The information and discussion on this show is for informational purposes only, and is not intended for specific tax legal or financial advice. Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. Past performance does not a guarantee of future results. Investments will fluctuate. And when redeemed, may be worth more or less than what originally invested. You should always consult your tax or legal professional and financial advisor or representative before making any financial decisions. Need a retirement wealth advisor? Bulman Wealth, WORLD EQUITY GROUP Securities, Inc it’s representatives or affiliates have any liability for investment decisions or other actions taken or made by you based on the information provided on this program. Christopher James Bulman is a registered representative offering securities through WORLD EQUITY GROUP Securities, Inc, member FINRA SIPC, an investment advisor representative of Retirement Wealth Advisors. Neither The Financial Compass or Bulman Wealth are affiliated with WORLD EQUITY GROUP Securities, Inc or Retirement Wealth Advisors. Licensed in California, number 0D67586.

This is The Financial Compass with Chris Bulman. At Bulman Wealth, we use results and advanced planning to help you grow and protect your money. And now, setting a course for a better retirement, it’s the Financial Compass with Chris Bulman.

Melissa Carter:

And welcome to the Financial Compass with Chris Bulman. I’m Melissa Carter. Give us a call, (916) 458-8199, (916) 458-8199 or Bulmanwealth.com. And we’re going to talk about how you can get a free financial plan, complimentary from Chris if you’re one of the first five callers. We’ll explain that in a second. Chris, I saw a statistic that said 75% of people, and this is from CNBC, do their own money, manage their own money. But then at the same time, the same group of people, up to 50% of them don’t even talk to their family about money. And that percentage varied based on whether they were divorced or not. Divorced people don’t talk about money with their family, and those who are married, the percentages were a little lower. My point is, if you combine those two, you have people who manage their own money and don’t talk to their families about it, and that seems like a recipe for disaster. Do you agree?

Chris Bulman:

Yeah, it can be a huge recipe for disaster, and I can give you so many examples of how that works. Specifically, we have several clients and even friends who… Imagine if one person’s in control of everything, including passwords, usernames, even where you bank and where you have your investments and if that person leaves us, if that person passes away, doesn’t come home today, how has that spouse going to find out where their accounts are, how to get into them, how to get access to them? It takes a while. It’s one thing to have to dig into, if you have pensions, social security, and you need to get ahold of those companies, those 1-800 numbers, but to then also not be able to get into your bank accounts and your investments because you don’t have the usernames and passwords. And even if you could, I mean, honestly, Melissa, what are you going to do? But you don’t know how to manage the money anyway.

Melissa Carter:

Right.

Chris Bulman:

So one of the biggest problems we see in our practice is people come in, they’re used to one person taking care of all the bills. For example, maybe the wife takes care of all the health insurance. If the wife isn’t able to do that anymore, the husband could be totally lost. Or maybe the husband takes care of all of the investments, and if the husband is not able to take care of those investments anymore, if the husband leaves us, passes away, whatever happens, disabled, Alzheimer’s, lots of things can happen, how is the wife going to continue that forward? Especially if he’s doing things like stock trades, which we see a lot, especially in California. You may love your Amazon and your Apple and your Google and your Facebook. But if your spouse doesn’t know what you’re doing or when you bought it or what the strategy is, they can really be in a lurch when they’re on their own.

Melissa Carter:

Well, and it makes me think of this spontaneity of a lot of people, because you mentioned just the passwords. How many people in our audience panicked? Because my story last week, I was trying to access certain websites and I was so used to a laptop saving my passwords. And then I guess over the course of time or through a reboot, the passwords were lost. And so I’m thinking, I don’t remember what password I used for this.

And so I had to physically get it from these companies, then write it down, which I know the worst thing you can do, but it just was frustrating knowing that. And then on top of that, I have some of those FinTech, some of those financial, technical apps like Acorns or whatever, no endorsements here, but where I just put a little bit or they shave off whatever my spending is and save that money in there. So those are accounts that people probably don’t think twice about because they’ve just put them on their phone and forgot about it.

Chris Bulman:

Sure.

Melissa Carter:

But that’s something else that a family member should have access to in case something happens.

Chris Bulman:

Yeah. And the first thing, when you get into retirement, you should have a financial plan. We talk about that every week, and with that financial plan comes a budget. Now, some people are strict with her budget and really watch it and update it every month. And other people just, as long as they have a little money left over, they feel like they’re doing okay. So everyone’s a little bit different. But if you have those things in place, you should also be discussing that with your spouse so that you’re on the same page so that you understand what’s going to happen next, what’s coming down the road.

And again, a lot of the discussions we have, to be honest with you, if we have a couple come in that’s in their seventies or in their eighties, a lot of the times the actual concern is, if I’m not here tomorrow, I want my wife to be able to understand what I’ve been doing or do this. And also, my average returns have been marginal at best anyway, can you just help us to manage our accounts together so that we take that burden off of myself. We hear that all the time, at least weekly, to be honest with you.

Melissa Carter:

Sooner than later is the best way to get that plan together. And Chris has a complimentary financial plan available to the first five callers who texts the word plan, P-L-A-N to (916) 458-8199. Again, it’s (916) 458-8199. And Chris, explain what this complimentary financial plan entails.

Chris Bulman:

Well, the complimentary financial plan is going to get you started off on the road that you want to be, so if you can imagine taking a snapshot of your entire financial picture. So what your financial picture look like today, if you were to take a snapshot and build a little book about it? We’re talking about how much do you have in your 401ks? How much do you have in your Iris? What is your pension going to look like? What is your social security going to look like? What is your spouse’s social security going to look like? How about rental? We’re in California, So a lot of people own rental homes. What does that look like? Do we want to hold onto those, or eventually do we want to sell those off so that we don’t have to manage them in the future?

But we start with a snapshot of what it looks like today. Then we talk about building your goals. Where do you want to get to in the future? Some of us, our plans are to live off of our pensions and social security and all of our assets we want to leave to our family, to our kids, to our grandkids, to our college. Other people want to spend every dollar and have a dime in the bank when they die. Now, that’s tough to do, but that’s some people’s plan. And so once we know about you, and everyone’s different, once we know about you and the plans that you want to have in your life, then we begin to put that financial plan together. And a financial plan is made up of your risk tolerance, your tax situation, we’re looking at inflation, we’re looking at incomes, we’re looking at expenses.

You don’t start walking down different aisles in the grocery store, generally, when you retire. So if you’re spending a lot of money in the grocery store today, probably going to be a similar amount in the future, and maybe more. Guess why? Because we like to eat out a little bit more, believe it or not, when we’re retired, some of us. Some of us may enjoy cooking and like to do that more. But we want to know that about you that way we can design a plan that’s going to work for you. We call it results in advanced planning, Melissa. And we talk about it every week, but some of my favorite clients, the biggest challenges we face, the plan’s fairly easy because they may have a lot of money. We have a lot of clients with millions of dollars that come in and see us.

But what they really want to know is, we want to take our family to Maui every year as long as we’re alive. It’s going to cost $50,000 a year. It’s going to cost 75, whatever it might be. Can we afford to do that and how will that impact our future? And so that’s important to know before you do it. We’ve had people come in and say… Again, it’s California, Teslas everywhere. We want to buy a Tesla. The payment’s $2,200 a month. Can we afford that? Is that going to wreck our budget? Are we okay? Whatever it is, we can test the plan. And before you actually start your financial plan, which you may do somewhere else, you just invest. 10, 15 years later you look back to see how it worked. In this case, we want to do results in advanced planning.

We want to test different ideas before we actually get started. And those ideas, again, it could be travel. Maybe you want to go to Europe every year. Maybe you want to spend $20,000 on travel, 30, new car, whatever it might be. Maybe you want to gift money. Can we give the money to the kids, to the grandkids? Whatever it is we can test out in advance so that you can see what plan a, it looks like plan B, plan C, and then you can move forward with one of those plans or a mixture of multiple plans. And we always find, when you can remove that uncertainty and the fear from the future, client’s outlook on their retirement gets a lot brighter.

Melissa Carter:

Well, it’s a lot better than going online and doing one of those generic things. Like a financial plan needs to be personalized.

Chris Bulman:

It really does.

Melissa Carter:

And is it’s your life and your money, what you want to with it. So be part of this, get a complimentary financial plan from Chris. First five collars to text the word plan, P-L-A-N, plus your name because he needs to know how to address you when he calls back. (916) 458-8199. Again, (916) 458-8199. I’m going to ask a couple questions, almost like rapid fire of the top things that concern people when it comes to retirement. So the first thing that most people ask is, “How much money am I going to need when I retire?”

Chris Bulman:

Yes, they ask that they ask. They ask, “Is my retirement plan set up for the risk that I’m willing to take?” In other words, “I don’t want to lose a single dollar. Is my account set up that way?” Or, “I’m okay if we lose 5%, but I can’t stand to have another 2008. Is my account set up that way.” Those are the top. Do I have enough income for retirement? That’s a big one. People are concerned that they don’t have enough income for retirement, or we talk about desired outcome versus required outcomes. Some folks come in and they say, “I think I want 10% return.” But when we do the plan, the plan is successful with only a 4% return. So the required outcome that we need is only 4% average return to hit all of our goals. If we actually shoot for that 10%, we’re going to have to… What comes with higher returns? Higher risk.

So we’re going to have to build in more risk to your portfolio. So then the question becomes, if we have a hundred percent of success at 4%, do we really want to try to get a 10% return when that introduces volatility? And when we talk volatility, thank 2001, 2002, 2003, 2008, do you want any of that type of volatility in your accounts? And if so, then we’ll build a portfolio accordingly, but if you don’t need it that’s a big eye-opener for a lot of people, that required versus desired outcomes and returns.

And so those are some of the big ones. Family protection is a big one, always, with respect to, if you’re still working, if you’re disabled, what do you need to have in place? If you pass away, what do you need to have in place to protect your family? And then legacy planning is a big one as well. We have a lot of clients that come in and say, “Chris, we know for sure, we’re never going to use this account, this million dollars. What can we do to pass that to our family in the most tax efficient manner? And maybe even expand it maybe double or triple it, what can we do with that money?”

Melissa Carter:

Another question I know people ask is when should I take social security?

Chris Bulman:

Right.

Melissa Carter:

Because for some who are probably further away from social security, they may not realize that once they make that decision, that’s what you get. You can’t take it at 62 or 65 and then do it again at 70 and get a higher paycheck. One and done.

Chris Bulman:

And interestingly enough, as you know, the social security laws and rules have changed a few times just over the past few years. Now, what do you think is going to happen in the future? They’re going to continue to change. Ultimately, they may have to raise the social security age. So when people come in, if you’re in your fifties or younger, we’ll do a social security plan for you, but it may change by the time you get to social security age. If you’re in your sixties, it’s going to most likely be pretty set. However, the government can always make changes. Historically, they’ve averaged about a 2% increase on social security, but we can show in your plan a flat, no increased social security plan and 2% increase. We can show 75% of plan. We can show a lot of different things depending on how negative or positive you are towards the future of the social security and how it’s going to work.

Melissa Carter:

A lot of people dealing with debt, and I see a lot of people ask the question if I should still have a mortgage when I enter retirement. And what do you find to be the best case for people?

Chris Bulman:

Well, I think people need to know the benefits, the positives and negatives about having a mortgage in retirement. I mean, the positives of having a mortgage generally is if you have your money elsewhere, you’re using arbitrage. If you’re paying the bank 4%, for example, and you’re earning 6%, you have a positive arbitrage every year and your 6% is compounding. And if it’s in a tax deferred account, it’s compounding tax deferred and your mortgage, historically, you can deduct. Now we’ve had some law changes around that with taxes lately, because now the standard deduction is higher than most people are going to get from a mortgage deduction. So your actual thought process on what you may want to do with your mortgage in retirement, we may want to look at paying it off now, so that there’s some new facts that you should be aware of.

Melissa Carter:

Well, and it goes back to the first thing I mentioned in the show, which is 75% of people surveyed by CNBC said that they manage their own money. And when you talk about not only the fees and taxes, we didn’t even bring up inflation and how things may cost. I mean, it just seems that it can be overwhelming and probably not a good idea for people not to get some kind of consultation when it comes to how they’re planning their future.

Chris Bulman:

Yeah, we don’t know what we don’t know. And you can relay that to almost anything. Golf, I thought I was teaching my kids how to chip really well. And then I had a lesson with a certain pro and he taught them different ways to chip based on how the ball was sitting in the grass, come outside in, inside out, straight through. And the ball is going to spin, jump, hop differently depending on the lie that you have. Who would have known? I’ve watched the Golf Channel a lot. I’ve never seen that. So it’s same thing in financial planning. You don’t know what you don’t know. And fortunately, not only do we meet in our office, we have six advisors. We meet with 30 people a week sometimes or more. And not only that, but we have hundreds of peers, hundreds of friends in the business as well, and we share information back and forth. So we have so much collective knowledge that we can share with our clients that it just makes sense to take advantage of that. There’s no cost to it.

Melissa Carter:

Well, yeah. Take advantage of this complimentary financial plan we’ve been talking about. If you text the word plan, P-L-A-N to (916) 458-8199, (916) 458-8199. Again, text the word plan, plus your name, and then you’ll get that complimentary financial plan and Chris can walk you through all the details of how you can improve your financial future. All right. So Chris, here is a formula that I want to pass by you to see if it’s anywhere in the ballpark of what people need to pay attention to. Okay? It’s a guy from MarketWatch, and market watch is a reputable site, and it claims that your house drives most of your spending. So according to formula, if you multiply the market value of your house by 0.3, that tells you how much annual income you’re going to need. So let’s say your house is worth $250,000, multiply 250,000-

Chris Bulman:

What state are we talking about?

Melissa Carter:

I know, right. $250,000 by 0.3, and you come up with $75,000 a year that you’re going to need in retirement. So what do you think that formula? So obviously, that is a low, low number in another part of the country. But if you were in California and your house is worth, I don’t know, half a million, $750,000, is that realistic to assume that you’re going to need that number when you multiply it by 30% as your retirement income?

Chris Bulman:

That’s an interesting way to look at it. Honestly, I don’t think that has anything to do with it. Everyone is so different. I have a client with a million dollar home and she lives off of $800 a week, basically. Now, she has to pay her taxes, but she’s owned the house forever. You have clients that live in a $400,000 home make $450,000 a year, and their budget’s $450,000 a year. So everyone’s different. It depends on your spending habits, how many kids, you have grandkids, how much you enjoy them. Some people live a modest lifestyle. The people that usually accumulate a lot of wealth, not the Kardashians, not the influencers as they’re called now, the new money. They don’t necessarily live a modest lifestyle, but the folks that are listening to us today, I mean, if you’ve got a million, 2 million, $5 million in investments in the bank, you probably live a fairly modest lifestyle. That’s how you got that money, and those are the folks that we see a lot.

Melissa Carter:

Chris, you’re constantly making the point about having a plan. Everybody’s different, that you are your own unique person. And that is why it’s important for people to talk to someone like you who have done this for decades and have seen every scenario out there to be able to talk to them one-on-one, and instead of them listening for 10 seconds to a commercial, or see an article about that formula for them to actually take their portfolio and come to you and say, what does my life look like?

Chris Bulman:

Here’s something that you can take away with you today, the four Ls of retirement income planning, we call it. You have longevity goals, lifestyle goals, legacy goals, and liquidity goals. And just to touch on those briefly, longevity goals, it centers around lifetime sustainability of the core expenses in retirement. So those largely really relate to housing, healthcare, basic living expenses, maintaining a basic level of financial independence without becoming a burden to others. Others could be your own children. So how long are we going to live and what should we be thinking about with respect to longevity and with our financial planning?

And then we have our lifestyle goals, and what what is the overall standard of living we want to have in retirement? Some people have this desired standard of living to retire. I love my clients that come in and every quarter they’re on a new trip to Scotland or Ireland or Europe or Asia, and they bring back some pictures and they bring back bottles of scotch for me, or t-shirts for the kids. And it’s fantastic. I love talking to those people. Those are lifestyle goals. How much do you want to spend on things like that? Self-improvement, do you want to be involved in yoga or a gym? I mean, gyms around here these days and in Sacramento area are getting upwards of sometimes $200 a month per person. They’re like resorts, but I mean, what standard of gym? Do you want the $19 a month or the $9 a month or the $200 a month? $200 a month comes with free towels every time. So that’s nice.

So then we have legacy goals. What do we want to do for our children or our family, our community? How do we want to leave those assets? And whether it’s the next generation or subsequent generations beyond that or to charities, and so legacy goals is always important. When I talk to people and they have all this money, whatever amount it might be, oftentimes I can see immediately, they’re never going to spend the money. So then what becomes important is what do we want to do with it? And if we want to leave it as a legacy somewhere or to someone, how do we do that in the most efficient and expandable manner that guarantees that they get that asset in the best tax efficient manner as well.

And then finally, the last dial would be liquidity goals. How much money do we need to be maintaining in those additional assets that can be tapped quickly? Whether it’s checking savings, CDs, whatever it might be, how much do we need to keep liquid? An example, in California, of course, I get a lot of people that like to keep three, four, $500,000 liquid in case a real estate property comes up that they want to buy quickly and they can come in and purchase something with cash, or at least put a big down payment on it so that they can get it, flip it, whatever they want to do.

So everyone has different goals. Those four L’s of retirement income planning though, I think if you write those down and you can always re-listen to this show on podcast, on SoundCloud, on Bulmanwealth.com, on iHeart radio, all over the place. So if you need to go back and listen to the four Ls and see where they fit in your life, and then give us a call and or text us at (916) 458-8199, and we’ll prepare that financial plan for you and talk through all these strategies as well.

Melissa Carter:

So we’ve got a few minutes left. I want to point out something you mentioned about the cash flow for the people who want to make the down payment. Personally, when I got serious about my retirement planning, one of the people that were helping me talked about how I had focused so much on retirement and focused so much on retirement accounts that I failed to build my own cash flow in case of emergencies or in case of anything. This is when I had my child, that’s when I started really getting serious about it, “Okay, I can’t mess him up too.” And I have to take care of myself, but I need to take care of him. I would assume a lot of people are in that situation. And I just wanted to point it out again. I don’t really have a question with it, but just to see if maybe other clients, that is something that they also overlook, that they’re so worried about when they turn 65 or 68 or 70, that they’re not worried enough about the 50, the 55 year old.

Chris Bulman:

Yeah, when we have calls like that or questions like that, I always go to the Dave Ramsey’s Seven Baby Steps. Now, I don’t agree with everything Dave Ramsey says. I’m going to put that out there, but he has a lot of good nuggets. And we work with tons of Dave Ramsey clients. So if you’re a Dave Ramsey acolyte or follower, we get calls every single day. We get between two and four calls a day, referrals from the Dave Ramsey show that come in to see us. So I’m just going to go through those Seven Baby Steps real quick. Number one, save a thousand dollars for your starter emergency fund. This is if you have debt, you have credit card debt, different places. That’s step one. Step two, pay off all of your debt except the house, using the debt snowball.

And that basically means… Well, you can look more on daveramsey.com, but the debt snowball is you start paying off one credit card at a time. And then the money that you were using to pay off that one, you snowball into the next one. And pretty soon, hopefully within six months to a couple of years, you’ve got all of those credit cards paid off. Step three is, to your point, save three to six months of expenses in a fully funded emergency fund. And that means somewhere that’s liquid. You can get to it. And if you lost your job, if anything happened, you’ve got six months of income, of money there that you can live off of while you’re trying to get back on your feet.

Melissa Carter:

Yeah, that’s what I had to learn how to do. Right, exactly.

Chris Bulman:

Yeah, everyone. Or it could be a roof. How many times has a roof ruined someone’s life?

Melissa Carter:

Exactly.

Chris Bulman:

They need a new roof and it puts them like 10 years back.

Melissa Carter:

And you don’t think about it until it falls apart.

Chris Bulman:

Yeah. Yeah. So then you have, baby step four is invest 15% of your household income in retirement. And this is depending on where you are. If you’re starting early, that’s a good number. If you’re starting late, you may need to do more like 20% or 25, but 15% is a good starter number. And then baby step five is save for your children’s college fund if that’s something that you need to do. Now, I wouldn’t start saving for the kids’ college fund unless you’ve started saving for retirement. There’s been so many people that can’t retire because they’re worried about paying their kids’ college. Kids can figure out college.

Melissa Carter:

There’s options.

Chris Bulman:

Adults need to retire someday. Exactly, you don’t want to your last day of life being at work. And then you have, pay off your home early, if that’s something you desire to do. And then the final step is legacy planning. Build wealth and give. Be able to give more money. If you have no debt, if you have no monthly payments, if you have no debt anywhere, it allows you to give more money to the places you want. Whether it be family, friends, church, school, SPCA, whatever it might be lots of different places you can do, but you shouldn’t be doing that until you’ve hit the other steps. So it’s a great, simple little roadmap. Sometimes people call us and they’re already beyond step seven. They just need wealth management help and tax efficiency help, and that’s where we can help. Some people call and their baby step one, and we can help just make sure that you stay on track from there as well.

Melissa Carter:

Well, just give Chris a call, (916) 458-8199. Again, you can also text the word plan, P-L-A-N in to (916) 458-8199 or go to Bulmanwealth.com. Chris, it’s been a pleasure as always. Thank you so much.

Chris Bulman:

Thank you. It has been a great show. And again, go to SoundCloud, go to Bulmanwealth.com. You can listen to all past podcasts there, and we look forward to talking to again next week.

Melissa Carter:

Fantastic. And we’ll be back with Chris Bulman and The Financial Compass again next week. We’ll see you then.

Speaker 2:

You’ve been listening to the financial compass with Chris Bulman. For your complimentary Morningstar report or to explore the options and strategies Chris talked about today, call (916) 458-8199. That’s (916) 458-8199. Find us online at financialcompassradio.com. Join us next week for more navigation tips to a successful retirement on The Financial Compass.

Speaker 1:

Annuities are generally considered long-term investments. It is intended for a person who has sufficient cash or other liquid assets for living expenses and other unexpected emergencies, such as medical expenses. A fixed index annuity is not a registered security or stock market investment, and does not participate directly in any stock or equity investment or index. Annuities are not deposits of or guaranteed by any bank and are not insured by the FDIC or any other agency of the US. All guarantees are solely backed by the financial strength and claims paying ability of the issuing insurance company. Insurance products, including annuities, are offered through Christopher James Bulman, a licensed insurance agent in the state of California. Christopher James Bulman is a registered representative offering securities through WORLD EQUITY GROUP Securities, Inc, member FINRA SIPC, an investment advisor representative of Retirement Wealth Advisors.