October Is National Financial Planning Month
Key Points – October Is National Financial Planning Month
- While October Is National Financial Planning Month, Every Month Should Really Be Financial Planning Month
- There’s a Misconception That People Think a Financial Plan Just Involves Your Investments
- There’s an Art and Science to Financial Planning
- Reviewing the Different Tactics Involved with Financial Planning
- 23 Minutes to Read | 38 Minutes to Listen
Did you know that October is National Financial Planning Month? It honestly came close to slipping our minds because we believe every month should be National Financial Planning Month. Dean Barber, Bud Kasper, and Matt Kasper celebrated National Financial Planning Month by discussing the importance of having a comprehensive financial plan on America’s Wealth Management Show.
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Welcome Matt Kasper to America’s Wealth Management Show
Dean Barber: Thanks so much for joining us here on America’s Wealth Management Show. I’m your host, Dean Barber, along with Bud Kasper and special guest, Matt Kasper. Matt and Bud are CERTIFIED FINANCIAL PLANNER™ Professionals. Bud is the original CERTIFIED FINANCIAL PLANNER™ Professional, right?
Bud Kasper: Well, not the original, but probably within the first five years of the existence of the designation.
Dean Barber: Bud was the president of the Financial Planning Association of Greater Kansas City?
Bud Kasper: Yeah. It was originally called the Institute of Certified Financial Planners. The difference was that the Institute of Certified Financial Planners allowed others besides CFP® Professionals into the organization. But then it separated out to what’s now known as the Financial Planning Association. There are chapters all over the United States where CFP® Professionals get together. A lot of CPAs are inside of that as well to get continuing education and understand new planning activities that we can have for our clients.
Dean Barber: All right. Well, Matt.
Matt Kasper: Thank you for having me. It’s a first time to be on the radio and what a blessing it is to be here with you and my dad. I’ve been in the business for 17 years and this is the first time I get to be on the radio with him.
Dean Barber: Well, we’ll try to do it more often.
Matt Kasper: OK.
Bud Kasper: By the way, I refer to Matt as the master planner in our office.
Matt Kasper: Now there’s pressure.
Dean Barber: I didn’t know that. We’re going to have some fun with that.
Bud Kasper: You bet.
Every Month Should Be Financial Planning Month
Dean Barber: So, this is the National Financial Planning Month. We were talking earlier about what that means. What is National Financial Planning Month? As far as I’m concerned, every month is Financial Planning Month because that’s what we do.
Matt has been in the business for 17 years, which is 18 years less than me and 20-some years less than his dad. But Matt, do you ever get the question, “What should I do with my money?” People oftentimes assume that if you’re a financial advisor that you’re like an investment guru.
There’s So Much More to Financial Planning Than Investments
Matt Kasper: Absolutely. I think that’s the biggest misconception is that financial planning is driven just around investments. As we all know, it’s much more robust than that.
When you talk about having a Financial Planning Month, how do we only have one month where we’re doing this? It’s almost like looking at January at the beginning of the year and saying that’s when you’re going to get in shape and it lasts about one month. What happens after that? We all know.
Planning for Retirement Is Like Training to Run a Marathon
Bud Kasper: Now, to give Matt credit, he just finished a marathon this last weekend.
Matt Kasper: In marathons, you’re just trying to last through the race. It relates the concept of financial planning as well. Our biggest objective is not just to have our money last through retirement, but to enjoy it and have a meaningful retirement. If you’re not planning, you’re going to end up like my marathon, which was very long and painful.
If you are planning, you can enjoy it and appreciate all the hard work that you put into it just to get to that point. For those folks that are not planning, they’re really missing out on the big picture of what retirement means.
A Financial Plan Is Also Like a Puzzle
Dean Barber: A lot of people confuse a financial plan with the money that’s in their 401(k) or IRA or their investments. Well, that’s not even close to a plan. That is a part of an overall plan. We shouldn’t even talk about where a person should invest their money until they’ve completed the financial plan. The financial plan is like a puzzle. As we put it together, we can finally identify what it is that your money needs to do for you to have the life you want to have.
Financial Planning Is a Team Effort
Matt Kasper: Absolutely. The big thing is that you’ve got to spend the time. There’s so much work that needs to go into it. And quite honestly, you can’t do it on your own. Even as a CERTIFIED FINANCIAL PLANNER™ Professional, I rely on the CPAs within Modern Wealth Management. I rely on attorneys to give us legal guidance. It takes a team effort for us to build a proper plan and to make sure that you’re getting the outcome that you’re hoping for inside of retirement.
Bud Kasper: I received a few phone calls in the last few weeks from people who have 401(k) plans and they’re worried about what their investments are doing or not doing. Well, we need to understand what you’re investing in and what the risk elements are associated with that. That’s relatively easy for us to identify for a client to try to get some balance back in the portfolio. But so many of those 401(k) plans use target date funds. They’re the no-brainer way of investing in your 401(k).
Dean Barber: Exactly. No brains necessary for that one.
Understanding What a Target Date Fund Entails
Bud Kasper: Dean and I both know those are highly used inside 401(k)s. And now with the market being upset, people are saying that it’s not working out very well. Well, do you not understand the definition of what you’re in? This person was in a 2035 target date fund, which meant a lot more stocks were in the portfolio.
I said, “Well, you can shift that down to the 2010.” I know that sounds silly and you might think the target date wasn’t new and didn’t exist at that time. But that’s going to be your most conservative way of doing that. Most people don’t understand that, which is why we’re explaining it to help people.
Dean Barber: Right. I think target date funds were born out of the Dot-Com Bubble. People didn’t really understand what they owned inside their 401(k)s. To me, it really doesn’t do justice to the way a person should invest their money. Let’s say you’re in 2035 fund. That’s the year that you’re going to retire.
Well, the person that’s running that investment doesn’t know you. They don’t know your risk tolerance and what your money needs to do. They have no clue. And it’s like a set it and forget it type of a mode. We all know that that can’t work.
The bottom line is that if we’ve done the job of financial planning and start talking about underlying investments, the first place that we should be looking is at the 401(k). There are such limited choices within the 401(k). Then, we can build the rest of the investment around what is the best option with inside the 401(k).
You Can’t Just Set It and Forget It
Bud isn’t a fan of those target date funds and neither am I. Just about the only thing worse than a target date fund is doing nothing. Target date funds just try to oversimplify things. It goes back to that same old adage that you should own your age in bonds. Or you should just own the S&P 500 Index and set it and forget it. So many people think that everything will work out by doing that. Matt, where do you start with someone with financial planning when you’re meeting with them for the first time?
The Difference Between Subjective and Objective Risk
Matt Kasper: That’s a great question, Dean. When you think about what Dean was just describing with investing in your 401(k), we all relate back to what is defined as subjective risk. What is my risk tolerance and what’s the appropriate investment lineup for what I’m trying to accomplish?
Ultimately, that’s an old way of viewing how you should be building your portfolio. You need to be like a GPS. You need to know where your destination is going to be. It’s easy to do that on my phone. I can get into my maps and say this is where I want to be. Give me the quickest path to get to that location.
What Do You Want Your Retirement to Look Like?
That’s difficult with financial planning because you need to go in and change from a subjective risk to an objective risk. What am I trying to accomplish? What are my goals? You really need to take the time and work with someone to understand what retirement looks like.
Once you have that big picture of what you’re trying to accomplish, we’re then designing that plan to get us there with the most success and efficiencies. And guess what? I always tell clients that the second they walk out the door that life is going to happen. As things evolve, whether it’s a regulation change or a big pullback in the market, we are there to evolve with them. We want to make sure that they are staying on track and getting to the finish line that they were hoping for.
Dean Barber: So, Matt is saying to step into the future. Imagine what you want that to be, and then come back into reality. What are the resources that you have to get where you want to go?
Matt Kasper: Absolutely.
Having Control of Your Future with a Financial Plan
Bud Kasper: And when the plan is established, it’s usually just a matter of tweaking the plan as we move forward. Because numbers change, markets change. We need to stay on top of it. That’s why we insist that we meet with our clients approximately every six months because numbers change. Their numbers change in terms of what their needs are. So, it’s a living, breathing way of helping you control your future.
Vision, Mission, and Tactics
Dean Barber: Since we’re hot into football season, I want to use a football analogy. This is the same thing in business leadership. It’s the same thing in professional sports, collegiate sports, etc. But there are three things that you need to understand.
The first one is, what is the vision? We’ll use the Kansas City Chiefs as an example. What’s their vision? They want to be Super Bowl champions.
Well, to accomplish the vision, you need to have missions that you’re going to try to accomplish throughout the season. That mission is going to be to win one game at a time.
And now, how are you going to win that game? You’re going to come back into the tactics—the blocking, tackling, passing, play calling.
Investments Are a Tactic, Not Your Vision or Mission
When you think about that from a financial planning perspective and somebody wants to start talking about investments initially, they’re talking about a tactic. They’re not talking about a vision, which is where I’m trying to go or a mission of how I’m going to get there. They want to get into the tactics. And anytime you start with the tactics, you’re never going to win a game. You’re never going to get to where you’re going to go.
Matt Kasper: That’s where you need to have the vision. How are you ultimately going to overcome this big feat? And that’s what is difficult about it. We’re not talking about retiring for five to 10 years. We’re talking about 20, 30, 40 years of potentially being in complete retirement.
It’s not about the tactics. It’s going to be about the big vision and how you get there. When you’re talking about a football team, there are so many coaches on the sidelines. There are dozens of players to lift each other up. It takes a community. It takes a team to accomplish what you’re trying to accomplish. That’s going to be getting that Super Bowl in this equation.
Creating Your Retirement Game Plan
Bud Kasper: It’s the integration of all the factors that are associated with a financial plan. When we look at the Social Security, Medicare, tax planning, estate planning, etc., each one affects the other. To get that plan to be as close to perfect as possible, there needs to be an understanding of all the integration to get the net result that you’re looking for.
There’s an Art and Science to Financial Planning
Dean Barber: For the 35 years that I’ve been doing this, my goal has been to help people get to and through retirement. I’m working with the second, third, and even the fourth generation of different families now. I believe that there is both an art and a science to financial planning.
The science part of it is the simple part. That’s the math. Those are the tax laws, the rules. The science is the easy part. The art is the hard part. That usually begins with a conversation with a good CERTIFIED FINANCIAL PLANNER™ Professional. It might last an hour to an hour and a half. You may need to have another session.
For a CERTIFIED FINANCIAL PLANNER™ Professional to truly do a good job with building your plan, they need to understand you. They need to understand everything about you and what it is that you’re trying to accomplish. So few CERTIFIED FINANCIAL PLANNER™ Professionals will take the time to talk and listen to you to help guide you about how to think into the future.
Watch Out for the Financial Salespeople
Bud Kasper: Let me add to that. Dean is talking about CFP® Professionals. What about the people that aren’t CFP® Professionals that are purporting to be planners who are not planners? That’s the misrepresentation that is out there. They might be trying to solve everything with a product as opposed to doing the real grunt work of understanding all the applications associated with their financial future.
Dean Barber: Right. Bud and I have made it very clear for several that we do America’s Wealth Management Show to provide education. We want to help people understand that the financial services industry has created what I’ll call some of the very best salespeople in the history of the world. It really started with the insurance companies and then the stockbrokers, etc.
And of course, they had a mission. And the company that they represented said, “Hey, we want you to go sell this product.” Then, that salesperson will say that they want to be independent. Now, you’ve got more companies saying, “Hey, go sell this product, We’ll give you something extra for that.” They turn into nothing more than a financial salesperson. And those people are easy to identify.
The Big Difference Between a Financial Planner and Financial Salesperson
If they want to talk to you about how you should invest your money and what kind of a product they have to offer, that’s not a financial planner. A good financial planner will look out for your best interest. A financial salesperson will have a product to sell that they get paid in commissions for.
Bud Kasper: And if you’re getting paid a commission, doesn’t that really taint the relationship unless you disclose that you’re getting paid on a commission? Some of these annuities are paying 6.5% to the salesperson who is showing them the option. That’s crazy.
Dean Barber: Let’s get back to the planning here. If you did the planning, that would not be the solution. Matt, let’s talk about it.
Truth, Wisdom, and Poetry
Matt Kasper: Being here with my dad reminds me of my late great uncle who unfortunately passed away a few years ago. He was renowned for saying, “There’s only three words that come out of my mouth—truth, wisdom, and poetry.” He always did it in a joking fashion. Uncle John was renowned for his good humor and enjoying life. He was such a selfless and great man.
What I take away from that from a planning perspective is that you deserve as someone that’s approaching retirement to hear the truth. That’s where we’re going in and building the clarity through these financial plans. It’s understanding the truth and finding out if you’re on the right path to retirement.
When I think about wisdom, that’s when you need to make sure you’re getting the right guidance from those experts. That’s what I mean by financial planning involving more than just a CFP® Professional. It involves a CPA, estate planning attorneys, and investment experts to get that expertise.
And back to Dean’s point, the poetry side is the difficult part. How do I build something meaningful to make sure that I’m not just getting through retirement, but I’m enjoying and having the retirement that I want?
Bud Kasper: And significant to that is what Dean created in the opportunity for people to test the waters for financial planning with our financial planning tool.
Celebrate National Financial Planning Month by Building Your Plan
Dean Barber: Absolutely. You can do it from the comfort of your own home. Even though every month is National Financial Planning Month to us, we encourage you to celebrate National Financial Planning Month by getting started with your plan. Get the truth about where you stand today so that we can help you build and live your one best financial life.
As we continue celebrating National Financial Planning Month in October and every other month, I want to do a quick review of what we’ve already discussed. There is an art and science to financial planning. There is a long-term vision and then the interim missions, and then ultimately the tactics that are going to allow us to accomplish the missions and ultimate vision.
Bud Kasper: And maximize the results.
Financial Planning Tactics
Dean Barber: And maximize the results. That’s what financial planning is all about. I talked earlier about tactics of football, but I really want to dive into the financial planning tactics that encompass a comprehensive financial plan.
Social Security Claiming Strategies
Let’s start with Social Security. A lot of people think that Social Security and when you should claim it is synonymous with the day that you retire. But we know that the average 62-year-old couple is going to have somewhere north of 600 different iterations on how they can claim their Social Security. The difference between the best and the worst decision can oftentimes exceed $100,000 of additional income with the same Social Security benefit and same life expectancy.
Matt, as a CERTIFIED FINANCIAL PLANNER™ Professional, how do you help people make the right decision when it comes to their Social Security claiming strategies?
Matt Kasper: I think the biggest thing with the Social Security decision is not putting yourself on an island. Don’t just look at Social Security by itself and think that you can properly identify the right age to begin taking your Social Security. Dean identified it perfectly. The most common election inside of Social Security is, “When I reach retirement, I’m just going to go ahead and turn that on.”
You can understand why people are going through this process since they were coming from a paying position and now they’re getting into retirement and want to still receive some type of paycheck. And of course, you earned that Social Security. You worked hard, you’ve been paying your FICA taxes all these years. Ultimately, you want to carry that cash flow for as long as you want.
Looking at the Big Picture of What You’re Trying to Accomplish
But the big challenge with this is that you could be giving up other benefits by not looking through all the different election options that you have available with Social Security. That’s where you need to have a big picture of what you’re trying to accomplish. Once you have that big picture through a financial plan, you then need to understand your resources to build out the best Social Security election for you and your family. Again, that’s not always going to be right out of the gates.
In fact, we find most of the time that it makes sense to do more of a delayed type of approach. Build a higher foundation of income. Give yourself better cash flow. And quite honestly, we can add even more complexity to the equation by asking ourselves, “What’s the best tax strategy and how does Social Security fit into that cashflow analysis?”
Dean Barber: You’re right, Matt. With our financial planning tool, we can plug in Social Security and earnings history for both spouses. It’ll show us every claiming strategy and what the total monthly check is going to be. We can look at life expectancy and how much would you receive at certain ages so you can determine your optimal claiming strategy.
The Relationship Between Claiming Social Security and Tax Planning
But that optimal one for just looking at Social Security by itself may not be the right strategy. Social Security is taxed different than any other source of income. We’ve talked about that several times here on America’s Wealth Management Show. Also, the amount of Social Security that you’re taking could have adverse impacts on tax planning strategies that are oftentimes good things to do in the early stages of retirement.
It becomes more of a complex puzzle. What you need to do is build the plan first and then stress test it. Let’s test that. Let’s look at this age, let’s look at that age. How does this impact your tax planning? Ultimately, you can arrive at the right answer. But now you get back to a tactic and there’s really an art to these tactics as well.
Social Security Cost-of-Living Adjustment Projections for 2023
Bud Kasper: Let me add to that as well. We need to account for the future and that means inflation. A lot of people don’t know this yet, but Social Security is on track to increase by 8.9% in this next year. They’ll make the announcement close to the end of the year as to what it’s going to be. When you hear it, you might say that it sounds great. And it is great but remember that inflation was last reported at 8.2%. So, it’s only about a 0.7% percent increase over the inflation at this point.
Dean Barber: Somebody recently asked me if they should turn on their Social Security so that they can make sure that they get that 8.9% inflation increase? And I said, “No, no, no, no.” Once you reach 62, your Social Security benefits, whether you claim them or not, you start getting the cost-of-living adjustments on that.
If you’re 62 and you go to ssa.gov and you look at your options for 62, 66, 70, etc., the only number that’s right is for 62 because that’s today. All the rest of them are wrong because they haven’t calculated what the cost-of-living increases are going to be over those years between now and the time that you turn it on. You get the cost-of-living increase every year from 62 on even while you’re in delayed status.
When You Claim Social Security Matters
Matt Kasper: One of the big things that you also want to look into is that ultimately those inflation factors are more significant for folks that don’t start right out of the gates. If you start your Social Security at 62, keep in mind you’re penalized for starting at that earlier age. The most common full retirement age right now is 67. If you’re delaying until your full retirement age, you’ve permitted your Social Security to be at a much more substantial amount.
When you have these inflation factors, these cost-of-living adjustments are going up at a much quicker pace than if you elected at those earlier ages and you’re penalized at those certain stages. So, keep that in mind. You’re trying to enhance your cash flow to make sure your money is lasting and you’re enjoying as much of your retirement as possible.
Looking at the Couple’s Benefit If You’re Married
Dean Barber: Another common mistake that I see people making is they’re looking at their benefit if they’re married. They’re not looking at the couple’s benefit. You need to look at how your benefit plays along with your spouse’s benefit. Generally, it’s the combination of the two. One spouse might turn their Social Security on at 62 while the other delays until 70. That might make the most sense. It’s all about how it goes along with your spouse’s benefit as well.
Matt Kasper: Absolutely. It can’t just be a simple break-even calculation, which is what so many folks are kind of relying on. It needs to be way more in depth as far as what we’re trying to accomplish. That’s where it needs to be solved for within a plan where we are detailing all the facts that are going to impact your retirement.
Bud Kasper: The important part of this is the integration into the plan because Social Security could impact Medicare.
Dean Barber: Oh, it will.
Why a Break-Even Analysis Won’t Work
Bud Kasper: So, if you don’t understand how to weave this blanket into something that’s going to keep you warm and secure, you better build a plan. You need to understand that there are experts out there that can help you get the maximum result that you’re hoping to achieve.
Dean Barber: Yeah. Matt just talked about the break-even analysis. A couple of weeks ago, a gentleman met with me and showed me their break-even analysis on their Social Security. He created a spreadsheet and that he was going to break even at 84.
I told him that didn’t matter and he didn’t understand why at first. We’ve already built his plan. He’s 63. I told him that we’re going to go into his plan and stress test with claiming each year from 63 through 70. We were looking at his plan’s probability of success, how his plan works, and his ending value with all other factors remaining the same.
We wound up seeing that if he delayed until 70 and lived to his life expectancy of 92, he would end up with over $250,000 more in his accounts at that time. That’s $250,000 more that he could spend over his lifetime or pass on to the next generation. That’s where the art and the tactics of financial planning can really come in and make a significant difference.
Inflation, Health Care, and Taxes
You need to get your financial plan done. It’s important every month to get one done, but why not do it now during Financial Planning Month. As we wrap up our conversation about Financial Planning Month and the importance of financial planning, there are three more things I want to review—inflation, health care, and taxes.
We could spend easily an hour talking about each one of those things because they all have such a dramatic impact on a person’s ability to get through retirement. These aren’t things to get to retirement, but get through retirement. I want to start with inflation.
An Inflation Rate Should Put Pressure into Your Plan
We use generally a 4% inflation rate and we have for years and years and years. Even when inflation was running at 1.5% or 2%, we’re still projecting a 4% inflation rate because that’s the long-term average.
Bud Kasper: It puts pressure into the plan.
Dean Barber: Right. Matt, let’s say you’re building a 4% inflation rate across someone’s plan, but someone wants it to be 2% if inflation were to fall back in the ballpark of 2%. Isn’t it a dramatic impact on the validity of that plan?
Matt Kasper: Yeah. It’s an incredible distinguishing assumption as to how it’s going to impact the results of the financial plan. In fact, my dad and I often sit down with prospective clients and if they have a financial plan, they bring it in and they’re using a 1% or 2% inflation rate. We quite honestly are deliberate with them and let them know it isn’t right. That isn’t applying enough pressure for them to truly have confidence in what they’re trying to accomplish inside of their retirement. Yes, it is an easy way of building a great result and build up somebody’s confidence, but they’re misguiding themselves in that process.
The Relationship Between Inflation and Health Care Costs
Dean Barber: Yeah, exactly right. Now let’s tie health care into inflation. When you get into retirement, the two largest expenses that most people are going to have throughout their retirement years are health care and taxes. Inflation has a huge impact on health care. So, how do we deal with health care in the plan?
Matt Kasper: We’re building a 6.7% inflation factor specifically with health care. Quite honestly, you really need to be detailed. You don’t want to just lump everything inside of a living expense or lifestyle expense. You need to get more specific and get into the weeds as far as what the different stages of health care expenses are going to look like.
Let’s face it, we all retire at different ages. If we retire before 65, that’s a big hurdle with having to go out to the marketplace to get health insurance. You have an excessive cost that you’re up against. Oftentimes, it’s going to divert you from even considering early retirement. I don’t want it to divert you. I want you to go through and pressure the plan appropriately by budgeting appropriately for those big expenses.
Medicare Is Complicated Beyond Belief
And then let’s face it, once we get to 65, now we’re going to get into the decision of Medicare. That’s a very complex decision. They didn’t make it easy on us. They try to confuse the dickens out of us. The first thing you’re going to need to learn about is part A, B, C, D.
After that, you’re going to look at supplemental and Medicare Advantage. What is this and why do they do Group A through Group N? Why are there so many different choices, so many different complexities and combinations? It’s a big decision and something that you need to have the confidence to make the right decision.
Again, Financial Planning Is Much More Than Your Investments
Dean Barber: A good CERTIFIED FINANCIAL PLANNER™ Professional is going to walk you through those things. A good CERTIFIED FINANCIAL PLANNER™ Professional understands far more than just investments. They understand how all these different components work together to craft that financial plan.
Let’s step back to when a person is working. Health insurance is generally provided. Taxes are withheld from my paycheck. I know how much is going to be deposited to my account every other week or however I’m paid. So, I have clarity, which gives me confidence, which makes me feel like I’m in control.
Well, the day that the paycheck stops, I need to come out of pocket for health care, Medicare supplements, or whatever the case may be. I need to calculate what my tax liability is going to be. I might have to make quarterly estimated payments. At a time when cognitive abilities begin to deteriorate, things get more complex than ever before.
Inflation’s Impact on Health Care
Bud Kasper: Inflation really affects healthcare. We know that because the multiples that we use in terms of our projections are seriously greater than what we have in our overall inflation rate. But too many times, we’ve witnessed that people can’t retire at 62 because health care is such a large part of the solution.
So, what do we need to do? Many times, we need to counsel because it would be so much better if they could wait until 65 because it could end up saving them maybe $8,000 a year. And times that by two if you’re married. That’s serious money.
Asset Protection Through Your Medicare Decisions
Matt Kasper: It’s critical to understand how you receive asset protection through your Medicare decisions. The last thing you want to have happen is getting into an unhealthy environment where those costs of going to the hospital become way too excessive for you to afford this without the right coverage and protection.
Dean Barber: Yeah, it’s interesting. I want to give an example of two people that we started working with earlier this year. They’re 57 and 58 and had the ability to retire early because they had done a fantastic job of saving. They were still very nervous because of the cost of health care up until age 65.
A Great Example of the Clarity That Comes from a Financial Plan
Do you know what we did? We built it into the plan and the plan worked. I don’t want people to think that they can’t retire until they get on Medicare. If you’ve done a good job of saving, it’s very possible that you can.
You’re going to have to spend a little bit more on health care those first several years of retirement before you get onto Medicare. But if your plan can handle it, do it. Because you only have one life. Time is our most precious commodity. And we don’t know what our health is going to be like five, 10 years down the road. So, take advantage of it.
Bud Kasper: But don’t guess at it. Know it. Plan for it.
Dean Barber: Good point, Bud.
Don’t Assume That You Can’t Retire Early
Matt Kasper: One of our big objectives is less stress and creating peace of mind. Typically, that doesn’t come until you get to that retirement stage. Like Dean said, so many folks are pushing retirement further down the road. And we understand that. That’s ultimately building your confidence of your money lasting. But don’t necessarily assume that you can’t retire at an earlier age. Go through the efforts of building a financial plan. And why not now with it being Financial Planning Month? Understand exactly what is impacting you and build that confidence, if it’s appropriate.
A Few Final Points on Taxes
Dean Barber: I agree. I want to finish up by talking about taxes. We talk about them a lot on America’s Wealth Management Show. Taxes are one thing in retirement that you have more control over in retirement than any other time during your life. As you’re building the financial plan, it’s critical that your CFP® Professional and CPA sit in the same room with you and that that CPA is helping drive the distribution strategy for your income. If you do it right, you can greatly reduce the amount of taxes that you pay.
When Required Minimum Distributions Come into Play
Matt Kasper: Absolutely. Ultimately, when you are thinking about building a financial plan, cash flow is always going to be top of mind. You need to be aware of how taxes are not only impacting you today or that first year in retirement, but where is it going to be 10 years from now? Where is it going to be 15 years from now? One of the big ages that we all need to be aware of is 72. You must take your first Required Minimum Distribution by April 1 of the year after you turn 72. What is the tax impact going to be at that point? What can we do up to that stage that’s going to provide more efficiencies long term?
Bud Kasper: The coordination of this makes you a winner. Therefore, you should give yourself that opportunity to understand exactly how this is going to impact you. It’s a great way to celebrate National Financial Planning Month.
Dean Barber: Again, you can do all this through our financial planning tool and do so from the comfort of your own home. Just click the “Start Planning” button below to begin building your plan today. I agree with Bud that it’s the best way to celebrate Financial Planning Month, even though it should be every month.
If you have any questions about building your financial plan, we’d love to help you on your journey to financial success, giving you clarity, confidence, and control of your financial future. You can ask us your financial planning questions by scheduling a 20-minute “ask-anything” session or complimentary consultation with one of our CFP® Professionals. We can even screen share with you with while using our financial planning tool.
We want to thank you for joining us on America’s Wealth Management Show. I’m Dean Barber, along with Bud Kasper and special guest, Matt Kasper. Matt, we’ll have you back again sometime. Everybody stay healthy, stay safe. We’ll be back with you next week, same time, same place.
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