(upbeat music) - Welcome to the Bogleheads Chapter Series. This episode was jointly hosted by the Tampa Bay and South Florida Chapters and recorded April 27th, 2021. It features Mark Zorrel, PlanVision's founder and colleague, Jason Lynch, discussing a variety of topics. Bogleheads are investors who follow John Bogle's investing philosophy for attaining financial independence.

This recording is for informational purposes only and should not be construed as investment advice. Alrighty, so welcome everybody to the Tampa Bay and South Florida Chapters joint meeting. We're pleased to have Mark Zorrel, the founder of PlanVision, joining us this evening along with his colleague, Jason Lynch, CPA, and they're gonna be presenting two topics.

We'll take time following each of the topics for question and answer sessions. And without further ado, I'll turn this over to Mark and Jason. - Great, thanks, Alan. By the way, I started PlanVision in 2012, even if it seems like it's been 20 years now. - Okay. - So I have a list of eight different topics or subjects that we're gonna go through as we talk about the considerations in instructing your investments before and after retirement.

Really, it's not necessarily just the investments, it's the whole idea of planning and preparing for retirement. What are some of the important considerations that you would go through? And then we'll talk about the technology as well. But I, Jason is involved in these as well. I do, at this point, about 17 retirement plans a week.

And so these concepts that we're gonna go through are very much a part of not all the reviews that I do and we do with our clients, but many of them. So very relevant concepts that we go through. So we'll just get started with the first one, and that is how to think about your healthcare costs as you approach retirement.

Because this is one that seemingly scares so many folks. First of all, I wanna go through how you will buy healthcare or how you can shop for that or think about. When you turn 65, you will be eligible for Medicare, for the most part, unless you're working for an employer and have some employer coverage, or maybe you have coverage through the military.

But you'll buy a Medicare supplement. But many people retire pre-65, and a lot of people have not shopped for healthcare on their own. They've got it through their employer in the past, and they're just used to the process of getting it that way, or maybe through their spouse's plan.

But when you're going to start buying healthcare on your own, a few of the options that you have, the first one, or for many people, is they can buy COBRA through their employer. So that is the option where you can get healthcare as an extension of your employment with your employer that you left.

You can buy it and pay the employer side of that. Many people are familiar with that and will elect to go with that. On the other hand, and many people, at least some of the people that we worked with, are not familiar with how to buy healthcare on their own.

They haven't done that before. Depending upon the state that you live in, your state may offer an exchange. We have one of those in Minnesota, and I've been buying my healthcare since 2012 on the exchange. So I go there and I shop for healthcare. Or you can buy it on the federal exchange, I believe.

There's some states that do not offer a state exchange. But anyways, you go on there, you shop for it. I think in most cases, eligibility is in November, December for the following year. Anyways, the important point about this is that it's worth your time. And if you're going to be going out, if you're going to be retiring and no longer get employer-sponsored healthcare, it's worth your time if you've just assumed that you will use your employer's coverage to shop for healthcare on the exchange in the state that you live in.

Now, it is likely that many people will say, oh, but it's expensive. Yes, it's likely going to be costly, particularly for those folks that will say things like, gosh, I've had great coverage for years, and they've been paying a small premium, or just haven't had to pay that much.

It may be a bit of a sticker shock when they actually have to shop for their own healthcare. On the other hand, what has developed the last several years with the Affordable Care Act is that many people, even those people that have significant wealth will qualify for an ACA subsidy.

And what that means is that instead of buying or using COBRA insurance from your prior employer, you may save quite a bit of money by buying your healthcare through the exchange. The federal government offers a subsidy on the premium that you pay. So I wanted to raise that as a point that we discuss with our clients.

And we certainly have come across people who are very experienced investors, have done a good job of planning, but just simply weren't knowledgeable about how to shop for healthcare, and didn't even realize that the ACA subsidy was available. So that would be the first point that I would want to mention as you think about the transition for retirement upcoming is how do you want to get or where do you want to get your healthcare from?

And a great place to go to, to get an idea of how much it's going to cost is just go to your state's website. And you can log in and you can price out some, you can price out some of the premiums that will be available. Now I've been buying it for years, as I mentioned, and I buy a high deductible plan, which means my out-of-pocket deductible is up to $13,000.

And those are the least expensive policies. So, and for many of the people that we work with that have accumulated wealth, they're going to want to buy a high deductible policy. So that's the first consideration. Now, at this point, I wanted Jason to provide some thoughts and he's got, he does a wonderful job with our clients in going through how they may qualify for the ACA premium and some of the tax implications from that.

- Right, okay, thanks, Mark. So, right, Mark alluded to, if you're shopping insurance, you may want to take a look on the, you know, the healthcare marketplace. Because the ACA premium subsidy, the premium tax credit as it's known, had been capped for households that earn, that have income of over 400% of federal poverty level.

If you're over that threshold, the ACA credit disappears completely instead of a phase out. That is known as the ACA subsidy cliff, and it's dramatic. You could get a subsidy if you're within the income threshold. And if you go $100 over that limit, you don't get the credit anymore at all.

You've fallen off the cliff. So, for a two-person household, that amount is about $69,000. A four-person goes up to about $104,000. And as Mark mentioned, some clients, some people that have wealth, don't have a lot of high income. They don't have much income anymore because they've retired now and they're managing their cash flow.

Now, it's important to note that the American Rescue Plan, the plan that was signed last month, removes that cliff and it simply caps marketplace health insurance premiums at no more than 8.5% of household income in 2021 and 2022. Okay, great, but what does that mean? What that means is, if your household income is already more than 400% of federal poverty level, FPL, for a household of four people, if the benchmark plan premium in your area, in your zip code, is less than 8.5% of your income, you won't qualify for the credit anyway, regardless if there was a cliff or not.

But, if the benchmark plan in your area is greater than 8.5% of your income, you're now eligible for the credit. And this will benefit many people who might not have otherwise been able to take advantage of it, and here's why. In the great state of Michigan, in Monroe, Michigan, in my zip code, 48166, a 54-year-old couple, both 54, with 120,000 modified AGI for this purpose, would get a monthly credit of $230.

Okay, not a huge amount, 2,800 for the year. But, their friends in Bloomington, Illinois, zip code 61701, they're identical. They modified AGI, would get a monthly credit of $951, which is almost 12 grand. But, their cousins, who live in Charleston, West Virginia, also have $120,000 modified AGI, would get a monthly credit of $1,500, almost $19,000 against their premium.

It's all, now, I cherry-picked these, of course. These are all based on your zip code, and I've been using, it's called the healthinsurance.org calculator, and we'll be able to have show notes for that, so that you can look at it. So, the main thing I wanna make here, the main point, is that don't assume that this premium tax credit doesn't apply to you, and that's for 2021 and 2022.

- Yeah, all right. Thanks, Jason. Yeah, it's, I guess, a weird outcome of this law that we have clients with five, $8 million, they're getting a subsidy on their healthcare premium. Moving on to the next topic, I'm gonna discuss how to think about withdrawing money from your account. - Mark and Jason, if I could, we have a hand-raiser, Jody M.

- Okay. - Has their hand raised, if they have a question. - And so... - No. Folks, unless there's something that's really critical, relevant to what they're talking about, let's try to hold questions until after they're done with a segment of the presentation. - Okay, I'll go ahead and move on.

So the second segment I was gonna talk about was how to think about taking money out of your account. And certainly a lot of people will think, well, gosh, I spent all my life accumulating this money, how am I gonna live off this? And this can intimidate people. So I'm gonna talk about some considerations on your investments and how to structure those, and then a bit of just the mechanics of how you go about doing it.

First of all, when I work with our clients and we talk about the structure of their assets, I basically break down their assets into three different compartments. One would be their, what we call their qualified money, IRAs, 401ks, 457 deferred comp, that is pre-tax. Any money that they have, which is tax-free, and some people have pretty large Roth IRAs, or they plan on doing Roth conversions, that's the other bucket.

Then the final one would be their brokerage accounts. And I would throw cash in there as well. So the way that I view how they will invest or allocate their money is when are they gonna need to take that money out? For many people, it is likely going to be wise, and of course, these are generalizations.

It's likely going to be wise for them to take money out of their brokerage account and their cash first and allow their Roth IRA and their qualified money to grow tax-free or tax-deferred longer. For many people also, one thing about their Roth money, depending upon how their plan looks, their Roth money is money they're never going to touch.

Now, they may end up using it, but for many of them, it can just be a part of their estate. They just have enough of their assets where they're not gonna need to dip into their Roth money. And then the retirement money or the qualified money may be somewhere in between.

They may start taking the retirement money out in three years, seven years, 10 years. They may not take it out until their required minimum distributions that begin at age 72 at this point. So an important concept when you think about that is when I think about the investments for my clients, 'cause that's what Bogleheads think about, is, oh, I gotta have the perfect asset allocation or otherwise I can't sleep at night.

So a lot of times what they do is they'll look at their portfolio as a whole, and that kind of drives, I mean, personally, it drives me like nuts to think that way 'cause then you have to massage these portfolios to get the right percentage, and this account, and so on.

So I've evolved in my thinking a little bit where I would focus more on the compartment of money and how soon are you going to need to access that money. So my point would be, if you have a Roth and an HSA, and you may use your HSA really as a long-term plan, and that's gonna be long-term, then you may want to just have that be 100% in stocks if you're comfortable with that.

Really, regardless of the size of the Roth. The retirement assets, if they're going to be the second in line, you can still be maybe relatively aggressive with that, whatever that means to you. If that's 90/10, 80/20, 70/30, some asset allocation mix like that. And we do plans with retirees where they're retiring at 55, 58, 62, and it's clear from their plan that they're not gonna need to take their money out to RMDs, and then when they get to the RMDs, they're only taking it out 'cause they have to.

So they can still afford, if they're comfortable, to be relatively aggressive with their qualified money. So then that just leaves their cash or their brokerage account. And that is money that, frankly, I would encourage my clients to think seriously about how aggressive they wanna be with that money, because that's money they may end up relying or using fairly soon.

So the point about this that I'm making is, if you think of the money in your brokerage account, and I know this is somewhat heresy to some bogo heads, is that you might wanna actually have that in bonds or more stable-oriented assets. I know it's not tax-efficient, but still you've gotta think through when would you take the money out?

And so I think that's an important consideration for people that are getting close to the point where they're going to start drawing on the money, because that's how I kind of think of their assets is the different compartments that they can take money from. So that was something I wanted to talk about when we think about withdrawing money.

Now, another area is just, there are a lot of people that actually don't know how they're gonna take money out from their accounts. And it has gotten to be relatively simple. We'll talk a little bit about this on the technology area or how we think technology is gonna impact things.

But yeah, you can have, if you have mutual funds, you can get set up for automatic distributions on those where they come out every monthly, or you can do them once a year or twice a year or quarterly. And you can just have the money sent right to your bank account.

So when you think of taking money out of your account, it is actually really simple to do that these days. I find that my clients, as they get older, they tend to want to simplify things. And so they'll just say, "Look, just send me the money in January or whatever.

I don't care if it's too much or whatever the case may be." Jason, do you have any thoughts that you wanted to add in this area or not on the withdrawing of the funds and the asset allocation? - No, I think you covered it pretty well. - Okay. So we're gonna get to another one.

The third one here is the social security decision and some considerations about that. And that's a common one. We run different, we will run different scenarios for our clients on when they may think they will take out the social security or begin to receive social security. And for a lot of people, the default is, "Oh, well, I'll just take it later because I'll get more money when I take it later." So that's a natural way of thinking for many folks.

Here's what I've learned over the years since I've worked with my clients about the socials, about the decision on when to take social security. Now I've run a lot of scenarios on these, just a lot of them. And in many cases, gosh, the dollar differences by the time you're 90 or 92 in when you take social security, it's really a rounding error.

I mean, now it's $80,000, $100,000. Now that was a big number when you were 25 and 30, but in a plan where the assets get to be $4 million, $5 million, that literally is a rounding error in the plan. So many times there can be very little difference in the actual amount of money that you have based upon when you take social security.

But here's what comes into play on social security. As you're getting closer to social security, we tell a lot of our clients, they're 55, 58, 62, they wanna know, well, when's the best time to take social security? And I'll tell them, look, that's gonna be more of a game time decision.

As you get closer, that will come into play. I think someone's got a question. We actually don't have any slides. So there aren't any slides here. So you will kind of figure out your social, when you wanna take social security, kind of how it goes. If you have a change in your health, that may motivate your interest in taking social security early.

Clearly happens to people where they may become more skeptical about their longevity. And so they're gonna take social security earlier. If your assets are not performing well, when you're 64, 65, 66, you may say to yourself, look, I just wanna get this guaranteed paycheck coming in. Let's just start getting social security now.

Another factor which I think may impact people more in years ahead will be if we develop more cynicism about social security and how much it's gonna pay, I think that may motivate people to begin to take social security earlier as well. Look, let's just lock it in. I don't know if they're gonna start cutting this thing in the future.

But the biggest single factor in my experience in when people take social security or the reason to take it instead of deferring it to 70 is 'cause they want the money. It's really that simple. The benefit of taking social security later means that you're going to have more money when you're 84, 85, 87.

The problem is when you're 87, you're gonna wanna be 65 again. And so that is a realization that a lot of people have where they kind of look past the numbers with social security. And they'll say, look, there are things we wanna do now. We wanna spend, we're healthy now.

We're gonna travel and spend time with our family, spend money on our family. And social security is a way for them to simply have more money now. And by the way, I have done plans with people, kind of the early retiree, the 57, 58 year old, where depending upon their spending level and the amount of social security they're going to get, if they take it early, and when I mean early, I mean 62 or 63, that actually improves their assets over the long run because it allows them to avoid dipping into assets from 62 to 67.

That doesn't happen that much, but we've had enough scenarios where I can say that it is a legitimate outcome. Jason, did you have anything you wanted to add on social? 'Cause Jason gets involved in these as well with our clients. - Yeah, I'm on the side of the fence that although it is a rounding error, I agree with Mark.

Social security right now is the only inflation adjusted annuity we can buy. And we buy that by waiting. And it goes back though to personal choice, because look, how many of us have a two and a half or three or three and a half percent mortgage? Does it make sense to pay it off early?

Well, that's personal preference. Some people want to pay it off early, pay off the mortgage early, even though they could afford to write the check. Other people don't want to pay it off early because it's such a great rate, they think they can do better in the market even though they have assets to do that.

So it's personal choice. With social security, some people want to take it. That's great. It's really not gonna affect people on the high end of the spectrum that have a lot of assets. Now, it will mess up when we're trying to do growth conversions because you're bringing in more income.

You're in that really goofy social security tax bubble where even though, yes, you're in the 12% tax rate, based on how things go, you may be paying 18 to 20 to 40% for every additional dollar of social security based on the way that the bubble works. For people that are clearly past that, again, it's personal choice.

I believe in delaying it longer rather than sooner, especially if one of the spouses is younger and if that younger spouse is a female, you typically want to delay in order to get the survivor to have as much as a benefit as they can get. I do have a couple of slides that I'm gonna pop up real quick.

They're not designed to convince or confuse you. They're just a couple of slides I wanna show up to show graphically. The first slide, I have to give credit to where it came from. I went to a CPE class put on by the AICPA and Ted Sperensky, well-known in this area.

He's a great presenter. He did a whole two-hour production and I just grabbed a couple of slides. The first slide I wanna show that he put up is this is the same age for a couple, the same benefit, and the different bars are the colors starting at age 62, early, full retirement, and then delaying to 70.

Also, both dying, which probably won't happen together at 75, 85, and 95. The color coded is down here at the bottom where the dark, we start at 62, 66, 70. If you know when you're both going to die, it's easy. We know that, but because we don't know when we're going to die, that's why this question is a big deal.

When should I start taking it? The main thing that I've learned is take it when you want to. If you don't need to take it, then you can think about if you want to delay or not. If you're gonna die early, yeah, take it as soon as you can.

If you're gonna live to about your life expectancy, you know, it doesn't matter if you get a full retirement age or you delay because it's close. It's when you live longer, obviously, that you'll get more, but you may have to spend down other assets. Again, this is inflation adjusted.

That's a huge benefit. One more slide I want to show. This is the bigger deal. If one of the couple is a low or no wage earner married to somebody with a full retirement benefit of $2,000 and the lower no wage earner is actually older. In this case, you know, no matter when you die, you probably want to take it as soon as you can.

And that's just pure math. We went through, like I said, a large presentation on this, but I thought these will graphically show. Sometimes there's not a lot of difference when you wait. And other times there is a lot of difference when you wait. - Right. - Anyway. - Thanks, Mason.

So I'm going to go on to the next topic here. Now, this one is fun for me. And it has to do with this decision about when you're going to retire. And this involves being honest with yourself and having some introspection and kind of evaluating your aspiration. And it's the decision about actually leaving your profession.

And I've run into this one a lot. And so I've had to ask some of my clients and I'll acknowledge with them. This is for those out there that have not retired yet. Do you really have the courage to quit your job? Because once you leave, for the most part, you're not coming back.

And then you got to figure out what you're going to do with your time. And man, that can really impact you personally, can impact your relationships with those close to you. So it takes a lot of courage for people to retire. I did this podcast because I kept on getting this complaint, or I wouldn't even say complaint, a comment from my client.

They used to say this to me and I had to do a whole podcast on this. Oh, well, I can't retire because of healthcare costs. So they've got three and a half, $4 million. They're going to spend about 80, 90,000 a year. They got social security, got a pension, but they're going to keep working just 'cause now they actually have to pay for healthcare.

And I would say to them, I don't really think that's why you're not retiring. I think you're rationalizing why you can't stop working. And they kind of agree with that. And so many of the folks that I work with, and maybe some of you out there, it kind of, it's a tough call to leave work forever.

And so we can run the numbers for folks and they're going to look pretty great for many people that we do these plans. Some folks, they're going to be more challenged, but man, that transition involves a lot of courage for many folks. And as a kind of an addendum to that, or an additional consideration, for many people that we work with, many people here, many people you know, they are successful planners, successful savers.

They've arrived at a good place. And so they're ready to transition or they are transitioning to retirement, but man, they have difficulty spending money. They can't do it and it's really a shame. I had a meeting with a guy last week and this is what he said. And we were talking about his investment allocation.

I didn't use the word greedy to him, but actually that was kind of going through my head. And what we were talking about was his investment allocation. And kind of a default comment I have to my clients is that if were it me, and it will be me at some point, 'cause I will retire eventually, were it me, I would opt for more stability and give up growth.

So that would be kind of how I would want to transition on into retirement. So I would have a more conservative portfolio. And in this guy's particular case, he was comfortable being about 85% stocks. And his comment was, well, if the markets don't cooperate, which for many people is like the biggest thing that they think about is how's my portfolio gonna do?

Can I live off my money if the markets go down? And his comment was, if the markets don't cooperate, then I'll just reduce my discretionary spending for a few years. And I said, really? So between the ages of 62 and 65, you're not gonna like do much, really? You got one life.

And so that just means you're gonna have more money when you're 85 or 90. But man, you weren't able to do things when you were in your 60s, which is really when you wanted to do things. And so that was a part of my point was that if you've been thinking about your future for so long and planning for retirement, or maybe not even thinking about it, but it was a methodical part of your process.

And now you're there. And if you are successful, gosh, I wouldn't be hesitant about spending your money. It's okay to blow through some of your money as a retiree. So, and that is a difficult mindset for some people to get into. But man, it's just gonna be a shame if you've done the right things, but can't pull the trigger on, and I'm not talking about spending $250,000 a year, getting a nicer, taking a longer vacation, spending more money on your family, whatever's important to you.

So I wanted to talk about that as you begin to think about this transition from retirement, or if you're already there and are thinking about how to spend your money. Now, this is kind of related to this one, but this one has been something that has always been a part of my conversations with the people that we work with.

And it's about how you should think of your expenses when you think about your aging years. Now, the way that I view retirement is that for most people, depending upon when they retire, they're going to have a period of time, whether it's five years, 10, 15, 20 years, where they're gonna spend more money.

But there's also going to be at some point or another, a drop-off in their spending, their consumption. And in some cases, it will go down dramatically. So when you think of the future, I would not be intimidated by the idea of spending down some of your assets. I think it's perfectly fine to do that.

But I would think of your expense spending pattern as kind of a trajectory where it steadily goes up and then it drops down. In some cases, it drops down dramatic. And I share with my clients, my father, he's a great example of this. My dad's 89, he'll be 90 this summer.

He still lives in his house by himself. And his health is generally pretty good, as good as it can be for somebody his age. But what is he gonna do? He can't spend money. He goes to the diner and he watches the ball game. That's kind of what dad does.

He cuts the grass and he socializes with neighbors. He lives in Washington State. His biggest expenses is his property taxes and his insurance. But he spends about $28,000, $29,000 a year. Now, when mom was alive four years ago, they had cut down spending even before she passed. They were spending about $35,000, $36,000 a year.

And in their heyday, as it were, they were spending about $65,000 to $70,000 a year. So even with inflation, which is the next point I wanna get into, their consumption had gone down. So I don't think it does you any good when you're planning for your future to simply say, oh, well, we're spending $95,000 this year.

So when we're 88, we'll be spending $165,000. Like that's just not the way people behave. It's not how their lives unfold. So that's an important consideration when you think about your expenses over time. In a moment, we're gonna talk about long-term care, insurance, and how to think about long-term care as well.

But that's an important consideration in how we do plans with our clients. In fact, we have a category we call initial retirement. And we suggested our clients use it. It's for a period of time, 10, 15 years, where you just have a larger number. And even for travel, we usually only do the travel budget for maybe 10, 15, 20 years as a part of their plan.

Which leads me to the second point about inflation. And I've done some rants about inflation on my podcast, and I've really ran into clients about that. But when we do our projections for our clients, and we have these different graded expenses, I like to use 1.2% as an inflationary factor.

I know that there are many models that talk about the importance of inflation and the real rate of return on your investments and the nominal rate of return. But gosh, I'd be very careful about using significant inflation numbers when you think about your plan and trying to figure out if you have enough money to retire.

Because if you run a plan with, let's just say, a base return of inflation of even 2% or 3%, and you add that into the year expenses, and then you start to make decisions about when you can retire and when you can't retire, you're gonna be looking at some massive expenses when you're 85.

So I would recommend using a much more modest inflation number in your planning purposes. And that actually kind of fits in with that prior comment I was making about where we even have recommended our clients that they have different expense categories over time. But I don't fear inflation at all.

I mean, I certainly would fear inflation if we start getting rampant inflation in our economy, but just in day-to-day consumption expenses, inflation for retirees, that's not a concern that I have. Which leads on to the next point, which is long-term care insurance or long-term care costs and how you might wanna consider that.

And Jason will talk about this as well. Do you need long-term care insurance? I actually am a proponent of people getting long-term care insurance if they are in the right situation, meaning that if their assets are enough where I think that they're in jeopardy. If your assets are pretty low, maybe less than 300, 400,000, I'm not sure long-term care insurance makes sense just because you don't have enough to insure.

Maybe you can just spend down your money and then at that point you just qualify for medical assistance. On the other hand, if you have assets which are greater than some level, some certain level, 2 million maybe, whatever it happens to be, at that point, if your numbers project really well, I think you can definitely self-insure.

Also, for many, their home is a pretty big asset. Their home may be valued at $700,000, $800,000, $900,000, and that's nice to have in your back pocket if you end up needing, or the last surviving spouse ends up needing care, they can sell that property and take a lot of those proceeds that will help pay for their care.

With regards to long-term care insurance or long-term care in general, I don't know if you've ever been to one of these long-term care seminars, but we certainly used to have these trainings when I worked in a conventional distribution system, but the statistic is two out of every three Americans at some point in their life need long-term care.

And my mom needed long-term care. She was in a transition care facility for about 60 days, went back home, went back into another one again for a couple of weeks, and then she went to a group home and passed away there. And so the long-term care sales industry will use that as a ploy, I guess, to get people interested in long-term care insurance.

I've seen a couple of other studies, two others though, that talked about your real risk has an American over the age of 65 of having an extended long-term care event, which is when it's really gonna get costly. And that's less than the area of 10, that's less than about 10% of people that are going to have a significant costly long-term care event.

If you're going to, now, but I would definitely encourage people if they are interested to shop for long-term care. In my experience, kind of the sweet spot to look at it is your early to mid to latter 50s. Of course, if you talk with a long-term salesperson, it's like, whenever you talk with them, that's the right, if you're 10, that's the right time to take out a long-term care policy.

And some concerns, and they do certainly raise an important point in that if you get diagnosed with a condition, and think, oh, maybe I should go get a long-term care policy, then you're gonna damage your ability to receive a policy once you get diagnosed with some sort of condition, which would possibly indicate a higher likelihood of needing long-term care.

So yeah, so that's a bona fide factor in the consideration. But I think early to mid 50s, latter 50s is a good time to shop for long-term care insurance. Why would you get long-term care insurance even if you have significant wealth? There are people that do that, and they do it, in my experience, for two reasons.

One is they're simply sensitive to long-term care insurance. Maybe they dealt with it with their parents, a family member, they're very aware of the cost of it, and they simply wanna take that off the table. And for some, it kind of frees them up. They feel like they can spend more money, 'cause they got rid of that one big giant potential thing that could happen to them, even though it's not really gonna devastate their estate.

The other reason that people that have wealth will get long-term care insurance is just to preserve their estate. They'll use it as an estate preservation tactic. If you are going to get long-term care insurance and you're shopping for it, people say, "Well, I looked into it and it was pretty expensive." Well, if you're gonna get a long-term care policy, it's going to be expensive if it's gonna be a good policy, 'cause long-term care is expensive.

So you can expect to pay, I don't know, four to six, maybe $8,000 a year. You can also get these upfront pay policies where you pay a lot upfront, get all the premiums out of the way. But like other insurances that we buy, when you buy long-term care insurance, you can do a fair amount of cost sharing with the insurance company.

They have things called an elimination period, which is the period of time before the care policy kicks in, 90 days, 180 days, maybe 365 days. They have a daily benefit, and that's the amount of pay or the amount of cost that the policy will pay on a daily basis.

So you could look at a policy where you might say, "Look, we can afford to pay for 30% each day. We just want somebody to help with the majority of the cost." So you'd be willing to pay on some of the daily benefit. Another big variable in a long-term care policy would be the inflation rider.

These things come with an inflation rider. It's either simple or compound. Compound interest means that the money, the benefit that you're gonna get is gonna grow at a faster rate than a simple inflation rider, but it costs a lot more. That's a much more expensive policy. So you can massage the premiums or the cost of these policies by doing some cost sharing with the insurance companies.

So those are some thoughts on long-term care. Jason, did you have anything you wanted to add on long-term care and your thoughts on that? Maybe the insurance carriers? - Yeah, just a couple of brief comments. So long-term care, when it came out, I don't know, 20 years ago, I mean, two years ago, it was a novel concept and it was affordable.

I mean, people were talking about in their forties, "Go ahead and lock in a plan now." But what happened is the actuaries were not able to model the cost. And over a short period of time, many carriers got out of business and/or jacked up their rates to cover because the actuaries could not model these costs.

It wasn't like the risk associated with early premature death or disability that they've had decades of research and decades of experience. Modeling and doing the actuarial numbers ended up, they were wrong. So it has become very expensive. And the danger is if you buy it for a number of years, decades, maybe you can't afford it right before you actually need it.

So you have to be cautious and really think about how much you're going to rely on it. We definitely wanna buy it and we don't wanna use it because it's like buying a house insurance. If your home burns down, you're glad you have it, but you hope your house never burned down.

Well, what if your house insurance just got higher and higher and higher and higher to where you had a debate, "Should I continue to buy house insurance?" Well, house insurance does not go up. And the reason being is because the actuaries have it nailed down pretty well. Long-term care insurance, I agree with Mark.

If you don't have a lot of assets, you don't need it. If you have a lot of assets, you can self-insure. And the odds of running through your money are much lower than the industry would lead you to believe. It is there though, no doubt about that. Thanks. - Yeah.

Also, I've talked with a few clients and shared this experience. It's interesting how people feel about their long-term care policies. Like when they buy it when they're 55, it's, "All right, I got approved. All right, we'll write the check for this thing." They buy it with reluctance. They're 65, it's more regular part of their budget.

Now when they're 75, they're glad to have it. Then when they're 85, man, that's the one thing they don't wanna miss the payment on. They paid in this thing all these years, so they wanna make sure they get their money out of it. So a couple of other concepts I wanna go into, which are more general concepts.

One is the idea of how to handle your investments in general as you get closer to, and I mentioned this earlier. For those that have been, and of course, Bill Bernstein has the famous comment about, "If you've won the game, why keep playing?" I'm not sure if he literally means take everything and just put it in cash.

But I think what he's implying here is why expose yourself to unnecessary risk if you've already been a successful saver and your retirement's set up. And that is a comment I would share with my clients as well, is if you're already there, you've won, you have a successful plan, you've gotta figure out where you're gonna go with this thing.

And if it were at me, and again, it will be me at some point, I hope to retire. I'm gonna take, I'm gonna be a much more conservative, much more cautious investor, even without regard to the interest rates at the time. So I would move my portfolio into more of a stable portfolio, whatever that means, 40, 60, 50, 50, 55, 45, or some sort of asset allocation like that.

And I would encourage people to try, to the extent that you can really do this, and I know this is hard, but go through a bonafide thought exercise where you've retired, and we go through a really horrible financial apocalypse, not something that lasts for six months, and then the market goes back up again, or nine months, or a year and a half, but something that scares everyone to death.

Markets go down by 50, 55%. Whatever the intervention is, that whatever, that whomever's doing is not working. 'Cause you can't get away from that when it happens. Whenever the markets go down, like the last bad one we had was March of last year, two worst weeks ever, here we go again, they shut down the markets three days.

I actually had an email exchange with some buddies of mine, where we were trying to pick the low of the Dow, and we started to get really cynical. I was like, you know, one, whatever, it's gonna go. And of course, it settled down, but it went right back up again.

What if that doesn't happen for two, three, four years, and you're still 80, 20? Are you really gonna begin to stop doing things, enjoying your life when you only get one retirement? So it's a good thought exercise to really think, it was a good thought exercise. What I don't like about it, it's just a thought exercise.

It's like, it's not really what's happening at the moment. Now, the final thing I'll mention about planning for your retirement is when I have sessions with our clients, sometimes I feel like I'm pulling them out of this pit of weeds, where they're so bogged down in things that never matter, that they've lost track of the big picture.

So don't lose perspective on what you've accomplished and where you're at, as you're thinking about your future. And what I mean by that is I would not grind over these numbers unless you kind of enjoy that kind of thing, and some people actually do. Are you making changes in your portfolio or thinking about changes to just do it?

It's probably spinning wheels more than anything else. So I'd really try to take a few steps back and focus on the big picture. And where that really comes in handy is if you are hamstringing yourself from spending money on yourself or your family or things that are important to you, 'cause you're concerned about your plan when you've lost the perspective of how good your plan actually is.

So that's kind of the topics that we wanted to cover. I got distracted. Those are the topics that we wanted to cover for some considerations in structuring your investments. Now, Alan, did you want to have questions on this before we moved on to the technology? Our technology comments will actually be more brief.

So did you want to have a Q&A here if there were any? - Yeah, so why don't we take a little break and have some Q&A here, if you guys can submit questions by the chat. If people are not on camera and don't mind having their name pop up, I'll keep recording this for the time being.

So please submit your questions. Or if you want to ask a question in person, raise your hand using the raised hand icon. - Do have Larry Alexander had his hand up. I don't know if that was intentional. - Lady Geek, you had a question? - Yeah, I just wanted to mention that during the choice of the medical insurance, what helped me greatly was to use a medical insurance broker.

And there happened to be one near me, he helped my parents out, especially when you have to mix it with Medicare. That's not for me right now, but for my parents it was. He went through every plan. He came to the door and he, I know they take a commission, but it's no cost to you.

And they signed on the spot because he spent like half hour, 20 minutes, you know, a long time with them and just said, what's your situation? Here's what you do. This is the clear cut choice. So I'm actually using one now. I'm actually also on COBRA. I retired last year and I found out that COBRA for me was cheaper than the marketplace because of my age.

Maybe you should mention that the premiums go with your medical, the premiums of your employer go by the average age of the workforce. Since I'm an older person, it's actually more expensive if I go to the private market. So by going on COBRA, which actually is paying 102%, I still save nearly half of what it will cost me out on the marketplace.

So when my insurance expires in October, I'll call my broker and say, just set me up. So I think that just saves a lot of work and I'll do my own research, but I just want to mention that, use a broker to help you. They do this stuff every day.

- Yeah, definitely. I want to follow in on what Lady Geek said is that there are some really good people out there that are, and she's right. They work in this day in and day out. They know which plans and yeah, they're going to make a commission, but it's not untoward anybody.

They're actually doing a good thing out there. So yeah, good point. - Yeah, and make sure that's not the same as a life insurance agent. It's a separate agency that does medical. Don't go to the provincial or med life or any of those normal websites you see on TV.

It's a medical insurance broker and that's all they do. Okay, I'm done. - Yeah, it's a bit of a, you know, it's a specialization. Here in Minnesota, we have brokers from UCARE and Medicare or Medica and Group Health that can provide quality guidance to consumers. In fact, we did an hour long interview with, I can't remember her name, but she works for a national Medicare broker from out of Dallas.

So, you know, we put that on our podcast. - All right, Martha, you had a question? Perhaps. - I think I may have seen some questions in the chat. Is that where they're going? - Martha, I think you're on, there you go. - Thank you. Sorry. Jason, I missed why there was such a difference with the zip, people living in different zip codes on the subsidies.

Is it because of the way the states went into Obamacare? - Yeah, that's a big part of it. So, it has to do with the average, what the rates are in that particular county, because if you are shopping for health exchange, marketplace healthcare, it's based on the county and the zip code that you live in on how the plans are priced.

So, that's exactly it. That's why I picked those zip codes. I mean, I picked mine and it happens to be a very low number. But West Virginia is notorious for having high plans. In particular, Charleston, West Virginia is one of the highest, way higher than Hawaii and Oceanside, California.

So, it just depends on where you live, if it makes sense to use, especially with the removal of the cliff. - All right. There are a couple of chat questions here from Robert. I guess maybe this is just for the participants. How many clients, I guess participants limit their adjusted gross income by IRMA thresholds?

- I didn't hear that. Jason would know more about that one. Did you hear that question, Jason? - Was it a poll question or a content question? - No, I think it was just asking, one of our participants is asking other participants about how many of them limit their adjusted gross income, or I should say, manage it based upon IRMA thresholds.

I know for one, I tend to do that to some extent with Roth conversions, at least to factor that in. It's probably an individualized decision weighing the pros and the cons. - Yeah, I can jump in with a quick comment on that. I've had a couple of discussions with Mark and I'm going to share a slide here for everybody itching to look at another slide.

Okay, so this comes right off the source as the Medicare website. And what this is, is for 2021. Generally, we know that the Part B is 148.50 per month. So for a couple that each have Medicare, they're going to be paying about 300 bucks a month, 3,600 a year for Part B coverage.

Great. Well, what if they hit IRMA? Which IRMA ends up being additional premiums. It's called the income-related monthly adjustment amount. And if you are married filing joint, if you're over 176,000 up to 222, look, you're paying about, what, another 60 bucks each per month, per year. So it's not life-changing.

It does start to add up. You know, when you get up to more than 222,000 up to 276, and here we're talking about getting pretty thick into the 24% tax bracket, you're doubling Part B. Again, not the end of the world. The numbers do start to add up after a while.

Don't forget too, that's Part B. Part D, if you have a Part D plan, drug prescription plan, there's also an IRMA effect. If you're over 176,000, it ends up being 1,230 per month on top of whatever you're paying for your drug plan, 25 bucks a month more for a couple on Medicare.

So again, not plan busting, but the numbers add up after a while in the 24% tax bracket. You know, when you get up over 222, you're looking at $63 plus the amount of your drug plan. So you have to be aware of it. And definitely, if you're close to it and can keep under the next threshold, sure, do that.

But, you know, don't go without income. Spend your money, as Mark was saying earlier, because as I like to say, you know, go first class because your heirs definitely will. - True. Dan had a question. Why not keep taxable account in equities and replace them with equities in your IRA or 401k the same day?

That way you were actually selling bonds and not taking the ordinary income taxes in your brokerage account. - Yeah, well, yeah, a lot of strategies. You have to be careful though, you could have watch sales. But no, I mean, it's a strategy for sure because you're maintaining your asset allocation.

You're trying to sell strategically, tactically. Yeah, that's a good idea. - There was another one that just popped up there, Alan. - Okay, if you can read that. - Well, let me, I gotta figure out how to use this. Well, okay, why not? Okay. Okay. If you don't think you'll spend, okay.

- I see, if you don't think, go ahead. - If you don't think you'll spend all you have accumulated, is there any problem? Okay, I'm laughing. Is there any problem taking the mindset that hey, this is your grandkids money? You can do whatever you want with your money, whatever your mindset happens to be.

And so I think that's perfectly, because I think what you're talking about is either giving the money away while you're alive or just investing it in a way where it's really for your grandkids, which would typically mean you would invest it aggressively. There's nothing wrong at all with that.

As long as, if you make that decision when you're 80 or 79 or whatever, if when you're 90, you don't sit around and think, oh my, what was I thinking? How did I possibly end up with 100% equities? So as long as you can maintain that perspective, then yeah, that's perfectly fine.

You know, we do plans with people that, and they're in this group, like people, not like, I mean, these are representative of people in this group. Maybe there are some people we've done this plans with. Where they can't, they haven't come to grips with how much money they have.

Like they can't, they don't understand. The numbers are too big. And so they don't, you know, they've lost perspective on that. - One thing, I'll throw out relating to long-term care, a personal anecdote. My 89-year-old mother and my father, who passed away about 28 years ago, sold insurance in the end, selling long-term care insurance.

I didn't know much about the details of that, but I think he was honest and tried to work in his client's best interest. But he, before he passed, made sure my mother had an excellent long-term care insurance policy. And she's paid the premiums every year for 25 plus or 28 years.

And now her insurance company is Insolvent. It's based in Pennsylvania. It's in rehabilitation. I've read through the current legal filings and they basically are millions of dollars in the red. And now we don't know what percentage of the benefits she'll get. She'll get something because the Guarantee Association for each state then steps in, but it's really up to the state to decide how they fund that.

And that's another consideration. Even though she started off with an extremely highly rated insurance company, it got sold and then resold and purchased and acquired by somebody else until they went insolvent. Probably some legal shenanigans that went on there, I suspect, but that's another consideration is the strength of the insurance company.

And even if they are strong on paper currently, what will it be in 20, 30 years down the line? - That's a good point. If I could expand on that here a little bit, 'cause I hate the word guaranteed. You know who I worked for in 2008? I worked for Valek that was owned by AIG.

We had people, it's happened twice. We had a little tiny office in Edina, Minnesota, corner office. Two people came into our office threatening our staff. You may not remember what was going on at that time, but AIG was vilified in this country. And before that though, AIG, I think, was one of the seven or eight companies.

And I don't really remember this stuff, but had the most sterling ratings from the rating agencies here in America, from all of them. And we would promote that when we would go give presentations to one of the seven companies that have had a great rating for 80 years. And if you were to go read the Morningstar report and the ratings reports about AIG, they talk about the wide moat and all the businesses and how this is the most financially stable company in a matter of a weekend, right?

I mean, that's not how long it took to happen, but basically AIG collapsed over one weekend. So, and so I don't know how to do that analysis, Alan, where you would come up with an answer about the financial wherewithal of these companies in the future. But it's a legitimate point.

If you're gonna buy long-term care insurance, you know, that risk is out there, so. I think there's a quite, can we give an example of what you mean by big or what is considered average? That may be in the context of large assets. I think that I would relate the size of the asset to the amount of spending people have.

So if you are people that, or if you're a person or a couple where you kind of like to go to Greece for three months and you're gonna have a really nice place there, and then you're gonna go to Hawaii or wherever you're gonna go, and you're gonna spend $350,000 a year for the first seven years of your retirement, we don't have many clients like that.

But if you're gonna spend that kind of money, then your portfolio, if it's $3 million, is in jeopardy unless you're getting like a really big pension. You're gonna have to have bigger assets. Most of our clients are like that. So if the question is, what does the term big mean?

Gosh, many people can get by on social security and they, $1 million, 1.2, they're fine. You just don't do that much. So I guess I would compare the size of the asset to the amount that they're gonna spend to determine if it's big. 'Cause yeah, that can be a very mis, that can mean, that's a term that can mean something to one person entirely different to something to somebody else.

- Actually, I have something about a long-term care insurance. If I look at our family, most of the family members would not have benefited from long-term care insurance because it would not have kicked in before they passed away. Or they simply did not need to be in a home, let's say, care in their own home and the policy didn't cover that.

Or maybe had dementia and the policy, the old policy, some of them didn't cover that. We had one family member who did have Parkinson's for many, many, many years and actually ran out the long-term care insurance. For him, it worked, it was critical. It was very, very important. But for most of our family members, they could have afforded the, without the, they could have made it without the long-term care insurance.

- Yeah, you're right. I think that's the reality for most. And by the way, a comment I would make when we're talking about thinking about paying for long-term care, I'm uncomfortable with the strategy of giving away assets and going on medical assistance. And that's getting harder to do, I know, in various states 'cause they have look-back periods.

But I think an important consideration on that too is simply the idea that you don't have any more money and just giving it all away. And you're losing some of your dignity when you do that. And frankly, you're losing control over what your options may be in the future.

So for those that have wealth, they can consider doing it, but I consider that to be a fairly risky strategy and something I would have a hard time advocating. - Could you expand on that for people with wealth? We're talking about, shall we say, your average bogel head. (laughing) I mean- - Yeah, I know what you mean.

No offense. - I mean, like, it's sufficiently, a nice retirement. - Gosh, yeah. - And what do you mean by spending down? How would we spend it down if we have social security, if we have investments and I have a pension? How would I even spend it down? - Well, do you mean give it away?

Was that, I mean, for the long-term care? - No, you were talking about spending it down. And are you referring to spending it down so that Medicaid comes into play? Is that- - Oh, I'm sorry. I'm sorry, yeah. Yeah, so let's just say that somebody... No, I was talking about giving it away.

I'm sorry, yeah. And people will try to do that. They'll give away their wealth to their family 'cause they'll say things like, I don't want the nursing home to get my money. So I'm going to give it away. - And how do they, what do they do if they're not in a nursing home then?

- Well, they're out of money at that point. So, well, they may have enough to, they may have a pension or social security to pay the bills, but they're not spending that much money anymore. - Okay. - But yeah, I don't know if anybody's had any family members that could chime in.

I don't know anybody personally that's ever done that. But I mean, that I know, I know clients that have done that over the years, so. - Well, actually I am saving my money because we do not have long-term care insurance. And that I worry about because I've seen with our family that when we get older, we do need assets to make our life more comfortable.

For example, hospital beds, we needed a hospital bed. And the only type that Medicare would pay for was the crank type of hospital. They would not even pay for an electric hospital bed that would raise him up and raise him down at the push of a button. And so I said, well, who's going to pull, who's going to crank it up?

Well, he has to get out of bed to do it, or you have to have aides there to do it. In other words, we have to think ahead and have, I always felt, and have enough money in the bank to pay to make our life easier and more comfortable when we're older and infirm.

- Yeah, yeah. And go ahead, Algen. - I would just say basically self-funding, it has to be factored into the retirement plan, having sufficient assets to provide for that, self-insuring in essence, and making sure you have enough to fill the gap. - All right, any further questions on proceeding conversation topic?

If not, I guess we can move on to the next topic, which should be of interest in our technologically advancing world. - Yeah, I do have Zoom meetings with my dad, who's 89. So yeah, things are changing. But, and this will be brief, more brief, but Jason and I chatted a little bit about some of our views on how we see technology impacting financial planning.

Our business model, I mean, it's clearly based upon using technology efficiently. That's what our clients do, like you did and so on. And how you use video to support getting going with this. But it's this idea of financial planning, which is a part of what we do, it is my suspicion that in the future, there will be apps that will essentially make a lot of these decisions for us.

Right now, they're not there yet. And I think it's gonna take quite a while to be able to integrate the different moving parts together, or at least a firm hasn't figured out yet if they invest a lot of the money that would be required to do this, that they're gonna get paid on this yet.

Now, eMoney is a competitive, it's one of the more competitive products in the financial advisor space. Money Guide Pro is another good one and some other ones. And these tools are really good at doing planning and they have a lot of functionality. And right now they're used through firms like PlanVision and other advisory firms to work with their clients.

But I would guess that in the future, there's going to be tools where consumers can go directly to the app themselves and will be able to do a lot of their own financial planning themselves. Artificial intelligence, I assume will be some part of that. The challenge may be the interpretation of some of the information or the data, which actually is still a lot of what we do.

When we have these collaborative sessions with our clients, they've kind of moved all the way along and we're just helping interpret a lot of the information and providing comments on what they're seeing. But I certainly think that consumers are gonna be able to take a lot more ownership over their financial plans in the future.

And this process of looking at your assets, oh, how are they going to play out? Am I going to run out of money? Oh, and then you have to go over and look at your investments and say, well, okay, based upon that, I got to make this decision and then I should structure my assets.

I think that's going to be integrated a lot better in the future, where it'd be a lot more simple. So an example of where this might go would be for younger people, people that have debt in their 20s and 30s. There may be a point where the technology will essentially make that decision for them on whether or not they should pay off a loan early or invest their money.

And that might be, who knows? It might be a model that might change based upon the dynamics of the markets and that kind of thing. So that's one area where I see technology improving that. And our firm is trying to be on the front of that too in how we use technology.

But basically allowing people to do their own financial planning for the most part. And some of you probably use your own, some of these online calculators, which are getting better all the time and allow them to do quite a bit. This process of taking money out of your account, I would suspect that that would be simplified as well.

The distribution mechanism, it is somewhat simplified right now. I would guess there are some people here that are getting automatic payments right now on their retirement plans. They don't have to think about anything. It just comes out automatically for them. But my guess is that distribution management and what account you take money from and which actual asset you take it will be taken care of in the future.

And as a part of that, the tax implications of that as well. Again, this is all kind of tied into financial management or financial planning management as well, but more on the distribution side. That the technology will be developed to integrate all this information together so that the consumer needs to make less decisions about where to take money from and when to take it.

So I would suspect that there's gonna be improvements in distribution management as well. And I guess as a part of that as well, if I didn't say this, is tax management too. That taxes will be much more automated in the future than they are right now. I mean, Jason, you worked at, was it TurboTax?

- Yeah, I worked at TurboTax and I was a tax expert with them. - Yeah. - And yeah, TurboTax is fantastic. They've got the internal revenue code built in and merely by asking questions, asking the right questions, the software walks you through. There can be some very complicated returns that people are able to do if they answer the questions correctly.

The decision though, on what to do. - Yeah. - AI has to come a lot, lot further along. But as far as actually tax compliance, yeah. I mean, it's phenomenal what the big firms do. TurboTax, H&R Block, all the software. - Yeah. - For sure. - Thousand ways to go.

And actually we are, you know, we use Salesforce. And for those that use Salesforce, man, that is an awesome program. And that's integral to how we manage our business. But we're having some initial discussions with our Salesforce developer on how we can have more interactive data gathering sessions with our, like, I mean, the Salesforce tech system in gathering information from our clients, integrating that into our system and then providing them with advice.

So that's a form of artificial intelligence, I guess. Even though it's somewhat, it's somewhat, you know, crude at this point. I've joked with some of my clients that hopefully someday I won't have to meet with them. But, so those are, you know, we'll see where this thing goes, but the financial services industry managed to escape the dot com craze.

And all these advisors that thought they were going to lose their jobs, oh, they're still around. They still want to talk to us. But slowly it's encroaching on the industry. And there's more pressure on them. My gosh, with the robos, who I think are a much better option for people than going to, you know, sit in some advisor's office and charge you 1%.

A robo really compressed that fee. And now it's coming down to, you know, 30 basis points, 25, 20. And, you know, you can, if you're, if you just want a simple fund, you can go to Target Date Fund, which is what I use. So a lot of pressure on the investment management side of this, but I think you're going to feel, see a lot more pressure as well, just on financial planning and guidance with artificial intelligence and the kind of the ability for programs like e-money to be done at the consumer's level.

- Yeah, definitely. And to add onto that, younger generations are far more willing to use apps on their phones to apply for mortgages. Look, you can do your tax return, kind of complicated, your tax return with an app. You take a picture of your W-2 and documents, the program will upload them.

You have to review it, of course, but younger people, not me, younger people are willing to do a lot with apps that as older folks, we want to sit across the desk or the Zoom call, but they're doing, AI is going to get there where you can do a lot more.

They can do a lot more with the apps. So technology is clearly rolling forward. - Yeah. So anyways, those are just some thoughts, not too much to add there, but I think there's going to be a lot of pressure even on the financial planning side. Now, maybe a ways down the road in the financial services industry where bubble heads won't have much left to talk about.

- Oh, we'll still talk. (laughing) - There's always oatmeal and Costco chicken. (laughing) - And whether you should invest in international funds. - Exactly. - Shall we open it up for questions? Lady Geek has her hand up. - Yeah. Okay, technology and a site administrator. Perfect confluence. Okay. Also, I'm also into, I promote the Bubble Heads wiki.

I'm a wiki admin. But one thing, everybody, you're using the magic words of artificial intelligence and that's something I'm a little bit more familiar with. But what I don't hear are the magic words in financial planning to start, 'cause you're talking about investments, you're talking about taxes. What I don't hear is an app that says, that basically follows the financial planning article in the Bubble Heads wiki, which is first, do you have an emergency fund?

Are you paying off your debts? What app can you give to a new person, like high school, college, that basically is gonna load in a ton of your financial information? So that's a privacy thing. But something that takes into account everything you're doing right now. What's your salary? Can you meet a monthly budget?

Budgeting, personal capital. But are you ready to invest? You go, okay, you go to Betterment. No, you're not ready for Betterment yet because you don't have six months of emergency. What's in your bank account? Oh, well, I can sort of eat chicken this week. So I don't hear the words to tell a new person or a person just getting on their feet to say, no, no, don't get a mortgage.

Your renting is fine. Where is the app that follows what I tell people in the Bobo Heads forums? Getting started. Don't just type it in the search box, financial planning, also planners, and see those basic steps. So I mean, I know Mark, it's beautiful applications and all your tools and everything.

It's helping you run your business and helping people. But I don't hear the words, oh, first of all, I'm retired and I'm in a good situation here, but I don't hear the words to tell a person you're not ready, that says don't invest. I don't hear the words. Here's how to save.

Are you meeting your budget? So let me give, I say Bobo Heads, we're very vocal. And I'm trying to help point things in that approach. Apps are focused on investing. Apps are focused on taxes. Where's the app that puts everything together like a super app or, you know, I can give all kinds of terms for that, but let's start.

- Is this a question? Is there a- - Yeah, it's a question. Well, we also give a lot of, it's just something, maybe you hit a trigger point in me, but that's what I'm trying to- - Actually, I have the answer to that, Lady Geek. - Okay. - It's not an app yet, but I have to give a shout out to William Bernstein, because this is what I show Lady Geek and all the Vogel Heads.

This is what I show to many of our new clients, especially the younger ones. And I say, look, take an hour to read this. If you don't live in the US, ignore the references to the US tax code, but the five hurdles will apply to you. And it's not an app, maybe I should write the app and split it with Mr.

Bernstein. But this is what you're talking about. We just needed an app form. - Yeah, okay. It's a free download, you know? Yeah, yeah, so- - Yeah, I know, but I got to show them a beautiful picture before I email it to them. - So you say, that's what I said, very, it's just that I hear different things.

I guess everybody has a different perspective and I like to work from top down. My background is just in engineering, so I retired. So I work at a big picture level and try and flow things down. So I want to get these people off on the right path before you send them down the path.

That's all I was trying to do. And maybe there's something that has this existing, that's fine. - Yeah, that's what I would kind of what I'm alluding to is that there would be some sort of tool that some firms will begin to develop that would be based upon where you're at in life.

And so if you're 21 and you start your financial planning that it would say, oh, well, you don't have enough money in the bank and you can't invest because you have, you know, a four and a half percent student loan, you'll deal with that first. That's my assumption of where this is all going with technology.

Is that it'll be based upon where you're at in life and it'll, you won't have any, like I'm being glib here, but you won't have any decisions to make. Your thing will just say to you, oh, what are you doing? You don't need to be doing that. You can't spend that money.

Get back in your house. - Okay, yeah. And one other aspect of financial planning actually includes estate planning. I like to encompass everything. Should you think about this about when you're 25? - That'll be quite an app. - Yes, it will. And it's a huge, but I say, should you be thinking about estate planning at 25?

Oh, yes. - Yes, especially for the people that have children, because if you don't have your guardians, you have no business to even open an account because, you know, that's critical. - Yeah. - So I agree. - Yeah, okay. I feel much better now. Thank you. - There's a, Jim posted a URL there for a flow chart.

I think it's for younger people as well to walk through some of these decision points. One thing I'm curious about, us bogleheads as a rule are generally financially savvy, otherwise we wouldn't be here or wanting to be, but we represent a small minority of the average population. So even with artificial intelligence and apps, I still think there's gonna be a tremendous need for advisors like yourself, if not in person, for handholding and explaining and coercing people to follow the recommendations.

- Yeah, the notion that there's just like some sort of an orb that describes your financial life for you and you carry it around with you and it hovers and tells you where to, that might be 250 years away, like way out there. But yes, I think there's always financial guidance at some level or another for many folks.

You know, it's interesting, but who is it? Bill Gross, the PIMCO guy, he's the CEO. Yeah, he has, it's a funny story, but I- - I'm a PIMCO guy. - Yeah, I'm a PIMCO guy. Yeah, but when I was at Valek, they brought in to speak his financial advisor.

The guy had a financial advisor. So yeah, I think there's a role for financial, however you wanna characterize that person or the role that they play for individuals, for many people, whether they're bogal heads or people that aren't bogal heads. - By the way, I wanna add, we're continuing the recording.

For anybody who, let's just go ahead and you can raise your hand or ask questions in the chat. If you wanna be on camera and wanna maintain privacy, you can turn off your video and/or change your name. But I think the recording will be worthwhile for other people to watch.

- And what is interesting to finish the thought, Alan, about that, 'cause some of the folks are chiming in here about the role of professional. It is, yeah, personal finance is very personal. Gosh, we'll talk with, I will have meetings back to back with people that have attitudes that are 180 degrees different about their investments and how they're gonna spend their money.

And yeah, and they may have an entirely different set of questions, even though their financial situations might even be relatively similar. - We have a question on web-based financial services that integrate a person's investment accounts. Has there been any significant security breaches in these services resulting in the compromise of the investment accounts?

- Well, I'm not aware of any. If you're talking, yeah, if you're talking about like the personal capitals of the world, maybe companies like e-money or I'm not aware of any breaches that have occurred. It doesn't mean it hasn't happened, but it hasn't gotten news to the level that I would have heard about it.

- Mark, I'm curious, since you have the option for most of your clients for them to connect to the aggregator in e-money, what percentage entered in manually versus actually connect? - I would say probably, I don't keep track of that, Alan, but I would probably say it's between 10 and 20% that manually type them in.

And you know, our program e-money and the other ones too, probably, they're actually pretty easy to use if you type in your stuff manually. It doesn't really take that long once you do it a few times. Of course, a lot of people like the updating feature, so both can work fine.

- Alrighty, further questions, folks? - Well, Jim K wanted to know why he had to establish an emergency fund before going with GameStop. - Well, I, as an, I don't know if it's an aside, but we actually, a very good friend of mine runs a hedge fund, right, as it were.

And so I interviewed him, Stu, and he's a podcast on our site, to talk about this, because man, when that was going on, I thought to myself, there is so much being made about this, and it's, there's just not a lot of depth to this whole thing. And it was, to me, it was almost like watching a Netflix show, you know, unfold.

You have these crazy folks in the Reddit website that are, you know, going after, going after a hedge fund. So it's just, it's kind of a weird dynamic, but I don't think there was a lot of substance to it, but it certainly got a lot of attention. - You know, I've got a question.

I know eMoney is owned, I think, by Fidelity, actually. So you're dependent upon their developers to add capabilities. I'm just curious, from your business perspective, how much feedback are they getting from individual advisors, asking for additional, you know, capabilities being added? Is it functional as much as you'd like it to be, or?

- I'm- - Are you handcuffed by whatever they decide to put in? - No, they're always doing updates, both software rollouts. Recently, in fact, just now, they're rolling out what they call a modernization of their report format, just to make it much cleaner. But there's a request that advisors can put in and if the request is already in, you just can vote it.

You upvote it. If you think, yeah, that's a great idea, they need to add that. Here's an example. eMoney has almost, not quite an unlimited number of types of retirement plans, but the 457(b) is not actually an option. So when I contacted them, they said, "Oh yeah, that's a popular request.

"We are working on it. "So just go into the survey, click on upvote "to put more votes behind it." And by popular opinion or popular demand, eMoney does direct improvements based on what the advisors are requesting. - And Alan, to add on that, I'm very impressed with eMoney. Their internal support is awesome and they do a really good job, I think, with their technology.

So they're great to work with from a vendor's perspective. - No, I've generally been impressed with it. I use Personal Capital also, which has some surprisingly robust tools for the individual DIYer, it's very helpful. I hope that all these platforms, we just, the Chicago Virtual Society, Jim's chapter has been exploring a number of various tools available.

- Tools. - And they have the new retirement folks on as well, which is interesting. Of course, they're developing that totally in-house. Probably don't have the resources that Fidelity and eMoney have, but it's nice to see multiple different platforms being developed and hopefully the competition will continue to push each one to a higher level.

- There was a question here about the podcast. We have just been doing the podcast for our clients only, but it's, we're going public now. And so we're right now on iHeartRadio and Spotify, and we're trying to get out, like our, whoever does our distribution is trying to, that's actually the website, Alan.

They can't get the podcast there. - Right, oh. - Okay, yeah. - Right. - So Jason put a note there, but on, we just, I'm not kidding, like in the last four days, we went on iHeartRadio, and then before that Spotify. We'll be on Apple, and yeah, Apple's the big one, iTunes, and then Google, and then there's another one.

So we'll be on five podcasts soon, but it's just, it's planned vision. I don't know how, I don't use podcasts much, so I don't know how you find them, but I think you just type in the name, I suppose, and we'll pop up there. - Yeah, it's interesting with all the podcasts, and now a lot of them are going on YouTube, the kind of, people are getting saturated, I think, with content, and it's hard to sort it all out.

- Yeah, you're right, yeah. - But I've listened to a number of your, the private podcasts for your clients, and they're excellent, and they're short and sweet, which is nice, little snippets of good information. I don't know if you-- - You know, I did that-- - In that format.

- I did that because when I was, well, the last six years of my life, I worked so much, that I don't have time for anything else, so I thought, well, I'll just do these short podcasts, 'cause that's what I could listen to. Lee, a client of ours, for clients who have worked with you for a while, what have they said they would do differently if they could retire again?

Does that mean, like, would they retire later if they could, or retire sooner? - I don't know, I guess I can just, the vibe I get from some of my clients is some of them don't feel prepared for retirement. And I don't mean financially. I mean, they're not ready to not work anymore.

They're scared of it. Some of them, man, best thing they ever did was stop working. - Right. But for retiring, for people that have been working for 20, 30, 40, 50 years, working is part of your identity and who you are. - Yeah, exactly. - And the psychologists say, do not retire from something, the job that's grinding you down.

You need to retire to something and be emotionally committed to whatever that is. And it might be volunteering, it might be teaching, it might be another job. It might be crocheting at home. Whatever it is, you have to be emotionally engaged and be excited to get out of bed to do whatever it is you're gonna do.

- Yeah, great. If people have the opportunity, a great thing to do is have a practice retirement where if you are able to slow down a little bit at work and devote more time to those pursuits that you think you want to continue with to see how it goes and be flexible.

I know, I thought I knew exactly what I was gonna do during retirement and I had a whole list of things and I've probably only done 10% of them, but I've added 90% of other things I hadn't anticipated, of course, forced by the pandemic, but you have to be flexible.

I think that's the key, regardless. And creative. - Yeah, I've been very inspired by many of the people that I've interacted with over the years who are still working. In fact, one of the clients I met when I started a group business was this, he's, gosh, he's gotta be 75 now, but they hired him when he was a 71-year-old former judge from Hennepin County here in Minnesota to be the executive director of a small nonprofit.

So I interviewed this guy and one of the things he, like he, the staff can't keep up with him and he said he's very insecure about his job. And he said he feels like he has to justify to the board all the time why they hired this old guy, is what he said.

I hired this old guy, I gotta keep on busting my ass so they can justify why they hired me. So, but a lot of people like that, just very inspiring people that continue to work in some capacity. Or other folks that leave and really find something that they enjoy that kind of re-energizes them and reinvents them a bit.

That is one of the gratifying parts of the work that I do is, and Jason does, is to interact with these folks. It's pretty cool. - Found everything that you've said to be very accurate. It was very difficult for me to retire and I didn't for many years for that reason.

And my husband went back to work. So, after he's home, we do have another question. What is the name of the insurance calculator that Jason referenced? - Oh, that's right. - Yep, I did put that up there. It's right- - Oh, I see, okay. - At 933. - Okay.

- And that's, they just updated it to accommodate the change with the ARP, the American Rescue Plan. They did update it. And again, it is a tool. It's not the be all end all, but it's pretty remarkable if you plug in your zip code. - Hey, I wanna make a comment about this whole retirement talk because this has happened several times in my career.

Even before I did plan vision, I was doing financial advising with Valak. One of the benefits of going through the exercise of doing a plan pre-retirement, whether it's eight years, six years, five years, to kind of get some clarification on the numbers, things change at work. Your health might change, culture might change, new boss.

You wake up one day and the world looks different. And I've had several people that send me an email and say, "You know, I'd like to go over the numbers again 'cause I think I wanna go." Something happened and that's, you know, the plans change. So that's on the early side.

Was that you, Miriam, that's saying you had difficulty leaving? - Oh, yes, it was impossible. For the reason you said that you are identified with your profession, with your job, with what you do. It is, what, 32 years, 34 years of my life. - Yeah. - Also, I felt that I had so much to offer.

I had so much knowledge, so much experience. - Yeah, exactly. - To offer, I was good for the world if I kept working. It was good for, you know, it was just a good thing to do. And why would I waste my education and all my experience to retire?

- Yeah. - And yet it was time. - So did you end up working two, three, four years longer than you needed to or felt like you should have? - I worked until I was aged out. - Oh. - I worked until I was aged out. My husband, but then went back to work.

And he still works. - Yeah, I was very impacted by a speech I heard in the late '90s by a hospital administrator from a small town in Minnesota. And it's hard for me to not get emotional thinking about this. But he was, he explained, he had retired. He came back to talk.

And he came back to talk about his retirement. But he was relating the story about his first week and his month and his first three months of not doing his job anymore and how devastated he was. He was the hospital administrator in a small to mid-sized town in Minnesota.

And so he knew everyone. And he was a part of everyone's life. And nobody called him anymore for his help anymore. And it just did, yeah, it just demoralized him. - He knew so much. He could have done so much good for so many more people for such a long time.

And yet now he's not doing that. - Yeah. It's a feeling of like, it just, you know, the song "Blowing in the Wind." It's just, you know, it's all just blowing in the wind now. - Of course. And when people, for some people, when they do this transition, now they're getting old.

- No. - Retiring is for my parents. - Exactly. By the way, for those that haven't come across this guy before, some of you may. One of the best speakers I've ever seen is Ken Dykewald. And Ken is the founder of Age Wave. And he's been speaking on the baby boom generation, their influence on our economy.

But he's a wonderful speaker and a very influential speaker on how people age and what aging is now, as opposed to what it was 30 years ago and 60 years ago and 90 years ago. Wonderful speaker. And you can go to YouTube and search him by name and watch some of his speeches.

They're very moving when he presents. He's a big buck speaker, but man, he is powerful. And he talks about how people's attitudes have such a big impact on their quality of life as they age. And he has great examples of, my gosh, these people that are part of our popular culture that are still 75 and 85, and they're still, they're still significant and making a difference.

- I'm curious something with, amongst your clients, do you have any that have embraced the FIRE movement or at least the Achieving Financial Independence part? And what are your thoughts on that? - You mean that cult? Actually, they're wonderful. I mean, that's one of the things about how the web hasn't impacted personal finance is that it's been a way for a lot of these people to kind of get together and realize, oh, there are other people that want to do this as well.

And of course you have a lot of the bloggers like Mr. Money Mustache, who's the leader of that, the kind of leader of all that. But yeah, we work with a lot of the FIRE people. And we do plans for them, 'cause we have popped up in a lot of the Facebook groups there.

And what they have going for them is many of them live well within their means. My gosh, they're saving 40, 50, 60%. A lot of them are doing indexing. They've been influenced by Jim Collins, who's got a good message about investing, or JL Collins, excuse me. So yeah, we have a lot of FIRE clients and it's, I was using the term cult in a positive way, I guess.

But yeah, they're just folks that are very interested in financial flexibility. - Yeah, interesting. By the way, one thing, an expression I've heard when it comes to like revisiting early on your retirement savings and ability to retire is to get to the point, it might've been, you've been JL Collins who used the term, I'm not sure, the F-U money, getting to the point where you have the option to retire.

And that can relieve a lot of anxiety and give you a way out if need be. Just something else to consider and a reason to build a financial plan and analyze it on a regular basis if need be. - Yeah, quick story was I was doing a review with a couple of good clients of mine, but they're in their late fifties.

And I was kind of moved by them because they are in a tough spot. They've been squeezed and they just know that they're gonna have to work longer, even though they have a really good attitude. But I had two meetings with them. One was with both of them, and then one was just with her.

And I could just tell from my interactions with her how their financial situation had taken a toll on her. There was just no way around it. And money can do this to people. Your finances can create so much pressure. So if people live within their means, if they don't have any debt, if they save a good emergency fund, if they've been good savers, at least that's one aspect of their life where they won't necessarily have to feel pressure if things aren't working out well for them.

But if things are, if they're struggling personally or in relationships with their family or their job or something, to have mounting debt or never feel like you're ever getting ahead, man, that is so damaging to people's health. - Financial problems are not just money, it's- - Yeah, they carry over.

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