Doug Houser:
From Rea & Associates studio. This is unsuitable, a management financial services podcast for entrepreneurs, tenured business leaders, and others who are ready to look beyond the suit and tie culture for meaningful, measurable results. I'm Doug Houser. On this weekly podcast thought leaders and business professionals break down complicated and mundane topics and give you the tips and insight you actually need to grow as a leader while helping your organization to grow and thrive. If you haven't already, hit the subscribe button so you don't miss future episodes. And if you want access to even more information, show notes, and exclusive content, visit our website at jhmi.ngskmc-eis.net/podcast and sign up for updates.
People tend to spend more time thinking about and planning their next family vacation than they do thinking about and planning for retirement. Isn't that true? As a result, they are ill-equipped to make that inevitable leap into their golden years when the time finally does come. Today, Darlene Finzer a later life planning expert at Rea & Associates is here to discuss what later life planning is, why it's important and how a professional in this field can help you plan and experience the retirement of your dreams. Welcome to unsuitable, Dar.
Darlene Finzer:
Hey, thanks, Doug. I'm glad to be here.
Doug:
It's always great to have you back. I know you're a veteran of the podcast. So, it's, obviously it's tax time here. I know we're recording this in the middle of that, and this will also come out here in a few weeks while we're still in the midst, but, it's always a great time for people to take a step back during that time and just look at the big picture and not just focus on the compliance of, "Hey, I need to get my tax chart done," but think about this concept of later life planning. So when does somebody start that one? When should you start thinking about that from your perspective?
Darlene:
Wow. So thinking about later life planning is probably something that someones should consider at least six years before they are planning to retire. Obviously, I say that we start planning for retirement the day that we have funds withheld from our paychecks and deposited into a 401k plan. So, really we're starting early on in our lives to plan for retirement, but to really get serious and think about everything that you do need to think about as you move into that phase of your life, I would start at least six years before you are going to make that transition.
Doug:
Mm-hmm (affirmative). So when you talk about later life planning services, what all does that mean? Obviously, beyond looking at say, tax and that type of thing. What else all does that encompass?
Darlene:
So later life planning is a consulting service that we offer at Rea & Associates. And it's really to assist clients to help them prepare as they move into and through retirement. And what it actually entails can be a lot of different things. Everything that goes into later life planning is specific to a person's specific situation. So, we can talk about some of the things that actually we go through whenever we are looking at later life planning services with someone.
Doug:
Yeah, absolutely. Walk us through kind of what those might be.
Darlene:
Regardless of who the individual is, the number one fear that someone has as they move into retirement is the fear of running out of money, that they are going to outlive their assets. And so part of the discussion is what does that mean for an individual? I wish that there was a magic number that we could say, "Well, this is what you're going to need in financial resources to be able to live through retirement without running out of money." But everyone's situation is different. And because of that, that's what requires additional planning. Everything has to be tailored to everyone's specific situation. So from our perspective at Rea & Associates, obviously we're an accounting and consulting firm and we deal in the financial realm, but there's more to later life planning than just the financial piece.
So we like to take the holistic view and incorporate other partners that offer that entire picture of everything that plays into retirement and things that you need to think about. I always like to use analogies, and the one that I like to use for this is a Rubik's cube. So, in the Rubik's cube, there are different colors in the Rubik's cube. And the goal is to get the same color pattern, all of the squares on one side. If you've ever worked with a Rubik's cube, maybe you could get one side or maybe two sides if you were lucky, but I was never able to solve the entire Rubik's cube, but that's like the retirement picture. So you might have one side or one piece of the later life planning, the retirement planning thing that you have said, but if you don't incorporate all those other pieces, all those other sides, if they're not in place, the plan might go out the window.
Doug:
Yeah. It's interesting you say that, because I see some of this where you may not have all the family members perhaps on the same page, for example, or two spouses may not have talked to their children perhaps. And how does everybody's desire and needs... How does all that factor in? We see this a lot with business planning where maybe a patriarch is involved in the business and has brought children in, but maybe the children aren't interested in actually running the business. And so you've got to factor in all of these different things, health care, are there other family members or parents that need to be cared for, so is that kind of the approach you take when you talk about that holistic approach, do you bring all those soft issues in to play as well with it?
Darlene:
Yeah, absolutely. And typically that's the piece that is missing in a retirement plan, all those soft issues. And you've mentioned about the kids might not be on board. Well, sometimes the spouses might not even be on board with each other as far as what they are considering retirement looks like, because they haven't really talked about it other than saying, "Well, someday we'll retire or we'll retire in five years or whatever it happens to be," but they aren't taking the time to look at that picture and see what does retirement look like? One spouse might want to travel, one spouse might want to be on the golf course. So if those plans don't line up, individuals are setting themselves up for failure in that respect whenever it comes to retirement.
Doug:
You almost have to be an amateur, a psychologist, right? It's a... I think one of the beautiful things about that you do, and particularly, I think it's your personality is you're able to draw out those things in conversation and make people feel comfortable in talking about those things. I think that's a huge, huge thing that you have to do and you have that characteristic and ability to do that. So in your experience, what are some of the things you do when talking? You start this conversation with folks to bring that out in them and make them more comfortable to talk about that stuff.
Darlene:
So, at Rea, we are trusted advisors, to begin with. So there's a lot of stories we've shared with individuals as they've matured, as they've grown businesses, so this is just a natural transition that we should also be talking to them about whenever they move into retirement. But the first thing that I like to do is just have a conversation. I want to find out about the individuals, what their perspectives are, where they're at, where we might find some holes in their plans of things that they might want to consider. Obviously, as you move into later years, there's the potential for the need for care from the medical perspective, it could be long-term care, could be in-home care, could be long-term care facilities. But if you don't know where someone's mindset is, talking about long-term care, if they know that they don't want to go into a facility and they have the means to have home health care, or they have family or friends that will be able to take care of them, then that's a completely different conversation that you have around that piece.
So it's really understanding where they're at, what their needs might be and making sure that we touch on points that maybe they're not even considering, you mentioned about health, there's insurance, there's the financial piece obviously is huge in this, but there's also the family, whether there's going to be legacy family planning that needs to be conducted if there are transitions with businesses. And then there's also the actual transition into retirement, which people might have an idea of what retirement might look like from the perspective of. "Well, I want to spend more time with family. I want to spend more time with my kids or my grandkids." But once you retire, you have to think, "Well, my kids might still be working." So it is, even though I have more time on my hands, they're going to be at work. So, you have to take those kinds of things into consideration because what you have planned might not actually materialize whenever you are in retirement.
Doug:
Yeah. I think to your point, bringing all those things out into the forefront and having that conversation and talking to everybody about what is your desire and have you thought through all these things and had these conversations rather than starting with a goal in mind already that's kind of predetermined and trying to back into that, it's sort of raising all of these issues and perhaps it's a living, breathing evolving process. It doesn't just because that's what makes sense today, or everybody decides that may change a couple of years down the road. So I assume part of the process then is having those ongoing, evolving discussions. It's not, "Hey, we did this and we checked the box and put together this report or plan, and then we forget about it." That's not the case. Right?
Darlene:
Correct. Yeah. So obviously you need to develop a plan, that would be present-day, what you think the future is going to hold or what you want to do in the future. And at least annually that plan should be re-evaluated because there are going to change that occur within that year's time. And there's going to have to be adjustments to that plan as those changes occur.
Doug:
Yeah. And, you talked a bit about even the healthcare thing, we've dealt with that in my family home care versus being in a facility, and what's everybody's attitude on that. What do you feel like, all of those things are so important obviously? Our expertise and your expertise certainly [inaudible 00:13:23] with regard to tax and tax planning and some of those types of things. I assume you also, as part of this process, bring in an investment advisor and, or attorney, a state attorney, those types of things to help bring this whole plan and process together. Correct?
Darlene:
Yeah. That's absolutely correct. So, like I said, going back to the analogy of the Rubik's cube, that's where those other pieces come into play. Obviously, as accountants, we don't play in the legal realm. So having an elder law attorney is best whenever it comes to some of the situations, the state attorneys, and also the investment advisor, one of the things that we do as we look at what the income in retirement is going to be.
And obviously, from an accountant's perspective, we want to look at the tax savings that can be bound in that situation. But we also need the investment advisor to know what the assets are, and to also look at how we receive those assets in retirement. So you do have to work in conjunction with each other. And that's part of that holistic plan, is making sure that everyone knows what the client's plan is. And everyone is working towards the same goal for that client because if not, you could have pieces that maybe one professional is providing to that client and it can counteract a plan that another professional is providing. So you really do have to work in concert with each other to make sure that the plan is being created according to how the client wants that to be held.
Doug:
Yeah, that's a good point. You don't want to keep everybody in their own silo. And I think oftentimes, we see that a lot, unfortunately, and that creates just miscommunication and not that necessarily anybody's trying to take advantage or anything like that, but it just opens the door for that miscommunication and not everybody being on the same page. You mentioned something there too about, like an elder council or elder attorney, and you hear more and more about this, and my wife happens to work at an assisted living facility and so tangentially, I hear some of these examples where maybe there's a guardian involved and there's some question as to elder abuse or somebody being taken advantage of, and boy that it sounds really bad, but it's sometimes it's hard to spot, right? Because it's not like physical abuse necessarily. It's just that their situation is being taken advantage of. Can you talk a little bit about it, I know that's a passion project of yours too, how you try to help with that as well.
Darlene:
Right. So elder abuse, especially if it's elder financial abuse, there are obviously different types of abuse that can occur, but we tend to focus more on the elder financial abuse piece of it. Obviously, most of the elder abuse that occurs is done by a family member. You would think it would be really straightforward and easy to say, "Well, this person stole this amount of money or this asset from me." And, we're off to the races to prosecute them, but that emotional piece, because it is a family member and that tie with that family member, the love that they have for them, they feel like they owe it to them that they don't want to prosecute. So it's very difficult, maybe not so difficult to spot, but it's very difficult to prosecute because of it being a family member or close friend.
Doug:
Yeah. It can be embarrassing too because it involves family.
Darlene:
And even if it's not a family member that's creating the abuse, individuals will be embarrassed because they let it happen to them, because they should have known better. And so it's very difficult to actually have an elder abuse case be prosecuted and for there to be any type of repercussions because of mainly those two factors.
Doug:
Yeah. There's a lot of emotion involved and as you said, guilt and all those things play into it. So that brings up the point, really, it's better to try to put all the things in place to prevent that from happening. And that's part of the process you go through with later life planning. So, talk a little bit about that, how you try to mitigate that risk and structure things so that some of those things can at least be prevented as much as possible.
Darlene:
Yeah. So I think that having a plan in place and obviously having the third parties involved really helps to make sure that everyone's on the same page. Sometimes family members are involved that they do know what the plan is. But whenever you have third parties who are involved and know what the plan is, if things happen, if money starts leaving an account, starts going to a family member. If you have the third-party consultants involved, that's something that definitely will throw up a red flag for us. And we can start questioning it sooner rather than having something go on for a long period of time and may be completely wiping out their assets.
Doug:
Yeah. That's a great point. It's better to have that transparency, have more folks aware and involved so we can be part of your team and watch out for those types of things. And I think it goes back to your whole approach with this, as you said, it's a long-term relationship-driven approach. It's not, "Hey, we want to put this plan together and complete it and then goodbye and good luck." It's an ongoing thing. I think that's so, so critically important.
Darlene:
Right. Yeah. Absolutely yes.
Doug:
Yeah. Well, Dar thanks for your time today. It's always a pleasure to have you on, and I know it's a subject you're very passionate about and you're just the best there is, and I think bringing all this together because you bring... You make this process comfortable for people because it is difficult when you're talking about later life planning and family issues and all these things. So I think that's a very underrated characteristic to have, and you have it in abundance. So that's awesome.
Darlene:
Oh, thank you.
Doug:
Yeah, thanks again for coming on. So that's what we have here for this episode of unsuitable. And if you want more business tips and insight, or to hear previous episodes of unsuitable, please visit our podcast page at jhmi.ngskmc-eis.net/podcast. And while you're there, sign up for exclusive content and show notes. Thanks for listening to this week's show. Be sure to subscribe to unsuitable on Apple podcast, Google podcast, or wherever you're listening to us right now, including YouTube. I'm Doug Houser. Join us next week for another unsuitable interview with an industry professional.
Disclaimer:
Views expressed on unsuitable on Rea Radio are our own and do not necessarily reflect the views of Rea & Associates. The podcast is for informational and educational purposes only and is not intended to replace the professional advice you would receive elsewhere, consult with a trusted advisor about your unique situation so they can expertly guide you to the best solution for your specific circumstance.
