Title: "The Great American Retirement Myth" with author Jim Capuano Show: Actionable Intelligence Alert (John Polomny's YouTube channel) — Polomny hosting Guest: Jim Capuano, president of the Integrity Life Brokerage; author of the upcoming book "The Great American Retirement Myth" (retirementmythbook.com) Date: 2026-08-13 URL: https://youtu.be/FV5YR8GuFi8 Length: 53:39 Note: Fillers (um/uh/you know) removed and stutters/false starts collapsed; wording otherwise verbatim, timestamps unchanged. Auto-transcript garbles left as spoken and mapped here rather than rewritten: "Irma" = IRMAA, "Jim Capuanu" = Jim Capuano, "John Pauly" = John Polomny, "adviserss" = advisors, "RAIA / RAAS / RAA" = RIA / RIAs, "coal" = COLA, "Charlie Mer" = Charlie Munger, "mom Donnie" = Mamdani. Personal-finance/retirement-planning episode (401k tax deferral, IRMAA, Roth conversions, annuities, cash value life insurance) — no securities discussed. =====
00:03 Hey guys, John Pauly here, Actionable Intelligence. Today we have a special guest, Jim Capuanu. He's with the Integrity Life Brokerage. He and I met via my channel. He reached out to me. He has an interesting book that's coming out, I think fairly soon. He'll talk about it more, called The Great American Retirement Myth.
00:26 And when I delved into some of his other interviews he's done, and he has a 20-page PDF introduction on the website for his upcoming book — it really shocked me. You guys know that I'm really big into understanding retirement, and when I got into this — and it's just the tip of the iceberg.
00:49 That's why we're having Jim on here. It really shocked me. So I think of how out of touch even I was on what's going on. So, Jim, welcome aboard. If you would just do a quick introduction and let's get started. Let's talk about that. >> Thank you. Thanks for having me. Yeah, my name is Jim Capuano.
01:11 I'm the president of the Integrity Life Brokerage and we are the firm that is kind of launching this brand called the Great American Retirement Myth. It is a collaborative of like-minded advisors all over the country who we've met through networking or introductions that have gone through the same changes in thought that myself and my partner have gone through and we've created this brand trying to re-educate people on how retirement in this country actually works.
01:45 and we want to deprogram them from the path that they were set on without ever asking the right questions. >> Okay. Outstanding. I think most people's view on this, or the average person, is I put my 288 a month into my 401k with employer sponsored 401k. They match. Everybody's worried about isn't 4% match 6%.
02:10 And that's probably the extent of the conversation. Can you give us more of like a 30,000 foot view of what are some of the pitfalls and the myths involved in just thinking simplistically about this? >> Yeah, absolutely. So, I think the best way to do it is kind of go through — this is really a seminar series.
02:30 We do these seminars all over. When I start a seminar, I like to start asking questions, getting people involved. So, I'll always start with the same four questions and they're: do you think taxes are going up or down? And everyone says they're going up. Do you think the cost of medical care or health care is going up or down? And everyone says it's going up.
02:52 Do you think the cost of goods and services are going up or down? And everyone says up. And then I ask, do you invest with the hopes that you have more money in the future than you have now? And the answer to that obviously is yes. Then I write three numbers on a whiteboard. 5, 15, and 20. And I can't take credit for this part of it.
03:13 I actually saw this at an AIG conference probably 15 years ago, and I was like, that makes perfect sense to me, so I stole it. So I tell everyone this is the simplest explanation of retirement you're ever going to get. Five is the amount of money you contribute. So that's your 2.
03:31 88 a month in your scenario. That's your contribution. Over the course of your working years, that $5 grows by $15. That's your 15. That's your growth. And when you retire, you take out your contribution and your growth. That's the 20. So 5, 15, 20. Contribution, growth, withdrawal. And I say, I know it's not that simple, but very, very high level.
03:57 Does that make sense to everybody? Everyone nods in agreement. Yeah, I guess that makes sense. So then I ask for a volunteer and I say, "Choose one of these numbers to pay tax on." And of course, every seminar I've ever done, the person chooses the five. They will obviously choose to pay tax on the lowest number.
04:15 Then I'll ask them to tell me the things that either they do or the average American does for retirement. And I'll have post-it notes. And as they're saying them, I'm writing them down. And the answers at every seminar are the same. 401k, IRA, non-qualified investments. I loop those together. They say other things, but non-qualified investments, social security, maybe a pension, CDs, home equity. That's it.
04:40 Those are what the answers are every single time. So, I write them down and I stick them up on the board. Then I ask the person that volunteered, "Take the Post-it note off of this side and match it to the five, the 15, or the 20. Match it to the number you get taxed on." and they can't do it, nor should they because they're not financial professionals.
05:02 They don't really understand the taxation and what each one is. So then I help them out. 401ks, IRAs, pension, social security, CDs, all those go at the 20. You get taxed on earned income, ordinary income; non-qualified, home equity, things like that. They go into the 15 bucket. And I move them all over.
05:24 And by the time the exercise is done, you see the five circled, but all the post-it notes are next to the 15 and the 20. And I ask the person, I say, "All right, well, you just told me 5 minutes ago that you wanted to pay tax at the five, but everything you're doing is in direct contrast to your tax preference. Why are you doing it?" And without fail, they always say, "It's what I'm told to do.
05:50 " That's the great American retirement myth. That's it right there. >> Yeah. And this kind of shocked me. When you're explaining this — we don't really have a whiteboard, but when you look at the — I in the PDF, it's kind of shown in there, illustrated. Or I've seen another presentation where you actually have like all the lines going and it's like, okay, what have I done here? What have I got myself into? >> Yeah.
06:19 And so I think that, like you said, people should — they have financial advisors, they have accounting professionals, they trust these people, but it seems like all the information is just based around just do what you're told to do, which makes sense to the average person.
06:38 Basically, most people think, well, you have to save for your retirement, you have to accumulate assets. One of the things that struck me is what you're doing here is almost inadvertently making the >> federal government your partner in this whether you like it or not. And again, we all know that taxes and things like this are going to be — a lot of this is you can't really avoid it completely, but there are things you can do to structure things such that you minimize this and it's all completely legal. I guess the
07:10 other thing that concerns me is the thought put into — as you retire, my own personal perspective, I retired — you have health insurance, but you're no longer covered, then eventually you have to transition to Medicare and Social Security and this is for many people a large portion of their thinking around their retirement and whether it'll be sufficient.
07:34 There's actually a lot of fear out there. So I don't know if you could talk some more about — it's not really worth talking about, I think, how we got here. It is what it is. But also maybe more around some of the ways that the federal government — I'm not saying that they've done this deliberately to cheat people, but they kind of — I used to have a view and I think you maybe saw this on some of my videos maybe we talked about, I have this negative view towards them or they're going to run out of money and all this stuff. your
08:02 arguments that you have made are kind of made my ears get pinned back. I was like, okay, they kind of do know what they're doing. They really have partnered themselves whether you like it or not with your 401k or IRA. So, I don't know if you could expand on some of that stuff. >> So, what we're looking at is, like everyone's heard social security and Medicare are going broke.
08:23 We've heard it for years and years and years. Don't count on your social security check. Social Security is going broke. I think that is only half true. Don't count on your Social Security check. Probably true. Social Security is not going broke and Medicare not going broke because the government pulls the levers to make sure that they can do what they need to to keep them funded.
08:45 That's actually how I got into this whole thing called the great American retirement myth. It's really based on this concept called Irma, which most Americans have never heard of. And scary enough, most financial professionals have no idea what it is. So what Irma is is a surcharge on your Medicare expense.
09:06 When you retire, unless you have qualified health insurance, you are forced to go on Medicare Part B to get your Social Security check. If you don't do it, they withhold your Social Security. So everyone does it. Obviously, you've paid into Social Security. I want my payment back.
09:27 All I have to do is get the health insurance from the government, which isn't a big deal because I need health insurance anyway. That's your one mandatory expense in retirement. What no one talks about though is the rate in which that is inflating at. It's going up an awful lot. Last year in New York, where I am, it went up over 9% from the previous year.
09:49 The federal government already told us it's going up by at least 7.2% for the foreseeable future. That's how they're recouping their losses because the more they charge you in Medicare, the less they have to pay you in social security. But on top of that is this thing called Irma. Irma is just a progressive tax.
10:08 The more you make in retirement, the lower the government subsidy goes and the higher your contribution goes. So if you make too much, you pay more for your Part B premium and your Part D premium. So, what people aren't realizing is everything you're doing in retirement is helping the government in two ways. You're building their savings account along with your savings account, but then when you take the money out, you're lowering your social security benefit because your Medicare is getting more expensive. And the worst part is you get
10:44 taxed on what your gross social security is, not what your net social security is. So, if I'm supposed to pay $22.60 in New York right now for my Part B and I'm in a bracket that's making me pay $600 a month, that's coming off of my social security check before I ever get it.
11:04 Never hits my account and I pay tax on it. All because of the way I saved. Nobody talks about this. And then there's this idea that people are like, "Well, don't worry, you're going to be in a lower tax bracket when you're retired." I think that's the most ridiculous thing I've heard. Notice they say tax bracket, not tax rate. Financial professionals will say you'll be in a lower bracket.
11:27 You don't care what bracket you're in. You care what your effective rate is. We're at historic lows when it comes to taxes right now. Where's the only place they're going to go? They're going to go up. So, does it matter if I'm at a lower bracket but a higher effective rate? It makes no sense to me. And the only way you're going to be at a lower bracket is if you make less money.
11:50 We're seeing inflation go through the roof. Who thinks that they're going to be able to live on less 20, 30 years from now than they're making right now? None of it makes sense anymore. Saving in your 401k in the '90s when we had really high taxes made sense. If you're taking the money out now, you made out like a bandit.
12:10 But now it's reversed. Yet no one changes. Everyone's doing the exact same thing because it's the wheel. You're plugged in. It's easy. Money comes out of your paycheck, goes into your 401k. Your accountant tells you April 13th, hey, you got two days to write a check to your IRA to reduce your tax burden, because your accountant's job is to help reduce your taxes today.
12:32 No one talks about what that's doing to you when you're retired, when you're more vulnerable, you have no ability to earn more income, and it's making your mandatory health expense higher and reducing what's most likely your only guaranteed source of income if you don't have a pension. That's how we got into the myth of it, and that's what the book goes into a lot.
12:55 >> Okay. So does this apply? When we're talking about this, I know people that, >> unfortunately, they didn't plan at all, or they have a small — I mean, pensions, forget about it. Very few people actually have pensions nowadays, unless they're government employee >> or firefighter or something.
13:21 But I know some people that their social security is their sole source. Does this apply across the board or is this more skewed to more high net worth people or is it just a matter where you're at? Some people could say — I saw, I was thinking, well, it's 202 or whatever and it goes to 600.
13:44 Well if my income's half a million dollars a year I don't really >> don't really care. you really care. But I think maybe if you move — I'm trying to find where the bulk of the meat of the people are and I think it does significantly matter to them where they live, because I know some people have accumulated — I don't know what you see, but I see people that like somewhere between maybe half a million or a million and a half in their 401k or maybe a little bit more, and then I can start thinking
14:13 like okay, well I can see how this is going to be a problem. And like you said, people don't — if you're running a 7.2% inflation rate a year on something or cost increases, you can put that into a compounding calculator, you're doubling cost every 10 years. Yeah.
14:34 So then the fact of the matter is like if you need some type of — actually people are living longer, if you get into assisted care situations and all these other things. >> You can really get yourself into a real mess here if you're not paying attention. So, I'm hesitant to — you can't really speak to people's situations, but what are some of the things that people do to kind of mitigate this, or what should be — if we've crossed the Rubicon into a new dynamic like you said, people that originally got into
15:05 these things — and this is not financial advice, I want to make the disclaimer, nobody can know anybody's individual situation, but I'm just talking generalities here. Some of the things, like even for myself who's fairly savvy, it's like okay, Roth conversion, what should I do? All these different things, plus and minus, it becomes like a part-time job, and if you're not really understanding what's going on. And then I'm hesitant — I've already been >> and I'm long-winded here — I've been interviewing some wealth advisors and
15:34 that's scary too because you're like, okay, if I go to my strip mall guy over here, vanilla, he's still selling the 60/40 thing and the retirement myth, if you will, probably doesn't even know what this conversation's even talking about. Has that been your experience? I know I threw a lot at you, but see what you can make out of these ingredients I threw at you — what are some of the big pitfalls or things people do to mitigate, or what are some of the potential things
16:06 that can be done? >> Yeah, so the people that it affects, let's go after that first. If you're dependent on your social security and that is the bulk of your retirement income, there is good news. That means you're already retired. Where we are right now isn't terrible, but it's getting worse every single year.
16:34 So 20, 30 years down the line, that's when it's going to be unobtainable. But if you're living on social security now, we're seeing the rising costs in Medicare. We're seeing the rising costs in Part D. We're seeing the rising cost in supplements. Even if you're not hitting Irma, your Social Security check just isn't growing the way it should.
16:55 It's not keeping up with inflation. There is this act called the Hold Harmless Act. And what the hold harmless act says: your social security benefit will not decrease if Part B increases outpace COLA. So if your social security only grows by three and Part B grows by five you're not going to lose that 2%.
17:19 You just stay flat basically is what it says. So I can tell you right now COLA is not 9% on social security. I think it's like 2.4% the last couple of years. So 9% — you're staying flat. But hold harmless only is applicable to Part B. It does not count to Part D and it doesn't matter for your supplements or Irma. So there is a very good chance that these people that are dependent on social security over the next couple of years can actually see their social security check decrease over time.
17:59 So it does affect them. The wealthy people that, like you said, nobody cares. That is the financial opinion right now. I talk to advisors all over the country and they have the same answer when I talk about it. It just means that we did good. We saved them a lot of money. They can afford it. They don't care. It's unavoidable.
18:19 They're all terrible answers. It is absolutely avoidable. You could have planned better. You don't have to be in Irma. It's optional to be in Irma. It just means that you didn't invest the right way. Not in the right things, not just the right way. It means we did a really good job. No, it means you did a really bad job because your job is to make them the most money they can put in their pocket.
18:40 Nobody cares about rates of return if you can't put it in your pocket. And then the other thing is, no one cares. They make so much money they don't care. Who decided they don't care, or did they tell you? Did you tell them by the way you're going to pay four times more than your neighbor for the exact same medical insurance, but you make too much money, you don't care, right? No, you never ask them that.
19:05 They're going to care. Nobody wants to give money back to the government. They don't have to. They've paid into Social Security already. So there are ways to avoid it. Certain people you can't avoid it. You're never getting out of it. Those people just have to plan better with what they do have. People that are approaching retirement — I have three groups.
19:26 I have the retired, pre-retirement, and income earners. If you're approaching retirement, you have to start looking at Roth conversions. That does not necessarily mean they're going to be right for you, but you have to ask the question and find somebody that gives you an accurate report to see if it's good for you.
19:45 Most of the time when I see somebody saying yes to a Roth conversion, say, "Yeah, you should do a Roth conversion," it means they're not managing your money. They're thinking, "Well, if I can talk this person into a Roth conversion when their guy doesn't want them to do it, I'll at least get some of, 70% of what they have.
20:04 " then the person who has it says, "No, you don't want to do a Roth conversion," because they don't want to see their asset base go down. Roth conversions aren't always the answer. They can go wrong very, very quickly because if you do it too close to going on Medicare, it's a 2-year look back for Irma.
20:18 So, if you do a Roth conversion at 66 and you go on Medicare at 67, you're going to be in Irma for the next two years. And I've seen that happen. They didn't take that into consideration when they did it. Roth conversions don't always save you money in the end. So, you have to get an accurate report, but it's a question you should ask.
20:39 Annuities are very, very frowned upon in the financial industry. Annuities are important for two reasons. One, they are the only product a person can buy that can give you guaranteed lifetime income. Only product. So, as I'm telling you your social security check is going to go down, you can have this product that will then give you guaranteed lifetime income to bump you back up. And then they'll say, "Well, they're not tax efficient because they're taxed as ordinary income.
21:05 " That's true. They are. But if it's qualified money, it doesn't matter. It's taxed the exact same way. And if it's non-qualified, they have these things called exclusion ratios where only a portion of it is taxable. So, if you get one with a good exclusion ratio, you could actually pay less in ordinary income than you do on capital gains.
21:24 And then for the younger generation, the income earner, don't take the deduction now. Contribute to your Roth. Don't do the 401k, do the Roth 401k. Don't do the IRA, do the Roth IRA. If you're making too much money to do the Roth IRA and you don't have the option for a Roth 401k, here's something that really drives financial advisors crazy.
21:46 You have to look at cash value life insurance. Cash value life insurance operates just like a Roth. You put after tax dollars in, it grows tax deferred. And if you take it out correctly — that's the big thing, if it's taken out correctly — it is tax-free. It has no impact on your Medicare. It has no impact on your Social Security. It has no impact on your tax rate.
22:10 So, think about somebody in their 30s that's just starting to save for retirement. They put 100% of their proceeds in Roth, the remaining money in cash value life insurance, some money in non-qualified, and that's it. When they're done, they're going to have tax on their social security, either 50 or 85%. And they're going to have tax on the capital gains on the non-qualified if they take it out.
22:39 If not, it's just going to be whatever's transferred within the account. They could make a million dollars a year on the Roth and the life insurance and pay base Medicare. Meanwhile, their neighbor could be making $250,000 a year on their 401k and be paying the second bracket of Irma. It's not about what you save in. I'm not saying buy this stock or that stock, buy this mutual fund or that mutual fund.
23:03 That doesn't matter. That's what the financial advisor does. Let them pick the platform. You have to figure out how to avoid the tax. >> Yeah, indeed. So, spinning back a little bit, I guess one of the things that's probably consistent across the board is you can't just be ignoring this, because the decision to ignore that is a decision. It can be a costly one.
23:30 You've thrown a lot of information out and I encourage people to go — and we'll have a link to it — and when your book comes out, and just even that 25-page preview is outstanding. I guess one of the main things to say is you need to have a financial advisor that actually kind of understands these things, and people say, well I don't need a financial advisor.
23:57 or I don't have enough assets. I made a mistake like that before when I was younger with business and not structuring things possibly, it cost me a lot — a big opportunity cost and taxes that could have been >> managed better. Let's just leave it at that. And so I think it is important, because if you're consistent and you do well.
24:25 I encourage people, familiarize yourself with a compounding calculator. They're online. Like how much money I put in — I'm just talking about for returns. You could end up with substantial amount of money and if you pre-plan properly you're going to be in a better place. It doesn't matter whether I like the federal government or I like the tax rates or I agree with Mamdani or I like Barack Obama or Don.
24:49 This is irrelevant. This is: well, how are the rules set up in this particular situation and how do I maximize it for my situation? That's not tax avoidant. It's not tax evasion. It's avoidance by using the rules and the regulations and setting things up and planning properly. I think if you try to do it on your own, you might be a little — and this is not selling anything.
25:11 This is just, I think, reasonable advice. Wouldn't you agree? Find somebody that understands this, that gets it, and understand that when you're talking to someone else, everybody's self-interested. Okay? Like you said, a lot of times if you're just an Edward Jones 60/40 guy, there's certain products you can push that have good fees, or people like to focus on returns.
25:34 Hey, I average my clients 18% a year and we have very little drawdowns. Well, that's terrific, but how are we doing that in a tax efficient manner? Because large numbers start coming into play if that's accurate, you know what I mean? At some point down the line. So, would that be a good >> plan of action for people? Because I ran into this already and it's like all of a sudden you get in your retirement and you're like, okay, I'm reading things, a Roth conversion, but how do you determine — you have to take some
26:05 self-responsibility, but what's the appropriate — and how can you put some checks in there if you're interviewing someone to help you with this or trying to pick somebody, because this is pretty complicated? just absolutely yeah so >> and it's a tough situation to be in because again it's like when you go to a doctor, if you get diagnosed with something and you're listening to a doctor, you just have to take their advice because they clearly know more than you do.
26:30 The difference between the medical field and the financial field is to become a doctor, you have to go through some pretty intense training, schooling, education, all of that. To be a financial advisor, you got to pass a couple tests. I go into my book about how when I first got my license, I was sitting at people's coffee tables at night trying to convince them to give me their retirement as a 24-year-old kid.
26:54 And I had no idea what I was doing. Like, "Oh, just give me your retirement. I'll get you a great rate of return." And I didn't know the difference between an IRA and an annuity. I thought they were the same thing. But I passed the test. My card said I was a financial advisor. So, I think when people are interviewing advisors, there's a couple of very important rules I like to stick to.
27:15 Ask them about different concepts and if they can speak intelligently about all of them, I like that advisor. Now, they don't have to be pro all of them, but they should be able to be speaking intelligently about them. Ask them about Irma. If they don't know what it is, that's a problem. That's a red flag. It's a big, big cost coming your way.
27:38 Ask them about annuities. They don't have to like annuities, but they should be able to explain to you the pros and the cons and tell them why they don't like it for you. Ask them about cash value life insurance. They don't have to like it, but if they can't explain to you how it works, give you some pros and cons and say, "This is why it doesn't make sense for you," that's not a good financial advisor.
28:00 That's kind of my rule. And it doesn't all have to be one person. You don't have to have one person. You can have the person that manages your assets. This is my AUM person, my assets under management person. This is my non-qualified guy. At the same time, I like to diversify. So, I'm going to go find somebody that specializes in life insurance.
28:23 Now, really be aware of these guys because this is the market I deal in all over the country. Get a look at a couple of illustrations and compare them because there's ways to kind of cook those books to make them look way better than they're going to be. So although I'm saying life insurance is a very powerful tool, be very wary of it before you buy it.
28:44 Ask a lot of questions, have a couple of eyes on it. Make sure that the person — do your due diligence on the person that's selling it to you. But you can have a life insurance person, you can have an annuity person, you can have a wealth advisor and then make sure that they talk to each other, because if the life insurance is doing well and your AUM has a down year — because the life insurance has a protection on it and we have a down dip 10 years — that wealth advisor should be able to call up your life insurance guy and say, "Hey,
29:15 we had a 10% dip this year. I'd really like to not have to take money out of this account and let it recoup, because if we have to take the 4% out now I'm down 14% in my account this year. Can we take a little bit extra out of the life insurance?" That's a perfectly legitimate conversation for those two people to be having and that's benefiting you.
29:35 So find people that can do that. They should be working for you. You pay them to do it. Now you might have to facilitate that. That's okay, too. But that's kind of my thing: you don't pick one guy to do everything. Have a team. We go about this all the time. As you can imagine, I've pissed off a lot of financial people in the country.
29:55 Actually, the way I got into this, I was at a financial planners association dinner. It was like a whole day of CE credits and then a dinner and all the presenters, and I had a table. I paid a few thousand dollars to have my company there and it was just not a great thing.
30:13 people really weren't there and interested in learning anything. They were just there for the CE credits, the open bar and the steak. And at the end of the day, I was like, "God, what a waste of time and money, and I'm miserable. I'm having a drink." And I hear a guy doing a presentation. He's like, "You're all criminals.
30:29 You should all lose your license because you're all screwing your clients over." Like, who is this guy? And he went on this whole thing about Irma. And it was the first time I heard it. I'd been in the industry for almost 16 years at that point. Never heard this. No one's ever told me that this existed before. So now I hear this and I'm with an advisor that I work with, excellent advisor, good guy.
30:52 And he looks at me at the end of the presentation, he goes, "Wow, I should probably sell more cash value life insurance." And I said, "I've been telling you that for 13 years at this point." And he says, "Yeah, but you do this for a living and he doesn't." That guy ended up being my partner. His name is Dan McGrath.
31:09 He is like the foremost expert on Irma in the country. He has a best-selling book called What You Don't Know About Retirement Will Hurt You. He's part of my team now. He's my partner in this whole thing. We've built this together. And that's how I went down the rabbit hole. This was probably going on five years ago now.
31:28 And from there, it's my business — what have I been doing? I'm in there selling product to people. I'm not solving anything. Then we completely changed our approach and this was kind of the thing and it bloomed from Irma to the whole financial industry.
31:49 Tax deferral, assets under management, all of the things that really make no sense, and how people who work on AUM are working to build their book of business to sell it in retirement. That's why they don't like certain products like life insurance and annuities. Even if it's good for you it's not good for them.
32:06 I'm not saying that for everybody, but there are people out there that act like that. So we have a team where we're out there. There's probably 10 of us across the country now that are really invested in this. So we're not the only 10. There are plenty of people that are buying into this now, but 10 people in our group.
32:23 And we've made like a solid commitment to be there to answer questions for people, but most importantly is people have to know the questions to ask. And that's what we're trying to get out there. And that's what my book is all about. Like here's a snapshot of what's going on. I can only write so much because you don't want to read any more than I'm writing.
32:44 But this should be enough for you to ask the questions that are going to change the way your retirement goes. >> Yeah. And I think it's important because like you said — you mentioned this earlier and I heard you mention this before and I think it's also mentioned — I learned this also, the older that you get you get to a certain point and that's it.
33:06 What you earned is what you earned. And that's unfortunate, because I like the analogy that you used with doctors. You can't have blind faith in any professional. You have to get an opinion, you have to judge the person, you have to interview, you have to spend some time. You just don't randomly go in, they assign some random person and this guy says that I need a biopsy. You get a second opinion.
33:37 You have to take charge. You ultimately are the boss. You have to make some judgments. And I think if all you're getting is 1,100 a month in social security, you don't have any assets, well, this probably doesn't apply to you. But if you've accumulated some things, the challenges that are coming up, you have to be engaged.
33:55 I'm not saying you turn it into a part-time job because no one's going to do that. But I think to your point, you're not going to get a second bat at it. If you screw it up, you're just going to have to pay. And the IRS or whoever the tax authority is is just going to make you pay.
34:11 And so they're not going to care. Say, "Well, I didn't know." Well, I'm sorry. You should have had a financial advisor. I don't know what to tell you. >> Yeah. I'll tell you that I will give the government credit in this. They're not keeping it a secret. >> They're putting the information out there.
34:25 It's just nobody on our side is telling the public about it. That's what we're trying to do. And the worst part, to really hammer home a point you made: when you retire, it's not really going to hurt you in the 60s. It's going to kind of hurt in the 70s. It's really going to hurt you in your 80s, your most vulnerable years, and into your 90s when you have no opportunity to make more money.
34:54 So that goes back to the deferring of taxes. Like you think you're kicking the can down the road. You're choosing to pay the bill when you're older, more vulnerable, and have no ability to make more money, than paying it now while you're working, while you're able to make more money. When you know what the tax rate is, it makes no sense.
35:17 And when I explain it to people that way, they're like, "You're right. Why would I ever do this?" I said, "I don't know. You're the one in a 401k." I never tell them it's a 401k. I explain it that way. They go, "Who the hell would do that?" I said, "Do you have a 401k?" They said, "Yeah, of course.
35:28 " I said, you chose to do it. That's exactly what a 401k is. But there's a reason companies have them. When you contribute to your 401k and they give you the employee match, they don't have to pay FICA on that money. It benefits a company to have a 401k. They don't get that with the Roth. >> I saw that.
35:50 I think it was interesting. I've seen that in my own experience as a manager and as a worker. I remember we had an amazing match and we had all these young guys working for me in this plant and they called down from HR. This is the largest utility in the US.
36:06 They're like, "None of your guys are enrolled in this 401k. You need to talk to them." I said, "I'm not their financial advisor. They're full grown men. I don't care what they do. It's their business." Well, the company — we used to have, when I first started, I barely missed the legacy pension plan by, they used to calculate it and I was all pissed off.
36:23 now I got to do all this work and manage this stuff, which I took an interest in, but I noticed that none of my co-workers did, none of these guys did, and it was a little bit shocking to me. And I think that stuck with me with what you just said: your ability to correct these things is diminishing over time, not increasing. You can say, if you're in your 20s or 30s you can always recover, if you go back, if you take your shot on a business or something and it didn't work — I'm still 27, I'll go back on tools and get things going. But
36:53 when you're — and I could tell people, I deal with people, friends and family that are in their 80s, become more simple and childlike over time. Not >> Yeah. >> I know Warren Buffett's still running around at 97, but you're not going to be like that, more than likely. So true. >> So anyway, I don't know what else to cover if you have some other things.
37:16 I'm kind of interested when this book comes out. I'd also like you to send me a link and I'll put it in the show notes for Dan McGrath, your partner's book. I think that's interesting. I think that folks should get engaged in this and I'm definitely interested. Now, one thing I will ask and I don't mean to offend.
37:31 I asked you this before, we had some offline conversation. >> I do know high net worth people and other people that had utilized insurance in various ways and I always thought it was for high net worth people and how they do it. When they were explaining it to me I was like, this is not for me, I'm just a regular person. But there seems to be — and I think you mentioned it too with some of the people you run into in the financial sector, that's why I think you got to bounce things back and forth and find
37:57 the right people to solve the problem, not just add to somebody's AUM. People have some stigmatization around insurance. I know that. okay absolutely even if you just talk about regular life insurance for a policy. I was fortunate that I fall into some cash value life insurance when I was very young.
38:19 My premiums are very low and I've used it almost as a — I mentioned to you I had that book How to Become Your Own Banker. I've used cash value life insurance to basically finance, invest, all kinds of stuff. It worked out pretty good for me and I accidentally fell into it. There's a stigmatization. People say, "Well, just get a term policy.
38:37 " We talked about how most cash value people don't even realize they have all this built-up cash value a lot of times. I think I saw a report 80% of the things never — people just >> they never think — pays out in death benefits or the company Exactly. >> There's definitely a stigma and I'll be honest, it's not unwarranted.
39:01 Listen, there are some dog policies out there, but generally speaking, these companies know what they're doing. They're pretty good policies, whether it's whole life, index UL, variable UL, whatever the chassis is, they're good, strong policies for the most part. Now, inside of the policy, there's ways to manipulate it to do different things.
39:20 You can make it more cash value heavy, make it more guaranteed heavy, more death benefit, less premium. There are always ways to do it. So I always say the biggest problem with cash value life insurance is the human factor. It's either the human that's buying it or the human that's selling it.
39:38 When it goes wrong 90% of the time it's one of those two humans' fault, not the policy's. So like you had mentioned, be your own bank. Full disclosure, I absolutely despise that term. Just the term, not the concept. The concept is spot on. It makes perfect sense. And I'll tell you why I hate the term. Because if you take a loan from a bank to buy something and you don't pay the bank back the loan, what happens to the thing you purchased? >> They take it back.
40:10 >> Bank takes it. Yeah. >> Yeah. If you're the bank and I take a $50,000 loan from my cash value life insurance policy and I say instead of paying the bank $800 a month for my car, I'm going to pay myself $800 a month for the car. Great idea. That's a great concept. But if you don't pay the bank, they take your car.
40:30 If I'm having a tough month, I still have to make that payment. If I'm the bank and all of a sudden I'm like, I had to put a new roof on the house, why have that happened? I just don't have it this month. I'm going to skip that payment. You can do that. You're not repoing the car from yourself.
40:48 It just gets added onto the loan. Now, a couple of that happens more and more and more and now this loan that you were supposed to have paid back in 10 years is now 15 years old and it's tripled and then they turn around and go, "Look at this. This policy blew up on me.
41:05 Cash value life insurance stinks." No, it doesn't stink. It did exactly what it was supposed to do. You didn't hold up your end of the bargain. It's the human aspect of the buyer. They either stop paying their premiums before they should, make a change to their premiums and don't tell the financial advisor, overloan the policy without checking, or don't pay back what they agreed to pay back.
41:24 You don't have to pay it back, but you have to see what's going to happen over time if you don't. Then there's the advisor side of it, and it's the world we live in. They get paid commission, and they get paid commission depending on how much money you put in and how the policy is designed. So there are numerous times that an advisor could have made the policy better but chose to make the policy better for themselves.
41:53 It's human factor. So the stigma absolutely is there. Do you have to be wary and know exactly what you're purchasing? Absolutely. Is it necessarily a product problem? In most instances absolutely not in my opinion. >> Yeah, that's kind of how I — I'm glad you clarified that. Because you're exactly right.
42:17 Again, it's more planning and knowing what you're doing. I want to go back to the financial advisor aspect real quick and ask you a question. I think we talked about this offline, but I'm just curious, like a financial advisor — just for people to understand motivations, and everybody's incentivized somehow. I'm a big Charlie Mer guy.
42:39 Try to understand people's incentives and that will give me some guidance on what they're trying to achieve. Not that they're trying to cheat me — everybody's incentivized somehow in their life, whatever they're doing. So for example, a financial advisor starts out young. They start getting clients.
42:59 People refer. They start building this book of business, I guess we'll call it. How do eventually they retire? They get to the point, I don't want to do this anymore. They have this book of business. >> How do they exit? Do they sell the book of business? How does that work? So they're incentivized to kind of keep the gas going and keep growing that book. >> Absolutely.
43:24 So when you have a book of business, it's all of your clients. Now there's two sides to that book of business. There's revenue producing clients and there's non-revenue producing clients. Non-revenue producing clients are people that bought certain types of mutual funds. You got paid on it one time and now it's just sitting there and you're managing it.
43:41 You're not getting a renewal on it every single year. Annuities, for the most part, you get paid one time on. You can stretch it out over a couple years if you want to, but eventually the commission ends. Life insurance, same thing. But when you manage money, assets under management — which my partner Dan McGrath was actually one of the pioneers in building assets under management — that gets paid as long as the asset stays under your management.
44:05 So generally speaking, you might get paid 1% of an asset. That's a negotiated thing between the advisor and the client, but say 1%. So if I have a million dollar book, I get paid 1% of a million dollars. As that grows through new clients and growth in the portfolio, I still get paid my 1%, but now my 1% is based on a higher number.
44:28 When I'm ready to retire and I say, "Hey, listen, I can either give this to a junior partner, let them work it, and take 50 basis points, 50% of the 1% and give them 50 basis points." You can do that. So, the higher the book of business, the more your retirement buyout is going to be. Or you can sell the book of business and somebody will come in and say you're generating $750,000 a year in revenue.
44:54 We'll give you five times. So here's your $3.75 million in buyout, whatever that works out to be. That's my retirement. I got a check. I'm done. Book of business is theirs. So advisors, they're building a business just like any other business owner. When you're building a business, you want the value of the business to go up and then when you're ready to retire, you have a lot of options.
45:20 You can pass it along or you can sell it. Their focus, AUM focus, is to build that book so it's the most valuable it could possibly be by the time they're ready to retire. Certain things inside of that diminish that value. Roth conversions inside of your book diminish the value of the book. It's a lower asset. If you want to do life insurance, take $100,000 out every year to pay a life insurance premium. No way.
45:46 I'm losing $100,000 a year plus the growth that can compound to a million dollars over the next couple years. Annuities, same thing. So, I'm not going to say financial advisors refuse to do those things because generally speaking, they don't. They're just not as incentivized to position them in the best way all the time.
46:09 >> Got it. One other question on this. I'm not bagging on financial advisors. I just want to understand this. These questions are popping in my mind as I go down this path and look at these things. Do you have a pro and con real quick? A lot of times I run into two types it seems.
46:25 You have fixed fee advisors and then percentage of assets under management. What's the pros and cons on that? >> Yeah. So the fixed fee is more like the RIA type where you're paying them a fee to manage your block and then there's the percentage of asset. RIAs are becoming extremely popular. Now, the concept behind an RIA is new and it's unique.
46:55 I work with a couple of RIAs. So a true RIA doesn't have any real licenses anymore. They've rescinded their licenses. So they can't get paid commission. >> So if they tell a client, hey, listen, you should really buy an annuity, they can't sell them that annuity. The client has to go out, or they have to say, hey, call this person.
47:18 They know what they're doing. They're not going to screw you over, but they can't get any of that commission. They're getting paid a fee for the advice. So, that's kind of a new wave because people are getting used to that and say, "Well, now I believe what they're saying because they're getting paid the fee.
47:36 They can tell me to do absolutely nothing or they can tell me to do this with my money. It has no impact on them." >> So it is becoming more and more popular. It's unique. I work with a lot of great RIAs. On the flip side, you have the assets under management guy. I work with very, very good assets under management guys.
47:56 I work with dozens of them. They get it. They're holistic. They've built their practice up. They're making a good amount of money. They don't need to worry about where their next meal is coming from. So it's not like they're like, "Oh my god, I need to make money today." They look at a client and say, "Well, this is what you should be doing.
48:12 " And then if they say an annuity is what they should be doing, they write the annuity. If they say life insurance is what they should be doing, they write the life insurance. In the meantime, they're managing the assets and they're getting paid that way. Which one is right and which one is wrong really personal preference. They could both be outstanding.
48:29 They could also both be very, very bad. It depends more on the person, not the title. >> So maybe I just found this out in my searching. I don't know if you mentioned it in another interview or in the PDF. If people just want to do some initial scratching the surface on this, isn't there something like an Irma calculator somewhere or >> Yep. Yeah. On our website, we have it.
48:58 So the website is retirementmythbook.com. That gives you kind of that free preview you were talking about. You can join the wait list. The book's supposed to be out like early to mid-September. You can join the wait list. We're not going to market or spam you. It's just when the book comes out, you're going to say, "Hey, the book's out. Here's the link.
49:18 " And then on there it says run your free report and you can put your information and basically your age, when you're planning on retiring, what state you live in, what your smoking status is. That's for the Medicare part. And then you just list your assets like I have X amount in tax deferred money, X amount in non-qualified money, X amount Roth money.
49:43 If you have a pension, put how much money you're making, how much money you're saving. And then you can click on it and actually go to this ssa.gov social security calculator to figure out what your projected social security is. And then you put that in there and you hit calculate. It takes like under a minute to put your information in.
50:00 And based on what you've put in, it gives you a snapshot of what your potential tax is based on today's tax rates and what your potential Medicare and Irma charges will be based on government projections. Now it's only singles. We didn't do the quick calculator for married couples. So, if you're married and you're running it single, it's probably going to be a little bit worse than it actually is because you're taking the bulk of it.
50:31 So, if you're married, don't put married assets. Split them in half. Gives you a more accurate assessment. But it's just to kind of give you an idea, saying, "Wow, I had no idea that was even a thing." and here you are telling me I'm going to spend $800,000 on it in retirement. We have the more in-depth software where we can break it down by person, by asset class, show you what your income is, show you what your social security does.
50:57 So we have all that, the group of us. So if you run your quick calculator and you're interested, give us a call or shoot us an email and we'll run you the full report and then you can actually get a look year by year what your income looks like. And I think it's really shocking to most people. I show every one of my clients and I've yet to see one that goes, "Oh, I knew that was going to happen.
51:22 " >> Not once. >> Yeah, I think people should check it out. I mean, I don't know. We kind of jumped around a lot. I think it was pretty good. A lot of information. A lot of stuff I think most people probably weren't even aware of. Anything else as we close up? We're going to put the link to the landing page to where the book is, to your organization here.
51:46 Anything else in closing that you'd like to mention or that we kind of missed or didn't spend enough time on? >> No, not really. Again, I think the most important thing is we call it financial boot camp. Break yourself down, unlearn everything you've learned, start from scratch like you're new, and then take that approach to your retirement and see with this new information how you would approach it if you had to start all over.
52:15 And don't ever say it's too late. That's one of the things that drives me crazy. I do seminars and there's somebody that's 65 years old. They go, "Oh, I wish I knew. I'm retiring in two years. It's too late for me." Well, if you're planning on dying by 68, yes, it's too late for you.
52:29 If you're going to live to 90, no, it's not. Fix it over the next 5 years. So then the last 20 years of your life are much, much better than they're going to be. That's kind of one of the things I really want people to take away. Don't ever say it's too late to fix it.
52:47 We might not be able to fix it, but you can make it better. >> All right. Well, appreciate you taking the time to come on and explain this. Again, like I said, I had no idea about some of these concepts. So, it was informative for me. Again, we're not selling anything here. This is not financial advice. Everybody's situation's different, but I never have seen somebody go this in depth into some of these things.
53:12 And I think if you run some of the numbers, depending on who you are, your situation, you could be talking about tens, if not hundreds of thousands of dollars here. So, it's probably worth looking at. So I appreciate you coming on and >> No, this is great, John. I appreciate you having me. >> Glad to have you. So, thanks again.
53:30 And we'll put the links to everything in the show notes so people can check it out. >> Thank you. >> All right. Thanks. >> Awesome, man. That was great.