Hey there and happy new year! 2022 will be a better year for everybody than 2021. I am very confident of it. However, an event occurred on the very first day of 2022, that illustrates really one of the most tragic things that can happen to you in retirement. This episode, we'll talk about that. The biggest mistake that you can make every retirees worst fear.
And I will give you concrete tips on how to avoid it. Time is limited. Let's get started.
Welcome BoomXers. Let's throw out the old playbook. It's time to tear down the traditional way of looking at your life and money and leverage the laws of money to our advantage. That's right. There are laws of money and those who learn and leverage the laws of money win. And sometimes win big. Stay tuned as asset protection attorney Darol Tuttle, educator, and leader of the Boom X nation shows us how. Beginners, investors, entrepreneurs, fellow attorneys, are you ready? Are you ready? Let's arm this bomb.
Now? Here's the Boom X show the laws of money. This is Darol Tutle, host of the Boom X show and leader of the Boom X nation. You can listen to the BoomX show on your smartphone podcast player. If you have an iPhone, simply search for the app called "wait for it" podcast. If you do not have an iPhone, an Android phone, you can find a BoomX show on Google play.
Regardless of your phone, you can download the app of Spotify, Stitcher, or SoundCloud, and find the BoomX show there. When you're not listening to podcasts on your phone, you can simply go to boomxshow.com where you will find this and prior episodes. And remember the BoomX show is really part of the Boom X nation, which includes the BoomX Academy.
Go to boomxacademy.com, join as a free member and you'll be automatically enrolled into the BoomX show companion course, which offers additional and enhanced content for each episode. Time is limited, but before we dive into today's episode, please consider this free, but very important resource.
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If you are in retirement or near retirement, depending where you are in the retirement process. And remember there are three phases of retirement. The first phase, the fun phase is starts about age 65. When you decide to retire, you begin that process with the gold watch from your boss and the great party.
And you set off on this magical adventure. Now the financial services industry is inundating you with commercials and advertisements and Facebook ads about how awesome that retirement is, their stock photos that they can present and do of just absolutely Tom Selleck looking type models in their sixties and seventies on the beach, having fun frolicking.
And that first phase in it probably lasts, just on average, everybody's different, but just imagine from retirement age 65 until 75 or early seventies, and that's the active fun phase of retirement. There's a lot of cruises going on. There's trips to Disneyland with the grandkids, golf. If your hobby, whatever it is, you will indulge in it.
If you are a civil war reenactor, civil war reenactor this is the time period where you will reenact Chickamauga, Gettysburg, Antietam. If you are into sailing, you will take cruises. You will maybe buy a new boat. And that's great. Now, a financial service industry and this is one of the big myths of retirement is messaging you. That first phase will last until the day you die from age 65 and till age 85.
I always say average life expectancy for an American male is 84 years old and 87 years old for a woman. However, if you are over the age of 65, you have, this is bad news. Be patient. There's going to be worst news in this podcast. I am going to talk about some horrible things.
And it orbits around this fact, if you are over age 65, you have a one and five chance of reaching age 90. The worst news is you have a one in 10 chance of reaching age 95. Now I don't know about you, but I'm not really looking forward to being that one in 10 myself. It just seems that in advanced, old age things, aren't nearly as fun, which brings us to the second phase of retirement.
So the first phase is one where financially there's oftentimes more money going out than coming in and regular and recurring income always think about retirement in terms of cashflow. Most people think about it just in terms like how much money have I saved? How big is my 401k? Do I have the right kind of Medicare supplement insurance?
So I had the light long-term care insurance. Those are all important, but they forget about cashflow. If you take a spreadsheet and if you look at the amount of regular recurring income that will occur for you, that is legally guaranteed throughout your lifetime. And you can even no doubt project, how much it will increase.
For example, social security, retirement income is a legal right that all Americans have assuming that they meet the method requirements and paid into the system. And the government will tell you exactly how much you will receive in retirement income and will tell you how much your cost of living increase will be.
And you can map that out. If you have a pension from your boss, you can map that out. Regular and recurring sporadic income that you might receive from a rental income, for example, or other types of investment that pays dividends that is not considered regular recurring income. So we don't count that for our cash flow purpose analysis rather.
And however, bear with me. If you look at that line item, think about how much regular recurring that money that we can count on. And then project expenses, mortgage rent, regular recurring cell phone, any kind of utility bills. Then we, and simply sum all of the expenses and add the sum from the inbound cashflow, hopefully throughout retirement, we have a positive number.
We have more money leftover at the end of the month than we did when we started. If we do that mathematically with no surprises and that's the problem are the surprises, but if there was more income coming in. Then it was going out and regular recurring income until the day we died, we would not need to have anything saved for retirement.
And of course, that's not the message that you have been told that you've been programmed to believe because a financial advisor, financial services cannot make a commission on your regular recurring income. Now, if you think about phase one, one problem that I've seen. When flaw in my idea of the perfect retirement is that oftentimes in the first phase of retirement, there is more expenses going out every month than income.
You're having fun. You're playing golf. You're going out. You're enjoying yourself in that early phase. And some of the things and activities that you participate in are quite simply expensive. Makes sense. The second phase of retirement, however financially and mathematically there's some good news.
The second phase of retirement is what I call the jeopardy phase. And by that, you slow down a little bit, you become sedentary. You're not excited about walking up the cement moss covered. I spent most of my life in the Pacific Northwest. And when I was growing up, everything was really damp and wet on the west side, Seattle Tacoma area.
And they were just always moss if your house faced the wrong direction. So if your front door faced north, you had to be careful. And during that phase, your health is getting worse. There's maybe a knee replacement or a hip replacement in there somewhere. And back in the day, that would be a three or four day hospital visit.
Now you're in and out. I don't even know how the doctors pull that off, but it's very odd that you can go in and three hours later, come out with a new knee. However, it takes a toll and you slow down and you're not playing golf as much if at all. And if you have to go to Disneyland with the grandkids on a family trip and go down splash mountain with this screaming kid in a hundred degree heat.
You're gonna freak out. And the civil war reenactment, you might go to. At age 75, you are no longer reenacting as a civil war, frontline soldier. You're more like the aid to camp, to the general in the back, making the coffee for Robert E. Lee. So that everybody is copied up for the battle, whatever your hobby is, you're probably doing less of it and you become sedentary.
I call it the jeopardy phase because. You're just sitting at home, watching a whole lot of jeopardy at that point in your life. Now that may seem dismal, however mathematically what I've noticed and keep in mind, I've been, I've read account statements and income statements of clients for 20 years.
I've been a lawyer for 26 years, but really got into the weeds on cash flow analysis and retirement asset analysis for 20 years. And so I know exactly how it works during that second phase of retirement. Usually, there's debt that's paid off. The mortgage is paid off. The cars are paid off.
You'll live a simple cost conscious life at that point. And very often, there's more regular recurring income coming in per month then there is expenses and that's awesome because now at the end of the month, we're net ahead. We were diving down into the red ink, spending more than we were saving, receiving an income during the first phase.
But second phase, we're catching up a little bit. Now, if everything works fine, your health stays consistent and good. You're fine. However, the third phase kicks in, if you are so unlucky to reach advanced old age. And what happens during advanced old age is it's not just watching jeopardy.
It is watch jeopardy, but it's watching jeopardy at the assisted living facility or the adult family home or in your private, a room in a nursing home. Now keep in mind that my background is in estate planning, but graduated to that area of law called elder law. And elder laws all about helping people in advanced age pay for long-term care by finding funding sources, be it Medicaid, be it waiver programs, be it VA benefits, whatever. It's in that third phase, that things can go wrong and go very, very wrong.
Now, and by wrong I want to alert you to a fact pattern that is too common. It's extremely tragic. It's hard to even talk about. And the Boom X show is not meant to be a complete buzzkill. Who wants to log into a podcast or a YouTube channel and hear a horror story that is depressing.
All of this of course is very important. The stories, the resources, the commentary on the law, the suggestions and tips that we give on the BoomX show laws of money podcast are meant to be educational, hopefully helpful to you and your family. As you build family wealth near or in retirement.
However, the laws of money must be followed. The laws of money are requirements in most cases, and he or she who leverages the laws of money. Definitely we'll come out ahead. I like to shift gears for just a minute or two and describe some of the important resources available through the BoomX academy, which offers additional content free and tuition based courses, office hours, and a community of other family leaders.
If you are in or near retirement, you may have concerns that one of the many threats to wealth in America today in particular high unreimbursed medical costs, unnecessary taxation, or even family mismanagement could threaten your retirement nest egg. The good news is that the law does have solutions.
Federal law and centuries old trust law offers many safe harbors. And when implemented correctly can protect your savings against Medicaid liens, state and federal tax agencies and even private creditors. But why do so many retires then suffer asset erosion or even complete depletion having failed to meet the laws requirements?
The simple but sad truth is that most are unaware of these asset protection laws, or believe that only the super wealthy can pay less in taxes or think that they must hire an expensive attorney. Some who charge tens of thousands of dollars to put it all together. Unfortunately, we live in a world now where middle class Americans simply do not have enough wealth to lose any of it.
It's more important than ever for most to have an asset protection trust and plan, even if they are not super wealthy. Now, for the first time families have help. Families can protect their assets if they learn a few basic concepts, have the correct legal documents and implement these asset protection plans correctly. To do this begin by enrolling in the BoomX Academy. The BoomX Academy is that you guessed it, boomxacademy.com.
That's Boom X Academy.com. Boom X academy offers free and tuition-based courses on topics related to retirement estate and asset protection planning. Sign up today for the family leaders membership level. And you will also join an online community of other lines.
You may attend weekly live office hours with me, Darol Tuttle, host of the boom X show and in the trenches asset protection attorney, best of all, you all have access to the BoomX drafting app so that you can easily draft all of the legal documents you need without hiring an expensive lawyer. To repeat, you will walk away with a full set of properly drafted legal documents that you understand.
You can join today as a free member and you will be enrolled in the BoomX show companion course automatically. You can also test drive the $40 per month family leaders level at the astounding rate of just $1 for the first 30 days.
During this first month, you will be able to draft a limited power of attorney to preserve their right to transfer your nest egg, to an irrevocable trust.
A proven strategy. I've helped clients implement countless times. This is also an $1,800 value. You will be enrolled at no further costs into the nest egg courts, which will introduce you to the concepts of asset protection and how to implement this legal document and begin your asset protection plan.
To learn more, go to boomxacademy.com. That's boomxacademy.com.
Welcome back to the BoomX show. I hope you do not think that was a tangent. The BoomX academy is an integral part of the BoomX show and the BoomX nation. And it is meant to intended to just help people, help people implement the laws of money. So that they can prosper do well, build family wealth that is generational, but also in some cases protect their retirement while they are still living.
You are still living and your, even your health before the break I had been describing or setting up the story, I'm about to tell to you, there's two of them actually. And it just illustrates the point that retirement successful retirement is financial analysis. Yes. It's protection against known threats through proven legal strategies, certainly, but it's also aging responsible, responsibly, and making decisions as a mature and responsible adult all the way through all three phases.
The first is a client story, and I have permission to tell this story, attorney-client confidentiality can be waived. And this story I was an attorney tangentially on it, and my clients agreed that I could repeat the story as a teaching point. Now, in the second phase of retirement, one thing that occurs is cognitive impairment.
It's just normal age related dementia, basically. And just imagine yourself for the first 45 years of life, depositing quarters and a piggy bank. And then at age 45, you start taking out nickels. That's like your mental powers. At 45 things start to deteriorate a little bit. You rely upon all of the experiences that you've had and everything that you've learned for the first 45 years.
But you start to decline. So by 75, you're not as sharp as you were when you're 65 concede that. And by 85, of course, you're not nearly as sharp as you were when you're 75. And at some point many folks who have not planned ahead who have not developed a written plan, especially one that's has been reduced to writing in a legal document so that it must be followed and it's legally effective.
And if anyone breach. It doesn't follow the written plan. They could be liable for breach of fiduciary duty. Like that's a solid plan. Now. Now, the point is that planning has to occur sometime during your life up to the first phase of retirement, maybe you can get away with the second phase.
My observation is most folks in their mid seventies at that point have already waited too long to really. And have the mental acuity to analyze the situation, analyze the risk and come up with a concrete plan. They just can't make a decision. And by the eighties, forget about it. Now, we've all had parents or family members who we would call stubborn.
A grumpy old men is a movie with Walter Matthau. At some point it is a phenomenon of being male and being age 80. It's just stubborn and almost mean-spirited not on purpose, but you just, this is how I'm going to do it. Now, the grumpy old men, old farts have a constitutionally protected right to make bad decisions. Absolutely.
And it's frustrating when we see a family member who was arrogant early in their life and then stubborn in the first and second phase of their life refusing to acknowledge the possibility of a catastrophe or. A probability of a fall. For example, if you're over age 65 and fall, that's the number one cause of injury, death for Americans over 65 is falling.
And so this first story both stories involve a fall. I want you to just imagine a couple and husband has dementia. And what happens oftentimes is one spouse steps into that caregiver role and just loves their spouse so much been married for so many years. That there's no way that they're going to allow their spouse to be transferred to a residential care community, such as an assisted living facility, memory care unit, or adult family home.
It's just too tragic for them. And so what they do is even if they do not have a background in providing care or a medical background or anything close to that just the love that they feel for this spouse, they believe will carry them through and they will be able to take care of the spouse even if that spouse is demented. Now that can work, but I want to alert you to a couple of things first.
It is so stressful. The, spouse in this first story, the well spouse was the wife and she cared for her husband and did everything for him. And he had advanced dementia and she's maintaining the house. She's doing all the yard work, all the housework and caring for a man who can't remember his middle name and thinks Gerald Ford is president.
And what often happens is the stress and fatigue is so great that spouse dies premium. Now, in this case, it was not a death. It was a fall. So she was up on a ladder in the backyard, pruning a tree and she fell off the ladder and broke her back. Of course, now she's ambulance comes in she's hospitalized and of course, husbands left alone in the home.
He burnt the house down within three days. She burnt the house down and died two weeks later from burns. The message I'm trying to get across is that couple did not, was not responsible. They did not make mature responsible decisions in light of husband's condition. One little mistake like that, which was a fall number one cause of injury death among Americans over age 65 is a fall.
So the probability is pretty high that there will be a fall as luck would have it. This one was so bad that it required her to be hospitalized. When she was released from the hospital, her husband had already died. That's a tragic story. The second one just occurred. It is not a client. It is a story of a person contacted me and asked me for a referral to a great probate attorney.
And I said, Okay. What's your goal? Are you anticipating litigation? And as it turns out, as I inquired as to the fact pattern to like, why do you want a probate attorney? A father who is in his eighties also was killed by fire. And he was in his personal residence and his front door was double bolted.
He was notoriously stubborn and a fire broke out in his home. He could not get out. And he was burned to death on a new year's eve this year, six days ago, from the time I'm recording this. And of course that fact pattern is so similar to the fact pattern of my client. And so of course I asked did his wife, did she survive or had she pre-deceased? She had died two weeks earlier. She was severely demented and fell down stairs in the home and hit her head and died.
Now those are horror stories, but those two fact patterns are basically so similar as to be identical and the medical bills that retirees pay for falls is in the billions of dollars. And so as we go into retirement and we think about what it means to enjoy the wealth that we have worked in our entire life to accumulate.
I'm just asking you, begging you, beseeching you to think of it responsibly. Project out and realize that the number one threat to your wellbeing and to your assets or personal residence, your own spouse is their own human frailty.
Now, in the case of both couples, you just got to make a hard decision and say, look, my spouse has dementia. He needs care. It can be home care. We need to put into place safeguards. If you are refusing to acknowledge that your wife is in her eighties, she's frail and she has dementia and you're in a three-story home with hardwood floors on the top floor was slippery rugs, cats running around and steep stairs down into the basement.
And the bottom floor of the basement is concrete then you are being a selfish, grumpy, old man and endangering the life of your spouse. Now, you can make the right decision. It's not as if you don't understand that a rambler is more safe than a three-story home. Of course you understand that at some point it's just that the stubborn refusal to acknowledge the reality can hurt yourself and it can hurt other people.
If you look back into the archives of the BoomX show, you will see that I have recently posted a episode in which I described the story of two daughters explaining how they found their mother had fallen in the garden. She too was a stubborn old Prairie woman that refused to make a financially responsible decision.
And, it's just frustrating for me as a casual observer, that all of these things could have been avoided. The how the personal resident, which was the main asset in the home is lost from fire. And both of those cases and the amount of medical bills the wife fell off the ladder.
She was hospitalized for more than two weeks. And the husband died from burns in hospital or two weeks. Just think about the unreimbursed medical expenses that those two incidents occurred are paid to pay. Medicare is not going to cover all that. I hate to tell ya. So just leave it like that. I acknowledged that this episode was a little bleak and there was no concrete legal solution.
There are legal solutions for financing, and we will talk about those in future episodes. But for today, I'm just beseeching you to, as you think about your own retirement. Think about your health and think about a mature, responsible health and long-term care plan that you have written down and placed inside of your health care power of attorney. Healthcare power of attorney is the place to write all of that down.
Do not just share your medical values with your family during Thanksgivingbecause everyone's going to hear something different. If you write it down in a legal document, it must be followed. The agent pursuant to the healthcare power of attorney must observe your wishes as to your health care.
And remember, this is you when you are at your most vulnerable. Boy, that was a bit of a bummer, but please take it seriously. And next episode, we will lay out the one provision in your health care power of attorney that you absolutely must have to avoid losing your personal residence. It sounds like I'm overstating that trust me, I'm not.
And that concludes this episode of the BoomX show laws of money podcast. I'm your host Darol Tuttle. As a reminder, you can go to boomxacademy.com. Membership is absolutely. And best of all, you can enroll in the BoomX showcompanion course. That's all for now until next time, remember? Yes, you can learn and leverage the laws of money to your advantage.
