Transcript: Income Investor Podcast Ep. 17 – Tom Hegna

Stan: Welcome, everybody. This is Stan The Annuity Man with my partner Jimmy Dot Direct. We are happy to have a return guest today, Tommy Hegna, one of the, if not the, best speakers on retirement income out there in the country. He is very well-known, has a PBS special out there. We’re going to give you all kinds of links and stuff like that so you can watch all of that. We’re primarily going to be talking about his new book today, which is called, “Don’t Worry, Retire Happy: 7 Steps to Retirement Security.” We’re going to try to get through all 7 steps.
I do encourage everybody out there, whether you are a consumer or if you’re an agent that decided not to work today and listen to this, which is fine because you’re going to learn something, you need to know who Tommy Hegna is. I call him Tommy because I like the word Tommy, but he goes by Tom. Tom Hegna. He is a superstar. I kid people all the time. If there’s a master of the universe about retirement income, it’s Tom. First of all, let me go to Jimmy Dot. We’re going to talk about Incomeinvestor.direct, which is a newsletter that we launched under the Annuities.direct platform. Jimmy Dot, talk about what we’re doing over there with Incomeinvestor.direct.
Jim: As many of our listeners know we started with Annuities.direct and have branched out into 5 websites on annuity-specific products, but the latest website that we’ve launched is Income Investor News Letter. If you just go to Incomeinvestor.direct, it is a digital newsletter. It’s updated on a regular basis. It’s about all things income. Whether you’re retired or not, it’s still about income. It’s focused on how to use different products from bonds to stocks to interest-baring accounts to annuities to anything that produces income.
You can go on the site, you can sign up right there on the home page. As the site’s updated, whenever it’s updated you’ll get an email with the latest posts, like this podcast will actually go live onto the site tomorrow. You’ll get an email when you can listen to it.
Stan: Excellent. The newest Annuities.direct site is IncomeRider.direct. We can get income rider quotes. As you know, we don’t hammer you, send somebody to your front door. This is for grown-ups, people that want real quotes and want to move forward with those type of contractual guarantees. Annuities.direct is the future. A little bit about Tommy before we get going, he’s got a pretty diverse background. He served 22 years in the United States Army and Reserve, and I think retired as Lieutenant Colonel with numerous rewards. He had all kinds of declarations.
If you walk up to him and say something nasty, he might punch you in the throat because he’s got that kind of training, and I like that. He speaks across the country. He just told us that he sold a ton of books. Some of the books he’s written, “Paychecks and Playchecks: Retirement Solutions for Life.” I actually found out about Tommy a long time ago riding on a plane. I saw an ad for this book and I’m like, “Who is this guy? I’m going to check this dude out.” He’s the real deal, definitely. That’s not his only book.
If you go to tomhegna.com, you can find all his stuff there, or retirehappynow.com is also a site. We’ll put those on the site as well. He writes for everybody. He’s an economist, he’s an author, he’s done it all. Tom Hegna, welcome to our podcast. Let’s just jump right in to your new book. Tell us, step one is what is your plan, so what is the plan, Tom?
Tom: Yeah, well thank you first, Stan and Jimmy, for having me. I think last time I was here, I talked a little bit about “Paychecks and Playchecks”. That was my first book. What happened with the “Don’t Worry, Retire Happy” book is I gave the paychecks and playchecks talk at a big industry meeting out in San Diego about 3 years ago, and there was somebody there from PBS Public Television. They said, “Tom, we need to take this message out to the American people because they’re getting the wrong message from some of these other talking heads, but we’re not sure that people will really understand this paycheck and playcheck thing. We would need a simpler title.”
I wrote the book “Don’t Worry, Retire Happy” because I think everybody can understand that. These are 7 simple steps that anybody can do, and it will improve their retirement mathematically and scientifically. These are not opinions. On step number one is you’ve got to have a plan. I say how can you get anywhere if you don’t have a road map or a plan of how to get there? With this, I say you should work with a financial professional. Even if you’re by yourself on Annuities.direct, they should be talking to somebody so that they …
I say look, it’s likely you’re not doing your own dental work in your garage with your drill set, and I don’t think people ought to be doing their own retirement planning. I believe they ought to have a plan, and I believe they ought to work with a financial professional. That is step number one.
Stan: Well then, into step number 2. Talk about social security. There’s a lot of bait-and-switch bad chicken dinner seminars out there where the annuity guru stands up at the bad chicken dinner seminar and talks about social security and surprise, surprise, every single solution is their index annuity of choice. I know for a fact that’s not what you’re talking about. Tell us about how you’re maximizing-
Tom: I talk about the importance of maximizing social security. For most listeners, social security’s the largest retirement asset they have. If you’re single, social security can pay over a half a million dollars. If you’re married, you can pay over a million dollars. Most people spend more time planning their summer vacation than learning how to maximize those benefits. I tell people I can’t make you a social security expert in 10 minutes, but I normally spend 10 minutes in the seminar going over how to maximize. In general, it’s that the breadwinner should delay.
Let’s say that the full retirement age is age 66 right now and that for every $1,000 a month you get at age 66, if you take it early at 62, you’re not going to get 1,000. You’re only going to get 750. If I could get you to wait a few more years to age 70, you’re also not going to get $1,000 a month. You’re going to get 1,320. When you compare the 1,320 to the 750, and that’s not even including any social security cost of living. If a person would delay from 62 to 70, their social security check will be about double at 70 what it is at age 62.
What I say is the breadwinner should do that because the breadwinner’s check covers both lives. When the breadwinner dies, the spouse gets that check. The lower-earning spouse can claim early, the higher-earning spouse should delay. I say that’s in general because everybody’s different. You’ve got to look at health status, medical condition. Sometimes there’s minor children in the home. You have to take it early to get those benefits. I just say in general, the breadwinner should delay.
Stan: Got it. Jimmy?
Jim: It’s interesting on social security because so much has changed in that, but I think it’s important to people really, Tom, to understand exactly what you’re talking about with that delay process. I would encourage people to read that part of the book because it’s such an important event to that delay period from 62 to 70 that it does make such a significant difference. Going on to number 3, I know Stan loves the word hybrid so I know that he-
Stan: Oh god, that hurts. Don’t say that.
Jim: Dying to find out what hybrid retirement is.
Tom: Before I do that, let me just say a couple more things about social security. I’m not telling people they can’t retire when they’re 62. I say you shouldn’t take your social security benefit at 62. If you want to then build an income bridge from 62 to 70 using some other money. You could use some IRA money. You could use some 401K money. You could take withdrawals out of a life insurance policy. You could set up a short term annuity pay out. There are many ways to do it, but don’t take that 70 money early. I say that’s the best money that money can’t buy.
The last thing I’d say about social security is that with the changes now that file and suspend is pretty much gone and file a restricted application is very limited, I say you really need to use a social security calculator. I don’t know if you have one at your website, I know I have a free one at tomhegna.com that people can use if they want to just do it. It’s free, they don’t even need a credit card to use it. I think it’s so important to use a social security calculator and calculate some what-if scenarios, and where you should delay and where you should take it.
Moving on to step 3, consider a hybrid retirement. The whole point here is that too many people are trying to retire too early. They haven’t saved enough money. I would rather see somebody work from 60-65, even 60-70 than be forced to go back to work from 75-95. Unfortunately, that’s going to happen to a lot of people. If I can get people to work just a few extra years, I can increase their success in retirement up to 50%. Why? Because they have increased earnings, increased savings, increased social security benefits, and I can keep them from tapping into that portfolio for a few more years.
Stan: I’m glad you’re using the word hybrid correctly. Most of the time in the annuity world, hybrid is used because the guy doesn’t want to say indexed annuity. I agree with that, and that’s very interesting. I know you’ve done the stats on that as well. From here on in, we’ll point people to your site for the social security calculator because yours is a non-selling informational site just like Annuities.direct. That’s a good resource for all of our listeners. Again, tomhegna.com for that social security calculator that you can just run scenarios on there.
The gorilla in the room, and something that everybody brings up to me Stan The Annuity Man and Jimmy Dot Direct when they finally get us on the phone, is inflation. What is Tom Hegna’s approach to inflation?
Tom: I say you’ve got to have a plan for inflation. You can’t just plan to have an income to age 100 and beyond. You’ve got to have a plan for increasing income to age 100 and beyond. Look, this is where stocks can fit. This is where mutual funds can fit. This is where real estate can fit. Real estate’s been a tremendous hedge against inflation over time. You can also protect yourself against inflation without using any risk products. I’ve already bought guaranteed lifetime income that will kick in when I turn age 60, but I bought even more that kicks in when I turn age 65. I bought even more that kicks in when I turn age 70.
I bought even more that kicks in when I turn age 75. I’ve really bought about 11 of these things so far. Every time I get some more money, 100% of my new purchases are going for income because I’ve kind of figured this out, Stan. Retirement is all about income. It’s not about assets. Assets make people miserable in retirement. Income makes people happy. I talk a lot about the happy factor in my book, and that income will make you happy. If you look at who are the happiest people in retirement, it’s people who’ve got guaranteed paychecks every single month.
It’s retired military, retired government, retired teacher, retired professor. It’s people with pensions. Pensions are nothing more than a lifetime income annuity. People who have guaranteed lifetime income are happier. The people who’ve got assets, they’re losing money in oil. They’re losing money in gas. Now they’re losing money in Netflix. They’re losing money in Tesla. These people are miserable. Assets make people miserable in retirement. What allows people to enjoy their retirement, what allows people to be happy in retirement is guaranteed lifetime income.
Stan: I think it’s important to clarify that spouses are not assets. Am I right about that, Jimmy Dot? What do you think? He said assets equal being miserable. I’m thinking guys are out there going, “Yeah, I’ve got an asset right now.” Never mind, I’m just kidding. You’re right, that’s interesting. Going from accumulation to de-accumulation, which I hate that kind of phraseology, but it’s been used in our industry forever. It is. I tell people all the time it’s all about the income. What you described there is just your basic ladder.
You can ladder the purchase date or you can ladder the start date or you can ladder both. At the end of the day, people also have to understand with annuities that they have the big buildings for a reason and the large truck-sized logo on the plane for a reason. They don’t give anything away. We get a lot of calls on CPAU increases and COLA increases. I say, “Hey, these sound good at a bad chicken dinner seminar, but the math works in the favor of the company because they’re just going to lower that initial pay out if you attach one of those really nice COLA or CPAUs.”
What Jimmy Dot and I talk about is if you’re going to do that, if you’re going to do a laddered approach, maybe one of those ladders has a COLA and one doesn’t have it. At the end of the day, you have to look at the math and look at the break even points on COLAs and those type of increases. There’s no perfect product that tracks inflation out there, even though most agents will tell you that there are. Jimmy Dot, sorry. I just jumped off my subject.
Jim: I haven’t ever known you to get off of your subject, but-
Jim: Step number 5 obviously is near and dear to my and Stan’s heart, which is the guaranteed lifetime income. It’s something that it’s staggering because no matter how many webinars Stan and I do or conversations we have with people across the country … We were just out in San Francisco. It’s interesting how people have such a hard time grasping this guaranteed lifetime income issue.
Tom: Yeah. I say there are 3 sources of guaranteed lifetime income. The first source is social security, and we already talked about social security. When you really look at social security, what it is it’s a lifetime income annuity. It’s a guaranteed paycheck for life. A pension is a lifetime income annuity. It’s a guaranteed paycheck for life. What math and science says is you should cover your basic living expenses with guaranteed lifetime income. Social security counts and pension counts. Whatever you’re short, you’re supposed to go find an insurance company and buy a lifetime income annuity.
I do a lot of seminars and there are people all the time that say, “Tom, I don’t like annuities. Suzy doesn’t like annuities. Dave doesn’t like annuities. Ken Fisher takes out full page ads. I hate annuities, and so should you. We don’t like annuities.” I just act surprised. I’m like, “Serious? You don’t like annuities? Let me understand this. You paid into social security for 35 years, but you’re going to call up the social security administration and say’ Stop those checks, I don’t want another social security check in this house. We don’t like annuities.’ Are you seriously going to do that?
You worked with a company for 42 years, but you’re going to call up HR and say, ‘Stop those pension checks. We don’t like those nasty pension checks. We don’t like annuities.'” Then the people say, “Well, I guess we like those kind of annuities. It’s just those insurance company annuities that I don’t like.” I say, “Well, why is that?” “Because they’re all loaded up with fees and everything.” “Really?” If you look at the total fees in a lifetime income annuity, it’s not even a fee-based product. If you’re guaranteed $1,000 a month for the rest of your life, guess how much you get? $1,000 a month for the rest of your life.
It’s called a spread product. The company has to make more than what they’re paying, but there’s no fee coming out of there. Then I have people say, “Well Tom, that’s not exactly accurate. I read the policy. It says there’s a $300 policy fee.” That’s already calculated in the $1,000 a month. There are zero ongoing fees in a SPIA or DIA contract. There are annuities that have fees. Variable annuities have fees. Some index riders have fees. That doesn’t mean they’re bad. What it means is you’ve got to weigh out what is the fee versus what is the guarantee.
I want your listeners to know they can buy guaranteed lifetime income that’s not in a fee-based product.
Stan: You’re exactly right. One of the things that your assistant sent us, and we got the book. I’ve put on my smoking jacket and my ascot. I’ve got the pipe out. One of the things I read, it was on mortality credits. I thought it was really, really good. Can you, in an elevator speech dumbing it down for the common man, which is hard to do, let’s talk about mortality credits? If we’re going to talk about lifetime income, let’s talk about mortality credits. I always tell people you’re transferring the rest of the interest coming to pay you for the rest of your life, and I don’t know what the ROI is until you die.
That’s, in essence, mortality credits. How do you explain that to people in English?
Tom: When you look at the payout rates of these SPIAs and DIAs , they’re very attractive. You can get 6%, 8%, 12%, 14% guaranteed for the rest of your life depending on your age, depending on how long you wait. People say, “Well, that just sounds too good to be true.” I say, “Well, those are not interest rates. Those are payout rates. Those are cash flow rates.” Every check you get from an insurance company is composed of 3 parts. Part number one is principle. Anybody can give you principle. Part number 2 is interest. Anybody can give you interest.
Part number 3 is the secret sauce that you can only get from an insurance company. You can’t get it from a broker. You can’t get it from a bank. It’s what I called in “Paychecks and Playchecks” mortality credits, what I call in “Don’t Worry, Retire Happy” longevity credits. It’s the same thing, but let’s use mortality credits for this conversation. It’s these mortality credits that are the secret sauce of guaranteed lifetime income. You get more of these mortality credits the older you are, the longer you live and the fewer guarantees you put on your contract.
When I was at New York Life, we hired the Financial Research Corporation of Boston. We said, “Hey, we think these income annuities are a pretty good deal. Would you take a look and tell us what you think?” They came back and they said, “You’re wrong. They’re not pretty good, they’re incredible. You can’t retire properly without them.” What they call these mortality credits is Retirement Alpha. It’s a new form of Alpha. It just kind of shocked me because I think most people know what Alpha is. Alpha’s a measurement of performance of any investment, where the fund manager brings extra performance.
Warner Buffet brings Alpha to his portfolio because his portfolio does better than an average portfolio. His brains and smarts and picking and buying and selling, that’s measured in a form that’s called Alpha. I always ask people, “Where is a 70 year old couple supposed to find any Alpha in today’s market?” Are they going to get any Alpha from their CDs? No. Are they going to get any Alpha from their bonds? No. Are they going to get consistent, reliable Alpha from the stock market? No. What is a 70 year old couple supposed to do? They’re supposed to come to us and get the new Alpha, Retirement Alpha that’s the mortality credits of both life insurance and annuities.
Let me explain it this way. If I was sitting down with a 70 year old couple, one of the things I would ask them is, “How much money are you planning to leave to your kids?” Most of them say, “Well, whatever is left over.” I say, “That’s not a good answer,” because people live a diminished retirement because they don’t take trips. They don’t do this because they think they’ve got to leave their kids some money. I say, “Let’s identify upfront how much money you want to leave to your kids. Then, for pennies on the dollar, we’re going to buy a second life insurance policy to go to the kids.”
We’re using the leverage, the mortality credits of life insurance, to buy the life insurance to go to the kids. What does that free them up to do with all the rest of their money? Now they can spend it. Now they can take life only, your joint-life only options on these SPIAs and DIAs and they can get the highest mortality credits. They’re using the leverage of life insurance to go to their kids, and now they can use the leverage of these higher payout rates for their own income. That’s a new form of Alpha called Retirement Alpha.
I wrote a white paper called Retirement Alpha that explains this. It shows the math and science behind it. That Retirement Alpha white paper is available both at retirehappynow.com and tomhegna.com.
Stan:  People talk about I hate annuities. I think that’s a great … The whole Ken Fisher thing, whatever. He’s a good marketer. People love lifetime income. They just have to understand how these products are developed and positioned, and the fact that you cannot compare it to a normal investment. Straight up. If you do one thing … You should do a lot of things Tommy’s telling you, but if you do one thing, read that white paper.
Jimmy, that’s what I had my smoking jacket on with the ascot and the pipe reading. My wife said, “What are you doing?” I said reading Tommy’s white paper. It’s unbelievable. I looked like Bruce Wayne in the Batman thing. That’s what I looked like. All right I digressed.
Jim: I think it’s interesting, Tom. We wrote a paper 25 years ago, Retire First Class or Coach, which is kind of what we’re talking about. If you’re planning for your income to be guaranteed to take care of your living expenses, it’s a lot easier to live what I would call a first class retirement because you’re focused on the fact that you don’t have to worry about outliving or giving to your kids or all the other things that people tend to worry about. Step number 6 is obviously one of those big worry issues, especially with the world changes launching just in Obamacare and other things.
Long term care, having a plan. Again, back to the planning issue. Address that, if you would.
Tom: Yeah. Step number 6 is you’ve got to have a plan for long term care. My guess is, among your listeners, this is the number one thing that has not been taken care of that can wipe out their entire life’s work. I’m very clear. No retirement plan is complete without a plan for long term care. It’s the one thing that wipes out more people than anything else. I also say this, any plan is better than no plan. There’s multiple plans out there. You can buy long term care insurance policy. That’s what I own.
The negative on that is that companies underprice them and they’ve been raising their premiums and it’s causing all kinds of commotion in the long term care market. I say this, no matter what they charge, if you think the cost of long term care insurance is high, you ought to try not having it. That’ll wipe you out. The second option is to buy a life insurance policy with a long term care benefit attached. Those will not go up in price, so I think that’s what a lot of people are going to use. The third one is if you can’t qualify for either, you get some type of income annuity that springs up with a bunch of income in your 70s and 80s.
As you know, there are some annuities that have income increases if you need long term care. I say any plan is better than no plan, but you’ve got to have a plan.
Stan: What’s the average cost now for long term care? I know when you can’t do 2 of the 6 daily functions, you live an average of 3 years a maximum 7, according to the actuaries. What’s the cost right now? I know it’s increasing, but if someone’s thinking, “Okay, how do I plan,” what is that cost?
Tom: It’s all over the map, but I think 60-90,000 a year is about average. My parents are in assisted living for the both of them. It’s $10,000 a month. You do the math on that. If they didn’t have that policy, and I made them buy a policy 16 years ago. They didn’t want to, it’s too expensive, we’ll never need it, it’s an insurance company rip-off. My dad said all those words to me. I made them buy it. I can’t imagine their retirement if they didn’t have those policies that are paying that $10,000 a month.
Stan: Question. Obamacare, as Jimmy Dot loves to call it, the Affordable Care Act, how does that play in, or does it play in at all to long term care? Or will it?
Tom: It really doesn’t so far. Once you’re older than 65, then Medicare takes over and then you’re not subject to all the Obamacare stuff. I think it’s clear that governments are out of money. I always tell people, “If you don’t know what Medicaid is, look to your left, look to your right. That’s Medicaid. You’re saying you’re not going to pay for yourself. You expect the person on your left, the person on your right to pay.” I say, “Well, look at them. They don’t have any money. They can’t pay for themselves, how the heck are they going to pay for you,” which is why Medicaid is broke.
There’s not enough people to the left and to the right. What they’re doing is now they did a 5 year look-back. I think they’re going to go to a 10 year look-back. I think they’re going to start now assessing children for their parents’ long term care costs. People better wake up, and you better have a plan. Like I say, any plan is better than no plan, but it’s the one thing-
Stan: Go back to the last point about the children. Hold on, I just fell off my chair. I’ve got to get back up. What did you just say about the children?
Tom: They’re going to start coming after children for the parents’ long term care costs. Look it up, Google it, read it. It’s coming. That’s going to be scary if all of a sudden, parents are in long term care and now they expect the kids to pay. If they don’t, they’re coming after the kids for … They’re coming up to the house and all that. That’s going to be coming. Just expect it because governments don’t have the money. Governments don’t have money. The only money government has is what they take from somebody else.
Stan: Tommy, that’s going to be easy because a lot of the kids are living in the basement, so they can just serve the papers to the kids in the basement … No, I’m kidding. Last point, number 7. One of the things is concerning home equity, which I didn’t know this until Jimmy Dot told me this the other day, but people can actually sell or do home equity without a celebrity being on the marketing material. Is that true?
Tom: Yeah. I say there are basically 3 ways to use your home equity wisely. For many people, their house is the largest asset they have. Number one, they can sell the home and downsize. If you’re single, you can capture up to $250,000 tax-free in capital gains. If you’re married, you can capture up to $500,000 tax-free in capital gains. That can certainly help a retirement. You can take a loan against the equity or you can do a reverse mortgage. Let me tell you where I come down on reverse mortgages. Here’s what I say. I am not for reverse mortgages, I am not against reverse mortgages.
They are a tool that can be used in retirement. My best professional advice is to be very, very careful and use a reverse mortgage expert. Having said that, there have been numerous changes in reverse mortgages just over the past couple years, and you’re going to read many more positive articles from very respected sources like The American College. I don’t know if you know Don Graves. He’s probably an expert in reverse mortgages. You might want to interview him sometime, or Wade Pfau . Wade wrote something on reverse mortgages.
You’re going to read a lot more. There’s no doubt in my mind that home equity will play a role for baby boomers’ retirements. I’m even planning to use one because once I’m 62, here’s what it allows me to do. When I’m 62, I can buy a $600,000 house for a one-time payment of about $300,000. I’m done for the rest of my life. I pay $300,000 I get to live in a $600,000 house. When I die, that house is probably not going to go to the kids. It’s probably going to go to the bank. If I know that going in there, I can have other money go to my kids. I can have life insurance.
I could use some of that other money for income. I’m telling you, I’m planning on using some of the tools. I just hope they’re still there when it’s available. You can do a home equity line of credit, which is a very smart thing to do because it grows every year, even if the value of your house doesn’t. Imagine if you’re sitting in like Phoenix, Arizona where housing prices drop 50% in a matter of months. If I have this home equity line of credit that’s going up over time and the housing market collapsed, I just got a put option on my house and I can walk away from that house with money in my pocket and the bank.
There’s a lot of smart ways to use some of this. All I’m saying is they’re not the nasty, negative things that they used to be.
Stan: Jimmy Dot, what do you think about it?
Jim: It’s like Tom said, home equity loans continue to be … They’re evolving, much like long term care has evolved, the insurance products have evolved over time to be better. I think home equity loans are going to evolve over time to be better. The tragedy is that we’re taking away an asset that used to pass from one generation to the next and was a valuable component of that. I think that what’s changing in the United States, at least from my perspective, is the lack of planning by each generation is coming back to roost.
Ultimately, we’re having to use all the tools because we haven’t saved enough or maybe we can’t save enough. It’s interesting. I think all the points that Tom’s making are valid. Everybody who’s listening to this needs to understand there are a lot of tools. It just takes time to sit down and plan. Unfortunately, that’s the one thing that we hate to do the most is actually plan. We spend more time planning our vacation than we spend planning our finances. I think this is a great book for people to read. I think there’s a lot of great tips in here.
A lot of things that people can walk away just from this 30 minute podcast and say, “I’m better for having listened to what’s going on.” I think people should take more advantage of what’s there. My last question, Tom, really is you mentioned life insurance a few times. I think that as much as annuities have an ugly feeling by the consumer, life insurance probably has even more connotation of ugliness. Just some brief comments of why you think … You talk about discounted dollars and all that. Kind of run through that quickly for people to understand the advantages of life insurance.
Tom: Yeah. I tell people all the time don’t leave your kids any money. Don’t leave your kids any money. I want you to spend your money. I want you to leave them life insurance because you can leave them so much more for so much less. One of the first things my wife and I did when we set up our plan, we had a discussion how much money we wanted to give the kids. We want to give them something. We don’t want to give them too much, we don’t want to give them too little. We picked a number. Once we picked a number, for pennies on the dollar, we bought life insurance to go to the kids.
What does that free us up to do now with every last penny we got? Spend it. You see, too many people live a diminished retirement because they think they’ve got to leave their kids some money. I’m going to tell you right now, I don’t want you to leave your kids a penny. I want you [inaudible 00:29:42] life insurance because you can do it so much cheaper. Same with charitable giving. We’ve got a lot of people who are listening that are very charitably-minded. I don’t want you to give money to charity. I want you to leave them life insurance because you can leave them so much more.
Protecting social security benefits. I can just go through an entire list of things where life insurance is the most efficient way. I don’t care if you like life insurance or not. That’s not the point. The point is where can you get the biggest bang for your dollar. Where can I get the most for the least. When you really start a retirement, you better be getting the most for the least because otherwise you’re going to run out of dollars. Leave your kids life insurance, and then spend your money. I can’t make it much simpler than that.
Jim: The fact that life insurance does pass tax-free to the beneficiary, so you don’t have to worry about that IRA distribution and all of the other things. People are leaving their kids with a tax burden was long with the money. Life insurance, planned properly, can go to them with no tax liability.
Tom: Right. IRA money’s the worst money to leave to the kids. Spend that, but leave them life insurance because it’ll go tax-free to them.
Stan: Tommy, one of the chapters is a note to women. In this crazy political season we’re in, I’m hoping it has nothing to do with either candidate.
Tom: No, it’s just that women face risks that men don’t. If you think about it, women live longer than men. They typically marry men who are older than themselves, so they’re going to be widows for 15, 20, 25 years. They’re going to live with the consequences of the under-insurance because men are very under-insured. Women are even more under-insured, but women will live with the consequences of the men being under-insured because the men don’t have enough life insurance. Then you add to the fact that now 50% of women are the breadwinners of their home. 50% of women own zero life insurance.
That’s a huge risk. Women do most of the caregiving, both for children and their parents, and even the husband’s parents. A lot of times, it’s the women that end up with the caring. This child care and parent care costs them … They have to take time out of the work force. It costs them hundreds of thousands of dollars in lost pension benefits, lost wages, lost social security benefits. Women need to read that, especially because they’ve got to save more. They need to take care of the long term care risk.
A lot of guys say, “Oh, my wife will take care of me.” When they say that, I say, “Okay, sir. I need you to lay down right here. Now ma’am, I need you to come over here and just pick him up and carry him downstairs, put him in the car.” “Well, I can’t do that.” If you can’t do that-
Stan: Has it ever happened, Tom? No, okay. I’m just checking. I’d love to see a lady dead lift that guy. That’d be awesome.
Tom: I say, “IF you can’t do that when you’re 67, how the heck are going to do that when you’re 87?” That’s long term care. Women face risks men don’t, and that’s why all of these is even more important to them.
Stan: Jimmy, now we have to of the 7 daily functions. Number 7 is can you dead lift your spouse. If you can’t, you know what? You’re in trouble. You know what, this has been great. Obviously we’re all busy and masters of the universe. I’m glad, Tommy, that you carved out some time for us. I hope you do that in the future. What we’ve been talking about today, if you have not been paying attention, smack yourself in the head. Don’t Worry, Retire Happy: 7 Steps to Retirement Security, the latest and greatest book from Tom Hegna, who is an absolute content dynamo.
He’s a god-like figure to all of us out there because he is hammering away at it. I encourage you to go to retirehappynow.com or tomhegna.com. His website, Jimmy you’re going to like this, it’s a veritable plethora of retirement information. It’s a cornucopia of information that you need. All kidding aside, he is a rock star. Tom, we really appreciate you being on Incomeinvestor.direct podcast, and hope to see you again very, very soon.
Tom: Thank you, I would love to do it. Talk to you in the future.
Stan: All right, take care. Bye bye.
Tom: Bye.

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