What The Wealth Retirement Podcast

Nine Accounts, No Plan: Planning a Real Tennessee Retirement (111)

• Jonathan Bednar II, CFP • Episode 111

Share episode

We recently worked with clients who had nine different financial accounts at nine different institutions with no coherent strategy, including around $450,000 sitting in cash earning nothing. After moving from California to Tennessee, they were struggling with both lifestyle adjustments and financial disarray while approaching retirement within five years.

How we helped:

• Consolidated nine accounts into fewer, more strategic "buckets" for better clarity and purpose
• Created a plan to systematically withdraw from a beneficiary IRA while funding Roth IRAs
• Moved bank deposits into interest-bearing accounts generating approximately $1,200 monthly
• Focused on creating simple, understandable plans rather than complex strategies clients won't implement
• Building momentum through small financial victories to increase confidence
• Helping clients navigate lifestyle changes like managing propane heating costs in rural Tennessee
• Working toward comprehensive retirement timing and Social Security optimization

If you haven't already subscribed to the podcast or the YouTube channel, please do so. That helps me more than you know. Be confident in your retirement. Have a wonderful day.

🗓️ Meet with me: https://paradigmwealthpartners.com/begin-your-journey/#calendly
↔️ Connect with me on LinkedIn: https://www.linkedin.com/in/jbednarii/
🌐 Paradigm Wealth Partners (website) – Financial planning for career professionals who want to retire and stay retired: https://paradigmwealthpartners.com/
🌐 What the Wealth (website) – Adding clarity to difficult financial topics: https://whatthewealth.com/
▶️ YouTube: Paradigm Wealth Partners

If you or someone you care about could use the help of a financial advisor and sees the value in establishing a financial plan, please reach out to me.

Thanks for Listening!

Jonathan

Speaker 1:

nine different accounts, new to Tennessee, and no plan. We recently worked with a new client and found us on Google and as we started uncovering their financial situation we realized they had nine different accounts at nine different places. They just moved from California to Tennessee and getting acquainted with a new way of life, new systems, new home and just the complexities of that that aren't overly actually complex but do cause, I guess, some anxiety around. You know what to do and where to go and just kind of figuring out the new lifestyles. Again, nine different accounts, nine totally different places and no plan, no strategy. And on top of that, about half of their money was in cash at the bank, earning zero. Total assets are about $900,000, roughly $450,000 at the bank, earning zero, roughly $450,000 spread amongst these nine different accounts. So just a lot of confusion and not know where to turn, who to turn to, what to do. And so as we met I think I mentioned they found us on Google and as we met, we had a lot of conversation about what their goals are, what their dreams are, what do they want to do. They are kind of retirement age, on the border of retirement, about five years out from retirement. The wife doesn't work. The husband is working as an electrician Currently, not making the money he was making in California, but cost of living is less, and so they're making it buy on what he's bringing home. Now they actually mentioned that they're getting used to actually having. I wouldn't call it rural, but it's not in the middle of Knoxville either, and so where they heat their house is from an actual 500 gallon propane tank, and so one of the challenges they've had to navigate is you know, how do you fill this propane tank up? And you know, do you wait till it's fully empty? Do you fill it all the way up, you know. And so, as they've done, done in the past, they let it go all the way down, and then, filling up 400 gallons, there's a pressure valve on there that kind of tells you when, when to stop, and so 400 gallons for them is the magic number. But it became a huge bill when they had to fill up with 400 gallons of propane, liquid propane, and so now what they do is they let it get down, you know, to $330, $350, and then they call and refill, so it's not as big of a price scare or bill when it comes due. But those are some of the little intricacies that they are trying to work through as they've moved to Tennessee.

Speaker 1:

And so again, as we sat down, we're talking through what does it look like to work with our firm? How do we think about financial planning? What are your goals and your dreams and your objectives? When does your husband plan to retire? Have you thought about when you're going to take Social Security?

Speaker 1:

What do all these accounts mean and how are you going to use them? Do you have any strategy beside them? And then, what are you doing over there with the investment or the money at the bank? So that's obviously their safety net. It feels good to have that money there, but again, it's half of their assets not working for them. So we started out just kind of talking through all of these accounts and right off the bat, we could combine four of these accounts together.

Speaker 1:

So they each had, I think, two Roth IRAs at two different places that we could automatically combine, combine. So we went from nine to seven and then there was a joint account that we could combine with another account, and so, right out of the gate, we could simplify some of this financial complexity by just consolidating these accounts and being more strategic, and what that did is let's them focus on less accounts, but also lets those accounts be more intentional and purposeful because they've got more dollars to them. Now I'm a big advocate of having bucket strategies, and you know you could think of this as having nine different buckets. To me, nine different buckets is too many buckets. You start to kind of lose control, and so I think the sweet spot is somewhere between three and five buckets allocated. Maybe one is Roth, maybe one is pre-tax, maybe one is after-tax. Maybe you're allocating by equities and fixed income and cash. You know there's a couple different ways you can think through these bucketing strategies, but it is definitely something that we have found that clients like and it's easy for them to understand. Okay, this is my growth bucket and this is my income bucket. Helping consolidate some of these buckets not only reduced some of that immediate stress out of the gate, but it also kind of gave us a sense of after the consolidation. Okay, what steps do we do next?

Speaker 1:

One of the things that they had was a beneficiary IRA. This is an account that her husband had inherited from his mother or father I can't remember which one it was and with an inherited IRA, with the new SECURE Act that money has to be depleted out of that account within 10 years, and so they're taking the minimum RMD. There's not a whole lot that they had ever talked with. Let me back up a step. They don't have an advisor on any of these accounts. They're all call centers, or the advisor left and left them with someone who never reaches out, and so they haven't had guidance on any of this stuff in probably three to four years. So back to this Benny IRA.

Speaker 1:

One of the things that we like to do and I've talked about this on the podcast before or talked about it on the YouTube channel before we do this a lot with clients is there's a roughly I don't can't remember exactly, but roughly $40,000 to $50,000 in this beneficiary IRA, and so what we're able to do is go ahead and take those distributions out. The money's got to be depleted at the end of the 10th year, so we're able to go ahead and take money out and then turn right around and fund their Roth IRAs for the current year because he's working and has earned income, and so we'll have that depleted in about three years out of the beneficiary IRA. That's taxable event. The IRAs have never been taxed, but then we turn right around and contribute into the Roth IRAs and we now let that money start growing tax-free from now on in their retirement, tax-free from now on in their retirement, and so over the next couple of years that other account will also fall off of their bucket strategy, if you will, or their household account strategy. So those are a couple of the things that we've done just to kind of give them a sense of, you know, clarity and comfort and strategy around basically what the heck do I do with all this and I'm lost.

Speaker 1:

The other thing that we did was created a fixed income strategy around the money that's at the bank, and so, since their income is less than they were making in California and they're still getting adjusted into the lifestyle here of Tennessee, what we did was we were able to put some of that money at the bank actually all of it into an interest-bearing account, and so now it's earning about 4%. That's not guaranteed, it can fluctuate, but as of today it's around four percent and so that gives them roughly $16,000, a little bit more dollars that they can use to help supplement their current lifestyle, and so that's roughly another $1,000, $1,200 a month on top of what he's making from his work. Again, that helps pay for some of those unexpected bills, like the propane bill or health expenses or what have you, and so getting that money working for them was a really big boost for not only their confidence and their strategy but also their cash flow needs. So those are a couple of the things we've done for these particular people to just kind of get them moving in the right direction for these immediate pain points. And then we're going to start talking about and dialing in okay, when are we going to retire and are we going to draw social security at 62? Are we going to wait until 65 or 67? What does that look like? Do we have enough to retire on and really start mapping out? What are the next five plus years look like?

Speaker 1:

So it's not uncommon for people to come with us and they don't understand what they have. If they have a plan, they don't understand it. Most of the times they don't have a plan at all, and a lot of times what I see is advisors make these really complicated plans and clients, you know, kind of nod their heads during the meeting, but they don't know really why they're doing this, and so what we like to do is build these one-page plans or these back-of-the-napkin plans that are real simple and easier to follow, instead of making these massive plans that end up having low adoption. And so, if we can tackle one or two tasks at a time and you can build that momentum you know Dave Ramsey talks about gazelle-like momentum If you can start building that momentum, excuse me, and you can start seeing some of these wins take place and you, you know, have these small victories. It just pushes and adds a little fire in your belly to continue to moving on.

Speaker 1:

So, you know, this is what we do for people. We, you know, not only do we do the investment management and help guide them on the investment decisions, because these people don't understand investments, they don't want to understand investments, you know. They want to, you know, spend their time with their family when he gets home from work. They want to have dinner together as a family and enjoy their new lifestyle here in Tennessee and explore, you know, this part of the country. And so taking that burden, that stress, off of their plate is really, you know, where we excel and where we're experts, providing that kind of a guidance and clarity and confidence for for clients. So, uh, again, just kind of a a quick case study and conversation we've had over the past week or so with clients regarding uh, you know their plan and how we're helping people in uh in the real world. So, uh, thanks for for thanks for listening.

Speaker 1:

If you haven't already subscribed to the podcast or the YouTube channel, please do so. That helps me more than you know. Be confident in your retirement. Have a wonderful day. Thanks for joining me on another episode of what the wealth. If you enjoyed the episode today, smash that subscribe button. It helps me more than you think. Also, if you found this episode insightful and a light bulb went off, share it your friend, aunt Judy, the random guy in the office who's always talking about investments. Wealth isn't about just the chain. It's about our choices, chances and changing our financial futures. The information in this podcast is informational in general in nature and does not take into consideration the listener's personal circumstances. This podcast is not intended to be a substitute for specific and financial, legal or tax advice. You should consult the approved qualified professional prior to making a final decision. Securities offered through LPL Financial member. Finra, sipc. Paradigm Wealth Partners is the other business name for Independent Advisor Alliance Investment advice offered through Independent Advisor Alliance. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. No-transcript.