Financial and retirement planning guidance from Certified Financial Planner John Teixeira and Nick McDevitt of PFG Private Wealth Management in the Tampa Bay, FL area. On this show, you'll learn about how the financial and retirement world has evolved over the past several decades, how to properly plan for your own future, and some of the important pitfalls to avoid. PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.
Thursday Aug 11, 2022
Thursday Aug 11, 2022
Thursday Aug 11, 2022
Finding yourself between jobs can be frustrating—whether you were fired, laid off, or just had to step away of your own choosing. But it can also present some opportunities. Let’s discuss some of the challenges and opportunities that you need to consider if you’re between jobs.
PFG Website: https://www.pfgprivatewealth.com/
PFG Private Wealth Management, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investment involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.
Transcript of Today's Show:
For a full transcript of today's show, visit the blog related to this episode at https://www.pfgprivatewealth.com/podcast/
Speaker 1: It's time for another addition of the podcast. It's Retirement Planning Redefined with John and Nick and myself, and talking about considerations to ponder if you find yourself between jobs. Guys, I want to frame this from the standpoint of 50 plus, okay? So, and maybe in that pre-retirement stage. Obviously we've seen the great resignation the last two years, people leaving jobs, fired, laid off, downsized, had enough, don't want to go back to work, dealing with COVID, the fear of COVID, whatever it might be. Just that mindset of changing jobs later in life. Some challenges to be aware of. You guys got a lot of clients of various different ages, but again, I want to look at this from an older standpoint. If you've got references from a younger standpoint as well, but I'd like to look at this from a retirement type of standpoint. So let's jump in and get started because I know we're up against the clock today. But first how you doing John?
John: I'm doing all right. I'm on day 12 of COVID and looking forward to this slight congestion to go away.
Speaker 1: Fantastic.
John: Other than that I'm good.
Speaker 1: Oh, yeah. Well, day 12, that's no fun. So all the best to get better soon. Nick, what's going on my friend? How you doing?
Nick: Better than John.
Speaker 1: Fair. Fair point.
Nick: Yeah, just got back from some traveling up north to my hometown in Rochester, and I go each summer and it's always kind of a good reset for me.
Speaker 1: Yeah.
Nick: So times with friends and family and a little bit cooler weather.
Speaker 1: I was going to say you got away from the heat didn't you?
Nick: Yeah. Honestly it was still pretty darn hot up there a lot of the time.
Speaker 1: Yeah.
Nick: But cooler than here.
Speaker 1: Well, let's dive in and take a look at some of these things. So again, whatever reason you've left, fired, laid off, walked away, you're own choosing, whatever. If you're 50 plus guys, maybe it's not the worst thing. I want to try to look at a couple different angles. Maybe it's time for a new career. I've talked to so many people who are like this job is super stressful, it's just wearing me down, and you add all these other elements in the modern world of what we got going on. And some people just want to kind of scale back. If they're financially in shape, it's not the worst idea to maybe look for something that brings you some better joy and less stress. What do you think, John?
John: Yeah, I definitely agree with that. And it comes down to kind of what you just said there and kind of looking back at what we talked about a couple of weeks ago on saving for retirement. So if you have enough saved up, you are in the driver's seat to go ahead and make this kind of decision of saying, "hey, I don't enjoy this anymore."
Speaker 1: Yeah.
John: My passion is X and I really want to do it. So, the more you have in the bank or saved up, the more options you have to go ahead and really consider what you want to do. Because it could take six months to a year to really get into that field [inaudible].
Speaker 1: Right. Are, we tapping into emergency fund money in that kind of vein?
John: You might have to.
Speaker 1: Yeah.
John: Again, everyone's situation's different. But you may have to do that depending on kind of where you're at.
Speaker 1: And where do you guys usually go with emergency funds? Six months worth of expenses in case of a job loss or 3, 6, 9? What do you guys kind of tend to recommend?
John: Usually if there's two incomes, we're usually around six months. If there's only one income that might kind of extend it a little bit longer than that.
Speaker 1: Gotcha.
John: And again, everyone's situation's different. I don't want to speak for Nick, but I have certain people that are more conservative and they're a minimum. They want one years and some two of emergency funds. And I have other ones that they're fine with six.
Speaker 1: Yeah.
John: So every everyone is definitely different. But for me, I would say you want to be at least at six months because you never know what's going to happen.
Speaker 1: Yeah. Okay. Well, Nick, actually it works well for you for my question. The next question which is, maybe that new career is actually a job for yourself, right? Maybe if you're 50 plus and you've kind of had enough and you're thinking about changing positions, maybe it's because you really wanted to go into business for yourself. There's a skill set that you have or whatever that you've always wanted to explore.
Nick: Yeah. So, one of the ways that we can look at this because obviously we end up being kind of a testing ground for people to explore some of these things. So the first thing that we try to do is put it into the plan. And with the software that we use, we can kind of model different things and be able to say to somebody, hey, if this is something that you're looking for, do you have an idea of what it would look like from an income standpoint, or how long it's going to take you? Or even work backwards and say, hey, let's figure out how long you could try this new endeavor without having any income, so that you can kind of enter into it with some sort of game plan to look to see what's feasible or what's reasonable and kind of look at it that way. But it's absolutely depending upon the field, it's easier for some than others. Some fields it may not be kind of conducive. And there's also something to be said for trying to build up your own business while working elsewhere. In reality, if you're going to run your own business, you're going to be working 60, 70, 80 hours a week anyways in the first few years. So kind of getting it up and started while you have something else going can kind of give you the light at the end of the tunnel, and give yourself an exit strategy without putting yourself through so much financial stress.
Speaker 1: That's not a bad idea either. So, all right. So those are the emotional or the job type setup scenarios. So let's talk a little bit, we talked about emergency fund or having some money to kind of stop gap us, but let's look at some specific pieces to that. Guys, so John, health insurance, okay? If you're walking away or have been asked to walk away, you may or may not have some healthcare options or even starting a business, right? Especially, again, if I'm talking 50 plus you might be still looking at 10 years let's say before Medicare. So what do you do?
John: Well, you have a few options and kind of the first one people look at is Cobra. So, you are allowed to stay on your workplace plan for, Nick, was it 18 months, Nick. Is that right?
Nick: I believe so.
John: Yeah, 18 months. So yeah, you could stay on there, but we find every situation's different again, but that typically can be very expensive.
Speaker 1: I was going to say, you got to have the funds for that though.
John: Yep. Then there's the marketplace. Just making sure seeing what else is out there on an individual marketplace. And with the loss of a job, that's considered a qualifying event so you should be able to jump right into another plan. And then also if your spouse is still working, there's the opportunity to jump on him or hers plan. So, big thing when you're doing this is you really want to look at the plan you're going on and what benefits you need. The last thing you want to do if you have some health issues is jump onto a worse plan that's going to be not beneficial for you and your family.
Speaker 1: Yeah, definitely. But it is something you got to think about. Don't just walk away or again, whatever the reason is and make sure that you've got some sort of plan in place for the health insurance, because at 50 plus again, this could be, and at any age really, but certainly at 50 plus, problems tend to come at us more fast and furious as John and I know. We were talking about some things a little bit here, so they start to show up on you a little quicker. So you want to make sure you got a plan in place for that. Nick, is it a good time to talk about that 401k and roll it over? Obviously, if you're walking away or been asked to leave, you don't want to just leave it behind, correct?
Nick: Yeah. I would say that oftentimes that is the case. The qualifier and disclaimer, just to kind of give an example is understanding what the next steps are. So for an example, tying in with some of the questions that we had previously, if somebody's going to be considering going into business for themselves, then maybe they're going to need some sort of startup capital. One of the things that we've done with clients before is, and not all plans allow this, but they've been in a plan that allowed for loans on the 401k, even though they're not employed there. And they were able to access the money to help with their startup costs and pay it back over time.
Speaker 1: Okay.
Nick: Versus if that money was in an IRA, and especially if they're under 59 and a half and they needed some capital, incurring some taxes and penalties, things like that. So, depending upon what the next steps are in the overall strategy. If it's a typical situation where you're shifting to a new employer and there's new benefits and you have other money you're looking to consolidate and want an advisor to help you with your funds, then the rollover could absolutely be a good time to do that.
Speaker 1: So if that's the case too, maybe it's worth having a conversation about Roth conversions, right? So that could be on the radar as well, because then you're taking advantage of maybe some of the tax opportunities now versus later. But more than anything else, I think just leaving it behind is typically not a good idea because you've got more control if you move it over as well as to tend to, can probably find some cheaper options as well. Because they can be a little expensive. So something to ponder.
Speaker 1: All right. John, last one, I'll toss to you buddy. Any severance conversation that may come up? Now again, if you've been shown the door, you might get a severance package, or even if you've just volunteered to leave or whatever, you might get some sort of severance package treating it a little bit like a pension conversation. Sometimes they offer a lump sum. Sometimes they offer monthly installments. Maybe that's some of the money you use to carry you over. But is it worth having a conversation about where you put that money and what you use it for?
John: Yeah, I think it is. And again, everyone's situation's different, and it's important to understand where you're at currently. Do you have that six months of emergency savings or a year? And really that will dictate quite a bit how you take it. Or just kind of going back to some of our questions here. Are you trying to start your own business? Like Nick mentioned it's going to take you some money, some capital to get that started. If you are, maybe you do take the lump sum option. Or if it's a monthly installment and you're going to get extra money, you don't need it, and you kind of do the math and it's like, hey, if I do the monthly, I'll get an extra whatever it is, 20,000, 30,000 over a period of time.
Speaker 1: Right.
John: Then you go with that option if you don't need it. So I hate to sound like a broken record, but it all comes back to your plan and what fits your situation. But definitely with severance packages you just don't ignore them and just take the first option they give you, you want to evaluate it and figure out what's best.
Nick: And just to kind of jump in here.
John: Yeah. Yeah.
Nick: I think this is a good time to kind of remind people. And one of the things that we try to tell people is that, use us for clients that are working together with us. We have the core of their plan built already.
Speaker 1: Mm-hmm.
Nick: And we're able to help model these sorts of question, and help them through these decisions to give them kind of at least the data they need from the perspective of finances. And then what that a lot of times does is because sometimes the concern of finances can be self-limiting. So a lot of times when we're able to kind of paint a picture from a financial standpoint, it lets them then prioritize the rest of the factors that they need to take into consideration and figure out how to kind of attack this. But these are the sorts of questions that we're here to help on.
Speaker 1: Yeah. I guess what I was going to say, if you're 50 plus and whether you expect to be shown the door or not, or you're choosing to leave whatever the case might be. It's one of those situations where you have got to have a plan in place. And if you're over 50, hopefully you do, hopefully you are thinking about the retirement journey, the future, whatever that might be, and you have a plan in place. And if you don't, then reach out to the guys at PFG Private Wealth. Again, the podcast is Retirement Planning Redefined. If you're catching this through a newsletter or something like that where you've come across it and you haven't subscribed to it yet, consider doing so. You can find this on all the major platforming apps like Apple, Google, Spotify, all that stuff, and you can also find it all centrally located back at the main website, PFGprivatewealth.com. That's PFGprivatewealth.com. Anything else guys that I might have missed before we go? If you're thinking about job transition, I think just having a good strategy ahead of time is probably the best recipe. John, what do you think?
John: I agree with that. It definitely put yourself in a situation to adapt to whatever comes up because as we know, things are always going to come up.
Speaker 1: Always going to come up. Well, thanks for your time my friend. I appreciate it. I know we got to let you get out of here. You've got to go sit with some clients. Nick, thanks for your time as always my friend. I'll catch you next time on the show. This has been Retirement Planning Redefined with John and Nick from PFG Private Wealth.