The Power of Your Decisions in Retirement – New Year New Strategies

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Mark Elliot: Welcome to The Retirement Income Show. I’m Mark Elliot alongside the CEO and founder of Oak Harvest Financial Group. You could find out more about Troy and the team just by going to the website oakharvestfinancialgroup.com. One of the better websites you’ll ever find, a lot of information, a lot of information about retirement, planning, and all the different areas of concern you may have about retirement. A lot of different areas are covered on the website, oakharvestfinancialgroup.com.

Of course, Troy has a great YouTube channel with over 100 videos on it. Just search for Troy Sharpe and Oak Harvest, and you will find those, no matter whether it’s a financial topic or retirement topic, and of course, those intertwine. There’s just a lot of different topics covered on the YouTube channel. Search for Troy Sharpe and Oak Harvest.

Of course, the office of Oak Harvest is located at 920 Memorial City Way right off I-10 and Bunker Hill. You can always give Troy and the team a call if you have any questions or concerns, or Troy talks about something you hear on the program today maybe that brings up some questions in your mind, 800-822-6434. No cost, no obligation to chat with the team. They’re here to help, just don’t know if they can until they hear from you. 800-822-6434.

How are you, Troy? We’re running down to the end of the year. We’ve got a lot of things going in 2022 at Oak Harvest and your clients and all of that. It’s always a new year and there’s always some interesting things going on as we move from one year to another year. Are you ready to go?

Troy Sharpe: Yes, it’s a great show today. I have a lot of powerful content for today’s show. For those of you that have listened for years, you know here on The Retirement Income Show, we answer the big questions. Do you have enough? Can you retire? How long will your money last? One of the big ones we always talk about is taxes. How do you pay less in taxes? Because once we’ve done all the right things and we’ve saved and we’ve filled up that tax-infested 401(k), how do we get it out of there by paying less tax? Of course, the big one that matters most to you is if something happens to you, will your family be okay?

Today, we’re going to talk a lot about the decisions that you have to make in retirement, the power of those decisions, and the compounding value of those decisions. When you look at retirement, and if you’re 2 years away, 5 years away, 10 years away, or you’ve just retired or have been retired for some time, there’s a light bulb moment. That light bulb moment is when you realize all of the decisions that you have to make and how they all interact with one another or how they are all interrelated. It’s like a domino. When you click over one domino and they’re set up properly, they’re going to clink, clink, clink, clink, clink, continue to knock over the dominoes.

That’s the power of making decisions in retirement. Once you make one decision, it knocks over the domino and it impacts every other aspect of retirement. If you take income, how much you take, when you take Social Security, are you doing Roth conversions? Those are all decisions that impact your account balances, how much money you’ll have later in life, how much income you can take out of that portfolio, when you should take Social Security, they’re all interrelated. I want to talk about the power of decision-making in retirement and make sure we drive that home.

Then we’re going to talk a little bit about Social Security and how it’s taxed. We’ve had some great comments on the YouTube channel from some of the videos that we’ve been doing lately. I think a lot of people, and it’s understandable because Social Security is tremendously complex, especially when you get into how it is taxed. We want to get into that because there’s been a lot of good comments and we’ve had to clarify some things on the YouTube videos. If you haven’t checked out the YouTube videos, just search Oak Harvest on YouTube, we have probably 120, 130 videos out there. They’re getting hundreds of thousands of views, very powerful content. We’re getting tremendously positive feedback.

The purpose of the YouTube channel is to help you become more connected to your money, to understand some of the retirement planning decisions that you’ll have to make, and then how they interrelate with other aspects of retirement. The first part is learning. Once you learn, whether you work with us, you’re working with another advisor, or you’re trying to do it yourself, the more you can learn about retirement because it’s complex, the better off you’ll be. Definitely go to the YouTube channel, check that out. Just search Oak Harvest financial group. You’ll see the videos, they’ll pop up.

Then, of course, we’re going to talk a little bit about 2022. We already are on the cusp of that and before you know it, we’ll be end of 2022. We’re going to talk a little bit about the stock market, some of the volatility that we’re experiencing, what we expect next year, and we’re going to tie all that back to the big questions, can you retire? How long will your money last? How much income should you take? Should be a really good show.

Mark: Troy, can I ask you a quick question about YouTube?

Troy: Sure.

Mark: I think when you started the YouTube channel and it’d run for maybe three, four, five months, you said the most watch videos were How Much Do I need to Retire, and the second one was The Average 401(k) by Age. Have those changed now that you’ve been doing it for quite a while?

Troy: When we started the YouTube channel, we were just trying to provide good content for existing clients that they could reference back to if they had questions or just so they could continue to learn. Also, prospective clients that were going through our Oak Harvest Retirement Process process. For those that don’t know, Oak Harvest Retirement Process, it’s a full approach. Everything from creating an investment portfolio to an income strategy, which accounts are you taking income from, a tax strategy and an estate plan.

We wanted people to have videos that help them to learn more on their own time. What’s happened is, as we explored different topics or content, we started to notice which ones were more popular and which ones got more views and which ones people were more interested in. Those were the two that were the most popular in the very beginning. Now, it’s been like a snowball going downhill. It’s just picking up steam, picking up steam. We’ve really found that it’s the financial planning videos, it’s the tax planning videos.

Most of you listening to the show today, you’ve done the right things. You’ve saved for your retirement throughout your life and now you have this big dilemma because all of your money is inside this tax-infested retirement account. The problem comes when you hit required minimum distribution age, when you’re forced to start taking those distributions out. For years, people have been telling you, “Put money into that account, put money in the account, defer it, defer it, defer it. When you get to retirement, continue to let it defer, defer, defer.” For many of you, that’s the exact opposite way of what you should be doing.

We’ve been telling people for years, we need to get money out of that account, because if you do the analysis and project into the future, you’ll see that many of you will be in very, very high tax brackets later in life when you probably won’t be needing that income or spending that income, you’ll just be distributing it and paying taxes. That’s where the content’s focused now. Those original two videos are still doing well, but the videos we’re putting out now, the financial planning videos, because that’s what people want, that’s what people need, that’s not what they’re getting from their current financial advisor, that’s not what they’re getting from the workplace, there’s no resources out there for people to really learn the nuances and the power of making decisions in retirement. They’re all doing really well right now.

Mark: I know you’ve really started a new trend of all these scenarios. I’m 62 and I have $750,000. Can I retire? I’m 65 and I have a $1,000,000 but I spend a lot of money, I wonder if I can retire. You have a whole bunch of scenarios that are really interesting to watch. I know I’ve even had some people, I tell them, “Hey, go watch this, I think you’ll enjoy it and it’s really fun.”

Congratulations on the success of the YouTube channel. You too can watch those and you can subscribe. There’s no cost to subscribe to Troy’s YouTube channel, but that way, and you click on the bell, I think, and then you can get all the new ones as well. It’s just YouTube, search for Troy Sharpe and Oak Harvest.

Let’s start with Social Security since you brought it up and taxes. When FDR started Social Security back in 1935, he said, “We’re never going to tax Social Security. ” Back then, 1935, you got Social Security, you could receive it at the age of 65, but most didn’t live past the age of 62. A much different scenario than today’s Social Security world. 1983, they said, “Hey, we can tax Social Security up to 50%.” 10 years later, 1993, they said, “Hey, we need a little bit more money from folks so we’re going to tax Social Security up to 85%.”

I would think people are surprised that Social Security is taxed. People that follow it certainly know, but I think for somebody that like me, I just turned 62. With your advice, I am not starting Social Security because I’m still working, but there are some areas, I think, if we don’t work in the financial world, we would not know about Social Security. We need some help and guidance in deciding when and how to take it.

Troy: Number one thing, understand Social Security, one, it’s a guaranteed lifetime income. I say that with a little caveat because I believe it was Greenspan and it was either the ’93. No, I believe it was actually- When was it, ’83, ’84, when they made that first modification?

Mark: ’83 was when they did the 50%, ’93 is when they went to 85% of your Social Security.

Troy: One of the notes, Alan Greenspan, if you guys remember, was the Fed Reserve Chair not too long ago. The time flies. He was the one who famously coined the term, “If you understand what I’m saying, I must have misspoken.” The Federal Reserve is the most powerful person in the world when it comes to the financial markets. They have to be very, very careful with their language because one word here or one word there could send the markets up 10%, 20% or down 10%, 20%.

Just recently Ben Bernanke, or excuse me, Jerome Powell, Bernanke was the Fed Chair after Greenspan, now we have Jerome Powell, recently said in the fourth quarter of 2018 that they were gonna start to raise interest rates. That immediately caused a 20% fourth quarter correction in 2018. Just recently this year, again, in the fourth quarter of 2021, they said they were going to begin the tapering process sooner or more quickly than they had anticipated, which has caused some of the recent market volatility along with the new variant that was found in South Africa.

He had a commission on Social Security before he became Fed Reserve Chair. One of the things that he brought up in this commission was to possibly means-test Social Security. The options that they presented to Congress were, we can tax a certain percentage of it, we can do a means testing, we can increase the Social Security age. These are things that all sound familiar to you right now, because these are some of the same concepts being floated. None of the ideas are new.

That’s really important to know when it comes to the stock market, also. I’m not going to go off on this tangent, but truth of the matter is, the stock market repeats history many, many times. We have certain periods in history that are more relevant than others. For example, when the Coronavirus happened, we looked back to the Spanish flu when tens of millions of people died globally to see what the stock market did. That’s one unique time where you can look at different periods historically to identify trans-context historical patterns.

Many pundits out there, and I said I wasn’t going to go down this rabbit hole, but real quick, many pundits out there are trying to forecast what the stock market will do next year, the following year or the past 4, 5, 6, 7, 8, 10 years, compared to World War II or compared to the Great Depression, compared to the ’60s or ’70s or early ’80s. Those are not parallel timeframes to be comparing because the Federal Reserve was not so active with the monetary policy back then as they are now.

Once the Fed began their quantitative easing program and really manipulating the financial system, and they’ve manipulated it in a positive way because there’s a lot more money out there that creates liquidity that has really fueled the market boom over the past 12, 13 years. You cannot compare what’s going on over the past 10 years to what happened in the ’40s, ’50s and ’60s because it’s such a powerful move. When the Federal Reserve injects trillions of dollars of liquidity, you simply can’t compare those two.

Getting back to Social Security, the reason Social Security is an important decision. One, it’s a guaranteed lifetime income. The caveat is, if you have a certain level of income or assets, it’s likely at some point in the near future they’re going to have another commission, they’re going to pose some certain options as far as increasing the solvency of the Social Security reserve fund. Some of those will absolutely be means-testing on Social Security, increasing the retirement age for people in their ’20s, ’30s, ’40s. Instead of 67 your full retirement age if you’re younger might be 70, 71.

All of these things will be proposed again. For our sake, we believe that people that are in retirement age already, that’s a very hard demographic to go after politically because that’s the largest voting base. Means-testing Social Security, it’ll be politically unpalatable to a certain extent. Possibly, if they frame it or the narrative becomes these evil rich people that have $1 million or $2 million or have a $100,000 of income, they don’t need all their Social Security. Something like that could be framed, but for now we do believe pretty safe to assume, Social Security is a guaranteed lifetime income, but it has favorable tax benefits as well. That’s what we’re going to get into on this next segment.

Mark: We’ll talk more about Social Security, we’re going to talk about retirement decisions that we’ll have to make in 2022. Certainly there are things that force us into some decisions, but the idea is that you have control over your retirement. Not Washington, not Wall Street, it’s about you. Troy and the team at Oak Harvest can certainly walk you through that because let’s say that Troy sits down with five clients in a day, for example.

You’re the pilot, Troy and the team are your co-pilot. You’re the CEO, they’re your CFO, if you will.
800-822-6434 is the number, there’s no cost, no obligation for this. 800-822-6434. Glad you were with us today for the Retirement Income Show. More with Troy Sharpe, the CEO and Founder of Oak Harvest Financial Group, right after this.
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