Tom Stephens, Executive Vice President of Robertson Wealth Management, joins us to talk about ensuring you have enough to retire comfortably.
Please excuse any typos in this hasty transcript.
Matt Register: Welcome back to the show, Texas Business Radio. TexasBusinessRadio.com is the website, 844-814-8144 is the 24-hour call-in line. I’m your host, Matt Register. Jay Curry is the one sitting over there in the co-host chair. We’re talking wealth management today. You work very hard and build up wealth. You build up value in your company. When you decide it’s time to stop doing what you do and retire, you need to be able to find a place to put that money and let that money add value to your life. It needs to fund the rest of your lifestyle, and there is a lot of planning that goes into that, and we have the guest in here today to give you some insights into how one goes about that because our listeners, as you know, are very, very good at whatever it is they do. They’re not good at making money with money or learning how to make sure that money works for them. But the good news is, there are folks out there that do know that. What do you think, Jay?
Jay Curry: I’ve got to agree 100%. With the lifespan increasing and the needs that can go, you can literally outlive your spouse by 20, 25, 30 years. My grandmothers outlived my grandfathers by 25 years. I mean, money’s going to be a big deal, and this is really, really important.
Matt Register: Not only can you outlive your spouse. You could outlive your money too, and you want to avoid that.
Jay Curry: Well, that’s the worst of it all, right?
Matt Register: Yeah. Tom Stephens, executive vice president of Robertson Wealth Management’s here in the studio to talk to us, and before we get started, we want to make sure that everybody knows First Allied is the broker dealer, and they are a member of FINRA and SIPC. Having said that, Tom, welcome to the show.
Tom Stephens: Thank you very much. Glad to be here.
Matt Register: Make sure First Allied knows we plugged them and everything is legal. Talk to me a little bit about the cost of aging. We were talking during the break, and you had some particular insights into the aging process when it comes to making sure that you don’t outlive your money. Is that accurate?
Tom Stephens: That’s absolutely correct. There’s so many misconceptions out there. The first is that I’m going to turn 65 and have free healthcare for the rest of my life, and in fact-
Matt Register: That’s not true, right?
Tom Stephens: That’s absolutely not true. One part of Medicare is free if you’ve worked enough hours, but for the rest of it, there are premiums, there are co-pays, there are deductibles. In fact, Fidelity does a study every year, and for last year, for 2016, a couple that turned 65 last year, on average according to Fidelity, is going to spend about $260,000 over the rest of their lifetime out-of-pocket for healthcare.
Matt Register: I mean, that’s not an insignificant amount of money, right? And it’s something that for sure you need to think about before you’re making the decision to exit. Tell me about your book because we have a book that is available on Amazon. We’ll have it linked right there from TexasBusinessRadio.com, The Cost of Aging. Talk us through a little bit about one, why you wrote the book, and two, what’s in it.
Tom Stephens: All right. There’s a couple of reasons. The first is my wife died of cancer, and going through that whole process, there were a number of things that maybe caught me off guard that I should have known that I could have done better. Second, during this whole process, my father was in endstage of Parkinson’s, and he was in an assisted living facility. Again, there were a number of things that caught me off guard, things that I should have known, things that I could have done better, and so I’ve assembled all that into this particular book called The Cost of Aging. I address four major areas that are both going to impact you financially, and in the book, I also give recommendation, no, I can’t say recommendation.
I give suggestions on how you might want to pay for that. The first is healthcare. We’ve talked about that. The second is long-term care. Long-term care, again, the misconception is Medicare is going to pay for me if I need long-term care, if I have to go into assisted living. In fact, that’s not the case. Medicare looks at long-term care as just assistance with daily living, and so in Houston, I think the average cost of an assisted living facility is somewhere about $4,000, but even that is, for the better facilities, that’s probably low. You’re really looking at somewhere between seven and eight thousand dollars minimum.
Matt Register: Per month?
Tom Stephens: Per month, for a decent place.
Matt Register: I’ll tell you what. Just the name of it is, with long-term care, I mean that this could last for a significant period of time, right? I mean, this is something that you definitely have to plan for. You definitely have to make sure that there are provisions set up to be able to do that because the thing is, by the time you need it, you’re not in a position to be able to make some of those decisions yourself. You’re going to have a loved one to it, and if you have things that you want them to do, you me to make sure you tell them and have it in a way that they cannot only know what it is you want, but to be able to access that as well, correct?
Tom Stephens: Well, that’s correct. Let me toss out two things. Number one, the general statistic right now is 70% or seven out of 10 people that are age 65 are going to need long-term care, so that’s huge.
Matt Register: That is huge.
Tom Stephens: Only three of us are going to go without that, and maybe that means we’re going to die before we need it.
Matt Register: You know, with the demographics changing in an aging population, and medicine getting to the point that we live a whole lot longer, this is going to become a bigger and a bigger issue. Retiring at 65 is an antiquated number, right?
Tom Stephens: It is.
Matt Register: That was a number that was around the age of life expectancy whenever it was picked, and the life expectancy is 10 years longer now, which means that some people are living significantly longer past that. The system is not set up to handle that, correct?
Tom Stephens: That’s correct. In fact, that number was selected back in the 40s when FDR created Social Security, and our average life expectancy back then was 63, and so they set it at 65. Now, that number is kind of cast in stone it seems, and we’re living significantly longer, into the 80s on average, and many are-
Jay Curry: That’s 20 years, yeah.
Matt Register: No, absolutely. What are some of the other things, we covered a couple of them, in The Cost of Aging?
Tom Stephens: A couple more things that I probably want to mention, and the first is hospice. Hospice is a very, very significant service that we’re going to need, and in fact, Medicare, most insurance will cover that, and if you can’t, you don’t have Medicare, you don’t have insurance, most hospice will cover that for free, so it’ll be no cost to you. The reason that’s significant, if you don’t have hospice and if you die at home, the police are going to get involved. If you have hospice, the hospice doctor will be there and take care of everything.
Matt Register: Sure.
Tom Stephens: The other thing that I want to mention is planning your own funeral. So many times, we’ve seen customers or clients that children have difference of opinion on what needs to happen, how they want this funeral to go on. We’ve had incidences where one of the siblings says, “We’re going to cremate mom,” and the other says, “Oh no, it’s against our religion,” and we’re having a fight here in the funeral home, and all of that needs to be worked out in advance.
Matt Register: Well, it’s very easy to have it worked out in advance, right, just to get it written down and make sure everybody understands it, but it’s an uncomfortable conversation to have and nobody wants to have it. It’s the right thing to do though is to just remove all of that nonsense from the equation. Your family has enough to think about at that time. You, by trade, are a wealth manager, right?
Tom Stephens: That’s correct.
Matt Register: So what is the easiest way for somebody to get in touch with you?
Tom Stephens: My website is TSS, well, that’s my initials, Tom Stephens, well, it’s TSSWealth.com.
Matt Register: TSSWealth.com is the website. Robertson Wealth Management, Tom Stephens. Thank you very much for joining us.
Tom Stephens: You’re very, very welcome.
Matt Register: Guys, I hope you enjoyed the show. Like we said before, you work very, very hard to build up wealth, and you got to make sure it’s going to last you through what could be a very, very significant retirement period, right, Jay?
Jay Curry: Absolutely, and this has been a great program. We’ve gone from creating wealth and managing it all the way to what you do at the latter part of your life with it, how do you control it. It’s a great program.
Matt Register: Yeah, great program indeed. You can see the entire thing in beautiful, high-definition video right there from TexasBusinessRadio.com. Unfortunately, we told you everything we know about it. We’re going to have to go get smart on something else and bring you a whole brand-new show next week, same time, same place. We enjoyed it, guys. We’ll see you next week.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.