Today’s Objective…

It seems that people have different definitions of “safe money” as it relates to their savings. Let’s discuss some of those varying explanations of the term and why it’s an important conversation for any retiree or pre-retiree to have.

(Click the featured times below to jump forward in the episode)

Tactical Points:

[2:09] How do people define safe money?

  • This term makes Dan think about insurers trying to sell annuities or those “education” steak dinners that you might have even been invited to attend in the past. It’s an important phrase to understand, but the way it is marketed and utilized is problematic.
  • If Dan had his way, he’d call annuities “locked up money” instead.
  • Safe money, according to Dan, would be when a client has sufficient cash reserves and only the appropriate amount of money at risk in the market.
  • You can break safe money down into three components…
    • Enough cash reserves to sleep at night.
    • A portfolio maintained in a way that you know exactly how much risk you’re taking.
    • Pulling the right amount of funds out of your savings.

[4:06] Do most people understand how much risk or safety they have?

  • Most people have almost no idea when they first come to Dan how much risk they’re taking.
  • Check out a related episode about defining risk tolerance.
  • Ask yourself, do you know exactly how much risk you can tolerate? How much money can you afford to lose?
  • It’s vital to work with an advisor who gives you a detailed breakdown of how much risk you have.

 [6:40] A client example

  • Dan shares a story about a young couple who had an aggressive portfolio.
  • The younger you are, the more risk you can take. But that doesn’t necessarily mean you should be in an aggressive portfolio. There are other factors to consider.
  • Dan makes sure he listens carefully to each client to find out what they want long-term.

In The News:

[10:33] IRA and 401(k) contribution limit increasing

  • The IRS announced that they are increasing the contribution limit for IRAs and 401(k)s. Should you increase your savings to the new threshold?
  • If you have a Roth 401(k) or a Roth 403(b) at work, then yes. If you don’t have that option, then open a Roth IRA.
  • Because of the tax implications, it’s good to start with the Roth.
  • Check out a related episode about why everyone needs to consider the Roth IRA.
  • What you don’t want to do is get a tax reduction now and then get a higher tax rate when you pull the money out later.
  • Get personalized advice on your financial situation.

Getting To Know Dan:

[12:59] Summer plans

  • After years of listening to Celtic music, Dan and his wife will get to experience it in person in Ireland while celebrating their 35th wedding anniversary.

Additional Resources:

The Plan:

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The Host:

Dan Betzel – ContactRetirement Trailblazer GuideRetirement Rescue Toolkit – Call: 614-472-4510