Business Innovators Radio - Interview with Kimberly Pohler, Financial Strategist with Pohler Financial Discussing 5 Risks of Retirement

Episode Date: March 14, 2024

Kimberly Pohler, CLTC, CFed®, is passionate about helping others. She helps her clients navigate the confusing world of finance by educating them on how to plan for each season of their life. It goes beyond protecting your health. Kimberly has identified many crucial areas of concern: health, life, disability income while you’re working, senior healthcare, Social Security, longevity (never running out of money), the high cost of aging impact on investments, and protecting a legacy for her client’s children. She uses her extensive knowledge as well as a team of specialists to provide cutting-edge resources in an ever-changing environment. She knows that God blesses us daily with the gift of life and the opportunity to make a difference in the world. Each new relationship in her business and personal life is meant to be cherished.Kimberly is an avid gardener who also enjoys cooking what she grows, hiking, campfires, and family fellowship. She lives in rural Indiana with her husband, Jeremy, her two sons, Blake and Preston, and their fur baby Yorkies, Brianna, Finnegan and their German Shepherd, Gus. She is the author of The Money Garden: Purposeful Financial Planning for Your Seasons of Life.Learn More: http://www.kimberlypohler.comInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-kimberly-pohler-financial-strategist-with-pohler-financial-discussing-5-risks-of-retirement

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 us Kimberly Polar, who's a financial strategist with Polar Financial, and we'll be talking about the five risks of retirement. Kimberly, welcome to the program.

Hey, Mike. Thank you for having me. You are welcome. Well, I would say I'm excited to hear about the five risks of retirement, but nobody likes to hear about risks. But maybe when you teach us what they are and how we can avoid them, then that'll help ease our mind. So I'm excited to learn from you. But before we dive into that, give us a little bit of your story and your background. And how did you get into financial services?

I've been in the financial services since 2007. and how that come about was I actually went to nursing school because I'd always had the desire to help others. I felt like I needed to make a difference in the world. And at a younger age, I thought that nursing was going to be the route that I went. And I actually went through three and a half years of nursing school before the light bulb went off and said, this is not the direction for me.

I enjoyed it. it was an expensive lesson at that time because I was paying for school. But you know what? It ended up being a very valuable period of my life because I've been able to use that throughout my life to understand more in depth as we do planning how our health and all the different factors that affect us going forward as we go through life, how it does impact us. But I had a friend introduced me to first the insurance world, suggested that I get involved there since I was so compassionate about helping others and I drug my feet. But finally,

I decided I would dive in and check it out. And when I seen everything that was going on in the markets at the time, I decided that I really liked the financial side because I wanted to make a difference in family's lives. So that's how I got started. I just kind of shut in and it just developed over time and it's continued to grow. You know, I'm certain that you could really pull back the layers of that onion and go, you know, one of the recurring threads with me feeling like I wanted to be in healthcare and nursing was, and maybe, you know, I wanted to serve people, help people, you know, people that are in pain. Well, you merge from people that are in financial or physical pain into financial pain. And you, you had a proclivity to that. Go, oh, I can notice

these opportunities and I can help and teach. And I think that is just wonderful because I teach my kids. You know, if you're not in a field that you love, figure it out. You want to be able to wake up every day and go, hallelujah, I'm able to serve my clients doing this. And now you're in here doing it with financial services. So I think that is awesome. And obviously with the topic of retirement, you're helping people making wise decisions to prepare for retirement. And we mentioned five risks. So let's start off with talking about the risks of retirement, because people want to have that nice, you know, skittles and rainbow retirement where everything is nice and birds are chirping. We don't want to hear.

about risks, but let's talk about them and how we can avoid them. Exactly. You know, the thing of it is, Mike, so many times we do want that great beautiful picture of the perfect world, but we kind of go through life with blinders on to some extent because some of it requires us to be very honest and real with ourselves. And, you know, one of the five risks of retirement is longevity. And you think, where's the negativity in that? Well, it comes down. to, you know, the fact is we do have people living a lot longer than they used to. And that rises to the top, the question of how is our expenses of living, having that longevity going to impact us over time? Are we going to outlive our money? And that is one of the biggest concerns we see out here

for retirees or potential retirees is how am I going to live too long, so to speak, longer than my money? And, you know, how is health care and housing and all of that going to be impacted along the way? That makes a whole lot of sense because I think that a lot of times people have in their mind, I want to retire at this age, whatever that age is. And I probably need to make my money last until this age, you know, whatever that age is. But because we're taking better care of herself, health care and food, nutrition, and exercise and all of that, that age at the end of the spectrum there is getting further and further out. So your money has to last, which means you have to have a certain nest egg set aside and then, you know, make sure that, you know, taxes and inflation and all that don't chip away at it.

But talk a little bit about some of those things that longevity is impacting, like you mentioned, healthcare and housing. Those are those are big expenses that people need to be thinking about as they're living longer, right? Yeah, they actually have to sit there and consider it's a situation where, you know, even if your house is paid for, there are so many expenses that are going to continue on and pull down onto the next egg of money that they actually have. And so you run into the situation of, okay, I'm paying for, I planned for 20 years in retirement, but now I am 30 years into retirement. And what does that look like? Am I down to just my Social Security or has my money been able to outpaced the level of expenses that I have currently. And so it becomes a real concern because

you mentioned like even if your house is paid off like I've paid off my house, but this past month, last month, I paid our property taxes. And here where we live in Colorado, our property taxes went up 50%. 5.0. Well, if I were retired on a fixed income, that would be a huge chunk. And I couldn't have planned for that. You just hear things. and all of a sudden you get this letter in the mail. So that's a really big point that you're bringing up is when we are living longer, is our money going to last enough? And it's not only the retirement funds and wherever that you have them.

It's these things like the cost of health care, the cost of your housing. And those are big things to plan for. And if you plan for them and don't need it, then good. But if you didn't plan for it and now you need it, you're behind the eight ball. Exactly. And it becomes a concern. because not only just like you said with the property taxes, you've got to think that all our taxes potentially go up, all of our expenses continue to go up, and, you know, even at doing a calculation

on average of a rate of return or, excuse me, inflationary rate of 3%, where we are, as we've seen, you're outpacing that. And so in our current environment, so that makes it become even more of a concern and more planning needs to be put in place to prevent those things from happening. So retirement risk number one is longevity. What's risk number two? Risk number two is market risk. For so many, they actually have money in the market as we all have. And as we go forward, we have to realize that there's major ups and downs in the market. And what I have seen, with several clients has been the unfortunate thing is they're ready to retire and all of a sudden there's been this major downturn in the market. Something that you really had no way of seeing

happen. You know, we've had different things happen in our environment and our world that have impacted the markets and now they've lost, you know, 39% 40% of their retirement as as we've seen back in 2008. And that was a major impact for several retirees. And I had, clients that we actually had to suggest they stay working. And that's a real unfortunate thing to see happen when they're ready to get out of the market. And maybe they just had too much at risk or, you know, had the hopes that they were going to stay in as long as they could. And we're just planning for those risk factors that are going to really impact them and maybe not even allow them to retire when they want to. You know, and you mentioned this a second ago, and I think that it

applies to both of these risks. It's like the peace of mind aspect. Like, you know, there's nothing wrong with, air quote, the market or having your money in the markets. But is it the volatility worth it at the age that you're at now? Maybe you can weather it a little bit easier in your 20s and 30s and 40s. But now at some point, you need to be started thinking about the market risk and volatility. And just the simple fact of the worry and the peace of mind that you don't have, if your money is taking hits and taking hits. So when you can assess that and when you can make the best decisions that make sure that your money is positioned the right way and protected, boy, that just gives you that peace of mind, doesn't it? Absolutely. You know, and the market isn't a negative.

I don't want to come across in that way that it is because obviously in our working years, we're all about accumulation. We're about trying to build that nest egg money as big as we can because we want to know that we have it for the peace of mind to retire and not outlive that money. So it all starts tying together. The problem we have is you can not leave everything at risk and feel like you can walk out into retirement and know that you're going to be okay. So, you know, for my practice here, the goal is always for us to design plans that we do meet all those needs. needs. We look at the market risk. We look at what their tolerance for being in the market is and maybe diversify that a little bit. It's not so much getting out of the market, but it's taking

the time to earmark enough money to secure that money that you won't lose that in the market. So maybe we break some of that off and put it into another vehicle to create a peace of mind or lifetime income, but still have money growth happening because we never want money. need to be stagnant. That's that's not a wise, wise move. So, you know, diversification is really the key to that. Yep. And there's not one cookie cutter templated solution that you say next, next, next, every client gets this, next. No, everyone's different. Let's assess. Let's see what you need. Let's see see what age you're at. Let's just see your risk tolerance and all of those things. But I think that's a, you made some really huge points about market risk. That's number two.

what's the next risk that you'd like to cover in retirement? Well, the third one is interest rate, inflationary risk. And boy, we've seen that kind of hit home in the last year or so, right? It's been one of those things that inflation can impact your purchasing power tremendously. And we're seeing that happen. You know, just like you, we were talking just a minute ago, you know, when you start having your property taxes go through the roof and you're retired out and you're on a set budget. And all of a sudden, that's not something you can budget for. Or we have, you know, in the financial sector, they have, oh, well, let's plan for 3% inflationary rate.

Well, we can't even come close to keeping up with those inflationary factors at this point. So what that really means for the person that's looking at retirement is you really have to assess the bigger picture. Because what is going to happen? It is not about, oh, I have a million dollars in my retirement. I'm going to be able to live on that just fine. That is just not a statement that I feel that we can make as good sound advisors out here. We have to be able to say, look, we potentially could see, like we have seen inflationary risk well above the three to five percent and higher.

And that is in every aspect of our lives. That's in our food. That's in our gas. That's in our medicine. That's everything. And it's, you know, the grocery, look at the grocery. tree bills. And I actually have people that have come in and just said, I need to look at this because, oh, my gosh, our cost is went through the roof. And this is not in the budget of what we had

budgeted. How is there a way to, you know, mitigate some of this potential risk for us, even though we are retired. And in some cases, we can still do that. But it takes the proper planning and being, I feel like educated. Education is huge. You have to understand the risk are there. You know, and what we're talking about here, interest rate and inflation, these are not things that are so obscure that they probably never would happen. It's happening. It's happened and it will happen again. You know, interest rates go up and down. Inflation rears its ugly head at some point and then it levels off and then you kind of catch your breath and then it'll come back. If we look back over 10, 15, 20 years, there were

inflationary times at different points and not inflationary times. So we know that it's there. And what you're mentioning is that purchasing power, you might think in order to retire at whatever age and last my money last until the other age, I need X amount of dollars. Well, is that enough when you factor in inflation and the purchasing power? So that's such a huge point that you're bringing up. Risk number three, inflation and interest rate risk. Let's move number four. What do you call number four of risk of retirement? Oh, it's, it's tax risk. And, you know, the problem, you can spend about seven hours on that one, huh? That's why I'm kind of chuckling on that one. You know, the question we often ask is, where do you think tax is going up or

down? And, you know, people always going to go, are you kidding me? You're even asking me that. And it's like, well, the reality is you have to think about that because that is another area that is going to, could potentially have great impact on your retirement, just like you were talking about property taxes. Those are up. You know, you can be debt-free, but you still are not debt-free because you have property taxes and those are going to hit you as well as income tax on any qualified accounts that you have not taken, you know, paid the taxes on their RMDs that you're going to have on the qualified accounts. So, you know, the big question becomes, is there a way to create tax-efficient strategies that are going to be able to help our clients go into a

retirement that they can be the most efficient possible. And the answer is yes to that, but it requires us, as always, as I say, to be educated and planned. Yeah. You know, you use the word a few minutes ago, mitigate. I'm confident that you agree the fact that we can eliminate tax. but we can mitigate them, which means lessen them as much as possible. So if you can do that and do it the right way, at the right time with the right strategies,

that's huge because it's kind of like having the big old bucket of water and here's holes in it. And if we can plug up as many holes as possible and plug up some of that market risk, inflation risk, tax risk, there's still going to be some cracks in the bucket and maybe a small hole, but it's not going to be, you know, flowing out like a sieve. So I think tax risk is so huge. And I've heard even someone use this example before. You know, we don't want to have, you know, our Uncle Sam is our guaranteed partner in, you know, taxes because they're going to get what's coming to them. And it's like having a fox just sitting there waiting at the top of a hole for the groundhog to pop out and snap it because we know that the money that went into certain of those, you know, qualified accounts.

You know, when you had a pre-tax coming out of your paycheck into whatever, 401k or IRA, it's not been taxed. Well, at some point, it's got to be. And when is the best place to hit that tax now, later? And then I think your point, too, is about where do you think taxes are going? Well, in my uneducated opinion, you can correct me if I'm wrong, but the taxes are tied to the deficit, which is astronomical. And the only way to manage the deficit is to lower spending won't ever happen or raise taxes to cover the deficit. Well, which do we think is going to happen? It's probably going to be taxes will continue to rise.

Right. And then on top of it, you know, it with the tax, tax risks, like you said, you're looking at you do have to pay those taxes. We're never talking about evading taxes. We're talking about paying our taxes that are due. And I often say this in in meetings as well as in some of the workshops that I've read. I believe that we are entitled to pay Caesar. What is owed to Caesar, right? So we are entitled to pay Uncle Sam if you want. want to call Caesar, Uncle Sam, that we have an obligation to do that. But I also believe that we can minimize them coming knocking on the door again and again and again. And part of that has to do with the planning because a lot of times with these qualified accounts, people don't realize that they have done the pre-tax side, but that they're going to be about fifth or six in line of actually getting paid once they start taking distribution on those accounts. And I can ask that, what do you mean? Well, you're going to pay taxes to the federal government, right?

Because you've got to pay the taxes due. Then you've got your state, your local. And in some cases, if your nest egg is big enough and you're drawing enough money, now you've got the Ehrma tax that can happen on your Medicare. You've got taxes that's going to impact your Social Security. And then you are like fifth or six in that list. So our goal is always to educate that this is a huge topic in retirement. and it really does impact you in that if it's designed properly,

you really can go into a very, very good and strong position in your retirement and create as much tax, excuse me, as much as possible. Yeah, you can eliminate it. Yeah. You can just mitigate it. You know, the goal is to create as much tax exempt dollars as you can as you're going forward. 100%. So four risks so far.

What's that last one in? of by risk of retirement. The last one is long-term care risk. And, you know, people just absolutely do not like to talk about this one. Yeah. And matter of fact, I had a lady say to me today, let's just assume we're not going there. And I said, well, you can assume all you want. But there's two things I know.

At some point in our life, we're either going to become sick or we're going to die. There is a guarantee of one or the other there. And so we do need to plan accordingly for the, And, you know, a lot of people have this misunderstanding when they hear the word long-term care as that it's just going in nursing home care, but truly it's not. Long-term care plays a role in assisted care, in home care, and in nursing care, if you have no other choice available to you as far as where your sickness takes you. And, you know, I don't think, because it's not a pleasant thought, I just don't see people. wanting to have that conversation a whole lot. They either are on board for having it or they absolutely want to avoid it. But the fact is it's a reality. It's going to impact their retirement.

It's going to impact how are they going to pass that wealth on to the next generation. And so it's just a huge risk that needs to be addressed. And there is two questions. Mike that will ask a client. will say if you got sick, where would you want to receive that care? And so inevitably, they're going to tell us at home. I mean, 84% or more, we'll say at home care. And that's great if you can do that. So that'll be the strategy that will work towards as a goal. But then the next question is always, okay, how do you intend to pay for that care?

What asset are you going to liquidate to pay for that care if you do not carry long-term care? And that's when it becomes kind of the rubber meets the road here. They all of a sudden look at you and go, oh, probably my qualified accounts that I have my IRA or my 401k. And that's where the conversation has to start that we really do need to earmark some money in our retirement planning process to protect them from that. 100%. And if you do what you just said like, okay, let's assume that it doesn't. But just for the sake of argument, what if? What if it did?

How would you pay for that? And then let's go ahead and plan for that. And if you never need it, the money is still there. We never used it because I know that there's some types of policies where if it's like your car insurance and you didn't have a wreck last year, you cannot call your agent and go give me my money back. Well, there's some kind of policies like through life insurance annuities where you can have some writers that give you long term care benefits. And if you never used it, no problem. The money's sitting still there. But if you plan for it and don't need it, wonderful.

But if you never plan for it, you might be caught off guard. Yep, exactly. Huge. Well, I tell you, like I said at the beginning, Kimberly, these are not fun risks to talk about, but you brought up some excellent key points and solutions and some hope. So if someone is listening to this thinking, maybe I need to have a comprehensive second opinion or look at my retirement accounts, what's the best way they can learn more from you and then also reach out and connect? Well, they're welcome to visit my website to learn more, and that is Kimberlypolar.com.

They can also reach out to us by calling here at the office, and our office phone number is 260, 306, 3456. And Amy would love to have a conversation with them and be able to direct if we need to have that appointment and how that would look. Excellent. Well, thank you so much for coming on. It's been a real pleasure talking with you. Thank you. I've enjoyed it. Thanks for taking the time, Mike. It's been a pleasure. 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.com.com.