EP37 GulfCoast Financial - Spring Cleaning
Peter Richon: Welcome into the program. This is GulfCoast Financial brought to you by the team at GulfCoast Financial Services, your resource for a commonsense approach to planning for your financial future. Founder and CEO with us, as always, John Kuykendall, John, welcome into the program.
John Kuykendall: Thank you, Peter, it's great to be here today. I hope everything's going well for you.
Peter Richon: It is for me, thank you very much. I hope the same for you. It's good to see you, here, John. We're meeting over Zoom technology, something that we've all had to become accustomed to here recently.
John Kuykendall: With this new norm, this is something that we've all gotten used to, and something that we're doing with our clients. It's really opened up a lot of doors for us. As we get back to the new norm, Florida opened up a little bit Monday. The restaurants are on limited occupancy. We're starting to see a little bit more activity. People are really getting used to things different.
Peter Richon: Yeah, and I think in some ways this actually makes things a little easier in some form or fashion. It's definitely different than what we have been used to before now. I know not everybody is doing the same thing with technology that you are. It's been harder to conduct business, obviously, with everything shut down, and people with the stay at home orders.
Things at Gulf Coast Financial have been progressing, have been moving along. You have been holding your client reviews, even helping people that had questions or concerns address those doing the complimentary financial analysis, and the retirement reviews, and strategy sessions. Although the media has changed, it's not the shaking the shaking the hand face to face, it's over the wonders of technology. The process has still been the same and still able to help people get their questions answered.
John Kuykendall: Oh, sure, it's still the same process, Peter. It's still the same working with someone whether we're face to face, or whether we're face to face with them on the computer. We want to give them that personal touch, and make sure that every question that they have is answered, and they feel comfortable either over the phone, or over the computer, or on a limited basis, it's now face to face as Florida begins to open up a little bit to being a little less regulated with this virus.
It's been a hard time for everybody, but it's like anything. I think that this has forced us to probably do things 20 years quicker than we would have been. Twenty years from now, we wouldn't meet each other in the office. We'd meet each other on the computer, or pick up the [sack] phone, and talk to each other over the video phone. It's just like – I have my Dick Tracy watch, and now I can talk to people and see people on my watch. We used to think when I was growing up that that was really something that we would never see that was so farfetched, but here it is.
Peter Richon: The flying cars haven't gotten here yet, though.
John Kuykendall: They're probably close. I've seen a couple on the highway that were almost there.
Peter Richon: Yep, well, I would like to just mention and remind, ladies and gentlemen, that if you've got questions or concerns, just a phone call away. GulfCoast financial, been voted best of the best by the Lake City Reporter in Financial Services. Office of convenience in Gainesville, so Lake City down to Gainesville, your resource. They are here to help you address your financial and retirement planning questions, or concerns, or just identify strategies to be more efficient with your dollars. Pick up the phone, give a call, 386-755-9018, the number to call, 386-755-9018.
John, I love that you send along the topic of the day every time we connect and are going to record one of these podcast episode and editions. Something that we certainly have been doing a lot of, I've had more time around the house to do the spring cleaning, but you wanted to liken that to our financial lives and encourage people, maybe it's time to do a little financial spring cleaning while we might still have some extra time on our hands.
John Kuykendall: It's something we don't think about, Peter, while we're binge watching on Netflix. I've just about seen everything there. One of the things I found out was that's really not free because if you're not careful, you'll go over your data with your internet provider. Then it's going to cost you a lot more to binge watch. Certainly, now, while we have time, and we're thinking about cleaning up and restarting, it's a good time to look at your financial position, and figure out where you are, and figure out where we need to go for retirement.
While our day-to-day lives have changed a little bit, the need for retirement hasn't changed. The need for money during retirement hasn't changed. It's going to be greater if anything. We'll talk about that a little bit in the show on taxes. Certainly, everything's going to be more expensive going forward. I've already – we've already talked about – at the office, here, this morning, Brett and I were talking over breakfast that people, now, are saying we're back at the restaurant but it’s going to cost more because products are going up, cost of paper and all that's higher, the shortage of meet. Everything costs more, and we need to make sure that we're going to have enough money to retire and live the kind of retirement that we dream of, or we're going to be in trouble.
Now's a great time to sit back, and take the broom, and brush the cobwebs off of that financial plan if you have one. If you don't have one, we'd love to work one up for you, but to get back to thinking about the things that you need to do in order to be successful. One of the first ones that we always talk to somebody about when they come see us is their debt. A lot of people, right now, are carrying a lot of debt. A lot of people, right now, because of their financial situation – a lot of people have not had income coming in for a couple of weeks, three or four weeks.
A lot of people have been laid off. Unemployment has certainly been – the benefit's been slow getting here. I haven't even gotten my stimulus check yet if I'm getting one. I don't know whether I'm getting one or not, maybe not. Things are hard on people, and so we incur debt, but then we've got to figure out a way how we're going to get out of debt. Interest is the one thing – while it is the eighth wonder of the world and compounding interest, it's the worst thing in the world when you've got it compounding your debt.
Peter Richon: Yeah, it can work for you if you're a saver, or against you if you are in debt and continue to build upon itself. You're right, I think a lot of people, obviously, we already had a predilection to spend and overspend our income. Right now, with everything that's gone on, it was more of a necessity than anything. A lot of people had to incur debt during this. You've always helped people address that and clean up the debt. I don't think that's going to change there at GulfCoast Financial. The first item on the list is where are the debts, and how do we help to address and handle those.
John Kuykendall: It is, Peter. I think back to the client that we had. We've been open 28 years now. In fact, April was our 28th anniversary. It was a heck of a way to celebrate our anniversary, but we did locally, just the office. I think back to when we first started, maybe four or five years in I had a schoolteacher who came to see me. She had so much debt, she couldn't make her monthly payments. She was behind, getting further behind. We helped her get out of debt, and then we started saving for her retirement. Then, believe it or not, an uncle died, and she ended up with $2.6 million in cash, which was a great windfall for her.
The thing was, whether she got that money or not, we had her on the road to recovery. We had her on the path towards making her own retirement and being able to survive. The last thing we want to do is pay non-deductible interest that we can't write off our taxes. It's just not prudent. Like I said, with that compounding interest, your debt – you'll never get ahead of it. You've got to put a plan in place to pay it off first. We even recommend, in some cases, not making contributions to 401Ks, to defined benefit plans, until we can get you out of debt. Then we'll start catching up.
Peter Richon: Yeah, now that's on a case-by-case – you help people decide which path they should pursue, what's the priority there.
John Kuykendall: Every plan's different. There's no one plan that meets the norm. I can't – there's no cookie cutter. Everybody's solution – they come and say, how much do I need for retirement? I can't give you that number that they talk about on TV, what's your number. I don't know. It depends on you. Some people take 2, 3, $4 million to retire, some people can retire on a half a million. Met with a couple yesterday that a couple of hundred thousand in savings is all they need because they've got enough income coming in, defined income every month, that they'll be able to survive and meet the inflation in the future. We'll take that 200,000 and grow it and make it a nest egg for them as they go forward.
Peter Richon: Fantastic that you're able to help folks out like that. Again, if we're doing a financial spring cleaning, debt is certainly a great place to start cleaning our financial picture up. If you need any help, give the team from GulfCoast Financial Services a call, 386-755-9018. Not quite the same, but related, and you touched on this, John, is that taxes are another big area. Taxes happen because the country has to cover expenses, the state has to cover expenses, the local governments have to cover expenses.
We have printed or digitized into existence an additional, what, at least $4 trillion during the course of the pandemic. At some point or another, I think that taxes have to be a big issue, and inflation, you mentioned that as well. These are the solution to the debt on a governmental level that is passed down to the people. We are going to have to handle this one way or another. A lot of people have saved for their retirement in a way that has kicked that bill down the road, deferring and delaying paying that tax debt. Now is the time to strategize on how to handle that question efficiently, right?
John Kuykendall: Oh, yeah, Peter. I think we've talked about this on this show many times about now we're the lowest tax bracket we'll probably ever have in history. I found some information out that David Walker, who is the U.S. Comptroller General in 1998 to 2008. He said that there's absolutely no question that taxes will have to go up. In 2000, our total debt was $1.293 trillion. It's now over $1.3 trillion in 2020. The national debt has gone from $13 million to over 23 – I mean, $13 trillion to over $23 trillion.
The highest tax bracket in 2000 was 35. The highest tax bracket today is 37. We're adding, as you said, another $4 billion to that national debt. The interest alone, as you can see when we talked about interest on debt, the interest on that national debt is adding that up faster than we can pay it off. We're running at a deficit every year. Eventually, how are we going to pay for this? We're going to have to pay for it by higher taxes, not in just one group, not just taxing the rich, but taxing everybody higher.
Peter Richon: Everybody, across the board – yeah, I've heard they talk about the 1%, the top wealth in the country. Even if you confiscated all of their wealth, it wouldn't really put a dent into that national debt if you just took every penny that that top 1% have. You've got to pass that along to everybody in the population. John, during the crisis, we can choose to panic, or we can choose to plan. I know there at GulfCoast Financial Services you choose the latter, you choose to plan. I feel like during this crisis, during the pandemic, the market and the market volatility got all of the attention, where the real long-term opportunity to do some effective planning might be this question of taxes.
John Kuykendall: Oh, yeah, certainly, Peter. One thing, right now everybody over 70 and a half does not have to take an RMD this year. We have a lot of clients that really don't live on that RMD, but we have to take it, and we have to pay the taxes on it. Since we don't have to do it this year, go ahead and do it, pay the taxes on it, put the money in a Roth IRA, let it grow tax deferred. Put it into a life insurance policy, which is another way we can go forward. Once you start, you'll end up with tax-free income coming out down the road. A lot of ways to do that. There are some other things that we can do. We can take money out of our 401K and pay the taxes back in three years.
There are things we can do to plan right now that we really need to do. This has just created some opportunities for us. If you're 70 and a half, you don't have to take the RMD until 72 anyway because that started with the Secure Act the first of the year. Go ahead and start those payments early. Let's get that money put into something else. There are a lot of ways that we try to do long-term care. Certainly, a lot of people in the United States, the majority, do not have long-term care protection. It's going to eat alive your retirement plan if we're not careful. I forgot what the statistics are, but if you're over 65, there's a 75% chance you're going to be confined.
Peter Richon: Yeah, I think it was seven and ten, right there.
John Kuykendall: Yeah, so we're going to need that – we're going to need some money to help cover that so our spouses, or so that our estates, they don't get eaten alive, so when we come back out we still have money. I think that there are some opportunities right now with the way the situation is in the economy and with what's happening that now is a great time. A lot of people are sitting in cash. Let's go ahead and make some changes. Let's make some plans. Let's do reallocation.
If you're in cash, you're in cash for a reason. You evidently got – took all the pain you could get, and you got out at the wrong time, or you were lucky enough, and some of us were that got out in the beginning. You didn't feel that pain. You've been waiting to get back in slowly. Now is the time, while we're sitting there in that cash, let's sit down and look at what we can do with it, how we can make it secure, find out what your risk number is, and then move forward.
Peter Richon: Yeah, well, again if you need any help, 386-755-9018, the number to call 386-755-9018. On your list of items to tackle during your financial spring cleaning, you listed as rebalancing, but really reallocating those funds might be part of that. I know rebalancing as well, similar, but there is a difference and especially with those retirement accounts. John, we treat them out of sight, out of mind. We ignore those old 401Ks that we've been contributing to for years and years. Rebalancing can make a measurable difference in our results. Good to pay attention and do that on a regular, periodic basis.
John Kuykendall: Oh, yeah, Peter, and that's another thing you talked about in different 401Ks and everything. Why do we have all these accounts? Why not consolidate them, pare them down, and only have one or two. It's like having 14 checking accounts and trying to balance them. You can't do it.
Peter Richon: Question, there, John, we hear a lot about diversification, and how important diversification is – because we have, let's call it maybe a young person who's changed jobs several times, five different 401Ks out there that we've left behind, and we consolidate them, bring them together into one IRA. That does not prevent us from diversifying within that account, correct?
John Kuykendall: Oh, sure, what happens is we actually end up with better diversification because when we've got all those accounts out there and we're not looking at them, nine times out of ten you're in the same investments. You just don't really realize it. When you bring it together and look at one pile, you can take the pot, and divide it up, and make sure that you are allocated properly. Whereas, when you've got all these piles out here in pots you're looking at, you don't get to stir them all at one time.
That's what happens. The S&P 500, the top 20 stocks make up 80% of the S&P 500. If you're in the S&P 500, you say, well, I've got 500 stocks. No, you've got 20 stocks that make up 80% of it. You need to diversify further than that. That's why we need to consolidate. Not only that, but to cut down fees, look at costs. The main thing is open the darn statements and see what you've got.
Peter Richon: Just easier to track and pay attention to when it's not multiplied with stacks of paperwork on your desk that you've got to go through.
John Kuykendall: It's not like the person that was telling me the other day, Peter, and I was talking to him. I said, "Well, what happened in your 401?" He says, "I don't know. I just threw the statement in the drawer." How do I know what I've got?
Peter Richon: Another critical financial spring cleaning, open your mail. Open your statements. Let's pay attention to these things, probably something you would encourage people to do pretty critically important there. Consolidating, rebalancing, those are important, and then reviewing performance. If we have not opened those statements, looking at how they've done and what's happened is another thing that's going to prove beneficial. Even if upon doing so the news is not so good at first, at least we understand that and then can take action and do something about it, right John?
John Kuykendall: Oh sure, that's right. The mutual fund, or the stock, that's number one this year is not going to be number one next year. What you need to do is look at the performance, figure out where they are, what they're made up for. Funds go stale. Funds get too large. They get too heavy for people to manage them. It's like moving Warren Buffet. It takes a lot to move that ship because he can make a market very quickly by buying or selling stock. Mutual funds can do that. We need to look and see where they are, what their performance is, what their ratings are. We need to do that continuously. Then we need to allocate based upon our risk tolerance.
Peter Richon: I think this last one on your list here, probably the biggest one that you help people with there at GulfCoast Financial Services, which is planning ahead. I mean, it is in fact called planning. Financial planning, retirement planning, it is not reacting. It is having a plan in place to help us accomplish our goals moving forward into the future, having a blueprint when you build a house, having a roadmap when you take a trip, having a plan when you want to move forward in your financial life and make progress, John. You help people put those together, or if they've already had one, or have at least the outline of one, really bringing those together and making sure that they're on the right track.
John Kuykendall: Margo, our Marketing Director, she called me this morning and said, "Hey, when we get back to normal," which – whatever that is, "what's our direction? What are we really going to be trying to market for the rest of the year?" I told her, our message hasn't really changed. We're talking about retirement planning. I don't care whether you're 30, 40, 50, or 60. 70, 80, it's retirement planning. We want to look – that will take care of life insurance, annuities, investments, all the things, components, long-term care, taxes, we want to look at the whole pile. I can't separate it and say, okay, we're going to focus on getting assets. We're not going to do that. We're focusing on retirement planning for our clients and for our prospects. That's where we're headed, and that's what we can do.
Peter Richon: Seeing the positive in the negative, John, through this pandemic, through this crisis, I think people are recognizing the need for qualified professional assistance, and advice, and guidance from somebody like yourself, from those like your team there at GulfCoast Financial Services that have seen these situations and helped people put together those plans to move them forward and to give them progress. I think that recognition is the positive in all of this. We know that you and your team provide that assistance where it's needed. Now, people are recognizing that it is needed. Just like spring cleaning, we had the time to tackle some projects around the house on that to-do list. Maybe we need to think about our financial life and tackle some of those to-do items as well.
John Kuykendall: Those are more important than the house cleaning, the spring cleaning. That financial life is something that's going to be with us the rest of our lives. We need to really do that so that we can live the kind of retirement lives that we want to live. I think it's great. Somebody asked me the other day. He said, I don't know how you stand it. What are your clients saying? How do you put up with the phone calls and the angry people? I can honestly say this that we have not had one phone call to our office asking us about the market, what's happening to the market, or what we're going to do?
All our calls that we've had have called to ask us how we're doing. Are we safe? We've called them and asked them that. We're calling to talk about plans. Okay, now that this has happened, what do I do? Then we're working them through it. I'm meeting with a client right after this where we're going to do that again, meet with them, go through their process, figure out where they are. Show them some things that we can do now because of the Secure Act and because of the Safe Act. Let's make sure that we do as much as we can to reduce taxes in the future.
Peter Richon: Let's be proactive. Let's identify those opportunities where we can be more efficient, where we can leverage our dollars. Where they are not being efficient, let's change that, let's address that. Let's consolidate. Let's get into a better position to move forward. Let's review that performance and plan ahead, ladies and gentlemen. Now is the time. Now is the opportunity.
We talked a little bit about the market performance getting a lot of the attention, maybe taxes being that big opportunity. GulfCoast Financial Services and their sister company, GulfCoast Tax Advantage, can take a proactive look from both the financial and investment perspective, and the tax planning perspective, to help you get ahead. Now may be the best opportunity. They make one great offer here on the program. That is for you to sit down with a team of qualified professionals to take a look at your planning and your financial situation.
Make sure that you are on the path to make that progress. Pick up the phone if you'd like to take advantage. They'll look at all aspects of your financial life and make sure that you are making well though through and informed decisions, 386-755-9018, the number to call, 386-755-9018, 386-755-9018. John, we always appreciate your guidance, your perspective here on the program. That's for reminding us to do that financial spring cleaning.
John Kuykendall: Great. It's great to be here. I hope everybody gets ready, gets those brooms, and go on and get that financial plan worked out. Peter, you stay safe and we'll see what the new norm is in a couple of months.
Peter Richon: You as well. Good seeing you, John.
John Kuykendall: Good seeing you, thanks.
Peter Richon: They're looking forward to hearing from you, seeing you there at GulfCoast Financial, folks. Pick up the phone, give them a call, 386-755-9018. Talk to you again real soon.