Tom Mosley:

There are two ways to make sure you don’t run out of money in retirement, make a lot more money, or make sure that your money lasts and you spend it on the right things. We are going through a series of shows where we talk about how to make your money last in retirement. Today we’re going to talk about the final three.

The first thing I want to talk about today is you’ve got to watch the little things. If I’m walking down the road and I get a big pebble in my shoe, I’m stopping and I’m taking that sucker out. But if I’m walking down the road and I just get a little grain and maybe I think, “Well, maybe my foot can work it around, maybe it’ll get to one side of my sock,” and it doesn’t get away from the foot, and by the time I get home if I don’t stop and take it out, that little bitty grain sometimes causes a bruise. In retirement, it’s the little bitty things you spend on sometimes that can cost you a lot of money.

Let me give you some ideas. Watch your subscriptions. Go through the credit cards, go through the checking account, and there are a lot of things you want to sign up for because you want to get one time, but you signed up for it, you gave them a credit card number and unbeknownst to you, or unbeknownst to you, or you forgot, and you’re paying $7.95 for a subscription that you’ve never used in the last six months.

I used to work for a guy who called that dripping nickels. If you’re losing $1 bills or $100 bills, you’ll stop and take the pebble out if you understand what I’m saying. But if you’re just dripping a little bit here, there, and everywhere, then you forget about it. And sometimes those things really mount up. My mother used to always say, “Pennies make dollars.” So watch your subscriptions.

And here’s another thing. If you still got cable TV, congratulations. You and I both have cable TV. We’re the only ones left. But a lot of times if you’ve got cable TV, if you’ve got a cell phone plan, if you’ve got other plans, a lot of times just a call to them and say, “Hey, I think I’m spending too much per month on what I’m getting for my cell phone or my cable subscription,” and you’d be surprised how, to keep your business, they’ll start cutting your monthly bill.

Again, one way to make your money last is just watch the little bitty small expenditures that mount up over a period of time. Be careful.

The second risk, and the second thing that could cause your money not to last is not having a balanced portfolio. When you get to retirement, you need some money in the bank, you need some money for emergencies that’s there in the bank for you. Stuff still happens in life. You need some money that’s left in the market because most of us retire and we’ve got 15, 20, 25, 3, who knows how long God will leave us on this earth, but we’ve got decades, sometimes, to live off of our retirement money, so you need some money in the stock market to continue to grow.

You also need, probably, to build a bucket of safe money. So you need to be diversified as to where your money is. You need to be diversified as to where your tax money is. Do you have all of your money in IRAs? Then you don’t have all of your money because you’ve got a partner with the federal government. You need to know, and you need to be working with someone who can tell you how much tax are you going to pay on that IRA or that 401k in a lifetime? Because most people see the value and most advisors see the value of building an after-tax account as well as a never taxed account so far where you’re still going to get taxed on everything over here, but you’ve already been taxed on this other bucket over here and you only pay tax on the growth. How diversified are you? Well, I don’t know. Well, you need to know. It’s really important to make sure you don’t run out of money in retirement.

The third thing I want to talk about on today’s show to make sure your money lasts is something we don’t like to talk about, but we need to talk about it. And that is, what is your healthcare going to cost? You need to have good healthcare coverage. And that’s insurance, okay? That’s insurance. And it starts with Medicare. A lot of people get part A and part B of Medicare and they think, “I’m done. I’ve got it all.” No, you don’t. You’ve got Eighty-percent coverage when you get part A and part B. That’s where you can either get a supplement, which is like a PPO, where that covers the other 20% or at least addresses the other 20%.

Or you can get a Medicare Advantage that’s more like an HMO. If you like your doctors, you’re not very sick, you don’t travel very much, that HMO might work for you. If you travel a lot and you want to be able to go to any doctor that takes Medicare, any facility that takes Medicare, you might want the Medicare supplement. You need to be working with somebody on your Medicare that has both sides to offer, not just the supplement, but also the Medicare Advantage.

And then what happens, God forbid, if you ever need long-term care or if you ever need home healthcare, well, there are a lot of things that, in building a retirement portfolio and in building a retirement plan, there’s sometimes one vehicle that can address many things. For instance, let’s take a fixed indexed annuity that we talk about from time to time on this show. A fixed indexed annuity can address, number one, the loss of one of the two social securities of a married couple when the first spouse passes away. It also, number two, many of them now have riders on them that address the activities of daily living. If you can’t do two of the six major activities of daily living, some of those fixed indexed annuities actually double their payout for five years.

A second reason is not just to replace income loss and not just to … But you also could address it by taking care of some of your healthcare needs if you get to that point of activities of daily living. The other thing you can use that annuity for is to address inflation.

And here’s what I like about it, and I like having a long-term care plan more than having a long-term care policy. If you invest in a fixed index annuity, it not only can take care of inflation, take care of the loss of income when one spouse goes, can take care of the activities of daily living, but if you never need it all goes to your children. It all goes to your heirs. A really good thing. Make your money last. Don’t let healthcare be the thing that torpedoes your retirement plan.

Let me review the final three of this series that we’ve got on making your money last in retirement. And if you’d like to check out the others, go here and you can click that tab and you can see some of our other making your money last ideas in retirement. But today we’ve talked about watch those little bitty things. Number two, make sure you’re broadly diversified with your investments. Don’t have all your eggs in one basket. And number three, watch your healthcare. Make sure that your insurance is … You pass that risk off to the insurance company, either through Medicare, maybe through an annuity to cover your long-term care or your activities of daily living. But make sure you have a plan as this is what we’re going to do if we need it.

If you watch or listen to this podcast very often you know, I started in this business to make sure that people never run out of income the rest of their life. If you’d like to have some help with that, reach out to us. Go to the website, click that. If you like what we’ve done in these shows and through this blog, then be sure to like and subscribe to our YouTube channel and you’ll be notified every week when our new show comes out every single week.