How and When to Claim Social Security Benefits

This week, I’m joined by fellow North Florida Financial advisor, April Schoen, for a live seminar on Social Security. Over the course of the seminar, we're going to be talking about how social security works, what you need to know around the program, different payment scenarios, and also issues that surround the program. April and I have over 50 years of combined experience in retirement planning and we’ll be using that knowledge today to discuss Social Security with retirement in mind.

We dive deep into how to claim Social Security benefits, as well as:

• How and why Social Security was formed

• How Social Security is funded today

• Where to see your statement to view your current benefits and earnings history

• Spousal, widow, and widower benefits

• The big changes made in 2015, including restricted application

• And more

Mentioned in this episode:

• Call the Tallassee Office at 850-562-3000

• John’s website: https://johnhcurry.com/

Transcript

April Schoen: Hello, everyone. I'm so glad that you guys could join us today. I'm sitting here with John Curry, author of Preparing for a Secure Retirement. Hello, John.

John Curry: Hi, April. Hello, everyone.

April: And today we're gonna be talking about social security. And we're going to be going into about the program, how does social security work, what you need to know about the program, different claiming strategies, and then also some issues around the program. Before we even get started there. Let you know a little bit about who we are. 

My name is April Schoen and as I mentioned, we have John Curry on the call with us today. John and I both are advisors with North Florida Financial. North Florida Financial was started about 50 years ago, and they're headquartered in Tallahassee. That's where John's located. And we've since grown, we've got locations from Jacksonville, all the way over to Louisiana, into Southern Georgia, Alabama, down to Tampa and Orlando. So I'm actually sitting at I'm in Jacksonville today. So I just love this technology, how we can all connect and don't have to all be in the same area. Right, john? 

John: Absolutely. As long as the technology is working properly, correct?

April: That's right. We had, we haven't had a couple of issues before with webinars. So fingers crossed all goes well, today, we can only

John: You know, we'll have more issues in the future. That's just the nature of the game. Yeah, just get over it and move on. Right?

April: That's right. That's right. So before we get into the content, a couple housekeeping items for you, if you don't have it, grab a piece of paper and a pen like I've got here, there may be some questions that you have as we go. We won't have time today for any q&a at the end, like we would normally do at one of our live events. When John and I were doing live seminars on Social Security, Medicare, and other retirement planning issues, our seminar's about an hour and a half long. And usually we have to kind of stick to a pretty tight agenda and schedule there to make sure to go through all the content, and especially have questions at the end. 

So as we're going through the presentation, if you have any questions, jot those down and then send an email over to me or to John, and someone on the team, we'll make sure that we get back to you about that. There may be some things as we go through, you want to drop down some to do's. So we're going to talk about some things you should be looking at on your social security statement. So you might have some to do's that you want to look at as well. And then there may also be a topic of discussion that you want to have with us. So just again, I suggest having some paper, some pen, because we're going to go through a lot of information today. Okay, a little bit about us and our team. So I always like to say you know, it's not a one man show or a one woman show around here. We have several members on our team. So you've got me and John. And then we also have Audie and Jay and Zac as well. 

So Audie and Jay are in Tallahassee with John and then Zac is in Jacksonville here with me. Before I go in, and we start really started digging into the the webinar content because I know some of you may have to jump off the call a little early. And if you do, I would recommend that we maybe schedule a time to do a phone appointment. This would be at 25-30 minute call for you to discuss any goals and concerns that you may have around retirement planning. So John has been helping clients with retirement planning issues, like Social Security, Medicare, IRA rollovers, required minimum distributions, inherited IRAs since 1975. 

What we find to be most important though, is that there are a lot of lessons that we've learned in the last 45 years of helping clients when it comes to retirement planning. And so we know what works and what doesn't work for people, and we can share those with you. So we're going to talk today we're gonna mostly be focusing in on Social Security. But that's only a small piece, if you will, to the overall retirement planning discussion that we have with clients. So we'll touch on some of that.

John: I will take a moment and share with everyone your background and then I want to make a comment before you get into the material.

April: Yes, thank you. So I am I have been working with John and our clients at North Florida for about six and a half years coming up on seven. And I worked with a previous firm in Tallahassee before that for about four years. And throughout my career, I've really focused on working with people, mostly helping them with retirement, I would say I was telling someone this morning that majority of people that I meet with and John meets with our people who are about one to three years from retirement sometimes earlier than that to five to eight years from retirement. And these people want to make sure that they have all their ducks in a row, right, and they're ready to step off into retirement. 

So that's primarily the group that we serve. And I'll take that a step further and say that we primarily work with people who are retiring from the Florida Retirement System, they're FRS members. And as I mentioned, I worked with a previous firm for about four years before I came to North Florida. And that's all we did. We worked with employees at state universities throughout Florida. And so they were FRS members. So I became very familiar with the benefits offered to people under FRS. Now, John, throughout his career as well, has primarily worked with members of the Florida Retirement System. Right, John? 

John: Correct. 

April: And so we've found some really good synergy and working together with both of our experiences to help people. And John his I'm gonna, I don't want to tell your story, John, but I will, that your father and your grandfather both retired from was it Department of Transportation, right?

John: That's correct. Over in West Florida, Defuniak Springs.

April: Mm hmm. So you are very familiar with the benefits that are offered to FRS members. And then also some of the common questions or concerns that they have too because you lived it through your parents and your grandparents.

John: Well, as a friend of mine put it I am, I grew up in a state employment family. So I understand the issues, both the retirement side, but also the day to day stuff. And because I have literally 45 years of doing that, I feel like I'm on top of it. And even though I have clients from all areas, and all walks of life, my number one passion is helping people in the Florida Retirement System.

April: Well, maybe we'll circle back and kind of talk about some of those key issues today. What we're going to be talking about when it was our presentation day on Social Security, we're going to be talking about how social security works, what you need to know around the program, different payment scenarios, and then also issues around the program as well. So let's, let's roll up our sleeves and get to work. So let's talk about how social security works, first and foremost. I think most of you on the call may be familiar with how social security works. But sometimes there is a little bit of confusion around this. So we'll kind of go through this together. Social Security was started back in 1935. And it's funded through the taxation of wages. 

Those of us who are paying into Social Security today paying into the trust fund are the ones who are paying the benefits for the beneficiaries today. So that we're gonna circle back and talk about that later, because that also comes in to some of the issues around the program when it comes to funding, but through taxation of wages, that goes into the trust fund for Social Security, and then that is what pays the current beneficiaries for Social Security. You can see here that the average monthly benefit now this was as of January of this year, was about $1500 per month. $1,503 is the average monthly benefit, again as of January of 2020. So those numbers get updated every year. 

So coming up in 2021, we'll have a new presentation with some new numbers for everyone about the different numbers that will change periodically. So we're going to go through some of those today. How do you qualify for Social Security. So you have to earn what's called Social Security credits. So as we're working, we earn credits for Social Security. And this is what allows us to qualify for Social Security benefits and Medicare benefits as well. When you've earned 40 credits, you're able to qualify for both Social Security and Medicare, you could earn up to four credits per year. So for most people, if you have worked for about 10 years, 10 years, then you qualify for Social Security and Medicare. There are some earnings limits, you do have to make a certain amount to qualify. 

But again, for most people, if they have 10 years of working history, they qualify for both and their spouse too would qualify for Social Security and Medicare. How is your benefit determined? Your benefit amount? That's really what it comes down to when we're talking about social security. We want to know what's your Social Security benefit going to be at the different ages that you can claim? So you know, you've got your full retirement age. We're going to talk about a little bit later about claiming early as 62 are deferring for as long as, as age 70. But how that benefit is determined, is Social Security averages your highest 35 years of salary. And if you do not have 35 years of a working history, then they're going to average zeros in for any year to get you to 35 years. 

Very important there. So when depending on your work history, you may want to double take a look at what so security has for you for your work history. And see if you've got your 35 years, if there are any zeros in there that might benefit that might change to when you're thinking about taking Social Security. That's one of the things that we want to take a look at there. But yes, they it's based on your highest 35 years of salary. And then if you don't have 35 years, they'll they'll put a zero in there for you. I would recommend going to the Social Security website and taking a look at your statement. They used to mail paper statements, and they kind of got away from doing that. And so the best way to look at your benefits now are to go online and set up an account. You can go to ssa.gov, or social security.gov. And you can take a look at your benefits. They've got some different calculators on there as well for you to take a look at. 

I will say too if you haven't registered on the social security website before, we would recommend that you at least set up an account. Because we've heard of some fraud that happens people try to go in and create a you know username for you if you haven't done that already. So I went I went in a couple years ago and created mine so that I can go in and see too. And you can see a couple different things. You can see what your earnings history is. So it's really it's kind of neat to see what the earnings history is what's been reported to Social Security. There's not usually too many issues with that. But it is good to double check and make sure all that looks accurate. And then you can see the different benefit amounts as well. Again, looking at what your full retirement ages are claiming early furring and then also what would be available to any survivors as well. 

Let's keep talking about the pros and cons about what you should know around the program. The first thing is when you were born determines your full retirement age. So if you were born between 1943 and 1954, your full retirement age is 66. If you are born 1960 or later, your full retirement age is 67. And if you're born between 1955 and 1959, they are bridging the gap between 66 and 67. So yours might be 66 and two months. 66 and six months, again, depends on when the year you were born determines your full retirement age. And when you activate your benefit, when are you going to start taking Social Security determines what amount you will receive. So we're going to talk about an example of someone's full retirement age was 66. And if they waited till 66, to claim Social Security, they would receive their full benefit. Sometimes we call it the FRA the full retirement age. If they can, you can also claim it early. So you can claim it early as 62. But if you claim it early, you're going to have a reduction in benefits. And that reduction is locked in for life. 

Sometimes there's there's a lot of confusion and misinformation about this. Some people think that if they take their benefits early at 62, they're going to give them a reduced amount for a few years. And then at 66 it'll change to their full amount. And that is not accurate. What you started at is what it's going to be locked in at. So very important when you're looking at your different calculations. We're also going to talk about what's called delayed retirement credits, because you can delay past full retirement age, and social security gives you an increase for every year that you delay past your full retirement age. Now everyone's situation is different. There is no right or wrong answer there is no one size fits all, or a rule of thumb. 

So I always say John's heard me say this before. I'm not a big fan of rules of thumb, because who's thumb are we using? Are we using my thumb or using John's thumb or using your thumb? So rules of thumb to me don't always work. It has to be very individual to your situation. And there's a lot of things to consider when you're thinking about if you're going to claim early or if you're going to do so john here, I was thinking we could just kind of talk through this a little bit about maybe reasons why someone would take it early, why they should delay taking Social Security, and other items that people should take into consideration when they're thinking about when to take Social Security.

John: Well, let me jump in for a moment, because I know you'll cover some of this in slides coming up. But let's just take each one of them. If you're going to consider taking your benefits at 62, to understand that if you earn more than 18,000 of earned income, you're going to have a penalty. So for every $2, you earn, above that 18,000, you're going to lose $1 benefit. We have people April who still don't know that. And then we have people, like you said just recently, we had someone who thought they could take the reduced benefit. And then once they reach full retirement age started to full benefit. So there's a lot of confusion about it. 

Should you take the benefit at age 66 in this example, or wait to 70. In my case, I started mine at age 66. April and I had several discussions about it, I've had the pleasure of looking at literally 1000s of plans in my 45 years of doing this. And with the time value of money, I decided I'd rather have the income now. Now, some people should wait until 70. Why? In my case, I have other savings investments, life insurance in place. So the life insurance would be to take care of people that I love and care about and either my death. I just recently advised a gentleman wait until 70, he did not need the income. Now he could wait by waiting until 70. Since he has zero life insurance, none, then the survivor benefit would be a higher number. 

So instead of like on the screen getting $3,000 per month, his widow would have almost $3800. So it depends on your individual situation. April is correct in stating that the one size does not fit all with this. I'm sick and tired of the advisors telling people take it as 62 to because bankrupt, you get all you can. Well, I got news for you, if the system were to go bankrupt, they're going to cut back on all of our benefits. There is a wealth of information on the website for Social Security, I would encourage you to read the trustees report for yourself. Most people will not do that. Because they get boring, or other than geeks like us that enjoy that stuff. It probably is. Which leads me to one other thing, the concept of who not how, April. 

And people ask us how do I do this? How do we do that? And you know, maybe that's the wrong question. Maybe the right question is who can do this for me? Or do this with me. So our job is to help you where you want to go. We have a lot of experience and focus on getting things done. Just went through some therapy yesterday, in fact, for vertigo. Well, I could have done exercises myself and hoping it would work. But I went in, young lady solved my problem in one hour session. And so who versus how. We know how to do it. So let us be the who that helps you if you want help with Social Security, Medicare and other issues involved in retirement. But those are my comments here because I'm sure you're getting this. If not, I'll jump back in.

April: Yeah, no, I think you're right. All of those are things to take into consideration and you just hit on a couple of key areas there. Will you continue working? That's a big thing. Even if you're at full retirement age, why are you going to continue working? 

John: Like me.

April: Like you. That's right, exactly.

John: On paper, I'm retired. I'm getting Social Security pension. I don't want to fully retire. I want to keep working as long as I am creating value and I'm relevant and I'm helping.

April: Right. And, you know, for everyone to get into that individual situation. You know, John, we were meeting with some clients earlier this week and one couple plans to work to about 68. But when they retire, that's it. They're done. Right? There's they're not going to do any sort of work after that when they leave. They're both their jobs. Ones retiring from the state one does not work for for government. And when they retire, that's it. They're done. There was another gentleman who he's got the potential to do some consulting. So he's gonna retire and then he'll probably do some consulting, what that looks like yet we're not sure, but he's got that option available to him. So it just kind of depends again, on your individual situation. You've got to consider your health. Right that's that's a big part of it as well, about when to claim. We can talk through your health. 

John already mentioned about depending on your other assets, and are we concerned about survivor benefits, those are some reasons why you may delay and again depends on other income streams that you may have in retirement. Do you have a pension? Or is the rest of the retirement planning burden on you, the individual to have the income that you need in retirement? So those are the things that we all look at when we're working with clients and going through what we call a retirement rehearsal, where we show you exactly what it looks like financially to retire, and we play what if. What if we did this? What if we took it early? What if we take it at full retirement age? What if we take it at age 70? What are your different pension options if you have those available? What does that look like from a retirement standpoint? 

And then we also talk about how to distribute assets. So if you've got, you know, retirement accounts, you know, maybe you have a 401k or a 403B or deferred comp, maybe you have some investments outside of that, and walking through, how are you going to have what's your plan for distributing those assets in retirement. So that's what we do, working on retirement rehearsal with clients.

John: And we have a number of clients who have either the optional retirement plan with the University System, or the FRS investment plan, which is a bigger, because now when you retire you have to pick the right social security option, determine when to do Medicare, but also how do you select the right income plan for you, based on. All of this is going to be addressed. Sadly, most people wait until the last minute, they're in scramble mode. So but I'm impressed with the number of people who registered for the webinar, I think we had like 60, I thank you said. So that I'm pleased to see that because we see ourselves as educators first. And if we can help people, then they're ahead of the game. And every time we do these, we just we get a full house, either live in the training center here or webinars. But anyway, I know, you got more stuff to cover so ahead.

April: Yeah, no, that's a good point. So let's just kind of keep going here. And we'll we'll circle back on some of these other key issues for people. Now, again, we talked about this a little bit, but you do have delayed retirement credit. So every year that you delay past social security and past your full retirement age, Social Security is going to increase your benefits 8% per year. They'll actually do it on a monthly basis. And so it's .67% per month. So let's say your full retirement age was 66. But we're going to work six more months, they're going to increase it by that many months that you delay taking Social Security. But it is an 8% increase, if you delay. 

I also want to point out too, if you're still working at this point, let's say you are, the couple we were talking to earlier this week, John, they're going to be he's going to be full retirement age next year at 66 and two months, but he plans to work to 68. He has a couple things that are going to be increasing his social security benefits. Not only is he going to get the 8% increase for delaying taking social security, but he's still working. So he's still paying into social security and his earnings right now are continuing to go to increase what his monthly benefit is. So this all comes back to are we going to be working? Are we not going to be working and all those other factors that we talked about earlier as well, especially when it comes to looking at these delayed retirement credits. On your benefit, you're going to see your different benefit amounts. Now you're going to see what happens if you take social security at 67, and your full retirement age 66-67 or somewhere in between. 

If you take Social Security early at 62, or you wait until 70 for your full retirement benefits. You're also going to see on your statements, what amounts would go to your survivor. And we're going to talk about survivor benefits a little later, when we're doing the retirement rehearsals for clients, we're going to ask for copies of your statements. If you're married we're going to ask for both so that we can take a look and walk through the scenarios of what it looks like. Maybe for one of you to start claiming, the other to delay. What about spousal benefits? There's a lot of different things to consider about the claiming strategies. We're going to talk a little bit about those today. 

So you know what they are. But that's why we would ask for copies of statements so that we've got your accurate numbers in front of us. There is a cost of living adjustment for Social Security. It's not guaranteed every year, but there is a cost of living adjustment. So the COLA the cost of living adjustment is tied to the CPIW which is the consumer price index for urban wage earners and clerical workers. This is not the inflation number that is often quoted in the media. So first. know that. But if there is an increase in the CPIW then you're going to see a cost of living adjustment for your Social Security benefits. 

For example, in 2020, the COLA was 1.6%. But there have been years when we've had zero cost of living adjustment. That was back in 2000, we actually had two years back to back 2010, 2011. 2016 was also zero. And then 2017. Right after not having a cost of living adjustment, you got a pay increase of .3%. Most people told me it was like almost insulting, you know, the the .3, not really giving them a cost of living adjustment or having a zero there.

John: That did not cover the cost increase on Medicare.

April: That's right. And so you have to take those things into consideration, too, about Medicare. Medicare premiums once you're over 65. One of the other common questions that we get about Social Security is taxes. How much will the tax be on social security? So, taxes on your Social Security benefit, depend on two things. One, it depends on your filing status. Are you filing as an individual or joint return, and then also, what is your combined monthly income. So your combined monthly income is a calculation, it's your adjusted gross income, plus any non taxable interest, plus half of your Social Security benefit. That equals your combined income. 

So we're gonna walk through both scenarios about if you file as an individual or a joint return, and what that looks like. Individual filing status, if your combined income is between 25 and 34,000, then 50% of your benefit will be considered taxable. If your combined income is greater than 34,000, then 85% of your benefit will be considered taxable income. We can help you with this looking at tax returns, John and I are not CPAs. But we review enough tax returns, we can help you if you need some help. Looking at the tax side of things. If you're filing a joint return, and your combined income is between 32,000 and 44,000, then 50% of your benefit is considered taxable. And if your combined income is over 44,000, then 85% of your benefit is considered taxable. You can have taxes withheld from your monthly benefit. Some people don't realize that we had a client a couple of weeks ago we're meeting with and she was actually she actually got penalized from the IRS, because she was not having taxes withheld from her monthly benefit. So just make sure that all of that is in good order when it comes to your taxes. Now let's talk about if you decide to continue working and taking social security. 

We talked about this a little bit earlier. But you can see if you're if you claim early at 62. And you're still you have any sort of like you have earned income over for 2020, it's 18,240, then your Social Security benefit is going to be reduced by $1 for every $2 above that limit. Now this 18,240 number, the earnings limit changes typically every year. Every year, that number goes up a little bit. So we just have to pay attention and have the accurate numbers. So that's why we talked about it's important to know if you're retiring and 60 do Are you still going to be working? And what's your income going to look like from that. If you take it in the year that you turn your full retirement age, any wages above 48,600, your Social Security benefit is going to be reduced $1 for every $3 above the limit. 

Now, John, we just had this case, and we were talking about with a client, because he is going to be full retirement age in August of next year. And he's working. And he's considering starting social security in January. So we had to walk through this very thing with him making sure that looking at if he was going to have a reduction in Social Security benefits, what would that be? Or was he going to be in good shape and not have any kind of reduction there. So again, all part of what we want to look at when clients are getting close to retirement and social security. Now if someone waits if you wait till the month that you reach full retirement age, there's no earnings limit. You can continue to work you can get your Social Security benefit and there's no earnings limit. 

So in his case, if he waits until August of next year when he turns his full retirement age, they don't care how much money he makes, he can make a million dollars, and he's not going to have any reduction in his benefits. It's only going to be between January and July that we have to pay attention to there in his case. Okay, let's get into some different payment scenarios with the program. The first is spousal benefits. So as we talked about earlier, when you have 40 credits for Social Security, both you and your spouse are eligible to claim a benefit or social security, and the spousal benefit equals half of the other spouse's benefit. Sometimes, you know, John, we find that it's easier if we use like numbers for this scenario here. 

Let's pretend for a moment that you and I were married, and you're spouse A and so your Social Security benefit is $1,000 a month. And let's assume that I have a lower record. And so maybe my spousal benefit is only $250 a month under my own record. I would qualify for a spousal benefit equal to half of yours. So in that scenario, I would qualify for a spousal benefit of $500 to get me to half of what the higher earner's record would be. So spousal benefits, higher earner gets their record their earnings, and then a lower earnings spouse, it's either going to be whatever they qualify their own record, or half of their spouse's, whichever is higher. And Social Security has what's called deeming roles now. And so if they'll automatically give you the higher of the two, of course, I always say double check, make sure that they're giving you the right amount. We always want to trust but verify. But they do have deeming rules where they should automatically be giving you the higher of the two. 

There are widow and widowers benefits as well, which, as a widow or widower is equal to the higher of the two records. You don't get both you don't get yours and theirs but you only get the whichever one was higher. So in that case, again, let's assume that my record my my benefit was $500. And John's was $1000. And John passes away, I'm going to receive $1000 from Social Security, not just the $500. So there are widow and widower's benefits, we can help walk you through these different payment scenarios as well. And depending on the different survivor benefits, I'm not going to spend a lot of time here because it can get a little complicated, because it's not just do you have a widow or widower's benefit, they're also going to look at if you have any income as well. But you can claim a widow or widower's benefit early. Can be even as early as age 60. But again, it depends on if you have other sources of income that are coming in as well. So we want to pay attention to that. 

Let's talk about divorced spouses. If you were married for at least 10 years or longer, you still qualify to have a spousal benefit under your ex spouse's record, even if you're not married to that person. And as long as you're still not married to that person. But as long as you're married for 10 years, you will qualify to have a spouse or record under your ex spouse, each of them have to be at least 62 years old to start claiming, and the hire record spouse if they remarry, let's pretend that they've remarried. 

You taking a spousal benefit on our ex spouses record does not impact their benefits at all. Doesn't impact their new spouses benefits either. Death has some different rules to go through when it comes to, you know, divorced spouses, but we can walk you through that if that's your situation. There were some major changes to Social Security back in 2015. In fact, john, those were some of the fastest changes that we've seen get passed through, right.

John: It's the fastest I've seen in my career. 1975 to 2015, I've never seen Congress come together and put aside their partisan views and make decisions so quickly. And it's gonna happen more because this is a very touchy subject. There's already some things brewing, that if there's time when you get into some of the issues I'll address that I've been reading about and studying. But you're right it's the first time we've seen something move this quickly. The last time we saw was 1980s when social security was totally overhauled back then. '83.

April: Two things happened. And when they past these changes in 2015, they were phasing out what's called the restricted application and they got rid of that file and suspend. I'm not going to spend any time on file and suspend today, because you would have had to have already qualified and done that with social security as of April 30 2016. We are going to talk about the restricted application briefly. But you had to have been 65 by January 1, 2019, to qualify for the restricted application. So if that's you, we should take some time to talk about that, again, you've got to be as it must have been 65 as of January 1 of 2019. 

So what the restricted application allows you to do, again, you've got two spouses, it would allow spouse A to defer taking their benefits, but take a spousal benefit from their spouse's record. So again, let's pretend that John and I are married, and he is the higher record spouse. What he would do is he would not take social security at full retirement age. And he would defer that until age 70, until you know, the maximum age for Social Security. And the meantime, though, I would take my record at my full retirement age, so I'm getting my benefit, and he would be getting a spousal benefit under my record. So this is one of the things that they are phasing out. So it is a claiming strategy, a very popular one. But you had to have been 65 by January 1 2019. 

To take a look at that. Now let's get into some of the issues around the program. You know, one of the main issues that we have with social security is the number of workers that are paying into Social Security. It's assuming that we're going to have the number of beneficiaries continues to grow, that are collecting Social Security. And so as that number grows, the ratio of workers to beneficiaries is shrinking over time. And that's putting more pressure on the trust fund to be able to pay out current benefits. The trustees are where they change this year. Sometimes it's you know, 2032, 33, 34. But it is projected that if social security, there are some changes aren't made, that the trust fund will be exhausted by 2034. And in that case, social security would only be able to pay 75% of current benefits. So for every dollar that you're receiving on Social Security, would be reduced that to 75% of that. That is obviously an issue with the program, we do think that they will make the necessary changes to make sure that that doesn't happen. 

And there are a lot of things that have been proposed over the years to do that. It could be that they start raising the claiming age from full retirement age like they've done before, from 67 to later. They could go away with people claiming early. That's a claiming as a strategist, some of they've talked about. Increased taxation for social security as well. So a couple different ideas that have been proposed for these changes, as we talked about with again, with the issues like John was saying, it's subject to political agendas. And then also it's this change that CPIW we talked about for the cost of living adjustment, which is something that we believe they should change at some point as well. But yes, the political agendas. It definitely becomes Social Security becomes that political football, it seems very often.

John: There was talk just this week about using CPIE based on elderly. If that happens, you're going to see lower cost of living adjustments. This is the kind of stuff that as I've gotten older, throughout my career, people would come to me with ideas. What do you know about this? What do you know about that? I didn't know. So I started learning. And that's the benefit of having clients that are ahead of me that are 100 years old, late 90s, early 90s, etc. It forced me to learn this at an early age, and you're benefiting by doing the same thing, Apirl. So we have the experience of dealing not just with our own planning, there's literally 1000s of people who will  be benefited by helping them over the years. We benefit because we learned something new. We can now share that information with other pepple by doing these webinars.

April: That's right. All right, let's recap what we've kind of talked about so far. So how social security works. It's funded by the taxation of wages, they average your highest 35 years of wages to get your benefit amount. You've got to have 40 credits for you and your spouse to qualify for Social Security and Medicare. And we recommend that you read your statement, what you need to know about the program, full retirement age depends on the year you were born. 

Also, when you start taking Social Security effects what your benefit amount will be, there's a cost of living adjustment, but it's not guaranteed every year, you may have to pay taxes on your benefit. That depends on what other income streams that you have. And if you plan to continue working in retirement, really want to pay attention to those earnings limits. And that all go that goes back to when do you start taking social security as well. There are different claiming strategies. You've got spousal benefits, widow or widowers benefits, survivor's benefits, divorced spouses. And then we also talked about the options with those delayed retirement credits and spousal benefits that that are being phased out. 

And again, you got to be 65 by January 1 of 2019 for those. And then issues around the program, funding, you know, that's something we all know, and we've heard about with Social Security. There's definitely a political agenda. Can be a couple political agendas. And then also, you know, it's not really an issue with the program. But it may be an issue that impacts your retirement is that Social Security was never meant to replace all of your income. So you have to have other income streams in retirement, whether that's a pension or assets.

John: April, let me jump in here, please. When, if you go back and you listen to the video of it. But the quote from Franklin Roosevelt was that we never intended to replace all their income. You have to remember when this was started, it is actually started back in 1933. First benefits was paid '35. We were just coming out of a great depression. Social Security was designed to be a way to give people a livable income. And some of the things that have been kicked around that are being rethought today, because of the pandemic and the economic crisis is creating. Economic crisis, meaning for some people who've lost their jobs, or other people who are very well, when people say the economy's in the tank, well, it depends on what you mean. Some businesses are doing extremely well. We're doing a webinar here, companies that are doing this type of service are flourishing, they're doing very well, because people are having to work from home. 

But one of the things that was proposed in Congress before was to stop allowing anyone to take social security at 62. I was just reading an occupational journal just three nights ago, that one of the big changes was, wait a minute, we can't do that now. Because so many people who've lost their jobs, claiming Social Security is 62. So what impact would that have on people who are in trouble? Another issue was do away with (inaudible) for your Social Security tax, that one we will probably see happen. Around $30,000 is the cap. Medicare is unlimited, we'll probably see these tests go higher taxable wages, or have another option to limit benefits in retirement, based on an earnings test. If you make over a certain income, then you have a benefit. 

So are all of these I can give you a long list. I think maybe next time we do a social security webinar. We try to stay away from political stuff. But if it's something that is potentially out there, but those are just some of the things. I want to make one thing clear. I am not someone who likes to deal with fear very well. I don't like it when someone uses fear tactics only. Someone tell you take your benefit now because the system is going bankrupt. I think you need to challenge that person or persons. It's not going bankrupt. There might be a lower benefit but if we as Americans keep saying I don't want to give up my benefit. If we don't do something to make it smaller. Like that.

April: Okay, John, anything else you want to add before we close out here today because we've gone through a lot of information.

John: The only thing I want to add is for everyone, I would encourage you to continue being curious through learning about this. When you see articles about it in a magazine or newspaper read it. I get questions about calls, we get surprised getting money. Most of the stuff that's out there we see it because we research and study. But I would encourage you to take advantage of a telephone appointment with no cost or obligation to do that. To chat with you. Most of the time in those conversations something will come up the person didn't even think about, and we're able to help them. And if we can help you, we'd love to know hype, no pressure. If you'd like to chat with us, please do.

April: That's right. And so we like I said, we would recommend that call, we schedule a time for a 25 to 30 minute phone appointment. And that'll be a time for you to discuss any goals or concerns that you have when it comes to retirement planning. You can do that a couple of ways you can reach out to John and I directly by email or by phone. To schedule a phone appointment, you can call our main office number, which is located in Tallahassee at 850-562-3000. Again, that's 850-562-3000 and ask to schedule a phone appointment, you can do that with me with John, or with anyone on our team. So with that, I just want to say thank you for taking the time to join us today on this webinar about social security. We hope you found it impactful. And hopefully you'll join us on our next one on Medicare. Yes, John.

John: April, just remind them of the date, even though you'll be getting the email but just put  this one the calendar.

April: Yeah. So it's gonna be December Wednesday, December 3 at noon will be our next webinar on Medicare. And as soon as I did mention, this has been recorded being recorded and will have a replay available. It does take a couple weeks for that replay to get posted to the our website. But as soon as we have the replay, we'll be sure to send that out to you.

John: And one last item, a shameless plug for checking out our podcast because on the podcast is a wealth of information. So if you've not done that, please. We have a series of 8 podcasts that have been produced that will be coming out regarding planning specifically for members of the Florida Retirement System.

April: Right. And you can find all of that on our website at johnhcurry.com. That's johnhcurry.com. All right. Thanks again. Have a great day.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own. 

The Social Security Administration has not approved, endorsed, or authorized this presentation. Contact the Social Security Administration for complete details regarding eligibility for benefits. Guardian and its subsidiaries do not issue or advise with regard to Medicare.

2021-116816 Expires March 2023

Retiring From a Career in Public Service

On this week’s episode of the Secure Retirement Podcast, we speak with Bonnie Bevis, a retiree with 35 years of work with Highway Safety under her belt. She began her career as a license examiner, and shares with us how she spent her years in public service while raising three children, as well as how she occupies her retirement time now. 

We chat with Bonnie about her extensive public service career, as well as:

• The need for a steady source of income 

• Fixed Assets Department duties and how they’ve changed

• Finding engaging hobbies to stay busy in retirement

• And more

Mentioned in this episode:

• Call the Tallassee Office at 850-562-3000

• John’s website: https://johnhcurry.com/

Transcript

John Curry: Hello, this is John Curry and welcome to another episode of John Curry's Secure Retirement Podcast. I'm looking forward to this interview. We just had lunch. Jay and I, Jay Wolfe and I are sitting here with our friend Bonnie Bevis. Welcome, Bonnie.

Bonnie Bevis: Hello.

John: Bonnie just retired from state government. 35 years of work with highway safety and Bonnie, if you would, please just share with our listeners a little bit about your background. Who is the real Bonnie Bevis? Where did you grow up? And then I want to get into your career. You're talking about raising kids, I don't reveal too much yet. But it was one talk about the real life of someone who spent 35 years in public service.

Bonnie: Well, I was born in Georgia and move to Tallahassee in 1966. Graduated from Leon went to TCC and FSU, worked for the state, was a driver's license examiner, quit, had children, did some private, went back to the state, and then retired after 35 years.

John: I've been doing podcasts for a long time. I've never had anyone so succinctly just sum up those things. So now we're going to unpack some of it. Okay, so you, you were telling us earlier about an experience as a driver's license examiner. Let's have some fun and share with us some of the things that you saw and experienced and I think you said you were doing that down in Fort Myers.

Bonnie: Correct. And my favorite story is always the retired policeman from Ohio. This was in 1977. So he was probably in his 80s. He knew he could drive better than everybody. We being stewards of the roads to keep them safe. We thought maybe we should give him a driving test. That made him mad. We had to give him the written test first, we caught him cheating. It took him several times before he finally did pass it we think on his own. Then we had to give him the driving test. 

Well, because he had gotten himself an attorney. He had to ride with, he had to ride with all of us, actually, all of the examiners had to ride with him. It was a very scary ride for all of us. He never did pass. Took his license from him. He continued to remind us how he was retired policemen from Ohio. He caused issues on the highway in front of the driver's license office. He turned south into the northbound lanes when he shouldn't have been driving. So he had to go to court caused a wreck in the parking lot. Didn't know who he caused the wreck with till they got into the courtroom. And it was the judge. So the judge told him that he would not get his license back.

Jay Wolfe: But out of all that he made sure to let you know that he was a retired police officer from Ohio.

Bonnie: Correct. He was very much a retired policeman from Ohio. We heard that regularly. In fact, when he was in the office, everybody heard it because he was one of those very boisterous older gentlemen.

John: So you had to maintain your cool and you're calm, try to help the fellow but at the same time, there are times when we should not be allowed to do certain things.

Bonnie: Correct. Like drive when you are a detriment to society.

John: Now you were there for five years, and then you moved you went back to Tallahassee.

Bonnie: Actually I came back to Tallahassee as a driver's license examiner. I was at the Northwood mall. Downstairs in that horrible place. Nobody wanted to show up too early. But I worked there until I was probably six months pregnant when it was like okay, I'm gonna stay home now for a while.

John: Okay, so at that time, were you still married? I can't remember

Bonnie: Yes.

John: You were still married.

Bonnie: I was married.

John: But you went through a period, talk about, you were divorced. And for a number of years you were raising children. 

Bonnie: Right. 

John: And then tell us a bit about that because I find it fascinating how many women especially with men and women that are single parents, but especially the ladies who have the power and the this the ability to just make it work. So share some of your experiences there.

Bonnie: Well, I had had my first child and I stayed married for about a year and a half after she was born. Then I had to have a place to live. I had to have a job because it wasn't working. I got hired by a friend of mine to keep books at his company. I had never done that before. But I liked it. I enjoyed the numbers. So when I quit working for him, went back to school, took some accounting classes, worked for a couple of private companies that you didn't always get a paycheck on Friday, they might, we'd write the checks, and we just tell everybody that maybe Monday, we'll have a good weekend and you can get paid on Monday. Sometimes, one of the companies got to where he'd give him, he, he gave us all $100 on Friday, and then I'd get to rewrite the checks and deduct that $100 from it. But he did at least give us enough in his mind, you know, get through the weekend, or all he could afford. But there's no benefits there, right

John: Today is as we're recording, this is December 9, 2020. And we've had a heck of a year dealing with the COVID virus. And your story, there is so relevant today, because there are pockets of businesses, industry that are in trouble. Because of the shutdowns, you have other industries that are thriving. But there are people out there who are going through the same thing. Now they've either lost their jobs, have no income, or their paychecks have shrunk, because the businesses are in trouble. And they're trying not to get rid of their employees, but at least pay them something. 

Bonnie: Right. 

John: So the experience that you went through is not unlike what people are dealing with today. 

Bonnie: I agree. 

John: And then if you're trying to raise a kid, especially a young one, a toddler, that makes it more difficult.

Bonnie: Correct.

John: More difficult. Talk a little bit about how, how did you deal with that? It had to be tough at times.

Bonnie: I relied heavily on my mother. Of course, she wasn't my babysitter, I had to have daycare because she had a job, but to have any kind of relief. And I love my children. Don't get me wrong, but you need a break from your child. And luckily, my mother would help me out there, she lived close. But you just do what you got to do. You ate a lot of hamburger back then it was cheap. It's not so much any more. Eat a lot of spaghetti. You get real creative with your hamburger. And then I realized I needed something with more security than put not getting a paycheck on payday. I needed where I got a paycheck on payday, and some health insurance. I needed benefits. So I went back to work for the state. Health insurance, retirement paid days off all the holidays when the kids are out of school. So I went back and did accounting. 

John: Okay I think there's a couple of lessons here. One, an adversity needing to go to work, because your daughters cause you to take a job that maybe you never would have considered doing books or someone. So that was a opportunity to learn something new. And that learning something new, got you back to school. And then you ended up having a career doing that new thing.

Bonnie: Correct.

John: So let's expand on that. So now you go back to work. Tell us what you did when you went back into the workforce. You went to highway safety.

Bonnie: Went back to Highway Safety. 

John: Take us through that progression.

Bonnie: And I was hired as the supervisor of the fixed assets section. Had a good group.

John: Tell us what that is. Fixed assets.

Bonnie: Fixed assets, desk, chairs, cars, we had to count all of them that the department owned. Every year, we had to account for all of them. Back then it was anything over $100. Now I think they've raised it up to over $5,000. So we were keeping up with desk chairs, chairs, trays, calculators were considered an attractive item. So yes, we had those on property too, because people might want to walk off with their calculator, which but so I kept up with all, and the cars. We bought the car, that we had a guy in our section that bought the cars disposed of the cars. And with highway safety, it was all the patrol cars. So we had a lot. We also were over the central supply. I used to call it the miscellaneous section because if nobody else did it, we got it. We had a couple of bank accounts we reconciled. We put made claims on car wrecks between department vehicles and private citizens. So if it was the private citizens fault, we of course sent you a letter and asked for you to pay for our damages. And hopefully you had insurance. So it was a miscellaneous type section. But it wasn't accounting.

John: Take us backstage a little bit behind the curtains because I'm fascinated by this. So who you are in a job where you're monitoring fixed assets like this table, chairs, equipment, automobiles. So I didn't think about that. But all that stuff has to be accounted for, doesn't it? 

Bonnie: Correct. 

John: You can't just assume that it's being taken care of

Bonnie: Right. Track it.

John: How frustrating or frustrating or how fulfilling was the work?

Bonnie: When I first got there, it was a little of both. The people before me really hadn't done their job. They they would put the property number on the piece of paper and fall it and never end property number was still stuck to the piece of paper. They never got it to the item. With highway safety, you've got the whole state. So it was from Pensacola to Miami. And if you move, John Q Trooper moves from Pensacola to Miami, he takes all this equipment with him. Well, all of those items have property numbers on them. And if they don't do the proper paperwork and send it to Tallahassee, those items are still assigned to Pensacola. They don't end up so now they're lost. Pensacola don't know where they are. 

John: Right? 

Bonnie: Miami has found items. And once you reconcile it, then you're like, okay, so now they're found plus the weapons, a lot of weapons. And when you're law enforcement you retire. Part of the statue is you get your service weapon. It's your retirement gift.

John: I didn't know that.

Bonnie: Correct. A lot of people don't. So we had to keep up with those because 20 years from now, 30 years from now. You're no longer with us, the retired law enforcement. Your child, his child has your gun.

John: Who got your fire arm?

Bonnie: We had one. We had a local Sheriff's Department call. And this gun is registered as belonging to the highway patrol. It was just involved in a crime. We had to figure out who it belonged to. And it was he was dead. And it had been passed down and stolen or who knows. But yeah, so the weapons are were a biggie.

Jay: Was that multiple weapons? Or was that just their basic, you know, just they had a nine millimeter on their side?

Bonnie: Correct. Just their pistol. Or just their service revolver. That's the only one they got. So we had to keep up with that. And we were all paper back then. Like we're moving to electronic. So as more things became electronic, of course, it got easier to keep up with. But still you're trying to get people in Miami to do paperwork that they're supposed to do. And you're sitting in Tallahassee, because Highway Safety is centralized. And everything happens at the Kirkman building. As far as accounting and all that good stuff, payroll, purchasing personnel, it all happens in Tallahassee. 

John: Central location, right? Talk a little bit about you made a comment about raising three children. And the years of difference between them. Share that.

Bonnie: My three different generations of children. I never had two teenagers at the same time, which was a blessing and a curse. It was there seven and a half years apart. All three of them didn't plan it that way. Just happened. The last one, when she got to middle school, she rolled her eyes at me about three times and I told her I said I'm not playing that game. I'm just not gonna play that game. She's like, what are you talking about? I said, go ask your sisters. So it was good. And it was bad. 

I was I look back and I'm glad I didn't have two teenagers at the same time. The middle one was very testy. She was the one that was going to test me for everything I was worth. My mother in law said, you're getting paid back for everything my son did to me. I said, you're right. I'm getting paid back. He's not because you know, Daddy and three little girls who could do no wrong. Right? She had him wrapped hook line and sinker. And she, middle school was tough. Once she got out of middle school, she turned out to be wonderful. But those three years are rough.

John: So you sorted the job, because you were divorced. How long were you divorced before you were remarried?

Bonnie: I was divorced, six years.

John: Six years.

Bonnie: Something like that. Five years, six.

John: And you lived in Tallahassee the whole time. How difficult was it to raise three children and have a career? Give us some insight into that, and a new husband had to train.

Bonnie: The new husband. Well get up in the morning, you got to get them ready, you got three little, well, for the longest time only had two because oopsy by the time she came along, the other one was pretty much grown the oldest. But getting them up getting them ready gotta brush teeth got to get dressed, got to get you to daycare, which of course is all the way in town, I got to turn around and come all the way back to work. They weren't next door to each other. It gets to be challenging, frustrating sometimes, then when you get off work, you don't get to just go home. Now you've got to go pick them up right from where you left them in the morning, they don't just show back up. So it was nice as they grew up. And it's like, oh, no, I get off work, I can just go straight home. Because they were at that point ridding buses.

John: It's interesting. Let's talk a little bit about getting ready to retire, you had your 30 years of service, you decided to go into the DROP program. You said that was an easy decision for you some people that we talked with, it's very difficult decision. They love the work, they want to say as long as they can. But they also are tempted by this bucket of money that will be in the DROP account after five years. Others who hate their job say I'm gonna get in DROP and get out as fast as possible. Talk about how you were feeling about going into DROP, and you share with us some of your insights into what people should consider if they are getting to the close to where they could go into DROP.

Bonnie: I think DROP's a great thing. The nice the bucket of money at the end is nice, you know, you're going to have a cushion. If you've been lit, especially if you've been living paycheck to paycheck. At the end of the five years, there's going to be that cushion, because they are just going to write you a check. You got retirement, the state currently pays most of the retirement for everybody, right. And then it's just five years, it's just five years and some people that go in too young do end up having to go find another job. Because the retirees health insurance is really expensive. Now, especially the family coverage, I was lucky enough to step out at the right age and go straight to Medicare so and then with the little supplement, but it's still a little more expense, but not much.

John: Well during lunch, you were telling us about that it just so happened to coincide. That when you had your 30 years, you were 60. So five more years took you to 65 for Medicare, correct. And so for you, you shared with us without us getting into revealing personal financial data in retirement, your pension and your Social Security is going to be pretty much equal to what you were earning, I think you said.

Bonnie: To my take home pay, which is what everybody's used to spend off of, right? While you're working, you're getting paid this big gross amount, which that's really what you're earning, but it's not what you're living on. 

John: And that's not counting what you'll decide to get into future with the money you had from DROP, as far as additional income. What we find interesting is people say that when they retire, they will be in a lower tax bracket. We're not seeing that. Most people when they retire, they're in the same bracket maybe a little bit higher, because they start taking their pensions, Social Security, and money in deferred comp, IRAs, whatever they did with their DROP probably went to an IRA, we're finding that their their income is not lower, in some cases is higher. So all of a sudden, they go whoops all the planning I had based on the lower tax bracket, it didn't happen, right. And now the environment we live in today with all the spending going on for stimulus. Most of us will probably be in a higher tax bracket within the next 2,3,4,5 years. 

Bonnie: Right. 

John: It may be one year, and depending upon what happens in Congress. Talk a little bit about what hobbies you had along the way. I thought was interesting, some of the things you shared about your hobbies. And I'm about to come back and tell you why I thought one was interesting, but share that.

Bonnie: I started quilting when I was a senior in high school. I don't remember what prompted it. But it was like I wanna do that. I think I had tried back before your time.

John: Let's be clear and tell everybody. Some people here may not know what the word quilting is so share it. So what is quilting?

Bonnie: Well, you take little pieces of material and you sew them together to make a large quilt. And then you've got to get your batting and your backing and put it all together like your grandmother used to do.

John: Oh, when I grew up, I have fond memories. Right now we're talking about earlier, my grandmother and her best friend, Miss Mary Calvert sitting around this big wooden frame hanging from the ceiling. They'd work all day on that. And make the most beautiful quilts.

Bonnie: I have one quilt that belongs to my oldest daughter. It was her great grandmother's. And they were, they lived in Sopchoppy. This is a really cool quilt. And it was it's called a signature quilt. And while all the men were off to war, in World War II, the little ladies sat around and made a quilt. And what they did was they each made a block. And they signed their name on it, and embroidered in their signature. And then they came together and put the blocks together. Now how Shelley's great grandmother ended up with the quilt, I don't know. But her grandmother had given it to me. So of course it;s hers. But it is the neatest thing to see the signatures. Of course, we only know one of them, which is her great grandmother. But it's just nothing matches. It's just been patterns. 

John: But just think of the time and the love that went into making that. 

Bonnie: Correct.

John: And today, we're we don't think about this so much, because we're such an instant gratification society. But you don't just sit down and do a quilt in an hour.

Bonnie: Oh no, it takes days. And you poke your fingers and you know, you've got holes in your fingers from the needle. It's, it's very time consuming. 

John: Are you still quilting?

Bonnie: I haven't in a while, but I'm fixing to start back actually pulled out. I pulled out all of my rock and roll concert t shirts the other day that I've collected from all the years. I'm gonna make a quilt out of the T shirts. I'm gonna cut the front of the shirt off and the back if there's something on it, and I'm gonna make a quilt. 

John: Cool. 

Bonnie: And I thought, well, that'll be fun. The kids can have a fun time with this with this, you know, 1972 Rolling Stones concert t shirt 

Jay: Creative way to preserve your memories, too. 

Bonnie: Correct, correct, because they've just been up in my cedar chest doing nothing. And I'm like, well, that'll give me something to do to get over COVID till we

Jay: I want to see it when you get done with it.

Bonnie: Until we go back to being real people. That'll keep me busy. And it'll be.

John: I think that'd be another podcast and maybe we'll do a video. That'd be cool. Talk a little bit about your other hobbies. You called yourself the jigsaw puzzle queen.

Bonnie: Oh, yes, I love a jigsaw puzzle. And, and nobody wants them when you're done with them. And I'm one that can't do it again. I've already done it. So I've got basically brand new jigsaw puzzles, actually started sending some to my cousin who recently lost a child and it's kept her very occupied and kept her from thinking about that. But I 2000 pieces, the table, you have a really large table, you got all the pieces. I just, I love putting jigsaw puzzles together. 

John: Growing up, my dad loved jigsaw puzzles. He got an old dining table, he put it in the corner of the room. And every time we will pass it would just be playing with the pieces. Right? And I think about that today in my work, what do we do? Basically, when people sit down with us, it's like taking all the pieces of a jigsaw puzzle. Put them together for them. So they have this vision of their retirement. Correct. And I love jigsaw puzzles for that reason, but I haven't done one in a long time. Now I'm thinking I need to go buy some jigsaw puzzles and take him out of my property.

Bonnie: There you go, I'll send you some. Okay. 

John: Thank you.

Jay: Yeah, I have fond memories of that too. Because my aunt Debbie, who is like a second mother to me. I grew up with her. And she did a lot of jigsaw puzzles. And it's one of those things where you can like you said, lay it out on the table and you don't have to get it all done right, then and there. 

Bonnie: Correct.

Jay: And kind of come back, do a little bit, leave it and slowly see how it builds. And what I thought was cool was that it always gives me fond memories of Christmas, which is appropriate being that we're in this time of year, because we would always do Christmas jigsaw puzzles. Heck would even do those 3d puzzles. I don't know if you've ever done those.

Bonnie: No I haven't.

Jay: Yeah, we took it to that level.

John: That's fun. Let's talk a little bit about your retirement plans. You and your husband Monty had planned on doing some traveling, but before we go into that, tell me how is it at home now? He has to go to work every day and you're retired. How's that working?

Bonnie: Okay, he's gotten a little more used to it because it's been you know, since the first of October. With me just sitting there in my night shirt drinking my coffee say and see ya.

John: Good day, hon.

Bonnie: But he has gotten worse about picking up after himself. Which I didn't really think he could get worse. It doesn't matter. But he has gotten a little worse. That was fascinating the other day about who did you think was gonna throw away that plate that you cut that in your nap home? Did you what he said, Well, that wasn't a conscious thought. I said, Well, but you left it on the counter. So I have noticed that he's a little less home productive, I guess we should call it.

John: I'm gonna change the subject. Okay, you had plans to travel? And you were sharing with us that because of the COVID virus, like most of us, right, that kind of halted those plans. share a little bit of some of the places you said you wanted to go.

Bonnie: Right. I've never been many places. I've been to Texas, and I've been up north a little ways, but I want to go to the Grand Canyon. See out west. Yellowstone might be pretty cool to just I'm not into getting into it with a buffalo. don't really care for bears, but the train rides through the Canyon. I'm petrified of heights. So I don't see me walking out real close to the edge of anything unless there's a large fence. But I still want to see it. You know, it's it's one of those things I think everybody should see.

John: Yep. It's awesome. I remember going with my son who was very young at the time, and we were on an Indian Reservation flew in by helicopter, excuse me a small plane, this one another's helicopter. And the the place where we were had no rails. So one of the guides suggested that we tie a rope around my son's waist and around my waist. And I looked at him like, do we need that? He said, you're gonna want it.

Bonnie: You both go off instead of just one of you.

John: Well hopefully I would be the one standing behind him and not let him go. But we still talked about that experience. He's 37 years old now. So it's just, I think it's called in our work. We call it building memories. So I've not been to Yellowstone, I want to do that. But I think that's a great trip you should take. Tell me a little bit about the other trains. We were we're both fascinated with trains. I want to go literally from coast to coast, right? You were talking about that.

Bonnie: I've looked at those. They've got all kinds of packages on the internet. Just got to figure out which company to go with.

John: I haven't done that yet. I want to do that. I just think it'd be fascinating. And I'm just to a point of where I've been on the plane once this year. 

Bonnie: Right. 

John: And that was in March. And even before the virus I just reached a point where I got tired of getting on airplanes, people banging your eye glasses with their purses in their bags and all this alright, so I just want to get on a train or get in my car or truck and just drive and just enjoy the scenery.

Bonnie: Mm hmm.

John: So tell us a little bit more about what you think you'll be doing regarding the travel. And then we'll switch gears and ask you to give our listeners a little bit of your personal advice about work. But anything else on the travel side, before we do that,

Bonnie: I really just want to see are this country

John: Same here.

Bonnie: I'm not really into going to somebody else's country. I used to think I wanted to go to Australia. But I don't like you said I don't think I want to get on plane and with COVID. We've got so much to see here.

John: Actually, I share the same feeling up to the point where I want to see this country. I've been to most states but there are several I've not been to I want to go to South Dakota, North Dakota, Wyoming. Montana, I haven't been there. But I want to do this things also, just take time out maybe once a quarter take time and just get away.

Bonnie: And just go.

John: If you said some things earlier that I thought were very important regarding advice. What I said folks was I said Bonne if you had the opportunity to give someone advice, and we're who's working in state government. And well with all of the turbulence and people saying this state's a terrible place to work and things like that. Share with us your view on that.

Bonnie: You may not get a pay raise every year. But the benefits are there and you don't really see the benefits. What the state pays for you. On the back end, the retirement the health insurance, the life insurance, the things they pay for you are worth hanging in there for. A lot of private companies, you're going to have, you may fuss about the 3% retirement that they're deducting at the state, you go somewhere else private, you may have to contribute all into your 401k. They may your employer may not contribute much, if any for you, where the state does it, 

John: Or they may hold that check over the weekend and give it to you next week. 

Bonnie: Right. 

John: Like we talked about earlier.

Bonnie: Right. There were sometimes we just didn't have the money to get paid.

John: I get frustrated when I hear people say anything negative about state employees. I grew up in a state employee family. My grandfather worked for DOT, transportation at springs, my dad did, they both retired there. And people who work in the Florida Retirement System across the board, you're doing good work that needs to be done. That all of us who don't see that everyday, like we take it for granted that those cars are taking care of themselves, you know, and not only do you have to track them, yet other people have to work on them. 

Bonnie: Correct.

John: With the things that we take for granted. You and people like you and say government are the reason those things were there for us? Well, so not only do you have the benefits but the point I want to make is not only do you have the benefits, but you're creating value for every citizen of the state. And you may not be singled out and recognized for it properly. But my hope is when we do these podcasts that we give people inspiration and let them hear stories like yours, or they can say, wow, I want to do that. I want to do that.

Bonnie: Mm hmm.

John: Anything else you would share?

Bonnie: Well, I did payroll for years, until I retired. And I really enjoyed helping troopers understand how and why they were getting paid what they were getting paid for. They always thought it should have been something different. That you're not getting shorted, you're going to get it. It's just the way the accounting system works. So you're not gonna get it today. You're gonna get it in two weeks. I enjoyed that. I liked working with the people. And then knowing that when I did retire, I wasn't going to just be retired. Relying on a on a social security check. Right there is that that retirement check that just magically shows up every month, right? By direct deposit. I don't even have to deposit it 

John: It's cool, isn't it? 

Bonnie: Yes.

John: Do you at this point? Have you been out long enough? Are you missing it?

Bonnie: No. No.

John: So you're one of those people you are able truly to retire? 

Bonnie: Yeah.

John: And just walk away.

Bonnie: I thought I was gonna miss it, more than I do. I had actually someone contacted me just this week about something. She said nobody can answer my question. And I hate to bother you. And I said it's okay. I'll help you. So I told her who to go talk to. But no, I really haven't missed it. My good staff that I had had already retired. So it's like a whole new staff and in the payroll section.

John: So it was time.

Bonnie: It was.

John: It was time to move on to another adventure. 

Bonnie: Mm hmm. 

John: Anything else you'd like to share before we close?

Bonnie: No.

John: I just want to thank you for doing this. Because the stories that we hear from people who have worked a career and then look back on some of the things that happened, it's just fun. And I want to I want to know more about the quilts that you do. And definitely we'll see some of the jigsaw puzzles.

Bonnie: Yeah, gonna get you some puzzles.

John: Bonne, thank you so much for doing this.

Bonnie: Okay, no problem.

John: It was a pleasure. 

Bonnie: Okay.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own.

2021-115531 Expires 2/2023.

Staying Open to Opportunities

Our special guest on this week’s episode of the Secure Retirement Podcast is Helen Livingston. Helen was a teacher, a high school counselor, and a principal in Alabama, and earned both her Master’s and PhD, all while raising four children. She was also an integral part of opening the Medical School at Florida State University. Helen has had an extensive career in education and continues to stay busy and active in her version of retirement. 

“It's important that you take a good clear-eyed look at your fiscal situation so that you know that you're not going to add stress to your life in retirement, because there will be enough stress. Getting old is not for the faint of heart,” says Helen.

We chat with Helen about living with passion and enthusiasm, as well as:

• Life in both K-12 and higher education, and the changes witnessed over the years

• The community impact of a new Medical School

• Doctors returning home to make a difference in places of need

• Saying YES to opportunities when they present themselves

• Evaluating your reason for retirement

• And more

Mentioned in this episode:

• Call the Tallassee Office at 850-562-3000

• John’s website: https://johnhcurry.com/

Transcript

John Curry: Hey folks, welcome to another episode of John Curry's Secure Retirement Podcast. Today I have a lady named Helen Livingston sitting across the table from me. And Jay Wolfe is sitting here with us. Helen, welcome to our podcast first.

Helen Livingston: Thank you very much.

John: I've been wanting to do this interview for a long time. Because every time that we're sitting with you, I learn something new. You're a fascinating lady. She's always very kind, very gracious. She's tough as nails, though, I think you'll hear that come out in a few minutes. But, Helen, you retired twice from Florida State University, most recently as Associate Dean of the College of Medicine.

Helen: Correct. 

John: If you would please just kind of give us a background of who the real Helen is a little bit about your background, personally and professionally. And then we'll just take it from there. And folks, I have no idea where this next 30 to 40 minutes is going, we're just going to have fun and talk.

Helen: Well, I'm old, so I've lived awhile. I started out as a teacher, k-12 teacher, and did that for many years, and became a school counselor, I found myself after my second marriage did not work out, supporting a single mother pretty much supporting a family. And so I pursued, earned four degrees during that time. 

John: You said four? Tell us what they were.

Helen: Well, I had two masters, my bachelors, of course, two masters degrees, certification, administration certification when I became a high school principal. And then I earned went back and earned my doctorate. And I did that because I could see that as a teacher, your options were limited. So if the more education you got, then you would have more options, and as a single mother with four children, whom I had to educate, raise and keep alive, that it seemed to me that my future depended upon the education that I availed myself of. So that's what I did. 

And fortunately, it has never bothered me to leave one situation behind and move into the unknown. And I was had, I left my k-12 position, I was a high school principal for five years. And I decided that I couldn't that five years is probably as much as you could give to a 24/7 type of job like that, and survive. And I had, in the meantime gone back and was very close to getting my doctorate, I had everything done, but my dissertation. So I had an opportunity through some connections, of moving to Troy State University, in Dothan, as an administrator and working there, and I chose to leave my principal's position and go to Troy State. And while I was there, I finished my dissertation and earned my doctorate.

John: So of this you were in Alabama.

Helen: I was in Alabama, during all this time. Not during no time at work, but during this latter part. I was decided, well, when Alabama the taxes don't meet the needs of the state. They have what they call proration. And everybody gets cut. And I had in the position I had. When I was Director of Extended University. I found myself having I'd worked two weeks without a break. And I had a staff of 12 people to help me. And when proration hit, I lost all but two of them. But I still had to maintain that same job.

John: The work did not get prorated.

Helen: The work did not get prorated at all. And so I started looking for positions. And the gentlemen that hired me at Troy State had moved on to southwest Georgia. He had a position I applied for that they were getting ready to hire me. Internal politics happened and they withdrew the job offer and that would have been as a teaching developmental psychology, lifespan development, which was would have been a good job. So I kept looking and there happened to be a position at FSU in the program in Medical Sciences and I applied for it. 

My daughter live down here, outside of Tallahassee, and I thought now that will then be a nice place to relocate to. So I just apply. And six months later, I got a call from Dr. Myra Hurt, who is the director of the program, came down here interviewed and she had me on the spot. I was I was suddenly at FSU. And it was just a wonderful job. I was working in the program and medical sciences, which was the precursor to the medical school. We were then affiliated with the University of Florida, learned an awful lot had never been in medical education. So I had to come up to speed learn an awful lot.

John: Had you completed your PhD by then?

Helen: By then I had.

John: And did you have children at home?

Helen: No, thank goodness, I finally got all the four of them raised and grown and gone. So I was alone at that time. And came into the program medical sciences, thinking that that was going to be the end of my career. And it would be a nice ending, you know, interesting job. I was working in admissions. And working in the outreach program that Dr. Hurt had developed with her her colleague Thesla Anderson. And we were three of us working together in that with other staff members as well. 

She had also developed a advising office to handle pre med students pre medical advising office, and I was in charge of that as well. So during that time, learned an awful lot. And then about I had been there for about a year and a half. And suddenly, there was this proposal that began floating around to establish a four year medical school at FSU. The legislature got involved Dr. Durell Peaden, who was in the legislature at that time. John Thrasher, who was I think Speaker of the House at that time, and they began to develop this law. 

John: You remember what year that was? 

Helen: That was in 98, I think was when the first proposal because it took us about two years for the law to really emerge to create the medical school and to pass the legislation.

John: It was a great thing for our community and the university. We'll get to that in a moment. 

Helen: Yeah, and so then I was involved in that. So the law was passed in 2000. Governor Bush was governor at the time. And we, you know, he signed it into law. And we had to start admitting students to the new medical school. But we still had the program of medical sciences students that we had to finish out, had to have them complete their program and get them on to the University of Florida. It was a it was a challenge. You know, creating a new medical school was the first one in a generation. And people were not happy.

John: And you got it on the ground floor

Helen: I was on the ground floor. And there were many battles to fight. Dr. Hurt was our leader. She was the Interim Dean until we could hire one. And it was a real challenge. One of the main things was that the kind of medical school we were establishing was not the traditional school where you have a medical education, hospital, we were going to train our students in the community. The only there were two programs that did that in the nation at that time. One was in Washington state of the WWAMI program. And the other was in Michigan, Michigan State. In the upper peninsula, they had apprenticeship kind of model. 

So Dr. Hurt, looked into that. And that's how we began to develop this apprenticeship model for Florida. And, and the idea is you if you look at where patients were, they were in the community, right? There were only about 1% were in the hospitals where most physicians received their, their training. So our model was going to be based on training the doctors where the patients were. So that was that was the the glorious end to my first career and we got that up and running and I decided I wanted to retire.

John: Well, before you go there. Let's talk about the impact that the medical school had in our community and surrounding communities, because I've I remember, with my doctor Bill Kepper, he did a lot of the training helping some people with some of the doctors or students working in his office.

Helen: I mean, we couldn't have done it without the community physicians.

John: And it was amazing listening to the doctors talking about how the hope was that many of these students would go back to their communities 

Helen: Exactly right.

John: And set up practices there in the rural communities.

Helen: Exactly.

John: I was shocked at how many people have never, ever even thought about having a hope of being a medical doctor, or able to come to Florida State to go back to their local communities and serve.

Helen: And it's amazing the percentage that have gone into primary care of the graduates from the medical school at FSU. The many of the graduates, how many of the graduates have actually done that? There are many out there. And we recruited students from those rural communities. That was my first task, as, as we were founding the school was to find these these students and entice them to come to FSU

John: Tell us more about that. How did you identify them? How did you get them here? And how do you how would you say? How would you go about even possibly measuring the impact that they've had in their communities?

Helen: Well, I think, you know, now they can actually look at that and and see where our students are. And I don't have the exact data. It's available on the College of Medicine website. But I want to say that more than almost 60%, have entered primary care, and are actually in a rural our underserved community in the state of Florida. The rest of the students are slung throughout the nation, and in all of the all possible specialties. 

But our focus, and we made no bones about it, we were honest with students, we were recruiting, but this was our focus. Our training program was set up for that kind of primary care training. We want to be a good physician with who put patients first. Whatever specialty they entered, we didn't, we didn't try to influence them. But we felt that if they came from a community, that they wanted to go back to that community that those needs would emerge.

John: That's great. I grew up in a place over Holmes county called Westville. Went to high school in Bonifay, we didn't have any doctors there.

Helen: No, you do now. You have the Hawkins brothers, as a matter of fact. 

John: That's good. That's good. So talk a little bit about the recruiting process. How did you identify the people that might be good candidates?

Helen: Well, they found me if you know that, you have sort of a recruiting trip that you make to all the colleges and in the state of Florida, and I just visited every college. And I would those that were interested in medical school, or maybe something in medicine, they would find me, okay. And it's, and then you have to, then they have to they have to come with the goods, they have to have the academic prowess and the ability to, to make it.

John: So you told the story, and those who are attracted to the story came to you. 

Helen: Exactly. 

John: Pretty good. All right. Now let's talk about because you ultimately retired from that job. But tell us leading up to the you there, how many years in that role?

Helen: I was there for 10 years.

John: 10 years, and then you decided to retire? 

Helen: I did. 

John: Tell us about that. That was an interesting journey along the way.

Helen: Along with my daughter who is an artist. I had opened a bookshop book and art shop. And I thought that's what I wanted to do. And today the truth started in medical school. It took a lot out of all of us. And I had reached that age when I could retire, so I did. Things happened. And I found that retirement didn't keep me busy enough so I called Dr. Hurt, told her if she had a part time position, I'd be interested.

John: Would you share what you share with me during lunch about what happened with the business? Because our people need to hear these type stories too.

Helen: Well, in 05, we had all the hurricanes that came through Dennis, Ivey, I can't remember them all, but just a bunch of hurricanes, Katrina. That hit the coast. I think there were about four or five that came in this area and it was the year of the hurricanes. Not as bad as this year. But almost there were some really bad ones. And the entire Gulf Coast was just devastated. And that impacted my business because it was down in the Big Bend area. And so I was doing pretty well, before that happened. I looked at my bottom line and saw too much red. And I had said, when I opened the business, as long as I was breaking even, maybe making one make a lot, but doing pretty well, I would keep it open. But if I saw it going the other way I'd get out. And that's what I did.

John: One thing that I'm taking away from listening to you, that I've picked up bits and pieces during our time of working together. Is that you what you said earlier about willing to move on? Yeah, you have to be willing to cut your losses. 

Helen: Oh yeah.

John: And you have to be willing to pursue opportunities as they appear.

Helen: Well you have to look at your situation. You have to put away the rose colored glasses. And you have to you have to really be you know, look at it in an honest, through honest eyes, you have to see what's there, not what you wish was there.

John: How do you think you learn that? Because you're pretty strong person when it comes to how did you realize?

Helen: I think I came started out in the cotton fields to Southeast Alabama, if you're, if you're farming, you have to be honest with what you see. And you have to respond and react to things that are not in your control. And, you know, for some people, it makes them skittish, they are afraid to do anything. And for others, it makes them bold, and it just happened to make me sort of bold. And then life's experiences, were such that taught me that. If I, again, was honest with myself, looked at the field in a with clear eyes. I could make good decisions. Sometimes they were scary decisions. And sometimes they didn't work out the way I felt they would work out. But if you keep persevering, you can succeed. But you have to be aware of when an opportunity is in front of you and what you need to do with that opportunity.

John: Okay, now you brought up age while ago, you made the comment, because you're old. How young are you now tell us how young.

Helen: I'm 77. 

John: So here's a lady 77 years old, you're sitting across the table from where you never believe she's 77 full of energy, just full of energy period and a passion. So go back to your story about you retired, you had the business. You called Dr. Hurt again. So take it from there.

Helen: So she had in her hand this lady, you have to understand her. She's a she's a dynamo herself. And she's always thinking, and always looking forward. So when I called her, she said, Yeah, I may have something that will come up. She said, let me work on it. We've got some things going on. I was thinking part time. And I was doing some traveling at the time. And she says what when you get back, give me another call. By then she said I should know something. And so when I did call her when I returned and did call her back, she said Yeah. And this and she said let's talk about it. And she came in and she told me what she wanted me to do. So I was still thinking part time. But she wasn't. 

So she had there were several things that that she felt needed to be addressed. And she felt I had the skill set to do that. Before I had retired the first time she and I had started a bridge program, which was a transition program to help get students who might have some weak or academic background or had some difficulties that would make it they needed to beef up on some coursework, to do well in medical school, and we knew that they were the type of student that we wanted to, to meet the mission of the medical school. But when they needed some extra help, and they met the demographics and the background, rural, minority underserved kinds of communities that they came from. 

So we had started that program and it was doing well. But she and the administration at the time at the Medical School felt that it should be a master's program, but it could only be a nine month or 12 month program. It couldn't be that traditional two year program because they simply didn't have time. We had to get them in and get them into medical school. And how do you how do you make a master's degree that does that. 

John: That's what's called fast track. 

Helen: That's fast track is right. But it had to also have the rigor and the kinds of academic experiences that when you grant a master's degree, that is a true master's degree, not a watered down version.

John: Well it had to be, you had to have standards, you had to earn it.

Helen: You had to have standards had earned it had to have some had to have a research component had to have all the academic components that are necessary, because you also had to bring the students up to speed so that they would be successful in medical school. And so that was my task when I came back. And then there were, there were there was a list of other tasks that needed to be attended to that she felt that with my education background, Iwould be the one to help get those realigned so that they were fulfilling the standards that we wanted them to fulfill.

John: Nice. How long did you do that?

Helen: That was, well, again, I was thinking five years, it turned into another another 10 year, 11 years, 11 years.

John: 11 years after retirement.

Helen: Finally, I, you know, before I said, I'm wanting to retire before turned 80. So I told them, I'm going. Plus, I had identified a young man who could take my place and as Associate Dean, and I felt that he was ready, and I could walk out and not worry about it.

John: Knowing that your baby was taken care of.

Helen: My baby would be taken care of. And I wasn't wrong, he does an excellent job. Dr. Anthony Speights.

John: Can you talk a little bit about what I know you travel quite a bit.

Helen: I have I don't do so much anymore, unfortunately.

John: Well the pandemic can stop. But talk a little bit about some of the things that you've done, quote in retirement both times, and some of the things that are in the future, because we find that the most popular podcasts we do are the ones where people talk about what they're doing after retirement, because most people have a hard time retiring, and enjoying life. So talk about that.

Helen: Well, as I say, I do love to travel. I was very, very fortunate to have two sets of families. My third husband has family in North Carolina, so I visit them quite a bit before the pandemic and there he was from Ireland. And we I was able to take a trip back to Ireland before the pandemic it was last September. But really enjoyed traveling all over. I've been to China done the Mediterranean cruise, anything that puts you into a new situation and enables you to interact with people you don't normally interact with. So to me, that's the traveling is not it's the sights, yes. But it's also interacting with people who are different from me. One of the reasons I worked, we just got through work in the polls in Wakulla. County, which is pretty rural, pretty different. Of course, it was like going back home to me. I mean, I grew up rural. So this is being out with people that were like the people I grew up with was was a good reminder.

John: That just reminded me of something. Let's talk about your experience. Yesterday, you shared with us about the gentleman who was voting for the first time at age 50 having some difficulty share the bit of that story. Because I think and this divisive world we're in, I think people need to hear about how people are willing to be so helpful. Would you share that?

Helen: Well, you know, it's it's I was very impressed with the poll workers who were and the Supervisor of Elections in Wakulla County. My buddy Wells, who's just adamant that the votes counted. And anybody that came in there that wanted to vote. Their vote was going to count. So this gentleman came in he, he just had difficulty with the ballot. Tt you know, obviously, if you don't if you're not in some bureaucratic functionary job or situation where you had to fill out a lot of forms, you hand him a ballot. I mean, yeah, I know, there were samples around and so forth. But it's still different. And he just was having difficulty and we I think he had spoiled two ballots. And we were on the third. And finally, they just set him down at the table, and just helped him. Make sure that this third ballot was going to go through, okay. It didn't matter how you voted no, didn't matter what color he was.

John: That's right, comes down to what you do as a citizen.

Helen: Well is what is the basis of our whole democracy is that every person's vote is important.

John: I have some people one time at a social function, this was years ago, they were complaining it was back in 2000. Because the Bush/Gore debacle, you know, and one guy spoke at me, so I never I've never voted, and never will. And I said you obviously never served in the military, did you? He said, no, I didn't. And I said, I cannot imagine anyone not voting. Because so many people sacrifice their lives to give us that right, going all the way back to the American Revolution. Give me a break here. And but yeah, you're here you are sitting and complaining. And you're telling me you've never voted? To me, you have no right to complain at all.

Helen: I agree with you. But I think it's amazing. And you know, as divisive a time as we're living through, which is unfortunate and uncomfortable. The fact that in this election, over 130 million people voted in this election is astounding. 

John: Yes. 

Helen: And by the time they hit through getting all the votes, I think it's going to be even higher than that. And it's, you know, we should all want 100% 

John: Yes. 

Because then we get a true picture of what our country is, warts and all.

John: I agree with that. But I will, I'd rather talk about politics, but I tell you what I do wish. I wish that there were no polling allowed. And no discussion of who's ahead.

Helen: Obviously. They they're, they're useless anyway.

John: Well, that's true. But I think you should just you discover once that's done, yeah. Then we'd put a lot of TV anchors out of business. 

Helen: That might be a good thing.

John: Might be, might be. So let's talk about your future.

Helen: Okay. Yeah, my future.

John: You're a young 77 year old, you're in good health. Physically looking good. What's the future?

Helen: Well I hope to one day be able to go visit my family again, because as I was with it with a career that was very demanding, I unfortunately, didn't spend a lot of time visiting family. And now I can, and I want to do that. That's, that's what's important, I think. I also want to do some traveling again. And I don't have any particular destinations in mind. But there are some, there are some interesting places that I might want to 

John: What are some of the places you'd like to go to? 

Helen: Well, I want to, what I'd really like to is the there's a trip across Canada, that I would like to take a rail trip that I've always wanted to take. And then when I get to the other side of the, to the Pacific side, I'd like to take a trip and see Alaska. Internationally, it's funny, as I've grown older, I'm more interested in this country and this hemisphere than I am in, going across the ocean. That travel is difficult.

John: It's interesting. You say that, because I came to the same conclusion. I've been to Europe a few times love it. But I'm to the point now where I literally want to go to all 50 states. Now I don't mean just fly in and fly out. 

Helen: Go do something there. 

John: Yeah, just enjoy. And as much of it as I can. I just want to drive to drive and take into scenes.

Helen: One of the best trips I took was with my sister. And we just we we have a brother that lives in Tucson. And so and she lives in Alabama, so I drove up, picked her up. And we didn't have we didn't have a schedule. We had a map. And we headed West. And we'd say something that looked interesting, and we'd stop and tour and visit and just had the best time and of course drove my brother crazy. He was ex military. He wanted to know when where we were in when we get in there. And we said oh we don't know we're in truth the consequences tonight, so we might be there tomorrow.

John: We'll be there, when we get there.

Helen: And it was really so the driving is if you leave yourself open to stopping and enjoying plus along the way.

John: Okay. I would like for you to offer some advice here.

Helen: Oh goodness.

John: So if someone who is still working, let's say someone's listening to this, that's fairly, let's say they're in the 40s or 50s, maybe in the 60s even, but they're to the point of where they're challenged by their work. They have opportunities, but maybe there's some fear. With your background, share, a little bit of how you would counsel them to consider options in front of them. And then we'll talk about people that are retired.

Helen: Well, it's really easy to stay where you are. But it is not always the most fulfilling, nor the most lucrative. I think you have to have a clear eyed view of opportunities when they present themselves, and the courage to walk through those open doors, and not look back.

John: Amazing. So we talk with people about the dangers they're facing, threats, the opportunities in front of them, that maybe they see them, sometimes I don't see them. And also what are your existing strengths? And we challenge people, a friend and I do this all the time. He'll say, John, I need you to question my answers. I'll do the same with Steve. So it's amazing, though, that you're looking back on your career, the changes you've made, the doors are open, you could have easily said no, thank you. I have four children, I'm taking care of. I'm not doing that.

Helen: You know, one, for example of becoming a high school principal, I was the first woman hired to be a high school principal, since World War II, in the state of Alabama. It you know, because people didn't think that women could manage. They were mainly worried about the high school boys. So the boys were the easiest ones, the girls were the ones you had to worry about. And I saw it as an opportunity. I had credentials to do the work, it would have been easier for me to remain in my position as a school counselor. 

But it, it, I felt like I could do the job. And I felt that I could be a good instructional leader for the faculty. And that was my goal. And I could bring some needed changes to the programs in that particular school. And I did that work for five years. And I had one old guy that told me when I, it was quite a thing for me to you know, every meeting I went to there, just there was a there was me, and then all the other principals were men. So it was interesting being the only female in that setting. 

John: Were you having to prove yourself all the time in that environment? Were you having felt like you had to prove yourself all the time? 

Helen: Yeah, I mean, yeah, you do. And when the fact of the matter is, you know, think about those that day in time in the 90s 80s and 90s. You better be able to prove yourself and willing to do it and not take offense when you had to. 

John: More so then than now.

Helen: Oh, absolutely. So one old fella said you have to worry about the four B's that the buses, the budget, the band. And those things. If you were if you get all of that squared squared away, you'd be okay. And he was absolutely right. And ball. Athletics. Yeah. And so I took that to heart. I thought he'd been at this a long time, that was good advice, made sure that all the four B's were taken care of. And but that is it. It's a hard job being a high school principal. A very hard job.

John: I can't imagine being an educator period. In today's world. Yeah, it's at any level, any level, especially our school teachers, K to 12. Okay, let's let's counsel people who are either close to retirement, they're thinking about, okay, do I retire? Or do I stay? Because I look at myself, I'll be 68 in about a month, and I look at I don't want to ever fully retire. As long as I am relevant. I bring value, and I'm healthy and can do what I want to do. I want it. But I want to do more on my terms. You mentioned that earlier, you're living a lifestyle you want to live. So I don't want to have to go to work. I choose to go to work. And I get to pick and choose who to work with. But some people don't have that. Some people are in jobs where you do it my way or the highway. But for that person who's close to retirement, and they're trying to decide, do I stay or do I retire? What would you say to that person?

Helen: Well, I think you have to ask yourself, okay, I want to retire. Why am I wanting to do that? Why do I not want to work? I mean, sometimes it sounds like because I don't want to have to get up in the morning. I don't want to have to do this. I want to do what I do. I want to do well, you have to be I think you have to understand what the time how much time that's going to allow you. Because it's it becomes how do I fill my days? Do you have? Do you have the physical and intellectual wherewithal to fill your days? That's one of the questions, I think you have to ask yourself.

John: That's a good question. I like that. I know, in my case, I take quite a bit of time off, but I want to plan it then go. But as you know, I have a little shoulder issue and I was out of work for a while and I don't like sitting at home. Now if I've got something planned to go do that's one thing that I do, like, I like sleeping in just kind of like laying around. But I know me enough to know that I can't do that every day. I'm not there. The day may come, but I'm not there.

Helen: And I think you have to, you have to understand that about yourself. Just like you have you, you understand yourself. You understand your needs. Now I'm perfectly fine being by myself. I like my company. But not everybody is that way.

John: Let me be clear. I like being by myself. If I'm out of my property, where I'm out there by myself and as planned. That's one thing. But sitting home watching,

But you still want some sort of purpose? 

John: Absolutely. Absolutely. 

Helen: And and I think that that's another thing you have to be clear eyed about that do I do I have the wherewithal to create the kind of purpose that will be fulfilling to me because you don't want to become depressed or angry at your situation, when you're old and finished your your your work phase of your of your life. And some people just may never retire. And I think that's okay, too. I think you have to understand who you are. It's also important that you take a good clear eyed look at your, I hate to use the word financial, but your fiscal situation, so that you know that you're not going to add stress to your life, because there will be enough stress getting old. It is not for the faint of heart.

John: What'd you say earlier? Getting old is not for sissies.

Helen: No, it isn't. And and so you have you want to make sure that you you do not create more stress for yourself upon retirement.

John: Right. And that's the part that I focus on. About 25 years ago, I said I'm gonna focus on retirement planning issues, not just you, 

Helen: And you're very good at that. 

John: Thank you for that. We've got a good team. Jay, April, Audie, myself, Zack, we one thing I can't teach people is how to care. We have good caring team. And it's not just about money. No, it can't just be about how much money is coming in. 

Helen: That's why I hated to use the word finance, because it isn't that.

John: No, I'm glad you said it the way you did, because we like to ask people this question. That's great. So now you're retired, you got plenty of time? Do you have enough money to allow you to do what you want to do in that time? They go, I don't know. I say, let's find out. But I think there's a lot more. I have an advantage ove people. I've been doing. I'm in my 46th year doing this. And I started focusing on retirement planning stuff a long time ago.

Helen: And I'm glad that you exist. Because I don't want to know all that.

John: Thank you for that. But what I learned over the years is I have,  by dealing with literally 1000s of people, I have the benefit that I've learned from them. I'm thinking of people. Now our oldest client's 102. A lot of clients in their 90s, mid 90s, late 90s even so I've learned so much in working with them. Because they would say what do you know about this? I know nothing about it? What would you please figure it out and help me? Well, of course, by learning about that for that person, it allowed me to help the next person that comes along. So we take the mindset that if we can learn something new, that's great. I was interviewed yesterday for a survey. And I said, Well, what keeps you going? I said the fact that I every day I learned something new. And I get to share that with other people. So you got to be the student and you also got to be the teacher.

Helen: Well, and I think that's excellent. I'm glad you brought that up. That's important because I I think continuing to learn and continuing to be a student about things around you whether whether it's a formalized setting or not. And I think also aging and retiring sort of go hand in hand and good health and making sure that you maintain that and recognizing when you enter a situation either physical or mental. Where you need help, and then you seek that help out. And I think sometimes people retire and they just forget about all of that. And then they wake up one day and they find themselves not happy, or are they find their circumstances difficult because life continues. Yes. Even though you're retired, it continues. You know, one of the things we had here, here, we're in the midst of a pandemic. We didn't plan for that, did we?

John: No, we didn't.

Helen: And I've been, I've had a horse for 25 years that I quit riding when I turned 70. But anyway, I still had him, I had to put him down, that was unforeseen. I did not realize how difficult that was going to be for me. And saying goodbye to my old friend, was hard. And that's, that's one of the things you have to have to I think, gird yourself for and that is loss, because it will come in some some shape or form. And you have to understand the strength that you have, and your vulnerability to handle and deal with it and move on.

John: On that note, there's nothing else that I think either one of us could say that would back up, what you just said, make that any better. So let's move on. And just simply say this, I thank you so much for allowing us to do this.

Helen: Well, thank you. I've enjoyed it.

John: Same here. And folks, I hope you've enjoyed it as much as I have. I get the benefit of sitting across the table interviewing people like Helen and it's just fun. And I learn something new every time and you're an inspiration.

Helen: Well, thank you. You are, too.

John: Thank you so much. Thank you so much.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own.

2021-115530 Expires 2/2023

Approaching Retirement with a Healthy Mindset

In our ninth and final episode of our series for members of the Florida Retirement System, Steve Gordon once again hosts our very own John Curry. We discuss an aspect of retirement that is necessary for absolutely everyone approaching this stage of their life to consider, mindset, and dive into how to successfully execute John’s Secure Retirement Method.

We chat about the real motivations behind retirement, as well as:

• The spectrum of reasons why someone heads into retirement

• The four freedoms John continuously seeks

• Suspending belief and judgment in order to learn

• Managing client behavior for the long-term benefits

• And more

Mentioned in this episode:

• Call the Tallassee Office at 850-562-3000

• John’s website: https://johnhcurry.com/

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Transcript

Steve Gordon: Welcome to John H. Curry's Secure Retirement Podcast. My name is Steve Gordon, I am your host for the day. And this is the final episode in a continuing series that we've been doing. It's actually the ninth episode that we had done for members of the Florida Retirement System. And we've gone through lots of different areas of concern for FRS members. So if you've missed any of those, you definitely want to go back and listen to them. You can do that at johnhcurry.com and click the podcast link up at the top. And you can find all of those episodes plus all of John's podcast episodes. And I really encourage you to listen to them not just for these topics, but but you know, they're really episodes there that I think are you'll find very inspiring about people who are doing amazing things in retirement. And so John, welcome. Glad to be here. I'm happy to soon turn the reins of the podcast back over to you. But it's been fun to turn the tables on you a little bit.

John Curry: It's been fun. And especially since we've been sitting across the table from each other instead of doing it on zoom or some other video conferencing. So it's been nice.

Steve: That's right. Well, we've covered a lot through this series, we've talked about the FRS pension. We've talked about deferred comp, we went through all the pension options. We talked about 403b plan, and an even when we had a whole episode, we had a whole episode on what age to retire. 

John: Yes. 

Steve: And I'll be honest, at age 49, I actually learned a lot from that. Because I got a little ways to go. We talked about DROP. I know that's a big concern for for folks who are in the Florida Retirement System. And then we really hit the big three at the end, we talked about Medicare, Social Security, and Required Minimum Distributions. And and those really apply to everyone. But I know those are, those are the topics that you get just tremendous number of questions on from from all kinds of folks. So today, what I'm hoping that we're able to accomplish here is really to put a bow on the whole thing. 

So folks, if you missed any of those specific topics, and they're concerning you, go back and and listen to those episodes, you can do that, again, johnhcurry.com, click the podcast link at the top. And you'll find all the episodes there. And yet today, I think we ought to just kind of give an overview. But I think we ought to start our wrap up here where we began the whole series, John, and that's talking about mindset.

John: I love that topic. You know, we you and I discuss this a lot when we're together. So let me see tell you what I see when people come to see me. For planning, I'll see one of the spectrum is somebody who is angry at work. I'll hear things like I can't stand the people I work with that can't stand the job I've got, I can't wait to get out of there. The other end of the spectrum people who come as I love the people I work with, I love what I do. I don't really want to retire. But I know at this point in my life, there's some other things I want to pursue. So what's the difference? The differences are mindset. 

See, the first person is running away from something. And sometimes I'll tell them, it appears to me that you're running away from something not running to something. The second person is running to something they're embracing something new, something challenging they want to do, maybe is volunteering at the church. Maybe it's teaching a class at some school or something. Think of a guy right now who retired and now he's teaching part time out a TCC. So what are you, why are you retiring? 

And I like to talk about the Four Freedoms apply to me that I love, relationship freedom, time freedom, money freedom, and location freedom. To me, that's a mindset. Because if I know that those everything I do, and I mean everything, you know this about me, everything goes through that filter. What's the relationship we have? Do I want to have a relationship? Am I willing to put in the time to nurture that relationship? Is this somebody I want to allow to have my time and access? And if not, why would I do that? So if you're going to retire, and just sit on the front porch and do nothing like my dad did for a few years, then that's a mindset. I don't be around people, live by myself, just with my spouse. 

And there's nothing wrong with that. And if you do that, and maybe you don't need as much money or other resources. If you're like other people I know who retire and they're constantly taking a cruise, taking vacations, then you will need more money in retirement, won't you?

Steve: Absolutely. Well, you just touched on something reminded me of something one of our mentors, says. And it's the distinction between freedom from or freedom to. 

John: Yes. 

Steve: What are you? What are you really being motivated by? And I think, I think that's important for people to really stop and pause and think about. You know, am I right now motivated? And I think throughout life, we all are motivated by both at different times.

John: Totally agree.

Steve: So are you really being driven by trying to get free from something and you mentioned job or, you know, you hate what you do, or whatever you know you're running from. Or do you have a bigger vision for what you want your life to look like? And are you looking for freedom to do that? And to me, that's the first fundamental question is to really you, and I use the phrase question our answers, right, I always ask you, when you question my answers, you asked me the same thing. That's almost really kind of the first thing you need somebody to do is in their own mind, question their own answer, and, and stop and think what's driving me here.

John: As you know, over the years, I have hired various coaches. I discovered that when I get the most value is when I, what'd I tell you when, we started this series about the podcast and helping to get a second book published. I said, I'm in your hands. Correct? 

Steve: You did. 

John: So I have to be willing to trust, have confidence in the person across the table from me and put myself in their hands. Now I have the right that if I don't agree. So Steve, I don't agree with that. Can we tweak that. And I think it's the same thing with your retirement planning, whether it's me or someone else, just find somebody you can work with. And be willing to say, I'm going to suspend judgment. I don't understand all this stuff. Don't act like you do. Because you don't. I'm still learning. I learn every day. 

You know, just getting ready to do these podcasts. Going back to the Social Security website, the FRS website, Medicare. IRS's website, I probably have about nine hours. In addition to what we've done, just going back and making sure everything is up to speed. And I learned something new every time. But to me, that's a mindset. It's the mindset of am I willing to open up, suspend belief, suspend judgment and just learn? Some people can't do it, I'll have people come in, they'll fight me all the way. And when I was younger, I would deal with that and just try to work through. And now I simply say, look, this isn't going to work. I don't have the time, nor the desire to argue with you. And do what do you call it and you get to hands on to every arm wrestle? 

Yeah, I've got too many people who want me to argue with you if you don't want me. So what's the mindset? I thought of another thing too, that I use a lot is fear versus love. Or you do things out of fear or out of love. And today our country's is there's a lot of fear. There's a lot of anger, a lot of resentment. And so what are you gonna focus on, you will focus on the fear or the people you love. Going back to relationship, then I like to think in terms of money, people are being told, well, you got to have X amount of money when you retire. No you don't, no don't you don't. It's more important to have a monthly guaranteed reliable income stream that comes in every month for the rest of your life. I have that.

Steve: Wasn't that why most of us are trying to build that mountain of cash and hit that number that we're all told on those cute little commercials that we're supposed to have?

John: Well, no. People have been so damn brainwashed. So they think that if I if I have a million dollars in this retirement account, it's gonna take care of me forever. And I'll ask the question, tell me about your distribution plan. Anyone can teach you how to save the money. That's easy. You don't need me for that. Just sign up for your 401k, deferred comp, 403b and put money in. That's great. You've done a fantastic job. You got 100,000 200,000 a million, whatever it is. Now, what do you do? How do you make this money last you for the rest of your life and your spouse's life? And then when you both die, which will happen, who gets it? How do they get it? When do they get it? All of a sudden, people go, I have no idea. I haven't a thought of it? Well, I have. I've done it for myself. And I've done it for literally 1000s of people over the years.

Steve: So we talked a little bit about mindset. You know, we've gone through all these topics that the goal of all of this of the planning that you do you know that you've kind of encapsulated in what you call the secure retirement method is to to take people from wherever they are, you know, and you can't always change somebody's incoming circumstance, because they've done what they've done wherever they are in life. But really, it's, it's to look at their goals, look at their mindset, what do they want to achieve? And then sort of take what they have and try and create that life that they want to fund the life that they want. To the extent that it's possible with the resources they have, is that a fair way of stating it?

John: Precisely. What do you have? How far will it go? So I asked people, why don't we just see what you've got, first of all, but you're talking about my process. The secure retirement method.

Steve: Well, I want to come back around to that in just a second. But I want to get folk folks kind of clear on why this, this is all so important. It's because you're sitting there, whether you're, you know, maybe you're listening to this, and and, you know, I'm 49. And so I'm not at the point where I think about retirement every day, you know, because I got teenage kids still, maybe you're listening to this, at that stage, maybe you're a little younger, maybe you're a lot closer to retirement, and this is got your attention all the time, maybe at two o'clock in the morning, you're laying there doing math on the ceiling, trying to figure out how it's all gonna work.

John: Or maybe you've already retired and you've been retired three, four or five years, and you're going oops, I need a do over. So we get that too.

Steve: So all of this is, John, I think it's all so critically important for people to be thinking about, but as we've said, on a number of these episodes, it's complicated. Like we live, we've done, what, nine, maybe 10 hours of recordings. I don't know a lot. And we've covered, this is the ninth episode. So we've covered eight topics before today. And I said several times through this, I've got a technical background, it gives me a headache. 

You know, the the picture I keep having in my mind is somebody taking a jigsaw puzzle, dumping it on the table, taking away the picture on the box. So you can't see that and maybe thrown in pieces from another puzzle. Right? Just to confuse you. Right? So it's, it's not easy. And I think one of the things that that folks need to appreciate no matter who they work with, is you need somebody that has a process to sort all that out. So I want to talk a little bit about your you mentioned your process, I want to talk a little bit about your process, you call it the secure retirement method. You've kind of designed this over the years to take into account all of these crazy puzzle pieces. And you've got the picture on the box. 

John: Correct. 

Steve: So talk us through the the secure retirement method and your process and how you help folks sort all this stuff out.

John: Well, let me first talk about why it came to be. I got tired of having to recreate the wheel every time. So somebody would come in. Next thing I got two or three hours invested and nothing accomplished. So I say, okay, it all started back in 1982. When I started after my brother died, and my brother in law died, I was frustrated because I was trying to find how to get planning done for people. That's where it started. And then over time, I actually put more, I call it a formality into the process. 

So now it's pretty simple. I focus on four steps. Number one is what I call a vision session, what's your vision of retirement. We've talked about that several times. The discovery session where we determine what you have, what's working, what's not working. And then we'll take a look at the strategy session. That's where we start looking for the strategies or financial solutions. And then the implementation session, that's where you've got to take action. In the final analysis, you've got to take action. If you don't have a will, you got to see an attorney get a well drafted. Durable power of attorney. If you don't have health insurance, or if you need to change a beneficiary, someone has to implement and take action. If there are financial products that you need, then we put on a financial product hat and talk about different products, what they do what they don't do. 

And I talked before about the good, the bad and the ugly. And when I'm going through this, I tell people, we're going to look at everything, the good, the bad, and the ugly. And I'm going to lay it out there in front of you. Now what you do with it is up to you. When we get done, you will have a written report that lays out everything we've talked about. And there's only four things you can do with this data. You can ignore it, throw it in the trash can. Do it by yourself, go to a competitor or work with us. Now, once we've done the planning, you're free to do whatever you want.

Steve: So you've really simplified the whole thing. I mean, you've got it's these four steps.

John: Yeah, but it's taken me many, many years to get there. And 1000s and 1000s of interviews to get to the point of doing that. But yeah, finally, and I don't deviate much. Now if you come in and you've got a hot topic. I'll address that. But I'll say, timeout. If we're going to engage, we got to do the whole process. And some people's, I just want to buy a product, I want to buy XYZ mutual fund or insurance. Fine, I'll do that for you. But if we do that you're missing out, because you're not getting the whole thing. But if you're, if you're adamant about it, I'll help you. As long as I'm not hurting you. I'll turn down business, if it's if if I know it's not right for you, I don't want that. I don't want that burden. Well, at this point in my life, I don't have to do it.

Steve: Yeah. And I think that's key. That's really key. So one of the things that I always appreciate about, you know, people who have studied something for a very long time, is that they, they begin to see all the commonalities. And so you may think, Well, my situation is different, you know, how, how is John's process can fit my situation. And, you know, I get clients come to me, we, you know, you know, john, I help companies with marketing, and everybody thinks their situation is different. 

But I've been doing it long enough, that I know that, that if we follow the process, you're going to get the ideal outcome. You know, because I know that the steps of the process lead us there. And that's kind of the advantage of working with somebody who's, who's really, you know, honed their their skills over time. Talk a little bit, you talked about the four different sessions, give us a little preview of if I come and meet with you for the vision session, what does that look like?

John: Well, the first question I'm going to ask you is, I want you to think ahead to the day you retire. Whenever that is five years, 10 years, 15 years, looking back, what has to happen along the way for you to be happy in retirement? And I'll have people look at me and go I have no idea. Well, we probably should start there. Because if you don't have some clarity on what you want to do in retirement, what I call the your vision of retirement, does it really matter? How much money you've got? How much time you got? If you don't have any idea what to do with the time and money? Shouldn't we start there? Tell me about your interest. What do you like to do? Love to travel, like doing this, and then they'll start opening up. So start pulling things out. Because believe it or not, there are a lot of people who they don't have a clue what they're gonna do in retirement. 

My dad was that way. He retired at 62 died at age 85. I was worried about in the first few years of retirement, he did nothing. He would go hunting and go fishing, come back home sit in front of television all day. And one of my uncle's got him involved when they went to Cherokee, North Carolina on a trip and they started doing two three of those a year. But why do you want to retire? You know, for me, you know this about me, one of the definitions of retire is to withdraw from. If you're enjoying what you're doing, you're getting paid to do it, and you're having fun doing it, why would you quit? So I encourage people don't just quit, maybe retire from the Florida Retirement System from the state or university system wherever you're working. 

But maybe you should pursue other things. Maybe there are things you want to do, that you've never done. And that's where I love the podcast we're doing because I'm sharing stories of people who retired, they did not retire from the social network or the environment. They're still being productive. People ask me when I'm going to retire one, but on paper, I'm retired. But as long as I'm relevant, and people want me, and I'm having fun, I'll keep doing it. As long as I'm healthy and can do it.

Steve: I love that. And I really, you've you really kind of encapsulated this whole thing where we started with with mindset. So you know, for folks who are listening to this, and, and I mean, the natural. I think the natural reaction for a lot of people is that look, this is just too complicated. I'm just gonna put it off. What what's at risk?

John: Lifestyle. Your family's lifestyle. One of the saddest things I see. You see somebody who's got a good chunk of money, maybe it's their DROP account, which for most people represents the largest chunk of cash they'll ever have in their hands. And I'll see them make decisions with that. Like, I want to buy a brand new motorhome. So I'm gonna take the money, lump sum, pay all the taxes, and go buy a motor home, or buy a second home without analyzing other ways of doing it. So they lose all the money to taxation, and they lose the growth on that money. Economists call it opportunity cost. So I pay $60,000 in taxes, I didn't just lose $60,000 I lost all the earnings I could have earned and that money had it been invested. So I see that. 

Then I'll see people who make decisions that works for them because they're aggressive, but upon their death, then the spouse is left with very little to take care of themselves. I see people taking retirement option with the pensions, that's probably not the one they should have taken. But the key thing, the risk is, number one, your lifestyle could suffer. Now, the outside risks are taxation, inflation, interest rate risk, stock market risk. They're suffering, we financial advisors call it sequence of return risk, if I'm taking money out of my retirement accounts, and the markets doing great, okay. But what happens if you have 2000, 2001, 2002, three years in a row back to back losses, and you're taking money out? That was such a big issue that Congress even acted, Congress changed the distribution amounts from from your retirement accounts, required minimums, they went from a factor of 16 to 27. To take some of that pressure off. 

And then fast forward 2008. If you have money in stock market, S&P 500 was down 38%. 38 points. Excuse me, 38%. So now you're in a position of where holy cow, I got through this, I came back, and then I lost money. And all of us had that. I mean, if you were invested, you lost some money. And it came back, if you had staying power. Sadly, though, another risk is running away. People who lost money, sometimes they panic, and they move the money over to a checking account or money market account or a savings account or a CD, and it's not in the game. So the one word I come up with is behavior. The key word is behavior. I don't, I don't manage money, per se. I manage people's behavior. I listen to you about what you want, and then I help you go do the things necessary to get it done. If you engage with me, and we work together. And I want to be clear on something there. 

One of our mentors talks about there's 7 billion people on the planet. I don't need all 7 billion people on the planet. And the only people I care about are the ones who have decided that they won't be in their world. I will work my fanny off to take care of that person. Any critics criticize all the want. Doesn't matter to me. But my people and you've heard me talk about my flock, I have an obligation to protect each and every one that wants me. And I will fight for you. I will fight with you. But when you give up, I give up. That's my mindset. As long as you want help, my team and I will help.

Steve: John, for folks who are listening to this, and maybe they've listened to other episodes in the series. And they they're at a place where maybe they don't know what to do next. What would you recommend that the folks do as a next step?

John: Well, I think the next step is if you've liked what you've heard, and you like to have a conversation, we start with a telephone appointment. Low key, no pressure, no hassle. And we just we just talk. We find out our real fit, should we get together? And if if so then we either get together face to face, or we do it by computer and online. And you can see my screen, we walk through it that way. And we go to work. Had two new people come in last week who said hey, we're ready to go. But in both cases, I started with a telephone appointment. And they can do that with me or someone else on my team.

Steve: Okay. And so what's the best way for them to get on your calendar?

John: The best way is to call my office in Tallahassee. 850-562-3000. 850-562-3000. Or they go to my website, johnhcurry.com. johnhcurry.com.

Steve: Perfect. You know, John, we started this episode off with mindset. I think getting getting these issues solved begins with getting clarity, getting, you know, getting your mind clear and focused on what you want. And, and so you've given them that that clear next step. And folks, I encourage you to go back and you know and listen to these episodes. I encourage you to have that phone conversation with John, you know, and see if it's a fit, and see if he can provide the kind of help that you need. Now, John, you work with folks, not just here in Tallahassee, but all over the state of Florida and in other states as well, is as that right?

John: That's correct. And it doesn't matter if you're listening to this and you are not a member of the Florida Retirement System, or have family members that aren't in FRS. Doesn't matter. Social Security, RMDs, Medicare all that stuff applies to every person who's working. And we just want to do a series that we know that FRS members have to face. And I deal with that every day. So, but anyone would benefit from and the truth is the younger, the better, you've been kidding about as young as you are not worried about social security and all that stuff too far in advance. 

But if I can get in front of someone who are in their 40s, or 50s, and get them on a path, when they get to retirement, it's gonna be so much better. And you know, the beauty of my work, Steve? I know for I'm 67 be 68 in just a few months, December 9, and know that the work I've done, people will benefit long after I'm dead. That's my legacy. There will be people that will benefit 30, 40, 50 years into the future from work that I've been doing.

Steve: I love it. Well, this has been fun. Thank you for allowing me to hijack the podcast and interview you through all this.

John: You're welcome. Thank you for doing it. It's been fun.

Steve: It's been a pleasure. So folks, if you're catching this and you missed the other episodes, or you just want to go back and find them, you can go to johnhcurry.com/podcast. Or go to johnhcurry.com there on the homepage and click the podcast link at the top. And you can also find these on your favorite podcast app. So if you're an iPhone user, you can find it on Apple podcasts if you use an iPhone or any other platform, Spotify, Google podcasts, whatever your favorite podcast app is, you will find it there. And you certainly can listen on John's website. So John, thank you again, give everybody the phone number if they want to stop and call and book an appointment. Where do they get you?

John: 850-562-3000.

Steve: Excellent. Thank you my friend. Thank you for everybody listening. We'll see you in the next episode. 

John: Thank you.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own. 

2020-113401. Expires February 2023

Required Minimum Distributions and How to Plan for These Laws

On this week’s episode of The Secure Retirement Podcast, we approach the end of our Florida Retirement System series. The information in this episode will be valuable to our viewers nationally, even if you are not a member of the Florida Retirement System, as these laws apply across the country. We address the universal Required Minimum Distributions and offer ways to prepare for them so you aren’t caught by surprise.

John says, “No matter what type of retirement account you have, the day will come when you have to start taking money. And that's called a required minimum distribution.”

We discuss the recent changes with the Secure Act, as well as:

• Tax codes on various accounts

• Penalties for not taking funds when you’re supposed to

• Verifying your beneficiaries

• Which account types are subject to RMDs

• When and why congress amended RMD laws

• And more

Mentioned in this episode:

• Call the Tallahassee Office 850-562-3000

• John’s website: johnhcurry.com

---

Transcript

Steve Gordon: Welcome to Joh H Curry's Secure Retirement Podcast. I am your host, Steve Gordon. And I'm here with John today. And we are, I think, nearing the end, I think this and one more episode in our series for members of the Florida Retirement System. If you're listening to this, and you are not an FRS member, stay tuned, we're talking about a subject that actually is universal for folks retiring in the US. We're talking about required minimum distributions. RMDs. And, John, first welcome. This is a big, big topic, people get surprised by it and are worried about it, 

John Curry: Well they get surprised in a lot of ways, and we'll talk more about that some today. But the biggest thing is to understand that no matter what type of retirement account, you have, IRA, 403B, Deferred comp, a set plan, 401k, the day will come you got to start taking money. And that's called a required minimum distribution. As we get into it. I'll talk about the old law what the new secure act did. And we'll go from there. 

Steve: All right. Well, there have been changes here recently to all this. And I know that not everybody is aware of what's happening. As you're meeting with people, day in and day out, what are the big questions and concerns they have right now? About RMDs?

John: Well, surprisingly, a number of people say why do I have to even take one, I don't need the money. I don't want the money. So why am I being forced to take money out. An old law said 70 and a half the Secure Act changed it to age 72. So that's Congress's way of trying to spread it out a little bit farther. I don't think there should be a required minimum at all. I think if you have the money saved, then let it stay there until you die. And then when it goes to your kids, they can worry about getting taxes then. 

Because we keep we're being told that Social Security is in trouble. And it is, we're being told that Medicare is in trouble. And it is, and Medicare, excuse me, Medicaid is in trouble. And it is. So if all that's true, why wouldn't you just let Americans keep growing the money? And the answer is they want the taxes. So they put age limits on there, that you have to start taking it. So let's do a little history here. Let's just talk about an IRA an individual retirement arrangement. If you take money out before 59 and a half, you have to pay a 10% penalty, plus pay tax, because it is designed to encourage you to save for retirement. 

So if we believe that, and we do, that is to force you to save money for your own retirement, then why would you be forced to take it out if you don't need it. And so between 59 and a half, it was 70 and a half now 72 for most people, if you were 70, at the end of December 2019, this still applies for you to be 70 and a half. But if not, it's a 72. Unless Congress changes that which they might with the sunset of some of the tax laws. But the big issue is people get surprised because they don't know that they have to take a certain percentage. 

So I've had people say to me, oh, I've got a half a million dollars in my 403B or 457 deferred comp, I won't need that money, I'll just let that grow and sometime in my 80s I'll tap into. I said, well it doesn't work that way. At age 70 and a half, you had to take the value as of December 31 of the previous year, divided by a factor which currently works out to be 3.65%. So 3.65% of what's in that account, you've got to take out.

Steve: And that number is changes over time.

John: It changes every year. 

Steve: So if somebody's listening to this in the future, they need to check and see what the number is currently.

John: It's based on their age, and the IRS publishes a table. We have it. But just to give an example, at age 72, you're having to take out 3.91%. But at age 80, you're having to take out 5.35% at age 85 is 6.76%. So let's put this in perspective. So what if you're the kind of person you're real conservative, and you've parked your money in a money market fund, or a bank CD, that's earning 1% or less, and you're having to take out 3.65%. You're going backwards, aren't you? So it's very important that if you have money in any retirement account, that you don't just get so ultra conservative, that you say okay. I'm now retired and worried about losing my money. 

So we'll move it all over to a money market account, which we see people do. And then they get hit with the required minimum distribution. And they're seeing their account drop because they're tapping into principal. So there's a lot of moving parts here. So number one, when do I really need the income? Am I going to manage it myself? Am I going to invest in a way that I give myself a chance to outrun the distribution requirements. And then what happens when ultimately I die? Does my spouse get the money or not? Who gets the money. So there's a lot of moving parts. And on that subject who gets the money, let's think in terms of this, the secure act did away with something called a stretch IRA. 

That was a provision, Steve where if you died, and did not have a surviving spouse, you could leave the money to your children, and they could stretch it out over their life expectancy. So you're 50 years or you're 49 years old, your parents died, they left you an IRA, you didn't have to take it all today and pay taxes, you could take a monthly income based on your life expectancy. That was a great planning tool for people. A lot of our clients did it, a lot of them, because they didn't need all the money today. And they didn't want to take any but they at least they took a small sliver of it. Well, that was changed. Now, a non spouse beneficiary who gets an inherited IRA must liquidate that account, by year 10. They can take it all today. Wait until year 10 or anything in between. But 10 years after that death, that account has to be emptied. 

Steve: Wow. Big change.

John: Big change, and they did it because they wanted the taxes. It's just another way to collect taxes that people don't know about. And if they haven't been educated on it, they won't know.

Steve: Well, aside from the politics of all of that, because we don't have a whole lot of control over that. 

John: No we don't.

Steve: As you're working with people through, you know, accounting for the RMDs that they're going to have to they're going to have to contend with, what are some of the big considerations?

John: Well, the one I see most often is people have multiple accounts. As an example, I'll see someone who will have an IRA, a 457 deferred comp program with the state, and maybe a 403B from a previous employer. So they got these three accounts. And they've been told that you can just aggregate those, meaning add up the total, divided by your factor, and take it from either account. That's not true anymore. At one time, that was true, you could take all retirement accounts and bunch them up. 

Now, each account stands on its own. With this exception. If I have five IRAs, I can take it from one. If I have five 403B's, I can take it from one. So each category stands on its own. So if I've got three different accounts, IRA, 403B deferred comp, I've got to take from each code, I call it because each is based on a tax code. So I find that people don't know that. And they'll slip up and not take out an RMD that they were supposed to take. And if you if you do that, the penalty is 50% tax penalty on the amount you're supposed to take. So if you don't do it either intentionally, or you make a mistake, then if you get audited, then you could lose up to 50% of that amount you were supposed to take but did not take.

Steve: So that's, that's a huge risk, there.

John: It's a huge penalty, and it's on top of the tax you have to pay. So let's just say that your your RMD is 10 grand. And you don't take it. So you have to pay tax, let's just call it 30% tax. And then 50% penalty, you could lose as much as $8,000. Now, I've only seen it twice in my career. One was an attorney who said, nah, they'll never catch it. Well, they did catch it. And a widdow who didn't understand it. She went to the IRS audit. Said I'm sorry, I didn't understand how to do this. You know, is there any relief for it? And they they didn't make it pay the penalty. They actually refunded it. The attorney on the other hand, he was cocky and arrogant. No, sir, no relief, and he had to pay it.

Steve: Wow. So you have a note down here on on the sheet talking about tax history. 

John: Yes. 

Steve: Tell us a little bit about that and why it's important now.

John: Well, we we spent some time in one of our episodes on it. So I'd refer people to go back and listen to that. But I'll touch on it now. So we're told that when we retire we'll be in a lower tax bracket. If you go back and look at our tax history since 1913. When we first had the income tax with the 16th amendment, the tax rates go up and down. And they go up and down because there's Congress's way and whoever the current president is to argue with Congress to get their policies implemented. 

But I learned when studying for my master's degree in financial services, that it's really a controlling of the levers. See, Congress rewards and punishes us with a tax code. So they know that they need to employ more people, they will give you certain tax credits for employing people, or perhaps certain tax credits if you buy certain equipment because they're trying to stimulate the economy. Makes sense? 

Steve: Absolutely. 

John: So if you go and look at history, when we've seen massive amounts of spending, tax rates went up. What causes spending? Well, economic stimulus, or wars, go back and look at it. World War I, World War II, Korean War, Great Depression. 2008, 2001-2002. Just look at what happened with our market, stock market and taxes. And you'll see there's a little bit of correlation there. And so I tell people, when you retire, you should not assume that you're going to be in a lower tax bracket, I think you'll be in the same bracket, perhaps even higher. I don't know that until I see all of your numbers, we'll do some projections. But their RMD makes you take money out and most people that I work with, they don't really want to take it out, at least not all of it.

Steve: Well, I think this is this is one reason to begin, I think wrapping your head around this before you get there, right?

John: Yes, well, let me say this, if you're my client, I don't care if you're 45 years old, you're going to know about all of this because you'll be exposed to it. And I'll even tell you that you're you'd have no decisions to make now. But I promise you, you'll see this over and over again. Because I want you to be in a position that you're not worried about any of you already know which option to take with the state, you're going to do DROP or not do DROP, you'll be prepared. You'll know about Social Security, you'll have a good idea of when you're going to take it, you understand how Medicare works, you'll understand how RMDS work. What we're covering in this series is what I make sure that every person I work with, at least gets an overview of.

Steve: Yeah, well and, and I think that's that's the key. So we've covered these in individual episodes, because they are somewhat distinct topics. But in the practical sense, no one deals with them individually, you really only deal with them in concert with one another because they're also interrelated. And that's the thing that I've gleaned from our conversations through all these episodes.

John: And you're correct, because some things will be more important to one person than another. For example, if I have I'm thinking, one of my physician clients, he's got $3 million sitting in IRAs. That's a lot of money to be in IRAs. A lot of it came from rollover, some profit sharing plans where he worked in 401K's and things like that. Well, his biggest fear is how do I make this work for the rest of my life? 

Now, some of my listeners might say $3 million, and you're worried about that? Well, when you start determining that his age, I've got the factor, he's 75 years old. So he has to take that $3 million divided by 22.9. This year. And that's his required minimum, then you start taking into account everything else that's happening, taxation, things like that. He doesn't have a guaranteed pension. He doesn't have it. He's got Social Security. But I tell people who will listen to me that if you have a pension with the state of Florida, or anywhere, but especially the state of Florida, the value of that pension is huge. 

Because you take the monthly benefit, multiplied times 12, you get your annual benefit coming in, how much capital would you have to have invested with either a bank or mutual fund or some investment account to give you that same income?

Steve: This huge number I know.

John: It is if you if you're getting $40,000 a year, for example, let's just divide that by .04, say 4%? Because that's called the quote safe money withdrawal rate nowadays. I don't know if I believe that this one's called. You'd have to have a million dollars wouldn't you? $1 million at 4% is $40,000. Well, what if you lose some of the 1 million if the market drops, now your income drops. So these are risks that we have to explore, understand, because once you step out into retirement, you may not be able to go back into the job force. So how, how do we protect, grow and enjoy the assets during your lifetime? And then make sure that upon your death, we're all gonna die. Here's a question when? And when that does happen that's the grand exit. 

They're not going to put all that money in the casket with you. It's staying behind, so somebody will have to go unwind what you did, and deal with the taxes and expenses. So I spent a lot of time on this for clients. Because if you don't fix it, and I'll tell you the biggest thing, we have to help people do. We find people do die and have beneficiaries set up properly on their retirement accounts. And if they're not set up properly, it's a problem. Working with a couple right now, where he was arguing with me about beneficiary changes. It's all set up. It's perfect. I say okay, great. 

But until I see it, I don't believe it. Trust but verify. Well he comes back in, he said, Hey, I got eat some crow here because I didn't have a beneficiary. And his wife was angry. She said, well, what else have you not done? So needless to say, they are now going through the full planning process?

Steve: Well, it's so easy, it's just you're filling out the forms. Right?

John: Yes.

Steve: You know, it's an HR process at the time, you know, and you're filling out the forms, and you're trying to get through all of that. And you may not think as strategically as you ought to, in that moment.

John: Plus things change, people get divorced. Yeah. People die, you know. We're working on some stuff right now, for some clients that everything was perfect for them in the past, they've made some changes. I said look, let's check all the beneficiaries on everything, your retirement accounts, your life insurance, everything. Ahh, it's all perfect, we don't need to do that. I said, come on, you know, be better than that. You've been a client for 25 years, you know, I am not going to take that at face value. Let's find out. 

Sure enough, different beneficiaries wasn't set up properly. And the way it works, whoever's a beneficiary gets the money, you may have wanted your your wife to get it, I got news for you, if you named a previous spouse, they're getting the money. And you can they can protest that they can raise hell all they want like, I got new for you, ain't happening because this contract is going by beneficiary. And we see it all time. Another thing I see going back to the Florida Retirement System, is people picking an option without fully understanding the impact to the surviving spouse when they die. All this comes together. 

Let's talk for a minute about what accounts are subject to RMDs. Pretty much any retirement account, if you have a set plan or a simple IRA, if you have a 401k if you have a 403B, a 457 deferred comp, IRAs, where he talks about so any money that you put into the future without paying tax, we call it a tax deferred account, you've got to take RMDs. Roth IRAs, you're not required to take an RMD you could let the money sit there till the day you die. Now whoever inherits it will have to take some RMDs, but not you during your lifetime. And then the next thing is when do you have to take it, you have to take it by April 1, following the year now that you turn 72. You can wait and take two in one year, if you want to. I advise people not to do that. Let's take it in the year you turn 72 and then stay on track. But that's how the tax law works.

Steve: John what else do people need to be thinking about as it relates to RMDs?

John: I think one would be do you need all the income from the retirement accounts? Or can you take it from one account and let another one grow? So maybe we do enough from one account to satisfy the government's requirement and let the other accounts grow, and then reevaluate each year. I've got some people where we will intentionally spend down one account over say a 10 year period to over satisfy the RMD requirement and give them more income. But it gives them a 10 year period to let their other accounts grow.

Steve: So it sounds like there's there are a lot of different ways to approach this. And I would imagine everybody's situation is a little bit different based on where they have and what other assets they have. You know, you mentioned pension, Social Security, all of the other streams of income. And the interesting thing you said just just then was that you reevaluate this annually? 

John: Correct.

Steve: Okay.

John: They should, some won't, some will say no changes this year. So you in a couple of years. But the reason you look at it each year, what happened to your account, what if your balances had a big jump? Well, if your account grew as of December 31, so the following year, you've got to take out even more money. So this RMD is not static. It will change each and every year, if your account goes up and down. 

So you might have some years it goes down some years it went up, and most financial institutions now make it pretty easy. Because the IRS requires that they send a statement to you explaining what the RMD is. But every now and then what happens is on the statement, what do most people do with statements. They go in the trash can or the shredder, I'll help people come in with a stack of envelopes. I've been here for like seven or eight months, sometimes years. They say I didn't open these. Why? Because I didn't wanna see how bad my account was. Okay.

Steve: One of our mentors likes to say all progress starts with telling the truth.

John: That's correct. Just tell the truth, except it. I lost money. I lost money. Anyone who was invested in 2000, 2001, 2002 in the stock market, you lost money. 2008 s&p 500 was down 38%. Okay, people who stayed the stay the course it came back. But it's hard to stay the course when you got three years in a row like 2000, 2001, 2002. So let's talk about that one for a minute. How would you like to be coming out of the workforce at the end of '99, retiring, and you're all of your accounts are down? Double digits 20% plus, and you're being forced to take money out of retirement accounts. 

That's when Congress changed the factors. It used to be at age 70. You divide your retirement account by 16. They change that to 27. 27.5 I think it was. Excuse me, 27.4. Well, your life expectency did not go from 16 years to 27 years at age 70. That was an artificial number they use to give people relief, because of the having to take money out in a down market. I think that happened in 2001 is when Congress made that change. So again, we said this pretty much every episode, a lot of moving parts, and it's not static. Just look at what's happening today around us people staying home working more, pressure on businesses, a lot of things are going to come out of this. Some are going to be good, some not so good. Because more and more pressure on us every day.

Steve: Yeah. Well, all the more reason to have somebody to turn to that, as you and I like to say, question your answers. 

John: Correct. 

Steve: You know, and particularly somebody with the, with a breadth of experience.  

John: You know, I just thought of something that we'd not covered along the way, every now and then I'll have someone come to me, probably twice a year, on average, they'll come in and say, look, I can't do business with you. With any financial products because I have a relative in the business, I want to just pay you a fee. Have you looked at everything? Will you do that? Of course, we'll do that. We'll take it, we'll take you through our normal process A to Z, as if you were doing everything with us. 

And once I know what you've got, we can determine what the fee would be. Be happy to do that. We have to do that. In fact, we're to the point we're working on having a service where that's all we do. If you don't want to deal with us, you committed to someone else, come charge you a fee, we'll take you through our retirement rehearsal A to Z, you'll know everything you've got, you know?

Steve: Yeah, certainly sort things out for everybody. So John, we're getting really close to the end of this series. In fact, I think this is the last the last topic I know, in the next episode, we're going to sort of put a bow on the whole thing, and, and kind of do a summary. So I mean, definitely, you want to listen to that, because we're going to come back to this idea of how you tie it all together be you know, because at the end of the day, you know, we've said it all the way through this is like a giant jigsaw puzzle. And you don't you don't get the picture on the front of the box. So in the next episode, we're going to help paint that picture. Talk about a process to to bring it all together. Anything people should should be thinking about at this stage?

John: Well, actually, yes, there's a lot. Number one go check your beneficiary designations on every retirement account. While you're at it, check beneficiaries on life insurance policies, savings accounts, checking accounts, who is your beneficiary at the bank? Because most people don't do it.

Steve: Yeah, you just you just gave me a to do actually. Well John, thanks again for being here on this episode. Folks, go and and find all of the episodes in this series at johnhcurry.com. And and if you want to reach out to John, John, how can they get in touch with you if they want to book an appointment?

John: The best way is just call my office in Tallahassee. 850-562-3000. 850-562-3000 and just tell the folks you want to have a telephone appointment with me and if you're ready to go to work and you know you want to do business with us. Come on in for face to face or online meeting but I think it's better just have a telephone appointment to see if we get along and like each other.

Steve: Now people can be listening to this all over the state of Florida. And you actually surprised me in earlier episodes, you said, you've you've worked with clients who are state of Florida employees, but stationed in other states, that's correct, whatever your duties are, yep. So no matter where folks are, they can call that number and they can book a phone appointment. I know you work with people with video conference technology, so so you can meet that way rather than in person.

John: And have been doing that for several years. Because having clients and I think it's 13 states is a 12, or 13 states. But it's not just limited to the Florida retirement system if you have friends or relatives in another state, and we do the same type planning for them. Or if you own a business or employee and some other type business, pretty much everything we're covering applies to everybody, Steve, What's really unique is the Florida retirement pension system and how it works, and all the pieces around it.

Steve: Absolutely. Well, folks, again, go to johnhcurry.com. You can find all of these episodes plus a whole lot more. You can also find the latest dates for John's webinars and seminars. He and his team are doing presentations regularly on the topics that we've covered in this series and going in a lot more depth than on other topics. As well as they come up. You can find all of that at johnhcurry.com. And subscribe to the podcast, get the latest episode when it's released, right there on your phone, you can subscribe on Apple podcasts, Spotify, or Google podcasts.

John: Let me make a plug for that. Most of the podcasts, as you know, are about human interest things. You've been working with me talking about, hey, you really should do a series for the members of the Florida Retirement System and have several podcasts. And I gave you some pushback for a while. Said, ahh, I don't wan to do that let's just do human interest things such as friends who have retired and bought a motorhome traveled around the country, people who are retired, and volunteering, helping our community. I've got a half a dozen exciting podcasts I'll be doing in the next couple of months with people that are doing a lot of volunteer work, and looking forward to it.

Steve: Well and that comes back to something we talked about in the first episode in the series, John, and I'm sure we'll talk about in the next as well. The mindset around retirement and what is your retirement really look like? Because it really all has to start there. All the financial stuff is really just in service of how you want to live your life.

John: Correct. Begin with the lifestyle you want to live, and then make all of your financial decisions support that. But if you don't have a clue what you want as your lifestyle, no clarity, then it's difficult. So I tell people, my most valuable thing I can do for you is get clarity. Get you to get some clarity about your future.

Steve: Very good. Well, hey folks, thanks for tuning in. We will see you in the next episode.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own. 

2020-113400. Expires January 2023.

Navigating Medicare Coverage

On this week’s episode of The Secure Retirement Podcast, we focus on healthcare coverage, particularly Medicare Parts A - D, as we continue to address the key issues that affect members of the Florida Retirement System. With Medicare available from coast to coast, the information in this episode will be valuable to our listeners nationally, even for those outside of the Florida Retirement System.

John says, “Most people do not feel the effects of healthcare, or inflation in general, until they've been retired five to seven years. Then all of a sudden, without increasing spending or being extravagant, it's enough time for them to see some cost of living increases at the grocery store. And, healthcare is the biggest expense in retirement.”

We discuss the rising costs of healthcare, as well as: 

• Differentiating between the four types of Medicare coverage

• Enrollment windows and when to make your decision

• The delayed impact of IRMAA - Income Related Monthly Adjusted Amount

• Staying updated with the annual changes and increases

• And more

Mentioned in this episode:

• John’s podcast: https://johnhcurry.com/podcast

• John’s website: https://johnhcurry.com

• John’s office number: 850-562-3000

---

Transcript

Steve Gordon: Welcome to John H. Curry's Secure Retirement Podcast. My name is Steve Gordon, I am your host today. And we are continuing our series of episodes, specifically geared towards members of the Florida Retirement System. Now, if you're not a member of the Florida Retirement System and you're tuning in today, then you do want to stick around because we're going to actually talk about a subject that applies to everyone. We're talking about Medicare today. I'm here with John Curry. John, welcome. 

John Curry: Hello, Steve. 

Steve: You know, this one. Again, following up after our last conversation on Social Security, this is another big area of concern for folks. And I know that, you know, health care is really one of the biggest worries and costs for people going into retirement. 

John: It is, in fact, it ties up there sometimes it'd be one or two. But always what comes up is I'm worried about how do I cover my health care costs and in retirement and beyond? And I'm also concerned about running out of income. I want to make sure I don't run out of income.

Steve: Well, the two seem to be tied together. Because if my health care costs go up too much, I'd run out of income, wouldn't I? 

John: Well, you're going to have less spendable income, because we're seeing health care costs go up more and more. And that is a big concern for our nation. And so many people who do not have health insurance. So what's the answer? Is that a universal health plan is that Obamacare as it's called, who knows? I don't have the answers. All I know, is this, something has to be done. But I go back, I'll save this 1000 times. You have to take control of your own personal economy and do your planning first. Because you do not know what's going to happen in Congress or the legislature.

Steve: No, and you can't, you really can't control any of that. So as we were preparing to record the episode, I said, you know, we really ought to start off by explaining the the two parts of Medicare, yes. And then you said, Well, no, no, there are four parts. And I didn't know there were four parts. So educate us on the four parts, because I may not be the only one that didn't know that.

John: Okay. Well, let me do this. Let me give a quick overview. And then we'll come back and put some meat on the bones. How's that? 

Steve: Sounds good. 

John: Okay. So there are four parts. Most people only think about Part A and Part B. Part A happens pretty much automatically at a 65 if you're in a social security system. And part A covers the what was called the hospital insurance. So it helps pay for inpatient care in a hospital or limited time at a skilled nursing facility, following a hospital stay. So part A also pays for some home health care and hospice care. So there's a lot of confusion about it, there are some deductibles that you have to satisfy. 

I'm going to stay away from those today, because they change each year. And I don't want to have to go back and change this every time. Medicare Part B is called medical insurance. It helps pay for services from doctors and other health care providers, outpatient care, home health care, and certain medical equipment. And Part B costs you money. So when you sign up for part B, you got to pay a monthly premium, which comes out of your Social Security check. And I have a lot of people come in and go I don't understand this. And I paid into Medicare all these years. Yes, you did. You paid 1.45% of your income into Medicare. Unlimited, if you're under a million bucks, you're paying 1.45% on every dollar. Social Security has a cap. We talked about it. Last episode is 137,000. This year at 6.2%. 

But Medicare Part A for the most people, you pay nothing for it. But if you don't have 40 full quarters, 10 years of service under the Social Security system, you may have to pay into Medicare Part A. So most of the people listening to this will not have that problem, but they may know people who do and then you have what's called Part C, Medicare Advantage plans. So Medicare Advantage plans is where you say okay, I'm not going to be in the original Medicare. It is a special program that was established by Congress to say, okay, we're trying to control these health care costs. So in our area, in Tallahassee area surrounding counties you have a CHP Advantage Plan. So Capital, Capital Health Plan, thank you Capital Health plans. Mental block. Capital Health Plan has a program where state employees can be a member of that

Steve: And capital health plan for those who are outside the area is a local insurance health insurance company.

John: HMO. Health Maintenance Organization. And we could get into the pros and cons of that. I will say this to people who say, Well, I don't like the plan, they have a good plan. I don't work for them, so I'm not going to be endorsing it. But I will tell you, I've been to two of their workshops, because so many clients who are affected by it is, is good. There are also issues, especially if you intend to travel a lot. 

And I'll come back touch on those, because when I made my decision as to which way to go, original or C, I chose original. So we'll come back to that. And we'll talk about the pros and cons. And I should say this, now, I am not licensed to sell Medicare Supplement policies, I don't get into that. And I also don't work for the government. So what I'm going to share is my information that I've gleaned from dealing with this with clients and also their websites, and the research I do. 

And then Medicare Part D, that's a biggie, because I just got impacted myself. I have a medication. It's a drug plan D for drugs, and medication I've been paying $25 a month for. Went to fill the prescription on Thursday price jumped to $108 a month for the balance of this year, because I'm in what's called the doughnut hole. So you reach a point of where certain medications, I'll even tell you this one happens to be eliquis. So there's no generic for yet. So it's expensive. 

I don't know what it would be without care. I mean a plan probably five or 600 bucks a month. But this stuff is a complicated topic. It changes, some people will change plans, or every year or two. So we'll talk about that in a few minutes. But let me pause there guys see you I see your eyes glazing over.

Steve: Already confused. John, you know this, I've got a technical background, I think I'd rather go play with a slide rule than try to figure this out. So so we've got these four parts, you've given us kind of the overview. And let's kind of break them down with a little more detail kind of one by one because I think that'll help people. 

John: Okay. Well, the first thing to look at is is what is Medicare just think of Medicare as being our country's federal health insurance program for people that are 65 or older. There's some exceptions, younger people can benefit too. But let's just keep it simple. Say it's designed for people who are 65 and older for healthcare. When I retired on paper, I was under a pension plan, but also the Health Insurance Program. So I chose not to go into Medicare Part B, at age 65. I waited until 66. So when I started collecting Social Security, I actually had another year before I started, Part B. Come to think it, so two years. And I did that because I had health insurance coverage. So it made no sense to switch. 

So if you are part of a qualified group plan, you can stay under that or go to part B depending upon which one is best for you. So it's not automatic that you've got to go to part B. But it is important that when you register for part A, you let them know, I am covered under a group insurance program. So I will be deferring into the future before I take part B. If you don't, you may find that you're paying for part B, and you didn't mean to. And to their credit, they actually will call you they called me and I'm told by their people they call. 

So you go online, you enroll, they follow up to make sure that they have everything they need from you. And then then they start taking Medicare Part B out of your check. Out of direct deposit. Now there's two parts to Medicare, think of it this way, original. And then we talked about the Medicare Advantage with the original plan. I'll just want to talk about myself pick on me. What I did, I chose after looking at all the options that applied in our area, and there's a bunch of them, I decided that I would stick with Medicare original meaning Part A Part B and I would purchase a Medicare Supplement policy that would fill the gaps. It's called Medigap insurance by some people. So supplemental plan. 

So I have Part A Part B that I pay premiums for. And then I have premiums, I pay for it a separate policy that would fill the gaps. Why? Because I wanted the ability that no matter where I'm traveling around the country, that if I have to go get services at a hospital or doctor, I walk in, I put down my Medicare card, I put down the card for the company representing the Medicare gap policy. And that's it I'm done. I rarely pay anything out of pocket. They'll be some things I have to pay. But very little. 

Now, where I get in trouble, though is the beginning of the year is there is a deductible, you have to pay out of your pocket before you get full benefits. And then I also bought a part D supplement. So Part D, is a plan, and I've changed it twice, once I had two different plans sort of one year, because of the medications or own, you'd want somebody who handles that for you to shop it and tell you which Part D plan is best. So that you have to do during the open enrollment period each year. And if you miss it, you'll have to wait until the following year.

Steve: And what is what when does that typically happen during the year?

John: The short answer is typically October through December. I can't give you the exact dates, I could probably look it up. 

Steve: But I'm sure it varies year to year. But generally what we're talking about is the towards the last quarter of every year. 

John: That is correct. And that's why you see so many ads on television about Medicare, because there's a limited window there to enroll.

Steve: So, so you've talked a little bit about the four parts. And there's this name that's floated around, I guess it's an acronym IRMAA. What in the world is IRMAA?

John: Well IRMAA is spelled IRMAA folks. And basically, here's how it works. When you sign up for Medicare Part B, like for example, this year in 2020, is $144.60 per month for part B. However, if you earn over a certain income level, and Medicare publishes that each year, it's a different number, then you could pay as much as 400, and something dollars a month. $428. So your income in retirement will impact how much you pay for Medicare Part B. And that part B number remember is in addition to any type of supplemental policy you buy. So we'll have people come in very upset with the government saying, Can you explain this to me, all of a sudden, my Social Security check moved from x down to here, because what happens is they look back two years. 

So whatever your income was two years ago, impacts you today on your Medicare Part B premium. And when when I do seminars on these topics, because the two biggest seminars we offer Social Security and Medicare, sometimes we'll combine the two, because people have so many questions about so we're just gonna do an extended sort of hour and a half with a two hour session and simplify it and cover both. But it's interesting that people will say I had no idea that the premiums could be higher. Well, most of us don't, until it hits us. So I started educating people. And the reason that I started educating people, Steve, was with one of my long term clients, 35 year plus client. 

She came in one day and said, You know, I don't understand what's happened here. But my Social Security check dropped, I got this letter. And it was about IRMAA, you know, your, your premiums have increased because of the IRMAA. Income Related Monthly Adjusted Amount is what it stands for. And she's waiting. So basically, they're taking my money from me. So yes, because they're feeling is because you earn more money. And any money you take out of retirement accounts, like CDs, she took a chunk of money out of her IRA for a trip. Well, that pushed her over. And it was two years previous, so it hit her this year. That year, this year. So it's pretty complicated. But when it hits you and you all of a sudden you see your check drop, or your deposit drop, you're like, what happened?

Steve: So what I what I'm hearing you say is that when people are making decisions about when they take income, from maybe their retirement accounts or through employment or anything else. Sounds like they need to pay attention to where they stand related to these thresholds.

John: Absolutely. And sometimes there's nothing we can do to help them other times we can, it depends on what assets they have. As we'll get into another episode, we'll talk about required minimum distributions. That's where people usually feel it. Because all of a sudden, they've been retired for a few years. And now they're forced to take money out of retirement accounts. So that's income they didn't have before. And it pushes them up into another bracket for the IRMAA test. And then they get, boom, they get smacked. Wow, Where'd that come from?

Steve: So you're forced to take money out? Yes. puts you in another bracket that forces you to pay more.

John: That's correct. I have said for years, 35-40 years, I've said, I don't understand. I know why, but Congress should do away with the required minimum distribution. If you are frugal and you saved your money, you should not be forced to take it out. Because if you have retime resources you're having, you're putting less pressure on the system. System, meaning Social Security to help other people. 

But the reason they do it is they want the money all these years, you defer, defer, defer thinking you're saving taxes, and all of a sudden, you're taking it out, you go, I didn't save any taxes, I simply deferred it into the future. And then you get a cost of living adjustment, the Social Security maybe, and then all of a sudden, you see that disappear because the Medicare Part B premium was raised. And then if you get impacted by IRMAA, you have a further increase.

Steve: This is all really depressing.

John: Well, I'm sorry. I didn't write the tax law. My job though, is to help people to the extent that they'll let me project them into the future. So I'm experiencing this, let me help you. So I learned a long time ago, if I see your head, forehead is bloody, and skin missing, and I look over that wall, and I go, I see some blood and skin there, I don't need to go pound my head into the wall, if I see you do it. 

So I learned a long time ago, I'll be glad to pay you for your time and your services to save me time, and money, and frustration, and in some cases, anger because I get frustrated. So my deal is this. This is what I do every day that I see clients. I read it, study it, and somewhat of a geek about it, I'm gonna learn and stay on top of it. But there's a lot of stuff I don't know anymore. But when it comes to retirement planning, understanding how to get money out of retirement plans had to coordinate with Social Security and Medicare required minimum distributions. That's pretty much where I live.

Steve: Well, you were you use the word coordinate there. And yes, we talked in an earlier episode, I think I'm hit the comment that all of this is like a giant jigsaw puzzle, where they don't give you the picture on the box. And maybe they mix two pictures together with the pieces. And somebody's got to somehow sort it all out and make it work. 

And I mean, with all of the, the rules and regulations, and the different considerations here. This just seems so overwhelming to try and deal with. I can't imagine having to, you know, you look, you're looking at this several times a day with different clients every day. It just seems like it'd be a real challenge to do. And certainly for individuals who don't go through this don't even know where to find all the information. Maybe sometimes, it's gotta be completely overwhelming.

John: It is overwhelming. And one thing is, I think, where I don't think, I know for a fact that what happened for me one day and and I won't call the client's name, but long term friend, 45 years. He came in frustrated. Said John, I don't understand this stuff. He's an attorney, very, very intelligent guy. He says, I'm tired of this. I'm sick of it. And I'm not getting I'm not getting help at work. I'm not getting help from the Social Security Office, when I call and ask questions. I'm more confused. Can you help me? 

And that was the beginning of me getting serious about many, many years ago. I don't know how long, 15-17 years ago, because I wasn't to the point of being concerned about Social Security or Medicare at that point. But I got on that track to start learning. And then, you know, among other financial advisors, they'll call me and say you're the expert in this stuff. I say, eh, be careful, I don't claim to be an expert, I claim to be very knowledgeable. But I don't know that I'm the expert. But I know I know it pretty well. I would say very well actually. But it's how do you coordinate it. And one of the things that I'm tempted, and I was tempted, am I now because we talked about keeping this simple for this episode. 

But there's so much stuff when I get the manual each year, the Medicare manual is about an inch thick. And I actually read it. I go through it every year, highlight it, you know my style. I'll highlight stuff, put sticky notes on it. So people come in the office, I'll ask the question, so I don't I'm not sure that. Let me look. Go to it right up on the website and make sure nothing's changed. So there's your answer. How did you find it so quickly? Because I read it and study it. 

Steve: It's critical.

John: I get I keep all of my letters there in a binder in the office. So somebody says, Well, that doesn't work that way. Well, there's a letter from Medicare. Read it. It shows you what my IRMAA is. So IRMAA does exist. Shows my premium going up. Okay, I read there some black and white read it, you will have increased Part B premiums, there's no way that that can't not happen, because of the costs.

Steve: Well, is there anything else that comes up in your conversations around Medicare? John, as we kind of push towards the end of this episode, anything we haven't covered? That's critical here?

John: Well, we've covered it, but I'm gonna put it in contrast for you, in 2019, the Part B premium was $135.50. And this year it's $144.60. Okay, so what a $9 increase. So people say, well, it's not that big of a deal. It's not in one year. But if you're retired, and all you have is your pension, and Social Security, because you didn't save or plan and have other resources, or you did but you used them to take care of children or grandchildren that had to come back home, then that $9 increase every two or three years or every year, that erodes your net income. And if you see tax increases, come along with it, that hurts. And that's why most people do not feel the effects of cost of health care, or inflation in general, until, until they've been retired five to seven years, is what I say. 

Then all of a sudden, they'll say, John, what's happening? You know, we haven't increased our spending, we're not extravagant. I say, Well, you've been retired about five to seven years, that's enough time to just see some cost of living increases at the grocery store. You know, health care, your health care is the biggest expense in retirement. For most people, some people still have a mortgage payment, most don't that I've worked with, but you look at your health care. I mean, I know what I'm paying for me, and then I go look at I have to pay $108 for that one prescription for the rest of the year. And then next year, I'll have a $400 deductible. So I'll have to pay for four months basically for it again, before the coverage takes over. 

So I would just like to conclude that it's hard to fully understand all the pieces. It's not that difficult if you're willing to take the time to read it and study it. And just about time you think you know it, something will change, and you got to go back and read it again. So I'm constantly looking at and when I do the webinars and seminars is good, because it forces me to go back and double check all the numbers, like this sheet that I showed you that took off of the Social Security website. In the past, we've just referred to a book. No longer. You got to go to the website and get a straight from the the Social Security Aministration. Let's end with this. I was going to say that Social Security, Medicare, healthcare in general and your pension are very important benefits to you. But it's up to you to make sure it's coordinated properly. The government is not going to do for you. It's up to you.

Steve: Good advice. Well, folks, this is another in the continuing series that we're doing on on the key things the members of the Florida Retirement System need to pay attention to as they approach retirement in retirement, as they're planning for that. We've got one more to go in the series. In the next episode, we're going to talk about required minimum distributions. RMDs. John, I know, that's a big topic. A lot of questions around that. You want to give us just a 10 second preview?

John: Yes. RMDs were never designed to create income for you. It was a way for Congress and the IRS to recover all the taxes that you didn't pay. And they're finding more and more ways to collect the taxes and faster. Stay tuned.

Steve: So folks, tune in for that one. That is a big, big issue for folks. And if you have enjoyed this episode, maybe you found you found this kind of midway through the series if you go to johnhcurry.com click on the podcast link at the top, you'll find all of the podcast episodes, including all the ones in this series for members of the Florida Retirement System. 

And if you're not a member of the Florida Retirement System, there is a wealth of resources there on the website for you as well. Make sure you subscribe to the podcast and leave a five star rating. You can find it on Apple podcast, Spotify, Google podcasts, and share it with a friend share it with a friend that needs to hear this information. You know and please help them. So John. Thanks for being here with me again. I'll see you in the next one.

John: Very good enjoyed it.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.coms/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. 

Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a visionary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. 

Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinion stated are their own.

Guardian and its subsidiaries do not issue or advise with regard to Medicare.

2020-113399. Expires January 2023.

Key Social Security Considerations

On this week’s episode of The Secure Retirement Podcast, we continue addressing the key issues that affect members of the Florida Retirement System with a special focus on Social Security. Even if you are not a member of the Florida Retirement System, this episode will be particularly useful because Social Security touches everyone nationally.

John says, “For many people, Social Security is really the only guaranteed lifetime income. Folks who have a pension like the Florida Retirement System, they have two streams of income that's guaranteed, but if you're self-employed, or if you are in a job where you have a 401K but not a pension, Social Security might be the only guaranteed lifetime reliable income stream you've got.”

We chat about the impact of the pandemic on Social Security, as well as:

• How Social Security is taxed

• How the collection of Social Security will affect your spouse

• Actuarial equivalents

• Expected changes to Social Security and cost of living adjustments

• And more

Mentioned in this episode:

• John’s podcast: https://johnhcurry.com/podcast

• John’s website: https://johnhcurry.com

• John’s office number: 850-562-3000

---

Transcript

Steve Gordon: Welcome to John H. Curry's Secure Retirement Podcast. I'm your temporary host, Steve Gordon, I am here interviewing John. And this is a continuing series that that we're doing on the podcast, where John is really addressing some of the key issues that affect members of the Florida Retirement System. Now, if you're listening to this, and you're not a member of the Florida Retirement System, today's episode is actually going to be particularly useful for anyone because we're going to be talking about social security. John, welcome. I know this is a big issue for everybody. 

John Curry: Yes, it is. And it's good to be here to talk about it.

Steve: Now you do seminars on this topic. You do webinars in this topic, I know the last live seminar that you did, was pretty popular. And if I recall, you had about 90 or 100 people.

John: We had 97 people in the room, 97 people in the room, wow. That's a lot for a seminar. I work with a lot of people and doing seminars, and that's about as full as as you get them. And I would imagine, that's because it's a hot topic, people are concerned and it's complicated, hard to figure out, is complicated and is becoming more and more important issue as we see this pandemic spread. And more and more people are losing their jobs and having to retire earlier. We'll get into that in a few minutes about you the different ages to claim benefits, but is going to become even more hot topic, because the politicians are kicking around a lot to the income base is going up. So you have to pay more and more taxes. There's a lot of issues with social security.

Steve: Well, kind of guide us down the path. Where do you begin when you're talking with someone about social security?

John: Well, first, let me say this, our podcasts are typically around 30 minutes, there's no way no way that I can cover this in 30 minutes the way it should be. So what I want to do today is simply wherever the conversation goes, but I've got a few key points I want to make, and let people know just understand the big picture. And then come sit with me or talk with somebody on my team for a while then go to the website. And I'll warn you the Social Security websites got a lot of good information. But then the question is you get information overload, what the heck do you do with it? I've got a summary sheet in front of me right here just shows up dates for 2020. Right off the website.

Steve: Yeah, folks, it was actuall. I chuckled a little bit as we're preparing for this, because it took John longer to get organized for this episode than any of the rest, I'm looking across the table. He's got printouts from the Social Security website, he's got printouts of slides and notes from presentations that he's given on this. The array of information that's in front of us here is quite astonishing. And compared to every other topic we've covered in the series, it's very unique. So I can appreciate the fact that we can't get through it all in a single episode. But where should we begin? Where do people kind of start within their thinking, and their questions about social security? 

John: Well, the first one is, okay, when can I start collecting benefits, there is still a lot of confusion on that the earliest you can go in Social Security is age 62 for retirement. And then people will say, Well, I think the system's going to go bankrupt. So I'm gonna start mine as soon as possible. And here people, they mean, well, but they would say to you, Steve, is going to be bankrupt, you better take it as soon as you can get all you can. And then the next step is understanding that if you went into a full retirement age, which could be 66, or 66, and two months, etc, until you're 67. 

So it comes down to your birth, and we'll cover that. And then the maximum benefit is paid at age 70. So at age 70, you can get the maximum benefit, and you can earn all the money you want. But that didn't have a penalty. Same thing with full retirement age, you can earn a million bucks, no reduction of benefits, but at age 62. And up until full retirement age, there's a reduction. So we'll come back and talk about that. Also, there's a lot of confusion about how social security is taxed. 

So we'll cover some of that. And then we'll talk about what happens from the standpoint of like, in my case, I'm divorced, but I was married 41 years. So what happens is that my dad, so we've talked about the widows and widowers benefit a lot of misinformation on that too. And a lot of changes just in the last few years on Social Security. So there's a big picture. And then I want to touch on cost of living because everybody thinks Oh my god, and we got a cost of living adjustment every years my law. Wow, there's a provision for it. But you don't always get a cost of living benefit. So there's a whole lot of stuff. And the truth of the matter is, I'm not even sure what we're going to cover because whatever pops in my head depending upon your questions is where I'll go, but I do want to touch on those things. 

Steve: Okay. Well, let's start with the age question, because I would imagine that's probably in the front of everyone's mind.

John: Yes. So

Steve: I'm not anywhere near any of those ages. But let's say that I was right. Let's say I'm 60 years old, and I'm approaching, you know, the first age, I can take it. How do you begin to counsel somebody on when they should make that decision?

John: Great question. And even though you're not 62, let's talk about you for a second. You, you're 50? 49.

Steve: Don't make me too old.

John: Okay, I'm gonna call you 50. To make the math easy. So 12 to 13 years away? What should you know, and be doing between now and then? And anyone who's even closer to 62? Let's use your 60. But I would ask this question. Tell me about after 62. So you turn 62? Will you still be working? Are you full time part time? What would you be doing? So let's suppose you tell me, I have a great future 62, I can see myself still working, earning $100,000 a year, whatever the number is, they tell me. Great. So if you're making that kind of money, are you aware of what your penalty would be? If you're working and making that kind of money? No. Well, you'll lose $1. For every $2, you earn above the limit, which as we're talking today is $18,240. 

So you hear people say I can't earn more than $18,000 in retirement. And what they're referring to is the Social Security cap, the earnings limit, if you're 62. And there's another one for full retirement age, which we'll cover in a moment. Now on the drive over. Okay? to see you today, I'm talking with a client, good friend of mine, who's in a position of where he thinks he can't earn any more than $18,240 this year. So that's just not correct. You are now 66. In the month that you turn 66, you can earn as much as you want, and not have that penalty. He didn't know that. So he's been holding back all this year on what he could he could have been earing more.

Steve: Well, that's no fun. I mean, you barely put the gas in the car for $18,000 a year?

John: Yeah, well, although lately, the gas prices are down, that's a good read, let me just give a quick example. Anyone born between 1943 and 1954, full retirement age is 66. And how we came up with this system, I don't know. But then at age 55, it is 66 and two months. And then if you're going to 1956 is 66, and four months, etc. working our way up to if you were born in 1960, or after full retirement age for you is 67. So people say well, I can retire at 66 and getting the full benefit as well as when you were born. So that's browser speed. So they say whoops, I gotta wait a few more months to collect.

Steve: So I would imagine making that decision doesn't just come down to what you know where someone is age wise, or looking at social security, you sort of have to look at the whole, the whole board. You know, if we use the chess analogy, and look at all of their other various financial assets, to determine what income do you need? Are you going to be working on all these different considerations? It's just one factor really.

John: Always a very, very minute factor. Because if you don't look at everything I promise you, you'll look back and say, Well, I made a mistake. Let me just throw something out. So there's 62, you're collecting roughly 75% of what your benefit could have been had you waited four more years or five years to 66 or 67. So it's a 25% reduction for the rest of your life. So that's number one. Number two, what happens in the event of your death? What is your spouse get, and for some people say they don't have enough life insurance. So I'll tell some people you should delay Social Security long as you can. Because in your case, your Social Security benefit is going to be very important to your spouse. It used to be that the spouse got one half of the higher income persons Social Security now it's 100%. So if someone does does not have a good life insurance program, and I see that and they've got very little savings, perhaps they can work to 70 I said this is not just for you this is for your spouse may want to consider this as a survivor benefit. And if somebody doesn't have that issue, so I will work to full retirement age. 

Start your benefits then if you don't want to wait to 70 now every year that you wait though, from full retirement age, you get an April than increase. Now in my case, I took minus 66, I could have waited to 70 and get 32%, more four times like 32. I didn't do that time value of money and working with so many people for 45 years, as I will mine now. And I took that money, sometimes I'll use it to pay for life insurance, sometimes I'll put it in savings, sometimes I'll add it to my investments. But I just use it based on what sometimes I use it to take care of grandchildren. But I didn't want to wait, could I wait, it? Absolutely. Should I only time will tell. Because another factor is how long will I live? There's something called actuarial equivalent. If I live to life expectancy, I'm pretty much gonna breakeven. And you'll hear people talk all the time. 

Who does this type planning? What's the breakeven point? In what year roughly? What I received the same amount that's roughly age 83. Roughly 383, because social security uses age 83 for their life expectancy for men and women. And we're living longer. And that's another issue. If your role healthy got longevity on your side? Do you want to collect a benefit at 66 and get it longer? Or wait until 70? Get a higher amount, but for a shorter period of time? These are all issues after we look at another issue is what is your income going to be in retirement? Maybe you don't need Social Security until 70 because of other assets. But in my case, I had the assets I'm still working best and I want the money now. But I did not take it before 66, because I would have a big reduction.

Steve: Complicated stuff. Lots of moving parts, John. So you know, as as everyone thinks about this, the thing that I hear again and again. And I'm in Gen X, so I'm in a little tiny generation that could or maybe couldn't I don't know, we're going to find out. But the common thinking among my generation is that social security's likely not to exist, correct by the time we retire, because all you old guys are going to spend it all.

John: Right. So keep working hard. I hear that all the time. And I tell people, I do not think you'll ever see Social Security go away. I do think you're going to see some major changes. They should have already happened years ago, and neither political party wanted to tackle it. In my opinion, you should never have been allowed to collect Social Security is 62. It was never designed for that. Congress let that happen. That was a big mistake. That's when we started seeing problems with the social security trust fund never should have been allowed. And they should take it away now. 

Nope. As of now, no more 62. Now that would create one hell of a fuss because you got so many people that are unemployed right now because of this pandemic. And they need to count on Social Security soon, in a lot of cases. So I'm not sure what the answer is. But I do know this. Back in 1983, there were major changes to Social Security. And things are changing quickly. 2015, Congress, bipartisan, made changes to social security in two weeks, two weeks, they made a vote if done and they implemented it. So things are moving faster, because more and more people are realizing, if we don't fix it, it's going to be in trouble. 

And I'll tell you, folks, if you go to the Social Security website, and read the trustees report, every year, you'll get good quality information. They're very forthright in saying that if something's not done by 2033, or 2034, depending on who you listen to which report you read, that the system can only add about 70% of the current benefits. So we might take a reduction, but I don't think it will ever go away. I don't think the system meaning us the democratic system would allow it to go away. I think that'd be such a big fuss especially people your age and younger.

Steve: I'm sure. well, you know, the the bargain is pay into it all your life that you ought to get that money back at some point. Right?

John: Well, that's the thinking. But what people need to be understanding is you're not paying in for you know, you're paying for the people in front of you. And that's hard for people to get their arms around. Yep.

Steve: Yep. Well, so we've talked a little bit about when to claim we've talked about the health of the system a bit. I love the suggestion of going and reading the trip. What are some of the other issues that people worry about? I mean, you knowing about all of your seminars and all of your webinars, this one consistently, this topic can help distantly gets more people to come in. And it's got them concerned. Maybe rightly so maybe not rightly so. But it seems to have this this bigger role in people's minds.

John: It does, I think, is for a couple of reasons. I think one, for many people, Social Security is really the only guaranteed lifetime income, they have folks who have a pension, like the Florida Retirement System, they have two streams of income that's guaranteed. But if you're self employed, or if you are in a job where you have a 401k, but not a pension, Social Security might be the only guaranteed lifetime reliable income stream you've got. The burden is then on you to take that money that you have, whether it be 401k, 457, deferred comp, your IRA, your Roth IRA, 403B, whatever you got, the burden is on you to make it last for the rest of your life. Now, if you understand how to do it, then you could take that money and create your own guaranteed pension to take care of just you or you and your spouse. 

But another big issue that you'll hear people who have retired talk about is cost of living adjustments, because we're getting kind of cocky about that. And I have a short number referred to here. We'll go back to 2009. The cost of living adjustment that year was 5.8%. That's hard to believe. Because remember what the economy looked like in 2008 and 2009? I think that was Congress's way of saying we've got to do something because people are in trouble financially. But then in 2010, and 2011, zero cost of living adjustment, nothing. And then it was 3.6. And then it hovered around 1.7. 

Then in 2016, zero again, for this year, they raise at 1.6%. So people will complain, okay, I got a cost of living adjustment. But with the increase in Medicare, which we'll cover in another podcast, my premiums went up for Medicare Part B. So the wiped out my pay increase. And I'll touch on this because it's important to understand that when you take Social Security, Medicare Part A as part of that, Part B you have to pay for. Now, if you don't have enough quarters, to get full benefits is 40 quarters, 10 years of employment. If you don't have enough quarters, then you may have to pay out of pocket for part A people don't know that. Then Part B we all have to pay for there's an out of pocket cost for that. It could be higher, depending upon your income in retirement. So it kind of sneaks up on you.

Steve: Well, we're going to cover that. And I think the next episode, we're going to get all all into Medicare. Yes. For folks who have questions about that, because that's a whole other complex topic.

John: Another issue is taxation. I still meet with people, they don't realize Somehow, I think they do it. But they forgot that when they start collecting Social Security, that it would be taxed, because at one time your benefit was not taxed. You pay tax on the way right, put the money in. And so what do you mean, I'm taxed? Well, depending upon your income level, and individual or married couple, up to 50% can be taxed as high as 85% of your income from Social Security can be taxed. There's a formula that your your CPA or who does your taxes can calculate for you. But the bottom line is married couple earning over a certain amount of income. I won't get into specifics, because it's changed each year. But you may find that up to 85% of your Social Security benefit is considered income for tax purposes.

Steve: Bet that's a shock for people.

John: It is for some. Others, no. And it impacts me I don't like paying that much tax on Social Security. And so you take 85% of your benefit times whatever your tax bracket is, you just watch that money go right back to the government.

Steve: Well, when you're having your seminar's John, and you've got people in the room, what are some of the questions that come up with, you know, when people have the opportunity to to ask you about certain aspects of the work. The other questions that we haven't touched on? 

John: Excuse me, one would be okay, what am I really paying into social security? And I find that interesting, because on your Facebook tells you the number of most people just don't pay attention to it. I think they're paralyzed by I'm just it's too complicated. Don't bother me, I don't want to know. Just tell me the answer.

Steve: Well, I can tell you on the front end, I mean, as somebody who pays that, it sort of just goes into the ether.

John: It does. It does. But let me give you the specific numbers and this is right off of Social Security's latest update 6.2% is what you pay on your earnings up to $137,700 a year. So anything over 137 in this tax year 2020, you don't pay tax on that, however, on the Medicare portion, you pay 1.4 or 5%. No matter how much income you make, if you make $10 million, you pay 1.4 or 5%. And there's a lot of people in the political world are saying, hey, it's time to get rid of the cap. And 6.2%, no matter how much and that's one of the big issues as being debated among politicians. 

Now, is a debate these issues in Congress. Why is there a cap? Why wouldn't you pay 6.2%, if you make $500,000 a year, we want you to pay 6.2% on the entire 500. So a lot of things happening there. This has been addressed so many times, and every time they get closed, there's so much political pressure. I mean, just just think about all of those gray haired people out there. AARP is such a big lobbying force, that every time Congress wants to do something on their own, and full disclosure, I'm a member of AARP, support what they do. But at some point, we've got to say, You know what? It's got to change. It's got to change, or it will go the way the dinosaurs became extinct. But I don't think I don't think people will let that happen to bend changes to make it work.

Steve: John, this is a this is fascinating stuff. Are there any other key issues at a high level you want to cover?

John: Well, I want to touch on a little bit more detail about the earnings cap for 62. So if you're 62 years old, you people will say, I can't make more than $18,000. And this year is 18,240. But there's another one that people forget about. And in my seminars and webinars, I like to ask this question. It's a bit of a trick question. What happens in the year that you turn full retirement age, and in the year you turn full retirement age, you can earn $48,600 without having a reduction. However, for every dollar over that, every $3 over that limit, you lose $1 of your benefit. But in the birth month, birth month that you turned full retirement age that year, then there's no camp, you could earn a million bucks a year. So it's a little bit confusing, because I'll see people who say, Well, I'm gonna start my Social Security now. So you might want to wait two months, because in two months, you'll be full retirement age. There's no difference. 

Yes, sir. Yes. Yes, sir. Yes, have social security calculator for you and come back and tell me what you buy. No, hold the cows and lose a bunch of money. Yes, your work. Because if you earn a lot, then it impacts you. Another issue that we should touch on what happens upon your death. If you've been married for 10 years, or more, key prizes, 10 years, then upon your death, your spouse would be entitled to a widow or widowers benefit a spousal benefit. While living in retirement, your spouse will be entitled to a retirement benefit based on your earnings, either theirs with this higher or yours if yours is higher, a lot of questions about that. And it's a little confusing, because I just had a situation where a man died, we thought she was gonna collect his full Social Security benefit. And I said, That's not gonna happen. You got to go talk to them, or at least get him on the phone, because you're going to have a reduction because of your age, and the amount of money you make. And she said, that does not apply to me as a widow. I said yesterday, that was changed at one time. You're correct. But that changed a few years ago. I can't tell exactly what year, but it was changed. And I'm telling you, I have to constantly review can update myself? 

Because it changes, Congress will make changes sometimes it's widely known most time is not and Social Security Administration. I don't even know how many 1000s of regulations are I don't even at one time I could tell you there's like 5000 plus rules and regulations regarding Social Security. I don't know what it is. There's probably 6000 by now Who knows? Doesn't matter is complicated. And there, there's frustration out there because you're talking to one person with Social Security, you get one answer and then another person another answer. So it's truly up to the individual to retiree to do their homework and get some help. And full disclosure. 

Say it again. I don't claim to be an expert in socialism. I'm pretty darn good at it. But I don't work for Social Security, they don't pay me. I don't have access to everything they've got any more than you do. I have to go online to look at it, I will tell you that I'm part of a study group where we pay close attention to what's happening with Social Security, Medicare, retirement income planning in general, and tax planning.

Steve: I think this is one of the probably most challenging and frustrating things, is just trying to keep up with it. Because you're right. I mean, the Congress has almost an incentive not to publicize when they're making changes, because it's going to ruffle feathers as you say.

John: Yes. 

Steve: And so to stay on top of all of these things, I mean, you have to be simultaneously a lobbyist or congressional reporter, and a financial planner, and an accountant, you know, to really keep up with it.

John: What's interesting, in the 80s, there was hardly any press coverage about the changes that Social Security made. And the little bit that was, it was talking about the taxation of the benefit. But there were major changes. And I would encourage people, if you, if you if you're into this, like I am gonna look at it is public information. But it does take time. And you have to have an interest in it. And most people will do it as a swan tell people, if you can do it yourself, we want to go do it. But if you don't want to do that stuff, come see us. And we'll have a discussion. And if we can help you, we'll go to work.

Steve: Well, let's, let's talk about that for a minute, John, because I mean, this is complicated stuff. And I think for most people, they're going to look to a professional to help them whether it's you or somebody like you, they're going to look for somebody who can kind of hold their hand who does this day in and day out. I mean, you've got the advantage of, you know, in a, you know, a given day, maybe you work with half a dozen people on these issues, or your team with a dozen people on these issues. Right. And, and so you see a lot of different variations, which gives you a perspective, you know, and a knowledge of it that that most people wouldn't have, as you know, same with other professionals in your business. They're looking at this all the time. So if someone is, is thinking, Okay, I need to go get get some help. What is the process look like for somebody to go through? They come in? And maybe they meet with you? And how do you how do you walk them through what to look at first, because it's not just Social Security. Doesn't happen in a vacuum.

John: That's correct. Well, and each person we started different places, for example, maybe you can say, I'm 49 years old, and concerned about saving for retirement. So each person is different. But my process is this. First, we either start with a telephone appointment, which is, you know, 20 minutes, 30 minutes, find out if we really need to get together. And then we'll either have a face to face appointment or do it online. I have clients in 13 states. So we do a lot of online meetings, even before the virus had. But then it's a matter of, Okay, let's have a constant conversation. 

Let's talk about what you're trying to accomplish. Let's find out if what you're needing, and my skill set will mesh? If so, then we go to work. For some people it is I am paying way too much in taxes, can you help me reduce taxes, as well? I'm not a CPA, I'm not a tax attorney. But let me look at it. And I might have to refer you back to one of those professionals. But let's look at it. For others. It is specifically Social Security. I am so confused. I've got my benefit, we have a spouse benefit. When do we take each other's you know, do I work longer and delay to 70 and my wife take it now. It's all over the place. 

But the first step for us the very and I won't, this I will not shortcut period, I will refuse to deal with the client. If they don't do this part. You have to give me full facts. I have to know exactly what you've got. We put it in the system that we use to look at everything. Everything from car insurance, home insurance or health insurance, your legal documents, your life insurance, long term care if you have really good everything. And then we look at assets, liabilities and cash flow. But occasionally, sometimes I don't I just sell me a product. Okay, if you just want to buy a product, you have to be a salesman, right? You know where you want to buy. 

But once we get into that they never do it that way. Because they realize it doesn't make sense, just a byproduct. But for me, the first step is we lay everything out. We discuss what's working, discuss what needs work, prioritize. And then the question is, are you going to do this or are we do for you. And if we're going to we'll sit down talk about what the fee is, and go to work.

Steve: Pretty simple process.

John: I think it's very simple. It's not easy, but it's simple. The hard part is bringing together all the pieces. So you bring me all these pieces. It's like you dumping a jigsaw puzzle on the desk, and my team and I have to take all these pieces and put them together. And most people when they're serious about it, and once they engaged and they find all the pieces, bring it to us.

Steve: Let's talk about that for a minute. Because I think that's, that's a real challenge. I mean, particularly, for people who maybe have had, you know, if they've been employed, maybe in multiple places, maybe they got multiple retirement plans, yes. Or when you know, we're talking with, you know, people here in the Florida Retirement System, there are a lot of different options there. So pulling, just the act of pulling all the information together can almost be overwhelming, I would imagine.

John: It is for some people is very overwhelming, and they don't get started. And they haven't gotten started because of that. So I say, come sit with me. And we'll make it easier for you, we'll give you a format that you can go get. And if you don't know what your benefits are, we can help you contact the former employer and get that the biggest frustrations they have as they as people within the university system. Because they may have worked in four or five different universities, they got a benefit here and a benefit here and a benefit there. Now, how do I pull this together, and then it with multiple accounts that got to do something with and we get into the episode talking about required minimum distributions, that gets complicated there. And we have to remind them, all these all this beautiful money you've accumulated on tax deferred basis, guess why? 

IRS is waiting, and they are licking their chops, because they're gonna you're gonna pay tax on every dollar that comes out. And so you start, we talked earlier, another episode about people think they'll be in a lower tax bracket. Well, fast forward, you retire, you have a pension, or you have your 401k. And you got money in deferred comp, maybe you have the drop program, but the chunk of money, and you're collecting Social Security, Social Security, your pension all taxed, every dollar from retirement plan taxed. So don't just assume that because you retired, you'll be in a lower tax bracket, it's probably not going to be lower, it would probably be the same or higher.

Steve: I think that's shocked most people. Well, John, bringing this all to a close, what, I guess from a sense of next actions. Somebody listening to this, and they're thinking, okay, well, I'm getting close. What should they do next?

John: Well, they should find someone or there's me or my team or someone else, I should find someone, they can sit down and say, Look, this is all my stuff. Help me. And I'll make a plug for me and my team permitted here? I've been through this for myself. Going through, okay, we'll take it at 60 to 66, or 70. What about Medicare Part B, and all this stuff? I've gone through that. And I've done it also, for a lot of clients, literally hundreds of clients. And what's happened with me see is I'm I started in business at age 22. I'm 67 now be 68 in December. So I'm in a situation where I've grown with my clients. 

So as they got frustrated with something, they would come see me so do you know anything about this? No, but I'll research it. So I would do my homework help that person. Next thing, and I've got this, hopefully some wisdom because of having that experience of helping people. So I've been there done that. Plus, I'll just remind people who may not have heard the first episodes, my grandfather and my father retired and all they had was social security in their pension, that was it then have dropped back then they'd have deferred comp, they didn't do not do a great job of accumulating other assets. They had no debt. They were debt free in retirement, but they didn't have a lot of assets. So I've been there. I grew up in a state employee family. So if I understand the issues, I understand I understand a lot of it, let's just put it that way. And I would encourage people if you're not sure, have a conversation with me, or somebody on my team. And if you'd like to get a copy of my book, I'll send you that. And you can check us out.

Steve: Very good. Well, folks, if you've if you've tuned into this, and have not heard the other episodes in this series, go to johnhcurry.com click on the podcast link up at the top and you can find the whole series there. And, and certainly subscribe in your favorite podcast player because we got a couple more episodes in this series ahead of us. We're going to be talking about Medicare in in the next episode, so you'll definitely want to stay tuned for that. And then in the final one of these episodes, we're going to talk about required minimum distributions. And I know that's a big hot topic, John.

John: It's is a hot topic and the secure act last year made some major changes that people don't know about yet. I'll mention it to them they go, I never heard of that. I understand. There was no reason for you hear about it. I'm telling you now. So it's 15-20 years in advance because your kids or grandkids are going to get hurt if you don't address this.

Steve: Well, well, folks, tune in for that. Again, subscribe in your favorite podcast player. And go ahead and leave a five star rating for this in Apple iTunes so other people can find it, share it with your friends. Mr. Curry, wrap us up by letting everybody know how they can reach you if they want to have a personal conversation. 

John: The best way is to call me at the office. Tallassee number 850-562-3000. 850-562-3000 and just ask for a telephone appointment. Or if you know you're ready to go to work. Just say I want to come see John or book a more detailed appointment. And see if you mentioned the website, johnhcurry.com, johnhcurry.com. Check it out occasionally, because there's some good information on there, all the podcasts and there's some information in there about social security from time to time.

Steve: Very good. Well, thank you for investing a little bit time with me today and sharing with everybody. Folks. We'll be back in the next episode. We'll see you then.

Voiceover: If you'd like to know more about John Curry's services you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter charter financial consultant accredited estate planner masters in science and financial services certified in long term care registered representative and financial advisor at Park Avenue Securities LLC securities products and services and advisory services are offered through Park Avenue securities a registered broker dealer investment advisor. 

Park Avenue securities is a wholly owned subsidiary of Guardian. North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue securities is a member of FINRA SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. 

All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal, tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue securities or Guardian and opinions stated are their own.

The Social Security Administration has not approved, endorsed, or authorized this presentation. Contact the Social Security Administration for complete details regarding eligibility for benefits. 

2020-113398 Expires December 2022.

Selecting the Right DROP Option for Your Financial Goals

On this week’s episode of The Secure Retirement Podcast, we continue our special series focused on the specific concerns of members of the Florida Retirement System. 

“Some people say they have the ability financially to retire, but they don't have the ability mentally to retire. And I call that part of the mindset,” says John. “When it comes to the subject of drop, it's not just about money. It's the mindset, what will you do with the money? Do you need the income right away? Do you defer it? Do you take the money and pay tax on it? Pay off the mortgage?”

John uses the wisdom gained through 45 years of experience in retirement planning to decode the options available within the Florida Retirement System, educating others so they can retire with a sense of financial security.

We chat about the retirement frame of mind, as well as:

• To DROP or not to DROP

• Choosing one of the four DROP options

• Researching the right option for your goals

• Understanding DROP and where to go if you have questions

• Lawfully reducing income taxes

• And more…

Mentioned in this episode:

• John’s site: https://johnhcurry.com/

• Florida Retirement System: https://myfrs.com/

• Florida Retirement System DROP forms: https://myfrs.com/Resources_Forms.htm 

• Call John and his team at 850-562-3000

---

Transcript

Steve Gordon: Welcome to John H. Curry’s Secure Retirement podcast. I'm your host, Steve Gordon, and I am here today interviewing John Curry. And we are in the middle of a series of episodes, talking about the particular challenges related to being a member of the Florida Retirement System, the considerations that you need to make as you prepare for retirement and coordinate all of your benefits. And, John, welcome. Good to be back with you.

John Curry: Good to see you again.

Steve: Yeah, this is gonna be fun. Again, I'm learning a ton. I can only imagine that these episodes are going to be really beneficial for the folks who get a chance to listen to them. And if you folks, if you've missed any of the ones if you're coming into this, midway into the series, and this is the first episode that you've stumbled upon, go to johnhcurry.com, click on the podcast link, and you'll find all of the episodes in this series there. If you are listening to this, and you're Hey, I'm not a member of the Florida Retirement System, should I hang on? In all of these episodes, we are covering things that really are general principles related to retirement. And so I think these are all beneficial. No matter who you are. Today, in particular, we are picking up from where we left off in the last episode. So John, last time, you touched on the idea of drop program. And today, we're gonna, I think, deal with the eternal question. To drop or not to drop.

John: Yes. I love that. I like to use that to drop or not to drop. That is the question. The first I want to go back to something we talked about last episode about mindset, mindsets real big here. So I'm not gonna get into all the details of drop here, because you can go to the website, myfrs.com, and download the brochure or read it, and get into all the nitty gritty, because some changes were made in 2011. A lot of stuff happened there. But I'm gonna touch on some of it. But I want to talk more about should you drop or not drop? And let's talk about mindset. So actually, really two ends of the spectrum, when people come in talking about drop, I have people who come in, say that they hate their job, I can't stand this anymore. I want to get out as quickly as possible. But I'm also tempted because of this bucket of money. So I'm eligible to retire. So do I just retire? Do I continue working longer and not do drop and come out in a year or two? Or do I go into drop knowing that I may not finish the full five years? Or I may do the five years based on that? And when I hear that I say to them? 

You know, Steve, it sounds like you're talking about a prison sentence here. Where do you describe that? I mean, are you? Are you so unhappy? And what do you do? Maybe it makes sense just to go back and retire today? Well, I can't I can't afford to do this. If you could afford to do it, would I quit my job now? And what would you do tomorrow? So you quit today? Maybe you can. I've actually had class where it's just a thrill to show them you know what? Why don't we look at all of your stuff and see if you can retire today. And one of my classes but just yesterday, he reminded me You remember nine years ago, we had this conversation, I was mad as hell. And you told me I could afford to retire as I do. 

Just like it was yesterday. And he said, I went back to his internment camps. I went back to my office that day. Instead of hating my job. I was bound and determined that if I wanted to retire I could. And he went to see his boss. He said, I just love my financial advisor. He has shown me I can retire today. So we had the chat. If you want me to stay here until you leave. This is what has to happen. If not, I'm going over to personnel, human resources and I'm filing my papers like acid. Gonna get your cup of coffee. He's never had a Showboat, easy never offered a cup of coffee. kitchen area, get a cup of coffee came back sat down and worked out our disagreements. So some people say they have the ability financially to retire, but they don't have the ability mentally to retire. And I call that part of the mindset. So when you come to me and you say I'm thinking about going into drop Should I do it or not?

Steve: Let me take us down a little bit of gravel road. This is one of the things, You and I are good friends.

John: Let me interrupt you for a second. You know, the nice thing about this, when it's not scripted, we get to do whatever the heck we want to do. So gravel road, dirt road, you just take us down buddy.

Steve: Well, and I think, folks, I think this will be useful. One of the things I appreciate most about our relationship is, is that we, we talk a lot about mindset, we talk a lot about thinking, and really what you described right there, if I could sort of observe is you gave that that gentleman, a future, he didn't have a future, in his own mind, he didn't see that he had a future in that job, right. But by You're right, looking at that, and I'm not saying you're able to do that for everybody, everybody's situation is different. We know that.

John: I know, I can't do it for everybody. No, I know that, but most of the people I can.

Steve: But that's that, that's not the point even it's not even whether you can or you can't. But sometimes it's just a matter of sitting down with someone who will act as your coach and challenge your thinking a little bit. And, and that's one of the things I think you and I do well for each other, one of the one of the reasons I consider you one of my closest friends, is that you, you have the ability to just challenge people's thinking and not be emotionally attached to it. And, you know, and having that ability to sort of see the whole thing. And what if you're listening to this, folks, I, whether you come meet with John and do it or do it with someone else that you trust, right? The point is, if you're in that sort of situation, where you're so fed up with what you're doing in the working conditions, you need to be in a position where you have no future right there. 

You need to find somebody who can help you talk through that and ask you questions and, and give you your future back. Because I think it's sort of sad not to have a future, particularly if you're, if you're very skilled at what you do, and you're an expert in your career, and you've done it for a long time. I think it's important that you have that conversation with somebody. So that was the gravel road. And to me, that's, I don't care what you did for that guy financially. The fact that you had that single conversation, and gave him back in his own mind, the ability to see this future is probably more valuable than anything else.

John: He went back and worked two more years, to four years. So he got more benefits for himself. And the organization he worked for benefited. And his boss got another promotion because of him saying, so he loved. And then we had to go through the same thing with his wife, when it was time for her to retire because she was unable to pull the trigger. And the way I helped her identify her future, is I hit a hot button about travel. She said I wish I could do this, I wish I could do more of this, I want to go back to Europe, I want to do this. And I said, so what's stopping you? Well, I've got to go to work, I got to do this. And this, as you have to go to work, you've got to go to work, or you choose to go to work. And he is sitting there because he knows Robert, this is going and she says Shut up, don't say a word. And I said he's not going to interfere. This is when you and me, we're going to reschedule. And you and I are going to have just the two of us chat about your future. I'm not gonna tell you what to do. And I can try to control it. Honestly, it doesn't matter to me. You're my friend. You've been class forever. But you're there if you choose to. I'm going to show you the path. You can do what you want with it. Take the path, don't take the path. And now you're right about one thing I am. 

How I set up here many many years ago, I got so I can tell you the year 1982 because of my brother in law committing suicide leave on a young widow two little kids. August of that year, that was in May, August last year my brother committed suicide that man a widow, two little kids. I was any emotional wreck. And I worked through that. And there was no morning really. I worked through it physically Work, work, work, work. Sunday's 20 hours a day. And one day it hit me. You know I can't make you do the thing. All I can do is guide you, coach you and hopefully take my life experiences, hopefully, what knowledge, some wisdom that I've gained by seeing thousands of plans engaging. But here's what I learned. I do not take responsibility for anyone who won't take action and help themselves. I have family members who won't do what needs to be done. You know what, suffer. I'm here when you want it. I'll help you any way I can. I'm not doing it for you. I'll do it with you. 

And that has carried over to the sense of where I can ask the tough questions. I call it ruffling your feathers, I can ruffle your feathers and smooth them back out. But somebody needs to do that. I have people who do that with me, you do it with me, we call it questioning each other's answers with us that phrase half a dozen times a day. Because we need people around you that you can trust. That will not be true. They will tell you the cold, hard truth. And that's me. I like it. I use this phrase over and over, I will show you and tell you about the good, the bad and the ugly in everything we're doing. I'll show you the ugly many times before showing you the good because if you don't like the ugly, hell Don't bother. But back to drama. So should you go into drama or not? Well, if you can ask me that question. I'm gonna say tell me about your job. Do you like a job? I love my job. Like the people I love the people there. 

Do you want to keep doing it for just five years, another 1015 years? Or I'd love to do 20 years, then you probably shouldn't drop. Now, let's measure it. So you get your paper and got some estimates? Well, let's do it for you. So roughly This is how much money you'd have a lump sum. If you go into drop. Is it worth having that money to walk away after five years? Some people say no. I love my job. I'm just saying, I think you've answered your question the other side Well, I don't want to stay in this job. I want to retire from the state of Florida. And then I want to go do other things. Like what? Well, I want to start my own business. Okay, then you probably should consider drop. Now you got a lump sum. We'll talk about what you do with it the minute. Others will say well, I don't want to do any work for income. I want to be able to retire, do nothing. And I'm thinking of a lady now who is very active in nonprofit organizations and her church. 

She she's working full time. This reorganization, and she loves not getting paid a nickel does. She is needed. So retired from FSU. So she is dynamic. I think she's now 85 years old. Unbelievable. Wow, more energy than you and I combined. And we're pretty entertaining. So I get into that first. And we talked about in the previous episode, which one now we're talking about, you've got the financial side, and you got the mental side and last episode again. So the mental side of it, I think I'm sorry, because then it makes the financial side negative while you're doing it. Say in the draw program, what people need to understand is, when you go into drop, most people don't fully realize the many you go into the drop program, you've had to choose one of those four options. So that's the first step, which option will you choose? 

Because you don't want to make the wrong choice, because you might hurt somebody, like we talked about my grandfather taking option one and my grandmother losing that income for the rest of her life. So that's the first step. Because once you go into drop, you have retired. As far as the state of Florida is concerned, you have retired, and now you're participating in the deferred retirement option plan. That's what it's called. So you're still working, still getting your salary, and they're depositing your retirement check into this account that under current rules is getting 1.3% interest. And then at the end of the five years, you can come out center but into five years, then you have a choice. And there are three options, you can take a lump sum, and no withhold 20% for taxes. You can do a direct rollover to any other retirement plan you have that will accept a rollover, Ira, deferred comp, FRS investment plan, so these are options available to you. Or you can do a combined. So you can say give me a part, lump sum partial, and further. 

And we have people do that just had it happened. Lady said I'm $50,000. I'm gonna pay the tax that pays off all my debt. And then I want you to take the rest of the money and invest it and I don't want to touch the income until I have 272. So those are for the people who are wondering should they even consider drop? Those are the thoughts I have. Now let's talk about people who've already been in truck programs. What do you do when you get the money? Do you take lumps on paying all the taxes today for some people they should? Most people that should most people should defer it or take income from inside an IRA. The thing I tell people is if you work with us, there's only one thing I can promise you That is service, we're not an 800 number, you're not calling an 800 number and having to punch through four or five choices to finally get a different person, every time you call my office at 850-562-3000, you're gonna get either me, or one of the people on my team to assist. You might get a voicemail, if it's after hours, and we'll call you back. But you're not going to have to chase those down wondering what's happening. 

And when I meet with clients, Steve, I have another teammate with me. So that if I'm gone, because sometimes I take trips, like we catch an ex, I'll be gone for a week on a trip with my lady. And if I've had somebody in every meeting, they know what needs to be done. So you're not relying just on me. So it's not just John Curry, it's John Curry and teammates to take care of our clients.

Steve: It's fantastic, John. Are there any other things specific to draw that folks need to know before we wrap this one up?

John: Well, I would encourage people, if you're thinking about going into drop to seriously go to the website and read the handbook and understand it. And then if you want clarification, call me I'll help if I can. But I think most people approach drop the wrong way. They approach it as being this is an opportunity to get out of here and have a big chunk of money. And the reason to drop program came into being to encourage people to retire to make room if you will get rid of us old folks and bring in new people well, drop has become something totally different. It's become something where we almost feel like an entitlement, like Social Security, okay, they made changes and drop and people get upset about it. It was never designed to be what it has become. It should have been a temporary program to get people out and bring new people in. But it's there. And as long as it's there, you should participate in it. If it fits, you've heard me use this analogy many times. 

This is a football field, this legal ban. So as long as I'm running the ball, and there's green space between my black shoe and that white chalk, I'm in bounds on it. It might only be a centimeter. But as long as there's green there, I'm in bounds. So my philosophy is real. I'm going to follow the rules, the regulations and the law. But I'm going to take advantage of every law that allows me to reduce income taxes, and have more money for myself and my family. So every rule and regulation and FRS My view is something, let's look at it. Let's understand it and take advantage of the opportunities that are there. We talk a lot about dangers, opportunities and strengths. The strength is you've got these benefits. The key is it's up to you to coordinate them. If you don't, you got nobody to blame but yourself. 

Because after the fact is too late, choose the wrong option. Say too far, they can't help you. Sorry, you made a choice. Take the main lump sum, they withhold 20%. But you're actually in a higher bracket and you lose 30 or 40% of the money to taxation. That's up to you. Because you do not get educated. So I was emphasizing when it comes to the subject of drop. It's not just about money. It's the mindset, what will you do with the money? Do you need the income route away? Do you defer it? Do you take the money and pay tax on it? Pay off the mortgage? I've had clients come in telling me I'm gonna cash in my drop money. Go buy this nice RV and travel. So pretty expensive RV? Because you got 200,000 you had to pay 30% tax you lost $60,000? What would it cost you if you finance the RV? I don't know? Well, shouldn't we consider that. 

So maybe what we do is you get them to finance it for you. And you take enough out each month to make the payment. Maybe that's a better choice, I don't know, depends on the interest rate that you get, how long you finance it. But shouldn't we just look at other options and not just automatically panel that tax up front? So that's to me, that's what drop is all about is it's just another to give you a bucket of money to do something with at some point in the future. And then the question becomes if you do transfer it over to an account, what do you do to protect it? Because you know my rules number one, protect it. Number two, grow it. Number three, enjoy income when you're ready. So protected first, really enjoy it as income.

Steve: John, where can folks reach you? I know you mentioned the phone number earlier but repeat that again.

John: Tallahassee. 850-562-3000, or the website, johnhcurrie.com. johnhcurrie.com

Steve: And you work with folks all over the state. So if somebody is in the Florida Retirement System, but they're working in Miami or West Palm Beach or Gainesville or anywhere else.

John: Well, the truth of the matter is that we have clients in 13 states, because we actually have clients who are Florida Retirement System employees in other states, because with the Department of Revenue, they're in various states doing work. So we have got, which blew my mind the first time it happened. God tracked me down. He was in New Jersey. And I'm thinking, I don't know anything about New Jersey's retirement plan. So no, no, I'm in the Florida Retirement System. I'm an employee, but I'm stationed up here doing this work. So it doesn't matter where they are. And you don't have to be a Florida Retirement System employee to work with us. We have clients across all brackets, you name it, self employed, engineers, doctors, lawyers, professors. All kinds.

Steve: Very good. Well, folks, if you want to learn more, go to johnhcurry.com if you are looking for the other episodes in this series, again, go to johnhcurry.com and click on the podcast link. And you'll find them there. And check out some of the presentations that John and his team do; they put on regular webinars where you can tune in from your office or home or wherever, on specific topics, definitely check those out. Make sure you get a copy of John's book, Preparing for Secure Retirement. And depending on when you listen to this, you're going to want to look for his upcoming book that will be specifically for members of the Florida Retirement System. All of that is available through his website.

John: Steve, I just had a follow up as you're going through that. And people say what is it you really do want to ask about my work actually myself as being a retirement educator? Because the more information I can get out there helps people and when they're ready for my services, they come to me and that's why I can do it and not have any pressure on me or them.

Steve: I love it. I love Well folks. subscribe to the podcast wherever you like to listen to the podcast, check it out at giants crew comm slash podcast and tune in for the next episode, where we're going to get into social security and the various options related to it. This is an incredibly popular topic when whenever John does a seminar or a webinar on this topic, it typically fills up because people have so many questions I think around that and we're going to cover it in the next episode so we will see you then.

Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast. Again, that is johnhcurry.com/podcast. Or you can call his office at 850-562-3000. Again, that is 850-562-3000. John H. Curry, chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long-term care registered representative and financial advisor at Park Avenue Securities LLC. 

Securities products and services and advisory services are offered through Park Avenue Securities, a registered broker-dealer and investment advisor. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue Securities. 

Park Avenue Securities is a member of FINRA and SIPC, this material is intended for general public use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian and subsidiaries, agents or employees do not provide legal tax or accounting advice. 

Please consult with your attorney, accountant and or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of the Guardian Life Insurance Company of America, New York, New York, Copyright 2005-2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own. 

2020-113207 Expires 12/22