9.2.22: Audio automatically transcribed by Sonix

9.2.22: 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 Prosperity Principles with your host, Ed Cruz. Each week, Ed and his company seek to educate Americans like you by providing real strategies for protecting and growing their hard earned money. Get it for a full hour of financial information and economic news affecting your bottom line. Ed wants you to reach the financial freedom you've worked so hard for. So now let's start the show. Here's Ed Crews.

Ed Cruz:
Thank you for joining me this week on Prosperity. The principles I met when cruise your retirement income specialist located right here in central Florida for over 24 years now. Let's talk about what your future challenges could be and let's also discuss the strategies and solutions to these issues. And to talk all about this with me is my co-host, Matt McClure.

Producer:
Hey there, Ed, how's it going?

Ed Cruz:
Another great week. Busy week and add to it very rainy in the evenings.

Producer:
I hear you. That's Florida. And, well, basically any time of the year, you know, I think I've said this before, if you don't like the weather, wait about 5 minutes, it'll probably change.

Ed Cruz:
Yeah, well, we've been getting a little more than just 5 minutes of rain here lately. It's it's carried on for a good 2 to 3 hours. Some of us want to have some evenings to do some things, but, you know, we'll get past it.

Producer:
Central Florida monsoon season. There you go.

Ed Cruz:
And, you know, we are in hurricane season, but luckily we haven't had that. And that's a good thing, especially with with where we are in our economy. The oil, gas prices obviously being elevated. And I'm sure if a hurricane came through, this would just add to our pain.

Producer:
Oh, yes. That's it's enough already that we have to feel pain wise when we go to the gas stations these days. Absolutely. We don't need anything else adding to it. But yeah, we've got a great a great show plan for the audience today. And of course, Ed, we always, always appreciate our audience so, so much because with them. Right, we wouldn't we wouldn't be here at all.

Ed Cruz:
It's what I tell my clients all the time. You know, they thank me over and over and I say, you know what? I have to turn around and thank you. Because, you know, without my client base after all these years, where would I be? I'd be nowhere. So, yeah, absolutely. We have to thank our clients, our listeners, our their are everything. So yeah. Thank you.

Producer:
Absolutely. And folks, if you would like to find out more about the show, more about Edwin Cruz and more about just how to plan for your retirement, how to do it in a sound and safe way to take a look at your financial picture, to get some of the things that we're going to talk about in the show actually is smart review, right? To get a review of your finances, just go to the website. It is my prosperity team, my prosperity team, or you can give Ed a call directly at 3862285769. And I should say, folks, as well, in addition to hearing us on the air, you can also get us as a podcast. It is available wherever you listen to podcasts or talk an Apple. We're talking Spotify, iHeart, all the biggies. And you can just go there and search for prosperity. Principles will come right up. Subscribe. Leave us a rating. Send us a message. We absolutely love hearing feedback from our listeners as well, so that would be great if you would do that for us.

Ed Cruz:
Absolutely. And you know, when when they call in, I'd like to offer anyone that calls in the Annuity 360 book, which we'll cover and highlight a little bit throughout our show. And, you know, an interesting question that I receive often is, Ed, you know, when I call you, what is it that you can help me with? And I like to mention some of the unique things that we do because, you know, it's easy to say that we're going to move an asset from one area to another. But there are some tricky things that are out there that people don't know about. You know, when people say they're tired of their 401. Ks and and they say, but I can't do anything about this because I'm currently employed, and that's where my 401k is. You know, I'll ask them if they've ever heard of an in-service alternate rollover. And that's one unique feature that most most advisors out there don't offer. And there's very few of us, in fact, throughout all of Florida that offer this service. And so if you if you're not happy with your with your 401. K and you would like to do something about it, just like a gentleman did this past week. Give me a call and we'll discuss how we may be able to help you because it doesn't work in every case. But in most cases we can provide that help. So, you know, it's not just the ordinary planning that we do. We can help above and beyond the norm.

Producer:
And everybody's situation is unique, as you say. And that's why it's important to have that second set of eyes, get that second opinion on your finances and maybe straighten some things out. Of course, you could be doing just fine. And if that's the case, then, you know, it'll be like, Hey, everything looks good to me. Great, grand, wonderful. And you go about your way. But chances are there's always something in there that can be doing better for you. So once again, folks, that number, if you'd like to give at a call, get a copy of the Annuity 360 book or just chat about your finances. Get that free obligation, free and completely cost free consultation. It's 3862285769. And Ed, I mentioned a little bit earlier, of course, we've got a great show. We're continuing our series on the Smart Retirement Plan today. It's a little bit of review time from an earlier episode of the show because we didn't quite get through our section on smart income. So we're going to do some smart income talk a little bit later on in the show, and I hope that our listeners will really, really enjoy that because, you know, hey, I'm all for an income. So there you go. It's something that sounds good to me. So I'm sure it probably sounds good to a lot of folks out there. But also, we're going to do Smart Review, and that's a lot of what we just talked about. But we'll get into more in depth, maybe some of the situations that people can bring to you and all of that. Because, as we say, they're all unique, unique situations and nobody is the same. It's not one size fits all. So there we go. Well, we'll do that coming up here in just a bit. But first, it's, I don't know, one of my favorite parts of the show, and it's the part of the show where we get to to share a little knowledge with our listeners.

Producer:
And now of wholesome financial wisdom. It's time for the Quote of the week.

Producer:
And yes, Ed, it is it is the quote of the week where we get to share some, you know, as I say, some knowledge using the words of someone else, because generally anyone else is smarter than me when I'm in a room. I'm not in a room today, though, with Jim Rowan, but we are in a room with his words, so here we go, if any of that makes sense. Jim Rowan is who the quote of the week comes from this week. And it is time is more valuable than money. You can get more money, but you cannot get more time. That's very, very true. I think we can all relate to that.

Ed Cruz:
Yeah. I mean, we make all kinds of decisions in our lives throughout the day, throughout the weeks, and we can all think back and say, Boy, if I could change this, I would. And just throwing away our time on on some silly things or worrying about other things that we just don't really need to pay attention to or or put our minds to. And and, you know, we could just go on throughout our days and just not make anything happen. And, you know, some days we feel like we're like we're doing something. And when we look back, we just we notice that we've just basically blown that day. And if we could just reclaim that, well, that would be great.

Producer:
Yeah, it's true. I mean, you know, if I had, you know, sitting here thinking about it, if I had the time back that I spent worrying about stuff that doesn't need to be worried about it, would, you know, I would probably have just years and years of time. But unfortunately, that's not the way the world works. And, you know, you have to sort of adjust your frame of mind. Right. And that is very true, I think, with your with your finances, because I think a lot of this, too, is is is your frame of mind. Because if you think that you're not good at money, you're probably not because of the no matter what circumstances are around. It's all a lot about your attitude, right?

Ed Cruz:
Absolutely. If you could just change your attitude, it would just make a complete difference in the outcome of things that we do. And it's not just in finances, you know, it could just be as simple as how you treat others that are around you. You know, when you're when you're out and about, the courtesy that you show could lead to a conversation that may be of importance and you might think, Oh, why am I having this conversation just wasting my time? I've run into plenty of those situations where kindness leads to a conversation that leads to a client that needs my help. So you know how you spend your time and and what you do will make a difference in your life?

Producer:
Yeah, 100%. So those great, great words of financial wisdom this week from Jim Rohn in our Quote of the Week. Well, as promised, folks, we are going to continue our Smart Retirement Plan series with a couple of different parts to it here this week. And the first of those being smart review. Now, you know, we talked about this just a little bit to open the show, but I want to kind of do a little bit deeper dive into reviewing your finances. So talk about what a smart review is at and what our listeners need to know about maybe some things that they need to to look at or have in mind with their finances and get someone else to help them look at that they might not think of. It might not come to their mind immediately.

Ed Cruz:
Absolutely. And when we review the performance of your investments on a quarterly, semi-annual or annual basis, depending on how much you want to stay involved, we want to ensure that you're staying on the right track to meet your goals. We all need to retire someday, and that's why we want people to retire better. And so when we talk about this, you know, we're not just looking at where your assets are held. We want to know why your assets are there or why you think your assets are there. Then we'll take a look at the rate of return. Then we if we're dealing with qualified and non qualified funds, meaning pretax or after tax money, we want to see if there's anything there causing you additional tax exposure because the rate of return is only net after taxes. Right. And so if if we're not in a tax deferred area, you're just causing yourself more more taxation. And it's not just in the asset that you have, but it's also in the income that you're earning. So let's look at this multiple ways. And then what type of fees are you paying inside of inside of that retirement plan that you have or in the savings account that you have or in some other annuity that you may have? There's a lot of things that we need to look at. What type of guaranteed income are you looking forward to in these assets that you hold? Are they talking about income at all? If you if you would like a complete breakdown of the assets that you have and the income that it can generate, we put those types of reports together. So this is important because you really want to know, are you on track to retire well? Or are you on track to needing a boost in your retirement savings? And again, this is all done through discipline. So if we see that we're short, we just need to step it up and and make sure that our our future is is is well planned.

Producer:
Yeah. It takes some some commitment there, as you say. But, you know, you've got to take that first step and one of those first steps, you know, we've sort of been through this a smart retirement plan series for a few weeks now on the show. And we've we talked about that very first step. Is that smart vision, right know, knowing where you want to go. And then I think this though probably the smart review step is probably one of the most important because unless, you know, again, in the beginning, you sort of have to know where you want to go, right? Know where you're going. This is one of those things where okay, where am I right now? And then you can kind of plot the course between those two points, right? You've got to know where you are to then know how to get to where you want to go.

Ed Cruz:
Absolutely. Listen, if you're going to make a trip out to Mount Rushmore and say, well, the general track is through the center of America, but you don't chart this thing out properly. You don't know, first of all, if you're going to make it there, you don't know how long it's going to take you. You really don't have a plan. So again, just like taking a road trip, your financial trip should be no different. You need to plot it out, plan it out, have a road map to get there and you'll make it there. But if you don't do those things, you may end up in some trouble.

Producer:
Yeah, you might. You might end up, you know, car breaking down the middle of Wyoming somewhere. You know, if you don't just plan it out the right way.

Ed Cruz:
Yeah, I don't want to get run over by a bison either.

Producer:
Yeah, right, exactly. You got to watch out for those that can buffalo stampede coming at you. Oh, goodness. Well, yeah, that that would not be very, very good. But, you know, this sort of brings to mind, though, Ed, we were talking about smart review, the quote by Ronald Reagan who famously said trust but verify. You know, it's like you got to you might think that, you know what your financial situation is and you might know you might have a good picture of that in your brain, but verify it.

Ed Cruz:
And oldie but goodie right from Ronald Reagan. But just like getting a second opinion from from a surgeon. Why wouldn't you want to get a second opinion just because some adviser gave you a roadmap? Is that roadmap appropriate? You know, I've I've helped other clients where they've received retirement plans that just completely blew up their their taxable exposure. And so when I when I asked them, well, why are you receiving these other sources of income when you're checking accounts already have a quarter million dollars in them, you have a 10,000 a month income without these. Why do you have that? And then they come out and they show me a roadmap that somebody put together. And that roadmap that was computer generated was not carefully thought out by an independent advisor. And so, again, a second opinion is going to help you to confirm whether it's a good plan that was put together or if someone just created something that looks good on a spreadsheet so that they can so that they can actually just have you as a client. So, you know, a second opinion goes a long way.

Producer:
Yeah, absolutely. And of course, this is all part of the smart review process that we're talking about. And the good thing, I think for for our listeners, for anybody out there, is that we offer a comprehensive consultation absolutely free to our listeners and absolutely no obligation as well. And the good thing, I think, for our listeners to know about this because there's no obligation you only. We are going to work with them if it's the right fit for the both of you. Right. You both have to come together and agree. Okay, let's work together. I think this can be a good thing.

Ed Cruz:
Well, absolutely. And, you know, there are times where you just sit down with people and it looks like they got all their ducks in a row. And and you say, well, you know, I'm looking at this. It looks pretty good. And and but you don't have have you discussed what your fees are with your advisor? Do you know what those are? And I will tell you, eight out of ten times, they don't they have no idea where they are when it comes to fees. And so, you know, we want to go through this. Why? Because if you know this or don't know this in the financial world, when you're talking about variable type products, you could be looking at a mortality fee and people look at me and say, well, what is that? So obviously I'll have to sit there and explain it. Expense fees, administrative fees, sub account fees, death benefit fees, income account fees. And then to top it off, add insult to injury, you have a broker or advisor charge. And so when you start adding all this up, you could be talking anywhere from 3 to 5% in fees. And so, again, why wouldn't you want to sit down with someone, go over these accounts, find out what your fees are? Are they unnecessary? Could you have them somewhere else where there's no fee or a very low fee of 1%, one and one half percent? You know, that 2% over ten years adds up to 20%. And when you compound that, it's actually more, you know, four. So for every $5 you make, they're taking back one $1. I don't think that's a good bet for you. And if it was a good thing for your retirement account, I would hardly advise to do that. But obviously I don't agree with that.

Producer:
Yeah, there you go. It's only about what is best for you and for your retirement account, as you just said there. And you know, folks, if you want to give at a call or go to the website and get that free full retirement plan consultation. The website is my Prosperity Team. That's my Prosperity Team, Time.com. You can also call 3862285769. The number once again, 3862285769. And also got a mention. And we're going to actually hear a snippet from the book in just a little bit. You can get the free copy of the Annuity 360 book. It's everything you need to know about annuities. And it's not a it's not a hefty read. It's not a very long you know, it's not war and peace. We're talking here. It's it's a nice good you know, you could sit down and read the whole thing in an afternoon or so. And but there's a lot of great info packed into those pages. So if you want that free copy of it, once again, the website My Prosperity Team dot com is one of the places that you can go and do that. Well, Ed, as we continue on here with our Smart Retirement Plan series, we started talking about smart income last week. And there are some things that I think bear repeating all the time about smart income here, probably. But then there are some other things that we want to add to continue our smart income conversation. So talk about why thinking about income in particular in retirement is so important for folks.

Ed Cruz:
Yeah. As you said, I know that we covered some of this, but it bears to repeat that too many people think that retirement is about building one big nest egg. Right? I hit that million dollar mark and I'm going to be able to make this last for a lifetime. Well, how do you know that? What are your expenses? You know, you need to you need to think about everything in retirement. Is your home paid off? You know, what's your wife's Social Security going to look like? There's just too much to look at. You know, what type of taxes are you going to pay? Where are our taxes going in the future? I mean, I believe they're headed up. But, you know, that's we'll leave that to to the experts if they want to call themselves that. You need to have a plan to replace income. Right. When you're working, you're receiving X amount in salary or however you get paid. And so that income replacement, what is that going to look like? So keep that in mind because chances are your income's going in the in the other direction, not in the one you want, want to see. And so you just can't look at one big nest egg. You have to look at it in forms of income. And so this is how you're going to fund your your monthly expenses in retirement.

Ed Cruz:
Right. So keep in mind that some of these income sources, again, are going to be taxable while other sources are tax free or you hope that they'll be tax free. And if you don't know, the difference between the two are no one's ever explained that to you. You know, again, sit down with us. We'll tell you how you can convert taxable income into tax free income in the future. Or or if your income is not going to be high, how we can take maybe not all of it part of it and convert it that way because we don't want to create too much of a tax burden now either. So there are just ways to work on it slowly today and ramp it up as you go to retire or just do it fully in retirement, that there are different ways to skin this cat. And I just don't want you to think there's one way to do it. You know, when people say, what's the right way to do it? I tell them There's no such thing as the right way. It's just what makes you feel comfortable. I don't want you to feel like you're being pushed to do something. I want you to do it out of understanding and in your time frame. Yeah.

Producer:
And what's best for you might not be good for somebody else. And what's great for somebody else might not be good for you. So that's why it's important to have everything really examined, like we talked about in the Smart Review section of the show today. But as far as income, you know, I think a lot of folks think about their their primary income source in retirement possibly being Social Security. You know, Social Security has been around for a long time. It was the the act the Social Security Act was signed into law by FDR in 1935. The first payments went out back in 1940. It's one of the largest government programs, not only here in the US but around the world. And a lot of people paying Social Security taxes in 2021 to the tune of 176 million. As a matter of fact. And as of April of this year, more than 65 and one half million people here in the country receiving Social Security benefits. So, you know, the actually the Social Security Board of trustees is estimating, though, that funds are going to be depleted by the year 2034, only be able to pay out about 77% of scheduled benefits. And that's because, you know, as life expectancy of Americans increases, there are those concerns that the program will not be able to support retirees with less people in the workforce as compared to the number of people who are retired. Right. So the you know, there is reason to worry there, although my you know, my inkling is, of course, they'll find some way to keep it keep it around, because it's such a cornerstone of our promise as a country to our retirees in this country. And we all pay into it. Right. But is it going to look the same? You know, there are a lot of questions. So I think that that there are really a lot of concerns that are valid about Social Security. What do you say?

Ed Cruz:
Well, first thing I'll say is you really don't want to stick your head in the sand on this issue. Yeah, because it is going to be for most people, I would say, half of their retirement income at minimum. And so we definitely need to stay on top of it, keep an eye on it, see how see how our funds are being mistreated within this country. Make the choices that we need to make stand up for for what's right. But again, Social Security, when enacted, had the the people the life expectancy was only right around 66 years old. So the government didn't expect all this to happen. They thought it would be a free kitty for for them, and they surely have abused it. But going back to the gist of Social Security, you become eligible for benefits, early benefits at the age of 62. And and you must have been contributing to the program for at least ten years. Some I read it online where it talks about quarters and all that kind of thing. But however, waiting for full retirement age is, is what I would recommend to most out there and actually exceeding if you can hold off to the age of 70, if you can maintain an income, I would say, to keep to keep delaying Social Security as much as possible to get the maximum.

Ed Cruz:
That's that's the plan I've made for myself. But what's right for you? We'll have to figure that out. You may have you may have a pension because you work for a government. You may have a a healthy 41k that we can convert into a nice income stream. You know, your wife may have another leg of income or do. And so it just really depends on your situation. You know, I know what I've done for me, but what you do for you, you know, that's that's something that we'll discuss. If you were born in 1955, your full retirement age is 66 years and two months. And the and that increases gradually to the age of 67 for those born 1960 or after. I know that for me and more than likely for you, Matt, we are looking at the age of 67, so that's right. Hold on tight. But waiting the way I look at it is waiting another three years and getting the added benefit again. Looking at my family history, because that's something that we'll talk about as well that's rarely discussed. What's your family history like? You know, does your family unfortunately pass early age of 80? Does your family live beyond 90, 100? These are things that you have to take seriously because, you know, living for for 20, 30, 40 years in retirement, there are some significant decisions to make if you retire early versus holding off a little later.

Ed Cruz:
Right. There's a big difference from the people that retire at 55 and people that retire at 70 at 15 years. That's that's a lot to make up for. So we have to be we have to be very independent in the decisions that we make and know what we're what we're aiming for. So, again, your spouse, going back to your spouse, you know, they can collect benefits based on their earnings or their spouses earnings. And a lot of people don't know this. And I, I help them achieve that. The amount of the dollars that you can receive from Social Security is determined from your average indexed monthly earnings during your 35 highest years of earnings. And so as of April 2022, the average monthly benefit was $1,588 for a total of about 19,000 annually. And for every year that you delay collecting your benefits, starting at 62 and ending at 70, your benefit amount increases by 8%. So that's where I've made my decision to, to put that off a little longer.

Producer:
Yeah. And that's, you know, such a thing that I didn't know until I started really looking into these issues and started started working with you basically, Ed, is that, you know, the benefit does increase each and every year up until age 70, the maximum monthly benefit. There's really a huge difference here. The maximum monthly benefit this year for people who are 62 and they start receiving benefits is $2,364. Right. 2364. If you wait until age 70, that goes up to nearly 40 $200, just shy of 4200. So, I mean, that's a big a big gap there.

Ed Cruz:
1800. That's a big number. You're talking 23,000 for the year when you add that up quickly. I just did that in my head. Don't be surprised.

Producer:
But you're much better at math than I am. There we go.

Ed Cruz:
Yeah, my my wife calls me a human calculator, but there's also the one thing that that that's important to seniors and that's cost of living increases. Right. And and you and I have talked about this this year, it's going to be close to or somewhere in the 10% range, nine, 10% range. Cost of living increases. Ensure that your retirement funds don't lose value due to inflation. Right. So if we if we're looking at this in Social Security, keep in mind that we can also do this for the other income streams that we put together for you. And one of the worst things that I do see out there is a lot of people they'll put this great plan together. Now, looking at it, that plan doesn't have any type of cost of living increase. So here you are. You retired at 67. Now you're 87, 20 years later, with the same income. Do you think that dollar is the same dollar as it was 20 years prior? Absolutely not. And so that's one of the biggest problems that I see out there in the marketplace. When people are getting annuities to ensure an income stream, they're not really looking or thinking about because that advisor doesn't want to tell you that you're not going to receive any sort of cost of living increases, and you must have cost of living increases in any type of income planning that you do. If you don't, you're just cheating yourself. And I could pretty much say you're letting somebody cheat you.

Producer:
Yeah, well, there you go. I mean, that is, you know, it says a lot because it is very, very important, you know, because if you think about it, I mean, yeah, that that really hit home with me. If I was making the same thing now that I was making in 2002, for example, I would not be in the same situation that I'm in. I would I would be in in the poorhouse, basically, at this point. So, yeah, I mean, if you think about the way that things change over time and especially right now with inflation, I mean, a couple of years ago, you know, two and a half, three years ago now, who saw COVID coming? Not really anybody. And then that just walloped us, right? And then all the supply chain issues, the relief spending and all of that out of Washington and all just kind of compounded and then led to this inflation. And so that's really I mean, a big, big factor to think about. And yeah, you're right. Not enough people think about it.

Ed Cruz:
Yeah, absolutely. And you know, this this could lead to one or two things, right? When we think about income. And if if you're ready to, we can go on to the income income gap issue. Yeah, absolutely. Facing facing everyone. And that's that's what this will do to you if you're sitting there on the same income from 20 years ago. Obviously, there's going to be an income gap, right? You're not going to have an income surplus?

Producer:
No, not at that point.

Ed Cruz:
Unless someway, somehow you received one large inheritance, hit the lottery or some other anomaly happened in your life. You know, you're just going to be left short. So you want to make sure that you can create yourself what looks like an income surplus. Because I'm here to tell you that when you retire, things aren't, you know, your bills just don't all disappear. And retirement is a little more expensive than what people think.

Producer:
Yeah, absolutely. And you've got to plan for that. You know, you've got a plan for the the unknown. And that's a big part of what this is. Now, you know, when we talk about a retirement income gap, you know, a lot of people, as we mentioned earlier, 62% actually have baby boomers, according to an NHP Foundation study, believe that Social Security is going to provide at least half of their income during retirement. And there is a cost of living adjustment, as we said, with Social Security. So you have to sort of build that cost of living adjustment into your planning as well. You know, I mean, and really, income stability is such an important thing to folks. As a matter of fact, that same study said 76% of retirees say that income stability is a top concern for them in retirement. But it's so, so important. And I don't mean to harp on this one point, but it's important because stability doesn't doesn't necessarily mean staying the same. Stability means making changes and the ability to adjust as weird things happen with the economy like there have been happening here lately.

Ed Cruz:
Yeah. I mean, if you think about a retirement income gap, what creates that? It's our core expenses, right? You know, the food has gone up. Clothing has to me, I don't see a big change there. Renters, I hear from renters all the time where rents used to be about $1,000. Now they're at 5000 to 2000 taxes. They haven't gone up yet. But just keep an eye on the tax man, because there's a reason that they hired so many, so many new IRS agents out there. You know, your health care, you know, as we age, we have more of a need for health care. And so we need to be ready for that discretionary expenses. You know, how much are we eating out? How much entertainment do we do we take in on? Do you go to the movies weekly? Are you constantly ordering a movie from your cable box? There's a lot of things that we can control, but we don't because we can do these things. But at some point, this is all going to have an effect on our lives, right? So we want to make sure that when we take a look at how much we're spending, we need to balance that out with what our income sources are, not just today, but in the future.

Ed Cruz:
Right. It's easy to get away. Make a couple of mistakes today. You can get away with it, but when you're on a fixed income, you're not going to get away with those mistakes. And I see far too many seniors that overspend on a monthly basis. And when we sit down and we do a complete, complete breakdown of how they're spending their money, and if they don't know, trust me, they're pulling out their their checking account statements and we're going over those things. If they're pulling out cash, why did you pull out cash? We go over everything to the nitty gritty, but when they finally understand where they're spending, they make much better decisions on how they're spending, their pensions, their Social Security's, any other form of income streams that they have. So that we can help reduce that income gap, you know, because that income gap is also doing what? It's also drawing down their their retirement lump sums that they that they've been accumulating. And that's why you don't just want to look at lump sums, because at some point when they disappear, you're really in trouble.

Producer:
Yeah, that's absolutely right. And that's the thing that you have to really take into account is that you're going to be want and need that income. And the income itself is only half of the equation. But we're talking about a retirement income gap, you know, because the gap is that difference, as you said, between what's coming in and what's going out. And you want to have, as I like to say, you want to have more money than month, not more month than money, right?

Ed Cruz:
I've heard that a time or two and it couldn't be truer.

Producer:
Yeah, absolutely. You don't want to get to the end of the month and say, Oh, I wish I had some more money left. But yeah, but there are ways that you can fill that retirement income gap, right? That's one of the reasons it's very important for listeners to to reach out to you and find out exactly, you know, what could be a good strategy for them in particular, you know, to to fill that income gap if they do have one.

Ed Cruz:
Again, like you said earlier, if you were making the same amount of money 20 years ago, you'd be in the poorhouse. Right. But when we're but when we're receiving these raises, as we're making more money because we're small business owners, whatever it may be, as you're making more money, doesn't mean that your expenses should be going up. It shouldn't correlate dollar for dollar. What you should be doing is taking part of that and investing in yourself, investing in your future. And so what we need to do is save more during our high earning years, right? We need to review our monthly expenses for for anything extra that we're adding into our lives. We don't want to just keep adding on. Right. It's easy making 75,000 a year, 100,000 a year. And now my credit card allows me instead of 5000, they give me a 10,000 credit limit. Well, you know, folks, you really don't want to sit there and max out your credit cards because you're getting paid more. You know, you have to say I'm not going to use those credit cards unless it's an emergency, number one. Number two, credit cards, you know, you can use them to your advantage, right? You can have points. You can take advantage. It's like I tell people, credit card companies pay me. Why? Because I have two of them points. Pay them off at the end of each month and I just use them for that purpose.

Ed Cruz:
They actually make me money. And so you should be using credit cards to your benefit, not to benefit the large corporation. So make sure that you're not just creating yourself an income gap today because that problem is only going to compound tomorrow. And again, like we said before, consider delaying Social Security. It's going to be well worth it in the end. You know, constantly, constantly review your investment and withdrawal strategies. And again, if you don't have a plan on that withdrawal strategy, because sometimes it could be easy to think that we're we're doing enough in our in our investment strategy. But what is your withdrawal strategy? So it's worth repeating, right? Consider investing in annuities to establish an income stream that you can never outlive. And so why do we say that? Because it really is the only form of investment out there that's going to guarantee you an income stream. Write a pension plan now that'll give you a lifetime income. Most pensions, though, don't have cost of living increases. I've seen that time and time again. So again, when creating an income, like I said before, to make sure that we don't have an income gap in the future, let's go ahead and make sure that you have cost of living increases in any income plan that you create.

Producer:
You know, as you mention, the Annuity 3060 book just a bit earlier and how that is available to our listeners for free. We're actually going to hear a little bit from the Annuity 360 book. One of the chapters is on building your own personal pension. That falls in line right with exactly what you were just talking about. So let's listen to it. This is the author, Ford Stokes and reading part of his book, Annuity 360.

Ford Stokes:
Chapter nine. You can create your own personal pension. Big idea. Using an annuity to create a personal pension helps you create a lifetime income stream, but it also helps you leave a legacy for your beneficiaries. All annuities can create annuity income to supplement the income you need before or during retirement. Those who are approaching retirement are afraid that they will run out of money. But an annuity can help make sure you have an income you can never outlive. An annuity can be a great investment for your portfolio, but encourage you to be careful that you don't overpay for your annuity. When you put your money into an annuity, the annuity company will pay you your money back at a date. You specify you don't want an annuity company to charge you too much to simply pay your money back to you. I'm confident that leaving a remarkable family legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiaries. The goal of a personal pension is to generate lifetime income with no risk that grows your money and allows penalty free withdrawals. An annuity can create a lifetime income with market like gains and no market risk, while also allowing you to build enough wealth to leave for your beneficiaries when you pass away. Don't give the annuity company fees for doing nothing. We prefer fixed indexed annuities for our clients that do not have an income rider fee. But you can still create a personal pension without an income rider on your annuity.

Ford Stokes:
If you get an annuity with an income rider but don't utilize the features of that income rider, then you are not getting what you paid for. You are literally just paying the annuity company 1 to 2% each year. You defer annuities in your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principle, depending on how that index is performing. The growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments without an income rider. You should consider the features your income rider is providing you before deciding to purchase it as an add on. Make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you'll receive in annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows. Believe it or not, you can generate your own personal pension by distributing no more than 5% a year with penalty free withdrawals. From your accumulation based annuity policy, many accumulation annuities are set up to be RMD friendly, so you won't suffer a penalty when you have to take your RMD. It would be silly for you to be penalized for something you are required to do. Annuity companies take this into account by creating products that make taking your RMDs easier.

Ford Stokes:
Inspect what you expect with any annuity. Don't just go with what the annuity agent or advisor tells you. Read it for yourself. Specifically, you should read the annuity illustration guaranteed and non guaranteed tables included within the annuity illustration. Also, please remember that annuity policy is a contract between you and the annuity company, so caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you. They will help you build a successful retirement and they'll offer you peace of mind. Whether you choose to generate income through penalty free withdrawals or invest annually in an income rider, know the consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you 1 to 1 and one half percent of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option you are considering. Making the right decision up front will save you a lot of frustration in the long run. Also, please remember that if you withdraw too much annually, say 10%, you will run out of money in 10 to 12 years. Make sure that you're working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend no more than 5% be withdrawn each year from your account.

Producer:
And that was Ford Stokes reading from his book that he authored called Annuity 360. It's everything you need to know about annuities, and you can actually get a copy of the book absolutely free and tell our listeners how they can do that.

Ed Cruz:
They can do that by calling me at 3862285769. Or they can go and visit online. My Prosperity Team.

Producer:
That's it. And you can get a brand, brand new hot off the presses and absolutely free copy of annuity 364. You to to enjoy and to. Hopefully learn a lot because as you heard there in that chapter, there is a lot of information contained in it.

Producer:
It's time for this week's Problem Solver.

Producer:
Well, yes, it is that time once again where I present a problem to Edwin Cruz and he solves the problem for me. But luckily and most of the time now I get to present someone else's problem. It's not a problem I've actually created, but it is our problem solver segment. And I'm going to set up a scenario here that presents a bit of a problem, although I will. I'll say that this first problem is the kind of problem I'd like to have, but there are some complications that come along with it. So here we go. Here is the problem, and you'll give us the solution in just a moment. But there's a client who is inheriting and this is actually this is actually based on on a real person, believe it or not, a client who is inheriting $2.2 million. So just over $2 million, that that's the problem I would like to have. And the client and her husband generate 180,000 annual household income. They have two children as well. So that's kind of the basic situation that is occurring in their lives right now, $180,000 in annual household income. And they have two kids. The client, the wife is inheriting a little over $2 million. Here's the thing, though. She wants to retire early and replace her 30,000 a year in income. She's very concerned about market volatility. I mean, she's lost more than 24%, as a matter of fact, in the market this year, almost a quarter of their value of their investments in this year. And they also want to reduce the fees that they're paying to manage their assets. So with all of that being said, and what would you say is a good solution to that problem?

Ed Cruz:
Well, first of all, a good solution is. They could pass the $2.2 million over to me.

Producer:
Right. That was I mean, I was going to suggest that for me to.

Ed Cruz:
Solve that problem really.

Producer:
Quick. Yeah. Split it with me. Will be golden.

Ed Cruz:
There you go. But. Okay, so you're talking about someone that's quite conservative. Obviously, she wants to retire early and to replace 30,000. Just some easy, quick math here in my head, I would say that the client should take approximately one third of her assets and invest it in a fixed indexed annuity that will protect the principal because she's already taken a massive loss. So we can't lose any more of that value. And and, you know, there are products out there with free income riders. Some of them are for fee. It just depends what's right for you, what you're looking to do. And that will allow her to receive an income for life starting in year in year two without any additional charges. And I guess, you know, fees are going to be they're going to be very sensitive to fees because they're saying they want to reduce their fee. So so that's kind of the way I would go about it. The the value of the annuity should be expected to grow over time as it's tied to an index. And and they won't be paying unnecessary fees anymore. And, of course, we talk about bond replacement all the time. You know, we don't know I don't know that part of the situation in this case. But if there was a bond portfolio in there, obviously we would help a lot more.

Ed Cruz:
And, you know, to take that type of loss, I would say that there has to be with the with the rising interest rates, that that just clearly diminishes the value of bonds. So probably part of their problem there and they would be saving on their advisory fees. So these adjustments would allow the client to to retire now or at least a year from now. Right. And enjoy playing whatever sport they like, tennis, golf, while their spouse continues to work. And and from what I see, the spouse makes about 150,000 a year. So, you know, our clients need one check to rest the last the rest of their lives. And we take that very seriously. Protect and grow your money by investing in an annuity with 100% reserve requirement. And I think that, you know, that bears repeating that our clients just need one check to last the rest of their lives. Right. I mean, this could be multiple sources, but what we're talking about here is their annuity checks, their guaranteed income checks. It needs to it needs to last the rest of their lives. And we take that seriously. So let's protect and grow your money by investing in an annuity with a 100% reserve requirement.

Producer:
Well, there you go. Add another great problem solver of the week. Thanks for thanks for solving that problem there. Appreciate it. Well, you know, as we continue on here, we've been talking a lot about inflation, mainly because it's been a thing. And we want to give our listeners a little bit of advice on how to try and make it through this time of unprecedented inflation.

Producer:
Here's the cost cutter of the week.

Producer:
So at what is this week's cost cutter?

Ed Cruz:
As we've seen out there, and sometimes it's advertised on TV, but the early bird specials. Right. And we know that seniors love are growingly increasingly expensive due to inflation. Restaurants are not in the business of giving food away. So if there's an early bird special to be had for $12, chances are it costs the kitchen about $4 to whip it up. Right. And that's why it pays to cut back on dining out. If you're looking to save on food costs. If you're retired, it means you should conceivably have more time on your hands to cook. So we can start experimenting with recipes and getting creative in the kitchen. And I know people say they hate cooking for one or just hate cooking for two. They're waiting for the family to come in, but it's expensive to eat out all the time. And so it could not only help you save money, but it also gives you something to do with all the all the extra time that you have, and you'll end up spending less on leisure items such as eating out or whatever else you may want to do. So break out of those. Break out those old family recipes and give them a try.

Producer:
Yeah, absolutely. Break out the family recipes and break out of the habit of going out to eat all the time. That's a that's a good a good thing there. And of course, we got actually, I should say, folks, we got that idea from The Motley Fool. They actually published an article on that particular topic. And I think it's very timely for folks, you know, the cost of everything going up, the cost of groceries going up, too, but it's still a lot cheaper to cook at home and cook for yourself. And I always say, you know, from a kind of a health wellness sort of standpoint, too, you can control what goes into the food that you cook because sometimes you don't know necessarily what they put in something, maybe at a restaurant or whatever. That might not be the healthiest thing for you. So you can sort of watch what you eat if you do it at home. So that that kind of makes that part easier as well. Now I've turned it into a health and wellness show, but there we go. That's my health and wellness tip of the week. But before we run out in just about another only another minute here in the show, I wanted to share.

Producer:
Just one more quick thing with you. It's this week in history, and I wanted to share this one because it was a biggie and I actually kind of love it. And it gives us the opportunity to play a little music in the background as I talk about it. Because on this day in 1972, a revival of The Price is Right began airing with Bob Barker as the host. The show is aired over 9000 episodes since then, and it's the longest running game show in the US that's been running since 1972. Is now what is what is that? 50 years of the Price is Right. And now of course, hosted by Drew Carey, his show was named Greatest Game Show of All Time by TV Guide. I just had to share that because that's I used to love watching that during the summers, especially when I was home from school. And my, my my grandmother used to watch Bob Barker every day on The Price Is Right. Then the soap operas would come on and I'd leave the room. But we loved watching The Price Is Right Together. That's so much fun.

Ed Cruz:
Absolutely. I remember that show as a as a young child, and I would sit there with my mother. So anybody out there wants to call me Mama's boy. That's fine. I would sit there with my mother and watch every show religiously, every day. So it's incredible to hear that that that it lasted so long.

Producer:
Yeah. And it's still going strong today, even with the new, new host and sort of revamped and all that. But it's still going well. Add that brings us to the end of our time together for another week, sir. But I have really appreciated the time together as always and I look forward to doing it again.

Ed Cruz:
Absolutely. And again, thank you for all the listeners out there.

Producer:
Thanks for listening to Prosperity Principles. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money to schedule your free no obligation consultation. Visit my Prosperity Team dot com or pick up the phone and call 38862285769. That's 38862285769.

Producer:
It's not affiliated with the United States government. Edwin Cruz does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. A married life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or of the results obtained from the use of this information. Where's the best place to hang your hat when you retire? I'm Matt McClure with the Retirement Radio Network. Powered by a life. Whether retirement is just around the corner or several years away. Time is ticking on planning not only your finances for your later years, but where you want to live out your post-retirement life. Personal Finance Website Wallethub recently released its list of Best States to retire in 2022.

Jill Gonzalez:
Florida, unsurprisingly, ranked number one, followed by Virginia, Colorado, Delaware and Minnesota, while.

Producer:
At hub analyst Jill Gonzalez.

Jill Gonzalez:
The top ten continues with North Dakota, Montana, Utah, Arizona and New Hampshire.

Producer:
So what makes a state one of the best to retire in?

Jill Gonzalez:
The study was based on 47 metrics, including tax friendliness, the elderly, population, golf courses per capita and shoreline mileage.

Producer:
As for Florida, which landed the top spot this year.

Jill Gonzalez:
Florida excelled in tax friendliness, fellow retirees and things to do, but could use improvement with home health aides per capita, even.

Producer:
Though the Sunshine State is number one overall, if finances are your primary concern, you might want to consider a move to Mississippi. It ranked as the state with the lowest overall cost of living. As for tax friendliness, Alaska jumps to the top of the list. But what if you want some culture in your retirement years? New York ranks as the number one state when it comes to the number of museums per capita. The tradeoff there is, naturally, the Empire State is one of the most expensive in the country. So where do you want to spend most of your time in retirement and what factors are most important to you when considering a potential move? Those are key questions to consider as you plan for the future. With the Retirement Radio Network powered by O'Mara life. I'm Matt McClure.

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