2021 EP1120 Planning Matters Radio - Happy Thanksgiving

Plan planning matters radio programs as planning matters radio. I am John, founder advisor at Sean planning can always readjust your financial your investment questions at 91900569193005886. He can visit us online at Rich on landing, that's what it looks like my last name Rochon, but it looks like Rich on planning.com and back with me again today just an all-around good guy, captivating storyteller, so I just really enjoy talking with Johnny Mayfield Johnny welcome back. It thank you very much. I appreciate your insights. You got an interesting way of looking at life and I think that comes through a lot of different experiences all over the world.

True with not exactly all over but over a goodly portion of the face.

It would one I have to look at everything twice. Well you always keep a good sense of humor as well. And you know we've been through a lot this year but we still all have a lot to be thankful for and as we are preparing for the Thanksgiving week ahead. I thought we would spend a little time talking about that and and maybe Johnny some some of the family traditions and the things that we do over the holidays and then also focusing on some things that deserve some time and attention from a financial perspective personally with the children six euros and two boys. And that was the grandkids in a couple of great grand.

Believe me, there's a lot of fun a lot of things going on during the holidays of the Mayfield now how many of y'all are going to be able to get together over the holidays. Right now we don't know because there is a in-laws and outlaws and all the problems and associations in requirements for all the rest of the family, extended so we don't know the final count yet most cases we really don't know the final count until the end of the day on Thanksgiving and Christmas holidays. The invitation is opened, and you'll see who shows up exactly the way it works at our household to you is always a lot of fun that we enjoy the time around the table little nap somewhere, maybe watch some football.

We like to play games for all of our holiday gatherings so those are kind of our traditions and this year no different in that aspect. I don't believe that we are going to be getting together with a different side of the family that we don't get see too often so we'll see how goes well that's always a surprise.

One thing you tie everything together. When you have portions of the family that have been with you always find a common point and everything branches out from there and in most cases you find such commonality with the parents bonds uncle somewhere in between meeting over tripper everybody was together.

Then you can fill in the blanks.

From there, and that the fun really funny at times, especially when the grandkids looking at you saying really you did that you didn't have a color TV to your computer all the things that didn't exist 56 years ago will again Johnny I appreciate you being on the program and will talk a little bit more about Thanksgiving all that it means in all that we do have to be thankful for what I did want to talk a little bit about the fact that during this last year. A lot of people have really had to change their retirement timelines. Whether it was because their employer mandated or required it of them, or we had more time at home to kind of get to enjoy our time away from the office and a lot of people that I'm talking to have actually realize that they've they really enjoyed that time will use it is amazing what you spend your entire life working for and then you're at home and then you realize that you've been not too much working for living adjustment living. To keep work like a job and work a job it, but work is something that you voluntarily do a job is something that is necessary but not a joyful life article.

The 4040 40 retirement plan, you work for $40 an hour, 40 hours a week for 40 years of your life and hopefully one day you get to retire but a lot of people have realized that there time is actually more valuable than money, so we really need to begin to plan proactively to make the most of the money so that we can enjoy more of our time will there's a lot of people they have money that they never plan for the time when they don't money it comes to them is somewhat of a rude shock to say the very least well if you are planning on retiring early. There are a few things that you can do and I thought I'd share a few of those today.

Number one is to understand your income and expenses and start to formulate that spending plan and many of us have been lucky enough or blessed or worked hard enough Johnny that we can be in a position of financial confidence that we don't have to pinch every penny to Lisi to impressions on her fingers. We don't have to stretch every dollar and therefore we may not pay as much attention to the cost of things we just know that the money comes in. We pay all of our bills.

We live our lifestyle and then there's some left over.

And that's a very fortunate place to be and but for those same individuals. The change in income when you retire and walk away from the paycheck is that much more substantial. It is more impactful and we haven't paid as much of attention to expenses, so we may end up spending a little too freely.

Once we retire if we don't get in the habit of really thinking about our spending plan our expenses in our budget and part of what we do it Rochon planning is mapping that out for you ahead of time and then maintaining a ape a pulse on it throughout retirement. It's always nice to have money list at the end of week.

But all too many of us have a lot of week list at the end of the money and therein lies the difference in the people that plan and don't plan and in times like today when prices are constantly going is difficult to plan for the necessities, let alone the surprised well and I worship is are they they are unfortunately I am not hearing super positive things about all of the supply chain news. I am not hearing a lot of things that instill confidence meet in me that this inflation that were seeing is transitory is as they've conflict. I have talked to people in the automotive industry that run sales of fleet vehicles. I have run into people who manage lots. I have talked to people in agriculture supply acts apply in various elements of the act supply chain and all of them are saying that we've not only not seen the worst of it. We've barely scratched the tip of the iceberg because of a lot of contracts that were enforced prior to coated that set prices are getting ready to expire and where it would have cost them $2000 to ship their supplies somewhere. Now it's costing in excess of $15-$20,000 so wait a thousand percent increase in in those prices that a lot of contracts have been canceled due to the force may order the acts of God, things that are outside the control of anybody who had entered into that contract and so things are not clicking along nor regaining the momentum in traction very smoothly and to some extent, that should have been expected anticipated when you completely shut down the global economy first and go to sleep. It gets much much amateur radio operator enhancements.

I was 13 years and I speak to people all over the world. This is not just a United States issue. This is a worldwide issue in this something that's affecting everyone everywhere in all matters of life and there lies the difference in this particular situation where you can plan for everything, but you can't plan for everything you can plan for everything you know. But you can't plan for what you don't. And in the experiences of most of us the idea that fuel prices or go up is something that is totally off. And that's something that we all have to understand, and we all have to have to make accounting for you, go to the gas station. Gasoline is $0.20 a gallon more this month than it was last month. You can account for that. If you take with fuel oil. If you heat with propane or even natural gas prices are up. In this it will. How come natural gas prices are up because right lines. Differential product line construction.

You can't get people to work in the refineries you can't get the people you need to do jobs across the board net result is for the material that you need and want everything goes in healthcare same reason that my age of 70.

A lot of my bills doctrine that you have to be able to be to allow for even that and that takes all kinds of bike you have applied. It's only so big. How many fingers. You can't lick your fingers. After we talked about the same same thing as far as retirement accounts.

When you save for your retirement and we feel like we're getting the benefit of deferring on taxes not paying those taxes up front. There's extra fingers and hands in that retirement account ending in your cookie jar as I like to say it for retirement that you may not anticipate nor realize the size of the bite that they are going to take an inflation is an insidious form of silent tax and we see we see inflation happening around us because of forces that were outside of minis control, but we also see some self-inflicted damage there. If you look at the Federal Reserve economic data for the last 18 months we have created 20% of the total monetary supply of all of the dollars that exist anywhere in the world.

20% of them have been created in the last 18 months. So essentially that's water down the value of the existing dollars that were there before by about 20, 25% and were seeing inflation at 5 to 6% is what they're stating but things like heating and power and doctors bills healthcare Johnny. Unfortunately, those are the things that everybody has to pay for, or in the case of Dr. healthcare that affects those on a fixed income or with only a finite amount of money more than almost anything else actually gets worse because they're telegraphing the idea that were going to be paying much much more in them for electricity. For instance, you hear green and renew will green and renewable is not free and the reason why is you have 10,000 different sources in 10,000 different places and in the case of solar summary doesn't work at and the wind is not always well therefore your greeting renewable energy sources are not 100%, which means you have to have more expensive standby fossil fuel power back then you have another problem. If you use battery storage medical lot size batteries to store the extra energy. If you have any from your solar or wind farms. Let's just say I wouldn't want to be in the neighborhood when one of these megawatts sized batteries goes up in flames.

It's a scary thought to say the very least, and that's one of the things of thinking is these extra added costs. Look at Germany were there over 60% of the electricity in Germany is generated by greeting renewable energy but there also pay and depending on what source you read anywhere from $0.35-$0.45 per kilowatt hour for the electricity from these resources. That's 3 to 4 times as much, as we pray for electricity here in North Carolina there's nothing free about this green energy. The backup necessity of the reliance on fossil fuels for the electronic EV vehicles that are out there.

Most of them have a backup reserve with gasoline, you know they've got the battery power. They've got the ability to run for a little while off of that. But it clicks over and turns over to a traditional gasoline fossil fuel power vehicle at some points if power supplies run low, and if we look at this on the grand scale of the infrastructure to to implement that same kind of thing across the country. This infrastructure build back better bill with $3.5 trillion. That's not the true cost of of these things, they merely funded the near future of it. That's basically the price tag for the first three years of implementation that they are proposing. And guess what, they don't just have that money lying around that money comes from you and mine and everybody listening this program's pocket in the form of either taxes or printing additional dollars which waters down the value of our current dollars.

So these are things that we do need to be aware of. Again now I don't want to be completely negative and pessimistic here. I think we all still have a tremendous amount to be thankful for.

But there are at the same time very concerning things that I think will be the topics of a lot of conversations. Hopefully civil conversations around the holiday table with family this year. While it's easy to have a conversation with you. As you know which family you know the difficulty is making sure that the conversation doesn't turn into a one-sided shouting that you barely not seen a lot of videos of food fights and table flipping and stories of very ugly disputes among families because not everybody in a family always is seeing things on the same page in alignment and and in fact you choose your friends you can't choose your family. It's been said but you you got them and you're stuck with them. So let's find an agreeable way and maybe just a few ideas for that, you know, talk about the food talk about family memories talk about some future goals end of year to do some things that we need to take care of resolutions talk about the shopping and that all has some elements where were going to see a little bit of a different year, but if you need any help with a few of those the end of the year to do the planning, the achieving future goals. That's were here forgive a call 9193005886919300586 and from a financial and investment and retirement side of things at the at the very least we can help you out there.

Johnny, we've got some tax deadlines coming up to and I wanted to spend a moment talk about a few of those you know the end of the year is fast approaching and I can't believe where we are already in the year it seems like just turned the calendar page 220, 21, and it's about to be over with already a blink of an eye, but were moving close to the end of the year and before the end of the year. We got some tax moves that we need to take care of contributions to employer-sponsored plans. You got a deadline at the end of the year. Yes, with your individual time accounts you can actually make contributions up until the tax filing deadline so including about 3 1/2 months through April 15 or whatever the date is going to be and in 2022.

You can make IRA contributions but your employer-sponsored plan, you gotta do it by the end of the year. If you're considering Roth conversions by the end of the year. If you have to take those RMD's by the end of the year.

If you want to make charitable contributions and get a deduction. It's gotta be by the end of the year so a number of things there with.

We've got to move on now will I keep harping with this, especially with the terrible charitable deduction ear otherwise. And I did this for many decades because we had eight children and they were always constant growing and test the growing out of their other clothing. So we make charitable deductions to the Goodwill and Salvation Army, and that way we knew that with what they could not wear further down to help someone else, you need and we got help on our taxes, to which is something everyone should consider because the idea that the government is going to take care of us is a all things considered, let's put it this way and that's from personal experiences, I can tell you government takes care of yourself first. The people in many ways get in the way of their We should be in control of it, but all too many of us don't exercise our right to control it and you have to do the same thing when were planning on planning out what were going to spend our going to spend it allowing for modifications, variations in always surprises. That's not a good not a good thing. Surprises are never a good surprise indeed well when it comes to government.

I feel like there is a shift when they when they are campaigning. They talk about what they're going to do for the people and they seem to understand that they work for the people in the soon as they get up to that elected office or position it. It seems that they forget and they feel as though we work for them somehow so personal statement and then and hopefully that doesn't offend anyone. I suspect only politicians would be offended by that actually bullying. We talked about the changing retirement timeline. Let's circle back to that Johnny love the retirement budget. Determining the type of lifestyle that you want.

That would be very important.

Another thing that people could do if they do want to retire early. Specifically is is really consider where they are saving their money. If you've got a retirement account.

You probably understand that there are taxes and if you touch that retirement account before 59 1/2 theirs are also additional potential penalties.

So if you yeah and and if you're thinking about retiring before 59 1/2. You may need to really examine the benefits of saving in and outside of retirement account. A nonqualified just a regular brokerage or investment account. That certainly would be helpful to be able to access the money.

If you are thinking of retiring specifically before 59 1/2 and without the penalties and then a Roth account may be helpful as well for the tax benefits the back and provide I have seen two schools of thoughts on Roth one is to leave that till the very last asset you would touch because it's got the advantage of tax-free growth and income. And I totally understand that but there's also a time and a place for a case to be made for a Roth or Roth income to be used. If you are retiring say before Medicare and Social Security age because you can keep your income on the books relatively low. If you're pulling those assets. Those dollars that income from a Roth account.

Yes it does work out quite well. And also, once again you have to do the planning and because I can remember watching Alfred Hitchcock presents in the theme song from Alfred Hitchcock was called the march of the marionettes and all too many others get into a retirement plan without employer and were marching with the rest of the marionettes as it are stranger being pulled as we march along totally oblivious and completely ignorant of what the puppet masters are doing well there, pulling our strengths. We have no idea what's going on. As I said earlier, many thinkers are actually in your heart that you can't even text why I also like to remind people that just because the 401(k) retirement savings is done automatically.

It shouldn't be out of sight out of mind and that sort of the double-edged sword with the way that a lot of people were preparing for retirement is that the 401(k) is beautiful because it gets done.

You can set it up so that it automatically comes out and goes to those retirement accounts before you even see your money fantastic that that those contributions are being made. It's obviously going to be beneficial in the long run. However because it's automatic. A lot of the routine maintenance. The paying attention to your money that should be done is not because it's out of sight out of mind and and people forget to look at it to rebalance to to assess if they are making progress to see how much is growth due to the market verse growth due to the new contributions that they are making and even more importantly, when you get to a point where you have maybe transitions jobs or or even retired some of it so stay out of sight out of mind that people forget about those accounts completely and leave them behind it. Previous employers where they may not be appropriately invested all will not only so much appropriately infested, but totally yogurt and then you have the case of where they might be looted or missive misapplied I seen too many of my friends with the accounts with the say union retirement funds in this net the other where they have no earthly idea what was happening to the money until they hear that someone involved in the accounting was arrested for various and sundry misdemeanors, but they have no idea what it is, where it's gone. How much is involved, how long it's been going on all of these things are going on in the background when they were told and inched and assured that everything was safe and on the level that that's definitely not the case. Generally speaking, if you don't keep your nose in their business will definitely keep your nose in your business.

I recently talked with a couple and it's not a unique circumstance whatsoever. I've seen this many times, but there was an older 401(k) account that had rolled over to another institution that they were really not aware even existed in and they thought it may be some type of fishing scheme when when they were even notified of the accounts existence. I don't know if you ever seen those commercials on TV, but you know the ones that say, are you entitled to found money is there lost money out there with your name on it.

A lot of that found lost and found lost and maybe not found yet money is actually older retirement dollars that people have left behind and the company that they were with closed or stopped.

The plan transitions those assets over because they don't want to hold them forever. In essence, they're taking on some liability by doing so, and if they reach a point where they don't want that liability they'll transfer your account out to a third-party carrier you may not receive a whole lot of communication about that and and so we want to keep track of our money 95 times out of 100, when you leave a job should roll your money out with you. You are a participant in their plan, which means they get to set all the rules over there.

You don't have total choice of the investment options you don't have nearly as much control you should take that money with you, and it usually is not recommendable to roll it into your new employer's plan. Typically you want to roll it into an IRA because again you are the owner you have more control and and say so you can choose whatever investments you like, you can begin to do some proactive tax planning.

There are few exceptions, if, if that account is something that is tied with your years of credit in building toward other retirement benefits like a pension than you may not want to roll it out immediately.

If you've got company stock inside of the 401(k) plan. There something called an UA net unrealized appreciation where you want to be very careful when you roll it out. You may lose some tax benefits. The other thing that I see inside 401(k) is Johnny is is the popularity of these target date funds are yet another layer of autopilot and it's done for you and I like the concept of target date funds they they lower the amount of risk as you get closer to some targeted date out in the future, but they do not adjust for real world conditions, and so my analogy is that if I'm driving on a sunny, dry day, I feel pretty comfortable going the posted speed limit. But if it's raining or the weather is one of our famous North Carolina ice storms where we got 1/4 inch sheet of ice on the ground then I don't want to go the posted speed limit and the target date fund is going to continue going the posted speed limit in fact and in 2007, the largest fund by volume was a 2010 target date fund. So this is a fund intended to have people retire in three years one 2008 that calendar year, the fund lost almost 1/3 of its value. 32% because it didn't adjust for conditions.

The scary part about all of the tradition retirement planning. Most people, they say, okay, I'll put this aside in the bank account put this aside with my with my company cost at this aside no win for pension plan or with an insurance company. I call inflation big bet because it's something it's causing when you needed it will definitely blow your house that because in 30 years will be a fraction of what you need, but thinking about 30 years ago, not 30 years in the future. And therein lies the danger and the difference why think that we can agree that when it comes to the holidays. Traditions are fantastic and a lot of them. We really value and we will probably stick to them. But when it comes to retirement planning.

Some of the traditions some of the traditional approach really needs to be rethought. We need to revisit that and and think about where we are. In today's world and planning is proactive. It is forward-looking looking into the future are the things that were doing today and the things that have been done for 20, 40 years really the best for our financial future and if you'd like to examine that pickup phone. Give me a call. I'm happy to help you look over your investments, your retirement plan. Your total financial situation, the taxes, you may be liable for the risks that you are taking in many of these concerning topics that we've addressed today on the program now not to be disheartening and and depressing here. We do have a lot to be grateful for many of us are is a fantastic financial situation, but many of us still have those concerns and there is an opportunity to address them.

So give me a call 919-300-5886 919-300-5886. You can visit online it rich on planning.com it's Rochon planning.com my last name but it looks like Rich on planning.com Johnny all the time for today's additional program is always a pleasure to see you.

Have you along the right thank you very much matters. The content of this radio shows were fighting for informational purposes only and is not a solicitation or recommendation of any investment strategy you are encouraged to think investment tax or legal advice from an independent professional advisor.

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