Don’t Ignore Life Insurance


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Transcript

Mike:

If you’re retired, you say, oh great, I’m retired. I don’t need life insurance anymore. And that’s so fast. Think about all the taxes you and your 401k. Would it be a good idea? Like if you had a million dollar 401k, like 300,000 of that, isn’t your money. It belongs to the IRS. If you died, now your spouse is a single taxpayers could be in a higher tax bracket. Wouldn’t it be a great idea to leave your spouse? Like maybe, I don’t know, 300,000 of tax-free life insurance.

Zach:

Welcome back to your retirement today. I’m your cohost Zach Holcomb, and alongside me we have a certified financial planner and president and founder of Centennial Advisors right here in Austin, Texas. His name is Michael Reese. Mike, on today’s show, we’ve been talking about the three things you absolutely have to do to have a complete financial plan that we’ve talked about properly managing your money. And the last segment we talked about managing your tax liability. So what do we have coming up here? Right?

Mike:

Well, now we’re going to talk about protection. Okay? So here we go. What did I say at the beginning of the show? If you want complete financial security and we make it easy for you, by the way, we want to provide the easiest path to complete financial security. If you want that, you have to do three things. You must do these three things. Number one, manage your money properly. That’s all about asymmetrical investing versus symmetrical, right? Number two, you gotta manage your taxes. Stop just giving the IRS money blindly, right? Let’s be smart about this. And number three, you gotta protect yourselves from the unknowns. Now, what am I talking about here? The way I think about it, there are, you know, there’s kind of three ways to think about this. Here we go. Okay. You could live too long, die too soon, or get sick along the way.

Mike:

These are all uncomfortable things to think about. Well, first I had a great conversation the other day with you know, with a very nice gentleman. And he was commenting about how, you know, people really misunderstand, or maybe they, they are unaware of how fast the medical community is advancing their ability to treat diseases, right? I mean, it’s like, think about it. Computers grow memory and speed. They grow up like exponential rates. We all know that. Well, guess what? The same is true in about every field. Every field is growing at exponential rates in the medical community is no different. So the things that kill us, doctors are now helping us. They say, oh, I got that. We got you fixed. Now your lifestyle may not be so good on the other side or as good, or maybe it will. Right. But here’s reality. We’re all living longer than we expected. Right? I mean, if you’re 65 today and you’re healthy. I mean, if I’m in your shoes, I’m thinking, man, I’m probably living to 90, 95, easy.

Zach:

My great grandma was 1 0 3 when she passed, she was 1 0 3

Mike:

And that’s before all these medical advances. Right? So I think that something that people miss all the time, you know, enjoying complete financial security is about making sure that you know, your money, that you can just live on your money, like work being, you want work to be optional, right. But it’s not just, I want work to be optional means I’m working because I want to work. Not because I have to. But it also means, gosh, my money, if I choose to stop working and choose to devote you know, maybe towards volunteering or a hobby or something else, your money might have to last a lot longer than you think. Right? So you might live in fact, not might, odds are very good. You will live longer than you expect. Right? You got to plan for that. Well, but what, and by the way, if you manage your money properly, that’s okay, sure.

Mike:

We got that covered. That’s not the big problem. The big problem of the other two. What if you die too soon? Or what if you get sick along the way? Unexpected. Yeah. So what if you die too soon? Oh my gosh. Do you have enough life insurance? Right? Do you have enough life insurance? Most people don’t. And, and here’s a good way to think about it. What is the purpose of life insurance? It’s to replace lost wages, right? If you’re retired, you say, oh great, I’m retired. I don’t need life insurance anymore. And that’s so fast. Think about all the taxes you on your 401k. Would it be a good idea? Like if you had a million dollar 401k, like 300,000 of that, isn’t your money. It belongs to the IRS. If you died now your spouse, a single taxpayers could be in a higher tax bracket.

Mike:

Wouldn’t it be a great idea to leave your spouse? Like maybe, I don’t know, 300,000 of tax-free life insurance that he, or she can use to say, oh, I’m going to convert that IRA to a Roth IRA and get the IRS out of my life. Wouldn’t that be a good idea? Heck yes. And by the way, this is a fun one. Go find someone that got a check, a life insurance check because their spouse died and that check was like 500,000 or a million dollars. And ask that person. What do you think? Was it a good idea or a bad idea that they have life insurance? Good idea. It’s always a good idea. It’s never a bad idea. Right? So anyway, term insurance, for example it’s so these days it is so cheap. There’s no reason to be under-insured. So if you’re still working rule of thumb in today’s interest rate environment, look good.

Mike:

Like 15 times your salary, you’re making a hundred grand a year, get 1.5 million of death benefit in term insurance. You’re like, what? I mean, come on 1.5 million, really, man, it’s probably like 50 bucks a month or something. I would probably, it costs almost nothing. It’s ridiculous. Reasonable make. If you’re going to make a mistake, be over-insured not under insured with life insurance, especially if you’re younger, still working, what else do we need to think about? What if we get sick? Now you probably have health insurance through your work, right? You hit 65. You’ve got Medicare, which is about the best insurance. There is. That’s not what I’m talking about. What if you get sick with something that maybe your health insurance or Medicare doesn’t cover, and that happens all the time and I’m talking about long-term care. I know this is not everybody’s favorite topic, right?

Mike:

But again, if you want complete financial security, this is just like taxes. You cannot bury your head in the sand. You can’t be an ostrich, be an adult and say, look forward and say, Hey, what happens if I get Alzheimer’s Medicare, doesn’t pay for that health insurance. Doesn’t pay for that. How am I going to pay for that? You know, both my grandmothers, Zach, they both died in nursing homes with Alzheimer’s both of them. When both my grandmothers retired, this is really interesting. Both my grandparents both sets my mother’s side, my father’s side, when they retired in today’s dollars, they had over a million dollars. Neither set of grandparents were big spenders. In both cases. My grandfathers both died at the age of 67 from heart attacks. Like they retired at 62 or 65, couple of years later, boom, they’re gone heart attack, right? Leaving my grandmother’s on their own, but everything’s going fine until guess what?

Mike:

They didn’t plan for taxes. We talked about that in the last segment. So suddenly my grandmother’s more money to the IRS less money for them. And then they both ended up getting Alzheimer’s. They’re both in nursing homes. They both died without one penny to their name. Wow. Why? Because they buried their head in the sand. They ignored the problem. By the way, my grandparents way back then. I mean, this was like probably 20 years ago or more. I must be honest that wasn’t like, if you retired in 1975 or 78 long, I mean long-term care. It just wasn’t that wasn’t in our lexicon that we weren’t talking about that. Right. Nobody cared. I mean, because we didn’t live through this stuff, we just died. Right. But both my grandmothers died in their eighties and both with Alzheimer’s for like five years plus all their money ended up in the nursing home.

Mike:

Yep. Is that what you want? No, I mean, think about it. If you die too soon, is your family going to be okay? If you get sick, will your surviving spouse be okay? Do you want all your money going to the nursing home or would you rather keep it in your family? Right. If you live too long, are you going to run out of money or are you doing things the right way? How are you protecting yourself against the unknown? Have you truly addressed it? You know, when most people go see a financial advisor, what’s that conversation look like? You know, usually all the advisor wants to just talk about your investing, right? Why? Because that’s where they get paid. But that’s just one piece of the coin or one piece of the puzzle. If you will. One side of the coin, I guess that’s not complete financial security, complete financial security is the three things.

Mike:

One manage your money properly, a symmetrical versus symmetrical investing. If I can just, if I could just really drive one point home, I want you to be aware of that asymmetrical investing versus symmetrical second, got to be smart about your tax planning and third. Absolutely. You’ve got to protect yourself. What if you live too long, die too soon, get sick along the way that brings in that brings up. We have our one page. We want to make it easy for you though. I’m going to give you the easiest path to complete complete financial security. It goes like this. You just call us. He said, Hey, I want to get my personalized one page financial security blueprint. Right? That’s all you gotta do. You just got to call us. And when you call, you’re gonna have to leave the number, your leave your number, right, because it’s after hours. But Zach, you know, you’ll set up a time to talk to Zach. You’ll gather the information. We’ll get this done for you. One page will tell you here’s where you are in each of those three categories. Here’s what you need to do so you can enjoy complete financial security, the easy way, right? We want it to be easy. So Zach, they got to call the number to make this happen. They, what are they doing? What number were we?

Zach:

Hey, this is easy as well. Mike it’s 512 886 5850. Again, that number is 512 886 5850. Just give us a call, leave us your name and number. We’ll give you a call back at your requested time. We’ll get you this blueprint as soon as possible.

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