Do You Wanna Be a Millionaire, Or Do You Wanna Live Like a Millionaire | The Retirement Income Show

Mark Elliot: Glad you’re with us today for The Retirement Income Show with Troy Sharpe, the CEO and founder of Oak Harvest Finance Group the website oakharvestfg.com oakharvestfinancialgroup.com. A lot of great information there. As well as the retirement calculator that Troy was talking about, oakharvestfinancialgroup.com, go to the YouTube channel for any questions or concerns or something you want to learn more about as it pertains to your retirement and your financial picture. Over 300 videos the team has put out there. Just search Troy Sharpe and Oak Harvest. Of course, you can always give them a call.

You just want some, “Hey, I got a quick question. I wonder does this make sense? Can I come in and talk with you I want to learn more about my situation, my portfolio. Should I be making some adjustments?” 800-822-6434. 800-822-6434. Troy. I’m not going to have million dollars, but boy, I’d like to live like a millionaire.

Troy Sharpe: Here’s something that a lot of people I think fail to grasp. First off, retirement is about income. If you don’t have income, you don’t retire. Plain and simple. If I have a million dollars, and I’m not a big believer of the 4% rule, if you’ve followed this show for any number of time, if you follow the YouTube channel, I’m a much bigger believer in what we call a dynamic spending plan because some of you, it’s very, very comfortable to spend 5%, 6% of your nest egg in the early years of retirement. Others, you may need to spend a little bit less. When the markets are doing well, absolutely, it’s viable for many of you to spend more.

When the markets are doing poor, it probably makes sense to tighten the belt a little bit unless you have a plan in place where you know where your income is going to come from. As a general rule of thumb, about 35, 40 years ago, they came up with a 4% rule, and that just simply says, once you retire, take 4% out, increase it annually for inflation and you have a decent chance of not running out of money. My problem with it is it’s antiquated. Plain and simple. The economic environment and the forecasts moving forward for bonds in the stock market were much much different than they are today.

Mark: The founder of the 4% rule William Bengen back in the 90s is now retired and he said, “Yes, that was a really good idea back when I started it. It’s not working for me now while I’m in retirement. I’ve had to adjust things.”

Troy: Yes. It’s like driving a 1990 coupe or a 1990 Toyota. There’s new information out there. There’s new cars. There’s new models. There’s new ideas. Why are we stuck in the past and following this rule that many people are? Here’s the worst part, Mark. Financial advisors, many financial advisors at these big firms still recommending clients follow this 4% rule and I think it’s lazy. Honestly, I think it’s very, very lazy. Mainly I think they do so because they don’t have an actual income plan and tax plan. Most of these firms focus just on the investment portfolio. It’s easier at that point to call yourself a planning firm, but you really only are doing investment planning, and you’re telling people to take 4% out. If they have tax questions, you tell them to go see the CPA.

Now, if you have tax questions here, you talk to the CPA that we have in-house, or you talk to one of our advisors that are certified financial planners, that are chartered financial consultants, that are certified tax specialists, your retirement plan here at Oak Harvest Financial Group has taxes worked into it. I’m not just talking about harvesting gains or losses or tax-smart investing. This is another way that many people try to confuse the public with their tax planning when really it’s simply tax smart investing. That’s very basic stuff, rebalancing the portfolio, harvesting gains against losses.

Where you can take it to that 4,000-course level degree is when you start talking about managing it within a certain target tax bracket that makes sense for the client’s future requirement on distributions or medicare premiums, or we’re looking at Roth conversions, not just some willy-nilly amount $40,000, $50,000 but an amount that makes sense based on the extrapolation of data out into the next 20 to 25 years looking at if you do it this way, this is how much tax you’ll pay over the course of your retirement versus if you keep doing it this way, this is how much you’ll pay.

What this means, this thorough approach that we do here at Oak Harvest Financial Group, what it means for you is that you have more connection to your security and retirement. You have more connection to your money. You know how much income you can take. You know what it means for you and long-term, short-term. From my experience, it simply helps you be more confident with the decisions that you’re making. Now, I want to get back to a couple of concepts here where we talked about do you want to be a millionaire or do you want to live like a millionaire? When we think about income in retirement, this is how I started this conversation. The 4% rule, that’s where I was going. The 4% rule, if you have $1 million, that’s about $40,000 per year. You take that $40,000 out, you increase it for inflation.

Many of you have social security of $2,500 a month at full retirement age or $3,000 a month at full retirement age. I think the maximum benefit at age 67 right now is around $3,100, $3,200. That is almost the equivalent of $40,000 per year. When you think about delaying your social security, if it makes sense within the context of a full plan for you in your retirement, delaying social security could be similar to adding an extra $200,000 or $300,000 to your overall portfolio if you look at it in terms of income.

Right now, I did some research before the show, your best-deferred income annuity out there. So, if you’re 55 and have $500,000, you can be fully guaranteed over a million dollars of income from that investment from ages 65 to 85. No market risk, no uncertainty, 100% guaranteed. It actually was around $53,000 per year for life. If you live past 85, let’s say you live to 95, that’s going to be somewhere around $1.6 million, $1.7 million because it’s $53,000, not $50,000. Maybe you just need $500,000 to live like a millionaire in retirement.

Tax planning. Again, if you’re saving money inside the Roth versus the 401(k), you don’t need to accumulate as much money inside that Roth part of your 401(k) because everything that comes out is tax-deferred. About $800,000 to $850,000 inside a Roth is fairly similar to about $1 million inside the 401(k). Where you’re saving money. Now, of course, you want to have a tax plan in place and understand the repercussions of paying taxes today versus getting a tax deduction today and letting it all defer until some point down the road versus letting it all go tax-free in the Roth.

These are conversations that you should be having with a trusted advisor. If you’re just sucking money away and have your head in the sand, you’re missing out. There’s no other way to put it. You’re not optimizing, you are costing yourself a significant amount of money. It is the opportunity cost, which a lot of times we don’t quantify, many of you will say, “You know what? I just put the money in the market. Why would I pay a financial advisor?” That is one path you can choose. It is a free country.

When you quantify the opportunity cost– Russell Investments just did a study. About 4% a year, the average investor costs themselves, as opposed to what they could have done if they had professional guidance from a trusted person to help them with efficient investing, tax planning, tax harvesting, income strategies, all of the gamut of the financial planning activities.

Understanding all of these elements even if you can’t save up to get to a million dollars, if you think about it in terms of income, and we’re big proponents of multiple streams of income in retirement, this is one of the core planning techniques that we employ for you is making sure that we have multiple streams of income from multiple places.

If we can get more income than that million dollars, can actually provide, even if you don’t have a million dollars. I’ll give you a great example. We have some police officer clients that don’t have as much saved in dollars, but from an income standpoint, in my opinion, they’re worth more than a couple of million dollars. They don’t have that number in the bank, but the income that they have, it would take at least a couple of million dollars, probably more, to generate that type of income.
1-800-822-6434. 1-800-822-6434.

This is The Retirement Income Show. I’m Troy Sharpe. Check out the YouTube channel. Tons of content, learn more about what I’m telling you today on your own time at the YouTube channel. Just go to YouTube, search Oak Harvest Financial Group on your own time. Watch some of these videos. Become a better retirement planner yourself.

If you’re not going to reach out to us, you want to go at it alone, that’s what the videos are there for. If you do want our help and you say, “You know what, Troy? I’d rather sip Mai Tais on the beach and be with the grandkids. I don’t want to make mistakes. I don’t want to worry about this stuff,” then give us a call, 1-800-822-6434. Let’s see if we’re a good fit. Let’s have a conversation.

Let’s start down a proactive approach to making good decisions and putting you into a better, more secure place. We just launched our new website here. Well, it’s on our website. I know many of you have CDs that are coming due, and, yes, the rates are a little bit higher, but they’re significantly lower than what you can get in this guaranteed rate, multi-year contracts from life insurance companies. Right now for the next three years, you can get 4% compounded fully guaranteed. For the next five years, it’s around 4.2% per year, but if you go to oakharvestfg.com, search oakharvestfg.com/annuity, then you will find this tool to be able to search the rates for hundreds of different carriers, multiple lengths of time, and these are fully guaranteed rates. So oakharvestfg.com/annuity. Multi-year guaranteed rates that are always higher than CDs. I should say in most instances, I’ve never seen a CD rate for the same term higher than these guaranteed rates. If you have some cash if you have CDs that are maturing it’s a great opportunity to get some higher rates, get that money working for you, and also cash sitting in the bank. Don’t leave that cash sitting there. Let’s get it working. Let’s get it to combat inflation, go to oakharvestfg.com/annuity. 1-800-822-6434. This is the Retirement Income Show. Go to the YouTube channel, check all this stuff out and we look forward to talking to you soon. 1-800-822-6434.

Mark: Investment advisory services offered through Oak Harvests Financial Group, LLC. Oak Harvests Financial Group is an independent financial services firm that helps people create retirement strategies using a variety of insurance and investment products. Investing involves risk, including the loss of principal, any references to protection benefits, or lifetime income generally referred to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Oak Harvests Financial Group LLC is not permitted to offer and no statement made during this show shall constitute tax or legal advice. You should speak to a qualified professional before making any decision about your personal situation. We are not affiliated with the US government or any governmental agency. This radio show is a paid placement.