Plan Smart, Retire Well with Mark Fried, Episode 7
Cynthia (00:20):
And welcome to plan smart retire. Well, my name is Cynthia de Fazio. I’m joined today by Mark Fried. And Mark is the president of TFG wealth management. Mark, how are you today?
Mark (00:31):
I’m doing great. Cynthia, how are you doing? I
Cynthia (00:33):
Am doing fantastic. Always such a pleasure to see you. And I know that you’re so busy, so thank you for taking the time to always come in and do the show.
Mark (00:41):
I really enjoy it. I wouldn’t miss it. You know, every week we get a chance to sit and talk about all of those exciting things going on in the financial world.
Cynthia (00:50):
Absolutely. Let’s talk a little bit, what life has been like in the office for you? Because I know that since the show started, you’ve had just one phone call after the next of people that want to come in and sit with you. So how’s it been and how are you managing all the new clients right now?
Mark (01:05):
It’s been great and it’s been very exciting, not just for me, but for the entire team, you know, everybody, you know, we were saying, Oh, we’re going to be starting this television show. And, and you know, we’re going to be having all these people come in and, you know, kind of when it’s starting to warm up in, everybody’s like, how’s it gonna work out? And it’s just been amazing. It’s been amazing because of the opportunity that we’ve had to speak to so many people and, and start helping them. So this is great.
Cynthia (01:30):
What kind of questions are you hearing more than anything else right now? Is there one that seems to be like at the top?
Mark (01:37):
How am I doing? Am I on track? I mean, that’s really top of mind for everyone. And I have to say, it’s the same question that we’ve been getting for years, right? Where we see people who retire every day. Most people only retire once and they have so many decisions and they’re hit with so many choices. And you know, they’ve spent 30 years saving their money and they just want to make sure, am I on track? Do I have enough money? Am I going to have enough income? Will I continue to live at the same level that I’ve been, you know, while I’m working? Sure.
Cynthia (02:14):
Let’s talk a little bit. How about how you develop the retirement readiness review? What goes into that? If you will?
Mark (02:20):
Sure. So a number of years ago, because of all of these questions, we created our proprietary system, the retirement readiness review, and it really has four parts to it. Okay. So the first part, which is the big question that everybody asks is as you know, after we get through, am I on track is, you know, how much income can I expect to receive every month or every year I’ve saved for 20 or 30 years? You know, I might have social security or pension, but you know, how much am I going to live on? So that’s like question number one, we take a look at where they’re at, what they’ve saved and we can come up with a good idea of, you know, how much they’re going to be able to live on. And then, you know, the second question is, okay, is it really going to last?
Mark (03:04):
Is it, am I really going to make it into my nineties? Or, you know, people are living so much longer. So we look, we look at that and then is it going to last next, we want to take a hard look at where you are right now. We call it our stress test, right? When we’re investing, you know, people don’t think about the bad times, only think about the good times. Well, in retirement, you have to be as concerned about when it’s the market’s going down is when it’s going up. And so this stress test helps us take a look at exactly how much risk people have. And usually it’s a lot more than they think. And lastly, we take those three pieces and we actually put together a basic plan. Now, you know, name of the show, right? Plan smart, retire. Well, it’s all about planning.
Mark (04:01):
It’s all about making sure that you have a plan that you can follow. Most people think, well, I’ve got a 401k, I’ve got an IRA, I’ve got a retirement plan. Well, you have some retirement accounts. You don’t have a retirement plan. And so at the end of the retirement readiness process, we give everyone a basic plan. Now it’s not a final plan because there’s a lot more that goes into it. But we want to make sure that everyone who meets with us has an opportunity to get a plan and to see exactly where they are. Yeah.
Cynthia (04:32):
The retirement process. I love that. Thank you so much, Mark. I want to talk about a little bit today on today’s show, obviously the five penalties to avoid. We’re talking about planning for retirement and obviously let’s talk about social security. That could be a penalty that’s involved with social security,
Mark (04:49):
Right? So there are five penalties that we really have to watch out for that most people don’t know about. Because again, you only retire once. So how would you now with social security, there’s a couple of penalties associated with it. The first is taking it early. So there’s something called your full retirement age. That’s usually 67. That’s your base, that’s your base. And that’s what you would get your full retirement benefit from social security. Well, a lot of people want to take it early. You can take it as early as 62, but what they don’t know is that they’ll lose 30% of their benefit. So if at age 67, you were able to get a thousand dollars a month. If you take it at age 62, you’ll only receive $708 a month. So that’s a pretty big penalty on top of that, let’s say you’re 63, you’re 64.
Mark (05:51):
You’re a little bored. You want to go back to work. Maybe you’re going to take a part-time job at the auto dealership, driving cars. A lot of our clients do that. Well, if you make too much money, you have to give some of that social security back to the government. Right. They’ll claw it back. Right. But then there’s another part of it where there is actually there’s the penalty side, but then there’s the bonus side every year that you wait after age 67, you get an 8% bonus from the government. Oh wow. A lot of people don’t know that.
Cynthia (06:27):
I never knew that. Right. Thank you, Mark. I liked the bonus burn the penalty.
Mark (06:32):
If you had a thousand dollars a month at age 67, right. You would receive 1000, $268 a month at age 70. So there’s a lot that goes into it now again, if you need to take it at age 62. Okay. But you have to be aware that you’re giving up a lot. You’re giving up 30%. And then if you’re married, well, that’s a whole nother conversation, but just keep in mind that if you take social security before age 67, you will be panelized and you just want to make sure that you’re aware of it. And you take that into consideration in your retirement plan.
Cynthia (07:15):
All right, Mark. This is the perfect time for us to open up the phone lines to the viewers at home for the very first time this week. Do you want to explain to them a little bit more in detail about the retirement readiness review? Yeah,
Mark (07:24):
Absolutely. So for the next 10 callers that we have coming into the show, we’re going to actually take you through our retirement readiness review process that I talked about a little earlier, those four steps we’re at the end of the retirement readiness review. You’re actually going to end up with a plan that you can take with you a written plan. So if you call eight eight, eight, five six eight one seven five five, you can make an appointment to meet with me. And we’ll begin this process. You know, you only retire once and you have to make sure that you’re making the right decisions, because if you make a mistake, right, you take social security too early. That could be tens of thousands or hundreds of thousands of dollars that you’re missing out on that. You, if you had made the right decision, you would have gotten. So give a call right now, eight eight, eight five six eight one seven five five. Schedule your appointment with me this week. Let’s get started because it’s never too soon to start planning.
Cynthia (08:26):
Thank you, Mark to the viewers at home. That number to call once again is (888) 568-1755. What we’re talking about today are the five penalties to avoid. We’ve gotten through one. We have four more that we definitely want to get through. So please don’t miss the opportunity to call (888) 568-1755. And don’t go anywhere. When we come back, we’re going to have those final four penalties that you’re going to want to avoid in retirement. Please stay tuned. How confident are you in your current financial plan? Do you know with
Speaker 4 (08:56):
Certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes and how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances. So you can feel confident about your future call in during the next 30 minutes of today’s show only to set up an absolutely complimentary, no obligation full-blown financial review that will result in your own customized written plan. This is a $999 value that we’re giving away complimentary to the first 10 people who respond. We’ll start with a full-blown analysis of what you already have by running a report to untangle how much you’re currently paying in fees, how you’re allocated for risk and what it’s costing to work with your current advisor. Next we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with is your current financial plan set up to get you there without mishap, let’s design a roadmap to create a financial plan. You can follow with confidence, get the piece that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation full-blown financial review today,
Cynthia (10:26):
And welcome back to plan smart retire. Well, my name is Cynthia DeFazio and I’m joined today by Mark freed. And Mark is the president of TFG wealth management Mark, a great show in talking about the five penalties to avoid during retirement. We’ve already covered the one. So security, let’s talk a little bit about Medicare and some things that people may not really
Mark (10:45):
Let’s talk about Medicare. Okay. Medicare has so many different rules and regulations, but there’s a couple of things that are really important that you keep in mind. The first is that you have to register at age 65, right? But you don’t register at age 65. You register three months before you turn 65. So that’s a little tricky if you miss it for every year that you forget to register, you get a 10% penalty. So that means they’re going to increase the premium. So if you would have paid $150 a month, you’re going to end up paying $165 a month, right. It goes up and it adds up Medicare is one of these things that they nickel and dime you. There’s something called part D, which is the prescription. If you don’t register for that within 63 days of getting your Medicare again, there’s another penalty.
Mark (11:42):
But I think the biggest thing is a lot of people don’t realize that if you retire after age 65, right, you’ve had a insurance with your, with your your employer. So you didn’t really have to worry about Medicare was kind of there. You have eight months to register for the part B to get your Medicare, to get on board or else again, you’re panelized. So a lot of folks don’t realize that, that there’s all these little you know timing things with Medicare. Best thing. Just keep, keep, remember 65, got to make sure you’ve registered for Medicare and you’re good.
Cynthia (12:24):
Mm, okay. Okay. Thank you. That was again, information that people would not know unless they were watching the show today. So thank you, Mark. Let’s talk a little bit about 401k and IRA,
Mark (12:35):
401K and IRA. Okay. So now 401k and IRA have some very interesting rules that a lot of people get tripped up on. I think the first thing that’s important is for an IRA, if you are under 59 and a half and you want to take money out, you have to pay a 10% penalty, which can really hurt. Think about it. You’re paying income tax. And then it’s another 10%. A lot of people find themselves in very difficult situations. And then, you know, they need to raid that IRA, but 10% penalty. Wow. for a 401k. Okay. It’s under 55. So for 401k, you have a little bit more flexibility, but the catch is if the, if it’s with the employer that you’re still with, there are a lot of other rules. So the basic, the basic thing to remember is if you don’t have to don’t touch your 401k or your IRA until you’re fully retired and you’re over 60, we’ll just make it simple or else you could end up with a 10% penalty and a lot of other a lot of other issues.
Mark (13:45):
Now this past year, you know, a lot of people struggled because, you know, they lost their jobs or they were out of work for all different reasons, you know, with the, with the pandemic there was a special exemption that was put into something called the cares act. So if last year in 2020, you did happen to go into your IRA or your 401k. And you took out less than a hundred thousand dollars. There’s a special exemption where you may not have to pay that 10% penalty. And you may also be able to avoid the income tax associated with it, or at least spread it out over three years. So for everyone who’s listening who took money out of their IRA or their 401k, we would, couldn’t stress more. You need to talk to a qualified tax expert or when you’re meeting with us and you want to discuss it, we can obviously go over it with you, but it’s just really important because you want to avoid that 10%.
Mark (14:46):
You want to avoid having to pay more income tax than you have to the last thing, which is a little known fact, there’s a special tax benefit for company stock. So if you worked for Johnson and Johnson and you ended up with a lot of Johnson and Johnson company stock in your 401k and you’re retiring, there are certain rules that will allow you to take that stock out of the 401k when you retire and avoid paying income tax on it. Okay. But not many advisors understand these rules. And if you do it wrong, if you make one small mistake in how you’re taking your money out of your 401k, you lose the benefit. It’s called NUA. Okay. Net unrealized appreciation is the special tax benefit. So if you’ve never heard of that, if you’re working with advisor, you work with you have a company stock, and they’ve never mentioned that to you. They probably don’t know about it. And you might be giving up thousands, if not tens of thousands of tax savings. It’s something that we really look at because obviously we deal with every people who are retiring. And so we’re always looking for opportunities to save money whether it’s in avoiding penalties or reducing taxes. So that’s really important
Cynthia (16:09):
And keep in mind and Mark it’s called anyway. Can you repeat that? Just in case the viewers were writing it down,
Mark (16:13):
A net unrealized appreciation and it deals with company stock. So if you have company stock, if you work for Merck Johnson and Johnson at T and T, or any of the big companies where you get that company stock in your 401k, you really need to give us a call and talk to us about it before you retire. And before you take any money out of your 401k, because if you do it in the wrong way, you could lose this very special tax benefit where people can save, depending on how much in company stock, you have thousands, tens of thousands of dollars in tax.
Cynthia (16:52):
Absolutely. Mark, let me ask you about RMDs for a little bit. The penalty with RMDs
Mark (17:00):
Wired, minimum distributions. I always want to hear dunk dunk.
Cynthia (17:07):
This is great sound effects. Next time we have to work on that
Mark (17:11):
Required minimum distributions. I will tell you that we will start getting questions about required minimum distributions when people are turning 60, even though you don’t have to take them until age 72 because there’s so much fear and confusion, the penalty is severe. If you don’t take your required minimum distribution in the year that you’re required, which starts at age 72, there is a 50% penalty. That means if you were supposed to take $10,000 out and you missed it, it’s a $5,000. Wow. Yeah.
Cynthia (17:50):
And you pay tax on that penalty. Oh my goodness.
Mark (17:54):
Really important. That required minimum distributions that you really understand it. Now requirement required minimum distributions I’m even messing it up because it’s like, Ugh.
Cynthia (18:08):
The thing about
Mark (18:10):
Rmds is that there’s another penalty associated with it. And that is taxes right? Required minimum distribution. That means if you need the money or you don’t need the money, you still have to pay tax on it. It can be 10,000, 20,000. We have clients where it’s a hundred thousand dollars of additional income that they have to pay tax on and to avoid it or to minimize, it takes a years of planning, which is why it’s so important to come in and meet with us as soon as possible. You can’t wait until you’re 65, you know, because it could take us five or seven years of planning to reduce or eliminate that required minimum distribution and the taxes that are associated with it. And one of the things that we do as a part of the plan is we actually estimate what’s the cost in taxes on your 401k, if you do nothing. And then if you implement some of the strategies that we have, we show you what the difference could be. And it’s really important because it’s an eye opener. When folks learn that they could be paying 500,750,000, a million dollars in taxes over the next 20 to 30 years. And if you knew that you owed 500 or $700,000 in taxes, don’t you think you should take a little time to figure out maybe how to reduce that?
Cynthia (19:47):
It might be a good idea. Might be a good idea, Mark. This is the perfect time for us to reopen up the phone lines for the viewers at home. Would you like to tell them what they can expect to receive?
Mark (19:56):
Again, we only take 10 appointments a week, so you really have to call right now, eight eight, eight five six eight one seven five five that’s (888) 568-1755. If you are concerned at all about any of the penalties that we’ve talked about and discussed today call now because waiting will only cost you money. We will do our full retirement readiness review with all the four parts where we’ll look at, you know, how much income you can expect. And then, you know, how much will be generated, how much you have to invest at what rate you have to invest. We’ll take a look at the tax part and we’ll get that basic plan together, but call right now. Don’t wait. Don’t wait. Even until this show is over because all the slots might be taken up eight, eight, eight, five, six eight one seven five. You know, it’s just been amazing because we’ve been filling up every
Cynthia (20:51):
We, I know, and people are asking, can they be on the wait list for the following week? I know it’s been amazing. Well, Mark, thank you so much to the viewers at home. The phone lines are once again, now open, like Mark said, please don’t miss this opportunity. The number to call is (888) 568-1755. We know you have a lot of questions about how to plan your perfect retirement. When we come back, we’re going to have some more answers for you. So please stay tuned. We’ll be back in just a few minutes
Speaker 5 (21:16):
As a good saver. You’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money market volatility. Isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put sabers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead. We have retirement accounts such as 401ks or four Oh three BS. These accounts typically exposure, muddy to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market?
Speaker 5 (22:10):
The last thing you want is to lose a portion of the money you need for income due to market loss, by working with a financial professional, you can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse. If you’re married, we all have moments in our lives. When we wish we had taken action sooner, don’t let procrastination rain on your retirement parade act. Now, before it’s too late, please call our office to set up your no cost, no obligation retirement income review today,
Cynthia (22:44):
And welcome back to plan smart retire. Well, my name is Cynthia DeFazio. I’m joined today by Mark freed. And Mark is the president of TFG wealth management Mark. Obviously a great show that we’re having today talking about the penalties to avoid during retirement. And I love that. We talked about the fact that this show is doing so well. Those spots are filling up so fast. It’s amazing. So for the people that were blessed enough to receive one of those spots, what does it feel like when someone comes into your office for the very first time
Mark (23:12):
When I started TFG many years ago one of my focuses and my belief is that we really wanted to run it like family. You know, we wanted everybody to feel like family. We do so much with our clients throughout the year. And so, and it starts the minute someone comes in the door, right. And they get greeted. They sit down we’ve talked about the chocolate, which is only, you know, coffee, you know, tea, whatever you like. We try and make you comfortable and relaxed. And, and I think that one of the ways that we do that is we don’t start talking about money. We don’t start talking about your investments. We don’t try and kind of jump in and say, okay, you know, how much did they have or anything like that? Like other advisors might do we start talking about you, what’s important to you your family, your hobbies, your beliefs, your goals.
Mark (24:13):
How did you get here? What was your life’s journey? It is amazing. We learned so much from the people come and visit us. I think we learn as much from them as they do from us. And then we go through this process where we’re figuring out, are we the right advisor for you? Are you the right kind of client for us? Right. We have to get to know each other and really understand each other. At the end of that process, usually the retirement readiness review usually takes three meetings. By the time we get through those three meetings, we know a lot about each other and we have a good feel for whether or not there’s a fit. We want to help people. We need to make sure that we can help you and you need to make sure that we are the right kind of firm and the right kind of advisors for you. And you know, we’re not right for everyone and that’s okay, but we’re going to help everyone who comes in to see us. That is our mission. And that is our promise. And that’s why we created this retirement readiness review so that we’re helping everyone.
Cynthia (25:24):
Absolutely. Mark, let me ask you for that first consultation. Do you normally set aside maybe an hour, an hour and a half? What does the timeline look like?
Mark (25:33):
First? The first meeting is about 30 to 45 minutes. Where we’re, we’re getting to know each other and understanding what is important to you, what is important to them. And then after that, we usually have a 45 minute to an hour second meeting because by that time we’ve gathered all your information. My team and I have sat down, we’ve run an analysis and then we have a lot to share with you where you’re at. How long is your money going to last stress test all of that stuff. At the end of that second meeting, we’ll have a good feel if we can help you, right. We’ll be able to have identified. Is there any areas of concern, maybe you’re great. Maybe there’s no problems. And then we’ll decide to go onto a third meeting at the third meeting, we’ll share solutions, ideas, and strategies that can put you in a better financial position.
Cynthia (26:24):
Mark, how has, how important is it to work with someone who’s a distribution specialist versus working with someone that is in the accumulation phase of life?
Mark (26:32):
Well, there is a dramatic difference between an advisor who works with people, just accumulating money and an advisor like us who are also where we help folks make sure that they’re getting their money out and into their pocket. I mean, just the five penalties that we talked about on this show, right? The average advisor would never think about these things because they all come into play when you’re about to retire or when you’re just getting into retirement. And, you know, that’s a part of what this whole show is about and what we’re going to be talking about every week is something different and idea a concept, a penalty and opportunity that you really only see when you’re a retired or getting ready to retire. And that’s really what makes us different.
Speaker 1 (27:24):
Mark. We have about 30 seconds left of the show this week. Can you tell the viewers at home one more time, what they can expect to receive
Mark (27:29):
More time? Okay. Eight, eight, eight, five six eight one seven five five. I want to meet you. I want to have an opportunity to sit down and talk so let’s get together, but we can only do that. If you pick up the phone and call (888) 568-1755. And I think we only have a few slots left. So hurry up
