Business Innovators Radio - Interview with Jay Forgione Owner of Summit Retirement Solutions Discussing Retirement Planning Buckets

Episode Date: September 22, 2024

Founded in 2009, Summit Retirement Solutions, is made up of qualified financial professionals who are passionate about helping individuals and families achieve their ideal retirements. Jay is committed to helping clients work toward their retirement dreams by crafting customized, easy-to-understand financial strategies. Beginning as a Senior Regional Manager for a major corporation, Jay decided to follow his passion for helping others and opened Summit Retirement Solutions. As the leader of his firm, he works each day to ensure his clients receive the guidance, support, and resources they need to retire with confidence and joy. That includes protecting nest eggs with tax-efficient strategies. Jay has a Bachelor’s Degree in Business Management from the University of Connecticut. Jay enjoys being outdoors, skiing, hiking, golfing, and spending time with his wife and three kidsLearn More: https://summit-rs.com/Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. The commentary reflects the personal opinions, viewpoints and analyses of the author, Jay Forgione, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness. This content may include information and statistical data obtained from and/or prepared by third-party sources that Foundations Investment Advisors, LLC (“Foundations”), deems reliable but in no way does Foundations guarantee its accuracy or completeness. Foundations had no involvement in the creation of the content and did not make any revisions to such content. All such third-party information and statistical data contained herein is subject to change without notice and may not reflect the view or opinions of Foundations. Nothing herein constitutes investment, legal or tax advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. All investments involve risk and past performance is no guarantee of future resultsInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-jay-forgione-owner-of-summit-retirement-solutions-discussing-retirement-planning-buckets

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 back with this Jay Forgeone, who's the owner of Summit Retirement Solutions. Jay, welcome back to the program. Hi, Mike. How's it going?

today. Hey, doing really good. I know today we want to talk about another aspect of your service to your clients, which is a unique approach to retirement planning buckets. I guess before we start talking about that, let's define what is a retirement planning bucket. And then what are the buckets that you teach your clients about? So we kind of try to make it simple because, again, not everybody comes with a financial background. So sometimes when you meet with an advisor there, I'd be talking over your head. So we came up with this system. It's sort of like, it's basically three buckets. And we colored them like a traffic light, red, yellow, and green because they all have a different function. And it makes it a little easier for the client to understand what's happening and why it's

happening. And most people appreciate it. And, you know, the way we kind of look at your money is a lot of times people come to me and they give me a total nest egg number. You know, I've got X dollars. And I'm like, okay, well, that all has to do different things. What's your plan for that. So it's important to have a plan for, you know, how much of that am I going to spend? And how do I want to have that money invested? And what do I have for backup for safety and that kind of thing? So we divided into three buckets. And our first bucket is what we call our safety bucket. So that's for emergency. And we call that bucket red because we're going to just park some money there and don't touch it. It's a different number for every person because it really makes,

it depends on a little bit about what you have going on. You know, I have some clients come to me. I had a client come to me and they said, you know, I definitely have, I'm going to have this need where, you know, I'm going to have to take care of my mom for a while or some other thing that is absolutely going to happen where they're, you know, they don't want to be in an emergency situation where they're trying to raise money for it. I don't want to have that money in and invest it into a position where I could lose it. So basically, we create this bucket and we say, what are you going to need for emergency?

Like, think about not for vacation, not for any of those other things, but like the house you live in, how old is it? How many kind of repairs do you expect? Because you're not going to want to, if the furnish just go at the middle of the night and you need to spend $4,000 or something, and you're not going to want to have to go sell some assets off and pull some money out of your 401k. You want to just have some money ready to go. But typically that bucket is not invested in anything aggressive. It's pretty much cash, maybe money market, maybe a CD, something that's quick and liquid. But we usually sit and kind of talk to them and the things that would be in there is what kind of emergency money do you need?

Let's kind of pad that. And then the other thing that we put in this bucket is the one real big emergency, or not necessarily emergency, but the thing that you want to sort of plan for is one of the things I put there, I actually put long-term care there because we don't know if we're going to need it or not, but most people don't like traditional long-term care to buy the insurance. So they're telling me that they're going to kind of reserve aside some money. I want to have it invested, but in this particular case, I look at that as sort of like an emergency plan.

So that's one of the things I put in there. But for the most part, you know, I talk to people. and say if all of the, all of the utilities in your house, your furnace and all those other things, and you're planning on staying in this house until you pass away, we're going to be needing to replace these down the road. Is everything in your house new? So kind of think from an emergency perspective on a regular basis, how often would I have to dip into this area? I had one client who, she said, look, I got major repairs. I'm going to need on my house. But then I plan to sell it. So again, how much do I want to have sitting to the side where it's not necessarily

invested, but it's quick and liquid for me when I need to grab at it? Then the second bucket we look at is, I call it the green bucket. You know, let me mention this to you, Jay, on that safety bucket, is there a percentage of someone's portfolio that you would recommend saying, we want to at least have 10%, 20%, 2%, what percentage would that be that you tend to lean to work? So usually I kind of lean towards 10%. It really depends on the size of their portfolio. And it really depends on, you know, again, what their scenario is.

But I would kind of go in that direction. And then it just kind of comes down to comfort. I mean, I have some people that literally are not comfortable with just that much. They want significantly more. And again, there's a fine line where sometimes I have people who are just petrified of the market. They're petrified of everything. And they actually want to have too much in that bucket. and you don't want to do that easy.

That's probably not a good idea because you definitely want the money growing for you. But yeah, I usually rule thumb somewhere around 10% mark. And again, it just depends a little bit on everyone's scenario. Because when you're doing retirement planning, it's individualized. There's no cookie cutter plan. You know what I mean? You just have to be a fiduciary and independent, that's part of what we do. We spend the whole first meeting when we're talking with somebody about what are you trying to do.

I look at myself as like a general contractor. You're trying to build a raised ranch. We start to ask you questions about all kinds of things. So that kind of just comes into it. So if the safety bucket is the red kind of emergency, then you kind of move into the next bucket, right, which is, I guess, the yellow one you mentioned. Yeah.

So I actually go to the green bucket first, which is the income bucket. Reason for that is because once, I have the red bucket, which is emergency money filled in. And then I have the green bucket filled out, which is all your basic needs. So when I meet with the client, I say to them, I need two budgets from you. I need to know what you need to live on. And I usually say, I need a, I have to have budget.

And then I want to have budget. I have to have food, clothing, shelter, those kinds of things. But what does that look like? is that 60,000 a year, 100,000 a year, you know, what do you have to have come hell or high water? You don't have to have a vacation, but you'd like it. So the green bucket is basically the I have to have budget. And then we have to figure out when we tack on inflation, you know, we'll use average inflation and say, if your I have to have budget in today's dollars is 100,000, what's that going to look like?

and 20, 30 years from now. You know, depending on how close you are to retirement, if you're getting ready to retire or retirement a handful of years away, again, you have to take that into consideration because today's $100,000, won't spend as far in the future. And the example I always give with that when people kind of say, well, how much can it really go up? What did you pay for gas when you first started driving?

That usually gets a much. Yeah, yeah. So the green bucket, again, the way I look at that, is, again, it's different style investment strategy of what's in there. We're trying to recreate the paycheck. Most people are used to living on a paycheck most of their life. So we're going to try and recreate that. And so the products and the things that we use in there have some features to them.

One, social security goes in there because if you tell me when you're going to take it or we talk about when you think you're going to take it, we know what that number is going be. And we can also, we also know how that animal is going to act. And we also know if, you know, if it's a husband and a wife and one person passes, exactly how it's going to flow. There's not a lot of guessing, you know, not subject to the market. Then if you have a pension, again, there's going to be certain rules and regs. If you're married, how does it flow? Who's going to, who would be beneficiaries? And you can, again, then, so we start filling the bucket. The bottom of the bucket gets filled with sole security. And, and, you know, we're going to,

My need is, I don't know, $80,000 a year. The Social Security between husband and wife takes care of 40 of that or halfway up the bucket. Then maybe the husband's got a pension that's 20,000. We're three-quartered up. And then we say, what's left to fill? So you can do one or two ways. We can carve out traditional investment strategy to fill the rest of that bucket. So we're going to pull some kind of assets to the side.

and say, here's how much we're going to need to sort of like leave to the side to create this income with either dividends or, you know, different interest strategies or you could also even use an annuity, which some people don't like that word, but to me, it's a hedge that works better than any other. Why an annuity, an annuity works in a sense, basically you're going to give some money to the insurance company. They're going to hand you a pension style. pay out for the rest of your life. So again, there's no, I can use less of the money to put into an annuity to fill the rest of that bucket. We've got, we don't need to worry about the market anymore. We don't need to worry about inflation anymore because all those things are built into this

bucket that they're all going to grow and pay us out come hell or high water what we need. Now we've got the yellow bucket, which is basically what's left over, that I can invest aggressively. So that's going to be the I want bucket. And the reason I can invest it aggressively or I should say more aggressively back when I was like 30 and 40 is I'm really only touching that sometime. And if it happens to be a year with a market tanks, I don't take that big vacation that year. Would it not be, you know, I wouldn't like it, but am I eating and do I have shelter? Yeah. So I'm good. So, you know, maybe I postponed it a year. you know, COVID came up and we weren't expecting that to happen and the world kind of shut

down and the market took a 30% dump. Okay. So, maybe we're just not going to do anything that year. There's nowhere to go anyway. And then, like I said, the money is invested aggressively, so it's growing at a good rate. And that's also the bucket that we use for legacy. So everything else is going to be invested in there. And if you're, you know, when you're doing investment strategy, the longer I can let the money sit, the more aggressive I could be with it, just like when you were 20 and 30, because I'm not needing to touch it. So even if it does take a dip, you know the market's going to come back. We let it come back. And over a long run, you'll be better off. So, you know, to me, it just makes, it makes more sense and it's a little easier to

sleep at night because you kind of have, you know, it sounds a little elementary with using the buckets, but I think people understand that better than, you know, crazy graphs and all these Monte Carlo and they don't really even understand what you're talking about when you're going through that stuff with them. So this just kind of makes it quick and simple, and I understand, I've got a need, I've got a want, I'm going to cover the need, and then the rest of this, the want, I can see, you know, with the yellow bucket, they can start looking and say, well, I want to spoil the grandkids and I want to, you know, give a little money towards each of their education. So then we start plugging those things in.

When are we going to pay that? How much? And we start to see, like, do we have enough to do that? As opposed to just, it's a want. I wish I'll cross my fingers and maybe hopefully I can do it. Well, let's just find out. Can we or can we? You know, so it just kind of makes it a little more cut and try.

You know, that's really a super overview. And as you were describing that, it made me think about the question you asked, like, well, how much do you need, you know, for retirement? And what do you have now? And it's like you're going for that gap. You know, if you want to retire at this age and you want to, you know, we're going to guess to me you live to that age. You need this much money. It's kind of like you are a life coach of sorts to go, well, what does retirement really look like for you? What do you guys planning to do? Are you going to travel all the time or just twice a year? Are you going to start a new hobby, a business, a nonprofit? So talk a little bit about how you help guide your clients to really clearly articulate that so that you really get a nice sharp pencil, you know, figures on what they're actually going to need. Yeah. You know, I always say some of the reports that we use, I tell them it's a living document. And the reason why, you know, sometimes people are afraid of me with an advisor because they think they're going to get sold, you know, I'm trying to sell me something.

And I really have no idea. When somebody comes and sits with me, I literally sit down on the first thing I say is, you tell me how you think I can help you because I want to know what's going on in your head. And I have to find out first, what's your plan, what's your goal? You know, sometimes they just sit down and say, do I have enough money? I have no idea. When do I take full security? I have no idea.

You know, do I, should I buy an annuity? I have no idea. I don't know. What are you trying to do? And then we start to fill in the pieces. So, you know, to me, yeah, you are kind of like a life coach because they're sitting there telling you their dreams and what I want to do. And in some respects, you're going to point out all the things that they didn't necessarily think of. I had a client who came to me who was like, she was 59, couldn't take working anymore.

She's just distraught, you know, had it with her employer. And she's just like, I can't believe I got to work. another like, you know, 10 more years. And I was like, well, hold on a second. What do you tell me about this? What do you want to do? So we talked about it. And within a year, she retired.

And she's the happiest person. She's just like she's got her horses and she does things on. She's got like a little farm that she takes care of. And she just said, I just didn't like realize like what, what it is I need or how much I need. I need. I need more. I need more.

I need more. Which in some instances, yeah, we do need it. grow, but to what end are you trying to be the richest person in the cemetery? What are you trying? What's your goal? Like, what are you trying to do? And then to start actually working it through to say, can I do these things? And sometimes the answer is the opposite. Sometimes the answer is, if that's your goal, yes, you're going to have to work 10 more years. And this is how much you're going to have to put away. And this is what it's going to look like. But that's not always the case. You know, I get a lot of people come to me and they're gut checking. How do we look? Are we

okay? I don't know. What are you trying to do? Like I said, if you're going to go have houses all over the world and drive expensive cars, maybe not. But, you know, if your plan is to, like you said, spoil the grandkids, pay a little for someone's their education, maybe, maybe, I don't know, pay for a daughter's wedding or something like that. Do I have? have enough to do all those things plus have the life I want. And I always say that too when you retire, there's sort of phases. So I say when you first retire, like I just had a client in my office the other day and he is vacationing like crazy because he's in his early 60s and he was able to sell his business

and he's like, I want to go all I can because he's like my knees are now and different things. I always say there's sort of like this go-go period where you're probably going to spend more. because the whole point of this, you know, this working thing was to eventually retire and I don't have to work anymore. So we've got this go-go period where I'm going to want to go and run and do well I can. And then there's sort of like a go-slow period where, you know, maybe health starts to or maybe if it's a couple like one when the health starts to go or you're just not as

interested in doing some of those things anymore. And then there's what I call like no-go period, which both my parents are still alive. they're in their mid-90s and they're, you know, pretty well with it, but just mobility. Not as mobile as jumping on planes and taxis and all that. Yeah. In their go-go period, they saw the world. They literally went everywhere. And now they're kind of just happy, you know, to hang out grandkids and staying home.

So you know how we talked about having about, you know, setting aside about 10% for your safety bucket or thereabouts. When you talk to clients to go and hey, here's how much I think I need in retirement, do you also set aside or plan for a little extra margin percentage more than that because you just don't know whether that number's accurate or you don't know if maybe inflation is going to rear its ugly head and you actually need a little bit more than that? 100%. In fact, it's almost never it's almost never right when they first come in. Yep. Because everybody either underestimates or overestimates. Most people, underestimate, what I mean by underestimate is they're trying to make themselves live on the smallest amount possible. And I always stop them and say, hold on, was that your goal? So me get through. And then we look at the assets and I literally had a client in the office and we were going through with her. She was like, they had a decent amount of assets. And I said you literally can

spend three times. If I took all of your money out of the market and you were to and just stick in the bank and make zero percent. You literally have enough money to live on three times the amount that you want to. Still have emergency money, still have backup money, and you would be fine. And that would be meaning not even invested in the market. So like, and they just don't, they look at you. Like, you have three heads. And I'm like, it's just math.

Like, just do the math here. And I, again, I'm like, just. just live a little. And I've had a few people, you know, they'll call me and they're like, man, I am just glad I met you because I was just so scared to spend some of it. And you usually run into two things. They go crazy and start spending too much, which is rare, but happens. You know, usually it's because of some life event.

Or the other, which is the most common, which is they're holding back, holding back, holding back, holding back. And then all of a sudden they wake up in their 85. and they're like, I'm like, when is the release? When are you going to go do what you wanted to do? But again, it's a fear of, you know, they've had 30 years of investing where this market's broketing up and down, up and down. And there is no plan during that period of time because the goal in that period of time

is just to accumulate. Now once I've accumulated, the goals and plans need to change. Yes. Great points. You know, I think this has been so helpful to think about, um, you know, the periods, you know, like we talked about before, you know, we have accumulation, then we have preservation and decumulation and things, but how about these buckets? You know, we got to be safe with their money. We got to grow our money and then we got to make sure we have

enough money in income cash flow coming into meet our needs. So it's really a neat system that you put together there, Jay. If someone is interested in diving in and kind of learning a little bit more about the bucket system that you work with your clients on, what's the best way that they can do bet. They can visit our website, which is WWW Summit, S-U-M-M-I-T-HIS. So that's WWW-S summit-R-S, which stands for Retirement Solutions.com. And when they go on the website, they can, if you look at some of the information that we have on there, they can attend an event. We have several events where I talk about this. So I know some people are a little leery to talk to, like I said, their words are going to get sold or put in a high pressure position,

which we just don't do because it doesn't help anybody. I don't have anything that I'm trying to sell. It's more of how can I help? You know, it's a service. You know, we're fiduciaries where I'm trying to figure out what you're trying to do. So they, again, attend one of our events. We have these live events where I get up there and talk all about all these different avenues. We talk about the buckets, show you how they work.

Or you can just, you know, give us a call or schedule. visit off our website. If you want to give us a call, phone number is 860-269-0909. Excellent. Jay, thank you so much for coming back on today. It was a real pleasure talking with you. All right, Mike. I appreciate it. Thank you. 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. influential entrepreneurs radio.com.