True Wealth - Financial and Investing Podcast

It’s not about how much money you have: it’s about how well you understand it. Here are the five questions that separate people who retire confidently from those who just retire hopefully.

There are many layers of a financial plan: the real question is, do you need one? Ignorance is not bliss: learn about ways you can start planning for your future today.   Episode Highlights:   The critical benefits of starting financial planning early in life, particularly in your twenties or thirties, to ensure a stable financial future. Evaluation of the current financial landscape, including income, expenses and future goals, to create a comprehensive plan. How to establish and balance short term and long term financial objectives to maintain motivation and track progress. Examples of practical goals such as building an emergency fund, paying off debt, or saving for significant life events. Assessing your personal risk tolerance to choose appropriate investment options, whether conservative or aggressive. Aligning investment strategies with your risk appetite to optimize financial growth and security. Key considerations for retirement planning, including projecting retirement income needs and planning for healthcare costs and longevity. Being realistic and transparent about your financial situation to avoid underestimating expenses. Benefits of diversifying your investment portfolio across various assets such as stocks, bonds, and real estate to manage risk and enhance returns. Strategic allocation of assets based on time horizons and financial goals. SUBSCRIBE ON YOUTUBE! Looking for Personal Financial Advice? – Learn More Here   TRANSCRIPT 00:00:00 Significant time on getting this thing really crafted. And then they drop a bomb on me at the end of it. And they’re like, I got $200,000 of gold too. And I’m like, that would have been nice to know at the beginning.   00:00:00 That’s great information.   00:00:00 Yeah, because that completely changes the entire picture here. And you were super stressed out this whole time about your financial plan. And you’re willing to actually spend on some of that gold that you have, well that changes everything. And now that lifestyle that you wanted is very doable.   00:00:40 What’s going on, everybody? This is Matt Dickson. And with me in studio today for the True Wealth Radio Show is.   00:00:46 Justin Bruggeman.   00:00:48 Justin. Wow. This is what? Three part series now.   00:00:52 Three weeks in a row.   00:00:53 Yeah. So we are on a roll. We’ve been going over a lot of really good material and we’ve got more of that good material for you today. Justin, talk to me a little bit about what’s on the agenda for today’s show. What can listeners kind of expect?   00:01:08 Yeah, we’re going to talk about what, well, the pros of having a financial plan and what is included in a financial plan?   00:01:19 I think that’s a really important thing for us to talk about because a lot of the times when I’m fielding a phone call from someone who is just inquiring to the firm, you know, they have a lot of questions and they don’t necessarily know how to ask those because they don’t really know what it is they’re looking for, because they don’t really know what goes into a retirement plan. And so you get a lot of comments like, I have some assets in my retirement account and I’ve got some savings, but I’m six years away from where I think I might be able to retire, but I don’t know if I can retire. Can I retire? I need answers to these questions. So I think this is a really good show because people don’t know what they can expect.   00:02:04 Right.   00:02:05 So talk to me a little bit about some of the things that kind of go into a financial plan or kind of that comprehensive wealth management. What does that really look like, Justin?   00:02:15 Right, and so I guess to start off, what is a financial plan? So we’re even gonna go to the actual definition because it can be interpreted a lot of different ways, but the process of assessing the current financial situation and future goals and how to achieve them.   00:02:35 I think that’s a big one, the future goals part, because a lot of the time, you know, people are just looking at, what do I have and is that good enough? But they’re not looking at what, is it that I actually want to achieve, not what, is it that I feel like I just have to achieve.   00:02:50 And the best part about financial planning is, one, it’s subjective, and two, it is different for every person. There’s not a cookie cutter, you know, just save this amount and that’ll, you know, you’ll be fine, which yeah, there’s a dollar amount that probably is fine. But I mean, you have differences in clients. Some clients are spending $15,000 a month in retirement and others are spending three.   00:03:17 Right. So looking at where you at currently versus where do you want to be in the future and trying to run some projections based on those numbers.   00:03:26 And also adding things into it that can break a plan. Or, you know, a death is a big one that can really break a plan. But a good plan should have, you know, stated insurance coverages for situations like that. But to kind of start out with how, what’s all incorporated inside of a financial plan is the first part is what is your income and what are your expenses?   00:03:55 And are they expected to, you know, have a big change in the next couple years, because maybe you are pretty confident you’re coming up on a significant raise.   00:04:05 Right.   00:04:06 You know, and if you omit that from your plan, that could really change the dynamic of the conversation.   00:04:14 And it can change, like, maybe how much savings it is to get to where you want to even be. You could be in this job searching where you’re kind of bouncing around some jobs, kind of finding the… what you want to do for the rest of your life scenario.   00:04:29 Well, and I want to bring up something that just kind of hit my brain. One of the things that I’ve noticed is a lot of times people wait until the 11th hour and they’re like, all right, I’m ready for my financial plan. And I’m like, if you had only come in five years ago, we could have crafted things to look so much differently today because there’s not very many levers that we can pull. You’ve kind of backed yourself into a corner. And now we only have so many option sets.   00:04:58 Yeah, because you shift the time horizon a lot.   00:05:01 Right.   00:05:02 And so–   00:05:02 Because as an example, what if you wanted to retire early? Maybe you should have saved a little bit into a savings account, a joint account, some brokerage account where you have access to money that’s outside of a retirement account.   00:05:15 Exactly.   00:05:15 So I think getting into the financial planning piece a little bit maybe earlier than you naturally think that you should. It might really benefit you.   00:05:25 And it could even be as typically they’ll say, you know, you should review your financial plan every single year.   00:05:31 Right.   00:05:32 But… So say you’re in your early 20s or, you know, even early 30s at that point is maybe it doesn’t need to be looked at every year. Maybe it’s every three years, every five years.   00:05:44 Yeah, it doesn’t have to be every single year.   00:05:48 Or, you know, a quick update, you know, not a lot of changes. But even starting at that young is, I mean, maybe you get married, maybe you have children, and children shift the planning.   00:05:59 Yeah.   00:06:01 Maybe you’re saving to buy your first home, maybe you’re saving to buy your second home.   00:06:06 Well, a lot of the times, people don’t really know what they’re saving for, and it makes them a lot less likely to even save in the first place, because they, like, say it’s a married couple, right? Have you actually sat down face to face with your spouse and said, What is it that we want our lives to look like in five years? Because if you look at each other cross-eyed, like why would you even be saving in the first place? Because you don’t have a plan, right? So I think setting a financial goal is a really, really big piece.   00:06:37 Yes.   00:06:37 And you don’t have to start with anything exotic. For a lot of people, honestly, it’s as simple as, hey, we don’t have six months of our income saved up. We don’t have a nest egg.   00:06:50 Right.   00:06:50 So I can say, hey, maybe that’s a good spot to start or hey, you got behind on your credit cards. You’ve got credit card debt and you’re getting hammered at 30% interest. Pick that and make that the goal, but at least have a goal. And I think that’s where a lot of people fall short. They don’t have short-term goals. They don’t have long-term goals. And so where’s the money going and what’s it doing? There’s not really, like a use case or a purpose for those assets.   00:07:18 Because there’s a lot of baby steps involved in it.   00:07:22 Yeah.   00:07:23 I mean, it may not be as, you know, if you’re swimming in some debt and you don’t have an established emergency fund, you don’t need a financial plan. You need to accomplish those goals first, then graduate to the planning aspect because it’s also you run the risk of too much information where people will just, being like paralysis, I guess is, you just do nothing.   00:07:49 Yep.   00:07:50 And so establishing those goals are very important, but when it starts with the income, the expenses, any assets you have versus the liabilities you have to get your net worth.   00:08:00 Well, and I’ll challenge the person that already has the net worth, right? Because how many times have you run into the person and they have a lot of assets or they have a considerable estate, and then they walk in and they’re like, I’m just saving, I’m going hard at it and they’re doing wonderful, right? Like they’re knocking it out of the park. But then when you ask them, well, why did you save all this money?   00:08:22 Right.   00:08:23 They look at you cross-eyed and they’re like, well, I don’t know. And I don’t know what I’m gonna do with it. And I don’t know when I wanna retire. And they don’t, they’ve never thought about it. They just put their nose in the grindstone and they just hammer, hammer, hammer. And then they never stopped to smell the roses along the way or do any of the fun stuff or, you know, they don’t know what it’s for.   00:08:42 Yeah.   00:08:43 And then you can wind up 75, 80 years old one day and you’re like, you know, you’ve really slowed down and you’re like, well, gosh darn it. I wish I would have done something back when I was 65 or 60 years old, but time flies by. And if we don’t stop to analyze this stuff, it’ll go by in a hurry.   00:09:03 Well, what is the most common thing you hear when, you know, even, we have clients come in and we’re doing, you know, planning is I should have, came in earlier.   00:09:12 Oh yeah.   00:09:12 Should have started earlier.   00:09:14 Yeah.   00:09:14 Because it’s harder to play catch up.   00:09:17 Right. And if they had just like, contributed an extra $200 a month.   00:09:22 Yeah. I can make a drastic difference.   00:09:24 Right. Or, you know, maybe they had, way, oh, I mean, this sounds kind of weird. Maybe they almost over contributed to their retirement accounts and they have no, like, money on hand.   00:09:38 Yeah.   00:09:38 And so it’s all wrapped up into something that they can’t touch.   00:09:41 Yeah, they can go–   00:09:42 Without penalties or something. So there’s so many different little tiny areas or like little rabbit trails that you can go down and you end up in kind of a bad spot and you’re like, well, I just didn’t know. And that whole ignorance is bliss, doesn’t really apply to your finances. Ignorance is not bliss.   00:10:02 And what I’ve noticed that works the best and I think is the most important is scheduling the… those goals.   00:10:09 Yeah.   00:10:09 And stating what they are in, short term and long term.   00:10:12 Right.   00:10:12 Because if your only goal is, I want to have $2 million in retirement assets when I’m 65, that’s great. And that’ll get you there, but you’re missing everything else in between where, you know, maybe it is, I don’t have a home. So you didn’t save the way you’re supposed to do, supposed, should have, you know, when you’re renting for 30 years, when that money could have been used to–   00:10:38 Some of that money. Some of that money.   00:10:39 Asset that’s appreciating.   00:10:41 Yeah.   00:10:43 And then having the balance of short and long term is, well, have some within one year goal.   00:10:49 Yep.   00:10:49 Have two year, five year, 10 year goals and then have a retirement.   00:10:53 Well, and I hate to say it, but a lot of people look at this and they’re like, I just talked to this one guy this one time and he said to kind of do this. And so I do it. I’m like, do you know what you’re in? Right? Like, do you know what type of retirement account you even have? And is that beneficial for your unique tax situation? Right. Because maybe you don’t need the tax savings today. So maybe the Roth could be a better option for you. Or maybe you’re in a really, really high tax bracket today and you need some tax savings. And so–   00:11:28 And you don’t even necessarily have to be in a really high tax.   00:11:31 You don’t.   00:11:31 But it just means you may have cash sitting on the sidelines, and you’re eligible to be contributing to something that will save you taxes.   00:11:40 Maybe you have a small business and you’re kind of jamming your future self by not letting that business make some contributions on your behalf. There’s so many different ways that you can. like screw it up in a small way.   00:11:55 Yes. And you didn’t realize it.   00:11:56 No, you didn’t know that you were doing it, but it’s because you never took the time to talk to someone. So in the event you do want to talk to someone and you need someone, you know, we’re around, this is kind of what we do. Like littlejohnfs.com, you can look us up. You can even text the office line, I believe. So you know, if you want to shoot us a text message and say, hey, I need some help on retirement planning, you can do that too. The phone number to text is 541-375-0898. Like how I plugged that in.   00:12:31 I do. I’d appreciate that, Matt. And also, I mean, even if it’s, even if it can be not retirement plan.   00:12:39 Yeah.   00:12:39 It can be anything that’s money related.   00:12:45 And there’s so many different options based on how much risk tolerance you have. Right. Like if you’re a super aggressive investor versus a really conservative investment investor, there’s so many options out there. And most people don’t know what those options are, you talk to someone, right? It’s not as intimidating, I think, as you would assume that it is.   00:13:08 Right.   00:13:09 I can’t tell you how many times I’ve had someone call. They’re not a good fit for what we’re doing, but I’ve been able to have a 40-minute conversation with them on the phone. I’m not charging them for that, and I’m just giving them all the information that they need in order to go make the right move for them. And then sometimes people call thinking that they don’t need our services at all and they just have a question and then we get to talking and they’re like, whoa, like that’s kind of above what I’m comfortable doing. Do you mind just doing it for us? And I’m like, yeah, we probably can. So it just depends on your situation.   00:13:44 And the majority of people are more than capable of figuring all this out. But do they want to spend the time?   00:13:50 Well, do they have the time to do it?   00:13:51 Or have the time? Yeah. And sometimes that’s just the case, I don’t want.   00:13:55 I don’t have, I know how to spray. I know how to spray for bugs around my house.   00:14:00 Right.   00:14:01 But guess what? I don’t have the time to do it. And so I pay someone to make sure the ants aren’t in my house because the cost of me having to hear my wife complain about ants in the house is not worth it to me, I would rather pay the $30 a month to have someone do it. And so I farm that out. And a lot of people decide, hey, I don’t have the time to watch the stock market. I don’t have the time to, you know, be in the loop on this stuff. I’m just going to farm that out. And that’s okay.   00:14:33 Yeah. And so establishing the short term and the long term goals is extremely important because if you just have long term goals, you never, you don’t know if you accomplish them, really, till the end.   00:14:44 Okay. So, Justin, here’s what I want to do. I want to talk a little bit more about retirement planning and what goes into it.   00:14:50 Okay.   00:14:51 But I think we need to take an obscene profit break.   00:14:53 Perfect.   00:14:54 So, let’s go ahead and take that break. And then when we get back, we’re going to talk a little bit more about retirement plans and all that other fun stuff. You guys are listening to 93.9 FM and 1240 KQEN and the True Wealth Show will be right back.   00:15:12 Alright everybody, welcome back to the True Wealth Radio Show where myself, Matt Dickson and?   00:15:20 Justin Bruggeman.   00:15:21 Are bringing you everything that you need to know about retirement plans. And do you need one? Is it time for one? What actually goes into one? Well, all that and more. So hopefully you caught the first part of the podcast. If you did not, you can always go check that out. It’s going to be on our website, littlejohnfs.com. Justin, where did we leave off and where the heck are we going?   00:15:45 Yeah, well, we got through which number one, assessing your current financial situation, number two is setting the financial goals and number three that we’re kind of getting into right now is the retirement planning aspect of it.   00:16:00 Okay.   00:16:01 Which, and then this is one, is there’s always a rule of thumb, you know, you save enough money to try to replace between 70 and 90% of your pre-retirement income. It changes for everybody.   00:16:13 Well, and I think it also, correct me if I’m wrong, but I look at this and I’m like, it’s also kind of an estimate because, inflation, right?   00:16:22 Yeah.   00:16:24 They’re going to claim inflation was, blank percentage last year. And I’m going to just say, I don’t believe it because I feel like it was more than whatever you’re going to claim that it was. And so if you get a lot of years of back to back inflation, maybe you need more than that 70 percent or 80 percent or whatever they’re recommending.   00:16:44 People are probably feeling that about now.   00:16:46 Right. Like I feel bad for you if you just retired and then you’re in your first little wave of retirement and you’re having to pull extra because inflation’s hitting you pretty hard. Like we’re all feeling that.   00:16:57 Yeah, the hardest things that I’ve noticed to really project out was one, inflation. I mean, you can use historical averages. Two is, healthcare costs.   00:17:08 Or how long you plan to live.   00:17:10 And longevity is another one.   00:17:12 That’s a huge one.   00:17:12 It’s a huge one.   00:17:13 Right, like the difference of you living to age 75 versus 95, like that changes the picture dramatically. I just went through this a couple times, these last couple of weeks with people where we’re looking at the numbers and they wanna retire early. And then I’m like, okay, well, what if you lived to 95 instead of 100? It made a difference, right? Those last five years, especially as things continue to get more expensive. And that’s why you gotta take the retirement plan with a grain of salt, I feel like, because there are so many things that you have to assume in order to make a financial plan.   00:17:54 Yeah, I mean, you plan for the alternatives as you can plan for higher inflation. You know, the what if scenarios, what if inflation is higher?   00:18:04 Well.   00:18:04 What if tax rates change? Because trying to estimate taxes 30 years down the road.   00:18:09 Well, and this is why I like what you say, right? Like, plan like, worst case scenario.   00:18:14 Yep.   00:18:14 Don’t try and justify your whole retirement plan on a best case scenario, because what if you have five years of a down market?   00:18:24 Yep.   00:18:25 Or what if we actually have World War III and it takes six or seven years for us to get through that? And your retirement accounts aren’t what they were yesterday. There’s so many different things that play a factor in this. And I think that erring on the side of caution a little bit, it can be a good thing.   00:18:43 Yeah, and you can even kind of put guardrails around it and putting it as, alright this is if things go extremely well.   00:18:50 Right.   00:18:51 This is, you know, your cap of kind of, what you should take on a monthly basis and then you have, the other end is this is bad.   00:18:59 And this is why–   00:19:00 This is your low point.   00:19:01 Wouldn’t you say it’s really important to be looking like, especially in retirement, it’s really important to look at this thing on a yearly basis because if you have, for example, a bad year in the markets, maybe you’re drawing a little bit less out of your accounts. Or on the flip side of that, if you have a really, really good year, maybe you go ahead. Yeah, you actually take that trip to Europe that you really want to take.   00:19:29 Right.   00:19:29 You don’t take the trip necessarily on the year where things are down, but maybe you take the trip on a year that’s good. And so being flexible, I think in retirement is a really big piece.   00:19:40 And I even like for people, try to do the plan to retire a little bit earlier than you even expect. And because that is if things go great, yeah, maybe it’ll work. But then if you’re just planning for that one point and you don’t get there, then you can just be mortified and just defeated. And so that’s never a good thing either. So it’s like I want to retire at 50, 55 would be great, but if I have to 60, 65. Yeah.   00:20:13 Why not? And what about, you know, there’s also the potential sometimes for, even though you have officially retired, maybe you do some part-time job that you love and it’s your passion and it keeps you active out in the community. It makes you a little bit of income and then you’re not stressing that retirement account as much or maybe you’re not depending on that social security as much as you were before. That can be an alternative too. And so depending on your unique circumstances and what you’re willing to do or what you want your life to look like, it can make a big difference because some people, you know, what you want your life to look like, they’re like, hey, I just want a garden. I just want to stay home. I don’t want to travel. I just want to hang out at the garden. I want to have my grandkids over. And it’s simple. It’s cheap. And that’s what they want. But some people are not content with that. They want to travel. And so that lifestyle cost, that kind of goes back, I think, to what we talked about, you know, at the first part of the show was setting some goals and really being honest with yourself. Because if you go in and you make this financial plan, but you’re not being honest with yourself, if you come in and you’re like, I’m going to spend $3,000 a month, that’s easy. But you’re not being truthful. Your actual spending is like $5,000 a month. Well, your financial plan might not pencil how you hoped it would. So being realistic with yourself is a very big piece of that.   00:21:40 Being realistic and transparent because if you plan for something and you’re, you know, like what you just said is, I want three, but I need five. And you plan for three.   00:21:51 Yeah.   00:21:52 You’re gonna be in a world of hurt.   00:21:53 Well, you just mentioned it again, transparency. I did a financial plan for someone and we got to the end of this thing and we had spent some, you know, significant time on getting this thing really crafted and then they dropped a bomb on me at the end of it and they’re like, I got, you know, two hundred thousand dollars of gold too. And I’m like, That would have been nice to know.   00:22:15 That’s great information.   00:22:16 Yeah, because that completely changes the entire picture here and you were super stressed out this whole time about, you know, your financial plan and you’re willing to actually spend on some of that gold that you have, well, that changes everything. And now that lifestyle that you wanted is very doable.   00:22:35 And most commonly what I’ve run into and I’ve seen is, which this is being, very generic saying, somebody retires at 65.   00:22:47 Okay.   00:22:47 If you retire at 65, typically you have about 12 years, of where you actually are spending more money. You know, you’re traveling, you’re spending time with the grandkids. Typically, when people get in their late 70s, early 80s, they don’t tend to do as much.   00:23:06 Right.   00:23:07 So maybe the need in your 80s isn’t the same as the need in your 60s.   00:23:12 True.   00:23:12 And so you can account for that. And that can change. And some of it is some people say, well, I can’t retire. Well, you can, whether you should or not is a different story.   00:23:25 Absolutely.   00:23:25 And it’s a matter of adjusting the numbers to be realistic because it might… things change. And if you’re, especially on a fixed income and retirement, if you have to put a new roof on your home, that can change it quick.   00:23:39 Right, so it can benefit you to plan for those.   00:23:43 A new vehicle.   00:23:44 Yeah.   00:23:44 It can change, especially even without, especially if you’re a new car buyer. Another $40,000, $50,000 cars now. That can change the expenses in retirement tremendously.   00:23:56 Yeah, and I think one of the other big pieces too, especially as you’re getting older, is looking at what, is it that I actually want my estate to do over a long period of time? Do I have heirs? What do I want them to get, if anything? And then who gets what? And that can really actually shift the dynamic of how you handle those assets. And sometimes, especially, like if you live in Oregon and it’s not a real super tax friendly state for, you know, when you pass away.   00:24:30 Estate taxes, yeah.   00:24:30 Yeah, estate taxes and stuff, you know, maybe that kind of changes the narrative where if you have a large estate, maybe you’re looking at something like gifting some assets away or being strategic with how you set things up so that the tax implication is less and the errors get more.   00:24:51 And it could be as much as moving your primary residence out of state.   00:24:56 We’ve seen that. We’ve seen it save people a considerable amount of money.   00:24:59 Yeah, and then another important one, especially with retirement planning, is choosing the right accounts.   00:25:06 Oh, it’s huge.   00:25:08 When does pre-tax investment, you know, make sense versus post-tax investments. Like the difference between traditional IRA or Roth IRA or some 401(k)s have Roth options. Whether that makes sense now or not, or maybe it saves money to convert later.   00:25:28 Sure, it makes a difference.   00:25:30 So we can really drastically change the type of accounts. And again, like there’s no magic number. It’s different for everybody, but figure out what that number is you need in retirement on a monthly basis, and then you can plan around that. And you gotta throw in some curve balls in there too.   00:25:48 But Justin, I have some more curve balls actually that I wanna talk about now that you mention it. But before we get to those, do you mind if I take it, I’m seeing profit break.   00:26:00 No.   00:26:00 Okay. All right, everybody. Welcome back to the True Wealth Radio Show where Justin and I are covering retirement plans and we’re super stoked to give you all the stuff that you need to know. Well, maybe not all of it, but how about a lot of it?   00:26:16 Some of it.   00:26:16 Some of it. Okay. Because there’s a lot that goes into a retirement plan and everyone does it a little bit differently, right? Like, no two plans are probably identical to each other.   00:26:28 No.   00:26:29 And we kind of talked about maybe some of the key points that goes into building one. But Justin, when we were heading into the break there, we were starting to get into talking a little bit about kind of the strategy portion of this thing, you know, looking at your risk and how often do we need to kind of go over things? Do you want to kind of continue talking about that a little bit for us?   00:26:56 Yeah, so the investments, well, it also depends on what the goals are. So, I mean, time horizon is a big thing with regards to investment strategy.   00:27:09 Yeah.   00:27:10 So depending on what those goals are and what your time horizon is, it may shift how much risk you’re willing to take, because I mean, if you have a 30 year time horizon where you don’t even have access, like in a retirement plan, you may be more risky with those assets–   00:27:30 Yeah.   00:27:31 Than saving up to purchase a home.   00:27:33 Okay.   00:27:35 And so it can drastically shift, but your people have, typically a risk tolerance, how much risk they are willing to take. And it does not necessarily mean that that is for every single account. It’s for the blend of everything to kind of stay within a risk tolerance.   00:27:54 Okay.   00:27:55 Depending.   00:27:55 Yeah.   00:27:57 And then, you know, asset allocation, you know, diversifying assets, you know, having some stocks and bonds and maybe some real estate involved can be preferred, I guess, with that would be the way.   00:28:10 Yeah, if you have the ability to have assets strung out over different areas. It just… it goes back to that comment I think I made earlier about all the different levers that you can pull. It’s like, well, if you have a bunch of money in your retirement account, but you’re 45 years old.   00:28:25 Right.   00:28:26 And you need a hundred grand because whatever. If you had maybe a rental property that you had equity in and you’re like, I have to get to this money and I didn’t expect to have to spend a hundred thousand dollars. Okay, I’m going to let this piece of real estate go and now I have access to the money that I needed. And then you didn’t have to deal with the penalties around that retirement account that you had. So like you said, it’s really beneficial to, if you can have money in different places so that you can, you know, be a little bit more liquid and on your feet.   00:29:03 Yeah, and then there’s people that are, you know, they like to have a lot of the money and, you know, stocks, bonds, those assets, and then there’s other people that really like their money in real estate because, and they may be over concentrated in real estate, but that’s what they know.   00:29:20 Sure.   00:29:21 And there’s nothing wrong with that at all. It’s just understanding that the risks that come along with either one.   00:29:30 Yeah.   00:29:32 And access, a lot of time when people want to retire early can be problematic because of the 59 and a half rule for IRAs where you can’t access the money without penalty. Some 401(k)s have different rules in them that if you’re 55 and retired, you have access. But for the majority of it, as a blanket statement, I guess you could say, 59 and a half is kind of the ballpark to be able to access retirement funds. And so retiring earlier than that takes strategy.   00:30:02 Right. And here’s the thing I think a lot of people don’t think about is what if you’re not going to be taking your Social Security until, I mean, maybe even take it early. You take it at 62.   00:30:14 Yeah.   00:30:15 What are you going to do for the… roughly those two years in between where you don’t have social security paying you?   00:30:22 And you’re no longer contributing to social security too.   00:30:25 Exactly.   00:30:25 Which can change the numbers a little bit too.   00:30:28 And sometimes people really need to wait till full retirement age in order to start drawing on their social security because they are really dependent on the income. Right. Like some people, it doesn’t matter. They’re like, hey, I’ve got all these pensions over here. That’s enough income to meet my needs, to pay the bills. And then the other stuff is the fluff. But not all people are like that. Sometimes you are income dependent and that’s why it’s really important to look at the whole thing and say, wait a minute, let’s be tactical about how we do this.   00:30:59 Right, and longevity is another one with social security, is a big difference.   00:31:04 Yeah, like your health is shot. It’s like, well, maybe it’s okay to take it early.   00:31:09 Yeah.   00:31:09 But–   00:31:10 As it may make sense.   00:31:11 Maybe everyone in your family has lived to 110 and you’re like, well, maybe let’s delay this till 70. I don’t know. But I think you’re right. The strategy there is really important. One thing that I look at and say is also really important is insurance, right? Because now does everyone need it? And that’s not what I’m saying, but I’m saying in certain circumstances, insurance plays a huge role. Especially health insurance. This one we don’t talk about a whole lot. But man, if you end up in the hospital and you’ve got a million dollar bill and you didn’t have health insurance, I mean, it’s possible that you end up medically bankrupt, right?   00:31:56 Oh no, I have a million dollar child with medical events and I am thankful for insurance.   00:32:03 And yours is an example of one of those things where it’s like, you were being careful. It was a fluke accident, right? Like you weren’t, you were on a four-wheeler, but you were just putting, around in the yard and something out of the blue happens. And then it’s a million dollar medical bill, but you had the insurance. And so look, you’re not medically bankrupt. Congratulations.   00:32:24 And now I get to never complain about the cost of insurance, but–   00:32:27 Right.   00:32:27 That’s a whole nother scenario.   00:32:28 Yeah. But health insurance is just one piece of the mix. You also got to look at life insurance, right? I look at this personally, and I look at my own situation, and I’m like, okay, I know what our bills are. I know I have a child, and I just know my family dynamic. And I’m like, if something happens to me, and I’m out of the equation, that’s a really big income hit for my wife, and that completely would change the way that she’s able to raise our child. And I look at that and I’m like, I need to have adequate life insurance because in the event that something happens to me, I wanna make sure that not only is my wife taken care of, but my kid is taken care of, and not just taken care of, but I want her to be able to mourn me being gone. I don’t want her to have to go to work, right? I want her to be able to just stay home, be a mom, raise the child and not have to worry about money. So I’m willing to pay that extra amount to make sure that she’s taken care of, that the kid is taken care of. And it doesn’t have to be forever, right? Like he needs to just be able to be old enough to be out of the house. So realistically, he needs to be, you know, they both need to be kind of covered and taken care of until he’s 18 or 20 years old and he’s out kind of doing his thing. You know, maybe she wants to go back to work or do something, or maybe she wants to go back to work even sooner. I just want her to have the flexibility to do whatever she feels like is best and not have to let money make the decision for her.   00:34:13 I mean, me and you, we both have life insurance.   00:34:16 Yeah.   00:34:17 It’s not enough life insurance for my wife to be financially set for the rest of her life. That’s not the point of it. The point of it is, you know, pay off, you know, debts and things we have and then give her the ability to live and take care of the children.   00:34:31 You don’t want her to have to worry about a mortgage or a car payment or any of that stuff. Yeah.   00:34:37 And there’s a lot of… life insurance is great in a lot of different ways and it can do a lot of cool things. Is even having, you know, you can use life insurance for business reasons, is so, say, you know, you’re a partner in a company and one of the owner… owners passes away.   00:34:59 Right.   00:35:00 You can have a policy on them to be able to, say, purchase the rest of the company to own it outright.   00:35:05 Right.   00:35:06 And then differences in, like pensions with survivorship benefits, the difference in the pension may be cheaper to just go buy a 20 year term policy.   00:35:18 Yeah.   00:35:18 To cover if something happens to you, because if you’re [live], it’s you, it’s still going to pay. So, and then there’s just kind of math and figuring out if that cost makes sense. So it… life insurance is awesome.   00:35:31 Yeah.   00:35:31 And it can be used in a lot of different ways strategically.   00:35:35 Yeah.   00:35:35 Because there is, no blankets, like everybody needs a 20 year term policy when they hit 20 years old.   00:35:40 No.   00:35:42 That’s not necessarily true.   00:35:44 Well, and what, I mean, here’s the other thing to think about, too. Maybe you don’t have a wife and a kid. Maybe it’s just you. And you’re like, you know what? No one’s really depending on this income. I don’t need the life insurance. Or maybe you don’t have anyone that’s dependent on you. But in the event that you die, you want to leave something behind to someone that you love.   00:36:07 Or maybe it’s, you have enough assets where there’s no need.   00:36:11 That’s true too. Yeah, you’re sitting on $10 million. Maybe you don’t need a half a million dollar life insurance policy.   00:36:19 So there’s a lot of really great things life insurance can do. It’s not necessarily for everybody, but it’s unique in the things that it can do.   00:36:28 Yeah. You know, okay, so we’ve kind of talked about, you know, going back over this, we’ve talked about setting some goals and we’ve talked about knowing your… what your unique financial situation is. We’ve talked about kind of planning, getting in and doing that maybe a little bit earlier than you thought. We’ve talked a little bit about investment strategy and insurance. I kind of want to transition us over into, you know, you’re at that point where, you know, maybe you’re approaching retirement really quickly and you’re ready to start, or even, you’re even ready to start pulling some of those assets out of a retirement plan. I wanna talk about taxes, right? And everyone’s probably listening to this and saying, I don’t wanna talk about taxes. Yeah. Well, let’s talk about maybe how you can pay less in taxes. But we’ve gotta take it, I’m seeing profit breaks. So when we get back, Justin, I’m gonna ask you to talk to our listeners about how, can they be savvy and pay less in taxes? Are you ready for that?   00:37:33 I’m ready.   00:37:33 Okay, this is the True Wealth Radio Show. You’re listening to 93.9 FM or 1240 AM on KQEN, we’ll be right back.   00:37:41 Justin, we’re back on the air and we’re wrapping up an awesome segment on everything you need to know about a financial plan or a retirement plan. And when we left off, I gave you a little bit of a cliffhanger saying, hey, talk to me about tax planning. How do–   00:38:01 Taxes.   00:38:02 Yeah, taxes, our favorite subject. Talk to me about maybe, like how you can navigate that in a smart way.   00:38:12 Well, it’ll really depend on what assets are available and what type of accounts that they are in.   00:38:19 Yeah. If you only have one account in social security, we probably can’t get super exotic.   00:38:25 Yeah, probably. Maybe, depending. But even so we’re just, this is blanket, like assuming, you know, somebody has a Roth IRA, a 401(k) and some after-tax assets.   00:38:39 Right.   00:38:40 So it can be a strategy of, in retirement, especially so, say, you retire early, where there’s no income, you’re not taking social security. There’s no pension. You just have this gap years.   00:38:51 Okay.   00:38:53 That can be a potential is all right. It is. I have no income.   00:38:57 Yeah.   00:38:57 That’s when you can start pulling a lot, some, out of IRAs.   00:39:01 Right.   00:39:02 Traditional IRAs or 401(k). Sorry, not necessarily Roth IRA because that’s going to be tight.   00:39:07 I thought you were going to start talking about Roth conversions.   00:39:09 No.   00:39:09 And I’m like–   00:39:10 Maybe.   00:39:11 Yeah.   00:39:12 But depending on if it’s necessary or not, because maybe your income needs aren’t that high and you just want to drive down your 401(k) assets and then you can use the tax-free stuff later. It’s very unique for every single person. Roth conversions are great too in that same scenario. Whereas I have no income. Let’s take a distribution, we’ll convert it to Roth, pay the taxes on it, as long as you wait five years, it’s all tax free.   00:39:45 Right, and the growth of that money. Yeah, and that’s the big one, right? Like say you managed to get $100,000 out of, you know, your traditional account, whereas it grows, so does the amount that you gotta pay taxes on. But if you get it over into that Roth and then you can let that thing grow over the next 10 years or something and then you get to access all of it without paying taxes well, if you wanted to buy the beach house and you know, all you had was your traditional account, if you got to pull $300,000 out in order to make that purchase happen, well, that’s gonna suck because you’re gonna lose a lot of it to taxes. But if it was over there plunked in the Roth and growing over there, maybe you go pull it out of that account where you’re not gonna drive up your income for the year.   00:40:34 Right.   00:40:34 So there’s a lot of different things that you can do. And I think that’s one of the reasons why you actually pay your financial advisor.   00:40:42 Yeah.   00:40:43 Right? Like everyone gets hung up on this fee. Well, I’m paying this guy 1.2% or I’m paying this guy 1% or whatever that fee is, right? And then it’s like, well, did the guy that was charging you 1% do any planning for you at all, or did he just say, I’m gonna manage your assets? Well, was it worth the 0.2% that you’re paying extra to the other guy in order to set you up to where you’re saving thousands of dollars on potential taxes?   00:41:11 Right.   00:41:11 Right, and so I think that’s also one of the things I look at when I try and evaluate, is this person worth it? Because sometimes they’re not, but sometimes they are, and it really depends on what, is it that they’re offering you and what is it that you’re looking for.   00:41:25 And especially, with not understanding how the taxes can implicate things.   00:41:33 Yeah, you don’t know.   00:41:34 [It won’t] change. It may be a thirty thousand dollar savings in taxes.   00:41:39 Or maybe your estate was in bad order. And because you didn’t have a trust and everything was set up or not set up at all, maybe you were going to pay the state an extra hundred thousand dollars in state taxes just because you were never pushed or prompt to take care of your estate. So there’s a million different ways that you can, you know, pay more than you necessarily should in either taxes or whatever, penalties. There’s a bunch of ways that you can kind of go down the wrong path.   00:42:12 Estate planning is another big one. And even the most important part of an estate plan to me.   00:42:19 To you personally, yeah.   00:42:21 Is updating beneficiaries.   00:42:24 Right.   00:42:26 Because that can change and it can cause a mess.   00:42:30 It can.   00:42:31 And so you don’t want… you can update your beneficiaries at any time. So if you’re not sure, please go and check.   00:42:39 Yeah.   00:42:40 Because, you know, things happen, families change, the dynamics of family change, and you want things to go where you want them to go.   00:42:49 Yeah. That’s just a big piece of the thing is making sure that, you know, your estate is honored the way that you want it to be honored. And there are ways that you can set things up to where you just… you feel good about how you’ve done it and what the plan is. And it takes a lot of stress off of people when they know that things are in order. So there’s that. For me, you just mentioned that a big thing for you is making sure beneficiaries are in line. I look at this and I also say, one of the big things for me is going back ever so often and looking at what the plan is, right? And then saying, are we in alignment with what the plan really is, right? Because sometimes people… they get older and their plans change or something happens in their life. And you need to be able to adjust your goals and your strategy and review things and say, my risk is lower today than it was five years ago. Or the market has really slid down and I’ve got cash on the side, I want to be more aggressive because I want to try and buy this thing cheap. And so I think meeting with your advisor and talking and establishing a plan and reviewing that at least every year is a really good way to make sure that everyone’s on the same page and that you’re in the right spot.   00:44:22 And then another one that’s kind of important, which is going back to risk tolerance, is just because you’re retired, doesn’t necessarily mean your risk tolerance should drop tremendously.   00:44:35 Right. Because what if you have so much that you’re never going to run out of money and you want to be very… while I’m dropping the word, you want to be very liberal with your giving to others, right? You want to bless other people. So, you can afford to take a little more risk.   00:44:57 Even more of that is too, is, say you live into your 90s, you still have a 30-year time horizon.   00:45:04 That’s a long time.   00:45:05 Even in–   00:45:06 That’s a lot of market cycles.   00:45:07 And even in the economic conditions we’re in right now, when you have inflation going crazy, and you’re not able to capture some of that upside with what’s going on. You can find yourself going backwards.   00:45:23 Right.   00:45:24 Even though you’re spending the same amount of money, everything’s gotten so much more expensive. You may need to take more. Your risk tolerance may be higher to capture the upside parts of it to be able to ride you to 90 and 100.   00:45:40 Mm hmm. That’s true. Okay, well, Justin, I hate to break it to you, but we’re out of time. So.

Let’s discuss how retirement plans can provide tax benefits and serve as a retention tool for employees. We’ll also explore the role of financial advisors in helping entrepreneurs optimize benefit packages and the importance of understanding the scope of their services. Discover how Littlejohn Financial’s unique approach sets them apart in the industry, with a focus on providing compassionate guidance and personalized solutions tailored specifically for entrepreneurs. Episode Highlights: Understanding the importance of planning for family businesses Leveraging retirement plans for tax benefits and employee retention Navigating the differences between fiduciary and suitability obligations Evaluating investment performance in context and the impact of managed products SUBSCRIBE ON YOUTUBE! Looking for Personal Financial Advice? – Learn More Here   TRANSCRIPT   00:00:00 They do some common things in their business, but then a lot of things are not common, right? So, everybody’s kind of running their own business within a business. And so you don’t get the consistency of result by going from player to player. Some practitioners are really good and some are less so.   00:00:23 All right, it is that time of the week. It is your favorite Tuesday of How to All Week, and it is time for the True Wealth Radio Show. I’m your host, Dave Littlejohn, in studio with me today.   00:00:34 Matt Dickson.   00:00:35 Okay, Matt.   00:00:35 Yes.   00:00:37 Thank you for doing the prep work for the show today by not letting me see the prep work for the show today.   00:00:43 I know, I only printed one copy, so it’s like. Maybe it’s the interview Dave show.   00:00:48 It’s the, let’s see how well Dave does on his toes day. Should be fun.   00:00:54 I’ll walk you through it. How about that?   00:00:57 I love it. What is the theme that’s developing today?   00:01:04 I think a lot of people kind of have questions around, you know, what maybe does a financial advisor even do, right? We know they deal with money in some fashion or another. But more than just that, it’s talking, I think today, about business owners or people that have a company or an entrepreneur of some sort. Look at this and they’re like, how do I invest outside of my business? Most of the time, you know, people that have a business and are good at running a business, they know that landscape really well. But they might not know maybe some ways that they can save on taxes or you know, invest in ways that allow the business to continue to grow, but also to put some potential money in their own pocket and employees pockets. So I want to talk a little bit today to business owners and people who are even thinking about starting a business in the future.   00:01:57 So, business owners and entrepreneurs. And what I heard sneaking between the lines of everything you just said was some people want to invest a lot of people, the business is their investment. But what if you could reposition some money out of the IRS’s account and back into your own?   00:02:20 Yeah. Especially, yeah. I mean, talking about what are some of the benefits of maybe opening a retirement account. We could kind of start there in really generic language and say, is a retirement plan a good idea? And—   00:02:32 Yes. Okay, next question.   00:02:34 So could you talk to me maybe about some of the choices that are out there for someone who does have their own business and how those work.   00:02:43 Yes, I feel like just for those listening to kind of help out though a little bit, first consider, you know, maybe you’re not a business owner. This probably is still interesting to you in that, if you understand how the business made a decision, it may help you as an employee to kind of figure out like why are they doing this? What’s in it for me?   00:03:06 I think we should talk about the flip side of this. If you’re the employee and you’re being offered this menu to choose from like, hey, I’m allowed to open this type of retirement account. That doesn’t necessarily mean you can’t open another type of retirement account on your own.   00:03:21 So again, backdrop for everybody here, because I don’t assume that everybody knows what we’re talking about yet, right? The challenge of living in the financial world is that we do this all the time. And I know you guys listening, not everybody does this all the time. Right? So if you own a business, one of the things that now the state of Oregon pushes this to, right? They’re saying we want to help people save. Right? And so they’re encouraging businesses to open up or in certain cases, requiring businesses to create retirement plans. Okay. Which is kind of a weird thing. It doesn’t mean that the employer has to contribute to them.   00:03:57 But it means that the employer is expected to create an environment where they exist. That’s Oregon law, but I don’t know what, if you’re listening in a different state, it may be different where you’re at. But the point is, for entrepreneurs, first of all, a lot of the time we’re trying to figure out ways to save on taxes. A lot of people don’t understand that one of the things a business can do is create a benefit package for its employees, and you’re able to expense that from the business.   00:04:26 So it can be a retention tool for good employees. So creating benefits is a business expense, but it’s also sort of an investment in your employees as an entrepreneur, right? And now if you’re the employee, you’re like, huh, I guess maybe the boss is trying to keep me around by putting some things in place that are good for employees. Right? And the number one thing that we most often hear about is what?   00:04:56 Like an IRA of some sort?   00:04:57 I think it’s probably health insurance. I think that’s what most people think of when they think of business benefits. They think of health insurance and maybe retirement plans. But small businesses in particular oftentimes don’t offer health insurance because it is really expensive and doesn’t scale particularly well. So, if you have a business that’s got a couple hundred employees, there’s a lot of revenue running through that business because it’s employing a lot of people.   00:05:23 But the small mom and pop shop that’s got maybe 2 to 10 employees, that can be very expensive for a small business. So it’s not uncommon for those not to be offered. It’s much more common to see retirement plans offered in small businesses and certainly in bigger businesses. So with that as a backdrop, let me ask you the question, Matt. Why might a business owner want, besides the employee retention concept, why might they want a retirement plan?   00:05:52 I mean, they might want to be able. I mean, say, you know, the owner of the business is getting hammered on taxes, right? They’re just paying a ton. They have a lot of income. They might want to defer some of those taxes in order to not have to pay so much to the government in a given year.   00:06:14 It’s true. We talk a little bit about taxes on this program, but not a ton.   00:06:18 No.   00:06:19 Right? And that comes down to the fact that we’re not legally tax advisers, but we can still talk about what taxes do and how they operate, right? Taxes are a progressive thing. The more you earn, the higher your income tax goes. Okay? So, essentially, the retirement plan, if you will, is a way to shift money and expense it out of the business and put it into some kind of retirement vehicle that defers taxes.   00:06:50 If it’s not a Roth, right? If we’re talking about like regular retirement accounts, traditional IRAs, or 401Ks, they’re really the one that we’re kind of thinking of, but there’s other types of retirement plans, but they walk and talk similar to 401Ks. The idea is that the business can then expense out and rather than taking the income and paying taxes on it, you could put that income into a retirement plan and you don’t pay the taxes until later. Why is that a big deal?   00:07:21 Well, it’s a big deal because you’re saving for your future self while also getting a little bit of a tax break today.   00:07:28 You’re saving on the taxes now that money that’s not, that didn’t go away to taxes can now grow, right? So it’s part of the investment too. You’re not having to invest with what’s left after the taxes. You get the whole thing before the taxes and then you get to let that grow over time and as it grows, you don’t pay taxes on the growth, right? So you’re not experiencing capital gains, you’re not paying dividend taxes or any of those things as you’re accumulating. When do you pay the tax?   00:07:59 In retirement, when you go to pull the money out.   00:08:03 Right, and we assume retirement.   00:08:05 I mean, you could pull it early.   00:08:09 And what happens if you pull it too soon?   00:08:11 Well, depending on what type of account, most of the time there’s a 10% tax penalty.   00:08:16 Or more.   00:08:17 Or more. There’s ways that it can go higher than that. But then you also pay that as income. So if you had $70,000 of income for the year, but then you pulled $30,000 out of that retirement account, ooh, now you have $100,000 of income for the year and you paid the 10% penalty or higher on the 30.   00:08:36 Right, on the withdrawal. So there are some gotchas to it, but the benefit would be, especially if you’re working today and you have a bunch of income, Right? That you have more money, or a higher tax rate now, and then later on in the future, you expect a lower tax rate.   00:08:57 Me too.   00:08:59 So the lower tax rate in the future is what we’re literally trying to shift things toward.   00:09:06 I love you too, Amber.   00:09:07 Hi, Amber. We have a visitor in studio. Oh yes, we’re live.   00:09:15 That was awesome.   00:09:18 So now you know, right? So at any rate, you know, back to the train of thought, right? The whole purpose is like, hey, if I’m in a high tax bracket a day, but in my retirement, I’m not going to be earning as much and things are paid for. And I don’t have to take all of my money out all at once. I can shift money into a lower tax bracket in the future. So I’m getting several benefits at once, right? Lowering my immediate tax rate, increasing the amount that I’m saving and growing into the future, and I’m pushing into the future in a lower tax rate.   00:09:47 Well, and here’s something that that business owner might not be thinking about. Here’s a couple of things. One, it might not cost you as much as you think to have employees be part of that plan, right? So say you set it up to where they’re getting 3% of their pay. It might not cost you as much as you think.   00:10:06 Number one, you could potentially have it set up to where they’re not eligible, for that retirement plan for a certain period of time. So, before they even start getting contributions, well, you know, they’ve got to wait a little bit. So, that might incentivize that person to also stay there longer and be with the company. Less turnover potentially.   00:10:28 Sometimes golden handcuffs are a useful thing.   00:10:32 Wow, yeah. But, and you know, you don’t have to have a business full of employees, right? If you have your own business and it’s a business of one, there’s still options out there for you, even if you’re the only person in the business.   00:10:48 So that’s an interesting one, because a lot of people don’t realize that as the business owner, you get to wear two hats. You’re the employe-er and the employee, right? I think most folks that work for somebody else, they’re used to wearing the employee hat. And so, they’re sort of presented with the terms as to what they’re going to get, right? You know, here’s the types of benefits that we have or don’t have. Here’s the pay structure that you have. Here’s sort of what the assigned work is and this is how we get it done. And there’s a structure to that employment. The employer though, they have to figure out what is the right structure. Right. What can the business bear? What does it need? How does it, you know, how is it going to utilize this tool? Oftentimes it’s driven by the needs of the business owner, but not exclusively. And especially the larger the business, the more that it’s driven by the needs of the employees.   00:11:41 And there’s different types of retirement plans out there too. So one might not be the perfect fit, but then you explore another option and you’re like, hey, this one sounds like it really might work for me. There’s so many different options anymore.   00:11:54 Exactly. And there’s so many more nuances to the benefits too. For the sake of not boring our listeners to death. Here’s here’s kind of the key takeaway. Businesses can expense business benefits and those benefits because they’re being expensed becomes more tax-efficient and you then have opportunities to work with this is what a lot of financial planners are working with. A lot of financial consultants. Even insurance folks what they’re trying to do is try to reposition money within the business to be more tax efficient.   00:12:32 Can you kind of talk about what that tax efficiency looks like? Like how, like, so yeah, they’re giving some money to employees to their retirement account. How does that really affect their taxes? Do we want to get into the weeds on that?   00:12:45 So let’s discuss after this important profit break. Stick around, we’ll be right back. I’m Dave Littlejohn.   00:12:53 And Matt Dickson.   00:12:54 And you got True Wealth on News Radio, 90.3 FM at 1240 KQEN.   00:12:59 Hey, welcome back to the True Wealth Radio Show. I’m your host, Dave Littlejohn in studio with-   00:13:03 Matt Dickson.   00:13:04 And if you were just joining us, you have missed out on the first incredibly important segment for business owners and entrepreneurs. Which is, you know, sort of step one of understanding how businesses can expense certain benefits to the benefit of the employer and employee. So grab our podcast.   00:13:23 Do it.   00:13:24 So go to littlejohnfs.com and you can catch the podcast. Subscribe to the YouTube channel and you get it in little bits and pieces because that’s how we do it, right? And it’s also a great chance, if you have questions or things that you would like us to answer live, then it’s a great source of content for us is what is it that you would like to hear about? And so send us an email, info@littlejohnfs.com and we can uncover some more fun.   00:13:50 Matt, I understand today, a lot of what we’re trying to do, it’s helped folks kind of understand, like, why do I necessarily work with a financial advisor, and what are some of the things? And so we start with this entrepreneur concept of, advisors help custom design. That’s one of the things we do as planners. We work with entrepreneurs to help them design benefit packages in some cases and optimize them for their business.   00:14:14 That’s a big piece. Some other stuff that I kind of wanted us to chat about too. And you just mentioned it. What is it that a financial advisor can do or bring to the table? And what are some of those circumstances where it’s like, maybe at this juncture, I should seek out some help? Because when you hear financial advisor, that doesn’t mean a whole lot, right? Inherently.   00:14:36 Maybe before we jump down that path, I’m gonna Shanghai it for a second and ask you a couple of questions. There’s a lot of folks out there that refer to themselves as financial consultant, financial advisor. What do you think goes into this? Like, there’s this spectrum. What, who are the people that are calling themselves financial advisors? What do you need to know?   00:14:58 I think that’s one of the problems in the industry right now, right? Like a lot of people might kind of claim that they’re a financial advisor, but you don’t really know what service set that they’re offering. Maybe someone just manages assets. So they sit there and they say, oh, you want to invest? All right, we can do that. Hand some money over and I’m gonna just do stuff with it.   00:15:18 And you’re like, okay. Well, maybe that person wants more, right? Like maybe they have an estate, so they have a house and retirement accounts and a pension and social security. And they’ve got a lot of different pieces going on, and they’re like, I need to know how all of these work with each other, and how do I manage this whole thing, not just manage this money?   00:15:41 So let me sum this up for you in a word. Scope. Okay, no, not the mouthwash. I mean, scope like, what is the spectrum of services that an advisor is offering? Because I think you just correctly identified in there sort of a question that people should ask is, what does my financial advisor do? And what am I looking for them to do?   00:16:06 Exactly. It’s a really loaded question, right? Because I heard an advertisement on the radio the other day, and, you know, it was a bank talking about how they’re a fiduciary. And if you want them to actually take authority over your assets when you pass, they can step in and actually become the trustee for your trust. Which that’s a whole different scope of management. So there’s so many different avenues that a financial advisor or a fiduciary can take, which is just a fancy way of saying, an advisor who is legally obligated to work in the best interest of the client. Which I think that’s important, right? Because not everyone carries that standard. They can do things that are in the best interest of them.   00:16:59 I’ll be careful with that one, right? And just because I do want to defend the profession at large here, right? Fiduciary is a legal standard, okay? And so when you’re working with fiduciaries, there’s a legal obligation to put the client’s best interest first. Now, when you talk about financial advisors that maybe don’t have a legal obligation to be a fiduciary, many still act as if they are. And so, they are still attempting to operate in the best interest of their customer. The question is whether or not they have the legal obligation to, because there is a difference in terms of the standard of care associated, right? Do you have a fiduciary obligation or do you have a suitability obligation? That’s actually, they sound similar, but they’re not the same thing.   00:17:49 Can you talk about that a little bit?   00:17:51 Well, suitability means that it’s acceptable for the client, right? The example that this is always in extreme, right? But let’s say that you had two scenarios that were otherwise identical, but one pays a commission to a financial professional, the other one does not. And the long-term difference is that the commissionable product has higher internal fees.   00:18:14 You would expect over time that those higher internal fees would erode the customer’s performance experience. And so when given the ability to sell a lower fee structure or the higher fee structure, both would be suitable for the customer and that neither is going to harm them. One would be considered more suitable from a fiduciary perspective, but they’re not obligated to select the more suitable, they’re obligated to select the suitable one, which can mean that there are times that there could be financial incentives that would otherwise, perhaps cloud the judgment of the financial professional.   00:18:53 I think it’s important that you talk about this though, right?   00:18:55 Oh, you should, right? And I’m also really quick to defend, just because somebody operates under a suitability standard doesn’t mean they are not choosing what they believe genuinely to be in the best interest of their client. I think that the lion’s share of practitioners are trying to serve their clients well. I just don’t think all of them are. That’s the problem with any industry, right? Is that it only takes a handful of bad actors to tarnish the reputation of an entire industry.   00:19:25 And that’s why the regulations these days are so tight and so stringent.   00:19:35 So yeah, I think these are questions that people should ask. So what is my financial advisor? What is the scope of the engagement? What can I expect? I’m really convinced that the industry is not pinned down what expectations are. It’s really ambiguous. There’s sort of a minimum expectation that we have to give them statements. There’s certain reporting that has to happen. But in terms of how businesses operate, there’s a tremendous amount of difference from business to business in terms of how they engage with their customers.   00:20:03 I’m going to interview you for a second. So you said that there’s a lot of variation in this field. What are, you know, you set this company up and you’ve designed it to be and feel a certain way. What really, maybe not separates, but what are some things that you kind of think are unique to Little John Financial that might be maybe, I know this is going to sound like you’re bragging on air for a second, but kind of sets you apart where you feel like you might differentiate yourself from a more generic company that is just gonna manage the finances.   00:20:36 Sure, well, maybe to answer that, and you know, I get bashful about this stuff, right? We’ve been doing this radio show for a long time, and we try not to turn it into a sales pitch, right? My take on this has always been that good education for our listeners is exactly that, and if the needs of our customer aligns with what we offer, then it’s a good fit.   00:20:59 But I just wanna help teach people to do this because I’m convinced you can do this yourself. It’s just a lot of people don’t, won’t, can’t, there’s lots of reasons for it. So then you need somebody that you can trust. So with that as the backdrop, right? Then why was this firm created?   00:21:17 First was because having operated in some other firms, I found that there were a lot of internal rules that were designed to protect the business more so than the customer. And I just felt like that was a little bit misaligned. Second, I find that a lot of other firms are designed to accumulate lots of representatives of the firm, but all of those representatives, they do some common things in their business, but then a lot of things are not common, right? So everybody’s kind of running their own business within a business. And so you don’t get the consistency of result.   00:21:52 But by going from player to player. Some practitioners are really good and some are less so. And so I think, what I was shooting for with our firm, with Little John Financial was a more consistent experience for the customer. And the biggie for me was I didn’t want internal competition for customers. Okay. I felt like that was a disservice to the client was to create a your client, my client environment where people were competing for the same customer.   00:22:24 So we built a team practice. And I think that was a huge differentiator in philosophy that says, well, whenever a customer calls, they are who we exist to serve. So that was just the first and foremost is, well, let’s know who our customer is. Let’s know what brings the register for us. Next it was, let’s make sure that we, as closely as we can align our incentives so that we win because our customer wins, right? As opposed to we win regardless of whether or not our customer wins. That didn’t seem like the right alignment.   00:23:01 So that’s why we are, primarily, when it comes to our asset management, we’re a fee only firm. Can’t say we’re fee only because we have an insurance branch as well that can offer insurance to customers. We don’t do it a whole lot, but it’s available. And because that’s a regulated product, there’s a commission structure to it.   00:23:18 We can’t really strip that out in many cases. So, we can’t say that we’re fee only because if we do insurance and you do a handful of contracts a year, then, you know, it means that we’re in conflict with that. So we are fee based. But our asset management, when we say fee only. Think of it this way, right? We charge a percentage of the total account that we’re managing for our customer.   00:23:45 And rather than having a transactional expense associated, so whenever we buy or sell something, we get a commission for it, it doesn’t, we don’t get it in any kind of compensation for buying and selling.   00:23:55 And a lot of, would you say there’s still, you know, definitely a handful of firms out there that operate that way?   00:24:01 It still exists because a lot of mutual funds are still built that way. They’re designed to pay some kind of commission structure. And then there’s a residual fee that’s paid sort of in later months or years.   00:24:14 Back to the firm that.   00:24:17 Essentially to the representative, it’s to service accounts, right? So there’s a reduced fee on the back end that comes back. It’s called a CDSC or a contingent. Well, the contingent of sales charges, a sale penalty if you get out early. But they have what they call 12B1 fees. 12B1 fees are those residual fees that are collected out of the operating expense of the fund and they’re paid to the-   00:24:39 And you’re saying that’s not something that Little John really-   00:24:42 We don’t charge trail fees on anything because we’re not buying with commissions, right? We’re buying it wholesale. We do charge a fee for service, but that’s to stay aligned, right? And here’s, let’s just kind of use easy math. These are not necessarily real numbers, but he let’s just use your easy math. Let’s say a client has half a million dollars that we’re managing for them. And just to keep the math easy, let’s say that we charge 1% per year.   00:25:08 So 1% of a half a million dollars, it’s $5,000. If we can grow the account to a million dollars, then we would win with the customer. They have twice as much money. We’re getting paid twice as much too now because we have 1% of a million dollars instead of half a million dollars. So our interests are aligned. If the account shrinks, you don’t wanna stop paying. This is a really hard one, by the way.   00:25:35 People think, well, why don’t I only pay, if they’re making me money. Okay, this is actually a super important question. I’m looking at the clock. I want all of you guys listening to stick around for the answer to this question, which is, should I pay my advisor when the markets are going down? Very important answer to that might surprise you. I’ll tell you right after this break. Stick around, I’m Dave Littlejohn.   00:26:02 And Matt Dickson.   00:26:02 And you got True Wealth on News Radio, 93.9 FM and 1240 KQEN.   00:26:07 All right, welcome back to the True Wealth Radio Show. Dave Littlejohn in studio with-   00:26:12 Matt Dickson.   00:26:12 And I promised we would answer a really interesting question. You should catch the podcast if you’re just joining us today. We’re talking a little bit about fee structure. We’re specifically talking about what makes Littlejohn Financial a little bit different, which I don’t normally talk about because I’m not too into, like, major promo of our firm. I get it-   00:26:33 So I don’t even think it’s a promo. I think it’s just informing people, hey, you know, we might be a little bit different than the next guy. And you need to know that because we might not be the right fit for you. But then again, maybe it is perfect.   00:26:46 And by the way, there are other fee based or feel the advisors around. So we’re not it. Right? But we have our way of doing things and we like it, but nevertheless.   00:26:58 And if you don’t like it, kick rocks now.   00:27:01 And find somebody you do like, you know, that’s how that goes, and kick rocks. All right, why, the question, very loaded question is, in a fee only or a fee-based asset management scenario where you’re getting a percentage, like I said, the advisor is charging a percentage of the assets they’re managing.   00:27:22 It is often asked to me, why should I, as a customer, pay the advisor if the account is going down? Right? I understand that the account makes money. We both profit because you know, hey, I made money, so you should make money too. But if I’m losing money, a lot of people say then shouldn’t you be losing money? And what I would suggest is the advisor is being paid less. So they feel the impact. The business is very aware of this impact. But what could potentially go wrong if you only paid your advisor when you made profits?   00:28:00 Well, I’ll ask this question. Wouldn’t the advisor just wanna take on more and more risk? Because if you’re not getting paid when you’re losing, wouldn’t you just wanna ratchet up the risk and try and get super high returns?   00:28:13 And I don’t know, like want or not, but wouldn’t that be the incentive, right? Because you’re like, well, look, if I guess wrong and you don’t make money, okay, I don’t make money anyway, but if I guess right and you make some money I get paid right so you kind of, disincentivize risk management.   00:28:33 It’s like telling a baseball player in the major leagues, you know. Basically, you’re only gonna get paid if you hit home runs. Well, he’s gonna swing like crazy every time he steps up to the plate, he’s gonna only he’s gonna swing it almost everything.   00:28:47 If it could be a home run ball man as well. Because if there’s no penalty, it’s like, look, it’d be different if you’re going to get paid for home runs. But you’re not, you know, and you’ll get paid for base hits too. Like, it’s kind of what those things are-   00:29:02 You lose your entire paycheck if it’s a walk.   00:29:05 I was going to say like, you don’t get paid if you strike out. That would be the better one. Right? A walk actually still gets you on base. That’s playing it smart. Right? But if you. What’s the difference? You only get paid to make home runs or you don’t get paid if you strike out. There’s a difference. One of them is gonna be more defensive in nature. They’re gonna go for high percentage shots. And that’s the thing about investing. It’s like a lot of folks, you know, there’s different philosophies. Like, well, look, I’m gonna take 20 bets and one of them is gonna be a home run and it’s gonna make up for the 19 losers. We don’t prescribe to that theory, just so you guys are aware.   00:29:40 It is about long-term diversification value and there’s a lot of risk management strategies associated. And you know why? Easy answer. Like, why should you manage risk? Because sometimes clients need to take money out and you don’t want your account to be way down when you need to access money.   00:30:00 That is so true.   00:30:03 Sometimes you need the money and so if you are-   00:30:05 Wouldn’t you rather take money out when the markets are up?   00:30:09 I mean, for sure. You definitely don’t want to wait until, like, you know, the most recent example, like 2019 going into 2020, March of 2020, markets fall like 30 something percent in weeks, right? Two, three weeks, everything just collapses. What if you had to move and you had to take a big withdrawal from your investment accounts once you get 30% less purchasing power at that moment?   00:30:34 Well, and I think I’m glad you brought this up because I actually hear this question all the time. People like, is it a good time for me to take some money? And I do often say, hey, let’s take a look at, you know, where is the account? And oh my goodness, you’re up $50,000 this year. Go ahead and take $20,000 out.   00:30:52 Unless you like have 500 million and be like, well, you’re barely making anything, right? Remember, numbers should always have context. That’s another one that I would tell you. If you have any financial advisors out there, it’s like make sure the numbers have context because there’s three kinds of lies in the world, right? There’s lies, damn lies, and statistics.   00:31:14 You’re not wrong. I’ve seen that, you know, where someone’s like, hey, you know, I’m down $100,000. And it’s like you have a $3 million account. Like that’s a normal couple months.   00:31:23 We call that Tuesday. It’s just, it’s a percentage-wise, it’s not significant to the total volume of the account. It’s like, you know, if the diving board is six inches long, you know, it doesn’t move much. But when it’s 60 feet long, a one degree move, translates to a big fluctuation on the end of that board, right? And that’s what big accounts look like, is they just, it’s bigger moves.   00:31:46 And then it’s always funny too, and that person’s like, well, you know, my account’s up 12%, but the S&P is up 13. And it’s like, it’s a 1% difference, but-   00:31:59 Well, it does add up over time, but this again is one of those, the idea that-   00:32:04 Well, it’s when people aren’t measuring the same way each time. It’s like, oh, I’m looking at this loss. Well, that’s half a percent. And then they go, and then they change it and then they start looking at percentages when it’s time to evaluate performance instead of dollar amounts. You’re up $1 million this year. Well, I really wanted to be up 1.1. And it’s like, I-   00:32:25 It’s the tyranny of absolute versus relative return, right? Like on an absolute basis, here’s the dollars that I gained or lost. On a percentage basis or relative basis, I’m up this much or I’m this percentage or that percentage or down that percentage.   00:32:37 Well, it all is based on when you’re measuring it too. I was looking at some performance numbers today and it absolutely blew me away. I changed the calendar dates by like 20 something days. And the percent return on this one thing I was looking at went from like seven to ten. And I’m like, so if you had measured, you know, 20 days into the cycle past, when it started, your numbers wouldn’t look that great, but you add the last couple weeks of that in there and it’s like, now it looks awesome. So you can really manipulate the numbers by changing the dates. And that’s the thing.   00:33:13It’s, it’s hard to do also. Like I don’t see performance reporting done this way. I’ve worked in some softwares that does this a little bit, but it’s interesting if you were to take a rolling average return in an account. We do this a lot in the advisory landscape. When you’re doing investment research, you might say, well, I wanna see a 200-day moving average of the price of a stock. And what you’re doing is just saying, well, here’s the average price for the last 200 days. And tomorrow, I’m gonna take the oldest day off and I’m at the new day in, and I’m gonna take a new average.   00:33:44 And I’m going to plot that over time. And it sort of smooths out the ups and the downs. And so a 200 day price average, you can see, well, here’s the current price compared to the last 200 days. We call that a 200 day moving average or maybe a 50 day moving average or a 10 day moving average. But it’s a way to get a sense of how is the stock moving, not moment to moment, but over a period of time. But you don’t see people measure their performance that way very often.   00:34:11 They typically look at a calendar year and say, well, show me January 1 to December 31 and show me that snapshot. And that’s how I decide if it’s working or not. That’s largely what the mutual fund industry does. And it’s where a term called window dressing comes from.   00:34:25 Tell me about window dressing.   00:34:26 Window dressing is essentially trying to set the system up so that the numbers look good for a calendar basis. And so you see shuffling things around late November, early December to try to position, so that, a mutual fund number looks good at the end.   00:34:46 So you’re saying like, as an example, maybe a mutual fund manager is in November and they’re way above the target where they wanted to hit for the year. They’re like-   00:34:55 Or to get a bonus perhaps. Maybe they are there are bonus against how they perform against a benchmark.   00:34:59 And so if they’re crushing the benchmark, they could in theory, basically, you know, if the agreements of the mutual fund allow for it, they could reposition assets around to lower their risk exposure and try and lock in that gain.   00:35:16 They could potentially. Or here’s another one. Let’s suppose that they’re not going to hit their bonuses.   00:35:22 They take on more risk?   00:35:23 Well, they don’t necessarily, but they can do things like they can distribute a bunch of their adverse capital gains just to get it out of the way. Right? Because, there’s an interesting thing about the way mutual funds operate where they can choose when they declare their capital gains or losses, right? So they don’t declare a loss. They’re never gonna make a loss.   00:35:42 Oh, so you’re saying if they’re gonna end up missing it?   00:35:43 They’ll just say, I’m gonna just, yeah, I’m gonna miss anyway, then let’s get this toxic stuff off the books to set up a better next year.   00:35:50 Oh, so they might liquidate it.   00:35:51 It’s possible. It’s possible that something like that could happen. You’d have to look at the prospectus. But if you’ve got a whole bunch of embedded capital gains, and you’re not going to hit stuff anyway, then you just rip the band aid off and set yourself up so that the next year can look better. It’s potential out there.   00:36:11 And then maybe even re-buy it if it’s a position that they still like.   00:36:14 Sure, they could potentially change their basis and do tax management within the fund. It doesn’t happen often. I don’t think this is an abused scenario, but it’s not impossible. And so, those are just elements that happen when you’re in a managed product like that. It’s that a capital gain distribution could occur and it’s outside of your ability to control the timing.   00:36:38 And that’s not to say that all managed products are bad. Right?   00:36:40 No, no, we’re not. It’s just a feature of management. There’s other features of managed product that are kind of handy. Like you could, you know, you have your own capital gain of when you buy or sell it, but they may never distribute a gain to you. So you could have some tax efficiency because they’re taking in new cash. And so they’re rebalancing their portfolio with the new cash from new investors. Which means that you may actually experience increased tax efficiency in some scenarios.   00:37:03 Oh, double-edged sword.   00:37:05 So it can work out nicely in that respect. But all of this to get back to the idea that when you’re, well, I think I kind of even lost some of the original idea. We just started going down the mutual fund path so much. Oh, the moving average, that’s really what it came down to. It’s like, well, if you’re looking at how well your returns are, I think you’re better off saying, well, here was my January to January, February to February, March to March, April to April, and then take a look at how that evolves over time.   00:37:36 That gives you a sense of how stable your portfolio is and what your actual rolling return looks like. And again, not common to do. Most people just take a 12 month snapshot of what they were doing previously and maybe a three year snapshot and kind of go, well, here’s the trend and here’s how we’re looking.   00:37:52 You know one thing we didn’t do? We didn’t talk to our listeners kind of some of the stuff that we do internally that might be different than other places. We promised it.   00:38:07 All right. So Matt’s gonna tell us more after our last break.   00:38:13 All right.   00:38:13 Okay. Stick around. If you wanna know what Mace, like these guys on the radio, they got an investment firm. I’m kinda curious.   00:38:21 What do they do?   00:38:22 What do they do and how are they different? Just a little bit more when we come back. Stick around, I’m Dave Littlejohn.   00:38:26 And Matt Dickson.   00:38:27 And you got True Wealth? Yeah, we’ll do that. News Radio, 93.9 FM at 1240 KQEN.   00:38:34 And we are back. Welcome back to the True Wealth Radio Show. Dave Littlejohn in studio with.   00:38:39 Matt Dickson.   00:38:40 Matt, what did you, you promised our listeners. Okay, lay it on me.   00:38:47 Okay, so, when we left off at the break, we were talking about what are some ways that Little John financial kind of specializes in? What are some of those avenues where it’s like, that’s kind of an area where they’re really comfortable and familiar with. And so-   00:39:02 Diet sodas.   00:39:05 Unfortunately. But I won’t drink them. I can’t. I can’t do it. I love my real sugar Pepsis, as David will know. But no. Okay, getting back on track. So, David, do you want to start us off? Just give me one short little thing where, cause I’m actually, I’m gonna throw you on the spot. What’s something that you think we do well?   00:39:27 Something I think that we do well. I think we’re pretty high touch with our customers. Like we don’t even have a phone tree. Like if you call, you either get a person or you get a voicemail that like we all get harassed by and you get called back usually within moments. So you almost always get a live person to answer the phone and we don’t do phone tree on purpose.   00:39:50 I don’t even know that that is a good one. That’s not really where my brain was at. More of like some of the areas where it’s like when we’re doing business, it’s like, hey, that’s something or that’s a person that we tend to help. Right? So like, I’m looking at this and saying-   00:40:06 Matt, what’s the answer you’re looking for?   00:40:08 Okay, I’ll give you one. I’m gonna give you one and see if you can keep this going.   00:40:11 He’s trying to lead the way to something going, well, go ahead, just go for it.   00:40:15 Okay, so I think one of the areas where I think we do well, you have a spouse that’s passed away, right? And you didn’t really know maybe kind of how everything was invested. It just wasn’t your area of expertise. I think we do inherently a pretty good job of bringing that person in and saying, hey, you know, we don’t want to talk over you. We want to be able to get you kind of up to snuff with what it is that we do why we do it. And does that make sense for your journey?   00:40:46 Because sometimes it doesn’t and it’s like hey, this isn’t a good fit. But I think we do a good job communicating and coming up with ideas of how to help that person who has gone through a tragedy. Need to plan, need someone that they feel comfortable with and kind of walking that person through what the next steps are.   00:41:04 Sadly, I think you’re right. And sad only because when folks are going through challenging times like that, I think a lot of it just comes down to, again, it’s pretty personal. And our culture is not big mega business right now. It’s very personable. And so because we try to know all of our customers really well.   00:41:24 Like by name. It’s like you’re not just a number. We know who you are.   00:41:28 And so, I mean, it’s interesting too, because not everybody qualifies to be a client.   00:41:33 No.   00:41:34 Right? And that’s not because we’re trying to be uppity about things. It’s because the people that we’ve made commitments to, our first obligation is to them. So before we take on new obligations, we have to make sure we can meet the existing obligations. But yeah, I mean, we spend a great deal of time. I think there’s a compassionate side to us, but there’s also a lot of education. So people will come in and they don’t have a good knowledge base. And so we try to build that knowledge base up so they can be confident in what we’re doing. And then we work together on it.   00:42:03 I mean, speaking about the education piece, the other area I think, you know, we kind of dive into a little bit is for the person who has maybe multiple income sources and is getting close to retirement. And they’re trying to look at all the different pieces of the puzzle and say, how do they all fit together? And they need someone that can analyze what are all the different pieces that I’ve got going on in my life.   00:42:28 And then what is the plan moving forward? Can I retire right now? Where should I start accessing money from in retirement? A lot of people don’t know. They have maybe five or six different areas where they could access money, but they don’t know what the most tax efficient way to access money is. And so they show up and they say, hey, walk me through this.   00:42:50 I would say that is, it goes into strategic planning. These are terms that get tossed around a lot, but strategic plans, you need a strategy to be efficient. And so the idea is, well, let’s look at all the moving parts that you’re working with and then let’s figure out an optimized way to deal with them, right? And that’s just highly personal. You can’t kind of give that advice on the radio because everybody’s circumstance is unique and their needs are unique. But the idea would be that you sync up by understanding what they’re working with and what their goals are.   00:43:23 And then developing a strategy to optimize what they’re trying to do. So, and it generically falls under the term planning, right? But planning is pretty nondescript. So that’s my frustration. Our industry, because of regulation, waters a lot of terms down. What are we really trying to do for our customers? Look, you work really hard to scratch together what you have over a lifetime. Let’s not screw this up. So let’s not unnecessarily give it to the government.   00:43:52 Let’s not, like, mischaracterize the way we manage our taxes and overpay where we don’t need to. I think I just said the same thing twice. Let’s not, I guess, be frivolous and accidentally make an unforced error that costs us. That’s one of the things that we see a lot. And so there’s just a lot of things that come down to efficiency. And in the Plan B stuff, right?   00:44:18 You know, hey, we got to make sure that we got. If it’s not going to me, where does it go? And how do we do that stuff the right way? So I just think that there’s so much. I mean, at the end of the day, it’s funny, but the money management, that is secondary to the planning for us. It’s the thing that wags the dog at the end of the day. But if you have a lousy plan, you know, you blow up a whole lot of money in a hurry. So you got to start with the good fundamentals. I think that’s just where we’re at.   00:44:49 Well, there was so much more on the list, David, but I don’t know that we’ve got time for it.   00:44:53 No, we got like 18 seconds or something. So let’s just leave it at this. How do folks reach us if they have any?   00:45:02 It’s super easy to go to littlejohnfinancial.com. So, littlejohnfs.com and chat us, give us a call. We’re easy to find.   00:45:12 It’s true, all the best. So give us a chat when you can. And also, you know, consults are free. So if we can help or we can get your point in the right direction, that’s what we want to do. But we’re out of time for now. So until next time, I’m Dave Littlejohn.   00:45:24 And Matt Dickson.   00:45:25 You’ve been listening to True Wealth on News Radio 93.9 FM at 1240 KQEN.

Today’s show provides quick, practical advice to help parents save for their child’s college tuition. Learn tips, strategies, and insights from experts to make college savings simple and effective. Start securing your child’s academic future now!   Episode Highlights: The often overlooked expenses of college education such as room and board and strategies for managing them. Non monetary benefits of a college education, including life lessons and independence. Importance of early financial planning for college and the diverse paths available post high school such as entering the workforce or further education. Strategic major selection and how personal readiness and life goals can influence education and career paths. Critical role of financial literacy in a successful future and how writing skills are important in explaining complex concepts. Insights into 529 plans and Roth IRAs including recent legislative enhancements and their impact on educational savings. SUBSCRIBE ON YOUTUBE! Looking for Personal Financial Advice? – Learn More Here     TRANSCRIPT   00:00:00 Find something that you can be interested in and it will greatly increase your chances. What was I interested in? Marketing. So I ended up in the creative advertising channel, which was a journalism degree, not a business degree. Like the business advertising is all about numbers and media buying, which was like a giant yawn to me. Media buying, how interesting is that? Let’s go figure out where the target demographic lives and how much we have to pay to reach them. Yawn, right? But Super Bowl ads? Those were awesome. Right? Maybe you disagree, but I thought that was awesome. So that’s how my career path found me, or how my education path found me.   00:00:00 All right, that is the cue. We got our music playing, our favorite music said nobody ever. Welcome to the True Wealth Radio Show on this, the greatest Tuesday you’ve had all week. I’m your host, Dave Littlejohn. In studio with me today?   00:00:57 Matt Dickson.   00:00:58 And also a special guest. It’ll all make sense in a minute. Thank you for joining me.   00:01:03 Knut Torvik.   00:01:04 All right. So Knut, first of all, I’ve known you for a long time. You have, it’s, you have the advantage, something I don’t. You know what this is besides your striking good looks? That’s the word, it’s radio, right? You have kids that are in or nearly through the college system.   00:01:26 That is right. I have a daughter who’s just… will graduate from [U of O] now in about four weeks, and I have a daughter who’s gonna start in September.   00:01:36 Okay, so you’ve got one who’s about to finish, one who’s about to start. And I’m gonna be super selfish on the show today because this is my chance to ask, normally we’re like, we give a lot of advice on the show. That’s kind of the deal. But I’m gonna be asking Knut for advice today because here’s a guy that’s paved the road before me and we’re gonna be talking. So for everybody listening today, we’re getting close to graduation season. And so this… today is all about education. We’re gonna be talking about the cost of education, how we pay for education, what is the value of education, not necessarily the same as cost, or maybe we’re measuring it with different terms. And so I hope you’ll stick around and listen today because there’s a lot going on. But first, right out of the gate, Knut, now that you’ve launched one, or you’ve already launched one, you’re about to launch the next one, all right, is there anything that you would say, I learned, I did not expect this in the process? Or is something you learn that you’re, like everybody should watch out for this?   00:02:43 Well the biggest shock is the cost. We always talk about how expensive college is, but one thing I didn’t really consider was the cost of room and board, how expensive that is.   00:02:56 Okay.   00:02:57 And even if, you know, at the University of Oregon, the kids have to stay on call, on campus for the first year. She did that now, she’s moved out. And I had no idea how expensive housing was around there.   00:03:12 Right, just the either on or near campus housing options. Yeah, it’s definitely a premium.   00:03:20 And also how they force you to sign and lease that goes from September to September. Well, of course, she’s going to finish up in June and we still have to pay her lease for another two and a half months.   00:03:33 Oh, that’s delightful.   00:03:35 It is. Nice housing option. But basically it’s looking, glorified campus housing. It’s not that nice.   00:03:46 Now did she live on campus, like on campus housing itself for the freshman year?   00:03:52 She actually did. She actually lived for two years because the first year, she was there. She, you know, this was during the COVID and all that. She started in 2020.   00:04:01 Ah, okay.   00:04:02 And they were hardly ever, hardly any kids on campus. So my wife and I, we felt that the whole college experience is to live on campus in a dorm, eat in the lunchroom, and be surrounded with lots of kids. And so we actually made her live on campus also in her sophomore year. Just so she can get that experience.   00:04:24 Really soak it in.   00:04:26 Yeah, indeed.   00:04:27 Well, this will come up later too. I’m sure we’ll get a chance to talk about… Mark Twain has one of my favorite quotes of all time. He said, “Don’t let your schooling get in the way of your education.” I think there’s something to be said for, just listen to that closely, is the classroom education matters, but there’s more to certainly the university experience than just the classroom. So there’s a lot of growing up and a lot of learning that happens there. Let’s talk for a minute about… since this is something that’s also near and dear to my heart, because I want to try to address this for lots of different students. So for the high schooler that’s figuring out the next stage, you got a few options. I think that the primary courses are going to the workforce, and in the workforce, that’s pretty broad, lots of different types of work. Or there’s, go to some kind of university, some kind of, we’ll call it a junior college or a community college level or some kind of trade school. Can we think of others? Did I cover the spectrum on those?   00:05:39 I think that’s pretty good.   00:05:40 Okay. So Matt, is somebody that was a, you know, a recovering high school teacher.   00:05:45 Mm-hmm, right.   00:05:47 When you saw and did you teach, I mean, the high school, you had like all the years, right? So you had seniors and the whole mix.   00:05:53 Right, yeah, I started in the middle school, taught that for four years and then spent four years at high school teaching freshmen through seniors.   00:06:01 Okay, so as you see seniors and they are starting to launch, what were some of the things that you saw in seniors making decisions or maybe not making decisions and how they were trying to weigh those?   00:06:13 I think one of the biggest pieces is, no matter who you really are, you’re overwhelmed. This is a big next step, right? Most of the time you’re leaving town, you’re going to a new place, you’re doing an entirely new type of education system. This isn’t high school where everyone kinda holds your hand and walks you through it. You get to a university and you can kinda feel like you don’t have someone necessarily in your corner or in your back pocket. And so I think kids knew that. And so the one universal thing that I think I saw was everyone was just really nervous about that next step.   00:06:49 Yeah, well, and the next step, it’s an interesting one depending on where you are too because, I’m not sure everybody knows what the next step is. They just know that the last step was high school and that step’s over.   00:06:59 Right.   00:06:59 Now what?   00:07:00 Exactly.   00:07:01 Right.   00:07:02 They don’t really know what the future holds for them.   00:07:04 Yeah. Knut, how did your family decide on the university experience?   00:07:11 Well, you know, both of my wife and I are college graduates and we, it’s more than just you know, getting an education. It’s also about developing yourself as a human being. I’m not saying that if you go to a trade school, it’s a bad thing, but for us, it was never really an option. We never wanted that. And I’m sure we also influenced our daughters to think the same way. I think we sat down and told them that, you will go to college or else. It just happened.   00:07:45 Yeah, it just sort of implied in all the things that were going on. I’ll admit that there’s a bias to that in my household. It’s something that I am awakening to the concept though, of… and this is just for full disclosure, everybody listening, right? I do serve on the Board of Education for the community college here in town. So if you’re listening or watching on YouTube and it’s out of area, we have Umpqua Community College, right? It’s actually this cool community college, beautiful campus, lot of cool stuff going on. And I think my original impression of the college experience versus community college, it was that community college is where you went if you couldn’t go to the university. That was what I thought as a high school student. I no longer think that. I actually think community college is a very viable option. It’s a great way to get missing credits that kind of puts you into the right timing for the college ecosystem if you can coordinate that. And so I’m a much bigger advocate, plus community college serves everybody, right? So it’s, I don’t want you to just think that this is a program exclusively about the high school kids that are about to graduate and figure out where to go. You may be looking for new career skills. You may be somewhere else trying to assess the value of education. That’s very relevant, right? So I think it’s very, very relevant that you consider what your local community college can offer if you need to develop skills that are needed in the workplace, right? And also, I think because I’ve been on university campuses and I’ve been on the community campus at Umpqua, UCC. It’s… the experience on campus isn’t all that dissimilar, right? You know, you’re going to a dedicated place of education. You’ve got a campus where there’s not a lot of other things but education going on. It feels like that’s its dedicated purpose. The big deal though is there’s no on-campus housing. And I think there’s a, that is a really big differentiator in terms of the college experience. And very interestingly enough, something that UCC is starting to develop student housing now. So I think that the lines are getting blurred between the university experience and the community college experience in real time. I think that’s very relevant for a lot of our seniors out there in high school because sometimes cost is a barrier. If you think about the cost of college, I think that’s something really important. I’d like to maybe spend a little more time on that, but I also think, I’m looking at the clock right now, and this might be a very, very appropriate place for us to take our first obscene profit break. So, why don’t we do that? When we come back, then we can talk about, well, speaking of obscene profits, how are these colleges, you know, how are we going to afford them? Or what education about them, what might that cost? But we got to take this break. So stick around, we’ll be right back. All right, gang, welcome back to The True Wealth Radio Show. I’m your host, Dave Littlejohn, and in studio with me today is…   00:10:32 Matt Dickson.   00:10:33 And…   00:10:33 Knut Torvik.   00:10:34 Right, and a reminder, if you were just joining us, you can grab the podcast, we’ll also be streaming on YouTube later. But go to littlejohnfs.com and you can find it under the Educate section of the website or some resources for folks. And so if you just want to learn more about what we’re doing, you can check out their podcasts out. This one is, we’re talking about education today. And during the break, we started to kind of, down this path. Matt, I want to pick something up that you mentioned, right? And I promise we’re going to get to the concept of, cost of college. We said, you know, when we’re going, in the break, hey, let’s talk about cost. This was so relevant, Matt, that I just wanted to say it. Talking about what you said, you think the norm is.   00:11:15 Yeah, I think the norm for most people that are going into college, they might have parents who say to them, oh, well, okay, you wanna go in, we’ll try and help you out a little bit. And then a lot of parents, I think, are like, well, I don’t know, college, are you sure that’s kind of the route you wanna go? And so you’re not always necessarily met with a lot of optimism or it’s not always well received where you would think it might be.   00:11:43 Yeah, it’s hard for me to know what the norm is. I only know my own household and my experience. So I don’t know how, if a household says college is stupid, right? Like why would you do that? Or it’s, you know, college is just too expensive. It’s just not an option. I don’t really know what that looks like. I know in our household, it was something that early on, like when my kids were born, we started saving a little bit on the side to help them go to school.   00:12:10 It’s also about giving the kids an opportunity to spread the wings of it. You know, I think, you know, it’s not just the education. It’s also about, you know, moving away from home. For many kids, it’s the first time they are away from mom and dad. They get to experience that close to watch themselves. You have to clean your room. Mom and dad can’t do that anymore.   00:12:36 Not everybody does that, you know. Seats of college students, where’s the floor?   00:12:41 It’s an important life lesson. And I think that’s kind of, you know, when you’re 18, 19, those things are very important for you to experience and to develop and know how to handle.   00:12:53 Yeah, and I couldn’t agree more. I think that, I think there’s a lot of growth that happens when you start to get out from underneath your parents’ household. It’s a really critical time for folks because that launch, you’ve had, and it’s interesting, I had some clients yesterday, we had this comment about some folks end up duplicating what their parents did. And some folks do the exact opposite of what their parents did. The question is why? Right? And I’ve seen scenarios of parents that we would say, at least from the assessment of, hey, how was the financial success and how well did you navigate the landscape, right? They struggle with making what most people would say, common sense decisions, right? Like that’s a lot of bad decisions. It’s creating a lot of turmoil and hardship in your life. And the kid says, you know, I’m gonna do whatever that isn’t, right? They see it and they just know better. They don’t wanna do that. They said, that’s the example I will not follow. And then some people, that’s the example they follow. I don’t know what makes it go one way or the other?   00:13:58 I think it all just comes down to your personality type. And I’ve seen so many students over the years and you get an absolute mixed bag. You got the kid that’s coming from just immense poverty. They’ve never been read to, no one helped them with math. And you’re like, this kid, you know, you might have a preconceived notion. There’s just no chance. But they fight so hard and they’re so resilient and they put in so much effort that they overcome all of it and they go on to do great things. And then you see the opposite end of that spectrum too, where it’s like, you were handed everything, everything in the book, but you were lazy and you had no motivation and you squandered everything and you’re not going anywhere. And so it’s a very, very wide spectrum.   00:14:43 And here’s one thing that you can’t predict or even as a parent, how you can fix is the student’s motivation.   00:14:51 No, you can’t.   00:14:52 And it all depends, you know, that’s the same thing if you’re in a trade school, if you’re in college, if you’re in community college, it all depends. I just know for myself. And I was a total underachiever in high school. I did not do well there at all. I just… I had all the other interests. And I did really wake up, I always knew that I wanted to go to college, but I just didn’t really think through it, how I would do that. And I know that if I had started college immediately after high school, I would have failed miserably because I was just not motivated. So it took me a couple of years before I actually started college. I didn’t start college until I was, age 21.   00:15:35 So there’s an interesting one. Again, this is something that kind of came out of the break. You mentioned the idea of, should students coming out of high school, do you think that they should take a time gap before they go on? And I know that there’s a spectrum. I probably answered some should, some shouldn’t. How do you, I mean, I’m putting on a parent half a second. So how would you offer advice to somebody trying to make that decision?   00:16:03 Well, my oldest daughter, she wanted to go to college immediately. So she should… did. The youngest was accepted into college. And then she came to us and says, I think I need a gap year just to kind of collect myself after having gone through, you know, high school and all that. So she actually, over the last year, she hasn’t done, she’s just been taking a couple of classes that he used to see. She’s been working at a… at an office and just been playing. I mean, right now she’s in Denmark for God’s sakes. So.   00:16:38 Yeah. Well, when you say it that way, it sounds bad.   00:16:43 I think, and she also told us that, you know, for her to go… gone from high school to the university would not have been a successful thing. And we said, okay, you can do what you want.   00:16:57 Yeah, there’s this theory that if you have a break, the probability that you return to school, I don’t think it’s actually statistics. I’m kind of quoting the statistics that I don’t know, right? So, but anecdotally, yeah, the risk that you don’t get back in the system certainly increases if you get out of the system. I don’t know how well that aligns with the idea that some people get in when they’re not ready and then they just sort of squander an opportunity and they fail their way out. And then for them to go back, they start to rebuild a damaged transcript, if you will.   00:17:34 But I think it all depends on what is the student’s goals, do they have goals?   00:17:38 Sure.   00:17:39 And I think I knew that I always had a goal to do this. So even if I took a couple years break between high school and college, I was fine because I knew what I wanted to do.   00:17:53 Right.   00:17:53 I just wasn’t sure when I wanted to do it.   00:17:56 So I think that’s very important. So I’m gonna kind of, let’s frame this up if we can get some, like actual advice for our listeners and viewers. I have a theory about how to select a major, but before you can get to a major, I think you have to make that decision about, is education the next step for me? Right, and what type, but so.   00:18:14 Yeah.   00:18:15 So I think the first question is, do I want to go to the next level of education?   00:18:22 I think another question in there is, are you capable? Because let’s be realistic, some people are not cut out for college. They’re just not. That’s kind of a hard thing you have to–   00:18:34 Isn’t that a rough thing to say? Because my sense is that you want to believe, anybody can try hard enough. I don’t think we all get the same skills and I think that’s a good thing.   00:18:45 Right.   00:18:46 Right. And so I think I know what you’re saying. I don’t think this is a qualitative measurement of like, well, you’re a good or bad person because of whether or not you’re capable, you know, cut out for university. I think it’s more a question of like, you know, is this your wiring, your nature and what you want to do?   00:19:02 I mean, there’s some students that I had that their attention for reading lasted 15 to 20 seconds max. And it made them angry and they just hated just even looking at a book. I’m like, if you can’t be in a book for 20 seconds, college isn’t for you.   00:19:18 Right.   00:19:18 But I also think that some kids in high school or even before that, they’re not forced to make a plan, what they want to do with their lives. They’re just going to go along and don’t really have a plan for what they actually want to do. I think most kids, if they are forced at a fairly young age to decide what they want to do with their lives. That actually helps. And that’s it. I think this is in contrast to what most people here do, I think. But I think I knew very early on what I wanted to do. But I just didn’t know when I wanted to do it.   00:19:54 And so here’s the thing that’s really ironic about that. Just for this conversation, I did not. When I was really encouraged and sort of funneled into school at the next level. I was capable enough that I survived my own sort of bad behavior and discovery process before I got focused, but it wasn’t until about two years in and I’d done a little bit of academic damage. That’s a really nice way of saying I let my grades slide because I wasn’t focused on what I was doing. So I screwed around too much my first couple of years and then got some traction when I matured enough to start citing in, at what I was interested in. And so that gap here may have benefited me.   00:20:37 But you chose journalism, correct?   00:20:39 Well, you know–   00:20:40 Or marketing, or what?   00:20:41 Well, in a very backwards way, yes. I would say journalism kind of chose me. It’s not that I wanted journalism, but here’s, I’m gonna share this funny theory I have. Like this is the theory of how to select a major, which means we’re hopping over the question.   00:20:54 Is it, put them all on a wall and throw a dart?   00:20:57 No, no, no, it’s not that at all. It is, so when I was doing this, this is how long ago it was, you could get a physical course catalog. I think it’s harder to do that now, but what I did was I got a physical course catalog at where I went to school and I went to the University of North Carolina, okay? So go Heels. And I, you pull out a highlighter and you just start reading and any class that sounds interesting I’d highlight it, okay? And so I ended up with, you know, maybe 20, 25% of the classes seemed interesting enough. Yeah, I might go and learn that. That seems kind of novel. Some stuff seemed horrible, right? Like, why would I want to do that? That sounds like the worst thing ever. So highlight the things that made sense and then you put the thing down and walk away from it for two or three days. And then I came back and I opened it again and said, read this again and cross out anything on that list that doesn’t seem really interesting that I want to go to. Not just like would be tolerable, but like I want to go to it. And my rule was really simple. Like if you were to follow this pathway and you crossed off everything, join the Peace Corps. Do something else. Take a gap year. Get out. You are not going to be focused. You’re going to be resentful that you’re there. You need to do something else besides waste your resources. Okay? But if there’s stuff left on that list, you cross-reference that list with the majors that are available. Okay, and whichever major has the most of those on it, that’s the one you select because you’ll have the highest probability of maintaining interest. And for most people, the first, your bachelor’s degree is either the thing you’ll get that validates that you can learn to an employer, or it opens the door to the next level of education. And you want the best grades possible, and you want your college experience to be able to keep doors open rather than close them. And to me, the only way you could do that is you better like what you’re learning. Now, if you’re the kind of person that’s so disciplined that you could just slog through anything because you’re just full of nothing but piss and vinegar, and you’re going to do it, right? Fine. Just pick the major that’s hard and get through it. It’s something like, you want to go study organic chemistry because you just like pain. Do it. Some people probably love it, right? Like, they’re like organic chemistry is so interesting. It wasn’t for me. Right. But you follow my logic, right? It’s like, find something that you can be interested in and it will greatly increase your chances. So what was I interested in? Marketing. So I ended up in the creative advertising channel, which was a journalism degree, not a business degree. Like the business advertising is all about numbers and media buying, which was like a giant yawn to me. Media buying, how interesting is that? Let’s go figure out where the target demographic lives and how much we have to pay to reach them. Yawn, right? But Super Bowl ads? Those were awesome, right? Maybe you disagree, but I thought that was awesome. So that’s how my career path found me, or how my education path found me. Chronically, numbers, right? They live in numbers. Just like, how do you think journalism and finance, how did that happen? Oh, I used the journalism way more than the finance, or way more than the, like, I can use a calculator all day long, but you gotta explain why it works to your customers. Journalism is super valuable in this field. It’s just counterintuitive. So we taught gap year, right? If you can’t select something, I just take a gap year or–   00:24:23 Well, it’s not for everybody, but for some it is.   00:24:25 Right. And so–   00:24:27 Some people need this structure in a university or an educational setting. All of these people are fine to use as a way to, you know, develop themselves.   00:24:39 Here’s a weird one for you. I’m going to set this up in the worst way possible too. I’m going to let engineers, now we’re gonna, we need to go to break, right? And I’m gonna tease everybody listening when we do this. All right, welcome back to the True Wealth Radio Show where I don’t even know we could talk about what we were talking about during the break.   00:24:56 All the stuff you missed, yeah.   00:24:59 So anyway, welcome back. I’m Dave Littlejohn. In studio today.   00:25:03 Matt Dickson.   00:25:04 Knut Torvik.   00:25:05 And we’re talking about education and I think it’s, we’ve talked a lot about the university system. I’ll admit from, as far as the trade schools go, I don’t know a ton about them, having not gone into them. I know that there is a pathway where you go and literally get trained and then you get into, like oftentimes an apprenticeship role and you start learning by doing.   00:25:27 I don’t know much about trade schools either, but I will tell you having done both community college and the university route. For me, the community college, like the degree of education, the rigor, like how hard is that? The community college, hands down, was a lot more difficult than the university setting.   00:25:45 That’s interesting to me.   00:25:46 It wasn’t even close, yeah. No, you even look at my GPA. I mean, granted, you know, it was high at both places, but to get A’s at the university, just fall off a log easy. Hardly had to do anything. But at the community college, and I went to UCC, it was tough. The teachers there really demanded a lot, and I put in a lot more hours on homework at the community college.   00:26:07 You know, I’ve also heard some people that have gone to some of the Ivy League schools, how easy it is to get good grades there.   00:26:13 Yeah.   00:26:14 Well, you know, there is a real theory about grade inflation.   00:26:17 Oh yeah.   00:26:18 The biggest thing is, well, you have these high hurdles of entry, but once you’ve cleared them, they wanna make sure that their reputation still looks good. And having not gone to an Ivy League school, I can only go through the rumors that I’ve heard that a lot of what is valuable is the network. You’re tapping into an incredible network that’s already connected in the system.   00:26:43 I think the big difference that I noticed was when you’re in the community college setting, you might have 20 kids in a class. The university, granted, there’s going to be probably more kids in your class, but the university really stressed, not necessarily, we’re going to make sure that you really know this and we’re going to weed you out. That really wasn’t the case. It was more of, let’s really get in depth with this material and have higher level conversations. And they’re really trying to extract it verbally and in writing a lot more than just A, B, C, or D.   00:27:17 But then it was also very interesting how many employers actually looked at your transcripts.   00:27:22 Exactly.   00:27:22 Oh, man.   00:27:23 Although I’ve actually, the best job I’ve ever had, my boss looked at my transcripts. You want to see where those A’s were coming from. Are they coming from accounting, or are they coming from jewelry making.   00:27:35 Right, right.   00:27:36 Well, generally, grades only… helps you get you to the next level.   00:27:43 It’s mainly for the scholarships, or like you said, the next level. It’s not necessarily as much.   00:27:47 Right, it’s opening doors. I will say that one of the things that… I’m speaking as an employer right now, it does matter to me somebody’s education, but I’m really looking for validation of competency in certain categories. The one that probably–   00:28:03 Mainly writing.   00:28:04 Yeah, that’s the one that surprises people. They say, why writing in numbers?   00:28:08 Yeah.   00:28:08 Right? Pfft. Yeah, and so I’ll ask you, Matt, because I lean on you on occasion. I have you proofread things. Why do you think writing would be one of those that I would recommend that everybody learn how to write?   00:28:21 Well, it, when you write, it’s a reflection of your competency, right? And it’s kind of blunt, but like if you cannot write and you can’t get your thoughts on paper, that person is inherently not gonna trust you as much when it comes to letting you make those higher level decisions. Writing is a reflection of how you’re thinking. And if there’s a disconnect.   00:28:41 That’s literally where I was waiting to see. Is he gonna say that? Cause I think writing is how you… it’s a reflection of thinking.   00:28:50 Absolutely.   00:28:51 But it also depends on what you end up doing. I was working as a financial analyst and I needed to understand what net present value was.   00:28:58 Oh, yeah, yeah.   00:29:00 To calculate the internal rate of return. Those are fairly technical things, but it’s something that you need to know how to do it. You also need to understand what it is.   00:29:09 Yeah. I think that those are actually similar to writing in that it’s a validation that you have a deep understanding of concepts and know how to apply them. That’s what I think of thinking as, is that you have an understanding of the topic and know how to apply things to it.   00:29:28 But also there are certain things that are not being taught in universities that should be taught. For instance, I had no idea how valuable a CPA license is. You might not end up working as a CPA for the rest of your life, but it’s a tremendous door opener.   00:29:50 Yeah, I honestly think there’s some things, this is just–   00:29:53 Nobody told me that.   00:29:54 Yeah, well, talk about, band standing on this program, right? As a financial guy, this is where I’ll get on my soapbox for minutes. I think we really do a disservice in this country educating about the financial system, right? It’s something that we have tried to do on this program a lot. One of the things that’s poorly understood by the population at large, and we all get touched by it, is taxes, right? I mean, you have this basic understanding that if I earn money, the government takes it. But a lot of people struggle with the idea of how tiered and graduated taxes work, the different types of taxes, the treatment of capital gains, the way passive income is different than active income. And then we name all these things after, tax code. So, oh, well, you need a 1099-INT for something. And they’re like, oh, my gosh, what does that mean? And so between not teaching a whole lot and then having terrible naming nomenclature, right? It just leaves people sort of terrified. And so what do you end up doing? You end up hiring people to help you because they are trained in it. And it just ends up, so it’s a tax on the tax, right?   00:31:04 It’s also amazing to see how few say, and I was a business major, how few business majors actually understand what is a true cash expense, which is an accounting expense.   00:31:14 Sure.   00:31:14 Is depreciation, is amortization a cash expense? No, it’s not.   00:31:19 No, no.   00:31:20 But of course, it originates in cash, but it’s not treated as cash on the income statement. And very few people understand that.   00:31:28 Yeah, well, the nuances of accounting, and of course, if you really wanna get into the weeds of it, starting to understand the difference between cash basis and accrual-based accounting. And while it does make sense, it’s the same reason that, like people, I have a theory about really big businesses, right? And education’s a really big business now, that all of these really big businesses have an aspect of banking to them, because there’s cash moving through these organizations. And so the cashflow and the tax treatment matters, because you need to manage both in order to keep the resources balanced, right? And so, of course, nonprofit institutions, they have the advantage of not worrying about taxes the same way that for-profit institutions do. But they still have to worry about how cash moves through the system and the timing of when it arrives and the sources of funding. And most nonprofits are still tied to tax receipts. So they are connected. And I think that the general lack of education in the way that system works is a disadvantage to our citizenry. But I look at it and I say, and I’m not pointing a finger and assigning fault here when I say this, I know lots of teachers at high school or even college professor level, they don’t know this stuff either. How would we expect them to teach it? And that’s not an indictment, that’s just an acknowledgement of where we’re at in the system. I’m not saying you’re bad for that, I’m saying most people are like that because they didn’t get taught either. So I don’t know how people get the financial education. I had to seek it out with great intention, and I learned the hard way as an entrepreneur. Fortunately, my businesses were really small early on, and so the mistakes were less painful because they were small in scale, but the mistakes hurt, they’re expensive.   00:33:21 Well, and also, you know, just because you know anything in theory doesn’t mean that you have the practical skills to apply it. For example, you know, I was a finance major, I knew everything about forward contracts, options, you know, those kinds of things, currency hedging and whatnot. I still bought a huge option for US dollars versus the Norwegian Kroner back in 1989, a week or so before the Berlin Wall fell. And that option was a huge expense that I had to swallow.   00:33:52 Yeah. Well, I mean, now we’re going to get it. So all right. I’m going to stare at the camera. I know this is perfect. We need to take, like our last break. No, no, you set this up, right? Remember what I said. Sorry. So I need to hear the music, Dale. What you said, right? Early on, I said, don’t let your school get in the way of your education. Oh, you just talked about an education, didn’t you?   00:34:15 Yep.   00:34:16 And so let’s not all education takes place in the classroom. Stick around. We’re going to talk more when we come back. All right, gang. Welcome back to the homestretch of The True Wealth Show. Dave Littlejohn. In studio today I’ve got…   00:34:28 Matt Dikson.   00:34:29 And also my good friend.   00:34:30 Knut Torvik.   00:34:32 We have been talking about the education show. We’ve wandered around a little bit. This last one is not all education takes place in the classroom. Knut was just sharing some stories about, I’ve had plenty of mistakes professionally that have been very costly. Unfortunately, none of them have completely wiped me out. I’ve had to learn the hard way for sure. I guess I want to bring it back to our students. Let’s talk a little bit about affordability. One of the things, how do you pay for college these days?   00:35:08 Some people would like to have the kids have a stake, so to speak, by not paying the whole thing. Some people will say, well, you have to take up loans for the whole tuition bill and room and board. And other people are in a fortunate position that they can start early and save until they get the kids to go to college. My wife and I, we started to save as soon as the kids were born. I think they were soon to have their social security numbers. I went and opened up a 529 Plan for both of them. Didn’t invest a huge amount of money. I think we started with like 25 bucks or 50 bucks a month, but over time. I’m sure you talked about the whole thing with the time value money, the rule of 72 and whatnot.   00:35:57 Yes, we have on this program before, sure.   00:36:00 Yeah, but all that stuff works.   00:36:03 Right, right.   00:36:04 Over time, because you have 18 years to do this.   00:36:09 You know, there’s a couple of interesting things that have recently shown up. They were born out of the Secure Act in 2022, also around 529s that have made them far more interesting than they were at any point. 529s have, for a little while, we almost kind of called them a myth, right? I mean, meaning it was a sort of smart aleck way as financial advisors to say, well, 529s are kind of obnoxious because they don’t really give you a significant tax savings to contribute to them. And while they grow tax deferred, a lot of them are, every state kind of has their own program. So each state gets one, because they’re municipally administered, right? So it’s at a state level. And–   00:36:55 I think it’s important to also look at what is the best plan out there? Because if you go to the Oregon plan, there’s a certain tax implications involved.   00:37:06 Right.   00:37:07 In my mind, the tax savings is worthless.   00:37:11 Yeah, it’s pretty negligible. So you have to look at the underlying performance.   00:37:15 To look at what’s the best plan out there.   00:37:18 I was going to say, I think, didn’t they change the law starting January 1 of this year, where you’re now eligible to, potentially eligible [and asterisk that], because there are some things that you have to meet in order to do that. But you can roll that 529 into a Roth IRA.   00:37:36 Yes.   00:37:36 That’s a big deal.   00:37:38 It’s a very interesting feature. So, and here’s why it’s so interesting. There’s been a season where I would have suggested to parents it may be better to fund a Roth IRA for your kid than it would be to fund a 529. Maybe, right? Again, we don’t give specific advice on the program. You need to see me after class for that. But the reason being that if a kid ends up, one, retirement plans typically don’t count against the kid’s eligibility for financial aid. So Roth IRAs are interesting because they live outside of that. Two, Roth IRAs are eligible to be used for first time home purchase or education. You will not pay the penalty on early withdrawals. Right?   00:38:24 Okay.   00:38:24 So they still grow tax deferred. You do have to pay tax on the growth that comes out if it’s being spent there, but it’s more flexible. And if it’s not used for college, if they have scholarships or they don’t use it all for school, they get to keep it. And it ends up being a, you know, tax-free retirement if they satisfy the five-year-old and wait until 59 and a half for withdrawals. So it’s a good deal.   00:38:44 But still, you know, 529s have some funky deals for them. They’re difficult to manage because you can only change your investment options. I think it’s twice a year.   00:38:53 Yeah, and you only get the menu available from the 529 provider.   00:38:58 What’s even on that menu?   00:38:59 It depends. Each state is different.   00:39:00 Okay.   00:39:01 Right? The states usually contract with mutual fund providers. And so that’s kind of how it works. Typically it’s going to be a kind of network of index funds or low cost mutual funds.   00:39:11 So we didn’t look at any other options than that 529. That was the vehicle we chose.   00:39:16 Yep.   00:39:16 But there were other things out there that probably could have been better, I don’t know.   00:39:20 Hard to say. I mean, just in the form of, what it’s worth, we selected 529s for our kids, right? And so this is a financial advisor. That’s what we chose to use for our family. The reason it’s kind of handy is because you can have multiple 529 plans and for, you know, earmark for each kid or you can have one 529 plan and then just change the beneficiary to the kid as they use it. And remember, the benefit of a 529 plan is it grows tax deferred, and if it’s spent on qualified education expenses, it’s tax free.   00:39:51 Including room and board.   00:39:52 Including room and board. Qualified education expenses, that’s the key on this. So you just have to make sure it’s qualified.   00:39:58 But I think the major lesson is that you start early and you just keep going.   00:40:04 Yes.   00:40:04 You don’t have to save a huge amount.   00:40:07 Right. But the wild part about the law change now too is if you save a bunch in there, and grandparents can use this as a estate planning tool because you can accelerate gifts, you can do like five years of gifting all at once, get that money out of your state, save potential estate taxes, get it into an environment where it can start growing early. You put 40, 50 grand into an account when the kid’s two years old, that grows a lot by the time they’re 18, or should if it’s invested properly, but you do that. Then that’s a pretty good chunk for that kid. Let’s say they don’t go to college. Well, now if that plan’s been in existence for more than 15 years, you can start to fund a Roth IRA from that plan. Right, so my understanding is up to the income limits for the person, but you can, that money can be rolled into an IRA. You do have to have income to match it, but that can be the source, right? So that’s pretty cool that you could get it out of a 529 plan. If it doesn’t go to education, it can be converted to Roth now. That didn’t exist before.   00:41:08 I also think it’s important to look at what’s the best plan out there. Forget about the state income tax benefits, because that’s really worthless. I think it’s–   00:41:18 Yeah, it’s just so nominal that it shouldn’t wag the dog.   00:41:21 No. So we always looked for what the best mutual plan family out there to provide a good return. So I think we really started out with Oregon plan. Actually when we started Texas, of course Texas doesn’t have an income tax so there’s really–   00:41:37 Not a lot of, yeah, advantage there.   00:41:40 When we came to Oregon, we opened up through the Oregoncollegesavings.com.   00:41:44 Yep.   00:41:45 And we’ve… I’ve found that plan very difficult to work with. We chose something else.   00:41:50 Well, they did, depending on when they changed a few years ago. Years ago, I think it was administered by MFS. And I think that, maybe that one still exists. But then the Oregon College Savings created, they changed vendors, right? So those contracts are not necessarily static. So there are a number of resources. You guys all have Google out there and you can do some homework.   00:42:11 I think there’s a good website out there called SavingforCollege.com.   00:42:14 SavingforCollege.com, yeah.   00:42:16 It gives you information on all the plans out there.   00:42:19 Yeah, it gives you the four or five cap rating. It’s not stars, it’s the little college cap.   00:42:25 So you can compare and contrast.   00:42:26 Yeah. They’re pretty interesting. They really are.   00:42:30 But still, I think the most important thing is that you are starting early and you keep doing it.   00:42:35 Yep, early and often that’s where you get the benefit of time and compound interest because it is tax deferred in these vehicles. And again, there are others out there for purposes of today. And I don’t think we have the time to really dig deep into all the funding mechanisms. But, you know, here’s some low hanging fruit as far as hacks go for you. One, retirement plans typically, not going to be included in your FAFSA form, right? That’s the Federal Financial Aid application. But they are going to look at parents’ income, even if your parents, not helping you pay for it, your parents are going to probably count against you. So this is where, if you’re in high school, there’s a bunch of dual enrollment programs that are coming on board right now. Ask your high school guidance counselor about whether or not they’re a community college dual enrollment programs. They cost you nothing and you get college credit. So if you can start to accumulate that, that’s direct savings should you go into college. And I see zero downside if you end up going to trade school or not going to college to have that credit and not use it is better than to not have the credit and have missed out when you could have.   00:43:37 Because you can still use it for trade school, can’t you?   00:43:40 If applicable, yes, I would suspect so. So anyway, check out dual enrollment, fantastic program. I have seen some early glimpses of some of the new material coming out too. It’s very cool. So excited to see Roseburg and a lot of the other Douglas County School Districts partnering with UCC to get that done. So look into it again, talk to your high school guidance counselor. Guys, I’m looking at the clock. We are, we’re out of time. So I’m just going to go, Knut, thanks for joining us today and pitching in.   00:44:11 Thanks for inviting me.   00:44:12 Absolutely. And Matt, thank you as always. How do they reach us if they’re trying to navigate the college financing and they just want to get some insight?   00:44:20 Give us a call or shoot us a text, 541-375-0898.   00:44:25 All right. You can also, make sure you can find us at info@littlejohnfs.com if you want to email. Just go to littlejohnfs.com. You can navigate through lots of ways to reach us. As always, you know, if you’re not gonna do it yourself, find somebody you like and trust. If you don’t have that somebody, give us a shout. But otherwise, we are out of here. So until next time, I’m Dave Littlejohn.   00:44:45 Matt Dickson.   00:44:46 Knut Torvik.   00:44:47 And you’ve been listening to True Wealth on News Radio, 93.9 FM and 1240 KQEN.

Discover the nuances of inheriting money and how different types of assets can impact you. Join us as we explore the key aspects of inheritance and gifting that you need to know. Episode Highlights: Tax planning strategies that can save your heirs a bundle in taxes, such as adding a pay on death beneficiary to a bank account to avoid probate. How to manage the complexities of inheriting retirement accounts. After-tax traditional IRA contribution that can lead to a backdoor Roth IRA strategy. The two main categories of Individual Retirement Accounts (IRAs)– Traditional and Roth– and the tax implications for beneficiaries. Strategic tax planning for managing large retirement accounts, including timing withdrawals to reduce tax liability and the concept of “bullying your tax rate” to fall within lower tax brackets. Common misconceptions about inheritance and capital gains taxes, explaining the ‘step up in basis’. Potential tax implications of adding children to property titles. When life insurance may be subject to taxes. SUBSCRIBE ON YOUTUBE! Looking for Personal Financial Advice? – Learn More Here     TRANSCRIPT   00:00:00 So what I hear you saying is, if this is a problem you have, call Dave and Matt offline,   00:00:00 Yep.   00:00:00 Because almost nobody has this problem.   00:00:00 That is correct. And it’s a really interesting tax planning strategy. It’s also the front door into the back door Roth IRA strategy. Okay? So, why are you laughing?   00:00:00 That was funny. The front door to the back door. That was a little bit of a financial advisor kind of almost joke a little bit.   00:00:00 Yeah. Because we’re hilarious as financial advisors. So there you go.   00:00:36 All right, gang, it’s that time of the week. It’s the best Tuesday I’ve had all week. And this is the True Wealth Radio Show. And we’re excited to have you here today. Let me give you the rundown. It’s not just me, your host, Dave Littlejohn in studio today. I’ve also got with me.   00:00:49 Matt Dickson and someone special.   00:00:52 Derek Simmons, your favorite attorney.   00:00:54 He is our favorite attorney joining us today. As you guys know, we have Derek on often. Usually it is to talk about a combination of Kansas and Carolina basketball.   00:01:05 And I think that’s a reasonable topic. We’ve only got an hour today, so I’m gonna try to be brief.   00:01:10 Okay.   00:01:11 Kansas was pre-season number one and then flamed out in the round of 32 this year.   00:01:15 Right.   00:01:15 And that was disappointing. So now they’re pre-season number one again for next year.   00:01:21 Which just makes me question what pre-season number one means.   00:01:24 Nothing. That and $6 will get you coffee at Starbucks.   00:01:28 Very well. Yeah, I was gonna say Carolina went in as a number one seed and flamed out in, I think the round of 16. So nonetheless, they were out, and you know what? The ducks made it farther than I expected. So there you go. The Beavers were not in. So, although the ladies did real well. Right. I think they were, what? Final four. So, are close to it. Lead eight. They did great. So, anyhow, look, today we’re going to talk about all kinds of stuff. Cause that’s what we do. Some of it will be relevant to you, and some of it you wish will be relevant to you, right? Why? Because we wanna talk a little bit about what happens when you inherit stuff.   00:02:07 And the first task there is, pick your parents carefully.   00:02:12 Yes.   00:02:13 That is very helpful.   00:02:14 Yes, this is sort of like Derek and I have done estate planning like seminars together before, one of my favorites. You’re gonna get this from Derek on occasion, will be things like, Hey, if you don’t want to ever have to have a will or a trust document, what’s one of the things you could do?   00:02:32 Remind me.   00:02:32 Just be immortal.   00:02:34 That’s true. Immortality prevents the need for a will or a trust.   00:02:37 The other is if you hate your family. So those are two of my favorites. If you hate your family or you’re immortal, then by all means, you could skip the planning.   00:02:45 It works well.   00:02:47 Or if there are just no assets.   00:02:49 That actually is one of them, but that one was not so funny. The immortal wouldn’t, really caught me. I remember you said that the first time I just went, how am I supposed to follow that? So.   00:03:00 Well, and you know, a lot of people feel immortal for a certain period of their life.   00:03:05 Yeah.   00:03:05 They’re like, yeah, there’s no risk I’m gonna die. No risk. And then they hit about 45 and their back creaks at them. And then they go, all right, there’s a possible… possibility that I could die.   00:03:15 Right. And then the hill, as I say, gets steeper.   00:03:17 Yes.   00:03:18 So, well, today we’re gonna talk about the other side of this, right? We’ve often had times when we have had conversations about estate planning. Okay, because I like to take advantage when I’ve got Derek in studio because he’s a wealth of knowledge on this stuff. But today I want to talk about the other side of it. What happens if you’re getting stuff? Now we’ve teased about lottery winnings before. It’s, some things in common, but believe it or not, inheritance, a lot of you out there listening are either looking at how you might pass an inheritance on. But several or many people listening might get an inheritance. And so the question is, well, then what? Okay. And one of the, what’s one of the things that is similar to, between receiving an inheritance or winning the lottery.   00:04:05 Free money. It’s free money.   00:04:07 Yep.   00:04:07 Money that’s free.   00:04:09 Is that all of a sudden people will, it’s like a new resource in their life. So what do you do with it? Spend it. Right. And it can be gone in a hurry. So, but what compounds things in an inheritance environment is that there are certain things that you may inherit that you could really increase the tax bill dramatically on, but with a little bit of planning, you may save yourself a ton in taxes. I don’t think we have to spend the whole show on this, by the way, but I think it’s relevant because if you’re out there thinking, okay, so let me ask first the question of what are some things that people inherit?   00:04:48 You could inherit a parent’s IRA, so a retirement account.   00:04:52 That’s a hard one though. Let’s start with the easy stuff.   00:04:54 I agree. What’s an easy thing to inherit?   00:04:56 A bank account.   00:04:57 Bank account, piece of cake.   00:04:58 Yes, and you have to go through probate to get it if you have a will or no will.   00:05:02 Right.   00:05:03 But you just, it ends up being money.   00:05:05 Yeah, now what’s one very low cost thing you could do with a bank account that would help to mitigate or avoid probate?   00:05:13 You could, if you knew who you wanted to leave the money to, you could add them as a pay on death payee.   00:05:19 Correct, so oftentimes known as a transfer on death or a TOD.   00:05:24 And that way, they don’t have any, whoever you’re leaving the money to does not have any control over it until you actually die, but then it’s theirs without going through probate.   00:05:33 Derek, would you say that the probate process has changed much over the last five to 10 years?   00:05:38 I don’t know that the process itself has changed much. I know that it’s gotten really more expensive.   00:05:44 I’ve heard that.   00:05:44 Now, I don’t handle probates myself, but I’m hearing that probate can cost eight to $10,000 for one where people aren’t fighting.   00:05:53 Right, and this is in the state of Oregon, primarily what we’re talking about when we’re talking about probate. So depending on where you’re listening or watching this thing, your mileage may vary wherever you’re at. But yeah, and why is this so important?   00:06:07 Well, I mean, if you’re looking at the heirs, the people who are going to inherit things, if the cost of the trust is maybe, you know, less than that $10,000 mark in a probate court.   00:06:18 It might make sense to pay some to avoid probate.   00:06:20 Right.   00:06:21 Exactly. This is where we, yeah, we caught Matt on that one, right? Because he just dropped an Easter egg into his comment if you were paying attention, which is, you could get a trust, which is a form of pre-planning that’s designed to avoid probate, right? And it used to be that people think, oh, trusts, they’re so expensive. Why don’t I just have a will and then go into probate, but it may actually be cheaper to do a trust now with the rising cost of probate.   00:06:48 Yeah, the one good thing about probate is they charge you after you’re dead. But if you’re worried–   00:06:56 You don’t have to pay upfront.   00:06:57 You don’t have to, but if you’re worried about how much your heirs are going to inherit, then it’s gonna come out of their pocket. So then it’s come out either while you’re alive or it comes out after you’re dead. And then you kind of want the lower number at that point.   00:07:11 Exactly. And of course, since this was not supposed to be the probate show.   00:07:16 It wasn’t, we’re talking about inheritance.   00:07:18 Right.   00:07:18 So we did bank accounts.   00:07:20 Bank accounts. What are some other things that you could inherit? That–   00:07:24 Car. Truck, a vehicle.   00:07:26 Okay, vehicles. All right, so what happens if you inherit a vehicle?   00:07:30 Well, there is a title.   00:07:32 Or wait, that’s not what we meant.   00:07:35 Yes, you have to get your name on the title. And–   00:07:40 That is a probate thing.   00:07:42 Well, it can be, it can be. And I have not seen that the DMV in Oregon requires you to go through probate every time. Lots of times they’ll accept alternate mechanisms of proof that you’re the right person.   00:07:55 So perhaps a death certificate or something similar.   00:07:57 Yeah, so that’s a possibility.   00:07:59 Yeah, the issue is if the chain of custody is confusing, right, you may have a vehicle, let’s say you’re married, right? You have a vehicle in one person’s name. [DMV] may be more inclined to allow the spouse that was obvious to take, title. But if it’s a next generation, now it’s more ambiguous what the chain of custody would be.   00:08:21 They may wanna see a will, even if it’s not probated.   00:08:24 Right. And we’re not speaking for the DMV, by the way. And again, your mileage may vary, your DMV may vary. I don’t even know. So, shouldn’t.   00:08:32 So that’s, vehicle. Third one might be real estate.   00:08:36 Real estate, another titled asset.   00:08:38 Real estate is either going to go through probate to change the title from the dead person’s name to the people who are inheriting his name, or it can use a transfer on death mechanism to pass without going through probate, but it does make it a little bit hard to sell the property for about 18 months.   00:08:57 Yeah, and–   00:08:59 So then, but that’s what you usually do, is the kids who inherit, or whoever’s going to inherit, has a choice, I’m either gonna live in it or I’m gonna sell it, one or the other. And so what the inheritor intends to do with it makes a difference on what the owner does in the first place.   00:09:15 Okay, so we’ve covered real estate, we’ve covered personal property items, right? Well, I guess that’s really more like things with title, vehicles we’ve talked about. So what about personal property? Things that don’t have title associated.   00:09:31 Yeah, so those are technically supposed to go through probate.   00:09:35 Exactly.   00:09:35 And yet, and yet they often don’t.   00:09:38 Yeah, it’s one of those things that, it’s kind of hard to account for sometimes. And it’s one of the big challenges in it, especially in a contested environment, is, well, what happens when something just walks away in the process? How do you prove–   00:09:54 Probate.   00:09:54 There it went.   00:09:58 That can be one of those things people fight about.   00:09:59 Yeah, I can remember a story of family members and they said, well, what happened to the tractor, right? That sort of disappeared from the premise. Of course, tractors have titles associated with them. So that ultimately, you know, found its way to resolution and it was awkward because you can’t just leave and say, I have no idea what happened to it. Well, that’s funny because trying to register that thing, we discovered.   00:10:22 It’s in your garage.   00:10:24 Right, right, so. Who knew, right? So here’s, I think Matt, you asked one of the tricky ones right out of the gate, okay?   00:10:34 Yeah, and I did do a lot of talking upfront because I don’t know the answer to what happens to an IRA.   00:10:39 Right, well the good news is we do, but the first question I would ask Matt is, what kind of IRA, right? I mean, first of all, how many types of IRAs are there?   00:10:50 There’s so many. You have your traditional IRA, your Roth IRA, your simple IRA, your SEP IRA. There’s a lot of different types of IRAs.   00:10:57 Yep, and then there’s a lot of things that walk and talk like IRAs, but they’re not actually IRAs.   00:11:03 Mm-hmm.   00:11:04 Okay, so there are some things that they all have in common, right?   00:11:09 Right.   00:11:09 And so I think it’s probably worth us talking about some of the things they all have in common and then what are some of the differences are?   00:11:15 Well, the easy one is beneficiaries.   00:11:17 They do all have beneficiaries, okay? Which you can be a beneficiary to a will. Of course, there’s beneficiary pathways through probate. You could be a beneficiary in a trust that should be a pathway without probate. Or you could be a beneficiary in a retirement plan. What the heck does that mean?   00:11:39 As I understand it, this is money that can’t come to me all at once. Or maybe it could, but it sucks.   00:11:46 Yeah. So it can, but the question is, is that the smart move? So first let’s paint the picture. There’s two big buckets of IRA money, right?   00:11:57 This is an example.   00:11:58 Yeah. So you have Roth IRA money or traditional tax deferred type IRA money. Now that tax deferred–   00:12:07 There’s two IRAs, traditional IRA.   00:12:09 They’re different pathways. Right. Let’s think of it simply as, there’s a third hybrid, it’s the most obnoxious one, but let’s understand Roth and traditional first, okay? A traditional IRA, and this is gonna be like most of your employee or sponsored retirement plans.   00:12:26 The stuff you haven’t paid taxes on yet.   00:12:28 No taxes have come out.   00:12:30 Yeah, you earn the money and before it’s taxed, we pull it out, put it into an investment and it is allowed to grow tax deferred. And then in the future, you take the money out and when you take it out, you pay the taxes as income in the future. Okay. The other basket is the Roth basket, which is you earn money, you pay the taxes and then with what’s left after you’ve already paid your taxes, you invest it and then it grows tax deferred. And if you qualify, we’ve done other shows about this, right? There’s the five year rule and some really kind of weird stuff around it. But basically assuming the Roth is sort of the switches turned on and it’s acting like a real Roth with no gotchas. So after five years, most of the time. Then when you take the money out, after full retirement age, another important caveat, tax free, right? You paid all the taxes upfront, so no taxes on the back end. The other one, you don’t pay the taxes upfront, so you get taxed on the back end. And those are the two big baskets. Now, there’s a third one that throws everybody off.   00:13:36 Is this a smaller basket or multicolored or what?   00:13:39 So yes, smaller, multicolored. It’s kind of the way annuities work. This is the scenario where you make too much money to deduct an IRA contribution. So you make an after-tax, traditional IRA contribution, and then it grows tax-deferred, and when it comes out, some of the money was taxed and some wasn’t. And you actually have to track it to tell the IRS so that you can keep track of how much tax you have to pay on that.   00:14:17 So what I hear you saying is, if this is a problem you have, call Dave and Matt offline.   00:14:21 Yep.   00:14:22 Because almost nobody has this problem.   00:14:23 That is correct.   00:14:24 Okay.   00:14:25 It’s a really interesting tax planning strategy. It’s also the front door into the back door Roth IRA strategy. Okay. So, what are you laughing at?   00:14:35 That was funny. The front door to the back door.   00:14:38 Yeah.   00:14:39 That was a little bit of a financial advisor kind of, almost joke a little bit.   00:14:42 Yeah. ‘Cause we’re hilarious as financial advisors. So there you go. The traditional IRA is gonna be a lot like your 401(k). So it’s gonna be a lot like a 403(b) if you’re in the public sector or, even like the IAP program for PERS, any of these. You haven’t been taxed on the money yet. So somebody has it, they’re in retirement, they’re pulling it out, paying taxes as they go, and they croak, it’s a technical term.   00:15:12 Right, and now Dave, you inherit this IRA.   00:15:16 Right?   00:15:16 Mm-hmm.   00:15:17 So first of all, I’m curious how I knew them. Right.   00:15:21 Yeah.   00:15:21 There’s, and why does that matter? Because if you’re a spouse, then you’ve got different options than if you’re not.   00:15:30 Mm.   00:15:31 Right? Why does this matter? Like, first of all, a lot of people may be thinking, oh yeah, do I have that rich uncle in Zimbabwe that’s finally going to come through? Or if you’re married and you lose your spouse and they had a retirement plan in their name, well, you’re going to get some options. One of them is you can leave the money in their name and carry on until, the other is you can roll the money over into your own name. There’s pros and cons based on your age, right? As to why you would do one or the other. And again, I’m not gonna go super deep on the radio on this. I’m gonna tell you, this is where if you don’t understand the nuances, find a tax advisor or financial planner that can help you with this, right? And if you don’t know one, Matt will shamelessly give you our phone number.   00:16:23 Yeah, 541-375-0898.   00:16:26 Or.   00:16:26 You can even go to our website at littlejohnfs.com.   00:16:30 Right.   00:16:30 Because–   00:16:31 Everybody’s circumstances, you know, yes, you nail that. Thank you. Yeah. So, but that’s the, between spouses, you get some options because they’re, the law allows you an unlimited transfer of assets between spouses without a tax effect, which is nice, but what if it’s not your spouse. It’s a kid, you know, somebody else that you, but it’s a person, right? You give it to a charity. We don’t worry about that. Okay, that’s great. They’re gonna take the money. And if the charity doesn’t pay taxes, they’re not paying taxes on what they get. But let’s say you’ve got a kid that’s gonna inherit this. What are their options when they inherit? Under current tax rules.   00:17:11 You could open something called a beneficiary IRA and then transfer those funds into the beneficiary IRA.   00:17:18 That is correct. That’s one option. So let’s start with what’s probably the less than ideal option typically.   00:17:28 Pull all the money out. There was $500,000 in there. You pulled it all out because you wanted to go on a spending vendor.   00:17:33 Yeah, Matt, that was really gonna help my Walmart trip, man.   00:17:36 I know.   00:17:37 Anything else is gonna be less happy for my Walmart trip.   00:17:38 Right, so why are you gonna pull a Sheeky O’Neal and go to Walmart and drop $600,000?   00:17:43 So you’re gonna just, you’re gonna inherit a big chunk of money. And why do I say big? Because if you’re gonna inherit 500 bucks, it’s probably not that big a deal.   00:17:50 Right.   00:17:51 If you’re gonna inherit 500,000, or more even.   00:17:55 Right. If you took that–   00:17:56 What happens if you just cash the thing out and put it in your checking account?   00:17:59 Well, if you pulled that money out of a traditional IRA, that’s now $500,000 of income for the year.   00:18:06 And you’re gonna hit the highest tax bracket.   00:18:08 Okay, talk to me about this, because, I mean, obviously I’m leading the witness here, but I just want you guys to explain to our listeners. What do you mean?   00:18:15 Okay, well, there’s a graduated tax rate. If I only make $15,000 a year, I’m not gonna pay much taxes. If I make $500,000 a year, I am gonna make a much, pay a much higher percentage of those, of that. And I think I go from like the 0% bracket to the 28% federal bracket.   00:18:35 I think it’s 37 right now.   00:18:36 Holy smokes.   00:18:37 Yeah, it’s high.   00:18:37 And then tack on another, what? Nine, 10%.   00:18:40 Maybe–   00:18:40 Four or something.   00:18:41 9.8% in Oregon, I think at that level.   00:18:42 Okay, yeah.   00:18:43 At least, I mean, don’t quote me on this.   00:18:45 Right.   00:18:45 I’m just pulling off the top of my head.   00:18:46 It’s a lot. You could lose almost half of it, is what we’re trying to say.   00:18:48 Yep.   00:18:48 Whereas if I string it, if I string it out for longer and don’t take it all at once, then its smaller bite-sized chunks that keep me below the thresholds.   00:18:56 Yeah. I believe you have like 10 years to take that money out.   00:19:00 Correct, this is the key here. If you were to just take all the money at once, out of, as a beneficiary, just take a check, put it in a checking account, that’s accepting all of the money at once, and the IRS says, great, then all of the taxes that have been deferred showed up at the door with this inheritance, and you just said you’re gonna pay them all to me right now. So we’re going to take all that money and apply it, the tax bracket to it right now, and it’s gonna drive your taxes way up.   00:19:29 And that’s one of the interesting things about retirement accounts versus anything else you’re gonna inherit. Anything else you’re gonna inherit, you’re probably not gonna get it until after the taxes have been paid. But an IRA is gonna come with, a pre-tax IRA is gonna come with a tax obligation attached to it.   00:19:49 Right. This incidentally is also true for annuities. Okay, so an annuity has that similar issue, is that the money that the tax that’s been deferred, that deferral doesn’t disappear when you die. It gets inherited by the heir. So that’s the key. Now remember annuities just like that weird hybrid, some of it was taxed and some of it wasn’t. Some money is usually after tax and some of it is pre-taxed. So it’s a mix of what you’re gonna be taxed on, because some of it you already paid, the tax was already paid, okay? So it just depends on how the accounts were structured, but the IRS looks at it pretty simply. They get you on the way in or they get you on the way out, and they only tax stuff that hasn’t been taxed already. And let’s not talk about CECorps. And–   00:20:40 So in an IRA situation, if I’m going to inherit an IRA, is the general rule that I’m always gonna wanna string it out?   00:20:49 So not necessarily, but if it’s a big IRA, the general rule is that you’d probably wanna string it out. And you may not need to string it out for 10 years, okay?   00:20:59 Right.   00:20:59 That you have up to 10 years with which to determine when to take the distributions. This is a change by the way from years past. You used to have different circumstance, not worth discussing because that’s not the rules anymore. But today, up to 10 years to make these withdrawals. So.   00:21:18 Yeah, I mean, while we’re on the inheritance topic, do we want to talk about how gifting is kind of related to this whole piece?   00:21:27 So we will.   00:21:28 Yeah.   00:21:29 But let’s, I’d like for our listeners to kind of, let’s finish up this, this is a concept, because I think this is an important one that everybody latches onto. If you’re going to inherit this thing, you ask the question, Derek, do you want to take it all at once? I think.   00:21:42 Right.   00:21:43 And the answer is–   00:21:44 What?   00:21:45 It depends.   00:21:46 The thing I said was, don’t we always wanna string it out?   00:21:49 Right.   00:21:50 And then you said no.   00:21:51 And I said, the answer is it depends on dollar effective tax rate, right? If it’s a really big account, you probably wanna stretch it out because you don’t necessarily want to give way more away in taxes unless there’s a really good reason. Like you just have to, you know, get a hold of to purchase something else. So.   00:22:10 If I’m in a really high tax bracket today right now, but I know that I’m going to retire in a year or two, I might wait till I have low income earning years and then I might pull a bunch of it out.   00:22:20 Yeah. You, and the idea is, your, I use this term a lot, right? You want to bully your tax rate. Okay. I’m bullying your tax rate is kind of like, yeah, you go pushing around right? Oh, you, what, did you want a piece of this? No, no. What I’m going to do is I’m going to push you into the lowest tax environment I can. So I’m going to shift it around into different years, or I’m going to try to shift it into different types of assets that will change the way it gets taxed if possible. So that’s the idea when you’re planning, when you’re trying to be tax aware, is to try to find the areas where your tax exposure is going to be lower. And if you can’t make it lower, then you spread it out so that you’re not driving it even higher, because the way progressive tax codes work, the last dollar in is the most expensive to be taxed, right? We didn’t talk about, effective tax rate initially. We talked about, highest tax rate. Okay. So once you, you know, if you have a million dollars, you’re, you’ve finished in the highest tax bracket, but you didn’t start in the highest. So your blended rate is less than your maximum rate, but for each additional dollar you take in that maximum bracket, you’re moving your blended rate higher, right? Because it’s a more expensive tax for each additional dollar that you would draw. So that’s why we tend to stretch this stuff out.   00:23:39 So, big account, stretch it out, unless you can see into the future and you know that the tax rates are gonna double next year.   00:23:48 Correct. Yes, if you’re clairvoyant, you should make really good decisions.   00:23:52 You really, yeah, you already know the answer. We wouldn’t even have to tell you, you know the answer.   00:23:56 Yes, so in fact, if you know the answer, because you can predict the future, please call us. Wait. If you really think you know the answer, maybe you shouldn’t call us.   00:24:12 So Roth IRAs, as a reminder, the taxes were paid before the money got put into the retirement account. And then it grows tax-free. And then when can you take the money out?   00:24:24 Okay. So this is before you’re dead, right?   00:24:29 Yes. So before I’m dead, when can I take it out? And then after I’m dead, when can I?   00:24:33 Okay, so first it has to satisfy the five year rule. Okay. And that is tricky. If you were, the only reason we really care about the five year rule is if you have a Roth 401(k) and you’re rolling money over because every time you make a rollover or every time you do a conversion of a traditional IRA to Roth, you get a new five year window on that block of money and the five year window says once I’ve existed for five years as a Roth, the later features, right? You have the now feature of tax deferral, but the later feature is tax free. It activates the tax free nature, which means once you are beyond age, currently 59 and a half is what we consider full retirement age, after age 59 and a half, if you satisfy the five year rule, the Roth IRA distributions are tax free.   00:25:26 Okay. So that’s for me.   00:25:28 Yep.   00:25:29 If I put money in a Roth, I can take it out after 59 and a half assuming it’s been in there for five years and I’m in good shape.   00:25:35 Yeah.   00:25:35 All right, now what about my children?   00:25:37 Okay, the cool thing is if children inherit it, the same story is you got 10 years to take it out, but tax-free to heirs. So you could potentially still defer 10 more years of growth and allow that all to compound and then, yeah, we presume it will compound, but then at the end, 10 years, take it as a lump sum distribution and it’s still tax free.   00:26:07 That’s interesting. So if they take it out in year one after they inherited it and invest and reinvest it in something else, they’re gonna pay taxes on income from that. But if they leave it in there for 10 years, all the growth is tax deferred and they don’t pay it till they take it out. So it makes great sense if they don’t have a burning need for the money to leave it in there for the full 10 years.   00:26:30 Absolutely.   00:26:31 Interesting.   00:26:31 Yep. The Roth is, we oftentimes talk behind the scenes, it’s one of the most utilitarian tools in the financial planning tool bag. The Roth IRAs are just really cool. They’re great because there’s no required distributions, unlike traditional deferred accounts. So right now at age 73, oh, you haven’t taken any money out, the IRS says it is time. You will take some out and pay taxes or you will be penalized worse than the taxes. So they’re really serious, right? Not so with the Roth IRA because there is no tax when it comes out. So they’re in no hurry, right? And it, that benefit transitions to heirs and they get that 10 year window as well. So it’s a great tool. We encourage folks to try to have a basket because it’s also great. Here’s like, something that we think so. Okay. One of the things that’s really obnoxious is getting sick and not dying. Right, it’s super expensive. And while when you start getting into Medicare years, if you’ve got the appropriate Medicare supplements and everything else, you can have a lot of the medical components managed. The idea of needing some kind of continuum of care becomes more and more common. What am I really talking about here?   00:27:51 Assisted living.   00:27:52 Assisted living, long-term care event, right, where you have a medically qualifying long-term care event, maybe it’s not even medically qualified, maybe you just need assisted living. And you can buy long-term care insurance, where if you have certain qualifying events, it can be, you can use that. It’s quite expensive, right? You can buy certain forms of life insurance with accelerated death benefit associated, which is a way to sort of claw death benefit into the now, if you have certain qualifying events and use that, that’s kind of exotic. I think there are some similar annuities with features that have some riders that are around distributions for certain qualifying events. But what if you had simply a chunk of Roth IRA money that was available that could be pulled out that wasn’t taxable in the event that you needed it? And if you didn’t use it, it went to your heirs and it became a flex fund for you in retirement. So you’ve designed a retirement income between social security pensions, and other retirement plans, and this basket of Roth money is your flex pool. And that to me is the real story behind these things that we miss. And I’m talking now about the person surviving rather than the person’s inheriting. But if you inherit, might suggest that that Roth is a really powerful tool, and it can also enable you to continue funding your own Roth.   00:29:20 And you know that long-term care spot is one of those, we joke about immortality.   00:29:26 Right.   00:29:26 But even folks who are getting to be in their 60s or 70s don’t ever think about, well, actually, I do encounter some that think about it, but many people don’t think about the possibility that they lose their ability to live independently without dying.   00:29:42 Yeah. And it’s, the triggering events are their own scenario too. There’s usually six activities of daily living and I don’t remember all of them. There are things that you want to be able to do, you know, dress yourself, go to the bathroom on your own, feed yourself.   00:29:57 Change channels to watch Kansas basketball.   00:29:59 Exactly. So.   00:30:00 Critical.   00:30:01 There are a number of those and if you can’t do those, then you would, those are qualifying events, but think about like what do you do if you need help? And so there’s a lot of people that rely on family and other folks to do caregiving, but, and some people do buy long-term care insurance. It’s just become really cost prohibitive because insurance companies look at this and say, I have no idea how to price this thing because the cost of medical, is escalating so radically that we can’t really afford to stay in this business.   00:30:30 So our Roth IRA is our secret plan to pay for assisted living if we need it.   00:30:35 It’s certainly part of the utility. I mean, when we talk to folks right now.   00:30:39 It’s not, secret if you’re gonna tell people about it.   00:30:40 It’s not, but the idea of, hey, part of healthy and robust planning includes contingency planning. And that means, in my opinion, the best way that you can handle potential long-term care is self-insurance. What do I mean?   00:30:57 You mean having enough money that you don’t need insurance.   00:30:59 Exactly. Right? Like, why do you not typically need life insurance when you retire?   00:31:05 Because you don’t have any kids in the house that you gotta worry about supporting.   00:31:08 Yeah. What does life insurance do?   00:31:12 It buys you peace of mind that everyone’s gonna be taken care of. And if everyone’s gone and out of the house, who’s left to take care of?   00:31:19 Okay.   00:31:20 That’s true. Usually I hear from people who buy term insurance because they want to cover a specific thing. Like if I die, I want my kid’s college to be paid for.   00:31:30 Right.   00:31:31 I hear from other people who just buy insurance and are not thinking about it. And they keep paying and they keep paying it. And then eventually we talk about what it’s for. They don’t have anything that, what it’s for.   00:31:42 Here’s my take on what life insurance is for. It does one of two jobs, okay? And then there’s a third one that is hinky, right? The first one is it replaces income that people anticipated you earning. You were supposed to earn income that was gonna be able to pay for stuff, and now you can’t.   00:31:59 But you croaked, yes.   00:32:01 Right, and so we need to replace the income that was gonna come in by ensuring that ability for you to earn the income. And that’s the form of life insurance if you die and disability insurance if you don’t die. So that’s the two forms of insurance there. And life insurance is when we talk about the most because it’s the most permanent typically, or it’s the most obvious, right? Disability is one we don’t often associate as frequently, but you know if somebody dies, like that income’s definitely not returning. And we’ve seen and all heard the stories of the hardship of somebody left behind without life insurance.   00:32:36 I’m guessing the second one is gonna be estate taxes.   00:32:39 Exactly.   00:32:40 So if I die with a bunch of real estate, I don’t want my kids to have to sell it in order to pay the state of Oregon estate taxes. So that being the case, I would buy a policy that would spin off enough money to pay the taxes, and that way they can just inherit the property and not worry about the taxes.   00:32:58 Right. And the third one, which we are not gonna go deep into because it’s gonna just annoy me.   00:33:04 Are you sure you wanna tell them, Dave?   00:33:06 Yes, I’m sure.   00:33:07 Fine.   00:33:07 Yeah, it is… there are certain scenarios when you can build up cash value in life insurance and use it as a funding mechanism for specific purchase items.   00:33:21 Are you going to talk about, whole life?   00:33:23 No, I’m not. I mean, that is a feature that comes with whole life or universal or even variable universal life. But there are just so many gotchas in it and it’s such a long term commitment. And there are people out there that will sell it like this is a really amazing way to become your own bank and replace banks and all that. And my suggestion is that that is a pretty complex, really long term commitment. And so while it can academically on paper work out, I rarely see scenarios where it plays out the way it’s designed. So I’m just very careful about saying, sure, that’s a great solution. I think that’s a super, super nichey solution. And for most folks out there, I struggle to think it’s appropriate for their circumstance. So anyway, so there’s the three, okay? Now, here’s the question. What is the kind of stuff that you would most like to inherit?   00:34:17 Gold bullion.   00:34:18 Yes, it was just pretty good.   00:34:19 Or worse-   00:34:20 Is it because you just wanna swim in a big pool?   00:34:23 I did read about Scrooge McDuck as a child and I have to be candid, it had some appeal.   00:34:27 Right.   00:34:28 But I also would, I think small unmarked bills would be a fine thing to inherit, just a lot of them.   00:34:34 Yep.   00:34:35 Turns out small unmarked bills.   00:34:37 I am actually going to inherit small unmarked bills.   00:34:39 Yes.   00:34:40 Just not very many of them.   00:34:41 So the interesting thing, like inheriting cash tends to be pretty good. Right. Because there’s no tax associated with it for heirs.   00:34:51 Unless you want to go buy, like a $500,000 house with cash that’s unaccounted for and then every red flag, red flag.   00:34:58 Right. So let’s talk about, as an heir, what are the things, so one of the things I hear a lot, common mistake, people will say, well, great, now I’m gonna inherit this thing and I’m just gonna have to pay taxes on it. Is that so?   00:35:12 Well, no, it’s gonna be taxed before they inherit it.   00:35:16 Right, and it depends on which tax we’re talking about. I can only think of two taxes, really.   00:35:23 Estate tax.   00:35:25 Estate tax, which right, that’s the–   00:35:26 I have tax–   00:35:27 Depending on the state. What’s the other tax?   00:35:30 Capital gains?   00:35:32 Probably not. Probably.   00:35:35 You’re gonna get a step up in basis.   00:35:36 Correct. Probably it would be that IRA scenario we talked about earlier in the program.   00:35:40 Oh, deferred income.   00:35:41 It was deferred income, and you’ll have to pay deferred income tax. Otherwise, and you just said it, what do you mean by step up in basis?   00:35:50 So if I buy property for $100, and then later on I sell it for $1,000, that’s a capital gain.   00:35:58 Right.   00:35:58 And I get to deduct my basis from the gain, from the sale price. So now I’m paying tax on $900 of capital gain. But if I buy something for $100, leave it to my children, die and leave it to my children. And the very next day they sell it for $1,000, then my basis increases to the fair market value on the date of my death. So they pay zero taxes.   00:36:23 All right. Let me-   00:36:24 Did I make that over complicated?   00:36:25 Nope, nope, you actually did real well. I’m just gonna substitute one word for our listeners and see if this helps make sense. You are, your capital gain tax is on your profit.   00:36:37 Yes.   00:36:37 Okay, so if you bought for a hundred and sold for a thousand, you had 900 of profit. And that’s new money into your ecosystem. And the government says, we’re going to tax you on your profit. And they divide the profit into one of two categories, short term or long term. Now I’m not sure exactly why they do it, but I guess an easy way for me to remember it. If you’ve owned something for less than a year, then they consider that you’re buying it and selling it again, well then that’s your job. You’re just flipping through these things and so you got your day job, so they’re going to tax it as so it looks like income. It’s not an income tax because it was in fact a profit, but they’re gonna tax it that way and they’re gonna call that a short-term capital gain because you held it for less than a year. Longer than a year, they’re gonna call it long-term capital gain and they’re going to change the tax rate on it. And it’s gonna become lower and more favorable. It’s a really important thing to remember out there, by the way. But for people inheriting, your point is the profit basically gets erased because it’s like getting a reset to the current value the day they inherit.   00:37:42 That’s correct. And this is one of the things that comes up in lots of estate planning discussions is parents will say, what if I just add my children onto the title of my property?   00:37:53 Right.   00:37:54 But the problem is if you do that, it’s a transferred basis.   00:37:58 Yep.   00:37:59 So now when you die and the kids are the owners, they still only have $100 in. And if they sell it the next day for a thousand, they have $900 worth of profit.   00:38:08 Yep, so you lose that sort of, I called it a racing profit. It’s, I mean, it is effectively what it is, but it’s that step up in basis.   00:38:16 Right.   00:38:16 Right? So typically when you inherit property, you’ll get that step up in basis, okay? And the same is true, by the way, side note for how life insurance works. Typically speaking, life insurance is going to be inherited tax free. Okay. When wouldn’t it be tax free?   00:38:36 When wouldn’t life insurance be tax free? It’s going to be income tax free.   00:38:40 Right. It wouldn’t be tax free in the event that it was paid for with pre-tax money. Remember the weird thing where the IRS gets you on the way in or they get you on the way out? If, in most, now health insurance is a different animal, but life insurance is what we’re talking about. If you pay for life insurance with, like, let’s say you own a business and you say, oh, I’m gonna buy insurance on myself.   00:39:03 That’s the key, yeah.   00:39:05 And you pay for it and you write it off and then you die. The benefit now becomes taxable.   00:39:11 So this is why we tell people never deduct life insurance payments in a business if you’re both the payer and the beneficiary, it doesn’t work.   00:39:19 Correct. So you don’t want to have your death benefit sort of, take be, like goofed up.   00:39:28 That’s a good one.   00:39:29 So you pay for life insurance with after-tax money. Okay? Now, all of this, in the end of the day, if you were inheriting, there’s a couple things to keep in mind, right? One, hopefully, there’s emotions associated with this. I encourage everybody, take your time making decisions, especially if you’ve gone through a really emotionally traumatic experience, you don’t want to necessarily have your judgment clouded because of what’s going on, so.   00:39:56 We need a one week waiting period before Matt goes to Walmart.   00:39:59 Well, you’ll never find me in a Walmart, but most of Douglas County, you’ll find me.   00:40:03 Right. And so that’s the first thing though, is just be slow and deliberate. If you are emotional, I would encourage you to find somebody else that you can kind of run ideas by. This is where a financial professional can be really valuable. And then the other, I think, is if you’re going to inherit stuff is you take the time to understand the tax ramifications before you make those decisions. There’s the emotional side and then oftentimes we don’t know what we don’t know. If you’ve heard this program, like I said, get the podcast, send it to a friend because if you’ve got heirs out there, you want to make sure that you navigate this cautiously. On the last one, look, if you’re in the planning process and you are trying to set this up so your heirs are in good shape, you can call Derek.   00:40:52 Absolutely. 541-677-7185.   00:40:56 Okay. And if you are in the process of inheriting and you would like some help navigating, you can certainly call us. Yeah.   00:41:04 541-375-0898.   00:41:07 Okay. Us being, you know, Matt and Dave. I will also tell you that we will offer a free consult on any of this stuff. Our goal is to just get you in the right spot. If it ends up that you’re a good fit and we become, have a customer relationship together, awesome. But if not, that is okay. The purpose here, just like this program, we wanna make sure we get you put in the right spot so that things are working for you. And so our goal is simple. If you walk in the door, we want you to leave in a better spot than you got there. And if that means you’re working with us, wonderful. If not, we hope we’re pointing you in the right direction. So that is all. But I’m looking at the clock. Guys, can you believe it? We actually blew through the time.   00:41:45 Wow.   00:41:45 With only one more reference for Kansas basketball. Only time for one.   00:41:49 Exactly. Well, that’s the music. We got to run. So until next time, I’m Dave Littlejohn.   00:41:54 Matt Dickson.   00:41:54 Derek Simmons.   00:41:55 And you’ve been listening to True Wealth. Thanks for tuning in on News Radio at 93.9 FM and 1240 KQEN.