Business Innovators Radio - Interview with Len R Martinez Founder of LRM Retirement, Discussing The Truth about Annuities

Episode Date: July 15, 2025

Len R Martinez is an Investment Advisor and a Fiduciary in Texas. Len is a fee-based planner and works primarily with clients planning for or in retirement. His goal for his clients is to replace “hopefully, we will” retirement with “we know we will” retirement. With 25 years of client relationships and success, Len focuses on educating his clients on how to plan for and pay for retirement.Learn more: https://lrmretirement.com/Investment advisory and financial planning services are offered through Simplicity Wealth, LLC, an SEC-registered investment adviser. SEC registration does not constitute an endorsement of the firm, nor does it indicate that the adviser has attained a particular level of skill or ability. Insurance, Consulting and Education services offered through LRM Retirement. LRM Retirement is a separate and unaffiliated entity from Simplicity Wealth.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-len-r-martinez-founder-of-lrm-retirement-discussing-the-truth-about-annuities

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 Len Martinez, who's the founder of LRM retirement, and we'll be talking about planning for retirement as a federal. employee. Len, welcome back to the program. Thanks, Mike. I appreciate it. I really enjoy these talks. Yeah, you know, I love your fresh, clear, simple approach to explaining topics that sometimes can get confusing. And I can only imagine that retirement is a broad topic, but retirement for a federal

employee could pose some additional challenges to understand. So where do you start when you're working with a client who's a federal employee? How have they successfully navigated? How have they successfully navigated retirement compared to those in the private sector. Right. Thank you. Yeah, it's very important. Someone early in my career, some 20-something years ago, said to me after a presentation, they said, Lynn, I appreciate that you explain this stuff in English. And I took that to heart, and I've tried to make that the case every time I stand in front of a group of people or I'm sitting with one of my clients at their kitchen table doing detailed work. The financial planning services market is very complex, products are very complex. It's very important to make sure that we understand and we use language

that people can relate to and repeat. Well, being a federal employee adds another layer to that because the federal retirement program is unique. It has things that are, in my opinion, excellent among the best in terms of benefits, but they're very unique. And if you work with an advisor that's not familiar with them, there's some critical mistakes that could do things like cause a widow to lose her health insurance later in life. I mean, it's that serious. And the mistakes cannot be undone. I've been working in the federal marketplace. Sometimes I hate to count this because it keeps adding every year, but somewhere in the neighborhood of 16, 17 years. And counseling federal employees that are either planning for retirement or in the process of

retirement, or now in probably well over 100 clients that have been retired for some time, and they're my advisory clients. The benefits that a federal employee has are good, but they're different. They're different from the private sector, and they're even different from other public sectors. Right here in Texas, we have TRS, which most teachers are a part of. We have regional. We have municipality programs that are all very different.

In most cases, what I recommend, first and foremost, is it's very important to leverage fully all of your benefits. of course, task A is to understand all the details. Learn the numbers, I like to say. Outside of the federal government, people get confused as to when does Social Security start? When is Medicare? Do I have Medicare? Do I need Medicare?

When do I have to take money out of my IRA? Those dates, 62, 65, 67, 70, 73, or 74, some of those have changed over the last few years. So even the things you may have learned five years ago, the laws have changed. In the federal marketplace or in the, or should say federal employees, you have a whole different set of numbers. You have to know in addition to those. What is my minimum retirement age? Can I retire and not have 20 years and still get some kind of pension? How do I do that?

Do I keep my medical insurance? Do I need Medicare? Those are questions that are very unique and need to be clearly understood before a person starts to fill out that paperwork. You know, it's really important to fully know what are all of these benefits and fully understand them because it's one thing to understand, oh, the main ones, but what about the ones you just didn't even think about? So I think that's really a huge point that you bring up. So let's talk a little bit about the specificity of that plan. So how can federal employees maximize their benefits from that TSP to make sure they've got that secure retirement? Yeah, this is where most of the conversation centers around once someone has understood their benefits, so to speak, they're going to look at what they have available to them. For example, you've got your pension. Almost anyone in the last few years are retired, retired under FERS. Prior to that, we had SERS.

Your advisor should know that. Benefits are very different. But for a FERS employee, you're going to have a pension that you're going to be paid the rest of your life. If you manage it correctly and if you do your paperwork right and you will let two, you can also cover a spouse after you pass away. There's limits, of course. But that's one part. Social Security is another piece. You actually have more of a three-legged stool when it comes to your retirement because you've got your pension and Social Security.

Again, very complex topic, important to understand how to do it. And then the third leg is the TSP. And this is where most of the conversation is around when it comes to speaking to it. advisors. A federally specialized advisor, someone with, let's just say, 15 years in the business, can customize a plan using the tools that you have within your own benefits and the tools that we have access to outside on the private side. We can customize plans for your needs, for your personal values, for where you want to be, which ultimately is all about maintaining your lifestyle. Yeah, that's a really, really big point. And I know that there's

some things we don't want to get in the weeds, but there's things like a TSP is similar to a 401k where you have allocations like, oh, what percentage do you want in this and that and fund and all of that? So what about allocations? What about timing? What about pulling, you know, timing of withdrawal? So those can make a big difference. And I think the point that you are bringing up is know what they are, understand what impact that it could have, and make sure you're getting that that good advice, right? Right, absolutely, especially when it comes to TSP itself. Yeah. Some clients want to stay within TSP, and that's fine, no problem, but you do need to understand exactly how it works. You do need to understand that you're signing up to be your own investment

advisor for the rest of your life. For anyone that's interacted with the TSP.gov website, you know, it can be a little tricky. It's good to have someone that knows that thing inside and out when you're trying to do any kind of function on it, withdraw money, transfer money, your checking account, whatever. If you make a mistake, you can undo it. I met a client many, many years back that wanted to roll over $100,000 into an outside investment. And she did the paperwork wrong, TSP center, $80,000 to her house and took $20,000 for withholding to the IRS. You can't undo that. She didn't mean to do that. She meant to move the money in whole and keep it. keep it invested as an IRA.

But she just checked one box wrong on the paperwork. And back then, used to have to fax your paperwork in. This is not that long ago. TSP was still using fax some 10 years ago. So having someone that understands those ins and outs is really, really important. Yeah, really is. So let's talk a little bit about some of the misconceptions that people might have. I think that, you know, sometimes people would make some assumptions.

and they might not be right, but what are some misconceptions that federal employees might have about their benefits? Yeah, I'll give you a few of the top ones, and this is from real life experience over many years. When clients want to go it alone, they don't understand the funds. You've got five funds, and you've got a whole handful of L funds, lifetime funds, or life cycle funds. Those funds consist of the other five funds, okay? Many people think that one fund is this or one fund is that without truly understanding. I met a client that had lost a bunch of money, didn't understand why. And she said, well, Lynn, I'm in the L fund. Isn't it safe? And I had to tell her not the one year in. She lost 20% of her money over during one of the corrections a couple years ago, 2022. And the fact is,

she had been using an L fund that was mostly at risk. As a matter of fact, one of the L funds today, 99% of your money is at risk. It's in stocks of some sort. Okay. Most people, don't understand that. So if you're going to be using TSP, you need to know the details and how to manage them. Another one, this is a big one I run into. Most people think that if I take money out of TSP, I have to pay taxes to move it. So they say, well, I can't move it to your investments land because I don't want to pay 20% or 24% taxes. Well, of course you don't. We've been moving 401Ks for, what, 50 years? It's called a rollover, done properly. The right forms, the right people, fiduciary, by the way, that money can be moved without paying the IRS anything. We don't want to let them dip in until, well, I was going to say until we're ready, but actually they'll tell us when they want someone. Done correctly, you don't have to pay taxes. Another one is huge. Big one is around the, I'm sorry, Mike. I said that's a huge point. Oh, yeah, absolutely. Another one is around medical insurance. For those of you that know your benefits a little bit, it's called FEHB. A lot of people think that FEAHB. A lot of people think that FEA

is essentially going to go way up when you retire. Oh my gosh, I have to pay for it. And on the other side of that coin, a lot of people think that the FHB is going to continue to be paid for by furs or by OPM or by the federal government. Both of those are wrong. When you retire, that FHB payment that used to come out of your check you never saw, you got to pay that. Now it's coming from your pension. And on the other side, the good news, it doesn't go up. The federal government subsidizes some 72% of your medical insurance. That's incredible. It's unmatched out here in the private world. That continues in retirement. You know, watch this space, right? The laws are obviously changing very, very fast. But as of today, that's subsidized. And it's an amazing benefit for a federal retiree. Yeah. Yeah, that's huge.

So what about even things like survivor benefits or pension calculations? How do you clear those up in those kind of conversations? Yeah, absolutely. So one of the things that we want to do is we want to use very customized. And then there's several programs out there. We have, I use one of three that I think is the best that takes and it simplifies your benefits so that we can just take data right from your LES. We can take data right off your Social Security statement.

I don't even need to see it. You just have to give me numbers. And I can create a report in five minutes that shows you within certain assumptions where you're going to be when you retire, five years, 10 years, 20, 25 years out. As a part of that, we can then move on to how do we want to invest this money? How do we want to use this money to get to those in goals? Which again, is maintaining the lifestyle that you want and that you deserve. Yeah. Yeah. That's it. And again, we're coming back to brings a topic to my mind, customization. It's what works for one person will not work for another person.

So it's all based on what you're looking for. So let's kind of wrap up with this thought, Lynn. Share some strategies or maybe case studies or examples from federal employees that you help them optimize that pension and the security benefits all to roll together to make that comfortable retirement. Yeah. Those issues, Mike, for federal employees. are a little bit different than for other folks. Typically, someone is retiring, hopefully, with the 401k, and then they have Social Security.

And those are kind of the two legs that they're going to be using to create some stability for their retirement. Social Security has within it some things that you need to understand, like earnings limit. What age can I take my Social Security? Can I keep working? What age can I work and how much can I make? All those fall under the title of earnings limits. Well, FERS has earnings limits, too. So I'm dealing with my first pension with earnings limits at a certain age, crossing over into Social Security as a pension, if you will, with earnings limits.

I better understand how all that fits together so that I don't end up giving some of my money back, either to first or to Social Security. Typical planning, kind of the traditional planning says, well, let's defer your Social Security as long as possible because it goes up a lot. It's guaranteed to go up every year you wait. Actually, every month you wait. But for example, between ages 62 and age 70, Social Security, your Social Security, my Social Security, the payout per month goes up 54%. That is really hard to do with pretty much anything on a guaranteed basis. Stocks, can you make 54% in a year?

Sure you can. Is it guaranteed? Absolutely not. I'm not saying everyone should wait until they're 70. Absolutely not. It's very personal to your family and your needs. But that's a fact that can be taken into account as you look at how you're going to use your pension. And as you look at how you're going to use your TSP, does it make more sense to spend some of my 401k TSP now?

Or should I be deferring that? Those are some issues that can only be answered by sitting down and looking at your numbers, your needs, your values. Yeah. Yeah, that's, again, I think that there are so many things that it reminds me of the example of when you play chest and you make a move and you leave your finger on it and you look to make sure that's the right move, you know, for you. Well, if it's not, then you pull it back and do something different. But if it is, okay, good, I checked. So there's so many moving pieces with respect to the first pension and social security and when to pull and how much to pull and it's different than someone

in the private sector. So talk a little bit more about coordinating the timing of some of those withdrawals as well as potential rollover as well as. us how that fits into social security planning. Yeah, that's, I've heard you make that point about the chess game before, Mike, and I really like it. I have, when we do, we do workshop, presentation, seminars, educational, kind of get gatherings, and I stand in front of a crowd pretty often. On our notes page, I have a saying something like I'm terrible remembering saying is or jokes, but more or less what it says is, it says the best time to start planning for retirement is yesterday. Okay? And I believe in that. That doesn't mean you need to go out and change

all of the rules and limits on your lifestyle. It simply means you need to have an eye towards it. And you need to be doing things that are smart based on your age. Where are you in your life cycle? When do you want to retire? Most of the people that we meet with are right kind of at the cusp of retirement, plus or minus a couple of years. Where you are, you're going to typically find yourself, not everybody, but most people would be somewhere between about 60 and 65. Those are the key years. When can I start taking Social Security? 62.

When can I get all of my Social Security and still work? 67 for most of us. When do I have to take Social Security? 70 or any month in between, okay? That timing is very important. And if I also have a first pension to consider, I need to take that into account as well. when does it make the most sense to take my Social Security? Does it make sense for me to have this type of investment versus that type of investment? Even in the federal space, we like to preach a two-bucket

strategy. We want some money that's going to be essentially in the stock market that can grow, but we also want some money that's not in the stock market. Do you have a real estate portfolio? Do you have some houses that you rent? Do you have any kind of guaranteed income sources outside of just furs and social security. All of those things can come into play and should, and a good education as you go through this process, that's why we should start yesterday, is key to having a good plan. Yeah. So let's think about this, Lynn. I know that the topic has been pretty broad. And if you're a federal employee, you, you but have just signed a bunch of papers when you got started and you never looked at allocations or different, you know, things like that. If someone is

listening to this thinking, okay, what are some of those key main points that I should kind of grab some papers, put a highlighter around it and sit down with Len and go, does this look right? What would those things be? Yeah, I think the main things that you want to consider are, what is the lifestyle that you want to have in terms of finances? A lot of people have the misconception that when you retire, so to speak, or stop getting a salary, that you're going to be in a much lower tax bracket. The fact is, excuse me, the fact is in most cases, it's not true. Will you be lower in a particular bracket? Possibly. But unless your goal is to cut back when you retire, we need to take that into consideration that you're probably going to be paying a similar amount of taxes as you do

now. Let's look at what that means in terms of the amount of money that you'd like to spend each month. And here's the framework. Inflation, guaranteed. Market. Risk, in other words, market losses, guaranteed. As we look forward one year, five, year, 10 years, 20 years, let's put reasonable assumptions in place. Be sure that we understand what happens when one of you passes away. You understand that when one person in a couple dies, one social security check goes away. If you're the pensioner, a federal employee, and you die, the best you can do is to leave your spouse 50% of that pension. So they're going to lose a social security check and half of the pension.

How is that going to impact things? Do you want to leave money behind? Most people these days don't. They simply don't want to be a burden. They don't want to run out. Well, let's make a plan that ensures that you don't run out. And then let's revisit that every once in a while and be sure we're still on track and make changes as we need to. Well, then, I think this has been so helpful and educational.

If someone is wanting you to take a look at some of those highlight and key points in their plan, what would be the best way that they can reach out and connect with you. Yeah, absolutely. So my phone number, feel free to call, text whatever. I do answer my own phone, unless I'm sitting with a client at the time, in which case that's dedicated to you. I'm at 214-549-3473. Our website is www.l-LRM Retirement.com.

And you can email me or my primary assistant. I'm at L-E-N at L-R-M-R-R-M-R-R-M-R-R-M-R-R-M-R-R-M-R-R-Mretirement. And Leanne has an unusual spelling. She's at L-E-I-G-H-A-N-N at L-R-M-R-Mretirement. Excellent. Well, Lynn, thank you so much for coming back on. It's been a real pleasure talking with you again. Thank you, Mike.

I really appreciate our talks. 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 entrepreneurs radio.com.