John, very good to see you. A really important conversation today, the six questions you need to ask your advisor before you retire. And of course, you don't necessarily need a relationship with a financial advisor before you retire, but we do recommend making an appointment to talk through these questions before you hang up your hat and before we get to the official question. So John, you have a bonus question conversation that you need to ask the advisor first.

Yeah, so right this video, we're focusing on questions you need to ask your advisor about retirement. But the real starting point in the bonus questions are really asking your advisor that you're going to see about them and their practice. Number one, most importantly, you want to ask your advisor, are you a fiduciary, right? Right? Are you held to that standard? It's the highest standard in the industry, which means they are required to do what's in your best interest at all times. So I, myself, and my podcast host and good buddy Tom O'Connell, we’re fiduciaries. The second thing you want to do is really ask this advisor, what is your expertise in retirement planning? Did they just get their securities license and they say, Well, yeah, I focus on doing retirement planning, or have they gone the extra mile to get educated in the retirement arena? So I have my RMA accreditation. That's a retirement management advisor which talks is of very advanced specific levels of retirement planning. There's other designations, like the ric, p, but has your advisor truly done that type of planning? And have they sought out that knowledge? You know, do they have a good understanding of Social Security claiming strategies? Because, you know, Erin, I see so many people that come into my office that their advisor just told them, yeah, claim when you're 62 and you know, when we run the numbers, and my training says that's not the right thing to do, and then the numbers back it up, right? This is a good reminder to everyone that if your advisor, or the person, the advisor you're interviewing can't answer these questions. Well, you might want to walk and go have another conversation with another advisor. All right, let's get into the six official questions. So number 1am, I financially ready to retire? Yeah. So I like it when a lot of people say, Well, you know, my 401, K calculator said, I have a million dollars, so I'm financially ready to retire, but this 408, calculator knows nothing about you, your life, your spending or your goals, so you really have to look in, and we've done videos on this. What's your retirement vision? What do you want to do? Do you want to just stay at home, garden and spend time with the grandkids, or do you want to travel the world? Do you want to go on Viking river cruises? There's two significantly different cost breakpoints there. So in retirement, for a lot of people, especially those who don't have pensions, your income is going to be dictated by how much you're spending, because if you're spending $100,000 a year in expenses, you're going to have to take out, you know, potentially $150,000 more or more in withdrawal distribution. So you have to understand, is that sustainable over a 30 plus year retirement period?

Next question, what income sources will I rely on in retirement, and How sustainable are they?

Yeah, so when, when we talk about income sources, I'm just going to kind of break it down, because you can have several accounts out there, but there's three IRS types of income sources, and we call these the tax funnels and they are taxable, which is your brokerage accounts, your individual your E trade account. Maybe this is the accounts that are subject to capital gains, qualified dividends, and all those. Then there's your tax deferred. This is all of your retirement money. So pretty much the money you accumulated saved away your 401 k4, 50 7b 401 A, all those accounts that are now typically rolled into an IRA, they're taxed as ordinary income, which is going to generally be one of your highest levels of income taxation in retirement. Then there's my last and my most favorite, the tax advantage, or tax free. You know, this is your your Roth IRA money. This is the most powerful money in your portfolio. So while a lot of people want to race to this money because they don't have to pay the taxes on it. You want to be very strategic in how you use this, because you have to consider other life events, like, you know, if one spouse dies, you have the widow tax. You have required minimum distributions. So you want to kind of use this money as a supplement, type of income stream.

Third question, which is related to our second one there, how can I minimize the taxes on my retirement income?

Yeah, so the best way is to try to get as much money from that tax deferred or tax forever at ordinary income rates to your tax free accounts. And obviously that's doing going through Roth conversions. Then there's other, you know, strategies we've done a lot of videos on in charitable deductions or qualified charitable contributions. But you want to make sure that anytime you're doing tax planning, that, especially if you're 63 or older, that when you're doing Roth conversions, you are watching your modified adjusted gross income, because that is going to affect your Medicare premiums. And the whole goal of tax planning and overall retirement income distribution planning is understanding where you lie within the marginal tax brackets in your tax code, what those rates are and the Medicare premium. So, you know, for a lot of people who are trying to minimize taxes, if they have a lot of money in their income, their taxable income bucket, we may use a portion of that in addition to their IRA income money, because while the IRA income money may be at 24% their long term capital gains may be at 15% so we're lowering that income. But if you don't pay attention to your modified adjusted gross income, those taxable money, those taxable accounts, can still push you over your Medicare premiums and Irma and raise that tax bill. So you have a lot of complex moving parts that you want to have someone that has the expertise and the software and the resources to be able to show you this is where we need to pull this account that the money for this trip or this month's bills from and this is why, right, these questions and answers are all interrelated. Good point. And next question, what if any adjustments should I make to my investment portfolio? 

Well, again, we, you know, we use the tax funnels, and then in our office, we use the tax shields, or what's called the tax buckets. And really, you you've worked so long to to get all this money saved, and now you're retiring. Now it's time to give your money jobs. And the first thing you want to do is you want to create, you know, buckets of safety. You want to have cash reserves that should be bank account money. You're your sacrifice. You're sacrificing rates of return for that safety of if something catastrophic happened, you can go to the bank, get the money out immediately. Then you want to have your income buckets. And we kind of divide this into two buckets. One is all income. This is an income generating bucket, and that's what you're going to pay your bills with. And if you want to fund, you know, your vacation fund into there. That's fine, too. Alongside that income bucket, we're going to have a soon bucket, which is essentially, listen, this is going to hedge. This is going to be an inflationary hedge, or an overspend hedge on our income, and this is for money you may take out in the next year or to five years, and your income bucket. You want it to be predictable and sustainable, and you do not want this to be exposed to as much market risk as possible. You want to have this in a very low exposure to market risk, because you do not want to have a big market decline when you're taking distributions from these accounts, because it's going to be the sequence of returns. I'm not going to go into that. We've done a bunch of videos on this in the past, but especially for early retirees, that is absolutely detrimental to your retirement. So we want this conservative. We want predictable, sustainable, then that last bucket of money, that growth money, that's money you're not going to need for five to 10 years. That can be more like your 401, K money. So in our office, we like to do what makes our clients comfortable, and for a lot of people, change isn't comfortable, so we try to mimic a retirement account bucketing that mimics their working years. So your income bucket is your paycheck, your your cash reserves, and your soon bucket will be your savings. And your growth bucket would be kind of like your 401, K, Yeah, makes sense when you put it that way. Next question, this one is really important. Do I have enough save to account for inflation and unexpected expenses? They always seem to crop up those, yeah. And, you know, for a lot of people, you know, up until the last couple years, people were getting a little to sleep with one. You know, 1.8% inflation rates. Not anymore. You have to be prepared for inflation. I say go, go on the high, the higher levels of inflation, three, three and a half percent. Really stress test your retirement. Because if we do have those high periods of inflation like we've had once you want to know how your retirement outlook would look before you retired, or when you're early into retirement, where you easier to make adjustments versus you. You underestimated inflation, and now 1520 years, you're in significant trouble of running out of money.

Really good point, John. And then last, we have to talk about the costs of long term care. Do you have a plan for long term care? Because if you don't, this is something that can absolutely wipe out your retirement savings. Just take a look at the cost of an annual median long term care cost. This is ranging anywhere from, I'm looking 20 years out of the 2043, column, anywhere from $124,000 a year up to $211,000 a year.

Yes, the long term care. You know, this is the number one destroyer of nest eggs. And you know, people are living longer, that's great. But if you live longer, you're going to be a lot more prone to needing long term care. And Erin, I got bad news for my Southern California clients, the numbers in Southern California are much higher, you know. So you have to have a plan. That doesn't always necessarily mean getting long term care insurance. But you know, where the long term care insurance comes into play is, do you want to take part of that risk and put it on an insurers, on an insurance plate, or are you going to carry all of it by yourself? Folks? Medicaid, medi, Cal, they're not coming to your help until you've spent down the vast majority of your wealth. And for a lot of people with less than a million dollars, especially here in California, you know, a couple years, a couple year long, long term care event will wipe you out. And you know, I been in a retirement planning class where this came up, and they said, but really, a lot of people that have that one to three plus million dollars in assets, they're actually at quite a bit of risk too, because they're a little bit overconfidence that they can actually self pay. Yes, they probably do have the assets to self pay. However, you know, if you have one client or one one spouse that you know needs $700,000 worth of care over a four or five year period. That's a large chunk of money. That's, that's half of your wealth, if you have, you know, close to one and a half million dollars. Now imagine if years down the road, the second spouse needed it. Now you might be looking at a million plus dollars. So you know, it's definitely something to where, if you're going to private pay, you have to set aside a significant amount of money for that long term care event, right, right? So all these questions, John, talking through them with you underscores the fact that if your advisor is just talking about your investments again. You need a new advisor. This is so holistic. I always appreciate getting to talk this through with you. John, so if somebody has any questions, how can they get a hold of you? Yeah. So, you know, we have tons of videos on the YouTube talking all about this, and I agree everybody loves investments. That's that's the sizzle of the portfolio, but there are so many more important things that need to be considered. That's, they're tough conversations to have, but you want to have them when you're not in that tough situation, because then at least you have a plan and you're going to lessen the pain of that event, if you don't have the conversation and that event happens, well, guess what, Erin, you're going to have that painful conversation, but then it's going to also probably come with much more dire circumstance. So getting back to your statement, yes, we have YouTube channel, you know, subscribe to that we have tons of videos that go far beyond what we talked about today. Or you can visit our website, www.gosecurus.com, while on the website, visit the contact us tab, where you can schedule a 20 minute phone conversation, where we answer any general questions you have. Or you can schedule complimentary vision and clarity consultation.

Great John, thank you so much. Thank you, Erin.