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Exploring Retirement Funding

Hey everybody, this is Erin Fountain with Suncoast Social Security Advisors . . . my special guests are Lori and Jason Hanson of Midwest Family Financial. And they’re going to give us some really salient information on what’s going on today. So, let’s start out with, you know, how do you guys feel the American public is feeling about their findings and security today and we’ll get to some of the things that you have available to them that can get them guided in the right direction

We are talking with a lot of clients who have noticed a dip in the retirement. So, if they have stock-based accounts 401k’s, IRA’s they’re seeing those accounts drop and then now they’re concerned about what does that look like for their financial future is, you know, is that going to be money that they’re going to be able to recoup? You know, a lot of times we hear we’ll let it ride. It’ll come back; you’ll be fine. Just wait it out. But a lot of people are now starting to think, can I wait it out? Will there be time? Will I recoup the losses? And can I afford to lose anymore? So, we’re talking with a lot of our clients and middle Americans on, you know, what can they do differently. They do have options available to them. So, we’re just going through those options and seeing what the best fit is for them to help ease their mind and put them in a better position so that they have that security moving forward.

And so, we’re getting at here is all market volatility right now. So maybe let’s roll into something a little bit more like what’s the biggest impact on household finances that you find?

I know I shouldn’t answer a question with a question, but do you know anyone that’s ever needed a GoFundMe? Do you know anybody that’s ever got really sick? Do you know anybody that’s ever got hurt really bad . . . some sort of an accident? That is the biggest impact on people’s finances when they get sick, or they get injured. And what most people aren’t aware is there’s vehicles out there to protect them from that. 48% of all small business failures, 50% of foreclosures and 62% of bankruptcies are caused by some sort of what we call a ‘negative life event’ in somebody’s life. I’m talking about illness or injury. I get some pushback sometimes when I throw those stats out there, people said, wait a minute, didn’t need any of those people have health insurance? Yeah, 85% of the people in that survey had health insurance. The problem with that is health insurance pays for doctors, hospitals and medication; it doesn’t pay the house payment, car payment, co-payments, deductibles – all the other things that go along with living, and we wind up completely wiped out and hoping that there’s enough generous folks out there that will kick into our GoFundMe or our benefit dinner, or whatever the case may be.

And that’s still hoping against something that’s not really a secure as you would want it to be and I know from what I’ve seen in disability that in most cases it’s a long process and even when it is awarded, there’s some restrictions and it’s not as much as you also might think that would be, too.

Yes, and a lot of people don’t understand, especially like with GoFundMe, depending on how you get them the funds, how much you do get, it could become another tax implication. And so, when you’re, you know, trying to raise money for something – you know, like a medical event, the last thing you want to do is then make a taxable event and put yourself in a deeper hole, maybe with the IRS. So those are all things that a lot of people are not aware of, and there are options or solutions.

And how do you with all these things considered . . . I mean it’s a whole other universe talking about taxes – any tips in these cases how to avoid paying less in taxes?

Most of us have been conditioned, and I say the word conditioned strongly. We’ve been conditioned to believe that there’s only two places that we can grow our money. We can either grow our money in the market where you can grow it in a safer place where we get less in interest. And then we’ve also been conditioned to believe that we have to grow it in some sort of an account that has an umbilical cord to the IRS, like a 401K or something like that. There are equal returns in accounts that are structured to grow just like a 401k does, or the money grows tax deferred, but then folks are able to actually access that money tax free when they’re ready to start taking income from that account and they can actually access the money prior to 59 1/2, that’s another thing. You know, what if I don’t want to wait till 59 1/2 to retire? What can I do? There are accounts out there that that will allow you to access that money tax free at any age for any purpose. So, that which leads me into those accounts that also work as a vehicle for college savings. Most of us are accustomed to growing money in a 529 – 529’s are great if your kids going to go to college or you’re going to use the money for something that’s accredited by the 529, but if it’s not, you’re going to get hammered with the taxes and penalties on that money. But the accounts that we work with, the money can be used at any age for any purpose. When we sit down with our clients, especially at the age of retirement or they’ve already been in retirement for a while, they’re sitting down with us – the biggest statement that we receive from them is ‘I did not realize the impact of taxes that would be on my retirement.’ Many people don’t quite understand how they get this taxed as income. And so, when they get to that age, they don’t prepare for that. So here they’ve saved, they thought they’ve done everything correctly and then they get into retirement and then realize that they’re getting those tax hits. It’s because that there wasn’t proper preparation for it or education on how that was going to look. Also, it can make their Social Security taxable, it can raise their tax bracket to where their Social Security gets – has a gigantic impact due to taxes on that so, it’s all about education.

Absolutely! Well, you guys have given just in the short time span just so much to think about. So, thank you guys so much for today. I’m going to include your information here at the end. Again, Jason and Lori with Midwest Family Financial

Thanks so very much for your time. Truly appreciate it.

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