Business Innovators Radio - Interview with Mario G. Taffo, Federal Benefits Consultant on Addressing Fears and Challenges in Retirement Planning

Starting point is 00:00:00 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, Maria Tatho, who's a federal benefits consultant and will be talking about the fears and challenges of retirement planning. Mario, welcome back to the program. Thank you for having me, Mike. It's a pleasure being here.

Starting point is 00:00:35 And again, I love your program and I love what you do for a post. Thank you very much. And, you know, it's kind of like, you know, fears and challenges of retirement planning. It's like, well, one of the challenges is if you don't start planning shoot enough, you don't have the runway to make some good moves and that amplifies some stress. So talk a little bit about some of the most common fears that your clients who are federal employees face when they start putting together that plan for retirement. So usually their first question is, how much do I need to put in my TSP?

Starting point is 00:01:09 What's the ideal amount? And their biggest fear is not having enough money or income in retirement and running out of money. Yeah. That's a great point because I would say that, you know, right up there with the fear of public speaking, running out of money in retirement is right on up there, right? Yeah, that's most people, and I'm sure most of us too, right? Even though I plan a lot and I set up all the folks' income and retirement, it's still a mystery, right?

Starting point is 00:01:45 Because we don't have a crystal ball or we don't know what's going to happen in the future, but definitely somebody that's planning is going to have a much better plan that somebody that does never plan or has nothing put in place. Well, it's like they say, if you fail to plan, then you plan to fail. So having a plan in place gives you that clarity. And running out of money in retirement, boy, I know that there's never the guarantee. Like, you will never get even on money because you never know what your personal expenses might be.

Starting point is 00:02:17 You know, you might have some health issues. You might have some long-term care. The tax rate might go up and you can't control those things. But if you can put a plan into place that at least addresses some of those, then that will make you feel more comfortable now. And it kind of makes me think about a comment you made in a previous conversation. You know, what if you get to retirement and you discover, wow, I really have plenty. You know, unlike the civilian jobs where a lot of people don't have a pension. So if federal employee has a security plus a pension plus their, you know, funds from TSP,

Starting point is 00:02:53 wait, you might discover you've got plenty, plenty of money and the thought could cross your mind, man, I could have spent a little bit more, you know, in years past to take that extra trip. That is correct. Usually, some of the eroding is factors for federal employees and retirement. You know, it's, you know, taxes. It's making sure, you know, that the loved ones that will take care of. Their fears is, you know, running out of money and not having enough time, right? Because they save up this money.

Starting point is 00:03:25 They have the money in the TSP. It has to come out. And like you said, most people don't even think about what if I need it now versus in the future, right? There has been cases where they don't make it far into retirement and they end up passing some of this TSP account. The average federal employee will pass more than 60% of their savings to their loved ones, meaning they're not even getting into half of their spending of their savings because of the pension, because of the Social Security. and income. That's why, you know, making sure that you have not just a supplement of income, but more income in retirement, it's based on preserving your principal and your savings. You know, that's a big point that you bring up there. And it's not only preserving it,

Starting point is 00:04:18 but making sure that you're not having holes in the bucket, you know, like, oh, I didn't plan for those taxes, the tax bill. And we touched on that a little bit, but how do you work with your clients to help them overcome that fear that they're not going to have enough money just even to cover the taxes or even some of those unexpected expenses that you cannot control similar to like, hey, we just got hit with this need for long-term care and we don't know how to cover that. How do you overcome some of those fears to make sure that they know that the plan is in place? great question Mike what one of the things that we we do is sit down with the client and first and foremost run what we call an income and retirement projection understand what the pension and social security income is going to look like understanding what the withdrawals as income is going to look from the from the TSP second with long-term care figuring out if we can self-insure right because some of these federal employees one they they they're long-term care needs are maybe half or maybe a third of somebody in the private sector because of the pension and social security income combined. And then they do have extra savings so we can protect ourselves by covering the additional need of long-term care with some of these savings.

Starting point is 00:05:44 Also, the employees will get to retirement and have the primary home paid off, meaning They're retired without a mortgage. In most cases, we utilize some of that principle, some of that equity inside their property as an emergency fund, right? We open a HELOC and then, you know, some of these HELOC you can keep open for 15 years and not have to pay money into it to have it open and utilize that, carve that equity out as an emergency fund. So therefore, we can use spend and utilize all that extra savings and not.

Starting point is 00:06:22 need to have a cushion or some kind of emergency fund aside just sitting in a savings account eroding to inflation. Yeah. Yeah, that's a really, really good point there is tapping the assets that you have in the right sequence, in the right way, whether it's using the line of credit, like you mentioned on the house, or maybe a reverse mortgage. And there's never one solution that fits everybody. So, you know, one of those options might not benefit everyone or neither one might benefit.

Starting point is 00:06:54 But knowing that that it's there is really, really huge. Talk a little bit about some of the solutions you offer to make sure that, you know, your clients are retiring well because once you get to retirement and you've got that TSP in the, you know, the plan, don't you want to potentially roll that into something so that it's, you know, a little bit more, you know, less volatile? That is correct. So most federal employees, when they adding money to their TSP account, it's probably one of the best IRAs out there. The problem is when they stop contributing to their TSP.

Starting point is 00:07:32 And the only way to contribute to the TSP is through their payroll. They cannot send the check in, and it has to be through their payroll. Therefore, as soon as they retire, they can't add more money to this account. So now it's up for grabs, you know, to inflation and volatility from the market. Both federal employees will move or be more conservative in retirement. Therefore, we got to identify different options for that portion of their protected components, right? Because we all want to protect our principal in retirement. At that point, we can't and we're not allowed to add any more.

Starting point is 00:08:15 money to the TSP. So protection becomes very important. And there's different options to protect and grow this money. Because remember, not only we're going to be withdrawing 4% per year at an 873, right, require minimum distributions, right? But we essentially could potentially start doing some Roth conversions, which means the money would still come out. So one or the other, we're going to either start the withdrawals early in our retirement to just alleviate some of that tax burden, or are we going to start withdrawing at 73 because we're forced to, because by law, we have to start withdrawing. So therefore, you know, like we talked about, you know, the market being down on the years

Starting point is 00:09:01 that we withdraw in money could potentially deplete our savings. And that's why we depend on income and we depend on the protection component. own it to make sure that we don't run out of money every time. Yes. That's a, that's a, and, and, you know, it's probably something where it gets to be very strategic, where we want to make sure that we're doing one thing first and then it follows with another, and then we've got to bring in our, you know, tax account to make sure we're doing that the right way and maybe even bring in your estate planning attorney to make sure

Starting point is 00:09:34 some of those kind of things are set up with the estate. So I'm sure you work with your clients, a full, you know, a financial team to make sure that everything is working the right way. That's the key, not just have me as a director or as a coach, right, but having the right team in place to make sure that what we're running, the numbers that we're running, the things that we're looking at, that everybody is, you know, in compliance, that, you know, the CPA understands why we pay in the taxes now, that the CPA. understand it has a plan for for the IRAs on the way out based on income that we're protecting our principle and that we're continuously having money in case we live until it's 108 Mike I I read into a a federal employee that is still living right he's a 108 and is still receiving a pension right so it it's definitely you know what one of those things that we could potentially make it to a hundred or we could

Starting point is 00:10:37 potentially to make it two months after retirement, right? So that's why the planning and having the option and having the different plans in place in case something happens early or in case nothing happened to age 100. You know, that's a really big point you bring up because when you, I've heard some people say that back in the 50s and 60s, you would calculate living in retirement to age, whatever it was, you know, 70, let's say. But now a lot of times you're running these calculations into 90, 95, because we as a society are actually doing better health-wise, eating better, exercising more.

Starting point is 00:11:21 Our health care tends to be more advanced with the doctors and the hospitals and all that. So if that is the case or since that is the case, boy, that sure makes a big difference in the numbers we have to prepare for to make sure we don't run out of money in retirement. It definitely does. And then us we start passing on these accounts as well, you know, to our beneficiaries, to our spouses, to our spouses, to their spouses. You know, sometimes this account, you know, they linger, right? Yeah, for a very long time, right? Because we pass it off, you know, to our spouses.

Starting point is 00:11:54 Our spouses would pass it on to our kids and maybe those kids will pass it on to their kids, right? That's what we for. And that's why, you know, protection and making sure that we have that personalized retirement plan in place to where we identify the needs, the ones, and most importantly, the house, right, of the plan. It's going to be key. And part of that personalized plan, I would suspect, is meeting all of the emotional needs of the client. And where I'm going with that is if you've got to worry that, hey, I just took my money and rolled. it out of that TSP into the market air quotes, you know, and I'm watching the news and I hear, you know, all of the stock market woes and volatility and dropped this and huge losses.

Starting point is 00:12:44 And then I get my portfolio statement and, oh, my goodness, it's going down, down. How do you help your clients avoid all of that and really have the peace of mind of having some kind of like consistency and guarantees? Great question, Mike. And that's definitely what are the biggest fears federal employees have, the market crashing, going back to, you know, 2008, right? Where we went to bed on a Friday night and then woke up on Monday morning to the market, you know, lose it 42, 48. I saw some folks lose 62% out of their entire portfolio, right? That's some of the biggest fears because we've seen it and we've heard about it and we saw it, right?

Starting point is 00:13:27 So one of the main things that we do is identify protected components. Like I said earlier, most federal employees cannot and will never add more money to their TSP. Their TSP fees are 0.06 percent, some of the lowest in the market, right? So we've got to identify protection and growth. If we know we're going to withdraw 4% per year and we know we're probably not going to withdraw more than 6, 7, maybe 8%, due to taxes, right? We have our margin.

Starting point is 00:14:01 We know exactly how much we have to make every single year to not, you know, to make sure that we have that we draw in place. So for federal police, the sweet spot is somewhere between 5% and 9%. So with that number, we know that our overall portfolio has to make somewhere between 5% and 9% to replace what we withdrawing, right? So there's different programs. There's different types of products out there that will give you that growth without putting that capital, that portion, that money. It, you know, at risk, right?

Starting point is 00:14:43 The risk will be zero and they'll still capitalize on that 5 to 9% growth. And that's something that, you know, I review with retirees all the time. And another thing that most people would not do in retirement with their TSP is touch it 30 days after they retire. So the TSP goes on what they call a TSP freeze. No money can come in. No money can come out for 30 days. So usually that's another area where, you know, what's going to happen during that 30 day period that we can't do anything? You know, what's going to happen to the money, right?

Starting point is 00:15:23 So we start preparing for protection and we start preparing for growth. And there's products out there that are going to make your life a lot easier. They're going to create better growth with more protection than inside a TSP. And I like that you're not mentioning this product, that product. Here's what we're going to do because I'm certain that being an independent professional like you are, you've got access to so many things and you might find that this product this year is great. And then here comes another one in two years that, oh, they've added on some great benefits. So the bottom line is make wise decisions so that your money's protected so that the actual gap between what you need in retirement and what you're going to have, you know, as far as cash flow, is covered.

Starting point is 00:16:14 Well, that might mean this product or that product, but that's where you are going to teach and educate and ask the right questions to make sure that, they're going to have that piece of mind to be protected. That is correct. I wish everything was a cookie cutter. Otherwise, we wouldn't be here, right? Yeah. I wouldn't be sold out so much, especially, you know, under the federal government, you know, planning section. You know, it's not a cookie cutter.

Starting point is 00:16:40 And there's different options. So some option might cost people money. Some other options might be free. Other options, you know, but may be giving higher. returns than others and that's why you know when I sit down with my clients it you know my first questions is not when they want to retire my first questions to them is close your eyes pretend tomorrow you don't have to go to work pretend income is not a problem pretend you don't have to pay any bills what will you do for the next six to eight months what what does that look like what will you do

Starting point is 00:17:19 with your free time? What will you do over an eight months period? Right? Because to me, it's more important of what people want, what they need, the income. Because once we start running numbers, once we start figuring things out, that's the easy part for me. You know, figure things out for a specific case under numbers. And you know, Mike, numbers don't lie, right? But we want to make sure that your retirement is it up based on what you want to do. It sounds like you almost become a life coach of sorts. You know, what does retirement mean and dream a little bit? And I would venture to say that some of the conversations you have uncovered things that your clients never thought of.

Starting point is 00:18:02 Like when you have now all the time, you know, you were going to your 9 to 5 job, but now you don't. You now might think, oh, I only need X number dollars every month of retirement. But what if you don't take into consideration the fact that, oh, now you've got the time to do that new hobby, to travel, to give to charity, to visit the grandkids. All of a sudden, it's like, oh, yeah, I guess I kind of need more than I was expecting. Yep, that is exactly right. And that's usually what we find out. We find out that, you know, some folks will run their preliminary numbers, and they think

Starting point is 00:18:37 they're great. They think their income is awesome. And so they realized that in retirement, they were planning to travel more. So now they require more income. They require more money. because they're going to be traveling more. So those are the little things that usually, because I understand my client's personal needs,

Starting point is 00:18:56 I can match their finances to their personal needs. I love it. Well, Mario, as always, it's been such a great time learning from you, seeing your measured approach to serving your clients and helping them have that peace of mind and protecting their retirement. So if someone is interested in learning a little bit more in reaching out and connecting with you,

Starting point is 00:19:17 what's the best way they can do that? Yes, sir. So they could call me, email me. I'm sorry, they could call me or text me, right, at 240454-6154. They can also look me up on LinkedIn. We have a huge presence on LinkedIn. We have a big follower presence. And they can also visit us online, www.ifa-online.org. And again, thank you for having me, Mike. We really appreciate it. I hope to see you here, you guys soon. Thank you so much, Mario. You've been listening to Influential Entrepreneurs with Mike Saunders.

Starting point is 00:19:58 To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.

Business Innovators Radio - Interview with Mario G. Taffo, Federal Benefits Consultant on Addressing Fears and Challenges in Retirement Planning

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