Business Innovators Radio - Interview with James Haass Retirement Income Specialist

Episode Date: July 31, 2023

Over 40 years in financial services, including 20 plus years with Northwestern Mutual Life. 15 Years as a financial advisor with large banks. Started own agency in 2015 with partner/spouse Michelle Haass, Thoroughbred Advisors.Probably the greatest gift I provide for my clients when they retire is a good night’s sleep.Learn More:https://www.linkedin.com/in/james-haass-aa611377/ or http://www.brookeandquinn.com/ Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-james-haass-retirement-income-specialist

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 his retirement income specialist James Haas. James, welcome to the program. Thank you, Mike. glad to be here.

Hey, you're welcome. So get us a little bit of your background and your story. What got you into the financial services industry back when you began? Well, Mike, it all began, believe or not, over 40 years ago. And I think we had a lot to do with it was my dad was a business owner, had a successful business when I was a child. and unfortunately he died in a car accident when I was very young, but fortunately he did some good financial planning and insurance planning and estate planning.

And, you know, I had three older brothers and my mom and nobody was old enough to run the business. So I saw the results of someone who really loved their family and really really. did a good job planning. So I think that made me realize how important this was. And I just wanted to do that for other people. So that's how I got into the business. And I just love helping people. So that was the beginning for me. You know, it's interesting that you laid out that way. I hear so many similar times people in many professions have a very similar story. Like I've interviewed chiropractors that said, you know, when I was a child, I had struggled with. and no one could figure out how to help me until I met this chiropractor.

And same with you. You know, your father passed away. And that kind of brought some things to light to where, you know, let's talk about protecting money. Let's talk about future and family. So I think that is so important. And, you know, someday I'll seems to never come. You know, someday I'll plan for retirement and retirement will be here.

I'll put that off. But all of a sudden, time flies. And you're at an age where it's like, I guess I really better start. getting things handled and maybe the runway is a little shorter than what it could be. So talk about the necessity for retirees to really carefully plan that retirement as it relates to income and distribution and safety. Yeah, well, Mike, you know, retirement planning is really not unlike climbing a mountain. You know, first you go up the mountain and I call that accumulation because you're working

through the years and putting away the money for retirement. And then when you get there, now you've got to figure out how to take the money out. That's what I call going down the mountain. And I'm not sure if you're aware of it, but if you compare that to like climbing Mount Everest, let's say, between 1921 and 2006, 192 people died on that mountain. And believe it or not, 56% of them died on the descent. Now, a lot of people would think, well, I just have to plan for going up the mountain. And once I get there, then it's just easy. I just go down the mountain. So I think what happened is with the mountain, people climbing the mountain, they became complacent. And they were probably exhausted from climbing the mountain all those years. So I don't think these people were prepared. So when we're going down this retirement mountain, there's a lot of things we have to be thinking of. about like taxes, inflation, and market volatility. These things will definitely affect how we take the money out. And let's go back to 2000. That was the beginning of a pretty bad bear market. We actually had three straight years of declining markets after the dot-com bus. And during that period

of time, even if you had, let's say you had a million dollar portfolio and you were smart enough at least to divide it into a 60-40 mix, which was the average mix end of 60% stocks, 40% bonds. And most people or advisors back then suggested what they called the rule of four, which was, well, just have this portfolio and take out 4% a year and you should be good to go. Well, if you did that back then, your portfolio, even though bonds went up about 12% over those three years. The market was down about 50. And if you were taking out that $40,000 a year, 4%, you had probably a little less than $700,000 left out of your million. So think about that.

You're only three years into your retirement and you've already lost 30% of your portfolio, which people did back then. So now you need to get 45% return back on that $700,000 just to get back where you were. But if you're still taking out that 40,000, which you need, because that's what you need to live on, that's almost 6% of your portfolio. So now you're taking out 6% of your portfolio and you need 45% growth. That's probably almost impossible. The math doesn't work. It doesn't work. And yet this happened to many people. And so what happens? People go back to work. really what happens is their lifestyle is really affected. And that's what we do.

We're all about lifestyle. We're not about numbers. We're about helping people attain a lifestyle that they're accustomed to. And if you leave it to chance or just a simple formula, there's a good chance it won't happen. You know, Jim, I want to go back to that example you gave with if you lose this and then the market turns and you have to get this rate of return. And whatever those numbers are, it could tempt someone to take on a little bit more risk to get back to that ground zero. And now it amplifies and compounds the problem even more, right? Because we know that if you, you know, 35, 40 percent rate of return is just ludicrous.

You're never going to get that. But you need to get that to get back up to that number. But if you take on extra risk, now all of a sudden, you could be notching down and losing even more than what you began with. So it becomes that just vicious cycle, right? Yes. Yeah. And I've seen over the years people do that. They just, and some people think that if they just have a bunch of different stocks,

that they have a diversified portfolio. And that's ludicrous. And, you know, I, oh, my God, I've seen some people who come in with horror stories where their portfolios have just blown up because of their risk that they never. And the funny thing is they never really needed to take that risk. to achieve the lifestyle that they wanted. I don't know if it was stupidity or greed or what, but I've seen people go through that in periods.

You know, and I feel like just from my uneducated outsider's opinion, it is an element of, well, it's just the way that I've always heard or I've been told or my friends at the water cooler or I Google it or, you know, people that they shouldn't be listening to, you know, they feel like, oh, don't put all your eggs in one basket, so get a lot of stocks. Well, that's not proper diversification. And we don't have time to get into what all that looks like. But to your point, you don't just get a bunch of stocks and think you're diversified.

You want to make sure your money is protected and safe. And maybe even at a certain age, put it in a type of account where you're guaranteed never to have it lose money. So what happens now when you're talking to clients if they, you're telling them, what happens if we kind of hit a bear market where we're taking some, volatility. How are you helping them make some of those moves and plan for that? Well, basically what we're doing is first we've got to get them to agree that they need to do something like this. I mean, there are some people that are just gung-ho and I meet people that have 90, 95% of their money in the stock market when they're older. And, you know, those people

I really can't help because they're just going to take that chance, that risk. But the people that do listen, We do an analysis for them. And what we normally come up with is we have a portfolio that's built with different types of buckets of assets, like the one that you just said. A portion of your portfolio should be in something that does have guarantees. And it is fixed. And it does pay a good income. This way, when we do come across these bare markets or down markets, you have the ability to withdraw money from part of the money. your bucket that will not suffer whatsoever from a bad bare market.

And this way, if you do have money, and we still suggest that people keep money in the market for growth, but if you have the ability not to have to withdraw money from a portfolio that's losing over a period of time, then you have a much better chance of that growing back to what you need because you still have a portion of your portfolio, which is protecting you. really a pretty simple concept. So, and it works. So I've seen it in action over the years. Yeah. And you know, I'm sure there are just a litany of examples of what types of products would do that. And that's what you'll work out with clients and pick some things and make recommendations that are best for them.

But let's just talk conceptually. When you're in that safe type of an account and you turn the news on and you hear, you know, the sky is falling and the markets are doing crazy things. when you have your money in those kind of guaranteed kind of protected accounts, don't you just feel much better and you're, you don't have that wrenching in your gut and you can actually sleep at night, you know, and that's a, that's a big gift that you're able to give to your clients to help them structure that kind of a setup. Absolutely. And you hit the nail on the head when you just said sleep at night. I mean, just imagine, you're watching the news and the market's down 20, 30 percent. And just imagine you don't have a portfolio like that. And you're watching your money go down 20, 30 percent. I'm sure that, you know, especially if you're retired, you know, if it's different, if you're 30, 40 years old and you got many years to go. But when you're retired or close to retirement, you may never get that back if you have that

in a portfolio with a lot of risk. But if you have a plan set up like we devise, you will be able to sleep in night because you know that the income that you plan for will continue and you won't have to withdraw funds at a loss, which you might have to if you didn't do this. And that's very comforting and helps people, like you say, sleep in night. Yeah. You know, and you mentioned something a minute ago about, you know, sitting down and making sure that you understand what people need and what's their goals. And, you know, it kind of almost gets into the aspect of you become a life coach of sorts to say, well, tell me what retirement.

really looks like to you. What are you expecting out of retirement? Are you going to what, fill in the blanks with travel and do all these things? Well, the reason I'm bringing that up is I know that there's a lot of recent stats and research that says people are taking better care of themselves and we're living longer. We're going to the doctor. We're exercising. We're eating healthier. So that longevity number when you sit down with a financial professional and say, okay, we need my money to last this long. well, maybe it actually needs to last a little bit longer than what you expected. How do you advise your clients with respect to that? Well, exactly, like you say, people are living a lot longer these days.

Let's go back to the 1930s when Roosevelt started Social Security, 1935. I think it was actually, believe it or not, I think it was August of 1935. Well, anyway, I believe the average life expectancy back then. was 64 years old, 65 tops. So think of what's happened since then. If people get to this point in time and they're expecting to live solely on Social Security, first off, it's not going to be enough money. Plus, people are dying at 65 on average.

Now the average life expectancy is for men, it's close to 80. for women, it's in the 80s. And if you're already retired in your 65 or 70, your life expectancy is even longer because you've already lived longer. So it could be another 20, 30 years. So you really have to take that into account of your life expectancy what it is today because it's nothing like it was in the past. So things have really changed over the years as far as preparing for retirement. Yeah, 100%. And everybody's different. And there's not a cookie cutter. You know, here's what you need to do next. Here's what you need to do. It's different for everybody. So I think it's so important to take a look at where you want to be, where you are now, and what it takes to get there. And I know another aspect of making those plans is making sure that you're planning for taxes. And I know that that's something that people, you know, they think, oh, well, I'll be in a lower tax bracket or taxes will be lower. Who can guarantee that? We know that taxes are out of our control. So what do you do to advise your clients to make sure they're properly prepared for

taking care of their taxes in retirement? Well, two things, you know, the old saying, there's two things that you can count on that's death and taxes. And that's still true today. We're all going to die and we're all going to pay taxes. So how you take it? your money out of your retirement plan is also just as important because there's going to be, you know, you're going to have IRAs, 401ks, you're going to have taxable accounts. You're going to have tax-free accounts. So you really need to sit down and determine the methods of how you're going to withdraw the money from which accounts and when, and that's to maximize your own tax bracket to pay the least

amount of taxes. Because if you don't do that, then some people would be paying way more in taxes than they need to pay in taxes. So yeah, so we put a lot of emphasis on how to withdraw your money to pay the least amount of taxes. Yeah, because a lot of times people, they think, oh, well, I've all, you know, I'm good to go because. And that because is inaccurate. So you have to take that taxes into consideration. You have to realize that, you know, in inflation could go up again or down again and that could affect things. And then I think another thing is, you know, what does retirement look like for you just to kind of take care of your needs and your goals in retirement? But what if there is a retiree that has goals beyond their retirement, meaning legacy?

You know, yeah, they need to pay their bills and live for a certain number of years. But after that, do they want to end their retirement with zero dollars and now their family has nothing? So what do you do to advise your clients to plan for retirement and beyond so that they have money and resources and wealth to leave to their heirs? Yeah, well, we call that legacy planning. And we also spend a lot of time on that, especially for people that kind of afford to have legacy. And, you know, some people may not be there. Some people don't have as much of concern. but many of the clients that we have do and are concerned about leaving a legacy.

And again, that too is affected by how you set up your portfolio and how you take withdrawals and setting up beneficiaries and trusts and such. And the tax laws, quite frankly, with that, have just been changing tremendously the last four or five years. So what was true just five, six years ago is not true any longer and it could definitely change again. So that has to be on the forefront and you really have to put a lot of emphasis into that if you're concerned about having a legacy. And that's why also we do, we still do quite a bit of planning with life insurance and even using trust with a life insurance. So that's how we do it. Yep. There's some many, many things to keep in mind. And I think it's so

important. I know that it sounds like you stay up to date on the cutting edge trends and learning. Talk a little bit about what you do to keep on the cutting edge of the financial markets and why it's important to never stop learning. Well, number one, I read a lot. I watch a lot of information that I get subscribed to. And for a number of years, we were just talking about taxes. I was actually doing a seminar in taxes in retirement, which I did for a number of years.

And what I did is I kept people abreast of all the tax changes that have gone on in recent years and how it would apply to them and then talked about ways to structure of their portfolios to take advantage of the tax laws, including legacy. And so those are just some of the things I've been doing in recent years. Yeah, because things change and they update. And if you don't stay up with it, you could make some in misinformed decisions.

So, Jim, it's been such a pleasure chatting with you. If someone is listening to this thinking, you know, maybe I need a second look on my approach to retirement, what's the best way that they can reach out and connect with you? Well, they could just go to my website. It's brook and quinn.com. That's Brooke, B-R-O-O-O-K-E and A-N-D and Quinn, Q-U-I-N-N.com. Excellent. Well, Jim, thank you so much for coming on today.

It's been a real pleasure talking with you. Mike, I really appreciate the time that you've given me today, and I look forward to talking to you again. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www. influential entrepreneursradio.com.