax affiliated insurance agency.

Before you can live the retirement dream, you have to figure out what the dream looks like in the first place. Let’s talk about some of the things you need to dream about.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey, gang. Welcome in to another edition of Plan with the Tax Man with Tony Mauro from Tax Doctor, Inc. and myself hanging out, talking investing, finance, retirement, and living the dream. That is the topic this go-around of the podcast, planning the non-financial retirement because that's just as important as doing the X's and the O's, and we're going to get into that just a second. Tony, what's going on, buddy? How you doing?

Tony Mauro: I'm doing well. How about you?

Speaker 1: Hanging in there, not doing too bad. As a matter of fact, this is a good topic because you're getting ready to do a little goof tomorrow, the next day, golf for those of us who know what I'm talking about, but you're going to play some golf, right?

Tony Mauro: I'm going to play some golf. It's getting a little cooler here. This is probably going to be it for the year for us as we're recording this at the end of September-ish. So, looking forward to that, and then it's batting down the hatches time.

Speaker 1: Yeah. Are you a fall guy? Are you a summer guy? We're in the fall. This is October, so our October podcast. Do you enjoy fall?

Tony Mauro: You know, I do enjoy fall. I'm a summer guy, though. I always have been. Fall, when those days start getting a little shorter and then it gets a little grayer, and it seems like to me anymore, around here anyway in the Midwest, the fall, it's hot. It's like summer, and then we don't have a much of a fall like we used to. It's changing.

Speaker 1: Gotcha. I go back and forth. I think I'm spring or fall. I enjoy summer just like everybody else, as well, but where I'm at, it gets blisteringly hot. I think spring is great because you get the flowers and everything, but there's a lot of rain typically, and then fall.

Speaker 1: So, maybe fall edges it out just a little bit, although the detractor is the pumpkin spice stuff. Don't hate me folks if you're a pumpkin spice person, but good Lord! Could we not start talking about pumpkin spice in August? Could we stop that and at least wait until late September? Now that it's October, it's okay, right?

Tony Mauro: That's right. Now, they can start talking all that.

Speaker 1: Now, you can talk about all that. So, is that part of your living the dream? So, let's talk about it. Tony's going to play some golf. That might be on your living the dream conversation. So, before you can live the retirement dream, Tony, you got to figure out what in the heck the dream is. For many retirees, pre-retirees, often the first time, maybe not the first time, but when they really get serious about some of these conversations, it's in front of an advisor like yourself.

Speaker 1: Now, maybe you've had some general things. You've said, "Hey, who do you want to hang out with? You know, who's our social circle? Are we going to still hang out with the Joneses? Do we like them, or whatever the case might be. When you're starting to plan and strategize the future, it's not always just the X's and O's, right?

Tony Mauro: No, it's really not. Even on our podcast show, we're always talking about getting to the dream and the numbers and sticking to the plan. Once you get there, outside of, like you say, the financial side, I like to talk to people about this. This is a great thing to talk about and just kind of get out in the open because a lot of people don't think about it.

Tony Mauro: Then, what I hear sometimes is, "Well, I'm in retirement, and now I don't like it because I'm I'm bored. I've got the money I need, but my life doesn't make any sense anymore. There's no purpose." I do hear that a lot.

Speaker 1: Good point.

Tony Mauro: I mean, we try to have some Frank conversations about that kind of stuff, not only who you're hanging out with, but what are you going to do? Are you going to travel? Are you going to volunteer?

Tony Mauro: I mean, what's your day going to look like to keep yourself busy and occupied and try to stay healthy, as well, along those lines. I've even had people where we actually put it down and put it part of the plan. Then, we do a little check-in, see if they're kind of following that or if they've gone off in a different direction.

Speaker 1: Nice. I like that.

Tony Mauro: It's just something kind of fun. It's not really accountability, but just kind of going over like, "Six months ago you said you were going to do this and now you're doing that but, as long as you're happy."

Speaker 1: Did you do it, right?

Tony Mauro: You're doing some things, yeah.

Speaker 1: Well, that light dose of accountability, not a bad thing. Think about it like this. A lot of times, couples will, they'll be sitting there talking and they're saying, "Okay, we're thinking about what do we want to do in retirement? Where do we want to travel?" We'll use golf. "Well, I want to play golf." "Look, we want to go out to eat more and try a lot of the restaurants we haven't had a chance to try.

Speaker 1: Okay. That's great, but that's really general. That's a general thing. So, when you're starting to talk about structure and planning and funding all of these things because, as my dad used to say, "Retirement is every day's a Saturday," and he spends the most money on a Saturday. So, every day in retirement is a Saturday. So, now you got to start kind of drilling this down. Well how often do you want to golf Tony, right?

Tony Mauro: Right.

Speaker 1: Two days or four days a year is a heck of a lot cheaper than two days a week.

Tony Mauro: Exactly. Yeah, and for a guy like me who loves golf, I don't see me, because I would probably get sick of it if I was going to say to myself, "I'm going to do this seven days a week" and [crosstalk 00:04:49].

Speaker 1: Oh, gosh, no. I don't think I can do anything seven days a week except for sleep.

Tony Mauro: Yeah. I just actually got back from a culinary thing in San Diego, and a lot of retirees were there, and they have their whole schedule planned out, and it's kind of refreshing because they feel like they're still, I mean they are busy, but they're busy with stuff they like to do, but they're very detailed about it. Most of couples I ran into, because I always ask everybody, "What do you do to occupy your day?", and, boom, they're listing it out, and it's pretty down to, really, every few hours.

Speaker 1: Wow! Really? Like activities and stuff, you mean?

Tony Mauro: Yeah, activities and things. Then, of course, there are travels in there and, for some of them, it's golf. For a lot of them, it's cooking and just ways to kind of keep busy and feel good. A lot of people are volunteering these days and/or kind of working that non-stressful type job just for something to do type of thing. It takes up some time.

Speaker 1: If you're talking about all these different pieces, we could go through each one of these individually, but I think it's just better served as a general conversation because, to my point, a second ago, everything costs money so, if you want to go out to eat and try places more often, not that you're living on a budget, but you don't want to go super crazy. Same thing with golf or same thing with travel, "Hey, let's see the grandkids more often," and let's say the grandkids live someplace you got to fly to.

Speaker 1: Well, what is more often? Is it going to be a few times a year because that stuff will start to add up and that's what your retirement money's for. Not saying, again, you have to go on a budget, just make sure that you're having these conversations and doing a little bit of strategizing with your advisor so that they know, okay, travel wise, we need to plan for X number of dollars. That's not only big travel, but the smaller travel out to see the grandkids.

Tony Mauro: You're right. To bring numbers back into it a little bit, you do need to have those conversations with your advisor because that has to fit into the plan you have created.

Speaker 1: Yeah. They got to clue you in, right?

Tony Mauro: Yeah, so because most advisors, if you're not talking to them about it, they're just basically focusing on, "Okay, now you're at the end. You're in retirement. It's your property taxes, your fuel, your groceries, you know, the basics just to live. There is a budget now, especially if you're not working and, if you start going over budget too much, depending on where you're at, that affects things.

Speaker 1: The difference Tony might be like, you show up to Tony's office for a check-in. It's review day or something. Somebody comes up and says, "Tony, check out these new golf clubs I got. I spent, whatever, about a thousand bucks on them or something."

Speaker 1: That's one thing that's, but it's different if you pull up in a Corvette that you spent 50 grand on and said, "Hey, check out what I, and the golf clubs in the trunk." Again, your money, do what you want, but did you just double check to make sure it's part of the plan so that you're not shorting what would be maybe some longevity, so that kind of thing. Am I on base there?

Tony Mauro: Yeah. I mean, right on the money with that because that does happen and, again, going back to...

Speaker 1: Then they say, "Fix it," right?

Tony Mauro: They say, "What can I do now?"

Speaker 1: Well, can you fix it, Tony? Well, wait a minute.

Tony Mauro: I mean, generally, you can the first few times, but let's say you were out buying those large purchases or around the world trips too much, then it becomes a "Well, now you got to change some things. Your budget now has to be adjusted downward. That's probably the last thing retirees want to hear is that. Again, everybody's different, depends on the nest egg you have Obviously, someone with a very large one is going to be making different decisions than someone a little more modest, but there's a lot of room in there though.

Speaker 1: Sure, you've got something going.

Tony Mauro: It's fun to think about and I think, well, at least the people we talk to and even pre-retirees, they haven't thought about that yet. What are they going to do when they get there? It's all about, "Well, I've got to save this much to get there."

Speaker 1: Right, and to my point to kind of kick this off, a lot of times, people will start to have these conversations maybe more seriously, or maybe a better term, Tony is more honestly in front of you, for example, as the financial professional, because maybe the husband and wife will go with the standard thing here. They're sitting there, and he says, "Yeah, we want to see the grandkids six times a year. This is where they're at. This is what we're thinking.

Speaker 1: She's like, "You know, I didn't really agree with that", and now you've got that other person kind of to be that moderator. "I only really want to go 12 times a year" or the really big one is, I've heard many advisors say that the wife sometimes will look at the advisor and say, "Get him out my house. Give him something to do. We're driving each other nuts."

Tony Mauro: I do hear that from couples a lot.

Speaker 1: That's non-financial, but it is going to be financial because, if you're going out and doing things, you're going to have to start spending the money for that or whatever the case is, but you also have to think about, you're going to spend all your time together and, sometimes, we just get tired of one another.

Tony Mauro: You do. I think, too, even a real life example for myself right now. My wife and I have been traveling, I wouldn't say a lot, but I mean, three to five vacation type things a year just because we're at the point where we want to start doing some of that, but I've always been one to love to travel, and one of our goals has been, well, we wanted to travel when we decide to retire, once a month, but we've been doing this.

Tony Mauro: My wife actually said on the way back to San Diego, the travel part of the travel gets wearing as you age. I said, "Well, we may not want to do that when we're 75 because we're not moving quite as quick,

Speaker 1: It drains you.

Tony Mauro: Yeah. It just is a whole different thing. So, things do change is I guess the point there and what we want now in the fifties and maybe even sixties is going to change as you get older. I mean, even go back to golf. When your 80 swinging the club versus 50s, it's a lot different.

Speaker 1: Mm-hmm (affirmative).

Tony Mauro: My dad still golfs at 80, but it does take it out of him, but he still likes to get out there.

Speaker 1: Exactly.

Tony Mauro: Yeah, he's a three-time-a-week guy.

Speaker 1: Oh, wow!

Tony Mauro: He likes to quit as soon as it gets like it is. I mean, as soon as it cools off, he doesn't like it because he can't. His back hurts and some things like that.

Speaker 1: Gotcha.

Tony Mauro: Yeah, it's fun to talk out with people because you hear all kinds of things and that's the funnest part about it.

Speaker 1: This is the cool side of what you do. You're doing the X's and O's. They've saved the money. You're doing the calculations and the planning and the strategizing so that they can do the dream, whatever the dream is. That was the topic this week on the podcast was just living the dream. Have you had some cursory conversations with your spouse? Has it just been, Yeah, let's travel. Yeah, let's go out to eat," or have you really dived more into, what does that really look like?

Speaker 1: Then, more so, have you shared it with your financial advisor so that they can help structure the retirement you're looking for. Maybe you're wanting to start a small business. Maybe you're wanting to convert the garage into a woodworking shop, whatever the case is. So, have you really dived into that? What is the dream for both of you?

Speaker 1: Then, have you shared that with the advisor so that you guys can all be on the same page so they're understanding how to finagle and work stuff to get you what you're after and also keep that longevity and keep taxes down and so on and so forth.

Speaker 1: So, that's the podcast this week, living the dream. Make sure you're talking about it. We're going to talk about taxes, actually, on the next episode this month, so tune back into that. If you haven't subscribed to us, do so on Apple, Google, Spotify, iHeart, Stitcher, whatever. That way, you catch new episodes when they come out like the next one, which is going to be on tax consequences or you can check out past episodes.

Speaker 1: So, there's lots of things you can do, so stop by the website. You can find it all at yourplanningpros.com. That's yourplanningpros.com to talk with Tony and get yourself set up on the calendar. My friend, I'm going to let you get out of here this week. Thanks for hanging out, and good luck with the golf swing tomorrow.

Tony Mauro: All right. Thank you. We'll talk to you soon.

Speaker 1: All right, we'll see you next time here on Plan with the Tax Man with Tony Mauro, Des Moines professional alternative @taxdoctorinc.

Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through an Avantax affiliated insurance agency.

If you’ve ever ridden the subway in London, you’ve probably seen the “Mind the Gap” signs warning you to be aware of the gap between the train door and the station platform. Let’s talk today about minding the gaps in retirement planning.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey everybody, welcome back into another edition of Plan With The Tax Man with Tony Mauro and myself and we're going to be talking about minding the gap this week on the podcast, and so you need to stick around for a second and figure out what that means, minding the gap. But if you've got questions and need some help when it comes to retirement, Tony has been doing this for a long time at Tax Doctor Inc and they're here to help you at yourplanningpros.com, that's yourplanningpros.com. Don't forget to subscribe to the podcast and all that good jazz and we're going to get into our conversation about minding the gap here in just a second. Tony, what's going on buddy? How are you?

Tony Mauro: I'm good. Thank you. Just got back from my vacation and things are going well.

Speaker 1: So fancy France.

Tony Mauro: Fancy France. Went over for some wine tasting.

Speaker 1: That's awesome.

Tony Mauro: Yeah, it's unbelievable.

Speaker 1: I bet. So obviously you had a great time, I don't even know why I'm asking.

Tony Mauro: We did. I do like Europe, this is my second time over there. And, I don't know, I guess there's something about it, the different culture and everything, it's something to see.

Speaker 1: Well, there's a lot of very old architecture, a lot of very old things to see, versus maybe we got some old stuff here in our country but not really, right? I mean, the way we kind of think of it but not some of that stuff. I mean, you're talking about Paris has been around for a really, really long time.

Tony Mauro: Yeah. It's weird when they think, yeah, that we're just youngsters as a country because-

Speaker 1: We're babies.

Tony Mauro: ... Yeah. They've been doing things and wine being one of them for a long long time.

Speaker 1: Yeah. We're still in our diapers compared to some of these other countries. So have you ever been to London?

Tony Mauro: I've never been to London. No.

Speaker 1: Okay. Well, I don't know about Paris so I'll talk about what I know, but there's the subways, right? We have subways as well, they call it the tube, right? Over in London, and they have little signs up when you're kind of stepping from the platform between the train door onto the subway cars and stuff, there's a little sign that says, mind the gap, okay? Because they don't want you to just trip and fall or there's that gap between the platform and the train, right? So I thought, well, let's talk about minding some financial gaps in retirement because we often think of just my first one here but there's several other gaps we need to identify so that we can be mindful of them, right? So I thought that'd be the topic this week, that will be a little bit of fun. I wasn't sure if they had something similar over in Paris but I was like, well, maybe he's been to London too so I took a shot.

Tony Mauro: Yeah.

Speaker 1: But anyway, let's talk about the first one, the obvious one Tony, that's the paycheck gap. At some point we no longer get a paycheck, how do we fix that gap?

Tony Mauro: Yeah. And a lot of people that gap becomes very forefront when that paycheck stops because a lot of them think, well, my social security or pension is going to cover all that. And if you haven't taken the time to figure that out, you're going to be in for a surprise because most of the time it doesn't, it only satisfies part of that. And so then you've got to figure that out and for most people it has to come from savings or other investments, or they have to go back and get that paycheck or some kind of part-time job and retirement planning to fill that gap. So it's important that you understand what that gap might look like long before you get there and so then working with your retirement plan, that's the whole point of it, is to fill that gap and make sure you've got enough to live on. So.

Speaker 1: Well, many people wind up saying, we know this, right? That's kind of basic stuff, we know we've been saving towards it, so on and so forth, but then they go, well, how do I do it though? How do I actually use it? Because you just want your mailbox money, right? At the end of the day or maybe I'm showing my age or you just want your EFT money, right? You just want the money transferred to your account, direct deposited, whatever, that's all we're thinking about, we're not necessarily thinking about how do we convert it into that. We know we've built it up but how do we access it or use it.

Tony Mauro: Yeah. And you've got to make that change as you approach retirement too from the mindset of, well, we don't necessarily need to continue to get a lot of growth on it although you do need some. Now it's in the mode of, how do I take this money at set intervals and of course today's technology makes it fairly easy to get it set up on the set it and forget it even with your investments, which is nice. But you'd have to take some time to figure that out because otherwise even though you might have the money and if it's not getting to you so you can pay your bills and do what you want, that's not good either. So.

Speaker 1: Yeah, I think that's a great point. The technology does make it easy but it still comes back to a lot of times the strategy of when and where and how, which bucket or which set of funds, how much do we take, when do we take them, so on and so forth, that's where the strategy starts to kind of come into place, especially when you start talking about social security, the spouse, and if you're married, both of yours, when to turn it on, when to activate this person's versus that person's, the pension options and on and on and on, all the things that we cover and talk about on the regular here on the podcast and that's because there are so many moving parts. Tony, I started doing these shows, radio shows and financial podcasts and stuff, six, seven, eight years ago and when I first started I was like, how much can there be to talk about? But there really is.

Speaker 1: It was kind of eyeopening to think about the facets of how many things can go into this whole strategy and planning process because the accumulation it's a bit easier, right? You can get a couple of accounts, dump the money in there, for the most part you're kind of okay. But it's the transition and how to use it and when to use it that becomes the bigger challenge, so that's kind of the gap concept and the gap conversation to have there. So that's the first one Tony, that's the one everybody thinks of, paycheck gap. So let's talk about the second one I've got on my list which is social security and or Medicare gap. And this really falls into place especially for people who want to retire early and that's been happening more and more and this can be a huge gap to fix. If you decide to retire, let's say at 60, you've got some strategies to plan, right? Because you can't touch social security for at least two years and you can't touch your medical for five.

Tony Mauro: Yes, so that becomes a huge issue. And I see that a lot with retail tax clients. A lot of people maybe not happy in their jobs, they've been working a long time, can't wait to get out and they want out at 60, 61. And first question I ask is, well, what are you going to do between now and the time you get your social security? And sometimes you get blank looks and I think to myself, you mean you haven't even thought of that? I mean, that's something that they don't know, number one, they don't have a plan for it, number two, and then many of them find out that, well, that's not going to be a very good existence until the social security starts. I'm a believer in delaying a little bit of social security if you can and have the plan in place to do that just to get the benefits pumped up a little bit.

Tony Mauro: But the other story though is the big one is with the way healthcare costs are now is, if you retire before 65 many employers are going to say, all right, enough with the benefits, and so now you're stuck trying to find some insurance which is really expensive. And my actual admin person, she's actually turning 65 in October and so she's been on our health plan, our group health plan, but she's excited to kind of get off and get on Medicare because it's actually going to be better for her, less costly but she's going to have to do some things with filling in the gaps with Medicare, but she's been smart enough to stay on our health plan until that Medicare kicks in. But those can be some things that could really creep up on you so you got to really work with somebody on that kind of stuff as you're thinking about this.

Speaker 1: Yeah, absolutely. Especially on that medical stuff because that can get really expensive. I was talking with somebody not too long ago, they wanted to retire at 58 and it's like, man, that's a lot of insurance you're going to have to carry so make sure that you're ready to fund that because that can make a pretty big dent in the income that you're planning on using or whatever over that time period. So just definitely make sure you're planning at minding that gap in that arena. All right. So let's do number three, and this is our old buddy, our good pal, Mr. inflation, the inflation gap. Okay. That sounds a little strange because like, oh, well wait a minute, I'd love to have a gap and inflation where we don't have any, but it's really more the other way, right?

Speaker 1: So it's the fact that you know it's out there and you know it's going to continue to chip away at your savings. And Tony, I don't know about you but I think this is a huge indicator about what's going on with inflation, the fact that they are going to do a substantial social security adjustment, I believe it's this year or maybe it's '22, I can't remember which one, but they've already announced and it's going to be something like 4%, between four and 6%, that's the first time they've done that in a really long time, that big of a number, if that doesn't say that cost of living adjustment that there's some real inflation happening, I don't know what does.

Tony Mauro: It is. And with this, this is what that invisible one that does creep up on you. And a lot of people I hear say, well yeah, but that really doesn't apply to me, and it's because you can't see it, it's there. But as soon as you start asking people about, well, what was this price 10, 15, 20 years ago versus what it is now. Even my accounting prices, I mean, what I charge now is more simply because of inflation, it costs more to do business and everything else. And I always tell people, nothing is going down, if anything, it's going up. And so if you constantly are not looking at this and especially when you are in retirement and if you've got your retirement savings in things like say CDs, money market, which you're not getting very good interest on, and inflation is more than that, you're actually going backwards and if you've got any longevity you're going to really start to feel that type of thing. The other thing too, is social security and they haven't been giving very many or very large adjustments lately.

Tony Mauro: And I don't know what's driving that, I admit, probably some politics there of somewhat but they're the same way, they don't adjust for the real cost of living and it's difficult to do. And I was actually talking to my payroll person today and we were just coming out of a conference, a payroll conference, they were talking about employees and how to pay employees a little bit more and keep up with the cost of living. But a lot of times even us employers don't think about that, it's like, we just give them the same amount of money. Well, their costs of their living go up too and unless they are on some kind of performance-based pay, you don't want to, as an employer, say, no, your salary is your salary. But things do go up and everybody feels it, especially I think in retirement with some of this stuff and the way insurance is going and things like that. So.

Speaker 1: Oh yeah. And it's hard for self-employed or for smaller businesses as well in that arena because you want to do that, you want to be able to help people out but at the same time, your costs are going up also. So it's a vicious cycle, that's for sure, and we know it exists but we don't often adjust for it so we just have to bear that in mind when we're talking about these different kinds of gaps. Another one is the long-term care gap. You might think, well, we could tie this into the social security and the Medicare conversations, but Medicare that couldn't do you any real good there when it comes to long-term care. So.

Tony Mauro: No. And if you are planning for this depending on how you want to handle it, you need to have a conversation with your advisor on if I need this, how am I going to pay for it? Because he could easily run, here in the Midwest, 70 to 90, 100 thousand bucks depending on where you're at. But if you aren't planning for this then what's going to happen is you have to go on that word Medicaid, they're going to make you sell everything, spend everything and then of course the government will pay but there's a lot of disadvantages to that. I think a lot of, oh my goodness, at least here in Iowa most Medicaid beds are in far reaches of the state and historically people say that they're not as good a care as others, I don't know if that's really true but probably somebody out there knows that.

Speaker 1: Yeah. I mean, this is not an ideal, right? I think most of us would love to pick the home option, right? Some sort of home care. Right.

Tony Mauro: Pick the home option, you can now age in place, pass away at your home and many people just need some assistance, maybe not full time medical care but there's a cost to that and so you've got to look at that because we're living longer than ever.

Speaker 1: And we're all going to get there, right? We're all going to get to the point where, and the long-term care need is growing all the time and the costs are just totally out of control so you've got to start talking about those gaps and how to cover it. And often it's really the second person that gets the short end of the stick, right? If you're married and one person has a long-term care event, the other one can usually be the one that gets depleted the finances taking care of the first one and then now you've got a real problem on your hands.

Tony Mauro: They've got a real problem, yeah. And a lot of the long-term care policies now are offering, and you pay more for it, but it's called a shared benefit so that if one person didn't use up all of their money or their pool that it could be used for the second person, so there are a lot of options out there. The key there is, if you're going to buy the insurance since you got to buy it while you're fairly young because it gets expensive quickly when you get up there.

Speaker 1: Yeah. And then my last one Tony, if you're coming off of the fourth one, the longterm care gap, and you know that it's a terminal illness and at some point you're going to be losing your spouse, hopefully you're taking the steps, you're getting more prepared for the things that you're going to have to deal with. But oftentimes, right? A lot of us we can pass away suddenly, it can kind of not be expected, I mean, we all know we're going to pass away. So it comes out of nowhere and now you've got this widows gap or widowers gap, but typically widows gap and it's easy just to kind of reference it that way. But there's a couple of major components that we're probably not thinking of that need to be addressed when we go from a couple to a single.

Tony Mauro: Yeah. And the first one really is social security because you're going to lose the one, usually what's the lesser of the two social security benefits, so you're going to lose that one. And then a lot of times if you didn't plan for your pension properly, in other words, set it up so that you take a little less but it covers both lives, you could potentially lose that one. And so that could be a huge chunk of the monthly overhead or not overhead, but income to pay overhead. And so you need to be thinking about that while both of you are live and make sure again, that that's set up properly so you don't, all of a sudden, you have a spouse pass away and now all of a sudden, besides dealing with all that grief and everything, now you've got a huge financial burden possibly as well. So.

Speaker 1: Yeah. And often those things, we just don't think about them. If we spent 40 years doing our taxes as married filing jointly and now we're single and we're thrown into a higher tax bracket, and often we're thrown into a higher tax bracket making less money coming in.

Tony Mauro: Exactly.

Speaker 1: So it's like a double whammy or a triple whammy because you've also lost your partner, your spouse. So it's unfortunate but it's the nature of the beast, right? We're all going to pass away. And of course and what you do for a living, that is the sad part about your job is that often you have to deal with these situations because you're dealing with retirees and then one of them typically will pass away first. So there's a lot of little gaps out there, it's not just the paycheck, it's not just figuring out how to turn the stuff on when we transition from our working years to our retirement years, it's all these other little pieces that can reach out and take a little nibble and all those nibbles can add up. So we want to make sure that we're getting a good plan in place, we're getting a good strategy rolling and that's why we call the show Plan With The Tax Man.

Speaker 1: So if you need some help, if you're not already working with Tony, you got some questions or you know somebody who might benefit from the podcast, make sure you send them by the website or stop by there yourself at yourplanningpros.com, that is yourplanningpros.com. A lot of good tools, tips and resources, great ways to get in touch with Tony and the team and get started today with your own strategy and your own plan. Don't forget to hit the heart button or whatever happens to be on the apps you're using for Apple Podcast or Google or Spotify, iHeart, Stitcher, whatever platform you like to use, make sure you subscribe to the podcast to catch new episodes as well as prior episodes. Tony, thanks for hanging out, I'm glad you had a great time overseas and stay safe, have yourself a good September, I'll talk to you, I guess next time we talk we'll be into October.

Tony Mauro: October. Wow. Yeah.

Speaker 1: So pumpkin everything will be everywhere.

Tony Mauro: Yes. All right. Well, you take care.

Speaker 1: All right. We'll see you next time here on Plan With The Tax Man with Tony Mauro from Tax Doctor Inc.

Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through an Avantax affiliated insurance agency.

Play along with this episode and see if you can answer some of these questions, if not it might be a red flag.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey, everybody. Welcome in to the podcast. Thanks for tuning in to Plan With the Tax Man with Tony Mauro and myself, talking investing, finance, and retirement. And this week, we're going to talk a little bit about red flags, how to spot some of those things in our finances, because Lord knows there's enough red flags going on around the rest of the world, but we're certainly going to talk about those a little bit from a financial standpoint. Tony, what's going on, buddy? How are you? Welcome in.

Tony Mauro: Thank you. I'm hanging in and enjoying the last few days of summer here.

Speaker 1: Yeah, the dog days of summer I suppose is what they call it, right?

Tony Mauro: Yeah, it's coming.

Speaker 1: Although it's super hot. I'm kind of looking forward to some cool down a little bit. I'm not going to lie.

Tony Mauro: Yeah.

Speaker 1: But it'll be here soon enough, I suppose. I believe this is our Labor Day podcast so this will be coming out right around Labor Day. So hope everybody has a great holiday and stay safe and all that good jazz and good stuff. And we're going to talk about these flags here a little bit.

Speaker 1: So Tony, depending on your answers, the questions that we cover today on the show could raise a flag for folks, right? So if they're playing along with us, for example ... Not your answers, sorry, but the answers of someone listening. So if they're playing along with us here and they answer some of these or can't answer some of these, it might be a red flag.

Tony Mauro: Correct.

Speaker 1: So for now, I'll let you give us some reasons why it could be.

Tony Mauro: Okay.

Speaker 1: Should the average person be able to name all the investments in their portfolio? Yes or no? What do you think?

Tony Mauro: I would say probably not, right off the top of my head. Now, there's different ways to look at it. Obviously, if you're in mutual funds and you have three or four mutual funds, hopefully you can remember and know what those are, but if you have say two stocks in your entire retirement portfolio, that's probably a red flag that you need more diversification.

Speaker 1: Okay, you can remember them because you only have two, right? Okay.

Tony Mauro: You only have two.

Speaker 1: Yeah.

Tony Mauro: And so that's probably something that unless you have some really good reasons for that, you should be talking with an advisor about that, because that could be a potential disaster in the making if those few companies happen to have some problems.

Speaker 1: Yeah.

Tony Mauro: And so I would definitely keep an eye on that, but yeah. I mean most people can't remember the names of the investments in their portfolio. A lot of times, they'll get anywhere from, I don't know, six to 20 or even the funds sometimes they can't remember. They go to their advisor and they talk about them, but then they kind of forget, but yeah, just be careful.

Speaker 1: Yeah, and if you're really diversified, as we should be, you're probably going to have a lot of stuff and the whole point is to not know all of the investments, I would think anyway, because your advisor's taking care of that stuff, they're helping you. You want to know about the plan, you want to understand it, and sure you want a working knowledge, but if you happen to be invested in 100 different items, it's going to be very hard to obviously keep track of all of that. And that's the whole kind of point. Maybe you're spending too much time thinking about this versus letting the advisor do their job. And in that case, are you really getting the value that you're after?

Tony Mauro: Exactly.

Speaker 1: So a couple of ways to look at it, whether it's too little or too much. Okay. How often do you meet with your financial advisor? I think most people on average would say once a year, and that's kind of the norm, I talk to advisors all across the country. Is that a good norm or is it truly a case-by-case, person-by-person scenario?

Tony Mauro: I think it's a case-by-case scenario. I would say at minimum, you should be doing a once a year. If you're not doing that, again, red flag, maybe not on your part or the advisor's, but if you're not getting that one meeting a year, even if it's a Zoom call, then you've got to ask yourself, "Okay, what am I really paying for," number one. And then you have no idea really, unless you're, again, following the stuff of where you're at, but ... When I say case-by-case basis, I mean a lot of our clients, we're quarterly. It just kind of depends on what they want a little bit, sometimes quarterly is too much for a lot of people. Other times, if you've got a smaller IRA let's say, there's really not a whole lot to discuss, and then we go semi-annual because we like to update the plan. We don't spend the time talking about individual investments as much as, are we on track with our plan and meeting the goals that we set up when we did the plan?

Speaker 1: Right, and checking in, I think on the annual basis for most people is probably good, but you should also be taking the thing on yourself to say, "Something's happened. Something's changed. Let me reach out to my advisor, let me reach out to Tony and say, 'Hey, this thing is coming up or something's happened in our life,'" and I think that's really where a good value to be found working with an advisor is because you can call up and say, and you should call up and say, "Hey, something major's happened or something's about to happen," whatever. Something as simple as your kid's going to get married and they've upped the timetable and you're trying to pay for part of that, you want to figure out the best ways to access that money or whatever.

Tony Mauro: Exactly, and in fact, right before this call, I was just on a call with a client and they were asking me about, they were thinking about buying a house in North Carolina. So even though it's not directly related to their finances, it is in a way of they're going to be spending some money, they wanted to know if they should pay cash or finance part of it and how long they should go. So just some general stuff they want to bounce off of me, which you should be doing with your advisor.

Speaker 1: Yeah, and you can't get that from a robo-advisor.

Tony Mauro: No.

Speaker 1: A relationship goes a long way into that. So that's another red flag. Account balances. Tony, there's always conversations about moving up, moving down, is it a red flag? Isn't it? I would've said maybe 30 years ago, 35 years ago, it might've been a bigger red flag, but with all the volatility, balances are certainly going to hop up and down. I guess maybe the question is, how much and how much can you handle?

Tony Mauro: Exactly. That's what I would ask people because unless you're in something say like money markets, CDs, things like that, where they aren't going to bounce around, you're going to have that and unlike 30 years ago, a lot of people are starting to understand that and they see that some. But again, it comes down to how much at once, and then, what's your timeframe, what's your goals, and are you comfortable with that? Because if you're not, then it's a red flag because you shouldn't be where you're at then. If it's keeping you up at night, that's something you need to talk to somebody about.

Speaker 1: Well, I was looking at a chart of the SMP from 1950 I think until 2016, I think it was, and if you looked at it, from the fifties through the sixties — now, if you really zoomed way in, of course you could you could see some ups and downs, some bigger volatilities — but pulled back, it was a very, very low and slow curve all the way up into really until almost the two thousands. Even through the eighties and stuff, it was a fairly steady rising curve. When you get to about 2000 and on, I mean, that thing looks like a heart monitor. It's just, "Beep, beep, beep." It's just pinging all over the place. And I think that's part of the internet and the advent of all the ways to watch this stuff and all the different trading ways. So it's certainly changed a lot in the last 20, 25, 30 years. So again, if your account balances are constantly moving, that's normal nowadays, however, you've got to really determine how much you can handle and that really comes back to that volatility risk conversation with your advisor.

Speaker 1:

So red flag number four, how much income will you need to maintain your lifestyle in retirement? Can you answer that question? So my question, Tony, to you is, should somebody be able to answer that? If they don't know how much income they're going to need to maintain their lifestyle in retirement, is that a red flag?

Tony Mauro: I think it's a red flag. For sure. You may not have it down to the exact penny, but you should know, if you're doing any planning, either on your own or with an advisor for sure, what that general ballpark number is supposed to look like based on conversations.

Speaker 1: Like three grand, let's say, or five grand, or whatever. Yeah.

Tony Mauro: Something like that. If you say, "Well, I have no idea. I just hope I have enough." That's a real red flag. We don't want people to be in that position. So I think the gist of this is you need to talk to your advisor about that and come up with some things, because it's one thing to have an advisor help you if you're just aimlessly plodding along and you really don't have any end goal or goals in mind, that's part of the problem. You got to have this number in mind to make sure that you understand what are the odds of you getting there. So I think that's a huge question.

Speaker 1: As you're playing along with us folks and listening to this, can you answer some of these? Yes or no. It doesn't necessarily mean you're in a bad spot, but it certainly means it could be a potential red flag for you to go ahead and get this information or get some better education I suppose, if you will, about the plan you have or the lack thereof. You could not have one at all, and that's why you need to do it, so you can figure these things out.

Speaker 1: All right, so let's do one more here. We'll make this one a short and sweet one this week. If somebody asked you to describe your retirement plan, could you do it? How many people do you think, Tony, could say yeah?

Tony Mauro: I would say not many.

Speaker 1: Yeah?

Tony Mauro: Yeah, I really would. At least with clientele, if you just asked them, [ran them 00:09:22] through here, retail tax clients, I don't think they have a retirement plan. Their plan consists of, "Well, I'm going to quit my job and take social security." I mean, that's the plan, but when you ask a little more deeper type of questions as well, how much do you want to have? What do you plan on doing? Do you plan on leaving anything? They've never thought of any of that.

Speaker 1: So they don't have a real strategy, they just have this general-

Tony Mauro: Just kind of a general rule, I know I'm not working.

Speaker 1: ... Guideline. Yeah. I'm not working, there you go.

Tony Mauro: So we try to get them to think about that and what that's going to look like, into the details. First we started with, do you have enough? But then, really it goes beyond that, what do you want to do? Do you want to work? Do you want to travel? Do you want to help kids and grandkids? Things like that so they really have a detailed roadmap, if you will. It's constantly changing as they get closer, but at least they've got something to go on.

Speaker 1: No, and I think that's the point. You've got to have an outline, right? And that's really kind of what a plan is. You could call it a plan or a strategy, or whatever term makes you feel good, or if you feel like, "I don't want to have to go get a retirement plan," well get a strategy, get something in place so that you've got at least a bit of a roadmap so that you're just not throwing darts at this thing. You don't want to guess in a retirement. We can guess at a lot of things in life, I don't think I feel good about guessing in retirement.

Tony Mauro: No, not for that area. No.

Speaker 1: Too many variables.

Tony Mauro: I would agree.

Speaker 1: Yeah, definitely too many variables.

Speaker 1: All right, folks, so how did you do? Do you have any answers to some of these questions? If you do, that's great, then you're probably onto the right path, you might already be working with, Tony, and you can like, "Yeah, I got all these answers because I've already got a good strategy in place," but if you're not, or you feel like there's some areas you need to shore up and you have some areas that popping up here and maybe give you a red flag, then as always, make sure you reach out and talk with a qualified professional, talk with your advisor. If you're not working with one, reach out to Tony and his team and say, "Hey," and they'll certainly talk with you and see if they can help you out with things that are going on in your mind and you can do so by going to YourPlanningPros.com, that's YourPlanningPros.com.

Speaker 1: And while you're there on the website, you can check out a lot of good tools, tips, and resources, subscribe to the podcast on whatever platform you like to use. Tony is a EA and a CFP, and he's been doing this for 20 plus years, so he's a great resource for you to tap into here in the central Iowa area. So 844-707-7381 is the number and YourPlanningPros.com is the website.

Speaker 1: All right, my friend, I'm going to let you get up out of here. I know that you've got a trip up pretty soon, so I hope you have a great time and a great holiday week.

Tony Mauro: Thank you. You guys do the same out there, yes. Hope everybody stays safe and gets outside a little bit.

Speaker 1: We're going to try. So everybody have a great Labor Day. If you're catching this probably right before or right after Labor Day, then have yourself a good time and a safe time, and we'll see you next time, here on Plan With The Tax Man.

Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through an Avantax affiliated insurance agency.

Believe it or not, Mick Jagger has dispensed a lot of retirement planning wisdom in his life. Granted, he didn’t mean for these statements to have anything to do with money when he said them, but we’re here to weave these quotes into a financial lesson.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1: Hey, everybody. Welcome to podcast number 50, here on Plan With The Tax Man. I think that's right, anyway. We're going to have some fun here on our episode, our 50th ... our 50th episode. I started saying anniversary, because Tony and I were talking about musicians' anniversaries, right before we started doing this. And that's actually going to be our chat this week. We're going to talk about retirement planning advice with Mick Jagger from The Stones. So obviously, they're coming up on like 60 years as a group, which is absolutely flipping amazing, Tony. Are you a Stones fan?

Tony: I am a Stones fan. I didn't really ever enjoy them growing up. But now that I'm a little older, I do appreciate their music. Yeah. Really good.

Speaker 1: Yeah. 60 years. Crazy, right?

Tony: It's incredible.

Speaker 1: There's marriages, a lot of marriages, that don't last that long, let alone a rock band, in a rock band marriage. And we were talking about the three original guys. It's still Keith and Mick and the drummer, Charlie. They've swapped out a couple ... but even the secondary guitar player, Ron Wood, I think he's made the joke that he's been the new guy now for 40 years.

Tony: Yeah. Right. And to think, within the rock world, how many bands eventually go their separate ways and end up fighting and leaving. And these guys have hung out, and to be able to do what they're doing at the age that they're doing it, for so long. And you just think, if you could sit down with these guys, what kind of life they've had.

Speaker 1: Still pretty crazy. And of course we've all seen, I'm sure, different memes and jokes about ... we got to start thinking about what kind of world we want to leave for Keith Richards, right?

Tony: Yeah. That's right.

Speaker 1: You know, because he's just going to be around forever, it seems like. So I thought we'd have some fun with this, because, believe it or not, Mick actually has dispensed a lot of retirement planning wisdom in his life. Now, granted, he might not have meant it to be financially based, but these statements actually work pretty well when it comes to money. So I grabbed a couple of these and I thought you'd have some fun with some of these, Tony, and then maybe you could give us your spin on it, okay?

Tony: Sure, sure.

Speaker 1:

All right. So here's some Mick quotes for you. First one, "The past is a great place and I certainly don't want to erase it or regret it, but I don't want to be its prisoner either." Genius about any walk of life really, but financially speaking, we do tend to do that. We kind of just hang on to our financial failures sometimes, and become its prisoner.

Tony: We do. And I think, for most of us, we hang onto a lot of our failures too much. I know I have done that in the past. You focus on everything that you should have did. I mean, you can't, as I've aged, you can't change it. All you can do is learn from it and move forward. And with finances, it's the same thing. I mean, there's no way to go back and start earlier. You just have to pick a spot and go forward from there. I think, with him ... I mean, again, we were talking before, he's probably sitting there at his age looking back at all the ... probably a lot of failures that they've had over the years and things. I'm not talking money wise, because they're all set, but, musically, I think that's where he goes with that, is one of the reasons they've been able to be so successful, is maybe they don't worry about that too much. I think we probably need to do more of the same, especially in the financial area.

Speaker 1: Yeah, yeah. I think it's probably, definitely a fair point. We all do that a lot with our past life. And I mean, again, the past can be a great place and many times we want to go back and revisit it. But unfortunately we just can't. Some folks will say, "You couldn't pay me to go back to high school." And others would be like, "Oh man, I'd love to do high school all over again." But it's neither here nor there, because clearly it can't be done.

Speaker 1: So when it comes to financial, we've got to sometimes move on from maybe a bad investment or a situation or maybe an advisor situation or something that just didn't pan out well. And I think we let that affect our future judgment. "Well, you know what? I had this bad experience with an advisor 10 years ago, so I'm just never going to trust another one." And I get that. But at the same time, as you get closer to retirement or your needs change, you may have to really let that go and rethink that a little bit, because it's really complicated now. And it just continues to get more complex, the world of retirement. So having somebody on your side can go a long way.

Speaker 1: And that's where meeting and having a couple of meetings, and most of the times these things are complimentary, and finding the right one, Tony, comes into play, making sure that you get the warm fuzzies and going through some process that it's going to be a good relationship.

Tony: Yeah.

Speaker 1: All right. So number two, "Lose your dreams and you may just lose your mind." Retirement's all about dreams.

Tony: It's all about dreams. I mean, you have to start with that, because you've really got to take some time to figure out what you want to do or not do in retirement. And with people living statistically as long as they are, you could have a long time in this stage. And so I'm of the thought process of, I want to have all my affairs in order, but boy, I sure want to, if my health allows, go out and do the things I'm capable of doing, because in retirement, if you are lucky enough to live a long time, the body tends to wear out a little bit. And so you want to do some things at certain times that you're physically able, and then you got to dream a lot. I tell you, after I hit 50 that I do a lot more dreaming of that now than I ever did.

Speaker 1: You and me both. Our last podcast, we talked about age and wisdom, and I think that's a side effect, right?

Tony: It is. It is. We were just talking about it not too long ago, again, about how much we want to travel and what we want to do and everything. It's just dreams at this point. But I think the other thing is, you've got to start there, but you also got to then, once that's the case, figure out, "Okay, that's the dream. How are we going to make this happen?"

Speaker 1: Well, I think, like you said, it's all right to dream, but you got to have a starting point, but if you want to make those dreams a reality, you got to put some plans behind them. My wife and I are completely polar opposites, unfortunately, when it comes to ... I'm like, "Whatever, we'll just wing it. This is fine. We'll ..." and I don't mean retirement, but I mean like, "Let's take a quick three-day trip" or something, and it's like, "Well, let's just wing it. We'll just pick a general destination and then we'll wing it." Well, she doesn't function very well that way. right? She's like, "Well, when are we leaving? Where are we staying?" You know what I mean? And so, she needs a bit more strategy and plan in it, and retirement certainly can call for that, because the one thing you ... spontaneity is one thing, I guess. But winging retirement probably is not a good idea.

Tony: That's definitely not a good idea, no.

Speaker 1: Winging a trip, like a weekend trip, is one thing, but yeah. Yeah. So winging retirement, not a good idea. So "Lose your dreams. You might lose your mind." Great quote from Mick. And then of course, a little bit of planning can help you turn those dreams into something that makes the mind work.

Speaker 1: How about, "It's all right letting yourself go," he said, "As long as you can get yourself back." And that's a nice way of looking at things, I think. He was probably talking about, maybe, emotionally or something along those lines. What if we kind of, I don't know, we lose some money or something like that? It's okay to maybe want to do something with your retirement money, Tony, just don't risk more than you can afford. I mean, it's common sense, right?

Tony: It's common sense, yeah. And I mean, everybody, if you're saving for retirement, education, whatever, and unless you're just using a savings account, there's going to be times where you're not going to move forward. It's going to go backwards a little bit. And so you really just need to, again, keep an eye on it. It's okay that that happens. You just got to make sure that you have enough time to rebound, and you also have to assess your risk and make sure that that aligns with what you're trying to do. And then you won't have much of that, you know?

Tony: So the last thing you want to do, especially in the financial world, is invest incorrectly. It's not in line with what you're trying to do. We haven't had this for a while, so everybody's kind of getting immune to it. It's the big rollback, back like we had in '08, '09, and everybody thought the world was coming to an end and all of that. You don't want to be on the wrong side of that, potentially. And again, everybody in ... it's out there. I mean, the markets right now just seems to be going up, up, up, and we forget about ... it doesn't always do that. And it doesn't do that forever.

Speaker 1: There's a land of the down, down, down. We just haven't seen it for a while, right?

Tony: That's right.

Speaker 1: And it's naive to think that it won't return. I think that's the biggest thing.

Tony: I think so.

Speaker 1: You and I have said this now, this is our 50th podcast episode, and I know we've said it at least once or twice along the way, that it's like a Rocky movie, this market. For the last 10 years, it's like Balboa, it keeps getting punched in the face. It gets knocked down and it gets back up. But at some point, and if you remember correctly ... now, "Rocky," you might say, "Well, Rocky always wins." Technically, he lost the first one.

Tony: Yeah, he did. He lost on the decision, if I remember it.

Speaker 1: Yeah, technically, he lost in the first movie. So, you got to be careful, right? And we've also talked about the fact, Tony, you've been doing this 20, 25 years plus, somewhere in that neighborhood, there's advisors out there who literally don't know anything but an up market. Now, they might say, "I've been in business for 10 years," and that's fantastic, kudos to you, but you've also had an up market for 11 years.

Tony: Yeah. That's right.

Speaker 1: So how do you help your clients through, not just a downturn, but a prolonged downturn, because, yes, we saw the blip in 2020 with the pandemic kickoff there, but how do you handle a prolonged downturn, if you've never gone through one, not only as a client, but as an advisor?

Tony: As an advisor. Exactly, exactly. It's difficult because, again, I always tell the clients ... and that's where we start out, with everybody, with a plan is, "That's our foundation, and we'll change, update the plan every year, but we really need to stick to the plan, if you want to reach whatever goals you've decided you want to do."

Speaker 1: And you tweak it and adjust it along the way, obviously, as things happen. It's not a set in stone, "Hey, you got your plan on day one of retirement. It's the same exact plan on day 216." Things change, but you still have a plan, an outline.

Tony: That's right. And as things get better, people want to deviate from the outline, as they .... "Well, let's just do this. Let's do that." You know? "Well, wait a minute. That's really not the plan. Here's what could happen if things start to-"

Speaker 1: Right, if they deviate too much. Yeah.

Tony: ... yeah, go another way. A lot of people too, ... you've got to dispel the myth of ... and I always tell them, I mean, I don't know where the market's going, but I don't think anybody else does either. I mean, yeah, there's` millions of people on TV and on the internet saying that, but at the end of the day, you can't depend ... or I shouldn't say ... that's a bad word, depend, rely, whatever you want to call it, on your advisor to be sitting there and saying, "As soon as the market starts going bad, you're going all to cash," because they don't know when that's going to happen.

Speaker 1: Well, isn't that where we want to have buckets or ladders or whatever term you want to be using, and a strategy to say, "Okay, so we've got some money ..."? Just like when the pandemic hit, as I mentioned earlier, yes, we had a 30% plus drop. And so a lot of people obviously lost a good deal of money, up to 30%, but that should have, hopefully, been more of their now money and maybe not their later money. And if that was the case, and you did stick with the plan and you didn't panic and you didn't sell out, then you were rewarded for that with your long-term monies. Because, obviously, we saw the market come back and go higher by the time the year was over.

Tony: Yeah, I mean, that's exactly it. If you've got the right temperament and things set up properly, there's nothing wrong with a downturn, because that's actually an opportunity for the right buckets. Yeah.

Speaker 1: Right, exactly. Not the easiest, but the opportunity. Well, as I said, who knew that Mick had some good wisdoms here that we could extract financially? Now I'm going to end off with a classic, but real fast. He did do a little tweak on the anything worth doing is worth doing well. Well, he said, "Anything worth doing is worth overdoing." Well, as the flashy showman that he is, that makes a lot of sense. Would you agree with that financially? Or is that when people get into trouble? We overdo it.

Tony: Well, I think with the right plan in place, the right temperament, I think that ... again, the way I take it in the financial area is dream big, like we were talking about, and let's try to get there, you know what I mean? If that's what you want to do, I mean, I always tell people it's not a dress rehearsal. You don't get a second act here.

Speaker 1: Okay, all right. If you're looking at it that way, that makes sense then, yeah.

Tony: Yeah, I'm just looking at it that way. But the other way of course is, yeah, if you try to overdo things without really thinking through it, you could get yourself in trouble.

Speaker 1: Well, if you're like, "Hey, I put a thousand into Dogecoin and it's making me a ton. So let me put a hundred thousand in it." Well, that might be overdoing it.

Tony: That's overdoing it the wrong way, probably.

Speaker 1: And that's probably the wrong way. Yeah, exactly, something speculative. Right. Okay. All right. Well then we're going to end with a classic, I don't necessarily really expect you to expand on this too much, but we have to end with a classic line from Mick Jagger and it's, look, "I can't get no satisfaction." So if you want some satisfaction, you got to take a little action sometimes, right? And sometimes that means doing things that are outside of your comfort zone. And maybe that is working with a financial professional, maybe that is allowing somebody into your financial world.

Speaker 1: We're very guarded as Americans, or maybe even humans, maybe, when it comes to our finances, sometimes. It's tough to do that for people, for many people to say, "All right, here's my world. Let me expose it to you. Be gentle," kind of thing. And so maybe that's a challenge for a lot of folks.

Speaker 1: If you're listening to this and maybe you're working with Tony, or maybe you're not, maybe you're sharing this with somebody who's not a client yet, or something like that, often that is the challenge for people, is to open themselves up and say, "All right, I need some help." And if you do, then reach out to Tony, have a conversation. Or if you know somebody who needs to be in that scenario, share the podcast with them. You can find it on Apple or Google or Spotify or iHeart or all those kinds of things. It's just Playing With The Tax Man. You can search that out in the search box of any of those podcasting apps. Of course you can always just find it all, actually, @yourplanningpros.com. That's probably the easiest way, is to send somebody there, or go visit there yourself.

Speaker 1: Again, yourplanningpros.com, to have a conversation today with Des Moines professional alternative at Tax Doctor Inc, Tony Mauro and his team, serving you here in the Iowa area. So check them out online, yourplanningpros.com. Don't forget to subscribe to us and all that good jazz and, Tony, I'll let you go. You can go listen to some Stones now-

Tony: I think I will.

Speaker 1: ... and enjoy your day.

Tony: All right. Sounds good. Thanks.

Speaker 1: Appreciate your time, folks. It's always here on Plan With The Tax Man. We'll catch you a little later on. Next time we see you, or talk to you, it'll be just after Labor Day. So have yourself a wonderful Labor Day. Tony, you as well. And I'll see you soon.

Disclaimer: Securities offered through Avantax Investment Services.  Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through Avantax Insurance Agency.

There’s an old quote that says, “Age is the price of wisdom.” Let’s talk about how that applies to the financial world.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript Of Today's Show:

Speaker 1: Hey everybody, welcome in to this edition of the podcast. This is Plan With the Tax Man with Tony Mauro hanging out with me as we talk investing, finance, and retirement. We are going to talk about age and wisdom and how they play into financial planning. This is actually podcast number 49, which is what I am, Tony. I'm going to be turning 50 here in about a month or so, so I guess pretty good topic for that time period when we're about to turn 50, right?

Tony Mauro: Yeah, that's right.

Speaker 1: How are you doing?

Tony Mauro: I'm doing good. Just back from vacation out in Wyoming.

Speaker 1: Nice.

Tony Mauro: Spent some time out there. The weather was beautiful and it's beautiful out here now, early August, so can't complain.

Speaker 1: Yeah. Well, and even if you did, nobody would listen.

Tony Mauro: That's right.

Speaker 1: Well, I'm glad you guys had a good time. Wyoming is beautiful, absolutely. My in-laws live out there and it's quite gorgeous. So yeah, as I mentioned, we were going to talk a little bit about this. Like I said, I'm turning 50, and so let's talk about just, what is it, age is the price of wisdom, something like that, right?

Tony Mauro: Yeah. Oh, yeah.

Speaker 1: I think we all agree as we get older, we tend to get smarter, I think, overall, for the most part. Although some of the things we see right now in the world maybe suggest otherwise, but that's another conversation for another day. Let's talk about from a financial perspective, how do you see your clients changing in their perspectives as they age?

Speaker 1: So, I don't know, I imagine your demographic is probably 50 and up, right? You probably have some younger folks as well too, but maybe primarily. As they're kind of moving through their 50s or into their 60s or whatever, do you see them kind of changing their thoughts and perspectives about money?

Tony Mauro: They do, quite a bit actually. Most of what we see really, and yes, most of our financial advisory practice is 50 and up. That doesn't mean we don't have people younger than that, but the younger people tend to be on the tax side. Yeah, they're not really that focused on their wealth or money or anything like that, my son being included, he's 25, perfect example.

Tony Mauro: As they cross that 50 line, people start to say, "There might be more behind me than there is ahead of me," and they start changing their views quite a bit, especially if they have not saved and they feel like they're behind. So they all of a sudden, and I have a younger brother who just turned 50, and all of a sudden now he's very conscious of the end and the retirement and everything else, and he wants to talk about it, whereas before it didn't even phase him.

Speaker 1: Yeah, it didn't bother him, and now since he's aging, it's changing, right? And we all do that. And I think obviously because, well we all know our time horizon is shorter and that we're kind of a little bit more, I guess, afraid of missing out on something or losing something or whatever that case might be. So is there a kind of a constant message or a consistent message maybe that you hear people say that they feel that they wish they had done earlier? Not that it's going to help us, but hopefully it will help sharing that for someone else who's in that spot. I imagine primarily it's I wish I would've started saving sooner. That's usually the one.

Tony Mauro: Exactly. Yeah. That's the big one right there. And so hopefully the younger people listening might take that advice and at least start with something, whatever you can afford as a younger person. The next thing I hear a lot of is, "Well, I just wasn't making any money back then." And to that I'd say, "You can always find a few bucks to stash away somehow, some way." And you always have to do that. You always hear the old adage pay yourself first. It's a lot easier said than done. But I do hear that one. I hear a lot of people my age and older that they felt like they were too conservative, that they didn't seek advice or have a plan, that they just kind of stuck some money away, mostly in savings types of vehicles, and they didn't really execute any type of plan is what I hear.

Tony Mauro: And again, you can't go back and I try not to draw on the past with them and beat people up about, "you should have done this, should have done that," because obviously we can't change that. But you know, basically I say, "Well, let's chart where we're at and let's see what you've got and where you want to go from there." And you still may be able to do some of the things you've always wanted to do.

Speaker 1: Right, that's true. Yeah. I mean, hopefully that's the case. And even if you did start late, and we've talked about many ways that there is to kind of catch up or to do some things, the continuing putting it off, "Well, I've waited too long. I might as well just... what's it matter now," that's just never a good way to go. So there's definitely things that can be done, but you can't keep putting it off. And so as people approach retirement, Tony, do you find that they worry more or less about some of the financial struggles than they did when they were younger? For me, it feels like the kid raising era would be the most frustrating or maybe worrisome, but I haven't gotten to retirement yet, so I can't speak to that.

Tony Mauro: Yeah. I mean, I find that they worry more about things than they did when they were younger only because they feel like, especially if they're behind, that there's going to come a time where I can't work and earn money and then I'm going to be living on X amount and that really scares them, especially if that [crosstalk 00:05:13].

Speaker 1: That's fair, especially if you know you're behind. But it seems like even folks who are in better shape than they realize still have some of those fears though.

Tony Mauro: They do, they do. I mean, they always feel like they're going to run out of money. My dad is one and he has plenty and he's 80 now. But he always feels like I shouldn't spend any of my money because I might run out. And even if you show them, you constantly have to show them, as long as you stay within these parameters, you're never going to run out. But they worry about that. They worry about their health. They worry about, if they have family long ways away, that they're by themselves. And then they have a worry about the eventual, the real end, and are they prepared for that.

Tony Mauro: They've got a lot on their mind. You wouldn't think so, especially in retirement. Everybody thinks you're just living carefree and waking up and just going out and having all kinds of fun. And a lot of times they worry a lot.

Speaker 1: Well, and the idea is that hopefully by working with an advisor and getting a good plan in place and a good strategy that you can kind of pull some of that worry off the table because the numbers there will hopefully, and the reinforcement, the confidence, a lot of the things that we discussed, will help you not worry as much and take some... where you can. Life is life. We're going to worry. That happens. But try to remove some of that extra strain if we can.

Speaker 1: Do you find, Tony, that people change their opinions about the legacy aspect and that's the leaving something behind to the kids? We were just joking the other day, my daughter's doing really great in life, much better than I was doing at this young age, serving in the military and hence we were teasing, I was like, "Well, your mom and I are going to spend all the money now. Since you're doing so great, you won't need it by the time." And she was like, "Wait a second." We were having fun, but do you see people kind of... As a matter of fact, I was talking with another advisor, Tony, who said he was going through the legacy planning with a client and when they got to the bottom number, he's like, "What's this number here?" And the advisor said, "Well, that's what you're going to have leftover to leave to your kids." And he's like, "Whoa, that is way too much. I want to spend some more of that."

Tony Mauro: I see. Yeah.

Speaker 1: Which there's nothing wrong with that, right?

Tony Mauro: Nothing wrong with that.

Speaker 1: He's like, "My retirement's a half a million and I'm leaving the kids a million? No, no, no. Let's flop that number."

Tony Mauro: Yeah. Yeah. And I do see people, they really get concerned about leaving some sort of legacy as they age. I mean it comes across everybody's mind. And so they want to know really how am I going to be able to live and what kind of lifestyle am I going to have and then am I going to have enough to leave something to my heirs? Now there's all over the board opinions with that, like you were getting into with that other advisor, but most people do want to leave them something if they can.

Tony Mauro: The real astute people have a kind of thought in their brain of doing, "I want to do this, this and this. And I want to make sure that not only it goes to my kids, but my grandkids," and they've really thought it out. And that's where you need some real help with an advisor and maybe even an estate planning attorney, depending on what's involved, to make sure that you have exactly what you want to legacy. I know I have. I mean, I didn't start thinking about it until I was about 51 52, but ironically, on vacation last week, my wife and I were talking about, "We need to get kind of our little, what we call our life book, finished up and updated," just so in case we both go at the same time or one of us dies suddenly, the other one knows what to do. And the legacy is important to us. We want to make sure that that gets passed to our son.

Speaker 1: I think that's where a lot of people feel like. I don't know, Tony, maybe there's no right answer to this, but maybe at the end of the day, a fair or healthy answer is enjoy what you've built, whether you're solo, or together, or whatever the case is. And then if there's something left over, then leave that to the family, or at least at their minimum, don't sacrifice anything more for yourself, because we all sacrifice for our kids all through life. And I get that that's part of it and some people might say, "Well, I want to continue to do that." And that's totally your prerogative, but I think once we get to retirement, maybe we've earned the right to no longer sacrifice as much, to me anyway. You know what I mean?

Tony Mauro: Yeah. And I would agree with that. Again, everybody's different, but you work 40, maybe 50 years doing all kinds of things and you're finally able to, like you say, retire, you've got some health left, you've don't have a ton of worries other than what we just talked about. There's some ways that you could... but you got to think about this when you're a little younger, is if you do want to leave your kids something is using life insurance and some other things and saying, "All right, if I spend every dime, I'm still going to go knowing that you're going to get something because the life insurance is going to pay out."

Tony Mauro: So there's all kinds of ways to tackle that, but yeah, I would agree most people, I think they continue to want to sacrifice even in retirement, maybe a little too much so, the ones that I work with.

Speaker 1: And finally then I guess if you're talking about just the opinions of money and the changing, all that kind of stuff, and legacy, I guess really it comes down to, Tony, how the risk plays into it. You know, all of the fears to me always circle back around to the entire risk factor and certainly the last two, basically we're now going into two years, has just been nothing but risk, upon risk, upon risk in all aspects of life, and so it becomes really hard to manage it.

Tony Mauro: And people's opinions, obviously, people can kind of figure this one out, as you get older, generally people get more conservative with their money because it's that whole, "I don't want to lose it because I don't have any time to make that up and I don't need to take on a lot of risks," which is okay. I think though if you don't have some sort of plan and you're not monitoring the plan, you could be cutting yourself short in terms of what you can earn on your money, depending on what the plan is, versus just sticking it in a bank account so to speak. And I'm not saying that that's all bad, but it's probably all bad if all of your, in money, for lack of a better word, is there, because you're not going to be able to draw a whole lot on it.

Tony Mauro: I have a couple of clients though that they said, "You know what, I don't care about that. I'm just going to draw on my principle and when I run out, then I've got this pension over here and then that's it." And for them that works. But a lot of people don't like to do that. They want to live off of the earnings and dip into the principle once in a while, give money to the kids. But generally, it's more conservative.

Tony Mauro: I don't have a lot of clients that I work with that really watch the TV like the young people do.

Speaker 1: Well, that's good.

Tony Mauro: I mean, they watch it, but they're not in my office like my last tax client was in here saying he wants to buy some Robin Hood. Well, "Okay why," I asked him. "Well, I don't know. It looks good."

Speaker 1: Well, let's talk through that, right?

Tony Mauro: Yeah. We need to talk through that a little bit.

Speaker 1: And that's the value. To me, at the end of the day, Tony, that's always the value of working with a financial professional such as yourself is you're just not going to get that from... the relationship is there so you can like ring up you and go, "Hey, I'm thinking about X, Y, or Z and I think it's a cool idea. Tell me why it is or isn't." You're not going to get that from a robo service or maybe even some other really large big brokerage houses. Not to say that you can't, but I think we're a bit more numberized when we go there.

Speaker 1: It's like, "Well, this is Nr. K5743216. You know, they've got this file number or whatever. And granted, we all do that in every business, but I think there's certain industries where just still being able to ring up somebody and say, "Hey, Tony, what do you think about me trying to buy a 1969 Chevelle? How's that going to mess with my retirement plan?" And you're like, "All right, well let's look at the best ways to get that money for you to get that."

Tony Mauro: Yeah, and most clients that we work with obviously, as most advisors do, we use some financial planning software and the plan generally is out there in the Cloud, so we're always updating it and whatnot. And so, yeah, it's easy for them, the clients, and us to take a look if something like that happens and you want to do that.

Speaker 1: Yeah. Because it's all about efficiency too, right? I mean, you may have the money, and I think sometimes when we think about a one-off thing has come up or happen and we really want to do something unique or special or whatever, and that's what the retirement money is for, hopefully we're in a position where we can do that. But don't go grab it willy-nilly without talking with your advisor because often I think what it affects, Tony, is the whole longevity aspect.

Speaker 1: Well, the plan was going to work for you to get to 95, but because you went and spent $50,000 on this '69 Chevelle without working with me on the best place to take the money, well that's going to shorten you up to about 84. So that's the kind of things we have to look out for. And I mean, it's our money at the end of the day. If we want to do it, we want to do it. But that's the value and the beauty I think of working with an advisor who can say, "Okay, this is the goal, so let's figure out how to be the most effective and the most efficient so that we can still keep that 90 number or that 95 number for longevity."

Tony Mauro: Yeah and the other thing in there with that besides longevity generally is taxation.

Speaker 1: Right.

Tony Mauro: And if you go start pulling a bunch of things out the wrong way, then you're going to be hit with unnecessary taxes, which is going to eat into that longevity.

Speaker 1: And that's that efficiency factor, right?

Tony Mauro: Yeah. Yeah.

Speaker 1: Okay.

Tony Mauro: You got to watch that.

Speaker 1: So with age comes wisdom and sometimes... I mean, my mom's 80 as well, Tony, and sometimes she acts more like a teenager than she does an 80 year old. So I think that's okay as well, but that's why we have to have a sounding board and bounce some things off and that's one of the reasons we do the podcast to hopefully share some nuggets of information. Because for many of us, maybe this is, like me, like I said, I'm not retired yet so I don't know really what to expect and there's hopefully some insight in there for people. And if that's the case with you and you need some help or you've got some questions, well, a couple of things you could do, you could subscribe to the podcast, catch more episodes as they come out, or you could just stop by the website and book some time with Tony or learn some more.

Speaker 1: Lots of good information at yourplanningpros.com. That is yourplanningpros.com and that's how you can get in touch with Tony, book some time. You can find all the podcast information. There's a lot of good tools, tips, and resources. So all of that's available to you. Make sure you reach out and take some action. Before you do anything, you should always check with a qualified professional like Tony Mauro, who is an EA and a CFP at Tax Doctor, Inc.

Speaker 1: All right, my friend, I'm going to let you go. Have yourself a great day and a great week and I'll catch up with you a little bit later on this month.

Tony Mauro: All right. Sounds good.

Speaker 1: Appreciate your time as always folks here on Plan With the Tax Man with Tony Mauro. We'll see you next time.

Disclaimer: Securities offered through Avantax Investment Services.  Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through Avantax Insurance Agency.

Everyone has a different reason, goal or something they want to accomplish in retirement. Let’s explore some of the various motivations people have in retirement and how your financial advisor can help you accomplish what you set out to do.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript Of Today's Show:

Speaker 1: Hey, everybody. Welcome into another edition of Plan With the Tax Man. Thanks for hanging out with Tony Mauro and myself as we talk investing, finance, and retirement. And this week on the podcast, what kind of retirement are you living for?

Speaker 1: Everybody's got a different reason or a goal or something that they hopefully want to accomplish in retirement. So let's explore some motivations that people have, Tony, in retirement, and how you guys go about doing what you do to help them accomplish said goals and said things. And we'll dive into that this week. What's going on, my friend? How are you?

Tony Mauro: I don't know about an hour or two, I think. But it looks great. It looks fun. A lot outdoor stuff.

Speaker 1: Very cool. My in-laws are from Wyoming, so I'm versed. They live there and we go out every so often and see them and we meet them in Grand Teton over in Jackson, so.

Tony Mauro: Yes. I would say with our clients, the number one thing that people want to do. I mean, obviously when we talk with them, the first thing that sets all this up is, do I have an adequate retirement so I can do some of these things? But when we start asking, "Well, what do you want to do?" Number one is this, is spending time with family.

Tony Mauro: A lot of times these days, not like when I was little at home. My family was in the same city. Kids move away and then you've got grandkids, and even brothers and sisters spread out throughout the country. They want to go spend time, the time they have left and enjoy the company. So it's important that, depending on what they think and how many times they want to go out and do that, is we have to work to ... And all these things we're going to talk about, to kind of section off parts of retirement that it's going to be used for those purposes. That way they don't have to worry about, "Well, if I do this, am I going to be okay? Can I still pay my bills? Can I still go out to eat once in a while?"

Tony Mauro: So that's what I think is important, to be able to do that without having to skimp on everything else. And that goes for all of these, but.

Speaker 1: Yeah. And of course family is going to be the top of the list for most people. And so we want to figure out a way to maximize our time, but also maximize the way we can do things efficiently so as to still have plenty in retirement for ourselves when we kind of start to wind down.

Speaker 1: Now, maybe Tony, you were really frugal with your spending over the years, and you were just a really good saver. And so you get to retirement and you're like, "Yeah, I'm going to buy some stuff. I want to get some things that I really want." Maybe that you've had an eye on a classic car, or you wanted to rebuild one, or you've wanted to build some grandiose garden in the backyard, and you're going to need a tiller or a small tractor, whatever. You just want to buy some things.

Tony Mauro: Yeah. And it's just like, and this ranks high up there. Although when we really start talking with them about the things they want, it seems like the older they get, the less they want stuff. They'd rather have experience and time, of course, but early on in retirement, yeah, a lot of people say, "I've done without for so long. I really want to do this or that." A lot of times it's a vehicle.

Speaker 1: And the ramifications of that too. Not only the tax bill, but also maybe the tax bump right up to the next category, yeah.

Tony Mauro: Yeah.

Speaker 1: That's amazing.

Tony Mauro: Yeah. I mean, you have to do that. And more and more people do want to help kids and grandkids as they get older. My dad has been that away a little bit. He's very much into now helping his grandkids and helping them out of college and whatnot. And that's very important to people, as they enter retirement. So as long as you check with your advisor and that's part of what you want to do, then, like you said, it's your money and you're the ultimate boss so to speak. You have your own money, your own destiny. So, as long as you've got some good advice, and in many times, a lot of things on this list, people like to do a lot of them. It's just ...

Disclaimer: Securities offered through Avantax Investment Services.  Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through Avantax Insurance Agency.

The world is stressful. Let’s take a small break from it with some goofy financial planning and financial advisor jokes and see what kinds of lessons we can learn from them.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1:

Hey, everybody. Welcome into this week's edition of Plan With The Tax Man, here on the podcast. We're talking about being a couple of jokesters and that's going to be the fun topic this week, because the world of financial stuff is stressful. Heck the world is stressful. So we're going to take a break and do some goofy, fun, financial jokes and advisor jokes. And see what kind of maybe lessons we can actually pull from them as well. So it won't be all fun and games, it will be a little bit serious here as well.

Speaker 1: But first let's say hey to, Tony. What's going on, buddy?

Tony Mauro: I am good. I'm just kind of trying to get back in the swing of things. As I mentioned after the fourth I'm in the mode of still having this a short week.

Speaker 1: Yeah. In a chill mode. Right? Still want to...

Tony Mauro: Right. Very relaxed.

Speaker 1: That's all right. Nothing wrong with that. Well, like I said, right, the world is stressful enough anyway. So let's have some fun with this, Tony. Basically, I'll tell you the joke. We went and scoured the internet and found some financial jokes or adviser jokes, and then I'll let you kind of just give me your 2 cents on it-

Tony Mauro: Sure.

Speaker 1: and kind of what you think. Okay? Sound like a plan?

Tony Mauro: Sounds good.

Speaker 1: All right, let's do it. All right. Here we go. So here's the joke. I'm not normally one to brag about my financial skills, Tony, but my credit card company calls me almost every day to inform me my balance is outstanding.

Tony Mauro: Then they probably love you too. But what a lot of people, they confuse, I think, good debt with bad debt. And a lot of advisors, they don't like to have their clients with a lot of debt. Me kind of included. I'm not a big debt guy. Especially if you've done any reading and done any studying, the Dave Ramsey stuff and all that.

Speaker 1: Right.

Tony Mauro: And getting out and staying out of debt. I do believe that that is a good route. However, obviously debt's a part of our life. And if you use it wisely, especially for large purchases, homes, the car, and whatnot and understand it and try to get out of it as quick as possible, it actually can be a decent thing.

Tony Mauro: But we do a lot of talking, clients about debt, because I don't think people understand it very well. And they just accumulate a lot of it, and don't ever make a plan to reduce it or get out of it.

Speaker 1: Mm-hmm (affirmative). Right.

Tony Mauro: And as soon as they do it's an instant raise. And so, we laugh about it and joke about it, but we've all been there. I mean, everybody's ran up a credit card or more, and got themselves potentially into situations, and some bad cases you see it all the time, where they ran up so much debt, they can't make the minimum payments.

Speaker 1: Right. Oh yeah.

Tony Mauro: That's horrible.

Speaker 1: It's a habit that definitely affects us Americans for sure. Because a lot of times they're really wealthy, right? They're saving money or they're doing things, and they've got more liquidity going on. And the banks that wind up having more disposable income, as of lately been seeing that, rates have stayed down, they're loaning money, things of that nature. And sometimes it's just the temptation to go, "Oh, well, wow. I've been approved for this and I don't really need it. But you know what? We kind of had our eye on this item or that item, so let's just go do it," right?

Tony Mauro: Yeah.

Speaker 1: And the interest rates are so low or whatever. So you find ways to justify this stuff. And then, before long you're like, "Man, we've got more than we really want to deal with." And as you're getting closer to retirement, well then maybe the joke's on you. Right?

Tony Mauro: Well, that's right. Going into retirement, I advise you to try to have as little or no debt if you can, because it's just going to make your lifestyle so much easier to maintain.

Speaker 1: Mm-hmm (affirmative).

Tony Mauro: And so, around retirement, I mean, I think that's the best move as far as that goes. I think too, and I remember too, when you're young you got to get that first credit card. And it's like, "Wow, this is great." But now, when we talk to clients about debt, is we say, "If you're going to use debt to purchase something, especially if it's not going to last very long, are you okay if the sticker price is, let's say is $800? Are you okay with paying $1,000 for that same item?" And most people will say "No." And then, you start talking about what the interest is going to cost you if you put it on a credit card. That's what you're going to be paying, so.

Speaker 1: Right.

Tony Mauro: You're not okay when you do it with cash, but you're okay with the credit card. And we've got to try to change their thinking on that a little bit.

Speaker 1: Yeah, absolutely. Well, you think about the joke. Right? So that's what we're doing, using that as a catalyst to have a conversation about something. And I think a debt was certainly a good way to take that one.

Speaker 1: How about this one? I got another one here for you. This reminds me, this is kind of a one-liner, like Henny Youngman. I know a lot of people may not remember him a long time ago, but he was kind of the king of the one-liners. Right? He would say stuff like, "The secret of a happy marriage remains a secret," so on and so forth. But this kind of sounds like one of his type of lines.

Speaker 1: Here's the joke. Why couldn't the advisor get people to buy bonds? Not enough interest.

Tony Mauro: Not enough interest.

Speaker 1: You can hear the rim shot right there.

Tony Mauro: Yeah. And a lot of people don't like bonds, and that is kind of the joke. And they don't pay a lot of interest in today's environment. People who've been around a while, remember those days of the 1980s, when a money market account was paying 9%.

Speaker 1: Right.

Tony Mauro: And those have trickled down with inflation being low, and they just aren't able to get that type of interest anymore, pretty much on anything. But that doesn't mean bonds don't have a place in your portfolio.

Speaker 1: Mm-hmm (affirmative).

Tony Mauro: Especially as you get towards retirement and whatnot, and you're not really seeking to bring in capital appreciation. You're really looking for return of principal, and then that income that hopefully you can't out live.

Speaker 1: Right. Yeah.

Tony Mauro: So bonds do have their place, and especially in the accumulation phase, probably not the best idea for most, depending on your appetite for risk. But for some people that's all they can stomach as far as risk, and that's why they're out there.

Speaker 1: Yeah. Have you seen that recently? Where people are like, "Hey, I'm not interested in bonds, because the rates are so low."

Tony Mauro: I've seen that, when the market's going crazy, the stock market that is, everybody wants to be kind of, so to speak where the action is. Well, gosh.

Speaker 1: Right. Yeah.

Tony Mauro: They read it on the internet that some guy's doing this or that. And so yeah, I do get a lot of that.

Speaker 1: Okay. All right. Now this next one here I've got, Tony, sounds a little bit like a Groucho Marx-ism. So we'll do this one here. This one's pretty funny too.

Speaker 1: I'm not saying my financial advisor was bad at his job, but when I went into his office and asked him to check my balance, he tried to push me over.

Tony Mauro: That's a good one.

Speaker 1: As somebody who has vertigo that's really hilarious to me.

Tony Mauro: Yeah.

Speaker 1: Because I'm dizzy on a regular basis, so I could totally see that and just die laughing.

Tony Mauro: We talk a lot to clients about keeping some sort of balance in their portfolio-

Speaker 1: Right.

Tony Mauro: A little bit. And many times when clients first come to us, I mean, they don't have any balance. Meaning that generally they'll have, let's say in their IRA or their 401k, and they're 55, 58 years old, and they have all of their money either in, maybe this is just an example, their own company's stock or one very narrow invested fund. In other words, almost a sector fund of some international fund type of thing. So they don't have diversification.

Tony Mauro: And so, we try to talk to them about that and, "You might want to diversify because generally speaking it's the best way to go over the long term. And so, by having those concentrations, yes, you are going to pick up some gains when that area is doing well. But boy, when it's not, you really suffer."

Speaker 1: Yeah.

Tony Mauro: And so, try to instill something in them to just start thinking about that.

Speaker 1: Well, talking about balance, and this next joke here actually kind of goes towards the question I was thinking about asking you the last time we talked and I totally forgot it. So it's kind of fortunate that it wound up being on here. But here's the joke.

Speaker 1: What's another name for a long term investment? A failed short-term investment. Right?

Tony Mauro: A failed short-term investment. Yeah.

Speaker 1: Is there such a thing, Tony, as a short-term investment in retirement planning, or is it always the long-term people are looking for?

Tony Mauro: Well, I think the people we've talked to, they're always looking to make money in the short-term, and we try to force them to think long-term. But I do think there's such things as short-term investments.

Speaker 1: Okay.

Tony Mauro: I don't think, I mean, it might have some place in a person's retirement plan. I mean, obviously as things come in and out of a favor you're changing things up, so it might be a short-term investment. But I don't think it's necessarily because it's a failed investment. It might just be because your goals change and you need to have something else-

Speaker 1: Right.

Tony Mauro: type of thing. But I think most people think short-term in their retirement. And they don't think that if they can't get X amount percent in a certain period of sometimes days, instead of years, they think it's a failed investment.

Speaker 1: Okay.

Tony Mauro: And we try to tell them, "That's not the case. We need a long term approach here."

Speaker 1: Right.

Tony Mauro: And I think they got to remain that. But again, I think that's a product though of too much news.

Speaker 1: Yeah. Being short sighted and too much news. Yeah, I think that's a very fair point. Because when you see something, and we're like, "Oh, well this is happening or that's happening," or, "We've got to get in on this or out on that," or whatever the case might be. And we don't really stick with the plan that we've started working on.

Speaker 1: And I get if the plan starts to seem like it's going awry, it makes you nervous, and you want to... maybe the immediate thought is to make a knee jerk reaction and change it.

Tony Mauro: Yes.

Speaker 1: But that might not be really what you need. You need to evaluate and take a look first. Because often, especially financially speaking, right, that when we make these reactions, we wind up kind of regretting that after the fact. It's not like you've got a plan together to use this bucket to haul up some fish or something. And the fish just aren't jumping in the bucket, and you got to come up with a new plan. Right? It's not like you're going to starve to death because of that. But you are going to have to work through it and try to figure out a good way to analyze, is it really the right time to change that plan, talk to the advisor, or am I just being nervous?

Tony Mauro: Yeah.

Speaker 1: Yeah. Okay. So speaking of nerves. Let's do this one. Here's the joke. Why was the client sleeping like a baby when the stock market crashed? Well, he woke up every hour and cried just like a baby.

Tony Mauro: Just like a baby. Well, a lot of times, especially when the market's going good, like it has been here lately. We get all kinds. People that meet with us first time, they are afraid. They get stressed out because again, they watch a lot of TV and whatnot. They think the market's too high, they're stressed out. They think that we need to get out or they need to get out.

Tony Mauro: Others come and say, "I've never been in the market. Everybody's talking about it. I think it's time for me," but they're stressed out too, because they don't have any idea as to what they need to be doing. And they just think that, sometimes they can just go buy some equities and all of a sudden make a lot of money. And that's not the case a lot of times.

Tony Mauro: So I think that people get stressed out about it. But like you were talking about earlier, as long as you've got a long-term plan. And that's what we do with them, is we've got to have a plan. People just come and say, "Well, I want to buy some equities." I mean, for us, we're not the advisors for them. We want to plan, we want to know what's going on, and why you're putting money away, and things like that, versus just kind of trading.

Speaker 1: Yeah. It's got to have a purpose.

Tony Mauro: Got to have a purpose.

Speaker 1: Yep. Okay. All right. Final one this week here on the podcast. Here's the joke. I've just got some great news from my financial advisor. He told me I could retire at 64, and live comfortably for an hour.

Tony Mauro: Yeah, right.

Speaker 1: Right. Nobody wants this. Right? We want to make sure we can get to retirement and stay retired.

Tony Mauro: And stay retired. And yeah, if you're coming to an advisor at 64 or 65, and have not planned, there's some things you can do. But more than likely, you're going to have to continue to work if it's possible, depending on what type of lifestyle you're looking for and what level of comfortability. But the best way to prevent this of course, is to plan. Plan early, and keep it going. And that way you won't have this type of thing.

Tony Mauro: And every, I don't know, two to five years, especially as you get into your 50's, I'm all already doing it, is I like to take a look at my own portfolio. And say, "All right, I've got this much time left. Assuming a reasonable rate of return and how much I'm putting in, what am I going to have as my nest egg? And will that last me the rest of my life once I decide to call it quits?" And that's what you have to do. You can't certainly just wait until the end and hope.

Speaker 1: Certainly not. And Tony, I imagine, well, typically that's the number one question. Right? Somebody probably comes in and they sit down with you for the first time or whatever. And they're like, "Hey, here's what I'd like to accomplish when I get to retirement, or, "I want to retire by this age or whatever. Now, how do you keep me there?" Right. And they want you to now walk them through how to build that structure, so that once we get there, we can stay there.

Tony Mauro: That's right. And luckily for us as advisors now with the software being so good, you can run scenarios very easily and let the software do all the heavy math lifting. And show a client, "Based on this, is what you have now. And this is when you want to retire, if you want to either take principle or just live off of the earnings."

Speaker 1: Right.

Tony Mauro: "Based on market conditions, this is how long your money will last you." And I like some of the software, the reports they spit out now of saying, "There's an 85% chance, or a 50% chance you won't run out of money," type thing. And people like to see, "Well, gosh, I want to be up there in 85-90%. Even if I live to 100, I'm not going to run out of money," type of percentages. You get down there in the below 50%, and they're like, "Okay. Well, what do we need to do?"

Speaker 1: Mm-hmm (affirmative).

Tony Mauro: "We have to fix it."

Speaker 1: Yeah.

Tony Mauro: And there are ways to fix it, but it may not be that pleasant, depending on how long you've waited to get started. Meaning that the longer you wait the more you're going to have to set aside to reach goals, or you've got to change the goals.

Speaker 1: Right. Exactly. Well, you know what? We don't want to be the joke. Right? We want to be the brunt of the joke for sure when it comes to retirement. So do yourself and your retirement a favor and have a conversation, and get started to Tony's point, take some action and go through some conversations and some pieces. And if you're not doing that, reach out to a qualified professional, like Tony here on the podcast.

Speaker 1: 844-707-7381 is the number to call. And of course, as always, you can just subscribe or follow, and find all the information that you really need. The easiest way to do it is just to go to Tony's website, yourplanningpros.com. That's yourplanningpros.com.

Speaker 1: If you're already working with Tony, but you listen to the podcast on the regular, make sure you share it with folks who might benefit from that message as well. You can do a little share link right there on the webpage, if it's Spotify or Apple or Google or whatever you like, all those social media things, give us options to share those with friends and family. So feel free to do that as well. But again, you can stop by the website at yourplanningpros.com. And find us on Apple, Google, Spotify, iHeart, Stitcher, and so on.

Speaker 1: All right, Tony, thanks for hanging out with me. I guess we'll both go back to work and do some more stuff. And hope you have a great week.

Tony Mauro: All right. Thank you. Talk to you soon.

Speaker 1: Yeah, well talk next time here. We are going to be firmly into July for our next episode, so should be nice and hot as well. It's already been fairly hot. So we'll see you next time here on Plan With The Tax Man with Tony Mauro, from Tax Doctor, Inc.

Disclaimer: Securities offered through Avantax Investment Services.  Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services.  Insurance services offered through Avantax Insurance Agency.

Before you can effectively put together a retirement income plan, it’s important to understand your own tendencies for spending. Let’s explore the different personalities.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript Of Today's Show:

Speaker 1: Hey everybody, welcome into mid-June here. We're back on Plan With the Tax Man, with Tony and myself. We're going to talk about our spending personality. What is your personality type when it comes to spending? It's pretty important to figure that out, and it's even more important to not only figure that out for yourself, but also share that with your advisor, and your financial strategist, your tax professional, and that's what we're going to talk about this week here with Plan With the Tax Man, with Tony Mara. What's going on, my friend? How are you?

Tony: Good, enjoying the summer so far. This is my time with my spending personality where I generally spend more. We're out, we're traveling, we're doing this and that. It's timely, because I think... And we ask and talk about this a lot, and so, it's going to be a fun topic today.

Speaker 1: I think, again, it's pretty important to self-identify, which is a big term nowadays. We hear it all the time in the social context. But when we're talking about our money and our finance, if you're not honest or don't know who you are when it comes to how you spend money, and by the time you get close to retirement, surely you know this about yourself, and have come to grips with it. But it's just as important to share that information with your advisor, and your financial professional, and your financial team, so that they can plan accordingly. There's nothing necessarily wrong with any of these categories that I've got for types of spenders, Tony. But if you're in one category, and your spouse is in another, and neither one of you are being honest with your advisor, it's making it pretty hard for them to get you a good plan that's going to get you to and through retirement, right?

Tony: It is, and it's something we ask everybody when we first meet with them, and the spouses as well. Because I like to know, just like you said, what kind of spenders they are, and if they're saying that they don't know, then we start asking some questions to try to identify it. Along with this, many, many that we talk to don't have... I think you can kind of generalize your spending personality, but a lot of people still don't use what I call personal finance software, whether it's Mint, Quicken, or what not, just to track your spending, see what's happening in the household, and then sitting down even without your advisor and discussing that on a personal level.

Tony: They don't do that. It's out of the checkbook or the debit card now, and nobody even looks at their bank statements. So, they really don't know what they're spending it on, so they kind of generalize this, and we try to get them to look a little deeper. Again, when we go over these, if you're out there listening, you're going to identify with one or more of them.

Speaker 1: Exactly. And I was going to say, that's a great point as well. You'd be surprised if you do some personal software type of tracking or budgeting. I know nobody likes the B word, but if you check that, you're often surprised, more times than not, nine out of 10 people are like, "Wow, I had no idea we were doing this much in these different ways." Let's dive into these categories. And again, you might find to be one or more than one, and you may be thinking about your spouse or significant other, and they may be the same way. And I'll play along and say the same thing, and Tony, you can as well. The first one is, the emotional spender. Talk to me about this. Give me some bullet points. What's an emotional spender?

Tony: This is somebody that just spends as it sounds, just when they're emotionally riding high or low, and that determines how they spend their money. For example, they may get a promotion, and then they'll say, "Great, I'm going to be making more money. I'm going to go out and buy X." Or, "I just got laid off," and oh gosh, instead of not spending money, they say, "I'd better go out and maybe drown my sorrows."

Speaker 1: "I'm depressed." Right.

Tony: "I'm depressed. Let's go out to eat, or do something." It's kind of a rollercoaster, because they're up and down with how their emotions go, and how they spend money. And so, sometimes that's not the greatest, because we're all going through ups and downs, and if you're letting that determine how you spend money, and you're not tracking it very well, you could end up wasting a lot.

Speaker 1: Yeah, and if we're talking retirees, pre-retirees, which is the bulk of our listening audience, our demographic, I like the concept for me, is like, "Hey, had a great day. Honey, let's go out to eat and celebrate." "Oh man, I had a terrible day, honey. Let's go out to eat, so I can feel better." Right? Or, "I'm really tired or stressed, and you don't want to cook, or I don't want to cook. Let's go out to eat." That's kind of where my wife and I sometimes, well, prior to the pandemic. Starting to just get back to that now, but that's where we would kind of find ourselves on that emotional wagon. It doesn't necessarily mean like a shopaholic. It doesn't mean that every time you have an emotion, you go on Amazon and buy something or whatever, but you may have a piece of that. You may have a percentage of that type of personality that does affect you.

Speaker 1: And so, identifying that just so you know, can really come into play when you're trying to work through... Sometimes people don't want to call it the budget, and what you guys do, and you're trying to get people to budget a little bit, just so you can see what's coming in and out. Not live on a restrictive lifestyle, but just understand the income and the outcome. I think a lot of advisors are starting to call it a personal spending... They're calling it a personal spending list, or chart, or something like that. It's got a nicer ring to it than, "Hey, let's figure out a budget." So, emotional spending can be one of those places you find yourself, or you might find yourself as the YOLO spender. What is this?

Tony: This is me. This is where I would classify myself, because it's basically somebody that spends money that they're going to, I don't want to say, live for today, but you only live once philosophy. It's easy for them to get a little overboard, spend lavishly on experiences and things. I would say I'm in it, and this is not a bad place to be, as long as you have all your bases covered, meaning that you're saving for retirement, you are out of debt, you've got enough money, discretionary income to go do some of these things. Because once you have all those envelopes or buckets filled up every month, and you still have money left, well then, that's your fun money, type of thing, at least in my opinion.

Tony: But if you're not tracking this, again, this can get out of hand, especially on things rather than experiences, for sure, where you can actually end up spending more than you're taking in, and you're wondering why you're going into debt. I don't do that, but I do fall into that category of, after everything is covered, this is time for me to enjoy things, type of thing. But I'm one of those guys, I don't buy a lot of things. I do like to travel and have experiences. I guess that would be my weakness. But I think, again, not necessarily a bad place to be, but with some constraints. This one especially, you need to be tracking, because if you find you're out buying a lot of useless toys, I call them.

Speaker 1: The big ticket items, yeah.

Tony: Yeah, big ticket items, you're not going to use them, and then you turn around and sell them, and then of course you're going to take a big hit. You've got to rein that in at some point, otherwise your whole plan is just not going to work.

Speaker 1: Right. And so, the YOLO spender, you only live once, that's the YOLO there. Actually, Tony, in a way, we saw a bit of an increase in this through the coronavirus, with the pandemic. They were calling it the coronapurchase. And so, people, when we couldn't go and do things, and so on and so forth, you were seeing people, in-home pool sales were way up, hot tubs were way up, campers were way up. Because okay, we can't go to restaurants, and we can't hang out, but my wife, and myself, and my kids, we all live together. We can be in a camper together, so we can go camping someplace.

Speaker 1: We saw a lot of those kinds of items, where people were ticking those things up. It could be some big tickets. And now that we're starting to get some freedoms back, you may see that switch to the experiences, to your point, right? Back out to concerts, or back out to this big vacation we've waited a year-and-a-half for, that kind of thing. I'm with you, I find myself to be a bit of an emotional spender, and a bit of the YOLO spender.

Speaker 1: I don't have a problem with a big ticket item, but I will be ticked off at myself if I go to Target and spend $100 and think, "What did I spend $100 on at Target?" And it's all little things in my car, things that you probably actually need. But I'm one of those people that a big ticket item doesn't scare me as much, and to your point, that can get you in trouble as well if you're not planning ahead of time. And for retirees and pre-retirees, that becomes more and more important. All right, that's the first two. This next one I imagine is probably the ideal place you'd like people to be, in your profession, and that's the savvy spender. What do we got here?

Tony: Yeah, so this one in my own family is my wife. She's much more balanced than me. She'll spend money, but she prefers a deal. I wouldn't say she's ultra tight, so to speak, but she's frugal. She does like quality. She does not like to just buy something in bulk. But she'll pay more if she feels like it's good quality, but she'll take a deal anytime she can. Whereas me, going back to the last one for a second, I really don't look for deals. I don't know why. I probably should, but I don't. But she does, and she likes to spend on experiences as well. She comes from a country background. I always say that she's a farmer, but she gets mad at me when I say that.

Tony: Stuff doesn't interest her, whether it's a big ticket item, or things like that. About the extent of what she likes obviously would be clothes and shoes, but she'll be very savvy about that. She's the kind that would walk into a store, let's say you're looking for some furniture, and she wants to look around and compare. Me? I'm like, I want to go right to this. I think I know what I want, and sometimes I get this way, the more expensive, the better. And then, she has to talk me down off the ledge, so to speak.

Speaker 1: I think that's common a little bit sometimes between men and women, often in a relationship. Luckily, my wife and I are the same way. Neither one of us are big fans of shopping. If we go into a store, it's like, find it, get it, move on it, be done with it. But yeah, you could definitely have two different kind of personality types, where one is, hey, I see it. I need a couch, we went here, I like this couch, I'm done. That sounds like that might be you as well. And the missus could be like, "Well, let's look at five stores, and 20 different couches."

Tony: Yeah. I can't stand that.

Speaker 1: Right, drives me nuts as well.

Tony: Yeah, but there's nothing wrong with that.

Speaker 1: Absolutely not. Right.

Tony: I'm all more about, God, the value of my time is worth more.

Speaker 1: That's a great point. That's a great point. In any of these spending categories, what is the value of your time worth as well? That's a great point. All right, so the savvy spender, again, balanced personality, thrifty when need to be, but prefers quality over quantity, things of that nature. And then, that brings us to our last one here, and that's the miser. And don't take offense out there folks if you're one of these. There's nothing wrong with it. Again, there's nothing wrong with any of these, it's just being honest about who you are, and then working with your advisor to be according. But I imagine the challenge for the miser, Tony, when it comes to what you do, this is the person who, or persons, who have saved really well, they're in really good shape for retirement. Now the problem is, you can't get them to spend the stuff and enjoy it.

Tony: Exactly. They don't want to spend anything, only if they have to. They get very stressed out about spending anything, especially if it's a big ticket item, even though they may need it, almost to the point where they feel very guilty about it.

Speaker 1: True.

Tony: These are the types that to the extreme, I would say, always trying to cut corners or costs on everything.

Speaker 1: Which is why they've got a lot of savings, probably.

Tony: That's why they've got a lot of savings. But it's trying to convince people of this personality of, okay, you've done a good job of maybe saving, you've sacrificed a lot. What's the end game? What good is it if you're not going to at least kind of enjoy it before you check out? To me, the miser personality to me is like, why go through all that, and put yourself through all that maybe for 30, 40, 50 years, if you're not going to enjoy it? I did have one guy say, "I wanted to leave it all to my kids." Okay, that's great, that's very noble. At least you have something, a goal in mind. But most are like, "No, I wasn't brought up that way. We were extremely low income growing up, and we didn't have a lot." Again, it's not bad, but we try to at least know what we're dealing with as advisors, because we certainly don't want to offend somebody that's of this personality. Maybe just try to get them to look at some different views.

Speaker 1: Sure. And I think with this kind of category too, well, really all of these, Tony, it's a great point, how we're raised plays a massive factor in how we view money, and how we treat money. It's almost like cigarette smoking in a way, and I'll say what I'm talking about there. My dad was a heavy cigarette smoker, and so, it turned me off so completely, I've never touched one in my entire life. I've had no interest in doing it. However, you could see that same thing with money.

Speaker 1: So, your parents might have been very tight, very frugal because they were low income, or maybe they came out through the Depression, or something like that. And so, therefore, you're that way. Or maybe you're the complete opposite, because they were always so tight. Now, you're a YOLO, or whatever the case is. It's just important to get in touch with who we are.

Speaker 1: And again, none of these are bad, none of these are wrong. It's simply understanding it, so that your advisor and your financial professionals can say, "Okay, this is who you are. This is what you want to accomplish or do. That helps me plan accordingly, so that I can structure this stuff for you to have everything you need when you need it, or how you want to, whether it's a legacy, or whether you want to spend it all and take every dime with you."

Tony: Right. Like I said, there's nothing wrong with any of these. But I think that a lot of us could benefit from listening to some different views on it. But for sure, from the advisor side, it's nice to know. And we ask a lot of questions when we're working with clients, and you could tell right away kind of what type of personality they have about spending. It's a fun exercise, and people generally will laugh and say, "You know what? That is me. You're exactly right." And we're not trying to change them, for sure, but it's a lot of fun.

Speaker 1: I think what will happen too, Tony, and I imagine what could be really challenging, is if you've got one partner is a YOLO, and the other partner is a miser, I imagine that can be an interesting challenge, and they know it. They probably butt heads about it, and maybe even have a giggle about it, or whatever. But that kind of goes into play with that other hat that sometimes you have to wear. You put on your tax hat, sometimes you put on your advisor hat, sometimes you put on your marriage counselor hat, by saying, "Okay, look guys, we've got to move this YOLO a little closer to the savvy, and we've got to move this miser a little closer to the savvy, so that y'all can enjoy everything together." And so on, and so forth. I think that's again, the value of where an advisor and a financial professional comes into play.

Tony: Yeah, I agree.

Speaker 1: So, folks, what are you? Are you an emotional spender, a YOLO spender, a savvy spender, a miser, a little bit of all? I think there's probably a little bit of all of us in each one of those. Again, hopefully you enjoyed that exercise. And if you haven't had these conversations not only with yourself, but with your spouse, and your advisor, do so immediately, because it'll certainly go a long way to helping them get the plan together that you need. And if you need some help, reach out to Tony at yourplanningpros.com. Visit him there on his website at yourplanningpros.com. Tony, thanks for hanging out with me this week. I'm about to get ready to get hit with some big thunderstorms, so I'm going to let you go.

Tony: All right, sounds good. Take care.

Speaker 1: We'll talk to you next time here on Plan With the Tax Man, with Tony Mara from Tax Doctor Inc. You folks have a great week, and we'll see you in July here on the podcast. 

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