Business Innovators Radio - Interview with D. Scott Kenik, Founder and Principal of Wealth Concepts Group Discussing Fill-the-Gap Income Planning

Episode Date: May 31, 2023

I first started in the industry back in 1995. I spent several years educating financial advisors from Merrill Lynch, Morgan Stanley, Prudential, and other national companies on retirement plan design, and I worked for Metropolitan Life helping them launch a new retirement program.There were 2 significant events in my life that led me to my current and most rewarding path of helping families gain financial security.The first was my parents’ retirement problems. They spent much of their retirement taking seminars and learning about investing and they traded their own accounts to supplement their retirement income. As far as I knew they were successful. They never said otherwise.When my dad passed, my mom told me that, in fact, they had lost a lot in the stock market and she was concerned about having enough money to live on. Now they were both smart people and had dedicated a lot of their time to learning about investing. Instead of Mom enjoying her golden years, she pinches every penny hoping that her money will last.The other significant event was the economic crash in 2008 from the mortgage crisis. I watched my retirement account drop like a rock, as did my friends and associates. I knew there had to be a better way.If a No-Stress Retirement is your goal, then we invite you to contact us for a complimentary Wealth Concepts Group consultation.Learn More: https://wealthconceptsgroup.com/ and get a complimentary copy of Scott’s book “No Stress Retirement Roadmap https://www.nostressretirementroadmap.com/ALL CONTENT IS FOR INFORMATION PURPOSES ONLY. OPINIONS EXPRESSED HEREIN ARE SOLELY THOSE OF THE WEALTH CONCEPTS GROUP AND OUR EDITORIAL STAFF. THE MATERIAL PRESENTED IS BELIEVED TO BE FROM RELIABLE SOURCES; HOWEVER, WE MAKE NO REPRESENTATIONS AS TO ITS ACCURACY OR COMPLETENESS. ALL INFORMATION AND IDEAS SHOULD BE DISCUSSED IN DETAIL WITH YOUR INDIVIDUAL ADVISER PRIOR TO IMPLEMENTATION. THE PRESENCE OF THIS WEBSITE SHALL IN NO WAY BE CONSTRUED OR INTERPRETED AS A SOLICITATION TO SELL OR OFFER TO SELL INVESTMENT ADVISORY SERVICES. ANY GUARANTEES REFER TO INSURANCE PRODUCTS AND ARE BACKED BY THE CLAIMS-PAYING ABILITIES OF THE UNDERWRITING COMPANIES.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-d-scott-kenik-founder-and-principal-of-wealth-concepts-group-discussing-fill-the-gap-income-planning

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with Scott Kenneck, who's the founder and principal of wealth concepts group, and we'll be talking about fill the gap income planning. Scott, welcome back to the program. Hey, thanks so much for having me on again. You're welcome. We're just continuing our series here, and it's just so exciting talking with you.

You make all these concepts very, very clear, and I know fill the gap income planning. That presupposes that there's a gap that needs to be filled. So let's just jump right in and define what is fill the gap income planning. Well, there certainly is a gap for most people. So fill the gap income planning is absolutely vital and necessary. It's really what my no stress retirement plan is all about. I call it really the definition of sleep insurance, and it's what I do for the vast majority of my clients. So we start by creating a list of all your monthly expenses, and we budget anticipated future expenses, such as trips you want to take, maybe buy travel a country in an RV, buy a boat, whatever is you want to do in retirement.

And we kind of add a cushion to that to make sure everything's covered. And we do the same with your income. Starting with Social Security, we added any pensions, if you're lucky to have one, a rental income, did it in income, any kind of income at all. And the difference between your expenses and your income is your gap. And for most people, the gap is negative, meaning that their expenses are greater than their income. So we then take their retirement savings and we create a pension-like income that'll give them guaranteed lifetime income stream to cover that gap. So the result is that your bills are paid for the rest of your life. You'll never have to worry about having enough income in retirement.

And you won't worry about stock market losses ever again. And this is why I called sleep insurance. And I talk about it quite a bit in my book, No Stress Retirement Roadmap. So, I mean, we could just stop right here and go, that is amazing. Thank you for coming on because that's spectacular. You know, I mean, you need to know what, how much money do you need? How much money am I going to spend? Where's the gap?

How am I going to fill it? Sainly, safely with as little risk as possible. And I heard a word that started with a G guarantee. Wow, that's really comforting for people. Before we dive into some of those and unpack some of those points, I was thinking of something you were describing that. It's almost like you're a life coach to people going, you know what? Let's talk about where you want to be in retirement.

What does retirement look like for you? Are you going to travel the world? Are you going to sit around and do nothing? Are you going to spend more money? I mean, all of these things. And it really is something where if you said to someone before you gave them some guidance or coaching, give me your estimated expenses in retirement. And then you gave them the per new perspective of, yeah, but are you going to be traveling

more? Oh, yeah, I haven't really factored all of those in. I bet it's a big aha to people for the actual expenses that they will be spending that they hadn't considered. Have you seen that before? Oh, absolutely. The fill the gap income concept is really an eye-opener because it forces people to really understand what their current lifestyle is, what their expenses are, and what they want in retirement. You know, they've thought about, they've dreamed about it, but they never had to put it to pen and paper and say, this is what I want to do. This is what it's going to cost, how do I pay for it? And that's what this fill the gap income plan not only

creates, but solves. And you mentioned earlier, do this with little risk. It's not little risk. This plan is no risk. We give guaranteed lifetime income to cover that gap, to cover that plan, to cover those retirement dreams. Amazing. That is spectacular. And how does longevity and lifespan fit into that calculation because I know that I read the headlines and people are taking better care of themselves. They're exercising. They're eating better. And that means that we're living longer. So I think that if you were to do the fill the gap plan 10, 15 years ago, it might look different than if we were doing it right now. So does lifespan factor into that as well? Not necessarily because this plan creates lifetime income strain. So whether you live to 85, 90, 120, hopefully.

You get lifetime income. That's even better than the question I asked because it factors it in, but it's a non-factor because it's kind of like that, you know, a timeline. It's just the arrow keeps going over to the right. That's really spectacular. And that's a huge difference between this and taking money out of your IRA 401K. So let's say that this fill the gap income plan gives you $3,000 a month. It doesn't matter what's $1,000 to $10,000.

Just pick a number, say $3,000. a month. If you take money out of your IRA 401k, you're eventually going to run out of money for most people. This plan is giving you lifetime income stream. So let's say you put in $300,000 into this plan, you take a certain amount of money out. If you've got that same $300,000 in your 401k and IRA, you take the same money out that you would in our fill the income plan concept. You'll be running out of money far sooner. And like I said, the guaranteed lifetime income is the difference. If you run out of money, it's age 80 out of your IRA, you're broke. You're working for Walmart as a greeter. With our plan, you got lifetime income. Your bills are paid for the rest of

your life as long as you live. You know, that's a good clarification because I think a lot of people might hear, okay, I'm sure there's some gap. And if you help me articulate the gap, then I'll just start withdrawing. You know, like maybe some of their accounts would have required, you know, minimum distributions where we have to take it out. But you're not talking about, oh, we're going to fill the gap because we're going to start draining your investment accounts. You're saying we're creating that cash flow income stream. So what type of investment options and strategies do you look at to fill that gap? The fill the gap income plan is based on guaranteed income, no risk. So we cannot use anything that has risks, anything that fluctuates

just a stock market. So we use guaranteed interest contracts. We use safe money options that have no stock market risk because this needs your bills are guaranteed. You need guaranteed income. And if you really want to enjoy your retirement, not just sit home and watch TV and tend to lawn all week, you're going to go out and do things and you need a way to pay for those. And that's what this concept provides. Yeah. And I think that's a big misconception to people because it's like, well, I am tired of getting upset when I see the news at night. You know, the Dow Jones Industrial Lavids tanked or went up. And so you're going to separate yourself from that by having these types of guaranteed instruments.

And when you mention the word contract, it makes me kind of have the thought of it's an added layer of protection with the word guarantee. Because a contract is set in stone. Exactly. Investments, you can lose money. Contracts you don't lose money. Huge. Huge difference. And like I said, your bills are guaranteed.

You're going to have bills every single day, for every single day. for every single month for the rest of your life. You need income to cover that. You need to make sure, you know, one of the people's biggest worries is, well, they have enough money in retirement. You know, people think about can they afford to retire, but they also need to think about can they afford to stay retired. So let's say they've got $500,000 million in the stock market really doesn't matter.

If the stock market crashes 50%, which it often does, can you afford to retire if you're about to retire when that crash happens? Or will you be able to afford to stay retired when that crash happens? So if you're taking money, you're depending on that stock market account and it loses 50%, how's that going to affect your life? How is that going to affect your retirement? And this fill the gap income plan eliminates all of those worries. It is why we call it sleep insurance.

Yeah, I love it. So let's say that someone comes today, takes a look at where they're at, you discover the gap, you talk about and lay out this plan. And let's just say, as an example, five years in, everything's going like clockwork, just like you have laid out. But they decide that they need to adjust their lifestyle up. For instance, they're like, hey, you know, we're taking one big trip a year. We want to now take two big trips a year or whatever the case is. And now the gap adjusts.

Are you able to make adjustments to that plan or layer in another tier to that plan so that then the gap then is being filled? absolutely these plans are very customizable to start off with and that we can certainly make changes along the way depending on how things are set up and what their goals are etc you know one of the things people have to understand is even with a fill a gap income plan their income is limited but you know it's based on the amount of money they have so if they've got a few hundred thousand they can't spend like a millionaire and you know even millionaires spend like billionaires sometimes uh so you know money is limited for most people so you know this one We'll cover our bills. This will cover our future expenses. This will cover our plans and our dreams. But we do need to take into account that it is not unlimited. It's a great point. And it also reduces some of those things like when you hear the Fed Funds rate is going to raise. And that means my CDs are going to go down. All those things, those seesaw, if this, then that, it kind of takes that out of the out of there. And what what I want really now to ask is from a person listening to you explaining this makes me think,

Well, is this some newfangled strategy that is not proven and I hope that it's going to work? Is this something that has a track record of decades and decades of proven results? The financial vehicles that we use are roughly 50, 60 years old. So they've been around for a very, very long time. The concept of fill the gap income planning is not something that's necessarily new. I mean, it's just basic logic if you think about it. It's no different than what you're doing today and if you're still working, you've got X number of dollars coming in from your income, you get X number of bills. But the difference is in retirement, that income is gone.

You don't have that paycheck anymore. So you need to replace that paycheck with income from your retirement savings. And that's where this is very important because this income from your retirement savings will never run out. So can you think of a time you worked with a client and they came to you and maybe they thought, all hope is lost. You know, I can't pay the bills. I'm going under every month. Or, you know, the previous advisor I was working with just was doing this and it wasn't working, but then you laid this out and it almost was like this light bulb goes off. What were some of the examples there? Okay. Well, if you got somebody that doesn't have enough money to retire on fill a gap income plan,

isn't going to work. Right. But where I see a lot of success is people say, well, I'm thinking about retiring. I'm not sure if I can afford to retire or I want to retire earlier. Can you help me? And that's where this really comes into play because we are laying out all of their income. We're creating a lifetime income and say, hey, this is how much income we can get you per month and per year. Is that something that you can afford to retire on? And so I was looking for, you know, 70,000 a year, but this plan is 90,000 a year. Hey, I can retire earlier than I thought. You know, I may not have to wait to 67, maybe retire at 65 or 62 because of this fill the gap into income plan.

And that's excellent. And I'm now putting myself in the position of like a client of yours going, well, how does this work? You know, because this is just information that traditionally you don't hear about. You don't think of it this way. So it's such a fresh new approach. It makes me think about, you know, you hear the horror stories of people that go, wow, I just got this notice that now I'm going to get all kinds of tax implications from because of Social Security,

because of security sees I made outside money. So does this cash flow impact the social security benefits that a client would get? It would not necessarily, it will not in, let me back up. It will not affect the cash flow, but it may affect the amount of social security that is taxable. The amount of social security is taxable is based on your income. So this will affect the percentage of social security that is taxed. And some of these plans depending on how we set them up and what you're going to goals are may have tax-free income. And in that case, that will actually potentially reduce

the percentage of the Social Security that you're taxed on. And obviously, every case is different. You know, like you said, if you have $300,000 or someone that has $3 million, it's going to be different and you still need to budget and be wise. But it's the same with that question about Social Security. It's not going to affect your Social Security. It's going to affect how much is taxed and how much will be taxed? Question mark. We don't know that you run the analysis, but I think a lot of people go, oh, we'll have to pay more in taxes. Well, maybe, but you got more money. So you still have more in your pocket. Yeah. So let's say the money comes from an IRA. The taxes are not going to change. You're still going to be your fill a gap income plan is still

going to be a qualified IRA type plan. So whatever the tax situation is with your existing money, that won't change. So if your money is IRA 401K money, the money coming out is going to be taxable. If we're using Roth money, then the money comes out tax free. So whatever the tax situation is where your money is sitting right now, when we can convert it to the fill the income, fill the gap income planning, the tax situation doesn't change. And I would suspect, too, that you would lay out a full plan or strategy that there may be stages that you want to start with this step first and let's put this piece in place. And then when we get to this level, then we're going to put it. So it could be something that rolls out or lays out over a few years

in some cases, right, based on someone's specific income and needs. Yeah, absolutely. You know, some people want a certain amount of income for a few years. Then when the second spouse retires, they may want more income. So we can ladder to them. We can customize them. We can really design these any way the clients need. See, I think that's a key thing that people don't realize. We go to Dr. Google to solve our ailments and we get misinformation. We go to the certified financial Google, ha ha, I'm being funny, but people tend to go, oh, I'm going to just Google this and find the recipe. Good luck.

You know, if someone puts in, you know, a Google search and tries to put together one of these plans and strategies with guaranteed and no risk and all of these things, they potentially are going to come out of that search a lot more confused than when they came in. And that tends to make people throw their hands up and go, well, I guess all is lost and there's no solution. That's certainly possibility. But even worse, is they take what they see online and think it's actually factual and works for them. And they create something that doesn't work at all. The problem with the Internet is answers you get may be very good.

The answers you get may be very bad. If you're not already an expert on the subject, you're not going to know if what you're reading is right or wrong. And I see it all the time, not only in financial planning, but a lot of other subjects that I'm very familiar with. I look at that. I know for a fact that that's not right. But if I wasn't already knowledgeable in the subject, I'd never know that. So the Internet is not a good source for information because you don't know right for wrong. There's a lot of information that's out there that is plain wrong.

There's a lot that's biased. There's a lot that's outdated and there's a lot that doesn't apply. You need to work with a financial professional that understands retirement income. Not retirement savings, but retirement income. And that's one thing where Wall Street falls short. They talk about growing your money. They talk about returns. They talk about growth and all that.

You'll notice the one thing they don't talk about is retirement income. The reason they don't talk about it is one, they don't offer these types of guaranteed retirement plans. They want to keep you in the stock market. They make money when you're in the stock market much more so than if you were in these types of plans. But very importantly, when you start taking money out, the volatility of the market, the ups and downs, the yo-yo of the market is what kills. income. And that's why they don't talk about income planning when you do Wall Street types don't talk about it because they want to keep you in the market. They don't want to talk about the downsides. And when you actually do an analysis of how the volatility can destroy your income,

it's shocking. And that's why getting out of the market giving yourself guaranteed returns, guaranteed income is so important. Yeah, that's such a huge point. And I don't think that any one of those people you mentioned would be maliciously trying to, you know, get someone to do something that's incorrect. They just are, that's what they're zoned in on. They, you know, they have a certain suite of products and they go, this is what we do. But in reality, getting with someone like yourself that looks at the full picture from the outside looking in, you know, sometimes you're too close to to the forest to see the trees, but you're going, you know what? Yes, we see 30, 40 year market returns of X, but look at these high volatile highs and lows. You don't want to be caught up in that

firestorm. So let's get out of the market. Yeah. The stock market is a great place to grow your money in your working years. You can afford the ups and downs. You can afford the crashes because you don't need the money and you got a paycheck. But that all changes when you switch over to retirement. Your entire financial life changes. Instead of contributing to your plan, you're now withdrawing from your plan. You need to think differently about your money. You need to shift your goals from accumulation with risk to protection and income. And that's not something Wall Street is good at. That is not something that they do. And this is why the fill-the-gap income planning with guaranteed lifetime income is so valuable and so important. I love it. Well, Scott, it's been a real pleasure chatting again. If someone is interested in learning more and getting a complimentary copy of your book, No Stress Retirement Roadmap, where can they do that and how can they reach out to you? Reach out on Wealthconceptsgroup.com or you can go to the website for my book, no stress retirement roadmap.com. Excellent. Thank you so much, Scott, for coming back on. It's been a real pleasure talking with you. I greatly appreciate you having me. I've enjoyed my time with you.

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