RETIREMENT MADE EASY

What should you ask a potential financial advisor? How do you make sure you hire the right person? How do you find a financial advisor that actually cares? In this episode of Retirement Made Easy, I answer a listener question by sharing the five top questions (+ a bonus question or two) you NEED to ask a potential financial advisor. Don't miss it!

You will want to hear this episode if you are interested in...

• [0:31] What do you ask a potential financial advisor?
• [2:21] Question #1: How long have you been doing this?
• [4:46] Question #2: Do you have a specialty?
• [6:57] Question #3: Are you a fiduciary?
• [8:08] Question #4: How are you compensated?
• [13:14] Question #5: What does working together look like?
• [15:31] Bonus question: How many clients do you have?

How long have you been doing this?

This is the first question you should ask your potential financial advisor. If you're about to retire, you want to hire someone to help you navigate through retirement. So I would caution you: don't hire someone who is in their 60s or 70s. They're going to want to retire at some point too. You don't want to be searching for another replacement right away.

You should look for at least 10+ years of experience in a financial advisor plus the right credentials. A Certified Financial Planner (CFP) is the gold standard. A Certified Public Accountant (CPA), Chartered Financial Consultant (CFC), and Accredited Investment Fiduciary (AIF) are also popular choices.

What do you specialize in?

Hopefully, their answer is retirement planning. But some of these professionals specialize in insurance planning (life insurance, auto insurance, etc.). That's probably not someone best-suited to help you with retirement planning. Just like doctors and lawyers have their own specialties—so do financial planners. Some work with retired government workers (highly specialized) or specialize in 401k or 403B plans (better for a group). The bottom line is that you want to hire someone who specializes in exactly what you're looking for.

Are you a fiduciary?

By law, a fiduciary has to act in their client's best interests—and put them ahead of their own at all times. A financial advisor is not required to be a fiduciary which is why you MUST ask. That doesn't mean someone who isn't a fiduciary is a bad person—but I would prefer to work with a fiduciary. I want to know they have to work in my best interests.

How are you compensated?

Do you know how you're paying your financial advisor? Are you paying fees or commissions? This is something you NEED to know. If you are going to have a working relationship, you should know the way they're being compensated. What are the methods in which they can be compensated?

• Commission-based structure: If a financial advisor recommends certain investments, he or she charges a commission when you buy or sell—similar to a real estate agent. It may be 2% or it may be 5%. It should be disclosed up front.
• Hourly fees: Just like an attorney bills by the hour, you may pay your financial planner by the hour. They may be analyzing a portfolio or building a plan.
• Advisory fee: this is the most common way to get paid. This comes directly out of your portfolio (a 1% fee is common). It's also a great way to track your progress. You can check your statements to see what you've paid.

Advisors shouldn't be ashamed of how you're being compensated. They are bringing value to your life if they're good at what they do. Are you getting a good value for the dollars that you're spending?

What does the process of working together look like?

How often do they communicate with their clients? The #1 reason people were dissatisfied with their financial advisor? Because they didn't communicate with them. Find out ahead of time what you're getting into. How are they keeping you updated on your financial plan? Will you meet with them over the phone or a Zoom call on a quarterly basis? You will have changes in your life and adjustments that need to be made with your plan. So you need to know how often you'll be communicating with your advisor. I share a bonus question you should ask—so make sure you listen to the whole episode!

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

Over the last 10+ years as a financial advisor, I've heard a lot of horror stories. I've also heard a lot of crazy things come out of my client's mouths. So in this episode of Retirement Made Easy, I'm going to share the top 5 financial life lessons I've learned from my clients. After all, the best way to learn is from someone else's mistakes. Hopefully, these lessons can help you make better decisions for your retirement.

You will want to hear this episode if you are interested in...

• [2:03] My Top 5 Financial Life Lessons
• [3:21] Lesson #1: Be careful loaning money
• [7:02] Lesson #2: Plan for the unthinkable
• [11:11] Lesson #3: Look at the big picture
• [15:40] Lesson #4: Be careful how you title assets
• [20:07] Lesson #5: Teach your kids how to save

Lesson #1: Be careful loaning money

A gentleman in his 70s loaned his best friend's son some money for a real estate purchase—north of $200,000. His son's friend was supposed to make interest payments on it. But the son moved to Colorado and stopped answering his phone. My client never received one interest payment. He lost a HUGE chunk of his retirement because he trusted the wrong person. Unfortunately, he still trusts that he'll get that money back.

If and when you loan money to people, you have to expect that you may never get it back. highly recommend you get an attorney or CPA to draft up a loan document that is notarized and signed—with the repayment terms spelled out in the document. Be cautious with your money and loan out an amount that won't devastate you financially.

Lesson #2: Plan for the unthinkable

I've been a financial advisor for 10+ years. I have, unfortunately, had clients pass away. A divorced gentleman left each of his kids over $500,000. When he passed away, his two kids were in their early twenties. Because they inherited a 401k, they had to pay taxes on every dollar that they withdrew. The son withdrew money to buy a $65,000 sports car. Then he bought a boat. Then he blew more gambling. In 18 months, the money was gone—and he didn't save enough to pay the taxes. The life savings my client worked so hard for was squandered by his son. The lesson? Make sure your inheritance goes to someone financially responsible—or put a trust in place.

Lesson #3: Look at the big picture

Someone I spoke with had a simple IRA through work. She told me she stopped contributing to it because the annual fee was $50 (she thought it was too high). But her employer was matching 3% of her salary dollar-for-dollar. 3% of her salary was $1,500 a year.

She was looking at the cost when the end benefit was far higher. A simple IRA is 100% vested from day one. That's a 100% rate of return on her money, for only $50 a year. She would've only paid $50 to make $1,450—but she thought it was too high. Be careful when you're trying to save money. There are no bargains in toilet paper, life preservers, heart surgery, or parachutes.

Lesson #4: Be careful how you title assets

My grandfather's best friend—a fellow Korean war vet—had one son. He decided that when he died, he wanted his son to inherit the 500+ acres of land that he owned in Illinois. So he added him as a joint owner. Unfortunately, his son got divorced. All 500 acres got auctioned off and a large portion went to his son's ex-wife. Perry was left with 120 acres of the original 500-acre farm. It cost him hundreds of thousands of dollars. He was in tears over it until the day he died. When you put someone's name on any asset, be very careful. If something happens to the person named as the joint owner, you may lose those assets. You open yourself up to a lot of risk.

Lesson #5: Teach your kids + grandkids how to save

I've never heard anyone say "Man, I wish I wouldn't have saved so much money for retirement." I've met many people solely living on social security because they had no other resources. Imagine the hurt and pain of someone only living on social security after they've diluted their entire retirement savings. That's why you NEED to teach your kids how to be good with money from an early age. Show them the value of saving and investing for their future so they don't end up penniless in their retirement years.

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

What does THE worst retirement plan I've ever seen look like? What should you avoid when you craft your retirement plan? Once you make certain decisions—there's no going back. You need to understand the choices you're making and how it will impact your future.

In this episode of Retirement Made Easy, I share a story about the worst retirement plan I've ever seen. I explain what makes it so cringe-worthy—including the SIX mistakes that were made—and what you should do instead.

You'll want to hear this episode if you want to avoid costly mistakes:

• [1:52] Mistake #1: Excluding your spouse from planning
• [5:16] Mistake #2: Single-life annuity pension option
• [8:05] Mistake #3: Making the wrong social security election(s)
• [9:43] Mistake #4: Relying on a possible inheritance
• [13:16] Mistake #5: Withdrawing too much from your retirement plan
• [16:37] Mistake #6: Choosing the wrong beneficiary

Mistake #1: Leaving your spouse out of retirement planning

In this story, we'll change the man's name to George. George is 72 years old and his wife is 8 years younger (64). She wasn't present at the meeting with me, and I asked why. George said "My wife doesn't need to know anything about retirement. She trusts me 100%." That's the #1 problem. It's a HUGE mistake: both spouses need to know the ins and outs of what's going on in case something happens to the other person. Plan your retirement with your spouse.

Mistake #2: Choosing a single-life annuity option for your pension

When George told me he was collecting a monthly pension, I asked: Is it a 100% survivorship pension? Is it a 50% survivorship? Turns out, he chose the single-life annuity option, which means he receives $2,500 a month for the rest of his life—but upon his death his wife gets nothing. To make matters worse, George doesn't have life insurance either. Why is that a problem? Listen to find out!

Mistake #3: Taking social security benefits too early

George claimed his social security benefit immediately at 62. He then encouraged his wife to start taking her benefits at age 62. Doing so means they claimed the lowest benefit possible simply to get it right away. By taking his benefit early, George also lowered the survivor benefit. Why is that important? If there is a big age gap between spouses, you want to make sure the younger spouse is provided for. If George had delayed taking his benefits, it would've provided his wife a higher survivor benefit. Instead, he greatly reduced her potential survivor benefit.

Mistake #4: Relying on an inheritance that may never come

Many of George's poor choices all hinge on the assumption that his wife's wealthy mother would leave her an inheritance. But you cannot count on an inheritance to make your retirement plan successful. I've seen countless examples of people who thought they were going to get a large inheritance—and ended up getting very little.

George's mother-in-law is 92. She could eat through any inheritance money paying for long-term care. What if she changes her will and gives her wealth to charity? What if he dies before his mother-in-law? What if he needed long-term care and his wife has nothing? Listen to hear what he should've had in place for protection.

Mistake #5: Overspending your retirement money

George and his wife were withdrawing north of 9% per year from their retirement accounts. They should only be withdrawing 4–5% per year to live on. They were withdrawing double what they should be. Why does it matter? They run the risk of running out of money. Even worse, most of the money was going towards country club memberships. He was 100% over-spending—all because he was relying on an inheritance for his wife. But when your money is gone, it's gone.

Mistake #6: The wrong beneficiary

While I was looking through George's paperwork, I noticed something odd and asked: "I thought you said your wife's name is 'Nancy'—why is someone else's name listed as the primary beneficiary on these statements?" Who was the beneficiary? His ex-wife. If something happened to him, ALL of his retirement accounts would go to his ex-wife.

There's a lot to be learned from the mistakes that George made when planning for their retirement. Listen to the whole episode for the full discussion—and what you need to do differently.

Resources & People Mentioned

• 2020 Tax Planning Guide
• Secret Sauce to Retirement

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

What big challenges could a retired couple face in 2020? Based on the research I've conducted, the average age of the American retiree is 62. According to the Social Security Administration, 34% of Americans begin to claim their social security benefits at age 62. That doesn't mean it's the optimal age to claim it. It even lowers the amount of money you'll receive monthly. So how should you plan for retirement so that early withdrawals aren't necessary?

In this episode of Retirement Made Easy, I share a retirement story based on a hypothetical couple. If you're planning for retirement, this is a retirement story you NEED to hear. Why? It will change the trajectory of your future. If you want to live a comfortable and sustainable lifestyle in retirement, you need to plan properly. Listen to this episode to learn what retirement planning should look like!

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You will want to hear this episode if you are interested in...

• [1:36] The retirement story everyone needs to hear
• [4:25] Planning for your retirement years
• [5:06] Joint life expectancy for our retirees
• [7:26] The average couple with average healthcare
• [8:33] Key takeaways we can learn from the past
• [16:05] What interest rates looked like in 1990
• [16:51] What can we take away from our couple?

Statistics about our hypothetical retirees

To better understand our hypothetical couple, here's some information about them:

• Our couple was born in 1958 and are turning 62 this year.
• The couple's names are Michael and Mary (the most common names in 1958)
• Neither of them are smokers (but did you know 14% of US adults are smokers?)
• Michael and Mary are the "average" couple with "average" healthcare

The life expectancy of the average 62-year-old

When you plan for something as important as retirement, you need to know how long it's going to last. You need to know how long a vacation will be to pack properly, right? It's the same for retirement. We don't know what our expiration date will be, but we have to use the information available to us. So what does the information tell us?

On average, women outlive men by five years. Statistically speaking, Mary is projected to live another 30 years (until the age of 92). If I was talking to Michael and Mary and told them their joint life expectancy was 30 years, they'd be shocked. It means their retirement income needs to last 30 years.

Do you think it's a safe bet to assume that people will continue to live longer in the future because of medical breakthroughs on the horizon? There's a good chance people will continue to live longer. Have you had access to top-quality healthcare? If you've been lucky enough to access above-average healthcare, you may be able to expect to live even longer than 30+ years.

If history is our guide, what are the key takeaways?

What can we learn from the past 30 years to gauge the next 30 years? 30 years ago, it was 1990. In 1990:

• A postage stamp was $0.25 (Today, a stamp costs $0.55)
• The national minimum wage was $3.80 (Today, the national minimum wage is $7.25)
• A Big Mac from McDonald's was $2.20 (In 2020, the average cost is $5.67)
• A base model Ford Mustang was $9,500 (Today, the base model is $26,395)
• Medicare benefits started at $28.60 a month (Medicare part B starts at $144.60 for the lowest income bracket in 2020) That's a 5.6% annual increase over the last 30 years.

All of these have gone up dramatically. If you retired 30 years ago and had a fixed pension of $2,000 per month you've watched everything increase—except your pension. Do you see the big problem? The cost of living went up about 3% a year. In 2020, it takes $2.44 to buy what $1 bought 30 years ago. Things change a lot in 30 years. Social security does increase—but not nearly enough.

The big retirement story takeaway

What can we take away from this? Michael and Mary can expect prices to double—if not triple—during their 30-year retirement. Their goal is to live a comfortable retirement with a lifestyle sustaining income. Can their income keep up with their cost of living?

What about you? Does this retirement story hit home for you? Are you prepared for a 30+ year retirement? I'd love to have a conversation with you about preparing for your retirement. Don't hesitate to reach out!

Resources & People Mentioned

• Social Security Administration

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

In this episode of Retirement Made Easy, I answer YOUR pressing questions. Over the last month, a variety of questions have been rolling in about social security, retirement, inheritances, and more. So with their permission, I'm sharing their questions—along with my best answer to them. As always, double-check my answers against whoever it is your family trusts for prudent financial advice before making any decisions.

You will want to hear this episode if you are interested in...

• [0:12] We answer listener questions in this episode!
• [2:15] Question #1: What do I do when I inherit an IRA?
• [8:47] Question #2: Can I gift IRA money to my children?
• [10:34] Question #3: How do Social Security survivor benefits work?
• [12:16] Question #4: Are annuities good or bad?
• [16:03] Question #5: How do social security spousal benefits work?

What do I do when I inherit a non-spousal IRA?

A 57-year-old listener recently inherited an IRA from his father, who passed away in January of 2020. He doesn't want to pay a 10% penalty for early withdrawal. So what are his options?

The IRS breaks the rules of inheritance into two different categories: spousal and non-spousal. If your spouse passes away, their IRA can get moved into yours—but that only applies to spouses. You cannot do that if you're inheriting a non-spousal IRA.

Your fathers' IRA has to stay separate as a beneficiary or an inherited IRA. The good news? There is NO 10% early withdrawal penalty. It does not apply. The SECURE Act that was passed in 2019 has more details on a big provision regarding inherited IRAs. New rules regarding required minimum distributions (RMDs) apply if you inherit an IRA from someone who passed away after January 1st, 2020.

The way the rules used to work: You could stretch that IRA out and every year you would take RMDs or you can take them out of a 5-year timespan. Now, the rules are totally different. Now you have up to 10 years to take withdrawals from that account. After the 10 years, all of the money has to be out and the taxes have to be paid.

So what are the listener's options for withdrawals? What can he do with the inheritance? Listen to find out!

Can you gift IRA money to your children?

Another listener is wondering if he can give part of an IRA to his children. Here's my answer:

IRAs and Roth IRAs are retirement accounts, more specifically, "Individual Retirement Accounts." They're based on your social security number, which is why you can't have a joint account with a spouse. You cannot gift retirement accounts to your children while you're still alive. If you want to give them money now, you'd have to withdraw it from your Roth IRA tax-free assuming two things: that it's been open 5 years or more, and that you're older than 59 ½. There are gift-tax rules and the annual exclusion in 2020 is $15,000

I answer a question about social security benefits and weigh in on whether or not annuities are good or bad—so keep listening!

How do social security spousal benefits work?

Another listener (who is 72) started taking his RMD of social security at age 70. When the benefits kicked in, he received $3,000 per month. His wife is 64 and her social security benefit is very low. How do spousal social security benefits work?

When you turn full retirement age (age 66) you can get your full retirement benefit OR up to half of your spouses—whichever is greater. A spousal benefit will max out at full retirement age. So it's not half of what he got at age 70—she'll get half of what his benefit was when he hit 66 (approximately $1,136 a month). There's no advantage to waiting until she's 70 to start taking her RMDs. Instead, look into taking advantage of her spousal benefit as soon as she reaches full retirement age.

Resources & People Mentioned

• What is an annuity?
• The SECURE Act

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

Who's the better investor: men or women? What is the difference between men and women? What makes one gender the better investor? In this episode of Retirement Made Easy, I share three different studies that all come to the same conclusion. You'll get my answer to this dangerous question: Are women better investors than men?

You will want to hear this episode if you are interested in...

• [1:45] Setting the record straight: who's the better investor?
• [2:52] Study #1: The Cal-Berkeley "Boys will be Boys" Study
• [4:28] Study #2: The Warwick Business School Study
• [5:24] Study #3: The Fidelity Survey of 8 Million Investment Accounts
• [8:25] The bottom line: What makes women better investors?
• [12:50] What can we learn from these three studies?
• [11:25] Men were 35% more likely to change their portfolio
• [12:50] What can we learn from these studies?

Resources & People Mentioned

• Boys will be Boys: Gender, Overconfidence, and Common Stock Investment
• Warwick Business School Study: Are Women Better Investors Than Men?
• Fidelity Survey of 8 Million Investment Accounts

"How should I be Investing in retirement?" This is one of the most popular questions that I get from listeners. What should you invest in? How do your investments help you reach your goals? What does your portfolio need to do for you in retirement? In this episode of Retirement Made Easy, I share my opinion on these questions and give you the 3 keys to successful investing in retirement.

You will want to hear this episode if you are interested in...

• [1:07] How you should be investing in retirement
• [3:01] Key #1: Understand how your investments will help you reach your goals
• [6:35] Key #2: Make sure your investments are flexible and liquid
• [9:24] Key #3: Keep your portfolio diversified

What does a $15 minimum wage have to do with retirees? Why would they be upset about it? Is it that big of an issue? Illinois recently enacted a plan to increase their minimum wage by $1 each year until 2025—at which time they'll have fully implemented a $15 minimum wage. In this episode of Retirement Made Easy, I use some hypothetical scenarios to explain the impact of the minimum wage increase and what pre-retirees need to prepare for.

You will want to hear this episode if you are interested in...

• [1:24] Why are retirees pissed off about the $15 minimum wage?
• [2:26] A Hypothetical example of a retiree in Illinois
• [5:14] How the minimum wage increase will impact grocery stores
• [7:63] WHY the minimum wage increase is terrible news for retirees
• [9:59] Check to see what your local state has in place for minimum wage increases
• [14:11] Understand the retirees perspective and how it impacts retirement planning
• [14:45] A brief discussion on the impact to small business owners
• [15:34] How to plan and prepare for a successful retirement

There are a lot of myths being perpetuated about retirement that are simply NOT true. These myths may leave the average personed discouraged and disheartened about their future and wondering if they'll ever retire. How much money do you need? How much will you spend? Will social security still be around? Will taxes be lower? In this debut episode of Retirement Made Easy, I dispel some of the myths around retirement to help you breathe easier—and prepare for your future.

You will want to hear this episode if you are interested in…

• [1:01] Myth #1: You will spend 70–80% of your pre-retirement income
• [5:04] Myth #2: Your taxes will be lower in retirement
• [11:36] Myth #3: You should take social security at age 62
• [15:33] Myth #4: you need $1 million saved for retirement to retire
• [19:07] Myth #5: Retirement is the end

Resources & People Mentioned

• Social Security Administration

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts