Business Innovators Radio - Interview with Luke Harrison with Olin & Associates, Discussing Retirement Planning

Episode Date: September 13, 2024

Luke is a value-added consultant for Medicare, Life Insurance, Annuities, and Ancillary products lines.With a 15-year background in the Senior Healthcare field, Luke has helped thousands of seniors and continues to be a guide today for thousands more.Learn more: https://olininsuranceadvisors.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-luke-harrison-with-olin-associates-discussing-retirement-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 back with us Luke Harrison with Olin and Associates and we'll be talking about retirement planning. Luke, welcome back to the program. Thanks, Mike. Thanks for having me back.

Hey, so I think we can spend about four and a half hours on this one topic and still not have scratched the surface. So I know we want to just kind of touch on things from a 30,000 foot view. But where do you start when you're talking with your clients? Where do you start working with them to educate them on this really, really vital topic of retirement planning? Wow. Yeah, that's a difficult starting point to find sometimes, right?

Here's what I would tell you. usually it's the first question that I get, when should I start retirement planning? Right. And a lot of times people ask me that. And other times they may say, well, I've already been planning on my retirement. And I'm all said. I have my 401k. And so it depends on the individual and their work and career, I would say.

The first step for me with retirement planning is figuring out, okay, well, how much money do you already have set aside? Do you have 401K? Do you have an IRA? Right. You go into all these little fact-finding questions, right? So the first step would be, what is that individual's lifestyle? What is it that they're doing to plan ahead? And what is their work life like? Do they have a strong income or not? So everyone's very different with, you know, where to begin? Yeah, we have to set a baseline where are you at right now? And then where do you want to be? And then how do we get there? And what do you say about at what age?

And I think that as much as people logically would say, oh, yeah, we should start as far ahead of retirement as possible. There's definitely the people that start at age 60 and they want to retire at 62. Well, you need to have more runway. So what are you recommending your clients at what age should you be starting the process? So this will sound sort of like a cliche, but as young as possible, right? So here's why I'll say that. And I'll use myself as the example. And this is sort of a raw example.

I am currently 30 years old at, you know, the age of 15, 16, whatever I start in my, you know, workforce and whatever little odd end jobs I'm doing at that point. But once you dive into your, you know, adult career and you have things ironed out, you found your spot. I'd say, okay, right there you need to start thinking, how much money should I pay myself? for my future, right? So that's sort of the, I guess, golden point if you do it at that point. But I mean, even, okay, so I myself, right, I got, I got licensed over six years ago and everything that I do. But I did not begin my own planning until a few years after that, right? Yeah. So it's, there's a, there's a, there's a recommended time, but then there's also a realistic timing that works for each person. And it's not always a clear cut answer. So I would say as long as,

it's a comfortable point to say, start setting 5 to 10% of what you're making, 10% being a golden number aside. And that's what you're paying yourself for the future. That's when you should begin. Now some people will tell me, okay, well, I can't set 10% aside. And that's where then you start going into budgeting and planning. Okay, well, how much money do you make? How much can we actually set aside? Well, and I would venture to say that if you started retirement planning at age 20, the sense of urgency is not as dire as if you're

40. So you have more time and more runway. I remember reading a book years and years ago called The Automatic Millionaire by David Bach. And one of the takeaways that I remember from that book is do things automatically so that it's just always being done. So, you know, how can you take that X percent, whatever, 5, 10 percent or whatever that it is and automatically put it into retirement? And one of the first things that I would venture to say that people, if they go get a corporate job is they're going to be told, hey, 401K. So that's automatic because it's going to come right out of your paycheck, go into that 401K. What is your advice that you give to clients regarding a 401K?

Because I know that some people would say, pile it all in and some advisors would say run from a 401k because it's not taxed and you're going to pay big tax way, way down the road. So what do you educate your clients about that? Sure. Here's what I would say. If you have a 401k as an option, go ahead. contribute to it. I think it's a good thing to do. And again, this is my opinion. And here's what I would say, though, is don't over contribute. A lot of times, you know, companies going to match what you're putting in. And I would just do that. And then utilize that as your bucket that you're putting something aside, right? It's automatic. It's coming out. You don't have to think about it. And if they're matching it, it's almost like you're getting free money, right? So put that aside until you research properly what other options might exist. Just to name a few of those options. For example, let's say down the road, 20, 30 years, you've been putting money into your 401k, and you realize, okay, well, I need to figure out what to do in my retirement because I've waited

a little bit longer to really structure this and what am I going to do about taxes? Well, you can roll your 401K funds into something much stronger and then utilize those for, again, tax shelter and risk shelter. So a lot of times people are, I think, fearful because they don't want to play in the market. They don't want to risk their money that they've been setting aside and working hard to, you know, build up their nest egg and this bucket of funds. So if you are able to roll that into, say, an IUL, which is that index universal life, or maybe an annuity or some other thing, you know, like that, some of those give you the

opportunity to take your money and turn it into so much more and have tax advantages. Yeah. Yeah, I like your point about the match, because if you're going to put in money to the 401k, that's great because it gets you in the habit and it's automatic. but if your company's going to match up to, let's just call it 5%, don't put 10% in because you're only getting matched to 5. So maybe do the 5 because that's leaving money on the table. Your company is ready and willing to give you free money up to 5%.

Do that. But then after that, then get with that financial professional to go, okay, I'm contributing 5% into this 401. What else should I be doing? And I think for the simple fact of that habit, that's huge. Now, you mentioned a couple times so far about index universal life or annuities. How do those two compare and how do they layer into then the plan? Because you never ever, we know the cliche, don't put all your achs in one basket.

So don't have your entire retirement plan in a 401K and don't have your entire retirement funds in anything else. So talk a little bit about the index universal life in policy or strategy as well as annuities. Sure. So the index universal life, the good news on. that is it's very easy to start one. Again, it's life insurance and let's say that we want to continue contributing the 5% to the 401k. And maybe we want to take 2.5% and contribute that to an IUL. So think of the same thing. It's going to be set up to automatically come out of a checking account usually, savings or something like that. And as we're funding that, it's going to continue to grow in a

whole different kind of bucket. And now you've gained two advantages. You're growing funds in another realm outside of the 401K? Let's say also, what if you leave work? What if you move jobs? What if you, you know what I mean? A lot of times people just leave their 401k sit. It's not growing at that point. But this still is. So if something happens, life events, you know, the IUL is now going to be building and at the same time providing you life insurance. So you have two needs met. Outside of that, you might have, let's say, a guaranteed income annuity that you're going to set up or a fixed indexed annuity maybe. That way you're going to try to, you know, target more growth and you're also negating any risk with certain annuity products such as a FIA.

You get to play in the market. It's like having a team of financial advisors working for you with no risk on that side because you're getting a guaranteed fixed return. But as you, as your money grows in, if the market does well, you might make even more money. And I would say that, you know, you're taking your 2.5 or 5% total on top of the five you put in your 401. Now you're at 10% and you're diversified in at least 2.5%. products. Maybe you decide to do more. It all depends on how much money you're willing to invest and grow. And you already said it. I'll say it again, time is the key factor here. You know, the more time you have, the more compounding interest you have on your side,

and the more powerful these little things become and they start to turn into oak trees out of acorns. Yeah, I was literally what you were mentioning the word time, I was thinking of compound. And it's really amazing how when you look at some of those charts, you know, hey, if I put this much over this much time, over this interest rate, look at how it grows. It is way more than just the addition of numbers. That compounding really is powerful. In fact, what's the quote from Albert Einstein that compound interest is the eighth wonder of the world or one of the wonders of the world because it is that powerful?

It is. Yeah, it's actually hard to wrap your head around. But if you sit down and just do some of the basic math on it or read any book that discusses compounding interest, everyone will tell you the same thing. which is why I'm saying the same thing that I've got from experts I've read from and learned from, start as early as possible, right? The earlier you start, you don't have to put 15 or 20% aside. You can put 1% or 5%.

And be consistent. You know, don't start and then cut it back and then stop it. I mean, just have that be every single paycheck, every single month, every single year, keep on putting it in. And one thing you mentioned, too, when you mentioned annuities that caught my attention is guarantee. Talk about the guarantee of that kind of product because people love guarantees. They don't want their money to be at risk. I know. I agree with you. And this is something that sometimes to me, when I first learned about it, I thought, well, that seems too good to be true. Nothing's

guaranteed, right? This is. So let's say that you have $50,000 that you've built up or set aside. And you decide, well, what do I do with my $50,000? Maybe I want to invest it. Well, your options might be and everyone knows what the S&P 500 is, right? So your option A might be, well, that's pretty conservative and safe. What if I put my money there? But then rewind a little bit to, you know, what may happen. And again, we're kind of in a bubble now. We won't get into economics. But in 2008, when everything collapsed at that point, even your safest investments plummeted, right? And if you look at annuities, how would that have looked if you put that 50,000 into an FIA? this is why I say it would be guaranteed.

If the market plummets, your money is still actually going to grow. And that's where the fixed side of fixed index annuity comes in. There's a certain point in a bucket set aside of your money of that $50,000. Let's say maybe it's 10 or $20,000. But no matter what, it's going to keep growing every year, at a very minimum, let's say the time you put your money in, they said it's going to grow at a minimum of 4% or 4.5%. Then you know if the market, even if it plummet, it's still going to grow at 4% or 4.5% at a bare minimum. But if the market does really well, right, it's still playing in the index side, which is your S&P 500s and things like that.

And it will grow more. That might be upwards of 10, 12% or higher. So when you have your friends that come over and go, oh, my word, did you see the news and what the markets are doing? And did you get your retirement portfolio quarterly statement? you know, it felt like the wind was knocked out of my sales because it plummeted. And then you're sitting there going, yeah, mine didn't do anything. I didn't lose a dime. In fact, on a portion of it, I was up X percent.

And I think that that is a powerful position to be in because maybe in your 20s and 30s, maybe early 40s or so, you can stomach the volatility of craziness of money in the market because you have time to recover. But at a certain age, you just want to be steady, Freddie. And like the tortoise and hair, you want to just be making that. steady process. So guarantees that's a huge gift, actually, that you're able to give to your clients so that they don't feel that volatility. Absolutely. Yeah, this is something that, and again, even I'm 30, right? I do play with some risk in my own investments, but I also have my safe ones.

And the safe ones are the guarantees, the ones that my money I know no matter what, it's steadily growing and the steady growth with compounding interest. And again, you've already said it as well, making sure you do not miss any contribution, making sure you're continuing to pay into everything, those are the ones that can, I mean, really become your big investments long term. So they don't seem like the big ones whenever you start, but they turn into the big ones later on. So I think that a lot of times people, when they hear the word retirement planning, that means you've got to have a plan for retirement. And I think one of the big fears that people have is, what if I don't have enough money to live through retirement? Because you know what? A lot of times we look around at the society we're in and people are exercising more, eating better, going to the doctor more. They're living longer. So what if I outlive my money? So how do you advise your clients on making sure that they've got the money that they need to keep living the lifestyle that they've been living at for the last 20, 30 years up to retirement? And then to make sure that that continues. Because that's a big deal.

So this is another guaranteed I'm going to throw out there. And it's again in the annuity realm. But this would be something called and get ready for this word because this is crazy sounding guaranteed income for life. Normally you only see this on billboards for the lottery saying, if you win this, you know, we're going to pay you every month for the rest of your life until you pass away. And that is the same exact thing of what I'm describing. We're going to pay you every month for the rest of the life of your life. And also sometimes your spouse is like depending on the, you know, if you put that in your election of the policy. So even after you pass, we're still going to pay your spouse for the rest of the. of their life. And so there's an amazing product. It's called a guaranteed income for life annuity.

So let's just use an example. And I'm not going to use numbers because they vary drastically depending on the company. But if you give, you know, you have X amount of dollars. You give that money to company ABC insurance. And they decide, hey, we're going to go with this annuity. All right, we took your briefcase of money. And that's ours now. You can't get that back from us. However, Our promise is since you gave us your briefcase of money, we're going to start paying you on an agreed date. Now, you could delay that to let the money grow first before they pay it out. Or it could be immediate.

They might pay you the very month that you gave them that money. And let's just say it's $4,000 a month every month for the rest of your life. It all depends on how much you gave them up front. And they'll tell you exactly down to the penny how much they'll give you every month forever. But this is the key. Let's say it was $100,000. and you're trying to live on $100,000 in a CD or a checking account or savings or whatever you had set aside, that might only last you six years, maybe, if you're lucky.

But let's say you gave that $100,000. Yeah, yeah, yeah, yeah. Yeah, that $100,000, though, you're not withdrawing from it. You can't outlive it. So even if that $100,000 turned into, I don't know, $1,000, $2,000, $3,000, whatever it is that that contract says, every month they're paying you that forever until you pass away. Yeah. That is how you can outlive your money.

That is, Yeah, that's how you make sure that you're going to have plenty of money to and through retirement to fund your lifestyle. And now, guess what? You need to make sure that you're not overspending or taking, you know, around the world trips every other month because, you know, this deal, you need to make sure that you've got a budget. But I think for a lot of people hearing that, it's like, how much money do I need to retire? well, the calculation might need to take into consideration of what you just mentioned there. And if you knew that your money was in, let's say that savings account, you're taking withdrawals every month to live. Well, you're just watching your balance drop.

Whereas the scenario you mentioned, it's like here comes my check every month until I die or beyond that if your spouse was named as part of that. And so now of a sudden, that gives peace of mind beyond belief. Oh, yeah, absolutely. And the thing is, like you said, we're living longer and longer with health advancements. And that's an exponential thing as well. And the last time that I had a discussion about that, maybe five years ago and longevity predictions, by the time that I would be, you know, I'm 30 now, by the time that I'm retiring, I might be looking at an average life expectancy of 110, 120.

We don't know. And that's a crazy thought, right? But that is reality. So how do you plan for that? I would say this is a great way, you know, a great piece of the puzzle. right. And by the way, that 401k we talked about, you could decide to roll all of that or a portion of that into a product like the guaranteed income for life. And there you go. Now you have some money that you were, again, I said in a bucket. You don't know what to do with it yet. Maybe that's the option you elect or at least one of them. Again, diversifying how you're paying yourself is also important. And that 401k money typically is in the market, which typically is volatile. So that could be a good option. Is it the right option for everyone?

Of course not. Talk with someone that knows what they're doing because you want to make sure that they're going to give you good advice on taxes. Because if you take money out of a 401k that's never been taxed to put it in one of these vehicles, yes, you're going to get that guaranteed income for life. Yay, but what's the tax man going to need? So you need to plan for that. Not that it's a bad decision, but you need to just have a plan in place for that. So don't try to go out there and figure it out on your own. have someone that like yourself that's going to do it because guess how much you charge people to do

probably nothing because it's like you get paid by the carriers and I'll just give good advice, you know? Yep, yep. I don't charge anything on an hourly or any, you know, there's no charge. And if you decide to not do anything right now or ever, there's still no charge, right? So I would say absolutely it's worth a conversation. It cannot hurt to look at your options. And then that way you can try to plan now, right?

And then again, we've talked about peace of mind. what life insurance does, and that's peace of mind for your family. But what about peace of mind for your own future and your retirement and your income whenever you decide it's time to stop working? And so that is exactly why we want to look at products like this. Well, Luke, once again, this has been really insightful, given some great encouragement. So if someone is interested in learning a little bit more about this guaranteed income for life for retirement planning, what's the best way that they could reach out and connect with you? Oh, sure. So my cell phone number, that's one thing. You can text me or call me on that number. That's 814288, 843. And I'm usually pretty quick to respond there. You can also reach me at my website. And that is olen insurance advisors.com. So web domain, obviously, www.Olininsuranceadvisors.com. Feel free to reach me there. You can also find me on Facebook or all of your regular social

media platforms, LinkedIn. So yeah, Luke Harrison, feel free to look me up. Awesome. Luke, thank you so much for coming back on. It's a real pleasure talking with you. Absolutely. Thank you, Mike. I appreciate it. 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.