Hello, and welcome to the It’s Law Podcast. I’m Richie Edwards back to host episode number four. Today I’m here with Michael Rojas. Michael is a Financial Advisor and he’s joined us today to talk about Financial Planning in their retirement and other spaces and this is a follow on to episode three, where Troy spoke with Andy about the alternative business structure, reliant group and all of the very innovative and good things we have going here with the financial planning, the estate planning, and legal side all all sort of rolled in together. So if you haven’t listened to episode three yet, I urge you to go back start with episode three, it’ll sort of lay the groundwork for what we’re doing here and then come back to us here at episode four, make sure you do come back because I think this is going to be a good one. And listen, our interview here with Michael. So Michael, thank you. I appreciate you being here and just asked me to start tell us a little bit about yourself and your financial planning background.
Well, thanks, Richie. I appreciate being here as well and yeah, my name is Michael Rojas. I’ve been in the financial estate planning world for about 25 years now. I’ve been I’ve worked all over the country related guidance we have licensed in 14 different states. So right now my focus is here with Arizona and FR Law Group. I am a fiduciary. My focus, though, is with people that are near or are currently in retirement. So I like to think of myself as a little bit different type of advisor because I come from more of a conservative approach. You know, I want to ensure that when people are considering retirement or if they’re in retirement, I want them to know that their assets are going to continue to be there for as long as they are in retirement.
Right. No, that’s excellent. And I have to I have to go back just quickly, you said the 14 states your your license, yes. Is that a is that a different test in every state? Or that seems like a lot?
It’s actually not a different test. Okay. Are you know, your home state mean, Arizona is my home? Okay, then it’s just the application process of of getting licensed in the states in which you want
to do it and keeping it up with your education? Yes. You’re in school more than more than I was in law school? Well, let’s I want to start with you said, you know, you focus on the retirement space and I think a big fear that I perceive anyway that people talk about is running out of money in retirement and you know, I’m going to retire I have this nest egg. Is that what you hear from your clients that their biggest fear? And if it is, can you explain why that worries people so much?
Well, yeah, that is the biggest fear of retirement is do we have enough to retire comfortably? You know, how much do I need to save, you know, when nine times out of 10, that’s going to be the number one concern. So when you got to think is it comes down to several factors. Number one, as we more as we get more mature in our life cycle we hopefully will have less debt, right? So there’s one way that you can, there’s only one way in my opinion that you can truly guarantee yourself from never running out of money and that is, how much do you have as income to cover your needs and also, to ensure that you’re going to be able to do the things that you wanted to do in retirement, right? You don’t want to sit at home in four walls watching TV, we want to go take those exotic trips, right? We want to play golf every day, we want to see the grandchildren, whatever it may be, then we got to factor that in as well into our income. Right? I’m talking about income ratio, I’m talking about guaranteed income. Okay, so if I’ve got enough guaranteed income, if my goal is to have $1,000 a month of guaranteed income? Well, what are those sources from that you got Social Security, right? We’ve got maybe a pension or two if your spouse has a pension as well. And we may have what I like to call self made pensions, because we can create our own pensions to ensure that we have enough guaranteed income throughout the last our lifetimes. Because if you do have guaranteed income for your lifetime to meet your needs and to meet your goals for retirement, you wouldn’t be happy if you lost 30 or 40% in the stock market. Right? That’s right. But if you have enough guaranteed income to meet those needs and goals, right, then that 30 or 40% loss, it doesn’t affect the way you live, okay, you’re gonna affect the way you live. So the key is, number one factor in what it is that you’re gonna need to meet your needs and then factor in how much you need for enjoying yourself, right? Once you’ve met those, and you can factor that in with guaranteed income. If there’s any gaps, then that has to be addressed. Sure. And then you know, then you’ll know that you’ll live a comfortable retirement,
Right? So we’re talking about you’re talking about needs in one bucket and then these wants that you have your vacations, your trips to see the grandkids, taking them to the ballgame, whatever it is. How how do you see? And how do you advise or teach somebody to know how much they have? Because in my head anyway, somebody’s working, and they’ve been working for 40 years, the moment they retire, no matter how well they’ve done or how well planned they are, that income level is probably going to drop in some in some way or some aspects. So how exactly does somebody know, this is what I need to cover my needs and to also live comfortably?
Well, there used to be a rule that said that you should retire on 80% of your final pay. Okay. Okay, that that’s what you should have as income, okay? Because I strongly believe that income is far more important than just saying I have $2 million in return, right? Okay, having a an account that has a certain amount of dollars whether it’s 500,000, or a million or 2 million, that’s not the all important factor, the all important factor is knowing again, that you have another income. So based on the 80%, that you used to have say, 10 or 20 years ago that that was the rule. I’d like to see my clients have 100%, right. If you had $1,000 a month of income, then you should shoot for $1,000 a month of income in retirement even though you may have less expenses, well, you may need to pay for medical costs, you may have additional costs that may be unexpected in retirement that you’re gonna need to account for. So my goal is to get my clients to having at least what they retired with as their final as their final goal for income.
Okay. And that’s excellent. I think that probably makes it easy. If this was your final income, this is how much you need and then you know, you’re going to be good. So I want to take sort of a step to the very early stages of retirement. I know a lot of times we’re dealing with people who are closer, but I want to start with a 401k. And my question, and it’s one I hear a lot from people sort of my age and in generally my age is how much should I contribute to my 401k?
Well, that’s a great question. And what I’m going to say is that you should be contributing as a minimum 10%.
And that’s 10% of my…
gross back, it’s 10% of the gross pay. If you can’t meet that minimum, then I’m going to say that you need to at least contribute whatever your employer is going to match as a matching that they’re going to give you as a benefit. So they’re gonna say, Richie, we’re going to match you 100% up to 4% of your contributions, then, but please, that should be your goal is to get at least 4% there so that you’re not leaving dollars on the table, right? If you’re only putting 2% Well, then you’re leaving 2% that the employer would have matched and you’re leaving money on the table? That’s free money, right? That’s money that your employer is giving to you as a benefit for being employed. Right? So do that worst case scenario, right. But the minimum should be 10%.
Okay, got it. So that what they’re matching is a good place to start. But we always need to work up towards the Yeah,
I mean, honestly, you need to be able to put in as much as you’re comfortable. Sure. So I say 10%. If you if you’re comfortable putting in 15%, then put 15%. Because keep in mind that this goes into the tax, right? So it when you factor in that you what you would have paid in taxes for that percentage that you put in, it’s not maybe it’s not exactly even there’s not going to be a significant difference that you might believe. Right?
Okay, that makes perfect sense. So, you know, say we’re in this situation, we’ve we’ve maxed out what are employers matching, we’ve maxed out the 10%, or whatever it is, but what do we do next? Where where’s the next spot to put money for retirement from someone sort of early on or in the middle of their journeys at an IRA? Is that what sort of vehicle would you recommend there?
I would suggest right now to if you’re able to do any additional contributions, then I would recommend an IRA, as you just mentioned, but I would look towards ROTH. Okay, first and foremost. Now, ROTH is different than a traditional IRA. Okay, a traditional IRA is pre tax dollars, much like your 401k, right. It’s a pre tax. So there’s a lot of different vehicles out there that you can put, I should say, a lot of what we call qualified accounts that you could put pre tax dollars, that’s 401K, that’s 403 B’s SEPs, Keos traditional IRAs, that’s all considered qualified funds. But under the same category, you’ve got a Roth IRA, that’s after tax dollars, it’s considered in the qualified umbrella but it’s after tax dollars. So it’s significantly different than the other sources of being able to place your money. Why would that be dry? Why would I recommend that scenario because after tax dollars, you putting that money into this Roth account and as as it continues to grow over the Here’s if you’re 35 years young, how old you are when you look young, then that money will continue to grow for the next 20 years, 30 years until it is that you decide to retire. Right? And you’re not going to pay tax on all of that game. Got it? Okay, that’s excellent. You could have 30 years of compounding interest, right and not have to worry about the tax. So you only pay tax on what you contribute it.
Right. So, overall, 30 years, my tax burden is way lower
than it could and with, you know, today’s historically low rates are our tax brackets are gonna go higher. Right. So, you know, who knows what they’re going to be in 30 years when you retire? But I would suspect that they’re going to be probably higher than when there are they’re at today. Right? So why not contribute to an account that will go tax free? Not tax deferred? Because traditional IRAs 401K’s that’s all tax deferred, right, right, tax free, and you’ll never have to worry about a set of taxation on that growth.
So in my understanding, right, if I understand you mentioned, the 401K traditional IRA, are tax deferred. So I get a tax benefit now, right? You mentioned, if I do the 10 or 15%, it’s really not hitting me that much because of the tax savings. My Roth IRA is tax now so it’s tax free growth, is it advisable to have, you know, sort of that good mix where you have some tax deferred some tax tax free? Is that something? You know, that’s sort of how I’m thinking about it? But I don’t know.
Well, absolutely. And the reason why I say that is because again, if your employer is going to match a percentage, then get that free money. Okay, so worst case scenario, get that free money at 4%, I would like to see you continue to do 10%, if possible, also, that’s going to be tax deferred. And that’s okay. Because when you do a Roth IRA, you’re only allowed to contribute so much into a Roth per year, right? If you’re under age 50, then you’re able to do 6500. Well, that’s not a significant amount of money. But again, it is after tax dollars, so it could affect your your pocketbook, right? Find that happy medium, if you’re 50 or older, then you can contribute 7500 into a wealth. So you should have a mixture and the more that you can have in tax free, obviously, the better would be for your retirement in general. But I always believe in, you know, what I would call tax diversification, you know, people talk about having a tax diverse portfolio. Yeah. Well, you can also have tax diversification, as well. So you know, if, for example, interest rates are, I’m sorry, not interest rates, tax rates are really high, and you’ve got money in Roth and you’ve got money in traditional IRAs, and you’ve got a 401k. And you decided that you need $50,000 for your daughter’s wedding. Right. Okay. Where would you pull from if tax rates are really high?
You pull from the tag that Roth
you’d pull from Roth? Exactly. So your tax diversify, when tax rates are at historic lows like they are currently, then you would want to pull from your traditional IRA or your 401K, so that you could pay the lower tax on right now. Right. So gives you that option to be able to pull from your accounts based on where economic conditions along with tax rates,
Right? No, that’s that’s really excellent. That’s a really great thing to know. So what if what if somebody comes in you’re talking to someone they’re starting to get towards retirement age? Is there a way if they’re not tax diversified? Can they transfer? Can they you know, I hear rollover all the time, is there a way to make them later in life tax diversified into a Roth IRA or some other vehicle like that?
Yeah. That, you know, that’s known as a Roth conversion. Okay. If you’re looking to take qualified funds, again, that would be 401K, traditional IRA 403 B, if you’re looking to take qualified funds and do a Roth conversion, I wouldn’t recommend it. But there’s a lot of factors, okay, that I’m seeing that as you know, that I would recommend that as long as you do your due diligence, okay. I personally like to see people ladder that out calling a Roth conversion but laddering segments of money out rather than doing a full conversion all at once. Okay, because if you do a full conversion all at once, then you’re going to pay tax on the full amount that you would convert into Roth. So let’s say you’re 65 and getting ready to retire and you got $500,000 in your 401k. Right. And you convert that whole account into a Roth. Well, the IRS doesn’t look at it that you’re just converting that amount and we’re gonna tax you on that amount. Yes, they’re gonna do that. Yes, they will. And they’re also gonna catch you on the act the years worth of earned income as well. So you make $100,000 at your employer, right? So you didn’t make $100,000 this year you made $600,000. You should so what’s gonna happen to your tax bracket? It’s gonna be at the highest rates, but it wasn’t like it’s gonna be at the highest rate, right? So not only is it going to be at the highest rate on your $500,000 of qualified funds, but also at the highest rate of your $100,000. Right. So you got hit in two places really hard all at once. Yeah. Now, you’re 65. So you just got hit and you lost oh, let’s just say you lost 150,000 to $200,000 of taxes on your 500 and you want it to retire next year? Well, you don’t have $500,000 working for him anymore, right? You only have 350, maybe $300,000 working for you for your retirement? Yes, it’s tax free. Well, it wouldn’t be considered tax free after the five year waiting period, because we’ve got to include that you can’t withdraw from the Roth until five years have gone by once you’ve converted.
Oh, gosh, okay.
My hands on where you’re at in your stage for looking for retirement? Factoring in Okay, wait a minute, instead of doing the whole thing. I’m going to lateral it out, I looked at my income tax return before I bumped myself up into the next tax bracket, right. Okay. Yeah, I look to see how much wiggle room I have to convert before going into the next tax bracket. They’ve got seven, if I’ve got $70,000 of money that I can earn right before getting into the next tax bracket didn’t maybe that’s all that you hear. Okay. And then the following year, you do it again, you write and then the following year, you do it again until you have enough rock converted money, that feel that you feel comfortable with,
Right. Okay, that’s that. So and I’ll probably get to this again at the end. But I’m the kind of person who I like, you know, get on the internet, talk to people and try to do with my own. It’s really seeming like we’re talking about financial planning, retirement planning, someone’s got to come see you. They’ve got to come see what someone who’s knows what they’re doing. Right. A fiduciary who has their best interests at heart? I mean, that’s the way I’m seeing it right now.
Oh, yeah. I mean, absolutely. There’s a lot of people that love to do it themselves. Sure. Which is, which is great. Because the more that you pay attention to your own assets to your retirement then probably the better off you’re going to be right, because I’ve spoken to a lot of people, you know, that have handed me statements and never even opened. I don’t want to look at it. Oh, no, I don’t want to I don’t want to know
it’s too anxious. Yeah.
I would much rather the person that doesn’t do that. Let’s I don’t know, some financial firm out there help manage the money that doesn’t open their statements. That’s not a good thing. You need to be opening your statements, you need to take control of your retirement, right? It doesn’t matter if you’re 30 years old or if you’re 60 years old and getting ready to retire. You have to know what you’ve got. So the person that does it themselves, fantastic, because they know what they’ve got. They’re trying to do what is in their best interest, right as well. Right? You’re not going to purposely try to lose money. Sure. But at some point, Richie Yes, you should consult professional advice you should get with someone who has your best interests, get with a fiduciary, you know, not just someone that could advise you where to place investments, someone to advise you give you an income plan, give you a written retirement financial plan because most people think that retirement and having a plan is okay, I’ve got a million dollars saved. Sure. It’s not a plan that’s got a million dollars saved. Well, it’s in the 401k, or money market or CDs or whatever it is, you pay a million dollars. Great, but that’s not a plan. Right? What is your plan for retirement? Right?
Right? No, that makes perfect sense, right? We have to do something with it. I think I tell people the same thing. You have to go see a legal professional if they you know, and people, I think we think Oh, of course, they’re saying that go see a Lawyer go see a financial adviser they’re getting the benefit. But really, it really is for your best interest. So I want to switch gears just a little bit to the overall portfolio and not necessarily with specifics but I want to talk about aggression. Right. And you mentioned somewhat earlier that there’s a conservative approach you can take in your portfolio and I’m sure there’s more aggressive approaches. My question is, how do I tow that line with being aggressive? So my money grows, but not being too aggressive? That it’s not there when I need it?
Great question. You know, today we are experiencing stealing. We’re experiencing kind of a lot of uncertainty in our economic conditions right now. You hear talk of possible recession, you hear talk of soft landing, you hear people say there isn’t going to be there is not going to be recession or self harm. So you could speak to 10 different advisors and probably get five or six different answers. Right. Yeah. But you know, how should you manage your risk tolerance? Because I believe that that’s what you’re talking about. How aggressive should I be? And what should my risk tolerance be? Well, it depends on what stage you’re at in your life. Richie, you’re young, so you can take on more risk than someone who’s face 65. Right, right, because what do you have on your side? More than likely than someone that is 65? Your time? Time? Right? And you’ve got time. So being aggressive when you’re young, yeah, is not a bad thing at all. Okay, because remember when the stock market is fluctuating or is is hit a recession? Or is it had a had a correction and you are contributing, say to your 401K, you’re getting something that a lot of people may or may not be receiving and that’s what’s called dollar cost. Dollar cost averaging, meaning you’re buying shares when the markets down and you’re buying low. So that $100 That you’re contributing, it’s not buying five shares anymore. It’s buying 25 shares now. Got it? Yeah. So when the market does eventually come back, because you’ve got time on your side, right, right. And the average correction typically takes just under six years according to history. Okay, to come back. Okay. Okay. So but once it does come back, you’re going to have a nice little explosion of your money, because you bought a whole bunch of shears, right? When they when the market was down? Yeah, so dollar cost averaging. But then when the market comes way back up to 100 bucks, again, it’s only buying 10 shares, right? So it’s called dollar cost average Got it, okay. And it’s great for people that are young people that are still working, and that you’re not getting ready to retire and you’re putting money into your 401K, you just keep putting it in there, just put it in, put it in, put it in put it. But that’s different than when someone is getting ready to retire. They’re 5 or 10 years outside of retirement, I call that a retirement redzone. Okay, it means that you really have to start looking as to how you have yourself position. So how aggressive should children’s? should someone be when they’re that close to retirement? Well, most every advisor, I should say, every advisor knows what’s the rule of 100? Okay. Most consumers don’t know the rule of one. Okay? The rule of 100 simply just says, you take your attained age 65, you subtract it from the number 135 as the balance 35 as a percent should be the maximum amount of exposure to risk to the potential loss of money. Interesting. Now, does that mean that every advisor implements that rule? No, it does not. Right? Does every advisor try to utilize our little? I don’t know, do I ask? I use it as a barometer. Every client’s a little different, right. So some clients may want to take on additional rest of that. So I may want to take on less risk than that. But I help every client. This is what the rule sets. Where do we stand? Like, you know, Richie, you have a million dollars. You’re now 65. I made you now 65. Okay, so. And if you were to take that million dollars, which you were to lose, you know, you’re getting ready to retire. And you say, you know, I asked you what you how much would you be comfortable losing? What percentage would you be comfortable with? And you say, Well, Michael, you know, if I lost, you know, 15% I think I’d be comfortable with that. You say so. Okay, Richie, you so you’re comfortable losing $150,000 Right before retirement?
we go. No, I would not be complying with lower than that. $100. Okay, so, in reality, then, how much would you be comfortable with? Well, you know, I don’t want to lose anything. Gotta hear? I don’t know about yeah, see what I’m getting? Yeah, definitely. It depends on where you’re at in your stage of life. If you’re young, you can absorb risk, risk time to bounce back, bounce back to recording from that. But if you’re 65, and you’re gonna retire next year, or you’re gonna retire today at 65. Maybe you don’t want to lose anything, maybe you don’t want to take on risk. Maybe you want to take a percentage of risk that is a lot less than what the rule 100 says, right? So if there’s a lot of things, again, that factor into that it’s something that you really have to sit down with. You and your spouse have to sit down together, maybe have a conversation and then maybe get with a fiduciary to give you thoughts and a plan to how to get you through retirement comfortably.
Right. Okay, so risk like we’re talking about it, as I understand it comes from the market, your money is out there and it fluctuates. So the hypothetical knee, it’s 65 with a million dollars, I want to really reduce my risk and I come to you how do you how do you do that? How do we how do we get me out of the market so to say and take my risk away?
Okay, so how do we simply if you don’t want to be in the market, right, right, there’s other investment vehicles right. Okay. Have what’s if some people use annuities as a retirement tool, okay, and these can be used as a retirement touring and Keep in mind that there are hundreds of that financial product out there. Every single annuity is issued to a life insurance company. Okay, everyone, you can buy an annuity at your bank, you can buy an annuity for your account. Okay, you can buy an annuity through your financial firm, as long as that individual or corporation has licensing or is licensed to be able to sell annuities. Okay. Can you get an annuity anywhere? I just mentioned that though, because, you know, I talked to people, they’ll say, oh, yeah, my annuities with Bank of America. Well, it’s not with Bank of America, you bought it at Bank of America, but Bank of America actually may be partnered with Transamerica or Prudential MetLife, whoever it is. Right. Okay. It partnered with okay to solicit these financial vehicles. So, got it. So the thing that makes I guess, me different if somebody was looking to get an annuity, what makes me different than maybe, say, Bank of America is I’m not partnered with any one company. I am an independent advisor. Okay. So I have the use of a lot of different financial vehicles. Got it? Okay. Yeah. You know, if someone is looking for, you know, the market, if they want managed money, then I have my custodian that I use for managed money. Okay, you know, and so, you know, the custodian would be like Charles Schwab or TD Ameritrade or fidelity. That’s what I have my custodian that is so perfect. You know, I don’t I don’t have your money in house. If I manage it. It’s with a custodian and just your money, man.
Got it. Okay. So the annuity. I’ve heard of annuities a lot. I think I have some concept of what they are. But can you explain to me what, you know what it at its core, what is an annuity?
An annuity? Well, again, there is a there’s a hunt, there’s hundreds of this financial product culture, and every one of them is going to break down into one of four categories. Okay. Okay. Okay. You’ve got an immediate annuity. Okay. You’ve got a fixed plan. You’ve got variable annuity. And you’ve got Indexed Annuities or Equity Indexed Annuities. Okay. And keep in mind that annuities have been around for a really long time. I mean, it isn’t something that just came out from the insurance industry 1520 years. Okay. One of those categories, I just mentioned, a Fixed Annuity that was around during the days of before the depression. Oh, wow. The insurance industry loves to claim, but is it that that is a time tested product, meaning that it went through the Depression, anyone who held a fixed annuity during the Depression didn’t lose a dime?
Really? Wow, really?
So that is one of their claims that yes, we’ve been kind tested and our financial products, you know, can endure huge corrections in the market. Okay, because a fixed annuity is not as it’s not invested in the stock market. So yes, how can you get out of the market? Well, this is one way that you can get out of the market is getting into that type of financial product. So having, or I should say, being that there’s four different categories, they’re all going to act a little differently not one annuity is exactly like the other. So it’s, like yourself says, yes, I’ve got a general idea of what annuities are. But the general idea is not going to give you that peace of mind, if you’d be looking for in a financial product, alright. So if you’ve got certain needs, or you’ve got certain requirements or goals that you want out of your retirement and you believe and annuity may be something that’s beneficial for you because again annuities are being more they are one investment vehicle that’s taken in more retirement dollars, probably than than than ever in history.
Right. Right. Okay. Wow.
So they are used highly for retirement vehicles. What like I said, if you want more information on annuities, then please have someone get reach out to me, give me a call. I’m happy to discuss the different categories because it is it is a learning process. You really have to understand what you got a variable annuity. Okay, a variable annuity is basically still you’re still in stock. Okay, a variable annuity takes on risk, there’s risk. Right, you could see the account value, you know, lose 50% And just like it would in any other scenario because what a variable annuity does, which is it basically is the umbrella of what the insurance industry placed are called mutual funds. But when they’re underneath the umbrella of a variable annuity they call them sub accounts. Okay, sub accounts all right stay the same basic thing is that mutual flattery so we’re gonna fluctuate and they’re going to absorb a lot of risk. You know, variable annuities also have fees associated with them, you know, so that’s where, you know, you really want to consider do is a variable annuity is the best vehicle for my retirement, you know, what are my fees? And do I want to absorb that much risk, right? Whereas say, and again, I’m just giving you a 40,000 foot indexed annuity and equity indexed annuity. It was it’s a financial product that was created to participate with stock like market returns. Okay. Okay. It’s I say like, because you’re not going to capture the full upside potential, of course, you’re not going to they’re going to hinder that annuity and its performance for the full upside potential of that of that vehicle. But the nice thing about equity index annuities is that if there is a 30% correction in the stock market, sure, then they’re guaranteeing not mean, the insurance industry, the insurance company is guaranteeing that that account will not lose anything in value due to a stock market correction. Oh, wow. Okay, so not capturing the full upside. So you’re giving away giving away off the top right, but you’re not going to lose 30, 40 or 50%? Because there’s been a
crush. Yeah, that’s hugely valuable.
So again, they’re drastically different. And again, under the next category, you know, hundreds of that vehicle out there, sure. They’re not all created equal under the variable category, hundreds of that really happened, right in your life.
Okay. And it sounds like, and I don’t want to make you rehash what you said, what sounds like the annuity, and depending on which one you go into in this specific vehicle, but it can be a way for a person to guarantee some of their income, right, that you buy the annuity and like you said earlier, we’re going to add it to your social security, or we’re going to add it to your pension and you have your your annuity benefit, right? Is that, is that understanding? Sort of correct in someone that’s getting closer to retirement?
Please? Um, yes, absolutely. It annuities, you purchase an annuity usually for one of two reasons. One, is that you want to ensure that you’re gonna have enough guaranteed income to last the rest of your life, and maybe not just on your life and maybe your partner’s life as well. So that’s one reason. And then the other reason, typically is for safety. Okay, so you’re looking for income, or you’re looking for safety. That’s usually those are usually the two reasons why you’re purchasing. So yes, can you create a guaranteed income from them? Absolutely. Absolutely. Can it can be what I like to call a self made pension. Okay. So if you have income between social security and any pensions that you may be receiving, keep in mind, pensions have pretty much gone away, right? Unless you’re a government employee or your educator or something of that effect, right, then you still have a pension. But if you don’t, then an annuity can be a way for you to guarantee yourself income that will last throughout your life to fill any gap that you may need to ensure that you’re gonna have that comfortable retirement.
So what sort of funds can I use to purchase the annuity? Is it? Is it from my savings account? Can I use that IRA 401 K? Like, how do I buy it?
First of all, you have to go to someone that’s licensed for sure. Right? So that’s the first thing
I can’t go into buy an annuity.com and then do it okay, I’ve got to come to you
got to come to me or someone that’s licensed so or go, I guess you could go directly, you could go right into the insurance company themselves, right. So if you say you want it all, that’s I guess you could type it in I want to an Allianz. So I want whoever it is that you’re looking for as an annuity and go directly to an advisor. You can type it in and get it and someone will show it. But the bottom line is you can use different types of funds, you can use money from your 401k if you’re getting ready to retire or something that maybe I should mention this some people don’t realize that if you’ve got a 401 k or a 403 B, you may be able to roll that over after age 59 and a half say retire yet. Sure. Okay. So you’re not ready to retire. Right? You still plan on working for five years, but you’re 60 years young? Okay. A lot of people want to ensure or or protect their what they’ve their balance, right? Their nest egg. Yeah. So they’re going to look into what’s called an in service transfer. Okay, it’s transferring the balance of your say 401k into a another vehicle, we want to transfer that if you don’t wanna pay the tax consequence, into a traditional IRA, if there is no tax consequence. And then if you’re looking for guaranteed income, maybe you’re looking for an annuity, you know, or you’re self directing that to any type of investment vehicle that you want, that’s going to meet your needs and goals. So yes, you can use 401 K money, you can use it while you’re still employed, and you still have your 401k active, meaning you’re still going to contribute, right? Right, you’re still gonna put in your 100 or two or whatever you’re putting per paper. Okay, you’re still gonna get your matching. Yep. But you’re just taking the stake.
Okay. And you’re protecting, protecting it somewhere else. Excellent. So I think I have a couple of questions. And I’ve appreciated this question. It’s really enlightening. A couple questions to finish off. The first is when should somebody start their retirement or financial planning?
Well, um, I think that again, if you are in a retirement redzone, five to 10 years outside of retirement, right, you absolutely need to start your retirement planning, okay. Financial Planning, you know, in my opinion, you can start doing that at any age, right? Because, again, you want to ensure that you have a comfortable retirement, the sooner you start your planning sooner you start saving, yeah, then you got to you’ve got the power of time on your side, right compounding interest, when you compound interest over 20, 30 or 40 years, it leads to a pretty good, yeah. But a lot of us when we are younger, and let’s just say there’s a lot of us when we’re younger, maybe can’t afford to put a significant amount of money away. But that’s okay. If you could put something away, right? If you can put something take
advantage of whatever it is, you know, maybe not
get that extra pizza and Peter Piper this week, put that regular basis right, for the next 20 or 30 years, then you could potentially have a
nice nest egg that ends up there. Excellent. And And my last question is, you know, you mentioned earlier, there’s some folks that they’ll say, No, I’ve got a million dollars in my money market, or whatever it is, but they don’t have a plan. So is it ever too late for somebody to come to you and say, I don’t have a retirement plan? But I want one, I need one?
No, you if you don’t have a retirement plan, you absolutely need to get with someone and look for what is what is my plan, you may be 70 years young, you may be 75 and you may feel like you don’t have as many years of retirement left after 75. But if you don’t have a plan, if you’ve got concerns, maybe your concerns are different than they were 10 years ago, or maybe your concerns now are long term care. Yeah. What is my plan for long term care? What happens if myself or my wife needs, you know, into going into a nursing home? How am I going to pay for that? Yeah. How where’s that going to come from? Is it going to come from our income? Is it going to come from the nest egg? It’s going to come from where? How are we going to pay for that? Is the State of Arizona gonna pay for it? Right, right. So you’ve got to have God as we go through stages, Richie. And at different points in our lives, we may need different. We may have different concerns, and they may, they may need to be addressed at that point in time, but it’s never too late.
Excellent. Well, I, I’ve learned a lot today, I appreciate your time. I hope everybody who’s watching later on learn something and and just to close off, we let the people know where they can reach you out how to contact you so that they can come in and get planning. Appreciate that.
Thank you. Yeah, great being here.
Great. So FR Law Group.com. And then do you have a website? Just rely on it have a website? How can how can folks come contact you?
Oh, we do have a website. But you can also contact me through line if you’d like to as well. So you can absolutely get a hold of me through line through FR and rely either way. So both scenarios. All right.
Well, that’s perfect. We appreciate everyone here today. And Mike, I appreciate your time. Thank you.
Appreciate it. Richie. Thank you. Perfect