Retirement Planning Is Harder Than It Used To Be (Part 1)

Plan With The Tax Man

Every generation likes to talk about how much harder things used to be when they were kids. Like all of the
people who used to have to walk five miles to school, in the snow, uphill both ways. But they had at least
one thing that was EASIER…and that was retirement planning. Let’s talk about why on today’s episode.

Important Links: Website: http://www.yourplanningpros.com

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Transcript:

Marc Killian 00:01

Every generation likes to talk about how much harder things used to be when they were kids. You know, we've all gone uphill both ways to school in the snow, all that good stuff, right? But we want to make sure that we're talking about the things we need to do for retirement planning. And is it truly harder than it used to be? So that's going to be our podcast for the next couple episodes. Right here on plan with the tax man with Tony Morrow. Look up in the sky. It's a bird. It's a plane. No,

Announcer 2 00:27

it's the tax man. He may not be a superhero. But Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for a plan with the tax man.

Marc Killian 00:40

Hey, everybody, welcome into the podcast. Tony and I are here to talk investing finance, retirement and retirement planning. Is it harder than it used to be? So we're going to break this into we get 10 points that we're going to cover over the next two episodes. We're going to break this into five and five atony and talk about these a little bit. And just see is it that that last couple of miles you know, like I said, the uphill going into snow both ways to school. So my dad used to tell me right, he's like, he's like, You guys have it so easy. I used to walk uphill both ways. I was like, wait, what? Yeah, go uphill both ways. What's going on my friend how you doing this week?

Tony Mauro 01:16

I've been good. You know, as we're recording this starting tax season, and it's kind of a weird thing, because our weather is was very, very cold. And we got a lot of snow and now it's all gone. And it's 60 degrees as we're taping this so it's weird. It's a weird February's Yeah,

Marc Killian 01:31

really? Yeah, you're warmer than I am today. If you're 60 right now, so I'm, like 52 here. And I'm in the south. So go figure, right?

Tony Mauro 01:39

Yeah, it's just odd to see the sun and this in February, we hardly ever get this. I'll

Marc Killian 01:44

take it and enjoy it. Right. Right. Right, take it and run with it. Well, I hate talking about the snow, right? So at least you gotta get rid of some of that with that sun. So enjoy it while you can. Well, let's dive into it. And like I said, we're gonna break this up into five and five. So we'll do the first five here and and see what, you know, our things are things harder now. Right. I think in some ways, they definitely are. And I think in others, we might see that there is some easier things, but it's all a matter about having a strategy and a plan that will I'm sure that's going to be obviously the overarching theme here. But let's jump in, let's start with the first one job stability and company loyalty, clearly way different now than what it was for our, you know, I mean, we're gonna we're in our 50s. So clearly different than it was for our parents or even our grandparents, for sure. That's

Tony Mauro 02:28

true. Yeah. And the reason that is, is because, you know, back in our parents days, and grandparents, you went to work for somebody for your entire career, you know, and a lot of times that was a goal, right? Yeah, that was that was it. And so people stayed at the same job. And I don't meet too many either on the tax side, or the financial planning side that have I mean, I've been with not only just maybe one or two employers, many, many that get into their 50s. They've been with 1015, sometimes more over their career. And so that's leads to a lot of I would say that that makes it a little harder, because people are jumping around more, you're moving 401 K's that sometimes they don't even get in them. Right. And they don't get that benefit of the old time. I think we're going to cover later but also to is, you know, a lot of these companies don't have the same type of old fashioned pensions,

Marc Killian 03:23

right? Well, there was the stability there. Right, like so if you if you did work that that long, 30 year job or whatever the same place, you did, not only did you have the stability of the job, but you also had the stability of the pension and the retirement plan that they that company tended to offer, right, which definitely made life a little easier. In that respect for retirement strategizing, right, because you had your three, three legs of a milking stool if you want, right, Tony, so you had your pension from that job for 30 years. You had your Social Security, and then maybe a modest little savings, it's you accrued a lot of weight. And you were good.

Tony Mauro 03:57

You were good. Yeah, you know, and some of these other topics will lend itself to that. But that's what you had. And today, you don't have that you've got basically the other two, and I will talk about them. And

Marc Killian 04:08

they're definitely harder the other two to deal with. So yeah, that first one, I definitely think that, in that respect, it's harder now than it used to be for sure. Let's go to housing market stability. All right. So number two here on our list, you know, was it more general? It'd be more stable and predictable? Yeah. I mean, I think there's definitely been times in our, in our society over the last, what, 60 years where home prices have been more stable than they currently are. They've obviously gotten out of control here over the last little bit. I don't know what's your take care?

Tony Mauro 04:38

I agree with that. I mean, I you know, back in the older days, it was, I think, a little more stable, you know, but I think the offset to that we you know, they had higher interest rates back then, for the most part. And I think that, again, though, most of our parents they didn't move around much like we do, and especially our kids, the younger people and so I'd never like to use the home as an asset or a source of income, I guess I should say, when we're retirement planning, it's nice to have the equity. It's nice to have all that. But unless we could turn it into some kind of repeatable and reliable income, everybody's got to have a place to live. And whether it's predictable, or volatile, or whatnot, I still like homeownership, or clients. And you know, and I know a lot of people, young people, especially will fight me on that. Well, I guess I'm old school too. Well, so

Marc Killian 05:32

for a little comparison here, right? So thinking about housing, and you're talking about rates? Just I'm sure you don't remember, no, this totally off the top of your head, but I'll throw it at you for fun. What was the US Treasury bond rate in 1980? Right, so do you have a guess? I'm gonna say it was around eight 9%. The low was nine, the average yield was 11. Point 4.4. And so for having something safe, right, in a bond or whatever. And so you'd go Okay, so we've got that we've got our civility of our job we just talked about, and we've got our home. Well, what was your home mortgage rate? By

Tony Mauro 06:04

the mortgage? Very, very high. Yeah, yeah. I'm

Marc Killian 06:06

gonna say 12 13%. You're right, sir. 13.74, in 1980, was the average. Right? So I mean, considerably higher, right. And now granted, the home prices were a heck of a lot lower. And that's the difference than what we're dealing with now. Right? You're talking six, seven, and 8%. Maybe you're five to 8% on mortgages right now, because of the interest rate rise that we had. But, you know, the prices are out of control. So that I think that's where it also is making it harder right now. I mean, if you're younger person trying to buy a house is pretty daunting. It's

Tony Mauro 06:36

very daunting. My son and his wife have been married a couple of years, they are thinking about buying a home, you know, and when they start looking at it, you start putting the numbers together. And it's hard to make that work as a young person. Get that mortgage in there. I know when I built my first house, and this was in my lifetime. It was 36 years ago. We built it with the land. And it was a small house. Sure, but it was $77,000. Crazy right then. Yeah, crazy. And your truck probably cost that now. Your cars are costing that, you know, in the average home, even here and in Iowa, you know, it's up there a couple 100,000 Oh,

Marc Killian 07:15

yeah, I think the average right man was somewhere between 350 and 450. Yeah.

Tony Mauro 07:19

Which is great. Well, we're in depending on where you live, yeah, part of the country. So it is I think it's rates are low. And I think it's a stretch for these younger people or anybody to get into them, especially the first time. Well,

Marc Killian 07:31

right now the old days are too low. We're we're losing here in the modern era from, it'd be an easier, let's go to three less reliance on personal savings. Well, we touched on that with the milk stool, right? So you had those other two pieces, so you didn't have to have as much saved personally. And obviously, that's completely flipped. Look at all the secure Act changes. I mean, the government, everything is saying, hey, you need to build your personal savings, because that's what you know, that's the ticket, you're gonna have to have that you are and

Tony Mauro 07:58

like, say, totally on us now as as Oh, yeah, investors, you know, it's not, we can't count on our employers. We'll talk a little bit about Social Security here in a little bit. But it's, if we don't save, and we get to the end of the road retirement, it's not going to look very pretty for us. And I do think it's, it's was a lot easier back then only because they had those pension plans. I would make the case, though, that a lot of people back then and we'll talk about a little later as well, is they didn't really know about saving and whatnot like we do today. But and we'll cover that. And that's true. And we've gotten better at that. But we've also had to write, we've had to because there's just there's, we have to rely on ourselves and our advisors, to help us out to get to get us to where we want to be because it's all on personal savings. Now in my my opinion,

Marc Killian 08:49

for sure. And that really leads into number four, which is it was a simpler investment landscape back then your options were way less. So it was a little maybe a little easier to navigate. Obviously, now we've got way more complexities going on. But in some ways, it's also easier to navigate now because we have the technology and we have a lot of different things. And we have a lot more options and a lot of cases maybe better options. But what happens is it gets confusing, because now there is just so many simpler, you know, sometimes can be good, right? So like, Well, what we used to have was just less less options. Now we've got so many options. It's kind of overkill, but we have created a lot of good things. I mean, think about it, Tony, like even ETFs right. I mean, they've only been around since the 90s. You know, so that was a great change from mutual funds, because ETFs are just a little bit faster. There's the little technology allowed that kind of thing to happen. Does that make sense? It did. Yeah.

Tony Mauro 09:42

I mean, they did and I think even with the vast array of investment products available, there are a lot more options to suit specific needs. Yeah, you can really, you can really dial it in now. Right? You can you can dial it in. I mean you know a lot of people Talk orally about annuities and you know, they do have their place, depending on the situation and back way back. Those options were, if they had them, it wasn't like they have today the you know that you've got fixed, you got variable, you got it, you got everything under the sun just in that arena. Yeah, let alone 1000s, maybe now of mutual funds and all of that. So I agree, I think both sides of the fence there, it was simpler. So it was easier. But I think today, we have more options to help us. You got to learn about them and get yourself educated. But yeah,

Marc Killian 10:32

you can really fine tune your your, your investing landscape now, which I think is really necessary leading back to that prior one, right, that personal savings, you know, how you're building your and it's not just the word savings? It's not like money in the savings account? Right? It's your personal, you know, wealth. It's your portfolio that you've built, right, which we know. So you've got to use the tools, you've got to be invested. I mean, you really do because you got to keep up with inflation, right? So it's, it's all this, we talked about it a million times, Tony, it's all this big puzzle that you do have to build. And so I think the technology and the tools certainly have helped in that landscape side of that thing, too. That works well. And in my opinion, it gives you more options to help people build all that personal wealth.

Tony Mauro 11:12

I think, too, you know, even in my case, compared to 1520 years ago, you know, when I was younger in this part of the business, right? We don't have the technology even you know, we have it today. But it's advancing so fast that, you know, we can really dial in people's finances in their plans, with basically just getting the data and getting it in there. And then you could run so many different scenarios so quickly through we used to have to do that by hand.

Marc Killian 11:42

Tony was That was not fun. Don't he was having hand cramps. Were I right all the time. Right. Yeah,

Tony Mauro 11:46

you know, and then then the spreadsheets came along. You tried to do it in spreadsheets, but now you've really got a lot of technology where in the client can be involved, you know, with that they can always see where they're at see their plan, which is great. So yeah, yeah, there's there's a lot of things. Good things I like about the technology,

Marc Killian 12:03

for sure. Are you at the 30 year market? I know you've been doing this quite a while i is 30 years. 30 years? 31 years? 31? All right, yeah. 31 years. Yeah. So yeah, I mean, a lot has changed, right? In the industry. You know, you're a CPA, a CFP, and an EA. And, again, you've seen a lot of changes that, you know, you don't go so far back at where you're just using the abacus. But no, but when I got out of college, when I went to work for a CPA firm, I literally had two pencils and an adding machine on my desk. Nice. Nice, good stuff, right there. All right, well, let's talk about the last one higher interest rates since you know, we, interestingly enough 2022 In parts of 2023. And even still right now, but certainly felt like this interesting, you know, what's that saying? History doesn't repeat itself. But it often rhymes. Well, everything felt like the 70s all over again, you know, in in a very interesting way. And not in a great way either. Gas prices are high interest rates were high, you know, shortages, all these kinds of things, we were seeing a lot of stuff, then it kind of throwing back to that. And so we just talked about the bond rates and the housing rates, you know, back in the 80s, they were quite high, even compared to now. And so, you know, it's great to salt a little bit, right was like, Oh, I'd love to get 13% on a CD. But you'd also be paying probably 13 to 16% on the mortgage. So take your poison. Yeah. And then you had you had rapid inflation back then as well. Right. And we have that now. But, you know, that 5% Right now, I mean, you know, four or 5% on a CD or even a fixed indexed annuity, some different things like that. I mean, there's some decent numbers now versus what we even saw just a couple years ago, Tony, but again, you got to have a, you got to have, you know, like, it's like Thanksgiving dinner, it's like that plate, right? You got a little bit of everything in order to have a really good Thanksgiving meal on your plate. If you just had turkey and mashed potatoes, it might get a little boring. Yeah,

Tony Mauro 13:50

I remember when my mom in this was in 87, her data just died. And she had some money, and we stuck it in the mutual or money market mutual fund that was paying like 9%. And, you know, back then, you know, I think with the higher interest rates, what's happened over the years is, you know, inflation has come way down rates have come way down, and for saving for retirement, especially last 20 or so years, except for a few peaks here. And there, it's never been eight or 9%, five, and everybody's jumping up and down, is you know, it's been around one or 2% on the safe side with CDs and things like that. And, you know, people save for retirement have had to say, Look, I can't build anything, you know, what with those kinds of rates, and so they've had to move to other types of investments. But I like the low interest rate environment. I mean, I think it's better for a lot of different things. I know retirees, you know, obviously they want as much as they can, but that whole interest rate thing intrigues me and I know I just watched on 60 minutes they were talking about you know, possibly lowering rates again, the Fed and and where we're going to be at with that had to try to keep inflation in check. And yeah, and bring us back to some sort of normalcy. Yeah, they're, you know, they're talking about it, but it just seems like we continue. And the problem is, is that what we've gotten into society with our leaders and everything else? And again, just my opinion, but we keep making short term decisions versus long term decisions, right?

Marc Killian 15:18

They do. And so we kind of we were very reactionary versus looking at things when a longer picture, and then it winds up being problematic later, and there's like, well, it's somebody else's problem to fix later. Right. And at some point, we kind of have stopped doing it. And you don't want to do that when it comes to your retirement. Well, I'll make a short term decision, and I'll deal with the, you know, deal with the rest of it later. Well later runs out, right.

Tony Mauro 15:41

I mean, like Tony, and I just said, we're in our 50s. Now later starting to get shorter, you know? Yeah. And our government unfortunately does too much of that. If we try that, like you say, we're really going to end up on the short end, which is why we're going over all this, you know, is to hopefully instill some, some visions, some aha moments, something you know, to make sure you're, you're staying on top of your plan. Yep, definitely.

Marc Killian 16:05

And that's why you got to strategize, folks. That's why you got to have somebody in your corner, helping you work through things, it's not as easy as it used to be. Certainly, retirement planning is harder now. Maybe some would argue than ever, you know, there's definitely a lot of things that can be helpful in today's in a environment and era, but a lot of complications as well. So, gotta have a strategize a strategy, and gotta have a plan to help you strategize, a planner, I should say, to help you strategize. So, reach out to Tony and his team and get onto the calendar, if you're not already working with him, share the podcast with others that might benefit from our content here that when we do these every couple of couple times a month, you can find us on Apple, Spotify, YouTube, all that good stuff. So reach out and let them know if you need some help you're planning proz.com All the tools, tips and resources are there at your planning proz.com And subscribe, at least definitely so that you can get the next episode, which we'll continue this conversation on, Tony, thanks for hanging out, buddy. All right, we'll

Tony Mauro 17:00

see you next time.

Marc Killian 17:01

Yep, we'll see you next time right here on playing with the tax band with Tony Morrow.

Walter Storholt 17:10

Securities offered through a van tax investment services SM Member FINRA SIPC, investment advisory services offered through advanced tax advisory services insurance services offered through an event tax affiliated Insurance Agency investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional