Tom Mosley:

Where to get income in retirement. You may be sitting there and you may be saying, “Hey, I’m just about to retire and I’ve got all these things in lump sums, 401ks, 403Bs, IRAs, Roths, I’ve got some money in savings. I’ve got some money in a brokerage account.” Hopefully you got all of those. You’ve got rentals and everything else. Where do I get income in retirement? That’s going to be the subject we’re going to talk about today. Thanks for watching this YouTube or listening to this podcast.

Tom Mosley:

I’m Tom Mosley, CEO, President of Mosley Wealth Management in Anaheim, California. Let’s get started. Where do I get income in retirement? Well, hopefully you’ve got more than one source. We do a social security workshop, and a lot of times people come to that social security workshop and we’re we’re willing to help anyone. But if they come to a social security workshop, and let me just give you a scenario recently that I had a lady, she was like 62 years old. She hated her job, she wanted to retire. She said, “I think I’m just going to retire and live off of my social security.”

Tom Mosley:

And sure enough, she came in and she had about $30,000 to her name instead of her social security. Now, a good thing for good advice, I very seldom give blanket advice, but sometimes we have to tell people, “Look, given where you are financially for income in retirement, you need to work as long as you can. You need to build that social security as high as you can. You need to let it grow from 62 to 70 if you can at 8% a year because it’ll double almost from the time you’re 62 till 70 if you’ll just hold off on taking it. And you need to save as much as you can.” That’s a retirement plan for somebody who doesn’t have much money.

Tom Mosley:

But if you do have assets and they’re sitting there, what I’m going to talk about is where do I get income in retirement? How do you use certain things? First of all, let’s talk about a pension. Now, I can remember going to my grandfather’s retirement and it had to be, let’s see, it had to be around 1963 because I still lived in Georgia, and I know that’s prehistoric for some of you guys, but 1963, I went down to Savannah, Georgia. My grandfather worked for the railroad. He turned 65. That’s the reason I know it’s ’63 because he was born in 1898.

Tom Mosley:

And they gave him a pension. They gave him a party because I was dressed up in a little zoot suit, the coat and everything with the tie. And they gave him the pension, the party, and they sent him on a white horse and they let him go off because he was done. He was retiring. When I ask in my seminars, “How many of you have a pension?” It’s not uncommon for about half the people still to say they have a pension.

Tom Mosley:

When I follow that question with, “How many of your children have a pension?” It’s not uncommon for only one or two people in a class of maybe 15 or 20 to say, “My kids still have a pension.” I have two daughters who have pensions because they work for the school district. But most companies, even a big aerospace company like Boeing recently, within the past couple of years dropped their pension for all new employees coming on. They’ve got seven different kinds of pensions because of all the companies they’ve bought, but Boeing has dropped their pension for new employees.

Tom Mosley:

So how do you use a pension? There’s some really big things you need to think about with a pension. For the long term of a 20 or a 25-year retirement. You need to ask yourself, “Does my pension have a COLA?” Now, that doesn’t mean a Coca-Cola or a Pepsi Cola or a Dr. Pepper. Does it have a cost of living adjustment? And if it doesn’t, which most private pensions don’t, that means that if you start taking your pension, let’s say it’s $4,000 a month and you’re 63 years of age. And when you’re 68, it’s going to be 4,000 a month. When you’re 73, it’s going to be 4,000 a month. When you’re 83, it’s going to be 4,000 a month.

Tom Mosley:

So one of the things you need to really look at with your pension is does it have a cost of living adjustment? Most of the governmental pensions like Strs and Pers and LACERAs for LA County and OCERS for Orange County, most of those have a 2% cost of living adjustment. Not enough to stay up with inflation like we’ve had in the past years, but you need to find out does it have a cost of living adjustments?

Tom Mosley:

Second thing you need to find out. How do I take that pension? If you’re married, you need to make sure when you put together a retirement income plan and you’re considering your pension, you need to make sure that you’re taking care of a surviving spouse. Now, if you outlive your spouse, no problem. It’s still going to pay you even if you take that larger 100%. But if you do not outlive your spouse, he or she is going to be left without any money at all from that pension or a reduced benefit from that pension.

Tom Mosley:

So it’s really important that even now you sit down and you project out and you say, “What if I go, I’m 63. What if I go when I’m 80 and my husband still stays around till he’s 85 or 90 or my wife stays around till she’s 85 or 90, will they have enough income and how can I use my pension best for both of us?” Yes, it’s in your name, “But how can I use that pension best?” So that’s a big number two.

Tom Mosley:

Number three, what happens to that pension if two months after… You’re married or you’re not married, you’re single and you’re just going with a friend and you decide to go to Bora Bora and before you get to Papeete, the plane goes down in the ocean. What happens to that pension that you’ve drawn two monthly installments from? Most of those pensions go away at that point. That’s the way they’re built. So you need to really say when you have to consider, “Do I take this pension or maybe do I take a lump sum from this pension and move it somewhere else where I continue to control it?”

Tom Mosley:

Particularly if you’ve got a legacy and that’s a spouse or children or people that are important to you that you don’t want that pension to go away, you need to consider at least that lump sum and whether I take that pension as a lump sum or how do I take it? So what are we talking about? Where do I get income in retirement? Number one, if you have a pension, great, consider those things.

Tom Mosley:

Now, if you don’t have a pension, most of you still have social security. Now, social security, I used to answer this question when people would ask me, “Tom, do you think social security’s going to be around?” I would always say yes, no politician’s going to stand in front of you and say, “We’re taking the Social Security.” And by the way, it’s not an entitlement. An entitlement is something you’re promised that you didn’t work for. Every time you get a paycheck, they take out social security. So that’s why I think they will never take away or reduce your Social Security.

Tom Mosley:

But listen to what I said, “I think they want… They might… They could…” Who knows what they will do in the future, but how you take your social security is really important. “Should I take it at 62? Because you never know how long those suckers are going to pay it.” I had a guy tell me one time. This guy was making $125,000 a year. He only turned full retirement age at 66, so he had four years from 62 to 66 where at that time he could only make $18,000 a year. Now it’s up to $21,000. So if he’s making $125,000 a year and he decides to go ahead and turn on his social security unwisely, when he goes over 21,000 in 2023, he’s going to start paying for every $2 over, pay back a dollar of Social Security. So taking it early could hurt you.

Tom Mosley:

Taking it early also could hurt you in the sheer amount that you’re going to get from 62 to 70, the amount of income you get from Social Security will go up about 8% per year. You could actually almost double from 62 to 70, particularly if you’re working and you’re making more money than you have in previous years. You could double by holding off on your Social Security. What about if you’re married and you both have Social Security. The one who has the most Social Security, that’s the one that’s called the Breadwinner, not trying to be chauvinistic or feministic or whatever. Not trying to be any of those things.

Tom Mosley:

I’m just telling you, whoever’s got the most social security is he breadwinner. If you’re married, one of you passes away before the other, the breadwinners Social Security is what stays. So often we’re able to build plans for people, and you should consider the fact that if you need a little extra income, turn on the lower Social Security early, allow the breadwinner to continue to grow at an 8% per year level so that once you do turn that on, that’s the one that’s going to stay when there’s only one of you left.

Tom Mosley:

So a lot of considerations about Social Security and how to turn that on, and you don’t need to just go down and, “Where they lead me, I will follow. What they feed me, I will swallow,” at the Social Security Office because sometimes they’re not there to give you options. They’re there to turn your Social Security on. You need to get some input on this.

Tom Mosley:

So let’s review where to get income in retirement? Pensions, Social Security. Also, some of you have rentals, and I’ll be very brief here because a lot of you don’t. But if you have rentals, I think it’s a good idea. I personally have rentals and as long as you’re not pulling out your hair over your rentals, and a lot of that has to do with the people that are in there or the company that’s managing it for you. But as long as you’re okay with that and you’re not pulling your hair out, rentals could be good because you’ve got an appreciating asset that pays you a dividend called rent, and in most markets, the value of the real estate is going up.

Tom Mosley:

Rentals however, are a difficult thing to get into unless you’ve got a lot of cash sitting around or a brokerage or account sitting around that’s not in an IRA or a 401k. So be very careful putting your IRA money into rentals. The IRS might love you to death because you might do it the wrong way and they would be able to penalize you.

Tom Mosley:

Where do you get income in retirement? The last place could be an income annuity. If you don’t have enough income, you say, “Here’s my pension, here are our socials, here’s what we’ve got for rentals.” Or maybe you don’t have some of those, but there’s a gap there and you want to have that insured so that it’s guaranteed to be there or increasing for the rest of your life and the rest of your spouse’s life if you’re married. You need to consider an income annuity, but only for the amount that you need for income. Because that will pay you then a guaranteed payment every single month or every single year for as long as you live, as long as you insure it with a good, solid insurance company.

Tom Mosley:

An annuity is insurance against living too long. Very few people give an annuity credit for one of its best principles, for one of its best qualities. If I’m in an IRA at one of the big brokerage houses and I get down to zero of my money and I go knock on the door of that place and I say, “Hey, this is Tom. I ran out of money in my IRA here last year, but I’m still here and I still need income.” They’re going to call the police because they’re going to say, “This crazy guy’s out here who ran out of money last year and he’s still wanting money.”

Tom Mosley:

But if you put that money in an income annuity, the nice thing, and nobody gives credit to annuities for this, even after you run out of money, if you’re not out of life, they will continue to pay you a monthly or annual payment how ever you set it up for as long as you live, even after you’ve run out of your money. And if you’re married, you can set it up where the surviving spouse will get that same income for as long as they live. There’s a lot of value there and they’ve taken a lot of flack, but there’s still a good quality product if you need income.

Tom Mosley:

Hey, give us a call. If anything we’ve talked about has meant anything to you or you have questions about it, call is (714) 421-4288 or you can reach us by email info@mosleywealthmanagement, that’s M-O-S-L-E-Y wealthmanagement.com, and I’d be more than happy to reach back out to you and help you in any way I can.

Tom Mosley:

Where to get income in retirement. There are multiple sources. You might want to use them all. Hopefully you have them all, but you need to use them in the right way. Thanks for listening to this YouTube, watching this YouTube, listening to the podcast. Hopefully I’ll see you next time.