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Eric Johnson and Kyle Allyn discuss the evolving landscape of retirement planning on their podcast. They highlight nine key changes: inflation, increased life expectancy, and rising healthcare costs. They emphasize the importance of having a comprehensive financial plan that provides a raise in retirement income. Eric and Kyle suggest strategies to combat these challenges, such as starting with higher income distributions and utilizing various financial tools like annuities and mutual funds to generate more income. They stress the significance of having a savings plan integrated into an income plan to ensure financial stability throughout retirement, including the “Go Go,” “Slow Go,” and “No Go” years.
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Transcript:
Intro 0:01
Protecting Main Street from Wall Street. It’s time for money unleashed with Eric Johnson and Kyle Allyn, you have to have a plan where you know if the market’s going to go up, what happens next. And you also have to have a plan where if it doesn’t go the way you think, you know what you’re going to do, it’s time to put you back in control of your money. I’m not trying to predict the weather, which is kind of what we’re talking about, right? It’s predicting the stock market. I’m trying to build a better boat. This is money unleashed with Eric Johnson and Kyle Allyn.
Eric Johnson 0:30
Welcome to the Money unleashed podcast powered by the Hoffman Financial Group. I’m Eric Johnson joining me, as always is Kyle Allyn. We’re the vice presidents of Hoffman Financial Group. You can catch new episodes of the podcast each Friday, so make sure you’re subscribed wherever you get your podcast. Let’s jump into the show. We’re going to talk about the nine ways retirement has changed. And I got news for everybody out there. It’s like goal posts being moved every single year. Rules are changing, taxes are changing, everything’s changing. You got to stay on top of it. But retirements changed a few different ways to right Kyle?
Kyle Allyn 1:01
Yeah, there are a couple of them. So one, of course, is inflation. There’s a discussion that people are retiring and living longer. So, you know, a lot of times when you’re doing a financial plan, you’re looking out into the future. You know, are you testing to 85 Are you testing to 95 one of the ones is that a millionaire may no longer guarantee a comfortable retirement. Yeah, right. So the idea of a millionaire came around a very, very long time ago, and so a millionaire today is not the same as a millionaire before. If you look at 1980 you have about 2 million millionaires, and now we’ve got about 20 million millionaires. So it may be that you thought certain numbers would work, and now you’re saying, I don’t know the other one is going to be that health care costs have risen over 121% since 2000 so you know, when you look at Medicare, when you look at Medicaid, when you look at health care costs, things are getting tricky. So I guess the question is, what are you doing, Eric, to combat these things? How do we pull all this together to make sure that somebody can when leaving your office feel confident? Because if there’s anything that we’re trying to do, it’s to give you the confidence and clarity to just move on from it.
Eric Johnson 2:00
I think the first thing that gives people the most confidence is when we put together a plan and they realize that their income will not only satisfy their day to day needs every month, but we’re actually giving them a raise in retirement. Because one of the big things that I ‘harp’ on in my meetings is income, right? Income is the key. Because let’s think about it for a second. When you get older, you know administrations aren’t your enemy, countries aren’t your enemy, your neighbors, not your neighbor. Might be your enemy, I don’t know, but usually not your enemy. You’re trying to tell us something, I love my neighbor. I got nothing wrong everybody. I love you. Don’t hate me. Okay, I promise I won’t mow the lawn too early this time. But no, it’s income. That’s what solves the problem. Because your true enemy everybody is time. That’s it like it’s time is always your enemy, like it’s the only commodity Kyle that we as human beings spend freely without knowing the balance. When you’re getting older. The reason why it’s so important to attack this is because you don’t have the luxury of being wrong like when you’re young. When it comes to planning for people and putting this together with inflation. Now I’m going to give you an answer that my little girls would give me: more. Yeah, daddy, it’s more. I made pancakes last weekend. Do you have any more? So maybe inflation.
Kyle Allyn 3:09
Okay, I’ve got a question, because I’ve noticed this over the years. One of the things I talk about sometimes to give confidence to clients. I’ve got a lot of clients who started income five years ago, six years ago, eight years ago. Yeah, and even with the price change in 2021 of 9% inflation, they’re not coming in screaming for more income. And I guess my question for you is sometimes I wonder, did we just start them out with a better number, because we do a lot of times a 5% or 6% distribution. Did we just start them out at a higher number and then so that gave them the ability to adjust? On the flip side, it’s just interesting to me that all these articles are saying that inflation is reducing purchasing power, yet we don’t, or I don’t, see clients coming in going, I’m in trouble. Can you send me more?
Eric Johnson 3:51
That’s great. So the reason why we give you more in retirement is the keys to the castle is you need to have a savings plan incorporated into your income plan. Oftentimes, Kyle when you’re dealing with retirement planning, most human beings already have their life situated. They’ve got what they like to do. They’ve got their lifestyle that they enjoy. I like to elevate it. So if you’re drinking $20 bottle of wine, and when I tell you to start entertain the idea of a 50 or $60 bottle of wine, if you’re hopping on a plane until you sit in the front, if you’re going to go to a hotel, I want a five star hotel with a spa and a bar, you know, like, it’s just, you know, if you’re going to Longhorn for a steak, delicious steak, I’m gonna tell you, go to bones. It’s a different experience.
Kyle Allyn 4:28
It just went to bones other night. Awesome. It was the first time I ever been to bones.
Eric Johnson 4:33
Now this is, I feel so guilty for it, because I can’t do this show anymore.
Kyle Allyn 4:36
I can’t do this show anymore. He’s only been to bones one time. What is going on?
Kyle Allyn 4:37
I don’t know why. And I even used to live right down the road from bones. There’s so many great steakhouses here in Atlanta. And to your point, much like me, you might be missing out on something that’s right next to you. So what are the tools, right? So you’re preaching income, and I’m gonna keep bouncing these questions off, answering them very well, what are the tools that you use to create that income? Right? You’re teasing everyone, saying, I can get you more income.
Eric Johnson 4:58
How banks and Insurance Company, mutual funds, have products. A lot of them are revolving around options, and oftentimes, when you’re utilizing these types of vehicles to create the income, not only can you create more income than you think you can, more than the three or 4% most people are used to using this the typical stock models, but you can actually create north of eight or 9% in income, which is much more than you think you can do. And the reason why that’s a big deal is because when you set up your income stream with a portion of your money, then you have other portions of your money, you can grow it in the stock market, and you can peel off gains. And you also can have like you referred to earlier, you know, safe vehicles that can make you four to 7% you can also peel off on an annual basis. So I like to take care of monthly income. I like to take care of, you know, a large lump sum we can throw at you every single year. And I also like an option to take money out whenever we want. So that gives you full flexibility for your income plan. And if you’re getting more than you think you need, and you don’t necessarily spend more money every month, great. Now you have a way to, supplement your emergency funds. Now, to answer your question, you don’t see a whole lot of people coming in there asking for more income. If you give them more at the beginning, they grow into the inflation that is already happening to them. So it doesn’t affect your pay, or it doesn’t affect what you’re spending on in retirement. So when eggs go from $2.50 to seven bucks. You’re like, okay, that’s right, yeah, I got it. Or, you know, gas goes up to $5 let’s hope that doesn’t happen. I don’t think it will.
Kyle Allyn 6:27
Don’t do that to me. That easy guy, easy on Ricky Bobby, don’t do that to me.
Eric Johnson 6:31
Don’t put that on me. Ricky Bobby, now if gas goes up, you’re okay with a buck here or a buck there, because you have the extra money coming in to satisfy that. And that’s what gets the 800 pound gorilla off your back, Kyle when you’re getting ready to retire.
Kyle Allyn 6:44
Doesn’t Chris call that the income wizard? Yeah, this show he talks about being an income wizard, having the ability to, like, work some magic, sprinkle some power into this, right? So one of the things that we’re here offering, one of the things that we’re here doing, is offering you the ability to come in and build an income plan and build something solid that you can lean into just because the w2 stops does not mean the income goes away. And as Eric likes to preach, we want to give you a raise. We want to allow you to have more in retirement. So I always tell the story. I was doing a workshop one time, and I said, for those of you that are about to retire, are we doing anything fun? And everybody got a little quiet, and one lady said, I’m buying a boat. Matter of fact, I’m buying two boats. Another lady on the other side of the room said we’re going with her. So are you the person that everyone’s coming to because you have abundance, because you have capability, because you have clarity and because you have income, or are you the person sitting in your home saying, Well, you know, we’ll cut some cost. Matter of fact, we’re not even going to do steak. We talked about one of our segments back in the day. We’re doing hot dogs. The hot dogs, that’s sausages, right? So we want to make sure that you are an income wizard. We want to make sure that you have the ability to build something that is sustainable through all of retirement. And I want to take one last question to Eric, because he is just knocking these out of the park when we’re looking at these changes in retirement. There’s another one that I mentioned, which is that health care costs have risen. Not only do you have to provide for the 60 year old, you the 70 year old. You. What about the 90 year old? You, the 85,87, 88 year old. You. What are you doing to make sure clients have the numbers they need and the clarity they need to cover health care costs in that last piece of the puzzle.
Eric Johnson 8:21
You know, I love this because it goes right back to the first answer, and that’s income. So let me, let me tell everybody what it’s like. You got three phases of retirement, right? You got the first phase, which is the Go Go years. And the reason why we want to give you more money in the Go Go years and you think you need to spend is because you need to, you know, spoil your grandchildren. You need to go on vacations. You need to go have your experience in this world while your body still allows you and you have the energy to do that, right? And as long as you take good care of yourself, the Go Go years can go for a nice long time. You need the money to have the fun that you need. Well, then you get somewhere in your 70s, you know, maybe even the 80s, if you’ve taken good care of yourself. And it turns into the slow go years, right where you maybe you don’t want to go to Europe anymore. You’re just going to stay in the southeast, or maybe you’re gonna, you know, tool around United States of America, which makes sense. And then you’re gonna get into the no go years, which is in your 80s and 90s. And guess what happens, guys, if you have enough money coming in, you’re taking care of inflation, you’re planning for the taxes, the amount that you spend on the fun stuff in the first bit, which is the GO, GO years, those expenditures go down. But you know what goes up medical, and if you already have the money coming in Kyle, you will have the money available to pay for those astronomical numbers that you just gave you for the medical, and you’ll have the ability to pay for it yourself, versus pulling from your portfolio to do that. So there’s multiple different reasons why I like more income, not just because I’m a kid and I like more. It’s because you got to have fun at first, and then eventually, if you know, if you keep bumping those numbers up to match inflation, you’re going to have enough money to pay for the health care that you’re going to need in retirement as well, too.
Kyle Allyn 9:50
All right, well, I said I had one last question. So I do have one?
Eric Johnson 9:52
Oh, I get another last one. Okay, come on, what you got?
Kyle Allyn 9:55
We’ve talked about all the changes and all the solutions. If you’re someone out there in radio land, you’re. Listening to our voices. The real question is, okay, how do I get that?
Eric Johnson 10:03
Got it. So we talked a lot about income. And so it’s kind of funny. We have this thing in our company. We call it the ‘replace your paycheck challenge,’ and it’s more of a challenge to us, not you, but I do challenge you to do this. And so what we do is you come in for one of our complimentary consultations. We go over your portfolio with a portfolio X ray, and if you need income, that’s the type of plan we put together for you. And we use every single tool at our disposal. And that’s why it’s so critical to have a fiduciary retirement plan or do that for you. You can go online and click, unleashyourmoney.com. There’s a button on there that says, replace your paycheck challenge. Mash that, and one of our client service representatives will reach out to you, and we’re happy to put together a full income plan for you that’s going to get you through not only retirement, but the Go Go years, the slow go years, and the no go years. And I know the income was my answer for all of your questions, which is why I had every single pitch out of the park, but that’s why it’s so critical to have it in your portfolio. You can’t just pull shares now, okay, Kyle, you’ve asked me a bunch of questions, and I’m going to throw one back at you. You’ve done a lot of these replace your paycheck. Challenge. What happens to people when they realize they can have the income and union retirement? How do they feel when they leave your office?
Kyle Allyn 11:28
I think this is one of the best parts of my day, which is most people come in with a fear that they’re gonna run out of money. Vanguard tells us that 83 to 84% of clients are thinking they’re gonna run out of money, and they walk out with a little bit of surprise, which is that they’re good, yeah, I mean, if I could just repeat it, I’m just going to repeat it forever.
Eric Johnson 11:44
You’re good, you’re going to be okay. That is the greatest feeling …
Kyle Allyn 11:48
I even had a interesting enough. I just had a client come in, and they’ve been with me for many years, and the husband’s been retired, and so the wife was working, and so most of our reviews was with him, and then she came in because she’s going to retire in a few months, and it caught me off guard, because he and I have had great conversations for many years. I always tell him, I’m saying, Hey man, you’re an easy client. You’re good. Look at all the success we’ve had. You’re never going to run out of money. And he knows that, yeah, right. Well, she comes in and she hasn’t been in the meetings because she’s been off working hard, and she’s looking at me like, I’m I don’t know if I can retire. I’m like, right? What do you mean? Yeah, she’s like, I don’t think I can retire. I need to stay working. I’m like, ma’am. We have repeated for five years in this room that you’re good, you’re okay, we’re doing great, and you have the income you need. But because she had not heard it, she did not feel it. So I said, Look, I’ll redo the plan. We did it five years ago. I’m gonna redo all the numbers. I’ll hand them to you again, and what he’s been learning and holding on to I want to show to you. And so we had the ability to sit her down, even though she was a client, and go, hey, you’ve been working and focused on your life. But the focus in here is you’re good,
Eric Johnson 12:49
that’s right And when you have the income taken care of guys, you have achieved financial freedom. And I agree that’s what everybody really wants. Or you can go online and check us out on unleashyourmoney.com, and hit that button, replace your paycheck Challenge.
Disclosure 13:06
Eric Johnson and Kyle Allyn are Investment Advisor representatives of Brookstone Wealth Advisors LLC, a registered investment advisor and affiliate of Brookstone Capital Management LLC, BWA and Hoffman Financial Group are affiliated under common ownership. Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients, we have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV two a page four for additional information, the Hopkins Financial Group and WSB are not affiliated. Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with a professional specializing in the field of tax, legal, accounting or investments regarding the applicability of this information for their situation. Any client experiences discussed during the show are unique to that client. They are not meant to imply or suggest you will experience the same results. Past performance is not a guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by Brookstone index or fixed annuities are not designed for short term investments and may be subject to CAPS, restrictions, fees and surrender charges as described in the annuity contract. Please refer to our firm brochure, the ADV two, a item four for additional information. Often, Financial Group is not affiliated with or endorsed by the Social Security Administration or any other government agency insurance licensed in Georgia, number 163546.
