Foreign. Hello and welcome to 2025. This year has been an unexpected year of events for me. In August my mother's husband fell and passed away just a few days later. Suddenly we were selling her house and moving her into a senior living apartment. And then in September we had Hurricane Helene come through and my daughter who lives in Asheville came and stayed with me for a week because they had no water and no electricity.
And then at Thanksgiving time I had a flood in my garage because my water main broke. And this past week when I got back from Christmas where I spent Christmas time in Asheville, my refrigerator and freezer had failed. There was all the food inside ruined and there was water on my hardwood floors which then buckled. And now I am dealing with insurance adjusters. So unexpected events like these happen all the time when we least expect them. Hence unexpected events.
I want to give a special thanks today to Melissa Bain for stepping in. I had a guest scheduled and he contacted me late yesterday to tell me he was sick with the norovirus and was not going to be able to be on today. So last night I reached out to Melissa who is my personal financial advisor and she was able to step in. So thank goodness for that.
And in today's episode we are going to be covering the topic we originally planned to talk about, which is planning for or preparing for protecting our nest egg when the unexpected happens. So welcome to Boomer Banter, the podcast where we have real talk about aging well. My name is Wendy Green and I am your host. Let me tell you about Melissa.
She is a Senior Private Client Advisor and Principal at Greenwood Capital, a one and a half billion dollar financial firm with offices in Greenville and Greenwood, South Carolina. In her role, she delivers holistic financial planning and personal service to high net worth individuals and families and she enjoys building relationships and is honored to come alongside her clients during their most difficult circumstances as well as to celebrate them during their happiest times.
Melissa directly manages over $200 million in client assets serving 150 households across the Southeast. Melissa joined Greenwood Capital in 2013 as the first female advisor and the first Certified Public Accountant at the firm. She is one of only a handful of women in the state of South Carolina to achieve both her Certified Public Accountant designation and her Certified Financial Planner designation.
In addition, Melissa is a Personal Financial Specialist, a Chartered Financial Consultant and is licensed in South Carolina as a life accident and Health insurance professional. So as you listen to this episode, think about who you know that would benefit from hearing all of the information we're going to Share today, a friend, a family member, someone that needs some of the wisdom about preparing to protect their financial and then forward this podcast to them.
They can find boomer banter on YouTube or any podcast app, and I bet they will thank you for the recommendation. So join me in welcoming Melissa Bain to Boomer Banter. Hi, Melissa. Hey, Wendy. So glad to have you with us today. Thank you so much for stepping in. Well, I appreciate that you thought about me. We're excited to be with you today. Near and dear to my heart, I do. Yes, we talk about this all the time, don't we?
So let's start with some of these unexpected events like water main breaks and refrigerators losing coolant. What role does an emergency fund play in preparing for these types of unexpected events? And how much should people aim to save in their emergency fund? Right. Well, you know, there are a lot of things that can happen in our lifetime, and one thing that we can always expect is that the unexpected is going to happen at some point.
You know, for a lot of folks, it can be, you know, job loss, it can be a disability, it can be a child with health issues. There's just so many things that come along. And an emergency fund is one of the most important things that I think someone can do to protect their nest egg and their assets.
So an emergency fund, usually I recommend that someone calculate what their monthly living expenses are, including debt service payments like credit card or mortgage, those kinds of things, and build to a point where you have six to 12 months worth of living expenses set aside.
That may sound like a lot, but if there's a major health issue or a job loss, depending on what the job market is like, right now we're enjoying a good job market, but there have been times when the job market was very poor and it could take six to 12 months to find another job. And it could be one at a lower level. Well, and especially as we get older, that becomes more difficult. Absolutely. 100%. And the emergency fund should be invested in something that is safe.
You know, we recommend that folks keep that emergency fund money in something like a bank savings account, certificates of deposit, or money market account, something that is FDIC insured and not subject to risk because that is your cushion. That's, that's your fallback when those unexpected things happen. Okay, six to 12 months. Good to know. So. So something happens like, you know, you suddenly have to move or replace, you know, major things in your home.
And it takes a while, especially if you're unemployed, to build that back up. So I'M curious, like, does it make sense to continue to try and build it back up or should we continue to just let our investments in our retirement accounts grow? Or is it a either or, or both? It's kind of a balance. But I will say that I would set a target for building back up that emergency fund. It does take time. I mean, it takes time to get to that six month cushion. That's a lot.
That's a most people having that emergency fund available keeps you from using credit when those bad things come along. Plus it keeps you from having to pull out of your retirement accounts, which could be not only taxable income to you, but also penalty if you're under a certain age or pulling out from an investment account when the market's down, which we, you know, we never want to do unless we absolutely have to.
I would focus on trying to get that emergency fund back where it needs to be and it may take six to 12 months to do it. Right, Right. So you started to mention some of the major events that could affect our retirement account. So we, we've now maybe depleted our emergency fund and now we're looking at the retirement. What are some of those major events that you run across with your clients?
Well, I would say one of the more common events that I see is a health issue that just out of the clear blue sky, because I think we all have in our minds, oh, I'm going to work until, you know, 65 or 67 or whatever that goal is. And we sort of take for granted that we're just going to be able to do that. But a lot of times that is just not the case. So disability is something that I see happen.
Another thing that I see happen is clients who maybe go too far in helping adult children with things. And we've all been through some major life events recently. You mentioned Hurricane Helene, which created a lot of havoc for a lot of people. Covid, just a couple of years ago, you can hardly turn on the news without hearing about student loan debt. And we are in an unusual period where we've had several things. I think student debt is at historical levels, Covid, is a tragic and unusual event.
And so our tendency as parents, and I'm a parent too, is to help our children as much as we possibly can. And that's of course what we want to do. But there is that balance where younger people do have some avenues available to them that as boomers maybe already retirees, we wouldn't have available to us if we get into a financial situation. So there Is a balance there that we need to try to keep in mind.
We don't want to sacrifice our ability to support ourselves through our lifetime by helping our children or grandchildren, whatever the case may be. For example, with school, there are loans available for school. We shouldn't necessarily take out a second mortgage on our house or something like that. That's just an example. There may be good reasons for doing things like that sometimes, but generally speaking, just to make sure we're not jeopardizing our ability to support ourselves.
Yeah, I remember when I was looking at college for my kids and I had an advisor say, you know, they have a lifetime of earning potential, you don't have that anymore. And so letting them take out loans when they have a longer time to repay those loans and to replenish their savings might make more sense than. Right. Yeah, yeah.
And then you also mentioned health and, and so what are some of the ways we can protect our retirement savings when we're looking at potential health and disability events? Right. Well, you know, insurance is a very important piece of, of anyone's financial situation and you know, having the right insurance in place and the right amount.
So definitely during your working years, when you have an income stream that you and your family are counting on, make sure that you have disability insurance, especially long term disability. Because most of us, if we have that emergency fund, if we had a short term disability, we would probably be okay. But it's those situations where people could be out of work for 6 to 12 months or longer that create a real financial burden.
As a matter of fact, most bankruptcies in the US are caused by disability. Is that right? Not death, but disability. Because if someone passes away, this sounds a little cold, but the expenses to take care of that person goes away. If someone is disabled, they have lost their income stream, but at the same time they're incurring some pretty expensive, could be rehabilitation, physical therapy and those kinds of things.
So I would suggest looking at, if you're still working, disability insurance, also life insurance. And there's a lot of different rules of thumb out there, but generally speaking, we typically suggest that someone have enough life insurance to cover outstanding debt and if there are children still at home to be educated. So that's kind of a minimum to cover debt and education.
Another kind of rule of thumb that a lot of folks talk about is 10 years worth of earnings, you know, so if you're making $100,000 a year, you'd want a million dollar policy. And in this situation, I'm specifically talking about terminal life Insurance, Okay. Because it's less expensive and you just have it for as long as you need it. And it's kind of like paying rent. When you don't need to pay rent anymore, the rent goes away.
So life insurance to cover those career years and those specific expenses. And then of course, you know, you mentioned the hurricane and I have unfortunately run across quite a few friends and family and clients whose property and casualty insurance did not cover storm damage. Right. Some of the things that they would have thought would have been covered.
So just maybe sitting down with your property and casualty insurance agent and get a clear understanding of what is covered, what isn't covered, should you think, think about adding some additional types of coverage, those sort of things. And life insurance, if you are no longer working and you don't have children at home, is it something we should still consider? Some people like to have a whole life type policy to use for legacy purposes, so. Or for final expenses.
I have a little, just a little small policy that, you know, I don't know what the rest of my life holds. You know, I'm sure there'll be lots of unexpected events. So years ago I just bought a small whole life policy that would basically cover a funeral and maybe some medical expenses so that if I'd had health issues and things that I had depleted my assets, at least my family would have a little small policy to take. Care of final expenses and then long term care.
I mean, if we're in our 60s or 70s, that's a hard policy to get if you don't have it already. It is. And Even in your 50s and 60s, long term care insurance is not inexpensive. So for some folks it's just not within reach. But I think the important thing, and you and I have talked many times about our parents and you know, kind of what we went through with my mom, her last few years with assisted living and memory care and things like that.
I think the most important thing is to sit down with your significant other and or your kids and talk about if that situation comes about. And for 60% of us, we will be in a situation where we need help. And as women we are most likely to need it because we typically will outlive our spouses if we're married. So have that conversation about where would you like to receive care? Would you like to receive care in the home or in some type of assisted living or nursing care facility?
I would even suggest visiting, visiting some places, some continuing care communities, some assisted living communities, some of the services that offer in home care and find out what's available and find out what the costs are and come up with a plan. That plan may not include long term care insurance. Right. Because it is very expensive. But a plan of, well, if we sell the home, that will provide X amount and I would like to get care in the home as long as I could that may be less expensive.
There may be some family members that have the skills necessary to care for you and they may just, you know, and I think I've told you before, with my mom, we didn't have those conversations, right. And when the time came that she needed help, she was very reluctant to any kind of change, which made it so much more difficult. We didn't know what she wanted and how she really felt about things. So we just kind of had to do what we, you know, what we thought was best. And that's, that's tough.
That's hard. That's hard. Yeah. Let me take just a moment to pause to recognize our sponsor, which is Greenwood Capital. And one thing that I appreciate about my financial advisor, Melissa Bain, is that she takes a holistic approach to financial planning. So a lot of what we've been talking about, and she makes sure that my accounts at Greenwood Capital work towards my goals and match my lifestyle. As an independent registered fiduciary, Greenwood Capital places your interests above their own.
I want to share that as a sponsor, Greenwood Capital has compensated my business for this testimonial. And for more information about how they can help you with a financial plan, go to greenwoodcapital.com all right, Melissa, let's continue. So how would, how should people approaching retirement or already retired protect their investments from market downturns or economic changes? Okay, that's a great question. Over the last few years, we've had quite the roller coaster.
Yes. Last year turned out to be a really good year. So we may not, you know, it's not normal to see those kind of results. I think one of the most important things is to sit with your advisor and look at the allocations in your accounts. So determine what you need your accounts to do in order for you to meet your goals. So if you need a 6% return, I'm just making this up. But if you need a, you know, on average a 6% return a year, well, then you don't need to invest as if you need 12%.
So one of the things that I try to spend a lot of time talking about with my clients is make sure that your account is allocated in a way that meets your goals and minimizes. Don't Take more risk than you need to. If you only need a 5 to 6% return, then why put that much more risk in your account to get 8 or 9%? Because the day will come when we have that big pullback and then emotionally we want to get out, and that's the worst time to get out. But it doesn't feel good.
So we spend a lot of time just talking about what will, what will meet your goals, not necessarily what's going to beat the market, what's going to keep up with the stock market, what do you need? And let's try to allocate the account in a way that will get you what you need over time and help you get a good night's sleep. I know. And you know, you know that I have gone up and down with that and called you, called you and said, oh my God, sell. Now you're like, wait, take a breath.
I think that's one of the biggest values that folks can get from working with an advisor is that we do try to help take the emotion out of it because we can point to other times in history when things have happened, but look how they did recover, sometimes very quickly. So we try to take that emotional piece out of it and, and look at the big picture. But your time frame is a very important piece of the puzzle.
So if you have a short time frame that, hey, I know I'm going to need this money in five years, you probably don't want to take a lot of risk with it because five years in the investment world is a short amount of time. And it makes it hard, though, for us on this side. You know, we're saying, yeah, but five years, give me five years of 10% growth, you know, and you're like, yeah, but you could also lose 10% if you're taking too much risk. And. Exactly.
Just finding that, that, you know, I'm not saying set it and forget it because obviously we, we actively manage our accounts here. We, you know, you should have lots of conversations with your advisor on a regular basis, but try to set that overall allocation in a manner that you feel comfortable that you won't panic. We can generally give you some idea about, well, with this allocation, this is what you could expect. This is what this type of allocation has done historically.
That doesn't mean it's going to repeat, but there's a pretty good chance that it will act similarly going forward. So I think it's just really important to set that proper expectation on the outside, on the outet, I should say. Yeah, my Mother has a one or two or three, I think maybe annuities that they bought years ago, you know, and it's great for her because it gives her an income every month. Right. Lately though, I mean, you and I have discussed this too.
I hear that annuities, you know, they're very expensive. Their return isn't as great. So talk to me about annuities a little bit. Okay. Now, we, we do not offer annuities here at Greenwood Capital. I am familiar with annuities, certainly. I'm not going to say all annuities are bad. I will say just understand what you are getting into. They are very complicated.
They're complicated contracts and some can carry pretty high fees and they're restrictive as far as when you can get money out, how much you can get and those sorts of things. So I don't think it's a bad idea to have to take a small amount of your investment portfolio and have it in an annuity. That would get you that what you're talking about with your mom. It's a lifetime income stream. But I'll probably would only do that with a smaller portion.
And I would ask a lot of questions about the fee structure, how I can get my money when I can get my money. If something happens to me, what will my family get and that sort of thing. So it's an insurance product, right? It is an insurance product. And so it's, you know, it's driven by the strength of the insurance company that issues the policy. You know, it is based, you know, on the financial strength of the insurance company.
So there's a certain amount of risk involved because it is, you know, the financial strength of the insurance company. But like I said, for some folks, if you are someone that does panic when the market goes up and down, if you feel like you would not be able to ride out a downturn, then something like that could be good. Because once you put it in there and annuitize it, which means you start that monthly distribution, you really can't jump in and out and you will get that income stream.
So, you know, I think it just depends a lot on your personality. It could be a good fit. So, you know, we're talking about the ups and downs of the market, right? And so the, the. And protecting our nest egg. So the market has been good, like you said. But what if this is the, like, I have to start taking my retired minimum distributions in a couple of years. What if that's the year the market crashes?
I mean, what do we do to protect what I have in there so that I don't wipe it out by taking those RMDs. Right. Well, typically, as folks get closer to that age where they need to take their required minimum distributions, oftentimes they do want to make the allocation a little less risky. So as long as you're not having to touch it and you've got years to grow, you maybe can afford to take a little more risk.
But it is very common as folks get to that retirement age, get to that required minimum distribution age, that they don't want to see the swings as much. And so you don't have to make a drastic move. But I have some clients that get 60, 65, they start wanting to back off of that equity a little bit. But I know you and I have talked before about inflation and what that does to our accounts. It erodes our purchasing power.
So even with interest rates where they are now, and they're pretty good, you know, you can get 3 and a half, 4% interest on some CDs and some money market and some high yield savings. But still, that's barely keeping up with inflation, right? So it's really hard to keep pace with inflation. You don't want to, you'd like to outpace inflation just a little bit if possible.
That's really difficult to do without having anything in the stock market because you do need that little piece of the pie that has the opportunity to grow when things are, are doing well. But when people get closer to those required minimum distribution ages, rather than having 60 or 70% in stock, they may want to be more like 40 to 50% in stock. Because to your point, you are, you have no choice. You have to pull money out whether the market is good or bad. So. And that's in your ira, right?
So, so is the, is the Roth IRA the same thing? Do you have a required minimum distribution for that? At this time? The Roth does not have a required minimum distribution date. They kind of go back and forth about maybe changing that, but right now there's, there's not. So when would it make sense for somebody to consider moving their IRA money into a Roth ira? Okay, that's a good question. I do have some clients that do Roth conversions from their IRA account to a Roth IRA account.
Of course, when you do that conversion, say you convert 10,000 from a traditional IRA to a Roth in the year that you do that conversion, you do have to pay income tax on that 10,000 that you convert. So you don't escape paying tax on that conversion. I guess, you know, the Big benefit that it gets you is any growth that that account has after that would be free from tax.
So generally I sit down with the client and their CPA and we try to do some calculations and some projections to see how much they should convert to keep them from jumping up into a higher tax bracket. So it's, it's kind of a balancing act. But some clients do Roth conversions because the bulk of their investment is in an ira. Okay. And they have a large ira. Okay. And they do the Roth conversion because they want to leave an asset to their children that's not subject to tax.
Okay. And because they're retired and in a lower tax bracket than their children who are working. I do have some clients that do it not really to benefit themselves, but to benefit that future generation that, that might be inheriting that money. They'd rather for them to inherit something that they don't have to pay tax on. Okay. Does that make. Yeah, that makes, that makes a lot of sense. Okay. And then other, other vehicles for feathering our nest egg, let's say.
So I also have a taxable investment account and then we have a savings account. What other vehicles would people use to provide them a long term nest egg? Yeah. Well, for folks who are still working, if you have an opportunity to fund a health savings account, that is a really good vehicle because I don't have the exact limits, but I think for a single person, I'm just going to give a round number.
I think it's about 3,500 you could put into that a year for a family, I think it's close to 8,000, 7,800, something like that. Those monies grow tax free. And after age 65, you can pull those monies out and use them for anything. It doesn't necessarily even have to be just healthcare. Oh, interesting. So I've read a lot of articles that folks say fully funding your health savings account is the best opportunity out there. Even better than your 401k because it's not taxable ever.
Okay. I mean, unless you pull it. If you pull it before 65, it has to be for health reasons. But after 65, you can basically use it like retirement money. But we can't invest in it once we're not working. Right. You have to, you have to be under a high deductible insurance plan in order to be able to fund one. So it's not available to everyone. But that is, that is one vehicle. You know, we touched on insurance a little bit earlier.
Another insurance that I like to talk with my clients about is umbrella policies. They're, they're relative, they're, they're very inexpensive actually. And umbrella policies come above and beyond your homeowner policy and your automobile policy. Okay, so say you're in a bad vehicle accident, it's your fault, and there are numerous people that get injured. Well, it doesn't take but a couple of injuries to honestly be hundreds of thousands of dollars in injuries.
So an umbrella policy would come above and beyond whatever your automobile insurance coverage is. So it would protect, you know, your personal assets from being seized if your underlying insurance didn't cover it. And you know, a million dollar umbrella insurance policy is probably 150 to $200 a year.
Oh. So I think especially for folks that have teenage drivers that, you know, we know about distracted driving and, and when my oldest son started driving, that's when I added my umbrella policy because, you know, accidents do happen. And, and it's, to me that's an expensive peace of mind. But you know, I think a lot of times when we're talking about our finances, you know, we want that. What's the silver bullet that can, can really ensure my financial security?
And you know, the bottom line is, and I tell it, my sons are so tired of hearing this. But, but you know, you have, you just have to live beneath your means. Yes. I mean, you, you just spend less than you make and save the difference. Don't rely on credit for things that really you, you can't afford. The credit card allows you to get it, but you, you really can't afford it. So just try to live beneath your means and save the difference. Build your emergency fund.
Yeah. Because when those things come up, you know, you mentioned refrigerator, that's not something you can do without. That's right. You know, a washer, dryer, you could maybe go to the laundromat for a month or so. Yeah. But refrigerator, you pretty much, when that goes out, you just, you have to have it. You do. So build that emergency fund so that you don't have to pull out a credit card to, to take care of those things that come up and then, then really focus on your buckets of money.
Money. And so your emergency money, keep it safe, keep it, you know, FDIC insured, just earning some interest, maybe your retirement money. That might be longer term. If you're still working, it may be 20, 30 years before you have to touch that. So maybe you can afford to take a little more risk there.
And then if you have a personal investment account, really depends on what your goals and objectives are if the personal investment account is, you know, for down payment on a house in 10 years, then you probably don't want to take too much risk with that either. But that a lot of what we're talking about really boils down to those two or three things. And if you can manage those two or three things, that'll get you a long way down the road. Yeah, that's such good advice, Melissa.
Thank you for that. Let me let people know how they can get get in touch with you so you can be found@the greenwoodcapital.com website. And any questions that we didn't get to today that you might want to reach out to Melissa and run them by her. Certainly feel free to check her out on the GreenwoodCapital.com website. And I should also at this point do the final thank you to Greenwood Capital and to Melissa, but thank you to Greenwood Capital for sponsoring this podcast.
As I said, Greenwood Capital is an independent registered advisory firm. They provide wealth management, investment solutions and financial planning to clients in 23 states. Wow. I also have a couple of final things before I let you go, Melissa. I always have a recommendation for a podcast that is also talking to people in this same demographic. And I want to recommend today a podcast called Fit strong women over 50.
It's part of the Becoming Ellie community where fit and strong women over 50 inspire and encourage each other. Jill McCauslin and Chris Brown interview experts and share motivational stories about getting fit, healthy eating and strength training, running and staying motivated. You can find them at Becoming Ellie. Ellie is E L L I and there's a whole story around that. You can find that out on their website.
It's at becoming ellie.com so check out fit strong women over 50 if you're looking for some motivation. And next week, continuing along in our financial literacy series, we'll be talking with Phyllis Jo Kube. She is a longtime tax professional and a well respected tax influencer. So that means she not only shares her knowledge on social media, but she also passes along her knowledge to younger generations of tax professionals at conferences and continuing education lectures.
And we're going to be covering many tax strategies from our taxes on Social Security to RMDs to things to be aware of when filing the year a spouse passes to Medicare. And I want to thank you all for sharing your time with Boomer Banter. And again, thank you Melissa for stepping in and being our guest today. This was very, very helpful. So glad we could do it. I am too. You have a good rest of your day and feel well. Thank you. You too.