That’s Debatable
by SGL Financial
Our 2 Cents – Episode #101
That’s Debatable
We start off with some fun on this week’s episode of Our 2 Cents by drawing the names of our three raffle winners, congratulations to you all!
Then, we’re posing a few questions to see what “side of the fence” Gabriel and Steve are on. Next we take a look at some priorities to keep in mind as you approach retirement, and finish up by answering a question from one of our listeners.
- Debatable Questions – Where Do You Stand?:
- Is the market going to go up or go down?
- Should you always pay off your house as soon as you can?
- Should you ever use credit cards?
- Are individual stocks better than buying mutual funds or ETFs?
- The Countdown to Retirement:
- What are you planning to do in retirement, and how will you pay for it
- Health insurance and ensuring there are no gaps in coverage
- Reducing or eliminating debt before retiring
- Planning your income sources and Social Security benefits
- Listener Question:
- “I am pretty much ready to retire, but I won’t be old enough for Medicare for another six months. Should I just tough it out until then?” – Paul
Tune in now to join us for this discussion!
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Podcast Transcript:
Announcer:
You’re listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the president of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies and more.
Gabriel Lewit:
Good morning, everybody. Welcome to Our 2 Cents, or good afternoon depending on whenever you’re listening to this. Maybe even good evening. But Steve and Gabriel Lewit here, back with our 101st episode.
Steve Lewit:
I hope it’s not goodnight like, I’m listening to this and I fall asleep.
Gabriel Lewit:
Well, definitely. I know it’s impossible to listen to a show of this caliber and fall asleep.
Steve Lewit:
And fall asleep.
Gabriel Lewit:
It’d be literally impossible.
Steve Lewit:
Definitely not. Yeah, impossible.
Gabriel Lewit:
Well, folks, we’re super excited to embark on our next 100 episodes with you. If you tuned into the last show, we had quite a bit of fun just celebrating everything that we covered over the last prior 100 episodes or so.
Steve Lewit:
And quite a bit of raffle.
Gabriel Lewit:
A ton of people texted in the secret code to enter into our 100th episode special, $100 winner gift card raffle.
Steve Lewit:
Do you think so many people texted in because you gave it away so early?
Gabriel Lewit:
Well, they did have to tune in, and then I realized even later afterwards I’m like, “Well, I guess someone could just jump to the end of the show.”
Steve Lewit:
Exactly.
Gabriel Lewit:
Streaming service anyway, but whatever. Thank you all for your inquiries and for your texts. It just meant a lot to us.
Steve Lewit:
And your congratulations. We got congratulations now that just…
Gabriel Lewit:
A lot of you just said some nice things, and so yeah. We wanted to, again, say thank you. We’re really excited about the next 100 episodes and beyond and, of course, this is our first of many, many more. But to kick things off here, we wanted to start off by picking live our raffle winners. I won’t say the last name on the show here, so if you pick out the… You can’t say it either when we draw these live.
Steve Lewit:
I thought I could say it.
Gabriel Lewit:
No, you can say the first name and the last initial, just don’t say the last name. Then we’ll email you or text you separately just to let you know that you, indeed, did win. Okay? You’ll probably…
Steve Lewit:
Just so you all know, we don’t have anyone with the same first name and last initial, so you should know who you are.
Gabriel Lewit:
I don’t know that for a fact but hopefully that’s probably the case.
Steve Lewit:
I checked it out.
Gabriel Lewit:
Yeah. Oh, you did? Okay. All right, so first things first, without further ado I’m ruffling up the names here in our cup that we’re going to draw from. It’s actually a very stylish SGL Financial cup. A mug, in fact, if you… I was talking to Katie and she thought people wouldn’t want to get some cool SGL swag as future raffles. I said, “I think people would love to have SGL swag.” So we might raffle off some stuff down the road or just give our listeners some awesome SGL gear to rep around from time to time. Stay tuned.
Steve Lewit:
Because it’s high quality. It looks good.
Gabriel Lewit:
Of course. Nothing but the finest.
Steve Lewit:
They’d be proud to hold it up to their neighbors and friends.
Gabriel Lewit:
It’s a very colorful, lovely looking mug.
Steve Lewit:
Definitely. You all should have one.
Gabriel Lewit:
Okay. Without further ado, pick our first one. Do not say the last name, Mr. Lew.
Steve Lewit:
Okay, okay. Hold on.
Gabriel Lewit:
Can you fit your hand in there?
Steve Lewit:
It’s full of things. I’ve got five of them. I have to pick one.
Gabriel Lewit:
Yeah. Okay. Here we go.
Steve Lewit:
All right.
Gabriel Lewit:
Here we go. Drum roll.
Steve Lewit:
All right. Drum roll is Geraldine A.
Gabriel Lewit:
Cool.
Steve Lewit:
Cool. All right.
Steve Lewit:
Geraldine, congratulations. You have won …
Gabriel Lewit:
$100.
Steve Lewit:
That’s fantastic.
Gabriel Lewit:
It is. That’s great. I hope you do something really cool with it.
Steve Lewit:
How does she get it?
Gabriel Lewit:
Well, we’re going to contact her and then get it to her. Congratulations, Geraldine. All right, number two. All righty, I’m going to pick this one. Can’t have you have all the fun.
Steve Lewit:
Go ahead. Mm-hmm.
Gabriel Lewit:
Okay, here we go. Ruffle, ruffle, ruffle, mix, mix, mix. All right. We’ve got Matt L.
Steve Lewit:
Matt L.
Gabriel Lewit:
Congratulations.
Steve Lewit:
Congratulations, Matt.
Gabriel Lewit:
We are so excited for you. Hopefully you do something fun with that, maybe a little dinner, maybe a night out, maybe some drinks with friends. Who knows? Go and live it up. That’s our goal for you guys.
Steve Lewit:
Yeah. Or you can bank it and invest it.
Gabriel Lewit:
That too. Send it right back. All right. The last one here, Mr. Lew.
Steve Lewit:
I put them all out here.
Gabriel Lewit:
I see that.
Steve Lewit:
It’s a lot easier.
Gabriel Lewit:
Yeah, okay. Now mix, mix, mix.
Steve Lewit:
I’m not looking.
Gabriel Lewit:
Alright I can see that. I can vouch for that.
Steve Lewit:
Okay. All right. All right, folks. Here we go.
Steve Lewit:
Okay. Tom M.
Gabriel Lewit:
Tom M.
Steve Lewit:
Tom M.
Gabriel Lewit:
Tom M.
Steve Lewit:
Tom M.
Gabriel Lewit:
Congratulations, number three winner.
Steve Lewit:
So we’ve got Tom M.
Gabriel Lewit:
Tom M, Matt L and Geraldine A.
Steve Lewit:
Geraldine A.
Gabriel Lewit:
Geraldine A.
Steve Lewit:
Right. Congratulations, everybody.
Gabriel Lewit:
Yeah. Guys, thank you so much. We might… As I mentioned, we are brainstorming. For our next 100 episodes we may start doing more fun, lighthearted raffles like this here. They’re just for some free gear and other SGL mugs and swag and stuff like that, so try to make sure we keep our show fun and exciting.
Steve Lewit:
I think that’s a great idea. Katie…
Gabriel Lewit:
Well, we have to buy more swag first before we raffle it off, I think, because all we have right now is…
Steve Lewit:
Swag?
Gabriel Lewit:
Well, we have mugs and we have pens. I don’t think anybody wants pens. Although, to be fair, I had one client that asked me if I could…
Steve Lewit:
I did too.
Gabriel Lewit:
… mail him some pens because he really liked the writing quality.
Steve Lewit:
Box of pens.
Gabriel Lewit:
So maybe people would want to raffle up pens.
Steve Lewit:
You never know.
Gabriel Lewit:
Who knows? Okay.
Steve Lewit:
You never know.
Gabriel Lewit:
All right, back to business here, folks. Can’t have all fun and no meat here. We’re going to talk a little bit today about different sides of common, I’ll call them debatable, questions in financial and retirement planning. As you know, there are often times… Well, I should say, there’s always two sides to a coin.
Steve Lewit:
What kind of coin are you thinking of?
Gabriel Lewit:
Well, I guess, to be fair there could be a double-headed coin.
Steve Lewit:
Same sides.
Gabriel Lewit:
But it still would be two sides, just with the same head. But the point is, because there’s very many topics out there, many different topics that people have different opinions on. So what we thought we’d do is, we’d pick some of these here and talk about them. There’s lots, we won’t get to all of them here. We’re going to talk about how we feel and maybe chat about the other side as well, just to give you some perspective and just have a little fun with that.
Steve Lewit:
I like it. You know what the first one is?
Gabriel Lewit:
I do, because I’m looking at the list.
Steve Lewit:
Well, I have one that’s not on the list.
Gabriel Lewit:
Well, then it can’t be the first one. It may be your first one.
Steve Lewit:
Okay. Then you go first.
Gabriel Lewit:
No, you go first.
Steve Lewit:
Is the market going to go up or down?
Gabriel Lewit:
Well, okay. That’s not usually a debatable question per se.
Steve Lewit:
Well…
Gabriel Lewit:
I mean, it’s always internally debatable but there’s no one…
Steve Lewit:
There’s no right answer to it.
Gabriel Lewit:
Right. I mean, I’ll give you the right answer. You want to know the right answer?
Steve Lewit:
I do know the right answer.
Gabriel Lewit:
Over time, it always goes up.
Steve Lewit:
Yeah. If you’re a person listening to Morgan Stanley saying the market will continue to go down over two years, or a year and a half I think they said, and then there’s another guru that’s saying, “No, no. The market’s going to go up by the end of the year.” Which side do you take?
Gabriel Lewit:
Well, I think that’s a hard one to answer. Everyone’s going to be different there just on how they feel. So I don’t know. I think the market’s going to go down a little bit more today, or this year I should say, and then it’ll come back maybe a little bit towards the end of the year. That’d be my prediction, but it’s very likely to be wrong because we don’t have a crystal ball. Neither do anybody else.
Steve Lewit:
Exactly.
Gabriel Lewit:
Right? I mean, what do you think?
Steve Lewit:
I don’t know. I actually don’t know. There’s data that says the market will continue to go down with rising interest rates for China and supply chains and housing prices starting to soften, which is a very important part of the economy. There are other forces that say, we’ve got our arms around this and it’s going to perk up at the end of the year. So I don’t know. I don’t know.
Gabriel Lewit:
Well, the point is, you have to pick a side. You can’t land on the edge, you’ve got to pick either heads or tails.
Steve Lewit:
All right. Mine is the market’s going to go down quite a bit further.
Gabriel Lewit:
And end of the year lower than it is today?
Steve Lewit:
End of the year lower than it is today.
Gabriel Lewit:
Okay. You heard it here, folks. Prediction Steve says, lower.
Steve Lewit:
Do not bet on my prediction.
Gabriel Lewit:
Prediction Gabe says, lower, then a little higher.
Steve Lewit:
Aha.
Gabriel Lewit:
So ending the year a little higher than we are today but it might go lower between now and then.
Steve Lewit:
All right. We’re going to see who wins that battle.
Gabriel Lewit:
How much are we betting there?
Steve Lewit:
Let’s bet a sleeve of Nespresso coffee.
Gabriel Lewit:
Oh. That’s an interesting bet. I like that. I’ll take it.
Steve Lewit:
Okay. One sleeve.
Gabriel Lewit:
Starbucks, though.
Gabriel Lewit:
Starbucks.
Gabriel Lewit:
Don’t cheap out on me.
Steve Lewit:
No, I don’t cheap out.
Gabriel Lewit:
Just kidding. All right. Second question to picking sides here of different debatable questions. This one is one we hear a lot, should you pay off your house as soon as you can?
Steve Lewit:
Well, that’s a debatable question.
Gabriel Lewit:
Well, that is the point.
Steve Lewit:
That’s the whole point of this.
Gabriel Lewit:
That’s the whole point. Where do you stand, Mr. Lew?
Steve Lewit:
I stand on, use your home as a business asset, not a home asset where you just say, this is my home. We’ve all been trying to pay off the mortgage. I grew up, you pay off the mortgage and own your house outright, you don’t want any debt. Well, yes and no. A lot of very, very successful businesses have debt and there’s nothing wrong with debt, as long as it’s in the proper place and you use it well. So if interest rates are low … I mean, even now a mortgage at 5% isn’t through the roof. Are you better off putting that money in the bricks of the house or are you better off putting it someplace else? Now, if that’s not a choice for you and you say, “I’ve got to pay off my mortgage because I look at it as my house, not as a business asset,” then I would say, go pay off your mortgage. You’ll feel better.
Gabriel Lewit:
Yeah, folks. It’s one that’s hotly debated. Some of the gurus out there, the big names … I might get them mixed up. Ramsey mixed up on what they believe on different things.
Steve Lewit:
That would be Ramsey.
Gabriel Lewit:
But one of them says, pay off all your debt immediately. I think they might even both say that about the houses. Yeah. Generally speaking, financially, if you’ve got a, I usually say a 4% or less mortgage, chances are longer term you might be better off investing the difference over 30 years. But to your point, everybody’s a little different and sometimes the numbers aren’t the whole story.
Steve Lewit:
Yeah. I think part of it is an emotional decision based on how we were trained as we grew up. I can tell you that my mother and father were rigid, “You’ve got to pay…” They worked hard to pay off the mortgage. It was everything to them that they owned the house outright. That still lives in me, but I’m willing to mortgage.
Gabriel Lewit:
Yeah. All right. That’s a very debatable one. Another very debatable question is, should you ever use credit cards?
Steve Lewit:
Yeah, of course. Of course, you should use credit cards but there’s a tagline.
Gabriel Lewit:
Should you?
Steve Lewit:
You should.
Gabriel Lewit:
Says who?
Steve Lewit:
Says the second penny here.
Gabriel Lewit:
Second penny.
Steve Lewit:
Penny number two. Yeah, but there’s a tagline on that. Do you know what the tagline is?
Gabriel Lewit:
What is it?
Steve Lewit:
You’ve got to pay off the credit card at the end of the month.
Gabriel Lewit:
Well, that’s where maybe the rub is. What if somebody says they’re going to do that and then they put the money on the credit card and then something happens and they realize they can’t pay it off? There’s still some risk involved in using the credit cards. Yeah. There’s a lot of mantras out there. This is semi-related to the first one about being really ultra debt free, versus being able to have well managed debt. I think this is another extension of that, part of why I just picked the second to talk about here, to connect the two. But if you can control your debt, if you can very confidently pay that off every month, get the extra points not incurring interest charges.
Steve Lewit:
You get the points. I love the points.
Gabriel Lewit:
Yeah, but usually one month of missed payments and the interest that you’ll accrue will offset all the points you’ll make for six months.
Steve Lewit:
There’s a little bit of risk but it’s not like you shouldn’t use a credit card. Plus people that don’t use credit cards, that write checks and do cash really annoy me in the food store.
Gabriel Lewit:
I don’t know many people writing checks these days, but maybe debit card is a safer option there.
Steve Lewit:
Oh, a debit card.
Steve Lewit:
Yeah. Yeah. I didn’t think of a debit card.
Gabriel Lewit:
Folks, you can tell Steve uses the credit card.
Steve Lewit:
All the time.
Gabriel Lewit:
Not the debit card.
Gabriel Lewit:
He forgot that that even exists.
Steve Lewit:
What’s a debit card?
Gabriel Lewit:
Here’s another very commonly, not in our office here you’ll see why in a second, debated question. Are individual stocks better than buying really good mutual funds?
Steve Lewit:
Whoa. That’s very debatable. Are you asking my opinion on that?
Gabriel Lewit:
I already know your opinion but I’m asking you to elaborate.
Steve Lewit:
Okay I will elaborate based on modern portfolio theory which was the noble prize winning research done in 1965 that’s been updated over the years. It says to win in the market have a widely diversified portfolio and give it time because the market always goes up. That’s how you win in the market. Now you can have a widely diversified portfolio by buying stocks but you have to buy 47 thousand different stocks.
Gabriel Lewit:
Individually?
Steve Lewit:
Individually and that’s uncontrollable. You can’t find out where the good… You can’t manage that by classification or anything like that. I’m down with mutual funds. I’m down with low cost index funds or ETFs and build a diversified portfolio. Now like you always say, Gabriel, most people have a under diversified or?
Gabriel Lewit:
Lightly.
Steve Lewit:
Lightly diversified portfolio.
Gabriel Lewit:
For example, somebody may have 30 stocks and they’ll say “Hey Gabe I’m diversified. I’ve got 30 stocks.”
Steve Lewit:
And they are.
Gabriel Lewit:
They are more diversified than the 10 stocks or one stock. But compared to 47 thousand, which is the average number of holdings SGL portfolio, very lightly diversified. Relatively speaking. You are putting your eggs in those 30 stocks baskets. If those 30 stocks do really well, you’ll do well. If they don’t do well, you’re not going to do well. But you’re concentrating that risk across those 30 instead of diversifying that further across 10s of thousands more.
Steve Lewit:
In other words, that 30 would be more volatile.
Gabriel Lewit:
Almost certainly.
Steve Lewit:
Almost certainly than a basket of stocks that are broadly diversified.
Gabriel Lewit:
Now my comment on this one, guys, generally goes back to one of my favorite phrases. Which is: There’s no bad investments. They’re like tools. They also a little like ice cream flavors. In other words, certain ones are better at certain things aka the tool. Certain people just like certain ones sort of like ice cream flavors. There are people out there who eat coconut popsicles and I find them disgusting and I would never touch one with a 20 foot pole.
Steve Lewit:
Your son had coconut something yogurt over the weekend, it was awful.
Gabriel Lewit:
Funny story, my son also thought he was eating a lemonade popsicle once and it turned out it was a coconut. He was really unhappy about it.
Steve Lewit:
Your son is how old? Four? Five?
Gabriel Lewit:
Oh come on.
Steve Lewit:
I don’t even know.
Gabriel Lewit:
Come on.
Steve Lewit:
Seven? Three? 19? Are you hiding something from me?
Gabriel Lewit:
He’s six!
Steve Lewit:
Six! Okay.
Gabriel Lewit:
Come on man. Guys, I think Steve hasn’t had his coffee yet this morning.
Steve Lewit:
I don’t track time. Time means nothing to me.
Gabriel Lewit:
My point there, folks, is stocks versus mutual funds. Neither are bad. Okay but certain ones are better at certain things. For us, the way we approach it: modern portfolio theory, the way millions of people approach it in their 401k. Highly diversified is going to out perform concentrated stock for the majority of people just because if you pick the wrong stocks you can really hurt yourself performance wise, amongst other challenges. Now if you’re a more sophisticated investor certain individual stocks may be better for you. It just depends a little bit.
Steve Lewit:
Yep.
Gabriel Lewit:
Yep. That’s a hard one to pick a clear winner.
Steve Lewit:
I think it’s an easy one. I think the clear winner is you need 47 thousand… Look, you got to go to the research. You can’t do it… Show me the research which says that active management of buying individual stocks is superior to having mutual funds that are widely diversified. There is none. You got to go to the independent research and if believe the independent research then you follow it. Which is what we do. So I think it’s an easy choice.
Gabriel Lewit:
Let me clarify. From that perspective, yes. But…
Steve Lewit:
But.
Gabriel Lewit:
It will be hard to sway certain people that think they can out perform with the individual stocks.
Steve Lewit:
It’s hard to sway certain people about anything. If you believe…
Gabriel Lewit:
It’s funny, I had a… She didn’t come on board with us as a client but we had a first call together with a lady, this was five months ago. I like to ask this question, What’s your philosophy on investing? First words out of her mouth, “I hate mutual funds and I only buy individual stocks.” I said to myself and my answer to her, I said, “Well we may not be a good fit.”
Steve Lewit:
Might be a problem.
Gabriel Lewit:
Might be a little bit of a problem. I said, “Why do you hate them so much?” “Why would you pay that extra fee to somebody when you could just buy the stock yourself.” Your not going to buy 47 thousand stocks and your not going to be… I couldn’t sway her. She was very locked into that mindset.
Steve Lewit:
Well it’s about anything. When people are believers in anything. Someone believes the world’s going to end tomorrow, you’re not going to sway them differently.
Gabriel Lewit:
It’s hard, very hard.
Steve Lewit:
Belief’s really lock you into… I had a client call the other day and said, “I believe the market’s going to go down I want to go to cash.” Right? That’s counter everything that we do and it took me an hour and a half, almost, to show him the light that that’s a bad idea. He was on the brink of just insisting that we go to cash. If he insisted that’s what we would have done but it’s the wrong decision.
Gabriel Lewit:
Guys, there’s a lot of these out there. We can’t cover them all today. We actually have a long list of other ones. We may do this again in a future show, probably not just may most likely will, to give you more of these because their fun to debate here internally a little bit. I would love your thoughts and feed back. If you have questions share them with us. Go to our Facebook page. Go to SGLfinancial.com/contact go to contact us there or give us a call, 847-499-3330. We’d love to heard any questions or thoughts you might have on those.
Gabriel Lewit:
Let’s switch gears here a little bit. Our second focus for today is… Interestingly this came from the fact that I have a client recently that just retired, big congratulations to him. It got me thinking as we were talking through some of the things that A, you need to do to prepare for retirement and then B, now that he’s retired, or he/she if you’re thinking about it for yourself, what do you do right after you retire? The first month or two.
Steve Lewit:
After you drink and have champagne.
Gabriel Lewit:
You have the party on Friday, everyone hugged you goodbye. Now it’s Monday and you don’t have to go to work.
Steve Lewit:
You don’t know what to do.
Gabriel Lewit:
What do you do, right?
Steve Lewit:
What do you do?
Gabriel Lewit:
More specifically. What do we do here? Counting down the days to retirement it’s important to create a check list. A check list of things that you know are important that you need to do. For example, it all depends on exactly when you’re going to retire. Let’s say you’re planning to retire at the end of the year. It is now June. You may wan to start creating a check list of things you want to complete between now and the end of the year. First and foremost, what would you say if you’re planning on retiring at the end of the year, what would be on your check list to start preparing for?
Steve Lewit:
You know I’m going to say do a financial plan. Let’s leave that aside. I don’t want to wake up in the morning, when I retire, and not know what I’m going to do. So I would start to map out things that I enjoy and explore those things so that when I retire I can transition right into something else that I enjoy instead of sitting around in the house looking at my spouse. That’s not a poem. Looking at my spouse…
Gabriel Lewit:
With a mouse.
Steve Lewit:
With a mouse. That’s not a poem either. She saying to me, “What are you going to do today, hunny?” And I’m going to say, “Well I don’t know.” That’s a situation I don’t want to find myself in.
Gabriel Lewit:
It’s funny you mention that. This client I was mentioning, I asked him what’s he want to do and he said, “I don’t know. I think I just want to do nothing for a while.” One of my favorite movies is Office Space. I don’t know if you’ve ever seen it. One of my favorites seen it over and over. It’s about this corporate 500 program or guy that sits in the big cubicle all day and he’s burned out. He doesn’t like his job. He’s chatting with one of his friends and he’s like, hey man if you had a million dollars what would you do? One friends like, I would do this and this. This one guys like, I would just sit on my couch and do absolutely nothing.
Steve Lewit:
That’s a plan. I don’t mind that if you want to veg out for a few weeks and just watch the grass grow, that’s great. That should be your plan. Hunny, I’m planning on doing nothing today.
Gabriel Lewit:
Nothing for a few months maybe.
Steve Lewit:
Maybe for a few months.
Gabriel Lewit:
Funny enough, that’s my preferred way of going on vacation. Granted, I’m not going to retire any time soon. When I go on vacation I’m not one of those guys that has 60 part itinerary planned out to the hour for the entire week that we will be gone. My wife kind of is, at least to some extent. She wants to know all the specifics. I’m just like, can we just get there then just sit by the pool with a drink and figure it out when we get there?
Steve Lewit:
Nope. My sister-in-law is that way. She takes my brother on vacations and they have an hour by hour itinerary.
Gabriel Lewit:
Oh gosh.
Steve Lewit:
Seriously.
Gabriel Lewit:
I couldn’t do that.
Steve Lewit:
I’d come home, I’d be exhausted man. When you think about retiring… your mental health, assuming you’re whatever physical health is is not going change in three months or six months. But it’s really about mental health. We’re working all of our life’s to retire because it’s just like we can relax now. We don’t have the same pressure. Then you have a different pressure. It’s like what’s my meaning in life? Especially for a guy because guys that don’t go to work feel I have no meaning in life because I’m not bringing home the bacon. I’m not doing my manly job. That’s a conditioning that we grow up with. It’s not okay to be sitting around and doing nothing.
Gabriel Lewit:
One would say, in retirement that is okay.
Steve Lewit:
It is okay.
Gabriel Lewit:
Because you’ve earned it.
Steve Lewit:
Exactly.
Gabriel Lewit:
On the financial end of things as you’re prepping for retirement one of the things you’re going to want to figure is you’re health insurance. I was chatting with this fellow that just retired. We coded out his cover cost to compare it to, he wasn’t Medicare age yet, but if you are Medicare age compare your Medicare options. Make sure you have that health insurance figured out so you don’t have a gap in coverage. It’s very very important.
Gabriel Lewit:
Another important one is…
Steve Lewit:
Reduce your debt.
Gabriel Lewit:
Funny we were just talking about that. For many people they like to, in retirement, they do enjoy being debt free. Some of our clients will make a final payment off a small remaining mortgage, or a car. Something that’s going to free up quite a bit of cash flow for them. Not a bad idea either. That’s got to be done in the context of your plan of course.
Steve Lewit:
Of course. That’s part of your emotional health. I want to go into retirement. I don’t want to have any responsibility. I don’t want to have to pay a bill or pay off anything. I just don’t want to do that. If that’s your thinking then you got to pay your debt down.
Gabriel Lewit:
Yep. Exactly. Other money things, just a couple more. There’s a longer list of course. If you’re planning on taking social security benefits, making sure you’re… I had a client, he’s since done it. He had a plan for him to take his social security benefits the moment he retired. He retired. This was just early this year. We had a review meeting in March and I was like, you got the social security coming in, right? He was like, well I haven’t started. We met again in June, not June sorry, late May just a couple weeks ago. I said, “Did you get that started?” “Well” I’m like, “We did have a plan and we bucketed it all out and it kind of depended on this 25 hundred a month coming in.” “Oh yeah, oh yeah. I’m going to get that going.” Making sure whatever your source of income is, whether its systematic withdrawals or social security or whatever it is, making sure you actually get on that. If it’s done with a plan in mind, try to follow the implementation of that plan can be very very important.
Steve Lewit:
Amen.
Gabriel Lewit:
Amen. I’d say the last countdown is really just making sure if you have any questions, guys, if you are thinking about retiring in the next year or less, the countdown sort of begins. Just jot down your questions. Anything and everything that you’re concerned about.
Steve Lewit:
It should just be let your pen write.
Gabriel Lewit:
What am I going to do? How am I going to pay for it?
Steve Lewit:
Should I have another career?
Gabriel Lewit:
Whatever those questions are write them down and bring them to us and we’ll walk you through them. We’ve helped people retire hundreds of times. Where as this may be your first retirement rodeo.
Steve Lewit:
You what, Gabriel, we have no fatalities.
Gabriel Lewit:
No fatalities.
Steve Lewit:
We’re batting a thousand.
Gabriel Lewit:
No one runs out of money if we give them a plan that says their not going to.
Steve Lewit:
That’s correct.
Gabriel Lewit:
That’s really really a good thing. We had a couple of listener questions. We probably only have time to do one here. We’ll go ahead and get one of these covered her today. We’re going to talk about… I like this one because it’s related to what we were just talking about. Paul asked, “I’m pretty much ready to retire but I won’t be old enough for Medicare for another 6 months. Should I just stick it out or tough it out until then?”
Steve Lewit:
Paul, do you like working or do you hate working?
Gabriel Lewit:
It sounds like he’s ready to retire.
Steve Lewit:
It’s sounds that way to me.
Gabriel Lewit:
So Paul, I think this is a… I get asked this question a lot whether it’s a year, year and a half, or six months or three years. Where people have the money, they don’t want to work but they think that they need to work that extra amount of time until they hit Medicare because they just have to.
Steve Lewit:
You know why that is? That’s their frugality. Which is how they save the money, still working. It’s like folks that retire… I have one client that has two and a half million dollars in retirement, spends 35 thousand dollars a year even though she could spend enormous amounts money but in her mind spending more than that wouldn’t be frugal.
Gabriel Lewit:
So Paul, the question is, six months of say Cobra before you qualify for Medicare. I don’t know if you’re married or kids on your plan but whatever. Let’s just say it’s a thousand dollars a month for simple math. You have to spend 6000 dollars to retire six months early. This is what, in our field, we call opportunity cost. Let’s say over the next 30 years of retirement, or life expectancy, that six grand would be worth 25 thousand, 30 thousand, dollars at age 90. Let’s say you pass away at 90 with two million dollars. Do you really care if you passed away with two million or two million and 30 thousand dollars? If you have the money and you’re ready to retire our guidance is almost always take that step.
Steve Lewit:
Sometimes, Gabriel, I get very direct with a client that says to me “oh I got to work. I’m not going to spend a thousand dollars a month. That’s 6000 dollars.” I just look at them and I say, “so what?” It kind of stops them and they look at me and say, “well yeah so what?” They still can’t retire. It’s hard.
Gabriel Lewit:
It’s hard. We get it. That’s where having us help you feel comfortable with that is a good next step for us to do.
Gabriel Lewit:
Well folks that’s our time here. We don’t want to keep you too long. Thanks again for tuning in 101st episode. Thank you for your loyalty and listenership over the years.
Steve Lewit:
And your kind words and support.
Gabriel Lewit:
Look forward to the next one. If you have any questions give us a call at 847-499-3330 or SGLfinancial.com and click contact us and send us your questions or schedule an appointment.
Steve Lewit:
Stay well everyone. Enjoy the summer.
Gabriel Lewit:
Have a wonderful… The summer?
Steve Lewit:
It’s it summer?
Gabriel Lewit:
It is but sounds like you’re sending them off for like six months,
Steve Lewit:
Oh no.
Gabriel Lewit:
Talk to you in the fall!
Steve Lewit:
Enjoy the summer days.
Gabriel Lewit:
We’ll talk to you next week.
Steve Lewit:
We’ll see you next week. Enjoy the summer during the next week.
Gabriel Lewit:
See you guys.
Steve Lewit:
Bye.
Gabriel Lewit:
Bye.
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Thanks for listening to Our 2 cents with Steve and Gabriel Lewit. For any questions about your finances give SGL a call at 847-499-3330. Visit us on the web at SGLfinancial.com and be sure to subscribe to join us on next week’s episode.
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Investment advisory services are offered through SGL Financial LLC. An SSCC registered investment advisor/ Insurance and other financial products are offered separately through individually licensed and appointed agents.
