Will You Run Out of Money? Take This 7-Question Retirement Test

Almost everyone who sits down across from Phil asks the same question, "Do I have enough to retire?" Or the scarier version, "Will I run out of money?" Phil's been doing this for 30 years. And he says, "The number on your statement is sometimes the last thing he looks at." Today, he's walking us through the seven questions he asks first before he'll tell anyone if they can retire. Phil, if it's not how much they have, what's the first thing you ask?

Phil, the scary question in this episode that you are asked by lots of people is will I run out of money? That is a very loaded question. What is usually your response? And I know that there's a method behind your madness, but what is your initial reaction to the question, will I run out of money?

My initial reaction is probably if we don't make a change, yes. Because when someone asks that question, they've already thought about it and they have some idea. They have some idea of what their cost of living really looks like and they're fearful of something or they wouldn't ask that question. Most people have a good idea if they spend within their means, if they have enough money to generate some interest that they can live on, if they have other income. They have a decent idea. Now, there are times when they don't.

And so, in those cases, I usually turn the question back to them and I say, "What do you think? Do you think you'll run out of money? I want to hear that." But then I come back to them with several questions because it's hard, right, to answer that question without knowing a lot more information. I can say, well, maybe not, but who knows? Depending on your spending, how much money do you have? What are you saving? When do you want to retire?

I talked with a client last week, Spell, and they're 50 years old and they're ready to retire in five years. They're adamant. They are not relenting. They will retire at 55. And they have done such a good job. They've followed literally every ounce of advice that we've given them. They've followed it and they are making progress like you wouldn't believe. Five more years they want to retire. They certainly have that option.

Nice. Nice.

That is diligence at its best. That is dedication at its best. That is perseverance at its best because they weren't always in that position. Today they are. So I just say to people, hey, we got to talk a little bit first before I can just tell you yes or no. But if I know all the information, I'm happy to answer the question.

It's always fun to talk about it.

It's the greatest fear of most people, certainly retirees, that is their greatest fear is will I run out of money?

And just as a caveat, or I should say their greatest fear is running out of money.

Running out of money. Yes.

Just as a caveat, our goal in having these conversations and going through these seven questions today, anyone who's watching this, you should be able to answer these questions. Don't let that be lost in the dialogue. You should be able to answer all seven of these questions. And if you can, kudos, great. But if not, then you either need to think long and hard about it or have someone help you answer the questions because they're really important.

Phil, I've been able to listen to you go through new client onboarding. I've listened to you talk to clients that you've had for multiple decades. And usually when the question comes up, will I run out of money? Do I have enough money? Can I retire? The first question that you say is, "What did you spend last year?" That's usually the first question. Start from the basics. So, you go there. Why? Why is that usually the first question?

Well, it's a reminder to them that looking forward is easy. But it only works if you're willing to stick to a plan. And so, if we go backwards and we look at a year and we say, "Well, how much did you spend?" And then I say, "Well, can you stick to that?" Then I can give you a pretty darn good idea how things are going to look.

But I used to ask clients all the time, Spell, years and years ago early in my career when they would say to me, "Phil, do you think I have enough? Do you think I'm going to be able to retire?" I would say to them, "What does Tuesday and Wednesday look like to you?" Because I can guess what a Saturday, Sunday looks like or a Friday night. I understand what the going out looks like in the normal part of life in the accumulation phase. When people reach retirement, you have seven Saturdays. You have seven Saturdays. So, what does Tuesday look like? What does Wednesday look like? Cuz your spending begins to change because now we have seven Saturdays. You got nothing to do. Is your spending going to change? And if it does, we might have a problem.

That's a great question. That's a really, really good question. Seven Saturdays.

Seven Saturdays.

I think we might have just created a brand.

Well, that's what happens when you retire. Seven Saturdays. And we know what happens on Saturdays. We go shopping, whether it's grocery shopping, whether it's shoe shopping or playing golf or anything else. All your hobbies tend to show up on a Saturday. Most clientele have nice taste and you multiply that by six, that moves the needle, Spell. So that used to be my go-to line was, "Hey, look what happens when we have seven Saturdays. How will you change your life?" And if we can put that in the context of dollars, I can tell you if you're going to run out of money or not, right? Because your portfolio has to sustain that, your pensions, your other income. It's pretty easy to see. And for most people, it's doable. But we've run into a number of clients who just can't control their spending.

Phil, the next question that you usually ask, this would be question two, is how much of your money has the IRS's name on it?

Yeah, I love that one. And I got into that not too many years ago, but that wasn't an original for me. But number of years ago, I started thinking if you have a qualified plan, you might not own a business. You might simply be an employee or an executive, but if you have a qualified plan, a retirement plan, IRA, 401k, 403b, whatever it is, you might not think of it this way, but you literally have a business and your business partner is Uncle Sam.

US government.

You're in a partnership 100%. You're in the partnership and let's just say on average your tax rate is 30%. Well, they own 30% of your business. Unless you're really good at planning.

Yeah. For sure.

Unless you're really good at planning, they own 30% of your business. So, when someone is in that situation, planning becomes really valuable because Uncle Sam's going to force you to pull money out of those accounts. Uncle Sam's going to tax you at the highest rate they can when you pull those dollars, and when you start being forced to take the money, you really can't fix anything at that point. You're at a point where you are basically going to just take what comes to you and that might not be a fun place to be.

So, let's say your portfolio is $2 million and you got a 30% tax rate on that 2 million. You're saying that $600,000 is the IRS's money, the government's money.

If you pulled it out in a lump sum, probably be more than that.

Well, yeah, you wouldn't be at 30 for sure, right?

It might be more than that. It'd be at least 30 plus you're going to pay your state. Unless you live in a tax-free state, but yeah, you're going to pay at least that.

So, your 2 million is effectively reduced to 1.4. That can change the game for some people.

And over the course of their life, it's even more.

Yeah, for sure.

If we grow it, protect it the right way, and they're making distributions for the rest of their life, they're going to pay even more. And then when they pass and leave it to their heirs, the heirs are going to be forced to pull it out over 10 years and they're going to pay whatever tax the owner didn't pay. Whoever gets it, they're going to pay it. And Uncle Sam has it designed now in such a way that they have to take it within 10 years or in 10 years. So, they're going to get theirs, right? Uncle Sam is going to get that tax. So, yes, you're in partnership with them. Probably 30% on the average, maybe a little more depending on your situation.

And depending on where you live. If you live in California, might be worse.

Might be worse. I live as far away from California as I can.

Well, from a tax perspective, I'm with you.

And probably the political climate's a little bit too rich for me out there. They just seem to have stuff going on all the time. So, I love California from a viewing standpoint. I love to go and visit. I love Napa Valley.

Yeah, nothing better.

I think that's some of the most beautiful country in the world. Some of the cliffs out there are awesome. But Monterey Peninsula just amazing. But I don't want to live there, man. The tax cost is too much.

Yeah, I'm with you on that. Phil, the third question, and think of this question as more or less being posed to a married couple, but I've heard you ask this time and time again to folks cuz we're planning and sometimes planning is not, the topics aren't always sunshine and dandelions, but usually one of the questions you ask is what is your income, imagine we're sitting at a table with husband, wife, what is your income the year after one of you dies? Why do you ask that question?

I think what people forget a lot, Spell, is that while you're married filing jointly, you live in a different tax climate, right? When you're married filing jointly, the tax bite is much, much lower. Your standard deduction much higher. If you're 65 years old or beyond it, it's 34, close to 34 or so thousand right now.

Mhm.

Standard deduction. And then there's other things that you can get on top of that. So someone dies, you get that last year filing jointly. But after that, you're single and the tax rates for a single filer change dramatically. The standard deduction cuts in half. So we're talking somewhere around the $16,000 mark. Versus 30 couple.

Yeah. Different animal.

The brackets, they shrink. So you're hitting those brackets much faster as a single filer. Someone dies, planning needs to be in place before it happens. Which is why planning is so important every year.

Yeah, for sure.

You don't wait until someone dies and then say, you know what, I need to get in there and see you guys. I need to plan. That planning needs to be preemptive and it needs to be happening year over year. Every year we need to be thinking about all those things. And what happens if someone dies? How will we deal with that? And how will it change your tax? And will that tax picture meaningfully change your wealth effect and your net wealth at the end? Will it change what you want to leave? A lot of things can change.

Yeah. I agree. There's risk management inside of all of that. One of our elements. There's investment strategy and that tax strategy in there, or investment oversight, tax strategy. All of that is at play here.

Someone passes away and particularly if you weren't planning for it, the bite can be really, really tough to handle.

Yeah, for sure.

And it's unnecessary. Those are things we can plan around.

Yep. No doubt. The fourth question, Phil, and this might be one of the more thought-provoking questions, particularly if you're listening and you're approaching retirement. This will be a question that you're going to want to hear how Phil thinks about this, but what happens if the market drops 20% the year you retire? Why do you ask that question? You got 30 years of experience, so there's a reason that you're asking that question. That is a thought-provoking question. Why do you ask that of our clients? Why do we ask that in our internal meetings when we're planning and stress testing a plan? Why is that so important?

Sequence of returns is important.

Yeah, sequence of returns people underestimate.

In fact, some people don't even know what it means. They certainly are not thinking about it as they get into retirement or as they start getting close to retirement, year, two, three years out. Spell, it's one of the most important questions we ask, is what happens if that market falls 25%, and it might fall more than that, might be a little bit less. But if someone's depending on that portfolio for income and depending on how they are investing, all of a sudden they feel the grip of a 25% decline and they were expecting, let's say on a $2 million portfolio, they were going to take say 100,000, maybe 125,000 a year.

And all of a sudden, 25% decline grips that portfolio. So you've turned 2 million into 1.5. It's 1.5. For them to get that same $100,000, we can't do it on a 5% distribution rate. Nope. Or the more common 4% distribution rate, right? We're going to have to be somewhere around seven. Now 7% distribution rate is far above what is generally sustainable.

Here's the crazy part, Spell. This is the part that's even more damaging. You better hope it's only one year of a decline. You better hope it's a 25% then it stops.

That's exactly right.

If it happens more than once and they're close to one another, maybe it's simultaneous. Maybe it's year 1, year two in retirement. If you had two years, say 20% drops, that portfolio is down to 1.2 now. And so now your 100,000 if you still need it, we're almost at a 9% distribution rate. Not sustainable. You're never going to come back from that sequence of returns.

So important.

So if you enter retirement and get slammed with a big market decline because you were not investing properly to enter that part of life, which happens a lot. People go along in accumulation phase, they stay very aggressively invested. That works for most people, but then when you start getting towards retirement, in distribution phase of life, you need to make adjustments to the portfolio, because most people can't stand a 20, a 30% decline in the market and be able to sustain their lifestyle without making significant changes, right? So, if you can make significant change, you might be able to weather that storm. But most people can't all of a sudden say, "Well, wait a minute. I was planning to spend this in retirement. I'm not really spending that much, but I really can't change anything." What do you do?

So, once that bleeding starts, Spell, sometimes it never stops. And then before you know it, I've seen clients run out of money. I should say I've seen prospective clients. Fortunately, we've never had one that ran out. But we've certainly seen and listened to and read horror stories of how that happened.

So I would say that question so important because you've got to be prepared getting into retirement. So, there are things that need to be done. Certain cash amounts need to be on hand. Certain contingency plans need to be on hand, need to be ready to execute. They need, or I should say be deployed in the event we go through that. We've got to know what the plan B is for sure. So that we don't put ourselves in a position of having to make larger than sustainable distributions or withdrawal rates.

Yep. Yep. Okay. Question five. Which dollars do I spend first and why?

Great question. I think one of the most confused things in our profession is dollars to spend first, and so a lot of, in fact the old school way of doing it, Spell, was always, well, you want to spend your tax-free dollars first and let your IRAs and 401ks grow until you hit required minimum distribution age, which was around 70 and a half years old for the longest time. Well, the logic was okay because everyone said, "Let that tax deferred growth continue to accumulate." What a lot of people didn't think about way back then was the amount that these qualified accounts can reach, right? Some of these things can be millions and millions of dollars. And so, do you really want to saddle your children with all of that tax when they might be in their peak earning years?

It's true. Means it's going to be that much worse.

Right. It's going to exacerbate the problem. But two, for your income. So, sure you let that money grow, but now when you start distributing, as that money grows, it also grows your effective tax rate. And so forcing it out at age 73 for most people right now, and then eventually, if you're born after 1959, it'll be age 75. So that distribution, you can't control it.

No.

So it's coming out no matter what. And if that spouse passes away, now you've got tighter tax brackets. You're going to be paying a lot more of it.

For sure.

Right now my opinion is it always depends. Depends on stage of life. Depends on assets, type of assets matter. And tax environment matters. All of those things matter. But if you are reaching retirement now, you're out of your earning years, you've got three or four, five years where there's no earnings, maybe you haven't started social security yet, but you've got enough in other sources to live on. We actually might be better off to start pulling from those qualified accounts while we have a goose egg for a tax bracket.

It's true, right? Potentially.

Now, that's oversimplifying it.

Yes.

But that is reality. If that tax rate is low enough, why not start taking some of those dollars?

Great point.

Why not convert them to Roth potentially? Why not use them for spendable income? Right. Or for lifestyle. All of those things matter. So I can tell you, Spell, it doesn't make sense to simply say the way a lot of, and I know advisers that still do it that way today. They say take the money that's not going to be taxed, take that first and let that tax deferred money grow. I can flip that on its head quickly, but it takes analysis, takes work, takes good analysis, takes work, and it takes an adviser who understands how to do all of that. Right. You got to have the right team of people to do it. But it requires that to get the right answer.

Here's the greatest problem in all of this is an unintended consequence, and that is the consequence of not knowing, doing these things only to find that you did them wrong. And in adult life, unlike when we were children, there is no do-over. Right. Once you make the mistakes, usually we can't fix it.

When it comes to this kind of thing, forget about it. Once you do it, you got to live with it.

Yep. It's true.

All right, Phil. Again, asking or posing this question to a married couple. I've heard you ask this a number of times. In fact, I don't know that there's any client relationship where this doesn't get asked at least once throughout the relationship. Maybe talked about lots. What's the plan if one of you needs long-term care?

You're right. We ask that question a lot. A lot.

We'll get right back to today's show, but first, I'd like to ask you a quick favor. If you're enjoying this episode, hit that like button and make sure that you're subscribed to our channel so you don't miss what's coming next. And hey, if something in today's episode has you wondering about your own financial plan, why not get a second opinion? Visit omnirestarfinanicial.com to schedule a consultation with one of our team members. It's quick, it's easy, and it could make a huge difference in your financial future. Now, let's get back to the show.

I think, Spell, long-term care is one of those things where people are fearful of it, and because they're fearful of it, sometimes they don't want to talk about it. On the other hand, they've witnessed a parent or parents going through it, and that's a different kind of fear. Now they're fearful because of watching their parents go through it. They want to make sure they plan so they don't have to put that burden on their children.

That question is important because some clients can self-insure.

True.

Not a problem. No big deal. Others are on that bubble. They can almost self-insure, but they probably need to transfer some of that risk to an insurance company. So, they might need some long-term care coverage, some gap coverage. It all depends. But I asked that question, and I think everybody should be asking themselves that question. They should be able to answer that if you haven't planned for that long-term care. In fact, I had this conversation last week with a client. $1 to $150,000 a year is what it's going to cost.

I looked at a tax return from April or May of this year and I couldn't help but notice the health care cost, and specifically it was to long-term care, but it was in-home care. But a partial year, Spell, a partial year was almost $300,000. That was for two people. And actually I take that back, was a full year. 334,000 I believe was the number.

Huge amount of money.

Massive amount of money. Not everyone can self-insure when all of a sudden it gets to be that level of expense. So I ask the question, I like to bring that up to clients, not because I want them to go buy insurance. I'd much rather they didn't buy insurance, but I also want them to protect what they've built. And if it's important to them to protect what they've built and not run out, sometimes you have to transfer risk and let someone else help you pay the bills. And it's much cheaper, Spell, it's much cheaper to build some premium into your cash flow.

No doubt.

Than it is to watch decades of building wealth potentially be severely, severely damaged because of long-term care expense.

It's true. It's, I have nothing to add to that. It's just very true. We've seen it.

Yeah, we've seen it. So, we've seen it and we've seen it in our own families, right? We don't know it just because of our clients. We've seen it with family members. So we know it. The gravity is there. We understand it. And when we talk about it to a client, it has nothing to do with, oh, well, hurry up. Go get you some insurance or our team can write that for you. It's all about, please put the right protections in place. Please understand your contingency plan.

That's right.

Please recognize that this is real. Statistically speaking, Spell, if two of you 65 years old today, that there is a strong chance that one of you is going to need long-term care. And statistically, I believe the number is something around 70%.

It's huge.

Now, doesn't mean you're going to need it, right? People listening to this show today, they might say, "Well, I'm never going to need" And you might be right, but the averages say that you will. And I can't tell you who's going to go, but I can tell you that you better be prepared if you do.

That's right. That's a good point. Question seven, right? How much do you want left over and for whom?

It's a great question. It's a great question. Most people can't answer that.

Nope.

Here's what most people say. I've worked with so many clients over the years and what most of them will say is, "Well, yeah, I want to leave my kids something or my grandkids. I want them to have it a little better than I did." That's pretty standard to hear. Occasionally though, I'll hear something that's much more specific. They'll say, "Well, I'd like to leave Junior a million dollars." Okay. How did you come up with that number?

Yeah, where did that come from?

It just felt right, or it just sounds right, or that's a good number. Well, maybe, maybe not. But I think how much you want to leave behind, great question that needs to be answered because it absolutely affects how you plan today.

No doubt.

Right. Do you want to leave a lot? Do you want to, is it important to preserve your estate? Is it important that you make your children wealthy? Is it important that we avoid tax when it goes to your children? What is their lifestyle look like? What are they going to need? Are you doing it because of that? Do you want to protect it from a spouse of your child? All kinds of questions that go into this conversation. But the first one is what do you want to leave?

And, Spell, you've heard this answer. Some clients say, "You know what? If there's something left, so be it. If there's not, so be it. So be it. I'm going to enjoy it. I created it. It's my money. And we as their parents, we're going to enjoy it first. And if there's something left, we'll leave it to them. They hear it often." And that's not a bad way to do it.

Not at all. Nothing wrong with that.

And then there's others who want to do a little bit of a combo. So they want to leave some to charity. They want to leave some to the kids. Maybe the grandkids. But they want to do more with their money. So there's that contingent of people, or I should say there's that cohort that says, is that the right word?

Yeah. Cohort.

So there's that cohort that says, I want to leave dollars to a lot of things. Doesn't really matter what it is. What matters is that you know that you want to do something, that there's a reason why, right? And then we have to start thinking about amounts so that we can plan for that. And if we don't plan for it, then you better hope that it all works out. And hope generally is not a good strategy.

Usually not a strategy at all.

No.

Yeah, that's true. I think, Phil, that question is important for someone to be able to answer because if there is an answer other than, well, I'm going to spend everything, which that's okay. I'm not knocking that at all. I think for a lot of folks, that's probably a really good thing to do.

But if there's something that you want to happen beyond your lifetime, you can't just speak that into existence and then it's carried forth by a magical carpet.

So, it's so true.

So think about it this way, Spell, and I think for our listeners, if you have extreme amounts of wealth, right? Then this probably not a relevant thing in the context of what we're talking about today, right? That is more of a conversation around family governance and how we treat it as far as generational wealth is concerned. What do we do with it? How are we stewards of that money? How do we transition the stewardship to the next generation? But that's a different conversation.

But for the average, a million to say $10 million, something in that range when you pass away. If you want to leave a lot of that to your children, well, couple things have to change today. Spending habits have to change for sure. Distribution rates have to change. Where you want those dollars to go, how safe you invest, how aggressive you invest, all of those things matter. And the dying broke idea goes out the window.

That goes out the window because now you got to change how you live so you can leave something behind. But I think before anybody answers that question, oh, and by the way, there's one other thing. Some people say, I really want to leave my kids as much as I can, or whatever that means, but they'll do it at their expense of enjoying life. And they not only avoid dying broke, they die with a lot of money, more than they ever imagined they would have in, Spell, they die having missed so many opportunities and so many things in life that would bring them joy, experiences with the kids. So many things.

And they die having never enjoyed any of that because they were so bent on leaving wealth to the kids. There is a way to do both.

For sure.

But it requires planning. It requires making adjustments along the way. Not so much sacrifice, but adjustments.

For sure. So, Phil, this episode is about answering the question, do I have enough to retire? Will I run out of money? There are lots of retirement calculators online. You can Google a retirement calculator and you'll find 17 versions of a retirement calculator, but they all ask how much you have in your portfolio. Why don't we start with that? Our first question today was not how much do you have in your retirement portfolio? In fact, I don't know that we ever asked that question. Why do all retirement calculators ask a question that didn't even make our top seven? Why is that?

Well, I think it's pretty common, as you said, every calculator asks for what do you have now? And that's because it's trying to project what you're likely to have when you hit retirement or it's trying to project a certain withdrawal rate. Here's what it's not asking. It's not asking about what is your Social Security going to cost you, what's your IRMAA tax rate going to be. It's not asking you what your ordinary income tax rates going to be as it changes or adjusts throughout your retirement. It's not going to ask you about some of these little bites, these little things that will sneak in and take away from your lifestyle or take away from your lively, right? It doesn't know to ask those things because it doesn't know you. So it doesn't say will you be able to support yourself throughout retirement with health care cost. It doesn't ask about any of that.

So I think the reason we don't start there is because there's so much more to it. Now of course we want to know what's in the portfolio so we can project what they're going to have. We have to know that there's so much more to it than just a portfolio balance. You get somebody with a $3 million portfolio balance and they might think, "Man, I'm gonna be great. More money than I've ever had. I got three million, four million. I'm going to be great in retirement." Well, maybe. Depends on what your tax rates are. What are the tax environments look like? How are they working for you or against you? What is all of that costing? Those are real dollars. But you're getting nothing for them. You're going to spend it, but you don't get anything for it, right?

And then what does my distribution rate need to look like? What does my lifestyle look like? Do I have lifestyle creep? Am I prone to that? Do I love to try new things? Can I keep my lifestyle stable or am I always trying new things? Do I want to travel all over the world? Who knows?

Oh, yeah.

But a calculator that just simply says, "Give me your portfolio balance and I'll tell you if you'll have enough." Well, it's just...

Yeah, you make a great point. It's static. What about inheritances? Do you expect one?

That's a good point, right? And that's something we didn't even get to talk about today. There's not enough time to talk through all of the variables.

True.

But it's true. You made a really good point in that it's just there to run a simple calculation, and retirement and calculating what you need for your retirement income and the taxes that are associated with that is anything but simple. It's not overly complex. Some people have overly complex situations, but for the most part, everyone's situation is rather simple, but it's not as simple as plugging in a number and saying, "Oh, I'm going to get this every year and I'm going to be fine."

A lot of moving parts that affect the outcome.

And there are small outcomes along the way and then there's the big outcome, right? All of that needs to be planned. And if it's planned well, then I think you end well. Fail to plan, right? And I don't think people plan to fail, right? But they do fail to plan, right? And when that occurs, I think the outcome is going to be something that probably is not what you hoped. It's not what you wanted. And if it's not good for you probably means that it affected someone else. Planning is so important and it is complicated, Spell. We can say it's simple and to us in a lot of cases it is but every person has lots of moving parts in their financial world.

That's true. Yeah, that's true.

And most of them don't know how those moving parts affect the overall plan. Having someone to guide you through that, to help you make good decisions, to show you when those things matter and when they don't. You really need that. Some people are blessed with the ability to do it. Most are not.

All right, Phil. Someone's watching this video. They've listened to the seven questions. Maybe they could answer five of them, six of them. Maybe they answered all seven. That's great if they can. That aside, what would you tell someone who's listening to go ask their CPA or their advisor today?

If you can answer all of those and you feel like you've got all those in order, that's really a good thing. But I think a lot of people tend to believe that they have everything in good order, but they're not asking enough questions. They're assuming. They're being given a tax return to sign. They're being given a plan that says, "Here, you're on track." What I can tell you is that most planning softwares work using static data, static information, fixed returns. That's not going to give you good information or at least reliable information. It's going to give you everything in a straight line.

Doesn't work.

So, I would tell anyone listening, ask your team what are they looking at? What numbers are they using? What rates of return are they using? What taxes are they using? And here's another one, Spell. Are they applying inflation to all parts of your plan? Because different parts of the plan inflate different ways.

That's a great question.

At different rates and most people overlook that.

Yeah, that's a really good...

What is long-term... I'm going to put you on the spot. What would you grow long-term care premiums using? What rate would you grow long-term care premiums?

Well, it wouldn't be at the standard rate of inflation, which is around 3% over a long period. If our Fed can get it back there, I think right now 2%. If we take these last, the last several years, we might see that thing get up there a little bit more. But over the last 50 years, yeah, sure. Say 3%. Heck, you're the guy with the economics degree. You tell me.

But I'd agree with you. All right. So let's say it's 3%. Long-term care, and we just saw clients jump 40%. 41% one year, last year to this year, 41%. I don't know if that happens every year, but I've seen long-term care rates go up exponentially. Tremendous increases since I started talking about long-term care 30 years ago. And so I've seen it continue to rise. Everything rises.

Eggs.

Hey, man. There we go with that egg. Couple men. But everything rises and everything rises at different rates.

That's right.

The cost to heat your home rises at a different rate than the cost to insure yourself. And the cost for your mobile phone that everyone has, right? That goes up at a different rate than say your electric bill at home, your cable bill. There's so many things and they all... the cost to replace the roof on your house. I can tell you, Spell, that just 20 years ago the cost to replace a roof on a house was dramatically lower than it is today. Dramatically.

Here's something that's interesting. I was with a group of friends and some family, not last weekend, but the weekend prior, and one of the guys that we were with bought the new Apple iPhone, the one that folds.

Oh, he got the folding version.

Yeah. You know how much that cost?

I heard they were a couple thousand.

As much as 3,000, I think.

Two grand for that.

Depending on the memory, it can get up to 3,000 or something, bro.

Two grand. Two grand for that's more expensive than this computer. And this computer is nice. This has got some high powered computing software. Well, here's my question for you. Was it awesome?

It was pretty awesome.

Okay. All right. I'm still not paying two grand for it.

I'm not either, but I heard they're pretty cool. We made fun of him. We were like, man, you got a mini iPad. That's pretty cool. Got an old flip phone, but a really cool way to flip the phone. But to your point, and I know you weren't talking about the cost of the physical phone. You were talking about phone plans, but still the cost of goods and the cost of services grow at different rates.

Absolutely. Even if it's a new folding, flipping iPhone, they are cool. I don't want one, not at two grand. But that is my point, Spell. I think a lot of people when they're planning, they're not getting into the weeds enough to say, "Wait, this grows at certain rate, this grows at a different rate." And you need to know that because it will affect cash flow.

Yeah, for sure.

Will affect the cash flow. So important for them to be doing that.

Phil, which elements collided in our conversation?

I think they all...

Man, you only get to pick two. I'm supposed to hold you to two. If you had to pick a right fist and a left fist and not collateral damage, what would you say?

Probably tax strategies and cash flow. Those two are, and risk management.

That's three.

Sorry, I can't resist. The elements are so powerful because they remind you of what a good plan entails, what needs to be included. And I think the more that people hear that, the better because we look at plans all the time. People that are new to us. We look at their plans and sometimes they don't become a long-term client. They just want us to review their plan. And, Spell, the things that are missing in these plans is sometimes shocking to me because sometimes it's the really simple stuff. Whoever they've been working with just never thought to put it in there.

It's true.

And those things can take what seemed like a really good plan and 10 or 15 years down the road when it's too late to fix it, they can expose weakness. They can expose things that turn into unintended consequences.