Episodes

Episode 143: When Should Your Client Pay Off The Mortgage With Jason Fichtner

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Should your client pay off their mortgage as they head into retirement?  Today, Jason Fichtner joins us again to talk about the risks inherent in answering this question with confidence. Jason is Vice President and Chief Economist at the Bipartisan Policy Center and Senior Fellow for the Alliance for Lifetime Income.
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Tanscript

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[Paul Tyler]: hi this is paul tyler and welcome to another episode of that annuity show and

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[Paul Tyler]: this is a special one but sometimes you know we have

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[Paul Tyler]: interviews with guest ramsey that beg for a part two and this certainly was the

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[Paul Tyler]: case for an interview we did about a month and a half ago do you wanna set it up

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[Ramsey Smith]: sure so we had jason fitch on about a month and a half ago and we talked about a

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[Ramsey Smith]: number of amazing subjects including social security and we just got

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[Paul Tyler]: let talking about

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[Ramsey Smith]: started talking about mortgages and decisions sets around mortgages

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[Ramsey Smith]: and today we’re going to continue that conversation when we left off so just to

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[Ramsey Smith]: reintroduce jason he is the

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[Paul Tyler]: like

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[Ramsey Smith]: vice president chief economist at the bipartisan policy center and he’s a senior

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[Ramsey Smith]: fellow for the alliance for lifetime income so he and the

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[Paul Tyler]: yeah

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[Ramsey Smith]: alliance have been great friends of great friends of the show and we’re just happy

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[Ramsey Smith]: to have them back so jason welcome back

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[Paul Tyler]: back and

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[Ramsey Smith]: and like just first of all like for for people that are new in the

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[Paul Tyler]: the audience

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[Ramsey Smith]: audience or for people that are that are coming back just remind us again that you

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[Ramsey Smith]: know the things that the work that you’re doing for

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[Ramsey Smith]: for the alliance and for the bipartisan policy center and let’s get right into it

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[Ramsey Smith]: on mortgages

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[Jason Fitcher]: awesome well thank you both for having me back it’s good great to see you and

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[Jason Fitcher]: again and looking forward to the conversation

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[Jason Fitcher]: my responsibilities and roles you know my fun

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[Paul Tyler]: what

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[Jason Fitcher]: job if you will is to help people have a financially secure retirement that’s

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[Paul Tyler]: oh

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[Jason Fitcher]: kind of my mission in life and i get to do that both the bipartisan policy center

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[Jason Fitcher]: and at the alliance for lifetime income and it’s talking about protected income

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[Jason Fitcher]: it’s an understanding of how to help people be more secure in retirement when

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[Jason Fitcher]: thinking about protected income and that just does not just mean annuities which

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[Jason Fitcher]: you talked about last time it’s also social security which is a form protected

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[Jason Fitcher]: income and it’s helping people understand what the role of social security and

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[Jason Fitcher]: other protected income means for having a financially secure retirement one in

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[Jason Fitcher]: which they can spend and

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[Ramsey Smith]: yes

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[Jason Fitcher]: enjoy retirement and one in which they can mitigate risks and too often we’ve been

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[Jason Fitcher]: brought up on this culture of you need to save save sake which i’m very in favor

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[Jason Fitcher]: of you need to maximize your return which i’m also in favor of but we don’t often

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[Jason Fitcher]: talk about what the risks are and we help people save for retirement through our

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[Jason Fitcher]: four hundred one thousand plans our four hundred three bs and iras we have

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[Jason Fitcher]: employer sponsored plans we have a lot of tax advantages people get to retirement

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[Jason Fitcher]: we say have a nice day and they’re looking around for help and what do they do now

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[Jason Fitcher]: with these defined contribution assets they built up they were afraid of spending

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[Jason Fitcher]: them down and running out of money retirement how do we

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[Ramsey Smith]: so

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[Jason Fitcher]: help them psychologically and financially make sure they can draw down that income

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[Jason Fitcher]: appropriately whether it’s through protected income strategies like annuities

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[Jason Fitcher]: whether it’s drawdown strategies whether it’s thinking about debt and what does it

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[Jason Fitcher]: do with debt levels because that’s very important both from a financial standpoint

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[Jason Fitcher]: and a psychological level how do we help them have the best retirement and we can

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[Jason Fitcher]: do that with the funding our future campaign we have the bipartisan policy center

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[Jason Fitcher]: and the alliance to lifetime income and the research were doing at the retirement

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[Jason Fitcher]: income institute and we had a great discussion last time so for the new audience

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[Jason Fitcher]: members who didn’t listen please pull up the last episode about a month and a half

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[Jason Fitcher]: ago and we left it off we ran out of time but we were talking about whether or not

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[Jason Fitcher]: people should pay off their mortgage and retirement and i had mentioned some

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[Jason Fitcher]: previous research i had done that showed that with each successive generation less

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[Jason Fitcher]: people are paying off their mortgage before they enter retirement and what does

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[Jason Fitcher]: that mean do you have some financial professionals telling you of course interest

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[Jason Fitcher]: rates are low you

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[Ramsey Smith]: yep

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[Jason Fitcher]: shouldn’t pay it off invest that money someplace else others are saying you want

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[Jason Fitcher]: to risk a less risky retirement pay off your house and use that investment in that

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[Jason Fitcher]: cash or something else what do you do and that’s where we left and we’re hoping to

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[Jason Fitcher]: tee it off again today

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[Paul Tyler]: yeah well and i guess for most people right if you said what are the biggest

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[Paul Tyler]: assets in retirement it would be number one probably social security

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[Paul Tyler]: probably number two would be any equity you have in your house and maybe you know

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[Paul Tyler]: if you’re lucky you’ve got a four hundred one thousand jason is that is that kind

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[Paul Tyler]: of the right way to think about it

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[Jason Fitcher]: yeah

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[Ramsey Smith]: yeah think about

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[Jason Fitcher]: to think about when you think about an asset and retirement so the the beauty of

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[Jason Fitcher]: social security is it pays your scheme of income but it’s not giving you a lump su

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[Jason Fitcher]: so you can’t go to social security right now and say hello i’m sixty seven i would

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[Jason Fitcher]: like my lifetime have income as a lu sum and then you think of an asset you think

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[Jason Fitcher]: of it as an income stream but you are right to talk about it as an asset the

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[Paul Tyler]: no

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[Jason Fitcher]: house and your four one k you see as a lump sum but you can convert that into an

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[Jason Fitcher]: income stream and that’s where you we start thinking about how do we use this kind

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[Jason Fitcher]: of assets to create protected income or income streams that would help people have

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[Jason Fitcher]: their most financially secure retirement but those are the three biggest and

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[Jason Fitcher]: actually for most people when you think about the lump sum amount like what you

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[Jason Fitcher]: actually

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[Paul Tyler]: yeah

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[Jason Fitcher]: can convert to cash today it usually is the house that’s bigger than the four one

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[Jason Fitcher]: k plan for most people that is their primary asset going into retirement so how

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[Jason Fitcher]: they utilize that asset when they do with that is very very important for

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[Jason Fitcher]: financial security and retirement

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[Paul Tyler]: yeah now i f i probably fall on the extreme when it comes to homes and it’s

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[Paul Tyler]: interesting what shapes your perspective of ris jason your smack on i i don’t

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[Paul Tyler]: think we talked about this like my mother’s a small business person and i would

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[Paul Tyler]: say she never should have been

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[Paul Tyler]: it was

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[Paul Tyler]: and we we frankly grown up had it was it was rough you know we had a couple times

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[Paul Tyler]: when our house was close to being repossessed because she got too far over skis

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[Paul Tyler]: with work

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[Paul Tyler]: and mortgages so there’s nothing coming home to see like auction notices on your

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[Paul Tyler]: door to say okay this will never happen and so you know i i i’m somebody who opted

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[Paul Tyler]: for the smaller house was paid off

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[Ramsey Smith]: no

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[Paul Tyler]: i’ve always adjacent had friends and rams you’re probably in the other you know

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[Paul Tyler]: probably from more from a a more risk uh have a better view of the risk but jason

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[Paul Tyler]: i had friends saying you’ve got to be kidding me you know in the real estate

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[Paul Tyler]: market unlv property is an asset that’s just going to waste

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[Paul Tyler]: how do you how do you think about risk

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[Paul Tyler]: like especially you’re they’re in going getting closer retirement

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[Jason Fitcher]: so this is i always found the buying a house the process so much backwards than

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[Jason Fitcher]: say buying a car so if if you were to go buy a car and if buying a car today’s

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[Jason Fitcher]: environment is a lot harder because of supply chain issues so the prices are

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[Jason Fitcher]: higher but usually you went to buy a car the salesman ask you paul ramsey how much

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[Jason Fitcher]: do you want to pay a month for your car what would the best answer be

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[Ramsey Smith]: i don’t know six hundred dollars a month

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[Jason Fitcher]: well i’d like to say zero right i’d like to

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[Jason Fitcher]: pay zero but that’s not the option

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[Ramsey Smith]: okay well

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[Ramsey Smith]: okay

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[Jason Fitcher]: right so you say zero but then you know but some people say well i pay four

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[Jason Fitcher]: hundred dollars so the dealer finds a way to fit you into the most expensive car

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[Jason Fitcher]: for four hundred dollars by doing what when they could extend the terms of a loan

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[Ramsey Smith]: sure

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[Jason Fitcher]: so one of

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[Paul Tyler]: what

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[Jason Fitcher]: the even though we’re talking about housing debt think about card debt so my

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[Jason Fitcher]: grandparents always paid cash for their car then you started getting loans out so

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[Jason Fitcher]: the average term for a loan used to be three years then four then five now it’s

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[Jason Fitcher]: seven years

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[Paul Tyler]: seven

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[Jason Fitcher]: so people

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[Ramsey Smith]: for a car really

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[Jason Fitcher]: are taking out for a car so now

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[Ramsey Smith]: wow

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[Jason Fitcher]: people are taking our seven year mortgages for a car and some people don’t own the

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[Jason Fitcher]: car longs when they go to get a new car they’re actually under water they owe more

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[Jason Fitcher]: than the resale residual value of the car is and the deal’s like don’t worry you

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[Jason Fitcher]: want to pay five hundred dollars a month we’ll just roll that balance into the

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[Jason Fitcher]: next slow so they keep getting further and further under water with debt by

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[Jason Fitcher]: getting new cars so the house sort of works

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[Ramsey Smith]: yeah

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[Jason Fitcher]: in the same way but backwards we go in and people say look mortgage rates are

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[Jason Fitcher]: lower because the rates are lower now you can afford to buy more house so let’s

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[Jason Fitcher]: get a more expensive house a bigger house because the rates are down we can keep

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[Jason Fitcher]: your

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[Ramsey Smith]: aw

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[Jason Fitcher]: mortgage payment slower you’re like this is a fantastic deal or out doo it so now

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[Jason Fitcher]: people have been buying bigger houses more expensive houses with lower rates as

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[Jason Fitcher]: rates go up better of course changes housing becomes more expensive than might the

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[Jason Fitcher]: downsize but we’ve created a generation

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[Ramsey Smith]: generation

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[Jason Fitcher]: of people who are used through lower interest rates and buying bigger houses are

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[Jason Fitcher]: they gonna be under water are they gonna pay them

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[Ramsey Smith]: harder

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[Jason Fitcher]: off they gonna keep using revolving credit

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[Jason Fitcher]: this is the problem with risk and again we might be more comfortable with debt now

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[Jason Fitcher]: we we take out debt for a lot of things and i now see online when i go

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[Ramsey Smith]: so that

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[Jason Fitcher]: to amazon it says do you want to pay this in four quarterly installments and i’m

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[Jason Fitcher]: like no i don’ i i but i still put it on a credit card and it’s it’s a much

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[Jason Fitcher]: different psychological thing if you have to go and pay cash out of your wallet

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[Jason Fitcher]: with everything you buy than just putting it on plastic or clicking your apple

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[Jason Fitcher]: watch or using an auto paes through a credit

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[Ramsey Smith]: it’s right

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[Jason Fitcher]: card where then you get a month they’re like wait how much should i spend how did

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[Jason Fitcher]: i do this so this is where we’ve gotten used to credit we’ve gotten used to

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[Jason Fitcher]: spending we’ve gotten used to low interest rates and we’ve carried that retirement

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[Jason Fitcher]: so when i did some research looking at what was called the health retirement

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[Jason Fitcher]: survey health return study through the university of michigan they look at those

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[Jason Fitcher]: who are fifty and older with each successive generations they track people so we

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[Jason Fitcher]: can look at the you know the world war ii generation we can go up to the baby

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[Jason Fitcher]: boomers with each generation they’re taking a higher level of debt into retirement

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[Jason Fitcher]: and less of them are paying off their houses going into retirement it used to be

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[Jason Fitcher]: you were told you know you when you basically retire pay off your house because

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[Jason Fitcher]: one as you said paul that’s sort of your biggest if not the biggest asset

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[Jason Fitcher]: retirement but two think about your current budget constraints so everyone who is

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[Jason Fitcher]: listening on this call right now think about your expenses what are you paying out

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[Jason Fitcher]: a month for food

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[Paul Tyler]: let’s see

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[Jason Fitcher]: for utilities for your cell phone for your cable my guess

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[Paul Tyler]: yeah

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[Jason Fitcher]: is that the largest expense people have or at least most people is mortgage or

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[Jason Fitcher]: their rent housing is the biggest expense what if that expense was gone in

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[Jason Fitcher]: retirement that frees up a lot of extra income source income whether it’s coming

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[Jason Fitcher]: from social security or from annuity or from your investments to use someplace

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[Jason Fitcher]: else you minimize risk if you carry

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[Ramsey Smith]: hear

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[Jason Fitcher]: that mortgage with you into retirement you’ve got to pay it and if you get

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[Ramsey Smith]: get down the

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[Jason Fitcher]: a downturn in the market or there is a hell shock or you get a shock in your

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[Ramsey Smith]: years ago

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[Jason Fitcher]: income do you want to get kicked out of your house we’re seeing more bankruptcies

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[Jason Fitcher]: in retirement because of housing than we have previously this is where we need to

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[Jason Fitcher]: start thinking about reframing our discussion

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[Paul Tyler]: excuse me

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[Jason Fitcher]: around risk mitigation retirement and not necessarily trying to have the biggest

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[Jason Fitcher]: and greatest yield you can get off your assets

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[Ramsey Smith]: yeah that makes a lot of sense i mean it it is it is it’s remarkable and

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[Paul Tyler]: yeah that makes a lot of stuff

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[Paul Tyler]: father had

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[Ramsey Smith]: problematic that decisions are made based on

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[Paul Tyler]: how about you

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[Ramsey Smith]: how much i can fund how much the how much the bank at any given point in time will

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[Ramsey Smith]: let you fund as opposed to what your utility is now if your

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[Paul Tyler]: no

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[Ramsey Smith]: utility happens to be you know in the same place and then

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[Paul Tyler]: maybe

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[Ramsey Smith]: maybe maybe there’s some other sort of reward for for buying the bigger house but

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[Ramsey Smith]: maybe maybe there’s some other sort of reward for for buying the bigger house but

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[Ramsey Smith]: you know

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[Ramsey Smith]: you know

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[Ramsey Smith]: in my mind right you’re taking on a lot

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[Paul Tyler]: that

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[Ramsey Smith]: of ex for risk without any true incremental utility

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[Ramsey Smith]: and i think that people could put themselves could avoid

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[Paul Tyler]: a lot

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[Ramsey Smith]: a lot of issues if if they if they thought about it they thought about it that way

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[Ramsey Smith]: because then they’re forced to downsize later and it might not be in a good market

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[Ramsey Smith]: so

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[Paul Tyler]: well i

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[Ramsey Smith]: i think this is a very good discussion for for precisely those reasons

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[Paul Tyler]: yeah no jason the calculation

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[Jason Fitcher]: yeah

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[Paul Tyler]: has shifted three if

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[Ramsey Smith]: um i studies at is rural

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[Paul Tyler]: let me put the step back if i were you know sixty six

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[Paul Tyler]: sixty seven owned a house with a mortgage

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[Ramsey Smith]: what is

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[Paul Tyler]: the calculus has changed so so dramatically over the last two years pre pandemic

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[Paul Tyler]: you know a lot of suburbs real estate market was down you probably had lost equity

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[Paul Tyler]: in your house

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[Ramsey Smith]: it’s w

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[Paul Tyler]: okay but the rates were low so you could afford to sit there and pandemic hits a

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[Paul Tyler]: lot of

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[Jason Fitcher]: what’s that

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[Paul Tyler]: suburban areas real estate goes way up okay it also means your equity is higher

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[Paul Tyler]: suburban areas real estate goes way up okay it also means your equity is higher

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[Paul Tyler]: maybe you can sell your house where you go

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[Paul Tyler]: now i don’t know like we just we we were talking before the show this last month

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[Paul Tyler]: wow interest

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[Ramsey Smith]: why

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[Paul Tyler]: rates are starting to spike again stock market

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[Ramsey Smith]: yeah that’s

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[Paul Tyler]: i don’t i wouldn’t want wanna to have sold my house and but i put it in the market

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[Paul Tyler]: last month not good how do you

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[Ramsey Smith]: yeah the last um r is

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[Paul Tyler]: how do you dynamically approach something like this

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[Ramsey Smith]: per person what

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[Jason Fitcher]: i well you you’ve bought out some great points paul and i think maybe the word

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[Jason Fitcher]: dynamic is something to focus on any dynamic and risk or two words we need to have

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[Jason Fitcher]: as our framing here because there are many people who again go into retirement

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[Jason Fitcher]: without paying off their house and think i’ve got income coming in from a variety

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[Jason Fitcher]: of sources including the market if the market

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[Paul Tyler]: what

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[Jason Fitcher]: this is where i think we talked about this last time too whether you should have

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[Jason Fitcher]: the three percentage rule the four percent drawdown rule that

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[Ramsey Smith]: that work

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[Jason Fitcher]: rule can work if you have an ever increasing market right the market keeps going

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[Jason Fitcher]: up ten percent a year and you’re taking out three or four it probably works for

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[Jason Fitcher]: you that only works if you don’t have a recession in the first two or three or

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[Jason Fitcher]: five years’ retirement and you don’t have it till the end it’s the sequence of

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[Jason Fitcher]: return risk we’re talking about the same goes for housing if people haven’t paid

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[Jason Fitcher]: off their housing or they’ve done something even worse like you know you’ve heard

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[Jason Fitcher]: the old jo of people taking out a whole meck line of credit when they retired to

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[Jason Fitcher]: buy a boat so

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[Ramsey Smith]: oh

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[Jason Fitcher]: now they

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[Paul Tyler]: i did

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[Jason Fitcher]: not pit off their boat they’re pay off their house

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[Paul Tyler]: i

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[Jason Fitcher]: they have a boat they’ve got to pay for and and the old joke is you know how do

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[Jason Fitcher]: you become a millionaire first you get a billion dollars and you buy a boat and

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[Jason Fitcher]: thats how

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[Ramsey Smith]: right

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[Jason Fitcher]: you become a millionaire

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[Jason Fitcher]: people take on this extra level of debt and debt i think we should really call

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[Jason Fitcher]: debt risk right and it really is risk can you are you at risk of not being paid

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[Jason Fitcher]: have an asset collected a secure asset someone can come after maybe you’re okay

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[Jason Fitcher]: with someone possessing your car your boat but your house

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[Jason Fitcher]: you live in it you need housing and in retirement

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[Ramsey Smith]: yes

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[Jason Fitcher]: and i think the dynamic nature is what i would like for us to start having is

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[Jason Fitcher]: these kitchen table conversations you never know she made the right decision until

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[Jason Fitcher]: that decision has passed have hindsight right hindsight is twenty twenty is the

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[Jason Fitcher]: market going to go up is the market going to go down boy i

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[Paul Tyler]: what

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[Jason Fitcher]: wish i would have done this you know if i had tried bought apple stock when it was

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[Jason Fitcher]: going to eight dollars back when i you know twenty thirty years ago i’d be a

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[Jason Fitcher]: millionaire a billionaire but you know i didn’t so i missed out

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[Jason Fitcher]: what do we do when it comes to these discussions about dynamic nature of housing

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[Jason Fitcher]: and risk and i think what i think people should think about is the house is an

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[Jason Fitcher]: asset if it’s paid off and you go into retirement you have minimized risk and you

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[Jason Fitcher]: have expanded your flexibility so for many people

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[Jason Fitcher]: if

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[Ramsey Smith]: yeah

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[Jason Fitcher]: your house is paid off you could use that home equity

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[Jason Fitcher]: down the road for long term care long term care insurance if you can find it now

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[Ramsey Smith]: we just don’t need that we here

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[Jason Fitcher]: it’s really really expensive

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[Jason Fitcher]: think about long term care as your housing in your really really senior years if

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[Jason Fitcher]: your house is paid off and you have to go into long term care you could sell your

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[Jason Fitcher]: house or you saw home equity or reverse mortgage to pay your long term care and

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[Jason Fitcher]: not leave that bill on your on your kids or your grandkids or you know hopefully

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[Jason Fitcher]: you’re not going to go on medicaid if you’re indigent to go into long term care

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[Jason Fitcher]: thinking about planning for this and the dynamic nature of what retirement means

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[Jason Fitcher]: and what the markets can do helps people think about how do you better use their

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[Jason Fitcher]: assets and i mean my fear is too often we’ve trained people to think about acid

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[Jason Fitcher]: accumulation in their years of working we haven’t talked about the either

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[Jason Fitcher]: distribution or accumulation phase and retirement and what that means for risk

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[Jason Fitcher]: mitigation and how to make sure people don’t outlive their savings they’re not

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[Jason Fitcher]: afraid to spend what they have and can actually have a financially comfortable

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[Jason Fitcher]: secure retirement that they’re enjoying that they enjoy their golden years you

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[Jason Fitcher]: know you want to be as worry free as possible if you’ve got that mortgage sitting

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[Jason Fitcher]: of your head you know in turbulent times like right now you know with how long

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[Jason Fitcher]: does this russian ukraine g were going to last is it gonna end tomorrow is it

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[Jason Fitcher]: going to end in three years whatever end what does that mean for oil prices that

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[Jason Fitcher]: go to one hundred thirty dollars a barrel one day and then down to below one

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[Jason Fitcher]: hundred the next mortgage

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[Paul Tyler]: just

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[Jason Fitcher]: rates again they’re now creeping upwards above four and five percent going towards

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[Jason Fitcher]: five the federal reserve is going to start raising interest rates to start trying

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[Jason Fitcher]: to tamper down on inflation if you need to sell your house and you haven’t put off

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[Jason Fitcher]: your mortgage are you going to be under water did you take out a home lot of

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[Jason Fitcher]: credit so you are under water now these are all really important factors to

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[Jason Fitcher]: consider when talking about the dynamic na paul but i think you’re right we need

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[Jason Fitcher]: to start talking about what this means for risk and when people say oh don’t

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[Ramsey Smith]: don’t

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[Jason Fitcher]: pay off your house because you can use that money to go to the market

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[Jason Fitcher]: well you can lose money in the market you really don’t wanna lose your home

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[Ramsey Smith]: so

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[Paul Tyler]: i she got couple

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[Ramsey Smith]: let me ask you this so there’s this is a this is a decision that’s that’s

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[Paul Tyler]: i

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[Ramsey Smith]: obviously very difficult

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[Paul Tyler]: christmas

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[Ramsey Smith]: for for consumers to make often they are going to financial advisors is your

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[Paul Tyler]: that’s pretty good

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[Ramsey Smith]: experience that the financial advisors or the financial advice community

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[Ramsey Smith]: is is is answering this question the way you think they ought to

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[Jason Fitcher]: i

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[Jason Fitcher]: would put it differently it’s not

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[Paul Tyler]: i would

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[Jason Fitcher]: whether they’re

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[Jason Fitcher]: answering it properly it’s

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[Ramsey Smith]: ja mm

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[Paul Tyler]: school

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[Jason Fitcher]: whether they’re having the right discussion and i think

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[Ramsey Smith]: okay

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[Jason Fitcher]: that’s what’s missing right so the answer shouldn’t be yes you should sell no you

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[Jason Fitcher]: shouldn’t sell you should you know pay off your mortgage no you shouldn’t it

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[Jason Fitcher]: really should be a discussion with the individuals about what are their risks what

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[Jason Fitcher]: other income do they have what other assets do they have what are their goals do

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[Jason Fitcher]: they have

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[Ramsey Smith]: they have

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[Jason Fitcher]: a spouse are they sick right there’s

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[Paul Tyler]: water

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[Jason Fitcher]: a lot of things that go into this conversation it’s the same sort of factors we

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[Jason Fitcher]: talked about when it was thinking about when do you claim social security

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[Jason Fitcher]: retirement benefits it’s a personal decision one science is not fit all the fear i

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[Jason Fitcher]: have is that somebody goes into financial professional and says what do i do and

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[Jason Fitcher]: they just give a quick answer without having the

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[Jason Fitcher]: discussion about what their needs are what their risks are and how they can

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[Ramsey Smith]: i would say a kid

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[Jason Fitcher]: minimize risk and there’s a difference between saying selling

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[Ramsey Smith]: what

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[Jason Fitcher]: an asset like selling a stock asset to pay off a house versus taking out a reverse

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[Jason Fitcher]: mortgage or another

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[Jason Fitcher]: mortgage i mean the number of people i’ve seen who in the research get into their

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[Ramsey Smith]: have the testimony i’m going

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[Jason Fitcher]: late fifty seconds and then refinance for another thirty year mortgage is really

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[Jason Fitcher]: surprising to me the idea that you could be paying off a mortgage until your

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[Jason Fitcher]: seventies or eighties it is just surprise not how i grew up that’s not how that

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[Jason Fitcher]: framing i was brought up with and some people like maybe we’re comfortable just

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[Jason Fitcher]: live in the

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[Ramsey Smith]: i

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[Jason Fitcher]: house if we died then someone comes and takes the houses where dead who cares

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[Paul Tyler]: yeah

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[Jason Fitcher]: that may be a smart decision for somebody who understands that and has other

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[Jason Fitcher]: assets and make sure that they have income coming in so there’s a market

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[Paul Tyler]: s

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[Ramsey Smith]: what

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[Jason Fitcher]: downturn they’re protecting they’re always paying their mortgage for somebody else

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[Jason Fitcher]: it might not be the right decision

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[Paul Tyler]: hm

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[Jason Fitcher]: and they might talk about how they can use their financial assets besides the

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[Jason Fitcher]: house to have a protective stream of income that also then pays off the house so

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[Jason Fitcher]: that’s off their balance sheet in retirement and becomes a pure asset that they

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[Jason Fitcher]: have flexibility with so it’s a discussion that i want to encourage not

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[Jason Fitcher]: necessarily focusing on what is the right or wrong answer because that really does

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[Jason Fitcher]: depend on the individual circumstances

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[Ramsey Smith]: so

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[Paul Tyler]: you been

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[Ramsey Smith]: you’ve mentioned reverse mortgages a few times and we don’t necessarily have a dog

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[Ramsey Smith]: in that fight on the show but it’s

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[Ramsey Smith]: it’s come up we’ve had um we’ve had don graves on here recently and we’ve had

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[Ramsey Smith]: we’ve had way at wed fowl also on a couple of times and both of them speak a lot

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[Ramsey Smith]: about the rule of reverse mortgages

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[Ramsey Smith]: you how do you feel about them there’s there’s two

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[Paul Tyler]: what

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[Ramsey Smith]: questions one is the function of them and the other is how they’re priced so i

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[Ramsey Smith]: will you know i guess

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[Ramsey Smith]: let’s focus on the function first and then we can

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[Paul Tyler]: spoke function first

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[Jason Fitcher]: okay

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[Ramsey Smith]: if you have an opinion on how their price we can talk about that too but as a

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[Ramsey Smith]: function

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[Ramsey Smith]: as you know for their utility what are your thoughts

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[Jason Fitcher]: so i again

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[Paul Tyler]: been white

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[Jason Fitcher]: my my hope in this discussion is we can talk about how the house can be used as a

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[Jason Fitcher]: financial asset and retirement to mitigate risk

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[Jason Fitcher]: and then one of i know wait fo talks about the idea of you know the risks you have

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[Jason Fitcher]: of sequencing of market timing and how you could use reverse mortgage to basically

415
00:19:10,000 –> 00:19:13,200
[Jason Fitcher]: get some more income later on your retirement years i think that’s an important

416
00:19:13,280 –> 00:19:14,720
[Jason Fitcher]: tool to talk about is the basket

417
00:19:14,657 –> 00:19:15,657
[Ramsey Smith]: yeah

418
00:19:14,800 –> 00:19:18,000
[Jason Fitcher]: of options one may have and again this goes back to my earlier thing early

419
00:19:18,240 –> 00:19:19,680
[Jason Fitcher]: discussion i want financial

420
00:19:19,439 –> 00:19:20,439
[Paul Tyler]: what

421
00:19:19,537 –> 00:19:20,537
[Ramsey Smith]: what

422
00:19:19,920 –> 00:19:23,440
[Jason Fitcher]: professionals to be able to talk to their clients about the options

423
00:19:23,177 –> 00:19:24,177
[Ramsey Smith]: oh yeah

424
00:19:23,520 –> 00:19:27,760
[Jason Fitcher]: that are available what the risks and rewards are the pros and cons and give them

425
00:19:23,520 –> 00:19:27,760
[Jason Fitcher]: that are available what the risks and rewards are the pros and cons and give them

426
00:19:27,840 –> 00:19:31,280
[Jason Fitcher]: a menu and walk them through it right no pressure just talk about your options

427
00:19:27,840 –> 00:19:31,280
[Jason Fitcher]: a menu and walk them through it right no pressure just talk about your options

428
00:19:31,360 –> 00:19:32,640
[Jason Fitcher]: here’s what they are

429
00:19:31,360 –> 00:19:32,640
[Jason Fitcher]: here’s what they are

430
00:19:33,579 –> 00:19:34,619
[Paul Tyler]: oh i think

431
00:19:33,700 –> 00:19:34,700
[Jason Fitcher]: i think

432
00:19:34,137 –> 00:19:35,137
[Ramsey Smith]: i think

433
00:19:34,400 –> 00:19:37,440
[Jason Fitcher]: a reverse mortgage would be part of that discussion but so could a home equity

434
00:19:37,520 –> 00:19:40,400
[Jason Fitcher]: line of credit right you could do a whole amount of credit as well if you wanted

435
00:19:40,400 –> 00:19:44,080
[Jason Fitcher]: to there are a lot of structures you can do and think about how to tap into the

436
00:19:44,080 –> 00:19:46,480
[Jason Fitcher]: assets of your home equity to help in retirement

437
00:19:46,399 –> 00:19:47,399
[Paul Tyler]: it

438
00:19:46,880 –> 00:19:48,000
[Jason Fitcher]: but it’s new at its conversation

439
00:19:48,699 –> 00:19:53,179
[Paul Tyler]: well is it wrong of me to think of taking a reverse mortgage effectively is doing

440
00:19:53,259 –> 00:19:56,379
[Paul Tyler]: what you’re saying i’m paying off your mortgage right because i think tell me if

441
00:19:56,379 –> 00:20:01,819
[Paul Tyler]: i’m wrong if i do a reverse mortgage and i’ve got a mortgage say hundred thousand

442
00:20:02,059 –> 00:20:06,619
[Paul Tyler]: dollars in the house i think that you got to wrap the whole thing up and get rid

443
00:20:06,619 –> 00:20:08,539
[Paul Tyler]: of the mortgage right is that yeah

444
00:20:07,920 –> 00:20:12,320
[Jason Fitcher]: yeah yeah so and this is again how do you use your house retirement the

445
00:20:12,319 –> 00:20:13,319
[Paul Tyler]: yeah yeah

446
00:20:12,400 –> 00:20:16,800
[Jason Fitcher]: asset and again as you said po it’s for most people it is their largest asset in

447
00:20:16,880 –> 00:20:19,680
[Jason Fitcher]: retirement and you know and if someone it again depends

448
00:20:19,617 –> 00:20:20,617
[Ramsey Smith]: definitely

449
00:20:19,920 –> 00:20:23,120
[Jason Fitcher]: on are youre to leave a request you do you have a spouse what’s the role you know

450
00:20:23,440 –> 00:20:27,120
[Jason Fitcher]: if you are a single let’s say you’re a single person you have no kids you have no

451
00:20:27,200 –> 00:20:31,200
[Jason Fitcher]: grandkids you’re not trying to leave a request to somebody why do you want to die

452
00:20:30,980 –> 00:20:31,980
[Jason Fitcher]: and leave thistles att

453
00:20:31,920 –> 00:20:39,120
[Jason Fitcher]: if you got a spouse to worry about if you’re worried about want to leave money to

454
00:20:33,199 –> 00:20:34,199
[Paul Tyler]: yeah

455
00:20:39,280 –> 00:20:42,960
[Jason Fitcher]: your kids or your family it’s a different conversation so again it’s it’s it

456
00:20:43,200 –> 00:20:44,320
[Jason Fitcher]: really is amazing how

457
00:20:46,320 –> 00:20:51,200
[Jason Fitcher]: times one of the reasons i love this show is we can talk about money yeah and but

458
00:20:51,440 –> 00:20:54,960
[Jason Fitcher]: but i mean that sincerely do you know how uncomfortable is talking money with

459
00:20:54,860 –> 00:20:55,860
[Jason Fitcher]: people like

460
00:20:55,279 –> 00:20:56,279
[Paul Tyler]: right

461
00:20:55,500 –> 00:20:56,500
[Jason Fitcher]: real people

462
00:20:56,337 –> 00:20:57,337
[Ramsey Smith]: sure

463
00:20:56,640 –> 00:20:59,840
[Jason Fitcher]: they’re they’re they just yeah you know this they get they they get nervous

464
00:21:00,580 –> 00:21:01,580
[Jason Fitcher]: going

465
00:21:00,977 –> 00:21:01,977
[Ramsey Smith]: what

466
00:21:01,360 –> 00:21:05,360
[Jason Fitcher]: back to this idea we can have kitchen table conversations with your family members

467
00:21:05,760 –> 00:21:08,720
[Jason Fitcher]: and this is what becomes important even for like people who aren’t retiring yet

468
00:21:08,720 –> 00:21:11,920
[Jason Fitcher]: but whose parents might be retiring you just sit down with that of discussion

469
00:21:12,160 –> 00:21:16,480
[Jason Fitcher]: about what are their finances what are their worries do they actually no one likes

470
00:21:16,560 –> 00:21:19,840
[Jason Fitcher]: to talk about death but do you have a will do you have you know do you have a

471
00:21:19,920 –> 00:21:23,920
[Jason Fitcher]: power of attorney have you structured all this i’m starting to have friends whose

472
00:21:24,000 –> 00:21:25,840
[Jason Fitcher]: parents are passing away and they’re finding

473
00:21:25,697 –> 00:21:26,697
[Ramsey Smith]: yeah

474
00:21:25,920 –> 00:21:30,560
[Jason Fitcher]: that their parents didn’t have the proper legal documents in order to help

475
00:21:30,880 –> 00:21:33,840
[Jason Fitcher]: straighten out their affairs because they were nervous about talking about it or

476
00:21:33,840 –> 00:21:36,560
[Jason Fitcher]: their kids now find out that they didn’t have much money as they thought and

477
00:21:36,640 –> 00:21:39,920
[Jason Fitcher]: there’s debt they’ve got to figure out how to pay off we need to go back to being

478
00:21:40,000 –> 00:21:41,840
[Jason Fitcher]: able to have these kitchen table financial conversations

479
00:21:43,920 –> 00:21:48,160
[Jason Fitcher]: in a responsible way without feeling guilty about it or nervous so we can talk

480
00:21:48,320 –> 00:21:51,760
[Jason Fitcher]: about what actually are our risks our trade offs the pros and cons of various

481
00:21:52,000 –> 00:21:54,640
[Jason Fitcher]: things and that’s where a financial planner comes in that’s where family and

482
00:21:54,720 –> 00:21:58,880
[Jason Fitcher]: friends can come in and we can have this again discussion of risk and how to

483
00:21:58,960 –> 00:22:01,120
[Jason Fitcher]: minimize risk especially in retirement

484
00:22:02,059 –> 00:22:06,379
[Paul Tyler]: so so if i think about the problem we’re really trying to help solve right you can

485
00:22:06,539 –> 00:22:11,259
[Paul Tyler]: step back a couple layers and say well it’s really how do you reduce your housing

486
00:22:11,339 –> 00:22:17,179
[Paul Tyler]: expenses in retirement right so big component obviously in a debt’s a hugely

487
00:22:17,339 –> 00:22:20,219
[Paul Tyler]: expensive proposition right there are other expenses

488
00:22:25,899 –> 00:22:27,499
[Paul Tyler]: okay i agree i

489
00:22:27,057 –> 00:22:28,057
[Ramsey Smith]: agree

490
00:22:27,579 –> 00:22:29,099
[Paul Tyler]: ha i wanna get my

491
00:22:30,379 –> 00:22:35,339
[Paul Tyler]: get rid of my mortgage it feels like a kind of high a rare solution where somebody

492
00:22:35,579 –> 00:22:38,539
[Paul Tyler]: could just go in and say hey you know rams i’m going to pull money out of my money

493
00:22:38,699 –> 00:22:42,939
[Paul Tyler]: market and pay off my mortgage right that feels like jason what are the most

494
00:22:42,660 –> 00:22:43,660
[Jason Fitcher]: yeah

495
00:22:43,099 –> 00:22:44,619
[Paul Tyler]: likely scenarios here where

496
00:22:45,420 –> 00:22:46,420
[Jason Fitcher]: so he here’s

497
00:22:45,659 –> 00:22:48,219
[Paul Tyler]: i actually do get rid of my eliminate my mortgage

498
00:22:48,480 –> 00:22:51,840
[Jason Fitcher]: here’s how the people should think about one is there’s when you pay off your

499
00:22:51,920 –> 00:22:54,880
[Jason Fitcher]: mortgage there’s a couple ways to do it right you just brought the idea of

500
00:22:55,040 –> 00:22:58,080
[Jason Fitcher]: basically taking money from another pot i have a you know buy a

501
00:22:57,839 –> 00:22:58,839
[Paul Tyler]: yeah

502
00:22:58,160 –> 00:23:02,720
[Jason Fitcher]: cash i have a money market i have stocks i have bonds i have a four one can retire

503
00:23:02,720 –> 00:23:07,120
[Jason Fitcher]: and going to sell x to pay off the mortgage y that’s one way and that becomes a

504
00:23:07,200 –> 00:23:10,400
[Jason Fitcher]: decision on one risk management it also becomes in how do you want to allocate

505
00:23:10,480 –> 00:23:15,200
[Jason Fitcher]: your assets think about your house it’s a portfolio right the first rule portfolio

506
00:23:15,280 –> 00:23:17,360
[Jason Fitcher]: diversification is it has to be diversified

507
00:23:18,640 –> 00:23:22,160
[Jason Fitcher]: a house is part of your diversified portfolio so you don’t want to sell all of

508
00:23:22,160 –> 00:23:25,760
[Jason Fitcher]: your stock assets to pay off a house but how do you balance it my

509
00:23:25,439 –> 00:23:26,439
[Paul Tyler]: what

510
00:23:25,920 –> 00:23:28,960
[Jason Fitcher]: thing has always been i’ve always been concerned that people take out these home

511
00:23:29,200 –> 00:23:34,080
[Jason Fitcher]: economic credits or keep refinancing to do cash refinancing to buy something else

512
00:23:34,640 –> 00:23:39,360
[Jason Fitcher]: so they start looking at their houses an atm and a cash machine as opposed to

513
00:23:39,840 –> 00:23:45,360
[Jason Fitcher]: retirement asset housing consumption et cetera so my first advice for people when

514
00:23:45,440 –> 00:23:48,240
[Jason Fitcher]: they get a mortgage is just unless rates drop

515
00:23:47,839 –> 00:23:48,839
[Paul Tyler]: water

516
00:23:48,640 –> 00:23:52,240
[Jason Fitcher]: stick with it and if race dropped you when to refinance don’t keep refinancing the

517
00:23:52,320 –> 00:23:55,680
[Jason Fitcher]: thirty years and pushing it out if you had a thirty year can you get a twenty year

518
00:23:55,760 –> 00:23:59,600
[Jason Fitcher]: next time perhaps a fifteen maybe you can do a ten year i

519
00:23:59,279 –> 00:24:00,279
[Paul Tyler]: i

520
00:23:59,680 –> 00:24:04,400
[Jason Fitcher]: ref you know my first house i couldn’t afford to pay cash for my first house i got

521
00:24:04,480 –> 00:24:06,320
[Jason Fitcher]: a thirty year mortgage rates started

522
00:24:05,919 –> 00:24:06,919
[Paul Tyler]: you

523
00:24:06,400 –> 00:24:10,000
[Jason Fitcher]: dropping i refinanced and at some point i was able to refinance to a fifteen year

524
00:24:10,160 –> 00:24:13,440
[Jason Fitcher]: mortgage and we were talking before the show and i’m happy to put it on in public

525
00:24:13,600 –> 00:24:17,680
[Jason Fitcher]: i am fifty years old and i’m two years away from paying off my house because i’ve

526
00:24:17,680 –> 00:24:21,520
[Jason Fitcher]: been paying it monthly and got a fifteen year mortgage i am going pay off my house

527
00:24:21,760 –> 00:24:24,640
[Jason Fitcher]: i am not i mean i get letters from you know banks

528
00:24:24,457 –> 00:24:25,457
[Ramsey Smith]: i think

529
00:24:24,720 –> 00:24:28,080
[Jason Fitcher]: saying hey you could be finance the equity you have in your house like yes that is

530
00:24:28,080 –> 00:24:31,120
[Jason Fitcher]: going to be my long term care insurance that is to me what my wife is gonna have

531
00:24:31,120 –> 00:24:35,600
[Jason Fitcher]: when i pass away that is going to be a worry free asset yeah i’ve gotta pay taxes

532
00:24:35,680 –> 00:24:39,440
[Jason Fitcher]: on it yes i’ll have to have maintenance i don’t have to pay rent i have to pay a

533
00:24:39,440 –> 00:24:44,160
[Jason Fitcher]: mortgage and that money that was allocated for housing can now go into other

534
00:24:44,320 –> 00:24:47,920
[Jason Fitcher]: things whether that’s vacation travel whether i want to put that back in the

535
00:24:47,920 –> 00:24:50,640
[Jason Fitcher]: market and reallocate money that what is going to housing and i’ll put

536
00:24:50,319 –> 00:24:51,319
[Paul Tyler]: see

537
00:24:50,720 –> 00:24:55,520
[Jason Fitcher]: it in investments i now have that flexibility but having the house paid off means

538
00:24:55,520 –> 00:25:00,000
[Jason Fitcher]: i can start going into retirement not worrying about housing which again for most

539
00:25:00,080 –> 00:25:03,920
[Jason Fitcher]: people it’s the biggest expense so that’s when we start thinking about housing you

540
00:25:03,920 –> 00:25:08,080
[Jason Fitcher]: know paul it’s not do i sell off all my assets to pay down the house when i retire

541
00:25:07,860 –> 00:25:08,860
[Jason Fitcher]: it’s what

542
00:25:08,239 –> 00:25:09,239
[Paul Tyler]: what

543
00:25:08,640 –> 00:25:13,280
[Jason Fitcher]: have i got is my portfolio and am i overleveraged in one versus the other and

544
00:25:13,440 –> 00:25:17,200
[Jason Fitcher]: don’t look at your house as a cash machine in the sense of using it to buy a boat

545
00:25:17,600 –> 00:25:21,360
[Jason Fitcher]: think about it as how you would take that house to mitigate risk and retirement

546
00:25:21,360 –> 00:25:24,720
[Jason Fitcher]: and presumably down the road maybe turn into a stream of income which could be

547
00:25:24,720 –> 00:25:27,760
[Jason Fitcher]: either again i’m not saying i’m buying into reverse mortgages because there’s a

548
00:25:27,760 –> 00:25:31,120
[Jason Fitcher]: lot of ways you could do home equity there’s a lot of things you can do but that

549
00:25:31,200 –> 00:25:34,640
[Jason Fitcher]: house you might decide to sell it maybe you get to the point where the house is

550
00:25:34,720 –> 00:25:39,280
[Jason Fitcher]: too big you bought this big house and the kids are gone the dogs are gone it’s

551
00:25:39,280 –> 00:25:42,400
[Jason Fitcher]: just you or maybe you’re in a spouse in this big house and you want to downsize

552
00:25:43,600 –> 00:25:46,560
[Jason Fitcher]: what do you sell how do you downsize what do you use the additional proceeds for

553
00:25:46,560 –> 00:25:48,960
[Jason Fitcher]: how do you use that to do you buy more protected income

554
00:25:48,737 –> 00:25:49,737
[Ramsey Smith]: she

555
00:25:49,040 –> 00:25:50,560
[Jason Fitcher]: do you reallocate it into the market

556
00:25:51,680 –> 00:25:54,720
[Jason Fitcher]: there’s a lot of things you can do and you have a lot more flexibility if the

557
00:25:54,720 –> 00:25:56,320
[Jason Fitcher]: house is paid off or close to it

558
00:25:56,857 –> 00:25:57,857
[Ramsey Smith]: i think

559
00:25:56,919 –> 00:25:57,919
[Paul Tyler]: i think

560
00:25:58,557 –> 00:25:59,677
[Ramsey Smith]: part of the issue here is

561
00:26:00,797 –> 00:26:05,437
[Ramsey Smith]: is is when financial advisor or somebody else is having a conversation

562
00:26:06,557 –> 00:26:08,957
[Ramsey Smith]: with a consumer that’s kind of in that right in

563
00:26:08,500 –> 00:26:09,500
[Jason Fitcher]: i

564
00:26:09,037 –> 00:26:13,037
[Ramsey Smith]: this age range we’re talking about is to sort of express upfront that

565
00:26:14,157 –> 00:26:16,397
[Ramsey Smith]: it is a it is a normal goal

566
00:26:16,500 –> 00:26:17,500
[Jason Fitcher]: yeah

567
00:26:17,197 –> 00:26:21,517
[Ramsey Smith]: to go under retirement with a debt free with debt free housing right like that

568
00:26:21,757 –> 00:26:26,557
[Ramsey Smith]: like that is a that is an aspirational first set it up as an aspirational goal so

569
00:26:26,717 –> 00:26:28,317
[Ramsey Smith]: people people see it as a

570
00:26:29,577 –> 00:26:30,577
[Ramsey Smith]: as a target

571
00:26:31,757 –> 00:26:33,117
[Ramsey Smith]: the second part of that i think

572
00:26:33,117 –> 00:26:35,357
[Ramsey Smith]: that that you said that’s very important

573
00:26:33,120 –> 00:26:35,120
[Jason Fitcher]: right um what

574
00:26:36,657 –> 00:26:37,657
[Ramsey Smith]: is

575
00:26:37,200 –> 00:26:39,040
[Jason Fitcher]: it down and the one is

576
00:26:37,277 –> 00:26:41,677
[Ramsey Smith]: ultimately highlighting that it’s an asset and then there are things that you can

577
00:26:41,677 –> 00:26:45,357
[Ramsey Smith]: do to create some liquidity around that asset so it’s the line of credit or the

578
00:26:45,357 –> 00:26:46,637
[Ramsey Smith]: verse mortgage driver you

579
00:26:46,340 –> 00:26:47,340
[Jason Fitcher]: uhuh

580
00:26:46,717 –> 00:26:49,117
[Ramsey Smith]: happen to do it but the key thing is that

581
00:26:50,397 –> 00:26:54,077
[Ramsey Smith]: that the liquidity and resources that you draw from your house

582
00:26:55,137 –> 00:26:56,137
[Ramsey Smith]: should be spent

583
00:26:55,700 –> 00:26:56,700
[Jason Fitcher]: watch

584
00:26:56,537 –> 00:26:57,537
[Ramsey Smith]: on things

585
00:26:57,180 –> 00:26:58,180
[Jason Fitcher]: know i said i

586
00:26:57,517 –> 00:27:00,077
[Ramsey Smith]: that are essential as opposed to things that are non essential

587
00:26:59,839 –> 00:27:00,839
[Paul Tyler]: what

588
00:27:00,157 –> 00:27:04,717
[Ramsey Smith]: i’m trying to i’m trying to take everything you said and sort of try to find a way

589
00:27:04,417 –> 00:27:05,417
[Ramsey Smith]: to sort

590
00:27:05,040 –> 00:27:06,640
[Jason Fitcher]: condense it yeah i think that’s great

591
00:27:05,117 –> 00:27:09,517
[Ramsey Smith]: of frame it for people that like you know that you really that that it’s okay to

592
00:27:09,199 –> 00:27:10,199
[Paul Tyler]: ban

593
00:27:09,257 –> 00:27:10,257
[Ramsey Smith]: finance

594
00:27:09,460 –> 00:27:10,460
[Jason Fitcher]: that

595
00:27:10,317 –> 00:27:11,597
[Ramsey Smith]: things but if you’re financing things

596
00:27:11,140 –> 00:27:12,140
[Jason Fitcher]: i

597
00:27:11,597 –> 00:27:15,437
[Ramsey Smith]: that are non essential you’re imparting more risk if you’re financing things that

598
00:27:15,377 –> 00:27:16,377
[Ramsey Smith]: are essential or

599
00:27:16,159 –> 00:27:17,159
[Paul Tyler]: that’s

600
00:27:16,477 –> 00:27:21,357
[Ramsey Smith]: potentially essential then you’re actually reducing risk so you know anyway i’m

601
00:27:21,337 –> 00:27:22,337
[Ramsey Smith]: this has been this

602
00:27:21,700 –> 00:27:22,700
[Jason Fitcher]: yeah

603
00:27:22,157 –> 00:27:24,237
[Ramsey Smith]: has been very helpful i’m trying to put a

604
00:27:23,600 –> 00:27:25,280
[Jason Fitcher]: well this is this is also where i

605
00:27:24,977 –> 00:27:25,977
[Ramsey Smith]: yeah

606
00:27:25,360 –> 00:27:28,800
[Jason Fitcher]: think for financial professionals to start talking to people about the role of

607
00:27:28,960 –> 00:27:32,240
[Jason Fitcher]: income and retirement what does it mean right to basically take the wealth you

608
00:27:32,320 –> 00:27:36,000
[Jason Fitcher]: have and make into a stream of income whether it’s a drawdown strategy or annuity

609
00:27:36,080 –> 00:27:40,880
[Jason Fitcher]: but it’s the role of income and we do find with research and also our anecdotal

610
00:27:40,960 –> 00:27:45,360
[Jason Fitcher]: experience talking to again real people is that they fear running out of money and

611
00:27:45,440 –> 00:27:48,320
[Jason Fitcher]: outliving their money so they fear they’re going to be living off cat food they’re

612
00:27:48,320 –> 00:27:51,840
[Jason Fitcher]: gonna spend down their money they don’t spend enough and for some people they

613
00:27:52,000 –> 00:27:55,440
[Jason Fitcher]: actually die with a significant amount of assets that they could have spent but

614
00:27:55,520 –> 00:27:59,120
[Jason Fitcher]: they were just afraid to do so and what we see this is research that david

615
00:27:59,120 –> 00:28:02,800
[Jason Fitcher]: blanchet michael have done and we’ve got some work at the alliance that this call

616
00:28:02,960 –> 00:28:06,560
[Jason Fitcher]: this license to spend right if you have enough income coming in that’s protected

617
00:28:06,640 –> 00:28:11,600
[Jason Fitcher]: it’s like your budget constraints if youer the number is that you know you’re

618
00:28:11,600 –> 00:28:16,560
[Jason Fitcher]: getting monthly it’s guaranteed it’s so security plus maybe annuity maybe it’s a

619
00:28:16,620 –> 00:28:17,620
[Jason Fitcher]: pension but you know you’ve

620
00:28:17,217 –> 00:28:18,217
[Ramsey Smith]: you

621
00:28:17,680 –> 00:28:22,480
[Jason Fitcher]: got it you spend up that and you allow other money then you can invest it you can

622
00:28:22,560 –> 00:28:26,000
[Jason Fitcher]: take it say i can go and be more risky in assets now because i know i’ve got this

623
00:28:26,080 –> 00:28:28,000
[Jason Fitcher]: printed income that pays for my essentials

624
00:28:30,000 –> 00:28:34,400
[Jason Fitcher]: if that essential includes housing whether it’s rent or mortgage that takes up a

625
00:28:34,480 –> 00:28:38,240
[Jason Fitcher]: significant dollar amount of your flexibility to do other things mitigate risks

626
00:28:38,240 –> 00:28:39,280
[Jason Fitcher]: that maybe your car

627
00:28:39,440 –> 00:28:42,720
[Jason Fitcher]: breaks down maybe you need to buy a new car during covid which is very expensive

628
00:28:39,517 –> 00:28:40,877
[Ramsey Smith]: hardly so s

629
00:28:42,960 –> 00:28:46,800
[Jason Fitcher]: if you have a housing repair get health shock all these things come into play so

630
00:28:46,880 –> 00:28:50,320
[Jason Fitcher]: you really need to think about what that means and then try to mitigate risk and

631
00:28:50,400 –> 00:28:53,200
[Jason Fitcher]: people don’t realize that a lot of these things start happening when you retire

632
00:28:53,440 –> 00:28:57,280
[Jason Fitcher]: again we get older things start breaking down not just you know our bodies start

633
00:28:57,440 –> 00:29:00,480
[Jason Fitcher]: going but we’re not as young as we used to be and who

634
00:29:00,097 –> 00:29:01,097
[Ramsey Smith]: good

635
00:29:00,640 –> 00:29:03,520
[Jason Fitcher]: knows it’s going to happen with inflation right you know is inflation going to

636
00:29:03,520 –> 00:29:06,320
[Jason Fitcher]: turn around also and go lower again is it going to continue to go up is it

637
00:29:06,400 –> 00:29:10,320
[Jason Fitcher]: transitory is it permanent how do we mitigate the risk and try to protect

638
00:29:10,640 –> 00:29:14,320
[Jason Fitcher]: ourselves and this is where it comes into big thinking more dynamically and the

639
00:29:14,480 –> 00:29:18,480
[Jason Fitcher]: more you can reduce debt to retirement the better off you’re gonna be

640
00:29:18,619 –> 00:29:24,859
[Paul Tyler]: yeah i i totally agree you got to have somebody you who’s knowledgeable helping

641
00:29:24,939 –> 00:29:30,219
[Paul Tyler]: you through this and and and i’ll just had this great chat we i i kind of read you

642
00:29:30,299 –> 00:29:33,419
[Paul Tyler]: a little bit of this just before the show but had an agent coming on an online

643
00:29:33,519 –> 00:29:34,519
[Paul Tyler]: chat and i

644
00:29:34,140 –> 00:29:35,140
[Jason Fitcher]: mm

645
00:29:34,539 –> 00:29:36,939
[Paul Tyler]: think of the risks okay the planning that’s

646
00:29:36,820 –> 00:29:37,820
[Jason Fitcher]: like

647
00:29:37,019 –> 00:29:40,859
[Paul Tyler]: involved in doing something like this and the amount of risk you’ve got to sort of

648
00:29:42,059 –> 00:29:45,499
[Paul Tyler]: dynamically work through can all you know kind of buil

649
00:29:45,260 –> 00:29:46,260
[Jason Fitcher]: but i

650
00:29:45,579 –> 00:29:51,019
[Paul Tyler]: your head so says and i’ll sanitize this a little bit so we’re not promoting

651
00:29:51,179 –> 00:29:55,419
[Paul Tyler]: products here but i have in laws that just sold their home and considering putting

652
00:29:55,499 –> 00:29:57,499
[Paul Tyler]: their profits into either one of your two

653
00:29:57,659 –> 00:30:03,259
[Paul Tyler]: annuities okay all right so they had this house they clearly sold it and they had

654
00:29:57,940 –> 00:29:58,940
[Jason Fitcher]: how you

655
00:30:03,339 –> 00:30:06,539
[Paul Tyler]: to make a bet on g do i keep this thing and

656
00:30:06,260 –> 00:30:07,260
[Jason Fitcher]: yeah

657
00:30:06,699 –> 00:30:09,819
[Paul Tyler]: get the appreciation keep you know is the market going to still going up so they

658
00:30:09,979 –> 00:30:14,059
[Paul Tyler]: bet that the probably the market’s up as high as it’s going go or they don’t need

659
00:30:14,119 –> 00:30:15,119
[Paul Tyler]: you know it’s something they

660
00:30:14,580 –> 00:30:15,580
[Jason Fitcher]: he

661
00:30:14,719 –> 00:30:15,719
[Paul Tyler]: don’t need

662
00:30:16,619 –> 00:30:19,659
[Paul Tyler]: so they’re gonna take their profits so they’re clearly using the principle and

663
00:30:19,659 –> 00:30:23,659
[Paul Tyler]: doing something else with whatever their or whatever their basis was in one of

664
00:30:23,659 –> 00:30:27,899
[Paul Tyler]: these news so they’re diversifying their risk right so they’re keeping some who

665
00:30:27,979 –> 00:30:30,619
[Paul Tyler]: knows what they’re doing the the capital gains the

666
00:30:30,340 –> 00:30:31,340
[Jason Fitcher]: and

667
00:30:30,779 –> 00:30:35,499
[Paul Tyler]: thinking of putting in annuities now here’s what it’s it’s more complicated i had

668
00:30:35,659 –> 00:30:41,259
[Paul Tyler]: to go dig deep on this one ramsey you love this if they submit jointly will a

669
00:30:41,060 –> 00:30:42,060
[Jason Fitcher]: what i

670
00:30:41,339 –> 00:30:42,859
[Paul Tyler]: policy continue as normal should

671
00:30:42,820 –> 00:30:43,820
[Jason Fitcher]: the new york

672
00:30:43,019 –> 00:30:47,419
[Paul Tyler]: one pass or is it better for just one to submit okay so he’s also managing

673
00:30:47,439 –> 00:30:48,439
[Paul Tyler]: longevity risk

674
00:30:48,160 –> 00:30:50,320
[Jason Fitcher]: but if and spouse

675
00:30:50,439 –> 00:30:51,439
[Paul Tyler]: the spouse

676
00:30:50,860 –> 00:30:51,860
[Jason Fitcher]: possible benefit

677
00:30:51,737 –> 00:30:52,737
[Ramsey Smith]: yep

678
00:30:52,619 –> 00:30:55,659
[Paul Tyler]: right how long are they are they going to go and you know the answer is

679
00:30:55,739 –> 00:31:00,139
[Paul Tyler]: complicated because you know if if one’s an owner as it turns out ramsay don’t

680
00:30:59,919 –> 00:31:00,919
[Paul Tyler]: know this before

681
00:31:00,880 –> 00:31:02,560
[Jason Fitcher]: why you go over that i

682
00:31:01,659 –> 00:31:07,259
[Paul Tyler]: you know certain of these features are disappear if the spouse is a is just listed

683
00:31:07,339 –> 00:31:11,979
[Paul Tyler]: as a beneficiary so you got to think through what the contract is who you put on

684
00:31:11,599 –> 00:31:12,599
[Paul Tyler]: as

685
00:31:12,100 –> 00:31:13,100
[Jason Fitcher]: i did like

686
00:31:12,219 –> 00:31:13,819
[Paul Tyler]: the owner and then

687
00:31:14,139 –> 00:31:18,139
[Paul Tyler]: jason the next questions we sort of dig down is like when the money is

688
00:31:14,400 –> 00:31:15,600
[Jason Fitcher]: she would be man

689
00:31:17,820 –> 00:31:18,820
[Jason Fitcher]: like you

690
00:31:18,219 –> 00:31:21,979
[Paul Tyler]: withdrawn on a monthly basis how’s it taxed oh

691
00:31:23,020 –> 00:31:24,020
[Jason Fitcher]: i think i

692
00:31:23,659 –> 00:31:27,499
[Paul Tyler]: you know here’s it okay well is it a free withdrawal versus income versus

693
00:31:28,939 –> 00:31:32,859
[Paul Tyler]: what does the tax rate look like five six ten years from now

694
00:31:32,640 –> 00:31:36,800
[Jason Fitcher]: ten year again your point life is complicated these are complicated decisions

695
00:31:36,859 –> 00:31:37,979
[Paul Tyler]: yeah so yeah

696
00:31:37,120 –> 00:31:40,640
[Jason Fitcher]: and i think well this is you know again there’s a lot of things we don’t know

697
00:31:40,720 –> 00:31:43,520
[Jason Fitcher]: about their their circumstances right do they have other assets besides the house

698
00:31:43,680 –> 00:31:47,680
[Jason Fitcher]: they just sold how much of the assets do they have are they getting any other

699
00:31:47,840 –> 00:31:52,720
[Jason Fitcher]: income from dividends are they do they have an ira they taking r m ds i

700
00:31:52,720 –> 00:31:56,880
[Jason Fitcher]: don’t know so there there’s is a lot that goes into this but what i started seeing

701
00:31:52,937 –> 00:31:53,937
[Ramsey Smith]: i don’t there’s

702
00:31:57,200 –> 00:32:00,480
[Jason Fitcher]: you know again and partis and the research you seeing the data and then two is the

703
00:32:00,560 –> 00:32:03,520
[Jason Fitcher]: anecdote when we talk to real people and you start to merge the two together to

704
00:32:03,600 –> 00:32:08,240
[Jason Fitcher]: get a picture of what’s going on in retirement is that more people are entering

705
00:32:08,320 –> 00:32:12,000
[Jason Fitcher]: retirement with housing debt so they haven’t paid off their mortgage and they’ve

706
00:32:12,000 –> 00:32:17,280
[Jason Fitcher]: been so useless framing of well i can borrow for cheap it’s almost co the phrase i

707
00:32:17,280 –> 00:32:19,120
[Jason Fitcher]: always hate is it’s almost free money

708
00:32:20,240 –> 00:32:21,840
[Jason Fitcher]: there’s no such thing as free i

709
00:32:21,920 –> 00:32:25,680
[Jason Fitcher]: mean there’s just there’s this and that and i don’t mean that you know the people

710
00:32:21,997 –> 00:32:23,117
[Ramsey Smith]: that’s the truth yeah

711
00:32:25,840 –> 00:32:28,880
[Jason Fitcher]: say free money because the cost is low but it’s the opportunity cost of that money

712
00:32:29,280 –> 00:32:32,240
[Jason Fitcher]: what you could do with it and you have some people saying well take the money out

713
00:32:32,240 –> 00:32:35,520
[Jason Fitcher]: of your house in which you’re paying even if you’re paying now say you’re paying

714
00:32:35,600 –> 00:32:38,560
[Jason Fitcher]: four percent if you’re paying four percent you can put up the market making ten

715
00:32:38,640 –> 00:32:41,440
[Jason Fitcher]: percent a year and your arbitrage the taxes you’re coming out of head you’re not

716
00:32:41,440 –> 00:32:45,280
[Jason Fitcher]: financially smart where the market goes down right so you lose twenty percentage

717
00:32:45,520 –> 00:32:49,440
[Jason Fitcher]: one year in a market you’ve now got this huge debt on your house

718
00:32:49,039 –> 00:32:50,039
[Paul Tyler]: yeah

719
00:32:49,520 –> 00:32:52,160
[Jason Fitcher]: that you got to pay for you might not be able to afford it where it happened to

720
00:32:52,240 –> 00:32:55,200
[Jason Fitcher]: your income stream now you’re out of a house what do you do you gonna go live with

721
00:32:55,100 –> 00:32:56,100
[Jason Fitcher]: your kids you’re gonna

722
00:32:55,657 –> 00:32:56,657
[Ramsey Smith]: it’s

723
00:32:55,900 –> 00:32:56,900
[Jason Fitcher]: you know

724
00:32:57,840 –> 00:33:01,280
[Jason Fitcher]: this is the risk that we’re not talking about it’s too focused on

725
00:33:02,320 –> 00:33:06,240
[Jason Fitcher]: trying to get maximum yield after the point of time when you should be thinking

726
00:33:06,240 –> 00:33:09,200
[Jason Fitcher]: about yield i’m not saying you don’t think of growth mats i think about inflation

727
00:33:09,280 –> 00:33:13,600
[Jason Fitcher]: but that goes back to a diversified portfolio and the house should be part of a

728
00:33:13,680 –> 00:33:15,600
[Jason Fitcher]: diversified portfolio and also

729
00:33:15,457 –> 00:33:16,457
[Ramsey Smith]: yeah

730
00:33:15,840 –> 00:33:20,560
[Jason Fitcher]: but it’s this is where think people get confused they they see like a stock and a

731
00:33:20,560 –> 00:33:24,320
[Jason Fitcher]: bond and they think that’s an asset so in their head it’s an asset they look at

732
00:33:24,400 –> 00:33:28,000
[Jason Fitcher]: the house and for a lot of fines professionals they talk about it as an asset but

733
00:33:28,080 –> 00:33:30,240
[Jason Fitcher]: it takes two functions one is the asset

734
00:33:29,999 –> 00:33:30,999
[Paul Tyler]: yeah

735
00:33:30,320 –> 00:33:32,240
[Jason Fitcher]: so diversify your portfolio but

736
00:33:32,559 –> 00:33:33,559
[Paul Tyler]: yes

737
00:33:32,960 –> 00:33:38,000
[Jason Fitcher]: you consume housing you’re living in it so to an economist i’m looking at this

738
00:33:38,000 –> 00:33:39,040
[Jason Fitcher]: house that i sit in and

739
00:33:38,897 –> 00:33:39,897
[Ramsey Smith]: did i

740
00:33:39,120 –> 00:33:43,280
[Jason Fitcher]: i’m talking to you guys on i’m consuming living here so it’s part investment part

741
00:33:43,360 –> 00:33:47,360
[Jason Fitcher]: consumption and it’s that consumption that we talk about with our monthly expenses

742
00:33:47,440 –> 00:33:51,040
[Jason Fitcher]: we have in retirement i have to consume utilities i have to consume housing i have

743
00:33:51,200 –> 00:33:54,720
[Jason Fitcher]: to consume carss that to consume travel to consume health care if all of a sudden

744
00:33:54,720 –> 00:33:56,960
[Jason Fitcher]: my housing consumption costs are low

745
00:33:58,000 –> 00:34:02,560
[Jason Fitcher]: i have a lot more flexibility to do and afford the other things including shocks

746
00:34:03,837 –> 00:34:05,997
[Ramsey Smith]: one of which is inflation right

747
00:34:05,860 –> 00:34:06,860
[Jason Fitcher]: is it yes

748
00:34:06,057 –> 00:34:07,057
[Ramsey Smith]: so like if you

749
00:34:06,719 –> 00:34:07,719
[Paul Tyler]: yes

750
00:34:07,197 –> 00:34:08,637
[Ramsey Smith]: because if you rent if you rent

751
00:34:08,260 –> 00:34:09,260
[Jason Fitcher]: good point

752
00:34:08,717 –> 00:34:11,277
[Ramsey Smith]: housing inflation’ is going to hit you more directly than if you

753
00:34:11,119 –> 00:34:12,119
[Paul Tyler]: yeah

754
00:34:11,677 –> 00:34:14,637
[Ramsey Smith]: and if you own your home so you’re indexed no

755
00:34:12,880 –> 00:34:17,120
[Jason Fitcher]: yep that that’s yep you’re exactly right and this is also i mean pill asked what

756
00:34:17,200 –> 00:34:19,280
[Jason Fitcher]: should i rent in retirement but yeah the best answer

757
00:34:18,959 –> 00:34:19,959
[Paul Tyler]: yeah

758
00:34:19,680 –> 00:34:24,320
[Jason Fitcher]: we always talked about for any economic question is it depends right so you go

759
00:34:24,400 –> 00:34:27,840
[Jason Fitcher]: back to that couple you were talking about the advisor who emailed you paul what

760
00:34:27,540 –> 00:34:28,540
[Jason Fitcher]: if that

761
00:34:27,777 –> 00:34:28,777
[Ramsey Smith]: like

762
00:34:27,780 –> 00:34:28,780
[Jason Fitcher]: couple

763
00:34:28,159 –> 00:34:29,159
[Paul Tyler]: that

764
00:34:28,640 –> 00:34:30,080
[Jason Fitcher]: said we’re you know we decide

765
00:34:29,879 –> 00:34:30,879
[Paul Tyler]: i want

766
00:34:30,240 –> 00:34:32,720
[Jason Fitcher]: we wanna take the next eighteen months in travel

767
00:34:33,760 –> 00:34:37,600
[Jason Fitcher]: you could use in some way some proceeds have a small base sign of twelve or

768
00:34:37,600 –> 00:34:41,280
[Jason Fitcher]: eighteen month lease right lock in payments have a have a home base use those

769
00:34:41,520 –> 00:34:42,640
[Jason Fitcher]: proceeds to pay for rent

770
00:34:42,417 –> 00:34:43,417
[Ramsey Smith]: by

771
00:34:42,800 –> 00:34:46,160
[Jason Fitcher]: go travel and then figure out when you come back whether or not you need to have a

772
00:34:46,160 –> 00:34:50,080
[Jason Fitcher]: small condo or a small house or what you want to do renting is not always bad but

773
00:34:50,240 –> 00:34:54,240
[Jason Fitcher]: again you have to understand that there’s consumption and that’s part of your

774
00:34:54,240 –> 00:34:57,760
[Jason Fitcher]: budget fine but you’re now exposing yourself to rental increases and everything

775
00:34:57,540 –> 00:34:58,540
[Jason Fitcher]: else so

776
00:34:59,440 –> 00:35:02,640
[Jason Fitcher]: got i want people to have these conversations because it’s the conversations that

777
00:35:02,720 –> 00:35:06,160
[Jason Fitcher]: allow the individual to say hey i also have this issue i didn’t tell you about

778
00:35:06,240 –> 00:35:09,440
[Jason Fitcher]: maybe add that into the conversation and see what that means for my my risk

779
00:35:09,179 –> 00:35:13,579
[Paul Tyler]: you visited oh yeah well in ramsey you gotta laugh so you know where my head

780
00:35:13,659 –> 00:35:17,419
[Paul Tyler]: goes there is gee if you’re going to travel and you’re senior do you have met sup

781
00:35:13,760 –> 00:35:14,880
[Jason Fitcher]: i don’t know yeah

782
00:35:17,579 –> 00:35:22,539
[Paul Tyler]: you have that advantage and are you going to be a networker out jason it’s just

783
00:35:22,539 –> 00:35:26,699
[Paul Tyler]: it’s like you pull a thread and it’s just it just will not stop coming

784
00:35:30,480 –> 00:35:34,400
[Jason Fitcher]: these are again they’re complicated issues i i don’t want to solve them with a

785
00:35:34,480 –> 00:35:38,800
[Jason Fitcher]: bumper sticker you know rules of thumbs you know are general rules that don’t

786
00:35:38,800 –> 00:35:43,840
[Jason Fitcher]: always apply to everybody but it it is important to have these conversations and i

787
00:35:43,840 –> 00:35:46,800
[Jason Fitcher]: think that’s one of the things that is improving we are seeing it improve

788
00:35:48,800 –> 00:35:53,520
[Jason Fitcher]: but too often i and i love that in fact we have access to credit believe it access

789
00:35:53,760 –> 00:35:58,000
[Jason Fitcher]: to credit makes things work i mean this is just i’m all in favor of access to

790
00:35:58,080 –> 00:36:01,600
[Jason Fitcher]: credit i want to be more nuanced i can have a better discussion of what it means

791
00:36:02,080 –> 00:36:05,840
[Jason Fitcher]: because it becomes too easy that people don’t really understand the long term

792
00:36:06,800 –> 00:36:11,520
[Jason Fitcher]: implications of that debt that’s whether credit card debt car debt housing debt

793
00:36:11,600 –> 00:36:15,200
[Jason Fitcher]: you name it um but it’s part of that conversation you have to have before you go

794
00:36:15,360 –> 00:36:17,840
[Jason Fitcher]: into well before you go into retirement to be honest

795
00:36:18,459 –> 00:36:23,659
[Paul Tyler]: so ramsey i don’t know you maybe you you your takeaways did we make this simpler

796
00:36:23,739 –> 00:36:24,779
[Paul Tyler]: or more complicated

797
00:36:26,637 –> 00:36:30,877
[Ramsey Smith]: for me that the the the biggest thing i would hope that everybody takes away from

798
00:36:31,037 –> 00:36:33,277
[Ramsey Smith]: this is one this

799
00:36:32,879 –> 00:36:33,879
[Paul Tyler]: like

800
00:36:32,980 –> 00:36:33,980
[Jason Fitcher]: well

801
00:36:33,177 –> 00:36:34,177
[Ramsey Smith]: idea that

802
00:36:33,177 –> 00:36:34,177
[Ramsey Smith]: idea that

803
00:36:35,137 –> 00:36:36,137
[Ramsey Smith]: that

804
00:36:35,759 –> 00:36:36,759
[Paul Tyler]: you

805
00:36:35,837 –> 00:36:39,517
[Ramsey Smith]: reducing risk and retirement is critical cause you’ve got fewer options

806
00:36:39,679 –> 00:36:40,679
[Paul Tyler]: that

807
00:36:40,397 –> 00:36:41,837
[Ramsey Smith]: to an important component of that

808
00:36:40,400 –> 00:36:42,080
[Jason Fitcher]: you’re like oh oh

809
00:36:43,057 –> 00:36:44,057
[Ramsey Smith]: is

810
00:36:43,500 –> 00:36:44,500
[Jason Fitcher]: that not

811
00:36:44,237 –> 00:36:47,837
[Ramsey Smith]: reducing or eliminating the debt that you have associated with

812
00:36:47,599 –> 00:36:48,599
[Paul Tyler]: my

813
00:36:47,997 –> 00:36:51,037
[Ramsey Smith]: your your housing because it imparts more risk three

814
00:36:50,719 –> 00:36:51,719
[Paul Tyler]: we

815
00:36:51,277 –> 00:36:54,077
[Ramsey Smith]: to the extent that you have a house that is an asset

816
00:36:54,239 –> 00:36:55,239
[Paul Tyler]: yeah

817
00:36:54,817 –> 00:36:55,817
[Ramsey Smith]: and you can

818
00:36:55,780 –> 00:36:56,780
[Jason Fitcher]: what type what

819
00:36:55,917 –> 00:37:00,637
[Ramsey Smith]: use it to create sources of liquidity those are sources of liquidity that should

820
00:37:00,717 –> 00:37:03,677
[Ramsey Smith]: be used one in the case of emergencies and two in the case

821
00:37:04,717 –> 00:37:08,237
[Ramsey Smith]: of financing your sort of essential consumption in retirement

822
00:37:08,940 –> 00:37:09,940
[Jason Fitcher]: alright

823
00:37:09,677 –> 00:37:14,237
[Ramsey Smith]: and only frankly as a last resort for non essentials so

824
00:37:12,400 –> 00:37:14,400
[Jason Fitcher]: okay i know about play s

825
00:37:15,279 –> 00:37:16,279
[Paul Tyler]: that’s

826
00:37:15,517 –> 00:37:19,917
[Ramsey Smith]: that’s sort of the framework that sort of i put together as we were as we were

827
00:37:15,517 –> 00:37:19,917
[Ramsey Smith]: that’s sort of the framework that sort of i put together as we were as we were

828
00:37:20,057 –> 00:37:21,057
[Ramsey Smith]: walking through this

829
00:37:20,057 –> 00:37:21,057
[Ramsey Smith]: walking through this

830
00:37:21,120 –> 00:37:24,960
[Jason Fitcher]: that’s a fantastic for eric ramsay and now we know why you get paid the big bucks

831
00:37:25,040 –> 00:37:27,360
[Jason Fitcher]: cause you hit it right on the not right in the nose

832
00:37:28,539 –> 00:37:33,499
[Paul Tyler]: yeah well jason this was this was great um i guess you you’ve done some really

833
00:37:33,279 –> 00:37:34,279
[Paul Tyler]: good research

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00:37:35,179 –> 00:37:36,459
[Paul Tyler]: we have a lot of advisors

835
00:37:37,499 –> 00:37:41,179
[Paul Tyler]: what would you suggest first of all where can they find more of what you’re doing

836
00:37:41,579 –> 00:37:45,099
[Paul Tyler]: and is there any place you’d say advisors should look to as they’re

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00:37:45,057 –> 00:37:46,057
[Ramsey Smith]: uh

838
00:37:45,259 –> 00:37:49,259
[Paul Tyler]: helping their clients think through what they do with their mortgage

839
00:37:50,320 –> 00:37:53,520
[Jason Fitcher]: so my research you can you can google my name and i think you guys post links

840
00:37:53,380 –> 00:37:54,380
[Jason Fitcher]: sometimes to the research

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00:37:53,919 –> 00:37:54,919
[Paul Tyler]: yes

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00:37:54,480 –> 00:37:57,600
[Jason Fitcher]: so i i have two papers that were financed by the social security administration

843
00:37:57,600 –> 00:38:01,920
[Jason Fitcher]: that were done through the university of wisconsin on on debt and retirement and

844
00:38:01,920 –> 00:38:05,120
[Jason Fitcher]: that includes not just housing debt which is the largest debt but even credit card

845
00:38:05,200 –> 00:38:09,360
[Jason Fitcher]: debt which shows that debt levels are rising and and if someone is going to email

846
00:38:09,440 –> 00:38:10,720
[Jason Fitcher]: you we should say that it’s also

847
00:38:11,137 –> 00:38:12,137
[Ramsey Smith]: yes

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00:38:11,200 –> 00:38:16,240
[Jason Fitcher]: assets arising but the debt to asset ratio is also rising so as people get more

849
00:38:16,320 –> 00:38:19,360
[Jason Fitcher]: assets they feel like they were more comfortable taking on more debt and we see

850
00:38:19,440 –> 00:38:22,480
[Jason Fitcher]: that like for ten percent of the population heading into retirement at some point

851
00:38:22,380 –> 00:38:23,380
[Jason Fitcher]: they have

852
00:38:23,097 –> 00:38:24,097
[Ramsey Smith]: yeah yeah

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00:38:23,200 –> 00:38:27,200
[Jason Fitcher]: more debt liabilities and assets to cover them so that’s also important so

854
00:38:27,039 –> 00:38:28,039
[Paul Tyler]: that

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00:38:27,360 –> 00:38:31,200
[Jason Fitcher]: that’s online again you can just google my name and like ho home mortgage those

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00:38:31,360 –> 00:38:33,280
[Jason Fitcher]: two papers should come up i would

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00:38:32,977 –> 00:38:33,977
[Ramsey Smith]: maybe

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00:38:33,440 –> 00:38:36,240
[Jason Fitcher]: encourage people to pull up a two to pager that the social

859
00:38:36,560 –> 00:38:40,800
[Jason Fitcher]: administration does when to start receiving retirement benefits it sort of walks

860
00:38:36,577 –> 00:38:37,577
[Ramsey Smith]: see

861
00:38:40,880 –> 00:38:43,840
[Jason Fitcher]: through this kitchen table conversation about thinking about your spouse other

862
00:38:43,920 –> 00:38:47,520
[Jason Fitcher]: assets that’s even a good framework to have on thinking about what it means to pay

863
00:38:47,600 –> 00:38:50,480
[Jason Fitcher]: off your house like what other assets do you have what other sources of income do

864
00:38:50,560 –> 00:38:52,000
[Jason Fitcher]: you have what do you want to do how’s your health

865
00:38:51,799 –> 00:38:52,799
[Paul Tyler]: let’s see

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00:38:52,080 –> 00:38:54,640
[Jason Fitcher]: those are important things to have a conversation with people

867
00:38:54,319 –> 00:38:55,319
[Paul Tyler]: what

868
00:38:54,800 –> 00:38:58,240
[Jason Fitcher]: on and then obviously the alliance for lifetime income which is that protective

869
00:38:58,320 –> 00:39:00,160
[Jason Fitcher]: income that or we have a lot of uh

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00:39:01,040 –> 00:39:03,680
[Jason Fitcher]: materials for financial professionals they can use

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00:39:01,057 –> 00:39:02,057
[Ramsey Smith]: hear

872
00:39:04,720 –> 00:39:09,760
[Jason Fitcher]: and also for consumers there’s a dictionary there’s glass of terms there’s things

873
00:39:09,840 –> 00:39:12,880
[Jason Fitcher]: you should ask your financial professionals so we have terms online as well and

874
00:39:12,960 –> 00:39:16,960
[Jason Fitcher]: the bipartisan pa center were doing lots of research on retirement security google

875
00:39:17,040 –> 00:39:21,200
[Jason Fitcher]: funding our future and it’ll pop up to the b b pc page you can see all the work

876
00:39:21,360 –> 00:39:24,720
[Jason Fitcher]: we’re doing there to help people have a financially secure retirement but also a

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00:39:24,880 –> 00:39:28,800
[Jason Fitcher]: financially secure working years we’re trying to also encourage like secure act

878
00:39:28,960 –> 00:39:32,560
[Jason Fitcher]: two point zero and more employers to have financial wellness programs and to

879
00:39:32,640 –> 00:39:35,360
[Jason Fitcher]: encourage people to have access to and save for retirement as well

880
00:39:35,739 –> 00:39:39,579
[Paul Tyler]: oh that’s great listen we’ll put all those links in the show notes and jason

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00:39:39,659 –> 00:39:42,379
[Paul Tyler]: thanks thanks for having me on here again this is great yeah

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00:39:41,357 –> 00:39:43,277
[Ramsey Smith]: thanks a lot thanks for coming back

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00:39:42,480 –> 00:39:45,280
[Jason Fitcher]: always a pleasure gentlemen good to see you both and have this discussion

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00:39:43,739 –> 00:39:48,459
[Paul Tyler]: yeah hey ramsey thanks and uh thanks to all our listeners and be sure to tune

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00:39:48,619 –> 00:39:52,299
[Paul Tyler]: again next week for another episode of that annuity show thanks

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEpisode 143: When Should Your Client Pay Off The Mortgage With Jason Fichtner

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