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TPOR_AreTaxesGoingUpInTheFuture_0610.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to take point on retirement with your host, Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tech Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams. And they can help you, too. And now let's start the show. Here's Erick Arnett.

Sam Davis:
And welcome in to take point on retirement. I'm Sam Davis, joined by Erick Arnett. Erick, how are you doing this weekend?

Erick Arenett:
Hey, doing great. How are you doing today, Sam?

Sam Davis:
Doing great. You know, we want to start off the show today on Take Point on retirement by taking a look at some things that are currently going on in the market. We always have the concerns of retirees and pre-retirees in mind. And one thing that's really affecting us all is gas prices. You know, those increases have been brought on by conflicts in Eastern Europe regarding Russia and Ukraine. I think that's been going on almost three or four months now. But taking a look, the national average for gasoline is $4.92 this week in the Sunshine State, unleaded is nearing $4.80. And what I'm really taking a look at and I'm concerned with Erick is diesel. Diesel in Florida is pushing 570 and in a couple of states, it's over $6 and climbing. So, you know, what are you seeing in the marketplace right now with gas prices, inflation, maybe what's going on in the Fed that's really affecting retirees and pre-retirees this year?

Erick Arenett:
Yeah, so good news and bad news. You know, a lot of the reports that we follow are coming out and showing signs that the worst of inflation is behind us, that it's peaked. You know, however, and there's so many dynamics that go into inflation, it's just not only fuel costs, but that's the thing that most of us are focused on because it's the headlines in the news and it's the thing we see mostly every every day when we go to the pumps and fill up. And yeah, I was actually I was actually this is this is how we get trained. Our brains get trained, you know, but I remember a couple of weeks ago, I paid $6 a gallon to fill up my diesel truck. I've got a diesel truck, so. It used to be like $2 and something and now so $6 to fill up my truck. 180 bucks. And I was just like, wow, this has got to get better. So I just keep a positive attitude. And and believe it or not, this past weekend, I was up in a more rural market of Florida and it was only like 565. And I was so excited that it was below $6 a gallon, but it's still double what I was paying. But this is how they train our brains. But yeah, you know, the most important thing is it's not only just what we're all paying at the pump, but obviously all those high fuel costs, you know, pass on to us in our food costs, all of our goods and services that we receive.

Erick Arenett:
I mean, everybody is marketing. It doesn't matter what business you're in, what service you're in, whether you're a landscaper or a painter or, you know, you're I don't care, you name it. Everybody's raising their prices to compensate for the fuel increases in some of the some of the reports that we look at when it comes to inflation and fuel costs, hopefully, potentially, we believe that this has peaked and we'll just start coming down from here. So I think there's relief in sight. And but, you know, there's also probably you know, I have to believe that there's price gouging going on. You know, a lot of this is traded in futures markets. You know, people listening out there, you know, you might want to actually, if you're bored one day sit down and Google how prices actually are affected and what causes the prices and how the oil markets and gas markets work. But, you know, there's a lot of other variables involved there. And, you know, it's all about supply and demand. And so you got OPEC restricting supply. You got the war in Ukraine, which is restricting supply. And we were still going and yet we were going in the world was going into its peak months of fuel consumption, which are the summer months, you know, the traveling.

Erick Arenett:
And and it's always been that historically where prices will increase, but this all hits at one time. So obviously it starts trickling into food costs. And you just got to be you know, I noticed that even in my own household, we just got to be a little smarter, a little wiser, a little more strategic. You know, I'm not going to name any names, but there are certain grocery stores that we're not shopping at right now because there's too expensive. And we're we actually are shopping at three different stores now, you know, because we know one does this, one has this. And one of those and they're better on pricing on here and there. And so, you know, we've really my household is really had a lot of success at maintaining the budget just by being more creative and putting a little more effort into shopping in different places and looking for those buy, buy one, get ones and all that kind of stuff. So yeah, absolutely. But the good news, Sam, is I really do think the worst is behind us. It's peaked. There's you know, when you're when your economy is literally peaked, it's just it's just on fire. I mean, we had the best economy, probably this country or the globe has ever experienced, you know, a year or two ago.

Erick Arenett:
And think about even coming out of the pandemic with all the stimulus. So we were really rolling along. So it feels painful here for for some because, you know, you're when you're you're coming off of that high, you know, and even though historically we're still really, really strong compared to history and the job market is super strong, which is actually going to put a lot of pressure on earnings for certain corporations because the wage increases. So the good news is that wages are increasing as well. And, you know, maybe not at the same pace, but I don't think inflation is going to stay here. I think we'll get it back to the more national average to 3%. This is temporary. Temporary in the markets have already digested all this and they're already looking forward a year from now. So that's what people have to keep in mind is when the markets are reacting, they're really reacting and trying to digest and predict news and what the economy is going to look like a year from now. It's all about forecasting. So, you know, all this bad news has already been priced in and that's why we've seen a really strong rebound off the bottoms of the market. You know, you have technology up 17% from the bottom right now. So I think we could be in a bear market.

Erick Arenett:
Who knows? We'll never know. We could be in a still being a bull market. You've got all these talking heads out there from day to day or say one thing or the other. But what what most folks need to know is it's really about staying focused and maintaining a good, solid asset allocation based. On risk tolerance and having a plan in place. And so and if you have a plan in place, you didn't have to make a knee jerk reaction. And I would encourage a lot of people out there listening, if you have been in control pretty much your whole life and you've been managing your accounts and unfortunately you have a lot of emotion tied to your money. And so one thing that we do at take point, wealth management is we take the emotion out of investing. And so we're able to make sounder decisions and really maintain our focus on the long term objectives and the long term plan. And there's so much that goes into that. So hopefully we'll dive into some more of that today on today's show. But just to summarize here, you know, market has kind of settled down here. There's still some volatility here. I think the market is trying to find a bottom, but we don't have just massive selling going on, which is a good sign. But we still have a lot of challenges ahead, of course, because these high fuel costs and inflation takes a while to trickle into the economy.

Erick Arenett:
So but there's some good reports out this morning. Even I was reading some things. A lot of economists and market experts saying that the Fed will will be able to curtail a recession or a deep recession. We might have a mild pullback in growth, which is OC, you know, but so I think that the worst is behind us. I really do. So more than ever, it's time for folks to really take a deep breath. We've been through the pandemic. We've been through this recent market decline, off the highs with all the changes and Ukraine and the Fed raising interest rates and the fuel prices going through the roof. So now is the best time to really sit down, come in, talk to us. I'm happy to chat with you on the phone. You can get a hold of us by just calling us 3526160511. You can you can go to my website, take point wealth management or even take part on retirement dotcom, our radio site. And you'll see in that upper right hand corner, you can just click and schedule an appointment or a chat session with me. So I think that more than ever, it's time to really focus on building that long term retirement plan, and it's a good opportunity to do that.

Sam Davis:
Yeah, and I think it's it's natural, Erik, to be emotional about your wealth and your finances, especially as you get closer to retirement and actually needing to turn that money in your 401. K or your IRA or wherever into income for your retirement. But, you know, the take caution with making decisions based off your emotions because you don't want to make a knee jerk reaction like you were saying, it's going to mess things up for you down the road. And we want to talk a little bit about investing for income, you know, making the right decisions with your investments that are actually going to create income for you during retirement, because that's really what retirement is. You're stepping aside from your day to day, 9 to 5 working life, and you really need to take all of the assets that you've been saving up for your working years and turn that into a consistent income, right?

Erick Arenett:
Yeah, a good point. I mean, more than ever, especially when you're close to retirement or even in retirement, you really have to change your focus. You have to kind of flip your brain from conventional wisdom and look at things very differently. And the most important thing is that most people miss is investing for income and focusing on creating income and creating good, long term sustainable income. It's not it's not about chasing stocks anymore or trying to find how you're going to try to get the biggest total return. It's it's your past that. So it's time to really focus on managing risk 100%. And the way you do that is building a very broadly diversified portfolio, having that portfolio rebalanced and also having that portfolio being tactically, tactically, actively managed, maintaining that risk and really looking at risk and then also creating that income is more important than ever. So, you know, maybe once you've maxed out your tax advantaged accounts, consider using any of your additional monthly cash to invest in an income producing assets. So these assets will continue to pay you when you stop working and give you some more flexibility with your retirement planning. So, so, so important to to give us a call, let's talk about investing for income and how we can do that. And the good news is. That rates have increased and interest rates have gotten much better than they were two years ago, three years ago. So even with our indexed annuities and our annuity and our income planning, there's a really some really strong rates out there and some really strong products where you can get some great income, some great capital appreciation, and you don't have to take the risk.

Erick Arenett:
Your money is 100% protected, your principal is 100% protected. So imagine being able to put your head on the pillow, knowing that your money will never go backwards, it can only go upwards, and that we can also put together some nice solid income streams to you. No one is to look at your income gap. Right? We've talked about this before. If you have a certain amount of guaranteed income coming in like Social Security or a pension or require minimum distributions or something like that, and then you look at your expenses, what your budget is, please look at your budget closely and maintain that and always reevaluate it. But so let's say your budget, you need $5,000 a month to live on, but you're only receiving around 3000 a month in guaranteed income. We need to put together a strategic income plan that's going to fill that gap and also be able to appreciate with inflation, because what's caught most of our seniors and even our retirees and our young retirees, what's really caught them and blindsided them here in the last year or so was this massive amount of inflation. And we've talked about it for years and years and years on the show and our seminars and our workshops. We have to be prepared for this. And if you had a good plan in place and a good, solid plan in place, you're weathering this storm very nicely. But if you don't have a plan in place, you're kind of like that ship lost at sea right now.

Erick Arenett:
I know a lot of people listening, probably panicked and bailed and went to cash. So their retirements are probably sitting in cash because I see people coming in my office every day, new new clients that, you know, they kind of panicked and didn't have anybody helping them. They didn't have a plan and they were kind of trying to manage things on their own because they feel like, Oh, this is my money. I have to control it. I can't give up this responsibility to anybody. And they panicked. They're in cash. And guess what? Unfortunately, like we talked about on previous shows, the emotions of investing when not to sell, these people now that are on the sidelines have missed already a rebound in the market. The market is slowly grinding higher, whether people realize it or not. We're 15, ten, 15% off the bottoms. So you've missed that move back in that recovery already because you didn't have a plan and emotions emotions took over your plan. And this is no way to manage your future or manage your retirement plan. So you've got to have a team beside you. You've got to have an advisory team that's been through. By the way, our team has been through, you know, probably ten of these cycles. So I got a lot of gray hair and there's a reason why. So I've been doing this 25 years and I've been through all kinds of market cycles, recessions, you know, major devastation and the economy and the markets. And so what I do always know is, even in the worst times, like, think about it, zero seven, zero eight, that market hit the bottom and boom, it was a V-shaped recovery.

Erick Arenett:
And if this may not be a V-shaped recovery, because I still think we have a lot of headwinds out there. However, stocks can only get so cheap and they got really cheap, and that's why they're getting picked up here at low prices. So now more than ever, folks, please give me a call and let's get a plan and get together and get one in place for you so you don't have to go through this feeling of anxiety and and turmoil and ever again. You just know that you have a solid plan in place and you can put your head on the pillow. And one thing that we pride ourselves here at take point on retirement is literally our phone did not ring through the whole first half of this year. We never heard from clients. You know, we're reaching out to folks. We're making adjustments to the portfolio. In fact, we tactically made changes to the portfolio a year ago before any of this stuff even started hitting the news, the news. So you have to have someone that's constantly massaging and tactically managing your portfolio. You've got to have good income strategies in place as well to provide that guarantee income for your future. Because one thing we don't want to do is ever run out of income. So now more than ever, I sound like a broken record, Sam, but we've got to get folks to give us a call and get that plan in place.

Sam Davis:
You can reach out to Erick and his team by visiting, take point on retirement dotcom just go online to take point on retirement. Dotcom, the phone number is on the website, but we'll give it to you here you. Pick up the phone and call 3526160511. That's 3526160511. Take point. Wealth Management is an independent and veteran owned financial advisory firm and Erick and his team, they're fiduciaries, which means they have your best interests in mind, not just because they want to, because they do, but because they have to. They win when you win. Erick And so how does that fiduciary responsibility kind of affect the way you guys approach building plans?

Erick Arenett:
Yeah, well, it's, it's, it's what we live and breathe by. It's what we lead with. And it's real simple. A fiduciary is ethically assigned. We sign an ethical document. To be a licensed fiduciary. You have to put your clients first and foremost and always have their best interests in mind. Not your own, not the firm's. And that's one thing that we do is we sit on the I look at it like this. When we bring on a new client, we treat that investment, that money, their retirement like it's ours as well. And that's how important it is to us. And we sit on the same side of the table as you do. We're on your team and it's us against them. It's us against Wall Street. It's us against all of the stuff that you hear on the news and all of the chatter that you hear in all the different websites and radios and TVs. I mean, there's so much constant chatter coming at people. It's so confusing. So we sit on the same time, same side of the table as you as your personal consultant, your personal advisor, your personal team member. And guess what? It doesn't cost anything more than what you're currently already trying to do on your own. Or if you've got a41k that no one's looked at and you're not really quite sure what to do with it, please give us a call.

Erick Arenett:
We'll get it set and we'll get it and set it in the right direction because that's one of the biggest mistakes we see every day. Sam is maintaining just the wrong asset allocation based on your risk tolerance. So as you grow older, it's especially important to make sure you maintain the right asset allocation so you aren't. You aren't at outsized risk of losing or losing your assets, but you also don't want to be too conservative in investing that you run the risk of running out of money. So there's a there's a balancing act there. So we've got to find out what your financial speed is and find out what kind of returns you need to be getting to maintain your account balance and to maintain your retirement portfolio. So more than ever, you've got to assess your risk tolerance and adjust your investments accordingly as you age. So we talk about this in the past, you know, the rule 100, if you're take your age, subtract it from 100, that's probably really the most you should have in growth assets. But when I say that's the most, that's the least as well. You should still at least have that much in growth. And probably a lot of our listeners may or may not even have that much in growth.

Erick Arenett:
And so you've still got to grow your portfolio, you're still going to have some volatility. But if the overall portfolio is diversified and you have multiple asset classes, including index annuities in there, you're going to see a much smoother ride, a lot less volatility, a lot less standard deviation, and we can get to point A to point B in a much more controlled, comfortable ride. And, you know, most people that experienced a lot of volatility is just because they just didn't have the right asset allocation and they didn't have somebody watching it. You know, after the pandemic in 2020, we had just the technology industry alone doubled and tripled. So technology was 60% of the S&P 500. So no other stocks were doing anything other than technology. So then people all ran into technology at the wrong time. And guess what? Technology was the first one that got decimated. And so you just can't keep jumping from one frying pan to the other. You have to have a very well balanced portfolio and you can call me. We'll set up a zoom. You don't even have to leave your house. I'll show you what I'm talking about. I'll show you the different charts and the strategies that we follow. And it's about putting up smooth, consistent returns over time with the least amount of volatility as possible.

Erick Arenett:
And that's maintaining risk. And that's the first thing we're going to do when we put put a plan together for you. It's real simple. You just give us a call. We're going to have a chit chat. We're going to gather some data, some information, ask some questions, and we're going to show you we're going to share a report with you and show you exactly how your portfolio is invested, how much risk is in it, how much you're paying in fees and expenses, what are your tax consequences? And so those three things are the most important things to focus on. So and it doesn't cost you a thing, by the way. It's absolutely free if you call in off of this radio show for us to do this work for you. And of course, yes, later on down the road, if you decide to implement something and something that we do for you makes sense, then of course, we want to have that opportunity to work with you long term and build a relationship. But first and foremost, let's really see how things are looking and let's do those projections. Let's test your plan. Maybe you already have a plan in place, so let's test it. But most importantly, let's look at the next ten years very differently than we did the last ten years.

Sam Davis:
You know, and you talked a few minutes back about people getting emotional with their investments, putting so much into cash. And we had talked in episodes past about when the market goes down, so many people get scared and get out. But when you miss those top trading days in the market, those big bounce back days, you really hurting yourself in the long term. So if you think of it as, you know, let's just give a round number as an example. Let's say you have $100,000 invested in the market and the market goes down 50%. You're now at 50,000. Well, if the market goes back up 50%, you're not at your original $100,000. You're only at 75,000 now. So it's a lot harder to get back up than it is to go down.

Erick Arenett:
Yeah, great point. And if you were just out of the market for one week last week, the market was up 6% in one week. So right there, boom, you just missed 6% of the recovery. So you got to stay in the game. But as well as weather the storm, you know, our portfolios because they're so broadly diversified, actively managed re reduced equity, you know, we did some things in our portfolios, added energy, added commodities, things that you had to do to kind of hedge and follow some trends. If you weren't doing that, then you're down as much as the market. It's so important to be rebalancing your your retirement investments. So many workers invest in their employees retirement investment plan of the IRA, but they fail to make sure the portfolio is properly allocated and rebalanced. So think about it. If we're halfway through the year and your equity side of your portfolio is. Down ten, 15%. You've got to rebalance to where you're basically purchasing more equity here at these levels and put your portfolio. If you're a say, you're say if you follow the Rule 100 and you're at a 4060 portfolio, now, your portfolio is only 30% equity in 70% bonds. You need to rebalance and make sure you're back to that 40, 60 mix because you're buying in at lower prices. Right. So you've got to constantly be rebalancing that portfolio.

Erick Arenett:
And so, unfortunately, a lot of people out there still working or they have that orphaned 401. K just sitting somewhere at a company and some kind of mutual fund or what I really don't like are those target return funds, which is basically what all retirement plans are now. Those are horrible. Please give me a call. We'll discuss that. But, you know, you're you're in a 2030 Target fund, which has a bunch of bonds in it, which basically just got annihilated in the last year and a half. So let's let's tailor something specifically for you based on what your true risk tolerance is, what your true needs are, or what is your financial speed? What do you need to return? Where do you need your retirement to be at in order to take care of your needs and retirement? So and we do all those projections for you. We test it. We throw 1000 scenarios at it, and we're going to pull out the probability of success and give you some confidence and clarity in either what you're doing currently or if you're not doing anything currently. Let's get a plan in place. We've had you know what's so exciting, Sam, is, you know, this year alone, we've had so many new clients come in off the radio show that we're in the same predicament that we're talking about.

Erick Arenett:
And now they're on the right track and they're so happy and they're so comfortable. I'm getting calls every day like, wow, this is great. Erick, you know, feeling really good about what we're doing here. And it's just about having a professional buyer's side and there's a ton of professionals out there. I get that. And what makes us different from the other, you know, it's it's really about how much we care and how active we are and how passionate we are and how communicative, communicative we are. I don't know if that's a word or not, but I just made it up. But it's about communication. We we pride ourselves on constantly communicating with our clients, constantly educating them. And and that's really what's giving our folks the most peace of mind and having a plan and having somebody by your side. You know, we've been doing this 25 years, so we've been through it all. And, you know, it's all about having that professional by your side to lead you to and through retirement. And I know that sounds like a sales slogan, but it really isn't. It's just what we really feel is kind of our our mantra and our guiding force. So, you know, just so, so important to to get that plan in place, please give us a call.

Sam Davis:
You're listening to Take Point on retirement. Get your plan checked by Erick and his team or get a plan set up so you can reach financial freedom and enjoy your retirement the best you possibly can. Visit them online at take point on retirement. Com That's take point on retirement dot com or give them a call 3526160511. When we come back, we're going to talk a little bit about eliminating the fees that could be dragging down your portfolio, as well as reducing your tax risk in the future with Roth conversions. Take point on retirement. We'll be right back.

Producer:
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Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

Producer:
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Sam Davis:
And welcome back to take point on retirement visit take point on retirement. Com to get in touch with Erick and his team over there at take point wealth management get a free financial consultation about your financial situation today. And before the break we were talking about fees a little bit. You know, if you're managing your assets yourself, do you know how many fees you're paying in bonds? Do you know how many fees you're paying on those target retirement date funds? We were talking a little bit about those. For many People's Company 401 k and retirement plans, it defaults to these target retirement date funds based on your age and fees can really drag those down. So Erick, tell me a little bit about how you guys take a look at fees when building people's plans?

Erick Arenett:
Yeah, that's one of the main things we focus on is a true fee assessment and analysis, and most folks have no idea what they're truly paying. And you brought up a good point. Even in those target return funds, they have an average of 1 to 1 and one half percent of internal fees inside of them. And they're just mutual funds of mutual funds. So think about it. You have this mutual fund that has hundreds of mutual funds in it. So that mutual fund charges a fee. And then also the mutual funds inside the mutual funds are charging fees. Right. So, you know, the fact that, oh, you know, I'm not paying any advisory fees. I hear this a lot to have my 41k just stay there at the company or you know, I've left that 41k there because I'm not paying any fees and I've talked to other advisors and they're going to charge me 1% to manage my money. It's really the wrong answer because you need to truly understand what your what you're paying. And that's what will first pull out for you. And what will show you is that it's no fun and you shouldn't be paying fees on also a portion of your portfolio that isn't performing know. So for years now you've had if you've been that just traditional investor and you pick out a target return fund based on your age or your risk tolerance or even if you've working with a broker or advisor and they've put you through what they call an investment policy statement questionnaire, and then they score you and you come out as a moderate investor, which basically means they're going to put you in a 60% equity, 40% bond portfolio.

Erick Arenett:
Now they're going to charge you a fee on that of 1% on average. What also inside of the portfolio, all of those investments have cost and fees. So imagine if you're let's just take $1,000,000 portfolio and 40% of it is in bonds. So 400,000 in bonds, you're paying a 1% fee. So you're paying 4000 a year on that. Plus the mutual funds that they're using to get the bond exposure probably have a 1% to maybe a half percent fee. And by the way, that 400,000 of your portfolio is down ten, 12, 15%, and it's done nothing in the last five years, and it probably won't do anything in the next five years. So you have you're just throwing money out the window. So immediately what we do is reduce fees instantly. We'll cut your fees in half just by our one. If it works out for you, it may not work out for everybody. But if it ends up being where we're very we feel very strongly about bond replacement with indexed annuities. And we'll get you know, we you have to be educated on them first and foremost, because I know most people out there don't even know what an indexed annuity is.

Erick Arenett:
But it's very different than most annuities that you hear about. And we have an awesome book that we'd love to give out to folks. If you just reach out to us, we'll get you that book for free. It's Annuity 360 and it's a really quick read. It's an easy book and it'll really help you educate you on all the different annuities that are out there. Don't just take our word for it. You should never take an advisor, just an advisor or a broker or some insurance guy off the streets. Word for anything. You should do your own investigation investigating and educate yourself. It's your money, right? And so but just immediately by replacing your bonds with indexed annuities, you're eliminating the that fee from that portion of your portfolio. So in this case, maybe five, six, seven, 8000 a year gone because most of the index annuities that we utilize are we really strive to find the ones that have no fees. And there are a lot of fantastic ones out there that charge, you know, fees. And and so if you're immediately. I have no fees on half your portfolio. Boom. I've already reduced your costs right there. And then on the equity side, you know, who knows what you're paying. So let's look at that as well and what you might find.

Erick Arenett:
So let's just say instead of paying that adviser 1% on $1,000,000, which is 10,000 a year, you're only paying an adviser 6000 a year because only the 1% or the 600,000 is in the market being being actively managed. So you you've already cut your portfolio, you've made it much more efficient. And so that's just one little one little idea. But it's so important because year after year that four or five, six, seven, $10,000 just adds up, adds up, adds up and becomes the slow eating parasite on your portfolio that you can't even really recognize. Really important to talk about bond replacement, replacement and deleting those fees that you're paying to generate income. So if you're really you're trying to generate income on this portion of your portfolio, but you're losing money and you're paying fees. So you're almost like just banging your head against the wall and you don't even know it. So let's first and foremost get that under control. And, you know, in our smart, safe plan, that's one of the one of the legs of our our smart plan is the smart, safe side. And we utilize the index annuities for that. So you can get market like gains without market risk. Let me say that again. You can get market like gains without market risk. And you're going to first and foremost, protect your hard earned assets. Your principal is 100% protected and insured.

Erick Arenett:
You can also generate a consistent income for retirement and even grow the income with inflation and your money grows tax deferred inside of an indexed annuity. And first and once again, also just to pound it home as it eliminating those advisory fees that you pay on your bond income. So, so important, Sam. So if you got questions about annuities, we're here to help educate you on all the options. So just reach out to us and we'll get you that book Annuity 360. And hey, I don't care if it takes ten phone calls, ten meetings, 20 meetings. This is what I'm passionate about is putting people at ease and educating them. I'm an educator. I don't consider myself an advisor. I consider myself an educator. Truly having the knowledge is the power. So many of our clients have followed this path over the years, are so happy, it's so easy and it doesn't have to be complicated. And we we strive to take that off of your shoulders so you can just enjoy retirement. Stop kidding yourself that you're going to outperform the markets or outperform advisors, and you're not going to pay anybody fees because you want to control your money. There's a study that just came out. It's called the Dial Bar Study, and it comes out on an annual basis and I encourage people to Google dial bar. It's gotten worse than it was in the past.

Erick Arenett:
It used to be. The studies show that retail investors, that's people that try to manage their own money, that for one case, everything else, they underperformed the market by 50% in this recent study. They underperformed the market by 10%. That's huge. So the stock market did 12%. You did, too, by trying to manage your money and flip flop and stuff and trying to find the next hottest thing and and letting emotions run the portfolio. This is not a plan, folks. We've got to stop it. We've got to get a plan in place. And it's called the Smart Plan. It's having the equity side and the growth side of your portfolio tactically, tactically and actively manage someone's watching it and monitoring it daily and making shifts in the portfolio that need to be made based on what's going on in the economy, in the markets. And then the other side is the smart, safe leg, which is indexed annuities, which eliminate the fees on bonds, protect your principal 100% because yes, by the way, your bonds lost value last year in the last two years. And so and then focusing on fees, focusing on risk and focusing on taxation. And I think we're going to talk a little bit about the Roth here in a bit, and I think that's in the next segment. I'm not sure you're you're you're the leader here saying, where are we at?

Sam Davis:
Yeah. Well, first off, I want to let people know that if they want to get in touch with you, Erick and his team over there at Tech Point Wealth Management, just go online to take point on retirement. Again, that's take point on retirement or pick up the phone and call them at 3526160511. So we're talking a little bit about reducing fees. Right. And so. It makes sense. As you get closer and nearer to retirement, you want to reduce the amount of assets you have at risk in the market, and that's good. That's why he's investing rule of 100 and all that. But too often what you're seeing people doing, Erick, is they're switching from stocks to bonds and those bonds are being dragged down by fees, like you're saying. And and talking about annuities, you think that fixed indexed annuities, a product that can offer protection but also growth is a good replacement for bonds?

Erick Arenett:
Yeah, absolutely. Because look at bond returns over the last ten years and then compare them to index annuity returns. This is a great alternative to cash just sitting on the sidelines or bonds where you're trying to hedge the stock market. In the past, we utilize bonds to hedge the stock market or to create this wonderful income. Well, it just doesn't work that way anymore. So in order to hedge the market and create income, income, you've got to utilize indexed annuities. It's plain and simple, and that's going to take out the risk in the market fluctuation. And remember, if you're chasing high yield, you know, there's there's risk. The higher the yield, the higher the return means, the higher the risk. And don't let anybody else tell you any different. So, so, so important to really, truly understand how this is going to help your portfolio and be implemented and, and act as that as that leg and that hedge against the market. And, and there's so many of them out there. So one might not be right for you and the other one might be right for your neighbor. But we have to sit down and evaluate your case and build out a plan and find out what is the right piece for you and then get you moving forward.

Sam Davis:
Yeah, let's talk a little bit about Roth conversion because, you know, you and the team, Erick, you're not just interested in protecting and growing people's money, but you're interested in saving people money to. And one thing that we could all save maybe a little bit more on is taxes. And one, one way that you're able to reduce people's tax risk is through something called a Roth conversion. You may have heard of a Roth IRA, you know, the traditional 401. K, that is a tax deferred investment vehicle. You put your money in there pre-tax. But when you take it out later, whether when it's you get to an age where you have to take a required minimum distribution or you just decide you want to take it out, you're going to have to pay taxes on that withdrawal. But with a Roth, you actually pay taxes going in and when you take it out whenever you'd like, beyond a certain age, the taxes are already paid, right?

Erick Arenett:
Yeah. Unfortunately, one of the most underutilized tools in financial planning. And the problem is, is that most folks, they go to work as a young person, they walk in, they fill out their air forms and they're just told, hey, you know, Max out this for one K, we're going to match it for you and go to work and then I'll send you pick up your head 30 years later and you got you've got your entire savings or retirement plan inside of this tax deferred 401. K, which you can roll over to an IRA with no taxation. So once it's in your own traditional IRA, you have the flexibility to change the investments and do whatever you want with them. You can even buy a home or an investment property. You can buy annuities. You know, you have a lot more options when you take control and move that 41k to your own traditional IRA. So let's talk about that first and foremost, when you give us a call, because there's different strategies and options depending on where you're at and what age you're at. But but there's basically three kinds of buckets that you can have your money dispersed in. And unfortunately, we find out when we sit down with people, they only have their money in one bucket. And that's that tax deferred bucket that for one K or IRA, they have nothing in the tax free bucket. And there are ways and strategies. And the sooner the better that we can get to you and help you out to get money over in the tax free bucket.

Erick Arenett:
And one of those is what the example that you brought up is the Roth IRA. It's an amazing tool. It's so underutilized. And it's I think it's one of the best tools we have out there to help folks and to create a really amazing long term financial plan. Because one thing is, when the money is in there, it grows tax free, right? Just like the IRA does. However, the difference is when you pull the money out, it's tax free. So you're getting tax free growth over the years. And then when you have to take the money out, it's tax free. Now, here's what's the most important part of it. At age 72, the IRS is going to require you to. For money out of your IRA and pay taxes. And so we don't know where taxes are going to be in the future, but they're probably going to be much higher than they are right now. So imagine being forced to take money out of your account that you may or may not even need and have the government tax it. And then you're like, okay, now what do I do with this? I got to reinvest it. So it also has reinvestment costs, which is huge because you've got to take your money out, maybe you got to sell it, maybe you have to sell right now when the market's getting beat up, when you should be buying stocks to raise the money to pay your RMD.

Erick Arenett:
So it's just a horrible position to be in where you have no control of your own money, your own assets, the IRS, the government is a partner in your retirement plan. So let's eliminate that the best we can. And so one of the tools is is utilizing the Roth because guess what? At age 72, there's no required minimum distribution on the Roth that's so powerful. That means you can let your money grow and continue to grow, and you can take the money when you want it and when you need it. And it's tax free when you take it out. And oh, by the way, when it passes to your heirs or your beneficiaries or your spouse, it goes to them tax free. So it's huge. If you leave a41k or IRA to your beneficiaries, they have to pay tax on all that money. So we've got to get out in front of this now and utilize this tool more than ever, because we do have a huge deficit. We have increasing taxes coming down the road. That's absolutely guaranteed for sure. We're going to have much higher taxes. There's no way around it. I don't see the government cutting spending anytime soon to you. So, you know, so utilizing the tax free bucket, there's also life insurance, a whole life you can utilize as well. And that's an awesome option. Let's talk about educate you on that and then you got to have money in your taxable bucket.

Erick Arenett:
That's just your regular little bucket that's kind of being taxed as you go every year, your regular brokerage account or a trust account or an investment account or even your bank and savings accounts. So you've got to try to have that money, you know, balanced. And unfortunately, everybody's top heavy. There's a crazy amount of money in what we call tax deferred accounts. And so the government knows, you know, they're licking their chops because they know all that money's got to come out and they're going to be able to tax it at whatever rate they want to. And so the other thing that's missing here, Sam, which is so, so important, is, guess what? If you're pulling money out of your Roth and it's not being taxed, that also does not go to the bottom line, which does not increase your gross income, which reduces the taxes on your Social Security, and you're going to pay lower Medicare costs as well. So that's a huge factor. How much are you giving back right now in taxes with Social Security and so just so many benefits and it's not too late? Heck, I've got a guy in my office this past week off the show and he's 72 and he's like, I'm going to start doing Roth conversions. I don't care if it's too late. And, you know, it's great to get to the people when they're much younger, you know, because we can kind of have a longer, you know, time to do this.

Erick Arenett:
But that's and I'm talking about the Roth conversion so you can take your IRA or your 41k and you can take any amount you want and you can convert it to a Roth. Now pay the taxes on it now or the taxes are low. And then over the next ten, 20, 30, I don't know, 40 years, however long you live, your money's grown tax free, and you get to take it out whenever you want. And it's also taken out tax free. So huge, huge underlying underutilized tool, unfortunately. And it's just because folks just weren't educated on it, even as an adviser, a young adviser, when I first came in the business way back when, they never we never talked about Ross. It just wasn't a subject, you know, and but now more than ever, it's got to be a part of your retirement plan. I try to get almost every single one of my clients and even my new clients to get on a path of slowly converting those monies strategically in different tax years and even spreading it out if we have to, into the Roths. So it's 100% paramount in our planning. And if you have an advisor or a broker or you're working with some kind of investment management company or whatever you're doing, and they haven't talked to you about that then. Then you really owe it to yourself to give us a call so we can get you on that path.

Sam Davis:
You can reach out to Erick and the team at Point Wealth Management by visiting, take point on retirement that's take point on retirement dot com or call them at 3526160511. And the website contains the phone number as well. Just visit take point on retirement. So it's really about saving you money but also. People. Their nest egg is not quite as big as they think. If all of their money is shored up in this. 4001k you yeah. The government could have 2530 or more percent of that upon distribution. So if you take out 10,000 out of your 401k. To go on a vacation. Well the government hasn't gotten their cut of that yet, so they're going to take 25, 30%, whatever tax bracket you're subject to that year. But with a Roth, you take out your 10,000. That's yours. You paid the taxes going in, right?

Erick Arenett:
Yeah, it's a great point. So you're sitting there looking at the balance of your 41k and you're thinking, Oh, wow, I'm doing really great. I got all this money. But guess what? You're big. There's a big partner that's sitting there right beside you on your shoulder that you may or may not know about is called Mr. IRS. And he's he's got a big, big part of that. So it's not all yours. So let's put a plan in place to kind of get that IRS guy off your shoulder and get rid of him the best we can. And there's one thing we're never going to completely escape is probably death and taxes. Right? But we may not we may not be able to eliminate them, but we can drastically reduce them. And that's going to be more cash flow, more money in your pocket, and your retirement plan is going to be able to sustain much, much longer. And so that's that's really exciting for us to be able to get folks in that direction because it's massively impactful. And we show you in our planning process, we have a page where we show you this Roth conversion and the difference it does. If you just we'll show you, okay, if you don't do anything and just keep everything like it is in a traditional IRA, this is how things would look. Here's how things would look over ten, 20, 30 year period if you had Roth conversion. And yet most people think, well, I don't want to pay these taxes. It's I know it's painful, but you're going to pay it now or you're going to pay it later, right? You're never going to get away from it. So start paying them now and let's get this conversion going.

Sam Davis:
Yeah. And it really comes down to the fundamental of investing with income in mind, because if you have too much of your money, too many of your assets in a tax deferred bucket and a tax deferred vehicle, then you really don't have quite as much as you think. But the Roth conversion is a fantastic thing to do. So like you said, Erick, it's not too late, even if you are just a few years away from retirement. I know people that have have just started, like you said, you have an example of a client in his seventies that is just embarking on this Roth conversion journey. But if you take a look at where the national debt is at the decisions that are being made by our elected officials in Washington, DC and even at the state level, you know, paying for all of these programs, these various things that go on, expenses continue to go up, take a look at what it's like. If any of us, if the average AmErickan family has debt in their home, what do you have to do? You have to either cut your expenses or increase your income. And the government's way of increasing their income is taxation and the IRS.

Erick Arenett:
Yeah, 100%, man. And and you nailed that. There's only two ways they can they can fix this problem. And it's either increase taxes or cut spending. And I don't think cutting spending is too popular in Washington, DC. So unfortunately, the even the even the Trump tax plan, the Trump Tax Act sunsets in 2026. So and they may increase taxes before then if they can. So we've already seen legislature on the table for massive increases across the board in taxation. Be prepared for that. Let's let's be prepared ahead of time before it happens.

Sam Davis:
With a couple of minutes left to go in this week's edition of Take Point on Retirement. Erick, I want to tell the folks one more time how to get in touch with you. You can visit them online at take point on retirement dot com or give them a call at 3526160511. So Erick, let's say I'm listening to the show today. You know, maybe I have a plan. Maybe it's time for me to get one in place for retirement, for me and my family. What's it like when I give you a call and start working with you?

Erick Arenett:
Yeah, if you're listening and you have a plan in place and you feel pretty comfortable and it's solid, that's great. But guess what? Let's test it. And all it takes is some time. I don't charge you anything to do it. It just takes a little time for you to gather the information that I need to do a true analysis, and I'll test your current plan. And then what we do is we'll sit there and we'll look at it and we'll try to optimize it to the best of our ability focusing on taxes, focusing on risk, and focusing on your diversification, your allocation, and reducing taxes. So that's what we. You first and foremost. But it's just a real the first the process. I really have a disciplined three step process and it's pretty laid back. And the first call is just to get to know you and talk about, hey, what does retirement look like to you? When are you retiring and what does it look like to you and what are you doing in retirement? And just to get to know you, really, it's just an informal chat and you need to get to know us as well too, because, you know, you need to build trust with who you're going to work with. And so that's first and foremost. And then what we'll do is completely free because you called in off the radio show is we're going to do that analysis and do that stress test and see what your plan will look like. And we'll throw 1000 scenarios at it, good scenarios and bad scenarios and check out the probability of success.

Erick Arenett:
And it guess what, folks? It may be that you're doing a great job. You don't need to change anything. And nobody's going to be sitting there trying to hard sell you to put a gun to your head. We're not that type of shop. We're very laid back. We're going to tell you, hey, you know what? What you're doing works. You don't really need to make any changes or, hey, what if we did this and made a small change here? It doesn't have to be wholesale changes. It might be little tweaks, little changes. That's what a true financial planner will do for you. And then, you know, if it if it makes sense to you to make some changes, then we'll implement those for you. We'll take the rain. There's nothing that you have to do. There's nothing laborious. We do everything for you and we'll implement those changes. And then we'll test that plan and we'll show you how our plan is going to hold up and compare it, because our goal is to optimize it, and then our goal is to constantly optimize it on an annual basis. We'll constantly reevaluate it. So if you put a plan in place two years ago, three years ago, five years ago, guess what? That might not be the right plan for today. So it's about constantly managing it as well. So just real laid back, Sam, just a nice conversation to get the ball rolling and that's it.

Sam Davis:
Give them a call at 3526160511 or find the phone number and visit them online at take point on retirement dot com. We're at the end of this week's edition of Take Point on Retirement. Erick, thanks for being with us.

Erick Arenett:
Thank you so much. Have a great weekend.

Producer:
Thanks for listening to Take Point on retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets, to schedule your free no obligation consultation visit, take point on retirement, or pick up the phone and call 3526160511. That's 3526160511. Investment Advisory Services offered through Brookstone Capital Management LLC. Bcm a registered investment advisor BCM and Take Point Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Please refer to our firm brochure, the ADV to a page four for additional information. 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 BWA.