Life Events Requiring Financial Advice And Planning Part 1

Intro: Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors®’ host, Bob Barber and his co-host, Shawn Peters. Shawn: Welcome to another episode of Christian Financial Perspectives. We’re so glad that you joined us today, whether that’s on video or audio, but if you are checking us out on YouTube right now, we’d love for you to hit that subscribe button and like this video if of course you’d like episodes on financial topics from a Christian perspective. And last time we checked, we’re still at about 80% of viewers haven’t subscribed. Bob: You say that a lot, Shawn. Shawn: I know. Well, it hasn’t changed. Like I’m hoping for us to hit a 70% or 60% that haven’t subscribed and we’ll work our way down. But yeah, so again, if you like episodes on financial topics, but from a Christian perspective, we’d love for you to hit that subscribe button. It helps us and it also helps other potential viewers to find the content. So today, we have a special program on 12 life events requiring financial advice and planning. And so today we’re gonna just cover part one. It’s gonna be the first six. And Bob, what do you think about this topic? Bob: Well, Shawn, what made me come up with this topic is there’s so many different types of life events that happen throughout our lives that many people don’t realize that the first thing they need to do when they’re looking at this life event that’s going to occur is to call an experienced financial advisor for advice and planning. And so that’s where I came up with this list. This list is from over 30 years of experience in seeing this. And many times I will see these life events occur, and financial planning is the last thing that people think of when these life events occur. Shawn: Yeah. Bob: Where it should be one of the first things that they take up. Shawn: That’s right And I think a lot of people, if you’re watching right now, you might be thinking, well, yeah, retirement planning, that’s probably like, what else would you really need financial planning or advice for? But as you’re gonna learn in these two episodes, there are at least 12 major life events that you should be looking at getting some financial advice and planning. Bob: And this will not only help you, today’s program, but maybe as somebody you know that’s going through one of these life events. So we do have the first one as re retirement planning. And Shawn, this is not something you should wait until you’re retired to then do the retirement planning. And that’s what I see more times than not: I’m retired now. Now what? Wait a sec. That’s okay. We can do it. Shawn: Well, speaking of planning ahead and not waiting to the last minute, we actually, you actually have a… Bob: There’s a good scripture for this. Shawn: Proverbs 21:5. Do you wanna read that one? Bob: Sure. “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.” That’s the importance of pre-planning. So with retirement, this is something that you need to start as early as in your mid 20’s. You need to start thinking about retirement planning. Shawn: Well, the sooner you start, the better off you’re gonna be simply because you have more time on your side for the wonderful compounding interest. The, what do we call that? The eighth wonder of the world. Bob: Eighth Wonder of the world. Shawn: Yep. Bob: Exactly. That’s what say it was. It was Benjamin Franklin who said that. Shawn: So start as soon as possible, but at the very least, like if you’re in your thirties, you definitely need, if you haven’t started ready, you definitely need to get going. Bob: And how much should you save? And that all depends on how much you want to retire on. So this is something I see more times than not, though, now we’re retired and our budget is $80,000 a year and we’ve got $400,000 in retirement. Not gonna happen. You can’t take 20% a year outta your $400,000. So you need to assess this before you ever do retire. Is that gonna work? You gotta look at your age. You gotta look at life expectancy. I will sit down with someone and ask them, how old did your parents live to? It’s genetics. A lot of this is genetics. I’m finding more and more, they’re still alive at 90. So, we need to plan for 90 or 95. Shawn: And if you’ve got a bunch of relatives and grandparents and other people who lived to age 100, well. Bob: Go to your family graveyard, you’ll see it. Shawn: Yeah. You should probably plan for 100 then. Bob: I went to my family graveyard. I’ve been on both my mom’s and my dad’s side. And man, we live a long time. We go to 85 or 90. Shawn: Just can’t get rid of you. Right, Bob? Y’all just keep on going. Bob: My family goes back in Texas to 1830 and we’ve got these, we go back to our grave sight, it’s called Hornsby’s Bend in Austin. And you’ll see these graves from 1850, 1860. It’s amazing. And you’ll see their age and yeah, they lived up there even back then when the life expectancy was low. Shawn: Especially back then. Bob: Yeah. That was a long, long time. So, how is your pension and all that going to come into play. So, that’s the first life event. The second life event. Go ahead. And you see it listed there. Shawn: A death in the family. So something with this is how will the life insurance proceeds be handled? Restructuring family finances? I mean, there’s a lot to think about when there’s a death in the family. Bob: You notice one thing I have here under my point, Shawn, is that the amount that you’re getting for life insurance should be kept highly confidential. I’m sorry to say this, but family members, if they know, and I’ve seen this happen, oh, it’s a sad thing too, where I remember one of our ladies that lost her husband in their younger years and there was an over a million dollar life insurance policy and she told a few of her family members and they start coming out of the woodwork about how they need money. And I was like, oh my goodness, so she should not have shared that. That needs to be, keep that confidential, even keep that probably from the children. And then, let’s look at the income that’s needed to, that’s gonna need to be replaced in the absence of possibly the breadwinner, if that was the breadwinner that passed away. Shawn: Okay. Now, one thing that you could use as a positive though, is making sure your spouse knows how much life insurance you have, because that’s a good incentive for you to not argue with your spouse and to keep that good relationship. You don’t want it to be tempting or anything. Bob: And enough life insurance, more times than not, we see somebody thinks, well, my $250,000 is adequate for what I need or my $500,000 policy, and the breadwinner’s making $100,000 a year. You need a lot more coverage than that. So, we got so many of these to cover and let’s go into the third one. Shawn: Sure. So the third one is divorce, whether it’s before a divorce occurs, like maybe you’re in the proceedings for that as well as after the divorce has finalized. There’s a lot of things to think about. Bob: We’re working with an individual, and it was from a divorce. And really, I wish so much so that I had been able to meet with her before the divorce because the settlement that she got from the divorce and the lifestyle that she was used to living, there’s no doubt that his attorney took advantage of her, really took advantage of her and now she’s got to really readjust her lifestyle. And and she was married to this man for over 40 years, so are you receiving enough? It’s the bottom line. And enough to replace the lost income and how are you going to handle that settlement? And we’ll definitely work with your attorney and bring the numbers to the screen where you can see them and everybody can see these numbers that this is not gonna work out. There needs to be more here or maybe it’s too much in some cases as well. So, but more times than not, I kind of end up helping the ladies with this. Well, more so than the men. Shawn: It’s just like the retirement or the death in the family. That you might think, oh, this is a lot of money, but the reality is that if there’s a certain amount of income you’re needing per year, well how many years potentially are you needing that income? Because that drastically changes that lump sum amount. Bob: So it does, it does. All right. This is fourth one. Shawn: Number four, new marriage. Bob: Yep. And, you know this new marriage. When I say new marriage, it might be the first marriage or it might be a second marriage because of the death of a spouse or a divorce, but now we’ve got to plan for two instead of one. The question “is it the second marriage”, there’s a lot of issues in the second marriage, especially if both have children from the first marriage and how that’s going to be structured. Because there’s always that… if like if Rachael were to pass away and I were to get remarried and we both had children, I wanna make sure that the assets that when Rachael and I were both married that those assets would go to my children, not to the children of the person I would marry. Shawn: And vice versa. Bob: And vice versa. Exactly. Shawn: Yeah. If you were are newly married because your spouse passed away and your new spouse also had children from that. Bob: That’s what I meant. Yeah. Shawn: Exactly. It’s like, well then they kind of have the same things. Like they have assets, right? Bob: Yeah. So that can be structured through an estate planning attorney and we know how to advise you to help you with that. The second thing is financial goals. When you have two people come together, they have different financial goals, and we need to get those goals to where those goals align with each other. Shawn: Well, and the other thing too, Bob, is you have people who get remarried and usually each person already has someone that has kind of been there for their financial advisor. And so, when you get married there’s a good chance that you’re gonna fire one advisor and you’re gonna keep the other one. It’s just something to think about, you know? It it’s not like nothing changes. It’s like you said, “Two becoming one.” Well, it doesn’t really make sense to have two separate financial advisors. At the very least, you need one that’s like your primary advisor. Maybe you have another one, you get a second opinion like a doctor. Bob: Well, but like I said here, my point that I have, too, Shawn is I’ve seen more times than not, I’ve served the husband and the wife for 20 years. The husband passes away, the wife gets remarried within the next two years and once she gets remarried, that new man, it’s kind of an ego thing here, that man’s like, we’re not gonna use that financial advisor that you and your husband used. Shawn: We’re gonna use the one that I’ve picked. Bob: I’ve got. Exactly. I see that. So there’s a lot of ego involved there, especially with us men. I’m a man, so I’m gonna say it. Shawn: Are you saying we sometimes have an ego problem? Bob: Oh yep. We do, especially when it comes to finances. I know how to do it better. So, that needs to, it’s something that’s a life event. That’s a major life event. The fifth life event is a disability or a major illness. And when this comes along, you definitely need to get with your financial advisor or planner look at how this is going to affect it. Is there gonna be a loss of income for a while? You remember when Rachael got cancer, and thank goodness we had very good disability on Rachael and I. I didn’t need to collect any disability because I was not disabled, but she was for a couple of months and that loss of income that she was making, because she was working with the firm then, kicked in. I’m glad that we had the disability and it definitely helped us between that and our health insurance and then Christian Healthcare Ministries covered the deductible. We were out no money, at all. Shawn: You know that disability insurance or that for loss of income from maybe even just a temporary illness, like a major illness, that is definitely one of the most common things that we have seen over the years is that people, they’ll have life insurance, but if you’ve got life insurance and you don’t have disability, you’re far more likely during your lifetime to need some sort of disability or like a major illness income replacement insurance than you are life insurance. Because as I’m sure you’re aware, Bob, you only need life insurance once. Bob: Yeah. Shawn: But you might need the disability insurance more than once. So it’s very important. Bob: All right, so this is gonna take us up to our last one for today. So we’re covering six for today. Next week, we’ll cover six more of these major life events that really you need financial advice or planning for. This last one is, and it’s a very important one. We’re ending up probably the last one is the biggest one is before any large purchases are done like a new home, a second home, an investment property, an expensive vehicle. Vehicles today can easily run $50,000 – a boat, a RV, or an airplane. I’ve even seen and had a couple clients purchase airplanes. Shawn: And even the small airplanes are expensive. Bob: Exactly. So can you afford this? Can your financial plan afford that new boat? Can you afford that second home? What’s gonna be the long term cost of that? And will there be a loss of return on the dollars withdrawn? And Shawn one of them… Shawn: The opportunity costs. Bob: Yeah. Well one of my things is I never like to put money in anything that’s not gonna be worth more money later. And so if you… Shawn: Sometimes you do it, though, but I think you’re… Bob: Very seldom do I do that. Shawn: You told me a story one time, because I wasn’t here at the time, but you had a client that wanted to take like the whole family, so it’s like themselves, their kids, and the grandkids on this big cruise, right. I think it was $15,000+ dollars. It was a pretty, pretty good amount when you got a whole bunch of people. And what’s really great in a situation like this is, even if it’s something like that, you can plug that information in. Like we use e-money, one of our last, our previous episodes was one on e-money. But basically, you plug that information in, and I believe at the time, just based on how long their life expectancy was to consider already in retirement, that $15,000 was technically a $60,000 opportunity cost. Bob: That’s right. That’s correct. Shawn: But once you plug the numbers in, they were able to see that, oh, even with that being the $60,000 opportunity cost, they were still well within where they needed to be between now and age 90. So this is just one of those things where even if it isn’t something that is going to be worth more later, at least knowing, hey, is this going to throw us off on our projections and on like, on our targets and our goals? Bob: So I would say go back and listen to that podcast we did, what was it about four or five weeks ago, on interactive financial planning and that points to that. So just be very, very careful about taking money outta your financial plan. That’s going to really relate to. You’re gonna have less dollars. It’s gonna be worth a lot less. Now, a second home or an investment is maybe a different story that could be worth more. Shawn: That should go up in value. Bob: So that’s gonna do it today for the first six life events. Next week, we’ll come back with part two as we cover these 12 life events that require financial advice and planning. If you know anyone that’s about to go through one of these life events that we mentioned today, retirement, death in the family, well, we don’t know that, but if they… Shawn: Or this just happened. Bob: Yeah. But just happened – divorce, new marriage, disability, or major purchase, feel free to give us a call. Have them give us a call or they can text our number at (830) 609-6986 or visit us on our website at www.christianfinancialadvisors.com. Any last thoughts, Shawn? Shawn: No, I think that about does it. God bless, and thank you again as always for joining us. Bye-bye. [CONCLUSION] That’s all for now. We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986. [DISCLOSURES] Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors®, a registered investment advisor registered with the SEC. Registration as an investment advisor does not imply a certain level of skill or training. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Shawn Peters, and their guests. Bob and Shawn do not provide tax advice and encourage you to seek guidance from a tax professional. 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