Business Innovators Radio - Interview With Ron Cook Jr, Owner of RC Wealth Advisors Discussing Secure Retirement Strategies

Episode Date: September 10, 2023

Ron Cook Jr is an independent fiduciary Investment Advisor Representative who helps families with the fear of possibly running out of money in retirement, lowering or eliminating retirement financial risks, and protecting their retirement funds from unexpected life events. He prides himself in making complex situations simple and easy to put into place with comprehensive retirement planning.Ron loves his God, country, and family. He is a big New England Sports fan, he has two French bulldogs, and has an annual pass to Disney World where he and his wife got married.Learn More:https://www.rcwealthadvisors.com/ and https://www.retirementmoneyschool.com/Investment Advisory Services offered through Retirement Wealth Advisors, Inc. (RWA) an SECRegistered Investment Advisor. RC Wealth Advisors and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RC Wealth Advisors and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any references to protection benefits or lifetime income generally refer to fixed insurance products. They do not refer, in any way to securities or investment advisory products or services. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors, Inc.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-ron-cook-jr-owner-of-rc-wealth-advisors-discussing-secure-retirement-strategies

Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Ron Cook Jr., who's the owner of RC wealth advisors, and we'll be talking about secure retirement strategies. Ron, welcome back to the program. Thanks, Mike. I'm back again, man. I'm ready.

Yep. I was excited to talk with you before and you just have some great insights. And today talking about secure retirement strategies, I always love when I hear a phrase. It's like, what jumps out at you? Well, the word secure. You know, like, yeah, yeah, yeah, retirement strategies. Those are diamond dozen, but talk to me about secure. So I want to dive into that because I know that is what so many people are concerned with because we don't want risk.

We don't want volatility. We want security. So when it comes to people's retirement, why do they have to pay attention now more than ever to market debts? Well, because we got to first of all explain kind of a foundation. Really, there's two phases of retirement that people go through is when they're first starting, to work, they go through this thing called the accumulation phase where they're just, you know, putting money into their accounts. But then once they hit past age 60, they really have to consider another strategy. It's a whole other ball game. We call it preservation and then distribution because

you're trying to preserve what you have, get a hold of it, so it doesn't have these big dips to it, and then also start to pay you like a monthly stipend to cover your lifestyle or if not, just continue to grow. So the thing is, is what happened. is there's a thing called dollar cost averaging that people do when they're going through that accumulation phase. So they don't really feel the market dips. Actually, they're putting money in every single month into their 401K, just plugging away. And the account goes up and down and you're not drawing any money from it. But then on the other side, when somebody goes to retire and that money's in the market and is volatile, and the market dips down, it can actually do the reverse effect,

which we call dollar cost ravaging because it eats this money, quick. quicker and quicker and quicker and quicker. So I love that phrase. Did you guys come up with that? No, actually, there's a professional out there, Tom Hegna, and I love what he has to say. And he's a big advocate of everything that we're saying. Well, I've interviewed Tom before. Yeah, I'll always shout out to my people that influence me.

Yep, that's awesome. Yeah, that's awesome. Yes. But let's sit on that for a second because I think that a lot of people at their early, you know, part of their investing for retirement early in their career. They hear about dollar cost averaging because they hear someone, maybe their 401k administrator or a financial advisor if you're going to do some Roths or investing in the markets.

They're going to say, hey, the markets are going to dip a little bit. But just remember, over the last 100 years and you know where that conversation goes, it always goes down and up. But we've seen this rate of return over the last 30, 40 years. But when you're doing dollar cost averaging, that's awesome because when the market dips, you keep buying, keep buying, but you're buying at a lower cost. So then when it rebounds in whatever time frame, you get that benefit. But then the dollar cost ravaging, that's huge. I think that's something that people don't really think about. Yeah. And they mean, so just say if you

took out the, you know, the dollar cost averaging or dollar cost ravaging, save the account, even just dips on a normal level. What happens, what people sometimes don't understand is when the market dips, it actually has to rebound and actually get a higher rate of return just to break even. So it's not an even even thing. Now, never mind, once you hit into retirement, you're now taking all money out of these accounts. So it eats that money quicker and quick. So you can have a sizable account that can get eaten very quickly depending on how much money that you need every single month from those accounts. You know, I've heard some people give examples and we don't need to dive into numbers, but just from that conceptual standpoint, what you just said there is massively huge.

If the market takes a dip and then it starts coming back, you might think, okay, that's good. good, it's coming back. But just to break even, you're going to need it to just rocket high in returns. And so depending on the runway you have in front of retirement, you might be able to let it, you know, take some many, many, many years to come back. But you might not have the time if you're closer to retirement. So when you're talking about that volatility, boy, that, it can be a punch to the gut. So I think that's a big, big point that you bring up. Oh, yeah, especially too. A lot of people, their retirement assets are all in, say, they're 401k. And it's all in a volatile. account. So when that market dips, it's on most of their money, you know, and that's going to be

devastating. So we have like a golden rule. If we can try to secure up things of usually five to 10 percent, because now if you can only have your money, like your whole net worth and that, like your investment accounts drop only five to 10 percent, that can actually recover a lot quicker and get out of the hole. So there are some strategies that we look at when securing to make sure we stay in that golden rule of five to 10%. Yeah, because your point about needing to take money out to cover lifestyle, if you're past the preservation stage and then you're into the distribution phase where it's like, now I need to use it. And your money, most of it is exposed to market volatility. Then when there's a dip and it's like, oh, man, I lost X percent and I need to take this much money

out this year to cover my expenses, now it's a double whammy. So that's a big, big thing for people to think about when it comes to volatility. So how do you keep it from happening? I mean, now let's qualify that with, we know that nobody can ever prevent all volatility. It's going to happen. But what are some of the things you advise your clients on to combat this from happening as much to them? Well, first of all, we want to combat that by we use a simple math equation called an income gap formula. So do we even need to, so people talk about, you know, I don't know if you've ever heard about the 4% rule.

So what the 4% rule was actually created by William Began in 1993. And what this said is that if somebody were 65 and they drew 4% out of a volatile account by the age of 90, this account would be zero, actually dry. So most people, they might not even have to take 4% if we go through this simple math equation. They may not even have to take money out of their account. It might just be extra money. So that will actually determine on how much of a draw does somebody actually have to take out of these retirement accounts. So what that math equation is with an income gap is we look at somebody's monthly expenses. We get a benchmark of those.

And then you want to put them against your guaranteed income streams. So your social security being a guaranteed income stream, a pension being a guaranteed income stream. And you want to see if there's a difference. Are your monthly expenses higher or lower than that? Now, if they are higher than that, you're in a surplus. do you necessarily need to take out money out of those retirement accounts? Probably not. Sometimes yes,

sometimes no, depending on the type of account. Oh, yeah, yeah. So, well, like for a monthly stipend,

maybe not. If anything, that's more of extra fun money. You know, like you want to go on a trip with a family. It's really left over money because every single month, your bills are covered by your social security and pensions. Now,

most people don't fall into that. They fall into a thing called the income gap where their expenses are more than their social security in their pensions. And there's several ways to go and cover that. When you're talking about gap, it makes me think about, again, without getting into the weeds, because I know when you say formula and algorithm, there's numbers that can go into this. But I do know that we as humans are living longer than we ever have in decades past. So back in the 50s, maybe this gap calculation would have looked very different because, oh, well, when you retire at this age, we need your money to last this.

long. Well, the life expectancy today might be a lot longer and especially I hear women live longer than men. So how do you calculate that into your gap calculation? Yeah. So if you're calculating, well, my thing is, is if you always have enough guaranteed income to cover your expenses, you actually lower all the different retirement risks. So it could because the longer that you live, what happens is you have a thing called longevity risk. It's a risk multiplier. So what I mean by that is if you live a long life. So we say either spouse. There's a higher chances of them raising taxes. There's a higher chance of the market dipping.

There's a higher chance of you getting sick or injured. There's a higher chance of you spending down your money. There's a higher chance of inflation being higher, which then could eat that money quicker and quicker. So the ways that you want to go and try to mitigate this or fight this is in several different ways. When we're looking at that calculation, the first thing might be obvious is try to cut your expenses, right? but I think of cutting expenses like a bad diet.

You know, we go and we figure it out. Yeah, we go and we cut out the expenses, but then the next year they come right back up because we're used to live in a certain lifestyle. We're used to spending that amount of money. So that's actually my last resort is trying to change and actually cut what you're actually spending, you know. So the next thing that I look at is something that we do have controls on

is our social security. How do we maximize our social security? Well, we can look at things like maybe pushing it out a little bit or maybe even taking it a little sooner might actually make sense. Or looking at a thing called a spousal benefit if that's an option for somebody, which would give the non-bred winning spouse a little extra bump in their social security. And if you have a pension, what are the different pension options to try to cover that gap? Are there ways of maybe delaying it or looking at a different option to cover that gap? Now, the next thing that somebody can do besides that is try to come up with another income stream. So if they have a gap, they could possibly have a part-time job, but now they know how much they need to make it that part-time job.

Maybe it's only a few hundred dollars a month. So I believe that most people, when they're heading into retirement, because we're going to talk about work real quick, is that when they, most people just, they don't necessarily want to quit work. they just want to slow down. They just want to slow down. So this actually gives them a strategy to slow down. But my thing is there's going to be a day that you can't work because either, you know, just age, maybe mental capacity, injury, sickness, you know, God forbid. So you're going to want to make sure that that gap's covered some way or another. And that's usually through other investments.

That's that pile of cash that you've saved throughout your whole retirement. You're only going to do one or two things with that. It's you're either going to spend it or you're going to give it. So what you want to do is make sure those assets are there to maximize spending to cover that gap. You know, it sounds like you become almost like a life coach of sorts when you're working with the client going, tell me about how you feel retirement should be. And I think when you're talking about some of those gaps, and then when I mentioned lifespan, it made me think about this. You know, someone might say, oh, here's the calculation for my gap. So here you go.

And you might look at it and go, okay, well, this is good, a good start. But here's something that you have not considered. You may be spending more in retirement because now you have more time to travel or do hobbies. Whereas in your fast-paced career, you weren't traveling as much as you would prefer or doing these hobbies. So have you ever had clients that you sat down with and said, hey, that gap calculation? Yep, good. Let's address it. But first, don't you want to spend more than a week vacation per year?

or don't you want to do that hobby? And so I think that that really is an eye-opener for some people, right? Yeah, I mean, so that's why when people come in, they think that retirement is just beating, you know, the market or making a good rate of return. It's really the benchmark is your monthly expenses. So when people first retire until about age 75, we call this the go-go years. This is where you're going to spend the most amount of money. And then from 75 to 85, they call this the slow-go years.

This is, you know, your early bird specials, you know, hanging out with the breakfast club, I like to say. And then what happens is you have 85 and on. These are the no-go years, we call it. This is where things really start to slow down. Now, my opinion, I see this kind of shifting out further because people are living longer and people are better educated about health. But these are just soft benchmarks to get again, I like using that word, soft benchmarks

to look at to consider that you're going to be spending a lot more money there. You really want to maximize those golden years from like really 75 to when you, you first retire. That's when you're going to be spending the most. And then the rest is really to kind of keep up with inflation, to keep kind of doing what you're doing and not do too much. I remember my grandmother. That's what she went through and my grandfather. So I lived through this. I get it. So what are when you've identified that gap, what are some of those recommended investment options to make sure that you've got low risk and guaranteed income and things like that? Yeah. So if we're strictly looking at investments, there's only three worlds that you can look at.

three real big major institutions. One, you have just your traditional banks. The next one that you have is usually the stock market or the market in general. It doesn't have to just be the stock market. It can be just the market. And that's where you'll see things like stocks, bonds, real estate, mutual funds, mutual funds, whatever it is. And then there's this other world that I feel like gets neglected or gets a bad rap is the insurance world. But the insurance world, actually, these insurance companies have great guarantees.

They've been around since the end of time, and they have great backing. And so when it comes to income to cover this gap, you have one of two options. You can either go with the unguaranteed option or the guaranteed option. Well, most of you, when you're looking at that income gap, have it covered through social security and a pension. Those are guaranteed income streams. Why not just create another with a portion of your money? And you have that option.

You can go purchase an income annuity, one that's going to go and cover that difference. And by doing that, when you cover that gap, now it lowers that risk multiplier. You get that off of the table because if you live a nice long life, you know that no matter what, your bills are going to be paid. And that's what's going to keep you happy and healthy. Because that financial product without getting into the specifics or getting into the weeds, that particular product has guaranteed income. And you don't have that worry on your mind of, oh, I wonder what the market did.

Or when I saw the news last night, it made me feel bad because the, market took a drop. That type of product, it's like, okay, this is dialed in. Or I mean, like if we just go back, even the banks, now you're not rate chasing. You know, you're not every single year trying to go back to the bank and say, what rate do you have? Like right now, they're great, but they might not be great after they figure out this inflation thing. And then there's other people that have real estate. That's great. You have a nice rent roll coming through, but it depends on how many units you have. And one thing I know, I don't want to be 70 years old and getting a call to go fix some pipes underneath, you know, at somebody's, you know, at somebody's

unit because the water broke that night. So I, that's a job. That's not an investor. Yeah. Yeah. So that's, that's something I want to cut back on. And I can get similar results outside of that where I can just sit there and enjoy the time with the people that I want to be with when I want to be with them for and where I want to be with them, you know, and enjoy life, you know, and do are my passions. And that's what ultimately I'm. want to do, you know, or you should do too. Yeah. I mean, that's, that's really what it's all about is if you've, you've planned the right way and done all of your accumulation years properly, then when it comes into kind of enjoying that and preserving that, now you've got your option.

So when we're thinking here, talking about these, you know, secure retirement strategies, I just love how you're focusing in on that. Can you think of an example, a case study or a client example where you've worked with someone that put these into place and then what they experience? Yeah. So actually, we had some people that were down the road from our office and they came to a social security workshop because we hold educational workshops all over and also webinars. And so they came in and this lady was super stressed out. She worked down at this an industrial park down the street from us too. She was super stressed out every single day. What happened was there was new management that came in. And new management ended up firing all of the older employers. for the most part and put younger managers in place. So now what happened is this lady, she was in her 60s. She had to go learn all this technology and she wasn't tech savvy. So she kept going into, I'm going to call it the Green Line company down the road from us.

And they told her, you know, you don't have enough money to retire. So what we did is we came, she came in after the workshop and we just ran the numbers for her. We did that income gap formula. And there was a shortage between her bills and her social security because they didn't live a crazy lifestyle, her and her husband, of only a few hundred dollars. But she had a decent size 401k. All we did is simply carved out a portion, used that guaranteed income to cover that income gap every single month. And the next day, she retired. So let me get this straight. The stress, the stress relief was awesome. You should have seen the. The 401k administrator at the company

said, oh, here's my opinion. You don't have enough to retire. And look what, look what the reality. was. Yeah. And by just using a simple math equation, because they're looking at a statement, a statement is not a financial plan. Yeah. You receive that every single quarter, it is not a financial plan. So you need to look at the whole thing, how it's all encompassed. And whatever the amount in her 401k was, it sounds like you did not even need to drain it. You just needed a portion of it to create that guaranteed to cover the gap, right? Yeah. And what's even, yeah, Exactly, Mike. And what's even neater, what's even neater about this is they carved out that portion. And that left the remaining amount that they have to literally do whatever they want with. They could do, yeah, if they wanted to go, you know, either pay off their house, if they wanted to go on vacation with the kids.

So they can really maximize those golden ears. And what we're going to talk about what we'd actually did with the remaining part of this money. We're going to have a later conversation about tax planning. Now what do you do with it? Yeah. How do we, how do we, how do we actually did? we lower that tax bill to really maximize if they wanted more money, they could spend it. If they wanted to keep up with inflation or if they were just trying to give more money, they were able to maximize and give that. And I'm going to talk about that in a later conversation with you about. So that example, start retirement strategy. I'm looking forward to that. And I think that's spectacular. I want to just kind of put a cherry on the top of that case study example. This lady was, was, you know, feeling turmoil. her gut comes,

talk to, sees your seminar, talks to you, you show them these hard numbers, and you show them the path forward. And they, she literally retired the next day. Oh yeah.

They were crying in my office, her and her husband, and her husband, you know, one of these blue collar guys, you know, tough blue collar guys. And he,

you know, he was a handyman. And, yeah, he was even crying. Because he, so it's like, it's like,

be relieved of this. Yeah. Yeah. I was just going to go to that, which is logically, I can now retire. My gap is covered. What a relief. But emotionally, you changed their life because they probably thought they'd have another 10 years to work to achieve retirement. Mm-hmm.

Mm-hmm. Wow. Yeah. I mean, it doesn't even just have to be an annuity. I mean, there's many different ways of covering that gap in investments. But I like guarantees. And that's why I look sometimes to this bucket, if that's the case. Now, they're not for everybody, but some people they work for great. In their case, it worked great.

Well, Ron, again, just some great, great insights. If someone is interested in learning more and even reaching out and connecting with you, what's the best way that they can do that? Yes. So they can actually go to my website, RCWealthAdvisors.com. And if they want some more in, if they want some more in-depth education about these secure kind of strategies, even the simple one I talked about, too, the simple retirement strategy and small. which we'll talk about later, they can actually go to my other website, my educational firm called Retirement MoneySchool.com, to really entrench themselves in more knowledge. But if they want the quicker and faster solution and actually talking to us, we're open to have the conversation with them at RC Wealth Advisors. Excellent. Well, Ron, thank you so much for coming back on today. It's been a real pleasure talking with you. Thanks, Mike. I appreciate it. It was awesome talking with you too. Investment Advisory Services offered through Retirement Wealth Advisors, Inc.

RWA, an SEC registered investment advisor. R.C. Wealth Advisors and RWA are not affiliated. Investing involves risk including the potential loss of principle. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

Consult your financial professional before making any investment decision. This information is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RC wealth advisors and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney. annuity guarantees rely on the financial strength and claims paying ability of the issuing insurer. Any references to protection benefits or lifetime income generally refer to fixed insurance products.

They do not refer, in any way, to securities or investment advisory products or services. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company, and are not offered by Retirement Wealth Advisors, LLC.