Business Innovators Radio - Interview with Steven Michael England, President of Capstone Retirement, Discussing Retirement Income Plan to Last a Lifetime

Episode Date: November 5, 2024

Financial advisor and Retirement Planner since 1982, Best Selling Author of “The Wealth Lifestyle”, honored with numerous industry awards and honors of achievement. I value close business relationships with clients and treat them the way I would want to be treated.Learn more: http://www.thewealthlifestyle.com/This podcast is for informational purposes only and should not be considered legal, health, investment, tax, profession advice. We are not responsible for any losses, damages, or liabilities that may arise from the use of this podcast. This podcast is not intended to replace professional investment, tax, or legal advice. The views expressed in this podcast may not be the views of the host or the management.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-steven-michael-england-president-of-capstone-retirement-discussing-retirement-income-plan-to-last-a-lifetime

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 the Stephen Michael England, who's the president of Capstone Estate Planning, and we'll be talking about building a retirement income plan. to last a lifetime. Stephen, welcome back to the program. Thanks for having me again, Mike.

Hey, so I know that I always like to kind of read into titles or topics and, you know, building a retirement income plan to last a lifetime. Building means it takes some effort. You know, you can't just click a box and go, okay, it's set up. It takes some thought and effort. And we want that income to last a lifetime to and through retirement. So I'm excited to hear what you do to lay this out for your clients. But get us kind of started with, first of all, let's define what that income plan is that

last a lifetime. What is the first way that you start talking with your clients to explain that concept? Well, you know, first of all, I would say when I started in the business way back, the pensions were a lot more prominent than they are today. So most people, years ago, people had large pension. pensions. Yeah. We find that that they still do, like government employees have many times large pensions.

But by and large, most people, their large assets are in 401Ks, but 401Ks are not generally, most all the time, are not guaranteed income. So they may have Social Security, they may have a small pension, but what we're finding today, most people that are my age and I'm age 65 as we speak today, they have very small pensions, but they may have saved quite a bit in their 401K. So things have shifted. So you need or many people want guaranteed income. And of course, you need enough guaranteed income to do what I say live the lifestyle that you want to live. And that's when I wrote my first book five years ago, the wealth lifestyle. It was all stories about clients that had worked hard, save some money, were in their 60s usually, and just wanted to live the lifestyle they wanted to live.

But to do that, it takes money. And maybe it's a simple life. Maybe it's a life where you're traveling or maybe it's not so simple. But you need money to do that. So I think also guaranteed income or pension type income gives you peace of mind, that you know you have that. coming in, you don't have to worry, and you can't outlive that money, and maybe it's guaranteed over not only your lifetime, but your spouse's lifetime. So things have really changed, and I see there's a big need for the pension-type income. It's lacking. Now, you don't

have to have all your money in guaranteed income, but you need that base, that security of what a pension type income would give you. And the beauty of it today is you can have guaranteed income without giving up your principal. Years ago, when you want a guaranteed income, you had to give your money in exchange for a guaranteed income. So you couldn't have both. Nowadays, you can really have what I call your cake and eat it too. You can have guaranteed lifetime income and you don't lose control of your money. So it's kind of the best of both worlds. Now, it always comes at some kind of a cost, some kind of a limitation. There's nothing perfect, but it should be part of someone's portfolio. If you have enough income where more than covers any expenses you have and you

just don't need the guarantees, and that's a different story. Then if you don't need guaranteed income and you have plenty, then it's a different type of plan. But I would say by and large, probably 60 to 70 percent of the people I talk to, they need some guaranteed income. And they probably lack that. And many people might feel that they can just live off what the stock market is going to make them. And they just take money out. And that may work. And it may not, depending on how things go. But it's certainly not a guarantee. Yeah, 100%. And, you know, like the old saying, the only thing constant in life has changed, you know, and there's some things that can be guaranteed, some things that can't. So you have to have those contingency plans. So let's talk a little bit about you mentioned pension. What are some other key strategies for this sustainable income? And then once you're talking about the strategies, how do you assess the sustainability of these strategies? Meaning, you know, sometimes people would say, oh, this might be good for now, but what if it changes? So what are some strategies and then how do you

assess the sustainability? Well, it's kind of a big word and it's, to a lot of people, it has an ugly name, but annuities are really the vehicle that give you the only vehicle that give you guaranteed lifetime income, that and a pension. And, but there's so many annuities out there. I call it the good, the bad, and the ugly. And there's literally thousands of programs out there. And one has to fit to you and has to be the right program. And I see a lot of people that make mistakes and even agents and advisors that make mistakes because they really don't even understand what they're selling.

There are so many people that have annuities that don't really even understand them. And then you have banks that sell them. and many times they don't really know how they work, especially if something happens to someone. You know, it's a little unusual. You have an owner and you have an annuitant, and they can be different. And so it's really a legal contract,

which technically can be owner-driven or annuitant-driven, and they work differently. But annuities are a great tool for providing guaranteed lifetime income. And you shop for the one who gives you the highest, income, but there's some pitfalls that you have to look out for. So it's not that all annuities are bad, all that are good, but I think it's how these annuities are sold, mostly they give them a bad name. And they're actually rather complicated. So it's not, you have to have some experience and you have to make the right decision when you purchase them. But when you think about it,

If you just want the traditional way and use bonds for income, bonds have risk. And if interest rates go up, the value of the bond goes down. We've seen companies go under. So what you do is you let the insurance company buy the bonds, let the insurance company take the risk. And then you have the contract with the insurance company. But we hear that, you know, all annuities are bad, but they're really like a pension. And, you know, if you won the lottery, Mike, and you took a 20-year payout, it would be paid out and guaranteed by an annuity. Interesting.

There's many groups, I think, even in the NFL, once you're, you know, an NFL player for not that many years, you get a guaranteed pension, which is an annuity as a plan. And so they've been around a long time, really since Roman times. And they really were designed for the protection that someone would have or the spouse, and the individual, and then the spouse would have guaranteed income. That's what it's all about. So you have to have that in your retirement plan. It doesn't mean all of your money has to be that. But it definitely makes sense to have that in your plan.

You know, and I mentioned about building. You know, what are the building blocks of that retirement plan so that it lasts a lifetime? And you mentioned for those that are lucky enough to have a pension, that's a building block. And then you've mentioned annuities and finding out the right kind for you and working with a qualified professional. So that would be another building block. I think you mentioned, but maybe just kind of touch briefly on another building block that people think of normally, which is Social Security. You know, who knows how much or when or if or all of those kind of question marks. right now, so security is a stream of income that people can plug into the retirement plan.

It's a big one. When you think with most people that I talk to, Mike, the Social Security income is a big part of their income. It might be half. And or it could be more. There are people that I've talked to that live on Social Security, which is tough to do. But the people, there are some people that do it. And many people, if they haven't taken Social Security, they always ask me, what, you know, what's the best way to do it? Well, there is no perfect way because everyone's situation is different.

So what you might do that works for you, I might do it differently because my situation is different. So, for instance, myself, I certainly will wait to 870. And one of the reasons is my wife's, if, Lord forbid, but if something happened to me, my wife's income would be dramatically less. She would have a low social security amount, so she would get my social security. So for me, it makes sense for me to wait as long as I can and take it at age 70. For other people, they may take it earlier. And of course, every year you wait, you get more.

But there is the magic of, when should I take it? and should I wait, but there's many factors that go into it, and especially if there's planning involved where if one spouse pre-deceases, then the other spouse's income changes dramatically, and you have to somehow plan for that. You know, I know that even, I remember personally 30 plus years ago hearing, well, just Social Security is going to go bankrupt and Social Security's not going to be around anymore. Well, now 30 years later, here we are. It's still here.

But then those comments are still there. And I know that no one knows the exact answer because anything can happen. But it reminds me when I think about that question, it reminds me of back in the 2007-8 economic crisis where the banks were failing. And you heard that phrase, well, they're too big to fail. So the government's going to step in. Do you feel that Social Security, if it started to falter, that it's too big to fail and the government would have to step in and go, nope, there's too many Americans relying on this,

so we're going to make sure that it is in place. Well, our government seems pretty good at borrowing money. I don't know if they can do that. They're bad at paying off debt and they're good at borrowing money. It seems like it's one of those things that you would have to keep funding. Now, they could make changes on people that have not yet started. started it. They could push the age out further.

They could increase the Social Security tax on people that are working. There's many things they can do, and they'll probably be forced to do some of those things. And hopefully it doesn't run out of money. It's one of those things that a lot of government things, I think, have shortfalls, and they somehow borrow the money or come up with the money to fund it. So it's one of those things that will have to work out. but I just don't see how they could, you know, eliminate it because really this senior population is very much they rely on Social Security. There's no question.

Yeah, that would have to be something catastrophic. Yep. Yeah, I think you're right. I've heard people talk even about Medicare and, you know, oh, things are going to change. Not dramatically, not, you know, catastrophically, but this little nuance might change. That little nuance might change. So probably be the same with Social Security. you probably is not going to disappear, but it might feel a little bit differently here and there.

So, you know, just like anything, we plan for, you know, one option plan A. We have a plan B in place and we're hinting at plan C just to make sure we're taking care of. And I think that sometimes when you think about what we're talking about here, building that retirement plan to last a lifetime, there's some things that could punch holes in that proverbial bucket like unexpected expenses or even inflation. talk a little bit about how inflation or unexpected expenses factor in because we know that they exist. How do you factor that into that plan? Well, there are pension plans and annuities that can increase to help cover inflation. So they're guaranteed to go up either from a market index and when they go up, they lock in or they can just go up automatically.

that you can have increasing income in retirement. But one of the things that I've noticed that people that live on a fixed income, whether it's neighbors or clients that I have that are actually retired living on Social Security and a pension, is they really complain about and they feel inflation, the cost of things going up more than even people do that are working because they have the same income and they just see those prices rise. And so inflation is real and it's it's something that you really, ideally, especially if you retire young, it's more of a factor if you retire very young and you may be in retirement 30 years or 25 years. It's much more of a factor, I think, then you have to really have something that will give you increasing income. Yes.

So because inflation is there, I don't necessarily believe all the statistics on inflation. You go by, you know, what you really see and feel, I think more because sometimes the inflation numbers don't add up to how things are increasing. Like in my state, auto insurance and homeowners insurance have jumped 40 percent, health insurance. has jumped, you know, 30, 40%. So these are huge increases, and maybe it won't always be that way, but things, they continue to go up and price. It seems like they never go down, and it really affects people that live on a fixed income.

So the other thing I would tell people is don't retire too early. Many people think they have the perfect formula. They have just enough money and they can retire, only to find out 10 years into retirement, they really didn't have enough. So I would say maybe you don't fully retire, maybe you do something different or work in a different way, you know, find a different lifestyle, but just full out retirement, some people do retire too soon. And then they're left after, you know, a period of time where they're enjoying that. they find themselves with, they were very active, very successful, and then they find themselves

with, you know, not having enough to do. So they can do something, maybe something different. But retiring too early or not considering inflation are definitely a couple of mistakes. And going back to annuities, there are many clients that I see and deal with that have annuities of some type. Maybe they bought one and they're unhappy with it. They'd never buy another one or maybe they have several. It's just, but a lot of people do have them. And I would say you definitely need an annuity review. There's software that we have that will give you a grade on your current annuity

and really stress test it and compare it to the best of what's out there. Now, it doesn't mean you can necessarily get out of. Sometimes you can fix the annuity that you have. Sometimes you can't, but you really need to under. understand what you have, even if you have to live with it, you need to know what you have and maybe the best way to manage what you already have. Because many times people have these annuities and they don't really understand what they have and how it really works.

So it's important to have an annuity review if you have one. And if you're looking for one, it's very crucial that it fits you and you can live with the limitations because all programs and products, especially annuity review, have limitations. It's not that it's a bad thing if you can live with the limitations, but what if you can't? Then it just means it's not a good fit for you. So finding a good fit will make, will ensure that you are happy with your decision and you can live with it. And so there's some, you know, I see retirees have unexpected expenses they never thought about. And guess what one of them might be?

Maybe a illness or a sickness? Somewhat, but dental. I see, well, when you think about it, whether we like it or not in any way to be negative, but things tend to wear out, whether it's a roof on your house, with tires on your car or whatever. So as we get older, I remember my father-in-law who retired from the Air Guard, and I was complaining as I was getting older about, you know, like joints and ligaments, or you sit down for a while and you go to get up and sore and stiff.

And he said, I wouldn't wonder because he's very logical. And I said, what do you mean? He said, well, you have, you know, 60-some-year-old joints and ligaments. And I'm thinking, and so a thought went through my mind, like, if I had rope out, like, I'm a boater, so you have ropes. I mean, can you imagine if you had ropes that were 60 years old? They probably wouldn't even last that long. But it's true.

As we get older, things wear out and, you know, it's just part of life. And I guess one of those things would be your teeth. And dental is very expensive implants or very expensive. And I find retirees that maybe end up with 8,000, 10,000, dollars of cost or something like that. They weren't even expecting it. So it really threw a wrench in their budget. Yeah. So that's one thing. And of course, the other thing you mentioned, the big one, Mike, and it's so true, is if you have a serious illness, it can just about wipe anybody out. Yeah. Because if you have someone that needs care and a lot of care, then the spouse, even though with the best of intentions, may not be able to handle it, especially 24-hour care who could. And it's so expensive. today, it could take someone's life savings and wipe them out in a fairly short amount of time. So when it comes to planning, planning for those unexpected expenses like dental or something that happens that's serious, you'd never think about that.

And then a lot of retirees today or have expenses with their children, they probably never thought they'd have. Yeah. that they feel compelled to help out with. Back in the house or it's a failed marriage and it's some financial burden that comes down on the parents. So there's many things that can happen that you never expected. I recently had to help a family member who in a major storm lost pretty much everything. And that's not something I was expecting.

Right. So things do happen. You know, when you think about planning and building that retirement income plan to last a lifetime, it makes me think about how do you project lifespan? Like, what is that lifetime? When you think of that word lifetime, underline, circle it lifetime, am I building that retirement income plan to last until I'm age? What? So what do you do to project that lifespan so that you're making sure that the retirement income is sufficient? Well, you can have, it's much like Social Security if you want it, and it's probably the ideal way to do it, is you can have income that's guaranteed as long as you live.

So I tell people then, well, then you can live as long as you want to. You don't have to worry about it. You can live to, you know, 110 if you want to. So that's nice to know. You can have lifetime, you know, the income is guaranteed to last for as long as you live, even if the account wants to. zero, they still have to pay you, you know, your income while you're living. And an income can be guaranteed over two lifetimes.

So for spouses, many times, people really like that where they want, they want income that's guaranteed over two lifetimes on one account. And that's, that's very popular today. I'll give you an example. There was a couple in California that he retired from Silicon Valley. and they had several million dollars in investments, but they took a portion of that because they wanted so much in guaranteed monthly income, like pension type income. And this gentleman wanted that guaranteed income to cover their costs, and he wanted it over both his and his wife's lifetime.

So that would be guaranteed lifetime over two lives for the rest of their lives on a certain amount of money. And then with the rest of his money, he was able to keep that invested the way he, the way that he wanted for growth and safety and whatever he wanted. But he covered his base. And he told me after he had it completed that he picked a high quality company for that. And he just said that he had peace of mind and just a comfort in his retirement, knowing that he had that. And him and his wife really talked about it. And they really were investment people.

They weren't really focused on, you know, that type of a product, if you will. But that's what facilitated that need and took care of that need. And he said that it really, they felt really good about it. It worked very well. and it gave them the income that they wanted every month. And they could rest in the fact that that was guaranteed for both of their lifetimes. And so he said it just really, he was happy to have that in his retirement. You know, you always think about will I have enough money for to last through retirement?

And you know, and you think about, oh, I've got X number dollars. So I'm going to need to pull out X number per month per year for my living expenses and whatever the case is. And then what if I get down to zero? What then? That's the big fear. But what you've been describing is a strategy that would provide that lifetime income for your lifetime as well as like what you just said here for two people's lifetimes. And then that relieves that fear not only because it's guaranteed and all that. But you're not going to run out of money because you're withdrawing, withdrawing, withdrawing, and oh, I had to withdraw and the market took a drop.

So I'm withdrawing and the rate of return is down. that eliminates that fear on several levels for what I'm here, you say. It's true. And I meet with people that do not need any guaranteed income. They already have enough with pension and Social Security more than enough. And then there are people that do. But I would say, you know, average people, they just want some guaranteed income to cover their expenses so they can kind of live the way they want to. And then it actually works better with your investments because you can invest maybe in a way that you'd really like to, rather than saying, well, I have to have so much here just because I need some guarantees.

So in the old days, people would do it with bonds. I think it's much safer to let the insurance company buy the bonds, let them take the risk, and then you buy the guarantee contracts from the insurance company. It just has to be done properly. none of these are perfect. There's a lot of kind of not so good ones out there, so you need some assistance in finding something you can live with. But the best time to get the high paying ones

are when interest rates are high. If interest rates are really low like there were a few years ago, it would have been good for a mortgage, but terrible for guaranteed income. But now, rates are very attractive. There was a lady who was a retired federal employee that I recently worked with. I had guaranteed income for her state planning that pays this terrible trust. And her payout or her age was a guaranteed 8%, over 8%, which is really good.

Yeah. So whether it's six or eight or whatever it is. is it gives you peace of mind, it gives you security, it gives you a foundation, and then maybe it allows you to do some things you'd really like to do with your other money. And if you have those types of things, I would get those checked because sometimes you need to refinance those if you have a low rate and you can get a higher rate. But it's good to have them checked, even if you can't fix them, you need to know what you have and how you can implement that in your plan to adjust it for other things.

And then to know when someone says, do I have enough for retirement, I kind of left. My dad was a real practical guy, Mike, and he was a builder. And he would always say, if anyone has ever built a house, they'll know what I'm saying here. But he would say, anytime you do a house or a project or whatever in building, you should figure on that it's going to take twice as long and it's going to cost you. twice as much, which is pretty extreme. And he said that way, when it comes in about 30% over and takes about 30% longer, you'll be happy and not disappointed.

So, anyway, it's from that standpoint, it's true. Most things take longer than you think, no matter what you're doing, and they usually cost more. So if you're planning for retirement, do I have enough money? I would say make sure you have more than enough. Yes. And also don't retire too soon. And even if it makes sense on Social Security and you get those increases,

if you can wait a little longer or wait a little longer for your pension. And then if you put a plan in place, it's really nice to give a plan a little bit of time to work before you have to immediately take income. I think one of the hardest things is when you have a client that says, you know, I need this set up and I need income starting, you know, right now. And so, but it's much easier if you can put a plan in place and then someone is a few years from needing that to be exercised, then the plan can do what it's designed to do. So it always works easier or it's always better for the client. Love it. Well, Stephen, that has just been so insightful.

If someone is interested in finding out a little bit more about, what a plan could look like for them or getting a second opinion, what's the best way that they can reach out and connect with you? They can email me, Steve at capstoneestateplanning.com. Excellent. Well, thank you so much for coming back on today. It's been a real pleasure talking with you. You've been listening to influential entrepreneurs with Mike Saunders.

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