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AL Financial Guru: Forming a strategy to prepare for the unexpected

Birmingham, Alabama-based financial guru Jeff Roberts, who was recently named one of the top private wealth advisors in the nation by Barron’s®, came on Yellowhammer Radio to lay out the facts so people can decide for themselves.

The full conversation with Mr. Roberts can be heard on the Yellowhammer Radio podcast or in the video above, and a lightly edited transcript of his interview with Yellowhammer’s Andrea Tice and Scott Chambers can be read below.

Subscribe to the Yellowhammer Radio Podcast on iTunes. Learn more about Jeff Roberts’ private wealth advisory practice at JeffRobertsAndAssociates.com.


Scott Chambers:

Welcome back it’s Yellow Hammer Radio Superstation 101 WYDE. I’m trying to bribe our producer Big Dave Richardson and I offered fast food. He says he needs a steak. See, I’m looking out for my finances, that’s what I’m doing. I’m looking out for my finances. I can’t afford a steak. I’m going to offer fast food, Big Dave. Because see I’ve talked to financial gurus like Jeff Roberts here, and that’s what I’d do. I’m looking out for my money, Big Dave, so that bribe still stands, but it’s got to be fast food, good sir. Okay? It’s got to be a fast food.

Andrea Tice:

And what are you doing with all that extra money you’re saving with your fast food bribery? I mean, are you squirreling it away with the plan that Jeff has given us?

Scott Chambers:

It’s going to bills. It’s going to go to bills. That’s where it’s going to.

Andrea Tice:

Not retirement? Oh.

Scott Chambers:

Exactly. It’s Wednesday. On the show with us is our local financial guru Jeff Roberts. Jeff is, of course, the founder of Jeff Roberts and Associates. His team of seven advisors can help simplify your complex wealth management needs. They’re exceptional financial advisors who have provided sophisticated financial planning and advice to high net worth clients for a combined 131 years.

Last week Jeff Roberts … We were talking about some interestingly cool stuff here on the program with you, like the 3-Minute Confident Retirement check; founded jeffrobertsandassociates.com. Now since then, we’ve been drilling down on your Confident Retirement approach and its four principles. So, let’s review it. Tell us again about the Confident Retirement approach, and by the way don’t you think that fast food’s cheaper than steak, right?

Jeff Roberts:

No doubt, brother.

Scott Chambers:

Exactly.

Jeff Roberts:

You’ve got to set those dollars aside for your retirement plan [crosstalk 00:01:37].

Scott Chambers:

Amen. That’s right. It’s right.

Jeff Roberts:

I’m serious. I mean don’t get me wrong. I know you love your job on the radio and you’d love to do it for the rest of your life. However, you want to get to the point where work is optional …

Scott Chambers:

Right.

Jeff Roberts:

… and retirement becomes affordable. So we’ve got to save, man, save [crosstalk 00:01:51]

Scott Chambers:

I’m thinking like 45 or 50. That’s when I want to call it a day.

Jeff Roberts:

We can do this. Have to be aggressive, though brother, save hard.

Andrea Tice:

[crosstalk 00:01:58] well really aggressive. Stop eating. Altogether.

Jeff Roberts:

That’s right. Well Ameriprise’s Confident Retirement approach gives clients a straight forward framework to create a sound retirement plan that can give them an income for a lifetime. The key word in this, and I always want clients to remember this, is confidence, confidence, confidence. It’s what everyone wants as they build towards their financial future, whether they’re in retirement now, or trying to get there.

The key that everyone wants is confidence, and we believe that there’s four essential ingredients to having confidence in retirement and we discussed in our first week. A key principle is covering essentials, and that is to have a set amount of money that is going to provide either guaranteed or secure stable income that will cover our fixed expenses that we know are going to be there all the time, like medical, utilities, transportation, food.

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

Gives us that peace of mind of knowing, “Oh I know I’ve got this bucket that covers my essentials.”

Then we move to the next principle, which is “insuring our lifestyle”, which is where we take an investment portfolio and design an income stream from it to cover the fun and extra things that we want to do in our life. The travel, dining out, the hobbies, bucket list stuff.

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

And then we have “preparing for the unexpected”, because we know that change can happen quickly in preparing for the uncertainty, or the certainty of uncertainty.

And then the last principle is “leaving the legacy.” Smart giving is about controlling and leveraging what you have accumulated in your life and plan now for what that legacy is to be.

Those are the four essential ingredients to being confident. You tackle each of those, you’ve got confidence.

Andrea Tice:

All right. So far, Jeff, we’ve covered the first two, and today is the time to cover the third principle which was “preparing for the unexpected.” So, tell us what that is all about.

Jeff Roberts:

Well, having a strategy to protect against the unexpected events is a critical part of achieving true confidence in retirement. With a plan in place to cover those essential expenses that we talked about, would guarantee your stable income. And then have a flexible investment withdrawal plan from a portfolio that’s going to cover our lifestyle. The next logical step is to prepare for the unexpected. That’s crafting a plan with solutions to mitigate the impact of unexpected life events that are going to hit us, so that you can ensure a truly confident retirement.

Scott Chambers:

Jeff, can you give us an example of an unexpected event?

Jeff Roberts:

There’s four primary that I would categorize. First is “long term care expenses,” “property loss and personal liability,” …

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

… “pre-retirement disability,” being sick or ill prior to getting retirement, …

Andrea Tice:

OK.

Jeff Roberts:

… and then “premature death.” Those are the four primary unexpected risks that people face prior to and even during retirement.

Scott Chambers:

You mentioned death, there. I know we’ve talked about the issue of long term care expenses before in previous segments. I know that’s a huge concern for people approaching retirement or if they’re already in retirement. So tell us again of some of the statistics that our listeners might want to know when considering their plans for long term care, because, you mentioned death a moment ago but maybe it’s not always death. Maybe it’s the long term care.

Andrea Tice:

Longer than expected.

Scott Chambers:

Right.

Jeff Roberts:

Well, long term care references is people that are in retirement. They become sick or ill for an extended period of time. And as we know, Americans are living longer than ever. This means that many will require long term care at some point in their retirement. An estimated 70 percent of the individuals age 65 or older will need long term care services during their lifetime.

So, the cost can be draining to a portfolio, obviously. The national average in terms of cost, of a private room in a nursing home, exceeds $85,000 dollars a year.

Andrea Tice:

Wow.

Jeff Roberts:

… per person.

Andrea Tice:

Wow.

Jeff Roberts:

The average stay which is about two and half years adds up to in that case, say $214,000 dollars for a private room. To give you some specifics related to Alabama. A private room in Alabama as it stands today is right at $6,384 dollars a month. That works out to be about $76,000 dollars a year for one person. So, it can have a substantial impact on somebody’s retirement nest-egg, if it’s not planned in advance. Huge.

Andrea Tice:

OK. So we’re talking about preparing for the unexpected. What are some common mistakes that you see people making as they’re moving to this third, you know, phase or plan?

Jeff Roberts:

You know, the principle of “preparing for the unexpected” was kind of a third principle of the Confident Retirement approach.

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

And often times it’s so simple, because the three most common mistakes that we see when clients come in and talk to us all the time, is number one, they don’t adequately prepare themselves for liability by having something as simple as an umbrella policy.

Andrea Tice:

OK.

Jeff Roberts:

And umbrella liability insurance can be a very effective means of protecting someone’s assets that is often really unnecessary to risk. An umbrella insurance can provide coverage beyond the liability limits of auto, or home insurance in the event you’re liable for personal injury of another.

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

And so, so many people don’t even have a simple policy that might have a million dollar limit or two million dollar limit. Simple, simple way of transferring risk and often times very inexpensive. That’s one.

Another common is, many people, when we think about disability … In someone’s working life, the final years before you retire, if you think about it, of your full time work tend to be representative of the period of peak earnings for most people, and the financial commitments that people typically have start to subside. So kids are out from under their wing. College education is done.

Andrea Tice:

Yeah.

Jeff Roberts:

They have greater resources that they can afford to put towards the funding of their retirement goals. Yet that’s also the time where people often time have unexpected illnesses or injuries …

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

… Prior to retirement. And it can have a substantial impact on their ability to save in the final stretch, to push that ball in the last five yards into the end zone.

Andrea Tice:

Mm-hmm (affirmative).

Jeff Roberts:

And so people have disability insurance often times through their employer, but the national average is- it’s around 40 to 50 percent of their base pay is what they would be covering, or covered with. And so having some sort of supplemental disability can make a tremendous difference in their ability to achieve their goals in the home stretch if they end up being sick or ill for an extended period. 50 percent of people are forced to stop working before they planned, and in half of those cases, it’s because of disability that has prevented them from working.

And the last example that we see most common is people that are under-insured for life insurance. Oh my gosh, you know, I cannot emphasize this as well, and especially when we see the young folks that have kids still under their wings, and responsible for food on the table for all of them. If a spouse might be working or not working as well. A rule of thumb might be 10 times someone’s annual income, as a minimum standard.

I just can’t emphasize enough how inexpensively you can get some, perhaps term insurance, either through through their employer or individually, that can help sure-up that gap.

There’s an interesting statistic- I was just reading it, kind of a last point. Each day there’s 10,000 baby boomers that turn 65 years of age.

Scott Chambers:

Wow.

Jeff Roberts:

And, that’s the traditional retirement age. But a lesser known fact is that each week, approximately 10,000 baby boomers die.

Scott Chambers:

Wow.

Jeff Roberts:

And not all baby boomers are at retirement. So, protection planning for disability, umbrella liability, life insurance, long term care, these are massive pieces that you’ve got to have nailed if you want to have confidence in retirement.

Scott Chambers:

No question. No question. Well, Jeff, if anyone has any interest in getting help or if they want to be more confident towards their own retirement, what do they need to do?

Jeff Roberts:

Give us a buzz at 313-9150 or look us up on jeffrobertsandassociates.com. Feel free to take our 3-minute Confident Retirement quiz. That’s excellent strategy.

Scott Chambers:

All right, yeah. Recommend people head over to jeffrobertsandassociates.com and do that. Jeff Roberts, my man, it’s a pleasure speaking with you each and every Wednesday. We look forward to chatting next week in continuing on this valuable conversation.

Jeff Roberts:

Enjoy it always, guys. Thank you.

Scott Chambers:

All right. Take care. God bless. Jeff Roberts, Jeff Roberts and Associates with us here on Yellow Hammer Radio. We’re back …