401(k)/IRA: Wake up call!

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Now let's get started with finishing well today on finishing well 401(k)/IRA wake-up call and I'm sure that you might've had a wicked comfort to God with my heart honestly as I was studying his word this weekend and it specifically because this is where he took me to the whole idea of waking up and interestingly the first place that I found that was in Deuteronomy 3211 and that's where it says is in the Eagle stirs up its nest and hovers it swing over its young. He spreads his wings and catches him. Listen up on his opinions.

So you ever thought about it but at some point in time, those baby eagles eat a lot of food for them to go and become in him mature eagles and so the Eagle has a very interesting thing apparently God knows this because he put it in Deuteronomy. There, that when it rustles up its nested literally makes it very very uncomfortable to sit in the nest anymore. They they put stickers in the air they move branches in the places where you know the chicks can no longer just sit back and rest. The thing about get real anxious and that they don't do what they need to do that up to snatch him up and taken for low fly and just here you go, but is no but they will catch him in their opinions if they would begin the fall, but you know we are kind of experiencing this right now and so many different ways.

You know that God's trying to show me that for a lot of folks they're looking at their account balances on their 401(k) or IRA's and their like what is happened yet word or not, looking at him to think and they should be as one client called me this week and she's not actually a client and she was just distraught and she's asking me what to do in your life. I listen to her and I really felt for her and I prayed for her and which is not client and she never came in. Did the staff that we were telling her to do here suggesting to her to do and I don't think she even liked it when we were given her a sample of it on the front end. She's she's actually listener the show so she wouldn't even look at it she she she she hadn't looked at it, so she didn't even note his eyes after a while in the conversation. I started asking her numbers and I was real clear. I didn't want her to just go sell it.

She presented this binary decision to me like should I keep it or should I sell and just & keep it just work without completely given her recommendation and I explained her little bit why religious there's just a lot of fear running around and I'm I'm I'm with you is is is it's a wake-up call and this lady is probably 65 years old still working but I thought what we do today is talk a little bit about really what stage in life and when you're going to need this money.

So if you're 30 or 40 years old, I mean up six assure you don't like your balance going down but if you think about this for a minute, you're already having a paycheck, probably since the big market down.

So your buying stocks at cheap prices is just and you'll keep buying them as long as the market stamp so people that have a lot of years to retirement. This is a little bit disheartening but it's you know it's a wake-up call, in the sense that it's just I need to start paying attention to this and paying attention to how this is invested and so what I would suggest for you. If you have a lot of years to retirement is involved in this look where you're invested, how much risk you have been there and make sure that it's what you wanted to be and I'll be glad to help you out with it. The other financial professional.

That is one of the bad things about 401(k)s is they cannot just leave it to the employee to to make you make your decisions and a lot of didn't put too much research and perhaps you didn't put a lot of research into that serve the younger people. It's a wake-up call, but it's also giving you using dollar cost averaging, which is by your stock at all different prices, as you put it in every paycheck. This gives you an opportunity to buy were stocks on sale for its eventually getting a backup and is just a question of whether to bottom yet then we need you know we start talking about people that are 50. Now it gets a little bit different.

You probably have a bigger balance early than you did when you were 40 is you've added to it for 10 years and then it's also the last 11 years of just been the longest running bull market ever so if you heavily invested in stocks.

You've you got a big balance and you really had counted out on your balance sheet and then all of a sudden you watch that disappear in a day or over several days in perhaps don't completely understand it, talk a little bit about why I think this happened beyond the coronavirus summit is 50 you really need to take a look at your investment allocations and you know my thinking is as if you're planning on retiring when you're like 65. We still have 15 years so you shouldn't panic you you you got a lot of time to make up ground yesterday to be adding for a number of years.

Even if you're gonna retire at 60 from this job is to get some time, but if you're one of these people to just check some boxes on your 401(k) and you really haven't looked at it, other than the balance. This of this can be a good time to really do some research and I would be fine. I would be glad to help you with that info.

If you know if you want to give me a call. Now let's talk about people that are 60 6570 somewhere in the 60s and you're right at retired you're either retired already. This money may already be over in an IRA or not.

It could be sitting at the 401(k). This is really a wake-up call is you probably been counting on that money for something in you, knowing them just to live on when you're in retirement and you've been counting all that you been watching it go up. Have you been paying a lot of attention to what it's invested in, because if you if you have an IRA or you have a 401(k) you got out huge range of investment options inside of their and if you're not real familiar with how it's all allocated and when you get a unit if you don't have a financial plan tied to this. This would be a good time to do Because a lot of us in a week and we had three boxes to check it out risky riskier than that's a risky and conservative kind of thing in like an owl with our partner now that he's like ma'am I things going up and up like to do what you do so in a week made those decisions based on not a lot of planning, but that went on we we saw on her coworkers and in what they had going in and we found out what risky risk is in the age that you discovering risky it is.

It's amazing to me how much people with 401(k)s that haven't done a lot of research on much of the fill attribute to the actual fund companies. It's behind the money.

That's all I got all my and Templeton funds in their good they've been going up and you know and they're just so what.

Whatever you do keep me in those Templeton funds when you know words is some other one, or Vanguard or whomever and I mean they all pretty much do about the same, especially if they're investing in the same sector.

Yet it it just speaks to me of the lack of information about that and when I get some of these folks that that are really worm were digging down doing this work. I almost started to hear a little bit of entitlement to a return that you know investing in stocks is like is like live made money for 11 years and they can't put a number on it, but it's just been up up up. They kinda remember 2008. Oh yeah, we lost money, but we hung in there. He now it is so yeah you are also 11 years younger than okay that much further away from retirement, so this is this is just a big wake-up call in the message here that I want to get across is it's time to really learn like what it is your own. What will you invested in this couple.

We talked about before the show actually bigger wake-up calls that would be more significant like wow I don't really know who my beneficiary was when I originally took this IRA that's like this.

If you look in your IRA that would be like number one on the list like where's Echo even if you do think you know he probably wouldn't be a bad idea if you haven't looked at in years to just check it and I think I made the point of the show earlier. Thanks for bringing that up that I mean we were getting ready for the show is this is a wake-up call but it would be more threatening. If somebody told you or is the market soldier something your beneficiary is not who you think it perhaps you had a second child.

Since then war, perhaps you got married and he did make the change. Perhaps you got divorced and you have made the change that my father had a life insurance policy not to the got beneficiaries on my raisin for life insurance policy that he had designated to a trust 25 years ago that had long since become something else and it was it was a lot of work and a lot of expense to unwind all that Bennett was just a matter of you know, he set it up 25 here 30 years when there was some you can unwind mean if you you've got, like you put your brother down because you started before you were married, and then you've never changed it to your spouse and then you had kids and you die suddenly your brothers going to get a check know whether he gives that to turn that over to your spouse or whatever and he's As taxes on two if it's a traditional IRA or traditional 401(k) so some to think about is is it will work.

This can be a wake-up call will a look in and learn about our investments and learn specifically what were and what our options are. Let's take a look at the beneficiaries well and so there's more. This is a few more calls that we gotta do what we got a total break so we want to remind you that the shows being brought to by Cardinals die.com. If you go to Cardinal guy.com you can get Hans's book the complete cardinal guide to planning for and living in retirement by simply ordering it there or you can email Hans and send it to you or get Windows 7 were established that they were talking about IRAs and in 401(k). So we come back on my goodness. We have some more of those like wake-up calls that I think we all need to heed if it were looking at what God may be shown us and again the ultimate wake-up call on his you know we got have time we can have Jesus no matter what happens to be good if we had been wearing his beneficiary is one thing is Hans and I would love to take our show on the road to your church and Sunday school Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to Cardinal guy.com and contact Tom to schedule a live recording of finishing well at your church Christian or civic group.

Contact Tom to Cardinal guy.com that's cardinal guide.com welcome back to finishing well with certified financial planner Hans Schild today show is 401(k)/IRA wake-up call and is where discovering is not just a wake-up call to where you have invested there's other little bombshell that might be waiting inside those funds that that that it's a good time to take a look at since clearly you know something's been brought to our attention. Yeah, any meat, so, so, what are the areas of concern. Obviously, the amount that it's worth the investment return or lack thereof, or the negative return is the number one thing in people's but let people check their IRAs or their 401(k)s regularly and we need to do. You can just go online. Once people do that they're going to check and balance and that could be all their checking and my suggestions to you is get yourself some education on that.

A lot of it's right there at the same website. You can also do that risk profile analysis. Click on goal maker.

Some places but insisted it's a program that will walk you through and show you how to allocate your investments based upon your personal preferences.

Some questions are Nancy and we had just spoken about beneficiaries.

I can't tell you the number of wrong beneficiary cases we deal with either finding him after somebody died were were dealing with the beneficiaries and finding out things work, thought, or with better than that is refining them when were requiring the people that are new clients to bring these things in and inquire about that were finding a lot of the stuff you know just wrong beneficiary or wrong succession of beneficiaries are deceased people so we brought that up and really the next area of wake-up call that it's too late when it happens to you is the amount of income taxes that you're going to have to pay on this balance in the IRA it's it's like you gotta a partner. That's a part owner of your IRA and is called Uncle Sam mean in any really comes at its worst from drawing a big hunk of it out all at once. I mean I'm just hoping and praying that we don't have a lot of people that now they lost a big mount and then make that right. The other situations they might find themselves laid off and say this so they lost a big amount. Then they get laid off from their job and then they make a withdrawal from the smaller balance and it's a big hunk of a withdrawal and then the gotta pay taxes and if there hundred 59 1/2. The gotta pay penalties and so we gotta look for me. I'm not can fault anybody is it that your only source of money and you know you got a live and you can you know this thing is an extended thing.

I'm not can say don't do that, but it's just that's kinda one of those hidden wake-up calls is what the tax liabilities are for drawn out a hunk of money out of and you asked somebody or get some information because you have an option when you take that money to set some of it aside from Uncle Sam does come to call absolutely and so if you're thinking it's only the regular tax rate and you're not figuring in the penalties you can really hurt yourself. Well, yeah, and it's just of a hunk of money creates a big tax and you gotta pull out the taxes well. So if you were a pull 50 grand out of their mean. Then you withhold the tax and that's going to need to be 20%. You know, and penalties and penalties and you know you you you start putting that in their services. So then you're only gonna get about 30 some grand and just need it.

You need but you know just understand that that that that that that that's really depleting your retirement savings. But anyhow the point that we want to make.

We don't want to get down in the specifics about 401(k) loan so much as we want to just talk about the tax liabilities. It's just laying there in your 401(k) and that speaks to what the whole thing what what is there money sitting at what why are you accumulating money in there in that are in IRA and the answer that question is for retirement and for retirement income so used to have pensions years ago when those pretty much gone unless you work for the government, or a huge company that still has those and they were replaced with a defined contribution accounts. Are you sure you're in charge of this money is just and you can accumulate as much and as well as you can invest in as well as you can save and company matches and then then you also have the problem that when you retire. You gotta create an income from this isn't just a simple as calling them up and say I want this much money is if you come to me for that.

I'm in a be left with the burden of making that money last for your whole lifetime and we don't how long you can live so we can only estimate things, but it just what I want to get people clear on his when you do start drawing this money out. It's probably going to be at retirement know that's when we want that and then you do not owe taxes on if you don't do this in a smart way you do a lot of taxes so there's a smart way. And then there's the pay high taxes way and if you just leave higher if you just leave it there like a lot of people do to accumulate until you die and then it goes to your heirs or your kids or your spouse or whomever, then you just postpone the tax from and I can tell you this right now. When your kids inherit that money even though there are some tax strategies they can use their don't want the money and so they got, you know all half of that's getting it wiped out. Income taxes are 40% owner because if they take a big lump and headed to their income and have high tax rates.

So you know there's a lot more to worry about than the balance going up and down in the investment, although that's the worry it's on everybody's mind that's what were going to deal with.

I just wanted to point out some of these other things that potentially are even more important. I there wake-up call to fight now and take a look at some. I looked at a while and now me let me think about that and then you know lower on that subject in the week. Remiss we didn't mention wrong yeah you time, but your uncle Ron for now all Rockville more you remember him. Yeah Roth the Roth is a type of IRA named after a guy I don't remember his first name was put he was a congressman sponsored the bill and it was back in 1997.

So Roth IRAs and Roth 401(k)'s are 23 years old and all Roth simply means is you've Artie paid taxes on the contributions so you don't have to pay tax on money coming out of Roth and you don't ever pay tax on the gains. So with a traditional IRA or 401(k) you still owe income tax and any money you pull out of their your partner Uncle Sam is going to get a piece of that and that's what I make my business of trying to minimize that, but it's still there. You have pay taxes. If you have a Roth and you can do such things called a Roth conversion.

So this is probably the worst time in the world to be talking about that hemodialysis went down, you know a lot and now I'm sitting here and now you're telling me to start paying taxes on some of the money to move it over to Arras. I will have to pay taxes later. I think I'm done with you, but really makes that's what I'm doing personally is is and I've been doing it for years as I want when I get to be 70. I want my IRA money that's left of most of the to be over on the raw side meeting and have all the taxes take care of while I'm working and I'm going to have a tax-free retirement at end of those those people right now who are in their 30s, 40s, 50s that can change their 401(k) right out of a Roth and and really protect their future tax wise you know making that decision right. I have several listeners to the show veteran exactly that since it was most them in their 50s, some in the 40s that they had the first meeting with us were still deciding whether we can work together, but I give away a lot of free advice during that his first meetings. I'm glad to do it and I have several of them that have gone back after that meeting and went on the computer and discovered their Roth IRA and change their allocations that day so that you know where they were put in 10% of their income into the traditional ensure they were getting.

They were saving on taxes they thought they were just postponing taxes and so they change their allocation to 10%. Ross little gay tax deductions that affected their net check, but now there accumulating account and then I have one of them. I know for sure is come back to us and hired us to put a Roth conversion plan together that he keys want to move money that he has in IRAs and 401(k)s. All because he's in his mid-50s, so the both and he's retired. He's doing the same thing I'm doing right so the actual wake-up call that a lot of people are experiencing is watching that thing decline and what what's the strategy that you would recommend for them. What I would say is don't make rash decisions.

We don't don't just go in and do something you're gonna regret later. My suggestion is that you consult another financial professional and just have a look at that taxes it did the idea of you know that God is stirred up our nest a little bit Nice but if you disburse it in our situation and you know ultimately he wants our attention to to put our faith and trust in and out and in Madden, and his atonement for us, but you know on the practical side right were looking to take care of our families and secure futures and finish well. And so you know, by the way we do that here is through Cardinal guy.com where we have no car conscious complete book in the workbook. The complete Cardinal guide to planning for living in retirement. It's got all sorts of charts and stories and in simple ways to learn this stuff so that that you feel like you have some sense of what you're talking about. Even when you're talking about financial professional but that that you have and I can't tell you how much you tell me to sit in on the show, which obviously can get the podcasts that you can listen to back podcasts you can you eat there all in the bank on the podcast apps so you know, believe me. I'm is troubled by all the stuff is all of you are and you know I'm just praying that your Wii fit. We had a bottom and also that we need some patients here that it may not retreat as quickly as it went down and ate a take a while for investors to have confidence that were to be back where we were in better by the fall of the year.

Thank you for listening. I think we hope you enjoyed finishing well brought you by Cardinal guy.com visit Cardinal guy.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows when you get Hahn's book go to Cardinal guy.com if you have a question, comment or suggestion for future shows.

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