Biggest Mistakes in Saving for Retirement

July 23, 2017 – Wealth Strategy with Bryan Rigg, Your Wealth Professor
Listen In Every Week: Saturday on WRR from 7:00-8:00 am / Sundays on 570 KLIF

Today we’re going to hit on a few topics that I think you’ll find interesting. We’re going to talk about savings plans for college education, then we’re going to roll into some big mistakes that people make in saving for retirement.

Later in the show, after the bottom of the hour, we’re going to deal with the cost of healthcare after retirement. How expensive is it, and can you plan for it, even though we don’t know what it’s going to be? I can tell you it’s going to be expensive.

Finally, we’re going to close the show with planning for the IRS and tax penalties while you’re investing. Whether it’s in the market, or 401(k)s, or IRAs, there are tax consequences and things you need to be aware of, so we’re going to try and open the pantry door on that.




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“Opinions expressed on this program do not necessarily reflect those of Broker Dealer Financial Services. The topics discussed and opinions given are not intended to address the specific needs of any listener.”

“Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Examples mentioned are for illustrative purposes only, individual results may vary. Past performance is no guarantee of future results. Investing involves risk including loss of principle.”

“A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. Every state offers at least one 529 plan. Before buying a 529 plan, you should inquire about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee savings are available depends on your state of residence. For tax advice, consult your tax professional. Non-qualifying distribution earnings are taxable and subject to a 10% tax penalty.

Welcome to Wealth Strategy with Bryan Rigg. Bryan is a Yale graduate adding a PH D from Cambridge, he’s a former officer in the United States Marine Corps and locally, a former Professor of History at SMU; a man of profound integrity, intelligence and life experiences. Please welcome your Wealth Professor Bryan Rigg and your host for the next hour, Rob Dalton.”  

Rob Dalton:  Welcome, welcome. I am Rob Dalton, and with me today, back in the saddle, is my best friend and co‑worker…

Bryan Rigg:  Bryan Rigg.

Rob: Hey, man. Welcome back.

Bryan: It’s good to be back.

Rob: It is the weekend. I’m so excited it’s another weekend. I like Monday through Fridays because of job security, but, man, do I love the weekends. Spending an hour with you each weekend is a great bonus to my life.

Bryan: Thank you.

Rob: You out there, it’s your weekend, as well, and I want to say thank you for joining us. This is “Wealth Strategy with Bryan Rigg,” and with us is our regular guest, our wealth professor, Bryan Rigg.

We’re going to talk about financial things today. We’re not going to try and confuse you and muddy the waters. Just the opposite, actually. We’re going to try and add some shock to that pool. We’re going to clear out the mud and the algae, and we’re going to make this crystal clear for you.

We’re going to use simple terms, some vocabulary. We’ll teach you a little bit about what you can do, and how maybe Bryan can help you with what you don’t know.

I remind you that saving for the future and saving for your retirement, and planning what you’re going to do after you quit working is not an organic process. This is something we have to learn, and if you don’t understand it, that’s OK. We’re here to help every weekend at the same time.

Thank you for making us part of your day and making us part of your weekend. If you really like it, we ask that you come back next weekend, as well.

Today we’re going to hit on a few topics that I think you’ll find interesting. We’re going to talk about savings plans for college education, then we’re going to roll into some big mistakes that people make in saving for retirement.

Later in the show, after the bottom of the hour, we’re going to deal with the cost of healthcare after retirement. How expensive is it, and can you plan for it, even though we don’t know what it’s going to be? I can tell you it’s going to be expensive.

Finally, we’re going to close the show with planning for the IRS and tax penalties while you’re investing. Whether it’s in the market, or 401(k)s, or IRAs, there are tax consequences and things you need to be aware of, so we’re going to try and open the pantry door on that.

We’re going to get started with Bryan. Bryan, it is the weekend. How has your weekend…off to a good start?

Bryan: Yes, taking care of the kids. Just came back from vacation, from Mexico, and so decompressing a little bit. Talking to the kids about what they’ve learned about the Mayan culture, so it’s all been good.

Rob: I can tell you got some sun.

Bryan: Yeah.


Bryan: I got all three of my kids scuba qualified. As a Marine Corps Officer I think that’s an important trait to have. I taught them how to sail, so we were enjoying a good family time, father‑children time.

Rob: You are a couple shades darker, so I can tell you haven’t been around Dallas as much, where we get a lot of our fluorescent office tan. [laughs] We’ve got some color.

We’re going to dive into college educations. I want to lead this segment with in the past pensions, and 401(k)s, and social security were enough to take care of our retirement, but we’re lasting and living longer than our actual work years.

This used to allow parents to focus on their child’s education, but times have changed and parents are no longer with that luxury of being able to help their kids with college. I know I, myself, took care of my own education, and I forced my kids to take care of their own.

For those that want to plan for their children’s future, or maybe their grandchildren’s future, what functions, and abilities, and programs are out there for them?

Bryan: In the financial world you have 529 plans. A lot of people wonder where do these numbers come from. They’re the IRS code that allows you to do certain things. 401(k), retirement plans through companies.

529 plans, they allow you to put money away, and then whatever growth you have on that money, if you pay for college, it’s tax‑free. If you have a child that gets a scholarship or is able to put themselves through school and doesn’t want to use that fund, then you can pull the fund out. You have to pay the taxes on it, but you don’t have that benefit anymore of tax‑free growth.

That’s the one way of doing it. Unfortunately, when we were going to school in the ’70s, ’80s, and ’90s, people to some degree could put themselves through going to school. Probably getting into the ’80s and ’90s it was starting to be cost prohibitive.

When I was at Yale University, from what I was told ‑‑ I graduated in 1996 ‑‑ I was the first $100,000 dollar class when I graduated in 1996. Now going to Yale you’re looking at well over $200,000 a year to go to that private institution.

Some of the best educations you can get out there are usually with the military academies, because they’re all free, and they’re the most expensive. I think now they’re pricing Naval Academy and West Point as the equivalent of around $350,000 because of all the resources.

You get to go on aircraft carriers. You get to go get jump qualified. You learn how to scuba dive. You have all the resources of the military there teaching you.

Rob: It’s the peripheral costs that add up?

Bryan: Yeah, but getting back to what you can do now. The 529 plans, each state has one.

Rob: Each state does?

Bryan: Yeah, and so you can get some unique benefits if you do it in your state, tax benefits if there’s a state income tax. Sometimes they will give you a break on some of the tax burdens that you have with the state. Sometimes they give you some benefit if you go to a in‑state university by using the 529 in that state.

The main thing that I have found with my clients over the last decade is 529 allows you to be disciplined in putting away for a college education. Usually the funds that the states set up are not very good.

They’re not bad, but they’re not great. You’re not going to be writing later on in your life to your friends about the wonderful financial performance of your 529 plans.

Rob: [laughs] It’s more safety and security than it is risk, and we talk about that often.

Bryan: There’s a lot of fees, because a lot of time they have you captured, and so a lot of time they’re mutual fund. Like I said, they’re not real efficient compared to what you can do if you were on your own.

Rob: Those are the state‑run programs?

Bryan: They’re state‑run programs.

Rob: I wanted to reassure that.

Bryan: Having that discipline, and then even if you only get 60 or 70 percent of a bull market, let’s say, because you’re not paying any taxes on that growth you’re getting on the short‑term gains 30 percent return, because you’re not paying taxes on that, and on the long‑term gains you’re getting around 20 percent return.

Even though they’re inferior compared to what you could do in the market on your own, from fees, as well as performance…

Rob: Tax abatements, right?

Bryan: Yeah, from a tax perspective you’re going to be better off, in some respects, by being disciplined and putting money away. People don’t realize that, in general, the cost of education is going up six percent every year.

Rob: Way more than inflation.

Bryan: Double. Inflation, the consumer price index right now has it pegged at around 2.8 percent, so you’re going to have to put away for college.

Rob: You really are.

Bryan: On the flipside, I used to be a professor. One thing that people also need to realize they can do is be proactive in the college process.

A lot of times what they do is they put in their financial package, and then they sit back, and wait, and twiddle their thumbs, instead of going into the financial aid offices or the career services offices of each university, and then being proactive in finding ways of getting scholarships.

Rob: That makes sense. Some financial help.

Bryan: By way of illustration, my father went bankrupt during the time that I was in college, and so all of a sudden we had the ability to pay for Yale University stop.

What most financial aid offices do is they look at your tax returns. They want to have the last two or three years, but if this year and next year doesn’t look good they don’t care because they don’t have any documents for it.

If last year looked like you could pay, but this year you can’t, they don’t care because last year you could.

Rob: They’re only looking at what’s in front of them.

Bryan: I was really struggling to pay for my education, but I went in there, and I found that there was a scholarship. Because I had a great‑great‑grandfather who fought in the Union under Sherman, I got some money there. My dad was a Navy veteran. Got some money there. My brother was a veteran of the Gulf War. Got some money there. I was from Texas. There was some money there.

Rob: These are things the institution can help with?

Bryan: Exactly, but in addition to putting away your money, you want to start conditioning your children to be proactive and going out there. There’s Pell Grants…

Rob: Asking for help.

Bryan: Asking for help. Getting back to the 529s, it’s a disciplined approach. Getting it set up and having a draft from your bank means that you are practicing, every month, a strategy. “I’m going to put away for my kid’s education or my grandchild’s education.” It’s a great gift.

What I encourage a lot of my clients to do is when their aunts, and uncles, and grandparents come to them and say, “Hey, what can we do for your kid, what kind of gifts?” instead of saying, “Hey, buy me that big plastic Jeep that he can drive around in the backyard for one or two years, and then we’ll discard it in the bulk trash day.”

Instead of doing that, “Why don’t you just write a check for his 529 plan and we’ll put that in?”

Those are 529s, in short. What I like to do with my clients is try to give them the whole perspective of what is out there to start planning for college education. 529 is just one part of the puzzle. As a former professor, and knowing that world, I can help an awful lot.

Also, as a white male I got half of my education at Yale paid for, and I got all of my education at Cambridge paid for with scholarships, so I know how to also work the system to get benefit there, to utilize the scholarships that are out there. A lot of people don’t know that there’s a lot of stuff out there.

Rob: You have to pick your priority, too, because as I heard someone say last week you can borrow for college, but you can’t borrow for retirement, so you’ve got to pick your priority and plan accordingly. Plan for your retirement, but look at your college options. I know you may or may not work with 529 plans, but if people have questions, they can call you?

Bryan: We do 529s. If you want to do that, we can set that up. Please call us at 972‑383‑1210, and also please visit our website at That’s Rigg with two Gs, R‑I‑G‑G,, and send us an email. We’d love to get in touch with you.

Rob: Great, and you’re good about answering emails and voicemails, so please take the time to call. Our next opportunity that we’re going to talk about is some of the mistakes people make in planning for retirement. We’ll be back after these messages.


Rob Dalton:  Welcome back from the break. I am Rob Dalton. With me today is always is…

Bryan Rigg:  Bryan Rigg.

Rob:  Bryan is our wealth professor. We are here every weekend at the same time doing wealth strategy with Bryan Rigg. We’re here to talk about simple things.

What we think are simple, but we’re trying to simplify the difficult and that is saving for our future, our retirement, saving today for tomorrow and making a difference, but actively doing it, not just putting it off until next week, next month or next year.

We want to give you the confidence to do that, so we hope you stick with us here. This next segment is going to be some of the mistakes people make about when planning for retirement. Later in this show, we’re going to get to the cost of healthcare beyond retirement as well as planning for and accounting for IRS and tax penalties in all of your savings plans and stock portfolios.

But for now, we’re going to spend just a moment talking to Bryan about some things he’s actually seen and witnessed as he manages people’s money, some of the mistakes that people make when planning for retirement. Bryan, during the break we talked about the number‑one thing you mentioned, and you had a passion for that and what was that?

Bryan:  The number‑one thing that I found with people when it’s coming to planning for retirement is to do it, is that people I found quite often ‑‑ especially in their early years, in their 20s and 30s ‑‑ always say, “I’ll do this tomorrow, after I get the house, after I get the kids, after I get the new car.”

Rob:  They put other things in front of it and they keep pushing it. It’s always number five on the priority list.

Bryan:  That’s a problem. In many respects, it should be one. What I love to do in life and I’m not perfect by any stretch of the imagination in doing this, but I try to keep it at the forefront of my mind, is that I rather be prepared for a situation and not have than have the situation and not be prepared.

Now one situation we are going to have is that we’re going to have usually retirement, most of us are. We’re going to be physically unable to do what we are doing now later on. We’re going to be pushed out of the workforce. There is a thing when you’re 65 or 70 sometimes, they don’t let you continue to fly airplanes.

Rob:  [laughs]

Bryan:  So there is for most people, the reality is eventually when they’re in their 70s, they’re going to be pulling way back, either forced to or we don’t want to.

Rob:  Right.

Bryan:  Most people today who are in their 30s, 20s, 30s, 40s, 50s are not planning for that reality. So the number‑one goal that I try to do with a lot of my clients is first say you’ve got to do it, and then what I am most passionate about and quite often shocked by is when you sit down with people and you start going over the nuts and bolts of it.

When you say, “OK, hey, when you retire, what do you think you need?” Most people don’t have a…

Rob:  They never thought about it. They base their retirement on what they’ve seen other people retire with or without. The only references they have are the stories that they can relate to.

So thinking of it as a self‑introspective question, it’s a foreign thought process to most people. When you bring it up, you get that deer‑in‑the‑headlights look.

Bryan:  Well, yeah. Like I like to often say in many of these radio programs, the problem with most people not making wise decisions in life is that they don’t think death has anything to do with them. A lot of times people don’t look at reality because in some respects, I think subconsciously, it makes them deal with their mortality.

You are coming to the end of the race and the party’s going to continue on without you, and it’s not a really pleasant thought but it’s the reality of what we’re dealing with. And toward the end, a lot of times, especially health‑wise from the research we have, we’re going to need more and more money to take care of our health.

Some research out there says that 80 percent of all costs, healthcare costs, are going to be incurred the last five years of your life. So part of retirement planning is planning for that reality and having disposable income to take care of you so you’re not a burden on anybody.

Rob:  That’s true and we’re going to talk about in the very next segment. If you’re interested in that, stick around.

But right now, we talked about some of the things you’ve witnessed in your dealing with clients and things. I know one of the things we talked about is when you counsel people, when you’re active with a client and they all of a sudden swap priorities.

They all of a sudden want a really nice car or they want to take an extravagant vacation. That gets into something we talk about that you have to discuss with people honestly called “burn rate.” Describe that for me.

Bryan:  So what I like to do with clients is when I start asking them, “What do you think you need for retirement,” and they don’t have a clue, I then ask them, “What is your burn rate per month? What do you think you’re going to need to support your lifestyle, your travel, car?”

Rob:  Not today, but what they are expecting.

Bryan:  You have to use numbers for today and then you can use inflation to give them a guesstimation of what that will be in 20 or 30 years.

You say, “In today’s money, what do you think you’re going to need? Well, you don’t have the college education burden anymore, and maybe you can get rid of the mortgage in the meantime. What do you think it’s going to be?”

A lot of times they say, “Well, $4,000 or $5,000, $6,000 per month would be nice.” Then I say, “How much money do you think you’re going to need to support that?”

Then they usually don’t have a clue. In today’s interest rates to support, let’s say, $4,000 a month, that’s $48,000 a year, you need roughly around a million dollars. Now a lot of times, people kind of gasp when you say that, but you say, “Hey, this is not as difficult as you think.”

Rob:  I’m going to interrupt just to say a million dollar nest egg can supply about, in ballparking, around 50 grand a year.

Bryan:  Yeah, but you also need to always remember that’s a flat rate with not taking inflation into consideration.

Rob:  Right. I’m just saying it’s, but ballparking it.

Bryan:  Ballparking, yeah.

Rob:  That’s what you’re getting.

Bryan:  And a lot of times, people say, “Well, man, I don’t think I’m going to be able to get that.” Then we sit down, I say, “OK, how much do you think you’ll get in Social Security later on?”

A lot of times they don’t know that and I have them call up the Social Security Office, get some of that information or do it on the Web. Then they find out, “Well, I’ll probably get about $2,000 per month.”

I was like, “Well, hey, that’s probably roughly around $500,000 equivalency…

Rob:  …of a nest egg.

Bryan:  …of a nest egg. So now we have to get $500,000 with you.” Then we start making it more manageable, “Hey, if you start putting away now, $10,000, $20,000 per year in the next 10 or 20 years with the growth and so on, you’re going to have that $500,000.”

Then they start breathing a little bit of a sigh of relief. We have a plan. We have a strategy. Like Plato always says, “When people don’t have a vision, they fail.”

Rob:  [laughs]

Bryan:  So with retirement, it’s a…

Rob:  I’m not a victim of that.

Bryan:  Yeah, it’s giving them a vision. This is the goal. This is how we can get there and then start planning for it. Like you say, priorities is critical. Most people do not make saving for retirement a priority, and this is where I get into the needs and wants.

When you start sitting down with most people and you look at their spending habits, a lot of times, they don’t like that because that’s a very uncomfortable process.

Rob:  Well, holding up a mirror can be very uncomfortable sometimes.

Bryan:  Yeah, but you have to do it because I guarantee you, everybody I sit down with, there has never been anybody that has looked at how they are spending and come away and say, “I am incredibly efficient.”

Rob:  [laughs]

Bryan:  “I don’t spend on things that I don’t need ever.” That never happens. I can always eek out several hundred if not thousands of dollars every month when I look at people’s spending habits.

Rob:  True. We talk about the mirror, and one of the things we’ve talked about in a previous show is one of the most alarming things is when you finally convince someone to bring you a month check statement and go over their check statement with them.

And, boy, they just cower when you start going over the items they really didn’t need. But, even if they do 50 percent of that, if they correct it by 50 percent, that can make a huge difference in their savings.

Bryan:  Yeah, doing nothing is the wrong answer. Also having it on fifth or sixth or seventh on the list of priorities is wrong. It really should be the number‑one goal financially.

Rob:  You’re taking care of yourself.

Bryan:  Exactly. You have a lot of people here in Texas that are very big about supporting their churches.

Rob:  Great.

Bryan:  I had a client for a while that she went through a divorce. She did not have the money to go out and do trips or buy another car or whatnot. But she was very hyper focused of tithing at least 10 percent to her church.

Rob:  All right. That’s her priority.

Bryan:  Yeah, and that’s her priority and I understand from a theological point of view where she’s coming from. But I looked at her, I said, “Do you want to be able to continue to give to your church for the rest of your life, or do you want to be able to give to your church for the next 10 years and then you have nothing for yourself and nothing for your church?”

Rob:  Yeah.

Bryan:  Then the light bulb went on.

Rob:  Yep, power.

Bryan:  I said, “OK, if you want to continue on helping your church, and in the lifetime of what you have hopefully for the next 40, 50 years, you’re going to be able to give so much more to your church than if you continue at this rate right now, you’re not going to be able to give to yourself or a church in 10 years.”

Then she’s like, “OK, I get it.” Then I brought up the Benjamin Franklin phrase, “God helps those who help themselves.”

I said, “You’ve got to first take care of yourself, make sure you get that nest egg and then from there, you see what you have and then you give from there or you do your spending from there.” That’s hard for people.

Rob:  It is and we talk about this segment’s about the mistakes that people have made. People need to realize that they have, it’s a ratio of time and money. If you have more of one, you don’t need so much of the other.

If you have a lot of money, you don’t need a lot of time. But if you have a lot of time, you can certainly make a lot of money.

Bryan:  What we’re finding from the research is people run out of time all the time. 50 percent of all people who retire today have 50 percent less than what they need, not than what they want.

So the role of a financial advisor is needed in most people’s lives.

Rob:  Is there a cost in not consolidating on the accounts?

Bryan:  It’s more of having the strategy, very clearly focused. If you have all these accounts all over the place and we do a very good job here in Rigg Wealth Management of bringing everything under one umbrella, getting a focus strategy, and I think that is very important for people to do.

Rob:  I think so too, that’s why I brought it up. Well, thank you. If they want to talk to you about some of the mistakes they can keep from making, what’s the best place to reach you?

Bryan:  They can call us at 972‑383‑1210. Again that’s 972‑383‑1210 or visit us at our website That’s Rigg with two g’s, R‑I‑G‑ and send us an email.

Rob:  People can learn from their mistakes. They’re still allowed to make them but they just don’t need to make them over and over.

Bryan:  Yeah, and if they know they’re making mistakes right now, they need to call us.

Rob:  Good, good point. Coming up next, we’re going to talk about the cost of healthcare beyond retirement. Please, don’t go anywhere.


Rob Dalton:  Welcome back from the break, thanks for sticking around. This is “Wealth Strategy with Bryan Rigg,” and of course, our wealth professor is here. Say hello.

Bryan Rigg:  Hello, good morning.

Rob:  All right, Bryan. He is our wealth professor. We’re going to get into a topic right now about saving for health concerns and insurance once we retire. A lot of us have our jobs, our careers, and we get the health benefits with it.

I know we have the Affordable Care Act out there. Most of us, in general, do have some form of insurance that’s paid for, whether it’s an 80/20 rule ‑‑ you’re paying 20‑percent of your premium and your employer’s paying 80 ‑‑ there’s all sorts of plans out there.

At some point in time, you’re going to have to get your own insurance when you retire and the cost is never going to go down. I’m pretty sure health cost is never going to go down.

Bryan:  Unfortunately, no.

Rob:  With Bryan, we’re going to dive into this in a few minutes. But before we get into healthcare, I wanted to take this segment, once we got the show going. It is summer. Bryan’s been out the past couple of weeks. You just got back from a vacation. Tell us about it.

Bryan:  Yeah, I took my children down to the Yucatan peninsula. It was part education, part fun. I have three children.

Rob:  Imagine a professor taking their kids on an education vacation.

Bryan:  I know, my kids are not happy. Some days, I got them up at 7:30, 8:00 to do tours. Some days, I let them sleep in to around 10:00, but I have two teenagers and they could sleep a lot longer than 10:00.

It’s hard for me being a former Marine, and also just a person that just loves knowledge. Here we are, you can say in some respects, in one of the cradles of civilization, the Mayans, and you’re not soaking it up as much as you should.

When we were down there, I took them to the ancient cities of Chichen Itza and Coba. A lot of people don’t know the Mayans probably gave us the symbol of zero. The Roman Empire didn’t have that in their numbers. Without it, you can’t really do very complex calculations, obviously. They were probably the foremost astronomers.

Rob:  The Mayans were?

Bryan:  Mayans, yes. Their whole religion was a religion of time, focusing on what the Sun tells you, the seasons tell you, what the stars tell you. They knew well before Galileo or Copernicus that we traveled around the Sun and not the Sun around us. They were able to study the Sun using volcanic glass. They were able to look and monitor, then track, and document what the Sun was doing any given time.

They built the pyramid to Kukulkan, their snake god in Chichen Itza. Every spring equinox, it actually is able to capture the sunlight in such a way that it makes a shadow go down the side of the pyramid, looking like a snake for 18 minutes.

It’s able to capture what the Sun is doing, and it’s done this for a thousand years. Their technology has never moved or shifted at all, it’s incredible. Also, one thing that’s remarkable is if you stand in front of the temple, there’s a temple mound on top of the pyramid that has openings. If you clap your hand, there’s an acoustic echo that comes back that mimics an eagle’s squawk.

The mathematical precision and the understanding of sound waves was so advanced at that time that they were able to build a structure to honor the eagle.

Rob:  That manipulated the sound.

Bryan:  The sound to come back. It boggles the mind how sophisticated they were. They had a huge literature, libraries. They wrote this all down. Unfortunately, when a very horrible and evil priest by the name of Diego de Landa arrived there in 1549, he forcefully converted all the Mayans.

With him and the entourage of Spanish came also syphilis and smallpox killing them, but he burned most of the books thinking they were of Satan. We’ve lost a lot of the knowledge of the Mayans, but just looking at what they’ve done architecturally, and then a few of the books that we do have, they had a sophisticated alphabet.

So yeah, I took my kids around. We had great father/children time, if you will. My son likes to call it father/son bonding time, bondage time. I taught him how to sail, I got him scuba dive‑qualified. We learned a lot about the Mayans, learned about that culture, respecting that, learning also about the horrific aspects of the human sacrifice they did.

Rob:  You had them scuba‑certified?

Bryan:  That’s right.

Rob:  How long did that take for them?

Bryan:  It took them three days. They had two days of a lot of classroom, and then in the afternoon, they would do dives. On the third day, they practiced everything they did. On the third dive, they get qualified.

My 10‑year‑old, 14‑year‑old, and 16‑year‑old, raising them up in a good Marine Corps tradition.

Rob:  Survival.

Bryan:  Yeah, absolutely.

Rob:  I’m glad you had some great time away and some good family time. Mexico’s a nice place to go this time of year, and it’s nice to know that they have the historical element that you can actually incorporate into the vacation.

Bryan:  Yeah, and if people are interested in looking more at what I found out, I have a Web page on Facebook called History Interpreted. I talk about World War II, and the Holocaust, and these type of themes all the time. I just bring out historical aspects that are enduring legacies of humanity.

Rob:  Thanks for sharing. I appreciate that personal insight. We’re going to dive into the topic of saving for health insurance coverage in the future. You mentioned earlier in a previous segment that 80‑percent of your healthcare costs over your lifetime will be spent in the last five years?

Bryan:  Yes, that’s some of the research that I’ve been reading the last couple of years. We’re living a lot longer, so we’re learning that this is now a new reality. When people died of abscessed teeth when they were in their 30’s and 40’s a couple of hundred years ago, or disease, or war, and the average lifespan of somebody was 50 years of age, a lot of things that we’re seeing now never really hit people.

Now with dementia, with cancer, and just with the joints and the body breaking down, heart problems, heart disease, our horrible diet, we’re seeing more and more problems. When they’ve done analysis of this, the last five years is really catastrophic for a lot of people, healthcare wise. You have to plan for more.

There’s nobody really out there that are in their 70’s and 80’s that are telling people, you know what, when I was thinking about what I was going to pay for healthcare 20 years ago, I was way under the mark.

Rob:  [laughs] Way under the mark.

Bryan:  Does not happen. You’re going to have unforeseen consequences for how you live your life today, living longer, which is a new reality that we’re having to deal with, and people need to plan for that accordingly. That’s all part and parcel with retirement, making sure that you’re taking care of yourself later on health wise.

Rob:  We aren’t. I know someone who is latter in life and their health insurance premium is like a mortgage.

Bryan:  The one thing I encourage people to do is if they have the ability to negotiate with their employer, if they have early retirement ‑‑ try to do it, if it’s possible ‑‑ stay on in some capacity to keep health insurance. That’s going to be one of the biggest burdens later on paying for health insurance.

Also, start looking at your life critically. A lot of times, people, they’re digging their graves with their teeth. They’re eating poorly, they’re overweight, and this is not a good thing for them. Maybe if they realize that they only have a certain burn rate per month that they can support, and if they go above that they’re going to be hurting.

If they look at what their healthcare cost is now and they realize, if I extrapolate from what I’m paying now at 50 or 55, and I realize the last 5 or 10 years of my life, I’m going to be incurring 80 percent, what is that going to look like?

Rob:  Yeah, how’s the going to factor.

Bryan:  People don’t think about that. The one way of planning for that you can do long‑term care insurance, which we can do here. When that day comes that you need more help and you can’t do your daily activities ‑‑ dressing yourself, cleaning yourself and so on ‑‑ you have that support insurance wise. That’s what I encourage a lot of people to look at.

That’s what most people can really do to offset the cost of healthcare.

Rob:  Is cover short‑term and long‑term care. Those options are available.

Bryan:  They are, and most people don’t know about that. Also, I encourage especially a lot of people who are single, who don’t necessarily have that partnership that they need to be looking into this, and especially people who don’t have children.

Rob:  Right, because there’s no one to fall back on.

Bryan:  There’s nobody to fall back on. You got to get that in order to make sure that you are not a burden to anybody and that you’re taken care of.

Rob:  You do want to be comfortable. You just have to be able to plan for it. This can all be done proactively. I know you and I have had many conversations, and you’ve had conversations with clients, but in the words of Dr. Phil, sometimes you’ve just got to get real.

Bryan:  Yeah.

Rob:  It’s holding up that mirror and making you think about what you need to think about. It’s not always easy, but doggonit, you’ve got to think about it.

Bryan:  Yeah. The killers out there right now that people can really be proactive with to minimize the healthcare cost, the research I’m seeing is less alcohol drinking, less sugar eating, and just some basic exercise. A lot of people say if you do just 30 minutes a day of just walking…

Rob:  The body is meant to move.

Bryan:  Oh, it is. Through the process of this millions of years of evolution, it wasn’t to all of a sudden come to the apex of life of sitting behind a desk and looking at a computer terminal. That’s not what we were designed for.

Stressing out the body, putting physical demands on it. Load bearing weight, especially as we get older, is critical, especially for women with their bones, and calcium retainment is very important to do.

That’s one thing that even though as a financial advisor, I haven’t designed my practice to be an advisor with health, with food, and so on, and how you live life…

Rob:  But there’s an element of a life coach.

Bryan:  Yeah, but I also try to live by example. I’m 46 years old. I’m still the same weight I was a junior in high school. I still work out every day, and I try to practice what I preach. That is part and parcel to planning for your healthcare burdens later on.

But even the people who are in the best shape of their lives and take care of themselves, the law of averages is that a lot of times, people end with dementia. A lot of times, people will end with cancer, and there’s a lot of burdens out there that you need to plan for.

And you need to be proactive. A lot of times, I find people ‑‑ just like when they don’t plan for retirement ‑‑ they put it off on the side, and they put their head in the sand like an ostrich. A lot of times, people are just doing basic health maintenance, like doing that checkup once a year.

Rob:  Yeah, because that’s something you can do today which will make it easier for tomorrow.

Bryan:  A lot of times what I’m shocked about people not doing is, hey, when was the last time you had your skin looked at from head to toe, and look for some of those cancer areas and catch them?

One of my friends, he had a spot on his forehead and went and got it checked out. They said had he waited another six or seven months, it would have metastasized and he probably would have died from it, but he was able to get it taken care of.

Rob:  Good.

Bryan:  Getting back to the planning, starting to just put away more for retirement with the thought of using that for your healthcare is part and parcel of planning for retirement

Rob:  It’s something to be weighed.

Bryan:  It has to be part of the plan.

Rob:  Right. Finally, another item that we’ve only got a few seconds for, but plan on some sort of power of attorney or guardianship.

Bryan:  Absolutely. You need to be thinking about somebody who is maybe your age, and if you’re in your 60’s and 70’s, who’s younger than you that you trust implicitly to be a health care surrogate that can make decisions for you if you’re not able to healthcare wise.

Rob:  Yes, that’s something we don’t want to think about. But like everything else we talked about, it needs to be a factor. Have a notion, have an idea.

Bryan:  A neighbor, a niece, a nephew, a child, and make sure you talk to them about it.

Rob:  Right, and share that information. These are good items. Someone wants to learn more about it and get real with you, as we say…

Bryan:  Yeah, they can call me at 972‑383‑1210, or they can visit me at my website at That’s Rigg with two G’s ‑‑ R‑I‑G‑G ‑‑ Please send me an email.

Rob:  These are difficult conversations people, but it’s good to know and to think about it. Even if you don’t say it out loud, get started with the thought process. Coming up next, income taxes and the IRS and what exactly are the penalties. We’ll be back after this break.


Rob Dalton:  Welcome back. Thanks for sticking around through the break. I am Rob Dalton.

Bryan Rigg:  And I’m Bryan Rigg.

Rob:  We are here every Saturday morning at 7:00 AM, on WRR to talk about finance and saving for retirement. We’d like to mention to people that it’s OK not to know how to retire and how to save. Why is that, Bryan?

Bryan:  I was a professor for many years…

Rob:  Of history.

Bryan:  …yeah, of history. What I found with a lot of people, even back then, is that we don’t do an awful lot in high school and college of training people how to be stewards of their money, of how to take care of retirement, how to take care of balancing a check book.

Rob:  We just don’t teach it.

Bryan:  No, we don’t teach it. Before the huge crisis in 2008‑2009, we had a negative five‑percent savings rate in America. People are going into debt left and right and they’re not practicing “don’t buy it, if you don’t have it.”

I think it’s OK to some degree because we don’t have a culture that is focusing on it on a daily basis, which they should. As we’ve talked about through this show, people don’t make retirement a priority, but it should be.

Also, we’re living longer and longer, and this is really a recent phenomenon in the last probably three decades.

Rob:  It really is, and especially the last couple of generations. For years and years, we would live to our, let’s just say, 50’s. If you had a farm, you would simply harvest and eat, then harvest and eat. Then when you passed, you simply left your farm to the next person. You worked until you died.

Bryan:  Your retirement, you’re rightly giving the analogy, was happening 50 years ago, 100 years ago, it’s been happening for thousands of years.

Rob:  Right, as a human race.

Bryan:  Your retirement plan was your kids, that was it, or the village, if you will. When you died, you didn’t have a lot of assets to leave, and most people were serfs and slaves. It was just a matter of, like you were saying, getting enough water and food everyday just to live.

Rob:  Right. Now when we cash our checks, we do the same thing. We harvest and we spend, and we harvest and we spend. Now that we’re living beyond our work years, it’s OK that it’s not organic and it’s not natural to save. That’s why we’re here to remind people to think about it proactively.

Bryan:  Yeah, and to keep that consistently in the forefront of your brain housing group and remind them how important it is. Most people do not do it, and as a result, a financial advisor, a financial coach, a financial doctor, if you will, is very important to have in people’s lives.

Luckily, the research shows that when people do actively have a financial advisor in their lives, they are so much further along in the game of taking care of themselves.

Rob:  It’s part of the conversation. It doesn’t have to pillow talk, but it needs to be talked about once in a while.

Bryan:  Absolutely.

Rob:  We’re going to do something a little different this time. We’re going to dump into what we call margin accounts. It is really kind of deep into the financial realm, but we’re going to try and keep it simple. Define for me, as an advisor, as an independent consultant that you are, what is the margin account, and how can it help us?

Bryan:  It’s basically using your account to get a bank loan.

Rob:  Your nest egg, your assets.

Bryan:  Your nest egg. You can put $100,000 with Fidelity, working on that with stocks and bonds.

Rob:  It’s just a round number. It doesn’t require $100,000.

Bryan:  It doesn’t require $100,000.

Rob:  Got it.

Bryan:  You can margin usually up to around 50 percent of that account, and Fidelity will give you, in this case ‑‑ a lot of other firms do the same thing ‑‑ $50,000 to do whatever you want. Your $100,000 now becomes $150,000 as far as power projection.

Now what you have to be careful about is if you put that $100,000, say, all in Citibank, a risky investment in just one stock and it goes down 50 percent. Then you’ll have a margin call, and then you’ll have to put money back into it. You could be actually out $150,000 if it went to zero because you’d have to pay back that $50,000.

Rob:  You’re just preparing them for the worst case scenario.

Bryan:  Worst case scenario.

Rob:  It gives you the chance to borrow 50 percent to reinvest with a little more gravity.

Bryan:  Yes. Sometimes margin accounts can give you anywhere between four to six percent interest rate. Let’s say you have some debt out there that’s with a credit card and they’re charging you 20 percent…

Rob:  Yikes.

Bryan:  …then you might want to margin your account, pay off your credit card debt and then pay off your own margin…

Rob:  Your own margin. Your own loan.

Bryan:  …at 6 percent, instead of 20 percent. Or, instead of doing a huge loan to upgrade your house or what not, and they give you 8 or 9 percent from the bank, or a business loan, you can go and say, hey, I have $300,000 or $400,000 over here. I can do some margin, only $30,000 or $40,000. I want to keep that money growing.

The interesting thing about a margin loan, let’s say you put $100,000 into some bonds and equities that are paying good dividends, five or six percent, and let’s say your margin loan of interest rate is four percent.

You can take that money out, put into your business operation, hopefully get that up and running, pay off the loan, and along the way, you’re getting modest growth. Maybe you have unrealized, long‑term growth that comes into the play, and the portfolio goes from $100,000 to $120,000, and it’s cash flowing like $5,000 or $6,000 per year, you’re going to be a win‑win.

Now you have to have it situated in such a way that it’s very diversified, and that the assets are not as volatile as they would be if you just had it in Citibank stock because you want to make sure you don’t have a margin call as best as you can. This is a very good tool for you to become your own bank and leverage your own money.

Rob:  Right, make money on your money.

Bryan:  There’s a study by a Yale professor that has shown, “Unconventional Investing,” that by margining your account and actually buying more stock and dividend‑paying assets, you can create more power in your own portfolio, by having more disposable money to invest.

Rob:  To invest.

Bryan:  People may raise a skeptical eyebrow about margin accounts, but if you look how things have been done since the Egyptians, it’s all doing your business with loans and going into debt to some degree. But what’s the manageable debt? Most companies out there that we see on The Street…

Rob:  Are managing manageable debt.

Bryan:  Exxon, Chevron, Toys “R” Us, Home Depot, they all have debt on the books.

Rob:  Yeah, that’s right. That’s part of doing business.

Bryan:  A lot of people do debt, but they do it in a very unwise way with credit cards.

Rob:  Right, because they don’t have the education, they do it with credit cards.

Bryan:  You’re going in debt, you’re creating incredible interest rates, instead of doing it in a much more prudent manner, and we can help people with that.

Rob:  That’s great. How versatile are margin accounts for the different type of investors?

Bryan:  How what? I’m sorry.

Rob:  How versatile are they?

Bryan:  Oh, OK.

Rob:  You mentioned being diversified.

Bryan:  Yeah. That’s what we come up with. If a person has a very good paying job and we know a lot of cash flow is coming in, we can maybe be a little bit more aggressive in case we have a margin call that we can weather it.

If they don’t have a lot of money coming in and they can’t weather that margin call, if it were to happen, you want to make sure the investments are more secure and that it makes sense to actually do a margin account to begin with.

Rob:  The diversity of our WRR listeners, it could work just about for anybody.

Bryan:  Yes, absolutely.

Rob:  That’s really cool. You work with small amounts, they don’t have to be large.

Bryan:  No. We can start accounts, $20,000, $30,000, $1 million. Credit Suisse, they always want us to start at $5 million, and you really bring down the pool of people you can help.

Rob:  That’s true.

Bryan:  Usually when you get several hundred thousand dollars, you can really do an awful lot for people and that’s a sweet spot to have. But we love to start people out with $10,000, $20,000 because to get the $300,000, you got to start somewhere.

Rob:  How can they reach you?

Bryan:  They can call us at 972‑383‑1210, or they can visit our website at That’s Rigg with two Gs, R‑I‑G‑G,

Rob:  We hope we didn’t get too deep into the weeds with you folks, we really want you to understand it. You can help yourself with margin accounts and Bryan can help. We’ll be back after these messages.


Rob Dalton:  Welcome back. I am Rob Dalton. With me, of course, is…

Bryan Rigg:  Bryan Rigg.

Rob:  Bryan is our Wealth Professor. It is Wealth Strategy with Bryan Rigg. Thanks for making us part of your day today. If you haven’t been here for the whole hour, you missed some great stuff, and I want to invite you back the same time next weekend and listen to the whole show.

This particular segment is going to be about income taxes, the IRS, the penalties. Everyone wants a piece of our pie and the IRS is no exception. There are fees and stuff associated with setting up your financial planning. The 401Ks and the IRAs, dividends and all these things are taxed by the IRS, and there are penalties.

We’re going to get into some of that just so you understand, and if you don’t understand all of it, understanding some of it is essential. You can always get a hold of our Wealth Professor by calling him directly and asking specific questions.

In general, there are penalties for some of the things and the IRS does want a part of whatever money you make, but we’ll start with this simple question, Mr. Bryan. Selling stock and making a profit, is there a tax?

Bryan:  Yeah.

Rob:  What are the tax ramifications?

Bryan:  You have long‑term and short‑term. In short‑term, you’re looking at over 30‑percent on profits, long‑term, you’re looking over 20‑percent. You never get away from taxes. Like Benjamin Franklin says, there’s two guarantees in life, death and taxes, and this is a good thing.

When you look at America, you got to be proud of our infrastructure, our roads, our hospitals, our police departments, our fire departments, our EMTs, it is incredible.

Rob:  Our military.

Bryan:  Our military, as a Marine Corps officer. Paying taxes is very important. The IRS, for all the demonizing that goes on about the IRS, it’s a very good institution to have. If you study a society and you allow people to have the flexibility of paying their own taxes, if they want to or not, they will not do it. Look at Greece, it’s a disaster.

Now granted, if I could do away with the IRS by having a flat tax, I would do it in a heartbeat. The IRS is very inefficient, they are not there to be your friend, and they have continually morphed into a huge organization that they like to feed their own.

“Forbes,” a few years ago, was very smart in saying if we had a flat tax, we could do away with a lot of government spending, very true. Now on the flip side, would I want to do away with the IRS totally? No, because any society that doesn’t have oversight on their taxes will die.

Rob:  And some sort of accountability.

Bryan:  I guarantee you if you said, no more IRS, and people, we’re going to depend on you being honest to pay your taxes, America would go away in a year. It would die.

Rob:  My goodness. I could picture 10 or 12 people already that would be happy, but yet, they’d be part of the problem.

Bryan:  Whenever I hear discussions with people demonizing the IRS, I just kind of shake my head. I look at them and I say, well if ‑‑ subconsciously, I’m not actually saying this verbally.

I look at them and I think to myself, if you were the person I was depending on to always pay the taxes to support this nation, it wouldn’t happen by the way you’re talking about the IRS because you don’t really understand the true function of the IRS.

Rob:  They’re talking about their personal relationship with the IRS, but they have to go beyond that.

Bryan:  Yeah. The IRS also will make people’s lives miserable because they want to justify their work. A lot to times, when they do audits, probably 9 times out of 10, they may find some things, but they are just trying to justify their work, so they’ll look for things that aren’t there.

One thing that I tell clients to do from the research I’ve seen is if you have been using a CPA, and all of a sudden you think you want to do it on your own, you will highlight yourself more. If you’re doing it on your own, you haven’t gone to a CPA and you haven’t been audited, you’re probably going to be OK, just law of averages.

Rob:  Just do what you do.

Bryan:  Most people will have, if they’re doing well and have earned a good living, eventually they will be audited. Now granted if you’re doing things that could raise a skeptical eyebrow, and a lot of people try to cut corners, be very careful. The IRS will probably catch up with you.

Rob:  Yeah, there are logarithms for that.

Bryan:  The IRS here again, the tax penalty out there is not paying your taxes, that’s a bad thing. Combing back later with a statute of limitations of two or three years, finding out that maybe you paid more is usually a better thing than if you start having a tradition of paying less.

There’s always going to be taxes in this world of finance. Getting back to your original question, long‑term, short‑term capital gains, you have to pay taxes.

Rob:  I wanted to bring up the fact that let’s say you have a stock portfolio and you are seeing a profit, it’s not a profit until you sell it, so you don’t pay taxes on that money. Let’s say you’ve had a 30 percent increase in the cost of that stock and it looks really good, you’re not paying taxes on that yet.

Bryan:  No. In our world, it’s called realized and unrealized gains.

Rob:  Thank you.

Bryan:  If you have 30 or 40 percent increase in your portfolio but you haven’t sold any of it, it’s unrealized gains. There’s no tax burden. You determining when you sell it is a very good thing.

Rob:  You have control over that.

Bryan:  You have control of it. You have some losses that you want to offset, you can sell. Let’s say you had a business loss of $30,000 to $40,000 and you have a profit over here of $34,000 in your stock portfolio. If you realize that profit, you can offset it with a loss and you don’t have to pay any taxes on it.

Rob:  It’s all timing and strategy…

Bryan:  And we can help people with that.

Rob:  …which is again what your vision allows. Yeah, you have some good advice there. IRAs and Roth accounts, there are tax penalties for that sometimes.

Bryan:  What I like to talk to people, especially if they’re young, about doing is converting their traditional IRAs, or their rollover IRAs into a Roth. To keep numbers clean, let’s say you have $100,000 in a rollover IRA right now, and yore 35.

I encourage people to go ahead and if they can weather the tax burden now, pay those taxes now on that and let it grow tax‑free. This is the two scenarios that you have. If you kept the $100,000 in there, let’s say you’re 35, and then you retire when you’re 70. Let’s say that $100,000 is $500,000, being very generous with the growth.

Instead of paying $200,000 in taxes, which is what you would probably have to do at that time period if you’ve got $500,000, so you get to have $300,000 in your pocket. You can go into a Roth and convert that $100,000 right now and the Roth is growing tax‑free, but you have to pay taxes now.

Rob:  Right, you pay today but you’re going to save money later.

Bryan:  On that 100,000 you may pay $25,000 or $30,000. Then that $100,000 grows to $500,000 and you pull it out tax‑free, $500,000 in your pocket. For a $30,000 payment now, you get a $200,000 benefit that you don’t have to pay in taxes later on, so Roth is growing tax‑free.

There’s some speculation out there that eventually the government may do away with that, that they may start taxing Roth, but hopefully, they will grandfather the ones that you’re doing now.

Rob:  The currently active.

Bryan:  The currently active. I encourage people when they’re looking for tax diversification, if you will ‑‑ if they have a current 401K, they rollover an old 401K to an IRA ‑‑ let’s convert that. If you can weather the tax burden, or convert a portion of it, get some of it growing tax‑free.

Rob:  That’s good advice. We have liquidity events in our lives, whether it’s inheritance, divorce, or trust funds, or you sold the home, people can call you for advice on what to do with it because there are tax ramifications.

Bryan:  Yes, absolutely. We’ll work with their CPA and go over the most efficient way to take care of their assets.

Rob:  You don’t know everything you don’t know. When I have a transmission issue, I’m taking it to a mechanic, and when I have a health issue, I’m going to a doctor, these are experts. When I have questions about finance, I’ll take that to a financial expert.

Just because I don’t know doesn’t mean I have to solve it myself, so I encourage people to call you. How can they call you?

Bryan:  They can call me at 972‑383‑1210. Again, that’s 972‑383‑1210, or they can visit us at our website, That’s Rigg with two Gs, R‑I‑G‑G, Send us an email and we’ll get together.

Rob:  It’s easy to do. Becoming a client, it doesn’t take a lot of money. It just takes time and a conversation, and Bryan, you’re good at that.

Bryan:  Yeah. Whether it’s $10,000 or a million dollars, get started now.

Rob:  Folks, it’s been great being a part of your weekend, thank you. Come back next week, same time, same station, of course. We’d like to hear from then. Bye for now.