Medical Expenses How Much Is Enough? With Chris Hogan, David Eissman

Medical Expenses


David Scranton:  So, exactly how much is enough? That indeed is one of the most important questions in retirement planning. But, you know, it’s not the only question, In fact, believing that it is the only question can lead to complacency and that’s when financial disaster can sneak up on you in a big way. But what leads to complacency and how can you avoid falling into that trap? We’ll talk about that and much more on today’s show. Yes, once again it’s time to tune out the hype and focus on the facts, facts that matter to you the income generation.

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David Scranton:  Hello everyone and welcome to the income generation. I’m David Scranton. Even if you were never a Boy Scout, you’re probably familiar with the old Boy Scout motto, be prepared and you know it is good advice. But when it comes to preparing for retirement in today’s challenging environment, it doesn’t go far enough. Health care costs today are rising faster and more steadily than most other expenses. Life expectancy rates are longer than ever before. And of course, the financial markets yes, they do have unprecedented challenges. Preparing for all that takes diligence when growing your nest egg, but you know it takes much more than just diligence. I’m going to tell you exactly why on today’s show and also share with you some specific steps that can help you truly be prepared. And helping me put it all in perspective are my guest today Chris Hogan, author of the bestselling book Retire Inspired. And my good friend David Eissman, financial advisor extraordinary from Atlanta, Georgia.

But first I’d like to share just a bit about why this is an especially important topic to me personally. If you grew up in a blue-collar household like I did, chances are you had a so-called rich aunt and uncle. Well, my Uncle Jack and Aunt Judy. Now were they really rich, well compared to me and my mom they certainly were and the truth is my aunt and uncle did make a lot of money over the course of their careers and they did a good job of actually accumulating and respectively large nest egg I’m guessing certainly well over a million dollars. After they retired though, he and my aunt were able to go on cruises their travel to Europe repeatedly, sometimes several times within a year and other places they always wanted to visit. They had two homes for a long time and very nice places and were able to pursue the kinds of fun simple goals that so many Americans want from retirement. But as they got older and health starts to decline, their goals changed. Who is no longer about cruises and doing things. Their number one goal eventually became staying in their home as long as they physically could, and to avoid the need for either of them to go into a nursing home. Now, I’m sure that each of you can understand those feelings. I can’t imagine there’s a single person watching the show right now who wants to end up in a nursing home. Unless it’s just visiting someone. My aunt and uncle, we’re no different. So, their goal was to stay in their home even if it meant hiring full-time home health care people. And eventually, it did mean exactly that as their health worsen. And financially yes, they were able to manage it for a long, long time. But you know, a bit later in their lives I ended up taking over their affairs as a financial power of attorney. And when that happened, I was shocked to realize that they only had about enough savings left to afford a few more months, less than a year of full time in home health care. Now, my aunt and uncle didn’t know this. And I wasn’t sure how I was going to tell them. In fact, I was actually considering his power of attorney trying to figure out if I can even get them a reverse mortgage on their property so that I wouldn’t have to have that painful conversation with them. As it turned out, they both passed away within a few months before I was forced to tell them and without either of them ever having to go into a nursing home. Under the circumstances. It was in many ways, bittersweet for me. Well, of course, I was sad to lose them, I was also relieved that they never had to know just how close they came to running out of money.

And as a financial advisor I know, for a fact, that my aunt and uncle story is not at all uncommon. The takeaway lesson and their story is that very often people who have done a good job of accumulating assets over the years can be especially prone to a particular danger. And that is the danger of complacency. It’s the danger of believing that the size of their portfolio alone is enough to protect them from virtually any disaster. I see it all the time. People think that a million dollars is a magic number or maybe $2 million is the magic number. They hit that goal and they become overconfident. They forget that while aiming for and achieving that certain number is important, it’s not all there is to successful financial planning. You might recall last year, we did a show focusing on professional athletes who made and lost massive fortunes, which is a fairly common story, unfortunately. In some cases, it’s the result of poor life choices. But in many cases, it’s the result of sheer complacency of believing that they haven’t so much money, that there’s simply no way that can ever lose it all, yet it does happen. And as we all know, not just to athletes. So while building your assets to a certain level is important, as my first guests will talk about in just a bit, it alone is not what successful money management is all about.

Because it’s also about recognizing and preparing for all the variables and circumstances your retirement may bring, or at least as many as you possibly can. And some people might have the expertise in the mindset to be able to do that successfully themselves. But in my experience, a qualified professional has a far better chance of identifying those variables in advance and helping you prepare to meet them. Why? Well, think of the difference between a very good chess player compared to a chess master. A very good chess player can typically see two or three moves ahead on the chessboard. And that’s actually hard to do. But it chess grandmaster, on the other hand, sees up to seven moves ahead. Now, you might consider yourself a great chess player and you might have done very well but the more moves ahead that you can see, the more variables and circumstances you can anticipate, the better your odds are of winning the game. And, of course, in this case, we’re talking about the game of retirement, or really, the game of life.

In fact, seeing seven or more moves ahead is more important than ever before today, because of our generation, the income generation. Let’s face it, we were looking at a lot of unique challenges that previous generations didn’t. So take my aunt and uncle, for example, even though yes, they’re a part of the previous generation, they did live into the early 90s. And the point, of course, those life expectancies today are longer than ever and yes, that type of longevity is increasingly common. In fact, according to the Center for Disease Control, and an average couple in their 60s today have about a 50% chance, five zero, that at least one of them will live into the 90s now, wow, that’s nice in one respect, that also makes preparing for retirement just a little bit more challenging than it was for Americans when life expectancies were a lot shorter. A longer life means a financial plan capable of covering it, plain and simple. It means a plan suited to provide 30 years of retirement or more instead of 10 or 20 and to meet an additional 10 years of variables and contingencies that maybe people didn’t have to deal with in the past.In other words, a financial plan that sees seven chess moves ahead. Did my uncle expect to live into his 90s? I doubt it. If he did I’m sure, he optimistically saw himself being independent and in good health right at the end. I doubt that he saw the need for in-home health care or expected that would cost him over $200,000 a year. But the reality is aunt and uncle situation is typical. Health declines, health care becomes far greater of a financial obligation, and most people count on or prepared to meet and especially if they’ve allowed themselves to become complacent at some point. We’ll talk more about this and just a bit.

Right now, I’d like to welcome my first guest, Chris Hogan. For more than a decade, author and financial coach, Chris Hogan of Ramsey Solutions, has been spreading his message of hope and financial peace to audiences across the country. He’s helped South Americans everywhere reach their retirement goals through his live events podcast, his bestselling book, Retire Inspired: It’s not an age; It’s a Financial Number. He’s an expert on mortgages and investing, and we’re happy to have him with us on the Income Generation.

David Scranton: Chris, welcome to the show.

Chris Hogan:  Hi, it’s a pleasure to be with you.

David Scranton: You know, Chris, I must ask you a favor. We were talking in the show about how calculating your number is a crucial step. As you heard, we’re also talking about the fact that’s not necessarily the be all and end all because the people living alone, you don’t really know what kind of unexpected things are going to happen in the future. So, if I’m nice to you on the show today, can I get you to just add one more chapter to the end of your book, if I talk nice?

Chris Hogan: Oh, wow. Okay, what might that be?

David Scranton: About All those questions? You know, we talked about it off air. So I know that you share my concerns about medical costs, and what happens. So, give me some points, if you will, about what people need to be careful of, and maybe how they can protect themselves to a certain degree on these medical costs, which are hard to quantify when you’re sitting there on the day of your retirement.

Chris Hogan: It really is. I mean, when you start to look at medical costs and expenses, you can start to understand that they can really start to snowball and get big fast. And so, I would encourage people out there just to be mindful of your coverage, understand what you have and what it protects. What are the things that are going to be inside of your network and covered versus things that are out of pocket or outside of your network? We must have an understanding and we want to go into it with our eyes wide open to know what it is, what it covers, and what some potential gaps are. And I think the best way to go about that is to make sure you’re educating yourself that you’re sitting down with an insurance professional to really understand what you have and what’s available.

David Scranton: So that’s great for basic medical expenses. But as you know, Medicare and Medicare Supplements don’t do much for convalescing care or home health care and let’s face it. Nobody wants to go to a convalescent facility. So how about that? How about home health care? I mean are you telling people that if they can afford it, or maybe if they can’t afford it, they should examine long-term care insurance?

Chris Hogan: Well, Long Term Care Insurance is a part of your financial plan, especially when you start to look at insurance. I mean, at the end of the day insurance is risk management; in exchange for a payment, you get coverage. And so I encourage people by the time they’re 59, to really start to look into getting long-term care insurance in place that would help you if you were in a nursing home, or you became incapacitated for an extended period of time. Now, I also caution people, depending upon your family’s medical history, or things that have gone on in the past, it may be something you need to take a look at sooner as opposed to later. But I think it’s always a good thing to have those conversations, understand the protection and for kids out there, adult children who have parents that are aging or getting up there, have that conversation with mom or dad or even your grandparents to understand what covers they have and where the information is located when it was needed.

David Scranton: It’s amazing. People are afraid to have these conversations and they should because you’re right. A lot of people get older, they can no longer afford the long-term care insurance and that’s if they’re even healthy enough to get it. So, Chris, we need to take a commercial break here. Will you stay with us for a couple more segments?

Chris Hogan: I would be honored.

David Scranton: And I’d like you to stay with us also. We have a lot more from my new friend Chris Hogan. We’ll be right back.

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David Scranton: As I mentioned earlier, I know from experience that my aunt and uncle story is common. Complacency over doing a good job of accumulating assets can be just as dangerous as doing a poor job. Here’s a typical example. A couple in their late 60s has about 2 million in assets, half it’s in an IRA, where they’re setting aside really, for health care costs are emergencies down the road. If they don’t need it for that, then it’s gravy; it’s inheritance money for their children. Why? Because they figured that between their other assets and social security and pension there, okay, they’ll have enough income to live the lifestyle they want to live. That’s they’re not seeing seven moves ahead. They’re planning to run into some serious problems. For example, they need to consider that health care costs typically rise at a faster and steeper rate than other expenses. Since 1948, the price of medical care has grown at the average rate of 5.3% per year, compared to 3.5% for the CPI index. So that close to 6% a year healthcare and medical costs are essentially doubling every 12 years. Which means by the time this couple gets into the early 90s, those expenses can be four times as high as what they are today; possibly between 600 to $800,000 a year annually for full-time home health care, but maybe they or their advisor did foresee this, and I thought, you know, we’ll be fine because that million dollars sitting in IRA were surely grow and be worth more than 25 to 30 years. So should we have five years of expenses covered, we should have more, but not necessarily, when you factor in this little thing called required minimum distributions RMDS. Starting at age 70 and a half the government requires you to start taking the annual distributions from your IRA accounts and paying taxes on them. Now, most people are somewhat aware of this, but many don’t realize what a slippery slope that required minimum distributions can be if you don’t have the right strategy for generating and taking them. RMDS start right off at 3.65% when you’re 70 and half years old, they hit 5.35% by the time you’re 80, and they’re nearly 9% by the time you’re 90. Well, if you’re taking you’re forced, required minimum distribution as a withdraw, then it’s going to come from one of two places, it’s either going to come from income from interest in dividends or if it doesn’t come from there, then it’s going to come from the principal. Unfortunately, many portfolios today are lucky if they’re generating even a 2% interest or dividend. So that won’t even cover you in the first year. So right off the bat, you have to take almost half of that RMD out of principal. Even more, unfortunately, if that situation doesn’t change, it means you have to start taking more and more and more out of principle, every year, you get older. To understand why this is so dangerous, I encourage you to think of a 30-year mortgage, you know when you started making the payments early on, you’re paying back pretty much all interest very, very little principle. But somehow, as the years went on, and the balance got paid down, you got to a point where you paid off the entire mortgage because every year was more and more principal and less and less interest. Now, consider this in reverse, assume that you’ve got a lump sum of money, in this case, a million dollars pool of a million dollars generating, let’s say, 3% interest or dividends to be generous $30,000 a year. So if you take that 30,000 and take just a little bit more each year, because the government forced you to take it, that some can also be depleted within 30 years, and much the same way that your mortgage is paid off.

So, getting back to our couple in their late 60s, confident that their million dollars IRA will grow, and the reality is that it’s going to start potentially shrinking. Thanks to the lack of a sound secure required minimum distribution strategy. By the time they reach their late 80s or hit 90, they could easily have cut that IRA in half. And if health care costs have indeed quadrupled by then now where’s they thought they had five years of full-time home health care funded now they have about seven or eight months funded because the expense has gone up in their savings has gone down in some ways to kind of sort of met in the middle. Now, they’re not going to be able to afford home health care if that happens. And they’re going to be forced to go into a convalescent facility. And again, that’s a very common example and unfortunately, it’s similar to what almost happened to my aunt and uncle. Despite all their success in the growth and accumulation stage of retirement planning, they got tripped up in the protection in the income stage. And this happens because many people don’t realize that there are really two separate stages. And when you go from one stage to another, the rules actually change. The challenges you go through change and the priorities and strategies that you use should also change in order to meet those challenges. That is how you see seven moves ahead.

I’m going to talk later in the show about some more of that challenge is unique to our generation, the income generation because longevity and rising health care costs are just the tip of the iceberg right now. I’d like to welcome back Chris Hogan.

David Scranton: Chris, you know, I’m glad to hear that you recommend long-term health care. A lot of financial people don’t understand insurance, they don’t talk about it so I’m glad you recommend that, I’m glad you recommend that children are afraid they had these conversations sooner rather than later with their parents. So, I assume that means that you’re also a fan with younger folks of disability insurance, correct?

Chris Hogan: Well, I think absolutely, I think it’s very, very important for us to be able to protect ourselves if we run into a scenario where we’re no longer able to work that might be for a short-term, or it could be even a longer-term period. And especially when you start to have younger people that have families. You start to get the little ones and young people in, in your home that you’re responsible for, you need to be able to provide for them. And so understanding what disability insurance does and for how long is very, very vital. And so I want to encourage everyone out there to sit down, talk to an insurance professional, understand what coverage you have through your job, you may have short-term disability available to you there. But then you may need to look at looking at Long Term Disability outside of the job. And so that’s something you’d have to put into place for yourself.

David Scranton: What’s interesting is if somebody gets started on the right foot, for example, I know you’re a fan of people saving as much as 15% of their paycheck if they can. So if you get used to those insurance costs, and you budget them, and then you save your 15% when it comes to applying for long-term care insurance, what you’re really doing just switching your disability insurance premiums for long-term care insurance premiums, because Long Term Care is really nothing other than disability insurance for retired people. Right?

Chris Hogan: It really is as you look at it. And if you start to look at the just the percentage out there the statistics are staggering of people that once their age 65 or older, the odds of them needing Long Term Care is staggering. And so it’s very important for us to look at this and understand. I mean ultimately, we’re working hard to be able to provide for ourselves in our financial future, we just need to make sure we have the right coverage is around to be able to protect it.

David Scranton: So, you say that it’s all about knowing your number. How does one determine what that number might be?

Chris Hogan: Well when I talk about the number I’m talking about people being able to live their dreams. Ultimately, I’m talking about people putting away enough and knowing that they have enough put away that they’re in their investments that you’re creating an income stream essentially to be able to replace your paycheck and so with it we developed a free tool called the RIQ or retire inspired quotient. It’s a free tool at my website where you can plug in a few basic numbers and understand what’s the significant number you need to have put away and if you’re a little bit behind or behind it’ll show you what you need to be investing now so you can catch up and get there.

David Scranton: So, you calculate that number but then, what do you do for a buffer for these types of contingencies? What do you tell people, or do you assume that if people have good goals? A lot of people have lots of retirement goals. Let’s face it, they actually spend a little more money in retirement than they do when they were working they never expect that but it’s the truth and maybe, are you thinking that, as a good friend of mine in the business says, “You know you go from your Go-Go years here slow-go years to maybe, your no-go years and what was an expense for fun stuff just becomes more of a medical expense at that point.” Is that kind of how you look at are you looking at different buffer?

Chris Hogan: Well, I think it’s number one. There’s a couple things I want people to bring into retirement. But there’s a whole lot of things I want them to bring. There’s a couple things I don’t want them to bring. I don’t want them to bring not having a plan and I don’t want them to bring debt of any kind. So, if you start to really look at that, if you’re not bringing a debt in with you and you’re bringing your dreams and your goals, as you start to look at how much you have put away, you do want to be aware a health care costs are a wild card. We’re not sure what’s going to happen and how much it could increase so I would rather people be over prepared than underprepared. So being able to look at your coverage that you’re going to be able to have to bring with you into retirement as you retire or if you’re working a part-time job, and you have some health care benefits available to you, or whether you’re paying out of pocket, I think it’s very important to look at that overall picture from a 30,000-foot view.

David Scranton: I agree completely. And Chris, we need to leave it there for this segment. Like to have you back one more time. You stay with us also, we’ll be right back with more from Chris Hogan.

Odds are that you’ve already heard the term ‘the sandwich generation’, and for many of you, it certainly might apply. It’s another byproduct of the fact that people are living longer than ever before. Not only do you have to plan for up to 30 years of your own retirement, but you may also have to consider that your parents, they end up depending upon you at some point for some level of financial support during that time or before that time. Oh, and by the way, you may end up having adult children still depend on you financially at the same time. So there’s your sandwich you have your parents on one side your children on the other, and you’re in the middle. According to the Pew Research Center, about one in seven middle-aged adults, income generation members, that’s about 15%, are providing financial support to both an aging parent and the child. And while the number of adults living in the sandwich generation has increased only slightly in recent years. The financial burden for those for whom it does affect for caring for multiple generations of family members have increased significantly, and it continues to mount.

As we discussed earlier, healthcare and medical expenses increased at a faster and higher rate than the overall rate of inflation. It means that if your aging parents have significant health issues, and you’re helping to cover these costs, those costs are just going to keep rising. In some cases, baby boomers have had to postpone their own retirements because of the added financial obligations of aging parents and grown children. This can create resentment and a lot of family strife. It can also add to the stress that might already be a tricky situation. You know, we love our families, of course, and we don’t ever want to be in the position of seeing someone we care about as a burden. But, by the same token, none of us would ever want to be a burden to our children or to any of our loved ones. The sad truth is, it does happen. Even if you’ve done an excellent job of building your nest egg. Even if you’re convinced you to have “plenty of money”. That’s because again, it’s about that number. But it’s also about protecting yourself from these other contingencies. The financial number is important for sure, but not everything. Even millions can end up being insufficient, if you haven’t made that paradigm shift from the growth and accumulation stage of retirement planning to the protection and income stage. That’s a stage where you work to develop actual strategies to help make sure you won’t end up being a financial burden to your children, or to better ensure that helping care for your own parents won’t force you to postpone retirement or cause resentment or bad feelings between family members.

I said at the top of the show that was going to share some actual practical steps that you can take to help become prepared. So I want to share these with you and some of the related challenges of the sandwich generation because it’s an issue that I’ve dealt with more and more with my own clients over the last several years.

The first thing is to get all the parties involved as early as possible and talk openly about it. You heard Chris Hogan, talk about that just a few moments ago. If you don’t know much or anything about your parent’s financial situation, for goodness sake, find out. Don’t be shy. Even if you think you’re sure that they have plenty of money, don’t be complacent about it and make sure that they haven’t fallen into that trap either. By the same token, re-examine your own portfolio to make sure that you made that paradigm shift from growth to protection and income. Sit down with a qualified financial advisor. Ideally, one who specializes in income and protection and helping people in that stage of life. Provide him or her with all the details of your situation and share your goals and concerns. If that person is the right advisor, he or she will start seeing seven moves ahead on your behalf and helping you be prepared.

Next, talk specifically with that person about required minimum distributions. Make sure your allocation is right for our RMD’S and that you won’t end up on that slippery slope toward depleting your principal.

And lastly, talk to your advisor about estate planning if you haven’t already done so. He should be able to put you in touch with a good estate planning attorney to help get you started in this process, which is especially important if you’re part of the sandwich generation.

But now guess what? It’s time to welcome back Chris Hogan. So, Chris, I know that you’ve been around for a while doing this as I have a teller income generation members about what are what are some of the challenges that you’ve seen that maybe people didn’t have 30 years ago, or maybe even 20 years ago?

Chris Hogan: Well, I think one of the biggest challenges when you start to think about your future and your dreams, I think one of the biggest challenges that has really grown over the last 20 to 30 years is the threat of debt. Debt is one of those things that it steals not from your now but it also stills from your future. We’ve all seen and heard about that credit card situation, the trillions amount of dollars that are in debt, they’re the mortgage situations, but there’s a newcomer on the scene here in the last 10 or 15 years, and that’s student loan debt. And so, with all these debt types, we’re talking about bigger chunks of debt, but going to really require people to get intentional and focus to be able to attack those, you don’t want to allow those debts to sit around and hang around for 10 or 15 years for the sheer fact that you’re giving up so much future income opportunity by throwing it away by paying interest. And so looking at that, and understanding that threat, and that is that the requirement for you to be able to have a plan and to understand how the market is working. The stock market and how you can best take advantage of 401 k ’s and 403 b’s, these are tools that we as individuals have as opportunities through our employers to prepare for a future because pensions are long gone, but writings are very few. And so we have to take that responsibility upon ourselves.

David Scranton: Yeah, I love to hear what you say about debt. This is great because I get people coming in all the time. Well, I should keep my mortgage during retirement right days because, you know, I need the tax deduction. So if they have a 4% mortgage, I say, Okay, well, if I could get you a 4% bank CD right now FDIC insured. Would you want to put some of your money in and of course, everyone says, well, of course. Well, if you pay off your mortgage, a penny saved is a penny earned. It’s just like having that CD at 4% you know, but what’s interesting is you and your entire group has been preaching this for decades now. I think that that the tailwind is finally now behind you with this. I was telling somebody earlier today I had one of the first right out of college I had to get a house and I had one of the first what’s called liar loans over 30 years ago. Where if you put down 30% you tell them you make $7 billion a year they don’t even question you and they give you the loan. So we’ve had this cheap money lenient lending policies now for over three decades. But what’s  finally happening now is it’s getting fixed from the root right the average investor, today is now realizing after two major stock market dropped since the turn of the century that, you know what, I’ve got to be careful, I have to pay down debt, and I’ve got to do the right things with my money. So, are you seeing a philosophical shift is I am now with people after the shellacking they took in the stock market, two of them since the turn of the century?

Chris Hogan: Well, I can tell you, you know how Americans are, we are tough, and we’re not scared, right? We’ll keep going. The other problem is, is we also have a short-term memory we tend to forget. And so this, this preaching the message of the threat of debt, and the importance of planning for your future, I think it’s a drum we’re all going to have to continue to beat just so people start to understand and really learn the lesson. And so looking at this, I think is an opportunity for people, especially Millennials and Xennials out there to truly jump in and get intentional on the front end. I would also caution baby boomers and Gen Xers and Gen Yers to really start to be smart as you make these real estate decisions. People will start to make home buying decisions emotionally, instead of with their business mind. These are business decisions that can impact your future. So, you want to go and do with your eyes wide open and understanding and knowing the numbers.

David Scranton: Well, I guess maybe I was being overly optimistic. You know, I kind of hope that the headwind was turning into a tailwind, but you’re saying that you and I can’t take our foot off the accelerator. We have to keep preaching the message as long as we possibly can. So, with that in the last 45 seconds or so we have in the segment, what would you say are the top two piece of advice that you want to hear our income generation members, those Americans over the age of 50, that you want to have them here come right from your lips?

Chris Hogan: Well, that’s a great question. The first great piece of information I want for them is to understand regardless of where you are, right now, you’re not done yet. It is never too late for you to still chase down progress and to make some realistic changes. You have that opportunity. The second tip is, don’t go it alone. It is so vital and important for you to reach out and find people that have answers to questions that you have. To be able to help you to get on a game plan and understand that game plan is going to put you in a position to not only win for yourself but to be able to provide for your family. So, it’s never too late and seek help as you need it.

David Scranton: You know, Chris is so true. So many people have, you know, they try to go it alone and very few people have a combination of the ability to have the proper knowledge, but also the proper stomach for it. As you know, that’s where people make the most mistakes is, they make emotional decisions with their money. So, Chris thanks so much for being with us on the show today. I’d love to have you back if you’re willing to come to join us to some point.

Chris Hogan: Well, I sure would thank you again for having me and I look forward to having another conversation with you.

David Scranton: Chris. Thanks again, we’ll be back in just a minute with more on the income generation.

Today’s message bears repeating, complacency can lead to disaster. And that movie never gets old, no matter how many times you see it. And no matter how well we may think that we know the road ahead curves and bumps and even clips can indeed pop out of nowhere. And again, all of this is especially true for our generation, the income generation. And again, this for several reasons that we’ve discussed.

First, the road ahead is longer than ever before, retirees in their 60s need to plan for up to 30 years of financial security and reliable income. In some cases, more than that. Next health care costs. Yes, again, they increase at a faster and steeper rate than other expenses at the current rate, they could quadruple within the next 20 plus years. What’s more, we’re not just living longer. But so our parents, we need to prepare for the possibility that they might need extensive and expensive healthcare down the road and that some of that may fall on us. At the same time, children aren’t flying the nest as early as consistently as they used to, which might also add to our financial burden. And there’s more additional challenges that are unique to our generation that make it crucial to have a financial plan that sees seven chess moves ahead.

A lot of our fathers and grandfathers probably retired with pensions, and that does still happen, but as Chris Hogan said, less and less frequently. To find benefit pension plans or other traditional retirement packages are mostly a thing of the past. Our generation much more so than our parents is on its own when it comes to creating and maintaining our own retirement accounts. You heard Chris say this just a few minutes ago. And finally, in our most critical years of saving and investing, our generation has already lived through two of the worst stock market crashes in history. The collapse of the housing market and the worst financial crisis since the Great Depression.

If you think the economy in financial markets have gotten a lot more stable and secure since all that. That they’re just back to normal like the 1990s. Well, that’s probably another kind of complacency that could be extremely dangerous. As we talked about in last week’s show. The odds that a third major market correction won’t occur are extremely slim according to a preponderance of evidence and if you think depleting principal from a mutual fund during a rising or stagnant market is a slippery slope you can bet it gets a lot slippery or in a down market.

With that let’s welcome back today second guest David Eissman. David is head of Eissman Wealth Management in Acworth Georgia. I mentioned Atlanta but when you’re from Florida, it’s all part of Atlanta. Like me, he specializes in working with investors who are retired or within 10 years of retirement. He’s an SEC-registered investment advisor representative and a staunch advocate of financial literacy and Investor Education. David, welcome to the show.

David Eissman: Well, thanks for having me.

David Scranton: You know, you’ve been in this business for as long as I have, and you’ve trained many advisors over the course of your career as I have. So how have you seen the industry change? How have you seen the financial markets change over the last 30 years or so?

David Eissman: Well, think, if you go back, you know, 25,30 years ago, if a client wanted to make a change to their portfolio or one to sell a stock or make a trade, they had to contact a broker. And that took a lot of the emotion out of the equation because generally, it might take anywhere from several hours to even a few days to hook up, you know, with your advisor to make that trade. Today it’s just as simple as going to your computer and hitting a button. And I think that has caused a much greater amount of volatility in the markets and much more uncertainty.

David Scranton: Yeah, even another commercial, one of the trading companies where the lady who got a dinner date with a guy or husband, boyfriend, or whomever says, “Oh, I just got to make a few trades.” He says, “Right here right now? She says, “Oh, yeah. It won’t take long, right here on my phone.” You know, so I think that’s one thing, you’re right. That made it more, is that because it’s an emotional place in your mind that people are making less logical decisions, more emotional decisions?

David Eissman: Well, I think that the there’s always been emotion involved in it. But the difference in the past there was some time between the emotional reaction in the actual transaction and today, they, you know, the emotion can be acted on almost immediately. So yeah, I think there’s a great deal of emotion in the markets and I think that causes more of the volatility that we see.

David Scranton: “We just saw but within the last month, we saw the Dow down about 1000 points in a given day. And that’s a big number. So I think you’re absolutely correct. And you know, people do make emotional decisions. It just that now they don’t have a chance to really calm down and think through it. So I think you make a really good point there.”

“Dave, stay with us we’ll be back for another segment. So, stay with us if you will, and Income Generation members you stay with us also. Want to talk to David a lot more about some of the changes we’ve seen in the financial markets over the last few years. We right back.”

Welcome back the Income Generation. We’re talking again with David Eissman.

David Scranton: “You know, Dave, it’s funny because we talked about emotions and volatility, right, we just got off a year, that was really high on optimism based upon President Trump. And many would argue that the upside we saw throughout 2017 didn’t make a lot of sense was emotionally driven. But then we’ve seen those emotions now whiplash and the other direction, it seems just over the last month. What do you make of what’s going on in the markets?”

David Eissman: Yeah, it’s really kind of funny, David, that what’s perceived as good news, you know, better employment, maybe a little bit of increase in GDP has also triggered the concern about rising interest rates of inflation. It has caused a backward movement in the markets. So, it really goes back to how unpredictable markets are, and sometimes the unforeseen causes of a pullback in the market.

David Scranton: Well, you know, the stock market, I can understand that the market is in the spirit of the Olympics, the market seems to have gotten a little bit over the top of its skis, maybe in 2017. So if good news comes out in the market goes down, it’s because the good news wasn’t good enough. But, you know, the interest rate thing is curious to me, even recently when the regional fed presidents came out and said that he was expecting maybe two and a half percent GDP for this year, and maybe less for next year. So, are you as concerned about inflation, as the media seems to be as of late?

David Eissman: You know, I’m not really concerned about it. It’s been relatively modest, and I really expected to continue to be fairly modest, we still haven’t consistently crossed the three or 4% growth rate in the economy. And I think until that happens, I think inflation is going to continue to be moderate.

David Scranton: Yeah, but what about those experts, all those people on TV that are saying, oh, inflation, worry about interest rates, you know, sometimes the bond market and interest rates overreact, right, we saw, you know, really, within a few weeks in trade and 10-year Treasury go up, you know, six tenths of a percent. Is that an overreaction? You think it will go further? Or do you think it doesn’t matter for most of our Income Generation members?

David Eissman: Well, for most of our Income Generation members, it’s not going to be tremendously significant other than we might be able to find some better yield opportunities increased their interest in dividends. You know, I do think that it’s a little bit, you know, overblown. Again, you know, a lot of our newscasts today are hype oriented, and I think you must always be cautious about, you know, how deep you get into, you know, following the trend lines, and really taking a step back and looking at reality.

David Scranton: Well, being a bond guy like myself, it’s kind of nice to see the rates go up a little bit. It makes it easier to buy bonds, it makes it easier for clients to get a decent rate of interest, and long-term, that’s all a good thing. So hopefully, nothing dramatic will happen. But hopefully, you’re right. We will see results, slightly higher interest rates. So David thanks a lot for being on the show. I appreciate it.

I’d like to thank today’s guests for joining us for another episode of the Income Generation. I’d also like to thank you, our new and returning viewers. If you’ve done a good job building and growing your nest egg for retirement, you should be proud. For most people, it takes commitment, sacrifice, and good decision making. You have every right to pat yourself on the back. At the same time, though, please understand that it can be dangerous to be overconfident, it may very well be that you saved and built enough. Even more than enough to meet all the challenges you’re facing retirement and most importantly, to achieve your goals. But that might not matter if you haven’t taken the right steps to protect what you’ve grown to anticipate those changes and the creative strategy to meet them head-on. In the end, it’s all about continuing what you started in the growth stage of retirement planning, being a good steward of your money for both you and your family. But being a good steward in the protection and income stage starts with recognizing that it’s a separate stage. It begins within 10 to 15 years of retirement. And it takes a different mindset, different priorities and a whole different approach to the game. I like to call it being good defensive coordinator versus offensive coordinator. It takes the willingness and ability to see seven moves ahead on the chessboard.

Thanks for watching. If you’re close to retirement, and you really want to know how to protect and maximize your money, it’s essential that you stay informed and up to date and right here is where you can do it on the Income Generation.

I’m Dave Scranton, your host and thanks again look forward to seeing you next week.

If you’re not using someone who’s well trained in fixed income and you’re born before 1966, it may just be time for you to break up with that advisor and move on. I would suggest someone who will care for you through these important years of your life. If you need help finding someone call or write us. I’d also like to remind you of the special report entitled The Income Generation this available free to you our loyal viewers online. If you haven’t downloaded your report pick it up after the show.

If you are near or in retirement, head over to the and download your special report written specifically for the needs of the Income Generation, again, those born before 1967.

I’m David’s Stranton, and you’ve been watching the Income Generation will see you all next Sunday.

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