Dick Duff: Retirement Breakthrough (Part 1)

Dick Duff joins Coach Pete and Peter Richon to discuss Retirement Breakthrough. In this February 2011 interview, they examine retirement income, investment risk, and strategies for planning through a changing economy. Call 800-661-7383 or text PLAN to 600-700. Transcript Automatically transcribed from this episode; timestamps are approximate. 00:00 And welcome back into The Financial Safari, your weekly show aimed at educating you about your money, about your finances, about your financial decision making. Peter Rashan here, along with Coach Pete D’Arruda. And we have another published financial author here on the program with us yet again, Coach Pete. It is Dick Duff, and he is author, most recently authored, Retirement Breakthrough. And this talks about basically investing in our new economy here and what people are trying to do or what they should be doing in order to have a successful retirement. Yeah, and Dick Duff is a licensed attorney and certified life underwriter. Folks, he is an expert in the field, and he's going to go over some of the strategies he's seen that works and, more importantly, other ones that don't work. Dick, welcome to the show. I'm glad to be here. Well, before we get going, Dick, I want to mention the fact that this book, Retirement Breakthrough, is available at your local bookstores, folks. 00:49 Or you can go online to retirementbreakthroughnow.com and pick up a copy free of shipping there as well. But, Dick, tell us about Retirement Breakthrough. What motivated you to write this book? Well, it used to be in retirement that there was first some Social Security, and then next there was a pension plan at work. And finally, if you had any money left, you usually lived off the interest and passed the capital to family as a legacy. And that's the way it used to be. So what is it now, Dick? Well, there isn't so much income coming in. Social Security is shaky, and there may not be much capital left to live off of. So we've gotten rid of the pension, we're maybe getting rid of Social Security, and we don't have any money left. I mean, that's why there's a huge focus on retirement income. And if there isn't a huge focus, believe me, there's going to be. 01:35 Well, what is the breakthrough? What do people need to be thinking about now, as opposed to 20, 30 years ago when they're planning for retirement? Is there a way to compensate for the fact that Social Security is in danger and pensions have basically gone away? Well, the trick is to change your thinking, and it's very difficult to do that. Change thinking from building a fund that you may need someday and keeping it there and living off one little interest that's being paid, and learning how to amortize, liquidate, or actually spend your money down to zero if you need to, and do it very, very effectively because you need maximum bang for the buck. When you get right down to it, the choices, there are two basic ways to look at this. You buy an annuity, a payout annuity, one that pays an income, and when people look at that, they think, don't they lose their money if they die, and aren't these expensive? 02:24 I think that's some of the reactions that people have, but on the way to learning about these, payout. And then the second possibility would be equities somehow that can be an inflation hedge, but they aren't built to pay a very good income. Of course, you can lose everything in a market crash. So those are the two choices, and we really need to study what makes up a good income and how to keep it there for maybe 30 or 40 years in retirement. A big job. Well, Dick, don't people need to be very, very careful when considering annuities, because are there not some annuities out there that are very expensive when it comes to the fees, and weren't there in the past, traditionally, some annuities out there that you did lose money if you passed away too early? Well, I think all of that and more. I mean, when I talk about retirement, or have a book signing, or just one-on-one with someone, 03:13 or just discussing it with a friend, I find that most people want safety. I mean, you mentioned some of these, and they don't want an expensive plan, so you mentioned that. They want simplicity, guarantees, cost containment, and an income they cannot live. That's probably the most important thing of all, an income they cannot live, because they think they're going to live, we all do, maybe until we're 105. And I'm seeing some of that now in my bridge tournaments. I play a lot of bridge in tournaments. These people that are sitting there, they look younger every day, but some of them are 95, and they're growing strong. Still sharp. So when you think about it, they also want a tax advantage. They want some protection from creditors and predators, like a Ponzi person that might show up in the system, and they want an inflation hedge, they want some personal control, 04:01 they want a legacy for family, they want it all. But they don't know how to look at their assets. I mean, we aren't accustomed to looking, I say they, at assets for life. Well, Dick, how does one, and I call it future-proofing their income strategy, how does one future-proof their income strategy, making sure they have guaranteed lifetime income, an individual plan for themselves that they never have to worry about? What does someone need to do? What are the steps they need to take? Well, again, it's thinking about income and not that principal or that money in the bank that pays 1% or the money in the market that you want to leave to somebody someday. It's learning how to spend your money. And just to give you one idea, you can buy an income for any amount of money that you want right now, just an income. You have $25,000 that's a bonus or something like that, 04:50 and you send it forward with an insurance company, and maybe it commences that income begins when you're 65 or 70, and maybe it's $417 a month, or maybe it's more. I don't know, but it's an income. So there you go. I mean, you just forget about it, okay? You can't touch this income. You can't touch the money. So you recoil because, oh, I can't get my money back. Well, no, the deal is that you get an income, but that's the good news. You're not going to touch it. Nobody's going to get it if you're sued, if there's a foreclosure, or you run over the neighbor's dog. And someone throws a lawsuit at you. You just bought yourself an income that basically you can't touch, nor can anybody else, until you reach that date. Again, protected from creditors, predators, and government gone wild. Much is possible. 05:36 That's the trick. The system does protect old-time incomes. It goes back to the hundreds. I mean, the 1800s in some cases, maybe the early 1900s, that incomes are protected. They're blessed. They're for retirement. They're for you. Well, capital is an easy mark today. Incomes aren't so easy. Each state is a little different here, and that's why working with a planner is very, very important. Yeah, and income planning, Dick, is very, very important, I think, to look at what you have now, and more importantly, look at how much you can get if you put it into what we call the money wheel accounts, the accounts that kick out a yearly income for the rest of your life. And, folks, if you're interested in finding out how much you can get income-wise, give a call right now to 800-661-7383. 06:22 Again, 800-661-7383. And, Dick, why does Walt... Well, they hate the idea of an income because the capital is no longer available for management fees. I mean, this is a fact. And, you know, insurance agents alike tend to want to view monies that are around somewhere as available at the right time. It's good thinking, but they view it as available for another product and maybe another commission. When the money goes into an income plan that's built on permanent, the money is probably not available for management fees or anything else, and therefore it's gone from the advisor, okay? Yeah, there seems to be a conflict of interest there, as in you will get to keep the interest you earn instead of paying it to Wall Street. 07:11 Well, or an advisor indirectly. You know, there always are commissions, there are fees. Everybody's entitled to give the advice to being paid. I mean, that's their passion. That's what they do. They understand the products. They work on tax planning edges that can improve everything. And they want to help people keep it from the system, if you will, from... I mean, John Elway in Denver here, where I live, lost... How much did he lose? $15 million to a Ponzi buddy of his. We featured that on our Brokers Behaving Badly recently. We have a segment each week, Brokers Behaving Badly, and that was on that segment. Yeah, because people... John Elway basically put too much trust in someone he should not have trusted. Yeah, I know you fight this battle every day where you're... That hurts everybody. 07:57 That hurts John Elway, it hurts the advisor, it hurts the system. But these are... This is a predator, if you will. That's a predator. And I even look at my... Where I have my money and say, you know, are these people really there? Well, it hurts the average person, too, because they don't know where to turn to for reliable advice. Now, I read a review of the book back in 2010, and Dick, the review said that you had laid out the new financial rules for 2010 and beyond, and it really talked about the different definitions nowadays as opposed to back maybe 10 years ago for diversity and asset allocation. And you lay out new rules for diversity and asset allocation. Can you talk to us a little bit about that? Well, I'm not sure they're new rules. I appreciate that. But I just advocate that because people want guarantees, safety, security, and predictability, 08:49 that the first step is not whether annuities are better than mutual funds or vice versa. The first step is an income that you can't outlive that forms a base core retirement income that's going to be there no matter what. I mean, that's different for everyone. I mean, some people might want it all that way. Others might say, yeah, give me $2,000 a month or $1,000 a month that I know I'm going to have. And then we'll go from there, and I say, fine. Maybe it's only $500 a month or whatever it is. Then after that, as I tell people and laugh, you're free to lose it all if you want. I mean, I hope that's not going to happen, but I have done that myself. I have income from six different payout annuities, and I know exactly what I'm going to have. And if there's inflation at 100%, you know, double inflation, I'll probably handle that because I'll put one piece of bread on a sandwich instead of two. 09:40 Well, Dick, you believe in the strategy that I haven't followed for a long time, and it comes from way back in the day. But it is called, I call it the core and explore. And there are only a handful of financial experts like you and I out there who believe in safe money first. And then if you have extra money, then you put that money at risk. But when we're talking about retirement plans, don't you believe putting money in a safe place first before you put money at risk? Absolutely, without question. It's not the other way around where you become a day trader and then after you get all the money, you put it in the bank. That's not the way it works. The income is the key, the base, the core that's paid to the bank account every single month. It may pay your light bill. It may pay the MasterCard automatically, which is wonderful stuff. 10:26 And you, the retiree or me, then can go play with the grandkids, play bridge, play golf, and play tennis. Because you know that income is always going to be there, not at the whim of the stock market, as we recently heard in the State of the Union address. Dick, we've got to take a quick break. But if folks would like to see what type of income they could guarantee for themselves, they're welcome to pick up the phone and call 800-661-7383. 800-661-7383 to set up that core of your core and explore portfolio. Folks, you need to do that. Think about that income first and foremost so you know you always have money coming in that you can never outlive. Again, that's going to be heard more and more here in the coming years, Coach Pete, we believe, certainly. And if you would like to get ahead of the curve and know that now today, what you could look at into the future for your guaranteed income, folks, pick up the phone and call 800-661-7383. 11:20 Quick break. We'll be back here with more on the Financial Safari. We'll be back here with more on the Financial Safari. See omnystudio.com/listener for privacy information.