Welcome to Something More with Chris Boyd. Chris Boyd is a certified financial planner, practitioner, and senior vice president and financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it Something More because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter.
Here he is, your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Welcome, and thanks for joining us for an episode of Something More with Chris Boyd. I'm here with Jeff Perry and Russ Ball. We are all of the AMR team at Wealth Enhancement.
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So we're going to talk a little bit about some of the challenges of trying to decide, do I spend my retirement money and try to make the most of the experiences and share that with my family and so forth? Or do I try to preserve wealth and pass that on as well? Both valuable considerations, but a lot to think about in trying to find the balance of how do we approach all this? So, Jeff, where would you like us to begin today? Well, I think you said it pretty well.
We do have clients that come in and say, I want to spend my last nickel on my way out the door, right? And so I want to live, basically, I want to live as large as I can. During my retirement, I saved, you know, I'm not interested in inheritances. Maybe I don't have people I want to leave it to. Maybe they don't think that's the right decision for their family.
And then there's the other group who are nervous about spending anything because they're afraid that they're going to have to help a family member or they're going to have some unexpected expense along the way. Or, you know, maybe they're going to need long-term care at the end of their life.
And they're just really hesitant and living well below their means in their retirement because of I'm going to say fear again, that fear that they're not going to have enough money when they need it the most. We have a client who refers to her decisions about thinking about wealth and wealth transfer generationally as skiing. She refers to it as spending her kid's inheritance, S-K-I. But she also talks about that in the context of shared experiences.
So she's taken all her kids on a one-on-one trip or in different places around the world, probably more than once at this point. She has taken her grandchildren on trips. And her thought is that she's sharing experiences that will be memories and relationship memories, but also broadening their horizons and impacting their view of the world to some extent. And so very valid, right? I do think there is a generational context.
When you think about the greatest generation and their passing, it seems to me that it's been a priority to that generation to try to leave the next generation, perhaps those are Gen Xers, or maybe those are boomers rather, where they're receiving wealth that they can build on. It's leaving them some additional resources to help them be better off and to help the next generation have a leg up, that kind of mindset.
And I think we're finding that as we talk to boomers, it's not always as big a priority. I read an article recently that said only 22% of boomers plan to leave an inheritance. I don't find that to be the norm of the people we speak with. I find most of the clientele we interact with really think they would like to leave money to their next generation. But there's something like $84 trillion that's expected to transfer generationally over the next 20 years. That's a ton.
That's an astounding amount of wealth. And when you think about these changing, shifting kind of priorities of, will people be looking to spend or will they be looking to look to efficiently transition wealth from one generation to the next? Generationally, right? When we're doing our financial plans for our clients, one of the questions with the software that I typically use is, how much do you want to leave for your inheritance? A number.
And a lot of questions we ask our clients in the financial planning process are pretty quickly answered, but that one's not quickly answered.
It's really one that people haven't, most people, I'm using generalities, but most people struggle with because it's actually, you can say you'd like to leave an inheritance or you don't, but when it comes down to assigning a dollar figure to it, it becomes really an opportunity for reflection and it points out the importance of a comprehensive plan and including all these things.
Because if you're not intentional about it, either way, not to be repetitive, but if you're not intentional about your plan and have it in writing and have it reviewed and look at it with your advisor and your estate planning attorney, you're likely not going to achieve the goals that you set out to. Having said that, I'm surprised at that 22 % number. I would have guessed it was going to be like a 50-50 split with people, whether or not they wanted to leave a sizable inheritance or not.
Yeah, I think it made me think of a few conversations we've had with clients recently where it's not as much about the inheritance that they leave behind, but gifting now. A lot of clients do want to provide gifts for their kids, for their grandkids, whatever it might be, while they're living.
This article that Chris referenced talks a little bit about that, but then it's like shifting priorities of do you withhold those gifts so you can make sure you're taken care of, and you and your spouse, whatever it may be, or can that become part of the giving plan? So it's like trying to figure out the balance of is there a gift amount that should be going out each month? Do we talk about it as an inheritance when you pass away?
So these are all the different things you have to consider in the financial planning process. I think that is true. I think a lot of times people think, well, why do I want to wait till I'm gone for them to have the benefit of some of this wealth in terms of gifting, like you're talking about, that they can enjoy helping family get into a home or paying for kids' education or whatever the priority might be in a given instance, that it can give them satisfaction around that, that people enjoy.
We've encountered this. Let's talk about this cultural phenomenon, though. You mentioned it, Jeff, at the outset, the idea of die with zero, kind of spend your last penny. Die Broke. It's a book. Yeah. Die Broke. It's a movement, right?
And there's also this whole FIRE movement, Financial Independence, Retire Early, this idea that people want to, I think we see this among millennials and younger, this notion that they want to live to the fullest, not work till they're older and not able to see the world, but they want to do that along the way, that kind of mindset at the same time or take sabbaticals more frequently or things that are kind of, I mean, on the one hand, you go, geez, that's kind of brilliant.
On the other hand, it's like, is that really practical? It's kind of dangerous. Yeah. So I can see the appeal at the same time. I guess I fall more into that mindset that I see the value and the virtue of trying to help along the way some, but not to the point where it becomes, there's a dependence upon that and an expectation surrounding that. You don't want a lack of drive or a lack of seeking financial independence from the next generation.
And I look at my experience, I've benefited from help from my parents along the way and family members, grandparents. We talked about these stories along the way at times. So Kristen's grandfather was great with helping us get some college education money started, that kind of stuff. You can think about these and family has done that. My parents and Kristen's parents help along the way. So you can see how you want to continue that at the same time.
And I'd like to leave this planet with some of the fruit of my efforts to help the next generation and leave them in a position where they might have a little more resources. My goal is not to die with zero. In fact, the problem with that, let's talk about the challenge of this goal. When are you going to die? If you knew the date, your end date, your expiration date, well, this planning becomes much more attainable. You can kind of plan that a lot better. Have you asked AI about this, Chris?
Maybe they can tell me, right? Based on my diet and exercise and be like, oh, yeah, here you go. Here's your number. There is actually an app out there. I saw Death Clock started on the news last week and it asks you 25, I know I'm going on a tangent. I apologize. It asks you 25 or so questions. And it gives you the date of your death. I'm going to write this down. I need to know. I'm not sure I want to know, but I'm dying January 26, 2054. Oh, you got a long time. I'll be 90. Yeah, nice.
I'm not relying on the Death Clock for my financial plan. It doesn't come with any guarantees. But it's a good point, that notion that you can live a long time. We don't know how healthy we'll be while we're alive. What kind of costs will be associated with it? What was this article that inspired our conversation here? It was a Kiplinger's article, and it's available online. The title is Holding Wealth, Why Retirees Shouldn't Focus on Leaving an Inheritance.
So we'll reference that in the show notes if anybody's interested in the article itself. But it did reference the costs of long -term annual healthcare costs. I think this is really nursing home long -term care. These are national averages. So when it refers to the cost of a nursing home as $127,750, that's a national average. In places where we live, Massachusetts, Florida, the costs are higher. Now, Florida is a little more reasonable than it is in Massachusetts.
If you live in the coast, if you live in DC, you live in New York, you live in California's Los Angeles or San Francisco areas, costs of living are great, are high. And you're going to have higher costs for these kind of expenses. In our area, we estimate it's about $180 ,000 for a nursing home for one year. Assisted living, they say $70,000. It's probably closer to $130,000 in our area. That's an estimate. It depends on, again, what's the level of care.
My point is, we don't know, even with our death clock health. That's right. That's right. Didn't tell me how many years I might need some assistance. Yeah. What your health will be along the way and what's going to be a need for health demands, healthcare costs.
The idea of trying to spend your last dollar on your last day is appealing, but I'd like to have a little bit of a cushion, a little bit of resource, because I really don't want to have to rely on state resources for the quality of my healthcare if I were to be in need of this kind of a circumstance. You talked about longevity with the death clock. We talk to people all the time and they have opinions about how long they're going to live. They usually underestimate what they live.
Yeah. No man in my family has ever lived past blank. Of course, in those family members, maybe they smoked or drank or heavily whatever, had jobs or lifestyle considerations that may be different from you. Maybe they had different medical technologies and resources than you might have at a given moment. These are variables and that's not to say that those aren't relevant and real concerns.
Let's face it, if you see that family members have died at a young age because of heart disease, as an example, or whatever, naturally you're going to think, well, my lifespan might be shorter. We have to think in terms of, particularly for family, if we're married, not only our own life expectancy, but how long will this money be needed for the combined circumstances of a spouse who may live a long time as well. This really is the biggest unknown in a financial plan.
We do a lot of projections, cashflow projections. As you mentioned earlier, Russ, we put in maybe the goal to give money away. We can model that. Can I spend so much a year on vacations? How often do I buy a car? I'd like to do the following gifts every year or periodically or have this fund that I can give away a certain amount. We can model all that out.
We have specific ages that we default to for how long we expect or want to plan for, depending on the circumstances, meaning how long we think they're going to live and be very conservative about that. This question of are you going to have a major healthcare issue, a long-term care issue where you need either home care or a facility is really the reason why you shouldn't try to die broke, in my opinion. You need to plan for this somehow.
We talk about this on other shows, but whether that's an insurance policy that is on the side of your financial plan or if it's a dedicated bucket of money, whatever it is, not having a plan on how you might deal with it, if it happens, this is one of those things I think that we commonly think happens to other people. It's not going to happen to me. If something happens to me, my wife's going to take care of me or something happens to my wife, I'm going to take care of her at home.
We're not going to have any of that expense. It just doesn't typically work out when you have that level of need that the spouse or a family member is able to actually take care of the person adequately in their home. I think the other piece too is even in the plan, you can say, all right, here are the variables that I'm going to account for. Let's say we have a three-year long -term care expense, we have living expenses, whatever.
We can put that all in there and say, all right, how much can we take from the portfolio to end up with zero dollars? We can create that math equation and come up with an answer. But then there's all those other uncertainties. Even if you take away long-term care, I'm just racking my brain for some examples.
For example, if a kid goes through a divorce and then you're helping the kid go through the divorce or helping them with their kids, or if a sibling has some health needs and they don't have the funds to cover it. We have clients who help their siblings out. There's a lot of things that you might not be able to account for in a plan.
Not to say that all these uncertainties should scare people to not spend any money, but at the same time, there are reasons to want to have something and not nothing when you die or at a later stage of life. Yeah. The article you referenced, Chris, its focus is to put yourself first. It's not so much not planning.
Of course, the article has components of financial planning included in it as a good financial planning article would, but it's to find a way in your financial plan to put yourself first and do those things that you want to do. That's also part of a plan. Sometimes people get mired down, and our conversations do too, about what happens if this happens, what happens if that happens. But that's not the only components of a financial plan. You should put those things that you want to do.
We always talk about travel. That's an obvious one that people can think about. Or if it's helping families, when you are developing your comprehensive financial plan, all of these things, the good things and the scary things should be in it. I shouldn't go through a whole episode without saying my favorite word. It gives you permission to do those things. I knew you knew what was coming. But it does.
If you were working with someone that takes the time, if you're working with an advisor who takes the time to develop this financial plan and review it with you at least annually, and you have this desire to make a big a big gift at a wedding, or make a gift so someone can buy a first house, or help someone with their college, or help a sibling, and it's in your plan, you can make a quick call to your advisor and say, I'm thinking about helping my sister.
She needs $20,000 for X, Y, or Z. And you just test the plan a little bit and say, yep, it's in there. You can do that. Or maybe you shouldn't do that. All these topics to me keep underlying the benefits of a plan and how it can bring you peace of mind. It shouldn't make you wary at the end of the day.
It should make you feel confident that you're ready, that you can spend a certain level of your wealth, do the things that are in your plan without having to wonder, what's it going to be like at the end of my plan? Yeah, great point.
And I think you've already made the point, both of you, that this can really be done in a way through a financial plan to help you model what you plan to spend, what if I want to do this extra for a gift, or for fun, or whatever it may be, these options that you might think about, and stress test for costs of healthcare or market fluctuations or whatever it might be, increased taxes and higher inflation. We do a variety of these kind of things. But this is where you start with all this.
Start with a good financial planning. We use some great software, but I would encourage our listeners to start with a good advisor, a fiduciary, and obviously we're here to help if you'd like to talk to us. But get some assistance in the process to help guide you through the whole process to make sure that you're approaching it in a way that is deliberate, considers all the variables, or at least many of them. I suppose you can't think of everything.
But try to go through some of the variations and stress tests and make sure that you've got a plan that works. So that's an important part of this. Jeff, this year, over the last year or so, you've been a big proponent of family communication. And that's another maybe element of this that's worth taking a minute or two to talk about so that there aren't unrealistic expectations for the next generation. What are you intending to do?
So there's no assumption of a massive inheritance or something, and that's not coming or whatever. I think one of the things that's important in the process is what we're trying to do, I think, sometimes is model behavior and extend our values. And maybe that's as my client I referred to earlier is doing by saying, hey, I want to have these shared memories and life experiences and instill values with you.
Whatever that is for you, that's part of what you're trying to communicate when you think about your responsible financial planning and potentially conveyance of wealth as well or not, whatever those choices you make are. And that might lead to talking a little bit about estate and estate planning discussion a little bit as well. Yeah, I think any good financial plan has to have an estate planning component to it.
Not that we're going to do your estate plan, but we're going to work with your estate planning attorney to make sure that your financial plan and your estate plan are working together, not opposite against each other. And to your point about communications, thanks for bringing that up, because I think it's not only the things that you mentioned about you're not going to get an inheritance, son. Good luck. I'm joking, right? Whatever it is.
And when I bring this up, I don't mean that you're going to have spreadsheets all over the table and say, if I die in 2054, like the death clock says, this is your expected inheritance. But talking about those issues about you don't need to worry about us. We have a plan for our long-term care if we need it. We have our estate plan. This is our estate planning attorney. We have a financial plan. So if we become incapacitated to handle our own affairs, this is who we chose.
Maybe it's you, the woman at the table, or maybe not. And this is why. And if we have a healthcare issue, this is our healthcare proxy. And this is why. Just putting those things out on the table not only provides your loved one's peace of mind, which is important, and they know who to turn to in the event of a crisis, but it also, I think, prevents strife in the family. And it takes away, you know, like, did dad really mean to appoint Sally as the power of attorney? That doesn't make sense.
If dad actually explained why Mary is the power of attorney, because she's local, you know, she's an attorney, or whatever the, you know, the reasons that dad has, I think it just is a gift to your family to have these plans in place and to let those people who are involved with those plans know your reasoning behind it. I'll just share a quick anecdote. Had a call yesterday with a client looking to connect with an estate planning attorney.
And, you know, so we started talking a little bit about their direction of their plan, because sometimes, you know, the one hand you think, well, I want to preserve wealth for the next generation. I might, maybe I want a Medicaid planning kind of trust versus one that's less useful in protecting assets from Medicaid spend down, a revocable trust, but one that I retain all the control, I have total access to my wealth, you know, that kind of thing. Important issues to people, yeah.
So this directional question of where we go. And as we talked about it, we said, well, gee, you know, you have the bulk of your investment wealth is in retirement accounts, IRA, Roth IRA. So those don't go in a trust anyway. The house has a mortgage on it. It's likely to be there for a while.
So, well, maybe that kind of like makes it less appealing to go down the Medicaid planning route because, you know, it's not an unencumbered asset that you could just gift to a trust or something or somebody else. So that's not really an approach that makes sense. So I was like, well, let's talk it out a little bit. And it kind of helped navigate, all right, well, which direction should we think about for your planning today? Not to say that's a forever decision, right?
Because, you know, if your health were to change or, you know, you had some greater clarity around, you know, needs or you decided to pay off the mortgage, okay, well, now you've got a different set of circumstances. So in any case, it helps to kind of help me to help them figure out which direction are we thinking we want to go in terms of their planning, given the bulk of their wealth isn't really subject to probate and the like, right?
So it's a matter of like whether they want to do a trust, a will-based plan or what. So I didn't want to go too far to say, oh, this is what you should do because it's ultimately, you know, we want to give the lawyer with their expertise the legal guidance, you know, that the client should have, but gave a chance to try to identify which direction, which kind of lawyer should we be looking for who's maybe the right fit for these different circumstances.
Yep. And sometimes when those communications don't happen, the estate planning attorney may have a whole different view of what that client's goals are if they don't have a good understanding of what their assets are. Well, I think to your point too, it's also, we have different disciplines. The accountant thinks about life through a prism that they look through. The estate planning attorney has a view of what they see and what they're prioritizing.
The insurance agent looks at things through a prism that they look at through. So hopefully as the financial planner, fiduciary, you know, where we can look at it, again, we have a prism that we look through, but trying to try to put it all together in a way that can help the client navigate those issues and make sense of it. Well, good stuff. Thanks guys for an interesting conversation.
I will again, just mention for our listeners, don't hesitate to reach out if you need a little help in finding direction as it relates to your planning. Let us know how we can help in the process and you can always connect with us at our office or by phone 508 -771-8900. Until next time, everybody keeps striving for something more. Thank you for listening to Something More with Chris Boyd.
Call us for help, whether it's for financial planning or portfolio management, insurance concerns, or those quality of life issues that make the money matters matter. Whatever's on your mind, visit us at somethingmorewithchrisboyd .com or call us toll free at 866 -771-8901. Or send us your questions to amr-info at wealthenhancement.com. You're listening to Something More with Chris Boyd Financial Talk Show.
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