Should you delay social security or take it as soon as possible? Are Roth conversion something that really makes sense or should you just ignore them? What happens if the market drops right after you retire? Could it have a major impact on your retirement? If you’re curious about the answers to any of these questions, then you are gonna be glad that you joined us for today’s show. I am Anthony Saccaro. Thank you for tuning into the Providence Financial Retirement Show, where it truly is all about the income. We are your retirement income source, and this is the place where retirees come for income. Every week on the Providence Financial Retirement Show, we generally take a topic and explore that topic and answer some of your listener questions along the way. But you guys have been busy. You’ve been writing in a lot of random questions about a lot of different things. So we’re gonna take our entire show today and we’re gonna answer your questions. It’s probably a good time to remind you that if you have a question for the show, all you need to do is make your way over to providencefinancialradio.com and you can ask us your question there and maybe we’ll get a chance to answer it in a future episode.

Daniel in Newport Beach – Should You Stay the Course or Reduce Risk Right Before Retirement?

Let’s start though by diving right into our first question, and this one comes from Daniel in Newport Beach and he wrote in this, I’m 64 and planning to retire sometime in the next year or so. I’ve got about $1.3 million saved mostly in stock funds. And while I’ve done well over time, I’m starting to get nervous about what happens if the market drops right after I retire. Everyone keeps telling me to just stay the course, but that feels a lot easier when you’re still working. How should I really be thinking about risk at this stage, Daniel, this is one of the most important questions that you can ask right before retiring. Lemme assure you that you are not alone. This is exactly the type of question that keeps a lot of people up at night, especially when there are a lot of moving parts that are going on in the world when you think about inflation and wars and everything else that you can point to today that has an effect on the economy and ultimately might have an effect on your retirement. So, great question, and I want to give you some things to think about. The first thing that I wanna note is that your question asked if you should stay the course because that’s what you are hearing. Well stay The course is another nice way of saying buy and hold, and that’s what Wall Street’s mantra is. Buy and hold. That’s what your brokers are gonna tell you. That’s what your friends are gonna tell you, and that’s what Wall Street wants you to do. The question though is buy and hold really the best strategy, especially before you’re about to retire. And before I answer that question though, I wanna point out a couple of things. First of all, most advisors, most brokers tell you to buy and hold pretty much no matter what. If you have a broker that’s told you to sell and get out and move back in, then you’re probably in an anomaly because most brokers, the standard saying in the standard piece of advice is buy and hold. That’s what they want you to do. But can you think of a situation. Any situation where the same advice applies to everybody all the time, well, that would be silly, right? Imagine going to a doctor and no matter what your condition was, whether you had a headache or you had a common cold, or the flu or broken arm, imagine that the doctor gave everyone the same prescription all the time. That just wouldn’t make sense. In the world of Wall Street, though buy and hold is advice given all the time and it doesn’t make sense for everybody all the time like they would have you believe. That also doesn’t mean it doesn’t make sense at all for anybody because there are certainly times that it does make sense. If you have more than 10 years to retirement and you are dollar cost averaging and buying the same investments over and over again, you should buy them and you should plan to hold them, but hold them till when. Hold them forever and never sell them at all. Never make any changes. No, that’d be ridiculous. And most of the times when someone tells me that they’re just gonna continue buying and holding, it’s because that’s what they’ve always heard. And people don’t necessarily tend to believe what’s true. They tend to believe what gets repeated often, and by and hold, it’s repeated so often that everybody thinks it’s the right approach. But I really love your sincerity and your question because you don’t feel like it’s the right approach. You feel like you’re gonna retire and you feel like you’re taking too much risk, Daniel, and you’re questioning whether that really is the correct move to continue staying the course or to actually make some changes. I think it’s a really smart question. I’m glad you’ve taken time to. Before I move on and dive deep into answering your question, though, I want to acknowledge that if you were to continue buying and holding at this stage of life, it might be a mistake. And there are a lot of mistakes that I’ve seen retirees make over my career that they don’t even know they’re making. Why? Because these same mistakes get repeated over and over, and we tend to believe them just because they get repeated so often. And if you’re on the brink of retirement or you are already retired, you need to know what these mistakes are. We’ve put together a short but powerful animated video that talks about the most common mistakes that I’ve seen retirees make and how to avoid them. And if you’d like to learn what these mistakes are, just to make sure that you’re not making them accidentally, just because you’ve heard these mistakes over and over again and you believe that they’re really true, you’re gonna wanna watch this video, we’ll send it to you. Absolutely. If free of charge, you just have to go to our website to get it. And the website, it’s providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information. We’ll get it right out, but it’ll show up in your inbox shortly and you’ll learn what these common mistakes are. Mistakes that many of you think are not mistakes, but actually are. To get your free animated video, just go to providencefinancialradio.com/video and give us your information. You will have that video in your email inbox soon. I’m Anthony Saccaro. Thank you for staying with us. You are listening to the Providence Financial Retirement Show. We’re taking our entire show today and we’re answering your question. So the show is always about you, but today the show is really about you, and we’re answering a question right now from Daniel who’s 64 years old and about to retire in the next year, and just kind of feels like maybe he’s taking a little too much risk, but everyone is telling him to stay the course, and he just wants to know if that’s really good advice or not. And we’ve already just covered the fact that staying the course is the same thing as buy and hold. And that’s the same advice that Wall Street gives to everybody all the time. If you’re 20 years old, it’s stay the course, buy and hold, don’t make any changes. And if you’re 70 years old, it’s stay the course and buy and hold and don’t make any changes. And to give everybody the same advice all the time is just really ridiculous. When is it then a good time to buy and hold. And when is it a good time to start thinking about making changes? Well, if you’ve got 10 or more years to retirement, meaning you’ve got at least 10 years until you’re retired, I think buy and holds a good strategy. Keep dollar cost averaging, keep buying the same investments over and over again. Don’t make changes. It’s good advice until you get to about the point where you’re 10 years away from retirement. Once you get to about 10 years away from retirement or so, what you need to start doing is you need to start shifting your portfolio away from growth and more towards focus on interest and dividends. Why? Because growth is unknown. You don’t know what the growth of your portfolio or what the growth of the stock market’s gonna be over the course of the next 10 years. And because of this unknown, you can’t count on it, but interest in dividends if you invest, right? Especially like we teach here on the Providence Financial Retirement Show, you’re gonna be able to count on them when you are invested for growth, it’s a guessing game. What is your mutual fund portfolio gonna be worth in 10 years? You have no idea. Now I know what some of you are thinking. You’re probably thinking, wait, Anthony, the market goes up all the time. Well, if I were to sit down with you and show you some charts going back 200 years, I can show you many 10 year time periods where the market has been just flat, no growth, drops, recoveries, volatility, but over a period of 10 years, no growth at all. That’s another thing that gets repeated so often that we tend to believe it. The market goes up all the time. You tend to believe that. What they don’t tell you though is that although the market does go up all the time, many times it’s recovering from a downfall. So if the market dropped by 20% and then it increases back to its normal level, yes, it’s going up, but you are going nowhere. The market has just been flat. Now, to be fair, there are many decade long time periods as well where the market does go straight up. And these long periods of time where the market goes straight up are usually followed by long periods of time where the market is just flat. And if you were to go back to the turn of the century to the year 2000, and you were to chart out from 2000 to 2026, what you would realize is that the first 13 years of this century, the market looked like a big W zero growth for the first 13 years, two crashes, two recoveries, no growth whatsoever. In the last 13 years, the market has done extremely well. And if these flat periods are followed by good periods, then history tells us that we might have another flat period coming. And if you’re planning on another decade of eight or 10% per year of growth and the market is flat, you might be sorely disappointed because your retirement plans might not work out the way that you anticipated. And that’s why I suggest that starting about 10 years out, you wanna start shifting your portfolio from growth to income because you can count on income, you can’t count on growth. And note the market doesn’t always go up. Back to your question then, Daniel, you’re only a year away from retirement, and if you are still invested like you were 10 and 15 and 20 years ago, then yes, it’s probably time to make a shift. And I think your gut feeling is exactly correct. I certainly hope I’ve helped given you something to think about, but thank you for taking the time to write in that question. If you’re the kind of person that would like to dig in a little more to market history and look at what the trends of the market have been over the last couple hundred years, realizing that this could actually help you kind of determine over the long run where the market might be headed. Well, you’re gonna wanna read chapter five of my new book, more Life Than Money, because I wrote extensively about those market trends, and it does give us a clue as to where the market might be going over the next 10 years. I’ll send you more life than money. Absolutely. If free of charge and it’s really easy to get, you just have to go to our website and ask for it. The website is providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we’ll get a brand new hardcover copy of More Life Than Money right out to you. To claim your free copy of More Life than Money, go to providencefinancialradio.com/book and we will get it right out. Thank you for hanging with us today. My name is Anthony Saccaro and you’re listening to the Providence Financial Retirement Show. We are your retirement income source and this is the place where retirees come for income. We’re taking our entire show today and we’re answering your questions. We’ve already answered a question about whether or not the buy and hold strategy works all the time for everybody or whether you should actually think about making some changes. We also have a question coming up about social security, but the next question that we’re gonna answer now has to do with Roth conversions, and it comes from Susan in Pasadena and she wrote in this, my husband and I are both 67 years old. Recently retired, and we haven’t started Social Security yet. We have about $900,000 in IES and a smaller brokerage account.

Susan in Pasadena – Do Roth Conversions Make Sense?

Our CPA mentioned possibly doing Roth conversions, but we’re worried about paying a big tax bill. Now, how do we know if that’s actually the right move? Well, Susan, thank you for taking time to write in your question. And the first thing that I wanna say is, I’m really proud of your CPA, because most CPAs that I’ve run into, they don’t often recommend Roth conversions. And when you think about why that is, it’s because of what you’re suggesting and that is that you have to pay a big tax bill now, and why do you hire your CPA to help you pay more taxes or to help you save money in taxes? And because they’ve been trained to help you save money in taxes, a lot of them really don’t focus on Roth conversions because Roth conversions are gonna cause you to pay more taxes. Now, although there could be some long-term benefit down the road, just based on the fact that your CPA even brought it up to me, tells me You probably have a really good CPA. So I really appreciate that. Let’s define the core issue though. Based on your email, most of your money is in pre-tax accounts. You have about $900,000 in IRAs. This means that every dollar you take out is going to be taxable, and that means that retirement’s gonna be very expensive. How expensive? Well, if you’re in the 25% tax bracket, that means that you’re gonna need to take out 25% more than you need, so that by the time you pay the tax, you actually have the amount that you need to be able to cover your monthly bills. And I’m really glad that you included that. You haven’t started taking Social Security yet, because that’s gonna be a really important consideration in deciding whether or not to even do Roth conversions. And if you’re not familiar with whether Roth conversion is, lemme take a minute and just explain it so you know exactly what we’re talking about. If you have money in a pre-tax retirement account. The government allows you to take some of that money and transfer it to a Roth IRA, which is called a conversion. When you make the conversion, you’re taking money out of your traditional IRA that you’ve never paid tax on and you’re transferring it to a Roth IRA that’s gonna grow tax free here on out forever. And when you do the conversion, you have to pay the tax, and that’s the number one reason why many of you have probably decided not to do conversions. You have to pay the tax. Why would you do that? And that’s exactly the question that Susan wants to know the answer to. And let me give you the short answer and then we’ll expand on it. When you do a Roth conversion or you set up a Roth conversion strategy over time, what you’re really doing is you’re paying off the taxes that you owe the IRS, and you’re converting those dollars into tax free income. Tax free income. And I’ve also add tax free growth. When you put that money or you convert those dollars into a Roth IRA, you never have to pay tax on the growth and you never have to pay tax on any income that you get from that Roth IRA. And that’s very powerful because if you are in a situation where you have all your money tax free, well now you’re not subject to required minimum distributions. And now you don’t have to take out 25% more than you need because there are no taxes to pay. In Susan’s situation, all of her money is in these pre-tax retirement accounts, and that means that she’s gonna have to pay whatever her ordinary income tax rate is on all of her income that she takes out of those pre-tax retirement accounts because it’s all gonna be taxable income. And as much as I hate to say it, Susan, and you probably don’t want to hear this, this is usually the worst way to go into retirement. Retirement’s very expensive when every dollar you would draw is taxed. The most optimal situation that I see and what we often help our clients with here at Providence Financial is to have a tax diversification as well. And that means that you have some money in your pre-tax retirement accounts. You also have some Roth IRA, and you also have some taxable brokerage accounts as well. And when you have those three tax buckets of money, you have a lot of flexibility and a lot of control later in retirement. I am gonna guess that many of you are familiar with being diversified among your investments, but you also wanna be diversified among the taxability of the different investments as well too. Some in pre-tax, some in tax-free, and some in taxable. That’s optimal. And Susan, I’m gonna finish answering your question, but before we move on, I know that a lot of you are wondering the same thing. You probably have a lot of money in pre-tax retirement accounts, and should you do Roth conversions? That’s probably a question that a lot of you have. We’ve got a resource that I want to get in your hands. It’s an animated video that talks all about IRAs and Roth conversions and whether or not they make sense for you based on your situation. You’ll learn more specifically what they are, how they work, the pros and cons, and certainly this video’s going to give you some things to think about. I wanna send you this video absolutely free of charge. All you need to do to get it if you think it would help, is just go to our website and ask for it. It’s providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information and we’ll email that video right on over to you and you’ll just have to press play and you’ll be able to watch it. It’s really fun because it is animated and it’s pretty short. I think it’s only seven or eight minutes long, but it’s also very powerful. You’ll learn for yourself whether Roth conversions are something you should consider. Just go to providencefinancialradio.com/video and we will get it right out. I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show, and we’re taking our entire show and we’re answering your questions. Presently, we’re answering a question from Susan who is asking about Roth conversions and whether it’s something that makes sense to do or not. We’ve already discussed the fact that tax diversification is also very important. Going into retirement with all of your money in pre-tax retirement accounts, that’s usually the worst way to go into retirement. It’s gonna make retirement very expensive. The better option would be to have some in pre-tax retirement accounts, some in Roth IRAs, and some in taxable accounts. That just gives you a lot of flexibility. Let me move on though, and give you some other things to think about when it comes to Roth IRA conversions. Things that you might want to consider in trying to decide whether or not it makes sense for you, because they certainly don’t make sense for everybody all the time. Remember earlier when I said that people tend to believe what is repeated, not necessarily what’s true. Well, it’s often been repeated about Roth conversions that you don’t want to do them because you’ve gotta pay the tax. Now, it doesn’t mean it’s necessarily true. It doesn’t mean it’s necessarily good advice, but we tend to wanna delay the pain as much as possible. And when you do Roth conversion, you are going to have to pay the tax now, and for many of you, that might be why you haven’t ever really taken it seriously, but what’s the alternative? Well, the alternative is to keep your money in pre-tax retirement accounts and then be forced by the government to start making withdrawals on the government’s timetable through required minimum distributions. And I know that many of you are actually underestimating what the ramifications could be of required minimum distributions. When you’re forced to take money out of your retirement account, you have to claim it as income, and of course that means you have to pay tax on it, but it may also push you into a higher tax bracket. It may cause more of your Medicare Part B premiums to be taxed. It may also cause you to have to pay tax on your social security income. So there’s a lot of negatives around required minimum distributions. And if you don’t do Roth conversions and you’re not proactive, then required minimum distributions are something that you’re gonna have to comply with. Otherwise, if you don’t, then you’re gonna have to pay a large penalty, 25%. That’s the penalty that the IRS will charge you if you miss a required minimum distribution. Required. Minimum distributions though, are only applicable to your pre-tax retirement accounts. They don’t apply to Roth ira. The reason is simple. With the pre-tax retirement accounts, you’ve never paid taxes, and the government doesn’t want you to just let it sit there forever. They want their tax dollars at some point, and that’s why they impose a required minimum distribution. But with the Roth, you’ve already paid the taxes. There’s no benefit for them to force you to start taking money out of your Roth IRA. So required minimum distributions go away, and that’s a big benefit of Roth IRAs that a lot of you’re underestimating. A common mistake that I see a lot of retirees make is that they try to do everything they can to save taxes this year without realizing what the tax consequences are gonna be over the rest of their life. And it’s always better to be proactive than reactive. And doing Roth conversions is a very proactive tax strategy. It’s a strategy that you’ll have to pay more taxes now, but you’ll get a lot of tax savings later. Oftentimes the best time to do Roth conversions is between the time you retire and the time that you start taking Social Security. Your income is a lot less. You don’t have your wage income anymore, and you’re not taking Social Security, which means your taxes are gonna be lower to begin with. And Susan, that’s exactly where you are right now. You haven’t started taking Social Security yet, but you’re already retired. The answer to your question then is yes, absolutely. I think your CPA is right, and you probably should start thinking about doing some Roth conversions with at least some part of your pre-tax retirement accounts. Hopefully that gives you something to think about, and maybe I’ve just shifted your perspective a little bit. Realize that your CPAI think is actually great in the advice that he’s given you, and talk to him further about what dollars and how much and when to do it. He can help you with all that. Thank you for taking the time, Susan, to write in that question. If you’re in the same situation as Susan and as many of you are with all of your money or a ton of your money in pre-tax retirement accounts, and maybe I’ve given you something to think about as well too, but you wanna learn more on my book, more Life than Money. I’ve written a lot about that. I’m willing to send you more life than money. Absolutely. If free of charge, and you can get it by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we will get it right out. To get your free copy of more Life than Money, go to providencefinancialradio.com/book and you’ll have it show up on your doorstep in just a few days. I’m Anthony Saccaro. Thank you for joining us here on KNX AM 10 70. We’re taking this entire show and we’re answering your questions. The next question we have has to do with social security and whether or not you should take it early as possible or whether you should delay taking it. That’s where we’re gonna pick up right here on the Providence Financial Retirement Show. I. Thank you for staying locked into the Providence Financial Retirement Show where it truly is all about the income. I’m Anthony Saccaro. We are your retirement income source and this is the place where retirees come for income. Thank you for joining us today, wherever you might be. Really glad that you’re here and we’re answering your questions.

Kevin in Thousand Oaks – Should You Take Social Security Now or Delay?

The next question that we have has to do with Social Security, and it comes from Kevin and Thousand Oaks, and he wrote in I’m 66 and still working part-time, but I’m eligible for social security. I don’t necessarily need the income yet, but I also don’t wanna leave money on the table. Is there a clear reason to delay or should I just go ahead and start taking it? Well, Kevin, you’re not the only one with that question. I find that many listeners have the same exact question, so we’re gonna take some time to give you some things to think about, about whether you should take it now or whether you should wait. Kevin, you use the phrase leave money on the table, and that phrase is what drives a lot of conversation and a lot of decisions because social security isn’t about winning or losing. It’s not just as simple as getting your money back as fast as possible. Social security is just one piece of your retirement puzzle. And I find that a mistake that a lot of you’re making when it comes to social security is looking at it in isolation. But social security has to be looked at among the bigger picture, and there are questions and considerations that you need to think about before deciding to take social Security or not. The general idea though, is that the earlier you take it, the less you get, the smaller your benefit’s gonna be, right? And the longer you delay, the higher your guaranteed monthly income’s gonna be. Essentially there’s a trade off and you’re choosing. Do you take more money now for longer term, or do you lock in a higher amount of income later, but for shorter term? I will also add that the longer you live, the more valuable waiting usually is, regardless of whether you take it at 62 or whether you take it at 70. At about 80, you’re getting the same dollar amount, but if you live beyond 80 years old, you’re gonna get a much greater benefit if you were to wait until 70 years old. But there’s a lot more to it than that. It needs to align with your plan. If you need the income now, it makes your decision easy. You can’t wait even if you wanted to because you’ve gotta rely on that social security to pay the bills. But Kevin, in your situation, you said that you don’t need it now. So for you, it becomes more of a strategic decision. You didn’t mention what your marital status is, but if you’re single, then that’s gonna have a different impact than if you’re married. If you’re single and you’re not in great health and you doubt that you’ll make it to 80, then you probably wanna start taking it as soon as possible. But if you’re in great health and there’s no reason you couldn’t live to 90 or a hundred years old, then delaying it probably makes more sense. Mathematically, you’ll get more lifetime income if you were to wait for a few more years until you reach 70 years old. If you are married though, there’s a completely different dynamic that is oftentimes ignored when it comes to taking social security, and that is the survivor benefit. Simply stated, the survivor benefit says that when one spouse passes away, the survivor is going to keep the larger of the two social securities. If you happen to be the breadwinner, Kevin and your spouse is gonna step into your social security when you pass away, then waiting till 70 might make sense because your spouse will get a much larger benefit because you waited for three years. That’s a massive consideration, but I find that most people ignore it completely when deciding to file for Social Security. Ultimately, though I don’t want you to look at Social Security in isolation, it has to fit in with your income plan. It has to fit in with your tax strategy and your Mari status. And when you begin to look at social security as part of the bigger picture, oftentimes it changes the decision that you might have made if you’re just looking at it in isolation. Kevin, I certainly hope that helps. If you are in a situation though, where you’re not taking Social Security yet and you’re wondering the same thing as Kevin, should you take it now or should you wait? Well, we’ve created an animated video that talks just about social security. I won’t charge you for it. There’s no obligation. I just want you to have the information. If you’d like to get this animated video, just go to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video, and we’ll get it right out and you’ll be able to learn what you need to about Social Security so you can make the best decision for you and your family. Simply go to providencefinancialradio.com/video and you will have it show up in your inbox shortly. Thank you for taking time outta your day to join us. I’m your host, Anthony Saccaro, and you’re listening to the Providence Financial Retirement Show, where it truly is all about the income. Our goal here on the Providence Financial Retirement Show is to give you the education and information you need so you can go into retirement or stay retired with the confidence and clarity that you deserve. It’s all about peace of mind, and peace of mind comes from having an understanding of. What the risks are and what you need to know to be able to stay retired successfully. Our entire show today is based on answering your questions. Our next question comes from Lisa and Carlsbad. She wrote in, my husband and I are both retired and we’ve been living off our dividends and occasionally selling shares when needed.

Lisa in Carlsbad – Is Selling Shares in a Down Market Just Part of the Process?

Our advisor keeps telling us we’re fine because the portfolio’s average good returns, but I feel uneasy having to sell investments when the market is down. Is that just part of the process or is there a better way to structure this? Lisa, thank you for taking the time to write in that question, and I know that many of our listeners are wondering the same thing, especially because we’ve had such a volatile market. To start off the year, just recently, the stock market went into correction territory, which means that it was down by 10%. And if you are selling assets to get your income, then you probably have that same uneasy feeling that Lisa has, and rightfully so, because you have a double drain going on in your account. The market is down, your portfolio is down, that’s drain number one, and you’re withdrawing income at the same time. That’s drain number two. Something I’ve often referred to as a double drain. You mentioned in your question, Lisa, that you’re living off of dividends and selling shares when needed. And that’s a very common total return approach. The challenge though is that when you sell shares in a down market like we’ve had over the first few months of this year, you’re going to lock in those losses. You’re not just writing volatility, you’re actually realizing it, and every time you sell shares to do whatever it is you want to do, and the market is down, those shares are gone. They never have the chance to recover when the market actually recovers. You also mentioned, Lisa, that your advisor is focusing on average returns, and that’s a mistake that’s often very, very confusing. You would think that if the average return of the stock market is 10% over time, that as long as you’re taking out less than 10% a year, you’re gonna be okay. That’s not the way the math works though. Averages have a way of smoothing things out, and I can look you in the eye and I can say that over the history of the stock market, it’s average generally eight or 9%. And when you throw in dividends, it’s gonna be closer to 10% return, somewhere between nine and 10% a year. Depending on how you measure it, is what the stock market averages over time. But there are many years where the market has gone down by 10 or 15 or 20, or even 30 or 40%. And Lisa, if you’re making withdrawals from your portfolio and the market goes down by 30 or 40% this next year, what good does the average do for you? That doesn’t do any good at all. You’re gonna have to cannibalize a lot more of your principle because the market’s a lot lower than if the market was actually up or just even with where it is when you started making those withdrawals. If you have 20 or 30 years to go into retirement, you can rely on averages because you’re putting money in. But when you are making withdrawals from your portfolio, throw the averages out the window. They don’t mean anything. And I think this is what your gut is telling you, which is why you wrote in with the question, the fact that the market averages 10% a year or more over the long run means nothing to you. You took a loss of 20% in the shares that you had to sell. Here’s something else I want you to think about too. And that is, what if the market goes down two or three years in a row? It’s not like that hasn’t happened many times in the future. If you’re making withdrawals from your portfolio and the market’s going down one or two or three years in a row, it could have a significant impact on the rest of your retirement. Once again, because the shares that you are selling to live your retirement lifestyle, they never have a chance to recover. They’re gone. I find, however, that a lot of advisors hide behind averages because they sound good, but when you’re in retirement, they don’t mean a thing. And I think it’s a mistake to rely on averages when you are actually making withdrawals. So yeah, I think your advisor is making a mistake, and I think you’re wise to listen to your gut. And it’s not uncommon for advisors to say that because most advisors specialize in accumulation, they specialize in growth, they specialize in averages. They don’t specialize in retirement like we do here at Providence Financial. What’s the better way? We’ll answer that question in just a minute, but before we move on and answer that question, I wanna offer you a copy of my book, more Life Than Money, absolutely Free of charge, especially if this is starting to make sense. If you’re starting to understand why you can’t rely on averages when you are retired and there’s no cost, no obligation, we’ll just send it out to you free of charge so that you can get the education that you need. If you’d like to give more life than money. Simply go to our website, providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information, we’ll get it right out. It’ll show up on your doorstep soon. One more time. Go to providencefinancialradio.com/book to claim your free copy of more Life than Money, and you’ll have it shortly. My name is Anthony Saccaro. You’re listening to the Providence Financial Retirement Show, where it truly is all about the income. We are your retirement income source, and this is the place where retirees come for income. We’re taking the entire show, we’re answering your questions. We’ve already answered a question about Roth conversions, whether they make sense. We answered a question about social security and should you take it right away or should you wait until 70 to take it? And we also answered a question as well about whether you should think about shifting some of your portfolio and making some changes as you are getting closer to retirement. Right now though, we’re in the middle of answering a question from Lisa and lemme read the question again ’cause we started answering it, but let me just bring you up to speed just in case you did join us. The question she wrote in was this. My husband and I are both retired and we’ve been living off dividends and occasionally selling shares when needed. Our advisor keeps telling us we’re fine because the portfolio has average good returns, but I feel uneasy having to sell investments when the market is down. Is this just part of the process or is there a better way to structure this? We’ve already discussed some of the problems with the advice that Lisa received, so I want to talk about what the solution is. I believe in my heart of hearts that the solution is to focus on interest and dividends. The reason is because when you are living off of interest and dividends, volatility doesn’t matter. I didn’t say volatility goes away. I just said it doesn’t matter. Volatility becomes a really big deal. When you have to sell principle in order to get your income, if the market goes down 10 or 20 or 30%, you have to sell more principle. In order to get the income you need to maintain your retirement lifestyle. And if you keep selling income over and over year after year, eventually you could be in a position to have to worry about running outta money. And that’s the number one concern that retirees have today. And the only reason they have that concern is because they’re in a position of cannibalizing their principle, hoping that their principle continues to grow at a pace faster than the rate at which they’re cannibalizing it. And of course, when the market goes down, your principle’s not growing at all. As a matter of fact, it’s shrinking. You’re making withdrawals at the same time. That takes us back to that double drain that I talked about. Drain number one is the portfolios dropping in value. Drain number two is you’re having to cannibalize your principle at a lower price in order to maintain your lifestyle. It’s a double drain, and it’s the number one reason why many of you are actually afraid of running outta money before you run out of life. But if you live off of interest and dividends, if you focus on income the way we teach here on the Providence Financial Retirement Show, that goes away. What you need to understand is that interest and dividends are renewable resource. You can spend them and they will come back again next year. You can spend ’em again next year, and they will come back again the following year. And it doesn’t matter what the value of your portfolio is at any point in time. It could be up, it could be down. But if you’re not cannibalizing your principle. If you’re leaving your principal intact and living off your interest and dividends, then the volatility no longer matters. And that’s gonna give you the confidence to know that you have income that will last your lifetime, and you never have to worry about running outta money. That’s gonna give you peace of mind. And that’s what we teach here on the Providence Financial Retirement Show. And Lisa, to round out the answer to your question, you said that you’re living on some interest in dividends and you’re selling some principle whenever you need the extra cash. I’m gonna suggest that you restructure your portfolio so that all of your income is coming from interest in dividends. That’s going to solve your worry. Thank you for taking the time to write in that question. If you’re starting to realize that interest in dividends is probably the way to go when it gets to retirement, but you wanna learn more. Well, we’ve got a resource that you’re gonna want to get. It’s an animated video that talks about the case for fixed income. You’ll learn what you need to know about interests and dividends and how you can structure your life and your retirement and your portfolio to be able to live off of interests and dividends so you don’t ever have to worry about running outta money before you run out of life. I’ll send you this video free of charge. We’ll just email it to you, but you have to let us know you want it, and you can do that by going to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your email, address your information. We’ll get it right out. You’ll learn what you need to know about how to live off your interest and dividends and leave your principal alone. And I’ll also say it’s fun to watch because it is an animated video. To get your free video, just go to providencefinancialradio.com/video and you will have it in your inbox shortly. Thank you for being with us today, wherever you might be listening from. You’re listening to the Providence Financial Retirement Show, where it truly is all about the income. My name is Anthony Saccaro and we’re taking our entire show today and we’re answering your questions. And the next question that we have comes from Brian and Glendale, and he wrote in this, my wife and I have been meaning to get our estate plan done, but honestly we’ve been putting it off because it just feels really complicated.

Brian in Glendale – Do We Really Need a Trust or Is a Will Enough?

We don’t have a massive estate, maybe around $800,000, including our home. Do we really need a trust or is a will enough? Well, Brian, thank you for taking the time to write in the question, and you’re probably writing in because you know that in addition to owning Providence Financial, which is a retirement planning firm, I’m also an estate planning attorney. So we’re gonna shift our conversation from some of the financial questions that we’ve had to an estate planning question. And the gist of the question is, do we need a trust or do we need a will? And I might even throw in that Brian believes it’s also complicated. Let me address the complicated issue first, because a lot of attorneys want you to think it’s complicated because the more complicated something is, the more they can charge you. The truth is though that estate planning’s not complicated at all. I know you mentioned that in your question, Brian, and it’s much more inexpensive than a lot of you might be thinking. Let’s turn though and answer the question, and we need to talk about the difference between a trust and a will. I think that’s a good place to start, and if we start by talking about a will, what you need to know is that it doesn’t avoid probate, in my opinion, a proper estate plan, especially here in California, where my practice is located, really should be to avoid probate. Probate’s very expensive. It’s public. You’re gonna have to involve attorneys. It’s gonna take a lot of time. And there’s really no reason to have to go through probate at all. But probate is the default if you don’t do anything, and it’s also required if you have a will. A lot of people inaccurately think that if you have a will, you avoid probate. That’s not the case. A will just helps the court determine what to do after probate is done. On the other hand, when you set up a living trust, it avoids probate completely. If you have an $800,000 estate, it could very well cost you 25 or $50,000 to go through the probate process, but to set up a living trust might only cost you three or four or $5,000, just depending on how you want the trust to work. That’s why I say a trust is relatively inexpensive compared to what the cost of probate is gonna be. A common mistake that I often see people make though is they think that estate planning is only for your beneficiaries. And that’s actually not true at all. It is true that your beneficiaries are gonna benefit from your taking the time to do estate planning, but it’s not only when you’re gone, there are components of an estate plan that you need to have even while you’re alive. If you’re ever in a situation where you can’t make your own decisions because you are either in an accident or because maybe you got dementia or Alzheimer’s or something like that. Well, a good estate plan is gonna allow someone to come in and make those decisions for you. A will doesn’t do any of that. A will is only for when you’re gone. But a trust is a living document, and that’s often why they call it living trust. If it was only designed for when you’re gone, maybe they would call it a dying trust, but it’s not called a dying trust. It’s called a living trust. And that’s because there are a lot of benefits that you’re gonna get. When you are alive, it’s not just about when you’re gone, but the primary reason to do a living trust is to avoid the excess cost and hassle of probate. And Brian, I certainly hope that gives you the answer that you were looking for. Now, if you’re in a situation like Brian, and maybe you’ve never done any estate planning, maybe you’ve thought it’s complicated, maybe you’ve thought it’s too expensive or you just don’t need it because you don’t have a terribly sizable estate, and you’re starting to realize that you should actually learn more about it. I wanna offer you a complimentary copy of my book, more Life Than Money, because I designate an entire chapter just talking about estate planning, and I’ve done entire shows on it. I’ve done entire podcasts on it, and much more than just answering Brian’s question. There’s a lot that you need to know, and a good starting point would be to get a free copy of More Life than Money and read that chapter. I’ll send it to you absolutely free of charge. All you need to do is go to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information. We’ll get a copy of More Life than Money right out to you. You’ll have it in a couple of days. Simply go to providencefinancialradio.com/book and we’ll get it right out. And I know one of the benefits you’re gonna get is learning how estate planning is actually gonna help you while you’re alive, not just when you’re gone. I know that’s what a lot of you’re thinking. providencefinancialradio.com/book. That’s where you need to go to get a free copy of more life than money. We’ve been answering your questions all show. We’ve answered a question about social security. We answered another question about should you start making changes to your portfolio as you approach retirement. We also answered a question about Roth conversions and now we just answered a question about a living trust versus a will. Thank you for joining us today, wherever you might have been. I’m Anthony Saccaro. You’ve been listening to the Providence Financial Retirement Show. Have a great week everyone. God bless.

PFR-Podcast-20250405_ThePainOfProcrastination

Well, hello there, and welcome to another edition of the Providence Financial Retirement Show. I’m your host, Anthony Saccaro. We are your retirement income source, and this is the place where retirees come for income. Thank you for taking time out of your day to join us wherever you might be. Really glad that you’re here.

We’re gonna spend our time together talking about the pain in retirement that you did not see coming. It’s usually never what you plan for that gets you. It’s always what you don’t plan for that gets you. And procrastination, very rarely is that a good thing. Usually, the results of procrastination are not good.

So we’re gonna take some time and we’re gonna flesh out some areas where procrastination and this pain might get you down the road if you don’t deal with it now. Plus, as always, we’re gonna take some of your listener questions that are relevant to our conversation today as well. So I’m glad you’re here.

We’re gonna have a great show, and why don’t we just jump right in? Sometimes later becomes actually too late. And procrastination in retirement will often turn an issue that’s manageable now into an overwhelming burden later. And although that’s a true principle in retirement, it’s really also a true principle just in life.

This is pretty obvious in the medical world where, you know, if you have a tooth pain or something like that that’s mild, and maybe you put it off for a little while because you dread the idea of going to a dentist, and the pain is not so bad, you can kinda live with it. Maybe it’s off and on. The truth is that we all know what’s gonna happen the longer you wait.

Every dentist will tell you that the longer you wait, the more painful it’s gonna get and the more expensive it’s gonna be to fix, and the harder it’s gonna be to fix. And if you wait too long, you might not even be able to fix it. You might have to pull the tooth and put in a cap or a crown or something like that.

Think about cancer for a minute. We all know that the sooner you catch it, the more likely it is that it’s really not gonna be a big deal in the end. And of course, I don’t wanna minimize that ’cause that’s not always true with cancer, but there are certain types of cancers out there that if you catch them right away, it’s almost like you never had it And that’s why getting a physical every year is so critical.

It’s the stuff that’s going on inside your body that you’re not even aware of, that pain that is gonna happen down the road based on what’s happening today that you can’t feel today, and that’s what’s gonna get you. When you go in for a physical, that’s what they’re looking for is, what’s going on in your body today that you don’t even feel, that you don’t even know?

And then, of course, the goal is to stop it as early as possible. On a completely different train of thought, I recently had a situation where that wood part above my house, I don’t know what you call it, but it’s that wood trim that goes around the side of the roof. Well, part of that had got damaged because of the Christmas lights that we hung up, and it just looked ugly.

And I had a painter come out to just go ahead and paint it, and that’s all I thought needed to be done. I thought that it was just gonna be cosmetic and make it look nice again. But the painter was smart enough to share with me that a lot of that wood was cracked. And he then went on to explain that because it’s cracked, water can get in, and if water gets in, the moisture’s in there, it’s gonna cause those cracks to expand.

It’s gonna eventually ruin all the wooden siding. And I could either wait until that happens and be forced to replace all of it, which would be very expensive, or he could just go ahead and throw caulk in there and waterproof it so that water can no longer get in, and it will delay the amount of time until I actually have to replace it.

And of course, that made sense, and that’s what I wound up doing. And in my personal example, I didn’t even know that that pain was there. And I kind of look at this as, like, a blessing in disguise. And I’m really glad that the painter just didn’t come out and do what I told him to do, but that he was actually proactive and took some steps to let me know what could happen down the road if I didn’t do some extra work now.

And I was thankful. And it’s really no different when it comes to retirement, and that’s why I do this show. That’s why The Providence Financial Show is designed, is to help you figure out or learn what it is that you don’t know so that your retirement won’t be affected down the road. You know, sometimes retirement planning feels optional, but the problem is, at some point, it might be too late to act without consequences.

Think about Social Security. If you wait too long to analyze your filing strategy, it can cost you hundreds of thousands of dollars. Estate planning, there’s not much difference there. If you don’t create a living trust or do any estate planning and you die, then probate’s gonna be a very expensive situation for you.

What about healthcare? If you delay long-term healthcare planning until you’re too old, then you might not even be able to afford it, or you might not be able to get it at all. And it’s not the pain that you see that you’re dealing with that’s gonna be the problem. It’s often the pain that you don’t see.

And in my quarter-century career of being a retirement advisor, I know that a lot of you aren’t even aware of the risks that are out there that could cause you a lot of pain down the road in your retirement. We’ve put together a short animated video that talks about the seven most common risks to retirement that I’ve seen really hurt retirees because they weren’t aware of them and they didn’t catch them soon enough.

So we put together a short video. It’s only seven or eight minutes, but it’s animated, so it’s really fun to watch, and you’re gonna learn about the seven risks to retirement. And I’m willing to send it to you by email absolutely free of charge. You just have to give us your email address. And if you wanna get it, just go to providencefinancialradio.com/video.

Once again, it’s providencefinancialradio.com/video, and we’ll get this animated video right out to you. But you’re gonna learn what are the seven most common risks so that you can plan for them and know that they’re risks and start to deal with them ahead of time. And once again, to get your free seven risks retirement animated video, just go to providencefinancialradio.com/video and we’ll send it right out to you.

You’re gonna enjoy watching it, and you’re gonna learn a lot as well too. If you just tuned in, I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show, and we’re talking about the pain in retirement that you didn’t see coming. Let’s continue our conversation by talking about the pain of outliving your money.

This is a pain that I’ve talked to enough retirees to know that it’s bothersome, it’s worrisome, it’s on a lot of your minds, and yet it’s still easy to put off and just not do anything about it. Procrastination. And there’s a lot of reasons why you could outlive your money. The first reason I can think of is you live longer than you expect.

You realize that life expectancies are much longer today than they were maybe, say, 50 years ago. The average life expectancy 50 years ago was in the 60s. What is it today? Well, it’s really gonna be in the 80s. And what that means then is that some of you won’t make it to the average, and some of you are gonna make it a lot longer than the average.

The fastest growing age group today are the centenarians. Those are the people that are turning 100 or older. And I find that a lot of people do their planning based on the fact that they’re only gonna live to 80, or maybe they’re only gonna live to 90. But a lot of you are gonna live a lot longer than that, and that’s a reason to be concerned about running out of money Another reason that you might have to be concerned about running out of money has to do with what’s called sequence-of-returns risk.

What that simply means is that the first few years of your retirement are really going to dictate how the last few years of your retirement look like, depending on the balance of your portfolio. If you’re invested in stocks and mutual funds and investments that are related to the stock market, and there’s a bad couple of years at the beginning of your retirement, that’s gonna have a much more dramatic effect on your retirement than if those bad few years happen towards the end of your retirement.

It’s what’s called sequence of returns. And a lot of you are gonna be retiring in the next few years, and if you happen to retire and luck is not on your side and the market goes against you for the first few years, that could have an effect on your entire retirement, not just those years Yet another reason why you might have to be concerned about running out of money before you run out of life has to do with how your portfolio is invested.

If you’re invested in mutual funds and stock market-related investments, then you know that you have to cannibalize your principal if you wanna make withdrawals from your portfolio. And if you keep cannibalizing your principal year after year, and you live long enough, there’s a possibility that you could run out of principal.

And that’s why here on the Providence Financial Retirement Show, we often talk about investing for income, living off your interest and dividends, because you can do that without ever touching your principal, and now you don’t have to worry about running out of money before you run out of life. And that’s gonna take us to our first listener question of the day, and it comes from Maria in Torrance, and she wrote in this: “I’m 67 years old, and I have a healthy nest egg, but I’m worried about inflation.

Maria in Torrance – How Do I Protect My Future Purchasing Power Against Inflation?

How do I protect my future purchasing power?” Well, that’s a great question, Maria. Thank you for taking time to write in that question. And this is a good time to remind you that if you have a question for the show, just work your way over to providencefinancialradio.com, and there’s an Ask a Question button.

You can type in your question, and maybe we’ll get a chance to talk about it in a future episode. But inflation, that’s a big deal, and I often find that a lot of retirees have not factored that into their retirement plan, but you have to. So how do you do that? And I’ll even add in an additional part to that question, and that is, can you adjust for inflation by investing for income the way that we talk about?

And the answer is yes. When we help you invest for income, you’re gonna be getting somewhere around six or seven percent a year of interest and dividends from your portfolio, and the average inflation rate is really only three or four percent. I know it’s been higher recently, but it’s probably not gonna stay that way, and matter of fact, it’s already come down.

But if the average inflation rate is three or four percent, and you’re getting six or seven percent on your portfolio, well, that means you’re already adjusted for inflation. So investing for income doesn’t mean you can’t adjust for inflation. So hopefully, Maria, that helps you answer that question. And again, thank you for taking the time to write in.

The number one concern of retirees today though, is the fear of outliving your money. And because it’s such a concern, I wrote a book and it’s called More Life Than Money, and that’s what it’s about, how not to outlive your money in retirement. And I’d love to send you a copy of this resource, my new book, More Life Than Money, absolutely free of charge.

All you have to do is ask for it, and you can do that by going to providencefinancialradio.com/book. Once again, it’s providencefinancialradio.com/book, and a brand-new hardcover copy will be sent right to your home. And in a few days, a FedEx truck will pull up with it and bring it right to your doorstep absolutely free.

We won’t even charge you shipping. And if you’d like to get, one more time, a copy of my new Amazon number one best-selling book, More Life Than Money, just go to providencefinancialradio.com/book and we’ll get it right out. You’re gonna enjoy reading it, and you’re gonna learn about the 10 most common mistakes that I’ve seen retirees make in retirement.

Just go to providencefinancialradio.com/book. You’ll have it show up on your doorstep shortly. I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show, and we’re talking about the pain in retirement that you never saw coming. And the next topic that we’re gonna explore has to do with taxes.

A lot of you are tax deferring a lot of your retirement accounts right now, and you’re waiting until a later point in time to pay those taxes. And yet a lot of times that creates a ticking tax time bomb that’s gonna blow up down the road, and the time to deal with that is not after you have a bunch of money in retirement accounts and now all of a sudden you have to pay the tax.

The time to deal with that is before it’s too late, and set yourself up in a situation to where you don’t have a tax time bomb at all. And I know the reason this is happening, it’s because we don’t like to pay taxes, right? The less tax you can pay today, the better off you are. Well, that’s what they say, but is that really true?

It’s something that feels smart, and it’s something that many CPAs recommend. Don’t pay tax now. I mean, that’s why you hire a CPA, right? To save you money on taxes. But there’s a short-term savings and also a long-term savings. But if you’re saving money now on taxes in the short run, but it’s gonna impact you dramatically down the road in the long run, that just might not be a smart strategy.

When we’re trying to save money today in taxes, it’s all about instant gratification, and that’s the type of world that we live in. People are going into debt to get the things that they really can’t afford because they can’t, or they don’t wanna wait until later. And if you’re letting instant gratification rule your life and you’re saving a bunch of tax dollars today, well, that’s nice.

You feel good this year, and maybe next year you’ll feel good as well. But what about when you retire, when that tax bomb starts to go off? Then it’s not gonna feel so good. Let me walk you through what a lot of you are doing. You’re taking a lot of money, and you’re saving it into retirement accounts today, and when you put that money in a retirement account, you’re not gonna pay tax on it today.

When are you gonna pay the tax? Well, at some point down the road when you wanna start taking money out of those accounts, or when the government forces you to start taking money out of those accounts through required minimum distributions. But at some point, you’re gonna have to pay the tax. Let me give you an example just to drive the point home.

Let’s say that over your career, you’ve put in $100,000 into your retirement accounts. And let’s say that that $100,000 over 20 or 30 years has grown to $300,000. It’s done really well. Well, what would you rather pay the tax on? The $100,000 that you put in or the $300,000 that your account has grown to? Well, of course, you’d rather pay the tax on the $100,000 because it’s less money.

But when you put this $100,000 into retirement accounts and it grows to $300,000, now you’re gonna wind up having to pay tax on $300,000, not the $100,000 that you put in. Why? Because you’re delaying… No, take that back. Why? Because you’re happy with the instant gratification of a tax break today, but it’s gonna cost you a lot more later And it really all comes back to that word, instant gratification.

But it gets worse. Where do you think taxes are gonna go from here? Down or up? Well, with almost $30 trillion in national debt, we know that they’ve got to increase taxes down the road at some point. And the implication of that is that now not only do you have to pay tax on $300,000 instead of $100,000, but you’re gonna have to pay a higher percentage of tax on $300,000 than the lower percentage of tax that you would have paid on the $100,000 that you put in.

And to me, that just doesn’t make a lot of sense. This is a situation where procrastination on the tax front, postponing that tax bill is gonna be very expensive down the road, and certainly could cause you a pain later that you might not even see coming now. And yet, I know what some of you are thinking, because this is very much what a lot of CPAs talk about and what a lot of the general media talks about, and that is that later in life when you retire, you’ll be in a lower tax bracket.

Well, quite frankly, that’s a myth. That’s just absolutely not true. Again, I’ve been a retirement advisor for 25 years, and I find that most people in retirement actually retire with more income than when they were even working. Maybe on a half a dozen occasions, maybe I’ve seen it actually work where people in retirement are actually getting less income.

But that’s usually not what happens. I would not count on your taxes going down in retirement, because that’s a myth. That’s just not reality. The truth is that if you’re delaying all of your taxes now until later, it could become a ticking tax time bomb, and I don’t want that to happen to you, but it’s certainly a pain that you might not see coming And the time to start planning for that pain is not when it’s too late, but now.

And because I would like to help you start preparing for taxes when it’s too early before it’s too late, we’ve put together a commission report that is talking about proactive tax-saving strategies. And in that report, you’re gonna learn what you can do now to have a much more tax-efficient retirement later, and to make sure that that ticking tax time bomb doesn’t blow up in your face.

And we’ll email this report to you absolutely free, but you do have to give us your email address. And to do that, just go to providencefinancialradio.com/report. Once again, it’s

providencefinancialradio.com/report, and shortly you’ll have in your email a report about proactive tax savings strategies. What you can do now to prepare for taxes later. To get your free proactive tax saving strategies, that report, just go to providencefinancialradio.com/report. You’ll have it shortly, I promise.

I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show. Thank you for joining us, wherever you might be. Really glad that you’re here, and we’re talking about the pain in retirement that you didn’t see coming. We’ve already covered the pain of outliving your money, the concern that a lot of you have, and now we just talked about the pain of a ticking tax time bomb down the road if you’re succumbing to your instant gratification today and saving a lot of tax dollars today at the expense of your future The next topic that we’re gonna cover, though, has to do with healthcare.

This is a big one, because I often find that although most people plan for some healthcare expenses in retirement, they don’t cover the full gamut. They do partial planning, but their planning is usually not adequate to cover the potential healthcare costs that they could have. Let’s start talking about Medicare very quickly.

Medicare does not pay the whole bill. There’s a pretty sizable deductible that you’ll have to pay, and there’s also co-insurance that you’ll have to pay as well, too. And if you don’t wanna pay these, then you’re gonna have to foot the bill for a Medigap insurance policy that will cover the difference.

But that can be expensive as well, too. It might be 250 or $300 a month per person, and that has to be planned on, and certainly those premiums are gonna go up over time as well. Medicare Part B is also something that I find is underestimated. Medicare Part B charges its own premium. It’s gonna be deducted right out of your Social Security check, and you’re gonna have to pay it every month.

The base price starts at just under $175 per month per person, but depending on your income, it could climb to as much as $600 per month per person. It can be very expensive, and you have to plan on that. And if you don’t, and you wind up spending $1,000 more a month in retirement than you planned on, it certainly could impact your retirement.

When it comes to healthcare, though, the biggest pain that you might not see coming may very well have to do with long-term care. This is the type of care that you might need when you get a little bit older and you can’t perform activities of daily living. Maybe you can’t live on your own, and that could be something that’s full-time and you need someone to help take care of you full time, or it could just be that you can’t do certain things and you need someone to help you part-time.

But all of this falls under long-term care, and I find that most people have not properly prepared for how expensive that type of an event could be. Do you know how much long-term care costs? Well, if you need full-time care and you go into a nursing home, it would be very easy to think that it could cost you $100,000, maybe even $150,000 a year, just depending on the place that you choose.

And if you decide to have that care done in the comfort of your own home and not have to go to a facility, it becomes a lot more expensive. It could be as much as double what it would cost if you were in a facility. Think about that for a second. $200,000 to $300,000 a year is what it might very well cost you in today’s dollars if you need full-time long-term care at your home.

And if you’re a couple over 60 years old, there’s something like a one in three chance that one of you will need long-term care. And if you’re over 80, that ratio drops to about one in two. So that means that one out of two of you, roughly 50% of you, one of you will need long-term care at some point down the road.

And that’s what the stats tell us today. So how expensive is that? What if you are 60 today and you don’t need long-term care for another 20 or 25 years? Well, if it costs two or $300,000 today, could it cost half a million dollars or $600,000 or more 20 years from now? Yeah, you bet your rock bottom dollar it can.

Oh my gosh, it’s very, very expensive. And I find that a lot of you have not prepared for this. And one of the best ways to prepare is through long-term care insurance. And yet just a very small percentage of you even have long-term care insurance. And if you don’t have it, long-term care could very well be a very expensive pain that’s coming down the road that you don’t see happening today Now, I don’t have time to get into the ins and outs of long-term care insurance here.

I could spend this entire show, and I actually have spent some shows talking all about long-term care insurance because it’s changed over the years. But if you don’t have long-term care insurance, then you’re gonna wanna read chapter nine in my book, because in that chapter, I talk about long-term care insurance, and I talk about the new policies that exist today that weren’t even available even as soon as a decade ago.

And if long-term care has been on your mind, you’re gonna learn a lot by reading this particular chapter. And my new book, More Life Than Money, it’s an Amazon number one bestseller that talks about long-term care, and it also talks about some of the more other common mistakes I’ve seen retirees make over their career.

But I would be very happy to get it to you absolutely free of charge, and you can read this chapter about long-term care or the other chapters as well. And if you’d like to get your free copy of More Life Than Money, all you have to do is give us your address, and we’ll send it out via FedEx. To do that, go to providencefinancialradio.com/book.

Once again, it’s providencefinancialradio.com/book, and a FedEx truck will pull up in front of your door within a few days and drop off a brand-new hardcover copy of my new book, More Life Than Money. To get your free copy of More Life Than Money, just go to providencefinancialradio.com/book. We’ll get it right out, and you’re gonna learn what you need about long-term care to make sure that that is a pain you can deal with now and not when it’s too late.

Go to providencefinancialradio.com/book, and we’ll get a copy of More Life Than Money right out to you. I’m Anthony Saccaro. Thank you for joining us today. We are talking about the pain in retirement that you didn’t see coming. The next pain point we’re gonna talk about has to do with the very home that you’re living in right here on the Providence Financial Retirement Show.

I’m Anthony Saccaro. You’re listening to The Providence Financial Retirement Show. We’re in the middle of a great show, and I’m gonna say it’s actually a pretty important show because we’re talking about the pain in retirement that you just never saw coming. We’ve already talked about the pain of potentially outliving your money.

We’ve talked about the pain of taxes and why delaying taxes for a, a later time might not be a great idea. And now we’ve talked about the pain of healthcare and why that might be a lot more expensive down the road than you were even thinking And if you don’t plan now for these pain points, they could blow up in your face down the road, and you could have a retirement that’s not the retirement that you were envisioning.

Thank you for being here. We’re gonna continue our discussion. And the next pain point that we’re gonna talk about has to do with your very own home. And there are several pain points that we need to talk about regarding your home, but they all really boil down to the emotional attachment that a lot of you have.

A lot of you have been living in your home for 30 or 40 years. Some of you, you might have even been living in your childhood home even longer than that, but we tend to have an emotional attachment to our home that might cloud our judgment and cause us not to make the best decisions possible. So there are a couple points that we need to talk about here that could be pain points later that you might wanna think about dealing with now.

The most obvious pain that jumps in my mind as soon as we start talking about this is the fact that some of you might not see that at some point down the road, your home might not be suitable for someone that’s a little bit older. This is a very common conversation I have with individuals that live in two-story homes.

When you’re in your 80s, going up and down a second floor is just not gonna be fun, and for some of you, it’s just not gonna even be possible. And hopefully, that risk never comes true, but what if it does? When would you rather deal with that potential risk, now or when it actually happens? One of my good buddies who is 78 years old, a buddy that we golf with all the time, every week, for probably the last 15 years, he’s in great shape, but they just moved from their two-story home to a one-story home just right up the street, because going up and down the stairs was just too difficult for them.

And this was something that I was talking about with him many years ago about doing this, and it just was a matter of procrastination that kept him from actually doing it. And at 78 years old, I just spoke with him the other day, and he mentioned that it’s gonna take him a couple months to recover from the move.

It’s just very difficult to move even when you’re that age. And I’m not suggesting that if you’re 60 or 65 now, that you immediately go out and sell your home and buy a one-story. I’m not suggesting that at all. You just have to know that that risk is there, and I don’t want it to creep up on you. I don’t want you to get to 80 years old and realize that you need to move.

I really want you to have made a conscious effort ahead of time to be more proactive and not reactive, and you and your spouse get together and decide if that’s something that you should consider even before you get there But if you don’t know that that risk exists, then you can’t prepare for it. And like we said earlier, it’s the risks that you don’t see coming that get you.

It’s not the risks or the pain that you actually plan for. Another potential future pain are for those of you that are house rich and cash poor. And there’s a lot of you out there that have a ton of equity in your home, but not a lot of cash to live off of. And yet you wanna stay in your home because of that emotional attachment And you might be living comfortably on your social security or pension, but not taking into consideration some of the other expenses that we’ve even talked about earlier, like healthcare or inflation.

And if at some point down the road you hadn’t planned for inflation properly or you have a healthcare issue that creeps up and now all of a sudden you need that extra cash, you might be forced to sell your home. And unfortunately, whenever you’re forced to do something, the end results are usually not good.

But my point is that if you’re house rich now and cash poor, you might be living very comfortably on your retirement income and not feel like you need a lot of cash, but at some point down the road you may. And that’s not the type of thing to deal with when the house is on fire. The time you wanna deal with that is now, or sometimes before that possibility becomes a reality.

But you can’t solve a risk if you don’t know it exists, and being emotionally tied to your home, that creates a couple of risks that we’ve just uncovered. But there are other risks. Retirement’s a risky business. We’ve put together an animated video that talks about the seven most common retirement mistakes and risks that I’ve seen retirees make.

And we’ll email this video to you absolutely free of charge so you can become better educated and better armed to make sure that these risks don’t become reality in the future. If you’d like to get that video, that animated video show up in your email box, just go to providencefinancialradio.com/video.

Once again, it’s providencefinancialradio.com/video and you’ll have it shortly. One more time, to get your free video about the seven most common retirement risks that we’ve identified, just go to providencefinancialradio.com/video and we’ll send it right out. I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement show.

We’re in the middle of a great show. We’re talking about the pain in retirement that you didn’t see coming. And the next pain point that we’re gonna talk about has to do with the wrong income strategy. If you have the wrong income strategy today for your portfolio, then you could be delaying a pain for much later down the road, and that’s a pain that can be avoided right now.

And this is probably the most common mistake that I see retirees make is they’re just not invested properly for retirement. And if you’re not even aware that investing in retirement should be much different than investing as you’re heading towards retirement, well, that in and of itself is a huge mistake.

You have to know about that mistake in order to be able to solve the pain that could eventually come on you That’s why my entire practice at Providence Financial and this radio show, The Providence Financial Retirement Show, focuses on helping you invest right in retirement so you never have to worry about outliving your money.

But if you’re invested wrong in retirement, you might have that concern. The reason that your investments in retirement need to be different than your investments as you’re heading towards retirement is because the goals are different. When you’re heading towards retirement, the goal is what? It’s to accumulate.

You’re in the accumulation phase of life, and that’s when your goal is to try to build your portfolio as much as you can. But what about in retirement? The goal is no longer to accumulate. The goal is actually to spend your money. You’re not putting money in anymore. You’re not saving retirement dollars anymore.

Hopefully, if you’ve set it up right, you’re gonna be taking money out of your accounts to supplement your Social Security or pensions or whatever other sources of income you have, so you can do the fun things that you wanna do in retirement. The goals are different, so your strategies have to be different And yet, the most common mistake that I see retirees make is they keep doing in retirement the same thing that they did heading towards retirement.

And this could definitely cause you some pain later on in your years in your retirement that you don’t see coming if you’re not made aware of it. Why are the strategies so different, though? Why do you have to make a change in retirement? Well, when you’re in that accumulation phase of life, the most common type of investments there are gonna be growth-oriented investments, stocks or mutual funds for sure.

And when you’re dollar cost averaging and you have the same money going into the mutual funds year after year after year, volatility in the market actually helps you. Because if the market goes down, then you get to buy more shares for the same dollar. And the math behind that shows that your average purchase price is actually being driven down, and that’s how you make money in the market, right?

Buy low. But what’s good one way is not good the other way. When you’re in retirement, you’re not buying shares anymore. If you’re gonna be taking money out of your retirement portfolio, you’re gonna be selling your shares, or you’re gonna be selling your principal. Same thing, really. Shares and principal are the same thing.

But you’re gonna be selling your principal to get the income that you need. And now if the market drops, you’re gonna have to sell more principal to get the same income because the market is down and the price of your shares has gone down. And when you’re ever in a position where you have to sell principal to get your income, then you’re in a race against time.

You have to worry about whether you’re going to outlive your money or not, because you’re selling principal to satisfy your income needs. When you’re retired, the strategy should be to focus on investments that are gonna pay you interest and dividends, because you can live off of your interest and dividends without ever selling principal.

And now you don’t have to worry about running out of money because you’re not selling principal to get your income, and that’s why the strategies are so different and why it’s so important to make that shift from investing for growth to investing for income right around the time you retire or, really, even preferably before that If you wait till you retire to make that shift and the market drops, well, you might not be able to retire.

So you don’t really wanna wait until last minute. I recommend starting to plan for this pain point about 10 years out. And much of my new book, More Life Than Money, is dedicated to helping you learn what you need to know to be able to live off your interest and dividends so you don’t have to worry about whether that pain of outliving your money is ever gonna be realized sometime down the road.

I’m willing to send you my book, More Life Than Money, absolutely free of charge. You just have to give us your information so we know where to send it. To do that, just go to providencefinancialradio.com/book. Once again, it’s providencefinancialradio.com/book. Leave us your name and address and your phone number, and we’ll mail you a brand-new hardcover copy of my new book, More Life Than Money, absolutely free of charge.

Just go to providencefinancialradio.com/book. You’ll have it in just a few days. You’re listening to the Providence Financial Retirement Show. I’m your host, Anthony Saccaro, and we’re talking about the pain that you didn’t see coming in retirement. Procrastination is a very easy thing to do because we tend to put off things that we don’t like to do, but the results are usually not good.

And one of the reasons that we tend to procrastinate about different retirement issues has to do with the fact that we have emotional biases in retirement that you need to be aware of. And if you’re not aware of these emotional biases, it could absolutely be a pain that’s coming down the road at some point that could be solved now if you don’t procrastinate.

You know, one of the things that I’ve come to realize is that oftentimes the behavioral mistakes that retirees make are often more damaging than the bad investment choices. Let me say that again. The behavioral mistakes that retirees make are often more damaging than actually choosing a wrong investment or a bad investment.

It’s the emotional mistakes that we make that tend to hurt us more than the bad investments themselves. The most obvious example of this is buying and selling at the wrong time. When you buy stock or you sell stock, there’s always gonna be emotion behind it. Unless you’ve put some safeguards into play to make sure that that doesn’t happen, unless you have a plan and a strategy to make sure that you’re gonna follow that plan regardless of what your emotions dictate or what your emotions tell you that you should be doing, what you feel like you should be doing.

If you’re acting on your emotions, you’re gonna make the wrong decisions. And if the market crashes, then you’re probably gonna do the opposite of what you should be doing. You’re gonna panic, and no good decisions are ever made when you’re panicking And it’s different if you’re 30 years old or 40 years old.

The fact is that you can ride it out. You have time on your side. But if the market crashes right about the time you’re gonna retire, you may very well make an emotional decision or an emotional mistake that could cost you huge in the long run. And while we’re on the topic, we got a good question that’s right in line with what we’re talking about now, and it comes from Jasmine in Glendale, and she wrote in this: “I panicked and moved to cash in 2022, and I missed the entire rebound.

Jasmine in Glendale – How Do I Avoid Panicking and Missing the Rebound Again?

How do I avoid doing that again?” Well, Jasmine, thank you for taking time to write in the question, and let me give you a few things to think about. But it’s right in line with what we just discussed, that no good decisions are made when you panic, and it sounds like that’s what you did. And I also have to acknowledge that you’re not alone.

A lot of people panicked in the COVID decline There’s two things that immediately come to mind, though. First of all, I don’t want you to be soured on the fact that you made a bad decision. Everyone’s made a bad decision. There is no listener on this show that has not made a bad decision. Okay, so you made a bad decision, and now you have to live with it, but I don’t want you to live with it for the rest of your life.

The emotional component there that we’re talking about is that you could ruin your retirement because of one bad decision. And it might not be ruined so much because of the monetary and the math, it might be ruined more by the fact that you’re just gonna dwell on it for the rest of your life and talk about what you should have done.

And I don’t want you to ruin your retirement just because you consistently dwell on it. So don’t dwell on it. It’s water under the bridge at this point. And once you stop dwelling on it, which I think should be, like, right now, then just do a reset. And that would be the best advice I could give you. Take stock of what you have, get with a financial advisor, figure out where you are, figure out what your goals are, and just do a reset and do what you need to do to accomplish your goals.

And if you don’t have a financial advisor, feel free to go to providencefinancialradio.com and look us up and feel free to get in touch with us. We’ll be more than happy to help you what a reset looks like. But I truly thank you for taking the time to write in that question, and I hope I’ve given you a couple of points to think about.

But this is a great example of the pain that we didn’t know about. We didn’t know COVID was gonna happen. We didn’t know that the market was gonna lose 40% in less than two months. Oh my gosh, we just didn’t know that. And it’s possible that it happens again, and you have to be prepared. And the time to prepare is not after it happens and you’re panicking.

The time to prepare is right now. But in order to prepare, you have to know what the risks are, and that’s why we’ve put together an animated video that talks about the seven most common risks and mistakes that I’ve seen retirees make and how to avoid them. I’m more than happy to email this video to you.

It’s only seven or eight minutes, and it’s animated, so it’s fun to watch. But it’s also very powerful because you will learn about the seven most common risks in retirement and how to avoid them. And if you’d like to get this video in your inbox shortly, all you need to do is go to providencefinancialradio.com/video.

Once again, it’s providencefinancialradio.com/video. Leave us your email address and just shortly you’ll have this video in your inbox. Go to providencefinancialradio.com/video and we’ll get it right out to you. I’m Anthony Saccaro. You’re listening to the Providence Financial Retirement Show. We’re talking about the pain in retirement that you never saw coming.

We’ve already touched on outliving your money. We touched on taxes. We talked about healthcare. And now we just talked about being invested wrong and getting income improperly from your portfolio And it seems very fitting to start to head towards a conclusion of our conversation by talking about another pain that you might not see coming, and that is leaving a mess with regards to your estate plan, the legacy that you didn’t mean to leave.

And estate planning is actually, I’m gonna say it’s probably the most easy area to procrastinate on because it’s something we can always do later And if you’re a regular listener of the Providence Financial Retirement show, then you also know that I’m an estate planning attorney, so this is really very near and dear to my heart.

I’ve often thought, what good is it to protect your assets while you’re in retirement, only to leave a legacy mess to your kids and have a lot of your assets go where you didn’t want them to go in the first place? Quite frankly, I’d rather have you spend them now than give them to people you didn’t want them to go to, or give them to the attorneys or to the probate court.

That just doesn’t make sense. But if you don’t do any estate planning, that’s likely what’s gonna happen. And from my experience, the number one reason why most of you haven’t done your estate planning, even though that it’s been on your list and you know you should, is because you think it’s terribly expensive, you think it’s for just rich people, and you think it’s gonna be complicated.

And a lot of attorneys I’ve talked to make it sound complicated because they wanna charge more money. The reality is that when someone comes to my law firm and they wanna do an estate plan, a living trust, or will, or any of the other documents that need to be done, usually in a one-hour conversation, we can get everything we need from you and do your entire estate plan.

It’s not complicated when you deal with an attorney. That makes it not complicated, and that’s what we try to do at my law firm, Anthony Saccaro Law. And it’s also not expensive. It certainly depends on your situation, but to get all of the estate planning documents that you’ll need, most of the times it’s only $4,000 or $5,000.

So it’s not expensive and it’s not complicated. That kind of take us to our next listener question of the day, though, that fits right in line with what we’re talking about with regards to estate planning, and it comes from Steve in Westlake Village, and Steve says this: “My mom passed without a will, and now the family is fighting over her assets.

Steve in Westlake Village – How Do I Make Sure My Kids Don’t Fight Over My Estate?

How do I make sure that that doesn’t happen to my kids?” Well, Steve, that’s a great question, and unfortunately, we’ve dealt with many estates where that’s exactly what happens. I can’t tell you how many times I’ve sat down with parents who have just sworn up and down that there will never be a problem with their kids, and then once they die, guess what happens?

Big problem with the kids. It’s a mess. And unfortunately, it’s a pain that you often don’t see coming as a parent that’s just trying to leave your assets as efficiently as possible to your kids. And in California, where I’m licensed to practice law as an attorney, the fact is that unless you just don’t have any money at all, you really should have a living trust.

A living trust allows you to dictate who’s gonna make decisions when you can’t and where your assets are gonna go when you’re gone. And the nice thing about having a living trust is that there are no courts involved at all, which means you eliminate the entire probate process. That’s one of the main drivers, the main reasons why most people get living trusts, is because it eliminates that whole probate process.

And of course, I don’t know your situation at all, but if you own a home, at a minimum, you definitely need to get a trust, and that will make sure that you leave the courts out of it and that your assets pass to those whom you want, and that the mess that you had to go through with your parents doesn’t happen with your kids.

And I certainly trust and hope that that answers your question, Steve. Thank you for taking time to write in. And if you’re listening to the Providence Financial Retirement Show and you don’t have a trust, and it’s been something that you’ve been thinking about for a long time, well, in my new book, More Life Than Money, I wrote an entire chapter about estate planning, trusts and wills and powers of attorneys and advanced healthcare directives, and really everything you need to know to be able to die legally in this country.

But if you don’t do any estate planning, then there could definitely be a pain down the road that you don’t see now for your kids. And if you’d like to read that chapter and just learn more about estate planning, I’ll send you More Life Than Money absolutely free of charge. All you need to do is go to our website to ask for it.

Go to providencefinancialradio.com/book. Once again, it’s providencefinancialradio.com/book, and we’ll get it right out to you. One more time, to get your free copy of More Life Than Money so you can read about estate planning and become better educated, just go to providencefinancialradio.com/book. We’ll send it right out.

Well, we’ve had a great show. We’ve been talking about the pains in retirement that you haven’t seen coming. We’ve talked about the pain of outliving your money, not being invested properly. We talked about taxes. We touched on healthcare. We covered the gamut in this show. I certainly trust that you’ve enjoyed the show.

My goal, as always, is to give you information and education you need to have a more peaceful and stress-free retirement that you already have. I’m Anthony Saccaro. You’ve been listening to the Providence Financial Retirement Show. Thank you for joining us. Have a great week, everyone. God bless.