Growing Your Wealth with Brian Evans

Welcome to Growing your wealth with Brian Evans and Jeff shade. A show this simplifies the complexities of investments, taxes, retirement and more so you can discover how to better sustain yourself and your wealth for years to come. Brian is a CPA with 30 years experience and a financial advisor which brings a unique perspective to the financial world. This show is brought to you by Madrona financial and CPAs home of the routed wealth plan. One a retirement plan designed to last 30 plus years, go to Madrona financial.com. And click get started to see what the routed wealth plan can do for you. And now, here are your hosts Brian Evans and Jeff shade. Thank you so much Welcome to Growing your wealth with Brian evidence to the show that gives you the straight talk and honest answers you need to help sustain yourself new wealth for 30 plus years on today's show, we're gonna be discussing 12 Common Retirement mistakes that even well informed individuals make. My name is Jeff shade. And as always, I'm just here to ask the questions. But their words of wisdom and solid advice come from Brian Evans, CEO and President of Madrona financial and CPAs. Brian, how you doing today? I'm doing great. Thanks, Jeff. was glad to hear that Brian, our listeners are doing well today, too. You know, Brian, there are a lot of strong opinions out there when it comes to retirement strategies. And I've compiled a list here of 12 Common Retirement mistakes that, as I understand it, many people make and I'd like to go through these with you on today's show, so that you can offer our listeners some context so that they can make the right decisions for themselves. So these are 12 Common Retirement mistakes that even well informed people like our listeners make number one is claiming Social Security too early. I think that's an all too common problem. Yeah, this is a big question for people. And I just kind of wanted to frame I hope that anybody listening to the show today can listen to much of it or all of it, because probably invariably be a couple things that you go Hmm, that he's talking about me right now. And that's the goal. Today, financial planning is so much more than just Gee, should you put your money in the vanguard target index, or the fidelity target index, you know, that's, that's just investing in the markets. That's kind of the easy part of what we do. It's the other stuff that differentiates us is why you would hire a financial advisor, not only do we have access to things that you just can't access on your own, but we have experience, and then of course, tax background and estate planning, etc, etc. But all of this together, basically, it's things you just can't do on your own, you can't create experience on your own the experience that we have, you know, working with hundreds and hundreds of clients over many decades, and so forth. And again, access to product. But the question that you asked was claiming so security too early. Now, I was just having a conversation with my advisers about this. And this is a huge question, because it's something that affects basically everybody at some point in their life, when do I take Social Security? So I can say unequivocally, that there are a couple of data points that we can know about? And there's a whole bunch that we cannot, so there is no right or wrong answer, necessarily. Whilst there are a couple of wrong answers. I'll give you that. But okay, there's a couple of data points, you know, because one way I could say it is, well, I can answer that question unequivocally. If you just tell me few things, how long are you going to live? How long is your spouse going to live? What's inflation gonna do to your money? What are your investment returns the rest of your life? And what's your quality of life and health? During your latter years? I don't know the answer any of those. Yeah, neither do I. And that's kind of what we have to know to get it. Absolutely right. So we can do our best to figure out that but claiming Social Security to early with you claim it between age 62 and full retirement age, every year, you wait, you get a lifetime, six and a half percent raise on all your future checks. And after full retirement age till age 70. The annual increases 8% A year permanently for all your future checks, the rubbish you got to give up 12 monthly checks to get that raise. And so that's that's the decision. Now, every software that I would punch this stuff into would say, Wait, if you believe you're going to live longer than say, 80 years old, you'll have more money if you wait and claim it at age 70 rather than full retirement age or at age 62. However, there is something called time value of money. And one of the questions I ask I ask a silly question. I say Would you rather have $10,000 When you're 65 or a million? When you're 100? And you can't leave any in legacy? You have to spend it? Yeah, people go, Hmm, I probably rather to have 10,065 Because what am I gonna do with a million dollars if I'm 100? Even if I make it that far? I said, well, the computer software says wait till 100 Because the rate of return is much higher, but the computer doesn't understand that as we age, money loses its value to some degree to us, right? I know 80 Something year olds, 97 year olds, 100 year olds, they really don't care that much. I mean, I think it's nice.
They get mentioned numbers on their financial statement. But it doesn't really affect their life too much. Like, while I'm living the way I'm living, that's not going to change regardless of I have another half million or don't have half a million on my bank statement or my account statement. And so time value money is really critical in all of this. And you know, then there's other decisions to make. For instance, if you're single, you might want to take it earlier. Or let's say that somebody says, Well, you told me to wait, because I have longevity in my family problem is I don't have any income. And I don't know when I'm going to eat well, okay. And then you might want to take it early, too. So there's a lot that goes into the decision about when to claim Social Security, but a huge one is claiming too early, or waiting too long. I mean, either way, it could be a wrong one, you want to get all the data points in the right questions asked and answered as best you can when making that decision. So claiming Social Security too early one of the retirement mistakes that even well informed individuals make the next one, Brian is going to be continuing to work after you claim Social Security. Yeah, here's the situation. You know, if you start taking Social Security, let's say you retired, it was say, 62. And you okay, I'm going to take Social Security. And I'm never going back to that job. Let's say it's a Boeing because this has happened with several of my Boeing people. I said, Is there any chance you're going to go back to work? And if not at chance? There's no way I am going back to work? Yep. And so Okay, well, and then they take their Social Security. And sure enough, 13 months later, they go, Brian? Yeah, I just got this offer as a consultant. And, you know, I'm kind of bored with golfing every single day. Yeah, I tend 12 hours a week, and, and they're gonna pay me two and a half times what I used to make per hour at Boeing, and it's a really good gig, what can I do here, I'm like, wow, you can get back your Social Security and not give any raises for a long time. And what yeah, if you don't give it back in the first 12 months of claiming it, you can't reverse that anymore. And if you make too much, which the often they would, if they make more than, say, $21,000 a year, they got to start giving it all back, and then they don't get the raises. And that's a terrible mistake. And so I caution people, give yourself a little time in retirement to absolutely say, I'm not going to go back. And maybe you're not going back to your old job. But there might be something else of interest to you, that pays more than 21,000 a year. Right? That's pretty low threshold. And it's interesting that we want people out of the workplace between age 62 and 67. Yeah, but it's okay. If you're 67, you can make as much as you want, and clean it and not give it back. But until full retirement age 67 For most of us, then you got to start giving it back. And that can be a huge problem and kind of live chain while I want to go back to work. I want the extra money. I don't want to be bored. But I made a terrible financial decision by claiming it too early that you might self chance to figure out what my retirement looks like. So one of the things that we just mentioned, again, on that is, if you're contemplating retirement, give yourself some time before you make any big, big decisions. See what that looks like. It is very different from working, commuting and working all those hours and then trying to squeeze in all your fun on a weekend or whatever I knew chores and so forth, and retirements different, but give yourself some time test it out, take it for a test, drive, write test drive for a year, and then reassess it, you're gonna probably make a lot better decision. And what do you lose, if you spent one year you know, and then at the end of it go, No, I really am not going to go back to work. I'll take Social Security now. Well, you got a six and a half percent raise for life. And you're probably better off having done that. And you may still want to wait depending on your other income source. And again, for most people listening to the program, their full retirement age will be between 66 and a half and 70 years of age approximately. But again, you can go to ssa.gov. And simply look into your estimated retirement benefits. But that earnings cap, if you're not full retirement age is going to be $21,240. If you go over that, you've got to give back $1 For every $2 that you make over that next common retirement mistake that even well informed individuals make Brian is carrying debt into retirement or paying off debt when you retire. Every one of these questions has discussion points where the answer could go either way, if I had two couples come in one right after the other, same age, same everything, I might give a different answer to each one. So claiming Social Security too early, a couple could come in and I find out that one of them has longevity. And let's say that a male has been working and his wife raised the kids. And so her Social Security benefits very low. He might be older, he might be in poor health and normally say Well, you better take that Social Security early. And I'm saying the opposite. I'm saying well might want to wait here because if you pass away before her and she's got longevity in her family, and I know a lot of widows have been around for 1015 20 years without their husband. I'm pretty sure they're happy if they're getting a much higher social security check for all those years because their husband waited rather than taking it early and limiting how much they can take
About the next couple could come in and be a different set of circumstances. You know, they both were working and they're in good health and he has longevity in the family on saying, Okay, well, this might be a different rationale for decision making and so forth. So the question here was carrying debt into retirement. Now, I did want to preface also, there's good debt and bad debt. We talked about that on the show. If you listen to certain people, they say, okay, never go into debt, put all your money in an envelope and just spend from the envelope and Okay, well, that's a good start. I hope my kids pay attention to that.
But you know, bad debt, to me is pretty easy to define. It's something that if I borrow this money and put it into something, is that something going to be awesome in 10 years or not? If it's your car? No, no, if it's a trip, no, if it's going out, no, you're not gonna have that in 10 years is buying clothes and shoes, no, they're gonna be worn out, they're gonna be a goodwill. So bad debt. Good debt is your first house. Okay, that's, that's good debt. It's a SBA loan on your business, that's good debt mortgage on a rental house that you bought, and you're fixing up and going to hold long term. That's good debt. So good debt needs to create value through leverage for later on. And so those are things that would be better in 10 years, your you know, your bought a house 10 years ago has probably gone up in value. So that was a good thing, your business, hopefully, it's successful, we're gonna get time for starting a business, whether it's a rental house probably gone up in value. So these are things that I considered good debt. So I did want to define that before I say, just pay off all your debt before you retire? Well, not necessarily. Because some people do carry low mortgage rates into retirement knowing they have the ability and wherewithal to pay it off whenever they want. So as long as you have that, then what's the rush? If you feel like you're investing well, and you're doing better than the interest on your debt, then it's okay to do that. Some people though, love the idea that come to me and I, and I encourage them all the time. As they said, Well, I only have a three and a half percent mortgage, and I know I can get a couple percent more in a fixed investment type account. But you know, it just bugs me every day of my life to wake up knowing I have mortgage, I owe somebody some money, and I'm retired as a guy that's common. So here's a non financial decision, pay off the mortgage feel better, and it's okay to do that. It is okay to do that. And then Ha, thank you, you know, there's almost like a breath of fresh air, they feel free. And freedom is an important emotion to encourage. So just because on paper, the computer, you know, if we're doing AI investing here, which I've been reading about lately, that artificial intelligence is supposed to take over our jobs. That ain't gonna happen. I don't think so. Yeah. Now, because it's things like this on paper. Yeah, the computer would say, Absolutely. Never pay off your mortgages, because you can get more in a fixed annuity or whatever. And I'm saying, well, you're missing the point here. It's, it's about how we feel in retirement, about our finances. And if you feel like you're going to be free, and stress free, and so forth, and your spouse is freaking out, because a mortgage is still there, they gotta pay every month and nobody's working, well, then pay it off. You know, it's okay. And so there is a decision part of the decision tree that is the non financial, as opposed to the financial decision making. So we defined, you know, is it good to have no debt and retirement? Well, I think basically, we can assume yes, but if you do carry some debt, do you have to pay off? No, but sometimes you may want to for, again, for non financial reasons. And you know, some people have debt, and they aren't investing and they don't have it invested well, and so I'd say, well, in your case, go for the sure thing, get rid of that mortgage payment that improves our cash flow in retirement because you don't mortgage anymore and a lot of people why can't pay off my mortgage because of the tax benefits Am I always second there, we have a very high standard deduction, most of the interest that you pay on your mortgage typically is non deductible, because you're getting that deduction anyway. And a lot of people that's a very common mistake. I've seen this many times where somebody come in and they make carrying a mortgage year after year after year, knowing they have money just earning nothing that they could use to pay it off stressing out their cash flow stressing out each other a little bit, yet they claim that the only reason to have the mortgage is for tax reasons, and I've been I've let them know I had I tell them the exact dollar amount they're saving, you know, it might be $300.
That's it. I'm carrying this mortgage for five years because I didn't know the question to ask. So you know, this this show is called 12 Common Retirement mistakes even well informed individuals. Yeah, that is one as happen over and over. And then just one other point on all this. You know, we're just into three of these so far, but I've had so many discussions on every one of these. And just light bulb after light bulb after light bulb goes on when when people come in and get their 30 Point analysis. And we're just scratching the surface today we say
We can't cover the 30 points in one show. But gosh, it's life changing over and over people that come in and get that 30 Point analysis. And we can talk through each one of these things. And people can see things from a different perspective sometimes. Well, Brian, I'm sure based on our conversation that people do have some questions about these 12 Common Retirement mistakes that people make. And of course, you did talk about that 30 Point analysis. So I want to open the phone lines right now so that people can request their personalized 30 Point analysis. If you'd like an in depth review of your planning portfolio, call this number 833-673-7373. You can do it right now and request your 30 Point analysis. If you're concerned about current market conditions, potential tax increases again, that number 833-673-7373, right now and request your Madrona 30 Point analysis. Once again, that number is 833-673-7373. Brian, I want to continue our conversation here about the 12 common retirement mistakes that even well informed people make like our listeners out there, the next one is going to be being too conservative or being too aggressive in the market. Can you comment on that? Absolutely. So this is an interesting one. Because what do you mean being too conservative can be a retirement mistake? Isn't that the epitome of being careful and prudent? No, because there's a couple of things that are at play here. One is inflation. And another is that investments typically go up over time, it's hard to time a market, but time in the market can make all the difference. So one example I have of that is somebody that was too conservative. And she came to me and I mentioned this on the show before but I think it's important to bring this one up because real life lesson here, because you know, there's supposed to be about retirement mistakes. This might be your kids making a mistake, or if you're younger, something you want to listen to. So she said, I've been working for the city for 35 years, all my cohorts are retiring right now there are 403. B is is up to a million dollars. And I've been putting away just like them this whole time. And I'm looking at mine on I have $150,000 in i Looks like I have to work the rest of my life. What is wrong with this picture? Is that can I see your statement? Sure. And I looked at it. I said, You're in cash. She's Yeah, yeah, I'm scared of that. I've been scared the market my whole life. And I said he's, you've been in this your whole life. Yeah, yeah. I said, you while you put in $150,000 is worth $150,000. And you got no investment gains? He goes, Yeah, because the markets are terrible. I said, Well, unfortunately, you know what, I don't think I said this to her. But unfortunately, when she started work, the Dow Jones was about 1000. And now it's in the mid 30 1000s. And had she just put it in any mix of any pretty much anything that they offered, she would have had the million dollars to like her cohorts, and her life would be different. So now I'm sitting there with a 65 year old woman who has $150,000 for her entire retirement and a small security check. And I'm trying to advise, you know, it's like, wow, I don't have a time machine here. i There wasn't much I could do. Because if she was nervous about the market when she was 30. Imagine how nervous she is 65, right. So there's no putting her into anything at this point. And whatever I put her into wouldn't generate enough cash flow for her to not have to work the rest of her life. So it was a sad, sad situation. And so easily preventable. What if you have this conversation, tell this story to your kid, or if you're young, tell the story to yourself, be your older self talking to your younger self going, yeah, if you got time in the market, you'll be fine. So go ahead and put it in the market. And you know, your retirement accounts, your 401 K's, your four, three B's 457. And through savings, whatever it is put that money in the market, let it do its thing, if you have time in the market, and you'll be better off. Like I said, the Dow was 1000 2000 when I started work, and now it's 30 something 1000. And so they go up but not in a straight line. But that's okay when you have time on your side. And so being too conservative is one of the worst things. Another one on being too conservative that's especially applicable to retirees right now. Almost invariably, when I see somebody new, I look at their statements. And I say you got a lot of money in cashier, right? Yeah, yeah. How much you're earning on that? Oh, not very good. And I'm like, yeah, having cash is fine. But would you like to get you know, maybe? Well, I did this. My uncle recently I looked at his high yield savings account, and it wasn't high yield. The word said that. Yeah. When he went down to the APR, not so much. Yeah. And he was literally making $6,000 a year in interest. And I said how would you like to make 65,000 a year? He was like, Well, do I take a lot of risk? No fixed annuity. Yeah. Like what? Yeah, yeah. Easy, easy switch. You got plenty of liquidity when not to worry about that. So yeah, I mean, so underperforming cash accounts is a huge retirement mistake right now. I saw another one and she's
Like I always roll over my savings in the CDs at Wells Fargo and I keep rolling over. So I get a good interest rate and it broke my heart to see she's getting point one person well, 1/10 of 1% Oh my God. And when you go online, the banks offering, you know, I don't know, 20 times that for anybody, but their existing clients, they were just like rolling them over at this ridiculously low rate. I was looking at that going. Are you kidding me? That's as terrible. So be careful about your CDs, they're rolling over if they're not at the right rate, and we can fix that. That's something we can do. Now. You can't do that on your own another one of those you can't do this on your own. Well, why not? Brian? Why are you so special? Well, because I'm licensed. Alright. And it's just the way it is. I mean, I can access products that unlicensed people can't do it yourselfers cannot do most of the stuff we talked about on the radio. And that's why we talk about if this are easy in any way to access it, maybe I wouldn't have a job, Jeff, you know, people didn't need advice or access to products. They do need advice, any experience and they also need access to products he can't on their own. So again, we offer something you can't do on your own. So the smartest do it yourself in the world who isn't licensed can't do it we're talking about on this show. So here's another example of being too conservative can nipa in many different ways to just address everything in your portfolio, have a talk with your kids about certain things. And oh, here's another one that my favorites went on talking to your kids. It's the I keep hearing about people that don't have money put away for their retirement. And there's always something there whether it's a pack of cigarettes a day, whether which isn't often anymore, or it's the two lattes or it's the whatever, whatever. How about a sleeve tattoos, you got tattoos all over your back. That's important thing about sleeve tattoos is you don't do them every every day of your life. No, you don't. Hopefully not. Yeah, right. But it's those those daily things that we don't even pay much attention to. Right. Right, if he had been able to put that in 401k plan. I wrote that article that million dollar latte, two lattes a day from age 25 to 65, you put any 401k You'd have over a million dollars. So compounding as another thing we should teach our kids in school is compounding not some of the other stuff we're learning about. But interest. Compounding is huge investment. Compounding is huge. But yeah, being too conservative and not being disciplined that way, as funny as it sounds, being too conservative can hurt your retirement. Because even in retirement, you say, well, that's fine up till I retire. But now that I'm retired, I have to be conservative. And I've had this discussion to where a person is I gotta take it all out of the market, because now I'm retired. And so I can't take any risk. And I said, Well, how old? Are you? 62? I said, Are you going to die it next year, and I will well no, I plan on living in my 90s Ah, that sounds like 30 years, 30 years, you're telling me we need to have a a one month or a one year investment strategy for 30 year retirement that doesn't align there are parts of your investment strategy that should be designed for the zero to three years ahead. And then some for the three to five and some are the five to 10. But there's also if you plan on living a long time, a long term component to your investment portfolio, that's why we can take more risky defined is more risky stock market or real estate type investments within a conservative portfolio even because we're going to allocate a certain amount of our investment strategy to long term to match your long term goals. So that money has grown by the time you actually need it, your short term money not so much, it's going to be more on liquidity and cash flow, your long term money is going to be on growth, we're going to marry all these different objectives when we're doing our 30 Point analysis. You know, once you become a client, we can do that and access products. You can't as I mentioned, to align with your goals, and not everybody has just one goal. I mean, I have multiple goals, I have a certain goal for the next three years of my life a certain goal for the next 10 financially and a certain goal from 10 Forward, they're all different. So your investment should reflect that when you're putting together a plan. If you're just joining us, this is growing your wealth with Brian Evans and we're talking about 12 retirement mistakes that people make who are otherwise well informed. If you want to hear the show again, don't worry, we're also a podcast just go to wherever you get your podcast and search for growing your wealth with Brian Evans. You're gonna find this show and all of our past shows you can stay on top of your wealth and your journey to a successful retirement. And again, if you'd like your 30 Point Madrona analysis, no cost no obligation for that call. 833-673-7373. It's 833-673-7373 One call could make all the difference. You can also request your 30 Point analysis online at Madrona financial.com. Growing your wealth we'll be right back with even more ways to help sustain yourself and your wealth for years to come.
Tired of only getting half the story
That's why it's so important to get your financial information from a CPA and an advisor like Brian Evans. Now let's get back to some of the most comprehensive financial information around. You're listening to growing your wealth with Brian Evans. Welcome back to the show. I'm Brian Evans, CEO of Madrona, financial and CPAs. And this segment, we're going to continue our discussion of 12 Common Retirement mistakes even well informed individuals make and Brian, we left off last segment with talking about being too conservative in retirement. But there's another side of this coin too, and it's being too aggressive in retirement. Can you tell us more about that? Yeah, being too aggressive in retirement is again, aligning your goals with what you actually have. So if you have all your money in the market, or tied up in long term investments, and you're retired and you haven't really planned for cashflow, then we have a misalignment. You know, there's there's certain things that investments can do. And you got to have some cash flow to have a successful retirement. And so if you take too much risk, the way I see the risk being too aggressive often is where if somebody says, hey, this thing's gone way up, I'm gonna buy it. And so they put a whole bunch of money into crypto a year ago or whatever, and it was the wrong time. So they're trying to time the market. So that to me is being very aggressive as opposed to time in the market. Again, that's a whole different thing. But timing different things buying like that can be where I see portfolios get messed up sometimes, because often our timing is pretty backwards. People were clamoring for stock market investments in 2005 2006, because it was just going up, up up. And then I never got as many new clients ever as I did in 2007. And well, we know what happened after that. 2008. Right, right. So people for the first time, they're watching all their friends and neighbors get rich in the stock market. And they're going I need to get into this I need to get all my money into that they did and month later market crashes. I saw that 1999 Two people were just throwing money at the NASDAQ it was up nearly 100% that year and was just you know, irrational exuberance. Everybody's throwing all they're taking money from their mattress, wherever they're getting it, throwing it into the market only to see a three year crash happened with the.com 911, all of that recession, all of that they're going wow, I wish I just stayed on the sidelines. So being too aggressive is a problem, especially if you don't take care of the next point we're going to make, right so there's a happy balance between being too aggressive and being too conservative. And let's talk about that next point here. And that is failing to be diversified. And then we have to define diversification. And my story on that that I've shared before on this show is a fella that I asked him specifically, he says, I do my own investing, and I'm very diversified. And my Oh, okay, what do you diversity, and I have stocks in Dell, and Intel and Microsoft and Apple and excetera and named all the components of a computer and software. And I'm like, well, that's not what I mean, by diversified or even if you say, Well, I have a stock bond portfolio. Okay, that's diversification. 101. Any do it yourself? I can do that. Okay, that's a start. But what about other things? What about the other investment categories? Do you have adequate cash and cash equivalents for liquidity and your short term plan? I understand you have stocks and bonds? Do you have investment real estate? Do you have any safe investments like insurance company products, or lifetime cash flow from insurance company products? Do you have any alternative investments? What's your mix of those? Are you diversified within each of those? Because let's say you had a non diversified bond portfolio and you went out a year and a half ago and bought a 30 year treasury and then paid yet I don't know, 3%, whatever. And then you checked its value a year later, and you go, wow, I lost 30% on 30 year Treasury in one year, how in the world does that happen? Well, it did. You weren't diversified in your bond holdings, you should have short term intermediate and long term corporate bonds, government excetera. So there's diversification within diversification. And the diversification I'm talking about typically on the show is diversifying into asset classes you cannot buy on your own, whether that's a fixed index annuities for lifetime cash flow, or guaranteed yields or to protect against losses, the Universal Life for tax free cash flow and retirement or tax free death benefits. Could be structured notes, it could be private, non traded equity or debt REITs, private equity funds development funds, you need a Delaware statutory trust and other one you can't do on your own opportunity's own investing all that stuff. So there's a lot of stuff that a do it yourself or just cannot access on their own. So we talked about that in the show, but a truly diversified portfolio would have aspects of most of those categories I just mentioned. And I would assume most people listening going, I don't even know what half those are. And, you know, so that's one of the issues that we're able to solve when people come in and get their 30 Point analysis and we review their portfolio and make the necessary adjustments. We're resolving those things. We're looking at what's not right what's not diversifying the portfolio and getting it to the right spot.
with products that we have access to, so that our clients don't have negative consequences to the inevitable market shifts, whether it's a bond market, the stock market, the real estate market, whatever, there are market shifts that happen. And as I mentioned, now the real estate in one person, I was investing his money his whole life, and he passed away left $3 million to his kid, his kid decided not to be diversified, went out in 2007, and bought I think, 12 houses in Phoenix. And by 2008, his $3 million lifetime savings that was inherited by her was completely gone bankrupt. So diversification is important. I tried to have that conversation with her. I've really, really tried, I tried to have that conversation with the the widow that the attorney asked me to meet with who had $3 million of stock and was getting a great dividend. And she would not listen to my diversification all of our money was in one stock and not listen to it. And I was like, I can't do anything about this. And sure enough, that was that was 2007. Right also, and her washing mutual was completely worthless a year later, and she had nothing. And very often in retirement, when we do a plan, it's like, okay, the objective is not to turn 3 million into 6 million, the objective is to have enough income from this portfolio and security and so forth, so that we don't have to go back to work. We're trying to protect some of this there, there needs to be the protection aspect to a diversified portfolio. And many most portfolios, I look that don't really have a protection aspect, because you really can't do that on your own through the stock and bond market. So diversified investments very, very important and also uncorrelated, diversified investments that don't move lockstep with the market, very important. And it is part of that Madrona 30 Point analysis. By the way, if you'd like to get in on this 30 Point analysis, no cost and no obligation, that number to call, you can do it right now. 833-673-7373 833-673-7373. The next one, Brian, common retirement mistakes that even well informed people make is not understanding how to pull income in retirement. Yeah, that's a big one. Because a lot of people just rely on why have we got a bunch of money in the stock market. And I'll just pull it out of that. And as I've mentioned, the let's see retired at the start of 2022. And you put your money into long term bonds, and stocks and NASDAQ, and so forth. And then you pulled 5% out, say, and then you look at your account statement, and you go, Well, I'm down 20%, plus the five I took out and I'm down 25%, my first year out, huh, that's a quarter of my retirement I lost in the first year, I retired to 62. And I was 63. I lost a quarter of it, this ain't working. And then they pull the money out and then market recovers and they Oh, I missed the recovery on the three quarters I had remaining. Now what you know, it's not aligning again, your investments with your objectives. The objectives definitely can change when you hit retirement when you're 20 3040 years old growth is your primary objectives, your investments, when your retirement age that shifts to cashflow first, typically as security second growth. Third, you want to protect what you have, but you need money to spend. So understanding how to pull income into retirement is critical to a successful retirement. And again, it's not something that's easily done on your own as a do it yourself investor because you don't have access to the income paying products that we have access to. And that we can put in your portfolio so that you can let your long term investments ride if it's there's a down market, which invariably there is at some point, and then take your cash flow from those investments designed to produce cash flow. So that's why it's super important to do a proper plan with a licensed financial advisor who has access and experience with all the different products that you need to have that plan. And you've also got pre tax and after tax and tax free accounts, how much you pull from each account can affect your overall retirement. Next common retirement mistake that even well informed people make is not planning for RMDs or required minimum distributions. Yeah. Well, thanks for making that point. You have I didn't get into the tax aspects. Right. Right. Tax Planning here tax free tax deferred, you know, after tax pre tax, where should I be taking money from? Someone asked me that question. I don't know. But I'll figure it out. Me and my team, because I've got CPAs. Here we have tax programs we can run what if scenarios? What if you do a Roth conversion? And what if you take money out of this account versus that account? Do I take it out of my capital gains? I'm a non qualified counselor, I take it out of my qualified retirement accounts. What's my bracket? What's my projected bracket into the future? There's a lot that goes on there. It's again, don't try this at home. It's
we understand and we want to help you effectively decide not only where to put the money, but which accounts is critical, which accounts to take out and take the money out of and when in our next point is is that also not planning for required minimum distributions? So here's the issue. So some people have very large retirement accounts and they're gone. They're bemoaning the fact that age 73 years 74 Whatever it is,
They're gonna have to start taking required minimum distributions, that pale bunch of income tax. And so they're not touching these accounts until they hit those ages. And then at those ages, they go, oh, wait a second, my required minimum distribution is enormous. And it just popped me into a really high tax bracket. Yeah, that is the problem. What could have been done? Well, again, back to that point I was just making about analyzing current and future draws from the different accounts. If you know you have a great big retirement account, why wait and bunch it up, IRS would love you to bunch up income. When you bunch up income in one year, they get it at a higher rate. If you spread it out over time, they get it at a lower rate. So to me required minimum distribution planning should start early. not late. And so you can spread this out, spread it out over lower brackets, keep more money, IRS loses you win. I always like that story. Oh, yeah. Go to that movie every every week every time. Oh, yeah. IRS loses my taxpayer wins. Let me let go that show give me some popcorn. Jeff. I'm gonna Yeah, enjoy this one. I'll sign up for that every single day. Sure. Yeah. So a lot of people don't even think about this doing required minimum distribution planning before you hit that age, if you have a large qualified account. And the next one, Brian is going to be overspending in your early retirement years or not spending enough. You know, when you get in your early retirement years, hey, I'm retired. I've got this money. Boy, it is here burning a hole in my pocket. I'm gonna buy anything and everything that I possibly can. Because every day is Saturday. I spend the most money on Saturday, but it's a big mistake. overspending in your early retirement years. Yeah, I've seen this with somebody who's doing their own financial plan. And I suspect they probably did it. And they go hmm, I want to spend more than that. And maybe I'll just up my projected return on investment. Yeah, from six to 10. A way to justify have a great retirement. Yeah, yeah, that way, but that's not very realistic. And so I won't spend a lot of time on talking about overspending in retirement years. I think most people that have a decent finances have it for a couple reasons. One is they worked hard. And another is they don't overspend. Because if you overspend, you're probably not my client, because you don't have a lot of money to invest. So just how that works, but not spending enough is a problem. That's another one of those things, or what do you mean not spending enough? Then I know I'll have it. And I said, Well, yeah, but if you have a big nest egg, and you're not spending money, are you living the life you want to live, and maybe you are, maybe your lifestyle is inexpensive. My dad like to go to baseball games and buy a cheap seat and stand and watch from behind home plate stand next to the trash can there. It's spring training. And that's what he likes to do. And, you know, he had a very inexpensive life. And that was good for him. But for most of us, we want to have the ability to do what we want to do in our retirement years. And a lot of my clients, boy, I talk to him so much. We do the plans, not only to make sure we're going to be okay, but also one of the interesting things that a financial plan can tell us that we do for our clients is how much you can spend in retirement. So they might say, well, I spend 60,000 a year I say, Well, that's true, but because your investments based on my projection, you could spend 150,000 A year and you'd be okay. And they're like, what, yeah, you got 90,000 A year cushion. And so knowing that number is huge. So you mean I can take that trip and fly first class? Yes, yes, do that. And so knowing that is critical, and you just can't know that without doing a proper financial plan. We've been talking about retirement mistakes that even well informed people make our program, of course, is called Growing your wealth with Brian Evans. And we've been talking about this Madrona 30 Point analysis, Brian, in which people can come in and sit down and have a consultation and go over these 30 points. And in order for people to get that they've got to make a phone call that number and they can call it right now is 833-673-7373. You can do it right now phone lines are open 833-673-7373 And Madrona 30 Point analysis allows our advisors and our CPAs to help you make deliberate adjustments to your plan and portfolio that can help you sustain yourself and your wealth for 30 plus years now you've got to have at least $500,000 of investable assets to qualify for this 30 Point analysis. But those who do qualify will be able to enjoy this conversational analysis intended to dynamically cover a wide range of topics based on your individual your unique situation so that you can proactively adjust your financial plan and strategy to help avoid many of retirements, potential problems, and as a bonus, we're gonna send you out Brian's book seven steps to a successful retirement. So once again, that number 833-673-7373 It's 833-673-7373. And once again, you can do it right now prime back to our conversation about retirement mistakes that even well informed people make the next one is a big one, I think and that is neglecting to plan for long term care because I think a lot of people think well I'm
not going to need that. But indeed, the stat show that you're probably will Yeah, statistically more people need it than not at some point in their life. So there's three different ways to do it, you can do traditional long term care where you send in a monthly check, you can do asset based long term care which you send it a big check, but then it's there for you. And if you don't use it often that that money can go back to your heirs later on. And then self insuring you just say, Well, I'm gonna pay for it out of my own pocket. So these are things we can look at traditional long term care, the monthly one has had a lot of bad stories, companies that just didn't make it. And so that can be an issue. If we do long term care, I don't recommend that I recommend asset based if you can afford to do that. And some of my clients have enough money where they'll just self insure, but that's an analysis we can do. And back to the I was talking about people not spending enough money in retirement, why why we can do a financial plan to figure out how much you could spend another reason we do a financial plan, and here's a common retirement mistake is working too long. And because you didn't really have a financial plan, because I can't tell you how many years people have been able to retire because they've done a financial plan with us because either that taxpayer or their spouse said no, you got to keep working. What if we run out of money? We don't know. We just went on people are miserable. My job. I wish I could retire. But we're nervous about running out of money. I said, well, let's just do a plan. And what if what if you retired today? What does that look like? And I show it to him? They go You mean, we'd be fine. I was gonna work another five years, you just saved me five years of my life. Because we did this plan. Yeah. And you showed my spouse who wasn't believing I told her, I couldn't hear him or I could retire, we'd be okay. But they didn't believe me. I said, I needed to work five more years, now you're proving to us we don't have to live that kind of life. So there's another big reason. And it's something you can do on your own. If you can't convince your spouse without you know, the numbers on paper coming from your one of our licensed financial advisors. And our next retirement mistake that many people neglect to really think about is not updating your estate planning documents. This is all too common, I think, very common. So don't feel bad. If you don't have updated, just get it done, put it on your list, get it done this fall, whenever it is, just get it done, get an updated will or living trust, durable power of attorney and healthcare directive and make sure in your will, you've had a discussion hopefully with us about some of the what ifs that can happen. doubling your tax free exemption in the state of Washington for estate tax purposes or for federal tax purposes. Having the proper language, having the proper trust and Trustee verbiage in your will or living trust to protect anybody that's inheriting that money. I've had this conversation just recently, they were gonna leave it to their kids straight out, but their kid didn't have a great marriage. And we knew that basically, you're leaving half your state to his future ex wife, as well, as is that what you want? Well, no, okay, well, then we need to just put some trust verbiage in there so and have someone else's trustee etc, etc. I can go on and on. But just get your estate planning documents done well, and get a good someone alongside. Again, that's something we can help with to make sure that all the what ifs are accounted for. And Brian, I know that you have people bring in estate planning documents, wills, and so forth. And as you've said before, they're all crinkly. They're yellow, they look like the Declaration of Independence. I mean, they really haven't looked at these in years. You know, it says here, you got two kids. Well, I've got four kids, actually. And you know, they really grandkids. That's right. Yeah.
That's common. And it's because it's not fun. I mean, how fun oh, let me do some spend some money to get some documents and see what happens after I'm dead. Yeah, it's like, wow, that is not the funnest thing in the world. What if I'm incapacitated, and let's go through all those scenarios? What if I die young? And you might get remarried? Or oh, boy, that's a that's not a fun conversation. either. I get it, I get why it's not fun, but it's critical. And if you've ever been executor of an estate, you know, critical that Yeah, So how often should you take a look at those documents? I mean, it's got to be more frequently than once every 1020 years. Absolutely. It's more than that. And so it should at least be done the one time when you when we have a new client and we take them through the 30 point plan, we go through all of this stuff, these are part of that 30 Point analysis is making sure that you have your your legacy and gifting plan put together properly. So what will make sure it's recent at that time, and then going forward, you know, every few years, or anytime there's a big life change, basically, or health change or something like that, another good time to review it, but get it done now or come and get your 30 Point analysis, do the financial planning, get the investments right and then get the legacy planning right to show estate planning documents very, very important and very important to have those up to date. Our next retirement mistake that even well informed people make Brian is under estimating how long you're going to live.
Yeah, I've got some, I had one client, bringing his stuff in his mom was 108. I mean, no, no, some people don't. But, you know, financial planning is about the second to die when I'm doing it for a couple really, it's, it's for longevity. Financial Planning is easy when there's not a lot of years to plan for. But for most of my clients, we don't know, we don't know how long they're gonna live. So you know, often we're talking about a 30 year retirement or more. And so we have to plan for that. And, and investments can run out if you're pulling money out of them. And that's why sequence of return risk. If you're just putting all your money in stock and bond, you're just going to pull money out, because you're going to live to be actual, really, it says you're going to be 80 years old. And sure enough, he lived to be 95. Well, how about that last 15 years? What how was that funded, oops, there's no reviews on that you can't go back in time and fix what you didn't have. So that's where increasing lifetime cash flow type investments, different kinds of investments can be aligned again, with the idea that we might be subject to longevity. Yeah, and it's very common these days for people to live well into their 80s. I mean, even into their 90s, with improved medicine, and things are only gonna get better for that. And the worst thing that can happen is for you to be, as you said to be 90 years of age and did not have any money. So that is very, very important under estimating how long you live. But of course, this is just an estimate. Nobody knows for sure. We're talking about common mistakes here that even well informed people make the 12th one on our list here, Brian is going to be quitting your job before your retirement plan is fully funded. Yeah, the whole take this job and shove it thing that happens.
And people you know, and they go, Oh, I'll be fine. How do you know that? Where's your plan? I don't know. I just, I just didn't want to do that anymore. Okay, well, that's it's your choice. But best to have a financial plan done. As I mentioned, very often, when we do a financial plan, I'm able to give really awesome news to them, that you can retire whenever you want, you've got enough money, you got plenty of cushion, etc, etc. Once in a while I do a plan for somebody and go, Yeah, you can't retire, you got to keep working. And here's how long you got to work. And that does happen, obviously. And so it can go either way. But you know, knowing that is good to know. And that way you don't subject your 7580 year old self to very difficult life because you decided to retire three years earlier than you could and you could have had that information if you've gone through the process, or 30 Point process would have told you that and it's good information to know one way or the other, can I retire with? What's my retirement look like? Or is it too early to do that? Well, we're all human, Brian and human beings make mistakes. And we try to learn from our mistakes, and we try to correct those mistakes. I would think that really the takeaway from this conversation is there are a lot of mistakes that even well informed people can make. But if you're proactive, you probably can prevent most of these. Am I correct or not? Yeah, absolutely. It's about making as many proper decisions as you can and reducing the big mistakes, big mistakes can cost you, they can cost you for the rest of your life and cost your spouse, your kids, everything for the rest of your life. And so we're here to help try to navigate this without making that big mistake. And I think a big takeaway I'd like people to have here is no matter how much studying Google and how many books you read, you can't necessarily do this on your own, you can but you don't have access to what we have the product selection, that you have to go through licensed financial advisors to get to do this the experience level, the tax knowledge, estate planning, whatever it is the experience that we have just working with all the clients, we do our 30 Point analysis, you can try but I'm pretty sure you don't have that most part if you're doing it yourself. Or if you have another advisor. Most of our clients really have another advisor, but they're just not getting this depth of analysis. And they're listening that going wow, I don't have any of these conversations with my advisor. Maybe it's time to think about shifting gears pivoting from where we're at to something much more inclusive so we can have a successful retirement. Brian, we've covered a lot on today's show. Can you recap for us for those people who have just joined us some of these common retirement mistakes? Yeah, today's show is 12 Common Retirement mistakes even well informed individuals make the first one we talked about was claiming Social Security too early, or just not doing a proper analysis of that. There's a lot that goes into that decision. And you can make big mistakes by taking it and going back to work continuing to work after claiming Social Security early again, you gotta pay it back and you don't get the raises going forward, carrying debt into retirement or paying debt off when you retire. Having the right kind of debt. There's good debt and bad debt. We talked about that. Being too conservative or too aggressive in the market. And being too conservative, something I see quite often because people lose opportunity when they actually had time and didn't align their investments to their objectives. Failing to be absolutely diverse.
versified in the way we define diversification, not understanding how to pull income in retirement, again, not aligning your investments to your cash flow needs, not planning for required minimum distributions early enough. Don't let it just sneak up on you and have put you in a higher bracket all at once. overspending in your early retirement years are not spending enough, that actually can be a problem. Neglecting the plan for your long term care is one of our points, not updating your estate planning documents under estimating how long you will live, and finally quitting your job before your financial plan is funded. So those are our 12 Common Retirement mistakes we went over today and are inclusive within our 30 Point analysis. And Brian, if people would like to have their 30 points analysis, once again, the phone lines are open right now for you to call 833-673-7373 to get that Madrona 30 Point analysis, no cost and no obligation for that. Once again, that number is 833-673-7373. You can also request your Madrona 30 Point analysis online by going to Madrona financial.com. That is Madrona financial.com. And once again, if you've missed any part of the show today, or you want to hear it all over again, we're a podcast. Go to wherever you get your podcast, you're gonna see this show, along with all the others simply search for growing your wealth. Brian Evans, we got a lot of shows up there. I think there are north of 400 shows on our podcast platform. Well, Brian, unfortunately, we're out of time for this week. I want to thank you for your time. But of course, most of all, I thank our wonderful, great listeners here in the Puget Sound for joining us for Brian Evans. I'm Jeff shade. Have a great weekend. We'll talk again next week with another edition of growing your wealth. No statements made during the growing your wealth show should constitute tax legal or accounting advice you should consult your own legal or tax professional on your individual information. Brian Evans and Madrona Financial Services is licensed to offer investment advisory services through Madrona Financial Services LLC an SEC registered investment advisor insurance products are offered through Madrona Insurance Services LLC, a licensed insurance agency and an affiliate of Madrona financial services. Past performance is not a guarantee of future results. Investors cannot invest directly into indexes. No investment strategy, including asset allocation and diversification guarantees a profit or guarantees the avoidance of loss. Financial Planning is an important tool that does not guarantee specific outcomes. Pst investments are only available to accredited investors and offered solely through the issuers offering document the DSG sponsor determines whether to accept any individual subscription documents. Madrona financial and CPAs is a registered trade name used singly and collectively for the affiliated entities Madrona Financial Services LLC Madrona and Bauer Evans APC Bauer Evans investment advisory services are provided through Madrona CPA services are provided through Bauer evidence