Episode Transcript
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.
This paid program is brought to you by Danny Noles and the Noles Group. Understanding retirement. Understanding investments. Understanding your money. When you have it and when you don't. Welcome to understanding money with the Noles Group. They work hard each day to educate Americans like you on how to reach the financial freedom they worked so hard for by protecting and growing their hard earned money. And they can help you too. So now let's start the show. This is understanding money.
Hello and welcome to another edition of Understanding Money with the Noles group. Matt McClure here with you. You know, pushing buttons and making sounds happen. Basically, just keeping us on the air is really all I do. The ones who really do the hard work each and every day for clients throughout the state of Alabama and across the country are the guys from the Noles Group. And this week we are glad to be joined by Parker Noles, Tyler Noles and Chandler Noles and also Jack rivers. As I guess Danny is doing a little traveling this this week. Again, he's, you know, Danny, he's kind of a busy guy, right?
Parker always on the road, always on the road. He was like, hey, guys, so someone's gonna have to stand in for me. I got to go to Dallas.
Uh, well, well, well, well.
Indian and I, I tried to, I tried to press gang Jack and, uh, another guy in our office. His name is Evan. He's going to be on next week. Um, but, uh, Evan was not going to be in in time, so Jack was the one who got shanghaied for it.
Well. Very good. Well, Jack, glad to have you back again this time around. So I really appreciate you joining in the festivities. Well, we're going to get started here with a bunch of great stuff here over this next hour. I mean, a lot of wonderful content for everybody, regardless of who's on the show. We just got a great show for you. That's that's basically how it's going to go. And we're going to ask the question, are you ready to retire? We got some big market updates coming up. We got some steps for listeners in their 50s and 60s to go through. One thing that I do want to say though, is a big, big thank you to everybody who's listening, because without you, we don't have a show. So, you know, this is the reason you are the reason for the show to begin with. And so whether you're listening on the radio in the state of Alabama or whether you're listening via podcast, wherever you get your podcasts, anywhere around the world, we thank you for that. Listeners can meet with the folks at the Noles Group regarding their own financial situation with themselves, their family, their business, all of the things, whatever your situation calls for, You can meet with them free of any cost or any obligation. Just give them a call. 205602565205. 6025065. Go online to the Noles group.com. And this is how you spell Noles. That's the Noles group.com. All right. So let's get an overview I kind of stole a little bit of your thunder there a second ago Parker. But let's get an overview of what's coming up here over this next hour.
Yeah. Uh, one thing, uh, I, I always thought that it was a little bit dramatic to put our listeners around the world in the intro. Uh, Tyler and I were looking at the, you know, like, SEO stuff for our website yesterday, and we saw that we had hits from Romania. And there was one other place that I one of the country like area, Bulgaria. Um, I was like, I guess they love us in the Balkans. Um, because you're listening. If you're listening to this radio show and you live in Romania, I wish I could say hello to you in Romanian, but I cannot. Just a couple highlights from today's show. We've got our market update as per usual. Um, the main meat and potatoes of our show is 12 steps for listeners in their 50s. And 60s is kind of a retirement checklist, almost. Um, and we're going to finish up today with going over what, uh, what you should do with a forgotten 401 K, which I hope no one listening to us has. But if you do, we got an answer for you. And Tyler's got our quote of the week this week.
And now for some financial wisdom, it's time for the quote of the week.
Yes, our quote this week. To achieve goals you've never achieved before, you need to start doing things you have never done before. And that was said by Stephen Covey, one of the greatest business trainers of all time.
Yeah, very, very smart guy and a great way of saying, you know, it's like it's a it's kind of a more positive spin on the, you know, the whole definition of insanity thing. Or it's like, that's the definition of insanity is doing the same thing over and over again and expecting a different result. Like, if you don't change things, things are never going to change. And so you got you got to make that change happen. This is definitely a more positive spin on that, which I appreciate. But yeah, Stephen Covey a great, great guy there with a great quote for us this week. And we're going to be talking a lot about, you know, how to make changes, how to make change happen in your own life and in your own financial life specifically. Coming up right now, though, let's get into this market update. I cannot believe you know, I'm looking at the calendar here the first half of 2025 behind us already. And um, boy, uh, it's it's been a busy one. There's been a lot of volatility. But Jack, I mean we kind of ended Q2 on a high note, right?
Yeah. Um, I mean, with the market being the way that it has been, uh, I wish I could say it flew by for us.
It really did not.
Just fly by.
But I mean, the markets have an extremely sharp rebound in Q2 after the volatile Q1. Uh, easing trade tensions and stronger than expected earnings has helped the S&P rise 10.8%. Um, obviously, international stocks have, uh, kind of led the performance, uh, over the market, boosted by the weak US dollar. And then we'd also want to kind of look at the policy. Uncertainty has been kind of the theme of this first two quarters. I mean, just.
Seeing this January.
Yeah, I mean, it was just nonstop, just the unexpected uncertainty of what was going to happen with the tariffs, the shifting trade policies, um, just the inflation expectations that in all reality really haven't even kind of truly affected us the way that everybody was kind of expecting it to. Uh, the fed is taking a wait and see approach, which, uh, Trump's not too happy about. To say the least. And, um, holding rates pretty steady. Uh, it's still looking like it's going to be the first soft landing in history, so. I mean, you can't be too mad.
Mayor, the fed chair of Birmingham thinks we're going to get a get a cut here soon. Yeah. Tyler's, uh.
Lobbying for them to open a Fed in Birmingham and appoint him chairman.
Um, he's been walking outside of the office with a picket.
Yeah. No, I'm just joking. I'm not a fed chair. Um, but I really do think we saw yesterday a couple of the minutes come out, and, um, it looks like we are hopefully going to get a couple cuts here at the next meeting. They've kind of said the easing of that, that policy is starting to go where they want it to. Now. As we've seen, things can change, but we need that interest rate to come down.
I could not agree more. And um, one big thing is just staying focused on what you can control. So with the volatility that may continue. I mean it's completely up to what Jerome decides or what Trump kind of implements with these tariffs.
Pretty much it's only those two. Yeah.
Yeah those those two are the biggest factors within it. But a long term strategy remains effective. A diversified portfolio aligned with your goals and your is the best defense against market swings. Um, Ty and I like to say time in the market beats timing the market.
So every single time and and this this past week, you know, we had a holiday. The market was closed from noon on Thursday. I think it was, uh, all the way through till till Monday. Um, but that shortened week produced yet more gains for US equity indices. The S&P was up 10.6% in the second quarter, while the Nasdaq rose An 18.8% over just one quarter. That's pretty. That's pretty big. Um, Trump's reconciliation bill was passed by the Senate and then subsequently passed by the House. I always thought that was a little backward every time they passed a bill that way, where it goes to the Senate and then to the House. Drives me nuts. It's supposed to go the other way around. Um, but, uh, president signed that into law on Independence Day. Uh, the futures markets regressed a little bit last Friday as Trump reiterated the July 9th deadline, um, and stated that, uh, some countries could face tariffs of up to 70%, though now I've seen them tossing around, you know, like what? August 10th, I guess. I guess to go back to your point about uncertainty, Jack. Uh, no one really knows when these things are actually getting. Uh.
Yeah, I just I think it's more of a bargaining tool, hopefully.
To also, like with a lot of the countries that are still there, it's not they're not important, but not as many imports come from them.
That they would call you from if they if they slap 70% on Equatorial Guinea, I think would be okay.
Okay. Yeah. You know, right now the big arguments between Brazil.
Brazil, yeah, we get a lot of beef from Brazil, a lot of beef, a lot of soybeans come from Brazil. Um, a lot of wood. Copper is a big one too, from Brazil. Um, but.
Get a lot of beef from Brazil. And we're having a beef with Brazil, apparently. So there you go.
Oh, that's funny. I think channel has got a little bit to jump in here.
Yeah, another thing about it, um, at the start of the year.
Few could have anticipated the.
Events and market volatility that would unfold over the first six months. Now, many were not expecting, and I'll tell you that right now. And the market's early year optimism was disrupted by policy driven, um, volatility. You know we didn't you know we said on here before Danny said it multiple times. Uh Trump made it pretty clear when he came in he was going to be a deflating president. Try to deflate what's going on. And, um, that's kind of what he started to do. A dynamic that could persist in the second half of the year. However, despite the policy uncertainty and market on volatility, financial markets have proven resilient. A good example in Q2, the S&P 500 posted its strongest quarterly return since Q4 of 2023, which fully reversed that quarter. One sell off. And, um, re, uh, when we first started, like the year, those first, you know, the first part of it, when everything was so volatile, we had a lot of our clients, you know, calling us, calling us, move us to cash, move us to cash, moves to cash, move us safe. Move us to safe, move us safe. And, you know, it's kind of our job to to calm you down to to, you know, change that mindset just a little bit because I'll tell you what, the ones that we, uh, the, the clients that we decided to keep in the market, they're pretty happy with, with the performance that we've done as of today. So that's one of the things we talk about. One part of being, you know, in the market is you, you know, part of it is there's going to be up and down swings. We just got to be, you know, when there's downs, we're going to come back up on those. So, um, I'm gonna let Tyler kind of talk about a little bit more about that.
Yeah. Basically what we're what we're saying is while market volatility is uncertain, it's it's an everyday part of investing. The market doesn't go up every single day, doesn't end up positive every single year. Um, but at the end of the day, it's it's a part of investing. Like I said, it's it's natural to feel uncertain in that time. But history shows that that remaining invested continuing to invest in down markets, that's where you really make the wealth. Um, the largest days of gains oftentimes come after some of the largest day of losses.
So yeah, because everyone with any money sees oh, we got beat up yesterday. I've got a spare ten grand to throw in.
You don't go buy the TV when it's at its top price. You wait till it has a rollback. So yeah.
Truly you got to look at it as it's on sale. You don't roll on.
The Saturday after Black Friday.
Oh, and plus, at the end of the day, when we're in a bull run like we've really seen since the end of 22, like we saw last year in August, like we saw a little bit in September, like we saw really this year. Corrections are healthy for a bull market. It recalibrates things. It calms people. It calms the market down, gives people opportunities to re-enter cheaper prices. And and we've seen it. I mean the market's positive this year. The market's positive by almost 8%. We're on track for 16% rate of return. So it's.
Just crazy. If you told me that if you told me that the third week of April, when the bottom was falling out, that we were going to be on track for 16% this year, I just said, oh, you're a candidate for the asylum.
It's just one of those things. Like Jack said, leave that money in the market.
Exactly. And the meat and potatoes of our show today is we've got a sort of a 12 step, not really a checklist, but just a list of tips, essentially, for people who are between 5 and 10 years from retirement. So if you're in your 50s or your 60s. You may be wondering or dreaming of how to retire within the next half decade to a decade. And with all this volatility and market uncertainty and policy uncertainty across the board is kind of the backdrop for many of these people's retirements. We just want to stress that you shouldn't let that scare you away from pursuing a retirement as a goal and a comfortable retirement as a goal. In fact, you. You might find that you can actually retire earlier than you expected if you if you come get some some advice, regardless of the exact timing. Congratulations. You're in the home stretch of a lifelong race to quit working. Um, and we've got some, some tips coming up to make it a whole lot easier to retire.
Yeah. And so let's take a look. Let's let's start diving in here. And especially, you know, these are because people were talking about here in their 50s and 60s. We talked about the retirement red zone a lot, you know, and we kind of use that term. And people might think, well, what does that actually mean? Well, that's, you know, about 5 to 10 years before retirement or 5 to 10 years within your retirement. That's going to be a lot of the people that we're talking about. If you're in your 50s or your 60s, give a call or go to the website of the Noles Group and they'll they'll help you out with that free consultation. 205602 56 52056025065. That's the number. The Noles Group is the website and it's how you spell NOLs. It's the NOLs group.com. All right so 12 steps I feel like I'm in a recovery program here. But 12 steps.
Honestly.
Right. If you're if you're if you're trying to recover from your working life and want to retire, here's what you need to do. If you're in your 50s and 60s. Jack, what is step one?
So step one kind of sounds a a little Redundant almost. But it's find more money and save it. Which, uh, I mean, doesn't sound as simple as it really is. Um, as a pre retired pre retiree, this is the last chance to amass the savings that you need to retire comfortably. You might be surprised how much you can save and as few as ten years from retirement. Uh, pre uh retirees should use the motivation of looming retirement to kind of buckle down and save as much as possible. And, uh, we have a couple strategies, mostly just cutting expenses that you don't really need necessarily, uh, saving those tax returns raises, bonuses, inheritances, all of the surprise money in a sense. If, uh, you can kind of lock that away instead of seeing that as a new a new paycheck to get a car. It's, uh, it can be extremely beneficial for that time period to really kind of last for your whole retirement, creating passive income and also saving just as much as possible. Uh, those last couple of years are a really big deal, especially if you're kind of a little bit behind the curve.
Yeah, big, big deal there. All right. So then number two is um, going to go to Chandler. Chandler, tell us, tell us what step two is here in our 12 step program.
Absolutely.
Step two max out.
Catch.
Up contributions. And we'll get into that really quick. If being just ten years from retirement is not enough incentive, know that pre retirees get extra tax incentives. The government encourage workers age 50 and older to save more than younger employees by increasing the contribution limits to the 401 K and IRA accounts. When I run my seminars, we notice a lot that a lot of people, um, they know about the IRA contribution catch up, but they missed or are not 100% aware of the 401k catch up contribution and I'm going to get into that. So anyone who has aged 50 to 50 9 or 64 or older can add a catch up contribution of up to $7,500 to their 401 K savings. That's that's almost an entire nother IRA right there included in your 401 K. That is in addition to the base contribution limit of 23,500. So the total that you can contribute that year 31,000.
I don't want to interrupt here, but, you know, he was he was talking about the seminars that he runs. And I just wanted to plug this last week. I just want to plug it this week. Um, on Monday, July 14th, we've got a retirement seminar from 11 a.m. to noon central time. And we've got another one on Thursday, July 17th from 6:30 p.m. to 7:30 p.m. and we go over kind of what Chandler has just been talking about contributions to IRAs, taxation, and retirement RMDs. We've only got a few spots left, so if you'll head over to our website WW Group. Com. Um, or, you know, take a look at our website. Give us a call. Um, we where.
Those events.
At? Yeah, they're at the library in the forest in Vestavia Hills on highway 31. Thank you. Tyler, I read it off the seminar card. I just I didn't say it. I guess I just thought it really hard. Um, but, uh, yeah, I we've only got a few spots left. Um, so if that sounds like something that you'd be into, uh, come, come see us and I'll let I'll let you finish out.
Absolutely, absolutely. So, um, if you're not, um, 50, 59 or 64 or older. If you are for the other people, if you're workers who turn age 60 to 63, the ketchup limit is higher, 11,250. And that's, uh, due to a recent federal change. So the total that you can contribute, uh, with that contribution would be three with 750. A lot of numbers, right. So that's adding that contribution to it. It's a big, big number. Now with the IRA, a majority of people know about that one, um, 50 year old. Their annual or the normal annual contribution is 7000. If you're 50 or older, you can add that extra $1,000 catch up, which takes it to 8000, um, a year. Of course, use both of those tools 100%. Um, they both grow tax deferred, which is a big thing. You know, Uncle Sam's going to get his money eventually, but we can defer it as long as possible. So, um, I'm gonna let Tyler kind of talk about, uh, number three, which I think is a pretty important one.
Yeah. So we basically just went through saying you can put a lot of money into your retirement accounts. Um, 31,000 into your 401 K after 58,000 into an IRA. I mean, between you and your spouse, that's up to $78,000 a year into tax advantaged accounts. Um, assuming that you're eligible to contribute to these types of accounts. But at the end of the day, that's that's a very important thing. But there are there's rules to IRAs. There's rules to 401. There's age requirements to that. So one thing we always, always, always encourage our clients to remain of is once you've hit those maximums you need to start saving to a taxable investment.
Yeah. Yeah. Even if you've got if you've got more than $78,000 a year to to dump into savings.
Because the reason, the reason for that is, is that money is liquid. That money is accessible every day of the week, no matter what age you are. Um, it can help pay for certain things, but it can also just be used for whatever you want it to be. Um, so one of the main things we always say is, especially for our clients that are looking to retire a little bit early, is you need to have a nest egg of some money that's put aside that you can touch any day of the week. Um, it's it's not just about retirement accounts and retirement savings. It's about general savings as well.
Yeah. And kind of what goes hand in glove with saving is is getting rid of your debt. Um, debt can be a huge problem for retirement. You know, we see lots of clients come in. Tyler was just working with with some clients who they they had to have a debt repayment plan before we could even get into talking about saving, uh, anymore. Um, according to the Employee Benefit Research Institute, 77% of families headed by people age 55 to 64. So write in this retirement zone that we're talking about have debt. The average amount of debt. And this this was shocking when I read it is $108,011. Um, in retirement your income is normally reduced to something fixed or close to fixed. You know, social security pensions, regular withdraws from retirement accounts like 401 K's. So you often don't really have the wiggle room, uh, to sustain spending tons of money on debt service. So if you're in the lead up to retirement, um, working with an advisor to create a debt repayment plan, especially for stuff like car loans and credit card debt, um, that that's really, really critical because if you don't get a handle on that in your 30s and 40s, early 50s, by the time you're in your late 50s and 60s, it'll balloon such that it's really, really hard to get that fixed.
Yeah, it's like you got you dug yourself into a big hole that you, you know, can't really get out of easily. And, uh, it just makes everything more difficult there.
Yeah, it makes everything worse.
Yeah, yeah. It's like, you know, you're behind and you can't get ahead. Um, so that is, uh, number four. Get rid of that big, big one there. Um, what about number five, Jack?
Yeah. Just talking with your spouse. Uh, survey from Fidelity Investments found in the finances and retirement planning are extremely difficult subject for married couples. In fact, the survey found that less than half of couples have a routine financial decision, such as budgeting. Paying bills together. Only 38% joint uh jointly discuss their investments and savings strategies for retirement. Other research finds that couples might not even be on the same page with how they want to spend their time in retirement. This lack of communication is like, uh, likely to prove problematic. Makes time to talk about your retirement and get on the same page for a happy future.
I mean, a happy future sounds good to me. Um, but, yeah, you know, it is. It's a difficult thing to talk about. You know, I mean, people people do, um, like to avoid the topic of money, especially with the spouse, it seems like, because it does cause a lot of friction. I mean, you know, it's like, um, tough subject.
Sometimes it is leading cause of divorce. Yeah. People, people think that, you know, it'd be the infidelity or something more serious like that. But no, its finances has been for decades.
But we always had a dinner the other night and I was talking with a, um, he does commercial banking, um, at a bank here in Birmingham, and he was just saying one of the its money's one of those topics that, unfortunately, is probably one of the most important topics in everybody's life. Yeah. It's just something that nobody wants to talk about. No, nobody wants. Unfortunately, and fortunately, it makes the world go round. So you gotta have the conversations about it when you want.
Yeah, don't don't avoid it. This is one of the things that I learned when I was a kid, um, very early in life is, like, my mom would always say, look, just if you ignore something, that doesn't mean that it goes away. It's not, you know, it's it's still there whether you want to pay attention to it or not. And, uh, yeah, the money situation is an important one that's always going to be there. And so, you know, and I mean another one that people don't like to talk about, um, you know, kind of a sub topic of money in general, uh, is a little thing called a budget. And a lot of people, you know, Tyler might think that budget is a four letter word that's got more than four letters in it that can't get kind of scared.
Yeah, no. And it's really the most important thing when it comes to retiring and budgeting is you need to know what you're spending today. You need to inventory what your current current spending is. And then what you really need to do is once you have that down, is kind of take that and figure out which items are no longer going to be there. When you actually retire, your house is going to be paid off, or your car is going to be paid off, or you're going to be paying that credit card debt. And then once you have your idea of your budget today, begin to kind of predict what you're going to start spending into retirement. Um, 95% of the people that we talk with and we sit down, one of their main things is when I first retire, I'm taking the three month trip to wherever the heck I want to go. Um, so it's understand that you're going to spend a little bit more of that saved money on fun in the beginning years of your retirement. Uh, but you also need to understand that as you get later in that retirement, you're going to be spending a lot less on fund and a lot more on health care.
It's inevitable it's going to happen. Um, we statistic, we always say is 70% of people will use some type of long term care at some point in their life for a minimum of 3 to 5 years. Yep. Um, and it's important to budget that it's it's prepare. It's better to be prepared than it is to react. Um, and a lot of times when we get to those later years and we haven't kind of budgeted our money, kind of had a spending plan throughout retirement. You come to that point and now you're doing an asset spend down. You're losing your house that you've had forever, homes, and you're going into a Medicare state facility. You know, it's it's it all leads back to the same thing. And it starts with how you're saving. Um, and obviously you can start at 50. I mean, people are like, oh, am I too late? No you're not. Um, but you're going to have to change your lifestyle a little bit today to be able to live that lifestyle you want to in retirement. Yeah. Um, I have a client right now. He, um. He's 30 years old. He has a very. He wants to be semi-retired at age 50.
Um, obviously at age 50, you can't take money out of your retirement plan. So we're having to be very diligent in kind of planning how much he needs to put towards his 401 K, towards his individual retirement accounts, while also making contributions to a taxable account. So when he does have that, about 10 to 12 years of time, he has something that he can live off of. Um, there are special scenarios you can do. Um, if you do plan to retire early and you have a nest egg of a retirement plan, there are IRS tax guidance that will allow us to actually bypass. Whole penalties, uh, basically under 59.5. You can pull money out. Um, but it's just things like that. It all starts with knowing what your budget is today. Knowing how that budget is going to change, and then also making sure that you going forward understand what those expenses will be in and retirement and they will change. I mean, we saw massive amounts of inflation in the last couple of years. And as you can tell, things get expensive. So make sure you're investing, make sure you're planning and make sure you know what you spend.
That's the biggest one. We we see so many clients that we sit with that when we break down our budget form. They're like, oh, I don't know what I'm spending on this. You know, I don't know what I have on that. I mean, if you don't know where your subscriptions are going, if you really break it down, you'll be surprised. You know, you could be signed up for. I noticed the other day myself, I signed up for two gyms that I hadn't gone to in years. Getting almost $50 a month. Had to cancel those, but it just takes breaking it down and fixing the budget. To really be able to understand that, you need to know where all your money's going, especially when you're near retirement or I mean, you know, or not. And we also ought to tie it in with each other. I mean, we we've recently met with a lot of clients that have been getting married as they are older. And, you know, we understand that when you come from previous marriages and you might have separate kids, you're going to separate your finances 100%. We're not going to tell anyone how to do their how to do their, um, situation. But, um, you know, we always say you need to get you need to get it to at least where you know, where it's at, where everything's at. And that's one reason why, um, I kind of wish everyone was on today. He recently started doing the e-money platform for us, which is a program that we offer our clients where you can put all of your, you know, everything. I mean, I don't know what you can't put on there. You can do insurance, life insurance. I mean.
There's nothing, you know.
Drivers upload your driver's licenses, Social Security, anything you want, you can put up on that system in it model. Yes. And that way, you know, when when something, God forbid, happens, you know, the good Lord calls us home. Your spouse or your beneficiary knows where to go to to get those things.
Yeah.
And, um, yeah, that's one of the biggest things that we see you want to add on.
Oh yeah. No, I just we, we've been, we've, we've had the, the e-money program kind of on deck for a couple of years. Um, but really in the past few months we've gotten a lot more serious about, um, you know, getting it out to our clients. And if you're one of our clients and you're listening to this show right now and you have not gotten a call from Evan, you will in the next few weeks. Um, Evan is, uh, like I said, someone that we hired to work full time, um, strictly to help our clients with e-money and the other, uh, software systems that we use that our clients interact with. Um, you guys are going to hear from him, uh, next week, uh, here on this show. Um, but, uh, I'm going to let Chandler talk for a bit about, um, Medicare and long term care. It's his area of expertise.
Number number seven. And it's a it's a harder one because you can't put it on a calendar, of course, but, um, plan for out-of-pocket medical expenses and long term care. One of the biggest ones. If you are somewhere around ten years from retirement, you really need to think carefully about your future health care costs. There are three categories of spending you need to consider your early retirement. Health care if you retire before 65, funding your health care before you become eligible for Medicare can be, um, extremely, extremely expensive. Um, we had a client that really, really wanted to she I, if I remember correctly, like 61, 62 and she wanted to retire 63, um, did not work any kind of government that would give her, you know, retired income. Cobra wouldn't take it that long. So at that point, what she had to look at when she wanted to retire, 63 was, um, the ACA, Obamacare plans. And at that age, at her income, I mean, we were looking at almost 15, $1,600 a month for just a plan that was not even really equivalent to her group plan. And that's a health care cost that many do not expect. So what that does then, is forces you to decide when you're going to retire. You know, Medicare being 65 almost forces us to wait until that because of how expensive the health care all marketplace can be. Um, We. That's one of the biggest things we see. If you do not have a retirement group and you're having to get on the ACA. I see clients like decided they're going to retire anyway and like go non-healthcare. They get an extremely high deductible plan. And, you know, they're 65, you know, 63 things happen. And now they're having to pay $15,000 for deductible for hospital stays. It gets it can get insane. Still still. And probably if we don't change things in America, always will be the number one cause of bankruptcy. And that does not discriminate by age whatsoever.
No. Or honestly wealth. Unless you're so, well, unless you're so wealthy that it literally does not matter.
And if you can come out of pocket $3 million, you might be okay.
Yeah, you might be okay, mate.
But even then, I'm saying not many people can do that.
I remember like a year ago, you told me about someone you knew.
Yeah. The lifetime maximum of health insurance, which, if I can remember back then, was like 2.6 or $2.7 million a year.
Health care charge. Yes. Here's, like, a. Okay. Catastrophic accident.
Like a whole. Yeah. Like full. Like 90% of his body burn. So in the hospital for like 8 to 10 months and ridiculous expense cost and he pays a dollar a month forever. But it's crazy. Yeah. Um, what it can do. So you got to really prepare for that. Even when you're on Medicare, there's still expenses that come with it that you need to be completely aware of. And that's going to bring me to the number two point of these three points I got here. Medicare. You're solely mistaken if you think Medicare will pay for everything. According to fidelity, the average couple who retire in 2024 at the age of 65th May need approximately 315,000 saved. And that's after taxes to cover health care expenses in retirement. That's a big number. That could number. You could be like, oh, that's not bad. Or you could be like, yeah, that's that's a that's an insane amount of money that I have no ability to pay. Um, we need to be aware of that. Medicare does not cover long term care whatsoever. You are completely on your own with that. Um, that's when we have to start looking. If you don't have a plan in place, that's when we have to start looking at spin down programs. We've talked about Benny's mom and our grandmother on this show multiple times where she, uh, when Francesa got anesthesia induced dementia for assisted living right there, uh, did not have a plan in place, and we had to spin down her assets.
And believe it or not, even if you think someone doesn't have any assets, I mean, they come for everything jewelry, cars, house, uh, anything until you get $2,000 or less. And then you're in a state facility where no one really ever wants to be, where you don't want to go visit your family. You know, you got to really have a plan for that. And that's that's pretty much the third point. Long term care. It's extremely important. I mean, we have we see so many people that have a doomsday plan. They have a plan of what happens if the world ends. But we we don't sit with many clients that have a plan for what happens if they, um, have, you know, like I said, if 70% of them 65 and up end up having some kind of long term care event, we hear them say the words that what I hear when I hear him say it. I love it because it tells me what? What kind of, um, people they raised. You know, of course, when they say, oh, my kids are going to take care of me, my kids are going to take care of me. Of course, always. They're going to want to write. Yeah, and quit their job to take care of you fully.
Yeah.
If you could pay them a salary, maybe, which is a possibility if you look at it, if you think about it. But your kids can't just quit their jobs, quit their lives to come completely, take care of you. And I promise you, you're not going to want them to. You're not. You're not going to want that. You're not going to. No matter how much you say it. You can't rely on your kids to be your long term care plan. They're going to be a part of your long term care plan every single time.
And people I think some of it is when when people are making these plans and all my kids will help me and my kids will help me, what they've got in their mind is, oh, you know, if I if I have limited mobility, you know, I'll my kids will help me get to the grocery store. They'll help me unpack my groceries or like, you know, take me to the DMV when I get to get my license renewed. But the reality is kind of a lot rougher than that. You know, no one is sitting in their 50s and 60s thinking, oh, well, when I'm 75 or 80, I need long term care. Uh, you know, my kid is going to come help me use the bathroom at three in the morning. Uh, or, like, help me dress wounds if I need a hip replacement surgery at 75. Exactly right. And unless your kids have, you know, a career of of being a caretaker like that, uh, they're not going to be prepared, either emotionally or, you know, in a literal sense of knowing what to do and how to do it. Right.
Yeah. I mean, caretaker fatigue, I see it all the time and it, you know, ruin it can don't let that be the last memories that, you know, you don't want that to be the last thing that your child remembers of you is them having to change their entire life, you know, uproot everything to take care. Not that they wouldn't, but it's hard not to subconsciously or even consciously build a semi resentment for that.
Oh, I mean, just look at look at, look at Mom and Aunt Shannon. That's what I'm saying. A pop, like, you know, uh, he.
Even had a plan in place.
Yeah, he had a he had a home health nurse, and it was still extremely hard on on my my mom and my aunt help their father, um, when, when he was, um, in hospice. Uh, and that was with a home health plan. Um, so it really is something that's worth planning. Um, and a big point of, of this plan. And, uh, our, our eighth item on this checklist is working to maintain the right asset allocation strategy and kind of lay the framework for income planning. Some experts recommend that your investments become more and more conservative the older you get. Um, but in practice, most advisors to actually work in the field work with this stuff all day long instead of being like a talking head on the radio. That's kind of ironic that that's the example. Um, but, uh, most advisors suggest you try to at least earn returns that will enable you to keep up with inflation or even slightly outpace it. Sometimes that's, you know, able to be done on the more conservative side, but sometimes it requires a little bit more aggression and a little bit more careful management from an advisor. That's not really something you can do on your own.
Um, the right asset allocation plan kind of depends on too many factors to get into. Even if we had a five hour show today, um, you know, your age, your risk tolerance, what fixed income sources you've got, if you've got a pension, Social Security, if you expect to get an inheritance, if your house is paid off, you know, a million different factors. Yeah. Expenses is a huge one. Um, it depends on your time horizon, your risk, uh, preferences. But working, you know, closely with an advisor who knows what factors should be considered and who has the expertise and has sort of the nerve to be able to manage your asset allocation properly can can enable you to take risks that you otherwise might not if you were managing it entirely on your own. Um, and managing your asset allocation to get the best possible rate of return is really what enables this planning that we've been talking about for long term care, uh, for for debt service and debt payoff for early retirement. It's all kind of dependent on that linchpin of proper asset allocation and proper continuous management.
Yeah. Which kind of brings me into retirement tax planning. Um, I mean, as near as retirement kind of looms, Mark. Tax planning is a significant way to extend the life of your savings. One key strategy is asset allocation. Uh, placing different investments in the right accounts. So that can be an IRA, a Roth brokerage account. Uh, Maintaining an effective emergency fund. For example, tax efficient assets like index funds may be a suitable way to for like tax advantages. While income producing investments can go into tax deferred or Roth accounts to reduce your annual tax burden. Consider a Roth conversion and the years before beginning required minimum distributions, or RMDs, converting traditional IRA funds into a Roth IRA. Now, when your tax rate may be a bit lower than what it's going to be, when you have to start pulling from that, you're going to greatly increase your taxable income when you start having to pull the RMDs. Uh, you can also reduce your future RMDs and provide tax free income later. This especially is useful in managing taxable accounts and retirement.
One of my favorite things to always say is don't allow the IRS to become a third beneficiary of your retirement. That's I.
Like that.
Um, there's there's very many strategies out there to really, really kind of change that up. And we. Now the biggest thing is, is when, when doing these conversions, tax planning and tax strategy is they need to be done well in advance. Um, that's one of the biggest things that we see because and it's also there's a lot of things you have to look at. And if you're earning $500,000 a year right now and you're not going to be earning that in retirement, there's no way. There's no way I'm going to tell you to do a Roth IRA. It wouldn't make sense. Um, so it's it's very, very centric.
To.
You. Um, there's things that you want to pay attention to. Now, there's things you want to pay attention to when you get to retirement and taxes and retirement. If you're not careful, can be one of the biggest beneficiaries of of that money you've worked so hard for. Um, so to find ways to, to mitigate those, to take, take advantage of products out there, IRS codes out there. And. And don't let your money get in the hands of the government more than it has to. Yeah. Yeah. Your uncle, your Uncle Sam, uh, he's, you know, he he may be a good uncle in a lot of ways, but he's not one that you want to partner with. Uh, in retirement.
He'll come out of the woodwork real fast.
Oh, yeah? Oh, yeah. He's like those relatives that are like. Oh, you got money now? Uh, yeah, I'll take some of that. That's that's great. Um.
Give me, give me, give me.
Yeah, exactly. Um, so, hey, tax planning got to be a big part of it. And, folks, if you want to get in on that, because, you know, I mean, it is such a huge, huge consideration for your retirement. And you want the the guys who know what they're doing, uh, to, to really help you out with your tax planning and with your overall financial planning for retirement. Give them a call. It's the Noles Group, 205 602 5065 (200) 560-2506 five. You can also go online to the Noles group.com and the Noles group.com and okay tie. So number ten here. Um is it kind of goes, you know, a little bit back to what we were talking about earlier with, um, you know, people sort of expecting their kids to take care of them, uh, in, in their retirement years. Right. It's it's at least related to that. Yeah. Number ten is, is consider your own needs before helping your kids or your age or your aging parents. And and I know that sounds a little rough, but it's no different than when you're getting the safety instructions on an airplane. And they say, put your mask on first, because if you can't support yourself, how are you going to help the next person? Um, if you're 5 to 10 years away from retirement, you often face a lot of a lot of mouths to feed. I mean, you have yourself usually a spouse you have saving for your future.
Typically you have kids about to enter college or right in college. Right now, you might have a parent with a financial or a medical issue sitting in long term care. And a lot of times that 50. That 50 years old feels kind of like you're a part of a sandwich when you're taking care of the younger kids kind of being, not necessarily forced, but you're also taking care of the older relatives, and if at times you can't afford it. So at the end of the day, you have to make sure your situation is taken care of first. Um, it's always great when you can pay for somebody's school, um, college for kids. But at the end of the day, you have to make sure you're taking care of yourself first. Because once we have a solid foundation for you, that's when we can start doing. The more, the more generosity, um, in the plan. Because at the end of the day, you got to make sure you're taken care of first, put your mask on first, and then assist the others. Yeah, if you can't, if you can't help yourself out in the world, you're gonna help somebody else, right? I mean, it's it's kind of what it boils down to. Um. All right. Lucky number 11 here. Chandler, what we got?
Absolutely. Know what you're going to do in retirement? Sounds simple, but that's that's a big thing that we that we see. It is easy to get wrapped up in the financial aspects of planning for retirement. However, having a plan for what to actually do in retirement is perhaps more important. The happiest retirees have a purpose and focused interest. It is time to start dreaming. You know we need you to get hobbies. Don't just lose your sense of purpose when you retire. We just, you know and don't sit at home all you know the whole time. Get active. Get out there. That's what keeps you healthy. Keeps you here the longest, is keeping a hobby. You know, mental health is just as important as physical health. When you retire. And, you know, it's something that you really have to focus on. Think carefully about where you will live in retirement. Do you want to stay in your you know, if you have a big house, do you want to stay? And all kids are gone? You know, you have to take care of it now. Still cut the grass of this big yard. You know you might enjoy doing it, but eventually it could get to a point where it's too much and you just want to make sure that you have an idea of where you're going to go if you want to downsize things like that. Um, this is the one time in your life when you are not tethered by your connections and a job, and you can choose a place to live that suits you. Uh, last week we talked about the states with no income taxes. Choosing states where it matters. You know, if you want to move, if you always had a plan of where you wanted to live, things you wanted to do, go do them. That's the point. When you retire, you can you can live if you want. If you felt like you weren't before, you know, that's that's one of the biggest things on Parker you want to take you want to close this off on number 12?
Yeah, I gave myself the easiest one in this list and that's set a date and celebrate. Make your future concrete, uh, set a specific retirement date and start actively imagining yourself as being retired. Tell your friends, tell your family. Plan a retirement party.
And that's if it exists.
Yeah. Speak it. Manifest it. To use a very modern word.
I love it. That's the most fun one of the of the list as well. The easiest and the most fun. Um, but yeah, I mean, you gotta, you know, I guess it all it all starts with having a plan. And the plan has got to start with having a destination, that place that you want to reach. You know, I always often tell people to think of it like a retirement GPS, right? I mean, you just you go in. You get in the car. What's the first thing you do if you're traveling someplace you've never been is you get out the GPS, you get out your phone, you get to do whatever GPS in the car, and then you set your destination. And so you've got to know where you're going before you can get, you know, be told how to get there, map out the the route to get there. And I know some some guys who are good at giving you the directions on how to get there to that retirement destination. It's the folks at the Noles Group. And you can go online to the Noles group.com to schedule an initial consultation.
It's free of any cost. It's free of any obligation. That's Noel, that's how you spell Noles. It's the Noles group.com. You can give them a call at 205602 5065. And Tyler, when they do that, let's talk about what, uh, what happens thereafter. What, uh, what happens, you know, when listeners give you a call and start working with you. Number one, first and foremost, we're going to sit down with you and we're going to we're going to ask you what your vision for retirement is. We're going to talk about your retirement goals, your income goals and and your life goals and what that retirement looks like to you, what the perfect retirement is. Um, after that, we're going to take a look at your current income. We're going to take a look at your current assets portfolio that you have. Um, and we're going to we're going to put it through the ringer, and then we're going to run it through our systems. We're going to backtest it on some of our platforms that we have access to, as well as the over.
60.
70 years of experience between the the people we have in this office. That just gives a good plan. Um, after that, we're going to make some recommendations. I, we very few have seen people come in and they're 100% good to go. Um, so after that, we're going to walk you through what our recommendations would be, how we would implement them here at the Noles Group, and how we're going to monitor that plan, because at the end of the day, that's the most important. And then after that, we're going to answer any questions that you have. We're going to sit there. There's no time limit on our meetings. Um, I've said it before. I'll say it now. When you join the group, you buy 168 hours a week of our time. Um, if you have a question, you have a need. We're here to answer it for you. At the end of the day, that's our job. Um, so give us a call. Let us do it for you. Yeah. 205602 5065 once again is the number. The website is the Noles group.com. And of course, one of the big things, uh, to, uh, to, to pay attention to the biggest, um, uh, source of income for a lot of folks in retirement is Social Security. And, uh, you got to make sure that that is planned properly, that that is, um, you know, you start claiming that benefit at the right time and all of the things, I mean, it's it really is an individualized thing. It's not, again, one size fits all by any stretch of the imagination. And one of the things that happens every year with Social Security, well, the vast majority of years anyway, we actually get one of these, uh, is Cola. That's a cost of living adjustment. And there's a new projection here, Chandler, about what exactly is going to happen, or what may happen for next year for the 2026 cost of living adjustment. Let's go into that. What do we have as far as the newest projection?
Absolutely. So according to separate estimates by the Senior Citizens League as well as independent Social Security and Medicare policy analyst Mary Johnson. The Social Security cost of living adjustment may result in a 2.5% increase for 2026. Um, this is a 0.1% from their projections last month, um, of a 2.4% increase, and is based on the inflation data through May. Um, you know, that's a good increase we get. But we did see during Covid up to 9% of inflation. So it's you know, we don't want it to be your solo income that you rely on. But it is nice that they at least give you that. But at this point, it's not fully clear what impact the Trump administration tariffs may have on consumer prices and inflation going forward. This estimate may rise, with the four months of data still to come before the 2026 cost of living adjustment will be announced in October. So just be aware. Be watching. Um, but don't let it be your only source of income. We want to make sure that we have other sources. We've talked about a lot here today. So, um, that's just the biggest thing about the cost of living adjustment. I'm gonna go ahead and pass it to, um, Jack to let him go over a few more things. Yeah.
And then just despite the tariffs, the CPI w, which stands for the consumer Price index for your, uh, urban wage earners and clerical workers, the index used to calculate the annual adjustment to Social Security benefits is 2.2% higher than it was a year ago, marking the lowest level of inflation since 2020. So you always hear all this talk of what the tariffs are going to do, what's going to happen with all of this incoming pressure on inflation. And I mean the numbers haven't really lot. You know, it's. We're having some of the lowest inflation since 2020. I know we're coming down from a pretty hard, uh, interest rate, but at the same time, I think the plan is going accordingly. Uh, I mean, all of this is kind of setting us up for a pretty strong run. I mean, even from what we've seen now, that that huge bounce back has been one of the largest bounce backs in the S&P in history. Uh, meanwhile, the SCA, which stands for the Senior Citizens League, uh, noted that the Bureau of Labor Statistics faces unpredicted challenges collecting data for the price index used to calculate the Cola. The origination point to the article and the Wall Street Journal, which noted that a hiring freeze at the agency has forced the Consumer Price Index program to cut back on the numbers of number of businesses where it measures prices.
Yeah, when we talked about this last week that the Cola this year may not be as accurate, whether it be higher or lower than it ought to be. It's kind of up in the air, but we're kind of not going to not going.
To really.
Know. It's it's always like we've we've had five years of, of craziness when it comes to interest rates and inflation. But to be honest, it we also proceeded that with one of the craziest times in my life, I'm sure it was one of the craziest times. And a lot of our listeners, like with the Covid pandemic, I mean, it's.
I don't know about.
Parker. He's pretty old.
For real now. Don't, don't don't be calling Parker old. That means I'm ancient.
Thanks, Matt.
Thanks, Matt. The biggest thing is.
Just.
We had a lot of uncertainty, a lot of craziness and as much crap as I'll give him. Jerome Powell has done a fantastic job. I mean, we're the closest we've ever been to a soft landing since the 80s, and I don't know. He hasn't pulled it off because I mean, we're.
He.
Pulled.
It off.
From Covid. Yeah. The inflation's coming down inflate. The interest rates are coming down. Inflation hasn't ticked back up.
Um we've seen an immense amount.
We've we've seen growth. And it's uh.
Does that mean people aren't.
Still struggling?
No, I mean, that's not at all what I'm saying. Numbers. Numbers are there. But it's it's just one of those things is we're getting back to normal. It was a very unnormal time. And you typically there's a reason they call them lagging indicators. Yeah. Exactly that. And the stuff happens and then we get the numbers a little bit later. Yeah. Um, so.
In our in our last few minutes here, I just kind of want to go over, uh, forgotten 401 forgotten 401 K's. Tongue tied. Um, this is something that we see kind of often. Um, often it's not. You know, people don't really forget a $250,000, 401 K. Um, but we see people forget 401 KS that are tens of thousands of dollars all the time. Um, and with especially now that more and more people are job hopping in the wake of the great resignation after Covid. Um, the risk of forgetting to roll over a 401 K with a previous employer this year with for maybe just a few years, got 15 or 20 grand in there. That risk has jumped. Um, as of 2023, studies showed that there were 29.2 million left behind, 401 K accounts holding $1.65 trillion in assets, a 20% jump from two years earlier. Um, nearly half of employees leave money in their old plans during a work transition, whether that's taking a sabbatical or, you know, lateral move or a big promotion at a new firm. Um, about half of workers leave their old 401 K unrolled over, uh, which is staggering to me. Um, and it can really come with some costs. Tyler.
Yeah. And, for 21 study by the US Government Accountability Office found that 41% of workers are unaware that their 401 charges them a fee, but they have fees that are associated with that. And basically the the biggest thing I want to say is when you're leaving a job, when you're going somewhere else, 401 K's are fantastic investment opportunities while you're at a firm, while you're getting that contribution, while you're contributing to it as well, getting that match percentage. But at the end of the day, there are some there are some not great things about them. They limit your investment options. Typically you have anywhere from 10 to 125 different options. So if you leave a company and you have the opportunity to roll that over to an individual retirement account with unlimited investment opportunity choices based off of what you want to do, not with your company offered you. Roll it over, put that money where you 100% direct it, and you have the authority to make the decisions on it.
Jack. Yeah, like Tyler said, it's kind of a no brainer when it comes to Just moving, whether your company has been acquired or even if you're just 59.5 and you have that freedom to do an in-service rollover, it, it's almost always beneficial to the client. We can look at different structures to where the fees would be limited greatly, especially with the typical structure of having that Vanguard or whatever company that's doing your 401 K, where it's the stock to bond ratio. And I talked about this all the time, that it's kind of an ancient practice because for the last 5 to 6 years stocks and bonds are moving together. They're positively correlated. So when you have you think you have a diversified portfolio within your retirement account and all reality stocks are up, bonds are up, stocks are down, bonds are down. So you're just getting hit harder on those down years when you really could be mitigating some of that risk. Um, at the end of the day with what to do with an old 41K when when you when workers switch jobs and they're able to move those monies. Look at rolling that into an individual retirement account an IRA.
Yeah. And the Noles group can help you do that. Just go to the NOLs group.com. And Ollie's is how you spell NOLs. All right guys. Well that is gonna do it for this edition of the show. A lot of great stuff here this hour. And I look forward to talking to you again next week.
Thanks, Matt. See you next.
Week. Thank you Matt.
Thanks for listening to Understanding Money with the Knolls Group. Our goal is to give you the tools you need to retire with confidence for personalized guidance and achieving your retirement dreams. Schedule a no obligation consultation today. Go to the Knolls group.com or call (205) 602-5065. That's the Knolls group.com or call (205) 602-5065. We look forward to hearing from you. Securities and investment advisory services offered through Mosaic Wealth Incorporated member Finra and Mosaic Wealth Incorporated is separately owned and other entities in all marketing names, products and services referenced here are independent of Mosaic Wealth Incorporated. Information obtained from third party websites or other resources is believed to be accurate. At the time of recording. Neither the host nor Mosaic Wealth Incorporated can make any strict guarantees to its accuracy or completeness. The views presented in these resources do not necessarily represent the views of Mosaic Wealth, incorporated information provided for broad educational purposes only. Personal situations vary a great deal, so please consult with a qualified financial, legal or tax professional for specific advice tailored to you and your situation. Danny Noles is not a certified public accountant or tax attorney and is not qualified to give authoritative tax advice. Information presented is for educational purposes only, and you should not substitute the information presented. For advice from a qualified tax professional, please consult a qualified tax or legal professional for guidance on your own personal situation.
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