2021 EP0116 Planning Matters Radio - YOUR MONEY

Planning matters radio and welcome into the program. This is Rich on planning planning matters radio. I am Peter Rochon, founder and CEO of Rochon Manning and on this program work going to talk about your money your intentions with your money, your planning with your money, your desire, your hopes and dreams with your money and how to plan effectively in this crazy financial world in order to work the plan and achieve your goals and today were just going to be talking with a few folks about their money and their financial situation and see what kind of challenges every day people are facing in how we can maybe strategize and plan to better handle our money with me for this first part of the program is generally Carter and she works in the office at Rochon planning so generally you hear a lot of conversations about money and in financial planning and retirement planning out a Peter yet you do and you I think are pretty astute. You got a good handle on your own finances you see seem to be the one in the household.

That's kind of you got the responsibility of the burden of handling the finances for your household current and that seems to be the case for most households these days.

One person wants to handle it in one person, as I know anything about it yet. Absolutely I would say that is a a big theme in in families in the family dynamic between spouses and households, there's always the yen and Yang right is not just money. It's it's kind of balance and everything and we tend to somehow end up with people who are not the same as us in many ways.

So in your household. You're the one is tracking every penny pension every every penny you can stretch in every dollar and paying attention to where it goes. Correct yet yet I remember one time my mom wrote a check for my son for his birthday, and I sort of lost the check and misplaced it. He didn't have a bank account at the time and she had written his name on it so he couldn't go and deposited about three months later she showed up and she said hey by the way, you have not cash that check that I wrote for Braxton's birthday yet and by this point and I had sort of forgotten about it. It was still tucked inside of his birthday card but she paid attention to her money that much to know that check had not come out of her account yet and sort of strike me as the type of pain attention to your money like that is actually a pet peeve. I guess you'd say of mine. I do not like to write checks for that very reason, people tend to hold on them and not cash them and then of course you forget about it and if you're not paying attention to every time someone cashed the check or money comes in your bank account. You might miss it and you might miss budget for that week for that month or even two or three months down the road with my desire so I found this check when the go cash it will now your budget stone for that right right you you have accounted for that month you had, for several months back. Okay. And then it it it it when missing or didn't get cash and all of a sudden it's upsetting. I I get that a lot and you know II think that that is one of the reasons why. While online banking in this digital world with plastic instead of paper took to make transactions is very convenient but at the same time, we've lost a little bit of that accounting you know we people used to balance their check books every month and understand where their money was and how much they were spending and pulling cash out of your wallet seems to be a little bit more painful than swiping a card, you tend to think about it a little bit more. Yeah, I think you're absolutely correct and you know, it's also important, though, for more than just one person in the household to understand your budget. You say that with frustration. Your voice law firm for twofold layer you you have a situation to where you know you have met. Probably one person that is carefree and doesn't matter what they spanned or where they spend it and are really not paying attention as other not really concerned about and then you have the other person on the other hand was watching it daily. Go in and out and they might panic just slightly every time their spouse runs that card not knowing what is even in the bank account but then on the other hand, you know what happens when one of you unfortunately passes away. That's another big reason so you know unfortunately if something were to happen to me. My husband's gonna be lost for short period time because even though I discussed this topic with him.

He does not care to sit down and find out what bills are where where they need to go. His theory is when it gets cut all now know I need to pay it yeah yeah I have seen this in my career. Literally countless times I can't remember the number of times where an individual's come in whose spouse has recently passed away and that spouse was the one who handled the finances in the household and sometimes they come in with their children and their children like mom doesn't know what to do and she doesn't know where the accounts are in. She doesn't know how to pay the bills so this is the paperwork I've been able to gather up, where do we go from here and there was no strategic plan. There was no conversation ahead of time and it it can be overwhelming. Hey you're already in the situation that emotionally you're probably overwhelmed and and then be, there is not a concrete guy that most people have now there are guys that exist and I have helped people put together this guide for for their individual situation. But what to do financially when a spouse passes away is a step-by-step comprehensive guide and I have been planning for some Valentine's Day events in looking at protecting your spouse to the greatest extent possible. In looking at protecting your family and your loved ones ultimate act of love and caring and compassion would be to provide them some amount of protection part of that is laying things out, letting them know where things are, but shall be receptive to that to the other side. You gotta be willing to to have those conversations and so we don't want to leave our spouse lost their number of things I think in in our modern society where the accounts are passwords online, but where the bills are where the bank accounts and retirement accounts and investment accounts are all those things need to be discussed along with having obviously those legal documents in place so current Peter and and also another aspect of that is nowadays it seems as though I guess I was a younger generation. I am still in part of that.

But a lot of it will keep their bank account separate nowadays. They don't have a household checking account or adding a household saving account and so this person pays you three of the bills and this person pays for the bills. But that also leaves the same thing. You know that that person who is paying for those bills goes away. You don't have that account in her name Regularly have access to that. So a lot of that you know in your legal documents make sure that you include that somewhere in there that person has access email payment upon death on your bank account. We know that another topic on Air Force's life insurance yeah well you you mentioned that the payable on death, the POD or TOD that is essentially a beneficiary designation on your bank account so making sure that somebody can show up and transfer that money. The person that you intend can can get a hold and get access to that money and then your beneficiary designations on your life insurance on your retirement and investment accounts and those legal documents in place and and having the appropriate amount of life insurance and we see it a lot younger folks in particular they have children at home.

They got a mortgage. They got income they need to replace and they don't have the appropriate amount of life insurance or any life insurance at all. And during the on the the oncoming of coded there was a rush of people who went out to secure life insurance and it was actually pretty difficult at that time to get that processing because of everything that was going on life insurance and your legal documents are are two things that you can't do the day after.

You need to have had them done. You've got to be proactive and plan ahead with them so we are here to help and assist, but more importantly today were here to talk about some of the common concerns that you have with money and and how you can talk those three would work goes through. So generally in your household. What are some of your concerns.

I know you had some recent frustrations, but on an ongoing basis. What are what are some of the thoughts that you have when you're when you talk about money when you think about money well here actually am a little bit of a panic or in a worrier and I like to plan ahead so are my husband says I morbid I think as it is in being prepared so making sure that if something does happen to him on at least able to cover our bases of basic needs.

We even have a separate bank account that a car payment comes out of, because if something happens to him and that goes away, and I have to get that car back that's okay that was not in my mandatory basic needs budget.

We have vehicles that are paid for for that just certain things like that. I have life insurance on my my child, I had that day.

He was I could get it after he was born in is very important in some near and dear to me because I have friends that have lost their children to make payments on their burials because they did not think he has something ever happened to my child and so therefore they didn't get any life insurance you gotta check you ever want to cash or receive but nonetheless important, because you certainly don't want to have that horrible experience and then go in debt as a result of it. Yeah, it's very important just now just a hard topic that people don't want to talk about the lives in the you know the lies and and while yes you know the world around us seems to be crumbling in this moment and that, maybe even more frustration for you to stay in touch with your partner about what's gonna happen in the future and the future is so unclear right now will play in time to do that though, right, I think you're stuck in a house together 24 seven but is just in time to sit down with them and maybe talk about and weights where you know it's not it's it's always going to sound morbid when you talk about one passed away, but honestly it's marked it's one of the best things you can do, not only for yourself but for your peace of mind and for you children will the way I view it is that my job as a planner is to make the bad things happen on paper and in the planning process so that people can be prepared. If they ever do encounter those events in real life and not have it be as devastating or as detrimental or obviously you know what I'm talking about bad things happening. Murphy's Law, the worst case scenario occurs at just the wrong time. It's going to be emotionally hurtful and raining. But if you have a plan in place. If you have talk to those events through beforehand. You're ultimately going to be better prepared for them and and probably handle them better and make better decisions because you don't want to be making knee-jerk reactions or not know how to handle a situation and not have a plan when the worst case scenario happens so I think you're right know having those conversations, it seems difficult but I think it's more difficult in people's minds that it is in reality.

And if you have those difficult conversations. Now you can then go out tomorrow and feel like you got that handled it should be a burden off your shoulders rather than something is weighing on your mind heavily over time, correct and most of it if you just view it the way I try to view it if paperwork and we all hate paperwork, but as soon as you get it done it's done and it slipped off your responsibilities. Now you have that box and it's checked. Now we go to the next task in life, then this is the way I view things everyone does not like me. So my husband's and he is more of a resell and get careless at that box is checked or not you same in my household. My wife, not the not the one that ultimately pays attention to the bank accounts or mouse checkbook and that's my responsibility. So I have to be even more cautious in taking further steps because I know that that is not her bailiwick and in her area so I gotta take steps to make sure that she is as much as possible protected in in those areas know these are the same concerns that I think every American household has on on top of what's going on in Washington what's going on in the stock market is a red day or a Green Day. How are my accounts doing. When's the next time the markets going to crash. It's these day-to-day kind of issue that really way on people's minds and that is the reason why some of the bigger issues don't get handled in a dress like they should.

I've read plenty of studies and say the average American could not come up with the cash for a $400 emergency going to go into debt for that that the median 401(k) balance for those ages 45 to 54 is about $40,000. No, those are those are folks that should be on their way to preparing for retirement, and that's not nearly enough for most people to retire successfully and and it's because the small tasks the day-to-day routine tasks are the things on her mind. And so we never even get to those larger tasks you gotta build your foundation.

You gotta start with the first things first and and start with the easy stuff in the small stuff and then you can really formulate your plan long-term to get where you want to go and I think that a lot of people feel like it's insurmountable that I've also heard and seen plenty of statistics that people spend more time planning their vacation than they do planning for their retirement and I I believe that that is because planning for a vacation seems like something you can accomplish week we can do it. It's bite-size. It's easy. It's a finite period of time to have a finite amount of money for his planning for retirement seems short, though, yet still is a lot easier for you to plan for a short bowling and market often is the think LFL of 20 years down the road, not just super and will you can't do it. You just get really overwhelmed trying to do that.

But as I watched you and I watch you with your client in a sit down with them and and you make a plan once it is on paper it seems a whole lot easier and easier to obtain what the questions were vacation writer are where are we staying where are we going, how much is a cost to get there and how much do we want to spend while were there yet. In this pleasures are still having the same, though, when you retire and if you plan for retirement nail vacation is just enough to something, you get to do when you retire. Well, every day is a Saturday in retirement and I know that right now for me. I'm either earning money or I'm spending money on either at work or I'm not.

And on Saturdays and on vacations. That's why spend the majority of my money, and so a lot of people are planning like Social Security's going to cut it. That's all they're going to need in retirement or like their income is going to substantially drop in retirement nest just not the reality of the situation.

Retirement can be very long, can be very expensive. I tell you another thing that a lot of people are planning under the assumption that they are going to be paying lower taxes in retirement by default by de facto if you are saving your money in a tax-deferred retirement account, like a 401(k) or an IRA and you are not paying taxes on that money today. The default assumption.

The reason you would do that is because you somehow believe that you'll be paying lower taxes into the future and I would carefully examine that line of thinking today because taxes have come down significantly since the 401(k) really started you know that the mid-80s the early 80s somebody making $68,000 was in the 35% tax bracket in order to be in the 35% tax bracket today. You gotta make over $600,000 per taxes could absolutely turn around and go back.

I believe taxes are on sale now and so Roth IRAs Roth 401(k)'s making conversions to tax-free retirement accounts.

I think is a big thing again, these are kind of them. The more long-term questions to ask and when we go through the planning process with individuals.

We don't jump right there.

We talk about first things first. Where your day-to-day financial challenges and questions and concerns and once we get the plan put together for short-term and long-term goals. We try to give people a snapshot of where they are today. I will talk about their hopes and dreams and what they envision were retirement to be about and and we put those in writing because a dream, written down, that becomes a goal. So we have their goals written down and then we try to map out a timeline of executable action items for them so they can easily understand what they need to do in order to make those goals a reality, and then were available for even short-term issues that come up those day-to-day issues at end you like your family to different people in the household. Sometimes weekly moderator sometimes work the refill if you will, of the financial world where we are balancing a couple different personalities and and different different descriptions of what we dream for and hope for in an envision retirement to be about, or even what we think the next week should be about all write Peter because I know in my household if I bring in 1/3 party professional.

9 pounds. I cannot husband's gonna listen to them way more than he will just talking to make no extra pounds LEL if you if you can manage to get your significant other to sit down with someone else to bring an outside view and it usually does really help on that and I'm just thing that over and over in our offices will will again. That's what we are here for. And if you would like to have those conversations. If you would like a optimized retirement plan in your hands. Simple, easy to understand language steps. Action items that you can execute on that you can read and understand what you need to do a guest call. Feel free would love to hear from you. Would love to talk it over with you on the phone or through a virtual meeting or in person and eventually if if it merits.

We'd love to put that plan together for you. There's no cost, no obligation for that we get all the way up to that step where you got the plan in your hands before we even have a conversation about what our compensation is or what our costs are and we are very cost-conscious. Another quality I know you're very cost-conscious you care what you pay for things I did.

I understand that people like that. I am like that and so before we we crossed the bridge a threshold where anyone is obligated to pay anything for planning. They've got a plan, a tangible document in their hands and they understand how we would help them execute that plan what we would do on an ongoing basis to deserve any compensation and we are very upfront about what that compensation consists of what it would be so if if you would like that kind of conversation. Again, it's just that to get started the conversation about your money about your finances, give us a call. Sean planning this rich on planning. This would look like. 919300588691930058869193005886 he can go online rich on planning.com against my last name were Sean, but it looks like Rich on planning.com and right there on the website can also request a copy of my book. Understanding your investment options. It's not cited it's not a page turner. But it's important information that I think of anybody does want to have a better grasp a better handle an understanding of how to put your money to work for you. It's a great read. It's important book for for you to have so I'll make that available to you for free.

Go online rich on planning.com or give us call 919-300-5886 and generally quarter.

Thank you for opening up a little bit about your your money, your finances and what that looks like in your household.

Your elevator is nice to be only allows a great conversation certainly appreciate generally sharing and I got another one of our team members here with me now about this is a younger man. Landon Holland is one of our team members on the production side. He handles actually producing these radio shows for us the land and welcome in hello Peter, hey how you doing good rush.

So if you and well doing well. Linda give just a little background you you're in school. How old are you, what grade are you in 17 years old 11th grade at Fuquay Marina high school. All right, all right, and you're earning some money now got a job getting paid what you doing with that money, saving up not really trying to just blow all through good good you got anything on your mind that you're hoping to do by any time and in the future. Plan on getting a better computer laptop. I have now is really slow like you trying do something than five seconds later it finally starts to work because I've second sets. That's a long time for computers to today. I guess it is you write so you you actually you thought about what you're saving up to purchase and it sounds like kind of intentional with what that purchase is going to be don't don't want just any run-of-the-mill laptop or or device or videogame system you're looking at like a real desktop computer, a buildable PC because it will be better on the less-expensive side okay the gun you get the specs that you want. Yes, fantastic, fantastic. That is awesome.

Hey that you're saving be that you, your your saving with purpose and intention. I think that's what everybody should do but a lot of people don't like a lot of people, the money comes in.

The money goes out. They don't know where it went.

All the sudden it's not there right, they've they've eaten out.

They've bought a few things, I got a couple new gadgets as weak as we get a little bit more affluent. They got a new boat in the driveway. A new car in the garage. Nice house. Lots of things inside of it, but where did the money go right and so I think we need to have that perspective is as you're beginning to earn money in and building up that that account savings should be a priority. I will let you know now saving and paying yourself first should be the first thing that you do with your money right. What, by the time you see it the government's Artie seen it right so you you you work putting your hours earn a certain amount and that's what you expect in your paycheck but by the time you actually receive your paycheck's Artie passed through the IRS's hands and you only get what they decide is left over for you so you pay the IRS first all of what you have left you should absolutely decide intentionally to pay your self first okay and Dave Ramsey on the Dave Ramsey Smart investor Pro he sees a big time radio show host and financial ruin. He talks about financial discipline and control in living debt free.

He suggests she's pretty adamant about it. 15% of your gross income should go toward your retirement accounts okay now.

My suggestion for you is Roth IRA all day. You know anything about Roth IRA notes are okay so let me we kind of explained it this way when you're saving for yourself for retirement.

Picture it as you're putting money in an envelope and your mailing it to yourself in the future. Now when you open it in the future, there shall be more money there as we hope for growth right with retirement accounts.

If you if you qualify money as a retirement account you get a few benefits right and you can decide which benefits you want to have, but you also have a few limitations. Technically, you can't use the money until 59 and X right that's what the government has deemed an appropriate retirement age. I picture choose two senators on the golf course and one wanted a 59. The other wanted to 60 and they say which of the middle 59. I don't know why they decided to but that's the age okay so when you are putting money in that envelope you can make a decision, do you pay tax on it now and all of the growth that occurs and when you open that envelope. All of the money that's inside you get to keep. It's 100% yours. That's a Roth Roth IRA or Roth 401(k) or do you get a tax break for that money.

Now you get to make that money go in that envelope before the IRS sees it.

And then when you open it in the future. They're going to tax everything that's there right now. Albert Einstein said the most powerful force on the planet was the power of compounding interest and II believe that the IRS was paying attention. They knew that if they let you make that decision and not pay your taxes on the seed that when you opened up that envelope in the future if there's growth on your money, you end up paying them more. Okay so for you, being younger, having a lot of time for this money to grow. Go ahead and pay your taxes now pay your taxes up front because you're probably in a much lower tax bracket and tax environment than you'll ever be for the rest of your life, especially 40 years, down, down the road here. I think taxes will be higher in the future for a number of reasons.

I fully believe that but if I'm wrong. If I'm wrong about that assumption and taxes are the same as they are today, and you've planned under the assumption that the be higher. Guess what you got more money than you thought you were going to have in retirement. So it's it's not a bad not a bad deal either way. So again, I would suggest for you. The Roth IRA and for most, younger savers and investors all day every day. I would suggest maxing out every Roth opportunity that you have and even for those that are kind of on the doorstep of retirement or even already retired we are in a low tax environment. Right now we understand what taxes are today we can buy the IRS out of our retirement accounts today but if you keep deferring. We don't know what changes will happen with tax law into the future and you are subject to those those changes so have you ever heard the saying it's not what you make is what you keep in no okay well let me let me tell you it is not what you make. It's what you keep, and taxes are the biggest thing standing between those two okay when we talk about what you make that your gross pay and then after taxes. That's what's called your net pay. So it's not what you make.

It's not that gross is what you actually get to keep that your net pay and was a retirement accounts how you're going to base your retirement. Do you hope to retire one day I hope so.

What one day you don't want to have to work right minute.

Gore said he'll do something if you want to do it but you don't want to have to do it. Just pay your bills. Of course that's that's the hope of talk time is more valuable than money or else we would just keep working working working for more money.

But that's not that's not really how it works. We traded just enough of our time for hopefully enough money so that we can enjoy some of the rest of our time in and one day we reach the point where hopefully we don't have to work anymore. That's retirement right in retirement. You gotta think about that retirement account the same way. It's not what you have is what you get to keep, and right now there's a lot of people out there with $500,000 retirement account with a million-dollar retirement account. They come in they say I got $1 million and I say congratulations when you take a look over, see what you got here and it's all tax-deferred and I have to break it to him. Sorry you don't have $1 million. You've worked hard to build this up your debt free except for the debt that you have the IRS inside of this retirement account and really only 650 to 750,000 of this is your money. So how are we gonna live off of that knows of conversations we have with people how to be efficient. How to be effective in planning how to keep more of your money. So Landon, thanks for joining me. Thank you Sharon a little bit about who you are in and your thoughts on money, but dies we as we go along. You will have more these conversations and hopefully get a good handle now because if you save from the age of 22 the age of 30 and stop you'll be better off in 72 starts at 30 and saves all the way to age 60 is how compounding interest works so start early. Okay. Okay. All right. We appreciate Lynn thank you very much laser show minutes if you want have conversations about your money if you like to talk things over. Learn a little bit more get a different perspective understand better how to be efficient leverage of dollars have a plan in your hands that you can understand.

Give us a call were happy to help you were happy to have those conversations with those together. I am Peter Rochon found her advisor at Sean planning looks like Rich on planning. You can go online to rich on planning, you can request a free copy of my book. Understanding your investment options.

We can give a call and we can set up a time to talk and if it merits if if you believe it will be beneficial at time to really sit down and and get the business of putting a plan together. We do not charge for that plan. You have that played in your hands before there is any type of compensation and we have a conversation about exactly what that is in and what will provide you as far as benefits before your obligated to, any costs or expenses so you like that plan in your hands if you like free book, give us a call 919-300-5886 919-300-5886 or go online Rich on planning for 60 minute radio content of this radio show is not a solicitation or recommendation of investment strategy, investment, tax or legal advice from an independent professional advisor investment investment strategies mentioned involve risk, including the possible loss of principal by three services on capital management for registered investment advisor is recently on the financial strength and claims paying ability withdrawals of growth from annuities may be taxable as ordinary income for the year. It is the visual should review content for specific details of the product growth may subject you to penalties protected by three advice is not just other activities such as advisory clients are particularly as a product that may result regarding