Stuffing Your Retirement Stocking

Will welcome to another edition of Mr. Stillman's opus.

The podcasts that helps you learn all about some of the ins and outs of financial and retirement planning on water, storable your guest host today alongside the one and only John Stillman. I don't know if you're a guest host immune if there is a host it's going to be you. Unless you're just not here. If I'm interviewing somebody I guess on the guest host.

I know how that works.

Once what's the actual sometimes raw order of X that's true, but he would be a guest host with the natural order of things. Me interviewing somebody. Are you interviewing me. I guess me interviewing you.

It's about 50-50 down and so that if I'm interviewing somebody else I'm a guest host and their guest just surviving. I'm the main house in the main host then we need to renegotiate my contract will talk about that next year if I'm not a filling host. Our guest house, then I think I command a higher market price.

So I said we'll talk about it next year. I don't leave the 2017 next year I'll your year after that.

Marty mentally and messily as he 2017. So let's unfortunately unfortunate that you're already mentally in the 2017 because we were going to talk about Christmas today, but we can still do that well all right will will let it let it pass will allow it will be talking on the podcasts today about what's in your retirement, stocking or what you would like to have in your retirement stocking how we doing this you're going to play Santa Claus, John, and you're gonna go around putting important things in people's retirement stockings death lab my my list of things that I would like for everybody to have in their stocking. That way you'll play the role of Santa but I'll be the elf today and I suppose I love stockings probably my favorite part of Christmas growing up really doing stockings. What did your parents put lesser quality things in there and then your bigger presence or raptor how I'll deposit structured. I just like the fun of seeing the stocking and mostly it was to see how low it was hanging that year and it's pretty embarrassing to look at what I was an only child and my parents love doing stockings was always one of their favorite parts are tradition. My grandmother hand knits stocking whenever a new family member comes along.

So mind to one connate when Connie Manning inserts common things up when Connie joined. She got undated one else when I was born in 1987. I guess my grandmother really put some extra stretching us into my stocking and that now over the years being only child. It has really got a nice workout. That thing is incredibly stretched out so I'm always making out like a bandit around the around Christmas time because it looks really sad if you don't fill it up if it's just a slick stretchy thing with little ball at the bottom. She got really packed that thing full.

That was some kind of law back in the 50s and 60s, and every body that was going to be a grandmother had to learn how to make a stocking like that out of stocking or I guess it's knitting is that what is it any better say because my grandmother Mott Armstrong made the stockings that the and mom and dad had grown up, and then she died in the mid-80s and so that I think mom's cousin maybe took over okay and she became the stocking maker will then now Molly's aunt also does stockings like that so that when Lily and Amos were born. They both got a stocking from it. So the figure we have a cool little tradition in our family where when you're very young.

Some random things we put in your stocking and you always leave it in there for year after year after year. So when my dad was the kids were going on like 50 years now. There were totally like little ants point ants that someone sprinkled all in his stocking so that we were talking like you know many many tiny little ants.

Every year when he opens a stocking just down the bottom to grab he's able to grab another still like probably 10 or 11 in there and he pulls a couple of the mountain laughs about it sticks a backend so there's very little ants.

Mine is a little sword. I have the little egg. The significance of that would be of course because your dad's a bug man that now it now is in pest control.

You got a funny Soviets came before he was in yesterday and then they said it inspired him to hear that it compresses, said this should mean I'm gonna be a pirate when I'm all grown up. I have a little sword that was a little figurine you know like you know like probably like an Army man, but it was little sword that must've broken off from the little guy in the stockings of this little sword is always the bottom of my stocking. That's that's my little nugget. That's weird all do some great stuff with stockings. I love it I love just everyone taking turns pulling stuff out what you get what you get joy seven orange and the total net.

I was always my mom's thing she always had an orange way and you call us for our swords and ants you have an orange and I mean you can eat an orange what are you doing a plastic sword at age 20, whatever you are that fresh. That fresh fruit in the stocking. Always a real real winner for Oaks school. I will. Those are some of the was the coolest thing you ever got in a stocking air hockey table was stocking wasn't actually in the stocking but at the bottom of the orange mom had taped like the first clue in a treasure hunt, which eventually led me to the basement okay and there was minor hockey table nice treasure hunts is another thing that I think we we grew up on defined presence or unit of that kind of stuff really and Amos. Yeah, probably the fun. I mean, it's a nice little lives correlated with Christmas. It's a crazy way to wrap a big present you just set the big present up wherever in the wrap the thing that leads into it. That's a good point. Well, let's talk about the retirement stockings that all of the people listening to the podcast today. Picture your retirement stocking hanging on the mantle. John Stillman is going to tell you some things to put in your retirement, stocking, or that he wishes he could provide for you. What are what are some of the things done well so the first thing that I would like for you to be able to reach down in there and pull out as it relates to your retirement is predictable income and Wilbur talk about predictable income, we mean well it's exactly what it sounds like income that isn't subject to the whims of the stock market right so what are all the things that fit that category. Social Security obviously at the very least you're going to have that as some predictable income. Those of the candy canes of the retirement world are always kind hanging on the top of the stocking. Easy to get around a long time you know they're not the most exciting but you know that there so Social Security pension for a lot of people would fit this category annuity income predictable guaranteed rental income.

I would place in this category because while it's true that you can't guarantee that the house is going to be rented every month you can assume it off fairly predictable amount of income. Year to year coming from your rental properties. If you have any if you're working you made your retirement. You still working in some form or fashion like you retired from the RTP company and you working at the golf shop or you're a starter on the golf course work at Home Depot were the quilt shop. Whatever it is you know that's income that's predictable because it's not related to the market were not worried about dividends or interest or anything like that. So if you have that in place. If you have the predictable income in place so many other aspects of the retirement plan take care of themselves and Sets that make sense to in this analogy of your retirement stocking because as long as some of those staples are there every year you're in good shape. You're going to have a good Christmas morning. Even if your kid and there's not much else to come after that. Like you can feel pretty satisfied with some of those important things you pulled out off the top of the stack right so you know for Christmas. Sometimes you get stuff that you you really need. Sometimes you get stuff that want this would be in the stuff that you really need category like you are saying if you got nothing else but you have that in place to be all right for a good Christmas like the year I got bottled water and batteries in my stocking.

You was a fun year batteries are good things you need right right. I actually bottled water, it was boss water is still water the batteries out take precise life, unwritten mom and dad on the next thing I would reach in there and pull out would be tax efficiency so very often overlooked. In some ways retirement plan. They just haven't done any really proactive plenty annual why would you expect them to the first retirement you've ever planned probably not something that's going to be in your wheelhouse but you need to be thinking about the tax implications of all of your savings. So as an example, let's say you have three different accounts one of them is tax-deferred so like your IRA or 401(k) 450 743B, whatever young pay taxes on any that money it's all going to be taxable and you take it out. You also have a taxable account where you being taxed basically on capital gains tax. As you go if you will sell all of your after-tax money in a brokerage account that's your taxable account and then the tax free account would be Roth IRA primarily municipal bonds technically would fit this but that many people have muni bonds or if you're borrowing from the cash value of life insurance policy that's your tax free bucket so three different classifications in terms of the tax treatment of different types of accounts always will be sure that were not taking all in one year from one and then all in another year from the other. We want to. In most cases have some of each.

In each year to kinda spread out the tax advantages and disadvantages of each account.

Over the course of many years. The one exception to that would be if you're very early in retirement and it's a situation where we play some games with something called provisional income. Provisional income determines how your Social Security is going to be taxed won't get into all the details, but long story short, if we have enough tax-free income that your Social Security is not taxable what we can actually get you pretty darn close to a 0% tax bracket, but this can be very few and far between in terms of that the cases that that actually works for them.

So it's not the most exciting part of our stocking. I guess that were getting into their but it comes with a little bit of a pleasant surprise and it maybe that's the gag gift that makes up a great stocking there's always going to the finish go I don't want to eat chocolate covered roaches, but you know you then you still glad that you got it still made it fun. Still nice to have you know a gift on hand. Here's a better example. So it says nobody had submitted what I say you opened a present that was pretty cool. You liked it. It needs batteries though well when you get to your stocking that had the bottle water to the batteries in it. Maybe the last thing in the stocking is the batteries you forgotten about the fact that you got a toy that needed batteries and so you're excited about all what the last thing we must ask why they gave a batteries going out this other thing great bullet out of his batteries and it's not that exciting, but you know you need that's happened many times before we go get a little something in the stocking and then you I want to know why got this and then you open present later that it relates to right that this is sometimes it's not batteries late in the plan. Alexander English they gave you the presents for it was to be a little clue just a school art. What else is in stocking Silas reached down and there now and pull out a real financial advisor who and when I say real advisor, I mean somebody who is an advisor, not a salesperson I a have an enormous amount of frustration with people who come in and tell me what their advisor has told them or in a lot of cases what their advisor has not told because they say they've had an advisor that they worked with in the past. Okay well what has he said about this Moses opinion on this. We have really talked about R12. What what'd he say about this particular area over here that we have really talked about then it becomes very clear that this is not somebody they meet with on a regular basis. This is not somebody's actually doing any advising or planning.

It's purely you know they sold them a mutual fund or a life insurance policy or annuity three or four years ago and you know if they have a question they might call up and ask his opinion but it's not like there's actually any advice happening. There is only job is to hope that he can find something else to sell them down. I mean, people try to call themselves advisors who spent the weekend studying and then took their insurance exam and now they are calling themselves a financial advisor happens happens. Many such a broad term and I don't do so. We have a problem with people were where that's what they do right. I just wish there was a better understanding by the average person out there in terms of what are you getting and what should you be getting from somebody that you're calling an advisor. If you say look this guy over here is going to be my life insurance guy any life insurance or annuity stuff that I do her long-term care insurance that I'm going to appease my insurance got all great fun as long as you recognize them as that. Or if you say look, I've got stockbroker and I love trading from time to time and you know I understand how the model works and I realize he's going to be able to tell me what I should do in terms of how to handle my Social Security or the spousal benefit on my pension but I want to use them as my stockbroker find the problem is people draw those lines and they assume that people are very small niche that they actually handle can be depended on for broader advice and that's not the case is pretty cool.

Hard to fit a financial advisor into a stock. While this is a situation where we would use the treasure hunt.

Okay so you draw the first clue out and in three for clues.

Later, there is my financial just so that the note of the date the advice you seek is under morocco would lead you to the. The old spinning globe down in the basement there was an exclusive interesting that's what it would be is going to with the price of tea in China.

This is very is very high, very mysterious guy. Anything else in the stocking last thing would be the holiday season, not peace on earth, so that would be nice. Joy to the world. Also nice hard to achieve with a financial plan but peace of mind okay and so a lot of this stems from two things, one having enough of some of the stuff we talked about earlier like predictable income and knowing where the paychecks are going to come from and also just an understanding of what the many different pieces are in your financial puzzle and what they're supposed to be doing for you.

So often we have people who it's like they just have this big pile of money, and it seems like enough. I got $1.5 million and I'm retiring at 67. You know I want to live on about $10,000 a month and I sure hope that's enough well if you don't actually have a plan in place.

If you haven't structured your income in such a way to see where the paychecks are going to come from and how your money needs to be invested in order to get that for you. You never have peace of mind. You can't ever spend with confidence because something in the back your mind is saying that you know maybe you need to back off a little bit you might run out of money down the road.

What happens if you own the nursing home. If you haven't very specifically and intentionally plan for those things you never can have peace of mind. Pretty cool, unless you're just oblivious and you're actually in a dangerous situation, and you don't know or don't care which. That's not good. These are the gift cards in the stocking that really increase that value of the stocking because I know every year of my uncles going to splurge and he shouldn't but is going to splurge and there's gonna be $100 lands and gift card in my stocking and eyelids in gift card and I know I'm going to get new shirt you read about ISAs and Reuters suitcase for yourself that has your initials in it like that good shirts are likely insurance side really know Lindsay will still think my mom is all the time, violins and stuff and I love you. Good sweaters and in really good shirts. I like him every basketball season rolled around January of got a new shirt I can wear the rest of the year self gift card always a winning ticket scoops. Let's within the retirement stocking and that's that's frequent a lot of stuff to fit into a stock you really need the big grandpa stocking a grandpa gets the real big one that you just shovel a bunch of good stuff is he said many years of the stocking getting stretched out exactly what has especially needed.

Very cool.

Anything else you want to have any final nuggets very Christmasy ants in the bottom of pleasant boxing day to all, happy Kwanzaa awesome buffet for joining us on another edition of Mr. Stillman's opus. Happy holidays and all that good stuff to you and happy new year. More podcasts coming up the 20 17th, yet we won't be back until 2017 but I will talk to you for joining us