Retirement Daily Roundtable: Smart Retirement and Financial Planning Moves for 2022 – TheStreet

On Feb. 11, 2022, Robert Powell sat down with three experts to talk about top-of-mind topics for retirees and soon-to-be retirees this year. 

CJ Miller of Sensible Money, Marcia Mantell of Mantell Retirement Consulting, and Lee Baker of Apex Financial Services shared their thoughts and solutions about the issues facing retirees and how to take action.

Meet the Experts

Learn more about the Retirement Daily Roundtable experts Lee Baker, Marcia Mantell, and CJ Miller.

Lee Baker

Lee Baker

Lee Baker, CFP®, has been recognized as one of Investopedia’s Top 100 Advisors in America. His passion for helping people achieve financial security combined with a desire to bring a little bit of “Wall Street” to “your street” led him to establish Apex Financial Services. When Lee is not working with clients he is leading positive social change as the President of AARP Georgia. In addition, he is currently chair of the Advisory Board for the financial planning program at Clark Atlanta University where he contributes to the future of the planning profession by helping to mold the planners of tomorrow. Lee remains active in his community as a member of the Georgia Tech Alumni Association Board of Trustees, the Financial Planning Association and his church where he is currently Chair of the Trustee Ministry at Antioch Baptist Church North. Lee is frequently quoted in various publications including Black Enterprise Magazine, the Wall Street Journal, Kiplinger’s, Christian Science Monitor, and Financial Planning Magazine. He also writes a column for MarketWatch and appears regularly on CNBC.

Marcia Mantell

Marcia Mantell, RMA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” and blogs at

Marcia Mantell, RMA® is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women” and blogs at

CJ Miller

CJ Miller, Sensible Money

CJ Miller, CFP®, RMA® is a financial planner with Sensible Money in Scottsdale, Arizona. Miller is also a member of the Financial Planning Association (FPA) of Greater Phoenix Board of Directors and is involved in the Active 20-30 Club.


Below is a slightly edited transcript of the roundtable discussion held on Feb. 11, 2022. 


Bob: Hello, everyone, and welcome to Retirement Daily’s first-ever live webinar, Smart Retirement Planning Moves for 2022. I’d like to welcome our panelists for today’s program. Marcia Mantell, she’s the president of Mantell Retirement Consulting and one of the country’s top Social Security and Medicare experts, Lee Baker, president of Apex Financial in Atlanta and host of Level Up With Lee on finStream.TV, and CJ Miller, a financial planner with Sensible Money. 

Here’s our format for today’s program. I’ve asked each panelist to talk about what they considered to be the two or three most important financial and retirement planning moves you can make in 2022. 

Inflation & Retirement


Bob: So let’s get started. I think one of the top two, three things that people want to talk about today is inflation. What do people need to know about inflation and how might they prepare or change their portfolios given what you’re seeing? CJ, you want to go first?


CJ: Absolutely. I think one of the key things to keep in mind is to keep the inflation figures in perspective. When the news reports on inflation, they are not reporting on how inflation impacts you and your retirement plan, frankly, because they don’t know, and you might not know until you’ve developed a comprehensive and holistic retirement plan. And so if you’ve been measuring kind of your plan against benchmarks over time and you’ve been using a conservative rate of inflation, you’ve likely seen over the last five to 10 years that inflation hasn’t been what you’ve been projecting at. It’s been below the historical average. And so it’s not abnormal now to see inflation be above average number for a year or two, and it shouldn’t make or break your plan as long as you keep that in perspective and don’t panic.


Lee: I agree with CJ. I mean, here’s the thing. Going back to, I guess, it was last May or June of 2021 is when we first saw a big inflation number, 5%, 6% year over year. And I will be honest with you and admit, I was one of the people in the camp that believed it to be transitory and that it would last six to nine months and as things opened up, inflation would begin to recede back to more normal levels.

Now I still think at this juncture, sometime maybe in the summer, we start to see the inflation numbers recede but go back towards more normal, long-term historical averages. So if you’re talking to clients, or if we’ve got some retail investors on the line with us, do not expect or change things making the assumption that, hey, we’re having a return to the ’70s, where we’re going to have sustained years of 5%, 6%, 7% inflation. I just do not think that’s where we are. But again, 2%, 3%, those are our long-term historical averages, and so we should be there because, again, as CJ pointed out, we’ve been below those averages for quite a while.

And when you’re thinking about inflation, listen, inflation will slowly, quietly rob you of your wealth over time. I’ve got young kids, and I read comics and that sort of thing when I was younger, but inflation is kind of like Thanos from the Marvel Universe. If you’re not paying attention, it’ll just be a snap of a finger and your wealth has been eroded. So when you’re thinking about inflation, think Thanos from the Marvel Universe.

And Thanos can’t be defeated.

Bob: Marcia, you want to be Wonder Woman and share thoughts.

Healthcare Planning & Inflation in Retirement


Marcia: Oh, I’d love that. Thank you for that wonderful intro. My perspective on inflation — completely agree with both Lee and CJ — please don’t panic. But the one area I do watch since I spend a lot of time with Medicare and the healthcare side of the equation, healthcare consistently, and of like college tuition, consistently blows up inflation averages. So if inflation is on average running 2.3%, 2.5% over long periods, healthcare’s closer to double that. So that’s something to plan for separately in retirement. And that often is an unpleasant piece of information for folks planning for their retirements, but I always think it’s better to know what you’re facing rather than not know.

Bob: Right. And as you know, and I’m sure as Lee and CJ know, healthcare as an expenditure roughly runs around 5% to maybe 15% of a household’s budget. Not an insignificant amount.


Lee: And you’ve got a similar dynamic as it relates to energy, and that’s something that bounces around a whole heck of a lot more. I mean, literally just here, probably in the last two to three months, we’ve seen the price of a gallon of gas drop. That as we’ve had these tensions with Russia and Ukraine we’ve seen the price of a gallon of gas start to creep back up. There’s now discussion about some bills in Congress to suspend the gas tax temporarily to help alleviate some of those. But there’s a lot of components to inflation. So we tend to think of sort of that one monolithic number, that CPI, that, again, historically, 2%, 3%, but when you start to look at the components, that gives you a clearer, perhaps more detailed picture of where you are with things. So you absolutely want to keep that in mind.


Bob: Lee, I think that’s a good place to interrupt and say, when you look at the components of inflation, we can think about headline inflation, core inflation, PCE. And then when you look at the various components, there are certain components that were largely responsible for the increase in inflation, like used cars and trucks, gasoline, meats, et cetera. Items like shelter are actually below the average rate of inflation. So not each and every component has risen dramatically. Some have risen more than others. And I have to think at some point the inflation rate for used cars has to come down because you will have bought all the used cars that there are out there. We can’t keep buying used cars and having the price go up. 


Lee: Yeah, absolutely. I mean, your point about used cars and some of the other segments is spot on. We looked at things… And we experienced it in our own house. We got a daughter in college, and we bought a nice little four-cylinder car for her to go away in college, and our younger daughter who’s still at home in high school said, “Okay. Well, what about when it’s my turn?” And we looked at virtually that exact same car, the price had gone up 30% during the course of the pandemic. That is not going to continue to happen for a number of reasons.

At some point, the components that go into the automobiles, the chips, at some point, these backlogs where the supply chain is just simply clogged up, at some point it’s going to break loose. We’re not going to be in supply chain hell forever. Just like COVID was not going to last forever. So that’s going to open up some things, and we’ll begin to get chips that can go into new cars and some of those prices will begin to recede.

I also talked to some people that said some of the new car manufacturers are thinking about letting some of the cars move off the lots but you come back later on, like they get an upgrade, if you will, because many of the things that are controlled by the chips don’t prevent the cars from being drivable. It may mean the navigation doesn’t work. So if you as a consumer are comfortable driving a car without the navigation system in there, you can just take it back later on once the chip shortage has been taken care of.

The same thing with housing. Some of the price increases that we’ve seen in housing… Early on you got a location like here in Metro Atlanta, where there’s a lot of stick-built homes, and so there’s a lot more lumber that goes into it, where we’ve begun to see that the future market for lumber has started to come back some. And so if there was nobody there cutting down the trees, turning the trees into two by fours and two by sixes, okay, then it’s the law of supply and demand, but now that people are out, we’re starting to see the dynamics around COVID recede into the background, normal metrics are beginning to matter again.

Wages Rising


Bob: One thing I’ve noticed in the inflation numbers too is that wage growth is also rising, maybe not as fast as CPI in general, but obviously that’s a good thing on the one hand that people’s salaries or hourly wages are rising, maybe not quite on pace with CPI, but certainly they’re rising. Good thing, bad thing? Thoughts about that?


CJ: Well, I think it’s a good thing when wages rise in general. Typically it means people are more productive. That being said, when people think inflation, they think about their expenses. And so it’s important to keep in mind that you can control your expenses in some ways, whether it’s for planning, where you can add an extra 10% for miscellaneous expenses you might not be thinking about and then when inflation creeps up you kind of have wiggle room there. And like Lee said, things like automobiles, if you can hold off that auto purchase till prices come down. That’s going to affect you a lot more. And then extra wages on top of that can be helpful. Really expense planning can help you hedge inflation more than anything, I think.


Bob: There was an article in the Wall Street Journal this morning that said that the average increase for a household, given the current inflation rate, is roughly around $276 a month, which on the one hand seems manageable enough if you’re keeping track of your expenses and you have discretionary expenses perhaps that you can cut back on, or things that you could do to make up for the extra cost, be it a part-time job or some other tactic.


Lee: I saw some data, and I’ll try to go back and find it and maybe include it when you put this out on Monday, but even when you take a look at the increase in wages, there’s been some interesting dynamics in the various segments. And so the lower end of the pay scale has gotten a bigger increase from a percentage basis than towards the middle and upper of the pay scale. Personally, I think that is a very good thing. Economically speaking, through the years we’ve had these different stimulus programs and years ago where everybody got $600, those dollars tend to go right back into the economy, or those at the lower end of the pay scale and the earning. So I think it is stimulative across the board, but I also think it’s about time.

Again, this is just my opinion. It is been quite a while since there was any sort of minimum wage increase. And if you accept that there is a minimum wage, what you could get was $7.25 an hour 15 years ago is not the same today. And so I think some of what we’ve seen and sort of that skew to the lower end of the pay scale has helped to close that gap in wages.

Bob: Marcia, any thoughts?


Marcia: Yeah. I would agree with Lee, and I think along those same lines. It’s long overdue to get a minimum wage increase. But the gap is still so big. It’s not going to empower necessarily those and, say, the bottom third of the economic spectrum to make these great strides forward. And where I get particularly concerned with that is they’re still just, and exactly rightly, every dollar in goes right back out. It’s to buy all the basics: food, gas, sneakers for the kids. They still can’t carve out the amounts they are going to need for healthcare and for future retirement. It’s just not in their reach. That’s one problem that still will need to be solved, but overall I’m delighted to see the increase in the Social Security wage. COLA, cost-of-living adjustment, went way up for 2022, 5.9%, so the seniors were a little bit happier. Doesn’t keep pace but it helps. So any forward motion in increasing wages does help.

Managing Inflation in Retirement Portfolios – TIPs


Bob: All right. So we’ve covered inflation. What we know now is that the Federal Reserve is worried about inflation and that they probably will increase the funds rate in March. Right now there’s a 50% chance that it will be a 50 basis-point increase. One, talk about that, and also, what’s the actionable advice in terms of what people might be doing with respect to their portfolio. Should they be thinking about adding TIPS, for instance, to their portfolios? CJ, you want to go first?

CJ: Sure. Well, I think the first thing you need to think about with your portfolio and a rising interest rate environment is that usually people will conflate their fake bucket of money with their income bucket of money. So they see bond funds in their portfolio and they think, “Well, that’s supposed to be my safe money,” but all the academics will tell you, in a rising interest rate environment, those bond funds may lose money. So I think the first thing you want to do is understand what do the bond funds or individual bonds look like in your portfolio because they’re not all alike. If you have a long-term government bond fund, you may lose more money in a rising interest rate environment than if you have a one-year duration short-term bond fund. So I think understanding the duration in your funds is the first step.

And then the second step is looking at that safety bucket that is actually safe, the money you don’t want to subject to equity market risk or to interest rate risk, and say, okay. The price for that safety bucket is a low yield, and for me maybe I want to make sure that I have three or four years of my consumption spending locked in and not subject to those risks that I can’t control, and I’m not going to hurt very much on CDs, or buying an individual bond till much already, but that’s okay because I know I can sleep at night knowing where my next retirement paycheck is going to come from.


Lee: I’ll say from a standpoint of the interest rate, so let’s look at it on two sides of the equation, if you will. 50/50 chance that there’s a 50 basis-point increase come next month. We all know with, I’d say, a fairly high degree of certainty that’s not going to be the last. So as we talk about the expense side of the equation, if you have some capacity to eliminate, reduce debt, any of those sorts of things, try to do that sooner rather than later because money will simply be more expensive a year to two years from now. I personally think we can be in a rising rate environment easily through the remainder of 2022 and on into 2023.

Now, when we flip over and say, well, what do we do from a portfolio standpoint? There’s that old saying that history may not repeat itself but it usually rhymes. There are some things that typically happen in a rising interest rate environment. There are some sectors that typically do well. So do we begin to look at things like financials? Do we look at real estate and some of those things that again tend to do well? And I don’t advocate market timing but if we’ve got a diversified portfolio, maybe you tilt a little bit. If we’re looking at that safe bucket, the fixed income CJ was talking about, well, there’s more to it than the Barclays AGG, if you will. There’s the credit markets, there’s private credit, short duration, longer term. Specific to TIPS, okay, but I’m candidly not terribly excited about that prospect. More inclined to, again, do some tilting or perhaps overweighting, if you will, in some segments; real estate financials amongst them and looking into private credit.


Marcia: From my perspective, I look at interest rates on a very tactical level in two places. The first is my savings account. And by golly, I’m going to jump for joy if I could get five bucks in interest on my savings account for my emergency fund money in the next decade. That would be super. So you will see some bits of an increase in your savings accounts. The other is on the mortgage side because the housing market does drive so much of the economy. I think it was today, or maybe last night, mortgage rates are up a tick, making them the highest they’ve been in quite a number of years. And if you just listen to that on the surface, it can sound a little scary. It’s not. They didn’t go from 2.8% to 99% interest. We’re talking about small increments. But, if you are trying to buy a house, or a condo, or something now, or some type of real estate property, they’re not going to be a lot lower going forward, so that’s something to weigh into any decision making you have.

I have two millennial daughters, and this is the first time they’ve seen rising interest rates on anything. They do own a house and it’s like, “Oh, good thing we got it last year.” I was like, “Girls, you have to live somewhere.” Sometimes it’s just the timing is interesting but you do the best you can to manage the interest rate in the moment that you need to buy something.


Bob: Right. CJ, I want to turn back to you on the subject of TIPS. There’s a report out from Capital Group that says, in essence, consider TIPS for a rising interest rate environment. Share your thoughts.

CJ: Well, TIPS are never… They are directly tied to inflation. The way these products work is every six months they are going to get an adjustment. And the nominal yield stated on TIPS are typically actually negative, and so if that inflation number doesn’t hit and offset the difference between what you could have gotten on a traditional bond and the negative nominal yield lifted on the TIPS, you’re pretty much worse off. In most people’s portfolios when they’re buying TIPS it’s because they are concerned about inflation. And in my mind there are better ways to hedge inflation within a long-term portfolio, because TIPS are never going to actually beat inflation, they’re only at best typically going to match inflation. And so if you have a diversified equity portfolio, for instance, over the last 24 months, even though inflation’s been high, your equity portfolio and assets have probably done better than the inflation rate, if it’s a responsible equity portfolio. And so in my mind, let that equity portfolio do its thing.

I’d rather, instead of selling out of equities and buying more TIPS to match inflation, understand what the job is for each asset class in my portfolio and stick to it for the long-term because those things are designed to work for a reason in most market scenarios.

Consider I Bonds for Saving


Bob: So we’ve talked about safe money. Recently, many experts have been suggesting using I Bonds for your safe money, granted you can only put $10,000 in, but at the moment the yield on an I Bond is fairly attractive.

CJ: Absolutely. I think for I Bonds there are a couple things to keep in mind. The first, and for lack of a better term, the TreasuryDirect website kind of sucks, so devote yourself to a couple hours trying to navigate that thing to get the I Bond purchased. The other thing to keep in mind too, there are some alternate strategies you can use to actually get more than $10,000 worth per tax filer. For instance, you can put up to $5,000 in a tax refund and invest in those. But again, the long-term perspective, like yes, that’s great if you’re willing to do it, but what is an extra 5% or 6% on $10,000? It’s a few hundred bucks. And so maybe you’re jumping through hoops to get a few hundred bucks more. That’s great but it’s not going to make or break your retirement plan. So do it if you want to do the legwork but don’t expect it to have material change on your overall outcome.

Behavioral Economics & Retirement Planning


Bob: One of the things, Lee, that you mentioned that you wanted to talk about is behavioral economics, which is an interesting topic as it pertains to retirement planning and financial planning. What do people need to know about that?


Lee: When we talk about behaviors, a lot of what we do as financial advisors, we spend a lot of our time coaching clients, and candidly, we should spend some time coaching ourselves, or being coached by someone. The theory here for me is is you don’t want to make permanent decisions based on temporary feelings. For many of our clients, if you think about how you felt in January here in 2022, or think of those people who made, candidly, what were permanent decisions because of how they felt February and March of 2020, for those people that just went, “Ah, I’m out of here,” and jumped out of the market, they missed in all likelihood a very quick run-up. Again, the markets went down faster than any other time in history, but that initial rebound, it went up faster than any other time. And so if you are not careful, you can make very harmful decisions that are lifelong because of a temporary feeling of fear.

And so you want to make sure that you’ve got some guardrails. Make sure that candidly you’ve got a plan. Be it a full-blown investment policy statement, really understanding what your risk tolerance is. And doing that research, and the planning, and analysis to kind of go, “Okay. Well, this sounds good that my portfolio might go up X percent.” But we know that these events are going to happen, where there’s going to be a sharp decline. Perhaps some people got lulled into a sense of false security.

Marcia mentioned she’s got some millennials there, and maybe just in the time they’ve been paying attention to the markets, yeah, the markets went down pretty severely when COVID hit but after that the level of volatility in the market was almost nonexistent. I think prior to this month, we didn’t have more than about a 5% pullback that lasted more than two days for a year and a half. That is not normal. A 10% correction periodically is the norm. And so we’ve got to be mindful and understand that, hey, listen, you don’t want to make really permanent decisions. Now that doesn’t mean you just stick your head in the ground and you don’t do anything, but take a look, understand the environment. Again, we’re in a rising interest rate environment. Are there some opportunities out there that you can take advantage of? But again, don’t let your temporary feelings wreck your future by making permanent decisions.

Marcia: Bob, can I tag onto that?

Bob: Yeah, please do.

It’s Important to Have a Retirement Plan


Marcia: Lee, I think that is so important, what you just said, that we are all bombarded right now with messaging and what we think is real information from every minute we’re awake. And if it’s not bombarding us, we can just hop on our phones and get more. So we’re hyper-alert but we don’t always know what to do with that information. And both you and CJ, well, said, the key here is to have a plan. And the real value of the plan is not so that you can say you have a plan, it’s so that you can put all that noise away, because it doesn’t matter. The only thing that really matters when you have this plan in place is how much cash do you have for the next opportunity. If you’re fully invested, you don’t have any cash for the next opportunity, that’s okay. Then you rebalance as well. But there are just certain tried and true behaviors that we know work.

Lee, the other thing you said, that I wanted to tag on, we need to reset what we think is normal. You’re right. It is not normal to not have at least a 10% correction that lasts like a quarter. This is a really unusual time, but when you’re my kids, they’re 25 and 30, this is what they know. This is now their benchmark. And so I think as an industry we could do a better job of explaining what the real benchmarks are, and that’s that on average we have a major correction of plus or minus 20%, usually we’re talking about the downside, every four to five years.

So when I talk to those who are going into retirement, it’s a matter of helping… Explain to them why you continue to need a plan, but you’re going to see in a 30-year retirement five or six more recessions. And are you prepared for that when you have no paycheck coming in from an employer? And that just helps them go, “Oh. That’s why I need my portfolio to work the way it does, or why I want some extra cash, so I can pay the bills when we do have a recession.” So we need to reconfigure some of the language and some of the benchmarks. This has not been a normal period during COVID at all.

Bob: Marcia, my kids, probably like yours, grew up in Boston in a time when it was normal for any Boston team to win a championship and they thought that was to be expected.

Marcia: Of course.

Behavioral Finance and Bias


Bob: So CJ, talk a little bit about behavioral finance and maybe some of the biases that clients face, whether it’s recency bias, or overconfidence, or whatever it is. Do you witness this in your practice?

CJ: Oh, absolutely. First I have to applaud Lee and Marcia for talking about this in general because it often gets overlooked, especially by the news of the day. And I felt like it was a bit of a cop-out for me to have a plan as the number one thing for 2022 but that’s what I would write for every year. And so the reality is just because, like Marcia said, it gives you peace of mind, from a planning standpoint, having that perspective also allows you to look at those biases and say, “Well, what is affecting my decision making?” And the truth about retirement planning is it’s a series of trade-off. And there are a lot of different levers you can pull, and there’s no one right answer or one way to get from point A to point B and have it be the best. It’s a series of risks. And so I think benchmarking bias is a big one.

If you don’t understand what every dollar in your portfolio is supposed to be doing, it’s easy to read the news or look at the day-to-day market activity and say, “I’m not matching the S&P 500,” but what you should be benchmarking against is your plan. We like to tell clients, the goal in decumulation is different than accumulation. You’re no longer as concerned about the day-to-day volatility of your portfolio minimizing that. You’re concerned about minimizing the day-to-day volatility of your income, and making sure that paycheck is it going to come regularly no matter the market environment. And so if you let those cognitive biases affect you, you’re going to be in a position where you might be led astray and have to change course way too many times for that paycheck to be consistent.

Is Social Security Going Bankrupt?


Bob: Speaking of things that frighten people, Marcia, one of the topics that you like to talk about is Social Security and whether it’s going bankrupt. Help us alleviate our fears around this.

Marcia: Yeah. Thanks, Bob. That is probably my biggest concern for folks coming, especially near retirement, I call it the hype and hoopla, that we’re all hearing out there, that Social Security is going bankrupt. I wrote an article, I think for you Bob, at one point, and said like, Chicken Little screaming, “The sky is falling. The sky is falling.” The sky is not falling. Social Security is not going bankrupt. It just isn’t.

And what we need to understand and have some knowledge about, is Social Security is a law. Actually it’s a massive law. It’s about 4,900 pages long right now. This is no small animal. The only way changes can occur is if Congress makes it so. So are there rumors or room to improve? Absolutely. We need to figure out something about our payroll taxes because money goes in, that we’re all putting in as we’re working, to pay our parents as they live in retirement and get this benefit. So it’s a pay-in or pay-to-play kind of system.

The savings account portion, the rainy day fund, that’s the part that is getting all the attention. It does need to be shored up. Yes, indeed. But Congress is going to do what Congress is going to do. We can’t get too excited about that. Why this is so important… We all need to understand that Social Security will be there. It is a social safety net and it is insurance. And once we understand those pieces, it makes it easier for us to make good decisions about when each of us individually can claim, and should claim. Though the concern that I have is that with all of the very negative and very scary headlines, and news stories, or whatever you see on Facebook, when you see all of this, it’s really natural to go back to behavioral finance, you want to get what’s yours. Before that pot runs dry, I want to at least get the part that’s mine as much as I can. And that equates to claiming early. And for the most part, or most Americans, the worst thing you can do is claim social security early.

This is not meant for you when you’re 62 and 63, it’s meant for you when you’re 85 and 95, but the decisions you’re making very early, often even before you’re retired, so those early 60s, they will dog you in your 80s and 90s, and if you made a bad decision in your 60s, that’s just too bad. You’ll live with it for your entire life. And it’s a significant reduction in benefits, up to 30% less per month because Social Security now has to pay you for a lot longer. So that’s why I worry about these kinds of… Bankruptcy, it’s such a negative word, and people are nervous when they hear it and they unfortunately make not as good decisions as they could.

Building a Retirement Plan & Reduced Social Security Benefits


Bob: So let me expand on that. We do know that the trust fund will be depleted in 2033 or so, and that the schedule benefits could be reduced by 25% or so. Maybe a question for Lee and CJ, would you build that into the plan? The possibility of benefits being reduced by 25%?


Lee: I’ll toss it out and answer or respond but let me give this caveat. And I say this simply because… From a volunteer perspective, I’m president of AARP here in the State of Georgia, and this is my personal positioning not AARP messaging. One, purely from a planning perspective, most of the software that we as planners use have the ability to adjust those kind of things up or down. And so we can illustrate to a client, “Hey look. Here’s what it’ll look like if there is in fact this 25% reduction.” But we start with that baseline and have that conversation.

Now, Social Security has changed before. 65 used to be the full number. It hadn’t been that forever. Over a period of years it ticked up, and now 66 and two months, or 66 and three months to get your full benefit, and current, for folk like me it’ll be 67. Do I think that Congress at some point will get together… As difficult as it may seem to imagine Congress agreeing to anything right now, including whether or not it’s raining outside, at some point they’ll get there and there will be this come together moment. Now, does that mean we are going to play around with the age of getting benefits again? Does it mean means-testing? Any of those sorts of things. I say, hey, listen, it’s all on the table, but Social Security is going to beat that. It’s not going to go away. There is not an elected official in Washington that would dare let it go bye-bye. I think the chances of that happening are zero.


CJ: I agree with that a 100%. I think it’d be political suicide to do nothing. So that’s the number one incentive for politicians to act. I have many working years ahead of me and I’m younger than, I believe a 100% of our current clients, especially the retired ones, and so I like to joke with them when they come in that, “Don’t worry. My payroll taxes will fund your Social Security.” I can pretty much promise them that.

And I think it’s important when it comes to what we model so that clients understand you don’t necessarily want to be too conservative. And it’s not just Social Security. We could say we’re going to run your plan with 50% less Social Security income, or even none at all if you’re that worried about it. We could also run your plan so that you live to age 110. That could happen. We could run your plan at 0% market returns, because even though it hasn’t happened in a 30-year period, it could happen.

And the result is always the same when you use two conservative assumptions, it’s, well, you actually can’t retire when we said you could or you can’t spend what you want. And you’re not going to get the worst-case scenario except all but maybe one to 2% of the time. And so if you use that if you’re planning for every time period, more often than not you’re going to end up being 85 with $10 million more than you needed. And so for us it’s about looking at it and saying, “Well, how do we use reasonable and responsible assumptions but not be so conservative that you’re sacrificing the golden years of your life when you’re 60 and 70?” I would never want to tell a client not to go take that big vacation with their kids and grandkids because Social Security might not be there 10 years from now. I think that’s just irresponsible.

More on Social Security Funding


Marcia: Then Bob, I just want to chime in too with… The last time Social Security’s reserve account was running very dry was 1982.

Bob: Right.

Marcia: In 1983, we had the Social Security amendments to take care of that problem.

Bob: Right.

Marcia: So you’re right. 2033 is the year right now that’s being projected when the savings account portion will run dry. Well, probably 2032 Congress will put this on the agenda. They go down to the wire, and we can’t overthink this or be overly concerned but eyes wide open.

Bob: Personally I’m of the opinion that I think you have to plan for maybe a worst-case outcome, the 25% reduction, and then if it turns out that there is none, you’ve benefited from having a worst-case scenario in your plan. My personal opinion.

Medicare, Retiring Before Medicare & HSAs 


Bob: Another topic, Marcia, that is on your list is how to become a better consumer of health insurance. In a world in which we have ACA prior to Medicare, and then Medicare post-65, lots of choices, lots of confusion. Lots that could go wrong in terms of buying more or buying less than you need.


Marcia: Yes. Health insurance is just a big mess at this point. While I do a lot in the Medicare side of health insurance, I also help people as they are leaving jobs, whether they chose to retire early or not… Because you have this gap. So say you’re 60, and you’re leaving your job for whatever reason and your health insurance will stop. You have to figure out what you’re going to do between 60 and 65 because Medicare’s doors do not open until each individual turns 65.

Learning the system is not an easy task. And there’s an awful lot of noise, again, out there. The ads that run for Medicare Advantage Plans and Medigap plans in the fourth quarter, the drug ads. I mean, it’s just an all healthcare environment these days. So what I suggest that people do, if you’ve got your health insurance at work, if you’re working still and have health insurance, and it works for you to have a high deductible health plan with an HSA… This is a particularly good strategy to put into place when you can, and it also really forces you into this whole notion of what it is to be in consumer-driven health insurance, because you have to have your hands dirty.

When you’re in an HSA, are you going to spend money out of the HSA or can you afford to pay for that doctor visit out-of-pocket? How are the costs structured? What’s this adjustment? You know, I got a $3,000 bill but the insurance company’s offset it or adjusted it by $2,900 and I owe a $100 . What? How can that be? Or various drugs that you might take prescription drugs that were zero last year in your health plan and now they’re 50 bucks a month. How can that be? So you start to become more familiar and more of a consumer, even though I will tell you that it is all but impossible to get to any transparency of what the costs are for a particular procedure, or why the drug at CVS, the exact same drug at Walgreens costs 92% less. It is quite a crazy system but we all owe it to ourselves before we get to Medicare to start to learn the ins and outs of the healthcare system.

And I think one of the best things to come really since sliced bread is the Affordable Care Act with the exchanges. It now allows all of us to get health insurance when we don’t have a job. It just really opened up a tremendous amount of opportunities for people to stay insured, because not being insured today will basically… That’s where bankruptcy comes in, when you get a $55,000 accident or heart attack and you don’t have $55,000 to cough up. That’s what happens without insurance. So stay insured, be insured, and learn about the different types of insurance available to you at each different age.


Bob: I’d say the number one question I used to receive prior to ACA was, “I’ve left the workforce pre-Medicare, how do I get health insurance after I’ve exhausted my COBRA payments?”. Lee, CJ, any comments about health insurance in your world with real clients?


Lee: I am a huge fan of the HSA option when it’s available. If you were to ask me, is there such a thing as a perfect investment vehicle, the HSA might be that, where you can take triple advantage, if you will, of the tax code. So you’ve got money going in on a pre-tax basis and you know that in retirement you’re going to have healthcare expenses and the ability to then take that out in retirement, it’s tremendous. To the extent that it’s an option for you, I encourage everybody to look at that strongly because…

We’ve now been conditioned, if you will… And it seems like 401(k) plans have been around forever. That’s not the case. Marcia, in the case of your daughters, it’s been around for the totality of their lives but perhaps not ours. And so you take a look at that and kind of go, “Yeah, I get it.” And there’s a little money coming out of my paycheck, and introducing my income so that’s going in pre-tax and it grows and maybe I pay the taxes when I get to retirement, but here with the HSA, it’s kind of like, no, you don’t pay taxes in retirement when you take it out for healthcare expenses. It’s a nearly “perfect” investment vehicle that can greatly benefit and help.

When we go back to the earlier part of the webinar and we were talking about the different segments of inflation and how you break down what’s going on in healthcare space, the HSA and the nature of how it’s taxed can help you catch up with some of that. Again, to the extent that it’s available to you and you can make contributions and get it to a point where you can then take the dollars that you put in it and grow it in the markets. So, absolutely take a look at that and see if you can take advantage of it.

Bob: CJ, any thoughts?


CJ: Absolutely. Yeah, I second that. The HSA is very powerful, not only an accumulation tool, but a decumulation tool. Some of the most flexible accounts out there. I do encourage retirees to keep very detailed tracks of their receipts. And most affluent retirees can pay for their healthcare out of pocket, but there’s no deadline on when you need to redeem those qualified medical expenses for a tax redistribution. So you could have a leg surgery for $10,000 or something, pay for it out of pocket, and then keep the $10,000 in your HSA growing for 10 years, and then say, “Well, I need that $10,000 back tax free,” go redeem the receipt 10 years later. And it’s doubly important for your errors because unlike an inherited IRA where they can take it out over a 10-year period and limit the tax liability, an HSA has to be redeemed with qualified medical expenses within 12 months after the decedent’s death. And so if you don’t have those receipts stockpiled, your heirs may have trouble actually getting that money out without paying the taxes.

And the second point I want to make on the healthcare conversation is that the cost is only one side of the coin. The other thing you need to keep in mind prior to retiring, before being Medicare age, is coverage and access. As much as I love that the Affordable Care Act gives people an option now to have coverage, the options are very limited in those states. For instance, we have the Mayo Clinic here in Arizona, and many of our local clients will continue to work up to age 65 if they get coverage through the Mayo Clinic because they don’t have access to that on an exchange plan. Even if they can afford it on an Affordable Care Act, or even if they can afford the premiums for an exchange plan, they might not be able to go see their doctors or get the same level of care that they were getting while they were working. And so just make sure that you understand that the coverages may be different and it’s not all about modeling in the cost.

Cryptocurrency & Retirement Planning


Bob: We have a question that came in about crypto, and it has to do with whether it’s too late for the person to invest in crypto. I’ll let that be a jump ball. Or maybe, Lee, let’s start with you since we talked about that briefly.


Lee: Okay. I’ll dive in. Fortunately just recently did a show with a genuine crypto expert. Again, put all the disclaimers, talk to your tax professional, your financial advisor, but no, it’s not too late if in fact you believe in crypto. When we talk about crypto, everybody’s familiar with Bitcoin. I think that digital currencies are here to stay. They’re not going to go anywhere. Now, are there a bajillion of them now? Absolutely. Do I think a bunch of them are just total garbage? Absolutely. Is it too late? No.

Now, in that same vein, this goes back to that idea of behavioral finance and behavioral economics. It was at about this time last year that Bitcoin started this run up and it’d maybe gotten to about 60,000 and the phone’s ringing off the hook. I’ve got classmates pinging me and Facebook and all those sorts of things and asking these questions about crypto. Everybody’s excited because Bitcoin was going to 60,000. And you have those conversations, it’s really volatile, so on and so forth. Bitcoin took a nosedive. By the time we got to June, it was back down 25,000, 30,000. Nobody called. And so my thing is, if you like Bitcoin when it’s 60,000, you ought to love it at 25,000 or 30,000. It’s a buying opportunity. Buy low, sell high. But even in the world of cryptocurrency, consumers, investors tend to make the same kind of behavioral mistakes with cryptocurrency that they do with traditional stocks, if you will, or stocks. So I don’t think it’s too late. I think there’s an opportunity there.

Now part of the problem is, I’ve seen some projections, if you will, that they think Bitcoin will go to a 100,000. So you’re not going to be able to take advantage of some of the dynamics we talked about with my colleague, Bobby, and he introduced me to it, and looked at his mining rig back in 2017 and what Bitcoin went to from 2017 till now. That horse has then left the bar. But is there still room to run? Yes. How will some things like Ethereum play out? We don’t know. We’re talking now NFTs and the metaverse, and I’ll be candid with you, I’m still trying to wrap my mind around that real estate idea of location location but in the metaverse. I’m thinking, okay, if I’m logging in or pulling out my phone and going somewhere electronically, does it really matter if that somewhere is next door to Las Vegas, or SoFi Stadium, or whatever it is? I don’t know but I’m still trying to wrap my arms around that portion of it.


Marcia: I’ll say there are a few of us here on the call old enough to remember Peter Lynch, who was the famed Magellan Fund manager at Fidelity. And I worked at Fidelity back in the early ’90s and Peter Lynch was still there. And he had one and only one phrase, and that was, “Know what you own.” And so my perspective on all the new crypto or the virtual currencies and the opportunities… There’s always an opportunity. Remember the gold rush. A few people make it really big and most people don’t, but you have to know what you own. And for people who have a hard time understanding I Bonds, municipal bonds versus junk bonds, for example, and TIPS, perhaps getting into crypto might be premature.

So if you want to invest the time, that’s when you win. If you just want to buy in because you like going to Vegas, you know the risks, you could lose it all, or you could gain big, but if you’re not invested in the process and in the investments, then you shouldn’t be there. And Bitcoin and the gang out there, no different. But you know, it’s fun at a cocktail party or at Super Bowl on Sunday to say, “Ah, I got Bitcoin.”


Lee: Thinking of Super Bowl… I don’t know maybe some of you may have read the story of Odell Beckham. He’s the receiver for the Rams and started the season playing for the Cleveland Browns and got traded mid-season, but decided to take his compensation in the form of Bitcoin. So the remaining part of the season it was valued at $750,000. Well, back in October, Bitcoin was at a high point so you got 60,000 coin. Well, you’re in California, you took that as compensation so it’s taxable as income. So where we stand today, you’ve got something that was worth $750,000 back in October, maybe it’s worth $400,000 now, you owe 300 and something in taxes. You’ve got $40,000 $50,000 of Bitcoin now after you pay taxes. So it’s a level of volatility that you’ve got to really be careful with.

And so as we begin to collectively try to wrap our arms around it, from a regulatory perspective as financial advisors, the systems aren’t built to deal with, quite frankly. Secondarily, how do we incorporate it into portfolios? It’s a different level of volatility. When people get nervous about what happened last month in the stock market where we had, again, a garden variety 10% correction if you’re talking about the Nasdaq, how do you deal with 350% downward corrections in a space of 12 months? And what does that do to your portfolio if that’s a part of what you’re looking to use in retirement?

So if you’re going to wade into those waters at all, please, please, please, downsize it. Tip toe into those waters and take some time to try to learn what that might do to your overall portfolio if you’ve got significantly more money in there. Because, again, the last thing you want to have happen is… Yeah, it sounds fun and it looks nice when things go up, but they come down, and so you don’t want your $5,000 a month retirement income to turn to $2,500. It’s real hard to make that up when you’re 80 years old.

Top Retirement Planning Moves in 2022


Bob: So we’ve got about five minutes left before the top of the hour. What I’d love to do is to have each of you for maybe one minute or so describe, reiterate the top retirement financial planning move that people need to make for 2022. CJ, let’s go with you first.


CJ: Build a plan, and I can’t state this enough, if a lot of the topics we discussed today were confusing or over your head, consult a professional. You don’t necessarily need to go out and hire a professional portfolio manager that you’re going to pay for the rest of your life. There are firms out there that will give you hourly planning advice, or help build a comprehensive plan as a standalone offer. But the biggest mistake you can make in pretending that you know things that you might not know and acting on incomplete knowledge, so know when to hire somebody and build a plan this year that you’re actually going to stick to.


Marcia: I would say the number one move to make is, start all of your preparation early. However old you are or whatever stage towards retirement you are, do things in a linear way. So much of our tax law, and the retirement laws, and Social Security and Medicare trigger on age. Start early to understand what the opportunities are for you at various ages. Make sure you’re getting all of your ducks in a row well years before you need them. And if you’re young, and even if you just think you’re young, keep saving. The more you can put into your 401(k), your 403(b)… Open an IRA. Does not matter if it’s tax-deferred or not. Any bucket you can cordon off, specifically for retirement, will be found money and you’ll be grateful when you’re over the 60s… When your numbers start with 60 for your birthdays.


Lee: I’ll start with one thing and it’s strategic, and candidly, it’s the tagline for our firm. You want to do three things. You want to have a vision. So what is it that you’re trying to accomplish? What do you want your retirement to look like? Start there. I mean, we literally go into the conference room and get up on the whiteboard with our clients. I’m a horrible artist, and maybe a stick figures, but we’re getting up there and trying to get people to envision what they want and what their life looks like because once you’ve got that vision established, then you can begin to outline that plan and draw up a plan to get there. So step one, have a vision.

Step two, have a plan to get there. And if you do those things and monitor it, water it like a garden, tend it like a garden, sometimes you got to go out and pull out some weeds, tax changes are going to happen, and so you’re going to have to course correct. I don’t care where you lie on the political spectrum, here in this country, we get a new president, we are going to get new tax code. It never fails. So understand that as we make these plans, they’re written in pencil, so every now and then you’re going to have to pull out the eraser and make some adjustments. Pay attention to those things and you can live well in retirement.


Bob: All right. I guess I get the final word, which is… My advice would be, to become a student of the subject. I recently spoke to a woman who was recently divorced. She asked me for some advice, I started throwing out terms like pre-tax and post-tax, and she said to me at one point that her eyes were glazing over, that she really felt confused by just those terms alone and that she really needed to become more literate about all things related to money. So for me, and for much of my career, helping people become students of the subject, helping them learn as much as they do when they are investigating whether to buy this or that washing machine, or to go on this or that trip is the same sort of intensity that you should have when it comes to personal finance and retirement planning.

So with that I’d like to thank CJ, and Lee, and Marcia for joining our first ever Retirement Daily webinar, and to thank all of you who attended today. It’s greatly appreciated that you took the time out of your day to join us. So thank you.

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