Common Sense Financial Podcast

Retirement isn’t a thing that happens. It's a time of life that needs to be planned for. When it comes to planning for retirement, there are a huge number of assumptions that people make about what’s going to happen and when, but what if those assumptions are wrong? Find out why you may need to rethink your retirement plans. Most people envision retirement as a destination. A fixed point in time where their pension or Social Security begins, but retirement is a transition, not a timestamp. Planning for the rest of your life requires certainty, not hope and optimism. Most retirees retire while relying on things that are out of their control, and on assumptions made in the past. They assume the rate of return, their income needs, their life expectancy, inflation rates and tax liabilities. Take longevity. The world of health and medicine is likely to make a major transformation. We are already seeing more people live beyond the age of 100. What if your retirement plan had to take into account you living an additional 10 to 20 years? The 4% Rule may make sense if you live an average of 30 years as a retired person, but if the average lifespan keeps increasing, the 4% Rule could lead to disaster instead. Any financial strategy that relies entirely on the stock market for support relies on performance that you have absolutely no control over. Looking at the past performance of the market doesn’t paint a great picture, and even averages can be misleading if you’re looking at a large enough time period. The problem is compounded when you add in withdrawals in retirement. Sequence of return risk is a major problem all retirees face. Making withdrawals during a down period can rapidly deplete your assets. Taxes are never going to go away. The government controls us using the tax code and there are 1000s, if not millions of jobs supported by having a complicated tax code. Every administration wants to either tax the rich or cut taxes on the middle class, and you can’t be sure what’s going to happen when you’re retired. We are guaranteed a tax increase in 2025 whether or not anything changes. Inflation is another constant that we need to take into account. It’s risky business when your plan is heavily reliant on consistent stock market returns, low taxes, low inflation, and a mortality that is historically in line with what is anticipated because all of this is outside of our control. Many financial advisors use probability analysis to offer confidence in a form of a percentage likelihood of money lasting until a predefined age. The trouble is the factors used in the analysis are based on the same risks. The core of every retirement plan is the fear of running out of money. You need to look at the worst case scenario and do what’s necessary to prevent that. Your goal should be moving more into your control, not giving up control.     Mentioned in this episode: bubblegumlogic.com

Would you rather look back on the past and regret what happened or would you rather look to the future and make plans so that you can choose the outcomes you want? The latter of course! But when it comes to taxes, most people take the first option without even realizing there are better choices. Learn about the difference between tax preparation and tax planning, and how you can create a comprehensive wealth strategy for your future, but you have to start now. There's a huge difference between a tax preparer and a tax planner. Generally speaking, a CPA is a historian who's looking backwards over the last year's tax situation using tax software for determining whether you owe or whether you'll receive a refund. If you’re getting a refund, they give you the good news with a smile. If not, they make the suggestion of an IRA contribution to lessen the pain. With a tax deductible account, you are allowed to defer taxes on contributions until the age of 59 and a half. You can’t access that money before that age without a penalty and are required to take distributions by age 72. By imposing a 50% penalty for failure to follow the rules, the government taxes 100% of the contribution and any gains at a rate to be determined in the future. This level of trust in the government to manage your finances is not always the most comfortable deal. You exchange paying taxes today for paying taxes in the future at an unknown rate. Deferring taxes is not saving you from having to pay taxes. However, tax deferral makes sense in two scenarios: You are a high income earner now and will drastically reduce your lifestyle in retirement, or if you don’t already have large, well-funded retirement accounts already. The desire to reduce taxes is never going to go away. You will pay the taxes owed now or you'll pay them later. If you choose to pay them later, you are gambling that both your income and tax rates will be lower. When you’re working with a tax preparer, remember that funding a retirement account does not actually save you on taxes. As a W2 employee, there is not a whole lot you can do to reduce your tax burden. Business owners and people with larger amounts of assets can benefit tremendously from digging into the tax code. There are 5800 pages in the tax code, and less than 30 of them are about raising revenue for the government. The majority deals with how business and investment incentives can actually lower taxes. Most tax preparers only focus on those 30 pages, and that’s why their clients miss out on opportunities that exist in the other 5770 pages. Most people and business owners work with tax preparers, but spend very little time with tax planning. The government uses these incentives to encourage businesses and investors to invest in ways that are beneficial to the goals of the government, but many tax professionals narrow their focus and don’t know what the possibilities are. For any of these professionals to break away from the status quo training they receive, they have to do the hard work of learning for themselves what they need to know, then moving out of the center lanes to professionally guide their clients. Partnering with a skilled wealth advisor is the secret to creating a comprehensive tax planning strategy for clients. The way to go about this is to find a team that has already been assembled because it costs a lot of money and time to form such a team. For tax professionals that want to find a team to plug into, go to qualifiedtoworkwithbrian.com to see if you’re a good fit.     Mentioned in this episode: takebriansquiz.com qualifytoworkwithbrian.com

Social Security can be a maze of rules, exceptions, and formulas and can feel  almost impossible to navigate for most people. That’s why Rich Grawer is back to talk about making sense of Social Security and the common sense guidelines that allow you to maximize your Social Security benefit and minimize your tax liability while in retirement. Social Security as the system is an income replacement system. It is not meant to be your sole source of income in retirement. The first thing to understand is that the system is not meant to replace your whole income, and earners can expect to receive between 35% and 54% of their working wages in retirement. There are three different ages you begin taking Social Security. The first is age 62, the second is age 65 when Medicare becomes available, and the third is your full retirement age. The advantage to waiting until your full retirement age is that you can work and earn at the same time as receiving your full Social Security benefit. One recent change in the past few years is that if you were born after January 1 of 1954, unless you’re the surviving spouse, you must take the highest benefit available to you when you file for Social Security. The most a spousal benefit will be is 50% of what the spouse will get at their full retirement age, so if your own benefit is higher, you have to take your own. It also doesn’t count if your spouse waits beyond their full retirement age, the calculation remains the same. Another key point is that every year before your full retirement age you take your Social Security, the more it’s reduced, and each year you wait your benefit is increased by 8% for each year it’s delayed. At age 70, those Delayed Retirement Credits stop accumulating so there’s no rational reason to wait past the age of 70. For widowers, the spousal benefit is 100% of the spouse’s full retirement age amount unless the Social Security was started early. The lowest amount is 71.5%. It’s also possible for widowers to start receiving one benefit and switch to another if the circumstances make sense. It's very important for people that are involved in a death and receiving a survivor benefit to get sound advice on this and not try to do it themselves. There are exceptions to every rule, and with 2700 rules, there are plenty of exceptions to the rules of Social Security. The Social Security Administration can only give you the facts. They can’t advise you on the best course of action, so it’s important to seek out sound financial advice from an advisor you trust. When it comes to retirement planning, or even the death of a spouse, pulling in the resources, and pulling the team together to make sure that everything is being looked at from multiple angles is critical for optimizing everything. Many government employees don’t pay into Social Security, and for them the WEP was created to balance the benefits between pensions and Social Security. Social Security is intended for low wage earners. Firefighters and policemen working additional part time jobs don’t fit that description, which is why the WEP was introduced. The more years of substantial earnings you have, and the definition of substantial changes from year to year, the less the impact of the WEP. The WEP can’t completely eliminate your Social Security benefit. The GPO (Government Pension Offset) can greatly reduce a widower’s benefit to the tune of ⅔. Social Security always starts calculating your benefit based on your full retirement age. One common myth is that Social Security looks at your last 10 years to make the calculation but that’s incorrect. They look at 35 years of earnings. If you don’t have 35 years of work history, the calculation defaults to 0, so it’s a good idea to work at least 35 years prior to retiring. You are unable to leave your Social Security benefit to anyone other than your spouse. If both spouses die, the Social Security benefit for both stops. People often rely on Social Security and pensions for income in retirement without planning for what happens when a spouse dies and some or all of that benefit goes away. That scenario is where life insurance can come into play to make up for the income gap. Social Security has been doing more online since the beginning of Covid. The best way to begin your application is to go online to ssa.gov and avoid waiting on the phone. Applying for widower benefits must be done in person or over the phone. Always emphasize when you want your benefits to start when applying online. You can’t apply for benefits any earlier than four months from when they would start. You won’t get the final calculation right away, it has to go through a human being first but you should receive your benefit calculation roughly ten days after filing your application. Don't plan for retirement two weeks before you get ready to retire, you really need to be looking at that at least two years leading up to retirement to know what your timelines are. Social Security uses something called provisional income to determine if any, some or all of your Social Security benefits will be federally taxed. Provisional income, by definition simply means your adjusted gross income plus one half of your Social Security benefits. The highest your Social Security can be taxed is 85%.     Mentioned in this episode: ssa.gov questionsforbrian.com brianskrobonja.com

It’s no secret that entrepreneurs and real estate investors are responsible for the majority of the wealth creation in the world, but did you know it’s possible to take the same strategies they use and apply them to your own investments? Learn how to multiply your wealth through the power of leverage and how to use the idea of internal and external rates of return to acquire assets that not only appreciate but generate cash flow at the same time. Many investors have a contradictory attitude when it comes to investments and leverage. With their investments, they favor risk but when it comes to leveraging they adopt a scarcity mindset. Entrepreneurs and real estate investors are the biggest wealth creators in the world, but the typical investor can benefit from using the same strategies they use. There are two primary reasons those two types of people create so much wealth. The first is they effectively leverage other people’s money. The second is they create cash flow using internal and external rates of return. Rarely do real estate investors purchase a house in cash because the more money that is tied up in one property, the less there is to purchase another. By using the bank's money to leverage the purchases, they have the ability to use the same amount of money to acquire multiple properties. This allows them to grow their wealth using internal and external rates of return. What many people fail to understand about real estate is that the property is worth the same whether or not it has a mortgage. The investor benefits from the appreciation of the property, not the bank. A $100,000 property with a $75,000 mortgage on it that appreciates 5% is the equivalent of a 20% yield on the investor's $25,000 investment. That’s the internal rate of return. Real estate investors also have the ability to create cash flow from the investment. The rent collected can vary, but assuming a rent payment of around $1200 per month or $14,400 per year, using the same example as above, $14,400 would equate to around 14% of the value of the property and a whopping 57% on the investor's $25,000. Even factoring in the interest on the mortgage, the total rate of return is still exceptional. This is why it makes more sense to leverage $100,000 to buy four separate properties than to buy one $100,000 property in cash. The concept of external and internal rates of return can be applied to anyone who owns real estate or cash value life insurance policies. The challenge many people face is that they dislike the idea of holding a mortgage and would prefer to pay it off quickly. If you can leverage the mortgage to get a higher rate of return, the logic doesn’t support the decision to pay down the mortgage quicker than you have to. There are very few subjects more misunderstood than the subject of life insurance and with so many options it’s easy to see why, but when a dividend-paying whole life insurance policy is designed and funded correctly, its benefits mirror that of most real estate. Both are properties that build equity, grow tax-deferred, allow for tax-free access to cash, and can be owned free and clear. Both are conduits for internal and external rates of return. With insurance, cash values will appreciate the same whether or not there's a loan. That's an internal return, and you can use tax-free loans to leverage as capital and generate cash flow. Using your home equity to make home improvements can increase the home’s value and possibly increase the overall cash flow, while essentially costing you none of your own money. Taking a loan from a life insurance policy and leveraging it into an investment or property accomplishes the same thing.     Mentioned in this episode: buildbanking.com

The sale or transition of a business is a messy, complex, and time consuming process. If you want to make sure it’s a success and doesn’t tear your family apart, you have to make sure it’s done right. Randy Long reveals the biggest misconceptions around selling a business and how to make sure your children still want to eat Thanksgiving dinner together afterward. Randy is a lawyer by trade with a background in finance, having practiced for the past 25 years. Around half way into his career in law, Randy started working with the father of exit planning, John Brown. Around 9 years ago, Randy and his daughter started a separate consulting firm focused on helping multi-family, multi-owner businesses get prepared to sell. Many business owners have no idea what it takes to prepare a business to be sold. Working in the business and getting the day-to-day tasks done can make it hard to step out of that role and plan for the future. That’s typically where Randy comes in. Transition periods can be quite long, with most businesses working with Randy for more than a year. Some families contract with him for multiple years when the situation involves transitioning between generations. One of the biggest misconceptions is business owners don't understand that buyers are going to look at their business differently than they do. They don't look at it with the same set of eyes. The business owner has to be able to put on the glasses of a buyer to look fresh at their company, which can be a major challenge. Many business owners struggle with transitioning their business to their kids without causing a lot of conflict and strife among the other family members. Randy uses the Thanksgiving Test to judge the success of a business transition to the next generation. The first year after the parents are gone, will the kids still have Thanksgiving dinner together and be happy to be there? Not communicating with the family can be devastating after a parent’s death. Another major misconception is the belief that a person’s business will sell for a hypothetical average multiple, but the truth is each business is unique and sold on their pros and cons. Many business owners also find themselves in trouble after selling their business where they no longer have the income, benefits, and insurance they used to be able to deduct. There are a lot of variables when it comes to selling a business and no two sales are going to be quite the same. The business and merger and acquisition cycles also have an impact on the sale of a business. Ideally, business owners time the sale to maximize the value. Don’t wait until you absolutely want to get out of your business, plan around the business cycles instead. Service-based businesses can be sold too, they just need to be structured in a way that the business owner isn’t physically necessary to get the work done. Those types of business owners need to shift their thinking from the down to earth job of getting things done to higher level strategies like joint ventures. Randy usually starts working with those business owners by eliminating their tasks and slowly delegating them out to employees, which frees up the owner to do what they are good at: finding new business and inspiring employees. You’ve got to get away from the day-to-day grind to give yourself time to think and get your head around the future. Business owners often desire control, which can prevent them from scaling past a certain point. The most successful multiply themselves and expect progress instead of perfection. The first step is finding the work the business owner hates doing. Once those tasks are identified, they become the job description of the next employee. Randy prefers to keep his consulting business small and work with around 15 clients at any given time. Most financial advisors are W2 employees, not business owners. Those employees can be integral to a business and are often targeted during a transition to encourage them to stay on. One of the keys to the sale is identifying key employees. Randy tries to put a package together for them to stay during the transition that’s beneficial to them and to the future owner. Buyers are always looking to eliminate risk, and locking in key employees is one of the most important ways to mitigate risks of the purchase. Randy usually takes businesses through a sale over 6 to 12 months and works with companies earning anywhere from $2 million to $100 million annually. You have to reinvent the company as you move forward. You’re not going to run the company that your father ran because the world has changed. Just like how there is more to retirement than a 401k, there is more than just the dollars and cents in the sale of a business. The secrecy of money is an obstacle that many families face when trying to leave a legacy. Open lines of communication are crucial to the success of a generational business transition. One of the big benefits of working with Randy is his company brings a lot of things to light that might have previously been completely unknown. Randy works with business owners to figure out all aspects of their financial life prior to the sale of the business, and that can include closing the gap on what the business needs to sell for in order to fulfill the client’s needs. There are ways to limit tax exposure, especially capital gains taxes, but it requires extensive planning and time prior to the sale. The problem is business owners typically aren’t qualified to decide what they really need in this arena, but some professionals take the easy way and just do whatever the owner wants. This can lead to silo-style planning that causes more problems than it resolves.     Mentioned in this episode: questionsforbrian.com brianskrobonja.com

There is a key mindset shift that many people fail to make when they retire and it can cost them thousands of dollars from their investment portfolio. Hear about Hypothetical Helen and how her plan to pay off her mortgage with money from her 401k once she retires actually puts her further away from her goals, and what the most optimal solution for cash flow in retirement is.   Retirement in its purest form is simply the creation of passive income sources used to support your cash flow requirements. Everything revolves around your cash flow in retirement, yet many people lose sight of this fact and overcomplicate their investment strategy. Take the example of Helen. Helen was to have $40,000 per year to supplement her Social Security income. She has a million dollars in a 401k and has a mortgage of $200,000 with a payment of $14,400 annually, and her home is valued at $500,000. Her plan is to eliminate her mortgage with funds from her 401k as well as make some renovation while living off a 4% draw each year from the remainder. The 4% Rule is not necessarily the best strategy for income in retirement. The assets to income stacking method often yields better results, and can often create an additional $20,000 a year in cash flow from the same $1 million investment. Using the 401k triggers a tax liability on the full $200,000. Using an estimated 25% tax rate, Helen would end up with a distribution of $262,500, leaving just $737,500 to draw from at 4%. Factoring in the home renovations, Helen would be paying around $75,000 in taxes and reducing her annualized income by $5,100. Every one of those decisions moves her further and further away from her goal. Every decision you make flows downstream to your cash flow, which is why everything should be about maximizing that amount. Giving up control over your money is usually a bad idea. Whether that’s a bank or the government. Many people get hung up on paying a mortgage, but in Helen’s situation maintaining the mortgage would be the best solution to getting the most income from her assets. To satisfy Helen’s $40,000 retirement income goal, she could designate about $667,000 at 6%. The remaining $333,000 could be invested long term to help offset inflation or other cash needs along the way. She could also refinance her mortgage and pay roughly the same each month, but also get access to $50,000 tax-free with which to make those renovations. Instead of using her 401k which will cost her $75,000 in taxes to obtain, while also lowering her income by over $5,000 for the rest of her life, she can just use her home equity to give her the cash she needs while maximizing her income potential. A few key takeaways: tax-free money is better than taxable money. Home equity and life insurance values are tax-free sources of money. A home will appreciate whether or not it has a mortgage and has inflation as its tailwind. Once money is spent, it's gone forever and is no longer able to create income, and there's opportunity cost for every dollar spent. The mindset shift from accumulation over to utilization is where most people struggle in retirement.     Mentioned in this episode: CSF episode - The First Domino questionsforbrian.com

Regret and retirement don’t have to go together, but for many people they often do. Learn about the top five regrets people have in retirement and how you can set yourself up so instead of feeling like you should have done more, you can retire with confidence. When it comes to retirement, there are almost always things that you’re going to regret. Investments you missed the boat on or investments that went sour. Unfortunately, there is no crystal ball to make retirement planning easy. There are five common regrets that most retirees have and the first is not starting soon enough. The sooner you begin to save the longer your wealth has to compound over time. In addition to saving sooner, retirees often wish they had begun planning for the transition to retirement sooner as well. There is more to planning your retirement than just having a large investment account and picking the start date. Many retirees, mere weeks before retiring, find out there's much more to it and wish they had started years earlier. The next big regret is not asking for help sooner. Making assumptions is a slippery slope, and there is so much to consider. It can be challenging even for a seasoned advisor to navigate all the tax implications and available products. Not changing strategies is another major regret of many retirees. There are certain phases of growing assets that require a different approach and knowing when you are entering into another phase is critical for capitalizing on opportunities. Many would-be retirees start off investing in mutual funds but end up blowing right past the time they should be adjusting their investment strategy. You shouldn’t be investing the same way in retirement as you did in your 20’s. Not saving enough is one of the most common regrets of people retiring today. The idea that saving 10% will allow you to achieve your goals is inaccurate. We’re seeing the most effective plans are coming from people saving in the 20%-30% range and with the end goal in mind. Many people put their head in the sand when it comes to making important decisions about their retirement because it brings to mind their own mortality, but it’s important to think ahead. The ideal time to figure out long-term care is not when you’re forced to. Many of these regrets may seem like common sense, but the vast majority of people aren’t following through with them, common sense or not.     Mentioned in this episode: brianskrobonja.com/retirement-checklist questionsforbrian.com

Most people think about what investments they should be making or what stocks they should have in their portfolio when they approach retirement age, but they are going about it backwards. Brian Skrobonja breaks down the calculations you need to make in order to understand how ready you are for retirement and what your retirement plan needs to factor in to be truly financially free. How do you know when it's safe to retire? The answer depends on your plan and understanding the most important numbers in retirement. Success is the result of following a plan to fruition. The more specific the plan is, the higher the probability of reaching the goal. If you’re on the cusp of retirement, you may have a number of new questions and concerns starting to enter your mind. Are you invested in the right assets for retirement? How much should you be withdrawing from your accounts? Do you have enough saved up to last your whole retirement? If you search the internet, you’ll end up finding a lot of often contradictory advice. If you want to get a good sense of direction, take our complimentary Retirement Readiness Quiz. The quiz will ask you a series of questions to help you gauge how ready you are for retirement and give you an idea for what you still need to work on. One of the most important numbers you can know when it comes to retirement is your income needs. When you understand what level of income you need to afford everything in retirement, it’s much easier to work backwards from there to figure out what you need to create that flow of income. Total up all your bank payments, insurance, tax, and monthly living expenses. Include your regular expenses throughout the year as well because the total you’re looking for is how much money you will spend over a year. Keep in mind that your income needs in retirement will not be the same as they are when you’re working. Be sure to think about how you'll be spending your time in retirement because you will have a lot of time to fill. Once you have your income needs for the year calculated, subtract your Social Security and/or pension benefits, and any other fixed income. What’s left over is your income gap. With the income gap number you can calculate how much of your invested retirement money is required for retirement income. This will also tell you the yield you need to achieve to fund your lifestyle from the assets you have. This figure shouldn’t be more than 4% or 5%. Any higher and you considerably increase the risk of running out of money before you run out of life. You also have to factor in inflation on top of market volatility and healthcare expenses. If you stretch your resources too far right off the bat, you are setting yourself up to run out of money much sooner than you would otherwise. When making these calculations it’s best to err on the side of caution. Inflation will continue to be a major factor going forward. Using a historical figure of 3.5% inflation each year, we can estimate that over the course of 15 years, your income will depreciate by 68%. This is why you need two pools of income for retirement, one for income now and another for income later. The key is in finding income-producing assets, particularly ones that are pegged or indexed for inflation. This can be done either actively (getting a part time job, buying a business, owning a rental property) or more passively (annuities and other similar investments). Formulate a plan that articulates where you are, where you're going and what needs to be done to start receiving the income you need.     Mentioned in this Episode: Retirement Readiness Scorecard - brianskrobonja.com/retirementreadinessscorecard/ 6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement - kiplinger.com/retirement/retirement-planning/603596/6-things-you-can-do-right-now-to-ensure-your-money-will-last

How do you pick between a lump sum payment from your pension and an annuity? A lot of that decision depends, but if you want to have control over your financial assets, a lump sum is often the better option. Find out when you should take a lump sum option instead of an annuity, why insurance is one of the most important pieces of the puzzle, and how to ensure your family doesn’t lose out either way.  The choice between a pension annuity and a lump sum often comes down to which provides the greatest income, but that’s not the only factor you need to consider. We're seeing fewer and fewer pensions than we did 20 years ago because of the systemic issues with defined benefit programs. They are often replaced with defined contribution programs like 401(k)s. People used to retire at the age of 65 and could expect to live another 10 to 15 years on average. Today, people are retiring sooner and living longer than ever, and that is making the traditional approach to retirement unsustainable. Historically, pensions aimed for between 4.5% and 7.5% to calculate their projection of benefits. With interest rates being below that range for decades and with life expectancy being lower in the past, the math worked out, but that’s no longer the case. According to an article in the Daily News, nearly 1 million working and retired Americans are currently covered by pension plans that are in imminent danger of insolvency. Pensions are insured similarly to bank accounts by the Pension Benefit Guaranty Corporation (PBGC), but according to Heritage.org, they found that for promised benefits of $24,000 a year, they're insured up to $12,870. The PBGC has the same problem as the FDIC. The FDIC has billions and reserves, but has exposure to trillions of dollars in bank accounts. The promise of insurance for both pensions and bank accounts is not mathematically supported. If the PBGC becomes insolvent, the promise goes from $12,870 down to about $1,500. If you are relying on an annuity payment from a pension, you're placing a lot of trust in the pension calculations. And if the calculations are off, there's not enough insurance to cover the loss. The alternative to the pension annuity, the lump sum payment, gives you much more control over the future of your finances. Not all pensions are destined to go broke, but the risk should be taken into consideration when constructing the income streams that will support you for the rest of your life. A lump sum payment gives you control over your financial assets. Your income needs can fluctuate in retirement and the control of the assets backing your income gives you flexibility to meet your income needs. In the event that you predecease your spouse, they gain control of the asset. Your heirs can also inherit the asset, which is not the case with a pension annuity. Not all pensions offer a lump sum offer. In that case, the goal is to move as much of it into your control as possible. A single life annuity option is often your highest monthly benefit and is the quickest way to get the most from the pension in the shortest period of time. The downside to electing this option is that it can leave your spouse with an income shortage, which is why your spouse will have to sign off on it. In that case, you should buy insurance either within the pension or outside of it. With insurance outside the pension, you would accept the single life benefit taking the highest annuity payment then pay a premium to an insurance contract to pay a lump sum to the surviving spouse or the children if you die. Inside the pension, you take the lower annuity amount to ensure your spouse continues to receive the benefit after your death. Buying insurance within a pension that has a cost of living adjustment also comes with additional costs which compound over time. For most people, this means you’re paying an ever increasing monthly premium for a decreasing benefit. It's critical that the type of policy you purchase and the amount of the insurance obtained are in alignment with what you need to protect your family. One misstep in this process can leave your policy at risk of lapsing or expiring, leaving your spouse vulnerable to a significant income gap.     Mentioned in this episode: pensionelectionguide.com questionsforbrian.com

When it comes to investing for retirement, following the status quo investment advice is one of the worst things you can do. Most people are deferring taxes in their 401k, storing money in a bank, and working to pay off their mortgage, all without realizing that doing those things won’t move them closer to what they really want in retirement. Find out how to ditch the status quo and build an investment portfolio that allows you to retire without having to worry about income, taxes, or what’s happening in the stock market. There are no perfect investments that are right for everyone. Financial unicorns don’t exist, but it is possible to create a portfolio of investments that accomplish everything you would want from that one investment. In order to find what you’re looking for in an investment, you have to know what you’re looking for. You need to know what your goals are and what investment features you need to accomplish those goals. People often default to doing things that don't always align with what they're looking to achieve. Example: A 45-year-old business owner storing cash in a bank account earning nothing while borrowing money from a bank and paying interest to finance equipment purchases. We usually see people settling for the status quo out of a desire to do something, but it's most often not what they're looking for. They are usually following some generic advice they heard about investing that doesn’t really apply to them or their life situation. Most savers are looking for financial security. They know they need to do something to achieve that, but don’t know exactly what actions they should be taking so they default to what everyone else is doing. Deferring taxes in a 401k. Storing money in the bank, and paying off a mortgage are the three most common financial aspirations, however, these three concepts for handling money have caused more problems and difficulty for people than anything else other than debt issues. They are simple, which makes them easy to understand and appealing for most people, but the results are often underwhelming and frustrating. If you're storing money at the bank, the bank is making money on your money while paying you next to nothing in return. If you're borrowing money from the bank, you're giving up control of a portion of your cash flow to repay the loan while paying the bank interest. When you fund a tax-deferred account, you're essentially allowing the government to dictate when you can access your money, and have no real idea what tax rates will be in the future, gambling with your money in the process. There are four broad categories to consider when pairing products together, you have long-term growth, consistent income, access to cash, and tax mitigation. Aside from entrepreneurship and real estate, public markets have the highest growth potential over the long term specifically centered around capital appreciation. But there are two other aspects of growth that most people overlook, growth through income and uninterrupted growth. Growth of income is centered around an asset that creates income to reinvest and is best achieved through private markets. Uninterrupted growth is where your money continues to accumulate and earn interest in a vehicle like a specially structured whole life insurance policy while allowing you to borrow against it essentially for free. See our past episode on Infinite Banking to learn more. Stacking these growth strategies together expands your diversification. It reduces risk and volatility and can increase your wealth more effectively, giving you more control over time. Having consistent income ranks highest on the list of things needed to have financial security. Without consistent income flowing into your checking account, you cannot effectively manage your cash flow. If the source of the income is at risk, you add another layer threatening the longevity of your income. The public stock market is the status quo default of retirement plans and is the least manageable of all the areas being discussed, yet most people only think of the stock market when they think about investing. You cannot control the markets and therefore cannot predict the income account value or its longevity. Annuities and private market investments are best suited for income and should be the primary source for fulfilling the goal of having consistent income in retirement, you just need to know what you’re looking for. Having access to cash is also high on the list of priorities. Traditional stock market investments fail this requirement with age restrictions, market volatility, and tax liabilities all being major negative aspects. Public markets are best suited for long-term growth and banks are best suited for moving money around to pay your bills and conduct business. Tax mitigation is desired by everyone but seldom seen in real life because tax mitigation strategies fall outside the status quo. Tax deferral does not equal tax mitigation. Deferring taxes may actually be causing you more headaches in the future as we can’t be sure what tax rates will be during your retirement with many experts predicting them to be considerably higher. Tax mitigation is a complicated process and has a lot of factors. It’s best to consult a professional about your exact situation to come up with a plan for mitigating taxes and minimizing taxes along the way.     Mentioned in this episode:  Past Infinite Banking episode - podcasts.apple.com/us/podcast/an-alternative-banking-option-encore/id1226624694?i=1000554171157 takebriansquiz.com questionsforbrian.com